10QSB 1 v063611_10qsb.htm
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

FORM 10-QSB

(Mark One)
x QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended April 30, 2006

o 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 small business issuer as specified in its charter)

Nevada
22-2436721
(State or other jurisdiction of
(I.R.S. Employer Identification No.)
incorporation or organization)
  
 
215 Morris Avenue, Spring Lake, New Jersey 07762
(Address of principal executive offices)

(732) 282-1620
(Issuer’s telephone number)

MEDI-HUT CO., INC.
(Former name, former address and former fiscal year, if changed since last report)

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act 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 o No x 
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x 
 
As of December 31, 2006, there were 21,701,090 shares of the Issuer’s common stock, par value $.001 per share, outstanding.
 
Transitional Small Business Disclosure Format (Check one): Yes o No x 
 
 
SCIVANTA MEDICAL CORPORATION

INDEX TO FORM 10-QSB

     
Page
PART I
FINANCIAL INFORMATION
    
       
Item 1.
Financial Statements
  
1
       
 
Consolidated Balance Sheets
    
 
as of April 30, 2006 (unaudited) and October 31, 2005
 
1
       
 
Consolidated Statements of Operations (unaudited)
    
 
for the three and six months ended April 30, 2006 and 2005
 
2
       
 
Consolidated Statements of Cash Flows (unaudited)
    
 
for the six months ended April 30, 2006 and 2005
 
3
       
 
Notes to the Unaudited Consolidated Financial Statements
 
4
       
Item 2.
Management Discussion and Analysis or Plan of Operation
 
14
       
Item 3.
Controls and Procedures
 
17
       
PART II
OTHER INFORMATION
    
       
Item 1.
Legal Proceedings
 
17
       
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
 
21
       
Item 3.
Defaults Upon Senior Securities
 
21
       
Item 4.
Submission of Matters to a Vote of Security Holders
 
21
       
Item 5.
Other Information
 
21
       
Item 6.
Exhibits
 
21
       
Signatures
    
22
       
Index of Exhibits  
E-1


PART I. FINANCIAL INFORMATION
 
Item 1.
Financial Statements

Scivanta Medical Corporation and Subsidiary
(formerly Medi-Hut Co., Inc.)
Consolidated Balance Sheets

   
April 30,
2006
(Unaudited)
  
 
October 31,
2005
  
Assets
          
Current assets:
          
Cash and cash equivalents
  
$
833,840
  
$
612,076
  
Prepaid insurance and other
    
38,437
    
14,645
  
Note receivable, current portion
    
450,000
    
600,000
  
               
Total current assets
    
1,322,277
    
1,226,721
  
               
Other assets:
              
Note receivable, net of current portion
    
—
    
150,000
  
Other
    
24,655
    
33,864
  
               
Total other assets
    
24,655
    
183,864
  
               
Total assets
  
$
1,346,932
  
$
1,410,585
  
               
Liabilities
              
Current liabilities:
              
Accounts payable
  
$
120,272
  
$
106,209
  
Accounts payable - related party
    
392,402
    
287,132
  
Accrued expenses
    
121,913
    
139,618
  
Convertible debentures
    
300,000
    
—
  
               
Total current liabilities
    
934,587
    
532,959
  
               
Long term liabilities:
              
Convertible debentures
    
—
    
300,000
  
               
Commitments and contingencies
              
               
Stockholders' Equity
              
Common stock, $.001 par value; 100,000,000 shares authorized;
21,276,090 shares issued and outstanding
    
21,276
    
21,276
  
Additional paid in capital
    
19,766,486
    
19,766,486
  
Deferred compensation
    
(25,263
)
  
(37,018
)
Accumulated deficit
    
(19,350,154
)
  
(19,173,118
)
               
Total stockholders' equity
    
412,345
    
577,626
  
               
Total liabilities and stockholders' equity
  
$
1,346,932
  
$
1,410,585
  
 
The accompanying notes are an integral part of these consolidated financial statements.

1

Scivanta Medical Corporation and Subsidiary
(formerly Medi-Hut Co., Inc.)
Consolidated Statements of Operations
(Unaudited)

   
Three Months Ended
April 30,
  
Six Months Ended
April 30,
  
   
2006
  
2005
  
2006
  
2005
  
                   
Net sales
  
$
—
  
$
—
  
$
—
  
$
—
  
Cost of sales
    
—
    
—
    
—
    
—
  
Gross profit
    
—
    
—
    
—
    
—
  
                           
Operating expenses:
                          
General and administrative
    
282,580
    
291,895
    
598,635
    
792,580
  
                           
Loss from operations
    
(282,580
)
  
(291,895
)
  
(598,635
)
  
(792,580
)
                           
Proceeds from settlement of litigation
    
425,000
    
—
    
433,500
    
300,000
  
Interest income
    
—
    
—
    
—
    
699
  
Interest expense
    
(5,852
)
  
(796
)
  
(11,901
)
  
(1,135
)
                           
Net income (loss)
  
$
136,568
  
$
(292,691
)
$
(177,036
)
$
(493,016
)
                           
Net income (loss) per common share, basic and diluted
  
$
0.01
  
$
(0.02
)
$
(0.01
)
$
(0.03
)
                           
Weighted average number of common shares outstanding:
                          
Basic
    
21,276,090
    
15,604,198
    
21,276,090
    
14,993,643
  
Diluted
    
21,436,092
    
15,604,198
    
21,276,090
    
14,993,643
  
 
The accompanying notes are an integral part of these consolidated financial statements.

2

Scivanta Medical Corporation and Subsidiary
(formerly Medi-Hut Co., Inc.)
Consolidated Statements of Cash Flows
(Unaudited)
 
   
Six Months Ended
April 30,
  
   
2006
  
2005
  
Cash flows from operating activities:
          
Net loss
  
$
(177,036
)
$
(493,016
)
Adjustments to reconcile net loss to net cash used in operating activities:
              
Depreciation
    
9,209
    
4,324
  
Amortization of deferred compensation
    
11,755
    
37,903
  
Consulting expense related to warrants
    
—
    
1,640
  
Changes in operating assets and liabilities:
              
Accounts receivable
    
—
    
5,369
  
Prepaid insurance and other
    
(23,792
)
  
(14,438
)
Income tax refund
    
—
    
6,246
  
Accounts payable
    
14,063
    
19,960
  
Accounts payable - related party
    
105,270
    
45,118
  
Accrued expenses
    
(17,705
)
  
4,460
  
Net cash used in operating activities
    
(78,236
)
  
(382,434
)
               
Cash flows from investing activity:
              
Proceeds from sale of distribution rights
    
300,000
    
—
  
               
Cash flows from financing activities:
              
Proceeds from note payable
    
—
    
52,520
  
Repayment of note payable
    
—
    
(22,967
)
Proceeds from exercise of warrants
    
—
    
5,664
  
Net cash provided by financing activities
    
—
    
35,217
  
Increase (decrease) in cash and cash equivalents
    
221,764
    
(347,217
)
Cash and cash equivalents - beginning of period
    
612,076
    
693,939
  
Cash and cash equivalents - end of period
  
$
833,840
  
$
346,722
  
               
Supplemental disclosure of cash flow information:
              
Cash paid during the period for interest
  
$
—
  
$
1,135
  
Cash paid during the period for income taxes
  
$
500
  
$
500
  
               
Noncash financing activity:
              
Issuance of common stock as payment of amounts due to related party
  
$
—
  
$
59,749
  
 
The accompanying notes are an integral part of these consolidated financial statements.

