UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For quarterly period ended October 31, 2005
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number: 0-27028
EMBRYO DEVELOPMENT CORPORATION
------------------------------
(Exact name of Registrant as specified in its charter)
Delaware 13-3832099
- ------------------------------- ------------------------
(State or other jurisdiction of (State or I.R.S. Employer
incorporation of organization) Identification Number)
305 Madison Avenue, Suite 4510
New York, New York
------------------------------
(Address of principal executive offices)
10165
-----
(Zip Code)
(212) 808-0607
--------------
(Registrant's telephone number including area code)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months and (2) has been subject to such filing requirements for
the past 90 days. Yes X No
--- ---
Indicate by check mark whether the Registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).
Yes X No
--- ---
Class Outstanding at December 14, 2005
- ------------ --------------------------------
Common Stock 7,995,000
EMBRYO DEVELOPMENT CORPORATION
------------------------------
FORM 10-QSB
-----------
QUARTERLY REPORT
----------------
For the Six Months Ended October 31, 2005
-----------------------------------------
TABLE OF CONTENTS
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Page to Page
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Part I - Financial Information
Item 1. Financial Statements:
Balance Sheet..........................................1
Statements of Operations...............................2
Statements of Cash Flows...............................3
Notes to Financial Statements.......................4-12
Item 2. Management's discussion and analysis
of financial condition and plan
of operations......................................13-19
Item 3. Controls and Procedures......................20
Part II. - Other information..........................21
Signatures............................................22
Part I - Financial Information
- ------------------------------
Item 1. Financial Statements
- ----------------------------
EMBRYO DEVELOPMENT CORPORATION
------------------------------
BALANCE SHEET
-------------
(Unaudited)
---------
October 31, 2005
----------------
ASSETS
------
CURRENT ASSETS:
Cash $ 188
------------
Total Current Assets 188
------------
PROPERTY AND EQUIPMENT, net of accumulated
depreciation of $40,707 665
------------
OTHER ASSETS
Deferred financing costs 6,955
Deposit on asset acquisition 70,000
------------
Total Other Assets 76,955
------------
Total Assets $ 77,808
============
LIABILITIES AND STOCKHOLDERS' DEFICIT
- -------------------------------------
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 397,385
Notes and interest payable 117,824
Convertible bridge loans and interest payable,
net of debt discount of $663 808,603
------------
Total Current Liabilities 1,323,812
------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' DEFICIT:
Preferred stock, $.0001 par value; total authorized
15,000,000 shares,6,000,000 Series A, 3,000,000 Series B;
120,000 Series B issued and outstanding,
liquidation preference $4,800 12
Common stock, $.0001 par value; authorized 30,000,000
shares; 7,995,000 issued and outstanding 800
Additional paid-in-capital 10,634,773
Accumulated deficit (11,881,589)
------------
Total Stockholders' Deficit (1,246,004)
------------
Total Liabilities and Stockholders' Deficit $ 77,808
============
-1-
EMBRYO DEVELOPMENT CORPORATION
------------------------------
STATEMENTS OF OPERATIONS
------------------------
(Unaudited)
---------
SIX MONTHS ENDED THREE MONTHS ENDED
---------------- ------------------
OCTOBER 31, OCTOBER 31,
----------- -----------
2005 2004 2005 2004
---- ---- ---- ----
General and administrative $108,649 $27,996 $53,974 $27,455
OTHER (INCOME) EXPENSES:
Interest income - related party - (5,674) - (2,837)
Interest and other 36,388 915 17,480 222
Amortization of debt discount 88,635 16,667 35,984 16,667
Amortization of financing costs 57,361 - 27,118 -
Loss on extinguishment of debt - 187,500 - 187,500
Gain on forgiveness of debt-royalty - (354,000) - (354,000)
Reserve for investment in
unconsolidated investee 39,026 - 39,026 -
Reserve for collectibility of
promissory notes and interest - 8,134 - 4,067
Cost of failed asset acquisition 132,959 - - -
--------- --------- -------- --------
Total Other (Income) Expenses 354,369 (146,458) 119,608 (148,381)
--------- --------- -------- --------
NET INCOME (LOSS) $(463,018) $118,462 $(173,582)$120,926
========= ========= ========= ========
BASIC AND DILUTED NET INCOME (LOSS)
PER COMMON SHARE $ (.02) $ .01 $ (.01)$ .01
========= ========= ========= ========
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES USED IN COMPUTING
BASIC AND DILUTED NET INCOME (LOSS)
PER COMMON SHARE 19,995,000 10,603,696 19,995,000 13,212,391
========== ========== ========== ==========
-2-
EMBRYO DEVELOPMENT CORPORATION
------------------------------
STATEMENTS OF CASH FLOWS
------------------------
(Unaudited)
---------
SIX MONTHS ENDED
----------------
OCTOBER 31,
-----------
2005 2004
---- ----
OPERATING ACTIVITIES:
Net income (loss) $(463,018) $ 118,462
Adjustments to reconcile net income
(loss) to net cash used in operating
activities:
Depreciation 558 668
Amortization of debt discount 88,635 16,667
Amortization of financing costs 57,361 -
Loss on extinguishment of debt - 187,500
Gain on forgiveness of debt-royalty - (354,000)
Reserve for investment in
unconsolidated investee 39,026 -
Write-off of deferred
asset acquisition costs 37,545 -
Reserve for collectibility of
promissory notes and interest - 8,134
Changes in operating assets and liabilities:
(Increase) decrease:
Interest receivable - (9,427)
Deferred merger costs (25,000)
Accounts payable and accrued expenses 178,919 (27,173)
Royalty payable - (25,000)
--------- ---------
Net cash used in operating activities ( 60,974) (109,169)
--------- ---------
INVESTING ACTIVITIES:
Loan receivable - merger candidate - (300,000)
Repayment of loans from unconsolidated
investee - 14,876
Payment of asset acquisition deposit (100,000) -
Return of asset acquisition deposit 30,000 -
--------- ---------
Net cash used in investing activities ( 70,000) (285,124)
--------- ---------
FINANCING ACTIVITIES:
Purchase and retirement of Series A
preferred stock - (20,000)
Net proceeds from convertible bridge loan - 175,000
Proceeds from advances on convertible
bridge loan - 358,000
Deferred financing costs (4,485) -
--------- ---------
Net cash provided by (used in)
financing activities (4,485) 513,000
--------- ---------
NET INCREASE (DECREASE) IN CASH (135,459) 118,707
--------- ---------
CASH at beginning of period 135,647 94
--------- ---------
CASH at end of period $ 188 $ 118,801
========= ==========
-3-
EMBRYO DEVELOPMENT CORPORATION
------------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
(Unaudited)
---------
SIX MONTHS ENDED OCTOBER 31, 2005
---------------------------------
1. Organization and Nature of Operations and Liquidity:
---------------------------------------------------
Embryo Development Corporation [the "Company"] is a Delaware Corporation
which was formed in 1995 to develop, acquire, manufacture and market various
bio-medical devices throughout the United States.
