Delaware
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26-2593535
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(State or other jurisdiction of Incorporation or organization)
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(I.R.S. Employer Identification No.)
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Title of Each Class
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Name of Each Exchange on Which Registered
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Common Stock, $0.0001 par value per share
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The NASDAQ Stock Market LLC
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Large accelerated filer
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Accelerated filer
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Non-accelerated filer
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Smaller reporting company
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(Do not check if a smaller reporting company)
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three U.S. patents (5,824,703; 5,840,767; 6,167,887), three Australian patents (690,277; 722,417; 759,557), and two Canadian patents (2,239,170; 2,311,122) pertaining to the use and application of PFCs as gas transport agents in blood substitutes and liquid ventilation with an average remaining life of approximately 4 years;
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exclusive in-licenses to three fundamental gas transport patent applications that represent the core technology used in our products and product candidates with an average remaining life of approximately 16 years; and
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numerous patent applications for treatment of several medical and dermatological conditions such as TBI, acne, burns and wounds with an average remaining life of approximately 17 years.
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methods to treat certain diseases and conditions and for biological gas exchange;
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therapies for burn and wound victims;
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delivery of oxygenated PFC;
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various formulations containing PFC; and
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methods and compositions for controlled and sustained production and delivery of peroxide and/or oxygen for biological and industrial applications.
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the scope, rate of progress and cost of our clinical trials and other research and development activities;
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the costs and timing of regulatory approval;
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the costs of filing, prosecuting, defending and enforcing any patent claims and other intellectual property rights;
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the effect of competing technological and market developments;
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the terms and timing of any collaboration, licensing or other arrangements that we may establish;
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the cost and timing of completion of clinical and commercial-scale manufacturing activities; and
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the costs of establishing sales, marketing and distribution capabilities for our cosmetic products and any product candidates for which we may receive regulatory approval.
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our ability to obtain additional funding to develop our product candidates;
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the need to obtain regulatory approval of our most advanced product candidate, Oxycyte, for the potential treatment of TBI;
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potential risks related to any collaborations we may enter into for our product candidates, including Oxycyte;
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delays in the commencement, enrollment and completion of clinical testing, as well as the analysis and reporting of results from such clinical testing;
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the success of clinical trials of our Oxycyte product candidate or future product candidates;
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any delays in regulatory review and approval of product candidates in development;
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market acceptance of our cosmetic product candidates;
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our ability to establish an effective sales and marketing infrastructure;
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competition from existing products or new products that may emerge;
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the ability to receive regulatory approval or commercialize our products;
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potential side effects of our product candidates that could delay or prevent commercialization;
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potential product liability claims and adverse events;
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potential liabilities associated with hazardous materials;
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our ability to maintain adequate insurance policies;
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our dependency on third-party manufacturers to supply or manufacture our products;
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our ability to establish or maintain collaborations, licensing or other arrangements;
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our ability, our partners’ abilities, and third parties’ abilities to protect and assert intellectual property rights;
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costs related to and outcomes of potential and ongoing litigation;
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compliance with obligations under intellectual property licenses with third parties;
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our ability to adequately support future growth; and
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our ability to attract and retain key personnel to manage our business effectively.
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we may not be able to control the amount and timing of resources that our partners may devote to the development or commercialization of product candidates or to their marketing and distribution;
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partners may delay clinical trials, provide insufficient funding for a clinical trial program, stop a clinical trial or abandon a product candidate, repeat or conduct new clinical trials or require a new formulation of a product candidate for clinical testing;
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disputes may arise between us and our partners that result in the delay or termination of the research, development or commercialization of our product candidates or that result in costly litigation or arbitration that diverts management’s attention and resources;
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partners may experience financial difficulties;
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partners may not properly maintain or defend our intellectual property rights, or may use our proprietary information, in such a way as to invite litigation that could jeopardize or invalidate our intellectual property rights or proprietary information or expose us to potential litigation;
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business combinations or significant changes in a partner’s business strategy may adversely affect a partner’s willingness or ability to meet its obligations under any arrangement;
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a partner could independently move forward with a competing product candidate developed either independently or in collaboration with others, including our competitors; and
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the collaborations with our partners may be terminated or allowed to expire, which would delay the development and may increase the cost of developing our product candidates.
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reaching agreements on acceptable terms with prospective CROs and trial sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and trial sites;
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obtaining regulatory approval to commence a clinical trial;
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obtaining institutional review board, or IRB, approval to conduct a clinical trial at numerous prospective sites;
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recruiting and enrolling patients to participate in clinical trials for a variety of reasons, including meeting the enrollment criteria for our study and competition from other clinical trial programs for the same indication as our product candidates;
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retaining patients who have initiated a clinical trial but may be prone to withdraw due to the treatment protocol, lack of efficacy, personal issues or side effects from the therapy or who are lost to further follow-up;
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maintaining and supplying clinical trial material on a timely basis; and
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collecting, analyzing and reporting final data from the clinical trials.
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failure to conduct the clinical trial in accordance with regulatory requirements or our clinical protocols;
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inspection of the clinical trial operations or trial sites by the FDA or other regulatory authorities resulting in the imposition of a clinical hold;
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unforeseen safety issues or any determination that a trial presents unacceptable health risks; and
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lack of adequate funding to continue the clinical trial, including unforeseen costs due to enrollment delays, requirements to conduct additional trials and studies and increased expenses associated with the services of our CROs and other third parties.
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The data obtained from laboratory testing and clinical trials are susceptible to varying interpretations, which could delay, limit or prevent FDA and other regulatory approvals
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Adverse events could cause the FDA and other regulatory authorities to halt trials
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At any time the FDA and other regulatory agencies could change policies and regulations that could result in delay and perhaps rejection of our products, and
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Even after extensive testing and clinical trials, there is no assurance that regulatory approval will ever be obtained for any of our products.
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The federal anti-kickback statute is a criminal statute that makes it a felony for individuals or entities knowingly and willfully to offer or pay, or to solicit or receive, direct or indirect remuneration, in order to induce the purchase, order, lease, or recommending of items or services, or the referral of patients for services, that are reimbursed under a federal health care program, including Medicare and Medicaid;
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The federal False Claims Act imposes liability on any person who knowingly submits, or causes another person or entity to submit, a false claim for payment of government funds. Penalties include three times the government’s damages plus civil penalties of $5,500 to $11,000 per false claim. In addition, the False Claims Act permits a person with knowledge of fraud, referred to as a qui tam plaintiff, to file a lawsuit on behalf of the government against the person or business that committed the fraud, and, if the action is successful, the qui tam plaintiff is rewarded with a percentage of the recovery;
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Health Insurance Portability and Accountability Act imposes obligations, including mandatory contractual terms, with respect to safeguarding the privacy, security and transmission of individually identifiable health information;
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The Social Security Act contains numerous provisions allowing the imposition of a civil money penalty, a monetary assessment, exclusion from the Medicare and Medicaid programs, or some combination of these penalties; and
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Many states have analogous state laws and regulations, such as state anti-kickback and false claims laws. In some cases, these state laws impose more strict requirements than the federal laws. Some state laws also require pharmaceutical companies to comply with certain price reporting and other compliance requirements.
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Our inability to recruit and retain adequate numbers of effective sales and marketing personnel;
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The inability of sales personnel to obtain access to or persuade adequate numbers of physicians to prescribe our products;
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The lack of complementary products to be offered by sales personnel, which may put us at a competitive disadvantage relative to companies with more extensive product lines; and
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Unforeseen costs and expenses associated with creating and sustaining an independent sales and marketing organization.
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We may be required to relinquish important rights to our products or product candidates;
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We may not be able to control the amount and timing of resources that our distributors or collaborators may devote to the commercialization of our product candidates;
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Our distributors or collaborators may experience financial difficulties;
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Our distributors or collaborators may not devote sufficient time to the marketing and sales of our products; and
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Business combinations or significant changes in a collaborator’s business strategy may adversely affect a collaborator’s willingness or ability to complete its obligations under any arrangement.
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others may be able to make compositions or formulations that are similar to our product candidates but that are not covered by the claims of our patents;
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we might not have been the first to make the inventions covered by our issued patents or pending patent applications;
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we might not have been the first to file patent applications for these inventions;
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others may independently develop similar or alternative technologies or duplicate any of our technologies;
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it is possible that our pending patent applications will not result in issued patents;
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our issued patents may not provide us with any competitive advantages, or may be held invalid or unenforceable as a result of legal challenges by third parties;
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we may not develop additional proprietary technologies that are patentable; or
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the patents of others may have an adverse effect on our business.
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These agreements may be breached;
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These agreements may not provide adequate remedies for the applicable type of breach; or
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Our trade secrets or proprietary know-how will otherwise become known.
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Decreased demand for our products and any product candidates that we may develop;
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Injury to our reputation;
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Withdrawal of clinical trial participants;
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Costs to defend the related litigation;
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Substantial monetary awards to trial participants or patients;
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Loss of revenue; and
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The inability to commercialize any products that we may develop.
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actual or anticipated fluctuations in our financial condition and operating results;
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status and/or results of our clinical trials;
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status of ongoing litigation
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results of clinical trials of our competitors’ products;
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regulatory actions with respect to our products or our competitors’ products;
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actions and decisions by our collaborators or partners;
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actual or anticipated changes in our growth rate relative to our competitors;
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actual or anticipated fluctuations in our competitors’ operating results or changes in their growth rate;
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competition from existing products or new products that may emerge;
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issuance of new or updated research or reports by securities analysts;
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fluctuations in the valuation of companies perceived by investors to be comparable to us;
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share price and volume fluctuations attributable to inconsistent trading volume levels of our shares;
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market conditions for biopharmaceutical stocks in general;
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status of our search and selection of future management and leadership; and
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general economic and market conditions.
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Year-Ended April 30, 2012
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High
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Low
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First Quarter
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$ | 71.00 | $ | 34.20 | ||||
Second Quarter
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$ | 61.60 | $ | 37.00 | ||||
Third Quarter
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$ | 47.20 | $ | 26.00 | ||||
Fourth Quarter
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$ | 64.00 | $ | 35.60 |
Year-Ended April 30, 2013
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High
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Low
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First Quarter
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$ | 45.00 | $ | 21.40 | ||||
Second Quarter
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$ | 24.20 | $ | 10.40 | ||||
Third Quarter
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$ | 22.00 | $ | 10.40 | ||||
Fourth Quarter
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$ | 15.80 | $ | 3.60 |
Period
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Total Number
of Shares
Purchased (1)
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Average Price
Paid per
Share (2)
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Total Number
of Shares
Purchased as
Part of Publicly Announced Plans or Programs
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Approximate Dollar Value of Shares
that August
Yet Be Purchased
Under the Plans
or Programs
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February 1, 2013 - February 28, 2013
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20 | $ | 13.60 | - | $ | - | ||||||||||
March 1, 2013 - March 31, 2013
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20 | 5.60 | - | - | ||||||||||||
April 1, 2013 - April 30, 2013
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20 | 5.00 | - | - | ||||||||||||
Total
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60 | $ | 8.07 | - | $ | - |
(1)
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Represents shares repurchased in connection with tax withholding obligations under the 1999 Amended Stock Plan.
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(2)
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Represents the average price paid per share for the shares repurchased in connection with tax withholding obligations under the 1999 Amended Stock Plan.
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Year ended April 30,
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Increase/ (Decrease)
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% Increase/ (Decrease)
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2013
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2012
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Product revenue
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$ | 92,683 | $ | 100,519 | $ | (7,836 | ) | (8 | ) % | |||||||
Cost of sales
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43,111 | 51,253 | (8,142 | ) | (16 | ) % | ||||||||||
Gross profit
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$ | 49,572 | $ | 49,266 | $ | 306 | 1 | % |
Year ended April 30,
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Increase/ (Decrease)
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% Increase/ (Decrease)
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2013
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2012
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Government grant revenue
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$ | 1,141,356 | $ | 314,515 | $ | 826,841 | 263 | % |
Year ended April 30,
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Increase/ (Decrease)
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% Increase/ (Decrease)
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2013
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2012
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Marketing and sales expense
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$ | 108,165 | $ | 393,922 | $ | (285,757 | ) | (73 | ) % |
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We reduced compensation costs related to marketing and selling the cosmetic topical product line Dermacyte by approximately $160,000 compared to the prior year. These costs include salaries, commissions, and employee benefits.
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Costs related to direct marketing and advertising, including travel and sample expense, decreased by approximately $125,000 compared to the prior year. These costs include attendance at trade shows and conferences, fees paid to a third party public relations firm, the costs of product samples distributed to potential customers, and the costs of direct print and online advertisements.
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Year ended April 30,
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Increase/ (Decrease)
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% Increase/ (Decrease)
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2013
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2012
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Legal and professional fees
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$ | 2,005,311 | $ | 3,063,595 | $ | (1,058,284 | ) | (35 | ) % | |||||||
Personnel costs
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1,490,752 | 1,747,055 | (256,303 | ) | (15 | ) % | ||||||||||
Facilities
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167,693 | 284,788 | (117,095 | ) | (41 | ) % | ||||||||||
Depreciation and amortization
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111,012 | 165,581 | (54,569 | ) | (33 | ) % | ||||||||||
Other costs
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(206,788 | ) | 436,865 | (643,653 | ) | (147 | ) % |
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The decrease in legal expenses was due to a reduction in the costs incurred for securities matters and SEC filings, general employment matters, intellectual property and our SIX listing, as well as proceeds received from our previous insurance carrier related to the Tenor litigation and fees associated with the closing of the Series A Preferred Stock offering in the prior year; partially offset by the costs incurred to defend and the accrual for the settlement of the Tenor matter described in Note J to the financial statements.
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The decrease in consulting fees was due to a reduction in executive recruiting fees and the elimination of other executive consulting expenses in the current period.
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The decrease in fees paid to our directors was due to approximately $200,000 in severance costs related to our former President’s resignation from our Board of Directors in the prior year, partially offset by an increase of $44,000 in fees and travel costs associated with directors’ retainers and meetings
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The decrease in accounting and filing fees was due primarily to a reduction in audit fees associated with the closing of the Series A Preferred Stock offering and other filings made with the SEC in the prior year.
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The increase in investor relations and listing fees was due primarily to an increase of approximately $60,000 in fees incurred for public and investor relations services, partially offset by approximately $24,000 in costs related to our SIX listing in the prior year.
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Year ended April 30,
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Increase/ (Decrease)
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% Increase/ (Decrease)
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2013
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2012
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Clinical and preclinical development
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$ | 1,569,594 | $ | 814,646 | $ | 754,948 | 93 | % | ||||||||
Personnel costs
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637,685 | 947,374 | (309,689 | ) | (33 | ) % | ||||||||||
Consulting
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117,211 | 382,374 | (265,163 | ) | (69 | ) % | ||||||||||
Other costs
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32,652 | 95,900 | (63,248 | ) | (66 | ) % | ||||||||||
Depreciation
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42,968 | 74,589 | (31,621 | ) | (42 | ) % | ||||||||||
Facilities
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55,706 | 147,755 | (92,049 | ) | (62 | ) % |
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We incurred an increase of approximately $592,000 in pre-clinical study costs. These costs are the result of CRO fees for the completion of milestones under the Grant-funded preclinical program to assess the safety of Oxycyte for the treatment of patients with TBI.
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We incurred an increase of approximately $522,000 in clinical study costs for our Phase II-b clinical trials for TBI. These costs include the manufacture of clinical drug material and CRO fees incurred to initiate sites and resume enrollment in the second cohort.
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We decreased Oxycyte development costs by approximately $159,000 due primarily to the costs to develop cGMP supply and manufacturing capabilities and validated release methods for our clinical drug product incurred in the prior year that were not incurred in the year ended April 30, 2013.
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We decreased Dermacyte development costs by approximately $200,000 due primarily to the costs to develop additional cosmetic formulations and to design and conduct proof of concept preclinical trials in prior year that were not incurred in the year ended April 30, 2013.