3

Scivanta Medical Corporation and Subsidiary
(formerly Medi-Hut Co., Inc.)
Notes to the Unaudited Consolidated Financial Statements
 
1.
Basis of Presentation
 
On January 4, 2007, Medi-Hut Co., Inc. changed its name to Scivanta Medical Corporation “Scivanta” or the “Company”). The financial statements included herein have been prepared by the Company and are unaudited; however, such information reflects all adjustments (consisting of those of a normal recurring nature), which are, in the opinion of management, necessary for a fair presentation of the financial position, results of operations and cash flows for the interim period to which this report relates. Certain information and footnote disclosures, normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America, have been condensed or omitted. Accordingly, these financial statements should be read in conjunction with the audited financial statements as of October 31, 2005 and notes thereto included in the Company’s annual report on Form 10-KSB for the fiscal year ended October 31, 2005, which was filed with the Securities and Exchange Commission (the “SEC”).
 
The Company currently does not have any revenue from any sources. On November 10, 2006, the Company acquired the exclusive world-wide rights to develop, make and sell certain proprietary technologies known as the Hickey Cardiac Monitoring System (the “HCMS”), a minimally invasive two-balloon esophageal catheter system used to monitor cardiac performance. The HCMS is currently in the development stage and the Company anticipates that it will take approximately 18 months to complete development and related clinical trials. In addition, the Company must also receive the appropriate regulatory approvals before the HCMS can be marketed in the United States or abroad. No assurance can be given that the Company will receive the appropriate regulatory approvals to market the HCMS.
 
Management believes the funds received in connection with the purchase and settlement agreement with Breckenridge Pharmaceutical Inc. (“Breckenridge”) and the proceeds received from the settlement agreements with: (1) Rosenberg, Rich, Baker, Berman & Company (“Rosenberg”); and (2) Syntho Pharmaceuticals Inc. (“Syntho”) and its principal owner, Muhammed Malik (collectively, the “Syntho Group”), together with funds currently available to the Company, will be sufficient to support planned operations through February 1, 2008 (see Notes 3 and 11). However, management believes that the Company will require additional capital to complete the development of the HCMS and to be able to acquire additional products and technologies.
 
2.
Related Party Transactions
 
David R. LaVance, the Company’s Chairman, President and Chief Executive Officer and Thomas S. Gifford, the Company’s Executive Vice President, Chief Financial Officer (Treasurer) and Secretary are Principals of Century Capital Associates LLC (“Century Capital”). Effective February 1, 2005, the original Consulting Services Agreement entered into between the Company and Century Capital as of February 1, 2003, was replaced by an amended and restated Consulting Services Agreement pursuant to which Mr. LaVance and Mr. Gifford provide services to the Company as executive management.
 
4
 
For the three and six months ended April 30, 2006, the Company was billed $150,000 and $300,000, respectively, for consulting services rendered by Century Capital. The Company also reimbursed Century Capital for expenses incurred in conjunction with performing the consulting services. As of April 30, 2006, the Company owed Century Capital $342,402 for unpaid monthly fees, bonuses and expenses, of which $18,652 was paid by the Company subsequent to the quarter ended April 30, 2006.
 
For the three and six months ended April 30, 2005, the Company was billed $150,000 and $375,000, respectively, for consulting services rendered by Century Capital. The Company also reimbursed Century Capital for expenses incurred in conjunction with performing the consulting services. In addition, during the six months ended April 30, 2005, the Company accrued $31,250 related to the annual bonus due to Century Capital, pursuant to the original Consulting Services Agreement, for the one year period commencing February 1, 2004 and ending January 31, 2005. As of April 30, 2005, the Company owed Century Capital $216,988 for unpaid monthly fees, bonuses and expenses.
 
On May 1, 2004, the Company and Century Capital entered into a Shared Services Agreement whereby the Company rented three fully furnished, business equipped offices approximating 340 square feet inside Century Capital’s existing offices. This agreement has a month to month term that requires sixty day written notice to terminate and a monthly rental fee of $2,500. During the three and six months ended April 30, 2006, the Company was billed $7,500 and $15,000, respectively, for rent. As of April 30, 2006, the Company owed Century Capital $50,000 pursuant to the Shared Services Agreement, which amount was paid by the Company subsequent to the quarter ended April 30, 2006. As of October 31, 2005, the Company owed Century Capital $45,000 pursuant to the Shared Services Agreement.
 
3.
Note Receivable
 
On October 17, 2005, as part of the purchase and settlement agreement between the Company and Breckenridge, the Company sold its distribution and other rights and business with respect to Syntest, a hormone replacement therapy drug, to Breckenridge. In consideration for the sale of such rights and the other benefits provided under the purchase and settlement agreement between Breckenridge and the Company, Breckenridge agreed to pay the Company an aggregate of $1,000,000 as follows: (1) $250,000 was paid in October 2005 after the execution of the purchase and settlement agreement, and (2) $50,000 was to be paid on the first day of each month for a 15 month period commencing on November 1, 2005 and ending on January 1, 2007.
 
During the six months ended April 30, 2006, the Company received aggregate payments of $300,000 from Breckenridge on the note receivable. As of April 30, 2006, the outstanding balance on the note receivable was $450,000. As of December 31, 2006, the Company received aggregate payments of $700,000 from Breckenridge on the note receivable.
 
5
 
4.
Convertible Debentures
 
On May 26, 2005, the Company closed on a private placement of 8% convertible debentures (the “Debentures”). The gross proceeds received in connection with this private placement were $300,000. The Debentures have a 2 year term maturing on April 30, 2007, and bear interest at a rate of 8% per annum. Interest is payable in annual installments, beginning on May 1, 2006, in cash or, at the option of the Company, in shares of the Company’s common stock. If the Company elects to pay the interest in shares of the Company’s common stock, the number of shares issued as payment will be equal to the quotient of the unpaid interest divided by the market price of the Company’s common stock as defined in the Debentures. Up to 50% of the aggregate principal amount of the Debentures are convertible into the Company’s common stock, at the option of the holders, at a conversion price of $0.10 per share. The remaining 50% of the aggregate principal amount of the Debentures are convertible into the Company’s common stock, at the option of the holders, at a conversion price of $0.20 per share.
 
For the three and six months ended April 30, 2006, the Company recorded a total of $5,852 and $11,901, respectively, of interest expense related to the Debentures. As of April 30, 2006, the Company had accrued $23,999 of interest related to the Debentures, which amount remains outstanding.
 
5.
Stock-Based Compensation
 
As permitted under the Financial Accounting Standards Board (the “FASB”) Statement of Financial Accounting Standard (“SFAS”) No. 123R “Share-Based Payment” (“SFAS 123R”), which replaced SFAS No. 123, “Accounting for Stock-Based Compensation,” and supersedes Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” (“APB 25”), the Company applies the intrinsic value method prescribed in APB 25 to measure compensation expense for stock-based awards to employees and, thus, recognizes no stock-based compensation expense for options granted with exercise prices equal to or greater than the fair value of the Company’s common stock on the date of grant. The Company records deferred stock-based compensation when the deemed fair value of the Company’s common stock for financial accounting purposes exceeds the exercise price of the stock options on the date of grant. Any such deferred stock-based compensation is amortized over the vesting period of the individual options.
 
The Company accounts for options granted to non-employees under SFAS 123 and Emerging Issues Task Force Consensus No. 96-18, “Accounting for Equity Investments that are Issued to Other than Employees for Acquiring, or in Conjunction with Selling Goods or Services” (“EITF 96-18”). These options may be subject to periodic re-valuation over their vesting terms. The resulting stock-based compensation expense is recorded over the service period in which the non-employee provides services to the Company.
 
