0001493152-16-013281.txt : 20160913 0001493152-16-013281.hdr.sgml : 20160913 20160913103133 ACCESSION NUMBER: 0001493152-16-013281 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 40 CONFORMED PERIOD OF REPORT: 20160731 FILED AS OF DATE: 20160913 DATE AS OF CHANGE: 20160913 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SCIVANTA MEDICAL CORP CENTRAL INDEX KEY: 0001093285 STANDARD INDUSTRIAL CLASSIFICATION: SURGICAL & MEDICAL INSTRUMENTS & APPARATUS [3841] IRS NUMBER: 222436721 STATE OF INCORPORATION: DE FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-27119 FILM NUMBER: 161882171 BUSINESS ADDRESS: STREET 1: 215 MORRIS AVENUE CITY: SPRING LAKE STATE: NJ ZIP: 07762 BUSINESS PHONE: (732) 919-2799 MAIL ADDRESS: STREET 1: 215 MORRIS AVENUE CITY: SPRING LAKE STATE: NJ ZIP: 07762 FORMER COMPANY: FORMER CONFORMED NAME: MEDI HUT CO INC DATE OF NAME CHANGE: 19990816 10-Q 1 form10-q.htm

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

(Mark One)

 

[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
   
  For the quarterly period ended July 31, 2016
   
[  ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
   
  For the transition period from _________ to _________

 

Commission file number 0-27119

 

SCIVANTA MEDICAL CORPORATION

 

(Exact name of registrant as specified in its charter)

 

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

 

215 Morris Avenue, Spring Lake, New Jersey 07762

(Address of principal executive offices)

 

(732) 282-1620

(Issuer’s telephone number)

 

 

 

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

 

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

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [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 definitions of “large accelerated filer,” “accelerated filer,” and smaller reporting company in Rule 12b-2 of the Securities Exchange Act of 1934.

 

Large accelerated filer [  ]   Accelerated filer [  ]
Non-accelerated filer [  ] (Do not check if a smaller reporting company) Smaller reporting company [X]

 

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

 

As of September 9, 2016, there were 20,934,717 shares of the registrant’s common stock, par value $.001 per share, outstanding.

 

 

 

 
 

 

SCIVANTA MEDICAL CORPORATION

 

INDEX TO FORM 10-Q

 

    Page
PART I FINANCIAL INFORMATION
     
Item 1. Financial Statements 1
     
  Balance Sheets (unaudited) as of July 31, 2016 and October 31, 2015 2
     
  Statements of Operations (unaudited) for the three and nine months ended July 31, 2016 and 2015 3
   
  Statements of Cash Flows (unaudited)  for the nine months ended July 31, 2016 and 2015 4
   
  Notes to the Unaudited Financial Statements 5
     
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 14
   
Item 3. Quantitative and Qualitative Disclosures About Market Risk 17
     
Item 4. Controls and Procedures 17
     
PART II OTHER INFORMATION  
     
Item 1. Legal Proceedings 18
     
Item 1A. Risk Factors 18
     
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 18
     
Item 3. Defaults Upon Senior Securities 18
     
Item 4. Mine Safety Disclosures 18
     
Item 5. Other Information 18
     
Item 6. Exhibits 18
     
Signatures 19
     
Index of Exhibits E-1

 

 
 

 

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

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

 

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

 

 
 

 

PART I. FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

The balance sheet as of July 31, 2016 and the related statements of operations for the three and nine months ended July 31, 2016 and 2015 and cash flows for the nine months ended July 31, 2016 and 2015 for Scivanta Medical Corporation (“Scivanta” or the “Company”) included in Item 1, have been prepared by us, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures required under accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been condensed or omitted from the following financial statements pursuant to the rules and regulations of the SEC. In the opinion of management, the accompanying financial statements include all adjustments, which are of a normal and recurring nature, necessary to present fairly our financial position and results of operations. It is suggested that the following financial statements be read in conjunction with the financial statements and notes thereto included in the registrant’s annual report on Form 10-K for the fiscal year ended October 31, 2015.

 

The results of operations for the three and nine months ended July 31, 2016 are not necessarily indicative of the results of the entire fiscal year or for any other period.

 

1
 

 

Scivanta Medical Corporation

Balance Sheets

(Unaudited)

 

   July 31, 2016   October 31, 2015 
Assets          
Current assets:          
Cash  $28,148   $21,658 
Prepaid expenses   4,739    6,969 
           
Total current assets and total assets  $32,887   $28,627 
           
Liabilities and Stockholders’ Deficiency          
Current liabilities:          
Accounts payable  $125,880   $102,086 
Accounts payable - related party   44,149    369,479 
Accrued expenses   34,937    119,046 
Convertible debentures   225,000    694,791 
           
Total current liabilities   429,966    1,285,402 
           
Note payable       105,000 
           
Total liabilities   429,966    1,390,402 
           
Commitments          
           
Stockholders’ deficiency:          
Preferred stock, $.001 par value; 20,000,000 shares authorized; no shares issued        
Common stock, $.001 par value; 500,000,000 shares authorized; 20,934,717 and 6,359,055 shares issued and outstanding, respectively   20,935    6,359 
Additional paid-in capital   24,231,579    23,080,594 
Accumulated deficit   (24,649,593)   (24,448,728)
           
Total stockholders’ deficiency   (397,079)   (1,361,775)
           
Total liabilities and stockholders’ deficiency  $32,887   $28,627 

 

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

 

2
 

 

Scivanta Medical Corporation

Statements of Operations

(Unaudited)

 

  

Three Months Ended

July 31,

   Nine Months Ended
July 31,
 
   2016   2015   2016   2015 
                 
Revenue  $   $   $   $ 
                     
Operating expenses:                    
General and administrative   64,843    62,829    215,968    176,979 
Gain on settlement of note payable           (105,000)    
                     
Loss from operations   (64,843)   (62,829)   (110,968)   (176,979)
                     
Interest expense   (4,536)   (16,916)   (41,640)   (54,342)
Loss on inducement of convertible debentures           (48,257)    
                     
Net loss  $(69,379)  $(79,745)  $(200,865)  $(231,321)
                     
Net loss per common share, basic and diluted  $0.00   $(0.01)  $(0.02)  $(0.04)
                     
Weighted average number of common shares outstanding, basic and diluted   20,861,786    6,359,055    12,093,663    6,359,055 

  

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

 

3
 

 

Scivanta Medical Corporation

Statements of Cash Flows

(Unaudited)

 

  

Nine Months Ended

July 31,

 
   2016   2015 
Cash flows from operating activities:          
Net loss  $(200,865)  $(231,321)
Adjustments to reconcile net loss to net cash used in operating activities:          
Gain on settlement of note payable   (105,000)    
Accretion of interest on convertible debentures   8,713    11,261 
Loss on inducement of convertible debentures   48,257     
Changes in operating assets and liabilities:          
Prepaid expenses   2,230    3,783 
Accounts payable   23,794    (1,719)
Accounts payable - related party   131,434    116,830 
Accrued expenses   47,927    38,582 
Net cash used in operating activities   (43,510)   (62,584)
Cash flows from financing activities:          
Proceeds from issuance of convertible debenture   50,000    50,000 
Increase (decrease) in cash   6,490    (12,584)
Cash - beginning of period   21,658    26,114 
Cash – end of period  $28,148   $13,530 
Supplemental disclosure of cash flow information:          
Cash paid for income taxes  $500   $500 
Noncash financing activities:          
Discount recorded in connection with issuance of convertible debenture  $3,504   $7,610 
Issuance of 7,548,522 shares of common stock as payment of principal and interest due on convertible debentures  $657,036   $ 
Issuance of 7,027,140 shares of common stock as settlement of accounts payable – related party  $456,764   $ 

 

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

 

4
 

 

Scivanta Medical Corporation

Notes to the Unaudited Financial Statements

 

1.Basis of Presentation

 

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company has incurred significant recurring operating losses and negative cash flows from operations. The Company had a working capital deficiency of $397,079 and an accumulated deficit of $24,649,593 as of July 31, 2016. The Company has not made the $25,000 principal payment due on a convertible debenture and, as a result, that obligation can be placed in default by the holder. The Company also has no lending relationships with commercial banks and is dependent on the completion of a financing involving the private placement of its securities in order to continue operations. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

On November 10, 2006, the Company licensed the exclusive world-wide rights to develop, manufacture and distribute certain proprietary technologies known as the Scivanta Cardiac Monitoring System (the “SCMS”), a minimally invasive two-balloon esophageal catheter system used to monitor cardiac performance. On January 22, 2016, the Company and the Licensor (as hereinafter defined) terminated the SCMS license agreement and, as a result, all property related to the SCMS held by the Company, including intellectual property, was assigned and returned to the Licensor (see Note 2).

 

The Company’s strategy for business development is focused on the acquisition, through licensing or purchasing, of medical devices, pharmaceuticals and other proprietary technologies, patented products or services. Any such acquisitions will be contingent upon the Company’s ability to secure the financing required to fund such acquisitions.

 

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

 

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

 

5
 

 

2.Amended and Restated SCMS License Agreement

 

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

 

Pursuant to the License Agreement, the Licensor granted the Company the exclusive world-wide rights to develop, manufacture and distribute certain proprietary technologies known as the SCMS. A cash payment of $105,000 was payable by the Company to Hickey as follows: (a) $50,000 was due to Hickey on or before a date that is thirty (30) days after the closing of any single financing by the Company of at least $3,000,000 or any series of financings by the Company within a six (6) month period totaling at least $3,000,000; and (b) $55,000 was due to Hickey on or before the date that is thirty (30) days after the first commercial sale of a product utilizing the licensed technology (see Note 4).

 

On January 22, 2016, the Company and the Licensor entered into an agreement to terminate the License Agreement (the “License Termination Agreement”). The Company and the Licensor released each other from any and all claims and liabilities related to the License Agreement, including the $105,000 payment due to Hickey (see Note 4). In addition, pursuant to the License Termination Agreement, the Company assigned all intellectual property related to the SCMS to the Licensor and returned all property in its possession related to the SCMS to the Licensor.

 

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

 

During the three and nine months ended July 31, 2016, the Company was billed $20,229 and $58,464, respectively, pursuant to the terms of the Sublease Agreement. On April 30, 2016, the Company paid $135,000 of rent and $36,899 of expenses due under the Sublease Agreement for the period commencing February 1, 2014 through April 30, 2016 and $284,865 of other expenses due to Century Capital for the period commencing September 1, 2013 through April 30, 2016 through the issuance of 7,027,140 shares of the Company’s common stock. As of July 31, 2016, the Company owed Century Capital $15,000 for rent due under the Sublease Agreement, $5,229 for expenses due under the Sublease Agreement and $23,920 for other expenses, which amounts are presented in accounts payable – related party. During the three and nine months ended July 31, 2015, the Company was billed $19,057 and $53,750, respectively, pursuant to the terms of the Sublease Agreement.

 

6
 

 

4.Note Payable

 

Pursuant to the License Agreement, a cash payment of $105,000 was payable to Hickey. Pursuant to the License Termination Agreement, the Licensor released the Company from any obligation regarding payment of the $105,000 to Hickey (see Note 2). Accordingly, for the nine months ended July 31, 2016, the Company recorded a $105,000 gain on the settlement of the note payable.