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Year ended April 30,
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Increase/ (Decrease)
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% Increase/ (Decrease)
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2013
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2012
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Restructuring expense
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$ | 220,715 | $ | - | $ | 220,715 | — | % |
Year ended April 30,
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Increase/ (Decrease)
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% Increase/ (Decrease)
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2013
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2012
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Interest expense
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$ | 4,238,456 | $ | 7,412,054 | $ | (3,173,598 | ) | (43 | ) % |
Year ended April 30,
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Increase/ (Decrease)
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2013
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2012
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Other (income) expense, net
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$ | (11,683 | ) | $ | 80,159 | $ | (91,842 | ) |
For the year ended December,
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2013
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2012
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Net cash used in operating activities
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$ | (4,921,283 | ) | $ | (8,278,366 | ) | ||
Net cash used in investing activities
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(147,987 | ) | (261,146 | ) | ||||
Net cash provided by financing activities
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3,972,926 | 9,467,440 |
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The initiation, progress, timing and completion of clinical trials for our product candidates and potential product candidates;
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The outcome, timing and cost of regulatory approvals and the regulatory approval process;
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Delays that may be caused by changing regulatory requirements;
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The number of product candidates that we pursue;
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The costs involved in filing and prosecuting patent applications and enforcing and defending patent claims;
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The timing and terms of future in-licensing and out-licensing transactions;
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The cost and timing of establishing sales, marketing, manufacturing and distribution capabilities;
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The cost of procuring clinical and commercial supplies of our product candidates;
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The extent to which we acquire or invest in businesses, products or technologies; and
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The possible costs of litigation.
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Fees paid to CROs in connection with clinical trials,
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Fees paid to research institutions in conjunction with preclinical research studies, and
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Fees paid to contract manufacturers and service providers in connection with the production and testing of active pharmaceutical ingredients and drug materials for use in preclinical studies and clinical trials.
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April 30, 2013
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April 30, 2012
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ASSETS
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Current assets
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Cash and cash equivalents
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$ | 783,528 | $ | 1,879,872 | ||||
Accounts receivable
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445,237 | 13,385 | ||||||
Government grant receivable
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96,226 | 35,650 | ||||||
Inventory
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99,204 | 83,370 | ||||||
Prepaid expenses
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247,646 | 455,946 | ||||||
Other current assets
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170,410 | 162,809 | ||||||
Total current assets
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1,842,251 | 2,631,032 | ||||||
Property and equipment, net
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205,389 | 293,606 | ||||||
Debt issuance costs, net
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150,043 | 278,659 | ||||||
Intangible assets, net
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924,698 | 872,971 | ||||||
Other assets
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58,262 | 65,666 | ||||||
Total assets
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$ | 3,180,643 | $ | 4,141,934 | ||||
LIABILITIES AND STOCKHOLDERS’ DEFICIT
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Current liabilities
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Accounts payable
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$ | 977,162 | $ | 542,809 | ||||
Accrued liabilities
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874,876 | 1,273,837 | ||||||
Convertible preferred stock
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- | 1,247,266 | ||||||
Current portion of notes payable, net
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57,539 | 62,958 | ||||||
Total current liabilities
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1,909,577 | 3,126,870 | ||||||
Other liabilities
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54,660 | - | ||||||
Long-term portion of notes payable, net
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2,994,442 | 1,361,110 | ||||||
Total liabilities
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4,958,679 | 4,487,980 | ||||||
Commitments and contingencies; see Note J.
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Stockholders' deficit
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Preferred stock, undesignated, authorized 9,990,400 shares; issued 2,100; outstanding 987 and 0, respectively; see Note E and Note H.
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1 | - | ||||||
Common stock, par value $.0001 per share; authorized 400,000,000 shares; issued and outstanding 1,930,078 and 1,470,890, respectively
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193 | 2,942 | ||||||
Additional paid-in capital
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115,265,854 | 107,279,296 | ||||||
Deficit accumulated during the development stage
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(117,044,084 | ) | (107,628,284 | ) | ||||
Total stockholders’ deficit
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(1,778,036 | ) | (346,046 | ) | ||||
Total liabilities and stockholders' deficit
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$ | 3,180,643 | $ | 4,141,934 |
Period from May 26, 1967 (Inception) to | Year ended April 30, | |||||||||||
April 30, 2013 | 2013 | 2012 | ||||||||||
Product revenue
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$ | 562,937 | $ | 92,683 | $ | 100,519 | ||||||
Cost of sales
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352,579 | 43,111 | 51,253 | |||||||||
Net product revenue
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210,358 | 49,572 | 49,266 | |||||||||
Government grant revenue
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1,455,871 | 1,141,356 | 314,515 | |||||||||
Total net revenue
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1,666,229 | 1,190,928 | 363,781 | |||||||||
Operating expenses
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Selling, general, and administrative
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50,585,212 | 3,676,145 | 6,091,806 | |||||||||
Research and development
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24,531,128 | 2,455,816 | 2,462,638 | |||||||||
Restructuring expense
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220,715 | 220,715 | - | |||||||||
Loss on impairment of long-lived assets
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390,970 | 27,279 | 29,534 | |||||||||
Total operating expenses
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75,728,025 | 6,379,755 | 8,583,978 | |||||||||
Net operating loss
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74,061,796 | 5,189,027 | 8,220,197 | |||||||||
Interest expense
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43,962,019 | 4,238,456 | 7,412,054 | |||||||||
Loss on extinguishment of debt
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250,097 | - | - | |||||||||
Other (income) expense
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(1,229,828 | ) | (11,683 | ) | 80,159 | |||||||
Net loss
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$ | 117,044,084 | $ | 9,415,800 | $ | 15,712,410 | ||||||
Preferred stock dividend | 958,071 | 958,071 | - | |||||||||
Net loss attributable to common stockholders | $ | 118,002,155 | $ | 10,373,871 | $ | 15,712,410 | ||||||
Net loss per share, basic
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$ | (6.29 | ) | $ | (12.12 | ) | ||||||
Weighted average number of common shares outstanding, basic
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1,650,280 | 1,296,414 | ||||||||||
Net loss per share, diluted
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$ | (6.68 | ) | $ | (14.07 | ) | ||||||
Weighted average number of common shares outstanding, diluted
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1,759,025 | 1,387,621 |
Preferred Stock
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Common Stock
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Additional paid-in capital
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Defecit accumulated
during the
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Total
stockholders'
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||||||||||||||||||||||||
Number of Shares
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Amount
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Number of Shares
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Amount
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development stage
|
equity (deficit)
|
|||||||||||||||||||||||
Balance at April 30, 2011
|
- | $ | - | 1,169,666 | $ | 2,339 | $ | 88,189,012 | $ | (91,915,874 | ) | $ | (3,724,523 | ) | ||||||||||||||
Common stock sold, net of offering costs
|
168,422 | 337 | 7,999,664 | 8,000,001 | ||||||||||||||||||||||||
Common stock issued for convertible preferred stock
|
93,713 | 187 | 3,462,136 | 3,462,323 | ||||||||||||||||||||||||
Common stock issued as interest on convertible debt
|
12,192 | 24 | 549,809 | 549,833 | ||||||||||||||||||||||||
Common stock issued as dividend on convertible preferred stock
|
2,241 | 5 | 81,886 | 81,891 | ||||||||||||||||||||||||
Compensation on options and restricted stock issued
|
1,602 | 4 | 192,894 | 192,898 | ||||||||||||||||||||||||
Issuance of warrants
|
3,130,808 | 3,130,808 | ||||||||||||||||||||||||||
Exercise of warrants and options
|
23,054 | 46 | 733,583 | 733,629 | ||||||||||||||||||||||||
Beneficial conversion feature of convertible debt
|
2,939,504 | 2,939,504 | ||||||||||||||||||||||||||
Net loss
|
(15,712,410 | ) | (15,712,410 | ) | ||||||||||||||||||||||||
Balance at April 30, 2012
|
- | $ | - | 1,470,890 | $ | 2,942 | $ | 107,279,296 | $ | (107,628,284 | ) | $ | (346,046 | ) | ||||||||||||||
Preferred stock sold, net of offering costs
|
2,100 | 1 | 1,851,149 | 1,851,150 | ||||||||||||||||||||||||
Common stock sold, net of offering costs
|
- | |||||||||||||||||||||||||||
Common stock issued for convertible preferred stock
|
(1,113 | ) | 400,708 | 804 | 4,509,184 | 4,509,988 | ||||||||||||||||||||||
Common stock issued as interest on convertible debt
|
16,524 | 33 | 745,175 | 745,208 | ||||||||||||||||||||||||
Common stock issued as dividend on convertible preferred stock
|
17,409 | 32 | 331,366 | 331,398 | ||||||||||||||||||||||||
Compensation on options and restricted stock issued
|
4,465 | 9 | 269,522 | 269,531 | ||||||||||||||||||||||||
Issuance of warrants
|
656,535 | 656,535 | ||||||||||||||||||||||||||
Exchange of warrants
|
20,000 | 40 | (380,040 | ) | (380,000 | ) | ||||||||||||||||||||||
Beneficial conversion feature of convertible debt
|
- | |||||||||||||||||||||||||||
Fractional shares of common stock due to reverse stock split
|
82 | (3,667 | ) | 3,667 | - | |||||||||||||||||||||||
Net loss
|
(9,415,800 | ) | (9,415,800 | ) | ||||||||||||||||||||||||
Balance at April 30, 2013
|
987 | $ | 1 | 1,930,078 | $ | 193 | $ | 115,265,854 | $ | (117,044,084 | ) | $ | (1,778,036 | ) |
Preferred Stock
|
Common Stock
|
Additional paid-in capital
|
Defecit accumulated
during the development
|
Total
stockholders'
|
||||||||||||||||||||||||
Number of Shares
|
Amount
|
Number of Shares
|
Amount
|
stage
|
equity (deficit)
|
|||||||||||||||||||||||
Balance at May 26, 1967
|
- | $ | - | - | $ | - | $ | - | $ | - | $ | - | ||||||||||||||||
Preferred stock sold, net of offering costs
|
2,100 | 1 | 1,851,149 | 1,851,150 | ||||||||||||||||||||||||
Common stock sold, net of offering costs
|
773,306 | 1,058,966 | 39,749,887 | 40,808,853 | ||||||||||||||||||||||||
Issuance of common stock for promissory notes
|
365,526 | 243,621 | 23,773,189 | 24,016,810 | ||||||||||||||||||||||||
Compensation on options and restricted stock issued
|
25,317 | 36,495 | 12,951,573 | 12,988,068 | ||||||||||||||||||||||||
Warrants issued with debt instruments
|
- | - | 8,619,525 | 8,619,525 | ||||||||||||||||||||||||
Issuance of warrants
|
- | - | 8,461,863 | 8,461,863 | ||||||||||||||||||||||||
Exercise of warrants and options
|
63,259 | 164,696 | 3,630,188 | 3,794,884 | ||||||||||||||||||||||||
Common stock issued for convertible preferred stock
|
(1,113 | ) | 494,421 | 991 | 7,971,320 | 7,972,311 | ||||||||||||||||||||||
Beneficial conversion on convertible debt
|
- | - | 3,292,648 | 3,292,648 | ||||||||||||||||||||||||
Beneficial conversion feature of convertible debt
|
- | - | 2,939,504 | 2,939,504 | ||||||||||||||||||||||||
Common stock issued in conjunction with funding agreements and services rendered
|
17,922 | 53,764 | 883,160 | 936,924 | ||||||||||||||||||||||||
Contributions of capital by shareholders
|
- | - | 581,818 | 581,818 | ||||||||||||||||||||||||
Common stock issued as interest on convertible debt
|
28,716 | 57 | 1,294,984 | 1,295,041 | ||||||||||||||||||||||||
Issuance of common stock to officers to retire shareholder loans
|
3,482 | 10,444 | 177,556 | 188,000 | ||||||||||||||||||||||||
Common stock issued as dividend on convertible preferred stock
|
19,650 | 37 | 413,252 | 413,289 | ||||||||||||||||||||||||
Contributions of capital for services rendered
|
- | - | 65,700 | 65,700 | ||||||||||||||||||||||||
Exchange of warrants
|
138,189 | 3,584 | (2,963,924 | ) | (2,960,340 | ) | ||||||||||||||||||||||
Common stock par value change
|
- | (1,541,114 | ) | 1,541,114 | - | |||||||||||||||||||||||
Fractional shares of common stock due to reverse stock split
|
290 | (31,348 | ) | 31,348 | - | |||||||||||||||||||||||
Net loss
|
(117,044,084 | ) | (117,044,084 | ) | ||||||||||||||||||||||||
Balance at April 30, 2013
|
987 | $ | 1 | 1,930,078 | $ | 193 | $ | 115,265,854 | $ | (117,044,084 | ) | $ | (1,778,036 | ) |
Period from
May 26, 1967
(Inception) to
|
Year ended April 30,
|
|||||||||||
April 30, 2013
|
2013
|
2012
|
||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES
|
||||||||||||
Net Loss
|
$ | (117,044,084 | ) | $ | (9,415,800 | ) | $ | (15,712,410 | ) | |||
Adjustments to reconcile net loss to net cash used in operating activities
|
||||||||||||
Depreciation and amortization
|
2,219,612 | 148,804 | 206,677 | |||||||||
Amortization of deferred compensation
|
336,750 | - | - | |||||||||
Interest on debt instruments
|
43,552,326 | 4,236,332 | 7,397,357 | |||||||||
Loss on debt settlement and extinguishment
|
163,097 | - | - | |||||||||
Loss on impairment, disposal and write down of long-lived assets
|
826,846 | 35,673 | 123,518 | |||||||||
Issuance and vesting of compensatory stock options and warrants
|
8,374,928 | 84,267 | 65,373 | |||||||||
Issuance of common stock below market value
|
695,248 | - | - | |||||||||
Issuance of common stock as compensation
|
867,790 | 185,264 | 127,525 | |||||||||
Issuance of common stock for services rendered
|
1,265,279 | - | - | |||||||||
Issuance of note payable for services rendered
|
120,000 | - | - | |||||||||
Contributions of capital through services rendered by stockholders
|
216,851 | - | - | |||||||||
Changes in operating assets and liabilities
|
||||||||||||
Accounts receivable, prepaid expenses and other assets
|
(1,039,284 | ) | (245,747 | ) | (74,760 | ) | ||||||
Inventory
|
210,518 | (20,228 | ) | (7,280 | ) | |||||||
Accounts payable and accrued liabilities
|
2,012,288 | 70,152 | (404,366 | ) | ||||||||
Net cash used in operating activities
|
(57,221,835 | ) | (4,921,283 | ) | (8,278,366 | ) | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES
|
||||||||||||
Purchase of property and equipment
|
(1,778,942 | ) | (17,199 | ) | (17,652 | ) | ||||||
Proceeds from the sale of property and equipment
|
8,307 | 4,064 | 4,243 | |||||||||
Capitalization of patent costs and license rights
|
(1,896,928 | ) | (134,852 | ) | (247,737 | ) | ||||||
Net cash used in investing activities
|
(3,667,563 | ) | (147,987 | ) | (261,146 | ) | ||||||
CASH FLOWS FROM FINANCING ACTIVITIES
|
||||||||||||
Proceeds from sale of common stock and exercise of stock options and warrants, net of related expenses and payments
|
44,478,293 | - | 8,733,629 | |||||||||
Repurchase of outstanding warrants
|
(3,216,520 | ) | (380,000 | ) | - | |||||||
Proceeds from stockholder notes payable
|
977,692 | - | - | |||||||||
Proceeds from issuance of notes payable, net of issuance costs
|
7,621,192 | 102,671 | 837,692 | |||||||||
Proceeds from convertible notes, net of issuance costs
|
13,321,447 | - | 4,514,162 | |||||||||
Proceeds for issuance of convertible preferred stock
|
7,851,150 | 4,351,150 | 3,500,000 | |||||||||
Payments on notes - short-term
|
(1,360,328 | ) | (100,895 | ) | (118,043 | ) | ||||||
Payments on notes - long-term
|
(8,000,000 | ) | - | (8,000,000 | ) | |||||||
Net cash provided by financing activities
|
61,672,926 | 3,972,926 | 9,467,440 | |||||||||
Net change in cash and cash equivalents
|
783,528 | (1,096,344 | ) | 927,928 | ||||||||
Cash and cash equivalents, beginning of period
|
- | 1,879,872 | 951,944 | |||||||||
Cash and cash equivalents, end of period
|
$ | 783,528 | $ | 783,528 | $ | 1,879,872 | ||||||
Cash paid for:
|
||||||||||||
Interest
|
$ | 267,426 | $ | 2,123 | $ | 14,697 | ||||||
Income taxes
|
$ | 27,528 | $ | - | $ | - |
-
|
The Company issued 16,524 shares of restricted common stock for the payment of interest accrued on convertible notes. The shares were issued at a conversion price of $45.11 for the payment of $745,208 interest payable on convertible notes with a gross carrying value of $4,900,000.
|
-
|
The Company issued 191,934 shares of its common stock upon the conversion of 3,668 shares of Series A convertible preferred stock with a fair value of $4,509,987.
