CDEX INC.
ForDuring the threesix month periods ended April 30, 2015 there was no option or stock grant activity. During the six months ended July 31, 2013, share-based compensation expense was approximately $18,000, all of which was attributable to restricted stock grants issued for services. For the nine months ended July 31, 2013, share-based compensation expense was approximately $415,000, of which approximately $223,000 was attributable to options, $82,000 was attributable to warrants granted for services and $110,000 was attributable to restricted stock grants issued for services.
During the nine months ended July 31,April 30, 2014, 15,000 options were forfeited and approximately 276,000 shares of restricted stock were issued.
During the nine months ended July 31, 2013, 8,350,000 options were granted and 800,000 options were forfeited. During the period, options to purchase 8,000,000 shares of Class A common stock were granted to Mr. Brumfield, the Company’s CEO, with an exercise price of $0.05 a share exercisable for five years from the date of issuance and Mr. Brumfield forfeited the existing 800,000 options granted under his employment agreement. Additionally, options to purchase 150,000 and 200,000 shares of Class A common stock were, respectively, granted to Mr. Stevenson, a director of the Company and to Mr. McCommon, the Company’s CFO. These options have an exercise price of $0.05 a share and are exercisable for five years from the date of issuance.
We determine the fair value of share-based awards at their grant date, using a Black-Scholes Option Pricing Model applying the assumptions in the following table.Model. No options were granted for the nine monthssix month periods ended July 31,April 30, 2015 and April 30, 2014. Actual compensation, if any, ultimately realized by option recipients may differ significantly from the amount estimated using an option valuation model.
| | For the nine months ended July 31, | |
| | 2014 | | | 2013 | |
Weighted average grant date fair value | | $0.00 | | | $0.06 | |
Expected volatility | | 0% | | | 75% | |
Expected dividends | | 0% | | | 0% | |
Expected term (years) | | - | | | 5 | |
Risk free rate | | - | | | 0.77% - 0.79% | |
As of July 31, 2014,April 30, 2015, there were no unrecognized compensation costs related to unvested restricted stock grants.
CDEX Inc.
NOTES TO FINANCIAL STATEMENTS
July 31, 2014
(Unaudited)
During the three monthsmonth periods ended January 31,April 30, 2015 and April 30, 2014, there was no stock activity. In February 2014, we issued 92,165 shares to each of our independent Directors under the CDEX Inc. Board Compensation Plan. In the months April through July 2014, we issued 11,750,000 shares of common stock and 5,875,000 warrants to purchase common stock and cancelled 11,750,000 warrants to purchase common stock from our Warrant Exchange Offer where we offered to all warrant holders with an exercise price of $0.10 per share the opportunity to exercise their warrants for $0.02 a share in exchange for the number of shares of common stock issuable under the warrant and a 5-year warrant for half the number of shares of common stock issuable under the exercised warrant with an exercise price of $0.15 a share.
In the three months ended January 31, 2013, as a part of its Plan of Reorganization, the Company issued approximately 37.4 million shares of our Class A common stock and warrants to purchase 33.9 million shares of Class A common stock. Also, in the three months ended January 31, 2013, as compensation for his efforts as the Company’s Medical Director, the Company issued Jason B. Terrell, 500,000 shares of its Class A common stock and a warrant to purchase 500,000 shares of Class A common stock for $0.10 a share effective for five years.
In the three months ended April 30, 2013, as a part of its Plan of Reorganization, the Company issued approximately 3.9 million shares of our Class A common stock and warrants to purchase 6.3 million shares of Class A common stock. As a part of this issuance under the Plan of Reorganization, approximately 1.8 million warrants were issued to Mr. Brumfield, the Company’s CEO, with an exercise price of $0.10 a share exercisable for five years from the date of issuance.
In the three months ended July 31, 2013, the Company issued approximately 144,000 shares of our Class A common stock that had been approved and accrued for prior to the finalization of the Bankruptcy Plan. Additionally, approximately 67,000 shares were returned to the authorized and available shares because a creditor under the Bankruptcy Plan opted out of the Plan.
