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Note 2 - Liquidity
3 Months Ended
Mar. 31, 2022
Notes to Financial Statements  
Substantial Doubt about Going Concern [Text Block]

NOTE 2. LIQUIDITY

 

The accompanying unaudited consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates continuity of operations, realization of assets, and satisfaction of liabilities in the ordinary course of business. The propriety of using the going-concern basis is dependent upon, among other things, the achievement of future profitable operations, the ability to generate sufficient cash from operations and potential other funding sources, in addition to cash on-hand, to meet its obligations as they become due.

 

The Company had not generated any revenue from the sale of products prior to the quarter ended September 30, 2021 and has incurred operating losses in each year since it commenced operations. The Company began generating revenue in the U.S. from its sales of VAZALORE in the third quarter of 2021. The Company expects to continue to incur significant operating expenses and operating losses for the foreseeable future as the Company continues the commercialization of VAZALORE. Additionally, as of March 31, 2022, the Company had entered into media and advertising commitments for VAZALORE of $2.9 million which are expected to be paid in the second quarter of 2022.  Further, the Company has supply agreements with its contract manufacturer and packager for VAZALORE which contain minimum annual purchase commitments that started in 2021 and continue through 2025; the minimum annual purchase commitments are intended to ensure that manufactured product is available when required to enable the Company to meet its expected market demand for VAZALORE.

 

As of March 31, 2022, the Company had working capital of $44.5 million, including cash and cash equivalents of $52.5 million.  Although the achievement of future profitable operations and the ability to generate sufficient cash from operations is uncertain at this time, the Company’s cash on hand at March 31, 2022 supports that the Company can fund its obligations for at least one year from the date these financial statements were issued and mitigates the substantial doubt consideration.