UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
x QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended April 30, 2013
o TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to ______
Commission file number 0-27119
SCIVANTA MEDICAL CORPORATION | ||
(Exact name of registrant as specified in its charter) |
Nevada | 22-2436721 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
215 Morris Avenue, Spring Lake, New Jersey 07762 | ||
(Address of principal executive offices) |
(732) 282-1620 | ||
(Issuer’s telephone number) |
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes x No ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer,” and smaller reporting company in Rule 12b-2 of the Securities Exchange Act of 1934.
Large accelerated filer | o | Accelerated filer | o | |
Non-accelerated filer | o | (Do not check if a smaller reporting company) | Smaller reporting company | x |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act of 1934). Yes ¨ No x
As of June 12, 2013, there were 5,429,384 shares of the registrant’s common stock, par value $.001 per share, outstanding.
SCIVANTA MEDICAL CORPORATION
INDEX TO FORM 10-Q
Page | ||
PART I | FINANCIAL INFORMATION | |
Item 1. | Financial Statements | 1 |
Balance Sheets (unaudited) as of April 30, 2013 and October 31, 2012 | 2 | |
Statements of Operations (unaudited) for the three and six months ended April 30, 2013 and 2012 | 3 | |
Statements of Cash Flows (unaudited) for the six months ended April 30, 2013 and 2012 | 4 | |
Notes to the Unaudited Financial Statements | 5 | |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 14 |
Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 17 |
Item 4. | Controls and Procedures | 18 |
PART II | OTHER INFORMATION | |
Item 1. | Legal Proceedings | 18 |
Item 1A. | Risk Factors | 18 |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 18 |
Item 3. | Defaults Upon Senior Securities | 19 |
Item 4. | Mine Safety Disclosures | 19 |
Item 5. | Other Information | 19 |
Item 6. | Exhibits | 19 |
Signatures | 20 | |
Index of Exhibits | E-1 |
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain information included in this quarterly report on Form 10-Q and other filings of the registrant under the Securities Act of 1933, as amended (the “Securities Act”), and the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as well as information communicated orally or in writing between the dates of such filings, contains or may contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act and Section 21E of the Exchange Act. All statements other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws, including, but not limited to, any projections of earnings, revenue or other financial items; any statements of the plans, strategies and objectives of management for future operations; any statements concerning proposed new services or developments; any statements regarding future economic conditions or performance; any statements of belief; and any statements of assumptions underlying any of the foregoing.
Forward-looking statements may include the words “may”, “could”, “estimate”, “intend”, “continue”, “believe”, “expect” or “anticipate” or other similar words. These forward-looking statements present our estimates and assumptions only as of the date of this quarterly report on Form 10-Q. Except as may be required under applicable securities laws, we do not intend, and undertake no obligation, to update any forward-looking statement. You should, however, consult further disclosures we make in future filings of our annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K. Additionally, the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 most likely do not apply to our forward-looking statements because we are considered a penny stock issuer.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
The balance sheet as of April 30, 2013, the related statements of operations for the three and six months ended April 30, 2013 and 2012 and cash flows for the six months ended April 30, 2013 and 2012 for Scivanta Medical Corporation (“Scivanta” or the “Company”) included in Item 1, have been prepared by us, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures required under accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been condensed or omitted from the following financial statements pursuant to the rules and regulations of the SEC. In the opinion of management, the accompanying financial statements include all adjustments, which are of a normal and recurring nature, necessary to present fairly our financial position and results of operations. It is suggested that the following financial statements be read in conjunction with the financial statements and notes thereto included in the registrant’s annual report on Form 10-K for the fiscal year ended October 31, 2012.
The results of operations for the three and six months ended April 30, 2013 and 2012, respectively, are not necessarily indicative of the results of the entire fiscal year or for any other period.
1
Scivanta Medical Corporation
Balance Sheets
(Unaudited)
April 30, 2013 | October 31, 2012 | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash | $ | 64,880 | $ | 64,325 | ||||
Prepaid expenses | 23,258 | 9,543 | ||||||
Total current assets | $ | 88,138 | $ | 73,868 | ||||
Liabilities and Stockholders’ Deficiency | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 272,901 | $ | 222,845 | ||||
Accounts payable - related party | 24,252 | 82,651 | ||||||
Accrued expenses | 22,254 | 90,043 | ||||||
Accrued compensation | -- | 225,627 | ||||||
Notes payable | 15,847 | 105,000 | ||||||
Convertible debentures | 200,000 | 25,000 | ||||||
Total current liabilities | 535,254 | 751,166 | ||||||
Convertible debentures | 200,000 | 375,000 | ||||||
Note payable | 105,000 | -- | ||||||
Total liabilities | 840,254 | 1,126,166 | ||||||
Stockholders' deficiency: | ||||||||
Preferred stock, $.001 par value; 20,000,000 shares authorized; no shares issued | -- | -- | ||||||
Common stock, $.001 par value; 500,000,000 and 10,000,000 shares authorized, respectively; 5,429,384 and 3,111,691 shares issued and outstanding, respectively | 5,429 | 3,112 | ||||||
Additional paid-in capital | 22,880,390 | 22,371,230 | ||||||
Accumulated deficit | (23,637,935 | ) | (23,426,640 | ) | ||||
Total stockholders' deficiency | (752,116 | ) | (1,052,298 | ) | ||||
Total liabilities and stockholders' deficiency | $ | 88,138 | $ | 73,868 |
The accompanying notes are an integral part of these financial statements.
2
Scivanta Medical Corporation
Statements of Operations
(Unaudited)
Three Months Ended April 30, | Six Months Ended April 30, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Revenue | $ | -- | $ | -- | $ | -- | $ | -- | ||||||||
Operating expenses: | ||||||||||||||||
Research and development | -- | -- | -- | 8,890 | ||||||||||||
General and administrative | 128,198 | 50,319 | 195,162 | 118,353 | ||||||||||||
Loss from operations | (128,198 | ) | (50,319 | ) | (195,162 | ) | (127,243 | ) | ||||||||
Interest expense | (8,167 | ) | (6,207 | ) | (16,133 | ) | (13,132 | ) | ||||||||
Loss on conversion of convertible debentures | -- | -- | -- | (21,750 | ) | |||||||||||
Net loss | $ | (136,365 | ) | $ | (56,526 | ) | $ | (211,295 | ) | $ | (162,125 | ) | ||||
Net loss per common share, basic and diluted | $ | (0.03 | ) | $ | (0.02 | ) | $ | (0.05 | ) | $ | (0.05 | ) | ||||
Weighted average number of common shares outstanding, basic and diluted | 4,824,110 | 3,111,691 | 4,019,304 | 3,091,586 |
The accompanying notes are an integral part of these financial statements.
