UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

(Mark One) 

☒

QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended July 31, 2014

 

☐

TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________

 

Commission file number 0-27119

 

SCIVANTA MEDICAL CORPORATION 

(Exact name of registrant as specified in its charter)

 

Nevada		22-2436721
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

 

215 Morris Avenue, Spring Lake, New Jersey 07762

(Address of principal executive offices)

 

(732) 282-1620

(Issuer’s telephone number) 

 

 

(Former name, former address and former fiscal year, if changed since last report)

 

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒    No ☐

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒   No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer,” and smaller reporting company in Rule 12b-2 of the Securities Exchange Act of 1934.

 

Large accelerated filer	☐		Accelerated filer	☐
Non-accelerated filer	☐	(Do not check if a smaller reporting company)	Smaller reporting company	☒

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act of 1934). Yes ☐     No ☒

 

As of September 10, 2014, there were outstanding 6,359,055 shares of the registrant’s common stock, par value $.001 per share.

 

  

 

SCIVANTA MEDICAL CORPORATION

 

INDEX TO FORM 10-Q

 

		Page
PART I	FINANCIAL INFORMATION
Item 1.	Financial Statements	1
	Balance Sheets (unaudited) as of July 31, 2014 and October 31, 2013	2
	Statements of Operations (unaudited) for the three and nine months ended July 31, 2014 and 2013	3
	Statements of Cash Flows (unaudited) for the nine months ended July 31, 2014 and 2013	4
	Notes to the Unaudited Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	17
Item 4.	Controls and Procedures	17
PART II	OTHER INFORMATION
Item 1.	Legal Proceedings	18
Item 1A.	Risk Factors	18
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	18
Item 3.	Defaults Upon Senior Securities	18
Item 4.	Mine Safety Disclosures	18
Item 5.	Other Information	18
Item 6.	Exhibits	18
Signatures		19
Index of Exhibits		E-1

 

 

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

Certain information included in this quarterly report on Form 10-Q and other filings of the registrant under the Securities Act of 1933, as amended (the “Securities Act”), and the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as well as information communicated orally or in writing between the dates of such filings, contains or may contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act and Section 21E of the Exchange Act. All statements other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws, including, but not limited to, any projections of earnings, revenue or other financial items; any statements of the plans, strategies and objectives of management for future operations; any statements concerning proposed new services or developments; any statements regarding future economic conditions or performance; any statements of belief; and any statements of assumptions underlying any of the foregoing.

 

Forward-looking statements may include the words “may”, “could”, “estimate”, “intend”, “continue”, “believe”, “expect” or “anticipate” or other similar words. These forward-looking statements present our estimates and assumptions only as of the date of this quarterly report on Form 10-Q. Except as may be required under applicable securities laws, we do not intend, and undertake no obligation, to update any forward-looking statement. You should, however, consult further disclosures we make in future filings of our annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K. Additionally, the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 most likely do not apply to our forward-looking statements because we are considered a penny stock issuer.

 

 

PART I. FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

The balance sheet as of July 31, 2014 and the related statements of operations for the three and nine months ended July 31, 2014 and 2013 and cash flows for the nine months ended July 31, 2014 and 2013 for Scivanta Medical Corporation (“Scivanta” or the “Company”) included in Item 1, have been prepared by us, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures required under accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been condensed or omitted from the following financial statements pursuant to the rules and regulations of the SEC.  In the opinion of management, the accompanying financial statements include all adjustments, which are of a normal and recurring nature, necessary to present fairly our financial position and results of operations. It is suggested that the following financial statements be read in conjunction with the financial statements and notes thereto included in the registrant’s annual report on Form 10-K for the fiscal year ended October 31, 2013.

 

The results of operations for the three and nine months ended July 31, 2014 are not necessarily indicative of the results of the entire fiscal year or for any other period.

 

 

Scivanta Medical Corporation

Balance Sheets

(Unaudited)

 

		July 31, 2014				October 31, 2013
Assets
Current assets:
Cash		$	34,810			$	19,908
Prepaid expenses			3,684				12,018
Total current assets		$	38,494			$	31,926
Liabilities and Stockholders’ Deficiency
Current liabilities:
Accounts payable		$	90,148			$	215,584
Accounts payable - related party			139,564				96,659
Accrued expenses			43,907				41,388
Notes payable			--				4,615
Convertible debentures			507,987				300,000
Total current liabilities			781,606				658,246
Convertible debentures			100,000				100,000
Notes payable			105,000				105,000
Total liabilities			986,606				863,246
Commitments
Stockholders' deficiency:
Preferred stock, $.001 par value; 20,000,000 shares authorized; no shares issued			--				--
Common stock, $.001 par value; 500,000,000 shares authorized; 6,359,055 and 5,429,384 shares issued and outstanding, respectively			6,359				5,429
Additional paid-in capital			23,070,589				22,880,390
Accumulated deficit			(24,025,060	)			(23,717,139	)
Total stockholders' deficiency			(948,112	)			(831,320	)
Total liabilities and stockholders' deficiency		$	38,494			$	31,926

 

The accompanying notes are an integral part of these financial statements.

 

 

Scivanta Medical Corporation

Statements of Operations

(Unaudited)

 

		Three Months Ended  July 31,								Nine Months Ended  July 31,
		2014				2013				2014				2013
Revenue		$	--			$	--			$	--			$	--
Operating expenses:
Research and development			--				3,115				--				3,115
General and administrative			87,162				65,389				332,721				260,551
Gain on settlement of accounts payable			--				--				(80,656	)			--
Loss from operations			(87,162	)			(68,504	)			(252,065	)			(263,666	)
Interest expense			(23,013	)			(8,296	)			(55,856	)			(24,429	)
Net loss		$	(110,175	)		$	(76,800	)		$	(307,921	)		$	(288,095	)
Net loss per common share, basic and diluted		$	(0.02	)		$	(0.01	)		$	(0.05	)		$	(0.06	)
Weighted average number of common shares outstanding, basic and diluted			6,359,055				5,429,384				6,076,995				4,494,496

 

The accompanying notes are an integral part of these financial statements.

