(4)           Liquidity

The Company generated net loss allocable to common stockholders of $16,371,000 for the six months ended June 30, 2012 and a loss of $4,306,000 for the year ended December 31, 2011. At June 30, 2012, our working capital deficit was $12,015,000.As of June 30, 2012, we had one secured note outstanding in the principal amount of $2,750,000. The note is due on September 13, 2012. Management believes that our current cash, revenues from MuGard sales and expected license fees should fund our expected burn rate into the third quarter of 2012. We will require additional funds to continue operations. We do not have funds to pay the secured note. 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.