|
-
|
The Company issued 12,192 shares of restricted common stock for the payment of interest accrued on convertible notes. The shares were issued at a conversion price of $45.11 for the payment of $561,332 interest payable on convertible notes with a gross carrying value of $4,900,000.
|
-
|
The Company issued 79,164 shares of its common stock upon the conversion of 2,332 shares of Series A convertible preferred stock with a fair value of $2,931,406.
|
-
|
Fees paid to CROs in connection with clinical trials,
|
-
|
Fees paid to research institutions in conjunction with preclinical research studies, and
|
-
|
Fees paid to contract manufacturers and service providers in connection with the production and testing of active pharmaceutical ingredients and drug materials for use in preclinical studies and clinical trials.
|
Laboratory equipment
|
3 – 5 years
|
Office equipment
|
5 years
|
Office furniture and fixtures
|
7 years
|
Computer equipment and software
|
3 years
|
Leasehold improvements
|
Shorter of useful life or remaining lease term
|
Year ended April 30,
|
||||||||
2013
|
2012
|
|||||||
Historical net loss per share:
|
||||||||
Numerator
|
||||||||
Net loss, attributable to common stockholders
|
$ | (10,373,871 | ) | $ | (15,712,410 | ) | ||
Less: Effect of amortization of interest expense on convertible notes
|
(1,382,537 | ) | (3,817,550 | ) | ||||
Net loss attributable to common stockholders (diluted)
|
(11,756,408 | ) | (19,529,960 | ) | ||||
Denominator
|
||||||||
Weighted-average common shares outstanding
|
1,650,280 | 1,296,414 | ||||||
Effect of dilutive securities
|
108,745 | 91,207 | ||||||
Denominator for diluted net loss per share
|
1,759,025 | 1,387,621 | ||||||
Basic net loss per share
|
$ | (6.29 | ) | $ | (12.12 | ) | ||
Diluted net loss per share
|
$ | (6.68 | ) | $ | (14.07 | ) |
As of April 30,
|
||||||||
2013
|
2012
|
|||||||
Warrants to purchase common stock
|
759,410 | 261,999 | ||||||
Convertible preferred shares outstanding
|
97,400 | 29,142 | ||||||
Options to purchase common stock
|
11,336 | 17,592 | ||||||
Restricted stock grants
|
1,917 | 1,805 | ||||||
Convertible note shares outstanding
|
98 | 98 |
Level one
|
Quoted market prices in active markets for identical assets or liabilities;
|
Level two
|
Inputs other than level one inputs that are either directly or indirectly observable, and
|
Level three
|
Unobservable inputs developed using estimates and assumptions; which are developed by the reporting entity and reflect those assumptions that a market participant would use.
|
Fair Value Measurements at Reporting Date Using
|
||||||||||||||||
Balance as of
April 30, 2013
|
Quoted prices in Active Markets for Identical Securities (Level 1)
|
Significant Other Observable Inputs (Level 2)
|
Significant
Unobservable
Inputs (Level 3)
|
|||||||||||||
Current Assets
|
||||||||||||||||
Cash and cash equivalents
|
$ | 783,528 | $ | 783,528 | $ | - | $ | - | ||||||||
Current Liabilities
|
||||||||||||||||
Series A convertible preferred stock
|
$ | - | $ | - | $ | - | $ | - |
Fair Value Measurements at Reporting Date Using
|
||||||||||||||||
Balance as of
April 30, 2012
|
Quoted prices in Active Markets for Identical Securities (Level 1)
|
Significant Other Observable Inputs (Level 2)
|
Significant
Unobservable
Inputs (Level 3)
|
|||||||||||||
Current Assets
|
||||||||||||||||
Cash and cash equivalents
|
$ | 1,879,872 | $ | 1,879,872 | $ | - | $ | - | ||||||||
Current Liabilities
|
||||||||||||||||
Series A convertible preferred stock
|
$ | 1,247,266 | $ | - | $ | - | $ | 1,247,266 |
Series A Convertible Preferred Stock
|
||||
Balance as of April 30, 2012
|
$ | 1,247,266 | ||
Issued on June 15, 2012
|
2,500,000 | |||
Conversions to Common Stock
|
(3,747,266 | ) | ||
Adjustments to fair value as of April 30, 2013
|
- | |||
Transfers in and/or out of Level 3
|
- | |||
Balance as of April 30, 2013
|
$ | - |
Series A Convertible Preferred Stock
|
||||
Issued on December 12, 2011:
|
$ | 3,500,000 | ||
Conversions to Common Stock
|
(3,462,338 | ) | ||
Adjustments to fair value as of April 30, 2012
|
1,209,604 | |||
Transfers in and/or out of Level 3
|
- | |||
Balance as of April 30, 2012
|
$ | 1,247,266 |
April 30, 2013
|
April 30, 2012
|
|||||||
Raw materials
|
$ | 28,779 | $ | 25,579 | ||||
Finished goods
|
70,425 | 57,791 | ||||||
$ | 99,204 | $ | 83,370 |
April 30, 2013
|
April 30, 2012
|
|||||||
R&D materials
|
$ | 159,892 | $ | 116,936 | ||||
Other
|
7,090 | 11,394 | ||||||
Dermacyte samples
|
3,428 | 19,529 | ||||||
Unbilled government grant expenses
|
- | 14,950 | ||||||
$ | 170,410 | $ | 162,809 |
April 30, 2013
|
April 30, 2012
|
|||||||
Laboratory equipment
|
$ | 768,252 | $ | 968,101 | ||||
Computer equipment and software
|
135,697 | 134,005 | ||||||
Office furniture and fixtures
|
130,192 | 140,255 | ||||||
Leasehold improvements
|
- | 4,810 | ||||||
1,034,141 | 1,247,171 | |||||||
Less: Accumulated depreciation and amortization
|
(828,752 | ) | (953,565 | ) | ||||
$ | 205,389 | $ | 293,606 |
April 30, 2013
|
April 30, 2012
|
|||||||
Prepaid royalty fee
|
$ | 50,000 | $ | 50,000 | ||||
Other
|
8,262 | 15,666 | ||||||
$ | 58,262 | $ | 65,666 |
April 30, 2013
|
April 30, 2012
|
|||||||
Accrued settlement costs
|
$ | 500,000 | $ | - | ||||
Deferred revenue
|
185,068 | 244,013 | ||||||
Employee related
|
66,632 | 352,400 | ||||||
Convertible note interest payable
|
59,583 | 59,583 | ||||||
Restructuring liability
|
43,728 | - | ||||||
Other operating costs
|
19,865 | 64,012 | ||||||
Contingent liability
|
- | 532,350 | ||||||
Preferred stock dividend payable
|
- | 21,479 | ||||||
$ | 874,876 | $ | 1,273,837 |
April 30, 2013
|
April 30, 2012
|
|||||||
Current portion of convertible notes payable
|
$ | - | $ | 7,195 | ||||
Current portion of notes payable
|
57,539 | 55,763 | ||||||
Current portion of notes payable, net
|
$ | 57,539 | $ | 62,958 | ||||
Long-term portion of convertible notes payable
|
$ | 4,900,001 | $ | 4,900,001 | ||||
Less: Unamortized discount
|
(1,905,559 | ) | (3,538,891 | ) | ||||
Long-term portion of notes payable, net
|
$ | 2,994,442 | $ | 1,361,110 |
Maturity
|
The shares of Preferred Stock will mature on the one year anniversary of issuance of such shares.
|
Amortization
|
On each one month anniversary of issuance of the Preferred Stock, the Company will redeem, subject to certain exceptions (i) with respect to shares issued in the first closing, one-sixth of the initial stated value of the Preferred Stock, and (ii) with respect to shares issued in the additional closings, 667 shares of Preferred Stock.
|
Amortization Payments
|
The Company may elect to pay the monthly amortization payments in cash or, subject to certain conditions, in shares of Common Stock by delivering that number of shares of Common Stock equal to the amount of the monthly amortization payment divided by a per share amortization price, which shall be the lesser of (i) the then-existing conversion price, which is initially $44.40 per share of common stock and (ii) 90% of the calculated market price per share of Common Stock.
|
Dividends
|
The shares of Preferred Stock will carry a dividend equal to 7% per annum, paid monthly in arrears. The Company may elect to pay dividends in cash or, subject to certain conditions, in shares of Common Stock. If the Company pays dividends in shares of Common Stock, the shares will be valued at a calculated per share market price. Dividends shall be subject to a make-whole through maturity upon any earlier conversion, redemption or amortization.
|
Market Price
|
For purposes of the amortization or dividend payments on the Preferred Stock as described above, the market price shall be equal to the average of the volume weighted average prices (the “VWAP”) for the five lowest trading days, excluding the two lowest trading days of such period, ending on the 23rd trading day prior to the applicable payment date, subject to a “true up” based on the five lowest trading days during the twenty consecutive trading days ending on the trading day immediately prior to the applicable payment date.
|
Conversion
|
Holders may elect to convert shares of Preferred Stock into shares of Common Stock at the then-existing conversion price at any time. The initial conversion price is $44.40 per share of Common Stock, and is subject to certain adjustments, including an anti-dilution provision that reduces the conversion price upon the issuance of any Common Stock or securities convertible into Common Stock at an effective price per share less than the conversion price.
|
Redemption
|
If any shares of Preferred Stock remain outstanding on the maturity date after giving effect to any conversions on such date, the Company is required to redeem such preferred shares in cash in an amount equal to the then-existing conversion amount for each preferred share.
Additionally, after a triggering event, the holders of the shares of Preferred Stock have the right, at their option, to require the Company to redeem all or a portion of the then outstanding preferred shares in cash at the triggering event redemption price.
Triggering events include, among other events, certain breaches by the Company of its agreements, failures to pay amounts when due, failures to maintain any registration statement as required, failure to keep its Common Stock listed on any of the specified eligible markets (including the OTC Bulletin Board), and failure to keep a sufficient number of authorized shares reserved for issuance on conversion of the Preferred Stock or exercise of the 2011 Warrants.
The triggering event redemption price will be the greater of (i) 125% of the then-existing conversion amount, or (ii) the product of the then-existing conversion amount and the greatest closing sales price of the Company’s Common Stock beginning on the last trading day prior to the triggering event and ending on the date the holder of the Preferred Stock delivers a notice of redemption. In addition, the Company is required to pay to the holders of the Preferred Stock any additional make-whole amounts accrued at the date of the triggering event.
|
Liquidation preference
|
In the event of the Company’s voluntary or involuntary dissolution, liquidation or winding up, each holder of Preferred Stock will be entitled to be paid a liquidation preference equal to the initial stated value of such holder’s Preferred Stock of $44.40 per share, plus accrued and unpaid dividends and any other payments that may be due on such shares, before any distribution of assets may be made to holders of capital stock ranking junior to the Preferred Stock.
|
Voting rights
|
Shares of Preferred Stock will generally have no voting rights, except as required by law and except that the consent of holders of a majority of the outstanding. Preferred Stock will be required to amend the terms of the Preferred Stock.
|
Equity Conditions
|
The “Equity Conditions” will be satisfied on any date if: (i) on each day during the 30 trading days prior to such measurement date, all shares of Common Stock issued and issuable upon conversion of the Preferred Stock , as dividends on the Preferred Stock and upon exercise of the 2011 Warrants will have been issued or, to the extent not yet issued will be eligible for sale without restriction and without the need for registration under the securities laws; (ii) on each such day, the Common Stock is listed on The NASDAQ Capital Market, on one of several named alternative markets and, if subject to certain delisting proceedings or a failure to meet the maintenance standards of such an exchange, the Company must meet the minimum listing conditions of one of the other permitted markets (including the OTC Bulletin Board); (iii) on each such day, the Company has delivered Common Stock upon conversion by holders of Preferred Stock on a timely basis, as and if required; (iv) any applicable shares to be issued in connection with the determination may be issued in full without violating the ownership limitations described below or the rules of the Company’s principal market (except that the ownership limitations will not prevent the Company from delivering Common Stock in amounts up to such limits); (v) during such period, the Company has made timely payments as required; (vi) there has been no triggering event or potential triggering event under the certificate of designations; (vii) the Company has no knowledge of any fact that would cause the shares of Common Stock issuable in connection with the Preferred Stock or Preferred Warrants not to be eligible for sale without restriction; (viii) the Company meets certain minimum average trading volume qualifications on its principal market (i.e., a $375,000 aggregate dollar volume over the applicable 20 trading days); and (ix) we are otherwise in material compliance with our covenants and representations in the related Preferred Stock transaction documents, including the certificate of designations.
|
Installement Date
|
Pre-delivery Date
|
Preferred Shares Redeemedable
|
Less: Preferred Shares Redeemed / Converted at 04/30/13
|
Balance of Preferred Shares at 04/30/13
|
Fair Value of Preferred Stock at 04/30/13
|
||||||||||||||
5/12/2012
|
4/10/2012
|
583 | (583 | ) | - | $ | - | ||||||||||||
6/12/2012
|
5/10/2012
|
583 | (583 | ) | - | - | |||||||||||||
7/12/2012
|
6/8/2012
|
2 | (2 | ) | - | - | |||||||||||||
7/16/2012
|
6/15/2012
|
667 | (667 | ) | - | - | |||||||||||||
8/15/2012
|
7/13/2012
|
667 | (667 | ) | - | - | |||||||||||||
9/17/2012
|
8/14/2012
|
667 | (667 | ) | - | - | |||||||||||||
10/15/2012
|
9/12/2012
|
499 | (112 | ) | - | - | |||||||||||||
11/15/2012
|
10/12/2012
|
(112 | ) | - | - | ||||||||||||||
12/17/2012
|
11/12/2012
|
(110 | ) | - | - | ||||||||||||||
1/15/2013
|
12/14/2012
|
(28 | ) | - | - | ||||||||||||||
1/31/2013
|
1/31/2013
|
(138 | ) | - | - | ||||||||||||||
Convertible preferred stock
|
3,668 | (3,668 | ) | - | $ | - |
Installement Date
|
Pre-delivery Date
|
Preferred Shares Redeemedable
|
Less: Preferred Shares Redeemed / Converted at 4/30/12
|
Balance of Preferred Stock at 4/30/12
|
Fair Value of Preferred Stock at 4/30/12
|
||||||||||||||
1/12/2012
|
12/12/2011
|
583 | (583 | ) | - | $ | - | ||||||||||||
2/13/2012
|
1/10/2012
|
583 | (583 | ) | - | - | |||||||||||||
3/12/2012
|
2/10/2012
|
583 | (583 | ) | - | - | |||||||||||||
4/12/2012
|
3/10/2012
|
583 | (583 | ) | - | - | |||||||||||||
5/12/2012
|
4/10/2012
|
583 | 583 | 622,565 | |||||||||||||||
6/12/2012
|
5/10/2012
|
583 | 583 | 622,565 | |||||||||||||||
7/12/2012
|
6/8/2012
|
2 | 2 | 2,136 | |||||||||||||||
Convertible preferred stock
|
3,500 | (2,332 | ) | 1,168 | $ | 1,247,266 |
Amount
|
||||
Dividends paid in common stock
|
$ | 309,938 | ||
Fair value of warrants issued with preferred shares
|
656,535 | |||
Interest expense on conversion of preferred stock
|
762,738 | |||
Non-cash interest expense as of April 30, 2013
|
$ | 1,729,211 |
Amount
|
||||
Dividends paid in common stock
|
$ | 81,890 | ||
Fair value of warrants issued with preferred shares
|
1,170,322 | |||
Interest expense on conversion of preferred stock
|
530,943 | |||
Fair value adjustment to preferred stock
|
678,661 | |||
Accrued dividends payable
|
21,479 | |||
Non-cash interest expense as of April 30, 2012
|
$ | 2,483,295 |
Asset Category
|
Value Assigned
|
Weighted Average Amortization Period (in Years)
|
Impairments
|
Accumulated Amortization
|
Carrying Value (Net of Impairments and Accumulated Amortization)
|
|||||||||||||||
Patents
|
$ | 645,918 | 11.2 | $ | (27,279 | ) | $ | (258,499 | ) | $ | 360,140 | |||||||||
License Rights
|
572,370 | 15.6 | - | (117,969 | ) | 454,401 | ||||||||||||||
Trademarks
|
110,157 | N/A | - | - | 110,157 | |||||||||||||||
Total
|
$ | 1,328,445 | $ | (27,279 | ) | $ | (376,468 | ) | $ | 924,698 |
Asset Category
|
Value Assigned
|
Weighted Average Amortization Period (in Years)
|
Impairments
|
Accumulated Amortization
|
Carrying Value (Net of Impairments and Accumulated Amortization)
|
|||||||||||||||
Patents
|
$ | 546,624 | 11.7 | $ | - | $ | (233,989 | ) | $ | 312,635 | ||||||||||
License Rights
|
540,668 | 16.6 | - | (89,429 | ) | 451,239 | ||||||||||||||
Trademarks
|
138,631 | N/A | (29,534 | ) | - | 109,097 | ||||||||||||||
Total
|
$ | 1,225,923 | $ | (29,534 | ) | $ | (323,418 | ) | $ | 872,971 |
Year ending April 30,
|
Amount
|
|||
2014
|
$ | 57,490 | ||
2014
|
57,490 | |||
2015
|
57,125 | |||
2016
|
56,549 | |||
2017
|
52,632 | |||
2018
|
51,446 | |||
Therafter
|
539,299 | |||
$ | 814,541 |
For the year ending April 30,
|
||||||||
2013
|
2012
|
|||||||
Product revenue
|
||||||||
United States
|
$ | 46,016 | $ | 74,519 | ||||
Europe
|
46,667 | - | ||||||
Latin America
|
- | 26,000 | ||||||
Total product revenue
|
$ | 92,683 | $ | 100,519 |
For the year ending April 30,
|
||||||||
2013
|
2012
|
|||||||
Segment loss (income)
|
||||||||
United States
|
$ | 86,921 | $ | 355,241 | ||||
Europe
|
(28,328 | ) | - | |||||
Latin America
|
- | (10,585 | ) | |||||
Unallocated revenues
|
||||||||
Government grant revenue
|
(1,141,356 | ) | (314,515 | ) | ||||
Unallocated expenses
|
||||||||
General and administrative
|
3,567,980 | 5,697,884 | ||||||
Research and development
|
2,455,816 | 2,462,638 | ||||||
Restructuring expense
|
220,715 | - | ||||||
Loss on impairment of long-lived assets
|
27,279 | 29,534 | ||||||
Net interest and other expense
|
4,226,773 | 7,492,213 | ||||||
Net loss
|
$ | 9,415,800 | $ | 15,712,410 |
Dividends
|
No dividends shall be paid on shares of Preferred Stock.