 

 

Scivanta Medical Corporation

Statements of Cash Flows

(Unaudited)

 

		Nine Months Ended July 31,
		2014				2013
Cash flows from operating activities:
Net loss		$	(307,921	)		$	(288,095	)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock based compensation expense			32,333				4,725
Gain on settlement of accounts payable			(80,656	)			--
Accretion of interest on convertible debentures			19,783				--
Changes in operating assets and liabilities:
Prepaid expenses			8,334				13,509
Accounts payable			(14,780	)			71,281
Accounts payable - related party			102,905				69,738
Accrued expenses			34,519				(10,597	)
Net cash used in operating activities			(205,483	)			(139,439	)
Cash flows from financing activities:
Repayment of notes payable			(4,615	)			(8,813	)
Proceeds from issuance of convertible debentures			225,000				--
Proceeds from sale of common stock, net of offering costs			--				120,000
Net cash provided by financing activities			220,385				111,187
Increase (decrease) in cash			14,902				(28,252	)
Cash - beginning of period			19,908				64,325
Cash – end of period		$	34,810			$	36,073
Supplemental disclosure of cash flow information:
Cash paid for interest		$	54			$	526
Cash paid for income taxes		$	500			$	500
Noncash financing activities:
Issuance of 461,538 and 279,412 shares of common stock, respectively, as payment of accounts payable – related party		$	60,000			$	95,000
Issuance of 230,769 shares of common stock as payment of accounts payable		$	30,000			$	--
Issuance of 237,364 and 193,454 shares of common stock, respectively, as payment of interest due on convertible debentures		$	32,000			$	40,000
Discount recorded in connection with issuance of convertible debentures		$	36,796			$	--
Issuance of 50,000 shares of common stock as settlement of accounts payable for director fees		$	--			$	17,000
Issuance of 588,236 shares of common stock as settlement of accrued compensation and other related costs		$	--			$	225,627
Issuance of 36,477 shares of common stock as payment of offering costs related to private placements		$	--			$	12,534
Issuance of note payable as payment of insurance premium		$	--			$	20,220

  

The accompanying notes are an integral part of these financial statements.

 

 

Scivanta Medical Corporation  

Notes to the Unaudited Financial Statements

 

1.

Basis of Presentation

 

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company has incurred significant recurring operating losses and negative cash flows from operations. The Company had a working capital deficiency of $743,112 and an accumulated deficit of $24,025,060 as of July 31, 2014. The Company has not made $200,000 of principal payments due on convertible debentures dated February 1, 2007 and, as a result, these obligations can be placed in default by the holders. The Company also has no lending relationships with commercial banks and is dependent on the completion of one or more financings involving the private placement of its securities in order to continue operations. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

The Company continues to seek equity and/or debt investors and from time to time engages placement agents to assist the Company in this initiative. Effective November 1, 2011, each of the Company’s officers agreed to waive the annual base salary due to them and each of the Company’s directors agreed to waive the annual retainer and meeting fees due to them until the Company is able to raise sufficient capital that would provide the Company with the ability to pay cash compensation to its officers and directors. The Company has also paid certain obligations with shares of its common stock and deferred certain other vendor payments until the Company secures sufficient additional financing.

 

While the Company is pursuing the opportunities and actions described above, there can be no assurance that it will be successful in its efforts. If the Company is unable to secure additional capital, it will explore other strategic alternatives, including, but not limited to, the sale of the Company. Any additional equity financing may result in substantial dilution to our stockholders.

 

2.

Amended and Restated SCMS License Agreement

 

On February 14, 2011, the Company entered into an Amended and Restated Technology License Agreement with The Research Foundation of State University of New York, for and on behalf of the University at Buffalo (the “Foundation”), Donald D. Hickey, M.D. (“Hickey”) and Clas E. Lundgren (“Lundgren”). The Foundation, Hickey and Lundgren shall be collectively referred to herein as the “Licensor”. The Amended and Restated Technology License Agreement, as further amended on March 14, 2013, is referred to herein as the “License Agreement”.

 

Pursuant to the License Agreement, the Licensor has granted Scivanta the exclusive world-wide rights to develop, manufacture and distribute certain proprietary technologies known as the Scivanta Cardiac Monitoring System (the “SCMS”), a minimally invasive two-balloon esophageal catheter system used to monitor cardiac performance.. The term of the License Agreement ends on the later of (a) the expiration date of the last to expire patent right related to the SCMS, which is currently May 1, 2027, or (b) 17 years from the sale of the first licensed product on a country by country basis.

 

 

Under the License Agreement, a cash payment of $105,000 is payable to Hickey as follows: (a) $50,000 is due to Hickey on or before a date that is thirty days after the closing of any single financing by the Company of at least $3,000,000 or any series of financings by the Company within a six month period totaling at least $3,000,000; and (b) $55,000 is due to Hickey on or before the date that is thirty days after the first commercial sale of a product utilizing the licensed technology (see Note 4).

 

In addition, upon the occurrence of certain events, the Company has agreed to issue shares of its common stock to the Licensor. On the date the Company files for approval to market and sell a product utilizing the licensed technology, the Company will issue shares of its common stock to the Licensor with a value of $130,000. On the date the Company receives approval to market and sell a product utilizing the licensed technology, the Company will issue shares of its common stock to the Licensor with a value of $160,000. The number of shares of the Company’s common stock to be issued to the Licensor will be calculated based on the market price of the Company’s common stock, as defined in the License Agreement, on the date that each of the respective above noted events occur.

 

Scivanta is required to pay the Licensor a royalty of 5% of annual net sales, as defined in the License Agreement, subject to certain reductions as detailed in the License Agreement. Beginning with the first full year of sales of the SCMS in the United States and for two years thereafter, Scivanta is required to pay an annual minimum royalty of $100,000 to the Licensor against which any royalty on net sales paid in the same calendar year for sales in the United States will be credited. Further, beginning with the first full year of sales of the SCMS outside the United States and for two years thereafter, Scivanta is required to pay an annual minimum royalty of $100,000 to the Licensor against which any royalty on net sales paid in the same calendar year for sales outside the United States will be credited. The Company is also required to pay the Licensor 25% of all sublicensing revenue, as defined in the License Agreement, received by the Company in connection with the Company’s sublicense of the rights granted to the Company under the License Agreement.