3
Scivanta Medical Corporation
Statements of Cash Flows
(Unaudited)
Six Months Ended April 30, | ||||||||
2013 | 2012 | |||||||
Cash flows from operating activities: | ||||||||
Net loss | $ | (211,295 | ) | $ | (162,125 | ) | ||
Adjustments to reconcile net loss to net cash (used in) provided by operating activities: | ||||||||
Stock based compensation expense | 4,725 | 3,716 | ||||||
Loss on conversion of convertible debentures | -- | 21,750 | ||||||
Changes in operating assets and liabilities: | ||||||||
Grant receivable | -- | 131,979 | ||||||
Prepaid expenses | 6,505 | 2,645 | ||||||
Accounts payable | 67,056 | 9,502 | ||||||
Accounts payable - related party | 36,601 | 10,051 | ||||||
Accrued expenses | (18,664 | ) | (2,281 | ) | ||||
Net cash (used in) provided by operating activities | (115,072 | ) | 15,237 | |||||
Cash flows from financing activities: | ||||||||
Repayment of notes payable | (4,373 | ) | (6,916 | ) | ||||
Proceeds from sale of common stock, net of offering costs | 120,000 | -- | ||||||
Net cash provided by (used in) financing activities | 115,627 | (6,916 | ) | |||||
Increase in cash | 555 | 8,321 | ||||||
Cash - beginning of period | 64,325 | 46,245 | ||||||
Cash – end of period | $ | 64,880 | $ | 54,566 | ||||
Supplemental disclosure of cash flow information: | ||||||||
Cash paid for interest | $ | 297 | $ | 412 | ||||
Cash paid for income taxes | $ | 500 | $ | -- | ||||
Noncash financing activities: | ||||||||
Issuance of 588,236 shares of common stock as settlement of accrued compensation and other related costs | $ | 225,627 | $ | -- | ||||
Issuance of 279,412 shares of common stock as settlement of certain accounts payable – related party | $ | 95,000 | $ | -- | ||||
Issuance of 50,000 shares of common stock as settlement of certain accounts payable for director fees | $ | 17,000 | $ | -- | ||||
Issuance of 193,454 shares of common stock as payment of interest due on convertible debentures | $ | 40,000 | $ | -- | ||||
Issuance of 36,477 shares of common stock as payment of offering costs related to private placements | $ | 12,534 | $ | -- | ||||
Issuance of 55,237 shares of common stock as payment of $50,000 of principal and $3,729 of interest due on convertible debentures | $ | -- | $ | 53,729 | ||||
Issuance of notes payable as payment for insurance premiums | $ | 20,220 | $ | 15,867 |
The accompanying notes are an integral part of these financial statements.
4
Scivanta Medical Corporation
Notes to the Unaudited Financial Statements
1. | Basis of Presentation |
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company has incurred significant recurring operating losses and negative cash flows from operations. The Company had a working capital deficiency of $447,116 and an accumulated deficit of $23,637,935 as of April 30, 2013. The Company also has no lending relationships with commercial banks and is dependent on the completion of a financing involving the private placement of its securities in order to continue operations. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
The Company continues to seek equity and/or debt investors and from time to time engages placement agents to assist the Company in this initiative. The Company has reduced operating expenses and, effective November 1, 2011, each of the Company’s officers agreed to waive the annual base salary due to them and each of the Company’s directors agreed to waive the annual retainer and meeting fees due to them until the Company is able to raise sufficient capital that would provide the Company with the ability to pay cash compensation to its officers and directors.
On January 23, 2013, the Company issued shares of its common stock as settlement of $225,627 of accrued compensation due through October 31, 2011 to its officers and other related costs, $17,000 of fees due through October 31, 2011 to its current independent directors and a former independent director and $95,000 due for office rent through January 31, 2013 ($80,000 accrued as of October 31, 2012) (see Note 9). The Company has also deferred certain other vendor payments until the Company secures sufficient additional financing.
While the Company is pursuing the opportunities and actions described above, there can be no assurance that it will be successful in its efforts. If the Company is unable to secure additional capital, it will explore other strategic alternatives, including, but not limited to, the sale of the Company. Any additional equity financing may result in substantial dilution to our stockholders.
2. | Amendment to Restated Articles of Incorporation |
Effective April 22, 2013, the Company amended its Restated Articles of Incorporation to, among other items, effectuate a 10-for-1 reverse stock split with respect to its outstanding shares of common stock, par value $.001 per share (the “Reverse Stock Split”), and increase the amount of authorized capital stock to 520,000,000 shares, notwithstanding the effect of the Reverse Stock Split, consisting of 500,000,000 shares of common stock, par value $.001 per share, and 20,000,000 shares of preferred stock, par value $.001 per share. All references in the accompanying financial statements to the number of shares outstanding and per-share amounts have been restated to reflect the Reverse Stock Split. In connection with the amendments to the Restated Articles of Incorporation, the par value of the Company’s common stock remained $.001 per share, resulting in a reclassification between common stock and additional paid-in capital in order to account for the Reverse Stock Split.
5
3. | Amended and Restated SCMS License Agreement |
On February 14, 2011, the Company entered into an Amended and Restated Technology License Agreement (the “License Agreement”) with The Research Foundation of State University of New York, for and on behalf of the University at Buffalo (the “Foundation”), Donald D. Hickey, M.D. (“Hickey”) and Clas E. Lundgren (“Lundgren”). The Foundation, Hickey and Lundgren shall be collectively referred to herein as the “Licensor”. The License Agreement was amended on March 14, 2013 (the “Amendment”).
Pursuant to the License Agreement, the Licensor has granted Scivanta the exclusive world-wide rights to develop, manufacture and distribute the Scivanta Cardiac Monitoring System (the “SCMS”), a minimally invasive two-balloon esophageal catheter system used to monitor cardiac performance. The term of the License Agreement ends on the later of (a) the expiration date of the last to expire patent right related to the SCMS, which is currently May 1, 2027, or (b) 17 years from the sale of the first licensed product on a country by country basis.
Under the License Agreement, Scivanta made a cash payment of $30,000 to Hickey on June 3, 2011 and was required to make a cash payment of $105,000 to Hickey on July 31, 2012. Pursuant to the Amendment, the $105,000 payment was restructured as follows: (a) $50,000 is due to Hickey on or before a date that is thirty (30) days after the closing of any single financing by the Company of at least $3,000,000 or any series of financings by the Company within a six (6) month period totaling at least $3,000,000; and (b) $55,000 is due to Hickey on or before the date that is thirty (30) days after the first commercial sale of a product utilizing the licensed technology.
