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Nature of Business and Liquidity
9 Months Ended
Sep. 27, 2014
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Note 2. Nature of Business and Liquidity

Nature of business:  The Company is a natural products company that discovers, acquires, develops and commercializes proprietary-based ingredient technologies through its business model that utilizes its wholly owned business units, including ingredient technologies, natural product fine chemicals (known as “phytochemicals”), chemistry and analytical testing services, and product regulatory and safety consulting (as Spherix Consulting).  The Company provides science-based solutions to the nutritional supplement, food and beverage, animal health, cosmetic and pharmaceutical industries.  The Company acquired Spherix Consulting, Inc. on December 3, 2012, which provides scientific and regulatory consulting to the clients in the food, supplement and pharmaceutical industries to manage potential health and regulatory risks.

 

Liquidity:  The Company has incurred a loss from operations of approximately $4,128,000 and a net loss of approximately $4,161,000 for the nine-month period ended September 27, 2014.  As of September 27, 2014, cash totaled approximately $1,204,000.  Subsequent to the nine-month period ended September 27, 2014, the Company entered into a loan and security agreement with Hercules Technology II, L.P., as lender (“Lender”) and Hercules Technology Growth Capital Inc., as agent.  Lender will provide the Company with access to a term loan up to $5 million.  The first $2.5 million of the term loan was funded at closing, and is repayable in installments over 30 months, following an initial interest-only period of twelve months after closing.  The remaining $2.5 million of the term loan can be drawn down at the Company’s option at any time but no later than July 31, 2015.  For more details on the term loan, please see Note 11. Subsequent Events of the Financial Statements.

 

With the term loan described above, management believes it will be able to support operations of the Company with its current cash and cash from operations through at least November 6, 2015; however there can be no assurance that unforeseen circumstances will not require the Company to seek additional financing.  If the Company determines that it shall require additional financing to further enable it to achieve its long-term strategic objectives, there can be no assurance that such financing will be available on terms favorable to it or at all.  If adequate financing is not available, the Company may delay, postpone or terminate product and service expansion and curtail certain selling, general and administrative expenses.  The inability to raise additional financing may have a material adverse effect on the future performance of the Company.