Document_and_Entity_Informatio
Document and Entity Information | 3 Months Ended | |
Jul. 31, 2014 | Sep. 15, 2014 | |
Document And Entity Information [Abstract] | ' | ' |
Entity Registrant Name | 'NUVILEX, INC. | ' |
Entity Central Index Key | '0001157075 | ' |
Document Type | '10-Q | ' |
Document Period End Date | 31-Jul-14 | ' |
Amendment Flag | 'false | ' |
Current Fiscal Year End Date | '--04-30 | ' |
Entity Filer Category | 'Smaller Reporting Company | ' |
Entity Common Stock, Shares Outstanding | ' | 710,020,918 |
Document Fiscal Period Focus | 'Q1 | ' |
Document Fiscal Year Focus | '2015 | ' |
Consolidated_Balance_Sheets
Consolidated Balance Sheets (USD $) | Jul. 31, 2014 | Apr. 30, 2014 |
Current Assets | ' | ' |
Cash | $2,896,939 | $3,616,470 |
Prepaid and other assets | 172,133 | 570,106 |
Total Current Assets | 3,069,072 | 4,186,576 |
Licenses and patents | 3,549,427 | 3,549,427 |
Investment in SG Austria | 1,572,193 | 1,572,193 |
Other assets | 7,854 | 7,854 |
Total Assets | 8,198,546 | 9,316,050 |
Current Liabilities | ' | ' |
Accounts payable | 204,370 | 188,044 |
Accrued expenses | 5,262 | 7,803 |
Accrued interest, related party | 36,612 | 33,960 |
Due to an officer | 125,142 | 143,859 |
Total Current Liabilities | 371,386 | 373,666 |
Total Liabilities | 371,386 | 373,666 |
Commitments and Contingencies | ' | ' |
Preferred stock, authorized 10,000,000 shares, $0.0001 par value, 0 shares issued and outstanding, respectively | 0 | 0 |
Stockholders' Equity (Deficit) | ' | ' |
Common Stock, authorized 1,490,000,000 shares, $0.0001 par value, 710,356,214 and 690,615,714 shares issued and outstanding, respectively | 71,036 | 69,063 |
Additional paid in capital | 78,041,075 | 75,998,588 |
Common stock to be issued | 0 | 1,574,860 |
Accumulated deficit | -70,284,951 | -68,700,127 |
Total Stockholders' Equity (Deficit) | 7,827,160 | 8,942,384 |
Total Liabilities and Stockholders' Equity (Deficit) | $8,198,546 | $9,316,050 |
Consolidated_Balance_Sheet_Par
Consolidated Balance Sheet (Parenthetical) (USD $) | Jul. 31, 2014 | Apr. 30, 2014 |
Statement of Financial Position [Abstract] | ' | ' |
Preferred stock, par value | $0.00 | $0.00 |
Preferred stock, authorized | 10,000,000 | 10,000,000 |
Preferred stock, issued | 0 | 0 |
Preferred stock, outstanding | 0 | 0 |
Common stock, par value | $0.00 | $0.00 |
Common stock, authorized | 1,490,000,000 | 1,490,000,000 |
Common stock issued | 710,356,214 | 690,615,714 |
Common stock, outstanding | 710,356,214 | 690,615,714 |
Consolidated_Statements_of_Ope
Consolidated Statements of Operations (USD $) | 3 Months Ended | |
Jul. 31, 2014 | Jul. 31, 2013 | |
Revenues: | ' | ' |
Product sales | $0 | $0 |
Total revenue | 0 | 0 |
Cost of revenues | 0 | 0 |
Gross margin | 0 | 0 |
Expenses: | ' | ' |
Sales and marketing | 230,500 | 15,000 |
Compensation expense | 253,418 | 1,202,127 |
Legal & professional fees | 260,864 | 64,358 |
General and administrative | 838,378 | 119,206 |
Total operating expenses | 1,583,160 | 1,400,691 |
Net loss from operations | -1,583,160 | -1,400,691 |
Other income (expense): | ' | ' |
Gain on forgiveness of debt | 0 | 1,358,470 |
Loss on conversion of preferred stock | 0 | -640,000 |
Loss on settlement of debt | 0 | -3,973,795 |
Interest income | 988 | 0 |
Interest expense | -2,652 | -10,351 |
Total other expense | -1,664 | -3,265,676 |
Net loss | ($1,584,824) | ($4,666,367) |
Basic loss per share | $0 | ($0.01) |
Weighted average shares outstanding | 701,930,165 | 521,873,196 |
Consolidated_Statements_of_Cas
Consolidated Statements of Cash Flows (USD $) | 3 Months Ended | |
Jul. 31, 2014 | Jul. 31, 2013 | |
Cash flows from operating activities: | ' | ' |
Net loss | ($1,584,824) | ($4,666,367) |
Adjustments to reconcile net loss to net cash used in operating activities: | ' | ' |
Stock issued for services | 297,500 | 1,201,608 |
Stock issued for compensation | 86,100 | 0 |
Loss on settlement of debt | 0 | 3,973,795 |
Loss on conversion of preferred stock | 0 | 640,000 |
Gain on forgiveness of debt | 0 | -1,358,470 |
Change in assets and liabilities: | ' | ' |
Decrease in prepaid expenses | 397,973 | 29,547 |
Increase in accounts payable | 16,326 | 965 |
Increase in accrued interest, related party | 2,652 | 7,902 |
Increase in accrued expenses | -2,541 | 11,346 |
Net cash used in operating activities | -786,814 | -159,674 |
Cash flows from investing activities: | ' | ' |
Payments towards acquisition | 0 | -1,568,850 |
Net cash used by investing activities | 0 | -1,568,850 |
Cash flows from financing activities: | ' | ' |
Proceeds from the sale of common stock | 86,000 | 1,660,000 |
Proceeds from borrowings, related party | 0 | 77,853 |
Repayment of debt, related party | -18,717 | -2,594 |
Net cash provided by financing activities | 67,283 | 1,735,259 |
Net increase/(decrease) in cash | -719,531 | 6,735 |
Cash at beginning of period | 3,616,470 | 199,303 |
Cash at end of period | 2,896,939 | 206,038 |
Supplementary non-cash disclosures: | ' | ' |
Cash paid for interest | 0 | 0 |
Franchise and income taxes | 0 | 0 |
Common stock issued for debt | $0 | $533,598 |
1_BACKGROUND_ACQUISITION_AND_L
1. BACKGROUND, ACQUISITION AND LIQUIDITY | 3 Months Ended |
Jul. 31, 2014 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ' |
BACKGROUND, ACQUSITION AND LIQUIDITY | ' |
Historical Overview of the Company | |
Past Nutraceutical Company | |
The Company was founded as DJH International, Inc. on October 28, 1996. It changed its name to eFoodSafety.com, Inc. following the October 16, 2000 acquisition of Global Procurement Systems, Inc. The Company acquired Ozone Safe Food, Inc. for common stock on October 29, 2003. The Company's business plan was to provide methods and products to ensure safety of marketed fruits and vegetables worldwide. On February 4, 2004, the Company registered shares of common stock with the SEC. It began publicly trading on the OTC Bulletin Board under the trading symbol EFSF. | |
With unrealized demand for the Company’s produce sterilization methods and software tracking products, the Company changed its business plan and acquired Knock-Out Technologies, Ltd. and MedElite, Inc. in May 2004 and August 2005, respectively. Knock-Out Technologies, Ltd. was a developer of natural products using organic, non-toxic, food grade material. MedElite, Inc. was the exclusive distributor of Talsyn-CI Scar Cream in the United States, a topical scar- reducing cream. The Company's strategy was to market nutraceutical products. The Company sold its Ozone Safe Food, Inc. operations in August 2005. In November 2006, the Company formed Cinnergen, Inc. to manufacture and market a non-prescription liquid nutritional supplement designed to promote healthy glucose metabolism and purEffect, Inc. to manufacture and market purEffect - a four-step non-prescription acne treatment. On March 10, 2006, the Company licensed the marketing rights for purEffect to Charlston Kentrist 41 Direct, Inc. (“CK41”). In July 2007, the Company formed, I-Boost to market products to support the immune system. In March 2008, Cinnechol, Inc. was formed to promote cardiovascular health. In February 2009, the Company sold the rights to the purEffect product to CK41 for an equity position in CK41 and future royalty compensation. In March 2009, Freedom2 Holdings, Inc. was acquired to manufacture and market products including Infinitink®, a tattoo ink designed to be easily removed. | |
On January 20, 2009, the Company changed its name to Nuvilex, Inc. Its trading symbol on the OTC Bulletin Board® was also changed to NVLX. | |
Current Biotechnology Company | |
On May 26, 2011, the Company entered into an Asset Purchase Agreement (“SG Austria APA”) with SG Austria Private Limited (“SG Austria”) to purchase 100% of the assets and liabilities of SG Austria. As a result, Austrianova Singapore Private Limited ("Austrianova Singapore") and Bio Blue Bird AG ("Bio Blue Bird"), wholly-owned subsidiaries of SG Austria, were to become wholly owned subsidiaries of the Company on the condition that the Company pay SG Austria $2.5 million and 100,000,000 shares of the Company’s common stock and for the Company to receive 100,000 shares of Austrianova Singapore’s common stock and nine Bio Blue Bird bearer shares. | |