8. 9. | Commitments and Contingencies |
Litigation
We may from time to time be involved in legal proceedings arising from the normal course of business. As of the date of this report, we have not received notice of any other legal proceedings and the Company is not aware of any pending claims or assessments which may have a material adverse impact on the Company’s financial position or results of operations.
9.10. Subsequent Events
The Company’s management has evaluated subsequent events occurring after July 31, 2014,April 30, 2015, the date of our most recent balance sheet, through the date our financial statements were issued. In August 2014, we issued 387,500
Effective May 28, 2015, CDEX Inc. (the “Company”) entered into a Consulting Advisory Services Agreement (the “Agreement”) with Osprey Capital Advisors, LLC, a Florida limited liability company (the “Consultant”). The Agreement calls for the Consultant to provide advisory and consulting services to the Company, including introduction to, and establishing relationships with, individuals and entities for possible investment in the Company, guidance on markets, product distribution, employment, board development and related matters, business plan development, review of the Company’s long- and short-term growth objectives, investor relations and public relations services and the Company’s approach to its business and financial strategy and efforts taken by the Company to date to develop investor interest.
As consideration for such services, the Company has agreed to issue to the Consultant an aggregate of 12 million shares of common stock as consultant compensation and we received a $62,900 deposit to participate in our Warrant Exchange Offer and our Original Issuance Exchange Offer. In September 2014, we issued 585,000 shares of common stock and 292,500 warrants to purchase common stock from our Warrant Exchange Offer where we offered to all Warrant holders with an exercise price of $0.10 per share to exercise their warrants for $0.02 per share in exchange for the number of shares of common stock issuable under the warrant and a 5-year warrant for half the number of shares of common stock issuable under the exercised warrant with an exercise price of $0.15 per share. Also in September 2014 we issued 307,000 shares of common stock and 153,500 warrants to purchase common stock from our Original Issuance Exchange Offer where we offered to issueits Class A common stock, for $0.02 per share along with7.5 million of such shares issuable upon signing of the Agreement. The Agreement has a 5-year warrant for half the numberterm of shares of common stock issued with an exercise price of $0.15 per share.240 days.
ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operation
Our discussion and analysis of the financial condition and results of operations should be read in conjunction with the unaudited consolidated financial statements and the related disclosures included elsewhere herein and in Management’s Discussion and Analysis of Financial Condition and Results of Operations included as part of our Annual Report on Form 10-K for the fiscal year ended October 31, 2013.2014.
Cautionary Note Regarding Forward-Looking Statements
Certain statements in this Quarterly Report on Form 10-Q constitute forward-looking statements within the meaning of the securities laws. Forward-looking statements include all statements that do not relate solely to the historical or current facts, and can be identified by the use of forward looking words such as "may", "believe", "expect", "expected", "project", "anticipate", "anticipated”, "plans", "strategy", "target", "prospects", ”should”, “intends”, “estimates” "continue" and other words of similar meaning. These forward-looking statements are based on the current plans and expectations of our management and are subject to a number of uncertainties and risks that could significantly affect our current plans and expectations, as well as future results of operations and financial condition and may cause our actual results, performances or achievements to be materially different from any future results, performances or achievements expressed or implied by such forward-looking statements.
Important factors that could cause our actual results to differ materially from our expectations are described as Risk Factors in our Annual Report on Form 10-K for the fiscal year ended October 31, 2013.2014. Although we believe that the expectations reflected in such forward-looking statements are reasonable, there can be no assurance that such expectations will prove to have been correct. We do not assume any obligation to update these forward-looking statements to reflect actual results, changes in assumptions, or changes in other factors affecting such forward-looking statements.
OVERVIEW
CDEX Inc. (“CDEX,” “we,” “us,” “our” or the “Company”) is a technology development company incorporated in the State of Nevada on July 6, 2001 with a corporate office and research and development facility in Tucson, Arizona. Our Class A common stock is currently being traded on the OTCQB under the symbol "CDEX."