To date, the Company has generated minimal sales and devoted its efforts
primarily to various organizational activities, including negotiating of license
agreements, developing its business strategy, hiring management personnel,
raising capital through an initial public offering which was completed in
November 1995, and undertaking preliminary activities for the commencement of
operations. All of the license agreements for the development of various medical
devices have effectively been terminated and the Company has determined that the
remaining assets it had purchased relating to medical products have no viable
marketability. As a result, management has determined that the Company is no
longer in the development stage.
In January 1997, the Company acquired a majority interest in Hydrogel
Design Systems, Inc. ["HDS"] which was a consolidated subsidiary of the Company
until January 21, 1998. On that date, the Company's ownership of HDS dropped to
45.6%, and the investment was accounted for under the equity method. In January
1999, the Company's share of HDS dropped to 14.4% and was presented on the cost
basis from then on. HDS is engaged in the manufacture, marketing, selling and
distribution of hydrogel, an aqueous polymer-based radiation ionized
medical/consumer product. At May 25, 2004, the Company held 11.4% of the common
stock of HDS and 10.3% of total voting shares. On that date, Nesco Industries,
Inc. ("Nesco"), a publicly traded company listed on the Over The Counter
Bulletin Board Exchange (OTCC BB, Symbol NESK), HDS, certain stockholders of
Nesco and certain stockholders of HDS completed the transactions contemplated by
the Share Exchange Agreement, dated as of April 29, 2004 (the "Exchange
Agreement"), whereby HDS became a majority owned subsidiary of Nesco and the
holders of HDS common stock and debt hold a majority interest of Nesco. Prior to
the merger, Nesco was engaged primarily in asbestos abatement contracting but
had ceased these operations in 2003.
Nesco had intended to issue shares of its common stock in exchange for the
equity securities of HDS in certain ratios as provided for in the Exchange
Agreement. However, because Nesco did not have the required number of authorized
shares of common stock to complete the exchange on this basis, it issued shares
of its newly designated Series B Preferred Stock ("Preferred Stock") for, among
others, equity and debt of HDS as described in the Exchange Agreement. Upon
filing of the Certificate of Amendment to the Certificate of Incorporation to
increase the number of shares of common stock which Nesco is authorized to
issue, each share of the Preferred Stock will be automatically converted into
shares of Nesco Common Stock.
-4-
EMBRYO DEVELOPMENT CORPORATION
------------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
(Unaudited)
---------
SIX MONTHS ENDED OCTOBER 31, 2005
---------------------------------
(Continued)
---------
1. Organization and Nature of Operations and Liquidity (Cont'd):
------------------------------------------------------------
As a result of the Company exchanging the HDS shares it owned for Nesco
shares, the Company now holds the equivalent of approximately 4,837,500 shares
or 4.41% of Nesco Common Stock as of October 31, 2005.
On September 9, 2004, the Company entered into an investment banking
agreement for an initial term of 180 days with a third party to obtain bridge
financing of up to $950,000 in connection with an acquisition transaction (see
Notes 5 and 6). The Company received gross proceeds of $750,000 ($636,717 net of
financing costs) in connection with this agreement. The Company made advances in
the aggregate of $300,000 to a possible merger candidate under the terms of a
secured promissory note dated September 28, 2004 (see Note 3). On March 30,
2005, the Company terminated its efforts to complete a definitive transaction
with this party due to the inability of the candidate to cure defaults on
certain of its outstanding indebtedness owing to a third party.
On April 22, 2005, the Company entered into an investment banking agreement
for an initial term of 180 days with a third party to obtain bridge financing of
$42,000,000 in connection with an asset purchase transaction whereby the Company
would acquire the assets of a nutriceutical company and negotiated agreements to
complete that transaction (see Note 5) which was to close no later than May 25,
2005. On June 6, 2005, the Company deposited $100,000 into an escrow account as
a good faith deposit in order to extend the closing date for the transaction
until June 10, 2005. A principal of the investment banking firm has personally
guaranteed repayment to us of the escrow deposit. The transaction did not close
by that date and the $100,000 deposit was transferred out of escrow and
delivered to the prospective seller. We have terminated discussions regarding
this transaction. The Company has not made a demand under the personal guarantee
at this time for reimbursement of the deposit. As of October 31, 2005,the
principal of the investment banking firm repaid $30,000 of the deposit to the
Company.
The accompanying financial statements have been prepared in conformity with
accounting principles generally accepted in the United States of America, which
contemplate continuation of the Company as a going concern. The Company has
incurred cumulative losses of approximately $11,882,000, has a working capital
deficit of approximately $1,324,000, and has used cash of approximately $61,000
to fund operations for the six months ended October 31, 2005, which raise
substantial doubt about its ability to continue as a going concern. In addition,
the Company has not generated any revenue during the six months ended October
31, 2005 or in the last three fiscal years. Management recognizes that the
Company must generate revenue to achieve profitable operations and to meet
current operating costs.
-5-
EMBRYO DEVELOPMENT CORPORATION
------------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
(Unaudited)
---------
SIX MONTHS ENDED OCTOBER 31, 2005
---------------------------------
(Continued)
---------
1. Organization and Nature of Operations and Liquidity (Cont'd):
------------------------------------------------------------
The Company has no cash on hand at October 31, 2005 and expects to incur
additional expenditures over the next twelve (12) months for general and
administrative expenses consisting primarily of maintaining an office for the
Company, to handle administrative and accounting functions inclusive of required
SEC reporting, and for legal expenses in connection with the settlement of
obligations so that the Company may pursue a possible acquisition or other form
of reorganization. The Company has been able to effectively eliminate most of
its ongoing expenses, inclusive of rent and salaries. Although these expenses
are being accrued, they are not currently being paid. The Company's management
believes that the repayment of the monies advanced as an escrow deposit as
described above,if necessary, and the possible collection of a promissory note
(see Note 3) should be sufficient to fund the Company's operations until such
time that a definitive agreement is entered into for a merger transaction or
other form of reorganization.