 

The License Agreement also requires Scivanta to use commercially reasonable efforts to develop and market the SCMS within certain timeframes, subject to specified exceptions. If Scivanta materially fails to perform any covenant, condition or undertaking of the License Agreement, including the failure to make any payments when due, the Licensor may give written notice of such default to Scivanta. If Scivanta should fail to cure a default within ninety days of notice of such default, then the Licensor, at its option, may terminate the License Agreement. Further, the License Agreement contains standard provisions regarding indemnification and patent prosecution.

 

 

3.

Related Party Transactions

 

David R. LaVance, the Company’s President and Chief Executive Officer, and Thomas S. Gifford, the Company’s Executive Vice President, Chief Financial Officer and Secretary, are principals of Century Capital Associates LLC (“Century Capital”). Effective February 1, 2007, the Company and Century Capital entered into a sublease agreement pursuant to which the Company rents office space approximating 2,000 square feet inside Century Capital’s existing offices. In addition, the Company rents office furniture and other equipment from Century Capital. The sublease agreement has a month to month term that requires sixty days written notice to terminate and a monthly rental fee of $5,000. The Company is responsible for all operating costs associated with the office space, including utilities, maintenance and property taxes.

 

During the three and nine months ended July 31, 2014, the Company was billed $16,005 and $50,311, respectively, pursuant to the terms of the sublease agreement. As of July 31, 2014, the Company owed Century Capital $44,246 for expenses due under the sublease agreement and $95,318 for other expenses, which amounts are included in accounts payable – related party. During the three and nine months ended July 31, 2013, the Company was billed $24,905 and $59,662, respectively, pursuant to the terms of the sublease agreement.

 

4.

Notes Payable

 

Note Payable – Hickey

 

Pursuant to the License Agreement, as amended (see Note 2), a cash payment of $105,000 is payable to Hickey as follows: (a) $50,000 is due to Hickey on or before a date that is thirty days after the closing of any single financing by the Company of at least $3,000,000 or any series of financings by the Company within a six month period totaling at least $3,000,000; and (b) $55,000 is due to Hickey on or before the date that is thirty days after the first commercial sale of a product utilizing the licensed technology. As of July 31, 2014 and October 31, 2013, the Company classified the $105,000 due to Hickey as a component of non-current notes payable.

 

Note Payable – IPFS

 

On March 20, 2013, the Company entered into a finance agreement with IPFS Corporation (“IPFS”). Pursuant to the terms of this finance agreement, IPFS loaned the Company the principal amount of $20,220, which amount accrued interest at a rate of 9.3% per annum, in order to partially fund the payment of the premium of the Company’s director and officer liability insurance. The finance agreement required the Company to make nine monthly payments of $2,335, including interest, commencing April 13, 2013. For the three and nine months ended July 31, 2014, the Company recorded a total of $0 and $54, respectively, of interest expense related to this finance agreement. For the three and nine months ended July 31, 2013, the Company recorded a total of $229 and $526, respectively, of interest expense related to this finance agreement. As of July 31, 2014, this obligation was paid in full. As of October 31, 2013, the outstanding principal balance related to this finance agreement was $4,615, which was classified as current notes payable.

 

 

5.

Convertible Debentures

 

February 2007 Convertible Debentures

 

On February 8, 2007, the Company issued 8% convertible debentures, dated February 1, 2007, in an aggregate principal amount of $250,000 to individual investors (the “February 2007 Debentures”). The February 2007 Debentures originally had a three year term, maturing on January 31, 2010, which was initially extended to January 31, 2012. On January 11, 2012, the Company issued 50,000 shares of common stock as full payment of $50,000 of outstanding principal on certain February 2007 Debentures.

 

Effective January 31, 2012, certain holders of the February 2007 Debentures with an aggregate outstanding principal amount of $175,000, agreed to amend such February 2007 Debentures by extending the maturity date to January 31, 2014. In addition, effective January 31, 2012, a holder of a February 2007 Debenture with an outstanding principal amount of $25,000 agreed to amend his February 2007 Debenture by extending the maturity date to July 31, 2012. The Company has not made payment on the remaining outstanding February 2007 Debentures and, as a result, such obligations can be placed in default by the holders.

 

On April 30, 2014, the Company issued an aggregate of 123,078 shares of its common stock to the holders of the February 2007 Debentures in satisfaction of $16,000 of interest due for the period February 1, 2013 through January 31, 2014. The number of shares issued as payment of the interest due was calculated based on the market price of the Company’s common stock ($0.13 per share) as defined in the February 2007 Debentures.

 

For the three and nine months ended July 31, 2014, the Company recorded a total of $4,033 and $11,967, respectively, of interest expense related to the February 2007 Debentures. For the three and nine months ended July 31, 2013, the Company recorded a total of $4,033 and $11,867, respectively, of interest expense related to the February 2007 Debentures. As of July 31, 2014, $7,935 of interest due on the February 2007 Debentures was accrued and is included as a component of accrued expense. As of July 31, 2014 and October 31, 2013, the Company recorded the $200,000 of outstanding principal due on the February 2007 Debentures as a component of current convertible debentures.

 

May 2011 Convertible Debenture

 

On May 20, 2011, the Company issued an 8% convertible debenture in the amount of $100,000 to an institutional investor (the “May 2011 Debenture”). The May 2011 Debenture bears interest at a rate of 8% per annum and originally had a three year term maturing on May 20, 2014. Effective May 20, 2014, the holder agreed to a new maturity date of May 20, 2015.

 

On January 8, 2014, the Company issued 57,143 shares of its common stock to the May 2011 Debenture holder in satisfaction of $8,000 of interest due for the period May 20, 2012 through May 19, 2013. The number of shares issued as payment of the interest due was calculated based on the market price of the Company’s common stock ($0.14 per share), as defined in the May 2011 Debenture.

 

 

For the three and nine months ended July 31, 2014, the Company recorded a total of $2,017 and $5,985, respectively, of interest expense related to the May 2011 Debenture. For the three and nine months ended July 31, 2013, the Company recorded a total of $2,017 and $5,985, respectively, of interest expense related to the May 2011 Debenture. As of July 31, 2014, $9,605 of interest due on the May 2011 Debenture was accrued and is included as a component of accrued expenses. As of July 31, 2014 and October 31, 2013, the Company recorded the $100,000 of outstanding principal due on the May 2011 Debenture as a component of current convertible debentures.