During the three months ended April 30, 2006, the Company did not grant any options to employees. During the six months ended April 30, 2006, the Company granted 100,000 options to an employee. No stock-based compensation is reflected in the net loss for the six months ended April 30, 2006 as all options granted had an exercise price equal to the market value of the underlying common stock on the date of grant. During the three and six months ended April 30, 2006, the Company recognized a total of $1,142 and $11,755, respectively, of amortization expense related to the warrants issued to Century Capital on May 14, 2004 and February 25, 2005 and the warrants issued to the Company’s directors, other than David R. LaVance and Thomas S. Gifford, on February 25, 2005. See Note 8.
 
6

During the three months ended April 30, 2005, the Company did not grant any options to employees. During the six months ended April 30, 2005, the Company granted 35,000 options to employees. No stock-based compensation is reflected in the net loss for the six months ended April 30, 2005 as all options granted had an exercise price equal to the market value of the underlying common stock on the date of grant. During the three and six months ended April 30, 2005, the Company recognized a total of $1,901 and $3,541, respectively, of consulting and amortization expense related to the warrants issued to Century Capital on February 1, 2003 and February 25, 2005. During the three and six months ended April 30, 2005, the Company recognized a total of $15,796 and $36,003, respectively, of amortization expense related to the warrants issued to the Company’s directors, other than David R. LaVance and Thomas S. Gifford, on July 24, 2003, May 14, 2004 and February 25, 2005. See Note 8.

The following table illustrates the effect on net income (loss) and net income (loss) per share if the fair value based method had been applied to all awards:

   
Three Months Ended
April 30,
  
Six Months Ended
April 30,
  
   
2006
  
2005
  
2006
  
2005
  
                   
Reported net income (loss)
  
$
136,568
  
$
(292,691
)
$
(177,036
)
$
(493,016
)
Stock-based employee compensation expense included in net income (loss), net of related tax effects
    
—
    
—
    
—
    
—
  
Stock-based employee compensation determined under the fair value based method, net of related tax effects
    
(1,006
)
  
(1,819
)
  
(1,746
)
  
(3,665
)
Pro forma net income (loss)
  
$
135,562
  
$
(294,510
)
$
(178,782
)
$
(496,681
)
                           
Basic and diluted net income (loss) per share:
                         
   As reported
 
$
0.01
  
$
(0.02
)
$
(0.01
)
$
(0.03
)
                           
   Pro forma
  
$
0.01
  
$
(0.02
)
$
(0.01
)
$
(0.03
)

6.
Net Income (Loss) Per Common Share
 
Basic net income (loss) per share is computed by dividing net loss available to common shareholders by the weighted average number of common shares outstanding. 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, provided that the exercise price of the stock options and warrants and the conversion price of the convertible debt is less than the fair market value of the common stock. In periods where a net loss exists, diluted net loss per share is calculated using basic common shares outstanding since including potential common shares from the exercise of stock options and warrants would be anti-dilutive.
 
7
 
For the three months ended April 30, 2006, the Company recorded net income. As of April 30, 2006, there were 35,000 stock options and a warrant to purchase 125,002 shares of common stock outstanding at exercise prices that were less than the fair market value of the Company’s common stock.
 
During the six months ended April 30, 2006, the Company incurred a net loss. Accordingly, the weighted average number of shares outstanding for both the basic and the diluted net loss per share computation is the same. As of April 30, 2006, total potential dilutive securities included 2,104,998 shares of common stock subject to warrants, 370,000 shares of common stock subject to options and 2,250,000 shares of common stock issuable upon conversion of the Debentures.
 
During the three and six months ended April 30, 2005, the Company incurred a net loss. Accordingly, the weighted average number of shares outstanding for both the basic and the diluted net loss per share computation is the same. As of April 30, 2005, total potential dilutive securities included 2,229,998 shares of common stock subject to warrants and 270,000 shares of common stock subject to options.
 
7.
Income Taxes
 
The Company has approximately $10,639,983 and $10,620,255 in federal and state net operating loss carryovers, respectively, that were generated through October 31, 2005 and are available to offset future taxable income in fiscal years 2006 through 2025. The net operating losses for federal income tax purposes begin to expire in 2021 and for state income tax purposes begin to expire in 2008. The valuation allowance increased $69,941 during the six months ended April 30, 2006, attributable primarily to net operating losses.

The components of the Company’s deferred tax assets as of April 30, 2006 and October 31, 2005 are as follows:

   
April 30,
2006
  
October 31,
2005
  
           
Net operating loss
  
$
4,098,863
  
$
4,033,608
  
Write-down of impaired assets
    
1,507,469
    
1,507,469
  
Depreciation and amortization
    
151,344
    
146,658
  
Other
    
36,379
    
36,379
  
Total gross deferred tax assets
    
5,794,055
    
5,724,114
  
Valuation allowance
    
(5,794,055
)
  
(5,724,114
)
Net deferred tax assets
  
$
—
  
$
—
  

The deferred tax asset is fully offset by a valuation allowance as it was determined by management that the realization of the deferred tax asset was not likely to occur in the foreseeable future.
 
8
 
8.
Stockholders’ Equity
 
Warrants to Purchase Common Stock
 
Century Capital Warrant Dated May 14, 2004. On May 14, 2004, the Company issued Century Capital a ten year, non-cancelable warrant to purchase 700,000 shares of the Company’s common stock at a purchase price of $0.04 per share. 100,000 shares of the Company’s common stock underlying the warrant became available for purchase as of May 14, 2004, with the remaining shares underlying the warrant becoming available for purchase upon the achievement of specific milestones.

The fair value of the warrant was estimated on the date of issuance using the Black-Scholes pricing model with the following weighted average assumptions: dividend yield of 0%; risk free interest of 4.79%; volatility of 50.47%; and an expected life of 10 years. The warrant had a fair value of approximately $44,211 on the date of issuance.
 
During the three and six months ended April 30, 2006, the Company recorded $0 and $6,316, respectively, of amortization expense associated with the warrant shares that had vested pursuant to the warrant. During the three and six months ended April 30, 2005, the Company did not record any amortization expense associated with the warrant shares since no additional warrant shares had vested pursuant to the warrant. As of April 30, 2006, 200,000 shares underlying the warrant had been purchased, 100,000 shares underlying the warrant were available for purchase and 400,000 shares underlying the warrant were unvested and were not yet available for purchase.

Century Capital Warrant Dated February 25, 2005. Pursuant to the amended and restated Consulting Services Agreement, on February 25, 2005, a warrant to purchase 500,000 shares of common stock of the Company was issued to Century Capital. The warrant has a ten year term and is exercisable at $0.03 per share until February 25, 2015. The warrant vested as follows: (a) 250,000 of the shares of the Company’s common stock underlying the warrant became available for purchase as of February 25, 2005; (b) an additional 20,833 of the shares underlying the warrant became available for purchase on the last day of each month commencing February 28, 2005 and ending December 31, 2005 and (c) 20,837 of the shares underlying the warrant became available for purchase on January 31, 2006.
 
The fair value of the warrant was estimated on the date of issuance using the Black-Scholes pricing model with the following weighted average assumptions: dividend yield of 0%; risk free interest of 4.27%; volatility of 57.77%; and an expected life of one month for 250,000 shares underlying the warrant and an expected life of 2 years for 250,000 shares underlying the warrant. The warrant had a fair value of approximately $10,674 on the date of issuance.
 
During the three and six months ended April 30, 2006, the Company recorded $703 and $3,393, respectively, of amortization expense associated with the warrant shares that had vested pursuant to the warrant. During the three and six months ended April 30, 2005, the Company recorded $1,901 of amortization expense associated with the warrant shares that had vested pursuant to the warrants. As of April 30, 2006, 375,000 shares underlying the warrant had been purchased and 125,000 shares underlying the warrant were available for purchase.
 