On December 12, 2003, the Company received a letter from the SEC's Division
of Investment Management inquiring as to the possible status of the Company as
an unregistered "investment company" within the meaning of the Investment
Company Act of 1940 ("40 Act"). The Company responded to this letter on January
28, 2004 explaining that the Company may have inadvertently and temporarily
fallen into the SEC's definition of an investment company because of the lack of
success with a licensing agreements program that resulted in a disproportionate
percentage of assets being represented by ownership in another company. The
Company's response continued that by August 31, 2004, it intended to enter into
some form of reorganization with a private company or re-configure its assets to
remove itself from the definition of an investment company under the '40 Act.
The share exchange agreement with Yellow Brick Road LLC described in the
Company's 10-KSB filed on August 13, 2004, was intended to satisfy this
commitment. That transaction was not successful and was terminated in September
2004. The Company advised the SEC on September 1, 2004 that it will continue its
efforts to achieve a reconfiguration of its assets or enter into some from of
re-organization by December 31, 2004. The Company had entered into an investment
banking agreement (see Note 5) and was in discussions with a merger candidate
(see Note 3) in order to resolve this issue. This effort was terminated on March
30, 2005. The Company entered into an investment banking agreement on April 22,
2005 in connection with a potential acquisition transaction. Although
discussions in connection with this transaction have terminated, and the Company
cannot give any assurance that it will be successful in entering into a merger
or other reorganization, the Company believes it will resolve the investment
company issue in the near future. However, a determination by the SEC that the
Company is in fact an unregistered investment company could have a material
adverse effect on the Company's business.
-6-
EMBRYO DEVELOPMENT CORPORATION
------------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
(Unaudited)
---------
SIX MONTHS ENDED OCTOBER 31, 2005
---------------------------------
(Continued)
---------
1. Organization and Nature of Operations and Liquidity (Cont'd):
------------------------------------------------------------
In the event the Company is unable to satisfy its capital needs or settle
its current obligations to pursue an acquisition or other form or
reorganization, management may pursue the sale of some or all of the Company's
assets or seek additional financing. The primary asset has been the Company's
equity position in Nesco. As of October 31, 2005, the Company held the
equivalent of 4,837,500 shares of Nesco common stock representing 4.41% of the
outstanding equity securities of Nesco. Although these shares may be sold one
year from the exchange date (after May 25, 2005), the Company does not have
actual common shares at this time; as noted above, Nesco issued Series B
Preferred shares which will be automatically converted to common shares at such
time that authorization is received to issue these shares. Pursuant to SFAS No.
115, Accounting for Certain Investments in Debt and Equity Securities and FSP
FAS 115-1 and FAS 124-1, The Meaning of Other Than-Temporary Impairment and Its
Application to Certain Investments, the Company has recorded a 100% valuation
allowance on this investment in light of Nesco's deteriorated financial
condition as reflected in its public filings (See Note 4).
No assurance can be made as to the success of a future acquisition
transaction or other type of reorganization or as to the success of the
Company's future course of operations which are undetermined at this time. The
accompanying financial statements do not include any adjustments that might be
necessary if the Company is unable to continue as a going concern.
2. Basis of Presentation:
---------------------
The interim financial statements furnished reflect all adjustments which
are, in the opinion of management, necessary to present a fair statement of the
financial position, results of operations, and cash flows as of October 31, 2005
and for the six and three month periods ended October 31, 2005 and 2004. The
financial statements should be read in conjunction with the summary of
significant accounting policies and notes to financial statements included in
the Company's Form 10-KSB for the fiscal year ended April 30, 2005. The results
of operations for the six month period ended October 31, 2005 are not
necessarily indicative of the results to be expected for the full year.
-7-
EMBRYO DEVELOPMENT CORPORATION
------------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
(Unaudited)
---------
SIX MONTHS ENDED OCTOBER 31, 2005
---------------------------------
(Continued)
---------
3. Loan Receivable - Failed Merger Candidate:
-----------------------------------------
On September 28, 2004, the Company, under the terms of a secured promissory
note, made advances of $300,000 to a possible acquisition candidate. The note,
as amended, bears interest at 8% and was due on the earlier of (a) one year or
(b) on April 15, 2005 if a definitive agreement between the parties was not
entered into by March 15, 2005. On March 30, 2005, the Company terminated its
efforts to complete a definitive transaction with this party due to the
inability of the candidate to cure defaults on certain of its outstanding
indebtedness owing to a third party. On April 11, 2005, the Company agreed to
extend the due date of the note to June 15, 2005 subject to the Company
receiving a principal payment of $50,000, which was subsequently received on
April 19, 2005. This note is secured by the assets of the borrower. Accrued
interest of approximately $23,000 was fully reserved for at October 31, 2005. To
date, the note has not been paid and the Company has started collection
proceedings. At October 31, 2005, the amount due on the note and accrued
interest in the aggregate of approximately $273,000 has been reserved for by the
Company as collectibility is uncertain at this time.
4. Investment in Nesco
-------------------
As of October 31, 2005, pursuant to the share exchange agreement described
in Note 1, the Company now holds the equivalent of approximately 4,837,500
shares or 4.41% of Nesco Common Stock. This investment had been valued at cost
which approximated $39,000. However, pursuant to SFAS No. 115, Accounting for
Certain Investments in Debt and Equity Securities and FSP FAS 115-1 and FAS
124-1, The Meaning of Other Than-Temporary Impairment and Its Application to
Certain Investments, the Company has recorded a 100% valuation allowance on this
investment in light of Nesco's deteriorated financial condition as reflected in
its public filings.
5. Investment Banking Agreements:
-----------------------------
On September 9, 2004, the Company entered into an investment banking
agreement for advisory services and assistance with an acquisition transaction.