Through two addenda to the SG Austria APA, the closing dates were extended. In June 2013, the Company and SG Austria entered into a Third Addendum to the SG Austria APA (“Third Addendum”). Under the terms of the Third Addendum, the transaction contemplated by the SG Austria APA changed substantially. The Third Addendum resulted in the Company acquiring 100% of the equity interests in Bio Blue Bird and receiving a 14.5% equity interest in SG Austria. In addition, the Company received nine bearer shares of Bio Blue Bird. Under the Third Addendum, the Company paid: (i) $500,000 to retire all outstanding debt of Bio Blue Bird; and (ii) $1.0 million to SG Austria. The Company also paid SG Austria $1,572,193. The Third Addendum returned the original 100,000,000 shares of common stock to the Company treasury and the 100,000 Austrianova Singapore shares to SG Austria. | |
The acquisition of Bio Blue Bird provided the Company with exclusive, worldwide licenses to use a proprietary cellulose-based live cell encapsulation technology for the development of treatments for all forms of cancer using certain types of cells. The licenses are pursuant to patents licensed from Bavarian Nordic A/S and GSF-Forschungszentrum fur Umwelt u. Gesundeit GmbH. These licenses enable the Company to carry out the research and development of cancer treatments that are based upon the live cell encapsulation technology known as “Cell-in-a-Box ®.” | |
In July 2013, the Company also acquired from Austrianova Singapore the exclusive, worldwide license to use the cellulose-based live cell encapsulation technology for the development of a treatment for diabetes and the use of Austrianova Singapore’s “Cell-in-a-Box ®” trademark for this technology (“Diabetes Licensing Agreement”). The Company made its first $1,000,000 payment to secure the Diabetes Licensing Agreement on October 30, 2013. The second and final payment of $1,000,000 was made on February 25, 2014. |
2_CAPITALIZATION_AND_MANAGEMEN
2. CAPITALIZATION AND MANAGEMENT'S PLANS (Notes) | 3 Months Ended | ||
Jul. 31, 2014 | |||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ' | ||
Capitalization And Management's Plans | ' | ||
Capitalization | |||
The Company's financial statements are prepared using generally accepted accounting principles in the United States (“GAAP”) applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. As of July 31, 2014, the Company has an accumulated deficit of $70,284,951 and incurred a net loss for three months ended July 31, 2014 of $1,584,824. | |||
Funding has been provided by management and investors to maintain and expand the Company and acquire Bio Blue Bird. New investors enabled the completion of the acquisition of Bio Blue Bird which provided the Company the ability to begin preparations toward further clinical trials in patients with advanced, inoperable pancreatic cancer. Additional funding enabled the Company to obtain the diabetes license and to advance the Company’s preclinical studies and preparations for clinical trials of its product candidates. The remaining challenges, beyond the regulatory and clinical aspects, include accessing further funding for the Company to cover its future cash flow needs. The Company continues to acquire additional funds through management's efforts. | |||
The Company requires substantial additional capital to finance its planned business operations and expects to incur operating losses in future periods due to the expenses related to the Company’s core businesses. The Company has not realized material revenue since it commenced doing business in the biotechnology sector, and it is not without doubt that it will be successful in generating revenues in the future in this sector. The Company believes that cash and cash equivalents as of July 31, 2014 are sufficient to fund its operations through the end of July 31, 2015. | |||
If the Company is not able to raise substantial additional capital in a timely manner, the Company may not be able to complete its required preclinical studies and clinical trials and may be forced to cease operations. | |||
The Company will continue to be dependent on outside capital to fund its research and operating expenditures for the foreseeable future. If the Company fails to generate positive cash flows or fails to obtain additional capital when required, the Company may need to modify, delay or abandon some or all of its business plans. | |||
Management Strategy and Goals | |||
The Company's strategy is to build upon and advance the success of the previous Phase 1/2 pancreatic cancer clinical trials and develop a treatment for diabetes utilizing the Cell-in-a-Box® cellulose-based live cell encapsulation technology. Management believes the Company is positioned to move forward and become a significant biotech company predicated upon this platform technology. Management is committed to becoming an industry-leading biotechnology company in the treatment of cancer and diabetes. | |||
The Company will seek to raise capital to fund growth opportunities and provide for its working capital needs as the strategy of the Company is executed. The Company's efforts to achieve financial stability and to enable it to carry out the strategy of the Company consist of the following: | |||
· | Completing preparations for the Phase 2b clinical trial in advanced pancreatic cancer to be carried out by Clinical Network Services in Australia; | ||
· | Conducting preclinical studies and clinical trials by Translational Drug Development in the United States that examine the effectiveness of the Company’s pancreatic cancer treatment in ameliorating the pain and accumulation of malignant ascites fluid in the abdomen that are characteristic of pancreatic cancer; | ||
· | Conducting preclinical studies in connection with the development of product candidates to treat diabetes; | ||
· | Conducting preclinical studies to determine the feasibility of using constituents (cannabinoids) of marijuana for medical use, including the development of treatments for serious and deadly forms of cancer; | ||
· | Enhancing the Company’s ability to expand into the biotechnology arena through research and partnering; | ||
· | Acquiring new contracts and revenue utilizing both in-house products and the newly acquired biotechnology licensing rights; | ||
· | Developing further uses of the Cell-in-a-Box® technology through contracts, licensing and joint ventures with other companies; and | ||
· | Completing the testing, expansion and marketing of existing products and newly derived Company product candidates. | ||
3_SIGNIFICANT_ACCOUNTING_POLIC
3. SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended | ||
Jul. 31, 2014 | |||
Accounting Policies [Abstract] | ' | ||
SIGNIFICANT ACCOUNTING POLICIES | ' | ||
Unaudited Financial Statements | |||
The accompanying unaudited consolidated financial statements have been prepared in accordance with GAAP for interim financial information and pursuant to the instructions to Form 10-Q and Article 10 of Regulation S-X. While these statements reflect all normal recurring adjustments which are, in the opinion of management, necessary for fair presentation of the results of the interim period, they do not include all of the information and footnotes required by GAAP for complete financial statements. The unaudited interim financial statements should be read in conjunction with the Company’s annual report on Forms 10-K which contain the audited financial statements and notes thereto, together with Management’s Discussion and Analysis, for the fiscal year ended April 30, 2014. The interim results for the three months ended July 31, 2014 are not necessarily indicative of the results for the full fiscal year. | |||
