Document_and_Entity_Informatio
Document and Entity Information (USD $) | 12 Months Ended | ||
Oct. 31, 2013 | Mar. 13, 2014 | Apr. 30, 2013 | |
Document and Entity Information: | ' | ' | ' |
Entity Registrant Name | 'ARROGENE, INC | ' | ' |
Document Type | '10-K | ' | ' |
Document Period End Date | 31-Oct-13 | ' | ' |
Amendment Flag | 'false | ' | ' |
Entity Central Index Key | '0001403792 | ' | ' |
Current Fiscal Year End Date | '--10-31 | ' | ' |
Entity Common Stock, Shares Outstanding | ' | 21,395,860 | ' |
Entity Public Float | ' | ' | $0 |
Entity Filer Category | 'Smaller Reporting Company | ' | ' |
Entity Current Reporting Status | 'Yes | ' | ' |
Entity Voluntary Filers | 'No | ' | ' |
Entity Well-known Seasoned Issuer | 'No | ' | ' |
Document Fiscal Year Focus | '2013 | ' | ' |
Document Fiscal Period Focus | 'FY | ' | ' |
Entity Incorporation, Date of Incorporation | 7-Dec-06 | ' | ' |
CONSOLIDATED_BALANCE_SHEETS
CONSOLIDATED BALANCE SHEETS (USD $) | Oct. 31, 2013 | Oct. 31, 2012 | ||
Current assets: | ' | ' | ||
Cash and cash equivalents | $13,822 | $539,727 | ||
Prepaid expenses and deposit | 13,709 | 13,020 | ||
Total current assets | 27,531 | 552,747 | ||
Property and equipment, net | 1,705 | [1] | 3,271 | [1] |
Total assets | 29,236 | 556,018 | ||
Current liabilities: | ' | ' | ||
Accrued compensation | 85,280 | 29,240 | ||
Accrued payable to CSMC | 229,003 | ' | ||
Accrued legal fees | 50,518 | 7,754 | ||
Related party payables | 39,000 | 10,000 | ||
Other accrued liabilities | 77,850 | 32,599 | ||
Convertible notes | 10,000 | 10,000 | ||
Total current liabilities | 491,651 | 89,593 | ||
Total liabilities | 491,651 | 89,593 | ||
STOCKHOLDERS' EQUITY (DEFICIT): | ' | ' | ||
Preferred stock | ' | [2] | ' | |
Common stock | 2,135 | [3] | 2,109 | [3] |
Additional paid-in capital | 4,287,289 | 4,059,670 | ||
Deficit accumulated during the development stage | -4,751,839 | -3,595,354 | ||
Total stockholders' equity (deficit) | -462,415 | 466,425 | ||
Total liabilities and stockholders' equity (deficit) | $29,236 | $556,018 | ||
[1] | Property and equipment, net of accumulated depreciation of $2,992 and $1,426 at October 31, 2013 and 2012, respectively. | |||
[2] | Preferred stock, $.0001 par value 10,000,000 shares authorized, none issued. | |||
[3] | Common stock, $.0001 par value; 100,000,000 shares authorized; 21,350,860 and 21,090,860 shares, respectively, issued and outstanding. |
CONSOLIDATED_BALANCE_SHEETS_Pa
CONSOLIDATED BALANCE SHEETS - Parenthetical (USD $) | Oct. 31, 2013 | Oct. 31, 2012 |
CONSOLIDATED BALANCE SHEETS | ' | ' |
Preferred Stock, Par Value | $0.00 | $0.00 |
Preferred Stock, Shares Authorized | 10,000,000 | 10,000,000 |
Preferred Stock, Shares Issued | 0 | 0 |
Common Stock, Par Value | $0.00 | $0.00 |
Common Stock, Shares Authorized | 100,000,000 | 100,000,000 |
Common Stock, Shares Issued | 21,350,860 | 21,090,860 |
Common Stock, Shares Outstanding | 21,350,860 | 21,090,860 |
Accumulated depreciation, Property, Plant and Equipment | $2,992 | $1,426 |
STATEMENTS_OF_OPERATIONS
STATEMENTS OF OPERATIONS (USD $) | 12 Months Ended | 75 Months Ended | |
Oct. 31, 2013 | Oct. 31, 2012 | Oct. 31, 2013 | |
OPERATING EXPENSES: | ' | ' | ' |
General and administrative | $703,262 | $737,084 | $2,840,448 |
Licensing fees | ' | 480,430 | 480,430 |
Research and development | 452,384 | 98,549 | 550,933 |
Operating Expenses | 1,155,646 | 1,316,063 | 3,871,811 |
Income (Loss) from operations | -1,155,646 | -1,316,063 | -3,871,811 |
OTHER INCOME (EXPENSE): | ' | ' | ' |
Interest | -839 | -757,427 | -880,028 |
Other Income (expense) | -839 | -757,427 | -880,028 |
Net Income (Loss) | ($1,156,485) | ($2,073,490) | ($4,751,839) |
Weighted Average Shares Outstanding, Basic and diluted | 21,304,860 | 17,645,317 | ' |
Loss Per Share, Basic and diluted | ($0.05) | ($0.12) | ' |
CONSOLIDATED_STATEMENTS_OF_STO
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) (USD $) | Common Stock | APIC | Deficit Accumulated in Development Stage | Total |
Balances, Value at Aug. 06, 2007 | $1,096 | ' | ' | $1,096 |
Balances, Shares at Aug. 06, 2007 | 10,960,000 | ' | ' | ' |
Net Income (Loss) | ' | ' | -1,215 | -1,215 |
Balances, Value at Oct. 31, 2007 | 1,096 | ' | -1,215 | -119 |
Balances, Shares at Oct. 31, 2007 | 10,960,000 | ' | ' | ' |
Net Income (Loss) | ' | ' | -868 | -868 |
Balances, Value at Oct. 31, 2008 | 1,096 | ' | -2,083 | -987 |
Balances, Shares at Oct. 31, 2008 | 10,960,000 | ' | ' | ' |
Net Income (Loss) | ' | ' | -168,756 | -168,756 |
Balances, Value at Oct. 31, 2009 | 1,096 | ' | -170,839 | -169,743 |
Balances, Shares at Oct. 31, 2009 | 10,960,000 | ' | ' | ' |
Issuance of common stock for License, Value | 3 | ' | ' | 3 |
Issuance of common stock for License, Shares | 31,900 | ' | ' | ' |
Fair value of warrants issued to placement agent | ' | 13,133 | ' | 13,133 |
Warrants issued for advisory services agreement | ' | 251,112 | ' | 251,112 |
Extinguishment of related party payable | ' | 100,000 | ' | 100,000 |
Net Income (Loss) | ' | ' | -360,208 | -360,208 |
Balances, Value at Oct. 31, 2010 | 1,099 | 364,245 | -531,047 | -165,703 |
Balances, Shares at Oct. 31, 2010 | 10,991,900 | ' | ' | ' |
Fair value of warrants issued to placement agent | ' | 34,233 | ' | 34,233 |
Shares issued in satisfaction of accrued compensation, Value | 10 | 99,990 | ' | 100,000 |
Shares issued in satisfaction of accrued compensation, Shares | 100,000 | ' | ' | ' |
Net Income (Loss) | ' | ' | -990,817 | -990,817 |
Balances, Value at Oct. 31, 2011 | 1,109 | 498,468 | -1,521,864 | -1,022,287 |
Balances, Shares at Oct. 31, 2011 | 11,091,900 | ' | ' | ' |
Shares issued for licensing agreement, Value | 147 | 440,283 | ' | 440,430 |
Shares issued for licensing agreement, Shares | 1,468,100 | ' | ' | ' |
Reverse Merger with SRKP 16, Inc., Value | 224 | 389,464 | ' | 389,688 |
Reverse Merger with SRKP 16, Inc., Shares | 2,243,610 | ' | ' | ' |
Sale of Units at $1.00 per Unit, Value | 151 | 1,288,833 | ' | 1,288,984 |
Sale of Units at $1.00 per Unit, Shares | 1,510,250 | ' | ' | ' |
Conversion of Convertible Notes into common stock, Value | 478 | 1,442,622 | ' | 1,443,100 |
Conversion of Convertible Notes into common stock, Shares | 4,777,000 | ' | ' | ' |
Net Income (Loss) | ' | ' | -2,073,490 | -2,073,490 |
Balances, Value at Oct. 31, 2012 | 2,109 | 4,059,670 | -3,595,354 | 466,425 |
Balances, Shares at Oct. 31, 2012 | 21,090,860 | ' | ' | ' |
Sale of Units at $1.00 per Unit, Value | 26 | 227,619 | ' | 227,645 |
Sale of Units at $1.00 per Unit, Shares | 260,000 | ' | ' | ' |
Net Income (Loss) | ' | ' | -1,156,485 | -1,156,485 |
Balances, Value at Oct. 31, 2013 | $2,135 | $4,287,289 | ($4,751,839) | ($462,415) |
Balances, Shares at Oct. 31, 2013 | 21,350,860 | ' | ' | ' |
STATEMENTS_OF_CASH_FLOWS
STATEMENTS OF CASH FLOWS (USD $) | 12 Months Ended | 75 Months Ended | |
Oct. 31, 2013 | Oct. 31, 2012 | Oct. 31, 2013 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ' | ' | ' |
Net Income (Loss) | ($1,156,485) | ($2,073,490) | ($4,751,839) |
Adjustments to reconcile Net Income (Loss) to net cash used in operating activities: | ' | ' | ' |
Non-cash charge for reduction in conversion price of Convertible Notes | ' | 726,550 | 726,550 |
Amortization of debt placement costs | ' | ' | 121,517 |
Shares issued for License | ' | 440,430 | 440,430 |
Share-based payment expense | 37,333 | 22,400 | 311,013 |
Depreciation expense | 1,566 | 879 | 2,992 |
(Increase) decrease in prepaid services and deposit | -689 | -2,996 | -13,709 |
Increase (decrease) in accrued liabilities | 364,725 | -250,604 | 649,967 |
Net cash used in operating activities | -753,550 | -1,136,831 | -2,513,079 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ' | ' | ' |
Cash acquired in Reverse Merger with SRKP 16, Inc. | ' | 389,688 | 389,688 |
Capital expenditures | ' | -2,908 | -4,697 |
Net cash provided by (used in) investing activities | ' | 386,780 | 384,991 |
CASH FLOWS FROM FINANCING ACTIVITIES: | ' | ' | ' |
Proceeds received from Promissory Notes | ' | 80,000 | 80,000 |
Repayments of Promissory Notes | ' | -80,000 | -80,000 |
Net proceeds from sale of Units | 227,645 | 1,288,984 | 1,516,629 |
Net proceeds from sale of Convertible Notes | ' | ' | 624,351 |
Proceeds from sale of Series A Preferred Stock | ' | ' | 930 |
Advances from related parties | ' | ' | 1,300 |
Repayment of related party advances | ' | -1,300 | -1,300 |
Net cash provided by financing activities | 227,645 | 1,287,684 | 2,141,910 |
Net increase (decrease) in cash | -525,905 | 537,633 | 13,822 |
Cash and cash equivalents at the beginning of period | 539,727 | 2,094 | ' |
Cash and cash equivalents at the end of period | $13,822 | $539,727 | $13,822 |
Business_Overview_Basis_of_Pre
Business, Overview, Basis of Presentation and Consolidation | 12 Months Ended |
Oct. 31, 2013 | |
Notes | ' |
Business, Overview, Basis of Presentation and Consolidation | ' |
(1) BUSINESS, OVERVIEW, BASIS OF PRESENTATION AND CONSOLIDATION | |
