UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
Amendment No. 1
x | Quarterly report under Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the quarterly period ended April 30, 2013.
¨ | Transition report under Section 13 or 15(d) of the Exchange Act |
For the transition period from _____________ to _____________.
Commission file number 000-28761
CARDIOGENICS HOLDINGS INC.
(Exact name of registrant as specified in its Charter)
Nevada | 88-0380546 | |
(State or other jurisdiction of | (I.R.S. Employer | |
incorporation or organization) | Identification No.) |
6295 Northam Drive, Unit 8
Mississauga, Ontario L4V 1WB
(Address of Principal Executive Offices)
(905) 673-8501
(Registrant’s Telephone Number, Including Area Code)
Indicate by check mark whether the Issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.
Yes x No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer and “smaller reporting company” in Rule 12b-2 or the Exchange Act. (Check one):
Large Accelerated filer | ¨ | Accelerated Filer | ¨ | |
Non-Accelerated Filer | ¨ | Smaller Reporting Company | x | |
(Do not check if a smaller reporting company) |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act)
Yes ¨ No x
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes x No ¨
As of June 12, 2013 the Registrant had the following number of shares of its capital stock outstanding: 32,499,239 shares of Common Stock and 1 share of Series 1 Preferred Voting Stock, par value $0.0001, representing 13 exchangeable shares of the Registrant’s subsidiary, CardioGenics ExchangeCo Inc., which are exchangeable into 24,176,927 shares of the Registrant’s Common Stock.
EXPLANATORY NOTE
The sole purpose of this amendment to CardioGenics Holdings Inc.’s quarterly report on Form 10-Q for the period ended April 30, 2013, filed with the Securities Exchange Commission on June 20, 2013 (the “Form 10-Q”), is to furnish the interactive data files set forth in Exhibit 101 in accordance with Rule 405 of Regulation S-T.
No other changes have been made to the Form 10-Q. This amendment speaks as of the original filing date of the Form 10-Q, does not reflect events that may have occurred subsequent to the original filing date, and does not modify or update in any way disclosures made in the Form 10-Q.
ITEM 6. EXHIBITS
(a) Exhibits
See the Exhibit Index following the signature page to this Form 10-Q/A.
2 |
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
CARDIOGENICS HOLDINGS INC. | ||
Date: August 7, 2013 | By: | /s/ Yahia Gawad |
Name: Yahia Gawad | ||
Title: Chief Executive Officer | ||
Date: August 7, 2013 | By: | /s/ James Essex |
Name: James Essex | ||
Title: Chief Financial Officer |
EXHIBIT INDEX
*31.1 | Section 302 Certification of Chief Executive Officer | |
*31.2 | Section 302 Certification of Chief Financial Officer | |
*32.1 | Section 906 Certification of Chief Executive Officer and Chief Financial Officer | |
†101 | The following materials from CardioGenics Holdings Inc.’s Form 10-Q for the quarter ended April 30, 2013, formatted in eXtensible Business Reporting Language (XBRL): (i) Condensed Consolidated Balance Sheets, (ii) Consolidated Statements of Operations (Unaudited), (iii) Condensed Consolidated Statements of Comprehensive Loss (Unaudited), (iv) Condensed Consolidated Statements of Changes in Deficiency (Unaudited), (v) Condensed Consolidated Statements of Cash Flows (Unaudited) and (vi) Notes to Condensed Consolidated Financial Statements (Unaudited). Furnished herewith. | |
__________________ | ||
* Filed or furnished with the initial filing of this Form 10-Q filed on June 20, 2013. | ||
† Pursuant to Rule 406T of Regulation S-T, the interactive data files included in Exhibit 101 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. |
Debentures Payable
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6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Apr. 30, 2013
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debentures Payable |
In February 2013, shareholder loans were converted on a dollar-for-dollar basis for Series A Convertible Debenture Units (the “A Units”). Each A Unit includes a debenture having a term of three years, bearing interest at 10%, and a warrant having a term of three years. The debentures are convertible at any time into common shares of the Company’s stock at a price of $0.25 per share. The warrants entitle the holder to purchase 2 times the number of common shares of the Company’s stock allowed in conjunction with the debentures at any time up to three years.