 

5.Convertible Debentures

 

February 2007 Convertible Debentures

 

On February 8, 2007, the Company issued 8% convertible debentures, dated February 1, 2007, in the aggregate principal amount of $250,000 to individual investors (the “February 2007 Debentures”). The February 2007 Debentures bear interest at a rate of 8% per annum and originally had a three year term, maturing on January 31, 2010, which was initially extended to January 31, 2012.

 

On January 11, 2012, the Company issued 50,000 shares of common stock as full payment of $50,000 of outstanding principal on certain February 2007 Debentures. On March 31, 2016, the Company issued 856,934 shares of common stock as full payment of $175,000 of outstanding principal due on the February 2007 Debentures and $34,302 of accrued and unpaid interest for the period commencing February 1, 2014 through March 31, 2016 (January 31, 2016 for the February 2007 Debenture that was not converted into shares of common stock on March 31, 2016). The number of shares issued as payment of the principal due was based on the conversion price as defined in the February 2007 Debentures and the number of shares issued as payment of the interest due was calculated based on the market price of the Company’s common stock as defined in the February 2007 Debentures.

 

As of July 31, 2016, the remaining outstanding principal amount of the February 2007 Debentures was $25,000. The Company has not made payment on the outstanding balance of the remaining February 2007 Debenture and, as a result, such obligation can be placed in default by the holder.

 

For the three and nine months ended July 31, 2016, the Company recorded a total of $504 and $7,330, respectively, of interest expense related to the February 2007 Debentures. For the three and nine months ended July 31, 2015, the Company recorded a total of $4,033 and $11,968, respectively, of interest expense related to the February 2007 Debentures. As of July 31, 2016, $997 of interest due on the February 2007 Debentures was accrued and is included as a component of accrued expenses. As of July 31, 2016, the Company recorded the $25,000 of outstanding principal due on the remaining February 2007 Debenture as a component of current convertible debentures.

 

7
 

 

May 2011 Convertible Debenture

 

On May 20, 2011, the Company issued an 8% convertible debenture in the principal amount of $100,000 to an institutional investor (the “May 2011 Debenture”). The May 2011 Debenture bears interest at a rate of 8% per annum and originally had a three year term maturing on May 20, 2014 that was initially extended to May 20, 2015. Effective April 1, 2016, the holder agreed to a new maturity date of March 31, 2017.

 

On March 31, 2016, the Company issued 128,205 shares of common stock to the May 2011 Debenture holder in satisfaction of $16,000 of interest due for the period commencing May 20, 2013 through May 19, 2015. On June 22, 2016, the Company issued 129,032 shares of common stock to the May 2011 Debenture holder in satisfaction of $8,000 of interest due for the period commencing May 20, 2015 through May 19, 2016. The number of shares issued as payment of the interest due was calculated based on the market price of the Company’s common stock as defined in the May 2011 Debenture.

 

For the three and nine months ended July 31, 2016, the Company recorded a total of $2,016 and $6,006 of interest expense related to the May 2011 Debenture. For the three and nine months ended July 31, 2015, the Company recorded a total of $2,017 and $5,985 of interest expense related to the May 2011 Debenture. As of July 31, 2016, $1,630 of interest due on the May 2011 Debenture was accrued and is included as a component of accrued expenses. As of July 31, 2016, the Company recorded the $100,000 of outstanding principal due on the May 2011 Debenture as a component of current convertible debentures.

 

August 2012 Convertible Debenture

 

On August 15, 2012, the Company issued an 8% convertible debenture in the principal amount of $100,000 to an institutional investor (the “August 2012 Debenture”). The August 2012 Debenture originally had a three year term maturing on August 15, 2015 and bears interest at a rate of 8% per annum. Effective April 1, 2016, the holder agreed to a new maturity date of March 31, 2017.

 

On March 31, 2016, the Company issued 161,538 shares of common stock to the August 2012 Debenture holder in satisfaction of $16,000 of interest due for the period commencing August 15, 2013 through August 14, 2015. The number of shares issued as payment of the interest due was calculated based on the market price of the Company’s common stock as defined in the August 2012 Debenture.

 

For the three and nine months ended July 31, 2016, the Company recorded a total of $2,016 and $6,006 of interest expense related to the August 2012 Debenture. For the three and nine months ended July 31, 2015, the Company recorded a total of $2,017 and $5,985 of interest expense related to the August 2012 Debenture. As of July 31, 2016, $7,810 of interest due on the August 2012 Debenture was accrued and is included as a component of accrued expenses. As of July 31, 2016, the Company recorded the $100,000 of outstanding principal due on the August 2012 Debenture as a component of current convertible debentures.

 

8
 

 

December 2013 and April 2014 Convertible Debentures and Warrants

 

On December 12, 2013, the Company issued 10% convertible debentures in the aggregate principal amount of $150,000 to two individual investors (the “December 2013 Debentures”) and on April 1, 2014, the Company issued a 10% convertible debenture in the principal amount of $75,000 to one individual investor (the “April 2014 Debenture” and together with the December 2013 Debentures, the “Debentures”). In connection with the issuance of the Debentures, the Company issued warrants (the “Debenture Warrants”) to purchase shares of the Company’s common stock equal to 20% of the aggregate principal amount of the Debentures. The Debentures had a one year term with principal and interest on the December 2013 Debentures due December 12, 2014 and principal and interest on the April 2014 Debenture due April 1, 2015. The Debentures bear interest at a rate of 10% per annum.

 

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

 

On March 31, 2016, the Company issued 4,223,392 shares of common stock, at $0.065 per share, as full payment of the $225,000 of outstanding principal and $49,521 of accrued and unpaid interest due on the Debentures. Due to the reduction in the conversion price from $0.13 per share (as provided in the Debentures) to $0.065 per share, the Company recorded a loss on the inducement of the Debentures of $40,122 during the nine months ended July 31, 2016.

 

For the three and nine months ended July 31, 2016, the Company recorded a total of $0 and $9,269, respectively, of interest expense related to the Debentures. For the three and nine months ended July 31, 2015, the Company recorded a total of $5,671 and $24,566 ($7,738 accreted), respectively, of interest expense related to the Debentures.

 

February 2015 Convertible Debenture and Warrant

 

On February 12, 2015, the Company issued a 10% convertible debenture in the principal amount of $50,000 to an individual investor (the “February 2015 Debenture”). In connection with the issuance of the February 2015 Debenture, the Company issued a warrant (the “February 2015 Debenture Warrant”) to purchase shares of its common stock equal to 20% of the aggregate principal amount of the February 2015 Debenture. The February 2015 Debenture had a one-year term with principal and interest due February 12, 2016. The February 2015 Debenture bears interest at a rate of 10% per annum.

 

The Company separately accounted for the liability and equity components of the February 2015 Debenture based upon the relative fair value of the liability and equity components on the date of issuance. As a result, the Company recorded a discount of $5,983 for the February 2015 Debenture to account for the relative fair value attributable to the February 2015 Debenture Warrant. The $5,983 debt discount was accreted as interest expense using the effective interest method over the one-year term of the February 2015 Debenture.

 

9
 

 

On March 31, 2016, the Company issued 856,270 shares of common stock, at $0.065 per share, as full payment of the $50,000 of outstanding principal and $5,658 of accrued and unpaid interest due on the February 2015 Debenture. Due to the reduction in the conversion price from $0.13 per share (as provided in the February 2015 Debenture) to $0.065 per share, the Company recorded a loss on the inducement of the February 2015 Debenture of $8,135 during the nine months ended July 31, 2016.

 

For the three and nine months ended July 31, 2016, the Company recorded a total of $0 and $3,788 ($1,705 accreted), respectively, of interest expense related to the February 2015 Debenture. For the three and nine months ended July 31, 2015, the Company recorded a total of $3,178 ($1,918 accreted) and $5,838 ($3,523 accreted), respectively, of interest expense related to the February 2015 Debenture.

 

September 2015 Convertible Debentures and Warrants

 

On September 14, 2015, the Company issued 10% convertible debentures in the aggregate principal amount of $25,000 to three individual investors (the “September 2015 Debentures”). In connection with the issuance of the September 2015 Debentures, the Company issued warrants (the “September 2015 Debenture Warrants”) to purchase shares of its common stock equal to 20% of the aggregate principal amount of the September 2015 Debentures. The September 2015 Debentures had a one-year term with principal and interest due September 14, 2016. The September 2015 Debentures bear interest at a rate of 10% per annum.

 

The Company separately accounted for the liability and equity components of the September 2015 Debentures based upon the relative fair value of the liability and equity components on the date of issuance. As a result, the Company recorded a discount of $4,022 for the September 2015 Debentures to account for the relative fair value attributable to the September 2015 Debenture Warrants. The $4,022 debt discount was accreted as interest expense using the effective interest method over the term of the September 2015 Debentures (September 14, 2015 through March 31, 2016, the date the September 2015 Debentures were converted into shares of common stock).

 

On March 31, 2016, the Company issued 405,585 shares of common stock, at $0.065 per share as provided in the September 2015 Debentures, as full payment of the $25,000 of outstanding principal and $1,363 of accrued and unpaid interest due on the September 2015 Debentures.

 

For the three and nine months ended July 31, 2016, the Company recorded a total of $0 and $4,545 ($3,504 accreted), respectively, of interest expense related to the September 2015 Debentures.

 

January 2016 Convertible Debenture and Warrant

 

On January 4, 2016, the Company issued a 10% convertible debenture in the principal amount of $50,000 to an individual investor (the “January 2016 Debenture”). In connection with the issuance of the January 2016 Debenture, the Company issued a warrant (the “January 2016 Debenture Warrant”) to purchase shares of its common stock equal to 20% of the aggregate principal amount of the January 2016 Debenture. The January 2016 Debenture had a one-year term with principal and interest due January 4, 2017. The January 2016 Debenture bears interest at a rate of 10% per annum.

 

10
 

 

The Company separately accounted for the liability and equity components of the January 2016 Debenture based upon the relative fair value of the liability and equity components on the date of issuance. As a result, the Company recorded a discount of $3,504 for the January 2016 Debenture to account for the relative fair value attributable to the January 2016 Debenture Warrant. The $3,504 debt discount was accreted as interest expense using the effective interest method over the term of the January 2016 Debenture (January 4, 2016 through March 31, 2016, the date the January 2016 Debenture was converted into shares of common stock).

 

On March 31, 2016, the Company issued 787,566 shares of common stock, at $0.065 per share as provided in the January 2016 Debenture, as full payment of the $50,000 of outstanding principal and $1,192 of accrued and unpaid interest due on the January 2016 Debenture.

 

For the three and nine months ended July 31, 2016, the Company recorded a total of $0 and $4,696 ($3,504 accreted), respectively, of interest expense related to the January 2016 Debenture.

 

6.Stock-Based Compensation

 

The Company accounts for stock-based payments to employees in accordance with Accounting Standards Codification (“ASC”) 718, “Stock Compensation” (“ASC 718”). All stock-based payments to employees are grants of stock options that are recognized in the statement of operations based on their fair values at the date of grant. For each of the three and nine months ended July 31, 2016 and 2015, the Company did not record any employee stock-based compensation expense.

 

The Company accounts for stock-based payments to non-employees in accordance with ASC 718 and ASC 505-50, “Equity-Based Payments to Non-Employees.” For each of the three and nine months ended July 31, 2016 and 2015, the Company did not record any non-employee stock-based compensation expense.