|
Conversion
|
Holders may elect to convert shares of Preferred Stock into shares of Common Stock at the then-existing conversion price at any time. The initial conversion price is $5.00 per share of Common Stock, and is subject to certain adjustments, including an anti-dilution provision that reduces the conversion price upon the issuance of any Common Stock or securities convertible into Common Stock at an effective price per share less than the conversion price and a one-time price reset following the effectiveness of a reverse split of the Company’s outstanding common stock.
|
Liquidation preference
|
In the event of the Company’s voluntary or involuntary dissolution, liquidation or winding up, each holder of Preferred Stock will be entitled to be paid a liquidation preference equal to the initial stated value of such holder’s Preferred Stock of $1,000 per share, plus accrued and unpaid dividends and any other payments that may be due on such shares, before any distribution of assets may be made to holders of capital stock ranking junior to the Preferred Stock.
|
Voting rights |
Shares of Preferred Stock will generally have no voting rights, except as required by law and except that the consent of holders of a majority of the outstanding Preferred Stock will be required to amend the terms of the Preferred Stock.
|
Warrants
|
Weighted Average Exercise Price
|
|||||||
Outstanding at April 30, 2011
|
179,068 | $ | 78.00 | |||||
Issued
|
148,062 | 49.00 | ||||||
Exercised
|
(22,688 | ) | 32.40 | |||||
Cancelled
|
- | - | ||||||
Forfeited
|
(82,819 | ) | 73.60 | |||||
Other
|
40,376 | (1) | 26.20 | |||||
Outstanding at April 30, 2012
|
261,999 | $ | 41.60 | |||||
Issued
|
658,154 | 6.69 | ||||||
Cancelled
|
(67,568 | ) (2) | 44.40 | |||||
Forfeited
|
(93,175 | ) | 38.40 | |||||
Outstanding at April 30, 2013
|
759,410 | $ | 11.00 |
(1)
|
The Company has warrants outstanding that contain anti-dilution clauses requiring a repricing in the event of subsequent equity sales. Subsequent to the closing of the Series A Preferred Stock Offering, the repricing of these warrants resulted in an increase of 40,376 potentially issuable shares and a $16.80 reduction in the weighted average exercise price of the Company’s outstanding warrants.
|
(2)
|
Represents the aggregate number of warrants cancelled under the Warrant Exchange Agreements.
|
Shares Available
for Grant
|
||||
Balances, at April 30, 2011
|
12,192 | |||
Additional shares reserved
|
260,000 | |||
Options granted
|
(5,366 | ) | ||
Options cancelled/forfeited
|
13,162 | |||
Restricted stock granted
|
(10,474 | ) | ||
Restricted stock cancelled/forfeited
|
7,068 | |||
Balance, at April 30, 2012
|
276,582 | |||
Options granted
|
(1,595 | ) | ||
Options cancelled/forfeited
|
7,851 | |||
Restricted stock granted
|
(5,318 | ) | ||
Restricted stock cancelled/forfeited
|
5,206 | |||
Balance, at April 30, 2013
|
282,726 |
Outstanding Options
|
||||||||||||
Number of Shares
|
Weighted Average Exercise Price
|
Aggregate Intrinsic Value
|
||||||||||
Balances, at April 30, 2011
|
25,754 | $ | 90.80 | |||||||||
Options granted
|
5,366 | $ | 38.80 | |||||||||
Options exercised
|
(367 | ) | $ | 39.20 | $ | 3,227 | (1) | |||||
Options cancelled
|
(13,161 | ) | $ | 83.80 | ||||||||
Balance, at April 30, 2012
|
17,592 | $ | 81.20 | |||||||||
Options granted
|
1,595 | $ | 32.60 | |||||||||
Options cancelled
|
(7,851 | ) | $ | 106.40 | ||||||||
Balance, at April 30, 2013
|
11,336 | $ | 57.00 | $ | - | (2) |
(1)
|
Amounts represent the difference between the exercise price and fair value of Oxygen Biotherapeutics’ stock at the time of exercise.
|
(2)
|
Amount represents the difference between the exercise price and $5.00, the closing price of Oxygen Biotherapeutics’ stock on April 30, 2013, as reported on The NASDAQ Capital Market, for all in-the-money options outstanding.
|
Options Outstanding at April 30, 2013
|
Options Exercisable and Vested at April 30, 2013
|
|||||||||||||||
Exercise Price
|
Number of Options
|
Weighted Average Remaining Contractual Life (Years)
|
Number of Options
|
Weighted Average Exercise Price
|
||||||||||||
$4.60 to $38.40
|
4,868 | 8.4 | 3,128 | $ | 35.71 | |||||||||||
$38.60 to $57.80
|
2,725 | 5.7 | 2,506 | $ | 47.02 | |||||||||||
$59.40 to $100.00
|
2,418 | 5.5 | 2,352 | $ | 78.31 | |||||||||||
$101.60 to $138.00
|
1,325 | 6.4 | 1,325 | $ | 119.95 | |||||||||||
11,336 | 6.9 | 9,311 | $ | 61.50 |
Number of Option Shares
|
Weighted Average Exercise Price
|
Aggregate Intrinsic Value (1)
|
Weighted Average Remaining Contractual Life (Years)
|
|||||||||||||
Vested
|
9,311 | $ | 61.50 | $ | - | 6.4 | ||||||||||
Vested and expected to vest
|
11,113 | $ | 57.42 | $ | 20 | 6.8 |
(1)
|
Amount represents the difference between the exercise price and $5.00, the closing price of Oxygen Biotherapeutics’ stock on April 30, 2013, as reported on The NASDAQ Capital Market, for all in-the-money options outstanding.
|
For the the year ended April 30
|
||||||||
2013
|
2012
|
|||||||
Risk-free interest rate (weighted average)
|
1.29 | % | 1.79 | % | ||||
Expected volatility (weighted average)
|
79.62 | % | 78.88 | % | ||||
Expected term (in years)
|
7 | 7 | ||||||
Expected dividend yield
|
0.00 | % | 0.00 | % |
Risk-Free Interest Rate
|
The risk-free interest rate assumption was based on U.S. Treasury instruments with a term that is consistent with the expected term of our stock options.
|
Expected Volatility
|
The expected stock price volatility for our common stock was determined by examining the historical volatility and trading history for our common stock over a term consistent with the expected term of our options.
|
Expected Term
|
The expected term of stock options represents the weighted average period the stock options are expected to remain outstanding. It was calculated based on the historical experience that we have had with our stock option grants.
|
Expected Dividend Yield
|
The expected dividend yield of 0% is based on our history and expectation of dividend payouts. We have not paid and do not anticipate paying any dividends in the near future.
|
Forfeitures
|
As stock-based compensation expense recognized in the statement of operations for the years ended 2013 and 2012 is based on awards ultimately expected to vest, it has been reduced for estimated forfeitures. ASC 718 requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Forfeitures were estimated based on our historical experience.
|
Outstanding Restricted Stock Grants
|
||||||||
Number of
Shares
|
Weighted Average
Grant Date
Fair Value
|
|||||||
Balances, at April 30, 2011
|
- | |||||||
Restricted stock granted
|
10,474 | $ | 41.40 | |||||
Restricted stock vested
|
(1,602 | ) | $ | 41.60 | ||||
Restricted stock cancelled
|
(866 | ) | $ | 40.00 | ||||
Restricted stock forfeited
|
(6,201 | ) | $ | 40.80 | ||||
Balance, at April 30, 2012
|
1,805 | $ | 43.80 | |||||
Restricted stock granted
|
5,318 | $ | 35.00 | |||||
Restricted stock vested
|
(4,465 | ) | $ | 32.60 | ||||
Restricted stock cancelled
|
(741 | ) | $ | 36.20 | ||||
Balance, at April 30, 2013
|
1,917 | $ | 48.40 |
Charges Incurred During the
Year Ended
April 30, 2013
|
Amounts Paid
Through
April 30, 2013
|
Amounts
Accrued at
April 30, 2013
|
||||||||||
Future lease obligations, net of sublease revenue
|
$ | 134,984 | $ | 43,496 | $ | 98,388 | ||||||
Employee severance, benefits and related costs for work force reductions
|
53,991 | 53,991 | - | |||||||||
Other exit costs
|
31,740 | 31,740 | - |
Year ending April 30,
|
||||
2014
|
$ | 107,946 | ||
2015
|
111,171 | |||
2016
|
94,917 | |||
$ | 314,034 |
2013
|
2012
|
|||||||
U.S Federal tax benefit at statutory rate
|
(3,201,372 | ) | (5,342,219 | ) | ||||
State income tax benefit, net of federal benefit
|
(356,452 | ) | - | |||||
Nondeductible interest
|
1,592,027 | 1,458,660 | ||||||
Other nondeductible
|
47,652 | 22,227 | ||||||
Other, including effect of tax rate brackets
|
132,806 | (95,003 | ) | |||||
Change in valuation allowance
|
1,785,339 | 3,956,335 | ||||||
- | - | |||||||
Deferred Tax Assets (Liabilities)
|
2013
|
2012
|
||||||
Net operating Loss Carryforwards
|
27,446,605 | 24,172,571 | ||||||
Interest
|
- | 1,511,360 | ||||||
Accruals and other
|
336,631 | 244,207 | ||||||
Depreciation and amortization
|
16,766 | (32,473 | ) | |||||
Valuation allowance
|
(27,800,002 | ) | (25,895,665 | ) | ||||
Net Deferred Tax Assets (Liabilities)
|
- | - |
-
|
Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets;
|
-
|
Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that our receipts and expenditures are being made only in accordance with authorizations of our management and our Board of Directors; and
|
-
|
Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements.
|
Name
|
Age
|
Position with Oxygen Biotherapeutics, Inc.
|
Director Since
|
|||
Ronald R. Blanck, DO
|
72 |
Chairman
|
December 2009
|
|||
William A. Chatfield
|
62 |
Director
|
October 2009
|
|||
Anthony DiTonno
|
65 |
Director
|
December 2011
|
|||
Gregory Pepin
|
30 |
Director
|
August 2009
|
|||
Chris A. Rallis
|
60 |
Director
|
December 2011
|
Name
|
Age
|
Position
|
||
Michael B. Jebsen, CPA
|
42 |
President, Interim Chief Executive and Chief Financial Officer
|
||
Charles L. Pamplin III, M.D.
|
64
|
Chief Medical Officer
|
●
|
reviewing, evaluating, and discussing our financial statements and other financial information prepared on our behalf;
|
●
|
selecting, retaining, and monitoring the independence and performance of our outside auditors, including overseeing the audits of our financial statements and approving any non-audit services;
|
●
|
assisting the Board in fulfilling its oversight responsibilities, primarily through overseeing management’s conduct of our accounting and financial reporting process and systems of internal accounting and financial controls;
|
●
|
providing an avenue of communication among the outside auditors, management and the Board; and
|
●
|
preparing an annual report of the Audit Committee for inclusion in our proxy statement.
|
Name and Principal Position
|
Year
|
Salary
($)
|
Non-Equity Incentive Plan (2)
($)
|
Bonus
($)
|
Stock
Awards(1) ($)
|
Option
Awards(1) ($)
|
All Other Compensation(3) ($)
|
Total
($)
|
||||||||||||||||||||||
Michael B. Jebsen, CPA(4)
|
2013
|
330,000
|
—
|
—
|
60,308
|
(5) |
—
|
9,600
|
392,845
|
|||||||||||||||||||||
President, Interim Chief
|
2012
|
295,000 | 105,000 | — | 16,856 | (5) | — | 9,600 | 426,456 | |||||||||||||||||||||
Executive and Chief Financial | ||||||||||||||||||||||||||||||
Officer |
(1)
|
The amounts in these columns reflect the aggregate grant date fair value of awards granted during the year computed in accordance with Financial Accounting Standards Board ASC Topic 718, Compensation — Stock Compensation. The assumptions made in determining the fair values of our stock and option awards are set forth in Note H to our Financial Statements.
|
(2)
|
These payments were made based on achievement of milestones in accordance with Mr. Jebsen’s employment agreement, which is described below in the section entitled “Employment and other Contracts.”
|
(3)
|
The amounts in this column represent payments for automobile allowances issued in accordance with the terms of Mr. Jebsen’s employment agreement, which is described below in the section entitled “Employment and other Contracts.”
|
(4)
|
Mr. Jebsen began serving as our Interim Chief Executive Officer, effective August 24, 2011. In connection with such service, Mr. Jebsen receives additional compensation of $10,000 per month.
|
(5)
|
Represents the grant date fair value of the shares issued in accordance with the terms of Mr. Jebsen’s employment agreement, which is described below in the section entitled “Employment and other Contracts.”
|
Name and Principal Position
|
Grant Date
|
Number of Securities Underlying Options(1)
(#)
|
Exercise Price
of Options
($)
|
Number of Securities Underlying Restricted Stock Grant
(#)
|
Grant Date Fair
Value of Option and Restricted Stock
Awards(2) ($)
|
|||||||||||||||
Michael B. Jebsen, CPA
|
5/1/2012
|
—
|
—
|
430
|
(3) |
15,308
|
||||||||||||||
President, Interim Chief Executive and Chief Financial Officer
|
6/15/2012
|
—
|
—
|
1,223
|
(4) |
45,000
|
(1)
|
Each option listed in the table immediately vests and is exercisable over a ten-year period.
|
(2)
|
The amounts in this column reflects the aggregate grant date fair value of awards granted during the year computed in accordance with Financial Accounting Standards Board ASC Topic 718, Compensation — Stock Compensation. The assumptions made in determining the fair values of our option awards are set forth in Note H to our Financial Statements.
|
(3)
|
The shares underlying these grants vest monthly over a 12 month period.
|
(4)
|
The shares underlying these grants vest monthly immediately.