A summary of the Debentures at April 30, 2013 is as follows:
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Net Loss Per Share - Additional Information (Detail)
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3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Apr. 30, 2013
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Apr. 30, 2012
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Apr. 30, 2013
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Apr. 30, 2012
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Earnings Per Share Disclosure [Line Items] | ||||
Incremental shares excluded from computation of diluted earning per share | 2,917,085 | 9,834,969 | 2,917,085 | 9,834,969 |
Condensed Consolidated Statements of Operations (USD $)
|
3 Months Ended | 6 Months Ended | 185 Months Ended | ||
---|---|---|---|---|---|
Apr. 30, 2013
|
Apr. 30, 2012
|
Apr. 30, 2013
|
Apr. 30, 2012
|
Apr. 30, 2013
|
|
Revenue | $ 0 | $ 0 | $ 0 | $ 1,136 | $ 10,173 |
Operating Expenses | |||||
Depreciation and Amortization of Property and Equipment | 3,443 | 4,539 | 6,967 | 9,094 | 226,711 |
Amortization of Patent Application Costs | 1,695 | 1,260 | 3,429 | 2,560 | 22,722 |
Write-off of Patent Application Costs | 0 | 0 | 0 | 0 | 239,530 |
General and Administrative | 92,915 | 187,325 | 205,647 | 361,488 | 8,622,678 |
Write-off of Goodwill | 0 | 0 | 0 | 0 | 12,780,214 |
Research and Product Development, Net of Investment Tax Credits | 95,042 | 192,694 | 198,486 | 348,738 | 4,348,819 |
Cost of Settlement of Lawsuit | 0 | 0 | 0 | 0 | 1,753,800 |
Total operating expenses | 193,095 | 385,818 | 414,529 | 721,880 | 27,994,474 |
Operating Loss | (193,095) | (385,818) | (414,529) | (720,744) | (27,984,301) |
Other Expenses (Income) | |||||
Interest Expense and Bank Charges (Net) | 32,892 | 6,015 | 36,716 | 9,485 | 2,195,024 |
Loss (Gain) on Change in Fair Value of Derivative Liability | (10,781) | 0 | (10,781) | 0 | 12,410,242 |
Loss (Gain) on Foreign Exchange Transactions | (4,116) | 2,238 | 3,923 | (19,126) | 194,266 |
Total other expenses (income) | 17,995 | 8,253 | 29,858 | (9,641) | 14,799,532 |
Loss from Continuing Operations | (211,090) | (394,071) | (444,387) | (711,103) | (42,783,833) |
Discontinued Operations | |||||
Gain on Sale of Subsidiary | 0 | 0 | 0 | 0 | 90,051 |
Loss from Discontinued Operations | 0 | 0 | 0 | 0 | (127,762) |
Net Loss | (211,090) | (394,071) | (444,387) | (711,103) | (42,821,544) |
Net Loss attributable to non-controlling interest | (1,231) | (2,368) | (2,721) | (4,431) | (340,655) |
Net Loss attributable to CardioGenics Holdings Inc. | $ (209,859) | $ (391,703) | $ (441,666) | $ (706,672) | $ (42,480,889) |
Basic and Fully Diluted Net Loss per Common Share attributable to CardioGenics Holdings Inc. Shareholders | $ 0.00 | $ (0.01) | $ (0.01) | $ (0.01) | |
Weighted-average shares of Common Stock outstanding | 56,676,166 | 55,626,166 | 56,676,166 | 55,626,166 |
Summary of Significant Accounting Policies.