Management further acknowledges it is solely responsible for adopting sound accounting practices, establishing and maintaining a system of internal accounting controls and preventing and detecting fraud. The Company's system of internal accounting control is designed to ensure, among other items, that transactions are recorded and valid and in the proper period in a timely manner to produce financial statements which present fairly the financial condition, results of operations and cash flows of the Company for the respective periods being presented. | |||
Principles of Consolidation | |||
The accompanying financial statements include the accounts of the Company and its subsidiaries as of July 31, 2014 Bio Blue Bird and Medical Marijuana Sciences, Inc. (“MMS”). All significant inter-company balances and transactions have been eliminated in consolidation. See Note 4 for further discussion on consolidation. | |||
Cash and Cash Equivalents | |||
For purposes of the statement of cash flows, the Company considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents to the extent the funds are not being held for investment purposes. There were no cash equivalents as of July 31, 2014. | |||
Segment Reporting | |||
ASC Topic 280, “Segment Report,” requires use of the “management approach” model for segment reporting. The management approach model is based on the way a company’s management organizes segments within the company for making operating decisions and assessing performance. ASC Topic 280 has no effect on the Company’s consolidated financial statements as the Company consists of one reportable business segment. All revenue is from biotechnology operations. | |||
Use of Estimates | |||
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. | |||
Property and Equipment | |||
Property and equipment are recorded at cost. Expenditures that increase the useful lives or capacities of the plant and equipment are capitalized. Expenditures for repairs and maintenance are charged to income as incurred. Depreciation is provided using the straight-line method over the estimated useful lives as follows: | |||
· | Computer equipment/software - 3 years | ||
· | Furniture and fixtures - 7 years | ||
· | Machinery and equipment - 7 years | ||
· | Building improvements - 15 years | ||
· | Building - 40 years | ||
Goodwill and other Indefinite-Lived Intangibles | |||
The Company records the excess of purchase price over the fair value of the identifiable net assets acquired as goodwill and other indefinite-lived intangibles. The Fair Accounting Standards Board ("FASB") standard on goodwill and other intangible assets prescribes a two-step process for impairment testing of goodwill and indefinite-lived intangibles, which is performed annually and when an event triggering impairment may have occurred. The first step tests for impairment, while the second step, if necessary, measures the impairment. The Company has elected to perform its annual analysis at the end of its reporting year. | |||
Valuation of Long-Lived Assets | |||
The Company accounts for the valuation of long-lived assets under the FASB standard for accounting for the impairment or disposal of Long-Lived Assets. The FASB standard requires that long-lived assets and certain identifiable intangible assets be reviewed for impairment whenever events or circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of the long-lived assets is measured by a comparison of the carrying amount of the asset to future undiscounted net cash flows generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the estimated fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value, less cost to sell. | |||
Functional Currency | |||
The accounts of Bio Blue Bird are maintained in Euros. The accounts of this foreign subsidiary were translated into US dollars in accordance with ASC Topic 830 “Foreign Currency Matters.” According to ASC Topic 830: (i) all assets and liabilities were translated at the exchange rate on the balance sheet dates; (ii) stockholders’ equity is translated at historical rates; and (iii) statement of operation items are translated at the weighted average exchange rate for the period. The resulting translation adjustments are reported under other comprehensive income in accordance with ASC Topic 220, “Comprehensive Income.” Gains and losses resulting from the translations of foreign currency transactions and balances are reflected in the statements of income. | |||
Foreign Currency Transactions and Comprehensive Income | |||
GAAP requires that recognized revenue, expenses, gains and losses be included in net income. Certain statements, however, require entities to report specific changes in assets and liabilities, such as gain or loss on foreign currency translation, as a separate component of the equity section of the balance sheet. Such items, along with net income, are components of comprehensive income. Translation gains are classified as an item of accumulated other comprehensive income in the stockholders’ equity section of the unaudited Consolidated Balance Sheet. | |||
Basic and Diluted Earnings (Loss) per Share | |||
Basic and diluted earnings per share is calculated using the weighted-average number of common shares outstanding during the period without consideration of the dilutive effect of stock warrants, convertible notes and convertible preferred shares. All outstanding warrants are convertible into 57,115,600 shares of common stock. | |||
Fair Value of Financial Instruments | |||
For certain of the Company’s non-derivative financial instruments, including cash and cash equivalents, receivables, accounts payable and other accrued liabilities, the carrying amount approximates fair value due to the short-term maturities of these instruments. The estimated fair value of long-term debt is based primarily on borrowing rates currently available to the Company for similar debt issues. The fair value approximates the carrying value of long-term debt. | |||
Accounting Standards Codification ("ASC") Topic 820, “Fair Value Measurements and Disclosures,” requires disclosure of the fair value of financial instruments held by the Company. ASC Topic 825, “Financial Instruments,” defines fair value, and establishes a three-level valuation hierarchy for disclosures of fair value measurement that enhances disclosure requirements for fair value measures. The carrying amounts reported in the consolidated balance sheets for receivables and current liabilities each qualify as financial instruments and are a reasonable estimate of their fair values because of the short period of time between the origination of such instruments and their expected realization and their current market rate of interest. The three levels of valuation hierarchy are defined as follows: | |||
· | Level 1. Observable inputs such as quoted prices in active markets; | ||
· | Level 2. Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and | ||
· | Level 3. Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions. | ||
The following presents the gross value of assets and liabilities that were measured and recognized at fair value as of July 31, 2014. | |||
· | Level 1: none | ||
· | Level 2: none | ||
· | Level 3: none | ||
Effective October 1, 2008, the Company adopted ASC subtopic 820-10, Fair Value Measurements and Disclosures ("ASC 820-10") and Accounting Standards Codification subtopic 825-10, Financial Instruments ("ASC 825-10"), which permits entities to choose to measure many financial instruments and certain other items at fair value. Neither of these statements had an impact on the Company's financial position, results of operations or cash flows. The carrying value of cash, accounts payable and accrued expenses, as reflected in the balance sheets, approximate fair value because of the short-term maturity of these instruments. | |||
