Endeavor IP Inc. (ENIP), the patent assertion company run by newly appointed CEO Franciscus Diaba, said its net loss for the fiscal year ended Oct. 31, 2014 more than doubled on higher operating expenses, leaving Diaba with the difficult task of raising money at a steep discount, selling the business or going out of business.
Diaba was named to replace former CEO Ravinder "Rob" Dhat earlier this week after only a year on the job.
Company officials didn't immediately return a telephone call seeking comment.
New York-based Endeavor IP today reported a net loss in the fiscal year ended Oct. 31, 2014 of $2.14 million, compared with a loss of only $818,247 for the previous year. The company said revenue was outstripped by increasing operating costs.
During the year, Endeavor IP incurred compensation expenses of $452,650, compared with only $59,142 during the year ended October 31, 2013. The increase was the result of compensation and stock based compensation paid to the officers.
Endeavor IP also incurred director fees of $391,847, compared with only $68,250 during the previous years. The company said the changes resulted from consulting agreements during the year and compensation paid to additional appointed directors.
The company also incurred professional fees of $878,434, compared with $276,173, a year earlier. The company said the increase was due to additional professional services required from activities and filing requirements during the year. The company said the fees were for professionals engaged for legal, accounting and auditors, investor relations and consulting services.
The company’s general and administrative expenses also increased to $280,559 from $234,281 a year ago. The changes resulted mainly from filing and list expenses, travel expenses and insurance which the company incurred during the year ended due to an increase in operations compared with the previous year.
Endeavor IP had cash and cash equivalents of only $210,704 as of Oct. 31, 2014, down from $297,507 a year earlier. It had a working capital deficit of $3.19 million, up from $1.92 million a year ago.
The company said its net cash used in operating activities for the year ended October 31, 2014 was $426,312, compared with $405,233 for the year ended October 31, 2013. The increase in net cash used in operations was due to an increase in loss from continuing operations offset by increases in adjusting components such as stock based compensation, amortization expense and accretion of debt discount.
During the year ended October 31, 2014, Endeavor IP raised $372,000 from a private placement of convertible notes, down from $1.5 million raised from promissory notes in fiscal 2013.
“For the long term, however, we must raise additional funds or increase revenues from licensing our patents in order to fund our continuing operations,” the company said in a 10K filing with the Securities and Exchange Commission. “We may not be successful in our efforts to raise additional funds or achieve profitable operations. Even if we are able to raise additional funds through the sale of our equity or debt securities, or loans from financial institutions, our cash needs could be greater than anticipated in which case we could be forced to raise additional capital.”
The company said at the present time it has no commitments for any additional financing, raising substantial doubt about its ability to continue as a going concern.
“If we cannot get the needed capital, we may not be able to become profitable and may have to curtail or cease our operations.”
Shares of Endeavor IP are currently trading at half a penny.
To reach the reporter responsible for this story please contact Dan Lonkevich at 707 318-7899 or at email@example.com