 

7.Net Loss Per Common Share

 

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

 

As of July 31, 2016, diluted net loss per share did not include the effect of 193,332 shares of common stock issuable upon the exercise of outstanding options, 903,846 shares of common stock issuable upon the exercise of outstanding warrants and 593,750 shares of common stock issuable upon the conversion of convertible debt, as their effect would be anti-dilutive.

 

11
 

 

As of July 31, 2015, diluted net loss per share did not include the effect of 203,332 shares of common stock issuable upon the exercise of outstanding options, 673,077 shares of common stock issuable upon the exercise of outstanding warrants and 2,782,051 shares of common stock issuable upon the conversion of convertible debt, as their effect would be anti-dilutive.

 

8.Stockholders’ Equity

 

Issuance of Common Stock as Payment of Interest on Convertible Debenture

 

On June 22, 2016, the Company issued 129,032 shares of common stock to the May 2011 Debenture holder in satisfaction of $8,000 of interest due for the period commencing May 20, 2015 through May 19, 2016 (see Note 5).

 

Stock Option Plans

 

The Company currently has two stock option plans in place: the 2002 Equity Incentive Plan and the 2007 Equity Incentive Plan (collectively, the “Equity Incentive Plans”). The 2002 Equity Incentive Plan was approved by the stockholders on July 5, 2002. The aggregate number of shares of common stock which could have been awarded under the 2002 Equity Incentive Plan was 200,000. As of July 31, 2016, options to purchase 110,000 shares of the Company’s common stock were outstanding under the 2002 Equity Incentive Plan. As a result of the adoption of the Company’s 2007 Equity Incentive Plan, no further awards are permitted under the 2002 Equity Incentive Plan.

 

On May 31, 2007, the stockholders approved the Company’s 2007 Equity Incentive Plan. The original aggregate number of shares of common stock which could be awarded under the 2007 Equity Incentive Plan was 300,000 shares, subject to adjustment as provided in the 2007 Equity Incentive Plan. Effective December 27, 2013, as permitted under the 2007 Equity Incentive Plan, the Company’s board of directors increased the number of shares of common stock that could be awarded under the 2007 Equity Incentive Plan to 814,408 shares. As of July 31, 2016, options to purchase 83,332 shares of the Company’s common stock were outstanding under the 2007 Equity Incentive Plan and up to 731,076 shares of the Company’s common stock remain available for awards under the 2007 Equity Incentive Plan.

 

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

 

12
 

 

A summary of stock option transactions for employees and directors under the Equity Incentive Plans during the nine months ended July 31, 2016 is as follows:

 

  

Stock

Option Shares

   Weighted Average Exercise Price Per Common Share   Aggregate Intrinsic Value 
Outstanding at October 31, 2015   203,332   $1.70   $ 
Granted during the period             
Exercised during the period             
Expired during the period   (10,000)  $0.80      
Outstanding at July 31, 2016   193,332   $1.74   $ 
Exercisable at July 31, 2016   193,332   $1.74   $ 
Exercisable at October 31, 2015   203,332   $1.70   $ 

 

Information with respect to stock options outstanding and stock options exercisable as of July 31, 2016 that were granted to employees is as follows:

 

    Stock Options Outstanding   Stock Options Exercisable 

Exercise

Price

  

Number of Shares Available Under Outstanding Stock
Options

   Weighted Average Exercise Price Per Common Share   Weighted Average Remaining Contractual Life (Years)  

Number of Shares Available for Purchase Under Outstanding Stock

Options

   Weighted Average Exercise Price Per Common Share   Weighted Average Remaining Contractual Life (Years) 
                                 
$1.40    83,332   $1.40    2.1    83,332   $1.40    2.1 
$2.00    110,000   $2.00    0.5    110,000   $2.00    0.5 
      193,332   $1.74    1.2    193,332   $1.74    1.2 

 

13
 

 

Warrant to Purchase Common Stock

 

A summary of warrant transactions during the nine months ended July 31, 2016 is as follows:

 

   Warrant Shares   Weighted Average Exercise Price Per Common Share   Aggregate Intrinsic Value 
             
Outstanding at October 31, 2015   750,000   $0.12   $ 
Issued during the period   153,846   $0.07      
Exercised during the period             
Expired during the period             
Outstanding at July 31, 2016   903,846   $0.11   $ 
Exercisable at July 31, 2016   673,077   $0.13   $ 
Exercisable at October 31, 2015   596,154   $0.13   $ 

 

As of July 31, 2016, the weighted average remaining contractual life for warrants outstanding was 1.6 years and for warrants exercisable was 1.3 years.

 

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

 

Background

 

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

 

On November 10, 2006, we acquired the exclusive world-wide rights to develop, manufacture and distribute the SCMS, a minimally invasive two-balloon esophageal catheter system used to monitor cardiac performance. On January 22, 2016, Scivanta and the Licensor entered into the License Termination Agreement pursuant to which the License Agreement was terminated and, as a result, all property related to the SCMS held by Scivanta, including intellectual property, was assigned and returned to the Licensor. Scivanta is currently searching for a new business, technology, product or service to acquire.

 

Scivanta is currently operating on a limited basis as it continues to seek additional financing that will allow it to acquire a new technology, product or service. Our business development strategy will depend upon our ability to secure additional financing.

 

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

 

14
 

 

Critical Accounting Policies and Estimates

 

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

 

The critical accounting estimates that we believe affect the more significant judgments and estimates used in preparation of the financial statements contained elsewhere herein are described in the Management’s Discussion and Analysis of Financial Condition and Results of Operations and in the Notes to the Financial Statements included in the Company’s annual report on Form 10-K for the fiscal year ended October 31, 2015. There have been no material changes to the critical accounting policies.

 

Results of Operations

 

General and Administrative. For the three months ended July 31, 2016, general and administrative expenses were $64,843, as compared to $62,829 for the three months ended July 31, 2015. The $2,014, or 3%, increase in general and administrative expenses for the three months ended July 31, 2016 was primarily due to a $2,020 increase in legal expenses related to fundraising efforts and evaluation of potential acquisitions, a $1,333 increase in office related expenses and a $1,266 increase in expenses related to SEC filings and common stock issuances, offset by a $3,925 decrease in travel related expenses.

 

For the nine months ended July 31, 2016, general and administrative expenses were $215,968, as compared to $176,979 for the nine months ended July 31, 2015. The $38,989, or 22%, increase in general and administrative expenses for the nine months ended July 31, 2016 was primarily due to an $18,000 increase in consulting expenses and a $12,654 increase in legal expenses, each related to fundraising efforts and evaluation of potential acquisitions, and a $5,186 increase in office related expenses.

 

The amount of general and administrative expense to be incurred by us during the fiscal year ending October 31, 2016 will depend upon our ability to secure additional capital through an equity and/or debt financing or corporate partnerships. In the event that we are able to obtain additional capital sufficient to fund the acquisition of a new business, product, technology or service, we would expect general and administrative expenses for the fiscal year ending October 31, 2016 to increase as we build the administrative infrastructure necessary to support the development or sale of a new business, product, technology or service. If we are unable to obtain additional capital sufficient to fund the acquisition of a new business, product, technology or service, we would expect general and administrative expenses for the fiscal year ending October 31, 2016 to remain at current minimum levels.

 

15
 

 

Gain on Settlement of Note Payable. For the nine months ended July 31, 2016, we recognized a $105,000 gain on the settlement of the note payable to Hickey pursuant to the License Termination Agreement.

 

Interest Expense. For the three months ended July 31, 2016, interest expense was $4,536, as compared to $16,916 for the three months ended July 31, 2015. The $12,380, or 73%, decrease in interest expense for the three months ended July 31, 2016 was primarily due to the April 30, 2016 conversion of outstanding principal on the February 2007 Debentures, the December 2013 Debentures, the April 2014 Debenture and the February 2015 Debenture into shares of common stock.

 

For the nine months ended July 31, 2016, interest expense was $41,640, as compared to $54,342 for the nine months ended July 31, 2015. The $12,702, or 23%, decrease in interest expense for the nine months ended July 31, 2016 was primarily due to the April 30, 2016 conversion of outstanding principal on the February 2007 Debentures, the December 2013 Debentures, the April 2014 Debenture and the February 2015 Debenture into shares of common stock.

 

Loss on Inducement of Convertible Debentures. For the nine months ended July 31, 2016, we recognized a loss of $48,257 on the conversion of certain convertible debentures due to a reduction in the conversion price.

 

Net Loss. For the three months ended July 31, 2016, our net loss was $69,379, or $0.00 per share (basic and diluted), as compared to a net loss of $79,745, or $0.01 per share (basic and diluted), for the three months ended July 31, 2015. The $10,366, or 13%, decrease in net loss for the three months ended July 31, 2016 was due to a $12,380 decrease in interest expense, offset by a $2,014 increase in general and administrative expenses.

 

For the nine months ended July 31, 2016, our net loss was $200,865, or $0.02 per share (basic and diluted), as compared to a net loss of $231,321, or $0.04 per share (basic and diluted), for the nine months ended July 31, 2015. The $30,456, or 13%, decrease in net loss for the nine months ended July 31, 2016 was due a $105,000 gain on the settlement of a note payable and a $12,702 decrease in interest expense, offset by a $38,989 increase in general and administrative expenses and a $48,257 loss on the inducement of convertible debentures.

 

Liquidity and Capital Resources

 

As of July 31, 2016, we had a working capital deficiency of $397,079 and cash on hand of $28,148. The $6,490 increase in cash on hand from October 31, 2015 was primarily due to the receipt of $50,000 of gross proceeds from the January 2016 Debenture, offset by our continuing operating expenses.

 

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

 

16
 

 

On March 31, 2016, we issued 7,419,490 shares of our common stock as payment of $649,036 of outstanding principal and accrued interest on certain convertible debentures. On April 30, 2016, we issued 7,027,140 shares of our common stock as payment of $456,764 related party accounts payable. On June 22, 2016, we issued 129,032 shares of our common stock as payment of $8,000 of interest due on a convertible debenture.

 

As of September 9, 2016, our cash position was approximately $22,400. Without any additional financing, we will only be able to continue our administrative operations, on a limited basis, for approximately four months from the filing date of this quarterly report on Form 10-Q. Effective November 1, 2011, Scivanta’s officers agreed to waive the annual base salary due to them and Scivanta’s directors agreed to waive the annual retainer and meeting fees due to them until Scivanta is able to raise sufficient capital that would provide Scivanta with the ability to pay cash compensation to its officers and directors. Scivanta has also deferred certain vendor payments until it secures sufficient additional financing. We did not make $25,000 of principal payments due on a convertible debenture and, as a result, this obligation can be placed in default by the holder. Our independent registered public accounting firm included an emphasis of a matter paragraph in its report included in this annual report on Form 10-K, which expressed substantial doubt about our ability to continue as a going concern. Our financial statements included herein do not include any adjustments related to this uncertainty.

 

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

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk

 

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

 

Item 4. Controls and Procedures

 

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

 

17
 

 

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

 

PART II. OTHER INFORMATION

 

Item 1. Legal Proceedings

 

None.

 

Item 1A. Risk Factors

 

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

 

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

 

On June 22, 2016, the Company issued 129,032 shares of common stock to the May 2011 Debenture holder in satisfaction of $8,000 of interest due for the period commencing May 20, 2015 through May 19, 2016. In connection with this issuance of shares of common stock, Scivanta relied on the exemption from registration for a private transaction not involving a public distribution provided by Section 4(2) of the Securities Act.

 

Item 3. Defaults Upon Senior Securities

 

Not Applicable.