Under the terms of the agreement, as amended, bridge financing would be provided
to the Company of up to $950,000, in two tranches. This bridge financing was
provided by accredited investors, the terms of which were agreed upon by the
Company and the entities providing the financing (see Note 6). On March 30,
2005, the Company terminated its efforts to complete a definitive acquisition
transaction due to the inability of the targeted candidate to cure defaults on
certain of its outstanding indebtedness owing to a third party.
-8-
EMBRYO DEVELOPMENT CORPORATION
------------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
(Unaudited)
---------
SIX MONTHS ENDED OCTOBER 31, 2005
---------------------------------
(Continued)
---------
5. Investment Banking Agreements (Cont'd):
--------------------------------------
On April 22, 2005, the Company entered into an investment banking agreement
for an initial term of 180 days with a third party to obtain bridge financing of
$42,000,000 in connection with an asset purchase transaction whereby the Company
would acquire the assets of a nutriceutical company and negotiated agreements to
complete that transaction which was to close no later than May 25, 2005. On June
6, 2005, the Company deposited $100,000 into an escrow account as a good faith
deposit in order to extend the closing date for the transaction until June 10,
2005. A principal of the investment banking firm has personally guaranteed
repayment to us of the escrow deposit. The transaction did not close by that
date and the $100,000 deposit was transferred out of escrow and delivered to the
prospective seller. We have terminated discussions regarding this transaction.
The Company has not made a demand under the personal guarantee at this time for
reimbursement of the deposit. As of October 31, 2005,the principal of the
investment banking firm repaid $30,000 of the deposit to the Company. The
Company had incurred additional costs in connection with this asset acquisition
of approximately $133,000 which are included in operations as costs of failed
asset acquisition at October 31, 2005.
6. Convertible Bridge Loans:
- ----------------------------
On September 29, 2004, the Company received the first tranche of bridge
financing in connection with an investment banking agreement (see Note 5). The
Company received gross proceeds of $200,000 and entered into a Note Purchase
Agreement with an investor. Pursuant to the agreement, the investor purchased
from the Company a $200,000 one year 8% convertible promissory note. The note
shall convert on a mandatory basis into 20,000,000 shares of common stock if any
time prior to maturity the Company consolidates with, or merges into, another
corporation or entity, or effects any other corporate reorganization resulting
in a change in control. The lender may exercise a discretionary conversion at
any time prior to maturity. The value of the beneficial conversion feature of
the convertible debt was in excess of the aggregate proceeds received which
resulted in the total proceeds of $200,000 being recorded as an equity
component. For the six months ended October 31, 2005, the amortization of debt
discount was approximately $83,000. The balance due on the note at October 31,
2005 is approximately $217,000 consisting of approximately $200,000 in principal
and $17,000 in accrued interest. Interest expense for the six months ended
October 31, 2005 and 2004 was approximately $8,000 and $1,000, respectively. At
October 31, 2005, the note had not been converted. On September 8, 2005, the
lender agreed to extend the maturity date for an additional six months to March
29, 2006 with the same terms and conditions as the original note.
-9-
EMBRYO DEVELOPMENT CORPORATION
------------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
(Unaudited)
---------
SIX MONTHS ENDED OCTOBER 31, 2005
---------------------------------
(Continued)
---------
6. Convertible Bridge Loans (Cont'd):
---------------------------------
On November 23, 2004, the Company received the second tranche of bridge
financing in connection with the investment banking agreement (see Note 5). The
Company entered into a Securities Purchase Agreement whereby the Company offered
for sale up to $750,000 of its one year 8% senior secured convertible promissory
notes. The purchasers of the notes would also receive five year warrants to
purchase an aggregate of up to 750,000 shares of the Company's common stock at
an exercise price of $.10 per share (1 warrant for each $1 of principal amount
of note). On November 24, 2004 the offering was completed and the Company issued
notes in the principal amount of $550,000 and warrants to purchase 550,000
shares of common stock in connection with these notes. Approximately $11,000 of
the proceeds were attributed to the fair value of the warrants. This amount was
recorded as an equity component. The remaining balance of $539,000 was recorded
as long-term debt. For the six months ended October 31, 2005 the amortization of
debt discount was approximately $5,000. The notes are convertible into common
stock on a mandatory basis if the Company consolidates with, or merges into,
another corporation or entity, or effects any other corporate reorganization
resulting in a change in control within six months from the date of the notes,
or if any time prior to the maturity date the Company consummates a private
equity financing or series of such financings in which the Company receives
gross proceeds of at last $3 million at a pre- money valuation of at least $20
million. The notes shall convert at a per share price equal to a 25% discount to
the per share price of the financing shares sold to investors in the financing.
The lenders may exercise a discretionary conversion during the last 120 days
prior to the maturity date of the notes at a conversion price of $.10 per share
or at any time prior to maturity if the Company consummates a financing but it
is at a pre-money valuation of less than $20 million dollars at a per share
price equal to a 25% discount to the per share price of financing shares
actually sold to investors in such financing. The balance due on the notes at
October 31, 2005 is approximately $591,000 consisting of approximately $550,000
in principal, $42,000 in accrued interest and unamortized debt discount of
approximately $1,000. Interest expense for the six months ended October 31, 2005
was approximately $22,000. At October 31, 2005, the notes had not been
converted. On December 6, 2005, Ocean Drive Holdings, LLC, acting as appointed
agent of the lenders as per the loan documents, agreed to extend the maturity
date for an additional year to November 23, 2006 with the same terms and
conditions as the original note.
The Company paid approximately $117,000 in financing fees associated with
these transactions which are being amortized over the life of the loans. For the
six months ended October 31, 2005, amortization approximated $57,000. At October
31, 2005, the unamortized financing fees approximated $7,000.
-10-
EMBRYO DEVELOPMENT CORPORATION
------------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
(Unaudited)
---------
SIX MONTHS ENDED OCTOBER 31, 2005
---------------------------------
(Continued)
---------
7. Notes Payable:
-------------
In conjunction with a June 2001 litigation settlement the Company recorded
a long-term note payable in the amount of $75,000 which was due on June 26, 2003
and bears interest at 7% per year. The note was not paid when due. No default
has been declared on the note. The balance due on the note with accrued interest
of $97,800 is included in current liabilities.