9
 
Director Warrants Dated July 24, 2003. On July 24, 2003, a warrant to purchase 200,000 shares of common stock of the Company was issued to each of its directors, other than Mr. LaVance and Mr. Gifford. An aggregate amount of 800,000 shares of common stock could be issued pursuant to these warrants. Each warrant has a five year term and is exercisable at $0.26 per share until July 24, 2008. The shares of common stock underlying each warrant vested on the date of issuance (66,666 shares), on the first anniversary of the date of issuance (66,666 shares) and on the second anniversary of the date of issuance (66,668 shares).

The fair value of the warrants were estimated on the date of issuance using the Black-Scholes pricing model with the following weighted average assumptions: dividend yield of 0%; risk free interest of 3.08%; volatility of 105.64%; and an expected life of 5 years. The warrants had a fair value of approximately $155,138 at the date of issuance which the Company recorded as deferred compensation to be amortized over the vesting period of the warrants.

As of July 24, 2005, all of the shares of common stock underlying the warrants had vested. Accordingly, during the three and six months ended April 30, 2006, the Company recorded no amortization expense with respect to the warrants. During the three and six months ended April 30, 2005, the Company recorded $9,455 and $22,472, respectively, of amortization expense associated with the warrant shares that had vested pursuant to the warrants. As of April 30, 2006, an aggregate of 599,998 shares underlying the warrants were available for purchase and an aggregate of 200,002 shares underlying the warrants had been cancelled.
 
Director Warrants Dated May 14, 2004. On May 14, 2004, a warrant to purchase 200,000 shares of common stock of the Company was issued to each of its directors, other than Mr. LaVance and Mr. Gifford. An aggregate amount of 600,000 shares of common stock could be issued pursuant to these warrants. Each warrant has a five year term and is exercisable at $0.04 per share until May 14, 2009. The shares of common stock underlying each warrant vested on the date of issuance (66,600 shares) and on the first anniversary of the date of issuance (133,400 shares).
 
The fair value of the warrants were estimated on the date of issuance using the Black-Scholes pricing model with the following weighted average assumptions: dividend yield of 0%; risk free interest of 3.92%; volatility of 50.47%; and an expected life of 5 years. The warrants had an aggregate fair value of approximately $32,137 at the date of issuance.
 
As of May 14, 2005, all of the shares of common stock underlying the warrants had vested. Accordingly, during the three and six months ended April 30, 2006, the Company recorded no amortization expense with respect to the warrants. During the three and six months ended April 30, 2005, the Company recorded $5,223 and $12,413, respectively, of amortization expense associated with the warrant shares that had vested pursuant to the warrants. As of April 30, 2006, an aggregate of 66,600 shares of the Company’s common stock underlying the warrants had been purchased, an aggregate of 400,000 shares underlying the warrants were available for purchase and an aggregate of 133,400 shares underlying the warrants had been cancelled. 
 
Director Warrants Dated February 25, 2005. On February 25, 2005, a warrant to purchase 200,000 shares of common stock of the Company was issued to each of its directors, other than Mr. LaVance and Mr. Gifford. An aggregate amount of 400,000 shares of common stock could be issued pursuant to these warrants. Each warrant has a five year term and is exercisable at $0.03 per share until February 25, 2010. The shares of common stock underlying each warrant vested on the date of issuance (100,000 shares) and on the first anniversary of the date of issuance (100,000 shares).
 
10
 
The fair value of the warrants were estimated on the date of issuance using the Black-Scholes pricing model with the following weighted average assumptions: dividend yield of 0%; risk free interest of 3.91%; volatility of 57.77%; and an expected life of 5 years. The warrants had an aggregate fair value of approximately $6,378 at the date of issuance.
 
During the three and six months ended April 30, 2006, the Company recorded $439 and $2,046, respectively, of amortization expense associated with the warrant shares that had vested pursuant to the warrants. During the three and six months ended April 30, 2005, the Company recorded $1,118 of amortization expense associated with the warrant shares that had vested pursuant to the warrants. As of April 30, 2006, an aggregate of 100,000 shares underlying the warrants had been purchased and an aggregate of 400,000 shares underlying the warrants were available for purchase.
 
Century Capital Warrants Exercised During the Quarter Ended April 30, 2005. During the three and six months ended April 30, 2005, Century Capital exercised it right to purchase 453,124 and 1,075,000 shares, respectively, of the Company’s common stock underlying warrants dated February 1, 2003, May 14, 2004 and February 25, 2005. The $10,311 and $26,749, respectively, due to the Company from Century Capital as a result of these exercises was offset by the Company against monthly consulting fees due and owing to Century Capital that had been deferred for payment.
 
Issuances of Common Stock

On February 25, 2005, the Company issued 500,000 shares of common stock (fair market value of $0.03 per share or $15,000) to the principals of Century Capital in lieu of the $50,000 bonus deferred by Century Capital for the period commencing February 1, 2003 and ending January 31, 2004. In addition, on February 25, 2005, the Company issued 600,000 shares of common stock (fair market value of $0.03 per share or $18,000) to the principals of Century Capital in lieu of $60,000 of monthly consulting fees that had been deferred by Century Capital.

The Company recorded a $77,000 reduction in consulting expense during the three and six months ended April 30, 2005 in order to account for the difference between the fair market value on the date of issuance of the common stock issued to Century Capital ($33,000) and the amount of accounts payable that was satisfied by the issuance of the common stock ($110,000). The Company did not receive any proceeds from this issuance.

9.
Litigation
 
As set forth in “Part II, Item 1. Legal Proceedings,” the Company was involved in various litigation during the periods covered by this report. Set forth below is a brief description of the developments in litigation set forth in “Part II, Item 1. Legal Proceedings,” which occurred during the three months ended April 30, 2006.
 
11

Syntest Litigation
 
On February 22, 2006, the Company amended its complaint in this action to, among other things, include claims that Muhammed Malik, in his capacity as a consultant to the Company and as president of Intermax Pharmaceuticals, Inc. (“Intermax”) and Syntho, provided substantial assistance to the former officers and certain former directors of the Company in carrying out the scheme to overstate the Company’s revenues and earnings through fraudulent accounting practices and committed violations of state and federal laws prohibiting forgery and fraudulent practices and otherwise participated in “racketeering activity” as that term is defined in 18 U.S.C. §1961(1) and N.J.S.A. 2C:41-1.
 
On April 10, 2006, the Syntho Group counterclaimed against Medi-Hut and Century Capital, David R. LaVance and Thomas S. Gifford, as agents of the Company, for allegedly violating the Lanham Act and tortiously interfering with Syntho’s contractual relationship with Breckenridge. See Notes 3 and 11.
 
Litigation Against Certain Former Officers and Directors and Others
 
In late 2005 and early 2006, defendants Syntho and Muhammed Malik made motions to dismiss the Company’s claims based on the entire controversy doctrine and the principle of comity. These motions were denied. In April 2006, Syntho and Muhammed Malik sought leave to appeal the denial of their motion to dismiss on the principle of comity. This motion was also denied.
 
On April 6, 2006, the Company filed a second amended complaint in which it alleges that, among other things, it has suffered significant damages as a result of the Syntho Group’s breach of the distribution agreement between Syntho and the Company, pursuant to which the Company had exclusive rights to distribute Syntest, and the Syntho Group’s related conduct. See Note 11.
 
Litigation Against Former Accounting Firms
 
On February 21, 2006, the Company entered into a settlement agreement and release with Rosenberg. As part of the settlement, the parties released each other from all claims and Rosenberg paid the Company the sum of $425,000. This settlement was entered into without any admission of liability or any inferences of wrongdoing by any settling party.
 