 

August 2012 Convertible Debenture

 

On August 15, 2012, the Company issued an 8% convertible debenture in the amount of $100,000 to an institutional investor (the “August 2012 Debenture”). The August 2012 Debenture has a three year term maturing on August 15, 2015 and bears interest at a rate of 8% per annum.

 

On January 8, 2014, the Company issued 57,143 shares of its common stock to the August 2012 Debenture holder in satisfaction of $8,000 of interest due for the period August 15, 2012 through August 15, 2013. The number of shares issued as payment of the interest due was calculated based on the market price of the Company’s common stock ($0.14 per share), as defined in the August 2011 Debenture.

 

For the three and nine months ended July 31, 2014, the Company recorded a total of $2,017 and $5,985, respectively, of interest expense related to the August 2012 Debenture. For the three and nine months ended July 31, 2013, the Company recorded a total of $2,017 and $6,051, respectively, of interest expense related to the August 2012 Debenture. As of July 31, 2014, $7,785 of interest due on the August 2012 Debenture was accrued and is included as a component of accrued expenses. As of July 31, 2014 and October 31, 2013, the Company recorded the $100,000 of outstanding principal due on the August 2012 Debenture as a component of non-current convertible debentures.

 

December 2013 and April 2014 Convertible Debentures and Warrants 

 

On December 12, 2013, the Company issued 10% convertible debentures to two individual investors (the “December 2013 Debentures”) and on April 1, 2014, the Company issued a 10% convertible debenture to one individual investor (the “April 2014 Debenture” and together with the December 2013 Debentures, the “Debentures”). In connection with the issuance of the Debentures, the Company issued warrants (the “Debenture Warrants”) to purchase shares of the Company’s common stock equal to 20% of the aggregate principal amount of the Debentures. The gross proceeds received in connection with this private placement were $225,000. The Debentures have a one year term with principal and interest on the December 2013 Debentures due December 12, 2014 and principal and interest on the April 2014 Debenture due April 1, 2015. The Debentures bear interest at a rate of 10% per annum.

 

The entire principal and accrued interest amount of the Debentures is convertible into shares of the Company’s common stock at the option of the holder: (a) upon the Company issuing equity securities and/or debt in a transaction or a series of transactions resulting in aggregate gross proceeds to the Company of a least $3,000,000 (a “Qualified Financing”); (b) at the maturity date of the Debentures; or (c) upon a change in control of the Company, as defined in the Debentures. Upon the occurrence of a Qualified Financing, the Debentures are convertible into shares of the Company’s common stock at a conversion price equal to: (i) 80% of the per share price paid by the purchasers of the Company’s common stock in the Qualified Financing; (ii) 80% of the per share conversion price of any instrument convertible into shares of the Company’s common stock, if no shares of the Company’s common stock are issued in the Qualified Financing; or (iii) $0.13, if no shares of the Company’s common stock or instruments convertible into shares of the Company’s common stock are issued in the Qualified Financing. On the maturity date or upon a change in control of the Company, the Debentures are convertible into shares of the Company’s common stock at $0.13 per share. The quoted market price of the Company’s common stock on both December 12, 2013 and April 1, 2014 was $0.13 per share. An aggregate of 1,730,769 shares of the Company’s common stock can be issued pursuant to the Debentures at the current conversion price of $0.13 per share.

 

 

The Debenture Warrants have a three year term and provide the holders the right to purchase shares of the Company’s common stock equal to 20% of the principal amount of the related Debenture divided by: (a) 80% of the per share price paid by the purchasers of Company’s common stock in a Qualified Financing; (b) 80% of the per share conversion price of any instrument convertible into shares of the Company’s common stock issued in a Qualified Financing, if no shares of the Company’s common stock are issued in the Qualified Financing; or (c) $0.13, if no shares of the Company’s common stock or no instruments convertible into shares of the Company’s common stock are issued in a Qualified Financing or if a Qualified Financing is not consummated within one year from the Debenture Warrants issuance date. An aggregate of 346,154 shares of the Company’s common stock can be issued under the Debenture Warrants at the current exercise price of $0.13 per share. All of the shares of the Company’s common stock underlying the Debenture Warrants vest on the earlier of (a) one year from the Debenture Warrants issuance date, and (b) the consummation of a Qualified Financing. The exercise price of the Debenture Warrants will be subject to adjustment for stock dividends, stock splits, or similar events.

 

The fair value of the Debenture Warrants on the date of issuance as calculated using the Black-Scholes model was $43,989, using the following weighted average assumptions: exercise price of $0.13 per share; common stock price of $0.13 per share; volatility of 271% (December 2013 issuance) and 250% (April 2014 issuance); term of three years; dividend yield of 0%; interest rate of 0.62% (December 2013 issuance) and 0.91% (April 2014 issuance); and risk of forfeiture of 0%.

 

The Company separately accounted for the liability and equity components of the Debentures based upon the relative fair value of the liability and equity components on the date of issuance. As a result, the Company recorded a discount of $36,796 for the Debentures to account for the relative fair value attributable to the Debenture Warrants. The $36,796 debt discount is being accreted as interest expense using the effective interest method over the one-year term of the Debentures.

 

For the three and nine months ended July 31, 2014, the Company recorded a total of $14,946 ($9,275 accreted) and $31,865 ($19,783 accreted), respectively, of interest expense related to the Debentures. As of July 31, 2014, $12,082 of interest due on the Debentures was accrued and is included as a component of accrued expenses. As of July 31, 2014, the unamortized discount on the Debentures was $17,013 and the net carrying value of the Debentures was $207,987, which was recorded as a component of current convertible debentures.

 

 

6.

Stock-Based Compensation

 

The Company accounts for stock-based payments to employees in accordance with Accounting Standards Codification (“ASC”) 718, “Stock Compensation” (“ASC 718”). All stock-based payments to employees are grants of stock options that are recognized in the statement of operations based on their fair values at the date of grant. For the three and nine months ended July 31, 2014 and 2013, the Company did not record any employee stock-based compensation expense.

 

The Company accounts for stock-based payments to non-employees in accordance with ASC 718 and ASC 505-50, “Equity-Based Payments to Non-Employees.” For the three and nine months ended July 31, 2014, the Company recorded non-employee stock-based compensation expense of $0 and $32,333, respectively. For the three and nine months ended July 31, 2013, the Company recorded non-employee stock-based compensation expense of $0 and $4,725, respectively. Each of these amounts was included in general and administrative expense.