In addition, pursuant to the Amendment, the Company agreed to issue shares of its common stock to the Licensor with a value equal to $130,000 on the date the Company files for approval to market and sell a product utilizing the licensed technology. The Company also agreed to issue shares of its common stock to the Licensor with a value equal to $160,000 on the date the Company receives approval to market and sell a product utilizing the licensed technology. The number of shares of the Company’s common stock to be issued to the Licensor will be calculated based on the market price of the Company’s common stock, as defined in the Amendment, on the date that each of the respective above noted events occur.
Scivanta is required to pay the Licensor a royalty of 5% of annual net sales, as defined in the License Agreement, subject to certain reductions as detailed in the License Agreement. Beginning with the first full year of sales of the SCMS in the United States and for two years thereafter, Scivanta is required to pay an annual minimum royalty of $100,000 to the Licensor against which any royalty on net sales paid in the same calendar year for sales in the United States will be credited. Further, beginning with the first full year of sales of the SCMS outside the United States and for two years thereafter, Scivanta is required to pay an annual minimum royalty of $100,000 to the Licensor against which any royalty on net sales paid in the same calendar year for sales outside the United States will be credited. The Company is also required to pay the Licensor 25% of all sublicensing revenue, as defined in the License Agreement, received by the Company in connection with the Company’s sublicense of the rights granted to the Company under the License Agreement.
6
The License Agreement, as amended by the Amendment, also requires Scivanta to use commercially reasonable efforts to develop and market the SCMS within certain timeframes, subject to specified exceptions. If Scivanta materially fails to perform any covenant, condition or undertaking of the License Agreement, including the failure to make any payments when due, the Licensor may give written notice of such default to Scivanta. If Scivanta should fail to cure such default within ninety (90) days of notice of such default, then the Licensor, at its option, may terminate the License Agreement. Further, the License Agreement contains standard provisions regarding indemnification and patent prosecution.
4. | Related Party Transactions |
David R. LaVance, the Company’s President and Chief Executive Officer, and Thomas S. Gifford, the Company’s Executive Vice President, Chief Financial Officer and Secretary, are principals of Century Capital Associates LLC (“Century Capital”). Effective February 1, 2007, the Company and Century Capital entered into a sublease agreement pursuant to which the Company rents office space approximating 2,000 square feet inside Century Capital’s existing offices. In addition, the Company rents office furniture and other equipment from Century Capital. The sublease agreement has a month to month term that requires sixty days written notice to terminate and a monthly rental fee of $5,000. The Company is responsible for all operating costs associated with the office space, including utilities, maintenance and property taxes.
During the three and six months ended April 30, 2013, the Company was billed $17,026 and $34,757, respectively, pursuant to the terms of the sublease agreement. As of April 30, 2013, the Company owed Century Capital $15,000 for rent and $9,252 for other expenses, which is included in accounts payable – related party (see Note 9). During the three and six months ended April 30, 2012, the Company was billed $17,011 and $36,567, respectively, pursuant to the terms of the sublease agreement.
5. | Notes Payable |
Note Payable – Hickey
Under the License Agreement (see Note 3), a cash payment of $105,000 was due to Hickey on July 31, 2012. Pursuant to the Amendment, the $105,000 payment was restructured as follows: (a) $50,000 is due to Hickey on or before a date that is thirty (30) days after the closing of any single financing by the Company of at least $3,000,000 or any series of financings by the Company within a six (6) month period totaling at least $3,000,000; and (b) $55,000 is due to Hickey on or before the date that is thirty (30) days after the first commercial sale of a product utilizing the licensed technology. As of April 30, 2013 and October 31, 2012, the Company recorded the $105,000 due to Hickey as a non-current note payable.
7
Note Payable – IPFS
On March 20, 2013, the Company entered into a finance agreement with IPFS Corporation (“IPFS”). Pursuant to the terms of this finance agreement, IPFS loaned the Company the principal amount of $20,220, which amount would accrue interest at a rate of 9.3% per annum, in order to partially fund the payment of the premium of the Company’s director and officer liability insurance. The finance agreement requires the Company to make nine monthly payments of $2,335, including interest, with the first payment due on April 13, 2013. For the three and six months ended April 30, 2013, the Company recorded a total of $297 of interest expense related to this finance agreement. As of April 30, 2013, the outstanding principal balance related to this finance agreement was $15,847.
6. | Convertible Debentures |
February 2007 Convertible Debentures
On February 8, 2007, the Company closed on a private placement of 8% convertible debentures dated February 1, 2007 (the “February 2007 Debentures”). The gross proceeds received in connection with this private placement were $250,000. The February 2007 Debentures originally had a three year term, maturing on January 31, 2010. In January 2010, the holders agreed to a new maturity date of January 31, 2012, extending the term of the February 2007 Debentures for an additional two year period.
On January 11, 2012, the Company issued 50,000 shares of common stock at $1.00 per share as full payment of $50,000 of outstanding principal on certain February 2007 Debentures and 5,237 shares of common stock at per share prices ranging between $0.70 and $0.80 as full payment of $3,729 of accrued and unpaid interest related to those February 2007 Debentures. Due to the reduction in the conversion price, the Company recorded a loss on conversion of these February 2007 Debentures of $21,750.
Effective January 31, 2012, certain holders of the February 2007 Debentures with an aggregate outstanding principal amount of $175,000, agreed to amend such February 2007 Debentures by extending the maturity date to January 31, 2014. In addition, effective January 31, 2012, a holder of a February 2007 Debenture with an outstanding principal amount of $25,000 agreed to amend his February 2007 Debenture by extending the maturity date to July 31, 2012. The Company has not made payment on this February 2007 Debenture and, as a result, such obligation can be placed in default by the holder.
For the three and six months ended April 30, 2013, the Company recorded a total of $3,912 and $7,834, respectively, of interest expense related to the February 2007 Debentures. For the three and six months ended April 30, 2012, the Company recorded a total of $3,946 and $8,731, respectively, of interest expense related to the February 2007 Debentures. As of April 30, 2013, $3,902 of interest due on the February 2007 Debentures was accrued and is included as a component of accrued expense (see Note 9).
8
May 2011 Convertible Debenture
On May 20, 2011, the Company issued an 8% convertible debenture in the amount of $100,000 to an institutional investor (the “May 2011 Debenture”). The May 2011 Debenture has a three year term maturing on May 20, 2014 and bears interest at a rate of 8% per annum. For the three and six months ended April 30, 2013, the Company recorded a total of $1,951 and $3,968, respectively, of interest expense related to the May 2011 Debenture. For the three and six months ended April 30, 2012, the Company recorded a total of $1,972 and $3,989, respectively, of interest expense related to the May 2011 Debenture. As of April 30, 2013, $7,586 of interest due on the May 2011 Debenture was accrued and is included as a component of accrued expenses (see Note 9).