Recent Accounting Pronouncements | |||
In February 2013, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) No. 2013-02, Comprehensive Income (Topic 220): Reporting of Amounts Reclassified out of Accumulated Other Comprehensive Income, to improve the transparency of reporting these reclassifications. Other comprehensive income includes gains and losses that are initially excluded from net income for an accounting period. Those gains and losses are later reclassified out of accumulated other comprehensive income into net income. The amendments in the ASU do not change the current requirements for reporting net income or other comprehensive income in financial statements. All of the information that this ASU requires already is required to be disclosed elsewhere in the financial statements under GAAP. The new amendments will require an organization to: | |||
· | Present (either on the face of the statement where net income is presented or in the notes) the effects on the line items of net income of significant amounts reclassified out of accumulated other comprehensive income - but only if the item reclassified is required under GAAP to be reclassified to net income in its entirety in the same reporting period; and | ||
· | Cross-reference to other disclosures currently required under GAAP for other reclassification items (that are not required under GAAP) to be reclassified directly to net income in their entirety in the same reporting period. This would be the case when a portion of the amount reclassified out of accumulated other comprehensive income is initially transferred to a balance sheet account (e.g., inventory for pension-related amounts) instead of directly to income or expense. | ||
The amendments apply to all public and private companies that report items of other comprehensive income. Public companies are required to comply with these amendments for all reporting periods (interim and annual). The amendments are effective for reporting periods beginning after December 15, 2012, for public companies. Early adoption is permitted. The adoption of ASU No. 2013-02 is not expected to have a material impact on our financial position or results of operations. | |||
In July 2013, the FASB issued Accounting Standards Update 2013-11 Income Taxes (Topic 740) Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carry-forward, a Similar Tax Loss, or a Tax Credit Carry-forward Exists. An unrecognized tax benefit, or a portion of an unrecognized tax benefit, should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carry-forward, a similar tax loss or a tax credit carry-forward, except as follows. To the extent that a net operating loss carry-forward, a similar tax loss or a tax credit carry-forward is not available at the reporting date under the tax law of the applicable jurisdiction to settle any additional income taxes that would result from the disallowance of a tax position or the tax law of the applicable jurisdiction does not require the entity to use, and the entity does not intend to use the deferred tax asset for such purpose, the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets. The assessment of whether a deferred tax asset is available is based on the unrecognized tax benefit and deferred tax asset that exist at the reporting date and should be made presuming disallowance of the tax position at the reporting date. This Update applies to all entities that have unrecognized tax benefits when a net operating loss carry-forward, a similar tax loss, or a tax credit carry-forward exists at the reporting date. The amendments in this Update are effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. | |||
The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations. | |||
Revenue Recognition | |||
Sales of products and related costs of products sold are recognized when: (i) persuasive evidence of an arrangement exists; (ii) delivery has occurred; (iii) the price is fixed or determinable; and (iv) collectability is reasonably assured. These terms are typically met upon the prepayment or invoicing and shipment of products. | |||
Income Taxes | |||
Deferred taxes are calculated using the liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carry forwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. | |||
In June 2006, the FASB interpreted its standard for accounting for uncertainty in income taxes, an interpretation of accounting for income taxes. This interpretation clarifies the accounting for uncertainty in income taxes recognized in an entity’s financial statements in accordance the minimum recognition threshold and measurement attributable to a tax position taken on a tax return is required to be met before being recognized in the financial statements. | |||
The FASB’s interpretation had no material impact on the Company’s financial statements for the quarter ended July 31, 2014 or the year ended April 30, 2014. Current tax laws limit the amount of loss available to be offset against future taxable income when a substantial change in ownership occurs. Therefore, the amount available to offset future taxable income may be limited. No tax benefit has been reported in the financial statements because the Company believes the carry forwards may expire unused, although acquisition of sufficient operating capital to complete the acquisition of all of the assets of SG Austria may change this. Accordingly, the potential tax benefits of the loss carry forwards are offset by a valuation allowance of the same amount. | |||
Research and Development Costs | |||
Expenditures for research and development are expensed as incurred. Such costs are required to be expensed until the point that technological feasibility is established. | |||
Concentration of Credit Risk | |||
The Company has no significant off-balance-sheet concentrations of credit risk such as foreign exchange contracts, options contracts or other foreign hedging arrangements. The Company maintains the majority of its cash balances with one financial institution in the form of demand deposits. | |||
4_BUSINESS_ACQUISITION
4. BUSINESS ACQUISITION | 3 Months Ended |
Jul. 31, 2014 | |
Equity Method Investments and Joint Ventures [Abstract] | ' |
BUSINESS ACQUISITION | ' |
As of April 30, 2014, the Company had completed the purchase of Bio Blue Bird. Shares for both Austrianova Singapore and the Company originally held in escrow under the SG Austria APA have been released from escrow and returned to the respective original owners, with the 100,000,000 shares of common stock having been returned to the treasury of the Company. Bio Blue Bird is now a wholly owned subsidiary of the Company. |
5_DEBT
5. DEBT | 3 Months Ended |
Jul. 31, 2014 | |
Debt Disclosure [Abstract] | ' |
DEBT | ' |
In February, 2014, the Company settled its obligation to pay $20,000 plus $6,000 of accrued interest to a note holder with the issuance of 250,000 shares of common stock. The shares were valued at $45,500 using the closing share price of the common stock on the day of issuance resulting in a loss on settlement of debt of $19,500. |
6_COMMON_STOCK_TRANSACTIONS
6. COMMON STOCK TRANSACTIONS | 3 Months Ended |
Jul. 31, 2014 | |
Equity [Abstract] | ' |
COMMON STOCK TRANSACTIONS | ' |
In May 2013, 75,000 shares of common stock were issued to settle debt of $32,392. The shares were valued using the closing share price of the common stock of the day of issuance, resulting in a gain on settlement of $21,142. | |
During the year ended April 30, 2014, a shareholder converted 8,500 shares of the Company’s Series E Preferred Stock (defined below) into 54,000,000 shares of common stock. The shares were valued using the closing share price of the common stock on the day of issuance for a total of $6,475,000 resulting in a loss on conversion of $5,895,000. | |
