1. Business and Liquidity
PLC Systems Inc. (“PLC” or the “Company”) is a medical device company specializing in innovative technologies for the cardiac and vascular markets. Over the past four years, the Company has begun commercialization outside the United States (the “U.S.”) of its newest product, RenalGuard®, which currently represents the Company’s key strategic growth initiative and primary business focus. The RenalGuard System consists of a proprietary console and accompanying single-use sets and is designed to reduce the potentially toxic effects that contrast media can have on the kidneys when it is administered to patients during certain medical imaging procedures. The Company conducts business operations as one operating segment.
For the six months ended June 30, 2012, the Company incurred a loss from continuing operations of approximately $8,222,000, and used cash in operations of $1,464,000. At June 30, 2012, the Company had an accumulated deficit of $106,949,000. Management expects that quarterly losses and negative cash flows will continue during 2012. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
Based upon the current financial condition of the Company and the expectation of continued quarterly losses during 2012, management is currently investigating ways to raise additional capital that can be completed in the next few months. Subsequent to December 31, 2011, the Company reported that it had engaged a financial advisor to assist the Company in this effort. The Company was able to raise an additional $1,000,000 in capital on July 2, 2012, through the completion of additional financing by the closing on the second tranche of convertible notes with GCP IV LLC (the “Investors” or “Holders”) and is discussed in greater detail in Footnote 13. The Company will continue to review its other expense areas to determine whether additional reductions in discretionary spending can be achieved.
The Company also believes that the recent publication of positive clinical results from two independent investigator-sponsored clinical trials in Italy, which show RenalGuard to be both a safe and effective product for the prevention of CIN in at-risk patients, presents a substantial opportunity for it to increase its sales and achieve profitable results in the next few years, provided the Company is able to raise the additional capital it needs in the near term to sustain its operations and expand its RenalGuard sales and marketing programs.