August 2012 Convertible Debenture
On August 15, 2012, the Company issued an 8% convertible debenture in the amount of $100,000 to an institutional investor (the “August 2012 Debenture”). The August 2012 Debenture has a three year term maturing on August 15, 2015 and bears interest at a rate of 8% per annum. For the three and six months ended April 30, 2013, the Company recorded a total of $2,017 and $4,034, respectively, of interest expense related to the August 2012 Debenture. As of April 30, 2013, $5,766 of interest due on the August 2012 Debenture was accrued and is included as a component of accrued expenses.
7. | Stock-Based Compensation |
The Company accounts for stock-based payments to employees in accordance with Accounting Standards Codification 718, “Stock Compensation” (“ASC” 718”). During the three and six months ended April 30, 2013, the Company did not record any employee stock-based compensation expense. During the three and six months ended April 30, 2012, the Company recorded employee stock-based compensation expense of $0 and $3,716, respectively, which amounts were included in general and administrative expense.
The Company accounts for stock-based payments to non-employees in accordance with ASC 718 and Topic 505-50, “Equity-Based Payments to Non-Employees.” During the three and six months ended April 30, 2013, the Company recorded non-employee stock-based compensation expense of $4,725, which amounts were included in general and administrative expense. During the three and six months ended April 30, 2012, the Company did not record any non-employee stock-based compensation expense.
8. | Net Loss Per Common Share |
Basic net loss per share is computed by dividing net loss available to common shareholders by the weighted average number of common shares outstanding during the period. Diluted earnings per share reflect, in periods in which they have a dilutive effect, the impact of common shares issuable upon exercise of stock options and warrants and conversion of convertible debt that are not deemed to be anti-dilutive. The dilutive effect of the outstanding stock options and warrants is computed using the treasury stock method.
9
For the three and six months ended April 30, 2013, diluted net loss per share did not include the effect of 241,432 shares of common stock issuable upon the exercise of outstanding options, 32,000 shares of common stock issuable upon the exercise of outstanding warrants and 666,667 shares of common stock issuable upon the conversion of convertible debt, as their effect would be anti-dilutive.
For the three and six months ended April 30, 2012, diluted net loss per share did not include the effect of 249,532 shares of common stock issuable upon the exercise of outstanding options, 343,000 shares of common stock issuable upon the exercise of outstanding warrants and 416,667 shares of common stock issuable upon the conversion of convertible debt, as their effect would be anti-dilutive.
9. | Stockholders’ Equity |
Issuance of Common Stock as Payment of Certain Obligations
On January 23, 2013, the Company issued an aggregate of 588,236 shares of its common stock to its two executive officers (294,118 shares of common stock were issued to each of Mr. LaVance and Mr. Gifford), as settlement of $225,627 of accrued compensation due to them and other related costs.
On January 23, 2013, the Company issued an aggregate of 50,000 shares of its common stock to its current independent directors and a former independent director as settlement of $17,000 of fees owed to them.
On January 23, 2013, the Company issued 279,412 shares of its common stock to Century Capital as settlement of $95,000 of office rent owed by Scivanta through January 31, 2013 ($80,000 accrued as of October 31, 2012).
On March 22, 2013, the Company issued 36,477 shares of its common stock to a third party service provider as payment of $12,534 of offering costs ($9,125 accrued as of October 31, 2012) related to certain private placements of the Company’s securities.
On April 8, 2013, the Company issued 33,750 shares of its common stock to a third party service provider as payment of $4,725 of consulting fees.
Issuance of Common Stock as Payment of Interest Due on Convertible Debentures
On January 23, 2013, the Company issued an aggregate of 32,000 shares of its common stock to the holders of the February 2007 Debentures in satisfaction of $16,000 of interest due for the period February 1, 2011 through January 31, 2012. The number of shares issued as payment of the interest due was calculated based on the market price of the Company’s common stock ($0.50 per share) as defined in the February 2007 Debentures.
On January 23, 2013, the Company issued 16,000 shares of its common stock to the May 2011 Debenture holder in satisfaction of $8,000 of interest due for the period May 20, 2011 through May 19, 2012. The number of shares issued as payment of the interest due was calculated based on the market price of the Company’s common stock ($0.50 per share) as defined in the May 2011 Debenture.
10
On April 16, 2013, the Company issued an aggregate of 145,454 shares of its common stock to the holders of the February 2007 Debentures in satisfaction of $16,000 of interest due for the period February 1, 2012 through January 31, 2013. The number of shares issued as payment of the interest due was calculated based on the market price of the Company’s common stock ($0.11 per share) as defined in the February 2007 Debentures.
Sale of Common Stock
On January 25, 2013, the Company sold to an individual investor, 454,545 shares of its common stock for an aggregate purchase price of $50,000, or $0.11 per share. The Company did not incur any offering costs in connection with this private placement.
On March 22, 2013, the Company sold to an individual investor, 454,545 shares of its common stock for an aggregate purchase price of $50,000, or $0.11 per share. The Company incurred offering costs of $5,000 in connection with this private placement.
On April 16, 2013, the Company sold to an individual investor, 227,272 shares of its common stock for an aggregate purchase price of $25,000, or $0.11 per share. The Company did not incur any offering costs in connection with this private placement.
Stock Option Plans
The Company currently has two stock option plans in place: the 2002 Equity Incentive Plan and the 2007 Equity Incentive Plan (collectively, the “Equity Incentive Plans”). The 2002 Equity Incentive Plan was approved by the stockholders on July 5, 2002. The aggregate number of shares of common stock which could have been awarded under the 2002 Equity Incentive Plan was 200,000. As of April 30, 2013, options to purchase 147,000 shares of the Company’s common stock were outstanding under the 2002 Equity Incentive Plan. As a result of the adoption of the Company’s 2007 Equity Incentive Plan, no further awards are permitted under the 2002 Equity Incentive Plan.
On May 31, 2007, the stockholders approved the Company’s 2007 Equity Incentive Plan. The 2007 Equity Incentive Plan was placed into effect in order to encourage and enable employees and directors of the Company to acquire or increase their holdings of the Company’s common stock and to promote these individuals’ interests in the Company thereby enhancing the efficiency, soundness, profitability, growth and stockholder value of the Company. The 2007 Equity Incentive Plan provides for awards in the form of restricted shares, incentive stock options, non-qualified stock options and stock appreciation rights. The aggregate number of shares of common stock which may be awarded under the 2007 Equity Incentive Plan is 300,000, subject to adjustment as provided in the 2007 Equity Incentive Plan. As of April 30, 2013, options to purchase 94,432 shares of the Company’s common stock were outstanding under the 2007 Equity Incentive Plan and up to 205,568 shares of the Company’s common stock remain available for awards under the 2007 Equity Incentive Plan.
11
Stock option awards under the Equity Incentive Plans were granted at prices as determined by the Company’s compensation committee, but such prices were not less than the fair market value of the Company's common stock on the date of grant. Stock options granted and outstanding include only non-qualified stock options and vest over a period of up to five years and have a maximum term of ten years from the date of grant.