10.
Recent Accounting Pronouncements
 
In October 2004, the Financial Accounting Standards Board (the “FASB”) concluded that the proposed SFAS No. 123R, “Share-Based Payment” (“SFAS 123R”), which would require all companies to measure compensation cost for all share-based payments, including employee stock options, at fair value, would be effective for public companies (except small business issuers as defined in SEC Regulation S-B) for interim or annual periods beginning after June 15, 2005. The Company will not have to adopt SFAS 123R until the fiscal year ending October 31, 2007. The Company does not expect SFAS 123R to have a material impact on its consolidated results of operations or financial condition.
 
In July 2006, the FASB issued FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes - an Interpretation of FASB Statement No. 109” (“FIN 48”), which clarifies the accounting and disclosure for uncertain tax positions, as defined. FIN 48 seeks to reduce the diversity in practice associated with certain aspects of the recognition and measurement related to accounting for income taxes. This interpretation is effective for fiscal years beginning after December 15, 2006. The Company does not expect FIN 48 to have a material impact on its consolidated results of operations or financial condition.

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements” (“SFAS 157”). SFAS 157 defines fair value, establishes a framework for measuring fair value, and expands disclosure requirements regarding fair value measurement. Where applicable, this statement simplifies and codifies fair value related guidance previously issued within United States of America generally accepted accounting principles. SFAS 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. The Company is currently reviewing SFAS 157 and has not yet determined the impact that the adoption of SFAS 157 will have on its consolidated results of operations or financial condition.
 
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11.
Subsequent Events
 
Litigation

Syntest Litigation. On November 22, 2006, the Company, Century Capital, David R. LaVance and Thomas S. Gifford entered into a settlement agreement and release with the Syntho Group and Intermax. Pursuant to the settlement agreement, the Company and the Syntho Group agreed to dismiss with prejudice the actions against each other which were pending in the United States District Court for the Eastern District of New York and in the Superior Court of New Jersey (see Litigation Against Certain Former Officers and Directors and Others). In addition, the Syntho Group agreed to dismiss with prejudice the related actions against Century Capital, David R. LaVance and Thomas S. Gifford which were pending in the United States District Court for the Eastern District of New York and the Company and Intermax agreed to dismiss with prejudice the related actions against each other which were pending in the United States District Court for the Eastern District of New York and in the Superior Court of New Jersey. As part of the settlement reached by the parties, the Syntho Group agreed to pay the Company an aggregate of $3,100,000 (the “Settlement Amount”) as follows: (1) $250,000 was paid upon the execution of the settlement agreement; (2) $100,000 will be paid on the 27th day of each month for a 3 month period commencing on December 27, 2006 and ending on February 27, 2007 and (3) $2,550,000 will be paid on or before March 27, 2007. A portion of the Settlement Amount, $2,850,000, is secured by a first priority mortgage on real property owned by the spouse of Muhammed Malik. In the event that the Syntho Group defaults on the settlement agreement, the Syntho Group and Intermax will be responsible for all reasonable costs and expenses incurred by the Company as a result of the default, including any foreclosure related expenses associated with the real property which secures the first priority mortgage. In addition, upon a default by the Syntho Group, a consent judgment in favor of the Company in the amount of $4,000,000 will be entered into in the Superior Court of New Jersey against the Syntho Group and Intermax. As of December 31, 2006, the Company received an aggregate of $350,000 of payments from the Syntho Group pursuant to the settlement agreement.
 
Litigation Against Certain Former Officers and Directors and Others. On November 22, 2006, the Company entered into a settlement agreement and release with the Syntho Group and Intermax pursuant to which the Company, the Syntho Group and Intermax agreed to dismiss with prejudice the actions against each other which were pending in the Superior Court of New Jersey. See Syntest Litigation.
 
Loures Lawsuit. On October 4, 2006, the Company filed a motion to dismiss the plaintiffs’ complaint for failure to comply with discovery requests in the time required by the court. On November 3, 2006, the court granted the Company’s motion and dismissed the complaint without prejudice.
 
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Item 2.
Management Discussion and Analysis or Plan of Operation
 
General
 
Certain information included in this quarterly report on Form 10-QSB and other filings of the Company 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. Such statements are subject to certain risks, trends and uncertainties that could cause actual results to differ materially from expected results. Among these risks, trends and uncertainties are economic conditions generally and in the industries in which the Company may participate; competition within the Company’s chosen industries, including competition from much larger competitors; technological advances; available capital; regulatory approvals; and failure by the Company to successfully develop or acquire products and form new business relationships.

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 accounting principles generally accepted in the United States of America. The preparation of these financial statements required the Company 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, the Company evaluates its estimates, including those related to bad debts, income taxes, contingencies and litigation. The Company based its 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 the Company believes 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 or Plan of Operation and in the Notes to the Financial Statements included in the Company’s annual report on Form 10-KSB for the fiscal year ended October 31, 2005. There have been no material changes to the critical accounting policies.
 
Results of Operations

Net Sales. The Company discontinued all product sales during the fiscal year ended October 31, 2004 and currently does not have any revenue from any sources. On November 10, 2006, the Company acquired the exclusive world-wide rights to develop, make and sell the HCMS, a minimally invasive two-balloon esophageal catheter system used to monitor cardiac performance. The HCMS is currently in the development stage and the Company anticipates that it will take approximately 18 months to complete development and related clinical trials. In addition, the Company must also receive the appropriate regulatory approvals before the HCMS can be marketed in the United States or abroad. No assurance can be given that the Company will receive the appropriate regulatory approvals to market the HCMS.  
 
14
 
General and Administrative. For the three months ended April 30, 2006, general and administrative expenses were $282,580, as compared to $291,895 for the three months ended April 30, 2005. The $9,315, or 3%, decrease in general and administrative expenses for the three months ended April 30, 2006 was primarily due to a $2,422 decrease in the cost of director and officer liability insurance, a $34,555 decrease in legal expenses primarily related to a reduction in general corporate and litigation costs, a $7,487 decrease in compensation and related benefits as a result of a reduction in personnel, a $7,827 decrease in accounting related fees, a $2,095 decrease in travel expenses and a $16,555 decrease in amortization expense related to deferred compensation. These decreases in general and administrative expenses during the three months ended April 30, 2006 were offset by an increase in consulting expense of $64,306 during the period.

For the six months ended April 30, 2006, general and administrative expenses were $598,635, as compared to $792,580 for the six months ended April 30, 2005. The $193,945, or 24%, decrease in general and administrative expenses for the six months ended April 30, 2006 was primarily due to a $16,373 decrease in the cost of director and officer liability insurance, a $49,710 decrease in legal expenses primarily related to a reduction in general corporate and litigation costs, a $18,610 decrease in compensation and related benefits as a result of a reduction in personnel, a $24,585 decrease in consulting expenses primarily related to reduction in the monthly fee paid to Century Capital commencing February 1, 2005, a $11,404 decrease in accounting related fees, a $12,234 decrease in travel expenses and a $26,149 decrease in amortization expense related to deferred compensation.
 
The Company expects legal expenses related to litigation to decrease commencing with the first quarter of the fiscal year ending October 31, 2007 as a result of its settlement with the Syntho Group. General and administrative expenses overall should increase in the fiscal year ending October 31, 2007 as the Company develops the HCMS and pursues other corporate activities and strategic initiatives. The Company also expects research and development expenses to increase as a result of the development efforts related to the HCMS.