Our Company is widely recognized as a global leader in Enhanced Photoemission Spectroscopy. We have pioneered proprietary, patented technology that has been applied to create and bring to market two in-demand, proprietary product lines: ValiMed™ for the healthcare industry and ID2™ for the security industry.
Key competitive differentiators of CDEX’s solutions include:
| · | Powerful, real-time chemical detection and medication validation capabilities. |
| · | Highly reliable and accurate measurements. |
| · | Lower in cost to customers when compared to competing or alternative technologies. |
| · | Reduces potential errors in human interpretation. |
| · | CDEX has created an extensive and very valuable library of reference signatures (200+ for current CCT Model) and an ever expanding signature library for the ValiMed G4 of substances of interest, such as selected narcotics and high risk liquid compounded admixtures. Proprietary software validates a substance of interest by comparing its signature against the known reference signature of the substance of interest. The CDEX advantage is that substances of interest are tested at the base levels and their signatures are compared to the known signatures of the substance of interest. This provides rapid validation and authentication that the substance is genuine. |
| · | Our technology is not centered on packaging schemes such as holograms, inks, ingredient taggants or Radio Frequency Identification (RFID) tags, all of which can be defeated by determined counterfeiters. |
| · | Our technology can be adapted to other products and markets, including identifying counterfeit drugs, protecting brands and identifying explosives’ signatures, among others. |
Virtually all CDEX product development has been based on applying the same underlying technologies. CDEX anticipates developing and/or acquiring other technologies in the future through partnering and investment. However, unless and until such time as we acquire or develop other technology assets, all of the Company's revenues will come from products developed from our current suite of patents and patent pending technologies, or through licensing arrangements with companies with related intellectual property.
Our Technology.
Our research and development efforts have centered on, but are not limited to, the use of excitation energy sources and patented/patents pending processing technology for substance verification, authentication and identification. When certain substances are exposed to excitation energy, the substances produce photons at specific wavelengths that form unique spectral fingerprints, which can be used as signatures to validate and authenticate the substances.
CDEX creates reference signatures of substances of interest, such as select narcotics, explosive compounds and medicines. CDEX software validates a substance of interest by comparing its signature against the known reference signature of the substance of interest in the database.
The CDEX advantage is that substances of interest are tested at the base levels and their signatures are compared to the known signatures of the substance of interest contained in the database. This provides rapid validation and authentication that the substance is genuine. CDEX technology is not centered on packaging schemes such as holograms, inks, ingredient taggants or Radio Frequency Identification (or RFID) tags, all of which can be defeated by determined counterfeiters.
Products.
We are currently focusing our resources on marketing and improving real-time (within seconds) chemical detection products using proprietary, patented and patents pending technologies. Our primary focus in 2013,2014, which continued through the threesix months ended July 31, 2014,April 30, 2015, was the continued development and enhancement of our ValiMed G4 system (“VG4”) for use in the pharmaceutical market and sales of our ID2 product for the security markets with our principal product lines noted below. The Company continues to explore unique opportunities where its proprietary technology may provide low cost/real time solutions to growing security or liability concerns such as conducting urine, blood and saliva analysis for detecting illegal drugs and performance enhancement substances in the work place or sporting environment.
Healthcare Market.
Our ValiMed Medication Validation System (“MVS”) product line – consists of two products: our third generation ValiMed system, marketed as ValiMed CCT (“CCT”)and the ValiMed G4 (“VG4”). Both ValiMed systems help healthcare providers ensure patient safety and control costs by reducing medication errors and mitigating drug diversion, utilizing our patented and patent pending process known as Enhanced Photoemission Spectroscopy.
The VG4 system uses a patented detection process providing a real time (within seconds), quantitative (strength/concentration) and qualitative (identification of known) analysis of high-risk single component compounded medications and treatment solutions. The CCT system, which is operating in numerous hospital settings around the country, provides the healthcare industry with the ability to verify a known substance, specifically a known drug with a known strength/concentration, in a known diluent. The CCT system also utilizes our proprietary cuvettes in the process. Both devices help healthcare facilities comply with Joint Commission on Accreditation of Healthcare Organizations compliance requirements and United States Pharmacopeia's General Chapter 797 Pharmaceutical Compounding—Sterile Preparations (“USP 797”) guidelines for compounding sterile preparations. Both systems also provide a recurring revenue stream and address three problem areas in the healthcare market: (i) human error in the compounding of medications, with an emphasis on, but not limited to high risk medications; (ii) harmful counterfeit medications and (iii) diversion of hospital narcotics.