Arrogene, Inc. (“Arrogene” f/k/a SRKP 16, Inc.), was incorporated under the laws of the State of Delaware on December 7, 2006. On January 11, 2012, we consummated a reverse merger transaction (the “Reverse Merger”) with Arrogene Nanotechnology, Inc. (“ANI”), a company focused on oncology. Hereafter, SRKP 16, Inc., Arrogene and ANI are collectively referred to as the “Company.” Effective September 4, 2012, SRKP 16, Inc. officially changed its name to Arrogene, Inc. | |
As a result of the Reverse Merger, the shareholders of ANI received 12,660,000 shares of Company common stock or approximately 86 % of the issued and outstanding common shares of the Company immediately after the transaction. Further, ANI warrant holders received identical common stock purchase warrants in the Company. Additionally, immediately after the Reverse Merger, the officers of ANI became the officers of the Company and the Company’s Board of Directors was changed to consist solely of former ANI officers and directors. For accounting purposes, the Reverse Merger has been treated as an acquisition of the Company by ANI (the accounting acquirer) and a recapitalization of ANI. As a result, the financial statements for all periods presented and discussed herein are those of ANI. Immediately prior to consummating the Reverse Merger, the Company sold 502,000 units (the “Units”), with each Unit consisting of (i) one share of common stock, and (ii) two common stock purchase warrants (the “Unit Warrants”) that are exercisable for five years from the date of issuance in a private placement (the “Private Placement”). One of the Unit Warrants is exercisable at $1.50 per share and the other is exercisable at $2.00 per share. The Company received $404,688 in net proceeds from the sale of the Units after payment of commissions and other expenses associated with the offering, of which, $389,688 was acquired by ANI at the time of the Reverse Merger. | |
The Company has an exclusive license (the “License”) to a family of related nano-biopolymers conjugated drugs collectively referred to as “Polycefin ” as well as certain tumor bio-markers and related intellectual properties that are collectively expected to be capable of acting as a drug delivery and targeting platform (based on natural biopolymer, polymalic acid) for cancer therapy and diagnostics based on pre-clinical studies conducted at Cedars-Sinai Medical Center (“CSMC”). Polycefin are designed to target cancer cells and deliver a variety of bound therapeutics to them. In vivo pre-clinical studies have shown evidence that existing cancer drugs could have increased efficacy and reduced side effects when attached to the bioplatform. We believe that Polycefin has the ability to harbor various drugs at the same time making it possibly a master delivery vehicle that can be customized for a particular tumor and potentially for an individual patient. Additionally, in vivo testing has shown efficacy against more than one type of cancer (breast and brain) suggesting that Polycefin may have application to a wide range of cancer types, therapeutics and diagnostics. | |
We plan on commercializing our products using a licensing and cost sharing strategy, seeking to enter into arrangements with major pharmaceutical companies with existing cancer therapy drugs facing issues relating to patent expirations, market expansion or contraction. It is our goal to only commence later stage clinical trials with a commitment from a licensee to complete Phase II and III clinical trials, predicated on the successful outcome of each phase, and go to market, if approval is received. Further, we are also exploring use of Polycefin as a potential medical diagnostic product(s) for oncology related applications. We also have developed important related intellectual properties surrounding Laminin-411. Pre-clinical investigation is also on-going on methods of inhibiting Laminin-411 as a therapeutic agent, which could be conjugated in various forms of Polycefin in the future. | |
The majority, of our planned products will require approval or marketing clearance from the United States Food and Drug Administration (the “FDA”). To date we have not filed any applications with the FDA, but we have begun the process of validating our LDT with applicable regulators. | |
Since its inception in August 2007, ANI’s principal activities have involved developing a business strategy, raising capital, identifying and licensing the Polycefin technology, development of the technology principally in pre-clinical activities, expanding intellectual property rights, and recruiting management, key staff, and board members. For accounting purposes, the Company is considered a development stage company in accordance with Accounting Standards Codification (“ASC”) 915. | |
The accompanying consolidated financial statements include the accounts of Arrogene and its wholly owned subsidiary ANI. All intercompany transactions have been eliminated in consolidation. |
Going_Concern_and_Managements_
Going Concern and Management's Plans | 12 Months Ended |
Oct. 31, 2013 | |
Notes | ' |
Going Concern and Management's Plans | ' |
(2) GOING CONCERN AND MANAGEMENT’S PLANS | |
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. Since our inception in August 2007, we have not generated revenue, incurred cash and operating losses, and as of October 31, 2013, had a deficit accumulated during the development stage of $4,751,839. Further, as of October 31, 2013, our cash balance was $13,822 and we had a working capital deficit of $464,120. These conditions raise substantial doubt about our ability to continue as a going concern. | |
We have relied primarily upon proceeds from the sale of the Units and convertible notes (the “Convertible Notes”) to fund our operations. Through October 31, 2013, the Company had sold 1,770,250 Units in the Private Placement receiving net proceeds of $1,516,629. Management believes that existing cash on hand, combined with 45,000 Units sold subsequent to year end, will be sufficient to fund the Company’s planned activities through February 2014. This assumes that we continue to defer payment of certain liabilities to our officers and CSMC. We have not paid management for their services since August 2013 nor have we paid CSMC for services provided since February 2013. Additionally, certain key professionals such as legal counsel have also had payments deferred as well. While these parties have continued to work with the Company despite this lack of payment, there is no assurance they will continue to do so, and the loss of a key management member, or the loss of CSMC as a research partner, could have a material adverse effect on the Company’s business prospects. The Company is currently attempting to raise additional capital, and to this end, on February 28, 2014, the Company authorized the issuance of up to $700,000 in unsecured convertible notes (the “Bridge Notes”). The Bridge Notes are due and payable one year after the close of the offering (the “Maturity Date”), bear interest at 10% per annum, and are convertible into shares of our common stock at a conversion price of either (i) 50% of the price per share of our common stock as sold through a qualified initial public offering as defined in the terms of the Bridge Notes (“Qualified IPO”), or (ii) in the event a Qualified IPO has not taken place prior to the Maturity Date but there has otherwise developed a public trading market for the Company’s common stock, then the conversion price shall be 50% of the 30 day Volume Weighted Average Price (“VWAP”) per share as quoted on the over-the-counter market, or (iii) in the event a public trading market has not been established for our common stock prior to the Maturity Date, then the conversion price shall be $1.00 per share. Accrued and unpaid interest on the Bridge Notes will be payable in shares of common stock at the conversion price on the earlier of (i) the date of conversion of the Bridge Notes or (ii) the Maturity Date. Further, for every $1.00 of Bridge Note principal that an investor elects to convert into shares of common stock, the investor will receive one warrant. Each warrant shall be exercisable into shares of common stock at a price equal to the conversion price of the Bridge Notes. If the investor elects not to convert their Bridge Notes prior to the Maturity Date, then the note holder will receive one warrant for every $2.00 in Bridge Note principal. | |
On February 28, 2014, we sold $170,000 in Bridge Notes, receiving net proceeds of $147,765 after payment of offering costs. Management believes that the funds received from the Bridge Notes will be sufficient to fund the Company’s planned activities through at least the end of June 2014 using the same cash conservation principles described above. There is no assurance that the Company will be successful in selling additional Bridge Notes or raising additional capital of any kind on acceptable terms, or be successful in raising additional capital under any terms. | |
