What's Next For Emisphere Technologies, Inc. (OTCMKTS:EMIS) As Financial Woes Kick In?

Late last year Emisphere Technologies, Inc. (OTCMKTS:EMIS) transitioned to a non-reporting company, a move that angered the markets triggering a selloff of the stock. Fast forward, the dust appears to have settled. The stock has spiked in spite of concerns about the company’s ability to continue operating as a going concern. EMIS Daily ChartThe stock is currently trading at the $0.4 handle close to the $0.42 psychological level. A close above the $0.42 handle could mark the end of a sell-off wave that had pushed the stock to all-time lows. However, failure to break the key resistance level could see the stock tank to the $0.36 handle seen as the immediate support level, below which the stock could drop to the $0.30 handle.Taking into considerations recent developments, it goes without saying that Emisphere Technologies is susceptible to high price swings given underlying financial woes that could spook investors.Before we carry out a detailed analysis on why the stock remains susceptible to high price swings, let us first look at what the company does in pursuit of growth.Emisphere Technologies Business OverviewEmisphere Technologies bills itself as a commercial-stage pharmaceutical and drug delivery company. In partnership with other companies, it develops formulations from existing products as well as new chemical entities.Through its proprietary, Eligen Technology, the company creates new oral formulations of therapeutic agents. Emisphere technologies pipeline currently includes medical food product candidate’s and prescription drugs for the treatment of diabetes, appetite suppression and pain management.Recent DevelopmentsMid last year, Emisphere Technologies filed form 15 with the Securities and Exchange Commission and was consequently relieved of the obligation to file annual, periodic and current reports. By doing so, the company eliminated SEC reporting costs and reiterates renewed focus on business development activities.It remains to be seen what the company has been able to achieve, on severing ties with SEC reporting requirements. A lack of updates from the company has gone a long way in raising concerns about the well-being of the company’s operations as well as its growth metrics.Earnings ReportThe last time Emisphere Technologies reported financial results, it was for the first quarter ended March 31, 2017. With the company having completed form 15 filling, it could take a while for it to release up-to-date financial reports needed to gauge its prospects.For the first quarter of last year, the company says it generated a net income of $6.1 million or $0.10 a share, an improvement, compared to a net loss of (-$1.8) million reported the prior year. The operating net loss in the quarter more than halved to (-$1.1) million from (-$2.7) million reported the prior year.Emisphere Technologies reported a non-operating income of $7.2 million compared to $0.9 million for the comparable period in 2016. The increase was due to a $6.6 million increase in the change in fair value of derivative instruments.Financial Woes The commercial stage pharmaceutical company had approximately $4.6 million in cash as of March 31, 2017, representing a net decrease of $1.4 million from December 31, 2016. Declining cash balance at the back of no new revenue generating streams should be a point of concern that could spook investors going forward.

“We have limited capital resources and operations to date have been funded with the proceeds from private and public debt and equity financings, collaborative research agreements and income earned on investments,” Emisphere Technologies in a statement.

The company’s financial obligations as of the first quarter of last year included $53 million under a second amended and restated convertible Note and $26.2 million under a loan agreement entered in 2014.In response to the financial obligations, the management team has already raised warning bells about the Emisphere Technologies ability to continue operating as a going concern.

“We have evaluated the significance of the conditions in relation to our ability to meet our obligations and believe that our current cash balance will provide sufficient capital to continue operations through approximately March 2018,” Emisphere Technologies in a statement.

Capital Raise OptionsThe company plans to raise additional capital from commercial operations and through product partnering opportunities. Given that there are, no assurances the company will be successful on this front, chances are very high that it will default on existing loans.Emisphere may be forced to issue stock as a way of raising capital a move that will lead to further dilution of the stock.What the Future Holds For Emisphere Technologies With the stock currently trading at a key resistance level, it may be time to maintain a cautious approach given the financial woes the company faces. The company has already admitted that it only has the cash to sustain operations until March 2018.That said the stock remains susceptible to edge lower should it fail to raise additional capital needed to continue operating as a going concern.We will be updating our subscribers as soon as we know more. For the latest updates on EMIS, sign up below!Disclosure: We have no position in EMIS and have not been compensated for this article.