During the year ended April 30, 2014, 52,370,000 shares of common stock were issued to officers and directors of the Company for compensation. These shares were valued using the closing share price of the common stock on the day of issuance for a total non-cash expense of $14,101,788. | |
During the year ended April 30, 2014, 13,756,666 shares of common stock were issued to consultants for services rendered to the Company. These shares were valued using the closing share price of the common stock price on the day of issuance for a total non-cash expense of $1,810,348. As of April 30, 2014, $528,808 of this expense has been deferred to prepaid expenses and will be expensed to future periods as determined by the term of each agreement. | |
During the year ended April 30, 2014, the Company sold 27,000,000 shares of common stock for $4,918,000. As of April 30, 2014, 17,000,000 of these shares had not yet been issued and are disclosed as common stock to be issued. | |
During the year ended April 30, 2014, the Company converted some of its Class A and Class B warrants into 19,649,600 shares of common stock for $1,592,880. | |
On February 14, 2014, the Company entered into a stock purchase agreement with Lincoln Park Capital Fund, LLC (“Lincoln Park”). Lincoln Park initially purchased 8 million shares of common stock at $0.25 per share for $2 million and had committed to invest up to an additional $25 million of equity capital over the term of the stock purchase agreement. As consideration for its commitment to purchase shares of common stock pursuant to the stock purchase agreement, the Company issued to Lincoln Park 5,062,500 shares of common stock upon execution of the stock purchase agreement. These shares were valued at $0.169, the closing price of the stock on February 14, 2014, for non-cash expense of $855,653. On May 28, 2014 the Company and Lincoln Park executed a Mutual Termination and Release Agreement releasing all parties from certain obligation under the stock purchase agreement. As consideration for terminating the stock purchase agreement, the Company issued Lincoln Park an additional 1,062,500 shares of common stock. These shares were valued at $0.28 for total non-cash expense of $297,500. | |
During the quarter ended July 31, 2014, 300,000 shares of common stock were issued to an officer of the Company for compensation. These shares were valued using the closing share price of the common stock on the day of issuance for a total non-cash expense of $86,100. | |
During the quarter ended July 31, 2014, the Company sold 200,000 shares of common stock for $20,000. | |
During the quarter ended July 31, 2014, the Company converted some of its Class B warrants into 550,000 shares of common stock for $66,000. | |
During the quarter ended July 31, 2014, 17,628,000 shares of common stock were issued to fully satisfy all stock payables due in the amount of $1,574,860. | |
All shares were issued without registration under the Securities Act in reliance upon the exemption afforded by Section 4(2) of the Securities Act. |
7_PREFERRED_STOCK
7. PREFERRED STOCK | 3 Months Ended | ||
Jul. 31, 2014 | |||
Equity [Abstract] | ' | ||
PREFERRED STOCK | ' | ||
The Company has one series of preferred stock designated as "Series E Preferred Stock." The Series E Preferred Stock has the following features: | |||
· | Series E Preferred Stock does not bear any dividends; | ||
· | Each share of Series E Preferred Stock is entitled to receive its share of assets distributable upon the liquidation, dissolution or winding up of the affairs of the Company. The holders of the Series E Preferred Stock are entitled to receive cash out of the assets of the Company before any amount is paid to the holders of any capital stock of the Company of any class junior in rank to the shares of Series E Preferred Stock; | ||
· | Each share of Series E Preferred Stock is convertible, at the holder’s option, into shares of common stock, at the average closing bid price of the common stock for five trading days prior to the conversion date; and | ||
· | At every meeting of stockholders, every holder of shares of Series E Preferred Stock is entitled to 50,000 votes for each share of Series E Preferred Stock, with the same and identical voting rights as a holder of a share of common stock; therefore, the holder of shares of Series E Preferred Stock can effectively increase the Company’s issued common stock shares without a vote of the common stock shareholders, thus enabling any potential shortfall of authorized common stock outstanding from being converted should a holder of Series E Preferred Stock wish to convert. | ||
During the year ended April 30, 2014, a shareholder converted 8,500 shares of the Company’s Series E Preferred Stock into 54,000,000 shares of common stock. These shares were valued using the closing share price of the common stock on the day of issuance for a total of $6,475,000 resulting in a loss on conversion of $5,895,000. | |||
Holders of Series E Preferred Stock have specific rights to be paid in cash out of the assets of the Company prior to any junior class of common stock. As a result of the obligations for Series E Preferred Stock, the Company has determined these redemption features have the potential to be outside the control of the Company and, therefore, the Company has classified the Series E Preferred Stock outside of shareholder’s equity in accordance with ASC 480 regarding instruments with debt and equity features. Thus, the full value for the convertible Series E Preferred Stock was recorded outside of stockholders’ equity in the accompanying unaudited consolidated balance sheet. |
8_WARRANTS
8. WARRANTS | 3 Months Ended | |||||||||||||
Jul. 31, 2014 | ||||||||||||||
Warrants and Rights Note Disclosure [Abstract] | ' | |||||||||||||
WARRANTS | ' | |||||||||||||
A summary of the status of the Company's outstanding warrants for common stock as of July 31, 2014 and April 30, 2014 and changes during the periods is presented below: | ||||||||||||||
Warrants | Weighted | Weighted | ||||||||||||
Average | Average | |||||||||||||
Price | Fair Value | |||||||||||||
Outstanding, April 30, 2014 | 57,665,600 | $ | 0.18 | $ | 0.065 | |||||||||
Exercised | -550,000 | 0 | 0 | |||||||||||
Issued | 0 | 0 | 0 | |||||||||||
Outstanding, July 31, 2014 | 57,115,600 | 0.18 | 0.065 | |||||||||||
Exercisable, July 31, 2014 | 57,115,600 | $ | 0.18 | $ | 0.065 | |||||||||
Range of | Number Outstanding at 7/31/14 | Weighted Average Remaining Contractual Life | Weighted Average Exercise Price | |||||||||||
Exercise | ||||||||||||||
Prices | ||||||||||||||
$0.075, $0.12, and $0.18 | 57,115,600 | 3.4 | $ | 0.18 | ||||||||||
On January 21, 2014, the Company began the implementation of its “Warrant Conversion Program.” The program consists of having every warrant holder of a Class A warrant convert his or her Class A warrants (with a conversion price of $0.075 per share) into shares of common stock and receive an equal number of new Class D warrants (with a conversion price of $0.25 per share). As of July 31, 2014, 18,755,200 Class A warrants and 2,318,000 Class B warrants were converted for total cash proceeds of $1,658,880. |
9_LEGAL_PROCEEDINGS
9. LEGAL PROCEEDINGS | 3 Months Ended |
Jul. 31, 2014 | |
Commitments and Contingencies Disclosure [Abstract] | ' |
LEGAL PROCEEDINGS | ' |
The Company is not currently a party to any material pending legal proceedings. There are no material legal proceedings to which any property of the Company is subject. |
10_RELATED_PARTY_TRANSACTIONS
10. RELATED PARTY TRANSACTIONS | 3 Months Ended |
Jul. 31, 2014 | |
Related Party Transactions [Abstract] | ' |
RELATED PARTY TRANSACTIONS | ' |
As of July 31, 2014 the Company owed $125,142 of principle and $36,612 of accrued interest to an officer. The loan accrues interest at 8% and is due on demand. |
11_SIGNIFICANT_EVENTS
11. SIGNIFICANT EVENTS | 3 Months Ended |
Jul. 31, 2014 | |
Significant Events | ' |
11. SIGNIFICANT EVENTS | ' |