In the event that we cannot raise sufficient capital within the required timeframe, it will have a material adverse effect on the Company’s liquidity, financial condition and business prospects or force the Company out of business. The accompanying financial statements do not include adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from an inability of the Company to continue as a going concern. |
Significant_Accounting_Policie
Significant Accounting Policies | 12 Months Ended | ||||||||
Oct. 31, 2013 | |||||||||
Notes | ' | ||||||||
Significant Accounting Policies | ' | ||||||||
(3) SIGNIFICANT ACCOUNTING POLICIES | |||||||||
Use of Estimates and Assumptions | |||||||||
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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 reported periods. Actual results may differ from these estimates. | |||||||||
Cash and cash equivalents | |||||||||
We consider all investments with original maturities of three months or less to be cash equivalents. | |||||||||
Property and Equipment | |||||||||
Property and equipment is recorded at historical cost, and is comprised of computer equipment and software. Depreciation and amortization of property and equipment is provided in amounts sufficient to relate the cost of the related assets to operations over their estimated service lives using the straight-line method. The useful lives of the assets are three years. Depreciation and amortization expense amounted to $1,566, $879, and $2,992 for the years ended October 31, 2013 and 2012 and for the period from August 7, 2007 (Inception) through October 31, 2013, respectively. | |||||||||
Revenue Recognition | |||||||||
While we have not generated revenue to date, we will recognize revenue when there is persuasive evidence that an arrangement exists, when title has passed, the price is fixed or determinable, and we are reasonably assured of collecting the resulting receivable. Revenue arrangements that include multiple deliverables are divided into separate units of accounting if the deliverables meet certain criteria. If applicable, we will record product revenues net of revenue reserves such as sales returns and allowances. This accounting policy for revenue recognition may have a substantial impact on our reported results and relies on certain estimates that can require difficult, subjective and complex judgments on the part of management. | |||||||||
Research and Development Costs | |||||||||
Research and development costs are expensed as incurred. | |||||||||
Income Taxes | |||||||||
We account for income taxes by recognizing deferred tax assets and liabilities for the expected future income tax consequences of transactions that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Deferred tax assets then may be reduced by a valuation allowance for amounts that do not satisfy specified realization criteria. | |||||||||
Accounting rules also prescribe a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. We are required to recognize a liability in the financial statements for the impact of a tax position if that position is more likely than not of not being sustained on audit, based on the technical merits of the position. We currently do not have any tax positions that meet this threshold. | |||||||||
We currently have a full valuation allowance against our net deferred tax assets and have not recognized any benefits from tax positions in earnings. We will recognize potential interest and penalties related to income tax positions as a component of the provision for income taxes on the statements of operations in any future periods in which we must record a liability. Interest and penalties totaled $0 and $0 for the years ended October 31, 2013 and 2012, respectively, and $449 for the period from August 7, 2007 (date of inception) through October 31, 2013. We file income tax returns in the U.S. federal jurisdiction and with the State of California. We have not filed income tax returns for the year ended October 31, 2012, however, as no taxes are due, we do not believe these non filings will have a material impact on our financial statements. We are still subject to income tax examinations by the State of California and the IRS for all tax years since the date of inception. Since we have not recorded a liability at October 31, 2013, there is no impact to our effective tax rate. We do not believe there will be any material changes in our unrecognized tax positions over the next 12 months. Our review of prior year tax positions using the criteria and provisions presented by the FASB did not result in a material impact on the Company’s financial position or results of operations. | |||||||||
Share-Based Payments | |||||||||
We account for share-based payment costs at fair value on the date of grant and recognition of compensation over the service period for awards expected to vest. For stock options that may be granted in the future, the estimation of stock awards that will ultimately vest requires judgment, and to the extent actual results differ from our estimates, such amounts will be recorded as a cumulative adjustment in the period estimates are revised. We will consider various factors when estimating expected forfeitures, including historical experience. Actual results may differ substantially from these estimates. | |||||||||
We determine the fair value of warrants and stock options using the Black-Scholes valuation model, which considers the exercise price relative to the market value of the underlying stock, the expected stock price volatility, the risk-free interest rate and the dividend yield, and the estimated period of time option grants will be outstanding before they are ultimately exercised. Significant management judgment is required in making certain of these assumptions. | |||||||||
Earnings (Loss) Per Share | |||||||||
Earnings (loss) per share are computed by dividing the Company’s income (loss) attributable to common shareholders by the weighted average number of common shares outstanding. The impact of any potentially dilutive securities is excluded. Diluted earnings per share are computed by dividing the Company’s income (loss) attributable to common shareholders by the weighted average number of common shares and dilutive potential common shares outstanding during the period. In calculating diluted earnings per share, we utilize the “treasury stock method” for all stock options and warrants and the “if converted method” for all other convertible securities. For all periods presented, the basic and diluted loss per share is the same as the impact of potential dilutive common shares is anti-dilutive. | |||||||||
Shares of common stock from the exercise of warrants and convertible securities excluded from the calculation of diluted loss per share are as follows: | |||||||||
Years ended October 31, | |||||||||
2013 | 2012 | ||||||||
Convertible Notes.................................................................................. | 66,667 | 66,667 | |||||||
Warrants.................................................................................................. | 6,308,358 | 5,710,358 | |||||||
Segment Information | |||||||||
We operate in one business segment. The determination of reportable segments is based on the way management organizes financial information for making operating decisions and assessing performances. All of our operations are located in the United States. | |||||||||
Concentration of Credit Risk | |||||||||
We maintain a checking account with Wells Fargo Bank (“Wells”). The account is insured by the Federal Deposit Insurance Corporation (“FDIC”) for up to $250,000. At times our cash balance may exceed the FDIC insurance coverage. Management believes that the Company is not exposed to significant credit risk due to the financial position of Wells. | |||||||||
Fair Value of Financial Instruments | |||||||||
The fair value of cash, accounts payable and accrued liabilities, and notes payable approximate their carrying amounts due to the short-term maturities of these instruments. | |||||||||
Fair Value Measurements | |||||||||
We measure our financial assets and liabilities at fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., exit price) in an orderly transaction between market participants at the measurement date. Additionally, we are required to provide disclosure and categorize assets and liabilities measured at fair value into one of three different levels depending on the assumptions (i.e., inputs) used in the valuation. Level 1 provides the most reliable measure of fair value while Level 3 generally requires significant management judgment. Financial assets and liabilities are classified in their entirety based on the lowest level of input significant to the fair value measurement. The fair value hierarchy is defined as follows: | |||||||||
Level 1—Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities. | |||||||||
Level 2—Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. | |||||||||
Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. | |||||||||
We had no financial assets or liabilities subject to fair value measurement at October 31, 2013 or 2012. | |||||||||