 

7.

Net Loss Per Common Share

 

Basic net loss per share is computed by dividing net loss available to common shareholders by the weighted average number of common shares outstanding during the period. Diluted earnings per share reflect, in periods in which they have a dilutive effect, the impact of common shares issuable upon exercise of stock options and warrants and conversion of convertible debt that are not deemed to be anti-dilutive. The dilutive effect of the outstanding stock options and warrants is computed using the treasury stock method.

 

For the three and nine months ended July 31, 2014, diluted net loss per share did not include the effect of 206,832 shares of common stock issuable upon the exercise of outstanding options, 596,154 shares of common stock issuable upon the exercise of outstanding warrants and 2,397,436 shares of common stock issuable upon the conversion of convertible debt, as their effect would be anti-dilutive.

 

For the three and nine months ended July 31, 2013, diluted net loss per share did not include the effect of 241,432 shares of common stock issuable upon the exercise of outstanding options, 32,000 shares of common stock issuable upon the exercise of outstanding warrants and 666,667 shares of common stock issuable upon the conversion of convertible debt, as their effect would be anti-dilutive.

 

 

8.

Stockholders’ Equity

 

Stock Option Plans

 

The Company currently has two stock option plans in place: the 2002 Equity Incentive Plan and the 2007 Equity Incentive Plan (collectively, the “Equity Incentive Plans”). The 2002 Equity Incentive Plan was approved by the stockholders on July 5, 2002. The aggregate number of shares of common stock which could have been awarded under the 2002 Equity Incentive Plan was 200,000. As of July 31, 2014, options to purchase 123,500 shares of the Company’s common stock were outstanding under the 2002 Equity Incentive Plan. As a result of the adoption of the Company’s 2007 Equity Incentive Plan, no further awards are permitted under the 2002 Equity Incentive Plan.

 

On May 31, 2007, the stockholders approved the Company’s 2007 Equity Incentive Plan. The original aggregate number of shares of common stock which could be awarded under the 2007 Equity Incentive Plan was 300,000 shares, subject to adjustment as provided in the 2007 Equity Incentive Plan. As permitted under the 2007 Equity Incentive Plan, the Company’s board of directors increased, effective December 27, 2013, the number of shares of common stock that could be awarded under the 2007 Equity Incentive Plan to 814,408 shares. As of July 31, 2014, options to purchase 83,332 shares of the Company’s common stock were outstanding under the 2007 Equity Incentive Plan and up to 731,076 shares of the Company’s common stock remain available for awards under the 2007 Equity Incentive Plan.

 

Stock option awards under the Equity Incentive Plans were granted at prices as determined by the Company’s compensation committee, but such prices were not less than the fair market value of the Company's common stock on the date of grant. Stock options granted and outstanding include only non-qualified stock options and vest over a period of up to five years and have a maximum term of ten years from the date of grant.

 

A summary of stock option transactions for employees and directors under the Equity Incentive Plans during the nine months ended July 31, 2014 is as follows:

 

		Stock Option Shares				Weighted Average Exercise Price Per Common Share				Aggregate Intrinsic Value
Outstanding at October 31, 2013			241,432			$	1.57			$	--
Granted during the period			--				--
Exercised during the period			--				--
Expired during the period			(34,600	)		$	0.99
Outstanding at July 31, 2014			206,832			$	1.67			$	--
Exercisable at July 31, 2014			206,832			$	1.67			$	--
Exercisable at October 31, 2013			241,432			$	1.57			$	--

 

 

Information with respect to stock options outstanding and stock options exercisable as of July 31, 2014 that were granted to employees is as follows:

 

				Stock Options Outstanding												Stock Options Exercisable
Exercise   Price				Number of Shares Available Under Outstanding Stock   Options				Weighted Average Exercise Price Per Common Share				Weighted Average Remaining Contractual Life (Years)				Number of Shares Available for Purchase Under Outstanding Stock  Options				Weighted Average Exercise Price Per Common Share				Weighted Average Remaining Contractual Life (Years)
$	0.20				3,500			$	0.20				0.4				3,500			$	0.20				0.4
$	0.80				10,000			$	0.80				1.4				10,000			$	0.80				1.4
$	1.40				83,332			$	1.40				4.1				83,332			$	1.40				4.1
$	2.00				110,000			$	2.00				2.5				110,000			$	2.00				2.5
					206,832			$	1.67				3.1				206,832			$	1.67				3.1

 

Warrant to Purchase Common Stock

 

A summary of warrant transactions during the nine months ended July 31, 2014 is as follows:

 

		Warrant Shares				Weighted Average Exercise Price Per Common Share				Aggregate Intrinsic Value
Outstanding at October 31, 2013			20,000			$	0.40			$	--
Issued during the period			596,154			$	0.13
Exercised during the period			--				--
Expired during the period			(20,000	)		$	0.40
Outstanding at July 31, 2014			596,154			$	0.13			$	--
Exercisable at July 31, 2014			250,000			$	0.13			$	--
Exercisable at October 31, 2013			20,000			$	0.40			$	--

  

As of July 31, 2014, the weighted average remaining contractual life for warrants outstanding was 3.3 years and for warrants exercisable was 4.4 years.

 

  

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

Background

 

Scivanta is a Nevada corporation headquartered in Spring Lake, New Jersey. Scivanta currently does not sell any products, technologies or services.

 

On November 10, 2006, we acquired the exclusive world-wide rights to develop, manufacture and distribute the SCMS, a minimally invasive two-balloon esophageal catheter system used to monitor cardiac performance. The SCMS is currently in the development stage; however, since the end of fiscal 2009 all development activity has ceased as we attempt to raise additional financing.

 

Scivanta is currently operating on a limited basis as we continue to seek additional financing that will allow us to either continue the development of the SCMS or will allow us to acquire a new technology, product or service. Our business development strategy will depend upon our ability to secure additional financing.

 

In the event that we decide to continue the development of the SCMS and receive additional funding for such development, we would need to complete clinical trials and receive appropriate regulatory approvals prior to commencing sales of the SCMS. No assurances can be given that the Company will finish the development of the SCMS. In addition, no assurances can be given that if the Company successfully develops and markets the SCMS, such product will become profitable.