As discussed above, the Company acquired 100% of the shares and assets of Bio Blue Bird, including its intellectual property related to the “Cell-in-a-Box® live cell encapsulation technology. In that same transaction, the Company also received a 14.5% ownership in SG Austria. The Company also entered into the Diabetes Licensing Agreement with Austrianova Singapore for the treatment of diabetes utilizing the Cell-in-a-Box® technology. Under the Diabetes Licensing Agreement, the Company was granted an exclusive worldwide license to use the Cell-in-a-Box® trademark and its associated technology specifically addressing insulin and other critical component production for the treatment of diabetes. The Company has retained Vantage Point Advisors, Inc. (“VPAI”), to perform a valuation analysis of its contingent payment liability associated with the future milestone and royalty payments stemming from the Diabetes Licensing Agreement. The Company has also retained VPAI to perform a valuation analysis of its 14.5% ownership interest in SG Austria. These two valuations are currently underway and will be completed in the near term. Based upon the results of these valuations, the Company will adjust the value of its assets as required. |
12_SUBSEQUENT_EVENTS
12. SUBSEQUENT EVENTS | 3 Months Ended |
Jul. 31, 2014 | |
Subsequent Events [Abstract] | ' |
SUBSEQUENT EVENTS | ' |
The Company has performed an evaluation of subsequent events in accordance with ASC Topic 855, noting no additional subsequent events other than those noted below. | |
Subsequent to July 31, 2014, the Company terminated a professional service agreement with one of its consultants. In accordance with the terms of that agreement, the service provider agreed to return 335,296 shares of common stock to the Company. |
3_SIGNIFICANT_ACCOUNTING_POLIC1
3. SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended | ||
Jul. 31, 2014 | |||
Accounting Policies [Abstract] | ' | ||
Unaudited Financial Statements | ' | ||
Unaudited Financial Statements | |||
The accompanying unaudited consolidated financial statements have been prepared in accordance with GAAP for interim financial information and pursuant to the instructions to Form 10-Q and Article 10 of Regulation S-X. While these statements reflect all normal recurring adjustments which are, in the opinion of management, necessary for fair presentation of the results of the interim period, they do not include all of the information and footnotes required by GAAP for complete financial statements. The unaudited interim financial statements should be read in conjunction with the Company’s annual report on Forms 10-K which contain the audited financial statements and notes thereto, together with Management’s Discussion and Analysis, for the fiscal year ended April 30, 2014. The interim results for the three months ended July 31, 2014 are not necessarily indicative of the results for the full fiscal year. | |||
Management further acknowledges it is solely responsible for adopting sound accounting practices, establishing and maintaining a system of internal accounting controls and preventing and detecting fraud. The Company's system of internal accounting control is designed to ensure, among other items, that transactions are recorded and valid and in the proper period in a timely manner to produce financial statements which present fairly the financial condition, results of operations and cash flows of the Company for the respective periods being presented. | |||
Principles of Consolidation | ' | ||
Principles of Consolidation | |||
The accompanying financial statements include the accounts of the Company and its subsidiaries as of July 31, 2014 Bio Blue Bird and Medical Marijuana Sciences, Inc. (“MMS”). All significant inter-company balances and transactions have been eliminated in consolidation. See Note 4 for further discussion on consolidation. | |||
Cash and Cash Equivalents | ' | ||
Cash and Cash Equivalents | |||
For purposes of the statement of cash flows, the Company considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents to the extent the funds are not being held for investment purposes. There were no cash equivalents as of July 31, 2014. | |||
Segment Reporting | ' | ||
Segment Reporting | |||
ASC Topic 280, “Segment Report,” requires use of the “management approach” model for segment reporting. The management approach model is based on the way a company’s management organizes segments within the company for making operating decisions and assessing performance. ASC Topic 280 has no effect on the Company’s consolidated financial statements as the Company consists of one reportable business segment. All revenue is from biotechnology operations. | |||
Use of Estimates | ' | ||
Use of Estimates | |||
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. | |||
Property and Equipment | ' | ||
Property and Equipment | |||
Property and equipment are recorded at cost. Expenditures that increase the useful lives or capacities of the plant and equipment are capitalized. Expenditures for repairs and maintenance are charged to income as incurred. Depreciation is provided using the straight-line method over the estimated useful lives as follows: | |||
· | Computer equipment/software - 3 years | ||
· | Furniture and fixtures - 7 years | ||
· | Machinery and equipment - 7 years | ||
· | Building improvements - 15 years | ||
· | Building - 40 years | ||
Goodwill and other indefinite-lived intangibles | ' | ||
Goodwill and other Indefinite-Lived Intangibles | |||
The Company records the excess of purchase price over the fair value of the identifiable net assets acquired as goodwill and other indefinite-lived intangibles. The Fair Accounting Standards Board ("FASB") standard on goodwill and other intangible assets prescribes a two-step process for impairment testing of goodwill and indefinite-lived intangibles, which is performed annually and when an event triggering impairment may have occurred. The first step tests for impairment, while the second step, if necessary, measures the impairment. The Company has elected to perform its annual analysis at the end of its reporting year. | |||
Valuation of long-lived assets | ' | ||
Valuation of Long-Lived Assets | |||
The Company accounts for the valuation of long-lived assets under the FASB standard for accounting for the impairment or disposal of Long-Lived Assets. The FASB standard requires that long-lived assets and certain identifiable intangible assets be reviewed for impairment whenever events or circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of the long-lived assets is measured by a comparison of the carrying amount of the asset to future undiscounted net cash flows generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the estimated fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value, less cost to sell. | |||
Functional Currency | ' | ||
Functional Currency | |||
The accounts of Bio Blue Bird are maintained in Euros. The accounts of this foreign subsidiary were translated into US dollars in accordance with ASC Topic 830 “Foreign Currency Matters.” According to ASC Topic 830: (i) all assets and liabilities were translated at the exchange rate on the balance sheet dates; (ii) stockholders’ equity is translated at historical rates; and (iii) statement of operation items are translated at the weighted average exchange rate for the period. The resulting translation adjustments are reported under other comprehensive income in accordance with ASC Topic 220, “Comprehensive Income.” Gains and losses resulting from the translations of foreign currency transactions and balances are reflected in the statements of income. | |||
Foreign Currency Transactions and Comprehensive Income | ' | ||
Foreign Currency Transactions and Comprehensive Income | |||
