Mosaic ImmunoEngineering is a nanotechnology-based immunotherapy company developing therapeutics and vaccines to positively impact the lives of patients and their families.
Message: I Find This Interesting: Liquidity Issues and Avot Revolving Loan Note?
Liquidity and Capital Resources
Liquidity
Our cash and short-term investment balances increased from approximately $6,722,000 as of May 31, 2008 to approximately $7,108,000 as of February 28, 2009. We also have restricted cash balances amounting to approximately $51,000 as of May 31, 2008 and approximately $52,000 as of February 28, 2009. Total current assets increased from approximately $9,851,000 as of May 31, 2008 to approximately $10,202,000 as of February 28, 2009. Total current liabilities amounted to approximately $930,000 and approximately $2,366,000 as of May 31, 2008 and February 28, 2009, respectively. The change in our current position as of February 28, 2009 as compared with May 31, 2008 results in part from our receipt of approximately $7,649,000 in distributions from PDS, recording a liability for income taxes of approximately $1,027,000 and a decrease in our deferred tax assets of approximately $560,000.
During June 2008, we obtained a credit facility for as long as needed, which provides for financing up to 50% of the par value balance of our outstanding auction rate securities. The facility is collateralized by the full value of the outstanding auction rate securities, required no origination fee, and when drawn upon will bear interest at the federal funds rate plus 3%. On October 14, 2008, we borrowed $3,000,000 on the credit facility. The amount we can borrow against our collateral, currently $6,450,000, is limited by FINRA (see Note 13).
Current global economic conditions have resulted in increased volatility in the financial markets. The cost of accessing the credit markets has increased as many lenders and institutional investors have increased interest rates, enacted tighter lending standards, and reduced or ceased to provide funding to borrowers. Adverse changes in the economy could limit our ability to obtain financing from debt or capital sources or could adversely affect the terms on which we may be able to obtain any such financing. Currently, we have sufficient resources to fund our operations through at least the next twelve months.
Cash Flows From Operating Activities
Cash used in operating activities for the nine months ended February 28, 2009 was approximately $5,263,000 as compared with cash used in operating activities for the nine months ended February 29, 2008 of approximately $13,777,000. The principal components of the current period amount were: net income of approximately $788,000 and a change in income taxes payable of approximately $1,027,000. These increases were offset by: equity in earnings of affiliates of approximately $5,747,000, change in deferred taxes of approximately $1,762,000 and changes in accounts receivable and inventory of approximately $145,000 and $594,000, respectively.
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Cash Flows From Investing Activities
Cash provided by investing activities was approximately $4,130,000 and $5,519,000 for the nine months ended February 28, 2009 and February 29, 2008, respectively. The decrease was primarily due to a decrease in distributions received from PDS for the nine months ended February 28, 2009. Cash used during the nine months ended February 28, 2009 included approximately $668,000 in purchases of Crossflo and Avot convertible notes, approximately $1,050,000 in purchases of Avot preferred stock, approximately $497,000 in purchases of Talis membership units and approximately $2,578,000 in the acquisition of Crossflo and approximately $499,000 in the acquisition of the assets of Verras.
Cash Flows From Financing Activities
Cash provided by financing activities for the nine months ended February 28, 2009 was approximately $1,747,000 as compared to cash used in financing activities of approximately $5,786,000 for the nine months ended February 29, 2008. For the nine months ended February 28, 2009, cash of approximately $1,096,000 was used to purchase common stock for treasury and cash of approximately $416,000 was used to pay notes payable. Cash received from financing activities during the nine months ended February 28, 2009 consisted of $3,000,000 received on our line of credit and $250,000 received by Holocom on their line of credit facility.
Capital Resources
Our current position as of February 28, 2009 is expected to provide the funds necessary to support our operations through at least the next twelve months.
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