 

Item 4. Mine Safety Disclosures

 

Not Applicable.

 

Item 5. Other Information

 

None.

 

Item 6. Exhibits

 

See Index of Exhibits Commencing on Page E-1.

 

18
 

 

SIGNATURES

 

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

 

DATE: SCIVANTA MEDICAL CORPORATION
     
September 13, 2016 By: /s/ David R. LaVance
    David R. LaVance
    President and Chief Executive Officer
     
September 13, 2016 By: /s/ Thomas S. Gifford
    Thomas S. Gifford
    Executive Vice President,
    Chief Financial Officer and Secretary

 

19
 

 

INDEX OF EXHIBITS

 

Exhibit    
Number   Description of Exhibit
     
3.1   Amended and Restated Articles of Incorporation of Scivanta Medical Corporation, (the “Company”), which was filed in the Office of the Secretary of State of the State of Nevada on April 22, 2013 (incorporated by reference to Exhibit 3.1 to the Company’s current report on Form 8-K filed with the Securities and Exchange Commission (the “SEC”) on April 22, 2013).
     
3.2   Amended and Restated Bylaws of the Company (incorporated by reference to Exhibit 3.2 to the Company’s quarterly report on Form 10-QSB for the quarter ended January 31, 2006, filed with the SEC on January 29, 2007).
     
4.1   Specimen stock certificate representing the Company’s common stock (incorporated by reference to Exhibit 4.1 to the Company’s quarterly report on Form 10-QSB for the quarter ended January 31, 2006, filed with the SEC on January 29, 2007).
     
4.2   Form of Convertible Debenture, dated as of February 1, 2007, issued to the following persons and in the following amounts: Jesse H. Austin, III ($50,000); Andrew O. Whiteman and Gwen C. Whiteman, JTWROS ($25,000); Jack W. Cumming ($25,000); Scott C. Withrow ($25,000); Terrence McQuade ($25,000); Steven J. Olsen ($25,000); and Marc G. Robinson and Joshua Goldfarb ($25,000) (incorporated by reference to Exhibit 4.8 to the Company’s quarterly report on Form 10-QSB for the quarter ended January 31, 2007, filed with the SEC on March 14, 2007).
     
4.3   Form of Addendum to Convertible Debenture, dated as of January 31, 2010, issued to the persons set forth in Exhibit 4.2 (incorporated by reference to Exhibit 4.3 to the Company’s annual report on Form 10-K for the fiscal year ended October 31, 2009, filed with the SEC on January 29, 2010).
     
4.4   Form of Addendum to Convertible Debenture, dated as of January 31, 2012, issued to certain persons set forth in Exhibit 4.2 (incorporated by reference to Exhibit 4.4 to the Company’s quarterly report on Form 10-Q for the quarter ended January 31, 2012, filed with the SEC on March 16, 2012).
     
4.5   8% Convertible Debenture, dated as of May 20, 2011, in the principal amount of $100,000 issued to Zanett Opportunity Fund, Ltd. (incorporated by reference to Exhibit 4.4 to the Company’s quarterly report on Form 10-Q for the quarter ended April 30, 2011, filed with the SEC on June 14, 2011).
     
4.6   8% Convertible Debenture, dated as of August 15, 2012, in the principal amount of $100,000 issued to Zanett Opportunity Fund, Ltd. (incorporated by reference to Exhibit 4.1 to the Company’s current report on Form 8-K filed with the SEC on August 21, 2012).
     
4.7   Form of 10% Convertible Debenture issued on: December 12, 2013 in the principal amount of $150,000; April 1, 2014 in the principal amount of $75,000; February 12, 2015 in the principal amount of $50,000; September 14, 2015 in the principal amount of $25,000; and January 4, 2016 in the principal amount of $50,000 (incorporated by reference to Exhibit 4.1 to the Company’s current reports on Form 8-K filed with the SEC on December 17, 2013).

 

E-1 
 

 

Exhibit    
Number   Description of Exhibit
     
10.1   The Company’s 2002 Equity Incentive Plan, adopted and effective January 1, 2002 (incorporated by reference to Exhibit B of the Company’s definitive proxy statement, filed with the SEC on June 10, 2002).
     
10.2   Sublease Agreement, dated February 1, 2007, between the Company and Century Capital Associates LLC (incorporated by reference to Exhibit 10.14 to the Company’s quarterly report on Form 10-QSB for the quarter ended January 31, 2007, filed with the SEC on March 14, 2007).
     
10.3   Amended and Restated Technology License Agreement between the Company and The Research Foundation of State University of New York for and on behalf of University of Buffalo, and Donald D. Hickey, M.D. and Clas E. Lundgren dated February 14, 2011 (incorporated by reference to Exhibit 10.8 to the Company’s annual report on Form 10-K for the fiscal year ended October 31, 2010, filed with the SEC on February 15, 2011).
     
10.3.1   First Addendum to the Amended and Restated Technology License Agreement between the Company and The Research Foundation for State University of New York for and on behalf of University of Buffalo, and Donald D. Hickey, M.D. and Clas E. Lundgren dated March 14, 2013 (incorporated by reference to Exhibit 10.3.1 to the Company’s quarterly report on Form 10-Q for the quarter ended January 31, 2013, filed with the SEC on March 18, 2013).
     
10.3.2   License Termination Agreement between the Company and The Research Foundation for State University of New York for and on behalf of University of Buffalo, and Donald D. Hickey, M.D. and Clas E. Lundgren dated January 22, 2016 (incorporated by reference to Exhibit 10.3.2 to the Company’s annual report on Form 10-K for the fiscal year ended October 31, 2015, filed with the SEC on January 27, 2016).
     
10.4   Stock Option Agreement and Notice of Grant, dated February 5, 2007, pursuant to which David R. LaVance was granted a non-qualified stock option to purchase up to 500,000 shares of common stock of the Company (incorporated by reference to Exhibit 10.16 to the Company’s quarterly report on Form 10-QSB for the quarter ended January 31, 2007, filed with the SEC on March 14, 2007).
     
10.5   Stock Option Agreement and Notice of Grant, dated February 5, 2007, pursuant to which Thomas S. Gifford was granted a non-qualified stock option to purchase up to 500,000 shares of common stock of the Company (incorporated by reference to Exhibit 10.17 to the Company’s quarterly report on Form 10-QSB for the quarter ended January 31, 2007, filed with the SEC on March 14, 2007).
     
10.6   Company’s 2007 Equity Incentive Plan, adopted and effective May 31, 2007 (incorporated by reference to Appendix to the Company’s definitive proxy statement, filed with the SEC on April 27, 2007).
     
10.7   Stock Option Agreement and Notice of Grant, dated January 1, 2008, pursuant to which David R. LaVance was granted a non-qualified stock option to purchase up to 100,000 shares of common stock of the Company (incorporated by reference to Exhibit 10.21 to the Company’s current report on Form 8-K filed with the SEC on January 2, 2008).

 

E-2 
 

 

Exhibit    
Number   Description of Exhibit
     
10.8   Stock Option Agreement and Notice of Grant, dated January 1, 2008, pursuant to which Thomas S. Gifford was granted a non-qualified stock option to purchase up to 100,000 shares of common stock of the Company (incorporated by reference to Exhibit 10.22 to the Company’s current report on Form 8-K filed with the SEC on January 2, 2008).
     
10.9   Executive Employment Agreement, dated as of January 1, 2008, between the Company and David R. LaVance (incorporated by reference to Exhibit 10.26 to the Company’s current report on Form 8-K filed with the SEC on January 2, 2008).
     
10.10   Executive Employment Agreement, dated as of January 1, 2008, between the Company and Thomas S. Gifford (incorporated by reference to Exhibit 10.27 to the Company’s current report on Form 8-K filed with the SEC on January 2, 2008).
     
10.11   Amendment No. 1 dated as of June 18, 2010 to the Executive Employment Agreement, dated as of January 1, 2008, between the Company and David R. LaVance (incorporated by reference to Exhibit 10.27 to the Company’s quarterly report on Form 10-Q for the quarter ended April 30, 2010, filed with the SEC on June 21, 2010).
     
10.12   Amendment No. 1 dated as of June 18, 2010 to the Executive Employment Agreement, dated as of January 1, 2008, between the Company and Thomas S. Gifford (incorporated by reference to Exhibit 10.28 to the Company’s quarterly report on Form 10-Q for the quarter ended April 30, 2010, filed with the SEC on June 21, 2010).
     
10.13   Amendment No. 2 dated as of January 3, 2012 to the Executive Employment Agreement, dated as of January 1, 2008, between the Company and David R. LaVance (incorporated by reference to Exhibit 10.23 to the Company’s annual report on Form 10-KSB for the fiscal year ended October 31, 2011, filed with the SEC on January 30, 2012).
     
10.14   Amendment No. 2 dated as of January 3, 2012 to the Executive Employment Agreement, dated as of January 1, 2008, between the Company and Thomas S. Gifford (incorporated by reference to Exhibit 10.24 to the Company’s annual report on Form 10-KSB for the fiscal year ended October 31, 2011, filed with the SEC on January 30, 2012).
     
10.15   Stock Option Agreement and Notice of Grant, dated January 21, 2009, pursuant to which David R. LaVance was granted a non-qualified stock option to purchase up to 25,000 shares of common stock of the Company (incorporated by reference to Exhibit 10.32 to the Company’s annual report on Form 10-KSB for the fiscal year ended October 31, 2008, filed with the SEC on January 29, 2009).
     
10.16   Stock Option Agreement and Notice of Grant, dated January 21, 2009, pursuant to which Thomas S. Gifford was granted a non-qualified stock option to purchase up to 25,000 shares of common stock of the Company (incorporated by reference to Exhibit 10.33 to the Company’s annual report on Form 10-KSB for the fiscal year ended October 31, 2008, filed with the SEC on January 29, 2009).

 

E-3 
 

 

Exhibit    
Number   Description of Exhibit
     
31.1   Section 302 Certification of Chief Executive Officer.
     
31.2   Section 302 Certification of Chief Financial Officer.
     
32.1   Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350.
     
32.2   Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350.
     
101   The following materials from the Company’s quarterly report on Form 10-Q for the period ended July 31, 2016, formatted in Extensible Business Reporting Language (XBRL): (i) balance sheets; (ii) statements of operations; (iii) statements of cash flows; and (iv) notes to the financial statements.