A summary of stock option transactions for employees and directors under the Equity Incentive Plans during the six months ended April 30, 2013 is as follows:
Stock Option Shares | Weighted Average Exercise Price Per Common Share | Aggregate Intrinsic Value | ||||||||||
Outstanding at October 31, 2012 | 249,532 | $ | 1.57 | $ | 700 | |||||||
Granted during the period | -- | -- | ||||||||||
Exercised during the period | -- | -- | ||||||||||
Expired during the period | (8,100 | ) | $ | 1.40 | ||||||||
Outstanding at April 30, 2013 | 241,432 | $ | 1.57 | $ | -- | |||||||
Exercisable at April 30, 2013 | 241,432 | $ | 1.57 | $ | -- | |||||||
Exercisable at October 31, 2012 | 249,532 | $ | 1.57 | $ | 700 |
Information with respect to outstanding stock options and stock options exercisable as of April 30, 2013 that were granted to employees is as follows:
Stock Options Outstanding | Stock Options Exercisable | ||||||||||||||||||||||||
Exercise Price | Number of Shares Available Under Outstanding Stock Options | Weighted Average Exercise Price Per Common Share | Weighted Average Remaining Contractual Life (Years) | Number of Shares Available for Purchase Under Outstanding Stock Options | Weighted Average Exercise Price Per Common Share | Weighted Average Remaining Contractual Life (Years) | |||||||||||||||||||
$ | 0.20 | 3,500 | $ | 0.20 | 1.7 | 3,500 | $ | 0.20 | 1.7 | ||||||||||||||||
$ | 0.80 | 33,500 | $ | 0.80 | 1.3 | 33,500 | $ | 0.80 | 1.3 | ||||||||||||||||
$ | 1.40 | 94,432 | $ | 1.40 | 4.8 | 94,432 | $ | 1.40 | 4.8 | ||||||||||||||||
$ | 2.00 | 110,000 | $ | 2.00 | 3.8 | 110,000 | $ | 2.00 | 3.8 | ||||||||||||||||
241,432 | $ | 1.57 | 3.8 | 241,432 | $ | 1.57 | 3.8 |
12
Warrants to Purchase Common Stock
A summary of warrant transactions during the six months ended April 30, 2013 is as follows:
Warrant Shares | Weighted Average Exercise Price Per Common Share | Aggregate Intrinsic Value | ||||||||||
Outstanding at October 31, 2012 | 93,000 | $ | 1.19 | $ | -- | |||||||
Issued during the period | -- | -- | ||||||||||
Exercised during the period | -- | -- | ||||||||||
Expired during the period | (61,000 | ) | $ | 1.29 | ||||||||
Outstanding at April 30, 2013 | 32,000 | $ | 1.00 | $ | -- | |||||||
Exercisable at April 30, 2013 | 32,000 | $ | 1.00 | $ | -- | |||||||
Exercisable at October 31, 2012 | 93,000 | $ | 1.19 | $ | -- |
Information with respect to outstanding warrants and warrants exercisable at April 30, 2013 is as follows:
Warrants Outstanding | Warrants Exercisable | ||||||||||||||||||||||||
Range of Exercise Prices | Number of Shares Available Under Outstanding Warrants | Weighted Average Exercise Price Per Common Share | Weighted Average Remaining Contractual Life (Years) | Number of Shares Available for Purchase Under Outstanding Warrants | Weighted Average Exercise Price Per Common Share | Weighted Average Remaining Contractual Life (Years) | |||||||||||||||||||
$ | 0.40 | 20,000 | $ | 0.40 | 1.0 | 20,000 | $ | 0.40 | 1.0 | ||||||||||||||||
$ | 2.00 | 12,000 | $ | 2.00 | 0.5 | 12,000 | $ | 2.00 | 0.5 | ||||||||||||||||
32,000 | $ | 1.00 | 0.8 | 32,000 | $ | 1.00 | 0.8 |
13
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Background
Scivanta is a Nevada corporation headquartered in Spring Lake, New Jersey. Scivanta currently does not sell any products, technologies or services.
On November 10, 2006, we acquired the exclusive world-wide rights to develop, manufacture and distribute the SCMS, a minimally invasive two-balloon esophageal catheter system used to monitor cardiac performance. The SCMS is currently in the development stage; however, since the end of fiscal 2009 all development activity has ceased as we attempt to raise additional financing.
The SCMS will provide the primary measurements of cardiac performance, including left atrial pressure, which is a crucial measurement in monitoring cardiac challenged patients. The essential hardware, software and catheter components for the SCMS have been completed. Scivanta currently has a fully assembled SCMS device that has been used in the initial clinical trial. The two major items remaining in the development of the SCMS are the completion of the clinical trials and the design and engineering of the production model of the SCMS.
We will not be able to complete the clinical trials or the design and engineering of the production model of the SCMS without obtaining additional cash through equity and/or debt financing or through corporate partnerships. We continue to pursue potential investors and from time to time engage placement agents to assist us in this endeavor. No assurances can be given that we will be able to obtain sufficient capital to finish the development of the SCMS through any corporate partnerships and/or through equity and/or debt financing. In addition, no assurances can be given that if we successfully develop and market the SCMS, such product will become profitable.
In addition to developing the SCMS, our strategy for business development, if sufficient funding is obtained, will focus on the acquisition, through licensing or purchasing, of technologies, products or businesses that are sold or are capable of being sold in a specialty or niche market. Technologies, products or businesses of interest include, but are not limited to, medical devices, pharmaceuticals and other proprietary technologies, patented products or businesses. The Company believes that specialty or niche-market technologies, products or businesses generally offer attractive operating margins. These products are distributed through specialty distributor networks, manufacturer representatives or other specialized channels to the original equipment manufacturer market, supplier and provider markets and to the general marketplace.
Critical Accounting Policies and Estimates
The discussion and analysis of the Company’s financial condition and results of operations are based upon the interim financial statements contained elsewhere herein, which have been prepared in accordance with U.S. GAAP. The preparation of these financial statements required us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate our estimates, including those related to income taxes and contingencies and litigation. We based our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
The critical accounting estimates that we believe affect the more significant judgments and estimates used in preparation of the financial statements contained elsewhere herein are described in the Management’s Discussion and Analysis of Financial Condition and Results of Operations and in the Notes to the Financial Statements included in the Company’s annual report on Form 10-K for the fiscal year ended October 31, 2012. There have been no material changes to the critical accounting policies.
14
Results of Operations
Research and Development. For both the three months ended April 30, 2013 and 2012, the Company did not incur any research and development expenses. For the six months ended April 30, 2013, research and development expenses were $0, as compared to $8,890 for the six months ended April 30, 2012. The $8,890, or 100%, decrease in research and development expense for the six months ended April 30, 2013 was due to no patent costs for such period.