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6 Months Ended | ||
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Apr. 30, 2013
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Accounting Policies [Abstract] | |||
Summary of Significant Accounting Policies. |
Recent Accounting Pronouncements
In December 2011, the FASB issued ASU No. 2011-11, Balance Sheet (Topic 210): Disclosures about Offsetting Assets and Liabilities. ASU 2011-11 requires an entity to disclose information about offsetting and related arrangements to enable users of financial statements to understand the effect of those arrangements on its financial position, and to allow investors to better compare financial statements prepared under U.S. GAAP with financial statements prepared under International Financial Reporting Standards (IFRS). The new standards are effective for annual periods beginning January 1, 2013, and interim periods within those annual periods. Retrospective application is required. The Company will implement the provisions of ASU 2011-11 as of November 1, 2013.
In February 2013, the Financial Accounting Standards Board (“FASB”) issued guidance requiring disclosure of amounts reclassified out of accumulated other comprehensive income by component. In addition, an entity is required to present either on the face of the condensed consolidated statements of operations or in the notes, significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income but only if the amount reclassified is required to be reclassified to net income in its entirety in the same reporting period. For amounts not reclassified in their entirety to net income, an entity is required to cross-reference to other disclosures that provide additional detail about those amounts. This guidance is effective prospectively for the Company for annual and interim periods beginning January 1, 2013. The Company believes that the impact of this standard has not had a material impact on its consolidated financial statements.
Derivative Instruments
The Company’s derivative liabilities are related to embedded conversion features of the Notes Payable. For derivative instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in fair value recognized in earnings each reporting period. The Company uses the Black-Scholes model to value the derivative instruments at inception and subsequent valuation dates and the value is re-assessed at the end of each reporting period, in accordance with Accounting Standards Codification (“ASC”) 815. Derivative instrument liabilities are classified in the condensed consolidated balance sheets as current or non-current based on whether or not the net-cash settlement of the derivative instrument could be required within twelve months of the consolidated balance sheet date. |
Subsequent Events
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6 Months Ended | ||||||||
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Apr. 30, 2013
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Subsequent Events [Abstract] | |||||||||
Subsequent Events |
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Subsequent Event - Additional Information (Detail) (USD $)
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1 Months Ended | 6 Months Ended | |
---|---|---|---|
May 30, 2013
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Apr. 30, 2013
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Jun. 30, 2013
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Subsequent Event [Line Items] | |||
Debt instrument, interest rate, stated percentage | 10.00% | ||
Debt instrument term | 3 years | ||
Debt instrument, convertible, conversion price | $ 0.15 | $ 0.25 | $ 0.15 |
Share price | $ 0.25 | ||
Advances From Unrelated Third Party | $ 300,000 | $ 200,000 | |
Convertible Debt | $ 155,000 |
Stock Based Compensation
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6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Apr. 30, 2013
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Disclosure Of Compensation Related Costs, Share-Based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock Based Compensation |
Stock-based employee compensation related to stock options for the six months ended April 30, 2013 and 2012 amounted to $-0-.