Supplemental Disclosures of Cash Flow Information | |||||||||
Cash paid during the year for: | Years ended October 31, | Cumulative from Inception | |||||||
2013 | 2012 | (August 7, 2007) | |||||||
Interest | $ | 839 | $ | 8,477 | $ 9,560 | ||||
Income taxes | — | — | — | ||||||
Supplemental disclosures of noncash investing and financing activities: | |||||||||
Years ended October 31, | |||||||||
2013 | 2012 | ||||||||
Convertible Notes converted into common stock | — | 716,550 | |||||||
Recently Issued Accounting Pronouncements | |||||||||
In July 2012, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2012-02, Testing Indefinite-Lived Intangible Assets for Impairment (ASU 2012-02), which amended the guidance in ASU 2011-08 to simplify the testing of indefinite-lived intangible assets other than goodwill for impairment. ASU 2012-02 becomes effective for annual and interim impairment tests performed for fiscal years beginning on or after September 15, 2012 and earlier adoption is permitted. We adopted ASU 2012-02 effective November 1, 2012. The adoption of ASU 2012-02 is not expected to have any impact on our consolidated financial position, results of operations or cash flows. |
License_Agreement
License Agreement | 12 Months Ended |
Oct. 31, 2013 | |
Notes | ' |
License Agreement | ' |
(4) LICENSE AGREEMENT | |
On December 23, 2009, we entered into an agreement for the right to an exclusive license agreement with CSMC which provides us with the world-wide rights to U.S Patents No. 7,547,511 “Antisense Inhibition of Laminin-8 Expression to Inhibit Human Gliomas”, No. 7,935,677, “Polymalic Acid-Based Multifunctional Drug Delivery System”, No. 8,309,614 “Poly (Beta Malic Acid) with Pendant Leu-Leu-Leu Tripeptide for Effective Cytoplasmic Drug Delivery” , and No. 8,562,964 along with various Japanese, EU and Asian related patents and applications, related technical information to develop, market and sell human therapeutic and diagnostic products, including new pharmaceutical products and/or non-prescriptive products using the patented technology (the “CSMC Agreement”). The CSMC Agreement has been amended five times; December 8, 2010, June 30, 2011, August 31, 2011, October 28, 2011, and December 30, 2013. The CSMC Agreement also provides us with the rights to several other related, filed, but yet unissued patents. The CSMC Agreement requires royalty payments equal to 3.5% of the gross sales price and other forms of consideration (such as milestone and sublicense payments), as defined in the agreement, on all products using the licensed technology. The CSMC Agreement expires on a country-by-country basis on the date that the last patent covered under the agreement expires (currently 2032). | |
In connection with effectuating the License, on November 2, 2011, we paid a non-refundable cash licensing fee of $40,000, as well as issued to CSMC 1,468,100 shares of common stock. We valued the shares issued to CSMC at $.30 per share based on Convertible Notes most recently issued. Accordingly, we recorded $440,430 as a licensing fee to reflect the issuance of these shares. | |
The CSMC Agreement, as amended, also requires us to achieve certain other milestones in order to maintain the agreement. These include the following: | |
· Begin development or enter into a joint venture, licensing or sub-licensing agreement, or other business arrangement with a third party not an affiliate of the Company to cause development of at least one product consistent with sound business practices by December 31, 2012; | |
· Expend at least $500,000 in the aggregate toward the development or promotion of the sale of products based on the licensed patent rights or technical information commencing from the effective date of the agreement and continuing through and including December 31, 2012, and at least $1,000,000 annually thereafter, for further development or promotion of the sale of products through and including December 31, 2013; | |
· Provide to CSMC at least $150,000 (in aggregate) within at least a four year period to fund research and development of the licensed patent rights and technical information; | |
· On or before December 31, 2014, the Company shall have commenced a clinical trial or trials in connection with at least one intended commercial use; | |
We believe that we have achieved the required milestones for the contractual periods ended December 31, 2013. It is management’s belief that administrative expenses incurred in support of the Company’s business activities meet the definition of “development and promotion” of the licensed technology. We can, however, provide no assurance that CSMC will concur with our position and that we will be able to meet any or all of these milestones in the future. In the event that we fail to meet one or more of the milestones required by the CSMC Agreement, there is no assurance that CSMC will agree to amend or waive the requirements and we could lose the License. Additionally, as discussed further in Note 9, we have entered into a research and development agreement with CSMC that satisfies the milestone requirement described above regarding funded research at CSMC. However, in order to extend the Company’s cash on hand, we have been deferring payment to CSMC of certain payments due under the agreement. As of October 31, 2013, we had an outstanding liability to CSMC of $229,003 which represents amounts owed for services provided by CSMC from February 2013 through October 2013. | |
Further, in the event the Company issues or sells shares of common stock in addition to those sold in the Private Placement previously discussed, the CSMC Agreement requires that the Company issue to CSMC additional shares of common stock for no additional consideration so as to assure CSMC will own 5% of the total issued and outstanding shares of the Company until December 31, 2015. |
Convertible_Notes
Convertible Notes | 12 Months Ended |
Oct. 31, 2013 | |
Notes | ' |
Convertible Notes | ' |
(5) CONVERTIBLE NOTES | |
Commencing October 2010 through April 2011, we sold in private transactions an aggregate of $726,550 of Convertible Notes. The Convertible Notes were initially convertible into shares of our common stock at $.30 per share (the “Conversion Price”). The Convertible Notes do not bear interest and were originally payable on October 19, 2011. However, in October 2011, a majority of the note holders agreed to extend the maturity date of the notes to December 15, 2011. The Convertible Notes are secured by a first lien security interest on all of our tangible and intangible assets. We did not repay the Convertible Notes by the December 15, 2011 extended maturity date and the notes were therefore technically in default. As an inducement to obtain conversions, we agreed to reduce the conversion price of the Convertible Notes to $.15 per share. During the nine months ended July 31, 2012, holders converted $716,550 of Convertible Notes into 4,777,000 shares of common stock. $10,000 of Convertible Notes remains outstanding as of October 31, 2013 and 2012. On an as converted basis, as of October 31, 2013, the estimated value of the Convertible Notes exceeds the principal balance by $27,333. As a result of the reduction in conversion price, we recorded a charge of $726,550, in accordance with ASC 470-50-40 during the year ended October 31, 2012, which was included in interest expense on the accompanying consolidated statements of operations. | |
We evaluated the conversion feature of the Convertible Notes within the context of ASC 815 and concluded that it did not meet the definition of an embedded derivative due to the Company having no active market for its common stock. |
Stockholders_Equity
Stockholders' Equity | 12 Months Ended |
Oct. 31, 2013 | |
Notes | ' |
Stockholders' Equity | ' |
(6) STOCKHOLDERS’ EQUITY | |
Our articles of incorporation authorizes our board of directors (the “Board”) to issue up to 10,000,000 shares of preferred stock and allows the Board to determine preferences, conversion and other rights, voting powers, restrictions, limitations as to distributions, qualifications, and other terms and conditions. | |
Preferred Stock | |
In connection with the Reverse Merger in January 2012, all outstanding shares of preferred stock of ANI, 1,030,000 shares in aggregate, were converted into 10,722,000 shares of common stock. | |
In September 2013, the Board designated 3,000,000 shares as “Series A Preferred Stock” with a stated value of $.0001. As of October 31, 2013, there were no shares of Series A Preferred Stock outstanding. | |
Common Stock | |
In connection with the formation of the Company, we issued 238,000 shares of common stock to founders. We ascribed no value to these shares as management believes that the value of the common stock was $0 until after consummation of the CSMC Agreement in December 2009 and receipt of adequate funding. | |