In conjunction with a failed merger in the fiscal year ended April 30,2005,
an unrelated third party loaned the Company $30,000, of which $20,000 is
outstanding at October 31, 2005. The loan is payable on demand and is non-
interest bearing.
8. Stockholders' Deficit:
---------------------
[A] Issuance of Securities - On June 17, 1998, the Company issued options, to
three (3) directors and an employee, to purchase 1,650,000 shares of the
Company's common stock at an exercise price equal to the market price on the
date of the grant ($.0938) under the Incentive Stock Option Plan. In addition,
an aggregate of 500,000 options which were granted to an officer under the terms
of a prior employment agreement were amended to have an exercise price of
($.0938), the market price on the date of the amendment. These options were
exercised in June 1998 for an aggregate of 2,150,000 shares.
The Company received promissory notes dated July 1, 1998 to the three (3)
directors and an employee in the aggregate of $201,670 for payment of the
shares. The notes were to mature in five (5) years on July 1, 2003, with
interest at 8%, and were secured by the related securities. On July 1, 2003,
these promissory notes were extended for an additional three (3) year term under
the same terms and conditions as the original notes. The Company has set up a
reserve in the aggregate of approximately $320,000 for the principal and
interest due on these notes as their collectibility is uncertain at this time.
[B] Net Income [Loss] Per Share -Basic loss per share excludes dilution and is
calculated by dividing the net loss attributable to common shareholders by the
weighted average number of common shares outstanding for the period. Diluted
loss per share reflects the potential dilution that could occur if securities or
other contracts to issue common stock were exercised or converted into common
stock and resulted in the issuance of common stock. Because the Company incurred
a net loss, diluted net loss per share was the same as basic net loss per share
for the six months ended October 31, 2005, since the effect of any potentially
dilutive securities would be antidilutive. There were no potentially dilutive
securities outstanding at October 31, 2004.
-11-
EMBRYO DEVELOPMENT CORPORATION
------------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
(Unaudited)
---------
SIX MONTHS ENDED OCTOBER 31, 2005
---------------------------------
(Continued)
---------
8. Stockholders Deficit(Cont'd):
----------------------------
[B] Net Income [Loss] Per Share (Cont'd)- The income (loss) per common share for
the six months ended October 31, 2005 includes the current outstanding common
shares in the aggregate of 7,995,000 shares and 120,000 shares of Series B
Preferred which will be converted into 12,000,000 common shares. During the
fiscal year ended April 30, 2005, the Company issued an aggregate of 120,000
shares of Series B preferred stock which are automatically convertible to common
stock at 100 shares of common for each share of Preferred B stock. These shares
will convert to 12,000,000 shares of common stock upon the filing of a
Certificate of Amendment to the Certificate of Incorporation to increase the
number of shares of common stock the Company is authorized to issue.
9. Commitments and Contingencies:
-----------------------------
In June 2001, definitive settlement documents were executed in connection
with a consolidated class action in which the Company was a defendant. The
settlement documents provided that the Company would pay $100,000 by remitting
to the class representatives $25,000 and a note in the amount of $75,000 payable
in June 2003 with interest thereon at 7% per year. The Company had remitted the
funds and note described above to the class representatives to be held by them
in accordance with the terms of the settlement agreement and pending final court
review of the settlement. In December 2002, the court approved the settlement.
The note was not paid when due. No default has been declared on the note. (see
Note 7).
10. Supplementary Information - Statements of Cash Flows:
----------------------------------------------------
During the six months ended October 31, 2004, the Company exchanged an
aggregate of approximately $63,000 in debt for equity.
During the six months ended October 31, 2004, the Company issued common
stock valued at approximately $173,000. This amount was previously included on
the balance sheet in costs of failed merger at April 30, 2004.
The Company has not paid interest for the six months ended October 31, 2005
and 2004.
The Company has not paid income taxes for the six months ended October 31,
2005 and 2004.
-12-
Item. 2
- -------
EMBRYO DEVELOPMENT CORPORATION
------------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
---------------------------------------
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
---------------------------------------------
Liquidity and Capital Resources
- -------------------------------
The Company's ability to continue in the normal course of business is
dependent upon the success of future operations. The Company has had recurring
losses from operations which aggregate approximately $(11,882,000)cumulative to
October 31, 2005. At October 31, 2005, the Company has a net working capital
deficit of approximately $(1,324,000) and a stockholders' deficit of
approximately $(1,246,000) , which raise substantial doubt about its ability to
continue as a going concern. Management has determined that the Company is no
longer in the development stage as it has ceased development of all products due
to loss of licenses and product marketability. In addition, the Company has not
generated any revenue during the six months ended October 31, 2005 or in the
last three fiscal years. Management recognizes that the Company must generate
revenue to achieve profitable operations and to meet current operating costs.
The Company is presently exploring several business opportunities, inclusive of
the possible acquisition of a new line of business, which may or may not be
related to the development of medical devices.
On September 9, 2004, the Company entered into an investment banking
agreement for an initial term of 180 days with a third party for advisory
services and to obtain bridge financing of up to $950,000 in connection with an
acquisition transaction. The Company received gross proceeds of $750,000 in
connection with this agreement. This bridge financing was provided by accredited
investors, the terms of which were agreed upon by the Company and the entities
providing the financing. On September 28, 2004, the Company, under the terms of
a secured promissory note, made advances of $300,000 to a possible acquisition
candidate. The note, as amended, bears interest at 8% and was due on the earlier
of (a) one year or (b) on April 15, 2005 if a definitive agreement between the
parties was not entered into by March 15, 2005. On March 30, 2005, the Company
terminated its efforts to complete a definitive transaction with this party due
to the inability of the candidate to cure defaults on certain of its outstanding
indebtedness owing to a third party. On April 11, 2005, the Company agreed to
extend the due date of the note to June 15, 2005 subject to the Company
receiving a principal payment of $50,000, which was subsequently received on
April 19, 2005. This note is secured by the assets of the borrower. Accrued
interest of approximately $23,000 was fully reserved for at October 31, 2005. To
date, the note has not been paid and the Company has started collection
proceedings. At October 31, 2005, the amount due on the note and accrued
interest in the aggregate of approximately $273,000 has been reserved for by the
Company as collectibility is uncertain at this time.