The following is a summary of the common stock options granted, forfeited or expired and exercised under the Plan:
Options typically vest immediately at the date of grant. As such, the Company does not have any unvested options or unrecognized compensation expense at April 30, 2013. |
Summary of Common Stock Options Granted, Forfeited or Expired and Exercised under Plan (Detail) (USD $)
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6 Months Ended | 12 Months Ended |
---|---|---|
Apr. 30, 2013
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Oct. 31, 2012
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Options | ||
Outstanding beginning balance | 30,000 | 30,000 |
Granted | 0 | 0 |
Forfeited/Expired | 0 | 0 |
Exercised | 0 | 0 |
Outstanding ending balance | 30,000 | 30,000 |
Weighted Average Exercise Price | ||
Beginning balance | $ 0.90 | $ 0.90 |
Granted | $ 0 | $ 0 |
Forfeited/Expired | $ 0 | $ 0 |
Exercised | $ 0 | $ 0 |
Ending balance | $ 0.90 | $ 0.90 |
Notes Payable - Additional Information (Detail) (USD $)
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0 Months Ended | |
---|---|---|
Nov. 19, 2012
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Mar. 27, 2013
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Notes Payable [Line Items] | ||
Line of credit facility, maximum borrowing capacity | $ 350,000 | |
Line of credit facility, current borrowing capacity | 50,000 | |
Line of credit facility original issue discount | 50,000 | |
Line of credit facility, interest rate during period | 5.00% | |
Line of credit facility, description | the Company at a price equal to the lesser of $0.23 and 60% of the lowest trade price in the 25 trading days previous to the conversion. | |
Line of credit facility common stock outstanding percentage | 4.99% | |
Line of credit facility, amount outstanding | $ 25,000 |
Fair Value Measurements (Tables)
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6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Apr. 30, 2013
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Compensation and Retirement Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value, Liabilities Measured on Recurring Basis | The following table summarizes the financial liabilities measured at fair value on a recurring basis as of April 30, 2013, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value:
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Changes In Fair Value Of Derivative Liability | The table below sets forth a summary of changes in the fair value of the Company’s Level 3 financial liability, or derivative liabilities related to the senior secured convertible notes and warrants, for the six month period ended April 30, 2013.
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Notes Payable (Tables)
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6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Apr. 30, 2013
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Notes Payable [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Debt | A summary of the Notes at April 30, 2013 is as follows:
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Debentures Payable (Parenthetical) (Detail) (Convertible Debentures Payable, February 27, 2016)
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6 Months Ended | 12 Months Ended |
---|---|---|
Apr. 30, 2013
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Oct. 31, 2012
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Convertible Debentures Payable | February 27, 2016
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Short-term Debt [Line Items] | ||
Convertible Debentures Payable, Interest Rate | 10.00% | 10.00% |
Convertible Debentures Payable, Maturity Date | Feb. 27, 2016 | Feb. 27, 2016 |
Basis of Presentation - Additional Information (Detail) (USD $)
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Apr. 30, 2013
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Oct. 31, 2012
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---|---|---|
Basis of Presentation [Line Items] | ||
Deficit accumulated during development stage | $ 42,480,889 | $ 42,039,223 |
Summary of Notes (Parenthetical) (Detail) (USD $)
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6 Months Ended | 12 Months Ended |
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Apr. 30, 2013
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Oct. 31, 2012
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Debt Instrument [Line Items] | ||
Net of accumulated amortization | $ 22,900 | $ 22,900 |
Convertible Note Payable | November 19, 2014
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Debt Instrument [Line Items] | ||
Convertible Note Payable, Interest Rate | 5.00% | 5.00% |
Convertible Note Payable, Maturity Date | Nov. 19, 2014 | Nov. 19, 2014 |
Convertible Note Payable | March 27, 2014