 

E-4 
 

 

EX-31.1 2 ex31-1.htm

 

EXHIBIT 31.1

 

CERTIFICATION

 

I, David R. LaVance, certify that:

 

1. I have reviewed this report on Form 10-Q of Scivanta Medical Corporation;

 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: September 13, 2016 By: /s/ David R. LaVance
    David R. LaVance
    President and Chief Executive Officer

 

 
 

 

EX-31.2 3 ex31-2.htm

 

EXHIBIT 31.2

 

CERTIFICATION

 

I, Thomas S. Gifford, certify that:

 

1. I have reviewed this report on Form 10-Q of Scivanta Medical Corporation;

 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: September 13, 2016 By: /s/ Thomas S. Gifford
    Thomas S. Gifford
    Executive Vice President,
    Chief Financial Officer and Secretary

 

 
 

 

EX-32.1 4 ex32-1.htm

 

EXHIBIT 32.1

 

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

 

PURSUANT TO 18 U.S.C. SECTION 1350,

 

AS ADOPTED PURSUANT TO

 

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the Quarterly Report of Scivanta Medical Corporation (the “Company”) on Form 10-Q for the period ended July 31, 2016, as filed with the Securities and Exchange Commission (the “Report”), I, David R. LaVance, President and Chief Executive Officer of the Company, do hereby certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

 

(1) the Report fully complies with the requirements of §13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, 15 U.S.C. §78m or 78o(d), and,

 

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

Date: September 13, 2016 By: /s/ David R. LaVance
    David R. LaVance
    President and Chief Executive Officer

 

 
 
EX-32.2 5 ex32-2.htm

 

EXHIBIT 32.2

 

CERTIFICATION OF CHIEF FINANCIAL OFFICER

 

PURSUANT TO 18 U.S.C. SECTION 1350,

 

AS ADOPTED PURSUANT TO

 

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the Quarterly Report of Scivanta Medical Corporation (the “Company”) on Form 10-Q for the period ended July 31, 2016, as filed with the Securities and Exchange Commission (the “Report”), I, Thomas S. Gifford, Executive Vice President, Chief Financial Officer and Secretary of the Company, do hereby certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

 

(1) the Report fully complies with the requirements of §13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, 15 U.S.C. §78m or 78o(d), and,

 

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

Date: September 13, 2016 By: /s/ Thomas S. Gifford
    Thomas S. Gifford
    Executive Vice President,
    Chief Financial Officer and Secretary

 

 
 

 

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Document and Entity Information - shares
9 Months Ended
Jul. 31, 2016
Sep. 09, 2016
Document And Entity Information    
Entity Registrant Name SCIVANTA MEDICAL CORP  
Entity Central Index Key 0001093285  
Document Type 10-Q  
Document Period End Date Jul. 31, 2016  
Amendment Flag false  
Current Fiscal Year End Date --10-31  
Entity Filer Category Smaller Reporting Company  
Entity Common Stock, Shares Outstanding   20,934,717
Trading Symbol SCVM  
Document Fiscal Period Focus Q3  
Document Fiscal Year Focus 2016  
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Balance Sheets (Unaudited) - USD ($)
Jul. 31, 2016
Oct. 31, 2015
Current assets:    
Cash $ 28,148 $ 21,658
Prepaid expenses 4,739 6,969
Total current assets and total assets 32,887 28,627
Current liabilities:    
Accounts payable 125,880 102,086
Accounts payable - related party 44,149 369,479
Accrued expenses 34,937 119,046
Convertible debentures 225,000 694,791
Total current liabilities 429,966 1,285,402
Note payable 105,000
Total liabilities 429,966 1,390,402
Commitments
Stockholders' deficiency:    
Preferred stock, $.001 par value; 20,000,000 shares authorized; no shares issued
Common stock, $.001 par value; 500,000,000 shares authorized; 20,934,717 and 6,359,055 shares issued and outstanding, respectively 20,935 6,359
Additional paid-in capital 24,231,579 23,080,594
Accumulated deficit (24,649,593) (24,448,728)
Total stockholders' deficiency (397,079) (1,361,775)
Total liabilities and stockholders' deficiency $ 32,887 $ 28,627
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Balance Sheets (Parenthetical) - $ / shares
Jul. 31, 2016
Oct. 31, 2015
Statement of Financial Position [Abstract]    
Preferred stock, par value $ .001 $ .001
Preferred stock, shares authorized 20,000,000 20,000,000
Preferred stock, shares issued
Common stock, par value $ 0.001 $ 0.001
Common stock, shares authorized 500,000,000 500,000,000
Common stock, shares issued 20,934,717 6,359,055
Common stock, shares outstanding 20,934,717 6,359,055
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Statements of Operations (Unaudited) - USD ($)
3 Months Ended 9 Months Ended
Jul. 31, 2016
Jul. 31, 2015
Jul. 31, 2016
Jul. 31, 2015
Income Statement [Abstract]        
Revenue
Operating expenses:        
General and administrative 64,843 62,829 215,968 176,979
Gain on settlement of note payable (105,000)
Loss from operations (64,843) (62,829) (110,968) (176,979)
Interest expense (4,536) (16,916) (41,640) (54,342)
Loss on inducement of convertible debentures (48,257)
Net loss $ (69,379) $ (79,745) $ (200,865) $ (231,321)
Net loss per common share, basic and diluted $ 0.00 $ (0.01) $ (0.02) $ (0.04)
Weighted average number of common shares outstanding, basic and diluted 20,861,786 6,359,055 12,093,663 6,359,055
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Statements of Cash Flows (Unaudited) - USD ($)
9 Months Ended
Jul. 31, 2016
Jul. 31, 2015
Cash flows from operating activities:    
Net loss $ (200,865) $ (231,321)
Adjustments to reconcile net loss to net cash used in operating activities:    
Gain on settlement of note payable (105,000)
Accretion of interest on convertible debentures 8,713 11,261
Loss on inducement of convertible debentures 48,257
Changes in operating assets and liabilities:    
Prepaid expenses 2,230 3,783
Accounts payable 23,794 (1,719)
Accounts payable - related party 131,434 116,830
Accrued expenses 47,927 38,582
Net cash used in operating activities (43,510) (62,584)
Cash flows from financing activities:    
Proceeds from issuance of convertible debenture 50,000 50,000
Increase (decrease) in cash 6,490 (12,584)
Cash - beginning of period 21,658 26,114
Cash - end of period 28,148 13,530
Supplemental disclosure of cash flow information:    
Cash paid for income taxes 500 500
Noncash financing activities:    
Discount recorded in connection with issuance of convertible debenture 3,504 7,610
Issuance of 7,548,522 shares of common stock as payment of principal and interest due on convertible debentures 657,036
Issuance of 7,027,140 shares of common stock as settlement of accounts payable - related party $ 456,764
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Statements of Cash Flows (Parenthetical) - shares
9 Months Ended
Jul. 31, 2016
Jul. 31, 2015
Statement of Cash Flows [Abstract]    
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Common stock shares issued as setttlement of certain accounts payable related party 7,027,140
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Basis of Presentation
9 Months Ended
Jul. 31, 2016
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Basis of Presentation

1. Basis of Presentation

 

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company has incurred significant recurring operating losses and negative cash flows from operations. The Company had a working capital deficiency of $397,079 and an accumulated deficit of $24,649,593 as of July 31, 2016. The Company has not made the $25,000 principal payment due on a convertible debenture and, as a result, that obligation can be placed in default by the holder. The Company also has no lending relationships with commercial banks and is dependent on the completion of a financing involving the private placement of its securities in order to continue operations. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

On November 10, 2006, the Company licensed the exclusive world-wide rights to develop, manufacture and distribute certain proprietary technologies known as the Scivanta Cardiac Monitoring System (the “SCMS”), a minimally invasive two-balloon esophageal catheter system used to monitor cardiac performance. On January 22, 2016, the Company and the Licensor (as hereinafter defined) terminated the SCMS license agreement and, as a result, all property related to the SCMS held by the Company, including intellectual property, was assigned and returned to the Licensor (see Note 2).

 

The Company’s strategy for business development is focused on the acquisition, through licensing or purchasing, of medical devices, pharmaceuticals and other proprietary technologies, patented products or services. Any such acquisitions will be contingent upon the Company’s ability to secure the financing required to fund such acquisitions.

 

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

 

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

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Amended and Restated SCMS License Agreement
9 Months Ended
Jul. 31, 2016
Amended And Restated Scms License Agreement  
Amended and Restated SCMS License Agreement

2. Amended and Restated SCMS License Agreement

 

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

 

Pursuant to the License Agreement, the Licensor granted the Company the exclusive world-wide rights to develop, manufacture and distribute certain proprietary technologies known as the SCMS. A cash payment of $105,000 was payable by the Company to Hickey as follows: (a) $50,000 was due to Hickey on or before a date that is thirty (30) days after the closing of any single financing by the Company of at least $3,000,000 or any series of financings by the Company within a six (6) month period totaling at least $3,000,000; and (b) $55,000 was due to Hickey on or before the date that is thirty (30) days after the first commercial sale of a product utilizing the licensed technology (see Note 4).

 

On January 22, 2016, the Company and the Licensor entered into an agreement to terminate the License Agreement (the “License Termination Agreement”). The Company and the Licensor released each other from any and all claims and liabilities related to the License Agreement, including the $105,000 payment due to Hickey (see Note 4). In addition, pursuant to the License Termination Agreement, the Company assigned all intellectual property related to the SCMS to the Licensor and returned all property in its possession related to the SCMS to the Licensor.

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Related Party Transactions
9 Months Ended
Jul. 31, 2016
Related Party Transactions [Abstract]  
Related Party Transactions

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

 

During the three and nine months ended July 31, 2016, the Company was billed $20,229 and $58,464, respectively, pursuant to the terms of the Sublease Agreement. On April 30, 2016, the Company paid $135,000 of rent and $36,899 of expenses due under the Sublease Agreement for the period commencing February 1, 2014 through April 30, 2016 and $284,865 of other expenses due to Century Capital for the period commencing September 1, 2013 through April 30, 2016 through the issuance of 7,027,140 shares of the Company’s common stock. As of July 31, 2016, the Company owed Century Capital $15,000 for rent due under the Sublease Agreement, $5,229 for expenses due under the Sublease Agreement and $23,920 for other expenses, which amounts are presented in accounts payable – related party. During the three and nine months ended July 31, 2015, the Company was billed $19,057 and $53,750, respectively, pursuant to the terms of the Sublease Agreement.

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Note Payable
9 Months Ended
Jul. 31, 2016
Debt Disclosure [Abstract]  
Note Payable

4. Note Payable

 

Pursuant to the License Agreement, a cash payment of $105,000 was payable to Hickey. Pursuant to the License Termination Agreement, the Licensor released the Company from any obligation regarding payment of the $105,000 to Hickey (see Note 2). Accordingly, for the nine months ended July 31, 2016, the Company recorded a $105,000 gain on the settlement of the note payable.

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Convertible Debentures
9 Months Ended
Jul. 31, 2016
Debt Disclosure [Abstract]  
Convertible Debentures

  5. Convertible Debentures

 

February 2007 Convertible Debentures

 

On February 8, 2007, the Company issued 8% convertible debentures, dated February 1, 2007, in the aggregate principal amount of $250,000 to individual investors (the “February 2007 Debentures”). The February 2007 Debentures bear interest at a rate of 8% per annum and originally had a three year term, maturing on January 31, 2010, which was initially extended to January 31, 2012.

 

On January 11, 2012, the Company issued 50,000 shares of common stock as full payment of $50,000 of outstanding principal on certain February 2007 Debentures. On March 31, 2016, the Company issued 856,934 shares of common stock as full payment of $175,000 of outstanding principal due on the February 2007 Debentures and $34,302 of accrued and unpaid interest for the period commencing February 1, 2014 through March 31, 2016 (January 31, 2016 for the February 2007 Debenture that was not converted into shares of common stock on March 31, 2016). The number of shares issued as payment of the principal due was based on the conversion price as defined in the February 2007 Debentures and the number of shares issued as payment of the interest due was calculated based on the market price of the Company’s common stock as defined in the February 2007 Debentures.

 

As of July 31, 2016, the remaining outstanding principal amount of the February 2007 Debentures was $25,000. The Company has not made payment on the outstanding balance of the remaining February 2007 Debenture and, as a result, such obligation can be placed in default by the holder.