Other Income (Expenses). During the three months ended April 30, 2006, the Company recorded $425,000 of other income related to the settlement of litigation against Rosenberg. During the three months ended April 30, 2005, the Company did not record any other income. During the three months ended April 30, 2006, the Company incurred interest expense of $5,852, as compared to $796 for the three months ended April 30, 2005. The $5,056 increase in interest expense for the three months ended April 30, 2006 was due to interest accrued on the Debentures issued by the Company on May 26, 2005.
 
During the six months ended April 30, 2006, the Company recorded $433,500 of other income primarily related to the settlement of litigation against Rosenberg. During the six months ended April 30, 2005, the Company recorded $300,000 of other income related to the settlement of litigation with Kinray, Inc. During the six months ended April 30, 2006, the Company incurred interest expense of $11,901, as compared to $1,135 for the six months ended April 30, 2005. The $10,766 increase in interest expense for the six months ended April 30, 2006 was due to interest accrued on the Debentures issued by the Company on May 26, 2005.
 
15

Net Income (Loss). For the three months ended April 30, 2006, the Company had a net income of $136,568 or $0.01 per share (basic and diluted), as compared to a net loss of $292,691 or $0.02 per share (basic and diluted) for the three months ended April 30, 2005. For the six months ended April 30, 2006, the Company had a net loss of $177,036 or $0.01 per share (basic and diluted), as compared to a net loss of $493,016 or $0.03 per share (basic and diluted) for the six months ended April 30, 2005.

Liquidity and Capital Resources

As of April 30, 2006, the Company had working capital of $387,690. As of April 30, 2006, cash on hand was $833,840, an increase of $221,764 from October 31, 2005. The increase in cash on hand was primarily due to an increase in accounts payable and related party accounts payable of $119,333 and a $300,000 decrease in the note receivable related to the sale of the Syntest distribution rights. These increases in cash were offset by the net loss of $177,036, which included other income of $433,500 related to the settlement of litigations, an increase in prepaid insurance and other of $23,792 and a decrease in accrued expenses of $17,705.

On February 21, 2006, the Company entered into a settlement agreement and release with Rosenberg pursuant to which the Company was paid $425,000. See “Part II, Item 1. Legal Proceedings - Litigation Against Former Accounting Firms.”

On November 22, 2006, the Company, Century Capital, David R. LaVance, Thomas S. Gifford, the Syntho Group and Intermax entered into a settlement agreement and release whereby the Syntho Group agreed to pay the Company an aggregate of $3,100,000 as follows: (1) $250,000 was paid upon the execution of the settlement agreement; (2) $100,000 will be paid on the 27th day of each month for a 3 month period commencing on December 27, 2006 and ending on February 27, 2007 and (3) $2,550,000 will be paid on or before March 27, 2007. As of December 31, 2006, the Company received an aggregate of $350,000 of payments from the Syntho Group pursuant to the settlement agreement. See “Part II, Item 1. Legal Proceedings - Syntest Litigation; Litigation Against Certain Former Officers and Directors and Others.”
 
The Company has sustained recurring losses and negative cash flows from operations. The Company’s operations have been funded through a combination of convertible debentures, private equity and proceeds received from the settlement of litigation.

No revenue is currently generated by the Company. As of December 31, 2006, the Company’s cash position was approximately $790,000. As of that date, $50,000 is due from Breckenridge pursuant to the purchase and settlement agreement entered into on October 17, 2005 by the Company and Breckenridge and $2,750,000 is to be received no later than March 27, 2007 from the Syntho Group pursuant to the settlement agreement and release entered into on November 22, 2006 by the Company, Century Capital, David R. LaVance, Thomas S. Gifford, the Syntho Group and Intermax. The Company estimates that the combination of the cash on hand and the monies due from Breckenridge and the Syntho Group is sufficient in order to fund the Company’s operations and the development of the HCMS for at least the next 12 months.
 
16

Management believes that the Company will require additional capital in order to complete the development of the HCMS, to acquire additional products and technologies and to otherwise implement its strategy for business development. The Company currently does not have any lending relationships with commercial banks and does not anticipate establishing such a relationship in the foreseeable future due to the Company’s limited operations and assets. Consequently, management believes that the Company will have to focus on obtaining additional capital through the private placement of its securities. There can be no assurance as to the availability or terms upon which such capital might be available.

Item 3.
Controls and Procedures
 
As required by Rule 13a-15 under the Exchange Act, as of the end of the Company’s last fiscal quarter, 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 current management, including the Company’s President and Chief Executive Officer along with the Company’s Executive Vice President, Chief Financial Officer and Secretary (Principal Financial and Accounting Officer), who concluded that the Company’s disclosure controls and procedures are effective. During the Company’s last fiscal quarter, there has been no change in the Company’s internal control over financial reporting 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 reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in Company reports filed under the Exchange Act is accumulated and communicated to management, including the Company’s Chief Executive Officer and the Chief Financial Officer (Principal Financial and Accounting Officer), as appropriate, to allow timely decisions regarding required disclosure.

PART II
 
Item 1.
Legal Proceedings
 
Syntest Litigation
 
On May 12, 2003, the Company commenced an action in the United States District Court for the Eastern District of New York against the Syntho Group, the Breckenridge Group and Scott Schrader and his affiliates, namely Schrader Associates, Bluegrass Drug LLC and Medpharm Corporation (collectively, the “Schrader Group”), relating to the Company’s exclusive right to distribute the hormone replacement therapy drug, Syntest, under an agreement with Syntho which expired no earlier than November 2006. In its complaint, the Company alleged that Syntho permitted Breckenridge, Medpharm Corporation and Bluegrass Drug LLC to distribute Syntest in violation of its agreement with Syntho and that Scott Schrader and Schrader Associates, which had been appointed by the Company as the exclusive broker with respect to sales of Syntest to drug wholesalers, chain drug stores and managed care companies, offered discounts, incentives and rebates to customers of the Company without the Company’s authorization.
 
17
 
On April 21, 2004, the Company entered into a settlement agreement and limited release with the Schrader Group. Pursuant to this agreement, the Company and the Schrader Group agreed to dismiss with prejudice the actions which were pending against each other. As part of the settlement reached by the Company and the Schrader Group, the Schrader Group paid to the Company a cash payment of $375,000. In addition, the parties released each other from certain claims arising out of the distribution and sale of Syntest.
 
On October 17, 2005, the Company and Breckenridge entered into a purchase and settlement agreement pursuant to which the Company sold its distribution and other rights and business with respect to the hormone replacement drug, Syntest, to Breckenridge. In consideration for the sale of such rights and the other benefits provided under the purchase and settlement agreement, Breckenridge agreed to pay the Company an aggregate of $1,000,000 as follows: (1) $250,000 was paid shortly after the execution of the purchase and settlement agreement, and (2) $50,000 will be paid on the first day of each month for a 15 month period commencing on November 1, 2005 and ending on January 1, 2007. Further, pursuant to the settlement agreement, the Company and Breckenridge dismissed their actions against each other and released each other from any further claims arising out of the distribution and sale of Syntest, except as provided under the purchase and settlement agreement. As of December 31, 2006, the Company received an aggregate of $950,000 of payments from Breckenridge pursuant to the purchase and settlement agreement.
 