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Debt Instrument [Line Items] | ||
Convertible Note Payable, Interest Rate | 5.00% | 5.00% |
Convertible Note Payable, Maturity Date | Mar. 27, 2014 | Mar. 27, 2014 |
Warrants Outstanding (Detail)
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Apr. 30, 2013
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Oct. 31, 2012
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Class of Warrant or Right [Line Items] | ||
Warrants outstanding | 2,887,085 | 6,287,085 |
Issued to consultant August 1, 2009 an exercise price of $0.90
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Class of Warrant or Right [Line Items] | ||
Warrants outstanding | 287,085 | 287,085 |
Issued to Flow Capital Advisors Inc. on settlement of lawsuit August 2011, at an exercise price $0.30
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Class of Warrant or Right [Line Items] | ||
Warrants outstanding | 250,000 | 250,000 |
Issued to Flow Capital Advisors Inc. on settlement of lawsuit August 2011, at an exercise price of $0.50
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Class of Warrant or Right [Line Items] | ||
Warrants outstanding | 250,000 | 250,000 |
Issued to Flow Capital Advisors Inc. on settlement of lawsuit August 2011, at an exercise price of $0.75
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Class of Warrant or Right [Line Items] | ||
Warrants outstanding | 500,000 | 500,000 |
Issued to Flow Capital Advisors Inc. on settlement of lawsuit August 2011, at an exercise price of $1.00
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Class of Warrant or Right [Line Items] | ||
Warrants outstanding | 500,000 | 500,000 |
Issued to Flow Capital Advisors Inc. on settlement of lawsuit August 2011, at an exercise price of $0.75
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Class of Warrant or Right [Line Items] | ||
Warrants outstanding | 500,000 | 500,000 |
Issued to consultants in September 2011, at an exercise price of $0.10
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Class of Warrant or Right [Line Items] | ||
Warrants outstanding | 0 | 1,500,000 |
Issued to consultants in September 2011, at an exercise price of $0.34
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Class of Warrant or Right [Line Items] | ||
Warrants outstanding | 0 | 1,500,000 |
Issued to consultants in September 2011, at an exercise price of $0.50
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Class of Warrant or Right [Line Items] | ||
Warrants outstanding | 0 | 1,000,000 |
Issued to debenture holders February 2013, at an exercise price of $0.25
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Class of Warrant or Right [Line Items] | ||
Warrants outstanding | 600,000 | 0 |
Net Loss per Share (Tables)
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6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Apr. 30, 2013
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Computation of Weighted Average Shares Outstanding for Calculating Basic and Diluted Earnings Per Share | The following table sets forth the computation of weighted-average shares outstanding for calculating basic and diluted earnings per share (EPS):
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Changes in Fair Value Of Derivative Liability (Detail) (USD $)
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6 Months Ended |
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Apr. 30, 2013
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Changes In Fair Value Of Derivative Liability [Line Items] | |
Balance at beginning of period | $ 0 |
Additions To Derivative Instruments | 75,000 |
Change in fair value of derivative liabilities | (10,781) |
Balance at end of period | $ 64,219 |
Summary of Significant Accounting Policies. (Policies)
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6 Months Ended |
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Apr. 30, 2013
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Accounting Policies [Abstract] | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements
In December 2011, the FASB issued ASU No. 2011-11, Balance Sheet (Topic 210): Disclosures about Offsetting Assets and Liabilities. ASU 2011-11 requires an entity to disclose information about offsetting and related arrangements to enable users of financial statements to understand the effect of those arrangements on its financial position, and to allow investors to better compare financial statements prepared under U.S. GAAP with financial statements prepared under International Financial Reporting Standards (IFRS). The new standards are effective for annual periods beginning January 1, 2013, and interim periods within those annual periods. Retrospective application is required. The Company will implement the provisions of ASU 2011-11 as of November 1, 2013.