 

For the three and nine months ended July 31, 2016, the Company recorded a total of $504 and $7,330, respectively, of interest expense related to the February 2007 Debentures. For the three and nine months ended July 31, 2015, the Company recorded a total of $4,033 and $11,968, respectively, of interest expense related to the February 2007 Debentures. As of July 31, 2016, $997 of interest due on the February 2007 Debentures was accrued and is included as a component of accrued expenses. As of July 31, 2016, the Company recorded the $25,000 of outstanding principal due on the remaining February 2007 Debenture as a component of current convertible debentures.

 

May 2011 Convertible Debenture

 

On May 20, 2011, the Company issued an 8% convertible debenture in the principal amount of $100,000 to an institutional investor (the “May 2011 Debenture”). The May 2011 Debenture bears interest at a rate of 8% per annum and originally had a three year term maturing on May 20, 2014 that was initially extended to May 20, 2015. Effective April 1, 2016, the holder agreed to a new maturity date of March 31, 2017.

 

On March 31, 2016, the Company issued 128,205 shares of common stock to the May 2011 Debenture holder in satisfaction of $16,000 of interest due for the period commencing May 20, 2013 through May 19, 2015. On June 22, 2016, the Company issued 129,032 shares of common stock to the May 2011 Debenture holder in satisfaction of $8,000 of interest due for the period commencing May 20, 2015 through May 19, 2016. The number of shares issued as payment of the interest due was calculated based on the market price of the Company’s common stock as defined in the May 2011 Debenture.

 

For the three and nine months ended July 31, 2016, the Company recorded a total of $2,016 and $6,006 of interest expense related to the May 2011 Debenture. For the three and nine months ended July 31, 2015, the Company recorded a total of $2,017 and $5,985 of interest expense related to the May 2011 Debenture. As of July 31, 2016, $1,630 of interest due on the May 2011 Debenture was accrued and is included as a component of accrued expenses. As of July 31, 2016, the Company recorded the $100,000 of outstanding principal due on the May 2011 Debenture as a component of current convertible debentures.

 

August 2012 Convertible Debenture

 

On August 15, 2012, the Company issued an 8% convertible debenture in the principal amount of $100,000 to an institutional investor (the “August 2012 Debenture”). The August 2012 Debenture originally had a three year term maturing on August 15, 2015 and bears interest at a rate of 8% per annum. Effective April 1, 2016, the holder agreed to a new maturity date of March 31, 2017.

 

On March 31, 2016, the Company issued 161,538 shares of common stock to the August 2012 Debenture holder in satisfaction of $16,000 of interest due for the period commencing August 15, 2013 through August 14, 2015. The number of shares issued as payment of the interest due was calculated based on the market price of the Company’s common stock as defined in the August 2012 Debenture.

 

For the three and nine months ended July 31, 2016, the Company recorded a total of $2,016 and $6,006 of interest expense related to the August 2012 Debenture. For the three and nine months ended July 31, 2015, the Company recorded a total of $2,017 and $5,985 of interest expense related to the August 2012 Debenture. As of July 31, 2016, $7,810 of interest due on the August 2012 Debenture was accrued and is included as a component of accrued expenses. As of July 31, 2016, the Company recorded the $100,000 of outstanding principal due on the August 2012 Debenture as a component of current convertible debentures.

 

December 2013 and April 2014 Convertible Debentures and Warrants

 

On December 12, 2013, the Company issued 10% convertible debentures in the aggregate principal amount of $150,000 to two individual investors (the “December 2013 Debentures”) and on April 1, 2014, the Company issued a 10% convertible debenture in the principal amount of $75,000 to one individual investor (the “April 2014 Debenture” and together with the December 2013 Debentures, the “Debentures”). In connection with the issuance of the Debentures, the Company issued warrants (the “Debenture Warrants”) to purchase shares of the Company’s common stock equal to 20% of the aggregate principal amount of the Debentures. The Debentures had a one year term with principal and interest on the December 2013 Debentures due December 12, 2014 and principal and interest on the April 2014 Debenture due April 1, 2015. The Debentures bear interest at a rate of 10% per annum.

 

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

 

On March 31, 2016, the Company issued 4,223,392 shares of common stock, at $0.065 per share, as full payment of the $225,000 of outstanding principal and $49,521 of accrued and unpaid interest due on the Debentures. Due to the reduction in the conversion price from $0.13 per share (as provided in the Debentures) to $0.065 per share, the Company recorded a loss on the inducement of the Debentures of $40,122 during the nine months ended July 31, 2016.

 

For the three and nine months ended July 31, 2016, the Company recorded a total of $0 and $9,269, respectively, of interest expense related to the Debentures. For the three and nine months ended July 31, 2015, the Company recorded a total of $5,671 and $24,566 ($7,738 accreted), respectively, of interest expense related to the Debentures.

 

February 2015 Convertible Debenture and Warrant

 

On February 12, 2015, the Company issued a 10% convertible debenture in the principal amount of $50,000 to an individual investor (the “February 2015 Debenture”). In connection with the issuance of the February 2015 Debenture, the Company issued a warrant (the “February 2015 Debenture Warrant”) to purchase shares of its common stock equal to 20% of the aggregate principal amount of the February 2015 Debenture. The February 2015 Debenture had a one-year term with principal and interest due February 12, 2016. The February 2015 Debenture bears interest at a rate of 10% per annum.

 

The Company separately accounted for the liability and equity components of the February 2015 Debenture based upon the relative fair value of the liability and equity components on the date of issuance. As a result, the Company recorded a discount of $5,983 for the February 2015 Debenture to account for the relative fair value attributable to the February 2015 Debenture Warrant. The $5,983 debt discount was accreted as interest expense using the effective interest method over the one-year term of the February 2015 Debenture.

 

On March 31, 2016, the Company issued 856,270 shares of common stock, at $0.065 per share, as full payment of the $50,000 of outstanding principal and $5,658 of accrued and unpaid interest due on the February 2015 Debenture. Due to the reduction in the conversion price from $0.13 per share (as provided in the February 2015 Debenture) to $0.065 per share, the Company recorded a loss on the inducement of the February 2015 Debenture of $8,135 during the nine months ended July 31, 2016.

 

For the three and nine months ended July 31, 2016, the Company recorded a total of $0 and $3,788 ($1,705 accreted), respectively, of interest expense related to the February 2015 Debenture. For the three and nine months ended July 31, 2015, the Company recorded a total of $3,178 ($1,918 accreted) and $5,838 ($3,523 accreted), respectively, of interest expense related to the February 2015 Debenture.

 

September 2015 Convertible Debentures and Warrants

 

On September 14, 2015, the Company issued 10% convertible debentures in the aggregate principal amount of $25,000 to three individual investors (the “September 2015 Debentures”). In connection with the issuance of the September 2015 Debentures, the Company issued warrants (the “September 2015 Debenture Warrants”) to purchase shares of its common stock equal to 20% of the aggregate principal amount of the September 2015 Debentures. The September 2015 Debentures had a one-year term with principal and interest due September 14, 2016. The September 2015 Debentures bear interest at a rate of 10% per annum.

 

The Company separately accounted for the liability and equity components of the September 2015 Debentures based upon the relative fair value of the liability and equity components on the date of issuance. As a result, the Company recorded a discount of $4,022 for the September 2015 Debentures to account for the relative fair value attributable to the September 2015 Debenture Warrants. The $4,022 debt discount was accreted as interest expense using the effective interest method over the term of the September 2015 Debentures (September 14, 2015 through March 31, 2016, the date the September 2015 Debentures were converted into shares of common stock).

 

On March 31, 2016, the Company issued 405,585 shares of common stock, at $0.065 per share as provided in the September 2015 Debentures, as full payment of the $25,000 of outstanding principal and $1,363 of accrued and unpaid interest due on the September 2015 Debentures.

 

For the three and nine months ended July 31, 2016, the Company recorded a total of $0 and $4,545 ($3,504 accreted), respectively, of interest expense related to the September 2015 Debentures.

 

January 2016 Convertible Debenture and Warrant

 

On January 4, 2016, the Company issued a 10% convertible debenture in the principal amount of $50,000 to an individual investor (the “January 2016 Debenture”). In connection with the issuance of the January 2016 Debenture, the Company issued a warrant (the “January 2016 Debenture Warrant”) to purchase shares of its common stock equal to 20% of the aggregate principal amount of the January 2016 Debenture. The January 2016 Debenture had a one-year term with principal and interest due January 4, 2017. The January 2016 Debenture bears interest at a rate of 10% per annum.

 

The Company separately accounted for the liability and equity components of the January 2016 Debenture based upon the relative fair value of the liability and equity components on the date of issuance. As a result, the Company recorded a discount of $3,504 for the January 2016 Debenture to account for the relative fair value attributable to the January 2016 Debenture Warrant. The $3,504 debt discount was accreted as interest expense using the effective interest method over the term of the January 2016 Debenture (January 4, 2016 through March 31, 2016, the date the January 2016 Debenture was converted into shares of common stock).

 

On March 31, 2016, the Company issued 787,566 shares of common stock, at $0.065 per share as provided in the January 2016 Debenture, as full payment of the $50,000 of outstanding principal and $1,192 of accrued and unpaid interest due on the January 2016 Debenture.

 

For the three and nine months ended July 31, 2016, the Company recorded a total of $0 and $4,696 ($3,504 accreted), respectively, of interest expense related to the January 2016 Debenture.

XML 23 R12.htm IDEA: XBRL DOCUMENT v3.5.0.2
Stock-Based Compensation
9 Months Ended
Jul. 31, 2016
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Stock-Based Compensation

  6. Stock-Based Compensation

 

The Company accounts for stock-based payments to employees in accordance with Accounting Standards Codification (“ASC”) 718, “Stock Compensation” (“ASC 718”). All stock-based payments to employees are grants of stock options that are recognized in the statement of operations based on their fair values at the date of grant. For each of the three and nine months ended July 31, 2016 and 2015, the Company did not record any employee stock-based compensation expense.

 

The Company accounts for stock-based payments to non-employees in accordance with ASC 718 and ASC 505-50, “Equity-Based Payments to Non-Employees.” For each of the three and nine months ended July 31, 2016 and 2015, the Company did not record any non-employee stock-based compensation expense.

XML 24 R13.htm IDEA: XBRL DOCUMENT v3.5.0.2
Net Loss Per Common Share
9 Months Ended
Jul. 31, 2016
Earnings Per Share [Abstract]  
Net Loss Per Common Share

  7. Net Loss Per Common Share

 

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

 

As of July 31, 2016, diluted net loss per share did not include the effect of 193,332 shares of common stock issuable upon the exercise of outstanding options, 903,846 shares of common stock issuable upon the exercise of outstanding warrants and 593,750 shares of common stock issuable upon the conversion of convertible debt, as their effect would be anti-dilutive.

 

As of July 31, 2015, diluted net loss per share did not include the effect of 203,332 shares of common stock issuable upon the exercise of outstanding options, 673,077 shares of common stock issuable upon the exercise of outstanding warrants and 2,782,051 shares of common stock issuable upon the conversion of convertible debt, as their effect would be anti-dilutive.

XML 25 R14.htm IDEA: XBRL DOCUMENT v3.5.0.2
Stockholders' Equity
9 Months Ended
Jul. 31, 2016
Equity [Abstract]  
Stockholders' Equity

  8. Stockholders’ Equity

 

Issuance of Common Stock as Payment of Interest on Convertible Debenture

 

On June 22, 2016, the Company issued 129,032 shares of common stock to the May 2011 Debenture holder in satisfaction of $8,000 of interest due for the period commencing May 20, 2015 through May 19, 2016 (see Note 5).