The amount of research and development expense to be incurred by us during the fiscal year ending October 31, 2013 will depend upon our ability to secure additional capital through an equity and/or debt financing or corporate partnerships. In the event that we are able to obtain additional capital sufficient to fund our research and development program, we would expect research and development expenses for the fiscal year ending October 31, 2013 to significantly increase. If we are unable to obtain additional capital sufficient to fund our research and development program, we would expect research and development expenses for the fiscal year ending October 31, 2013 to remain at the current level.
General and Administrative. For the three months ended April 30, 2013, general and administrative expenses were $128,198, as compared to $50,319 for the three months ended April 30, 2012. The $77,879, or 155%, increase in general and administrative expenses for the three months ended April 30, 2013 was primarily due to a $45,312 increase in legal expenses related to the Company’s amendment to its Restated Articles of Incorporation and our review of potential acquisitions, a $17,000 increase in consulting fees related to our review of potential acquisitions and financings, a $9,229 increase in costs associated with mailings to stockholders and related SEC filings regarding the amendment to our Restated Articles of Incorporation and a $4,725 increase in stock based compensation to non-employees.
For the six months ended April 30, 2013, general and administrative expenses were $195,162, as compared to $118,353 for the six months ended April 30, 2012. The $76,809, or 65%, increase in general and administrative expenses for the six months ended April 30, 2013 was primarily due to a $56,470 increase in legal expenses related to the Company’s amendment to its Restated Articles of Incorporation and our review of potential acquisitions, a $17,000 increase in consulting fees related to our review of potential acquisitions and financings and a $9,043 increase in costs associated with mailings to stockholders and related SEC filings regarding the amendment to our Restated Articles of Incorporation, offset by a $5,000 decrease in audit related fees.
The amount of general and administrative expense to be incurred by us during the fiscal year ending October 31, 2013 will depend upon our ability to secure additional capital through an equity and/or debt financing or corporate partnerships. In the event that we are able to obtain additional capital sufficient to fund our development and marketing of the SCMS and to pursue the acquisition of other technologies, products or businesses, we would expect general and administrative expenses for the fiscal year ending October 31, 2013 to increase as we build the administrative infrastructure necessary to support the development and marketing of the SCMS and any other technology, product or business acquired by us. If we are unable to obtain additional capital sufficient to fund our development and marketing of the SCMS or to acquire other technologies, products or businesses, we would expect general and administrative expenses for the fiscal year ending October 31, 2013 to decrease as we continue to reduce our operating activities.
15
Interest Expense. For the three months ended April 30, 2013, interest expense was $8,167, as compared to $6,207 for the three months ended April 30, 2012. The $1,960, or 32%, increase in interest expense for the three months ended April 30, 2013 was primarily due to $2,017 of interest associated with the August 2012 Debenture.
For the six months ended April 30, 2013, interest expense was $16,133, as compared to $13,132 for the six months ended April 30, 2012. The $3,001, or 23%, increase in interest expense for the six months ended April 30, 2013 was primarily due to $4,034 of interest associated with the August 2012 Debenture, offset by a $897 decrease in interest associated with the February 2007 Debentures resulting from the conversion to common stock of a portion of the outstanding aggregate principal of the February 2007 Debentures in January 2012.
Loss on Conversion of Convertible Debentures. During the six months ended April 30, 2012, we recognized a loss of $21,750 on the conversion of certain February 2007 Debentures resulting from a reduction in the conversion price.
Net Loss. For the three months ended April 30, 2013, our net loss was $136,365, or $0.03 per share (basic and diluted), as compared to a net loss of $56,526, or $0.02 per share (basic and diluted), for the three months ended April 30, 2012. The $79,839, or 141%, increase in the net loss for the three months ended April 30, 2013 was primarily attributable to a $77,879 increase in general and administrative expenses.
For the six months ended April 30, 2013, our net loss was $211,295, or $0.05 per share (basic and diluted), as compared to a net loss of $162,125, or $0.05 per share (basic and diluted), for the six months ended April 30, 2012. The $49,170, or 30%, increase in the net loss for the six months ended April 30, 2013 was primarily attributable to a $76,809 increase in general and administrative expenses, offset by a $21,750 decrease in the loss on conversion of convertible debentures and a $8,890 decrease in research and development expenses.
Liquidity and Capital Resources
As of April 30, 2013, the Company had a working capital deficiency of $447,116 and cash on hand of $64,880. The $555 increase in cash on hand from October 31, 2012 was primarily due to the receipt of $120,000 of net proceeds in connection with the sale of an aggregate of 1,136,362 shares of the Company’s common stock that occurred in January and April 2013, offset by the Company’s continuing operating expenses.
During the past several years, the Company has generally sustained recurring losses and negative cash flows from operations. We currently do not generate any revenue from operations. The Company’s operations most recently have been funded through a combination of the sale of our convertible debentures and common stock and through the issuance of our common stock in exchange for services.
16
On January 23, 2013, the Company issued an aggregate of 588,236 shares of its common stock as settlement of $225,627 of accrued compensation due through October 31, 2011 to its officers and other related costs, issued an aggregate of 50,000 shares of its common stock as settlement of $17,000 of fees owed through October 31, 2011 to its current independent directors and a former independent director and issued 279,412 shares of its common stock to Century Capital as settlement of $95,000 of office rent owed by the Company through January 31, 2013 ($80,000 accrued as of October 31, 2012).
As of June 12, 2013, our cash position was approximately $40,000. Without any additional financing, we will only be able to continue our administrative operations, on a limited basis, for approximately four months from the filing date of this quarterly report on Form 10-Q. We have reduced operating expenses and effective November 1, 2011, Scivanta’s officers agreed to waive the annual base salary due to them and Scivanta’s directors agreed to waive the annual retainer and meeting fees due to them until Scivanta is able to raise sufficient capital that would provide Scivanta with the ability to pay cash compensation to its officers and directors. Scivanta has also deferred certain vendor payments until it secures sufficient additional financing. Our independent registered public accounting firm included an emphasis of a matter paragraph in its report included in our annual report on Form 10-K for the fiscal year ended October 31, 2012, which expressed substantial doubt about our ability to continue as a going concern. Our financial statements included herein do not include any adjustments related to this uncertainty.
We currently do not have any lending relationships with commercial banks and do not anticipate establishing such relationships in the foreseeable future due to our limited operations and assets. We believe that our focus should be on obtaining additional capital through the private placement of our securities. We are pursuing potential equity and/or debt investors and have from time to time engaged placement agents to assist us in this initiative. While we are pursuing the opportunities and actions described above, there can be no assurance that we will be successful in our efforts. If we are unable to secure additional capital, we will explore other strategic alternatives, including, but not limited to, the sale of Scivanta. Any additional equity financing may result in substantial dilution to our stockholders.