In the near future, we expect the VG4 product line to address multi component compounded admixtures, such as total parenteral nutrition. We expect to add oncology drugs to our formulary in 2016 as well. One of the most significant improvements with the VG4 is the capability to analyze through most containers that are currently being used in pharmaceutical settings. This provides our end users with a more streamlined application, with less labor and without compromising the sterility of the compounded admixtures.
Security Market.
Our ID2 product line – provides solutions for real time (within seconds) detection of specified illegal drugs. This product line currently comprises two devices, both which are hand-held models that detect methamphetamine. The ID2 Meth Scanner is a device that is used for the detection of methamphetamine in the home inspection industries, by housing authorities, the hotel industry and in our nation’s prisons and correctional facilities. The Pocket ID2 is a pocket-sized hand-held device that currently detects visible and prosecutable quantities of methamphetamine. We expect to expand our detection capabilities to include other drugs such as cocaine, heroin, OxyContin and Ecstasy in the near future.
We continue to explore opportunities to apply the ID2 technology to a table top device that will be portable and able to detect trace amounts of specified illegal drugs and explosives in real-time. Our ID2 products have applications in all areas of law enforcement, including local police and sheriff departments, U.S. border patrol, port authorities, TSA, FBI, U.S. Military, and other agencies engaged in counternarcotics.
INTELLECTUAL PROPERTY RIGHTS
We rely on non-disclosure agreements, patent, trade secret and copyright laws to protect the intellectual property that we have and plan to develop, but such laws may provide insufficient protection. Moreover, other companies may develop products that are similar or superior to ours or may copy or otherwise obtain and use our proprietary information without authorization. In addition, certain of our know-how and proprietary technology may not be patentable. Policing unauthorized use of our proprietary and other intellectual property rights could entail significant expense and could be difficult or impossible to do. In addition, third parties may bring claims of copyright or trademark infringement against CDEX or claim that certain of our processes or features violate a patent, that we have misappropriated their technology or formats or otherwise infringed upon their proprietary rights. Any claims of infringement, with or without merit, could be time consuming to defend, result in costly litigation, divert management’s attention, and/or require CDEX to enter into costly royalty or licensing arrangements to prevent further infringement, any of which could adversely affect our operating results. The Company makes business decisions regarding which inventions to patent, and in what countries.
Our competitive position also depends upon unpatented trade secrets. Trade secrets are difficult to protect. Our competitors may independently develop proprietary information and techniques that are substantially equivalent to ours or otherwise gain access to our trade secrets, such as through unauthorized or inadvertent disclosure of our trade secrets.
RESULTS OF OPERATIONS
COMPARISON OF OPERATIONS FOR THE THREE MONTHS ENDED JULY 31,APRIL 30, 2015 AND 2014:
| | 2015 | | | 2014 | |
| | | | | | |
Revenue | | $ | 36,762 | | | $ | 50,277 | |
Cost of revenue | | | 9,532 | | | | 6,239 | |
Selling, general and administrative | | | 139,119 | | | | 152,769 | |
Research and development | | | 39,971 | | | | 34,596 | |
Other income | | | (39,503 | ) | | | - | |
| | | | | | | | |
Net loss | | $ | (191,363 | ) | | $ | (143,327 | ) |
REVENUE
Revenue was approximately $37,000 and $50,000 during the three months ended April 30, 2015 and 2014, respectively. The decrease in revenue of approximately $13,000 resulted primarily from a reduction of sales of our ID2 Meth Scanners of $12,000 and a reduction in maintenance fees of $5,000, partially offset by a $3,000 increase in revenues from the sale of customer supplies.