On November 22, 2006, the Company, Century Capital, David R. LaVance and Thomas S. Gifford entered into a settlement agreement and release with the Syntho Group and Intermax. Pursuant to the settlement agreement, the Company and the Syntho Group agreed to dismiss with prejudice the actions against each other which were pending in the United States District Court for the Eastern District of New York and in the Superior Court of New Jersey. See “Litigation Against Certain Former Officers and Directors and Others.” In addition, the Syntho Group agreed to dismiss with prejudice the related actions against Century Capital, David R. LaVance and Thomas S. Gifford which were pending in the United States District Court for the Eastern District of New York and the Company and Intermax agreed to dismiss with prejudice the related actions against each other which were pending in the United States District Court for the Eastern District of New York and in the Superior Court of New Jersey. As part of the settlement reached by the parties, the Syntho Group agreed to pay the Company an aggregate of $3,100,000 (the “Settlement Amount”) as follows: (1) $250,000 was paid upon the execution of the settlement agreement; (2) $100,000 will be paid on the 27th day of each month for a 3 month period commencing on December 27, 2006 and ending on February 27, 2007 and (3) $2,550,000 will be paid on or before March 27, 2007. A portion of the Settlement Amount, $2,850,000, is secured by a first priority mortgage on real property owned by the spouse of Muhammed Malik. In the event that the Syntho Group defaults on the settlement agreement, the Syntho Group and Intermax will be responsible for all reasonable costs and expenses incurred by the Company as a result of the default, including any foreclosure related expenses associated with the real property which secures the first priority mortgage. In addition, upon a default by the Syntho Group, a consent judgment in favor of the Company in the amount of $4,000,000 will be entered into in the Superior Court of New Jersey against the Syntho Group and Intermax. As of December 31, 2006, the Company received an aggregate of $350,000 of payments from the Syntho Group pursuant to the settlement agreement.
 
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Litigation Against Certain Former Officers and Directors and Others
 
On December 4, 2003, the Company commenced litigation in the Superior Court of New Jersey against certain of its former officers and directors, Healthgen Distributors, Inc. (formerly known as Larval Corp.), Kinray, Inc. and Santi Greco, an officer of Kinray, Inc. In its complaint, the Company alleged that Joseph A. Sanpietro, a former director and the former President and Chief Executive Officer of the Company, Vincent J. Sanpietro, a former director and the former Chief Operating Officer and Secretary of the Company, Laurence M. Simon, the former Chief Financial Officer of the Company, and Lawrence P. Marasco, the former Vice President of Sales of the Company, caused the Company to suffer significant damage and incur substantial costs by engaging in a scheme to overstate the Company’s revenues and earnings through fraudulent accounting practices. The Company also alleged in its complaint that these former officers and directors, in furtherance of their scheme to defraud, filed materially false and misleading documents with the SEC and disseminated materially false and misleading information to the general public, investors and financial advisors and brokers. In addition to the foregoing, the Company alleged in its complaint that these former officers and directors, with the assistance of Larval Corp., an entity controlled by Mr. Marasco, Kinray, Inc., a New York based pharmaceutical distributor, and Santi Greco, an officer of Kinray, Inc., committed violations of state and federal laws prohibiting forgery and fraudulent practices and otherwise participated in “racketeering activity” as that term is defined in 18 U.S.C. §1961(1) and N.J.S.A. 2C:41-1. Further, as set forth in the complaint, the Company sought payment of a promissory note in the principal amount of $575,000 issued to it by former officer and director, Robert S. Russo, plus all accrued interest thereon.
 
On February 4, 2004, the Company entered into a settlement and release agreement with Vincent J. Sanpietro. In exchange for a one time payment of $20,000, the return of 554,800 shares of the Company’s common stock and certain other non-monetary considerations, the Company agreed to discharge its claims against Mr. Sanpietro.
 
On April 14, 2004, the Company entered into a settlement and release agreement with Joseph A. Sanpietro. In exchange for a one-time payment of $60,000 and the return of 3,179,200 shares of the Company’s common stock and certain other non-monetary consideration, the Company agreed to discharge its claims against Mr. Sanpietro.
 
On May 14, 2004, the Company entered into a settlement and release agreement with Robert S. Russo. In exchange for a one-time payment of $300,000, the return of 125,000 shares of the Company’s common stock and other non-monetary consideration, the Company agreed to discharge its claims against Mr. Russo.
 
On September 16, 2004, the Company entered into a settlement agreement and release with Lawrence P. Marasco. As part of the settlement, Mr. Marasco paid to the Company the sum of $60,000, returned 405,000 shares of the Company’s common stock and agreed to provide certain other non-monetary consideration.
 
19
 
On November 29, 2004, the Company entered into a settlement agreement and release with Laurence M. Simon. In exchange for the return of 30,000 shares of the Company’s common stock and certain other non-monetary consideration, the Company agreed to dismiss its claims against Mr. Simon.
 
On January 19, 2005, the Company entered into a settlement agreement and release in connection with its action against Kinray, Inc. and its officer, Santi Greco. Kinray, Inc. agreed to pay to the Company the sum of $300,000. This settlement was entered into without any admission of liability or any inferences of wrongdoing by any settling party.
 
On November 22, 2006, the Company entered into a settlement agreement and release with the Syntho Group and Intermax pursuant to which the Company, the Syntho Group and Intermax agreed to dismiss with prejudice the actions against each other which were pending in the Superior Court of New Jersey. See “Syntest Litigation.”
 
Litigation Against Former Accounting Firms 
 
On January 9, 2004, the Company commenced litigation in the Superior Court of New Jersey against two of its former accounting firms, Rosenberg, which served as the Company’s independent registered public accounting firm from February 1998 to March 2003, excluding a three week period in early 2002, and Koenig, an accounting consultant engaged by the Company to review various tax documents, financial statements and filings by the Company with the SEC. Robert S. Russo, a former officer and director of the Company and a defendant in a litigation commenced by the Company against certain of its former officers and directors on December 4, 2003, is a principal of Koenig. In its complaint, the Company, among other things, alleged that Rosenberg and Koenig, through their negligence and accounting malpractice, caused the Company to suffer significant damage and incur substantial costs.
 
In connection with the settlement of the Company’s separate action against Robert S. Russo in the Superior Court of New Jersey on May 14, 2004, the Company entered into a settlement and release agreement with Koenig. In exchange for certain non-monetary consideration, the Company agreed to discharge its claims against Koenig.
 
On February 21, 2006, the Company entered into a settlement agreement and release with Rosenberg. As part of the settlement, the parties released each other from all claims and Rosenberg paid the Company the sum of $425,000. This settlement was entered into without any admission of liability or any inferences of wrongdoing by any settling party.
 
Loures Lawsuit 
 
On December 28, 2004, an action was commenced in the Superior Court of New Jersey by James J. Loures, Jr. and his wife, Christine Loures, against the Company and certain of its former officers and directors. The plaintiffs allege that the Company, its former officers and certain of its former directors engaged in a scheme to inflate the Company’s revenues and earnings through a series of accounting irregularities and fraudulent financial disclosures during the period June 2001 through March 2003 which resulted in the plaintiffs’ loss of approximately $120,000. The plaintiffs’ allegations are the same as those alleged in the class action lawsuits discussed above. The plaintiffs were one of eight parties that opted out of the settlement related to the class action lawsuit.
 
20
 
On October 4, 2006, the Company filed a motion to dismiss the plaintiffs’ complaint for failure to comply with discovery requests in the time required by the court. On November 3, 2006, the court granted the Company’s motion and dismissed the complaint without prejudice.
 
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
 
None.
 
Item 3.
Defaults Upon Senior Securities
 
Not Applicable.
 
Item 4.
Submission of Matters to a Vote of Security Holders
 
Not Applicable.
 
Item 5.
Other Information
 
None.
 
Item 6.
Exhibits
 
See Index of Exhibits Commencing on Page E-1.
 
21

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
 
 		  
 		  
 
January 26, 2007 By:   /s/ David R. LaVance
   
David R. LaVance
President and Chief Executive Officer
     
     
January 26, 2007 By:   /s/ Thomas S. Gifford
 
Thomas S. Gifford
Executive Vice President,  
Chief Financial Officer and Secretary

22
 
INDEX OF EXHIBITS

Exhibit No.
  
