(2)            Liquidity

The Company generated net loss allocable to common stockholders of $853,000 for the three months ended March 31, 2014 and a net income of $1,551,000 for the year ended December 31, 2013. At March 31, 2014, our working capital deficit was $9,604,000. Management believes that our current cash, revenues from MuGard royalties and expected license fees should fund our expected burn rate into the first quarter of 2015. We will require additional funds to continue operations. These funds are expected to come from the future sales of equity and/or license agreements. If we are unable to obtain adequate capital funding in the future or enter into future license agreements for our products, we may not be able to continue as a going concern, which would have an adverse effect on our business and operations, and investors' investment in us may decline.