COST OF REVENUE
Cost of revenue was approximately $10,000 and $6,000 during the three months ended April 30, 2015 and 2014, respectively, a decrease of approximately $4,000. The gross margin percentage decreased from approximately 88% to 74%.
SELLING, GENERAL AND 2013:ADMINISTRATIVE
Selling, general and administrative expenses were approximately $139,000 during the three months ended April 30, 2015, compared with $153,000 during the three months ended April 30, 2014. The decrease of approximately $14,000 resulted primarily from a decrease in employee compensation of $24,000, consulting and professional expenses of $12,000, general expenses of $6,000, partially offset by an increase marketing and travel of $14,000 and equipment rent expense of $11,000.
RESEARCH AND DEVELOPMENT
Research and development (“R&D”) costs were approximately $40,000 during the three months ended April 30, 2015, compared with $35,000 during the three months ended April 30, 2014, an increase of approximately $5,000, which is primarily attributable to an increase in R&D compensation of $16,000 partially offset by a $12,000 decrease in R&D material.
OTHER INCOME (EXPENSE)
Other expense (net) for the three months ended April 30, 2015 was approximately $40,000 compared to $-0- for the three months ended April 30, 2014 a change of approximately $40,000 which is primarily due to approximately $47,000 amortization/interest expense on the Lines of Credit in 2015, offset by approximately $8,000 proceeds from the sale of obsolete equipment in 2015.
NET LOSS
The net loss was approximately $191,000 during the three months ended April 30, 2015, compared with a net loss of $143,000 during the three months ended April 30, 2014, due to the foregoing factors.
| | 2014 | | | 2013 | |
| | | | | | |
Revenue | | $ | 27,207 | | | $ | 30,574 | |
Cost of revenue | | | 7,522 | | | | 25,755 | |
Selling, general and administrative | | | 100,918 | | | | 145,045 | |
Research and development | | | 44,320 | | | | 35,542 | |
Other income | | | - | | | | 332 | |
| | | | | | | | |
Net loss | | $ | (125,553 | ) | | $ | (175,436 | ) |
RESULTS OF OPERATIONS
COMPARISON OF OPERATIONS FOR THE SIX MONTHS ENDED APRIL 30, 2015 AND 2014:
| | 2015 | | | 2014 | |
| | | | | | |
Revenue | | $ | 58,884 | | | $ | 126,284 | |
Cost of revenue | | | 16,252 | | | | 25,904 | |
Selling, general and administrative | | | 284,114 | | | | 274,796 | |
Research and development | | | 84,686 | | | | 91,151 | |
Other income (expense) | | | (77,275 | ) | | | 6,805 | |
| | | | | | | | |
Net loss | | $ | (403,443 | ) | | $ | (258,762 | ) |
REVENUE
Revenue was approximately $27,000$59,000 and $31,000$126,000 during the threesix months ended July 31,April 30, 2015 and 2014, and 2013, respectively. The decrease in revenue of approximately $4,000$67,000 resulted primarily from a recognition in the first six months of fiscal 2014 of $34,000 from a client opting out of their supply contract in 2014 and electing to pay the contracted exit fee as well as reduced pay-per-use revenue partially offset by the increaserevenues and a reduction in ValiMed maintenance revenue.revenues of $15,000 and a reduction of sales of our ID2 Meth Scanners of $12,000 partially offset by a $2,000 increase in revenues from the sale of customer supplies.
COST OF REVENUE
Cost of revenue was approximately $8,000$16,000 and $26,000 during the threesix months ended July 31,April 30, 2015 and 2014, and 2013, respectively, a decrease of approximately $18,000.$10,000. The gross margin percentage increaseddecreased from approximately 16%79% to 72%.
SELLING, GENERAL AND ADMINISTRATIVE
Selling, general and administrative expenses were approximately $101,000$284,000 during the threesix months ended July 31, 2014,April 30, 2015, compared with $145,000$275,000 during the threesix months ended July 31, 2013.April 30, 2014. The decreaseincrease of approximately $44,000$9,000 resulted primarily from the decrease in non-cash share-based expense and employee compensation of $37,000, as well as a decrease inan increase marketing and travel of $15,000$28,000 and equipment leasing of $11,000, partially offset by an increasedecreases in consulting and professional expenses of $15,000, general expenses of $9,000, including an allowance for doubtful accounts$14,000 and insurance expense.compensation of $5,000.
