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Mosaic ImmunoEngineering is a nanotechnology-based immunotherapy company developing therapeutics and vaccines to positively impact the lives of patients and their families.
Message: Liquidity and Capital Resources....
Liquidity and Capital Resources
Liquidity
Our cash and short-term investment balances increased from approximately $10,352,000 as of May 31, 2010 to approximately $14,065,000 as of August 31, 2010. We also have restricted cash balances amounting to approximately $21,000 as of May 31, 2010 and August 31, 2010. Total current assets increased from approximately $13,417,000 as of May 31, 2010 to approximately $15,905,000 as of August 31, 2010. Total current liabilities amounted to approximately $942,000 and approximately $3,171,000 as of May 31, 2010 and August 31, 2010, respectively. The change in our current position as of August 31, 2010 as compared with May 31, 2010 results in part from collection of our $950,000 note receivable plus accrued interest and our re-classification of our auction rate securities and debt balance to short-term as a result of our September 2010 settlement with Deutsche Bank.
During June 2008, we obtained a credit facility for as long as needed, which provided for financing based on the par value balance of our outstanding auction rate securities. The facility was collateralized by the full value of the outstanding auction rate securities, required no origination fee, and bore interest at the federal funds rate plus 3%. On October 14, 2008, we borrowed $3,000,000 on the credit facility. During June 2010, we repaid $500,000 on the credit facility and on September 20, 2010 we paid $2,642,954, the balance on the credit facility at August 31, 2010 plus interest through September 20, 2010.
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 equity 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 shortfalls currently experienced by PDS and TPL, and continued negative cash flows incurred by PDSG, will have an adverse effect on our liquidity. Accordingly, we are in the process of examining alternatives that could allow for the partnering or divestiture of PDSG. If successful, these measures may provide for a further reduction in expenses and cash use, or additionally in the event of divestiture, cash proceeds.
While our current liquid cash resources as of August 31, 2010, are expected to provide the funds necessary to support our operations through at least the next twelve months, the cash flows from our interest in PDS represents our primary significant source of cash generation. In the event of a continued decrease or interruption in MMP Portfolio licensing we will incur a significant reduction to our cash position as the revenues from our PDSG subsidiary are insufficient to cover the costs of their operations and the costs of Patriot Scientific Corporation as a whole. While our cash position has been enhanced as a result of our September 2010 auction rate securities settlement with Deutsche Bank, PDS did not receive any license revenue during the three months ended August 31, 2010. It is highly unlikely that we would be able to obtain any additional sources of financing to supplement our cash and net short-term investment position (as reduced by our line-of-credit) of $11,425,900 at August 31, 2010.
Why does Ptsc need to additional funding? First let's stop any compensation packages to BOD...that might help some. Secondly, let's get some qualified people to help the BOD, using the BOD compensation packages to fund this.
Anyone else want to chime in?
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