Note 2 - Going Concern

The accompanying financial statements have been prepared in conformity with generally accepted accounting principles in the United States of America, which contemplates our continuation as a going concern. At September 30, 2015, we had a working capital deficit of $10.1 million, a stockholders’ deficit of $31.5 million and have accumulated losses to date of $86.2 million.

Subsequent to September 30, 2015, we entered into an agreement with certain debt holders and investors whereby the investors agreed to sell back to us an aggregate of $19.7 million at a nominal price to facilitate our ability to restructure our balance sheet and raise additional capital. After this debt cancellation, $2.4 million of our 12% secured notes and $0.3 million of our 12% convertible promissory notes, were due on June 30, 2015 and are due upon demand by the noteholders (see Note 6). Our recurring losses from operations, negative operating cash flows and working capital deficits, raise substantial doubt about our ability to continue as a going concern. In view of these matters, realization of certain of the assets in the accompanying balance sheet is dependent upon our ability to meet our financing requirements, either by raising additional capital or the success of our business plan and future operations. We are actively seeking additional capital to take us through our current phase of growth, and consequently, we have adjusted our capacity expansion projects, engaged in discussions with our industry partners, realigned manufacturing activities with existing customer obligations, and continue to actively manage our inventory to meet customer expectations and commitments. Over the past six months, we have engaged strategic, financial and legal advisors to assist us in raising additional capital. As of the date of this Form 10-Q, there are no probable options available to us for such capital and our sole source of cash is from operations which is insufficient to maintain our operations and meet our obligations. For this reason, we soon may be forced to further curtail manufacturing activities and/or file for bankruptcy protection.