Expenditures related to the development of the SCMS are at our discretion. Assuming that we are successful in obtaining additional financing, we estimate that we could potentially spend approximately $1,000,000 related to the development of the SCMS over the twelve month period following the financing.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Scivanta is a smaller reporting company and is therefore not required to provide this information.
17
Item 4. Controls and Procedures
As required by Rule 13a-15 under the Exchange Act, as of the end of the period covered by this quarterly report on Form 10-Q, the Company carried out an evaluation of the effectiveness of the design and operation of the Company’s disclosure controls and procedures. This evaluation was carried out under the supervision and with the participation of the Company’s management, including the Company’s President and Chief Executive Officer and the Company’s Executive Vice President, Chief Financial Officer and Secretary, who concluded that the Company’s disclosure controls and procedures are effective. There has been no change in the Company’s internal control over financial reporting during the Company’s last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in the Company’s reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the rules and forms of the SEC. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in the Company’s reports filed under the Exchange Act is accumulated and communicated to management, including the Company’s Chief Executive Officer and the Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 1A. Risk Factors
Scivanta is a smaller reporting company and is therefore not required to provide this information.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
On March 22, 2013, the Company sold to an individual investor, 454,545 shares of its common stock for an aggregate purchase price of $50,000, or $0.11 per share. The Company incurred offering costs of $5,000 in connection with this private placement.
On March 22, 2013, the Company issued 36,477 shares of its common stock to a third party service provider as payment of $12,534 of offering costs ($9,125 accrued as of October 31, 2012) related to certain private placements of the Company’s securities.
On April 8, 2013, the Company issued 33,750 shares of its common stock to a third party service provider as payment of $4,725 of consulting fees.
18
On April 16, 2013, the Company sold to an individual investor, 227,272 shares of its common stock for an aggregate purchase price of $25,000, or $0.11 per share. The Company did not incur any offering costs in connection with this private placement.
On April 16, 2013, the Company issued an aggregate of 145,454 shares of its common stock to the holders of the February 2007 Debentures in satisfaction of $16,000 of interest due for the period February 1, 2012 through January 31, 2013. The number of shares issued as payment of the interest due was calculated based on the market price of the Company’s common stock ($0.11 per share) as defined in the February 2007 Debentures.
In connection with each of the above issuances of shares of common stock, Scivanta relied on the exemption from registration for a private transaction not involving a public distribution provided by Section 4(2) of the Securities Act.
Item 3. Defaults Upon Senior Securities
Not Applicable.
Item 4. Mine Safety Disclosures
Not Applicable.
Item 5. Other Information
Effective April 22, 2013, the Company amended its Restated Articles of Incorporation to: (a) effectuate a 10-for-1 Reverse Stock Split; (b) increase the amount of authorized capital stock to 520,000,000 shares, notwithstanding the effect of the Reverse Stock Split; (c) classify 500,000,000 shares of the authorized capital stock as common stock, par value $.001 per share, and 20,000,000 shares of the authorized capital stock as preferred stock, par value $.001 per share; (d) provide for the issuance of rights, warrants and options to purchase shares of the Company’s capital stock; and (e) include a limitation of liability provision with respect to the officers and directors of the Company.
Prior to the Reverse Stock Split, there were 54,293,838 shares of the Company’s common stock outstanding, and after the Reverse Stock Split, there were 5,429,384 shares of the Company’s common stock outstanding.
Item 6. Exhibits
See Index of Exhibits Commencing on Page E-1.
19
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
DATE: | SCIVANTA MEDICAL CORPORATION | ||
June 14, 2013 | By: | /s/ David R. LaVance | |
David R. LaVance | |||
President and Chief Executive Officer |
June 14, 2013 | By: | /s/ Thomas S. Gifford | |
Thomas S. Gifford | |||
Executive Vice President, Chief Financial Officer and Secretary |
20
INDEX OF EXHIBITS
Exhibit Number | Description of Exhibit | |
3.1 | Amended and Restated Articles of Incorporation of Scivanta Medical Corporation, (the “Company”), which was filed in the Office of the Secretary of State of the State of Nevada on April 22, 2013 (incorporated by reference to Exhibit 3.1 to the Company’s current report on Form 8-K filed with the Securities and Exchange Commission (the “SEC”) on April 22, 2013). | |
3.2 | Amended and Restated Bylaws of the Company (incorporated by reference to Exhibit 3.2 to the Company’s quarterly report on Form 10-QSB for the quarter ended January 31, 2006, filed with the SEC on January 29, 2007). | |
4.1 | Specimen stock certificate representing the Company’s common stock (incorporated by reference to Exhibit 4.1 to the Company’s quarterly report on Form 10-QSB for the quarter ended January 31, 2006, filed with the SEC on January 29, 2007). | |
4.2 | Form of Convertible Debenture, dated as of February 1, 2007, issued to the following persons and in the following amounts: Jesse H. Austin, III ($50,000); Andrew O. Whiteman and Gwen C. Whiteman, JTWROS ($25,000); Jack W. Cumming ($25,000); Scott C. Withrow ($25,000); Terrence McQuade ($25,000); Steven J. Olsen ($25,000); and Marc G. Robinson and Joshua Goldfarb ($25,000) (incorporated by reference to Exhibit 4.8 to the Company’s quarterly report on Form 10-QSB for the quarter ended January 31, 2007, filed with the SEC on March 14, 2007). | |
4.3 | Form of Addendum to Convertible Debenture, dated as of January 31, 2010, issued to the persons set forth in Exhibit 4.2 (incorporated by reference to Exhibit 4.3 to the Company’s annual report on Form 10-K for the fiscal year ended October 31, 2009, filed with the SEC on January 29, 2010). | |
4.4 | Form of Addendum to Convertible Debenture, dated as of January 31, 2012, issued to certain persons set forth in Exhibit 4.2 (incorporated by reference to Exhibit 4.4 to the Company’s quarterly report on Form 10-Q for the quarter ended January 31, 2012, filed with the SEC on March 16, 2012). | |
4.5 | 8% Convertible Debenture, dated as of May 20, 2011, in the principal amount of $100,000 issued to Zanett Opportunity Fund, Ltd. (incorporated by reference to Exhibit 4.4 to the Company’s quarterly report on Form 10-Q for the quarter ended April 30, 2011, filed with the SEC on June 14, 2011). | |