 

In the event that we decide to acquire a new technology, product or service, no assurances can be given that we will have the financial and other resources necessary for us to acquire additional technologies, products or services. In addition, no assurances can be given that any technology, product or service that we acquire as part of our business development strategy will be profitable.

 

Critical Accounting Policies and Estimates

 

The discussion and analysis of the Company’s financial condition and results of operations are based upon the interim financial statements contained elsewhere herein, which have been prepared in accordance with U.S. GAAP. The preparation of these financial statements required us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate our estimates, including those related to income taxes, contingencies and litigation. We based our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

 

  

The critical accounting estimates that we believe affect the more significant judgments and estimates used in preparation of the financial statements contained elsewhere herein are described in the Management’s Discussion and Analysis of Financial Condition and Results of Operations and in the Notes to the Financial Statements included in the Company’s annual report on Form 10-K for the fiscal year ended October 31, 2013. There have been no material changes to the critical accounting policies.

 

Results of Operations

 

Research and Development. For each of the three and nine months ended July 31, 2014 and 2013, we did not incur any significant research and development expenses.

 

The amount of research and development expense to be incurred by us during the fiscal year ending October 31, 2014 will depend upon our ability to secure additional capital through an equity and/or debt financing or corporate partnerships. In the event that we decide to continue the development of the SCMS, and are able to obtain additional capital to fund such development, we would expect research and development expenses for the fiscal year ending October 31, 2014 to significantly increase. If we do not continue the development of the SCMS, we would expect research and development expenses for the fiscal year ending October 31, 2014 to remain at the current level.

 

General and Administrative. For the three months ended July 31, 2014, general and administrative expenses were $87,162, as compared to $65,389 for the three months ended July 31, 2013. The $21,773, or 33%, increase in general and administrative expenses for the three months ended July 31, 2014 was primarily due to a $29,080 increase in travel costs related to the Company’s fundraising efforts and evaluation of potential acquisitions, offset by a $8,850 decrease in office maintenance costs.

 

For the nine months ended July 31, 2014, general and administrative expenses were $332,721, as compared to $260,551 for the nine months ended July 31, 2013. The $72,170, or 28%, increase in general and administrative expenses for the nine months ended July 31, 2014 was primarily due to a $55,030 increase in travel costs, a $27,608 increase in stock based compensation to consultants and an $18,000 increase in consulting expenses, each related to the Company’s fundraising efforts and evaluation of potential acquisitions, offset by a $18,854 decrease in legal fees and a $9,462 decrease in office maintenance costs.

 

The amount of general and administrative expense to be incurred by us during the fiscal year ending October 31, 2014 will depend upon our ability to secure additional capital through an equity and/or debt financing or corporate partnerships. In the event that we are able to obtain additional capital sufficient to fund the continued development of the SCMS or to acquire a product, technology or service, we would expect general and administrative expenses for the fiscal year ending October 31, 2014 to increase as we build the administrative infrastructure necessary to support the continued development of the SCMS or development or sale of a new product, technology or service. If we are unable to obtain additional capital sufficient to fund the continued development of the SCMS or to acquire a new product, technology or service, we would expect general and administrative expenses for the fiscal year ending October 31, 2014 to decrease as we continue to reduce our operating activities.

 

 

Gain on Settlement of Accounts Payable. For the three and nine months ended July 31, 2014, we recognized a gain on the settlement of accounts payable related to certain vendor obligations of $0 and $80,656, respectively.

 

Interest Expense. For the three months ended July 31, 2014, interest expense was $23,013, as compared to $8,296 for the three months ended July 31, 2013. The $14,717, or 177%, increase in interest expense for the three months ended July 31, 2014 was primarily due to a $5,671 increase in interest expense related to the Debentures and a $9,275 increase in accreted interest related to the debt discount associated with the Debentures.

 

For the nine months ended July 31, 2014, interest expense was $55,856, as compared to $24,429 for the nine months ended July 31, 2013. The $31,427, or 129%, increase in interest expense for the nine months ended July 31, 2014 was primarily due to a $12,082 increase in interest expense related to the Debentures and a $19,783 increase in accreted interest related to the debt discount associated with the Debentures.

 

Net Loss. For the three months ended July 31, 2014, Scivanta had a net loss of $110,175, or $0.02 per share (basic and diluted), as compared to a net loss of $76,800, or $0.01 per share (basic and diluted), for the three months ended July 31, 2013. The increase in the net loss for the three months ended July 31, 2014 was primarily due to a $21,773 increase in general and administrative expenses and a $14,717 increase in interest expense.

 

For the nine months ended July 31, 2014, Scivanta had a net loss of $307,921, or $0.05 per share (basic and diluted), as compared to a net loss of $288,095, or $0.06 per share (basic and diluted), for the nine months ended July 31, 2013. The increase in the net loss for the nine months ended July 31, 2014 was primarily due to a $72,170 increase in general and administrative expenses and a $31,427 increase in interest expense, offset by a $80,656 gain on the settlement of accounts payable.

 

Liquidity and Capital Resources

 

As of July 31, 2014, we had a working capital deficiency of $743,112 and cash on hand of $34,810. The $14,902 increase in cash on hand from October 31, 2013 was primarily due to the receipt of $225,000 of gross proceeds from the Debentures, offset by our continuing operating expenses.

 

During the past several years, we generally sustained recurring losses and negative cash flows from operations. We currently do not generate any revenue from operations. Our operations most recently have been funded through a combination of the sale of our convertible debentures and common stock and through the issuance of our common stock in exchange for services.

 

On January 8, 2014, we issued 230,769 shares of our common stock as payment of $30,000 of accounts payable to a third party service provider and we issued 461,538 shares of our common stock to Century Capital as settlement of $60,000 of office rent owed by us for the period commencing February 1, 2013 through January 31, 2014.

 

 

On January 8, 2014, we issued 57,143 shares of our common stock to the May 2011 Debenture holder in satisfaction of $8,000 of interest due for the period May 20, 2012 through May 19, 2013 and we issued 57,143 shares of our common stock to the August 2012 Debenture holder in satisfaction of $8,000 of interest due for the period August 15, 2012 through August 15, 2013.

 

On April 30, 2014, we issued 123,078 shares of our common stock to the holders of the February 2007 Debentures in satisfaction of $16,000 of interest due for the period February 1, 2013 through January 31, 2014.

