P35
amendments in ASU 2009-13 are effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010, with early application permitted. The Company is currently evaluating the provisions to determine the potential impact, if any, the adoption will have on the Company's financial position or results of operations.
(2) LIQUIDITY AND CAPITAL RESOURCES
As of December 31, 2009, the Company had US$1,265,373 (2008: US$9,175,712) in cash and cash equivalents and had no indebtedness.
The Company has had significant negative cash flows from operating activities since inception. Although these
cannot be guaranteed, the Company has produced monthly forecasts to the end of 2012 and based upon cash expected to be received through existing contracts, new contracts to be closed and the ability to control costs as a result of the Company's cost minimization program, with existing cash on hand and cash received from a share placing in May 2010, the Directors believe that the Company will have sufficient cash to meet its working capital needs through the next twelve months.
(3) ACCOUNTS RECEIVABLE
Accounts receivable as of December 31, 2009 and 2008 consist of:
2009
2008
Trade receivables, net of allowance of
US$90,893 (2008: US$878,697)
$ 571,764
$ 551,562
Interest receivable
65
6,931
Other receivables
3,028
1,295
$ 574,857
$ 559,788
(4) INVENTORIES
Inventories as of December 31, 2009 and 2008 consist of:
2009
2008
Raw materials
$ 605,624
$ 792,050
Work in progress
9,880
544,940
Finished goods
25,278
359,262
$ 640,782
$ 1,696,252
The application of lower of cost or market to the 2009 and 2008 inventories resulted in write-offs of US$1.7 million and US$0.7 million respectively. Inventory classification is determined by the stage of the manufacturing process the specific inventory item represents.
(5) PROPERTY AND EQUIPMENT
Property and equipment as of December 31, 2009 and 2008 consist of:
2009
2008
Leasehold improvements
$ 914,015
$ 914,015
Furniture, fixtures and equipment
707,592
707,592
Computer equipment and software
443,907
410,247
2,065,514
2,031,854
Less: Accumulated depreciation
(1,230,878
)
(777,283
)
$ 834,636
$ 1,254,571
Depreciation and amortization expense of US$453,595 (2008: US$479,618) is reflected in general and administrative expense in the accompanying consolidated statement of operations.
(6) ACCRUED LIABILITIES
Accrued liabilities as of December 31, 2009 and 2008 consist of:
2009
2008
Accrued compensation
$ 747,572
$ 327,908
Professional fees
924,698
593,687
Other
3,280
14,202
$ 1,675,550
$ 935,797
(7) LEASES
During the year ended December 31, 2006, the Company entered into a capital lease for certain equipment that expires in September 2010. At December 31, 2009, the gross amount and related gross amortization of the equipment recorded under capital lease amounted to US$16,601 (2008: US$36,940) and US$20,339 (2008: US$18,462), respectively. Amortization of assets under the capital lease is included with depreciation expense.
The Company has operating leases for laboratory space that expires March 31, 2012, but has a 90-day option to terminate prior to that date. The Company plans to provide notice of terminating this lease by July 1, 2010 and incur $54,162 in rent expense through September 2010 on this space. Rental expense for operating leases included in general and administrative expenses in consolidated statement of operations during the year ended December 2009 was US$122,680 (2008: US$111,348).