4.6 | 8% Convertible Debenture, dated as of August 15, 2012, in the principal amount of $100,000 issued to Zanett Opportunity Fund, Ltd. (incorporated by reference to Exhibit 4.1 to the Company’s current report on Form 8-K filed with the SEC on August 21, 2012). |
E-1
Exhibit Number | Description of Exhibit | |
10.1 | The Company’s 2002 Equity Incentive Plan, adopted and effective January 1, 2002 (incorporated by reference to Exhibit B of the Company’s definitive proxy statement, filed with the SEC on June 10, 2002). | |
10.2 | Sublease Agreement, dated February 1, 2007, between the Company and Century Capital Associates LLC (incorporated by reference to Exhibit 10.14 to the Company’s quarterly report on Form 10-QSB for the quarter ended January 31, 2007, filed with the SEC on March 14, 2007). | |
10.3 | Amended and Restated Technology License Agreement between the Company and The Research Foundation of State University of New York for and on behalf of University of Buffalo, and Donald D. Hickey, M.D. and Clas E. Lundgren dated February 14, 2011 (incorporated by reference to Exhibit 10.8 to the Company’s annual report on Form 10-K for the fiscal year ended October 31, 2010, filed with the SEC on February 15, 2011). | |
10.3.1 | First Addendum to the Amended and Restated Technology License Agreement between the Company and The Research Foundation for State University of New York for and on behalf of University of Buffalo, and Donald D. Hickey, M.D. and Clas E. Lundgren dated March 14, 2013. | |
10.4 | Stock Option Agreement and Notice of Grant, dated February 5, 2007, pursuant to which David R. LaVance was granted a non-qualified stock option to purchase up to 500,000 shares of common stock of the Company (incorporated by reference to Exhibit 10.16 to the Company’s quarterly report on Form 10-QSB for the quarter ended January 31, 2007, filed with the SEC on March 14, 2007). | |
10.5 | Stock Option Agreement and Notice of Grant, dated February 5, 2007, pursuant to which Thomas S. Gifford was granted a non-qualified stock option to purchase up to 500,000 shares of common stock of the Company (incorporated by reference to Exhibit 10.17 to the Company’s quarterly report on Form 10-QSB for the quarter ended January 31, 2007, filed with the SEC on March 14, 2007). | |
10.6 | Company’s 2007 Equity Incentive Plan, adopted and effective May 31, 2007 (incorporated by reference to Appendix to the Company’s definitive proxy statement, filed with the SEC on April 27, 2007). | |
10.7 | Stock Option Agreement and Notice of Grant, dated January 1, 2008, pursuant to which David R. LaVance was granted a non-qualified stock option to purchase up to 100,000 shares of common stock of the Company (incorporated by reference to Exhibit 10.21 to the Company’s current report on Form 8-K filed with the SEC on January 2, 2008). | |
10.8 | Stock Option Agreement and Notice of Grant, dated January 1, 2008, pursuant to which Thomas S. Gifford was granted a non-qualified stock option to purchase up to 100,000 shares of common stock of the Company (incorporated by reference to Exhibit 10.22 to the Company’s current report on Form 8-K filed with the SEC on January 2, 2008). |
E-2
Exhibit Number | Description of Exhibit |
10.9 | Executive Employment Agreement, dated as of January 1, 2008, between the Company and David R. LaVance (incorporated by reference to Exhibit 10.26 to the Company’s current report on Form 8-K filed with the SEC on January 2, 2008). | |
10.10 | Executive Employment Agreement, dated as of January 1, 2008, between the Company and Thomas S. Gifford (incorporated by reference to Exhibit 10.27 to the Company’s current report on Form 8-K filed with the SEC on January 2, 2008). | |
10.11 | Amendment No. 1 dated as of June 18, 2010 to the Executive Employment Agreement, dated as of January 1, 2008, between the Company and David R. LaVance (incorporated by reference to Exhibit 10.27 to the Company’s quarterly report on Form 10-Q for the quarter ended April 30, 2010, filed with the SEC on June 21, 2010). | |
10.12 | Amendment No. 1 dated as of June 18, 2010 to the Executive Employment Agreement, dated as of January 1, 2008, between the Company and Thomas S. Gifford (incorporated by reference to Exhibit 10.28 to the Company’s quarterly report on Form 10-Q for the quarter ended April 30, 2010, filed with the SEC on June 21, 2010). | |
10.13 | Amendment No. 2 dated as of January 3, 2012 to the Executive Employment Agreement, dated as of January 1, 2008, between the Company and David R. LaVance (incorporated by reference to Exhibit 10.23 to the Company’s annual report on Form 10-KSB for the fiscal year ended October 31, 2011, filed with the SEC on January 30, 2012). | |
10.14 | Amendment No. 2 dated as of January 3, 2012 to the Executive Employment Agreement, dated as of January 1, 2008, between the Company and Thomas S. Gifford (incorporated by reference to Exhibit 10.24 to the Company’s annual report on Form 10-KSB for the fiscal year ended October 31, 2011, filed with the SEC on January 30, 2012). | |
10.15 | Stock Option Agreement and Notice of Grant, dated January 21, 2009, pursuant to which David R. LaVance was granted a non-qualified stock option to purchase up to 25,000 shares of common stock of the Company (incorporated by reference to Exhibit 10.32 to the Company’s annual report on Form 10-KSB for the fiscal year ended October 31, 2008, filed with the SEC on January 29, 2009). | |
10.16 | Stock Option Agreement and Notice of Grant, dated January 21, 2009, pursuant to which Thomas S. Gifford was granted a non-qualified stock option to purchase up to 25,000 shares of common stock of the Company (incorporated by reference to Exhibit 10.33 to the Company’s annual report on Form 10-KSB for the fiscal year ended October 31, 2008, filed with the SEC on January 29, 2009). | |
10.17 | Stock Option Agreement and Notice of Grant, dated January 21, 2009, pursuant to which Lawrence M. Levy was granted a non-qualified stock option to purchase up to 3,500 shares of common stock of the Company (incorporated by reference to Exhibit 10.35 to the Company’s annual report on Form 10-KSB for the fiscal year ended October 31, 2008, filed with the SEC on January 29, 2009). |
E-3
Exhibit Number | Description of Exhibit |
10.18 | Stock Option Agreement and Notice of Grant, dated January 21, 2009, pursuant to which Anthony Giordano, III was granted a non-qualified stock option to purchase up to 3,900 shares of common stock of the Company (incorporated by reference to Exhibit 10.36 to the Company’s annual report on Form 10-KSB for the fiscal year ended October 31, 2008, filed with the SEC on January 29, 2009). | |
31.1 | Section 302 Certification of Chief Executive Officer. | |
31.2 | Section 302 Certification of Chief Financial Officer. | |
32.1 | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350. | |
32.2 | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350. | |
101* | The following materials from the Company’s quarterly report on Form 10-Q for the period ended April 30, 2013, formatted in Extensible Business Reporting Language (XBRL): (i) balance sheets; (ii) statements of operations; (iii) statements of cash flows; and (iv) notes to the financial statements. |
* Pursuant to Rule 406T of Regulation S-T, the interactive data files included as Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.
E-4