Liquidity and management's plans

9 Months Ended

Sep. 30, 2020

2.	Liquidity and management’s plans:

The Company had cash and cash equivalents of $36,707 as of September 30, 2020. As such, the Company has very little cash resources and has been unable for some time to secure additional funding, due in significant part to an ongoing litigations against the Company (below and see note 6). Based on the Company’s current operational plan and budget, the Company expects that it has sufficient cash to manage its business into the f

irst

quarter of 202

, although this estimation assumes the Company does not begin any clinical trials, acquire other drug development opportunities or otherwise face unexpected events, costs or contingencies (including, without limitation, as a result of the ongoing litigations), any of which could affect the Company’s cash requirements. Available resources may be consumed more rapidly than anticipated, resulting in the need for additional funding. The Company intends to finance additional research and development, commercialization and distribution efforts and its working capital needs primarily through:

•

proceeds from public and private financings and, potentially, from other strategic transactions (including potential royalty-related financing transactions), although the Company’s attempts over the last year to secure such financing have not been successful;

•

royalty revenue from Mayne Pharma from sales of SUBA-Itraconazole BCCNS upon and assuming approval by FDA (after earned royalties have been applied to any royalties advanced under Third Amended SLA, although it is uncertain if and when such FDA approval will be obtained);

•

proceeds from the exercise of outstanding warrants previously issued in private financings to investors;

•

potential partnerships with other pharmaceutical companies to assist in the supply, manufacturing and distribution of our products for which we would expect to receive upfront milestone and royalty payments;

•

potential licensing and joint venture arrangements with third parties, including other pharmaceutical companies where we would receive funding based on

out-licensing

our product; and

•

government or private foundation grants or loans which would be awarded to us to further develop our current and future therapies, or government payroll protection or similar programs available as a result of the novel coronavirus outbreak.

However, there is a significant risk that none of these plans will be implemented in a manner necessary to sustain the Company as anticipated and that the Company will be unable to obtain additional financing when needed on commercially reasonable terms, if at all. In particular, the Company is presently subject to shareholder litigation (see Note 6 – Legal Proceedings). The existence of the Action and the Class Action (as defined in Note 6) and the uncertainty surrounding their outcome has impeded the Company’s ability to secure additional funding and may continue to do so for so long as the outcome of the Action and the Class Action is uncertain. On June 4, 2020, the Delaware Court of Chancery held a hearing at which the separate motions of the Individual Defendants and Mayne Pharma to dismiss the Complaint were presented. At the conclusion of the hearing, the Court issued an oral ruling in which it denied the motions and declined to dismiss all counts alleged in the Complaint. Accordingly, the Action is anticipated to proceed in the course typical for such litigation. This ruling creates additional uncertainties which could continue to materially impair the Company’s ability to raise capital.

In addition, on January 30, 2020, the International Health Regulations Emergency Committee of the World Health Organization (“WHO”) declared the novel coronavirus outbreak a public health emergency of international concern and on March 12, 2020 the WHO announced the outbreak was a pandemic. On January 31, 2020 the U.S. Health and Human Services Secretary declared a public health emergency, and subsequently state and local governments have imposed various restrictions on public activity. The Company has maintained operations virtually during the outbreak, but the impact of the outbreak currently is unknown and rapidly evolving. The related health crisis has adversely affected the U.S. and global economy, resulting in an economic downturn that has impacted the financial markets and the Company’s ability to raise capital.

Approximately 90% of the Company’s current liabilities are amounts that are expected to be forgiven under a United States federal program (see Note 4) or are amounts due to the Company’s Board of Directors for past fees, legal counsel for accrued legal fees, and majority shareholder, Mayne Pharma, for Preferred Stock dividends which are payable in stock at the Company’s election. The remaining balance of current liabilities is unsecured accounts payable.

As a result of the foregoing circumstances, there is substantial doubt about the Company’s ability to continue as a going concern. The financial statements included herein do not include any adjustments relating to the recoverability or classification of asset carrying amounts or the amounts and classification of liabilities that may result should the Company be unable to continue as a going concern.

If adequate funds are not available when needed, the Company may be required to significantly further reduce or refocus operations or to obtain funds through arrangements that may require the Company to relinquish rights to technologies or potential markets, any of which could have a material adverse effect on the Company. In addition, the inability of the Company to secure additional funding in the near future could cause the Company to wind down or discontinue operations. The Company’s Chief Executive Officer and the Company’s Chief Financial Officer currently receive no cash compensation. The Chief Financial Officer serves the Company on a part-time basis.