|
Option Awards(1)
|
Stock Awards
|
|||||||||||||||||||||||
Name and Principal Position
|
Number of securities underlying unexercised options (Exercisable)
(#)
|
Number of securities underlying unexercised options (Unexercisable)
(#)
|
Option
exercise price
($/Sh)
|
Option
expiration date
|
Number of shares or units of stock that have not vested
(#)
|
Market value of shares or units of stock that have not vested
($)
|
||||||||||||||||||
Michael B. Jebsen, CPA
|
34
|
(2) |
|
123.00
|
7/20/2019
|
—
|
—
|
|||||||||||||||||
President, Interim Chief Executive and Chief Financial Officer
|
167
|
|
117.00
|
8/12/2019
|
|
|
||||||||||||||||||
34 | 127.60 | 9/1/2019 | ||||||||||||||||||||||
34 | 117.00 | 10/1/2019 | ||||||||||||||||||||||
34 | 129.00 | 11/1/2019 | ||||||||||||||||||||||
34 | 111.60 | 12/1/2019 | ||||||||||||||||||||||
34 | 115.80 | 1/1/2020 | ||||||||||||||||||||||
34 | 114.60 | 2/1/2020 | ||||||||||||||||||||||
34 | 102.00 | 3/1/2020 | ||||||||||||||||||||||
34 | 100.00 | 4/1/2020 | ||||||||||||||||||||||
34 | 100.00 | 5/1/2020 | ||||||||||||||||||||||
34 | 59.40 | 6/1/2020 | ||||||||||||||||||||||
34 | 57.80 | 7/1/2020 | ||||||||||||||||||||||
34 | 54.80 | 8/1/2020 | ||||||||||||||||||||||
167 | 55.80 | 8/13/2020 | ||||||||||||||||||||||
34 | 60.80 | 9/1/2020 | ||||||||||||||||||||||
34 | 50.60 | 10/1/2020 | ||||||||||||||||||||||
34 | 42.20 | 11/1/2020 | ||||||||||||||||||||||
34 | 43.00 | 12/1/2020 | ||||||||||||||||||||||
625 | 43.00 | 12/1/2020 | ||||||||||||||||||||||
34 | 38.40 | 1/1/2021 | ||||||||||||||||||||||
34 | 41.00 | 2/1/2021 | ||||||||||||||||||||||
34 | 38.60 | 3/1/2021 | ||||||||||||||||||||||
34 | 36.80 | 4/1/2021 |
(1) | Except as otherwise noted, the option awards reflected in these columns vested immediately on the date of grant. The date of grant for each of these options is the date 10 years prior to the expiration date reflected in this table. |
(2) | These options were granted with the following vesting scedule: 100% on the first anniversary of the grant date. |
Director
|
Fees Earned or
Paid in Cash
($)
|
Option Awards
($)
|
Stock Awards
($)
|
All Other
Compensation
($)
|
Total
($)
|
|||||||||||||||
Ronald R. Blanck, DO(1)
|
40,249
|
—
|
33,751
|
—
|
74,000
|
|||||||||||||||
William A. Chatfield(1)
|
34,249
|
—
|
33,751
|
—
|
68,000
|
|||||||||||||||
Anthony DiTonno(1)
|
36,031
|
34,461
|
—
|
—
|
68,500
|
|||||||||||||||
Gregory Pepin(1)
|
68,500
|
—
|
—
|
—
|
68,500
|
|||||||||||||||
Chris A. Rallis(1)
|
35,750
|
—
|
33,250
|
—
|
69,000
|
(1)
|
As of April 30, 2013, Mr. DiTonno held an aggregate of 1,761 stock options. In addition, as of April 30, 2013, our non-employee directors held the following restricted stock units: Dr. Blanck, 485; Mr. Chatfield, 465; Mr. Rallis, 230.
|
●
|
An annual director fee in each fiscal year of $45,000 ($65,000 for our lead independent director), which was paid in equal monthly installments in arrears on the last day of each month;
|
●
|
A fee for attending each meeting of the Board in the amount of $4,000;
|
●
|
A fee for attending each committee meeting of which the Director is a member in the amount of $500; and
|
●
|
Reimbursement of travel and related expenses for attending Board and Committee meetings, as incurred.
|
Beneficial Owner Name and Address(1)
|
Amount and Nature of Beneficial Ownership
|
Percent of Class
|
||||||
Principal Stockholders
|
||||||||
Vatea Fund, Segregated Portfolio
|
189,082
|
9.02
|
% | |||||
Rue Du Borgeaud 10-B
Gland, Switzerland 1196
|
||||||||
JP SPC3 OXBT FUND
|
248,429
|
11.85
|
% | |||||
Rue Du Mont-Blanc
Geneva, Switzerland 1201
|
||||||||
Officers and Directors
|
||||||||
Gregory Pepin(3)
|
452,345
|
21.57
|
% | |||||
Ronald R. Blanck, DO(4)
|
1,801
|
*
|
% | |||||
William A. Chatfield(4)
|
1,771
|
*
|
% | |||||
Anthony DiTonno(4)
|
1,761
|
* | % | |||||
Chris A. Rallis(4)
|
1,290
|
*
|
% | |||||
Michael B. Jebsen, CPA(2)(4)
|
2,984
|
*
|
% | |||||
All officers and directors as a group (7 persons) (2)(4)
|
461,952
|
22.03
|
% |
(1)
|
Unless otherwise noted, all addresses are in care of the Company at ONE Copley Parkway, Suite 490, Morrisville, North Carolina 27560.
|
(2)
|
With respect to Mr. DiTonno, includes 1,761 shares of common stock subject to options exercisable within 60 days of June 20, 2013.
|
(3)
|
Includes 189,082 shares of common stock held by Vatea Fund. Mr. Pepin is a Managing Director for Vatea Fund, and consequently he may be deemed to be the beneficial owner of shares held by Vatea Fund. Also includes 44,437 shares of common stock and 203,992 shares of common stock underlying a convertible note and warrants held by OXBT Fund that are exercisable within 60 days of June 20, 2013. Mr. Pepin is also a co-founder of EOS, an investment company, which serves as the Investment Manager and Managing Director for OXBT Fund, and consequently he may be deemed to be the beneficial owner of shares held by OXBT Fund. Mr. Pepin disclaims beneficial ownership of the shares held by Vatea Fund and OXBT Fund except to the extent of his pecuniary interest therein.
|
(4)
|
With respect to Dr. Blanck, includes 123 shares of common stock subject to restricted stock grants exercisable within 60 days of June 20, 2013.
|
(a)
|
(b)
|
(c)
|
||||||||||
Plan category
|
Number of securities to be issued upon exercise of outstanding options, warrants and rights
|
Weighted-average exercise price of outstanding options, warrants and rights
|
Number of securities remaining available for future issuances under equity compensation plans (excluding securities reflected in column (a))
|
|||||||||
Equity compensation plans approved by security holders
|
13,253
|
$ |
55.76
|
282,726
|
||||||||
Equity compensation plans not approved by security holders
|
—
|
—
|
—
|
|||||||||
Total
|
13,253
|
$ |
55.76
|
282,726
|
Date issued
|
Note principal
|
Final payment premium
|
Effective interest rate
|
|||||||||
November 10, 2010
|
$ | 600,000 | $ | 360,000 | 15.68 | % | ||||||
December 20, 2010
|
1,000,000 | 600,000 | 16.29 | % | ||||||||
January 26, 2011
|
400,000 | 240,000 | 16.89 | % | ||||||||
March 2, 2011
|
100,000 | 60,000 | 17.50 | % | ||||||||
March 4, 2011
|
650,000 | 390,000 | 17.54 | % | ||||||||
March 11, 2011
|
111,000 | 66,600 | 17.66 | % | ||||||||
March 18, 2011
|
430,000 | 258,000 | 17.79 | % | ||||||||
March 29, 2011
|
210,000 | 126,000 | 18.00 | % | ||||||||
April 5, 2011
|
100,000 | 60,000 | 18.14 | % | ||||||||
April 29, 2011
|
700,000 | 420,000 | 18.62 | % | ||||||||
May 9, 2011
|
400,000 | 240,000 | 18.83 | % | ||||||||
May 20, 2011
|
100,000 | 60,000 | 19.06 | % | ||||||||
May 23, 2011
|
200,000 | 120,000 | 19.12 | % |
2013
|
2012
|
|||||||
Audit fees
|
$ |
124,000
|
$ | 178,000 | ||||
Tax fees(1)
|
17,400
|
11,200 | ||||||
Total fees
|
$ |
141,400
|
$ | 189,200 |
(1)
|
Tax return and related service
|
-
|
Reports of Independent Registered Public Accounting Firm.
|
-
|
Balance Sheets as of April 30, 2013 and 2012.
|
-
|
Statements of Operations for each of the two years ended April 30, 2013 and April 30, 2012 and for the period May 26, 1967 (Date of Inception) to April 30, 2013.
|
-
|
Statements of Stockholders’ Equity (Deficit) for each of the two years ended April 30, 2013and April 30, 2012 and for the period May 26, 1967 (Date of Inception) to April 30, 2013.
|
-
|
Statements of Cash Flows for each of the two years ended April 30, 2013 and April 30, 2012 and for the period May 26, 1967 (Date of Inception) to April 30, 2013.
|
-
|
Notes to the Financial Statements.
|
OXYGEN BIOTHERAPEUTICS, INC. | |||
Date: June 26, 2013 |
By:
|
/s/ Michael B. Jebsen | |
Michael B. Jebsen | |||
Chief Financial Officer and Interim Chief Executive Officer |
Name
|
Title
|
Date
|
||
/s/ Michael B. Jebsen
|
Chief Financial Officer
|
June 26, 2013
|
||
Michael B. Jebsen | Interim Chief Executive Officer
(Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer)
|
|||
/s/ Ronald R. Blanck
|
Director
|
June 26, 2013
|
||
Ronald R. Blanck, DO | ||||
/s/ Gregory Pepin
|
Director
|
June 26, 2013
|
||
Gregory Pepin | ||||
/s/ William A. Chatfield
|
Director
|
June 26, 2013
|
||
William A. Chatfield | ||||
/s/ Chris A. Rallis
|
Director
|
June 26, 2013
|
||
Chris A. Rallis | ||||
/s/ Anthony DiTonno
|
Director
|
June 26, 2013
|
||
Anthony DiTonno |
Exhibit No.
|
|
Exhibits Required by Item 601 of Regulation S-K
|
2.1
|
|
Agreement and Plan of Merger dated April 28, 2008 (1)
|
3.1
|
|
Certificate of Incorporation (1)
|
3.2
|
Certificate of Amendment of the Certificate of Incorporation (14)
|
|
3.3
|
Certificate of Amendment of the Certificate of Incorporation (30)
|
|
3.4
|
Certificate of Designations of Series A Convertible Preferred Stock (28)
|
|
3.5
|
Certificate of Designations of Series B-1 Convertible Preferred Stock (31)
|
|
3.6
|
Certificate of Designations of Series B-2 Convertible Preferred Stock (31)
|
|
3.7
|
|
Amended and Restated Bylaws (22)
|
4.1
|
|
Specimen Stock Certificate (19)
|
10.1
|
|
Agreement with Leland C. Clark, Jr., Ph.D. dated November 20, 1992 with amendments, Assignment of Intellectual Property/ Employment (2)
|
10.2
|
|
Agreement between the Registrant and Keith R. Watson, Ph.D. Assignment of Invention (2)
|
10.3
|
|
Children’s Hospital Research Foundation License Agreement dated February 28, 2001 (2)
|
10.4
|
Exclusive License Agreement with Virginia Commonwealth University dated May 22, 2008 (9)
|
|
10.5
|
Amendment no. 1 to the Exclusive License Agreement with Virginia Commonwealth University Intellectual Property Foundation (10)
|
|
10.6
|
Amendment no. 2 to the Exclusive License Agreement with Virginia Commonwealth University Intellectual Property Foundation (10)
|
10.7
|
Agreement with Hospira to manufacture Oxycyte (8)
|
|
10.8
|
Termination Agreement between the Company and Hospira, dated August 30, 2011 (23)
|
|
10.9
|
Exclusive Supply Agreement with Exfluor dated November 12, 2009 (10)
|
|
10.10
|
Master Agreement with Dermacyte Switzerland (18)
|
|
10.11
|
Amendment no. 1 to Master Agreement with Dermacyte Switzerland (18)
|
|
10.12
|
|
Form of Option issued to Executive Officers and Directors (2)
|
10.13
|
|
Form of Option issued to Employees (2)
|
10.14
|
|
Restricted Stock Award Agreement (22)
|
10.15
|
|
Form of Warrant issued to Unsecured Note Holders 2006-2007 (3)
|
10.16
|
|
Form of Convertible Note – 2008 (4)
|
10.17
|
|
Form of Warrant issued to Convertible Note Holders (4)
|
10.18
|
|
Form of Purchase Agreement – US Purchase (without exhibits, which are included as exhibits 10.16 and 10.17, above) (4)
|
10.19
|
|
Form of Purchase Agreement – Non-US Purchase (without exhibits, which are included as exhibits 10.16 and 10.17, above) (4)
|
10.20
|
|
Form of Purchase Agreement – US Note Exchange (without exhibits, which are included as exhibits 10.16 and 10.17, above) (4)
|
10.21
|
|
Form of Purchase Agreement – Non-US Note Exchange (without exhibits, which are included as exhibits 10.16 and 10.17, above) (4)
|
10.22
|
|
Form of Warrant issued to Financing Consultants (5)
|
10.23
|
|
1999 Amended Stock Plan (amended 2008) (5)
|
10.24
|
|
Employment Agreement with Chris J. Stern dated February 1, 2009 (12)
|
10.25
|
Amended and Restated Employment Agreement with Chris J. Stern dated May 13, 2011 (20)
|
|
10.26
|
|
Business Consultant Agreement with Institute for Efficient Management, Inc., as amended March 26, 2008 (5)
|
10.27
|
|
Engagement and Consulting Agreement with Bruce Spiess (5)
|
10.28
|
|
Engagement and Consulting Agreement with Gerald L. Klein (5)
|
10.29
|
Employment Agreement with Gerald L. Klein dated May 13, 2011 (20)
|
|
10.30
|
|
Business Consultant Agreement with Edward Sitnik (8)
|
10.31
|
|
Business Consultant Agreement with J. Melville Engle (8)
|
10.32
|
|
Employment Agreement with Richard Kiral, restated February 1, 2009 (8)
|
10.33
|
Resignation of Employment and Consulting Agreement with Richard Kiral (20)
|
|
10.34
|
Employment Agreement with Michael B. Jebsen dated December 1, 2010 (16)
|
|
10.35
|
Amended and Restated Employment Agreement with Michael B. Jebsen dated May 19, 2011 (20)
|
|
10.36
|
Form of Indemnification Agreement (20)
|
|
10.37
|
|
Description of Non-Employee Director Compensation (25)
|
10.38
|
|
Securities Purchase Agreement (including exhibits) between Oxygen Biotherapeutics and Vatea Fund, Segregated Portfolio dated June 8, 2009 (6)
|
10.39
|
|
Amendment no. 1 to the Securities Purchase Agreement between Oxygen Biotherapeutics and Vatea Fund, Segregated Portfolio (11)
|
10.40
|
|
Amendment no. 2 to the Securities Purchase Agreement between Oxygen Biotherapeutics and Vatea Fund, Segregated Portfolio (12)
|
10.41
|
|
Amendment no. 3 to the Securities Purchase Agreement between Oxygen Biotherapeutics and Vatea Fund, Segregated Portfolio (23)
|
10.42
|
Form of Exchange Agreement dated July 20, 2009 (7)
|
|
10.43
|
Waiver—Convertible Note (10)
|
|
10.44
|
Amendment—Common Stock Purchase Warrant (10)
|
|
10.45
|
Form of Warrant for May 2010 offering (13)
|
|
10.46
|
Form of Subscription Agreement for May 2010 offering (13)
|
|
10.47
|
Warrant issued to Blaise Group International, Inc. (14)
|
|
10.48
|
Note Purchase Agreement between Oxygen Biotherapeutics and JP SPC 1 Vatea, Segregated Portfolio (15)
|
|
10.49
|
Form of Promissory Note under Note Purchase Agreement between Oxygen Biotherapeutics and JP SPC 1 Vatea, Segregated Portfolio (15)
|
|
10.50
|
First Amendment to Note Purchase Agreement between Oxygen Biotherapeutics and JP SPC 1 Vatea, Segregated Portfolio (17)
|
|
10.51
|
Lease Agreement for North Carolina corporate office (18)
|
|
10.52
|
Standard Industrial Lease relating to OBI’s California facility (12)
|
|
10.53
|
Task Order between the Company and NextPharma, dated November 15, 2011 (23)
|
|
10.54
|
Form of Convertible Note for July 2011 offering (included in exhibit 10.56)
|
|
10.55
|
Form of Warrant for July 2011 offering (included in exhibit 10.56)
|
|
10.56
|
Form of Convertible Note and Warrant Purchase Agreement for July 2011 offering (21)
|
10.57
|
Placement Agency Agreement, dated December 8, 2011, between Oxygen Biotherapeutics, Inc. and William Blair & Company, L.L.C., as placement agent (24)
|
|
10.58
|
Form of Warrant for December 2011 offering (24)
|
|
10.59
|
Form of Securities Purchase Agreement for December 2011 offering (24)
|
|
10.60
|
Form of Amendment Agreement for December 2011 offering (26)
|
|
10.61
|
Form of Lock-up Agreement for December 2011 offering (24)
|
|
10.62
|
Form of Amendment Agreement for December 2011 offering (27)
|
|
10.63
|
Fluoromed Supply Agreement (28)
|
|
10.64
|
Form of Warrant for February 2013 offering (29)
|
|
10.65
|
Placement Agency Agreement, dated February 22, 2013, between Oxygen Biotherapeutics, Inc. and Ladenburg Thalmann & Co. Inc., as placement agent (29)
|
|
10.66
|
Form of Securities Purchase Agreement for February 2013 offering (29)
|
|
10.67
|
Form of Registration Rights Agreement for February 2013 offering (29)
|
|
10.68
|
Form of Warrant Exchange Agreement, dated February 21, 2013, between Oxygen Biotherapeutics, Inc. and certain institutional investors party to the Securities Purchase Agreement for December 2011 Offering (29)
|
|
10.69
|
License and Supply Agreement dated February 5, 2013, between Oxygen Biotherapeutics, Inc. and Valor SA*
|
|
10.70
|
Settlement Agreement, dated March 14, 2013, among Oxygen Biotherapeutics, Inc., Tenor Opportunity Master Fund Ltd., Aria Opportunity Fund, Ltd., and Parsoon Opportunity Fund, Ltd.*
|
|
Consent of Independent Registered Accounting Firm*
|
||
|
Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*
|
|
|
Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350*
|
101.INS**
|
|
XBRL Instance Document
|
101.SCH**
|
|
XBRL Taxonomy Extension Schema Document
|
101.CAL**
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
101.DEF**
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
101.LAB**
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
101.PRE**
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
(1)
|
These documents were filed as exhibits to the current report on Form 8-K filed by Oxygen Biotherapeutics with the SEC on June 30, 2008, and are incorporated herein by this reference.