 

Stock Option Plans

 

The Company currently has two stock option plans in place: the 2002 Equity Incentive Plan and the 2007 Equity Incentive Plan (collectively, the “Equity Incentive Plans”). The 2002 Equity Incentive Plan was approved by the stockholders on July 5, 2002. The aggregate number of shares of common stock which could have been awarded under the 2002 Equity Incentive Plan was 200,000. As of July 31, 2016, options to purchase 110,000 shares of the Company’s common stock were outstanding under the 2002 Equity Incentive Plan. As a result of the adoption of the Company’s 2007 Equity Incentive Plan, no further awards are permitted under the 2002 Equity Incentive Plan.

 

On May 31, 2007, the stockholders approved the Company’s 2007 Equity Incentive Plan. The original aggregate number of shares of common stock which could be awarded under the 2007 Equity Incentive Plan was 300,000 shares, subject to adjustment as provided in the 2007 Equity Incentive Plan. Effective December 27, 2013, as permitted under the 2007 Equity Incentive Plan, the Company’s board of directors increased the number of shares of common stock that could be awarded under the 2007 Equity Incentive Plan to 814,408 shares. As of July 31, 2016, options to purchase 83,332 shares of the Company’s common stock were outstanding under the 2007 Equity Incentive Plan and up to 731,076 shares of the Company’s common stock remain available for awards under the 2007 Equity Incentive Plan.

 

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

 

A summary of stock option transactions for employees and directors under the Equity Incentive Plans during the nine months ended July 31, 2016 is as follows:

 

   

Stock

Option Shares

    Weighted Average Exercise Price Per Common Share     Aggregate Intrinsic Value  
Outstanding at October 31, 2015     203,332     $ 1.70     $  
Granted during the period                    
Exercised during the period                    
Expired during the period     (10,000 )   $ 0.80          
Outstanding at July 31, 2016     193,332     $ 1.74     $  
Exercisable at July 31, 2016     193,332     $ 1.74     $  
Exercisable at October 31, 2015     203,332     $ 1.70     $  

 

Information with respect to stock options outstanding and stock options exercisable as of July 31, 2016 that were granted to employees is as follows:

 

      Stock Options Outstanding     Stock Options Exercisable  

Exercise

Price

    Number of Shares Available Under Outstanding Stock
Options
    Weighted Average Exercise Price Per Common Share     Weighted Average Remaining Contractual Life (Years)    

Number of Shares Available for Purchase Under Outstanding Stock

Options

    Weighted Average Exercise Price Per Common Share     Weighted Average Remaining Contractual Life (Years)  
                                                     
$ 1.40       83,332     $ 1.40       2.1       83,332     $ 1.40       2.1  
$ 2.00       110,000     $ 2.00       0.5       110,000     $ 2.00       0.5  
          193,332     $ 1.74       1.2       193,332     $ 1.74       1.2  

 

Warrant to Purchase Common Stock

 

A summary of warrant transactions during the nine months ended July 31, 2016 is as follows:

 

    Warrant Shares     Weighted Average Exercise Price Per Common Share     Aggregate Intrinsic Value  
                   
Outstanding at October 31, 2015     750,000     $ 0.12     $  
Issued during the period     153,846     $ 0.07          
Exercised during the period                    
Expired during the period                    
Outstanding at July 31, 2016     903,846     $ 0.11     $  
Exercisable at July 31, 2016     673,077     $ 0.13     $  
Exercisable at October 31, 2015     596,154     $ 0.13     $  

 

As of July 31, 2016, the weighted average remaining contractual life for warrants outstanding was 1.6 years and for warrants exercisable was 1.3 years.

XML 26 R15.htm IDEA: XBRL DOCUMENT v3.5.0.2
Stockholders' Equity (Tables)
9 Months Ended
Jul. 31, 2016
Warrant [Member]  
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]  
Schedule of Stock Option Activity

A summary of warrant transactions during the nine months ended July 31, 2016 is as follows:

 

    Warrant Shares     Weighted Average Exercise Price Per Common Share     Aggregate Intrinsic Value  
                   
Outstanding at October 31, 2015     750,000     $ 0.12     $  
Issued during the period     153,846     $ 0.07          
Exercised during the period                    
Expired during the period                    
Outstanding at July 31, 2016     903,846     $ 0.11     $  
Exercisable at July 31, 2016     673,077     $ 0.13     $  
Exercisable at October 31, 2015     596,154     $ 0.13     $

Stock Option [Member]  
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]  
Schedule of Stock Option Activity

A summary of stock option transactions for employees and directors under the Equity Incentive Plans during the nine months ended July 31, 2016 is as follows:

 

   

Stock

Option Shares

    Weighted Average Exercise Price Per Common Share     Aggregate Intrinsic Value  
Outstanding at October 31, 2015     203,332     $ 1.70     $  
Granted during the period                    
Exercised during the period                    
Expired during the period     (10,000 )   $ 0.80          
Outstanding at July 31, 2016     193,332     $ 1.74     $  
Exercisable at July 31, 2016     193,332     $ 1.74     $  
Exercisable at October 31, 2015     203,332     $ 1.70     $

 

Schedule of Stock Options Outstanding and Stock Options Exercisable

Information with respect to stock options outstanding and stock options exercisable as of July 31, 2016 that were granted to employees is as follows:

 

      Stock Options Outstanding     Stock Options Exercisable  

Exercise

Price

    Number of Shares Available Under Outstanding Stock
Options
    Weighted Average Exercise Price Per Common Share     Weighted Average Remaining Contractual Life (Years)    

Number of Shares Available for Purchase Under Outstanding Stock

Options

    Weighted Average Exercise Price Per Common Share     Weighted Average Remaining Contractual Life (Years)  
                                                     
$ 1.40       83,332     $ 1.40       2.1       83,332     $ 1.40       2.1  
$ 2.00       110,000     $ 2.00       0.5       110,000     $ 2.00       0.5  
          193,332     $ 1.74       1.2       193,332     $ 1.74       1.2

 