On September 29, 2004, the Company received the first tranche of bridge
financing in connection with this investment banking agreement. The Company
received gross proceeds of $200,000 and entered into a Note Purchase Agreement
-13-
with an investor. Pursuant to the agreement, the investor purchased from the
Company a $200,000 one year 8% convertible promissory note. The note shall
convert on a mandatory basis into 20,000,000 shares of common stock if any time
prior to maturity the Company consolidates with, or merges into, another
corporation or entity, or effects any other corporate reorganization resulting
in a change in control. The lender may exercise a discretionary conversion at
any time prior to maturity. The value of the beneficial conversion feature of
the convertible debt was in excess of the aggregate proceeds received which
resulted in the total proceeds of $200,000 being recorded as an equity
component. For the six months ended October 31, 2005, the amortization of debt
discount was approximately $83,000. The balance due on the note at October 31,
2005 is approximately $217,000 consisting of approximately $200,000 in principal
and $17,000 in accrued interest. Interest expense for the six months ended
October 31, 2005 and 2004 was approximately $8,000 and $1,000 respectively. At
October 31, 2005, the note had not been converted. On September 8, 2005, the
lender agreed to extend the maturity date for an additional six months to March
29, 2006 with the same terms and conditions as the original note.
On November 23, 2004, the Company received the second tranche of bridge
financing in connection with the investment banking agreement. The Company
entered into a Securities Purchase Agreement whereby the Company offered for
sale up to $750,000 of its one year 8% senior secured convertible promissory
notes. The purchasers of the notes would also receive five year warrants to
purchase an aggregate of up to 750,000 shares of the Company's common stock at
an exercise price of $.10 per share (1 warrant for each $1 of principal amount
of note). On November 24, 2004 the offering was completed and the Company issued
notes in the principal amount of $550,000 and warrants to purchase 550,000
shares of common stock in connection with these notes. Approximately $11,000 of
the proceeds were attributed to the fair value of the warrants. This amount was
recorded as an equity component. The remaining balance of $539,000 was recorded
as long-term debt. For the six months ended October 31, 2005 the amortization of
debt discount was approximately $5,000. The notes are convertible into common
stock on a mandatory basis if the Company consolidates with, or merges into,
another corporation or entity, or effects any other corporate reorganization
resulting in a change in control within six months from the date of the notes,
or if any time prior to the maturity date the Company consummates a private
equity financing or series of such financings in which the Company receives
gross proceeds of at last $3 million at a pre- money valuation of at least $20
million. The notes shall convert at a per share price equal to a 25% discount to
the per share price of the financing shares sold to investors in the financing.
The lender may exercise a discretionary conversion during the last 120 days
prior to the maturity date of the notes at a conversion price of $.10 per share
or at any time prior to maturity if the Company consummates a financing but it
is at a pre-money valuation of less than $20 million dollars at a per share
price equal to a 25% discount to the per share price of financing shares
actually sold to investors in such financing. The balance due on the notes at
October 31, 2005 is approximately $591,000 consisting of approximately $550,0000
in principal, $42,000 in accrued interest and unamortized debt discount of
approximately $1,000. Interest expense for the six months ended October 31, 2005
-14-
was approximately $22,000. At October 31, 2005, the notes had not been
converted. On December 6, 2005, Ocean Drive Holdings, LLC, acting as appointed
agent of the lenders as per the loan documents, agreed to extend the maturity
date for an additional year to November 23, 2006 with the same terms and
conditions as the original note.
The Company paid approximately $117,000 in financing fees associated with
these transactions which are being amortized over the original life of the
loans. For the six months ended October 31, 2005, amortization approximated
$57,000. At October 31, 2005, the unamortized financing fees approximated
$7,000.
On April 22, 2005, the Company entered into an investment banking agreement
for an initial term of 180 days with a third party to obtain bridge financing of
$42,000,000 in connection with an asset purchase transaction whereby the Company
would acquire the assets of a nutriceutical company and negotiated agreements to
complete that transaction which was to close no later than May 25, 2005. On June
6, 2005, the Company deposited $100,000 into an escrow account as a good faith
deposit in order to extend the closing date for the transaction until June 10,
2005. A principal of the investment banking firm has personally guaranteed
repayment to us of the escrow deposit. The transaction did not close by that
date and the $100,000 deposit was transferred out of escrow and delivered to the
prospective seller. We have terminated discussions regarding this transaction.
The Company has not made a demand under the personal guarantee at this time for
reimbursement of the deposit. As of October 31, 2005, the principal of the
investment banking firm repaid $30,000 of the deposit to the Company. The
Company had incurred additional costs in connection with this asset acquisition
of approximately $133,000 which are included in operations as costs of failed
asset acquisition at October 31, 2005.
The Company was effectively able to complete certain transactions including
the settlement of a royalty due to a licensor for a previously terminated
agreement in the amount of $379,000 which was settled in full on October 21,
2004 for $25,000. The remaining $354,000 was recorded as forgiveness of debt in
the prior fiscal year. In addition, the Company was able to repurchase all of
its outstanding Series A Preferred stock from the sole shareholder in the
aggregate of 6,000,000 shares for $20,000. This stock has been retired.
The Company's statement of cash flows for the six months ended October 31,
2005 reflects cash used in operating activities of approximately $61,000. This
cash was used primarily to pay professional fees in connection with the year end
and quarterly required filings and other costs in connection with the failed
acquisition described above. Cash used in investing activities of approximately
$70,000 is attributable to the escrow deposit made for a failed asset acquisiton
as described above in the amount of $100,000 net of the $30,000 which has been
repaid to the Company. Cash used by financing activities of approximately $4,000
represents additional financing costs as related to the convertible debt.
The Company has no cash on hand at October 31, 2005 and expects to incur
-15-
additional expenditures over the next twelve (12) months for general and
administrative expenses consisting primarily of maintaining an office for the
Company, to handle administrative and accounting functions inclusive of required
SEC reporting, and for legal expenses in connection with the settlement of
obligations so that the Company may pursue a possible acquisition or other form
or reorganization. The Company has been able to effectively eliminate most of
its ongoing expenses, inclusive of rent and salaries. Although these expenses
are being accrued, they are not currently being paid. The Company's management
believes that the repayment of the monies advanced as an escrow deposit as
described above,if necessary, and the possible collection of a promissory note
from a failed merger, as described above, should be sufficient to fund the
Company's operations until such time that a definitive agreement is entered into
for a merger transaction or other form of reorganization.