|
(2)
|
These documents were filed as exhibits to the annual report on Form 10-K filed by Oxygen Biotherapeutics with the SEC on August 13, 2004, and are incorporated herein by this reference.
|
(3)
|
These documents were filed as exhibits to the current report on Form 8-K filed by Oxygen Biotherapeutics with the SEC on September 6, 2006, and are incorporated herein by this reference.
|
(4)
|
These documents were filed as exhibits to the quarterly report on Form 10-Q filed by Oxygen Biotherapeutics with the SEC on March 21, 2008, and are incorporated herein by this reference.
|
(5)
|
These documents were filed as exhibits to the annual report on Form 10-K filed by Oxygen Biotherapeutics with the SEC on August 13, 2008, and are incorporated herein by this reference.
|
(6)
|
This document was filed as an exhibit to the current report on Form 8-K filed by Oxygen Biotherapeutics with the SEC on June 8, 2009, and is incorporated herein by this reference.
|
(7)
|
This document was filed as an exhibit to the current report on Form 8-K filed by Oxygen Biotherapeutics with the SEC on July 21, 2009, and is incorporated herein by this reference.
|
(8)
|
These documents were filed as exhibits to the annual report on Form 10-K filed by Oxygen Biotherapeutics with the SEC on August 12, 2009, and are incorporated herein by this reference.
|
(9)
|
This document was filed as an exhibit to the quarterly report on Form 10-Q filed by Oxygen Biotherapeutics with the SEC on September 22, 2008, and is incorporated herein by this reference.
|
(10)
|
These documents were filed as exhibits to the quarterly report on Form 10-Q filed by Oxygen Biotherapeutics with the SEC on March 19, 2010, and are incorporated herein by this reference.
|
(11)
|
This document was filed as an exhibit to the current report on Form 8-K filed by Oxygen Biotherapeutics with the SEC on September 2, 2009, and is incorporated herein by this reference.
|
(12)
|
These documents were filed as exhibits to the current report on Form 8-K filed by Oxygen Biotherapeutics with the SEC on April 28, 2010, and are incorporated herein by this reference.
|
(13)
|
These documents were filed as exhibits to the current report on Form 8-K filed by Oxygen Biotherapeutics with the SEC on May 4, 2010, and are incorporated herein by this reference.
|
(14)
|
These documents were filed as exhibits to the current report on Form 8-K filed by Oxygen Biotherapeutics with the SEC on November 13, 2009, and are incorporated herein by reference.
|
(15)
|
These documents were filed as exhibits to the current report on Form 8-K filed by Oxygen Biotherapeutics with the SEC on October 13, 2010, and are incorporated herein by this reference.
|
(16)
|
These documents were filed as exhibits to the quarterly report on Form 10-Q filed by Oxygen Biotherapeutics with the SEC on December 9, 2010, and are incorporated herein by this reference.
|
(17)
|
This document was filed as an exhibit to the current report on Form 8-K filed by Oxygen Biotherapeutics with the SEC on December 30, 2010, and is incorporated herein by this reference.
|
(18)
|
These documents were filed as exhibits to the quarterly report on Form 10-Q filed by Oxygen Biotherapeutics with the SEC on March 21, 2011, and are incorporated herein by this reference.
|
(19)
|
These documents were filed as exhibits to the annual report on Form 10-K filed by Oxygen Biotherapeutics with the SEC on July 23, 2010, and are incorporated herein by this reference.
|
(20)
|
This document was filed as an exhibit to the annual report on Form 10-K filed by Oxygen Biotherapeutics with the SEC on July 15, 2011, and is incorporated herein by this reference.
|
(21)
|
This document was filed as an exhibit to the current report on Form 8-K/A filed by Oxygen Biotherapeutics with the SEC on July 1, 2011, and is incorporated herein by this reference.
|
(22)
|
This document was filed as an exhibit to the quarterly report on Form 10-Q filed by Oxygen Biotherapeutics with the SEC on December 15, 2011, and is incorporated herein by this reference.
|
(23)
|
These documents were filed as exhibits to the current report on Form 8-K filed by Oxygen Biotherapeutics with the SEC on November 16, 2011, and are incorporated herein by this reference.
|
(24)
|
These documents were filed as exhibits to the current report on Form 8-K filed by Oxygen Biotherapeutics with the SEC on December 9, 2011, and are incorporated herein by this reference.
|
(25)
|
This document was filed as an exhibit to the quarterly report on Form 10-Q filed by Oxygen Biotherapeutics with the SEC on March 15, 2012, and is incorporated herein by this reference.
|
(26)
|
This document was filed as an exhibit to the current report on Form 8-K filed by Oxygen Biotherapeutics with the SEC on June 15, 2012, and is incorporated herein by this reference.
|
(27)
|
This document was filed as an exhibit to the current report on Form 8-K filed by Oxygen Biotherapeutics with the SEC on June 15, 2012, and is incorporated herein by reference.
|
(28)
|
These documents were filed as exhibits to the annual report on Form 10-K filed by Oxygen Biotherapeutics with the SEC on July 25, 2012, and are incorporated herein by this reference.
|
(29)
|
These documents were filed as exhibits to the current report on Form 8-K filed by Oxygen Biotherapeutics with the SEC on February 25, 2013, and are incorporated herein by this reference.
|
(30)
|
This document was filed as an exhibit to the current report on Form 8-K filed by Oxygen Biotherapeutics with the SEC on May 5, 2013, and is incorporated herein by this reference.
|
(31)
|
These documents were filed as exhibits to the registration statement on Form S-1 filed by Oxygen Biotherapeutics with the SEC on March 22, 2013, and are incorporated herein by this reference.
|
*
|
Filed herewith.
|
**
|
Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files in Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.
|
2.1
|
"Affiliate" of a Party means a Person that, directly or indirectly, through one or more intermediaries, Controls, is Controlled by or is under common Control with the first mentioned Person. A Person shall be deemed to control another Person if such first Person possesses, directly or indirectly, the power to direct, or cause the direction of, the management and policies of the second Person, whether through the ownership of voting securities, by contract or otherwise.
|
2.2
|
"Control” means, with respect to any Person, the possession, directly or indirectly, of the power to direct or cause the direction of management of a Person, whether through ownership of voting securities, by contract or otherwise.
|
2.3
|
“Cosmetic Product” means articles intended to be rubbed, poured, sprinkled, or sprayed on, introduced into, or otherwise applied to the human body for cleansing, beautifying, promoting attractiveness, or altering the appearance, expressly excluding any article intended for use in the diagnosis, cure, mitigation, treatment, or prevention of disease, or to affect the structure or any function of the body of man or other animals.
|
2.4
|
“Dermacyte” means the Cosmetic Product containing PFCs manufactured and distributed by OBI.
|
2.5
|
"FDA" shall mean the U.S. Food and Drug Administration and any successor agency.
|
2.6
|
"Field" means, and is limited to, applications involving the use of Cosmetic Products and expressly excluding dermatological products or claims.
|
2.7
|
"Licensor Patent Rights" means those domestic and foreign Patent Rights that are owned or Controlled by Licensor as of January 1, 2013 as set forth on Schedule A, attached hereto and incorporated herein by reference, and which are subject to change without VCD prior approval, any such change to be automatically incorporated into this agreement upon receipt of written notification of such changes to VCD.
|
2.8
|
"Licensed Products" means any Cosmetic Product the packaging, labeling, use or sale of which relies in whole or in part on some or all of the Licensor Patent Rights or OBI Know-How. For clarification, any Product purchased by VCD from OBI is Licensed Product, and includes Product in any package and under any label which VCD may utilize for commercialization.
|
2.9
|
"Net Sales" means the gross amount invoiced by Licensee (and/or any sublicensees) for sales of Licensed Products less:
|
(a)
|
Transportation charges or allowances actually paid or granted;
|
(b)
|
Trade, quantity, cash or other discounts, if any, allowed and paid by Licensee independent parties in arms-length transactions;
|
(c)
|
Credits or allowances made or given on account of rejects, returns, recalls or retroactive price reductions for any amount not collected;
|
(d)
|
Any tax or governmental charge directly on sale or transportation, use or delivery or services paid by Licensee and not recovered from the purchaser.
|
2.10
|
"OBI Know-How" means all information, data, or materials, whether in hard copy or electronic form, that are necessary or useful for the sale, packaging, labeling or other commercialization of Licensed Product(s), which OBI controls as of the Effective Date.
|
2.11
|
"Patent Rights" means any and all patent applications and any patents issuing therefrom, worldwide, together with any extensions, registrations, confirmations, supplemental protection certificates and other like forms of patent term extensions, reissues, continuations, divisions, continuations-in-part, reexaminations, corrections, substitutions or renewals thereof, and all foreign counterparts thereof. Where applicable, it shall also mean Trademarks and copyrights.
|
2.12
|
"Person" means any natural person, entity, corporation, partnership, firm, organization, limited liability company, trust, business trust, association, joint stock company, joint venture, pool, syndicate, sole proprietorship, unincorporated organization, any government or agency or political subdivision thereof, or any other entity.
|
2.13
|
“Product” means a specific formulation of Cosmetic Product containing one or more PFCs, manufactured in bulk quantities by OBI, for purchase by VCD.
|
2.14
|
“Territory” means worldwide.
|
2.15
|
"Third Party" means any Person other than OBI or Licensee.
|
3.1
|
Licenses:
|
3.2
|
Sublicenses:
|
4.1
|
Annual License Fee
|
4.2
|
Royalties
|
(a)
|
Licensee agrees to make quarterly written reports to OBI within thirty (30) days after the first days of each January, April, July, and October during the life of this Agreement and as of such dates, stating in each such report the number, description, and aggregate selling prices of Licensed Products sold or otherwise disposed of during the preceding three calendar months and upon which royalty is payable as provided in Section 4.2 hereof. The first such report shall include all such Licensed Products so sold or otherwise disposed of prior to the date of such report.
|
(b)
|
With each such report, Licensee shall remit to OBI the total amount of royalty payments due. All amounts payable to OBI hereunder shall be payable in United States funds, subject to deduction for any taxes, assessments, fees or charges of any kind withheld or imposed by any country on any royalty or other payment payable to OBI hereunder. Payments of royalties that are not made when due shall accrue interest at the rate of one percent (1 %) over the prime rate in effect at the Chase Manhattan Bank (N.A.) on the due date.
|
(c)
|
Licensee will keep complete, true and accurate books of account and records for the purpose of showing the derivation of all amounts payable to OBI under this Agreement. Such books and records will be kept at Licensee's principal place of business for at least three (3) years following the end of the calendar quarter to which they pertain, and will be available no more than once during any calendar year, during normal business hours, upon seven (7) days prior written notice, for inspection by a representative of OBI for the purpose of verifying Licensee's royalty statements or Licensee's compliance in other respects with this Agreement. The representative will be obliged to treat such books and records as Confidential Information.
|
(d)
|
Inspections made under this section shall be at the expense of OBI, unless a variation or error in any amount payable to OBI under this Agreement is identified, in which case the expenses of the Inspection shall be paid by Licensee.
|
5.1
|
Technology Transfers.
|
5.2
|
Diligence Requirements.
|
6.1
|
OBI's Warranties.
|
(a)
|
it is the good faith belief that it holds all rights necessary to grant to Licensee the licenses granted under this Agreement with respect to the Licensor Patent Rights;
|
(b)
|
it has received no notification that the Licensor Patent Rights are invalid and has not received written notification from a Third Party claiming that the rights granted hereunder will infringe on any patent or other proprietary right of such Third Party;
|
(c)
|
it has not assigned or conveyed, and has not promised to assign or convey, any interest in any Patent Rights inconsistent with the rights granted under this Agreement;
|
(d)
|
it has the good faith belief that it holds all rights necessary to grant to Licensee the licenses granted under this Agreement with respect to the OBI Know-How; and
|
(e)
|
it has not assigned or conveyed, and has not promised to assign or convey, any interest in any OBI Know-How inconsistent with the rights granted under this Agreement.
|
6.2
|
Licensee's Warranties.
|
(a)
|
to its knowledge, the execution, delivery and performance by Licensee of this Agreement do not contravene or constitute a default under any provision of applicable law or any agreement, judgment, injunction, order, decree or other instrument binding upon Licensee; and
|
(b)
|
Licensee has no agreement with any Third Party that, by its terms and without a material breach of the terms of such agreement, materially and adversely affects the rights of Licensor or the obligations of Licensee under this Agreement.
|
6.3
|
Injunctive Relief:
|
6.4
|
Assumption of Risk.
|
(a)
|
Except as otherwise noted below, as between Licensee and OBI, Licensee assumes all responsibility for and all risk of damage or injury that may occur as a result of its, or its sublicensees', storing, filling and finishing, using, marketing, selling, offering to sell, importing, exporting or distributing Licensed Products. Licensee shall indemnify, defend, and hold OBI and its directors, officers, equityholders, agents, employees, Affiliates and representatives (each, an "Licensor Indemnified Party," and collectively, "Licensor Indemnified Parties") harmless for any and all Third Party claims, suits, demands, proceedings, actions, damages, judgments, costs, liabilities, settlement costs or losses, including, without limitation, attorneys' fees, legal expenses, and costs arising from the actions of Licensee with respect to any Licensed Product used, sold, offered for sale, imported, exported, distributed, received or provided as a result of its licensing the OBI Patent Rights or the OBI Know-How under this Agreement, including without limitation (i) any products liability or similar claim for personal injury or property damage; (ii) claims or actions arising from or based on a breach of Licensee's representations and warranties set forth in this Agreement; (iii) claims or actions by Licensee's sublicensees arising from or based on a breach of Licensee's obligations under a sublicense agreement; and (iv) claims arising from clinical trial studies conducted by or on behalf of Licensee related to the Licensed Products, insofar as any such claims do not arise out of the negligence or willful misconduct of Licensor or Licensor Indemnified Party, as applicable. The foregoing right of indemnity for claims shall not be subject to the limitations of liability described in Article 7
|
6.5
|
Indemnification.
|
6.6
|
Notice and Cooperation Requirements.
|
6.7
|
Infringement Claims
|
6.8
|
Insurance
|
(a)
|
Licensee shall maintain at all times during the Term of the Agreement, and until the date that all statutes of limitation covering claims, actions or suits that may be brought for personal injury based on the packaging, labeling, sale, distribution or use of such Licensed Product have expired in all countries in the Territory., commercial general liability insurance from a recognized, creditworthy insurance company, on a claims-made basis, with endorsements for contractual liability and product liability, and with coverage limits of not less than $5,000,000 per occurrence, and which shall name Licensor as an "additional insured" thereunder. The minimum level of insurance set forth herein shall not be construed to create a limit on Licensee's liability hereunder.