In December 2009, we issued to CSMC 31,900 shares of common stock in connection with entering into the CSMC Agreement. We ascribed no value to the common shares issued to CSMC. As described above in Note 4, in November 2011, we issued to CSMC 1,468,100 shares of common stock in order to effectuate the License. We valued the shares issued to CSMC at $.30 per share based on the stated conversion price of the Convertible Notes most recently issued. | |
In connection with accounting for the Reverse Merger, we are deemed to have issued to the shareholders of SRKP, 2,143,610 shares of common stock which we recorded at $389,688, representing the net assets received in the acquisition. As part of the same transaction, 100,000 shares of common stock were issued to legal counsel. | |
On August 29, 2013, we entered into an agreement with a third party for investor relation services (the “IR Agreement”). The IR Agreement has a term of one year but can be terminated by either party after 90 days upon 30 days written notice. The IR Agreement requires the Company to issue 400,000 shares of common stock as compensation for the services provided, 100,000 shares issuable after each 90 days of service provided. We valued the shares at $0.56 per share based upon the value ascribed to the common stock of our Unit sales using the Black-Scholes option pricing model. For the year ended October 31, 2013, we recorded $37,333 of stock compensation expense under the IR Agreement which is included in general and administrative expense on the accompanying consolidated statements of operations. At October 31, 2013, $37,333 is included in other accrued liabilities on the accompanying consolidated balance sheet representing the value of the common shares issuable under the IR Agreement. | |
Units | |
During the years ended October 31, 2013 and 2012, we sold 260,000 Units and 1,510,250, respectively, for $1.00 per Unit, receiving net proceeds of $227,645 and $1,288,984, respectively. Each Unit consists of (i) one share of common stock, and (ii) two Unit Warrants. Subsequent to yearend, we sold an additional 45,000 Units receiving net proceeds of $44,955. | |
Warrants | |
In connection with the sale of the Units, during the year ended October 31, 2013 the placement agents earned warrants to acquire 78,000 shares of common stock consisting of 26,000 warrants exercisable at $1.00 per share, 26,000 warrants exercisable at $1.50 per share and 26,000 warrants exercisable at $2.00 per share. During the year ended October 31, 2012, the placement agents earned warrants to acquire 603,675 shares of common stock consisting of 201,225 warrants exercisable at $1.00 per share, 201,225 warrants exercisable at $1.50 per share and 201,225 warrants exercisable at $2.00 per share. Each warrant expires five years from the date of issuance. During the years ended October 31, 2013 and 2012, we valued these warrants at $17,160 and $99,677, respectively, using the Black Scholes option-pricing model. We recorded the warrants as a reduction to the net proceeds from the sale of the Units with a corresponding increase to additional paid in capital. As of October 31, 2013, we are obligated to issue 681,675 warrants to the placement agents for sales of the Units with a weighted average exercise price of $1.50 per share. | |
At October 31, 2013, we had 6,308,358 warrants issuable or outstanding with a weighted average exercise price of $1.43 per share. |
Income_Taxes
Income Taxes | 12 Months Ended | ||||
Oct. 31, 2013 | |||||
Notes | ' | ||||
Income Taxes | ' | ||||
(7) INCOME TAXES | |||||
The Company did not incur any income tax expense or benefit during the years ended October 31, 2013 and 2012. | |||||
A reconciliation of the statutory federal income tax rate to the effective rate is as follows for the years ended October 31, 2013 and 2012: | |||||
2013 | 2012 | ||||
Federal income tax rate | 34.00% | 34.00% | |||
State income taxes, net of Federal income tax effect | 5.80% | 5.80% | |||
Nondeductible expenses and other | -0.1 | -11.5 | |||
Valuation allowance | -39.79 | -28.3 | |||
0.00% | 0.00% | ||||
Deferred tax assets and liabilities represent the future impact of temporary differences between the financial statement and tax bases of assets and liabilities. At October 31, 2013 and 2012, the significant components of deferred income taxes relates to net operating loss carryforwards, offset by a 100% valuation allowance. | |||||
The Tax Reform Act of 1986 contains provisions that limit the utilization of net operating loss (“NOL”) and tax credit carryforwards if there has been a change of ownership as described in Section 382 of the Internal Revenue Code. We have not prepared an analysis to determine if a change of ownership has occurred. Such a change of ownership may significantly limit the utilization of our net operating losses. | |||||
Total deferred tax assets and the valuation allowance increased by $500,000 during 2013. As of October 31, 2013, we had an estimated NOL carryforward of approximately $3.4 million for federal income tax purposes, which is available to offset future taxable income, if any, through 2033. The ultimate realization of these assets is dependent upon the generation of future taxable income sufficient to offset the related deductions and loss carryforwards within the applicable carryforward period. All tax years since inception (August 7, 2007) are still subject to examination by the State of California and the IRS. |
Promissory_Notes
Promissory Notes | 12 Months Ended |
Oct. 31, 2013 | |
Notes | ' |
Promissory Notes | ' |
(8) PROMISSORY NOTES | |
In November 2011, the Company entered into two promissory note agreements each for $40,000 for an aggregate of $80,000 (the “Promissory Notes”). The Promissory Notes did not bear interest but required repayment of $44,000 representing principal and an origination fee. The Promissory Notes were to mature on January 30, 2012. In addition to the required payment of principal and origination fee, upon repayment of each Promissory Note, the Company was obligated to issue 20,000 shares of common stock. In the event the Promissory Notes were not repaid by January 30, 2012, the Company was to issue an additional 2,000 shares of common stock under each note for each thirty day period until the note is paid in full. The Promissory Notes were unsecured. | |
The Promissory Notes were repaid in full in January 2012. Included in interest expense for the year ended October 31 2012 is $8,000 representing the origination fees. Also included in interest expense for the year ended October 31, 2012 is $22,400 representing the value of the 40,000 shares of common stock issuable to the makers of the Promissory Notes. As of October 31, 2013, these shares had not been issued, and accordingly, the associated liability is included in other payables and accrued expenses on the accompanying consolidated balance sheet. |
Commitments_and_Contingencies
Commitments and Contingencies | 12 Months Ended | |
Oct. 31, 2013 | ||
Notes | ' | |
Commitments and Contingencies | ' | |
(9) COMMITMENTS, CONTINGENCIES AND RELATED PARTY TRANSACTIONS | ||
Consulting Agreements | ||
We have an agreement with an entity controlled by our chief executive officer for his part-time personal services as CEO. The agreement is referred to as the Synthetica Agreement. Under the Synthetica Agreement, there is no monthly retainer or minimum billing amount but the maximum that can be charged to us in any given month cannot exceed $15,000. During the years ended October 31, 2013, and 2012 we were billed $162,600 and $180,000, respectively, under the Synthetica Agreement which is included in general and administrative expenses on the accompanying consolidated financial statements of operations. At October 31 2013 and 2012, $47,600 and $15,000, respectively, is included in accrued compensation on the accompanying consolidated balance sheets resulting from a voluntary deferral of fees due under the agreement, agreed to by Synthetica to allow the company to optimize its cash flow. Additionally as of January 1, 2014 in an effort to further optimize the company’s cash flow, Synthetica has agreed to further amend the Synthetica Agreement to provide Mr. Vecchione’s services going forward for $1 per year in compensation. However, our chief executive may request that his compensation revert back to the original terms of the Synthetica Agreement with 30 days written notice. | ||
In September 2010, we entered into a business and financial consulting agreement with an entity controlled by our Board chairman for operational consulting services. The agreement was for an initial term of 12 months with an automatic 12 month renewal period unless terminated by either party upon 30 days written notice. The agreement is now on a month-to-month basis. There is no monthly retainer or minimum billing amount but the maximum that can be billed to us in a given month cannot exceed $10,000. During the years ended October 31, 2013 and 2012, we were charged $104,000 and $120,000, respectively, under this agreement, which is included in general and administrative expense on the accompanying consolidated statements of operations. At October 31, 2013 and 2012, $39,000 and $10,000, respectively, is included in related party payables on the accompanying consolidated balance sheets. | ||