RESEARCH AND DEVELOPMENT
Research and development (“R&D”) costs were approximately $44,000$85,000 during the threesix months ended July 31, 2014,April 30, 2015, compared with $36,000$91,000 during the threesix months ended July 31, 2013, an increaseApril 30, 2014, a decrease of approximately $8,000,$6,000, which is primarily attributable to increasesdecreases in R&D material of $11,000$14,000 and R&D Travel of $6,000 partially offset by a reductionan increase in R&D compensation of $2,000.$14,000.
OTHER INCOME (EXPENSE)
Other incomeexpense (net) for the threesix months ended July 31, 2014April 30, 2015 was approximately $-0-$77,000 compared to $1,000 other income (net) of $7,000 for the threesix months ended July 31, 2013.
NET LOSS
The net loss was approximately $126,000 during the three months ended July 31,April 30, 2014 compared with a net loss of $175,000 during the three months ended July 31, 2013, due to the foregoing factors.
COMPARISON OF OPERATIONS FOR THE NINE MONTHS ENDED JULY 31, 2014 AND 2013:
| | 2014 | | | 2013 | |
| | | | | | |
Revenue | | $ | 153,491 | | | $ | 459,538 | |
Cost of revenue | | | 33,426 | | | | 95,456 | |
Selling, general and administrative | | | 375,714 | | | | 912,210 | |
Research and development | | | 135,471 | | | | 95,087 | |
Other income | | | 6,805 | | | | 28,267 | |
| | | | | | | | |
Net loss | | $ | (384,315 | ) | | $ | (614,948 | ) |
REVENUE
Revenue was approximately $153,000 and $460,000 during the nine months ended July 31, 2014 and 2013, respectively. The decrease in revenue of approximately $307,000 resulted primarily from the sale in the nine months ended July 31, 2013 of ValiMed CCTs to Al-Essa Medical & Scientific Equipment Company in Safat, Kuwait, offset by revenue from a client opting out of their supply contract in 2014 and electing to pay the contracted exit fee.
COST OF REVENUE
Cost of revenue was approximately $33,000 and $95,000 during the nine months ended July 31, 2014 and 2013, respectively, a decrease of approximately $62,000. The gross margin percentage decreased from approximately 79% to 78%.
SELLING, GENERAL AND ADMINISTRATIVE
Selling, general and administrative expenses were approximately $376,000 during the nine months ended July 31, 2014, compared with $912,000 during the nine months ended July 31, 2013. The decrease of approximately $536,000 resulted primarily from the decrease in non-cash share-based expense and employee compensation of $463,000, a decrease in professional and consulting expenses of $34,000, a decrease in marketing and travel of $31,000, decreases in shipping and supplies of $8,000, and insurance premiums of $7,000 and depreciation of $4,000 offset by of an increase in allowance for doubtful accounts of $13,000.
RESEARCH AND DEVELOPMENT
Research and development costs were approximately $135,000 during the nine months ended July 31, 2014, compared with $95,000 during the nine months ended July 31, 2013, an increase of approximately $40,000, which is primarily attributable to increases in R&D material of $30,000, R&D travel of $7,000 and R&D compensation of $3,000.
OTHER INCOME
Other income for the nine months ended July 31, 2014 was approximately $7,000 compared to $28,000 for the nine months ended July 31, 2013. The net change of approximately $21,000$84,000 which is primarily due to approximately $87,000 amortization/interest expense on the recognitionLines of Credit in 2013 of approximately $43,000 for forgiveness of debt income from those creditors opting out of our Plan of Reorganization and the refund in 2014 of approximately $7,000 of excess fees paid to the United States Bankruptcy Trustee, which was2015, partially offset by approximately $15,000$10,000 in fees paid togains from the United States Bankruptcy Trusteesale of obsolete equipment in 2013.2015.