 

As of September 10, 2014, our cash position was approximately $28,500. Without any additional financing, we will only be able to continue our administrative operations, on a limited basis, for approximately four months from the filing date of this quarterly report on Form 10-Q. Effective November 1, 2011, Scivanta’s officers agreed to waive the annual base salary due to them and Scivanta’s directors agreed to waive the annual retainer and meeting fees due to them until Scivanta is able to raise sufficient capital that would provide Scivanta with the ability to pay cash compensation to its officers and directors. Scivanta has also deferred certain vendor payments until it secures sufficient additional financing. We did not make $200,000 of principal payments due on the February 2007 Debentures and, as a result, these obligations can be placed in default by the holders. Our independent registered public accounting firm included an emphasis of a matter paragraph in its report included in our annual report on Form 10-K for the fiscal year ended October 31, 2013, which expressed substantial doubt about our ability to continue as a going concern. Our financial statements included herein do not include any adjustments related to this uncertainty.

 

We currently do not have any lending relationships with commercial banks and do not anticipate establishing such relationships in the foreseeable future due to our limited operations and assets. We believe that our focus should be on obtaining additional capital through the private placement of our securities. We are pursuing potential equity and/or debt investors and have from time to time engaged placement agents to assist us in this initiative. While we are pursuing the opportunities and actions described above, there can be no assurance that we will be successful in our efforts. If we are unable to secure additional capital, we will explore other strategic alternatives, including, but not limited to, the sale of Scivanta. Any additional equity financing may result in substantial dilution to our stockholders.

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk

 

Scivanta is a smaller reporting company and is therefore not required to provide this information.

 

Item 4. Controls and Procedures

 

As required by Rule 13a-15 under the Exchange Act, as of the end of the period covered by this quarterly report on Form 10-Q, the Company carried out an evaluation of the effectiveness of the design and operation of the Company’s disclosure controls and procedures. This evaluation was carried out under the supervision and with the participation of the Company’s management, including the Company’s President and Chief Executive Officer and the Company’s Executive Vice President, Chief Financial Officer and Secretary, who concluded that the Company’s disclosure controls and procedures are effective. There has been no change in the Company’s internal control over financial reporting during the Company’s last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

 

 

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in the Company’s reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the rules and forms of the SEC. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in the Company’s reports filed under the Exchange Act is accumulated and communicated to management, including the Company’s Chief Executive Officer and the Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

 

PART II. OTHER INFORMATION

 

Item 1. Legal Proceedings

 

None.

 

Item 1A. Risk Factors

 

Scivanta is a smaller reporting company and is therefore not required to provide this information.

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

None.

 

Item 3. Defaults Upon Senior Securities

 

Not Applicable.

 

Item 4. Mine Safety Disclosures

 

Not Applicable.

 

Item 5. Other Information

 

None.

 

Item 6. Exhibits

 

See Index of Exhibits Commencing on Page E-1.

 

 

SIGNATURES

In accordance with the requirements of the Exchange Act, the Registrant has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

DATE:	SCIVANTA MEDICAL CORPORATION
September 12, 2014	By:	/s/ David R. LaVance
		David R. LaVance
		President and Chief Executive Officer
September 12, 2014	By:	/s/ Thomas S. Gifford
		Thomas S. Gifford
		Executive Vice President,
		Chief Financial Officer and Secretary

 

 

INDEX OF EXHIBITS

Exhibit Number		Description of Exhibit
3.1		Amended and Restated Articles of Incorporation of Scivanta Medical Corporation, (the “Company”), which was filed in the Office of the Secretary of State of the State of Nevada on April 22, 2013 (incorporated by reference to Exhibit 3.1 to the Company’s current report on Form 8-K filed with the Securities and Exchange Commission (the “SEC”) on April 22, 2013).
3.2		Amended and Restated Bylaws of the Company (incorporated by reference to Exhibit 3.2 to the Company’s quarterly report on Form 10-QSB for the quarter ended January 31, 2006, filed with the SEC on January 29, 2007).
4.1		Specimen stock certificate representing the Company’s common stock (incorporated by reference to Exhibit 4.1 to the Company’s quarterly report on Form 10-QSB for the quarter ended January 31, 2006, filed with the SEC on January 29, 2007).
4.2		Form of Convertible Debenture, dated as of February 1, 2007, issued to the following persons and in the following amounts:  Jesse H. Austin, III ($50,000); Andrew O. Whiteman and Gwen C. Whiteman, JTWROS ($25,000); Jack W. Cumming ($25,000); Scott C. Withrow ($25,000); Terrence McQuade ($25,000); Steven J. Olsen ($25,000); and Marc G. Robinson and Joshua Goldfarb ($25,000) (incorporated by reference to Exhibit 4.8 to the Company’s quarterly report on Form 10-QSB for the quarter ended January 31, 2007, filed with the SEC on March 14, 2007).
4.3		Form of Addendum to Convertible Debenture, dated as of January 31, 2010, issued to the persons set forth in Exhibit 4.2 (incorporated by reference to Exhibit 4.3 to the Company’s annual report on Form 10-K for the fiscal year ended October 31, 2009, filed with the SEC on January 29, 2010).
4.4		Form of Addendum to Convertible Debenture, dated as of January 31, 2012, issued to certain persons set forth in Exhibit 4.2 (incorporated by reference to Exhibit 4.4 to the Company’s quarterly report on Form 10-Q for the quarter ended January 31, 2012, filed with the SEC on March 16, 2012).
4.5		8% Convertible Debenture, dated as of May 20, 2011, in the principal amount of $100,000 issued to Zanett Opportunity Fund, Ltd. (incorporated by reference to Exhibit 4.4 to the Company’s quarterly report on Form 10-Q for the quarter ended April 30, 2011, filed with the SEC on June 14, 2011).
4.6		8% Convertible Debenture, dated as of August 15, 2012, in the principal amount of $100,000 issued to Zanett Opportunity Fund, Ltd. (incorporated by reference to Exhibit 4.1 to the Company’s current report on Form 8-K filed with the SEC on August 21, 2012).