GAAP requires that recognized revenue, expenses, gains and losses be included in net income. Certain statements, however, require entities to report specific changes in assets and liabilities, such as gain or loss on foreign currency translation, as a separate component of the equity section of the balance sheet. Such items, along with net income, are components of comprehensive income. Translation gains are classified as an item of accumulated other comprehensive income in the stockholders’ equity section of the unaudited Consolidated Balance Sheet. | |||
Basic and Diluted Earnings (Loss) per Share | ' | ||
Basic and Diluted Earnings (Loss) per Share | |||
Basic and diluted earnings per share is calculated using the weighted-average number of common shares outstanding during the period without consideration of the dilutive effect of stock warrants, convertible notes and convertible preferred shares. All outstanding warrants are convertible into 57,115,600 shares of common stock. | |||
Fair value of financial instruments | ' | ||
Fair Value of Financial Instruments | |||
For certain of the Company’s non-derivative financial instruments, including cash and cash equivalents, receivables, accounts payable and other accrued liabilities, the carrying amount approximates fair value due to the short-term maturities of these instruments. The estimated fair value of long-term debt is based primarily on borrowing rates currently available to the Company for similar debt issues. The fair value approximates the carrying value of long-term debt. | |||
Accounting Standards Codification ("ASC") Topic 820, “Fair Value Measurements and Disclosures,” requires disclosure of the fair value of financial instruments held by the Company. ASC Topic 825, “Financial Instruments,” defines fair value, and establishes a three-level valuation hierarchy for disclosures of fair value measurement that enhances disclosure requirements for fair value measures. The carrying amounts reported in the consolidated balance sheets for receivables and current liabilities each qualify as financial instruments and are a reasonable estimate of their fair values because of the short period of time between the origination of such instruments and their expected realization and their current market rate of interest. The three levels of valuation hierarchy are defined as follows: | |||
· | Level 1. Observable inputs such as quoted prices in active markets; | ||
· | Level 2. Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and | ||
· | Level 3. Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions. | ||
The following presents the gross value of assets and liabilities that were measured and recognized at fair value as of July 31, 2014. | |||
· | Level 1: none | ||
· | Level 2: none | ||
· | Level 3: none | ||
Effective October 1, 2008, the Company adopted ASC subtopic 820-10, Fair Value Measurements and Disclosures ("ASC 820-10") and Accounting Standards Codification subtopic 825-10, Financial Instruments ("ASC 825-10"), which permits entities to choose to measure many financial instruments and certain other items at fair value. Neither of these statements had an impact on the Company's financial position, results of operations or cash flows. The carrying value of cash, accounts payable and accrued expenses, as reflected in the balance sheets, approximate fair value because of the short-term maturity of these instruments. | |||
Recent accounting pronouncements | ' | ||
Recent Accounting Pronouncements | |||
In February 2013, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) No. 2013-02, Comprehensive Income (Topic 220): Reporting of Amounts Reclassified out of Accumulated Other Comprehensive Income, to improve the transparency of reporting these reclassifications. Other comprehensive income includes gains and losses that are initially excluded from net income for an accounting period. Those gains and losses are later reclassified out of accumulated other comprehensive income into net income. The amendments in the ASU do not change the current requirements for reporting net income or other comprehensive income in financial statements. All of the information that this ASU requires already is required to be disclosed elsewhere in the financial statements under GAAP. The new amendments will require an organization to: | |||
· | Present (either on the face of the statement where net income is presented or in the notes) the effects on the line items of net income of significant amounts reclassified out of accumulated other comprehensive income - but only if the item reclassified is required under GAAP to be reclassified to net income in its entirety in the same reporting period; and | ||
· | Cross-reference to other disclosures currently required under GAAP for other reclassification items (that are not required under GAAP) to be reclassified directly to net income in their entirety in the same reporting period. This would be the case when a portion of the amount reclassified out of accumulated other comprehensive income is initially transferred to a balance sheet account (e.g., inventory for pension-related amounts) instead of directly to income or expense. | ||
The amendments apply to all public and private companies that report items of other comprehensive income. Public companies are required to comply with these amendments for all reporting periods (interim and annual). The amendments are effective for reporting periods beginning after December 15, 2012, for public companies. Early adoption is permitted. The adoption of ASU No. 2013-02 is not expected to have a material impact on our financial position or results of operations. | |||
In July 2013, the FASB issued Accounting Standards Update 2013-11 Income Taxes (Topic 740) Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carry-forward, a Similar Tax Loss, or a Tax Credit Carry-forward Exists. An unrecognized tax benefit, or a portion of an unrecognized tax benefit, should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carry-forward, a similar tax loss or a tax credit carry-forward, except as follows. To the extent that a net operating loss carry-forward, a similar tax loss or a tax credit carry-forward is not available at the reporting date under the tax law of the applicable jurisdiction to settle any additional income taxes that would result from the disallowance of a tax position or the tax law of the applicable jurisdiction does not require the entity to use, and the entity does not intend to use the deferred tax asset for such purpose, the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets. The assessment of whether a deferred tax asset is available is based on the unrecognized tax benefit and deferred tax asset that exist at the reporting date and should be made presuming disallowance of the tax position at the reporting date. This Update applies to all entities that have unrecognized tax benefits when a net operating loss carry-forward, a similar tax loss, or a tax credit carry-forward exists at the reporting date. The amendments in this Update are effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. | |||
The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations. | |||
Revenue Recognition | ' | ||
Revenue Recognition | |||
Sales of products and related costs of products sold are recognized when: (i) persuasive evidence of an arrangement exists; (ii) delivery has occurred; (iii) the price is fixed or determinable; and (iv) collectability is reasonably assured. These terms are typically met upon the prepayment or invoicing and shipment of products. | |||
Income Taxes | ' | ||
Income Taxes | |||
Deferred taxes are calculated using the liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carry forwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. | |||
In June 2006, the FASB interpreted its standard for accounting for uncertainty in income taxes, an interpretation of accounting for income taxes. This interpretation clarifies the accounting for uncertainty in income taxes recognized in an entity’s financial statements in accordance the minimum recognition threshold and measurement attributable to a tax position taken on a tax return is required to be met before being recognized in the financial statements. | |||