Description of Exhibit
     
3.1
  
Restated Articles of Incorporation of Scivanta Medical Corporation, formerly Medi-Hut Co., Inc. (the “Registrant”), which was filed in the Office of the Secretary of State of the State of Nevada on January 23, 2007 (Incorporated by reference to Exhibit 3.1 to the Registrant’s Quarterly Report on Form 10-QSB for the quarter ended January 31, 2006, filed with the Securities and Exchange Commission (the “SEC”) on January 29, 2007).
     
3.2
  
Amended and Restated Bylaws of the Registrant (Incorporated by reference to Exhibit 3.2 to the Registrant’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 Registrant’s common stock (Incorporated by reference to Exhibit 4.1 to the Registrant’s Quarterly Report on Form 10-QSB for the quarter ended January 31, 2006, filed with the SEC on January 29, 2007).
     
4.2
  
Convertible Debenture for $50,000, dated May 1, 2005, issued to Manor Oaks Capital Management (Incorporated by reference to Exhibit 4.2 to the Registrant’s Annual Report on Form 10-KSB for the fiscal year ended October 31, 2002, filed with the SEC on November 25, 2005).
     
4.3
  
Convertible Debenture for $50,000, dated May 1, 2005, issued to Chartwell Partners, LLP (Incorporated by reference to Exhibit 4.3 to the Registrant’s Annual Report on Form 10-KSB for the fiscal year ended October 31, 2002, filed with the SEC on November 25, 2005).
     
4.4
  
Convertible Debenture for $50,000, dated May 1, 2005, issued to Glenwood Partners, L.P. (Incorporated by reference to Exhibit 4.4 to the Registrant’s Annual Report on Form 10-KSB for the fiscal year ended October 31, 2002, filed with the SEC on November 25, 2005).
     
4.5
  
Convertible Debenture for $50,000, dated May 1, 2005, issued to Radiology for South Philadelphia Profit Sharing Plan (Incorporated by reference to Exhibit 4.5 to the Registrant’s Annual Report on Form 10-KSB for the fiscal year ended October 31, 2002, filed with the SEC on November 25, 2005).
     
4.6
  
Convertible Debenture for $50,000, dated May 1, 2005, issued to Mark W. Cooper (Incorporated by reference to Exhibit 4.6 to the Registrant’s Annual Report on Form 10-KSB for the fiscal year ended October 31, 2002, filed with the SEC on November 25, 2005).
     
4.7
  
Convertible Debenture for $50,000, dated May 1, 2005, issued to Richard Rimer (Incorporated by reference to Exhibit 4.7 to the Registrant’s Annual Report on Form 10-KSB for the fiscal year ended October 31, 2002, filed with the SEC on November 25, 2005).
 
E-1
 
10.1
  
The Registrant’s 2002 Equity Incentive Plan, adopted and effective January 1, 2002 (Incorporated by reference to Exhibit B of the Registrant’s definitive proxy statement, filed with the SEC on June 10, 2002).
     
10.2
  
Amended and Restated Consulting Services Agreement, dated as of February 1, 2005, between the Registrant and Century Capital Associates, LLC (Incorporated by reference to Exhibit 10.7 to the Registrant’s Annual Report on Form 10-KSB for the fiscal year ended October 31, 2002, filed with the SEC on November 25, 2005).
     
10.3
  
Warrant to purchase 200,000 shares of common stock of the Registrant, dated July 24, 2003, issued to James G. Aaron. (Incorporated by reference to Exhibit 10.9 to the Registrant’s Annual Report on Form 10-KSB for the fiscal year ended October 31, 2002, filed with the SEC on November 25, 2005).
     
10.4
  
Warrant to purchase 200,000 shares of common stock of the Registrant, dated July 24, 2003, issued to Richard E. Otto. (Incorporated by reference to Exhibit 10.10 to the Registrant’s Annual Report on Form 10-KSB for the fiscal year ended October 31, 2002, filed with the SEC on November 25, 2005).
     
10.5
  
Warrant to purchase 200,000 shares of common stock of the Registrant, dated July 24, 2003, issued to John A. Moore. (Incorporated by reference to Exhibit 10.11 to the Registrant’s Annual Report on Form 10-KSB for the fiscal year ended October 31, 2002, filed with the SEC on November 25, 2005).
     
10.6
  
Warrant to purchase 200,000 shares of common stock of the Registrant, dated July 24, 2003, issued to Salvatore J. Badalamenti. (Incorporated by reference to Exhibit 10.12 to the Registrant’s Annual Report on Form 10-KSB for the fiscal year ended October 31, 2002, filed with the SEC on November 25, 2005).
     
10.7
  
Warrant to purchase 200,000 shares of common stock of the Registrant, dated May 14, 2004, issued to Richard E. Otto. (Incorporated by reference to Exhibit 10.13 to the Registrant’s Annual Report on Form 10-KSB for the fiscal year ended October 31, 2002, filed with the SEC on November 25, 2005).
     
10.8
  
Warrant to purchase 200,000 shares of common stock of the Registrant, dated May 14, 2004, issued to John A. Moore. (Incorporated by reference to Exhibit 10.14 to the Registrant’s Annual Report on Form 10-KSB for the fiscal year ended October 31, 2002, filed with the SEC on November 25, 2005).
     
10.9
  
Warrant to purchase 200,000 shares of common stock of the Registrant, dated May 14, 2004, issued to Salvatore J. Badalamenti. (Incorporated by reference to Exhibit 10.15 to the Registrant’s Annual Report on Form 10-KSB for the fiscal year ended October 31, 2002, filed with the SEC on November 25, 2005).
     
10.10
  
Warrant to purchase 700,000 shares of common stock of the Registrant, dated May 14, 2004, issued to Century Capital Associates, LLC. (Incorporated by reference to Exhibit 10.16 to the Registrant’s Annual Report on Form 10-KSB for the fiscal year ended October 31, 2002, filed with the SEC on November 25, 2005).
 
E-2
 
10.11
  
Warrant to purchase 500,000 shares of common stock of the Registrant, dated February 25, 2005, issued to Century Capital Associates, LLC. (Incorporated by reference to Exhibit 10.17 to the Registrant’s Annual Report on Form 10-KSB for the fiscal year ended October 31, 2002, filed with the SEC on November 25, 2005).
     
10.12
  
Warrant to purchase 200,000 shares of common stock of the Registrant, dated February 25, 2005, issued to John A. Moore. (Incorporated by reference to Exhibit 10.18 to the Registrant’s Annual Report on Form 10-KSB for the fiscal year ended October 31, 2002, filed with the SEC on November 25, 2005).
     
10.13
  
Warrant to purchase 200,000 shares of common stock of the Registrant, dated February 25, 2005, issued to Richard E. Otto. (Incorporated by reference to Exhibit 10.19 to the Registrant’s Annual Report on Form 10-KSB for the fiscal year ended October 31, 2002, filed with the SEC on November 25, 2005).
     
10.14
  
Shared Services Agreement, dated May 1, 2004, between the Registrant and Century Capital Associates LLC. (Incorporated by reference to Exhibit 10.23 to the Registrant’s Annual Report on Form 10-KSB for the fiscal year ended October 31, 2002, filed with the SEC on November 25, 2005).
     
10.15
  
Technology License Agreement between The Research Foundation of State University of New York for and on behalf of University of Buffalo and the Registrant dated November 10, 2006 (Incorporated by reference to Exhibit 10.24 to the Registrant’s Current Report on Form 8-K filed with the SEC on November 14, 2006).
     
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.
 
E-3