|
(b)
|
Notwithstanding the obligation set forth in Section 6.8(a) above, each Party shall at all times maintain in force at its sole cost and expense, with reputable insurance companies, general liability insurance and products liability insurance coverage in an amount reasonably sufficient to insure against liability. Within 10 days following written request of a Party, the other Party shall furnish a certificate of insurance evidencing such coverage as of such date, and, in the case of a modification or cancellation of such coverage, a new certificate of insurance evidencing coverage that meets the requirements in the first sentence of this Section 6.8.
|
8.1
|
Obligations Regarding Confidential Information
|
(a)
|
The Parties have entered into a Confidential Disclosure Agreement (“CDA”) effective October 15, 2012 which is hereby incorporated by reference. The maintenance of confidential treatment to disclosed information shall continue for at least five (5) years after termination of this Agreement.
|
(b)
|
Licensee and Licensor (as applicable, each a "Receiver") shall each use all reasonable steps to keep confidential, for the term of this Agreement and for five (5) years thereafter, and with respect to trade secrets, for so long as such trade secrets are protected, any Licensee know-how and Licensor know-how, as the case may be, and any other proprietary or business information provided or made available by the other Party (as applicable, each a "Discloser") hereunder ("Confidential Information"), which steps shall include, without limitation, steps no less stringent than the Receiver employs to protect its own Confidential Information. Without the prior written consent of Discloser, Receiver shall not use (except as contemplated by this Agreement), or disclose to any Third Party, any Confidential Information of Discloser; provided, however, that the foregoing shall not apply to Confidential Information that Receiver can establish by written documentation:
|
(i)
|
was publicly known at the time of disclosure by Receiver;
|
(ii)
|
becomes publicly known, without Receiver's breach of this confidentiality restriction subsequent to such disclosure to Receiver hereunder;
|
(iii)
|
was otherwise known by Receiver from a source (other than Discloser) lawfully having the right to possess and disclose such information without restriction;
|
(iv)
|
was developed by Receiver independently of the disclosure by Discloser; or
|
(v)
|
was known by Receiver without obligation to Discloser prior to receiving such information from Discloser.
|
8.2
|
Permitted Disclosures of Confidential Information
|
(a)
|
to its legal representatives, Affiliates, agents, consultants, directors, outside subcontractors, sublicensees, development partners, and prospective investors under like confidentiality obligations on the part of the recipients and solely for the purposes of the Receiver fulfilling its obligations under this Agreement;
|
(b)
|
to the extent required by law or regulation, provided that to the extent reasonably possible, Receiver shall give prompt written notice of the proposed disclosure to Discloser so as to allow Discloser an opportunity, at its own cost and expense, to object to such requirement and, if applicable, assure that confidential treatment will be accorded to such Confidential Information;
|
(c)
|
to Regulatory Authorities, to the extent that such Confidential Information is reasonably required to be disclosed for the purpose of securing necessary governmental authorization for the clinical testing or marketing of Licensed Products or for the purpose of conducting clinical testing; or
|
(d)
|
to the extent that such Confidential Information is reasonably required to be disclosed for the purpose of prosecuting or defending litigation; provided, however, the Receiver shall promptly notify the Discloser of such request and cooperate with the Discloser to obtain any and all possible protection for such Confidential Information prior to providing same to requestor, if such is ultimately required.
|
8.3
|
Confidentiality of This Agreement.
|
8.4
|
Extension of Obligations.
|
9.1
|
Patent Prosecution and Maintenance.
|
9.2
|
Further Assurances.
|
9.3
|
Patent Marking.
|
10.1
|
Infringement Notice.
|
(a)
|
If OBI becomes aware of any infringement or threatened infringement of any Licensor Patent Rights in the Field, then OBI shall give notice to Licensee within ten (10) business days of becoming aware of such infringement or threat.
|
(b)
|
If Licensee becomes aware of any infringement or threatened infringement of any OBI Patent Rights in the Field, then Licensee shall give notice to OBI within ten (10) business days of becoming aware of such infringement or threat.
|
10.2
|
Enforcement Actions.
|
(a)
|
In the case of any infringement of any OBI Patent Right by any Third Party (an "Infringer") in the Field during the Term, Licensee shall have the right and the obligation, at Licensee's expense, to cause such Third Party to cease such infringement and to otherwise enforce such Licensor Patent Right. Licensor shall assist Licensee as reasonably requested, at Licensee's expense, in taking any such action against any such Infringer. Any amount recovered as a result of any action taken by Licensee hereunder shall be retained by Licensee. If, following reasonable notice from the OBI, Licensee shall fail to take any action against any Infringer which Licensor may reasonably deem necessary or desirable to prevent such infringement or violation, or to recover damages therefore, in addition to any other remedy available to it, Licensor may, upon notice to Licensee, take any steps OBI may deem appropriate against such Infringer at OBI's own expense. Licensee shall assist OBI, at OBI's expense, as reasonably requested in taking any such action against any such Infringer. Any amount recovered as a result of any such action taken by OBI shall be retained solely by OBI. This paragraph shall survive the termination or expiration of this Agreement.
|
(b)
|
No settlement, compromise, consent judgment or any voluntary final disposition of the suit may be entered into by Licensee without the prior written consent of OBI, which consent shall not be unreasonably withheld or delayed.
|
10.3
|
Patent Actions.
|
(a)
|
In the event that Licensee files an action for a declaratory judgment of patent invalidity, initiates a re-examination or opposition proceeding, interference, or otherwise challenges the validity or enforceability of any of OBI’s Patent Rights (each a "Patent Action"):
|
(b)
|
Such Patent Action will be resolved, upon written notice of its demand for arbitration ("Demand") to OBI, by arbitration under 35 U.S.C. 294 (and, in the event of an interference action, under 35 U.S.C. l35) and the United States Arbitration Act 9 U.S.C. ss. 1 et seq., to the extent not inconsistent with 35 U.S.C. 294 or 35 U.S.C. 135. The arbitration shall be administered by the American Arbitration Association ("AAA") under its Supplementary Rules for the Resolution of Patent Disputes and judgment on the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof. The arbitrator shall be appointed within thirty (30) days of the filing of a Demand and discovery shall be limited to a period of sixty (60) days. The written decision and award shall be rendered within six (6) months of the filing of the Demand. All arbitrator(s) eligible to conduct the arbitration must undertake in writing as a condition of service to render their opinion(s) promptly after the final arbitration hearing and to provide a reasoned written opinion setting forth the findings of fact and conclusions of law. Except to the extent entry of judgment and any subsequent enforcement may require disclosure, or except as required by law, all matters relating to the arbitration, including the award, shall be held in confidence by the parties.
|
(c)
|
Licensee shall continue to pay all Annual Licensing Fees and other payment obligations due under this Agreement during the pendency of any Patent Action, without the right to recoup any amounts paid under this Agreement in the event that the Patent Action is upheld.
|
(d)
|
In the event there is no judgment of invalidity or infringement with respect to the Licensor Patent Rights, Licensee shall reimburse all of Licensor's costs and expenses (including without limitation, attorneys' and experts' fees) arising from its defense of such action.
|
11.1
|
Term.
|
(a)
|
Unless terminated earlier, according to the provisions of sections 11.2 or 11.3, the premises and promises and this Agreement are in effect for five (5) years from the Effective Date.
|
(b)
|
Either Party may terminate this Agreement in the event of breach of a material obligation of the other Party if such breach remains uncured thirty (30) days after written notice of such breach is delivered to such breaching Party.
|
(c)
|
OBI may cancel this Agreement with ten (10) business days notice in the event of a failure to pay Annual License Fees or Royalty Fees when due.
|
11.2
|
Termination for Cause
|
(a)
|
OBI shall have the right to terminate this Agreement immediately upon notice in the event VCD ceases to conduct its operations in the normal course of business, including inability to meet its obligations as they mature, or if any proceeding under the bankruptcy or insolvency laws is brought by or against VCD, or a receiver is appointed for VCD.
|
(b)
|
OBI may terminate this Agreement without penalty immediately following written notice if Licensee (i) is the subject of any proceeding related to its liquidation or insolvency (whether voluntary or involuntary) which is not dismissed within ninety (90) calendar days or (ii) makes or attempts to make an assignment for the benefit of its creditors.
|
11.3
|
Effect of Termination
|
(a)
|
Except as expressly set forth herein, all licenses, rights and obligations under this Agreement shall immediately end upon termination of this Agreement for any reason; provided, however, that termination of this Agreement shall not release any Party from any payment obligation that has accrued as of the effective date of the termination. Without limiting the foregoing, Licensee shall pay OBI, within thirty (30) days after such termination, amounts equal to all reimbursable expenses payments and all other payments which were owed by Licensee. In addition, for a termination other than expiration as set forth in Section 12.1, Licensee, its Affiliates, and sublicensees, as applicable, shall return to OBI within sixty (60) days of termination all tangible OBI Know-How and Confidential Information provided to Licensee by Licensor pursuant to this Agreement.
|
(b)
|
Upon termination of this Agreement VCD shall pay to OBI all undisputed amounts then due and payable, including any due but unpaid Annual License Fees and Development Costs. VCD shall be responsible for the purchase of Product which constitute Firm Orders as of the effective date of termination; and OBI shall not otherwise be responsible for any material ordered by VCD in anticipation of forecasts or future orders or for costs or profits on Products not supplied.
|
(c)
|
The respective rights and obligations of the Parties hereunder shall survive the termination or expiration of this Agreement to the extent necessary for the intended preservation of such rights and obligations including, but not limited to, insurance, indemnification, confidentiality, regulatory compliance, records retention, audit rights, and recall responsibilities.
|
(d)
|
VCD shall pay Royalty Fees as they become due on any Product purchased prior to termination.
|
12.0
|
PRODUCT DEVELOPMENT
|
12.1
|
Product Development
|
(a)
|
At the request of VCD, OBI shall use reasonable efforts to develop Product to meet VCD’s needs.
|
(b)
|
VCD has requested OBI to develop the following Products:
|
(i)
|
Dermacyte Concentrate with a PFC content of fifty percent (50%) or greater
|
(ii)
|
Dermacyte Eye Complex with a PFC content of twenty-five percent (25%) or greater
|
(iii)
|
Dermacyte Day cream with a PFC content of one percent (1%) or greater
|
(iv)
|
Dermacyte Night cream with a PFC content of percent (3%) or greater
|
12.2
|
Product Development Costs
|
(a)
|
VCD shall be responsible for the payment of all costs for Product development (“Product Development Costs”).
|
(b)
|
OBI shall provide VCD with estimates for costs to be incurred and no costs shall be incurred by OBI until they have received seventy-five percent (75%) of the estimated costs.
|
(c)
|
VCD shall reimburse OBI for the actual costs incurred within thirty (30) days of VCD’s receipt of a final expense report from OBI,which will include a 10% markup for administrative overhead..
|
(d)
|
All intellectual property and Know-How generated from or in connection with Product Development shall be owned exclusively by OBI and shall be incorporated as part of the License granted to Licensee hereunder.
|
12.3
|
Product Formulation
|
(a)
|
OBI shall develop formulations for each Product requested by VCD. VCD shall have no right to independently develop formulations for Product. VCD shall approve all formulations prior to OBI’s manufacture of Product.
|
(b)
|
Product formulation costs will be considered Product Development Costs.
|
12.4
|
Safety Testing
|
(a)
|
OBI shall conduct toxicology, stability and other safety tests (“Safety Testing”) on all Product(s) prior to making such Product(s) available for purchase by VCD.
|
(b)
|
All Safety Testing shall be considered Product Development Costs.
|
12.5
|
Cosmetic Clinical Trials
|
(a)
|
Upon mutual agreement of the Parties, OBI shall conduct cosmetic clinical trials on Product(s).
|
(b)
|
Such cosmetic clinical trials will be considered Product Development Costs.
|
(c)
|
VCD shall have the right to review and approve all study protocols prior to implementation.
|
12.6
|
Packaging and Labeling
|
(a)
|
OBI’s obligations for packaging and labeling are limited to the packaging of bulk Product in a container that is appropriately labeled for shipment to VCD or VCD’s designee.
|
(b)
|
VCD shall be solely responsible for, and shall bear all costs of, the final packaging and labeling of all Licensed Product.
|
(c)
|
OBI packaging, labeling and shipping shall be considered manufacturing costs.
|
13.1
|
Delivery.
|
(a)
|
VCD shall provide forecasts of the quantity of Product required for the next quarter (“Forecasted Orders”) as part of their quarterly reports in accordance with section 5.2(b) above.
|
(b)
|
VCD shall provide a Purchase Order for each Product sixty (60) days prior to delivery date (“Firm Order”). OBI shall furnish Products within the timeframe established at the time VCD requests the shipment. OBI agrees to use its best efforts to meet any request by VCD for delivery of Products prior to a delivery date stated in the applicable Purchase Order. OBI shall notify VCD of any Late Delivery and specify the estimated delivery date and the circumstances causing the delay, keeping VCD informed about the status of the Late Delivery.
|
(c)
|
VCD shall be solely responsible for all transportation expenses and risk of loss or damage to Products. OBI shall ship Products in compliance with all Applicable Laws.
|
(d)
|
OBI shall pack and ship all Products in accordance with the VCD shipping specifications given at the time the shipping request is made to ensure that no damage shall result during shipping.
|
(e)
|
All shipments of Product delivered by OBI shall be accompanied by the appropriate Material Safety Data Sheet (“MSDS”).
|
13.2
|
Pricing/Payment.
|
(a)
|
Purchase price of Product will be OBI’s actual manufacturing costs plus twenty-five percent (25%) for administrative overhead.
|
(b)
|
Upon receipt of a Purchase Order signed by both parties, VCD will issue a payment equal to fifty percent (50%) of the total Purchase Order amount. All payments will be issued as follows, or in accordance with such other written instructions as OBI shall provide:
|
(c)
|
OBI shall prepare and deliver to VCD an invoice for each lot of released Product purchased hereunder. All invoices shall be submitted in writing issued as follows, or in accordance with such other written instructions as VCD shall provide:
|
(d)
|
All invoices shall be submitted contemporaneously with or subsequent to the release of Product under the Purchase Order. The invoices shall specify the price of the Product, the Purchase Order number, the quantity of Product actually released, and any prior amount paid by VCD to OBI against the applicable Purchase Order as provided for in section 12.2(a). In no event shall any invoice be dated prior to the date of release.
|
(e)
|
Payment terms for each undisputed shipment of Products shall be net thirty (30) days from the date of invoice, provided that no invoice shall be dated prior to the delivery and acceptance of corresponding Products.
|
13.3
|
Specifications; Quality:
|
(a)
|
OBI shall label and package Product in accordance with the provisions of all Laws, Product Specifications and Purchase Order specifications, as applicable.
|
(b)
|
Product released pursuant to this Agreement shall comply with the Product Specifications. A Certificate of Analysis showing the Product name, lot or batch number, date of manufacture, release date, and the specifications and results of the analysis of all Product properties requested by VCD, will be provided by OBI with each lot of manufactured Product.
|
(c)
|
Subject to Applicable Laws, neither the Product Specifications, nor any change in any Product that may alter its properties, impurities, or any other characteristic of the Products, may be changed without VCD’s prior written consent. OBI shall not unreasonably withhold its agreement to any change in the Product Specifications requested by VCD. OBI shall not make any substitutions for Products ordered without the prior written approval of VCD.
|
(d)
|
OBI is responsible for retaining samples of each lot of Product.
|
13.4
|
Notice of Claim or Rejection.
|
(a)
|
In the event that VCD learns, or should reasonably learn, of any claim with respect to Product, VCD will inform OBI in writing of the claim. OBI’s sole responsibility shall be replacement of Product. OBI will not be responsible for replacing or reimbursing the cost of the packaging, labeling, or other processing costs incurred by VCD.
|
(b)
|
Should the Product fail to meet specifications during its labeled shelf life, VCD is responsible for the recall and disposition of Product
|
(c)
|
In the event that a shipment of Product fails to conform to Purchase Order or to meet any warranty hereunder, VCD shall notify OBI within ten (10) days of receipt of Product. Notification of non-conformity must (1) be in writing, and (2) contain specific details regarding the nature of the defects, and (3) specify the specific Product(s) and Purchase Order the affected product was purchased under. Upon receipt of such notice, OBI shall advise VCD on whether to return such Product(s) to OBI or store them pending instructions from OBI as to their disposal. Issuance of the notice of non-conformity shall be deemed a rejection of that portion of the shipment which was non-conforming and payments made in advance of rejected Product shall be credited to the next Purchase Order or replacement Product will be immediately shipped, at OBIs sole discretion.