The FASB’s interpretation had no material impact on the Company’s financial statements for the quarter ended July 31, 2014 or the year ended April 30, 2014. Current tax laws limit the amount of loss available to be offset against future taxable income when a substantial change in ownership occurs. Therefore, the amount available to offset future taxable income may be limited. No tax benefit has been reported in the financial statements because the Company believes the carry forwards may expire unused, although acquisition of sufficient operating capital to complete the acquisition of all of the assets of SG Austria may change this. Accordingly, the potential tax benefits of the loss carry forwards are offset by a valuation allowance of the same amount. | |||
Research and Development Costs | ' | ||
Research and Development Costs | |||
Expenditures for research and development are expensed as incurred. Such costs are required to be expensed until the point that technological feasibility is established. | |||
Concentration of Credit Risk | ' | ||
Concentration of Credit Risk | |||
The Company has no significant off-balance-sheet concentrations of credit risk such as foreign exchange contracts, options contracts or other foreign hedging arrangements. The Company maintains the majority of its cash balances with one financial institution in the form of demand deposits. |
8_WARRANTS_Tables
8. WARRANTS (Tables) | 3 Months Ended | |||||||||||||
Jul. 31, 2014 | ||||||||||||||
Warrants and Rights Note Disclosure [Abstract] | ' | |||||||||||||
Schedule of outstanding stock warrants | ' | |||||||||||||
Warrants | Weighted | Weighted | ||||||||||||
Average | Average | |||||||||||||
Price | Fair Value | |||||||||||||
Outstanding, April 30, 2014 | 57,665,600 | $ | 0.18 | $ | 0.065 | |||||||||
Exercised | -550,000 | 0 | 0 | |||||||||||
Issued | 0 | 0 | 0 | |||||||||||
Outstanding, July 31, 2014 | 57,115,600 | 0.18 | 0.065 | |||||||||||
Exercisable, July 31, 2014 | 57,115,600 | $ | 0.18 | $ | 0.065 | |||||||||
Warrants by range of exercise price | ' | |||||||||||||
Range of | Number Outstanding at 7/31/14 | Weighted Average Remaining Contractual Life | Weighted Average Exercise Price | |||||||||||
Exercise | ||||||||||||||
Prices | ||||||||||||||
$0.075, $0.12, and $0.18 | 57,115,600 | 3.4 | $ | 0.18 | ||||||||||
2_CAPITALIZATION_AND_MANAGEMEN1
2. CAPITALIZATION AND MANAGEMENT PLANS (Details Narrative) (USD $) | 3 Months Ended | ||
Jul. 31, 2014 | Jul. 31, 2013 | Apr. 30, 2014 | |
Capitalization And Management Plans Details Narrative | ' | ' | ' |
Accumulated deficit | ($70,284,951) | ' | ($68,700,127) |
Net loss | ($1,584,824) | ($4,666,367) | ' |
3_SIGNIFICANT_ACCOUNTING_POLIC2
3. SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) | 3 Months Ended |
Jul. 31, 2014 | |
Computer Equipment [Member] | ' |
Property, Plant and Equipment [Line Items] | ' |
Estimated useful life | '3 years |
Furniture and Fixtures [Member] | ' |
Property, Plant and Equipment [Line Items] | ' |
Estimated useful life | '7 years |
Other Machinery and Equipment [Member] | ' |
Property, Plant and Equipment [Line Items] | ' |
Estimated useful life | '7 years |
Building Improvements [Member] | ' |
Property, Plant and Equipment [Line Items] | ' |
Estimated useful life | '15 years |
Building [Member] | ' |
Property, Plant and Equipment [Line Items] | ' |
Estimated useful life | '40 years |
4_BUSINESS_ACQUISITION_Details
4. BUSINESS ACQUISITION (Details Narrative) | Apr. 30, 2014 |
Equity Method Investments and Joint Ventures [Abstract] | ' |
Shares returned to treasury from purchase | 100,000,000 |
5_DEBT_Details_Narrative
5. DEBT (Details Narrative) (USD $) | 12 Months Ended |
Apr. 30, 2014 | |
Debt Disclosure [Abstract] | ' |
Stock issued in settlement of debt, shares issued | 250,000 |
Stock issued in settlement of debt, value | $45,500 |
Debt settled with stock issuance | 20,000 |
Accrued interest settled with stock issuance | 6,000 |
Loss on settlement of debt | ($19,500) |
6_COMMON_STOCK_TRANSACTIONS_De
6. COMMON STOCK TRANSACTIONS (Details Narrative) (USD $) | 1 Months Ended | 3 Months Ended | 12 Months Ended | |
31-May-13 | Jul. 31, 2014 | Jul. 31, 2013 | Apr. 30, 2014 | |
Stock issued to settle debt, shares issued | 75,000 | ' | ' | ' |
Stock issued to settle debt, value | $32,392 | ' | ' | ' |
Gain on settlement of debt | 21,142 | 0 | -3,973,795 | ' |
Loss on conversion of stock | ' | 0 | -640,000 | ' |
Stock issued for compensation, shares issued | ' | 300,000 | ' | ' |
Stock issued for compensation, value | ' | 86,100 | ' | ' |
Prepaid expenses related to stock issued for compensation | ' | 172,133 | ' | 570,106 |
Stock sold, shares issued | ' | 200,000 | ' | 27,000,000 |
Stock sold, value | ' | 20,000 | ' | 4,918,000 |
Stock to be issued | ' | ' | ' | 17,000,000 |
Warrants converted to common stock, shares issued | ' | 550,000 | ' | 19,649,600 |
Warrants converted to common stock, value | ' | 66,000 | ' | 1,592,880 |
Stock issued to satisfy all stock payables, shares issued | ' | 17,628,000 | ' | ' |
Stock issued to satisfy all stock payables, amount | ' | 1,574,860 | ' | ' |
Shareholder | ' | ' | ' | ' |
Series E Preferred stock converted into common stock, Series E stock converted | ' | ' | ' | 8,500 |
Series E Preferred stock converted into common stock, common stock issued | ' | ' | ' | 54,000,000 |
Loss on conversion of stock | ' | ' | ' | -5,895,000 |
Officers and Directors | ' | ' | ' | ' |
Stock issued for compensation, shares issued | ' | ' | ' | 52,370,000 |
Stock issued for compensation, value | ' | ' | ' | 14,101,788 |
Consultants | ' | ' | ' | ' |
Stock issued for compensation, shares issued | ' | ' | ' | 13,756,666 |
Stock issued for compensation, value | ' | ' | ' | 1,810,348 |
Prepaid expenses related to stock issued for compensation | ' | ' | ' | $528,808 |
7_PREFERRED_STOCK_Details_Narr
7. PREFERRED STOCK (Details Narrative) (USD $) | 3 Months Ended | 12 Months Ended | |
Jul. 31, 2014 | Jul. 31, 2013 | Apr. 30, 2014 | |
Shareholder | |||
Series E Preferred stock converted into common stock, Series E stock converted | ' | ' | 8,500 |
Series E Preferred stock converted into common stock, common stock issued | ' | ' | 54,000,000 |
Loss on conversion of stock | $0 | ($640,000) | ($5,895,000) |
8_WARRANTS_Details
8. WARRANTS (Details) (Warrants, USD $) | 3 Months Ended |
Jul. 31, 2014 | |
Warrants | ' |
Warrants outstanding, beginning balance | 57,665,600 |
Warrants exercised | -550,000 |
Warrants issued | 0 |
Warrants outstanding, ending balance | 57,115,600 |
Warrants exercisable | 57,115,600 |
Weighted average exercise price outstanding, beginning balance | $0.18 |
Weighted average exercise price outstanding, ending balance | $0.18 |
Weighted average exercise price exercisable | $0.18 |
Weighted average fair value per share outstanding, beginning balance | $0.07 |
Weighted average fair value per share outstanding, ending balance | $0.07 |
Weighted average fair value per share exercisble | $0.07 |
Range of Exercise Prices, warrants | '$0.075, $0.12, and $0.18 |
Number outstanding | 57,115,600 |
Weighted average contractual life | '3 years 4 months 24 days |
8_WARRANTS_Details_Narrative
8. WARRANTS (Details Narrative) (USD $) | 3 Months Ended |
Jul. 31, 2014 | |
Proceeds from warrant conversion | $1,658,880 |
Class A Warrants | ' |
Warrants converted to stock | 18,755,200 |
Class B Warrants | ' |
Warrants converted to stock | 2,318,000 |
10_RELATED_PARTY_TRANSACTIONS_
10. RELATED PARTY TRANSACTIONS (Details Narrative) (USD $) | Jul. 31, 2014 | Apr. 30, 2014 |
Related Party Transactions [Abstract] | ' | ' |
Due to officers and a director | $125,142 | $143,859 |
Interest rate on due to officers and a director | 8.00% | ' |
Accrued interest | $36,612 | ' |