In the event the Company is unable to satisfy its capital needs or settle
its current obligations to pursue an acquisition or other form or
reorganization, management may pursue the sale of some or all of the Company's
assets or seek additional financing. The primary asset has been the Company's
equity position in Nesco. As of October 31, 2005, the Company held the
equivalent of 4,837,500 shares of Nesco common stock representing 4.41% of the
outstanding equity securities of Nesco. Although these shares may be sold one
year from the exchange date (after May 25, 2005), the Company does not have
actual common shares at this time; as noted above, Nesco issued Series B
Preferred shares which will be automatically converted to common shares at such
time that authorization is received to issue these shares. Pursuant to SFAS No.
115, Accounting for Certain Investments in Debt and Equity Securities and FSP
FAS 115-1 and FAS 124-1, The Meaning of Other Than-Temporary Impairment and Its
Application to Certain Investments, the Company has recorded a 100% valuation
allowance on this investment in light of Nesco's deteriorated financial
condition as reflected in its public filings.
On December 12, 2003, the Company received a letter from the SEC's Division
of Investment Management inquiring as to the possible status of the Company as
an unregistered "investment company" within the meaning of the Investment
Company Act of 1940 ("40 Act"). The Company responded to this letter on January
28, 2004 explaining that the Company may have inadvertently and temporarily
fallen into the SEC's definition of an investment company because of the lack of
success with a licensing agreements program that resulted in a disproportionate
percentage of assets being represented by ownership in another company. The
Company's response continued that by August 31, 2004, it intended to enter into
some form of reorganization with a private company or re-configure its assets to
remove itself from the definition of an investment company under the '40 Act.
The share exchange agreement with Yellow Brick Road LLC described in the
Company's 10-KSB filed on August 13, 2004, was intended to satisfy this
commitment. That transaction was not successful and was terminated in September
2004. The Company advised the SEC on September 1, 2004 that it will continue its
efforts to achieve a reconfiguration of its assets or enter into some from of
re-organization by December 31, 2004. The Company had entered into an investment
-16-
banking agreement and was in discussions with a merger candidate in order to
resolve this issue. This effort was terminated on March 30, 2005. The Company
entered into an investment banking agreement on April 22, 2005 in connection
with a potential acquisition transaction. Although discussions in connection
with this transaction have terminated, and the Company cannot give any assurance
that it will be successful in entering into a merger or other reorganization,
the Company believes it will resolve the investment company issue in the near
future. However, a determination by the SEC that the Company is in fact an
unregistered investment company could have a material adverse effect on the
Company's business.
Results of Operations
- ---------------------
Since its inception, the Company's primary activities have consisted of
obtaining the exclusive license to seven (7) medical devices developed by Dr.
Lloyd Marks, developing a marketing strategy for these and its other medical
devices and the start-up of HDS, a manufacturer of gel related products.
At October 31, 2005, the Company no longer holds any of these (7) licenses
it had purchased from Dr. Lloyd Marks. The final license was terminated on
January 22, 2001 as the Company could not pay the licensor the required
additional $250,000, under the terms of the amended agreement, to extend the
regulatory approval requirement.
In October 1999, the Company ceased sales on its other medical devices due
to the relatively low level of sales, capital constraints and price increases by
the manufacturer. The Company has evaluated the marketability of the licensed
technology relating to these products and has determined that these products
have no viable marketability at this time. At April 30, 2000, the unamortized
amount of this technology approximated $155,000, of which the Company has set-up
a 100% reserve based upon anticipated marketability of these products.
HDS was a subsidiary in which the Company previously held a 10.3% voting
share at May 25, 2004. On that date, Nesco, a publicly traded company listed on
the Over The Counter Bulletin Board Exchange (OTCC BB,Symbol NESK), HDS, certain
stockholders of Nesco and certain stockholders of HDS completed the transactions
contemplated by the Exchange Agreement, dated as of April 29, 2004, whereby HDS
became a majority owned subsidiary of Nesco and the holders of HDS common stock
and debt hold a majority interest of Nesco. Prior to the merger, Nesco was
engaged primarily in asbestos abatement contracting but had ceased these
operations in 2003.
Nesco had intended to issue shares of its common stock in exchange for the
equity securities of HDS in certain ratios as provided for in the Exchange
Agreement. However, because Nesco did not have the required number of authorized
shares of common stock to complete the exchange on this basis, it issued shares
of its newly designated Series B Preferred Stock for, among others, equity and
debt of HDS as described in the Exchange Agreement. Upon filing of the
Certificate of Amendment to the Certificate of Incorporation to increase the
number of shares of common
-17-
stock which Nesco is authorized to issue, each share of the Preferred Stock
will be automatically converted into shares of Nesco Common Stock.
As a result of the Company exchanging the HDS shares it owned for Nesco
shares, the Company now holds the equivalent of approximately 4,837,500 shares
or 4.41% of Nesco Common Stock as of October 31,2005.
The Company has not derived significant revenues since its inception in
March 1995. As a result of the Company's start-up expenses and acquisition of
licenses and royalty rights for the products that were being developed, the
Company has accumulated a deficit of approximately $11,882,000 through October
31, 2005.
The net loss for the six months ended October 31, 2005 was approximately
($463,000) as compared to a net income of approximately $118,000 for the six
months ended October 31, 2004. There were no revenues in either of the two
periods. The loss for the six months ended October 31, 2005 is primarily
attributable to general and administrative expenses of approximately $109,000
consisting of mainly accrued salaries and professional fees, amortization of
debt discount and financing costs of approximately $146,000, approximately
$36,000 in accrued interest for debt, approximately $133,000 in expenses
associated with a failed asset acquisition and approximately $39,000 for the
establishment of the reserve for the investment in Nesco. The income for the six
months ended October 31, 2004 is primarily attributable to the recognition of
income due to the forgiveness of debt of royalties in the amount of $354,000
offset by a loss on debt extinguishment of approximately $188,000 for stock
issued in settlement of debt.