In February 2013, the Financial Accounting Standards Board (“FASB”) issued guidance requiring disclosure of amounts reclassified out of accumulated other comprehensive income by component. In addition, an entity is required to present either on the face of the condensed consolidated statements of operations or in the notes, significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income but only if the amount reclassified is required to be reclassified to net income in its entirety in the same reporting period. For amounts not reclassified in their entirety to net income, an entity is required to cross-reference to other disclosures that provide additional detail about those amounts. This guidance is effective prospectively for the Company for annual and interim periods beginning January 1, 2013. The Company believes that the impact of this standard has not had a material impact on its consolidated financial statements. |
Derivative Instruments | Derivative Instruments
The Company’s derivative liabilities are related to embedded conversion features of the Notes Payable. For derivative instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in fair value recognized in earnings each reporting period. The Company uses the Black-Scholes model to value the derivative instruments at inception and subsequent valuation dates and the value is re-assessed at the end of each reporting period, in accordance with Accounting Standards Codification (“ASC”) 815. Derivative instrument liabilities are classified in the condensed consolidated balance sheets as current or non-current based on whether or not the net-cash settlement of the derivative instrument could be required within twelve months of the consolidated balance sheet date. |
Condensed Consolidated Statements of Changes in Equity (Deficiency) (USD $)
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Total
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Common Stock
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Additional Paid-in Capital
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Deficit Accumulated During the Development Stage
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Accumulated Other Comprehensive Income (Loss)
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Noncontrolling Interest
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Beginning Balance at Oct. 31, 2012 | $ (506,753) | $ 543 | $ 42,036,498 | $ (42,039,223) | $ (166,637) | $ (337,934) |
Beginning Balance (in shares) at Oct. 31, 2012 | 56,676,166 | |||||
Value of derivative associated with debentures issued in the period | 95,760 | 95,760 | ||||
Net loss attributable to noncontrolling interest | (2,721) | (2,721) | ||||
Comprehensive income, currency translation adjustments | 9,510 | 9,510 | ||||
Net Loss | (441,666) | (441,666) | ||||
Ending Balance at Apr. 30, 2013 | $ (845,870) | $ 543 | $ 42,132,258 | $ (42,480,889) | $ (157,127) | $ (340,655) |
Ending Balance (in shares) at Apr. 30, 2013 | 56,676,166 |
Nature of Business
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6 Months Ended | |||
---|---|---|---|---|
Apr. 30, 2013
|
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Organization, Consolidation and Presentation Of Financial Statements [Abstract] | ||||
Nature of Business |
CardioGenics Inc. (“CardioGenics”) was incorporated on November 20, 1997 in the Province of Ontario, Canada, and carries on the business of development and commercialization of diagnostic test products to the In Vitro Diagnostics testing market. CardioGenics has several test products that are in various stages of development.
CardioGenics’ business is that of a development-stage company, with a limited history of operations and whose revenues, to date, have been primarily comprised of grant revenue and Scientific Research Tax Credits from government agencies. There can be no assurance that the Company will be successful in obtaining regulatory approval for the marketing of any of the existing or future products that the Company will succeed in developing.
On October 27, 2009, the name of the Company was changed from JAG Media Holdings, Inc. to CardioGenics Holdings, Inc. |
Income Taxes
|
6 Months Ended | ||
---|---|---|---|
Apr. 30, 2013
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Income Tax Disclosure [Abstract] | |||
Income Taxes |
Based on the Company’s evaluation, management has concluded that there are no significant tax positions requiring recognition in the condensed interim consolidated financial statements.
The Company has incurred losses in Canada since inception, which have generated net operating loss carryforwards for income tax purposes. The net operating loss carryforwards arising from Canadian sources as of April 30, 2013, approximated $6,750,000 (2012 - $6,301,000) which will expire from 2014 through 2032. All fiscal years as originally filed have been assessed. Claims relating to research and development credits are open for review for the fiscal years ended October 2012, 2011, 2010, 2009, 2008 and 2007 and July 2009.
As of April 30, 2013, the Company had net operating loss carryforwards from US sources of approximately $40,769,000 (2012 - $40,652,000) available to reduce future Federal taxable income which will expire from 2019 through 2032. Returns for the years 2008 through 2012 are yet to be filed.