CSMC | ||
Certain founders and directors of the Company are employees of CSMC. These individuals are also the inventors of the Polycefin technology and are primarily responsible for its development. As described further in Note 4 above, we have an exclusive license agreement with CSMC for this technology. | ||
The License requires royalty payments equal to 3.5% of the gross sales price and other forms of consideration (such as milestone and sublicense payments), as defined in the agreement, on all products using the licensed technology. The License also requires us to achieve certain milestones as described in Note 4. | ||
In December 2012, we entered into an agreement with CSMC to support certain activities within the laboratory necessary to prepare compounds. Funding under this agreement is not used to support the activities of our founders and directors who are employed by CSMC. For the year ended October 31, 2013, we were charged $281,495 by CSMC under this agreement which is included in research and development costs on the accompanying consolidated statements of operations. As of October 31, 2013, $229,003 is reflected as payable on the accompanying consolidated balance sheets. As discussed in Note 4, we have been deferring payments under this agreement in order to extend our cash balance. | ||
Sublease Agreement | ||
For the period commencing November 2010 through March 2012, we had an agreement (the “Sublease”) with Compumed, Inc. (“Compumed”) for office space whereby we subleased space from Compumed and certain services such as internet, telephone and receptionist services. Our chief executive officer also served as the chief executive officer of Compumed during this time period. The Sublease required monthly payments of $8,000 and was on a month-to-month basis. For the year ended October 31, 2012, we recorded $40,000 of rent expense under the Sublease which is included in general and administrative expense on the accompanying consolidated statements of operations. | ||
Commitments and Contingencies | ||
Litigation | ||
From time to time, we may become party to litigation and other claims in the ordinary course of business. To the extent that such claims and litigation arise, management would provide for them if upon the advice of counsel, losses are determined to be both probable and estimable. We are currently not party to any litigation. | ||
Office Lease | ||
We have a lease agreement for office space with a third party (the “Office Lease”) that expires on February 28, 2014. Rent expense under the Office Lease for the years ended October 31, 2013 and 2012, was $37,692 and $17,808, respectively, and is included in general and administrative expense on the accompanying consolidated statements of operations. Subsequent to yearend, the Office Lease was renewed through February 28, 2015 on substantially similar terms. | ||
Commitments under non-cancelable operating leases are as follows as of October 31, 2013: | ||
Year Ended October 31, | ||
2014 | $ 45,160 | |
2015 | 15,296 | |
$ 60,456 | ||
Significant_Accounting_Policie1
Significant Accounting Policies: Use of Estimates and Assumptions (Policies) | 12 Months Ended |
Oct. 31, 2013 | |
Policies | ' |
Use of Estimates and Assumptions | ' |
Use of Estimates and Assumptions | |
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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 reported periods. Actual results may differ from these estimates. |
Significant_Accounting_Policie2
Significant Accounting Policies: Cash and Cash Equivalents (Policies) | 12 Months Ended |
Oct. 31, 2013 | |
Policies | ' |
Cash and Cash Equivalents | ' |
Cash and cash equivalents | |
We consider all investments with original maturities of three months or less to be cash equivalents. |
Significant_Accounting_Policie3
Significant Accounting Policies: Property and Equipment (Policies) | 12 Months Ended |
Oct. 31, 2013 | |
Policies | ' |
Property and Equipment | ' |
Property and Equipment | |
Property and equipment is recorded at historical cost, and is comprised of computer equipment and software. Depreciation and amortization of property and equipment is provided in amounts sufficient to relate the cost of the related assets to operations over their estimated service lives using the straight-line method. The useful lives of the assets are three years. Depreciation and amortization expense amounted to $1,566, $879, and $2,992 for the years ended October 31, 2013 and 2012 and for the period from August 7, 2007 (Inception) through October 31, 2013, respectively. |
Significant_Accounting_Policie4
Significant Accounting Policies: Revenue Recognition (Policies) | 12 Months Ended |
Oct. 31, 2013 | |
Policies | ' |
Revenue Recognition | ' |
Revenue Recognition | |
While we have not generated revenue to date, we will recognize revenue when there is persuasive evidence that an arrangement exists, when title has passed, the price is fixed or determinable, and we are reasonably assured of collecting the resulting receivable. Revenue arrangements that include multiple deliverables are divided into separate units of accounting if the deliverables meet certain criteria. If applicable, we will record product revenues net of revenue reserves such as sales returns and allowances. This accounting policy for revenue recognition may have a substantial impact on our reported results and relies on certain estimates that can require difficult, subjective and complex judgments on the part of management. |
Significant_Accounting_Policie5
Significant Accounting Policies: Research and Development Costs (Policies) | 12 Months Ended |
Oct. 31, 2013 | |
Policies | ' |
Research and Development Costs | ' |
Research and Development Costs | |
Research and development costs are expensed as incurred. |
Significant_Accounting_Policie6
Significant Accounting Policies: Income Taxes (Policies) | 12 Months Ended |
Oct. 31, 2013 | |
Policies | ' |
Income Taxes | ' |
Income Taxes | |
We account for income taxes by recognizing deferred tax assets and liabilities for the expected future income tax consequences of transactions that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Deferred tax assets then may be reduced by a valuation allowance for amounts that do not satisfy specified realization criteria. | |
Accounting rules also prescribe a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. We are required to recognize a liability in the financial statements for the impact of a tax position if that position is more likely than not of not being sustained on audit, based on the technical merits of the position. We currently do not have any tax positions that meet this threshold. | |
We currently have a full valuation allowance against our net deferred tax assets and have not recognized any benefits from tax positions in earnings. We will recognize potential interest and penalties related to income tax positions as a component of the provision for income taxes on the statements of operations in any future periods in which we must record a liability. Interest and penalties totaled $0 and $0 for the years ended October 31, 2013 and 2012, respectively, and $449 for the period from August 7, 2007 (date of inception) through October 31, 2013. We file income tax returns in the U.S. federal jurisdiction and with the State of California. We have not filed income tax returns for the year ended October 31, 2012, however, as no taxes are due, we do not believe these non filings will have a material impact on our financial statements. We are still subject to income tax examinations by the State of California and the IRS for all tax years since the date of inception. Since we have not recorded a liability at October 31, 2013, there is no impact to our effective tax rate. We do not believe there will be any material changes in our unrecognized tax positions over the next 12 months. Our review of prior year tax positions using the criteria and provisions presented by the FASB did not result in a material impact on the Company’s financial position or results of operations. |
Significant_Accounting_Policie7
Significant Accounting Policies: Share-based Payments (Policies) | 12 Months Ended |
Oct. 31, 2013 | |
Policies | ' |
Share-based Payments | ' |
Share-Based Payments | |
We account for share-based payment costs at fair value on the date of grant and recognition of compensation over the service period for awards expected to vest. For stock options that may be granted in the future, the estimation of stock awards that will ultimately vest requires judgment, and to the extent actual results differ from our estimates, such amounts will be recorded as a cumulative adjustment in the period estimates are revised. We will consider various factors when estimating expected forfeitures, including historical experience. Actual results may differ substantially from these estimates. | |