The net loss for the three months ended October 31, 2005 was approximately
($174,000) as compared to a net income of approximately $121,000 for the three
months ended October 31, 2004. There were no revenues in either of the two
periods. The loss for the three months ended October 31, 2005 is primarily
attributable to general and administrative expenses of approximately $54,000
consisting of mainly accrued salaries and professional fees, amortization of
debt discount and financing costs of approximately $63,000, approximately
$17,000 in accrued interest for debt and approximately $39,000 for the
establishment of the reserve for the investment in Nesco. The income for the
three months ended October 31, 2004 is primarily attributable to the recognition
of income due to the forgiveness of debt of royalties in the amount of $354,000
offset by a loss on debt extinguishment of approximately $188,000 for stock
issued in settlement of debt.
Plan of Operation
- -----------------
The Company has effectively terminated all of its license agreements as of
January 22, 2001. The Company halted plans to complete the development of the
last remaining license due to capital constraints. On January 22, 2001, the
license agreement effectively terminated as the Company could not obtain the
necessary government approval with the two (2) year term as required in the
agreement. The Company also determined that it could not pay the licensor an
additional $250,000 to extend the regulatory approval requirement.
-18-
The Company has a 4.41% investment, in its nonconsolidated affiliate Nesco,
which holds a majority interest in HDS, which is accounted for under the cost
method. The manufacturing facility of HDS became fully operational in late 1997.
On April 22, 2005, the Company entered into an investment banking agreement
for an initial term of 180 days with a third party to obtain bridge financing of
$42,000,000 in connection with an asset purchase transaction whereby the Company
would acquire the assets of a nutriceutical company and negotiated agreements to
complete that transaction which was to close no later than May 25, 2005. On June
6, 2005, the Company deposited $100,000 into an escrow account as a good faith
deposit in order to extend the closing date for the transaction until June 10,
2005. A principal of the investment banking firm has personally guaranteed
repayment to us of the payment into the escrow deposit. The transaction did not
close by that date and the $100,000 deposit was transferred out of escrow and
delivered to the prospective seller. Management has terminated discussions
regarding such transaction. The Company has not made a demand under the personal
guarantee at this time for reimbursement of the deposit. As of October 31, 2005,
the principal of the investment banking firm repaid $30,000 of the deposit to
the Company. The Company had incurred additional costs in connection with this
asset acquisition of approximately $133,000 which are included in operations as
costs of failed asset acquisition at October 31, 2005.
No assurance can be made with respect to the viability of the Company in
the long term. The Company no longer holds any development licenses and has
determined that its current medical products have no viable marketability. The
Company is continuing to explore several other business opportunities, inclusive
of the possible acquisition of a new line of business, which may or may not be
related to the development of medical devices.
In the event the Company is unable to satisfy its capital needs or settle
its current obligations to pursue an acquisition or other form or
reorganization, management may pursue the sale of some or all of the Company's
assets or seek additional financing. The primary asset has been the Company's
equity position in Nesco. As of October 31, 2005, the Company held the
equivalent of 4,837,500 shares of Nesco common stock representing 4.41% of the
outstanding equity securities of Nesco. Although these shares may be sold one
year from the exchange date (after May 25, 2005), the Company does not have
actual common shares at this time; as noted above, Nesco issued Series B
Preferred shares which will be automatically converted to common shares at such
time that authorization is received to issue these shares. Pursuant to SFAS No.
115, Accounting for Certain Investments in Debt and Equity Securities and FSP
FAS 115-1 and FAS 124-1, The Meaning of Other Than-Temporary Impairment and Its
Application to Certain Investments, the Company has recorded a 100% valuation
allowance on this investment in light of Nesco's deteriorated financial
condition as reflected in its public filings.
-19-
Item 3. Controls and Procedures
- --------------------------------
Disclosure Controls and Procedures. We carried out an evaluation, under the
supervision and with the participation of the our management, including our
Chief Executive Officer and Chief Financial Officer, who is the same person, of
the effectiveness of the design and operation of our disclosure controls and
procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act
of 1934, as amended (the "Exchange Act")). Based on such evaluation, our Chief
Executive Officer and Chief Financial Officer concluded that, as of the end of
the period, our disclosure controls and procedures were effective in recording,
processing, summarizing and reporting on a timely basis, information required to
be disclosed by us in the reports that we file or submit under the Exchange Act.
Internal Controls over Financial Reporting. There have not been any changes in
our internal control over financial reporting (as defined in Rules 13a- 15(f)
and 15d-15(f) under the Exchange Act) that during the fiscal quarter to which
this report relates, have materially affected, or are reasonably likely to
affect, our internal control over financial reporting.
-20-
PART II- OTHER INFORMATION
- --------------------------
Item 1. - Legal Proceedings
- ---------------------------
In June 2001, definitive settlement documents were executed in connection
with a consolidated class action in which the Company was a defendant. The
settlement documents provided that the Company would pay $100,000 by remitting
to the class representatives $25,000 and a note in the amount of $75,000 payable
in June 2003 with interest thereon at 7% per year. The Company had remitted the
funds and note described above to the class representatives to be held by them
in accordance with the terms of the settlement agreement and pending final court
review of the settlement. In December 2002, the court approved the settlement.
The note was not paid when due. No default has been declared on the note. The
balance due on the note with accrued interest of $97,800 is included in current
liabilities.
Item 2. - Changes in Securities.
- -------------------------------
Not applicable.
Item 3. - Defaults Upon Senior Securities.
- -----------------------------------------
Not applicable.
Item 4. - Submission Of Matters To A Vote Of Security Holders.
- -------------------------------------------------------------
Not applicable.
Item 5. - Other Information.
- ---------------------------
Not applicable.
Item 6. - Exhibits And Reports on Form 8-K.
- ------------------------------------------
(A) Exhibits:
Exhibit 31 - Certifications
Exhibit 32 - Certification of the Chief Executive Officer and Chief
Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
(B) Current Reports on Form 8-K filed during the quarter ended October 31,
2005:
None.
-21-
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned there unto duly authorized.
EMBRYO DEVELOPMENT CORPORATION
By: /s/ Matthew L. Harriton
-----------------------
Matthew L. Harriton
President and Chief
Executive Officer
Chief Financial Officer
Dated: December 15, 2005
-22-