For the six months ended April 30, 2013 and 2012, the Company’s effective tax rate differs from the statutory rate principally due to the net operating losses for which no benefit was recorded. |
Basis of Presentation
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6 Months Ended | ||
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Apr. 30, 2013
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Organization, Consolidation and Presentation Of Financial Statements [Abstract] | |||
Basis of Presentation |
In the opinion of management, the unaudited condensed interim consolidated financial statements reflect all adjustments, consisting of normal recurring adjustments, necessary to present fairly the condensed interim consolidated financial position of CardioGenics Holdings Inc. and its subsidiaries under generally accepted accounting principles in the United States (“US GAAP”) as of April 30, 2013, their results of operations for the three and six months ended April 30, 2013 and 2012, and the period from November 20, 1997 (date of inception) to April 30, 2013, changes in comprehensive loss for the three and six months ended April 30, 2013 and 2012 and the period from November 20, 1997 (date of inception) to April 30, 2013, changes in deficiency for the six months ended April 30, 2013 and cash flows for the six months ended April 30, 2013 and 2012, and the period from November 20, 1997 (date of inception) to April 30, 2013. CardioGenics Holdings Inc. and its subsidiaries are referred to together herein as the “Company”. Pursuant to rules and regulations of the SEC, certain information and disclosures normally included in financial statements prepared in accordance with US GAAP have been condensed or omitted from these consolidated financial statements unless significant changes have taken place since the end of the most recent fiscal year. Accordingly, these condensed interim consolidated financial statements should be read in conjunction with the consolidated financial statements, notes to consolidated financial statements and the other information in the audited consolidated financial statements of the Company as of October 31, 2012 and 2011 (the “Audited Financial Statements”) included in the Company’s Form 10-K that was previously filed with the SEC on January 29, 2013 and from which the October 31, 2012 consolidated balance sheet was derived.
The results of the Company’s operations for the six months ended April 30, 2013 are not necessarily indicative of the results of operations to be expected for the full year ending October 31, 2013.
The accompanying condensed interim consolidated financial statements have been prepared using the accounting principles generally accepted in the United States of America applicable to a going concern, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business.
The Company has incurred operating losses and has experienced negative cash flows from operations since inception. The Company has an accumulated deficit at April 30, 2013 of approximately $42.5 million. The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs and to allow it to continue as a going concern. The Company has funded its activities to date almost exclusively from debt and equity financings. These conditions raise substantial doubt about the Company’s ability to continue as a going concern.
The Company will continue to require substantial funds to continue research and development, including preclinical studies and clinical trials of its products, and to commence sales and marketing efforts, if the FDA and other regulatory approvals are obtained. In order to meet its operating cash flow requirements Management’s plans include financing activities such as private placements of its common stock and issuances of convertible debt instruments. Management is also actively pursuing industry collaboration activities including product licensing and specific project financing.
While the Company believes it will be successful in obtaining the necessary financing to fund its operations, meet revenue projections and manage costs, there are no assurances that such additional funding will be achieved and that it will succeed in its future operations. The accompanying condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts of liabilities that might be necessary should the Company be unable to continue in existence. |
Derivative Liabilities - Additional Information (Detail) (USD $)
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6 Months Ended |
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Apr. 30, 2013
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Derivative Liabilities [Line Items] | |
Derivative liability, fair value, gross liability | $ 75,000 |
Fair value assumptions, exercise price | $ 0.12 |
Fair value assumptions, risk free interest rate | 0.18% |
Fair value assumptions, expected term | 1 year |
Fair value assumptions, expected dividend rate | 0.00% |
Fair value assumptions, expected volatility rate | 170.00% |
Debentures Payable (Tables)
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6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Apr. 30, 2013
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Short-term Debt | A summary of the Debentures at April 30, 2013 is as follows:
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Supplemental Disclosure of Cash Flow Information (Tables)
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6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Apr. 30, 2013
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Supplemental Cash Flow Elements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash Flow Supplemental Disclosures |
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Advance Payable - Additional Information (Detail) (USD $)
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1 Months Ended | 6 Months Ended |
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May 30, 2013
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Apr. 30, 2013
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Advance Payable [Line Items] | ||
Advances From Unrelated Third Party | $ 300,000 | $ 200,000 |
Supplemental Disclosure of Cash Flow Information (Detail) (USD $)
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6 Months Ended | |
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Apr. 30, 2013
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Apr. 30, 2012
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Cash paid during the year for: | ||
Interest | $ 6,735 | $ 9,358 |
Income taxes | $ 0 | $ 0 |