We determine the fair value of warrants and stock options using the Black-Scholes valuation model, which considers the exercise price relative to the market value of the underlying stock, the expected stock price volatility, the risk-free interest rate and the dividend yield, and the estimated period of time option grants will be outstanding before they are ultimately exercised. Significant management judgment is required in making certain of these assumptions. |
Significant_Accounting_Policie8
Significant Accounting Policies: Earnings (loss) Per Share (Policies) | 12 Months Ended | |||||
Oct. 31, 2013 | ||||||
Policies | ' | |||||
Earnings (loss) Per Share | ' | |||||
Earnings (Loss) Per Share | ||||||
Earnings (loss) per share are computed by dividing the Company’s income (loss) attributable to common shareholders by the weighted average number of common shares outstanding. The impact of any potentially dilutive securities is excluded. Diluted earnings per share are computed by dividing the Company’s income (loss) attributable to common shareholders by the weighted average number of common shares and dilutive potential common shares outstanding during the period. In calculating diluted earnings per share, we utilize the “treasury stock method” for all stock options and warrants and the “if converted method” for all other convertible securities. For all periods presented, the basic and diluted loss per share is the same as the impact of potential dilutive common shares is anti-dilutive. | ||||||
Shares of common stock from the exercise of warrants and convertible securities excluded from the calculation of diluted loss per share are as follows: | ||||||
Years ended October 31, | ||||||
2013 | 2012 | |||||
Convertible Notes.................................................................................. | 66,667 | 66,667 | ||||
Warrants.................................................................................................. | 6,308,358 | 5,710,358 |
Significant_Accounting_Policie9
Significant Accounting Policies: Segment Information (Policies) | 12 Months Ended |
Oct. 31, 2013 | |
Policies | ' |
Segment Information | ' |
Segment Information | |
We operate in one business segment. The determination of reportable segments is based on the way management organizes financial information for making operating decisions and assessing performances. All of our operations are located in the United States. |
Recovered_Sheet1
Significant Accounting Policies: Concentration of Credit Risk (Policies) | 12 Months Ended |
Oct. 31, 2013 | |
Policies | ' |
Concentration of Credit Risk | ' |
Concentration of Credit Risk | |
We maintain a checking account with Wells Fargo Bank (“Wells”). The account is insured by the Federal Deposit Insurance Corporation (“FDIC”) for up to $250,000. At times our cash balance may exceed the FDIC insurance coverage. Management believes that the Company is not exposed to significant credit risk due to the financial position of Wells. |
Recovered_Sheet2
Significant Accounting Policies: Fair Value of Financial Instruments (Policies) | 12 Months Ended |
Oct. 31, 2013 | |
Policies | ' |
Fair Value of Financial Instruments | ' |
Fair Value of Financial Instruments | |
The fair value of cash, accounts payable and accrued liabilities, and notes payable approximate their carrying amounts due to the short-term maturities of these instruments. |
Recovered_Sheet3
Significant Accounting Policies: Fair Value Measurements (Policies) | 12 Months Ended |
Oct. 31, 2013 | |
Policies | ' |
Fair Value Measurements | ' |
Fair Value Measurements | |
We measure our financial assets and liabilities at fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., exit price) in an orderly transaction between market participants at the measurement date. Additionally, we are required to provide disclosure and categorize assets and liabilities measured at fair value into one of three different levels depending on the assumptions (i.e., inputs) used in the valuation. Level 1 provides the most reliable measure of fair value while Level 3 generally requires significant management judgment. Financial assets and liabilities are classified in their entirety based on the lowest level of input significant to the fair value measurement. The fair value hierarchy is defined as follows: | |
Level 1—Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities. | |
Level 2—Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. | |
Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. | |
We had no financial assets or liabilities subject to fair value measurement at October 31, 2013 or 2012. |
Recovered_Sheet4
Significant Accounting Policies: Supplemental Disclosures of Cash Flow Information (Policies) | 12 Months Ended | ||||||||
Oct. 31, 2013 | |||||||||
Policies | ' | ||||||||
Supplemental Disclosures of Cash Flow Information | ' | ||||||||
Supplemental Disclosures of Cash Flow Information | |||||||||
Cash paid during the year for: | Years ended October 31, | Cumulative from Inception | |||||||
2013 | 2012 | (August 7, 2007) | |||||||
Interest | $ | 839 | $ | 8,477 | $ 9,560 | ||||
Income taxes | — | — | — | ||||||
Supplemental disclosures of noncash investing and financing activities: | |||||||||
Years ended October 31, | |||||||||
2013 | 2012 | ||||||||
Convertible Notes converted into common stock | — | 716,550 | |||||||
Recovered_Sheet5
Significant Accounting Policies: Recently Issued Accounting Pronouncements (Policies) | 12 Months Ended |
Oct. 31, 2013 | |
Policies | ' |
Recently Issued Accounting Pronouncements | ' |
Recently Issued Accounting Pronouncements | |
In July 2012, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2012-02, Testing Indefinite-Lived Intangible Assets for Impairment (ASU 2012-02), which amended the guidance in ASU 2011-08 to simplify the testing of indefinite-lived intangible assets other than goodwill for impairment. ASU 2012-02 becomes effective for annual and interim impairment tests performed for fiscal years beginning on or after September 15, 2012 and earlier adoption is permitted. We adopted ASU 2012-02 effective November 1, 2012. The adoption of ASU 2012-02 is not expected to have any impact on our consolidated financial position, results of operations or cash flows. |
Recovered_Sheet6
Significant Accounting Policies: Earnings (loss) Per Share: Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share (Tables) | 12 Months Ended | |||||
Oct. 31, 2013 | ||||||
Tables/Schedules | ' | |||||
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | ' | |||||
Years ended October 31, | ||||||
2013 | 2012 | |||||
Convertible Notes.................................................................................. | 66,667 | 66,667 | ||||
Warrants.................................................................................................. | 6,308,358 | 5,710,358 |
Recovered_Sheet7
Significant Accounting Policies: Supplemental Disclosures of Cash Flow Information: Schedule of Cash Flow, Supplemental Disclosures (Tables) | 12 Months Ended | ||||||||
Oct. 31, 2013 | |||||||||
Tables/Schedules | ' | ||||||||
Schedule of Cash Flow, Supplemental Disclosures | ' | ||||||||
Cash paid during the year for: | Years ended October 31, | Cumulative from Inception | |||||||
2013 | 2012 | (August 7, 2007) | |||||||
Interest | $ | 839 | $ | 8,477 | $ 9,560 | ||||
Income taxes | — | — | — | ||||||
Supplemental disclosures of noncash investing and financing activities: | |||||||||
Years ended October 31, | |||||||||
2013 | 2012 | ||||||||
Convertible Notes converted into common stock | — | 716,550 | |||||||
Income_Taxes_Schedule_of_Effec
Income Taxes: Schedule of Effective Income Tax Rate Reconciliation (Tables) | 12 Months Ended | ||||
Oct. 31, 2013 | |||||
Tables/Schedules | ' | ||||
Schedule of Effective Income Tax Rate Reconciliation | ' | ||||
2013 | 2012 | ||||
Federal income tax rate | 34.00% | 34.00% | |||
State income taxes, net of Federal income tax effect | 5.80% | 5.80% | |||
Nondeductible expenses and other | -0.1 | -11.5 | |||
Valuation allowance | -39.79 | -28.3 | |||
0.00% | 0.00% |
Commitments_and_Contingencies_
Commitments and Contingencies: Commitments under non-cancelable operating leases (Tables) | 12 Months Ended | |
Oct. 31, 2013 | ||
Tables/Schedules | ' | |
Commitments under non-cancelable operating leases | ' | |
Year Ended October 31, | ||
2014 | $ 45,160 | |
2015 | 15,296 | |
$ 60,456 | ||
Business_Overview_Basis_of_Pre1
Business, Overview, Basis of Presentation and Consolidation (Details) (USD $) | 12 Months Ended |
Oct. 31, 2013 | |
Entity Incorporation, Date of Incorporation | 7-Dec-06 |
Units Sold | 1,770,250 |
Net Proceeds from Sale of Units | $1,516,629 |
Business Combination, Reason for Business Combination | 'The Company has an exclusive license (the “License”) to a family of related nano-biopolymers conjugated drugs collectively referred to as “Polycefin ” as well as certain tumor bio-markers and related intellectual properties that are collectively expected to be capable of acting as a drug delivery and targeting platform (based on natural biopolymer, polymalic acid) for cancer therapy and diagnostics based on pre-clinical studies conducted at Cedars-Sinai Medical Center (“CSMC”). |