 

 

Exhibit Number		Description of Exhibit
4.7		Form of 10% Convertible Debenture, dated as of December 12, 2013 or April 1, 2014, issued to the following entities and in the following amounts:  RL & KC, LLC ($100,000) dated December 12, 2013, James C. Czirr Trust U/A/D February 20, 2004 ($50,000) dated December 12, 2013 and Chris Hynes dated April 1, 2014 (incorporated by reference to Exhibit 4.1 to the Company’s current reports on Form 8-K filed with the SEC on December 17, 2013 and April 3, 2014).
10.1		The Company’s 2002 Equity Incentive Plan, adopted and effective January 1, 2002 (incorporated by reference to Exhibit B of the Company’s definitive proxy statement, filed with the SEC on June 10, 2002).
10.2		Sublease Agreement, dated February 1, 2007, between the Company and Century Capital Associates LLC (incorporated by reference to Exhibit 10.14 to the Company’s quarterly report on Form 10-QSB for the quarter ended January 31, 2007, filed with the SEC on March 14, 2007).
10.3		Amended and Restated Technology License Agreement between the Company and The Research Foundation of State University of New York for and on behalf of University of Buffalo, and Donald D. Hickey, M.D. and Clas E. Lundgren dated February 14, 2011 (incorporated by reference to Exhibit 10.8 to the Company’s annual report on Form 10-K for the fiscal year ended October 31, 2010, filed with the SEC on February 15, 2011).
10.3.1		First Addendum to the Amended and Restated Technology License Agreement between the Company and The Research Foundation for State University of New York for and on behalf of University of Buffalo, and Donald D. Hickey, M.D. and Clas E. Lundgren dated March 14, 2013 (incorporated by reference to Exhibit 10.3.1 to the Company’s quarterly report on Form 10-Q for the quarter ended January 31, 2013, filed with the SEC on March 18, 2013).
10.4		Stock Option Agreement and Notice of Grant, dated February 5, 2007, pursuant to which David R. LaVance was granted a non-qualified stock option to purchase up to 500,000 shares of common stock of the Company (incorporated by reference to Exhibit 10.16 to the Company’s quarterly report on Form 10-QSB for the quarter ended January 31, 2007, filed with the SEC on March 14, 2007).
10.5		Stock Option Agreement and Notice of Grant, dated February 5, 2007, pursuant to which Thomas S. Gifford was granted a non-qualified stock option to purchase up to 500,000 shares of common stock of the Company (incorporated by reference to Exhibit 10.17 to the Company’s quarterly report on Form 10-QSB for the quarter ended January 31, 2007, filed with the SEC on March 14, 2007).
10.6		Company’s 2007 Equity Incentive Plan, adopted and effective May 31, 2007 (incorporated by reference to Appendix to the Company’s definitive proxy statement, filed with the SEC on April 27, 2007).

 

Exhibit Number		Description of Exhibit
10.7		Stock Option Agreement and Notice of Grant, dated January 1, 2008, pursuant to which David R. LaVance was granted a non-qualified stock option to purchase up to 100,000 shares of common stock of the Company (incorporated by reference to Exhibit 10.21 to the Company’s current report on Form 8-K filed with the SEC on January 2, 2008).
10.8		Stock Option Agreement and Notice of Grant, dated January 1, 2008, pursuant to which Thomas S. Gifford was granted a non-qualified stock option to purchase up to 100,000 shares of common stock of the Company (incorporated by reference to Exhibit 10.22 to the Company’s current report on Form 8-K filed with the SEC on January 2, 2008).
10.9		Executive Employment Agreement, dated as of January 1, 2008, between the Company and David R. LaVance (incorporated by reference to Exhibit 10.26 to the Company’s current report on Form 8-K filed with the SEC on January 2, 2008).
10.10		Executive Employment Agreement, dated as of January 1, 2008, between the Company and Thomas S. Gifford (incorporated by reference to Exhibit 10.27 to the Company’s current report on Form 8-K filed with the SEC on January 2, 2008).
10.11		Amendment No. 1 dated as of June 18, 2010 to the Executive Employment Agreement, dated as of January 1, 2008, between the Company and David R. LaVance (incorporated by reference to Exhibit 10.27 to the Company’s quarterly report on Form 10-Q for the quarter ended April 30, 2010, filed with the SEC on June 21, 2010).
10.12		Amendment No. 1 dated as of June 18, 2010 to the Executive Employment Agreement, dated as of January 1, 2008, between the Company and Thomas S. Gifford (incorporated by reference to Exhibit 10.28 to the Company’s quarterly report on Form 10-Q for the quarter ended April 30, 2010, filed with the SEC on June 21, 2010).
10.13		Amendment No. 2 dated as of January 3, 2012 to the Executive Employment Agreement, dated as of January 1, 2008, between the Company and David R. LaVance (incorporated by reference to Exhibit 10.23 to the Company’s annual report on Form 10-KSB for the fiscal year ended October 31, 2011, filed with the SEC on January 30, 2012).
10.14		Amendment No. 2 dated as of January 3, 2012 to the Executive Employment Agreement, dated as of January 1, 2008, between the Company and Thomas S. Gifford (incorporated by reference to Exhibit 10.24 to the Company’s annual report on Form 10-KSB for the fiscal year ended October 31, 2011, filed with the SEC on January 30, 2012).
10.15		Stock Option Agreement and Notice of Grant, dated January 21, 2009, pursuant to which David R. LaVance was granted a non-qualified stock option to purchase up to 25,000 shares of common stock of the Company (incorporated by reference to Exhibit 10.32 to the Company’s annual report on Form 10-KSB for the fiscal year ended October 31, 2008, filed with the SEC on January 29, 2009).

 

Exhibit Number		Description of Exhibit
10.16		Stock Option Agreement and Notice of Grant, dated January 21, 2009, pursuant to which Thomas S. Gifford was granted a non-qualified stock option to purchase up to 25,000 shares of common stock of the Company (incorporated by reference to Exhibit 10.33 to the Company’s annual report on Form 10-KSB for the fiscal year ended October 31, 2008, filed with the SEC on January 29, 2009).
31.1		Section 302 Certification of Chief Executive Officer.
31.2		Section 302 Certification of Chief Financial Officer.
32.1		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350.
32.2		Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350.
101*		The following materials from the Company’s quarterly report on Form 10-Q for the period ended July 31, 2014, formatted in Extensible Business Reporting Language (XBRL):  (i) balance sheets; (ii) statements of operations; (iii) statements of cash flows; and (iv) notes to the financial statements.

 

* Pursuant to Rule 406T of Regulation S-T, the interactive data files included as Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.

E-4