XML 27 R16.htm IDEA: XBRL DOCUMENT v3.5.0.2
Basis of Presentation (Details Narrative) - USD ($)
Jul. 31, 2016
Oct. 31, 2015
Organization, Consolidation and Presentation of Financial Statements [Abstract]    
Working capital deficiency $ 397,079  
Accumulated deficit 24,649,593 $ 24,448,728
Principal payment due on convertible debenture $ 25,000  
XML 28 R17.htm IDEA: XBRL DOCUMENT v3.5.0.2
Amended and Restated SCMS License Agreement (Details Narrative) - Donald D. Hickey [Member] - USD ($)
9 Months Ended
Feb. 14, 2011
Jul. 31, 2016
Jan. 22, 2016
SCMS License Agreement [Member]      
Cash payment to related party $ 105,000    
SCMS License Agreement [Member] | After Closing Any Single Financing [Member]      
Cash payment to related party 50,000    
SCMS License Agreement [Member] | Six Month Period [Member]      
Maximum closing single financing amount 3,000,000    
SCMS License Agreement [Member] | After First Commercial Sale of Licensed Technology [Member]      
Cash payment to related party $ 55,000    
License Termination Agreement [Member]      
Cash payment to related party   $ 105,000  
Termination of license agreement     $ 105,000
XML 29 R18.htm IDEA: XBRL DOCUMENT v3.5.0.2
Related Party Transactions (Details Narrative)
3 Months Ended 9 Months Ended
Jul. 31, 2016
USD ($)
Jul. 31, 2015
USD ($)
Jul. 31, 2016
USD ($)
shares
Jul. 31, 2015
USD ($)
Feb. 01, 2007
ft²
Sublease agreement expenses $ 20,229 $ 19,057 $ 58,464 $ 53,750  
Number of shares issued | shares     7,027,140    
Sublease Agreement [Member]          
Sublease agreement expenses     $ 5,229    
Rent due under the Sublease Agreement     15,000    
Other expenses included in accounts payable - related party 23,920   $ 23,920    
Century Capital Associates LLC [Member]          
Area of office space | ft²         2,000
Notice period to terminate sublease agreement     60 days    
Monthly rental fee     $ 5,000    
Sublease agreement expenses     36,899    
Rent due under the Sublease Agreement     135,000    
Other expenses included in accounts payable - related party $ 284,865   $ 284,865    
XML 30 R19.htm IDEA: XBRL DOCUMENT v3.5.0.2
Note Payable (Details Narrative) - USD ($)
3 Months Ended 9 Months Ended
Jul. 31, 2016
Jul. 31, 2015
Jul. 31, 2016
Jul. 31, 2015
Gain on settlement of note payable $ 105,000
Donald D. Hickey [Member] | License Agreement [Member]        
Cash payment to related party $ 105,000   105,000  
Donald D. Hickey [Member] | License Termination Agreement [Member]        
Payment to related party     $ 105,000  
XML 31 R20.htm IDEA: XBRL DOCUMENT v3.5.0.2
Convertible Debentures (Details Narrative) - USD ($)
3 Months Ended 9 Months Ended
Jun. 22, 2016
Mar. 31, 2016
Jan. 04, 2016
Sep. 14, 2015
Feb. 12, 2015
Dec. 12, 2013
Aug. 15, 2012
Jan. 11, 2012
May 20, 2011
Feb. 08, 2007
Jul. 31, 2016
Jul. 31, 2015
Jul. 31, 2016
Jul. 31, 2015
Oct. 31, 2015
Debt instruments principal amount                     $ 25,000   $ 25,000    
Convertible debt carrying value net                     225,000   225,000   $ 694,791
Loss on conversion of convertible debt                     (48,257)  
January 2016 Debenture Divided [Member]                              
Debt instruments conversion into share   787,566                          
Debt instruments conversion into shares value   $ 50,000                          
Accrued interest   $ 1,192                          
Interest expense on debt                     0   4,696    
Debt discount     $ 3,504                        
Accreted interest expense     3,504                   3,504    
Conversion price per share   $ 0.065                          
February 2007 Debentures [Member]                              
Debt instruments principal amount                     25,000   25,000    
Debt instruments conversion into share   856,934           50,000              
Debt instruments conversion into shares value   $ 175,000           $ 50,000              
Accrued interest   $ 34,302                 997   997    
Interest expense on debt                     504 4,033 7,330 11,968  
Convertible debt carrying value net                     25,000   25,000    
February 2007 Debentures [Member] | Individual Investors [Member]                              
Debt instruments principal amount                   $ 250,000          
Debentures bear interest at rate                   8.00%          
Debt maturity date                   Jan. 31, 2010          
Debt initially extended date                   Jan. 31, 2012          
Debt maturity term                   3 years          
May 2011 Convertible Debenture [Member]                              
Debt instruments conversion into share 129,032 128,205                          
Accrued interest $ 8,000 $ 16,000                 1,630   1,630    
Interest expense on debt                     2,016 2,017 6,006 5,985  
Convertible debt carrying value net                     100,000   100,000    
May 2011 Convertible Debenture [Member] | Institutional Investor [Member]                              
Debt instruments principal amount                 $ 100,000            
Debentures bear interest at rate                 8.00%            
Debt maturity date                 May 20, 2014            
Debt initially extended date                 May 20, 2015            
Debt instrument new maturity date                 Mar. 31, 2017            
Debt maturity term                 3 years            
August 2012 Convertible Debenture [Member]                              
Debt instruments conversion into share   161,538                          
Accrued interest   $ 16,000                 7,810   7,810    
Interest expense on debt                     2,016 2,017 6,006 5,985  
Convertible debt carrying value net                     100,000   100,000    
August 2012 Convertible Debenture [Member] | Institutional Investor [Member]                              
Debt instruments principal amount             $ 100,000                
Debentures bear interest at rate             8.00%                
Debt maturity date             Aug. 15, 2015                
Debt instrument new maturity date             Mar. 31, 2017                
Debt maturity term             3 years                
December 2013 Debentures [Member] | Two Individual Investors [Member]                              
Debt instruments principal amount           $ 150,000                  
Debentures bear interest at rate           10.00%                  
Debt maturity date           Dec. 12, 2014                  
Debt maturity term           1 year                  
April 2014 Debentures [Member] | Two Individual Investors [Member]                              
Debt instruments principal amount           $ 75,000                  
Debentures bear interest at rate           10.00%                  
Debt maturity date           Apr. 01, 2015                  
December 2013 and April 2014 Convertible Debentures and Warrants [Member]                              
Debt instruments conversion into share   4,223,392                          
Debt instruments conversion into shares value   $ 225,000                          
Accrued interest   $ 49,521                          
Interest expense on debt                     0 5,671 9,269 24,566  
Percentage of common stock equal aggregate principal amount           20.00%                  
Debt discount           $ 36,796                  
Accreted interest expense           $ 36,796               7,738  
Conversion price per share   $ 0.065                          
Loss on conversion of convertible debt                     $ 40,122   $ 40,122    
December 2013 and April 2014 Convertible Debentures and Warrants [Member] | Minimum [Member]                              
Conversion price per share                     $ 0.13   $ 0.13    
December 2013 and April 2014 Convertible Debentures and Warrants [Member] | Maximum [Member]                              
Conversion price per share                     $ 0.065   $ 0.065    
February 2015 Convertible Debenture and Warrant [Member]                              
Debt instruments conversion into share   856,270                          
Debt instruments conversion into shares value   $ 50,000                          
Accrued interest   $ 5,658                          
Interest expense on debt                     $ 0 3,178 $ 3,788 5,838  
Debt discount         $ 5,983                    
Accreted interest expense         5,983             $ 1,918 1,705 $ 3,523  
Conversion price per share   $ 0.065                          
Loss on conversion of convertible debt                     8,135   8,135    
February 2015 Convertible Debenture and Warrant [Member] | Minimum [Member]                              
Conversion price per share   0.13                          
February 2015 Convertible Debenture and Warrant [Member] | Maximum [Member]                              
Conversion price per share   $ 0.065                          
February 2015 Convertible Debenture and Warrant [Member] | Individual Investors [Member]                              
Debt instruments principal amount         $ 50,000                    
Debentures bear interest at rate         10.00%                    
Debt instrument new maturity date         Feb. 12, 2016                    
Debt maturity term         1 year                    
Percentage of common stock equal aggregate principal amount         20.00%                    
September 2015 Convertible Debentures and Warrants [Member]                              
Debt instruments conversion into share   405,585                          
Debt instruments conversion into shares value   $ 25,000                          
Accrued interest   $ 1,363                          
Interest expense on debt                     $ 0   4,545    
Debt discount       $ 4,022                      
Accreted interest expense       4,022                 $ (3,504)    
Conversion price per share   $ 0.065                          
September 2015 Convertible Debentures and Warrants [Member] | Three Individual Investors [Member]                              
Debt instruments principal amount       $ 25,000                      
Debentures bear interest at rate       10.00%                      
Debt instrument new maturity date       Sep. 14, 2016                      
Debt maturity term       1 year                      
Percentage of common stock equal aggregate principal amount       20.00%                      
January 2016 Debenture and Warrant [Member] | Individual Investors [Member]                              
Debt instruments principal amount     $ 50,000                        
Debentures bear interest at rate     10.00%                        
Debt instrument new maturity date     Jan. 04, 2017                        
Debt maturity term     1 year                        
Percentage of common stock equal aggregate principal amount     20.00%                        
XML 32 R21.htm IDEA: XBRL DOCUMENT v3.5.0.2
Net Loss Per Common Share (Details Narrative) - shares
9 Months Ended
Jul. 31, 2016
Jul. 31, 2015
Stock Option [Member]    
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]    
Anti-dilutive shares which were not included in computation of diluted per share 193,332 203,332
Warrant [Member]    
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]    
Anti-dilutive shares which were not included in computation of diluted per share 903,846 673,077
Convertible Debt Securities [Member]    
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]    
Anti-dilutive shares which were not included in computation of diluted per share 593,750 2,782,051
XML 33 R22.htm IDEA: XBRL DOCUMENT v3.5.0.2
Stockholders' Equity (Details Narrative)
1 Months Ended 9 Months Ended
Jun. 22, 2016
USD ($)
shares
Mar. 31, 2016
USD ($)
shares
Dec. 27, 2013
shares
Jul. 31, 2016
USD ($)
StockOptionPlans
shares
Oct. 31, 2015
shares
May 31, 2007
shares
Jul. 05, 2002
shares
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]              
Number of stock option plans | StockOptionPlans       2      
Warrant [Member]              
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]              
Stock option plan outstanding       903,846 750,000    
Weighted average warrants outstanding contractual life       1 year 7 months 6 days      
Weighted average warrants exercisable contractual life       1 year 3 months 18 days      
Equity Incentive Plans [Member]              
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]              
Stock options vested over period       5 years      
Equity Incentive Plans [Member] | Maximum [Member]              
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]              
Stock options grant date term       10 years      
2002 Equity Incentive Plan [Member]              
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]              
Aggregate number of common stock shares awarded             200,000
Stock option plan outstanding       110,000      
2007 Equity Incentive Plan [Member]              
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]              
Aggregate number of common stock shares awarded           300,000  
Stock option plan outstanding       83,332      
Increased in number of common stock shares awarded     814,408        
Common stock available for awards under equity incentive plan       731,076      
May 2011 Convertible Debenture [Member]              
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]              
Debt instruments conversion into share 129,032 128,205          
Accrued interest | $ $ 8,000 $ 16,000   $ 1,630      
XML 34 R23.htm IDEA: XBRL DOCUMENT v3.5.0.2
Stockholders' Equity - Schedule of Stock Option Activity (Details)
9 Months Ended
Jul. 31, 2016
USD ($)
$ / shares
shares
Warrant [Member]  
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]  
Stock Option/Warrants Shares, Outstanding Beginning Balance | shares 750,000
Stock Option/Warrants Shares, Granted/Issued during the period | shares 153,846
Stock Option/Warrants Shares, Exercised during the period | shares
Stock Option/Warrants Shares, Expired during the period | shares
Stock Option/Warrants Shares, Outstanding Ending Balance | shares 903,846
Stock Option/Warrants Shares, Exercisable at July 31, 2016 | shares 673,077
Stock Option/Warrants Shares, Exercisable at October 31, 2015 | shares 596,154
Weighted Average Exercise Price Per Common Share/Warrants, Outstanding Beginning Balance | $ / shares $ 0.12
Weighted Average Exercise Price Per Common Share/Warrants, Granted/Issued during the period | $ / shares 0.07
Weighted Average Exercise Price Per Common Share/Warrants, Exercised during the period | $ / shares
Weighted Average Exercise Price Per Common Share/Warrants, Expired during the period | $ / shares
Weighted Average Exercise Price Per Common Share/Warrants Outstanding Ending Balance | $ / shares 0.11
Weighted Average Exercise Price Per Common Share, Exercisable at July 31, 2016 | $ / shares 0.13
Weighted Average Exercise Price Per Common Share, Exercisable at October 31, 2015 | $ / shares $ 0.13
Aggregate Intrinsic Value, Outstanding Stock Option/Warrants Beginning balance | $
Aggregate Intrinsic Value Outstanding Stock Option/Warrants, Ending Balance | $
Aggregate Intrinsic Value, Stock Option/Warrants, Exercisable at July 31, 2016 | $
Aggregate Intrinsic Value, Stock Option/Warrants, Exercisable at October 31, 2015 | $
Stock Option [Member]  
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]  
Stock Option/Warrants Shares, Outstanding Beginning Balance | shares 203,332
Stock Option/Warrants Shares, Granted/Issued during the period | shares
Stock Option/Warrants Shares, Exercised during the period | shares
Stock Option/Warrants Shares, Expired during the period | shares (10,000)
Stock Option/Warrants Shares, Outstanding Ending Balance | shares 193,332
Stock Option/Warrants Shares, Exercisable at July 31, 2016 | shares 193,332
Stock Option/Warrants Shares, Exercisable at October 31, 2015 | shares 203,332
Weighted Average Exercise Price Per Common Share/Warrants, Outstanding Beginning Balance | $ / shares $ 1.70
Weighted Average Exercise Price Per Common Share/Warrants, Granted/Issued during the period | $ / shares
Weighted Average Exercise Price Per Common Share/Warrants, Exercised during the period | $ / shares
Weighted Average Exercise Price Per Common Share/Warrants, Expired during the period | $ / shares 0.80
Weighted Average Exercise Price Per Common Share/Warrants Outstanding Ending Balance | $ / shares 1.74
Weighted Average Exercise Price Per Common Share, Exercisable at July 31, 2016 | $ / shares 1.74
Weighted Average Exercise Price Per Common Share, Exercisable at October 31, 2015 | $ / shares $ 1.70
Aggregate Intrinsic Value, Outstanding Stock Option/Warrants Beginning balance | $
Aggregate Intrinsic Value Outstanding Stock Option/Warrants, Ending Balance | $
Aggregate Intrinsic Value, Stock Option/Warrants, Exercisable at July 31, 2016 | $
Aggregate Intrinsic Value, Stock Option/Warrants, Exercisable at October 31, 2015 | $
XML 35 R24.htm IDEA: XBRL DOCUMENT v3.5.0.2
Stockholders' Equity - Schedule of Stock Options Outstanding and Stock Options Exercisable (Details) - Stock Option [Member]
9 Months Ended
Jul. 31, 2015
$ / shares
shares
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]  
Number of Available Under Outstanding Stock | shares 193,332
Weighted Average Exercise Price Per Common Share $ 1.74
Weighted Average Remaining Contractual Life (Years) 1 year 2 months 12 days
Number of Shares Available for Purchase Under | shares 193,332
Weighted Average Exercise Price Per Common Share $ 1.74
Weighted Average Remaining Contractual Life (Years) 1 year 2 months 12 days
Exercise Price One [Member]  
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]  
Exercise Price $ 1.40
Number of Available Under Outstanding Stock | shares 83,332
Weighted Average Exercise Price Per Common Share $ 1.40
Weighted Average Remaining Contractual Life (Years) 2 years 1 month 6 days
Number of Shares Available for Purchase Under | shares 83,332
Weighted Average Exercise Price Per Common Share $ 1.40
Weighted Average Remaining Contractual Life (Years) 2 years 1 month 6 days
Exercise Price Two [Member]  
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]  
Exercise Price $ 2.00
Number of Available Under Outstanding Stock | shares 110,000
Weighted Average Exercise Price Per Common Share $ 2.00
Weighted Average Remaining Contractual Life (Years) 6 months
Number of Shares Available for Purchase Under | shares 110,000
Weighted Average Exercise Price Per Common Share $ 2.00
Weighted Average Remaining Contractual Life (Years) 6 months
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