NET (LOSS)LOSS
The net loss was approximately $384,000$403,000 during the ninesix months ended July 31, 2014,April 30, 2015, compared with a net loss of $615,000$259,000 during the ninesix months ended July 31, 2013,April 30, 2014, due to the foregoing factors.
LIQUIDITY AND CAPITAL RESOURCES
The accompanying financial statements have been prepared assuming 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. We have experienced net losses since our inception and, as of July 31, 2014,April 30, 2015, had an accumulated deficit of approximately $36 million. We do not expect to have positive cash flow from operations until we have deployed a sufficient number of our ValiMed G4 drug validation systems. As of July 31, 2014,April 30, 2015, we had approximately $45,000$49,000 in cash.
We had a net increasedecrease in cash of approximately $54,000$42,000 during the ninesix months ended July 31, 2014April 30, 2015 primarily from the use of cash in operating activities offset by cash provided by our financing activities offset by the use ofand cash in operating andprovided from our investing activities. This amount is comprised primarily of our net loss of approximately $384,000 offset by an increase$403,000 and a decrease in our current liabilities of $43,000, a decrease in inventory of $20,000, depreciation and amortization of $17,000, a reduction of our accounts receivable of $12,000, share-based compensation of $9,000, and purchase$33,000, gain recognized on disposal of equipment of $10,000, offset by $235,000amortization/interest expense on the Lines of Credit of $87,000, depreciation and amortization of $8,000 offset by $305,000 from the proceeds fromreceived under the warrant exchange offer.line of credit and $14,000 proceeds provided by the sale of obsolete equipment.
ITEM 4. Controls and Procedures
Disclosure Controls and Procedures.
The Company’s Chairman and Chief Executive Officer and its Vice President of Finance and Chief Financial Officer, after evaluating the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of July 31, 2014,April 30, 2015, have concluded that the Company’s disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act, as amended, is recorded, processed and summarized and reported on a timely basis and is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting.
There were no changes in the Company’s internal control over financial reporting during the Company’s fiscal quarter ended July 31, 2014April 30, 2015 that materially affected, or are reasonably likely to materially affect, the Company’sCompany���s internal control over financial reporting.
PART II - OTHER INFORMATION
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds
In the quarter ended July 31, 2014, we issued 4,750,000 shares of common stock and 2,375,000 warrants to purchase common stock from our Warrant Exchange Offer where we offered to all Warrant holders with an exercise price of $0.10 per share the opportunity to exercise their warrants for $0.02 a share in exchange for the number of shares of common stock issuable under the warrant and a 5-year warrant for half the number of shares of common stock issuable under the exercised warrant with an exercise price of $0.15 a share. The Warrant Exchange Offer and issuance of shares was conducted under Section 4(a)(2) of the Securities Act of 1933, as amended, as it was not in connection with any public offering.
ITEM 5. Other Information
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds |
| (a) | |
| Not Applicable |
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ITEM 5. Other Information |
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| (a) Not Applicable |
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| (b) | The Company has not adopted formal procedures for the nomination by stockholders of candidates to serve on its Board of Directors. |
ITEM 6. Exhibits
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ITEM 6. Exhibits |
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10.1 | Form of Consulting Agreement. |
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31.1 | Certification of Chief Executive Officer. |
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31.2 | Certification of Chief Financial Officer. |
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32.1 | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Chief Executive Officer). |
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32.2 | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Chief Financial Officer). |
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101.INS | XBRL Instance Document |
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101.SCH | XBRL Schema Document |
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101.CAL | XBRL Calculation Linkbase Document |
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101.DEF | XBRL Definition Linkbase Document |
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101.LAB | XBRL Label Linkbase Document |
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101.PRE | XBRL Presentation Linkbase Document |
SIGNATURES
In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on September 10, 2014.June 12, 2015.
CDEX INC.
By: | /s/ Jeffrey K. Brumfield |
| Jeffrey K. Brumfield |
| Chief Executive Officer |
| |
| |
By: | /s/ Stephen A. McCommon |
| Stephen A. McCommon |
| Chief Financial Officer and |
| Vice President of Finance |
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