Arrogene Nanotechnology, Inc. | ' |
Business Acquisition, Effective Date of Acquisition | 'January 11, 2012 |
Business Acquisition, Name of Acquired Entity | 'Arrogene Nanotechnology, Inc. (“ANI”) |
Business Acquisition, Description of Acquired Entity | 'a company focused on oncology |
Business Acquisition, Cost of Acquired Entity, Description of Purchase Price Components | 'As a result of the Reverse Merger, the shareholders of ANI received 12,660,000 shares of Company common stock or approximately 86 % of the issued and outstanding common shares of the Company immediately after the transaction. Further, ANI warrant holders received identical common stock purchase warrants in the Company. |
Units Sold | 502,000 |
Net Proceeds from Sale of Units | 404,688 |
Net Proceeds from Sale of Units, acquired by ANI | $389,688 |
Arrogene Nanotechnology, Inc. | Common Stock | ' |
Business Acquisition, Equity Interest Issued or Issuable, Number of Shares | 12,660,000 |
Going_Concern_and_Managements_1
Going Concern and Management's Plans (Details) (USD $) | 12 Months Ended | |||
Oct. 31, 2013 | Feb. 28, 2014 | Oct. 31, 2012 | Oct. 31, 2011 | |
Details | ' | ' | ' | ' |
Revenue since inception | $0 | ' | ' | ' |
Deficit accumulated during development stage | 4,751,839 | ' | ' | ' |
Cash and cash equivalents | 13,822 | ' | 539,727 | 2,094 |
Units Sold | 1,770,250 | ' | ' | ' |
Net Proceeds from Sale of Units | 1,516,629 | ' | ' | ' |
Bridge Notes Sold, Value | ' | 170,000 | ' | ' |
Bridge Notes Sold, Net Proceeds | ' | $147,765 | ' | ' |
Recovered_Sheet8
Significant Accounting Policies: Property and Equipment (Details) (USD $) | 12 Months Ended | 75 Months Ended | |
Oct. 31, 2013 | Oct. 31, 2012 | Oct. 31, 2013 | |
Details | ' | ' | ' |
Depreciation, Depletion and Amortization, Nonproduction | $1,566 | $879 | $2,992 |
Recovered_Sheet9
Significant Accounting Policies: Income Taxes (Details) (USD $) | 12 Months Ended | 75 Months Ended | |
Oct. 31, 2013 | Oct. 31, 2012 | Oct. 31, 2013 | |
Details | ' | ' | ' |
Income Tax Examination, Penalties and Interest Expense | $0 | $0 | $449 |
Recovered_Sheet10
Significant Accounting Policies: Earnings (loss) Per Share: Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share (Details) | 12 Months Ended | |
Oct. 31, 2013 | Oct. 31, 2012 | |
Convertible Debt | ' | ' |
Shares of common stock from the exercise of warrants and convertible securities excluded from the calculation of diluted loss per share | 66,667 | 66,667 |
Warrants | ' | ' |
Shares of common stock from the exercise of warrants and convertible securities excluded from the calculation of diluted loss per share | 6,308,358 | 5,710,358 |
Recovered_Sheet11
Significant Accounting Policies: Supplemental Disclosures of Cash Flow Information: Schedule of Cash Flow, Supplemental Disclosures (Details) (USD $) | 12 Months Ended | 75 Months Ended | |
Oct. 31, 2013 | Oct. 31, 2012 | Oct. 31, 2013 | |
Details | ' | ' | ' |
Interest Paid | $839 | $8,477 | $9,560 |
ConvertibleNotesConvertedIntoCommonStock | ' | $716,550 | ' |
License_Agreement_Details
License Agreement (Details) (Licensing Agreements, USD $) | 12 Months Ended |
Oct. 31, 2013 | |
Licensing Agreements | ' |
Non-refundable license fee | $40,000 |
Stock Issued During Period, Shares, Share-based Compensation, Net of Forfeitures | 1,468,100 |
Share Price | $0.30 |
Licensing fee recorded to reflect issuance of shares | $440,430 |
Convertible_Notes_Details
Convertible Notes (Details) (USD $) | 75 Months Ended | 3 Months Ended | 12 Months Ended | |
Oct. 31, 2013 | Oct. 31, 2012 | Oct. 31, 2013 | Oct. 31, 2013 | |
Convertible Debt | Convertible Debt | Convertible Debt | ||
October2010ThroughApril2011Member | ||||
Net proceeds from sale of Convertible Notes | $624,351 | ' | ' | $726,550 |
Debt Instrument, Convertible, Terms of Conversion Feature | ' | ' | ' | 'The Convertible Notes were initially convertible into shares of our common stock at $.30 per share (the “Conversion Price”) |
Debt Conversion, Converted Instrument, Type | ' | ' | ' | 'shares of our common stock |
Debt Instrument, Interest Rate Terms | ' | ' | ' | 'The Convertible Notes do not bear interest |
Debt Instrument, Payment Terms | ' | ' | ' | 'originally payable on October 19, 2011 |
Debt Conversion, Converted Instrument, Amount | ' | 716,550 | ' | ' |
Debt Conversion, Converted Instrument, Shares Issued | ' | 4,777,000 | ' | ' |
ConvertibleDebtOutstanding | ' | ' | 10,000 | ' |
Reduction in conversion price | ' | $726,550 | ' | ' |
Stockholders_Equity_Details
Stockholders' Equity (Details) (USD $) | 12 Months Ended | |
Oct. 31, 2013 | Oct. 31, 2012 | |
Preferred Stock, Shares Authorized | 10,000,000 | 10,000,000 |
Common Stock, Shares Issued | 21,350,860 | 21,090,860 |
Common Stock, Par Value | $0.00 | $0.00 |
SaleOfUnitsShares | 260,000 | 1,510,250 |
Sale of Units, price per unit | $1 | $1 |
SaleOfUnitsValue | $227,645 | $1,288,984 |
Common Stock Purchase Warrants | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period, Fair Value | 17,160 | 99,677 |
Issued to founders in connection with formation of the Company | ' | ' |
Common Stock, Shares Issued | 238,000 | ' |
Common Stock, Par Value | $0 | ' |
Issued to CSMC in December 2009 | ' | ' |
Common Stock, Shares Issued | 31,900 | ' |
Common Stock, Par Value | $0 | ' |
Issued to CSMC to effectuate license | ' | ' |
Common Stock, Shares Issued | 1,468,100 | ' |
Share Price | $0.30 | ' |
Issued to shareholders of SKRP | ' | ' |
Common Stock, Shares Issued | 2,143,610 | ' |
Issued to legal counsel | ' | ' |
Common Stock, Shares Issued | 100,000 | ' |
IR Agreement | ' | ' |
Share Price | $0.56 | ' |
Allocated Share-based Compensation Expense | 37,333 | ' |
Share-based Compensation Expense included in other accrued liabilities | $37,333 | ' |
Income_Taxes_Details
Income Taxes (Details) (USD $) | 12 Months Ended | |
Oct. 31, 2013 | Oct. 31, 2012 | |
Details | ' | ' |
Income Tax Expense (Benefit) | $0 | $0 |
Effective Income Tax Rate Reconciliation, Change in Deferred Tax Assets Valuation Allowance, Amount | $500,000 | ' |
Income_Taxes_Schedule_of_Effec1
Income Taxes: Schedule of Effective Income Tax Rate Reconciliation (Details) | 12 Months Ended | |
Oct. 31, 2013 | Oct. 31, 2012 | |
Details | ' | ' |
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent | 34.00% | 34.00% |
Effective Income Tax Rate Reconciliation, State and Local Income Taxes, Percent | 5.80% | 5.80% |
Effective Income Tax Rate Reconciliation, Nondeductible Expense, Percent | -0.10% | -11.50% |
Effective Income Tax Rate Reconciliation, Change in Deferred Tax Assets Valuation Allowance, Percent | -39.79% | -28.30% |
Promissory_Notes_Details
Promissory Notes (Details) (USD $) | 12 Months Ended |
Oct. 31, 2013 | |
Origination fees | $8,000 |
Value of common stock issuable to makers of Promissory Notes | 22,400 |
Jaunary 2012 | ' |
Promissory Notes repaid | $80,000 |
PromissoryNotes1Member | November 2011 | ' |
Debt Instrument, Description | 'the Company entered into two promissory note agreements each for $40,000 for an aggregate of $80,000 (the “Promissory Notes”) |
Debt Instrument, Interest Rate Terms | 'The Promissory Notes did not bear interest |
Debt Instrument, Payment Terms | 'required repayment of $44,000 representing principal and an origination fee. |
Debt Instrument, Maturity Date, Description | 'The Promissory Notes were to mature on January 30, 2012. |
Commitments_and_Contingencies_1
Commitments and Contingencies: Consulting Agreements (Details) (USD $) | 12 Months Ended | |
Oct. 31, 2013 | Oct. 31, 2012 | |
Accrued compensation | $85,280 | $29,240 |
Related party payables | 39,000 | 10,000 |
Synthetica, Ltd | ' | ' |
Accrued compensation | 47,600 | 15,000 |
Entity controlled by Board chairman | September 2010 | ' | ' |
Related Party Transaction, Description of Transaction | 'In September 2010, we entered into a business and financial consulting agreement with an entity controlled by our Board chairman | ' |
Related party payables | $39,000 | $10,000 |
Commitments_and_Contingencies_2
Commitments and Contingencies (Details) (USD $) | 12 Months Ended | 75 Months Ended | |
Oct. 31, 2013 | Oct. 31, 2012 | Oct. 31, 2013 | |
Research and development | $452,384 | $98,549 | $550,933 |
Rent Expense Recorded | 37,692 | 17,808 | ' |
CSMCMember | ' | ' | ' |
Research and development | 281,495 | ' | ' |
Increase (Decrease) in Due to Related Parties | $229,003 | ' | ' |
Commitments_and_Contingencies_3
Commitments and Contingencies: Sublease Agreement (Details) (USD $) | 12 Months Ended |
Oct. 31, 2012 | |
Details | ' |
Operating Leases, Rent Expense, Sublease Rentals | $40,000 |
Commitments_and_Contingencies_4
Commitments and Contingencies: Commitments under non-cancelable operating leases (Details) (USD $) | 12 Months Ended |
Oct. 31, 2013 | |
Commitments under non-cancelable operating leases | $60,456 |
2014 | ' |
Commitments under non-cancelable operating leases | 45,160 |
2015 | ' |
Commitments under non-cancelable operating leases | $15,296 |