|
13.5
|
Audits.
|
13.6
|
Regulatory and Environmental Compliance:
|
(a)
|
To the extent an Adverse Event of which a Party becomes aware implicates supply of the Product, such Party shall promptly inform the other Party of such Adverse Event and shall disclose to the other Party any information it has regarding that Adverse Event.
|
(b)
|
If any Governmental Authority shall take any action which shall require a response or action by either Party with respect to Products, Product Specifications, or any operating procedure affecting the Products, the Parties shall immediately notify each other of the required response or action. This specifically includes receiving and responding to 483s and/or Warning Letters or items of a similar nature issued by an inspecting authority.
|
(c)
|
In carrying out its obligations under this Agreement, the Parties shall comply in all respects with Applicable Laws in effect.
|
14.1
|
Information Exchange.
|
14.2
|
Subcontracting.
|
14.3
|
Force Majeure.
|
14.4
|
Independent Contractor.
|
14.5
|
No Third Party Beneficiaries:
|
14.6
|
Assignment.
|
14.7
|
Severability.
|
14.8
|
Waiver.
|
14.9
|
Dispute Resolution.
|
(a)
|
Except as set forth in Section 10.3, all disputes, claims, or controversies arising out of or relating to this Agreement or the negotiation, validity or performance hereof that are not resolved by mutual agreement shall be finally and exclusively settled by binding arbitration to be conducted under the Rules of Arbitration of the International Chamber of Commerce ("ICC Rules") or its successor in accordance with the procedure set forth in this Section.
|
(b)
|
The arbitration shall be held in Raleigh, North Carolina before a single arbitrator appointed in accordance with the ICC Rules.
|
(c)
|
The Parties covenant and agree that the arbitration shall commence within ninety (90) days of the date on which a written demand for arbitration is filed by any Party hereto and shall proceed and be completed expeditiously thereafter. Each Party agrees to select one arbitrator within thirty (30) days of the commencement of the arbitration and the arbitrators selected by the Parties will select the arbitrator who will preside over the dispute. The arbitrator shall have the power to order the production of documents by each Party and any Third-Party witness that the arbitrator deems to be relevant to the issues in dispute. The arbitrator's decision and award shall be made and delivered within ninety (90) days of the conclusion of the arbitration proceeding. The arbitrator's decision shall set forth in writing a reasoned basis for any award of damages or finding of liability. It is the intent of the Parties that the arbitration proceed in a manner that is efficient and cost-effective.
|
(d)
|
The Parties covenant and agree that they will participate in the arbitration in good faith and that they will share equally its costs, except as otherwise provided herein. The arbitrator may in his or her discretion assess costs and expenses (including the reasonable legal fees and expenses of the prevailing Party) against any Party to a proceeding. Any Party unsuccessfully refusing to comply with an order of the arbitrator shall be liable for costs and expenses, including attorneys' fees, incurred by the other Party in enforcing the award. This Section applies equally to requests for temporary, preliminary or permanent injunctive relief, except that in the case of temporary or preliminary injunctive relief any Party may proceed in court without prior arbitration for the limited purpose of avoiding immediate and irreparable harm. The provisions of this Section shall be enforceable in any court of competent jurisdiction.
|
14.10
|
Consent to Jurisdiction.
|
14.11
|
Joint Drafting.
|
14.12
|
Governing Law.
|
14.13
|
Bankruptcy/Insolvency.
|
(a)
|
All licenses granted under this Agreement by either Party to the other Party including, without limitation, licenses of any interests in the (i) the Licensor Patent Rights, (ii) the OBI Know-How, (iii) the Licensed Products, and any embodiments of any such intellectual property and all other intellectual property in which Licensor has any interest (collectively, the "Intellectual Property"), for all purposes of Section 365 of Title 11 of the United States Code ("Title 11"), constitute "intellectual property" as defined in Title 11. During the term of this Agreement, each Party shall create and maintain current copies to the extent practicable of all such Intellectual Property. If a bankruptcy proceeding is commenced by or against OBI under Title 11 (a “Bankrupcy Proceeding”), the Licensee shall be entitled to obtain and retain a copy of any and all such Intellectual Property, and the same, if not already in the possession of Licensee at the commencement of the Bankruptcy Proceeding, shall be promptly delivered by the Party which commenced the Bankruptcy Proceeding or its duly appointed Trustee in the Bankruptcy Proceeding (the "Trustee") to Licensee upon the written request of Licensee. If Licensor or OBI commences a Bankruptcy Proceeding and that Party or its Trustee rejects this Agreement pursuant to Section 365 of Title 11, Licensee may, in its sole and absolute discretion, elect pursuant to Section 365(n) of Title 11 to either (i) retain all rights granted to Licensee under this Agreement to the extent permitted by law, including, without limitation, all rights to enforce all exclusivity provisions with respect to the Intellectual Property and any agreements supplementary to this Agreement to the Intellectual Property and any embodiments of the Intellectual Property or (ii) treat this Agreement as terminated.
|
(b)
|
In the event that (i) a Bankruptcy Proceeding is commenced by OBI or (ii) this Agreement is rejected in a Bankruptcy Proceeding of OBI pursuant to Section 365 of Title 11, Licensee retains all rights, in its sole and absolute discretion, to enforce its exclusive license, in the Territory to all of the Intellectual Property as set forth in this Agreement, with the right to sublicense (subject to the terms of this Agreement) under the Licensor Patent Rights, to develop, make, have made, use, sell, offer to sell, import, export, distribute, manufacture and otherwise commercialize the Licensed Products in the Field; provided, however, that Licensee shall continue to fulfill its royalty obligations under this Agreement. Licensee agrees to pay Licensor, or any Trustee in such Bankruptcy Proceeding of Licensor, a royalty for such a license equivalent to the license royalty provision provided in this Agreement and these rights shall survive termination or expiration of this Agreement pursuant to a Bankruptcy Proceeding.
|
14.14
|
Remedies.
|
14.15
|
Export Law.
|
14.16
|
Ownership of Enhancements.
|
14.17
|
Entire Agreement.
|
14.18
|
Headings.
|
14.19
|
Counterparts.
|
14.20
|
Survival.
|
OXYGEN BIOTHERAPEUTICS, INC.
|
VALOR SA
|
|
By/Signature: _________________________________
|
|
By/Signature:____________________________
|
Name: Michael Jebsen | Name: _________________________________ | |
Title: President, Chief Financial Officer | Title: _________________________________ | |
Date: _________________________________
|
Date: _________________________________
|
a.
|
Tenor is a Plaintiff and OBI is the Defendant in the following litigation (the "Litigation") pending in the United States District Court for the Southern District of New York: Tenor Opportunity Master Fund, Ltd., Aria Opportunity Fund, Ltd. and Parsoon Opportunity Fund, Ltd. v. Oxygen Biotherapeutics, Inc., Case No. 11 Cv 6067( KBF).
|
b.
|
Tenor and OBI were Parties to a Subscription Agreement dated May 4, 2010, which was the subject of the Litigation (the “Subscription Agreement”).
|
c.
|
Each of the Parties to this Settlement Agreement desire to permanently settle and resolve any and all claims, disputes, issues or matters that exist between them as of the date of this Settlement Agreement and to dismiss with prejudice the Litigation.
|
a.
|
Beginning on the first day of each calendar quarter following the Initial Payment, OBI will pay to Tenor by wire transfer five additional payments in the amount of one hundred thousand dollars ($100,000) plus interest accrued thereon from the date of this Settlement Agreement to the date of payment at the rate of fifteen percent (15%) per year (“Quarterly Payments”).
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b.
|
Should OBI enter into a transaction whereby cash proceeds are paid to OBI (“Financing”) or OBI receives assets of value or the aggregate sum of cash proceeds and assets received from a series of transactions during a trailing twelve (12) month period exceeds one million dollars ($1,000,000) prior to the last Quarterly Payment being made, OBI shall pay to Tenor an Escalated Payment on a pro-rata basis as follows, with the Quarterly Payments thereafter adjusted so that the aggregate of sums paid to Tenor under this Settlement Agreement equals six hundred thousand dollars ($600,000) in aggregate plus any interest accrued thereon as provided for in this Settlement Agreement (“Total Settlement Amount”) :
|
i.
|
Financing of five million dollars ($5,000,000) or greater: the aggregate of all Quarterly Payments that remain due shall be paid within five (5) business days of OBI’s receipt of proceeds from the Financing.
|
ii.
|
Financing of four million dollars ($4,000,000) or greater: eighty percent (80%) of the aggregate of all Quarterly Payments that remain due shall be paid within five (5) business days of OBI’s receipt of proceeds from the Financing. Any remaining balance of the Total Settlement Amount following this Escalated Payment to be paid in regularly scheduled Quarterly Payments as provided for under section 2(a) above.
|
iii.
|
Financing of three million dollars ($3,000,000) or greater: sixty percent (60%) of the aggregate of all Quarterly Payments that remain due shall be paid within five (5) business days of OBI’s receipt of proceeds from the Financing. Any remaining balance of the Total Settlement Amount following this Escalated Payment to be paid in regularly scheduled Quarterly Payments as provided for under section 2(a) above.
|
iv.
|
Financing of two million dollars ($2,000,000) or greater: forty percent (40%) of the aggregate of all Quarterly Payments that remain due shall be paid within five (5) business days of OBI’s receipt of proceeds from the Financing. Any remaining balance of the Total Settlement Amount following this Escalated Payment to be paid in regularly scheduled Quarterly Payments as provided for under section 2(a) above.
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v.
|
Financing of one million dollars ($1,000,000) or greater: twenty percent (20%) of the aggregate of all Quarterly Payments that remain due shall be paid within five (5) business days of OBI’s receipt of proceeds from the Financing. Any remaining balance of the Total Settlement Amount following this Escalated Payment to be paid in regularly scheduled Quarterly Payments as provided for under section 2(b) above.
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c.
|
If a scheduled payment date falls on a non-business day, the payment shall be made on the first business day following the payment due date. Such delay shall not be deemed a breach of this Settlement Agreement. For purposes of this provision, a non-business day shall be Saturday, Sunday or any day which OBI has designated as a company closure in Exhibit A attached hereto and incorporated herein by reference, or when a state of emergency has been declared for any portion of North Carolina within a fifty (50) mile radius of OBI’s Corporate Headquarters.
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a.
|
In the event of any breach of any obligation under this Settlement Agreement, the non-breaching Party shall provide the breaching Party three (3) business days written notice of breach and opportunity to cure, which may be delivered via electronic mail, overnight courier, facsimile or hand delivery service, delivered in accordance with the Notice provision of this Settlement Agreement. If and to the extent any breach is not curable, no such notice shall be required.
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b.
|
In the event OBI breaches its obligation to make any payment under this Settlement Agreement and such breach is not cured after notice within the period provided for in this section, all amount remaining payable or to come due under this Settlement Agreement shall immediately be accelerated and become due and payable, including interest thereon at the rate provided for in paragraph b of this section from the date of this Settlement Agreement to the date of payment.
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c.
|
It shall be a breach of this Settlement Agreement and constitute a default of payment obligations in the event that OBI shall (i) have entered involuntarily against it an order for relief under the Bankruptcy Code, as amended; (ii) not pay, or admit in writing its inability to pay, its debts generally as they become due; (iii) make an assignment for the benefit of creditors; (iv) apply for, seek, consent to or acquiesce in, the appointment of a receiver, custodian, trustee, examiner, liquidator or similar official for it or any substantial part of its Property; (v) institute any proceeding seeking to have entered against it an order for relief under the Bankruptcy Code, as amended, to adjudicate it insolvent, or seeking dissolution, winding up, liquidation, reorganization, arrangement, adjustment or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors or fail to file an answer or other pleading denying the material allegations of any such proceeding filed against it; (vi) take any action in furtherance of any matter described in parts (i) through (v) above; and (vii) fail to contest in good faith any involuntary bankruptcy proceeding or other attempt of creditors to seek relief for failure of OBI to pay its debts when due.
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d.
|
If OBI shall default on any payment due under this Settlement Agreement or is in breach pursuant to paragraphc. of this section, in addition to amounts otherwise due and payable, Tenor shall be entitled to recover and receive from OBI its reasonable costs and expenses of collection of such amounts, or enforcement of its rights under this Settlement Agreement, which costs and expenses shall include, but not be limited to reasonable attorneys’ fees.
|
a.
|
Tenor Release. Tenor, on behalf of its constituent entities and each of their agents, employees, representatives, partners, officers, parents, shareholders, directors, subsidiaries, attorneys, predecessors, successors and assigns does hereby irrevocably release, acquit and forever discharge OBI and each of its respective agents, employees, representatives, parents, shareholders, directors, subsidiaries, officers, directors, attorneys, jointly and severally (the "OBI Releasees"), of and from any and all debts, suits, claims, actions, causes of action, controversies, demands, rights, damages, losses, expenses, costs, attorneys' fees, compensation, liabilities and obligations whatsoever (hereinafter referred to collectively as "Claims"), suspected or unsuspected, known or unknown, foreseen or unforeseen, arising at any time up to and including the date of this Settlement Agreement, which Tenor may now have or at any time heretofore may have had, or which at any time hereafter may have or claim to have against the OBI Releasees, relating to, arising from, or concerning any claim asserted in the Litigation, or any other claim relating to or otherwise arising from the sale of convertible debt securities of OBI consummated on June 30, 2011 and July 1, 2011 (hereinafter "Released Claims"). For avoidance of doubt, except as expressly provided herein, Tenor does not release OBI from any obligations remaining or existing under the Subscription Agreement.
|
b.
|
OBI Release. OBI, on behalf of itself and its constituent entities and each of their agents, employees, representatives, partners, officers, parents, shareholders, directors, subsidiaries, attorneys, predecessors, successors and assigns does hereby irrevocably release, acquit and forever discharge Tenor and each of its respective agents, employees, representatives, parents, shareholders, directors, subsidiaries, officers, directors, attorneys, jointly and severally (the "Tenor Releasees"), of and from any and all debts, suits, claims, actions, causes of action, controversies, demands, rights, damages, losses, expenses, costs, attorneys' fees, compensation, liabilities and obligations whatsoever (hereinafter referred to collectively as "Claims"), suspected or unsuspected, known or unknown, foreseen or unforeseen, arising at any time up to and including the date of this Settlement Agreement, which OBI may now have or at any time heretofore may have had, or which at any time hereafter may have or claim to have against the Tenor Releasees, relating to, arising from, or concerning the Subscription Agreement, the Litigation or the subject matter thereof (hereinafter "Released Claims"). For avoidance of doubt, except as expressly provided herein, OBI does not release Tenor from any obligations remaining or existing under the Subscription Agreement.
|
c.
|
If and to the extent applicable the Parties and their representatives, heirs and assigns expressly waive and release any right or benefit which they have or may have under Section 1542 of the Civil Code of the State of California and any other statute or common law doctrine of like effect, to the fullest extent that they may waive all such rights and benefits pertaining to the matters released herein. It is the intention of the Parties, through this Settlement Agreement and with the advice of counsel, to fully, finally and forever settle and release all such matters and all claims relative thereto, in furtherance of this intention.
|
d.
|
Dismissal With Prejudice. Tenor, upon execution and delivery of this Settlement Agreement and receipt of the Initial Payment as provided for in section 2(a) above, shall execute and deliver to OBI a Stipulation Of Voluntary Dismissal (“Dismissal”), in the form attached hereto and incorporated herein by reference as Exhibit B.
|
a.
|
Any notice, demand, request, consent, approval, or communication that either party desires or is required to give to the other Party shall be addressed to the other Party at the address set forth below. Any Party may change his/his/its address by notifying the other Parties of their change of address(es) in writing. Any such notice shall be effective three (3) days after dispatch if mailed via First Class Mail, on the day after dispatch if delivered via pre-paid overnight courier and when dispatched if delivered via electronic mail or on the date of delivery if otherwise delivered via hand delivery service to the below addresses.
|
a.
|
In order to carry out the terms and conditions of this Settlement Agreement, the Parties agree to promptly execute upon reasonable request any and all documents and instruments necessary to effectuate the terms of this Settlement Agreement.
|
b.
|
By entering into this Settlement Agreement, no party admits or acknowledges that they committed any wrongdoing on their part or where a court of competent jurisdiction has held or might have held that a wrongdoing was committed, that such wrongdoing damaged the other Party in any manner. The Parties acknowledge and agree that amounts paid by OBI under this Settlement Agreement are being made solely to avoid the costs of defense of further litigation.
|
c.
|
This Settlement Agreement shall be governed by and construed in accordance with the laws of the State of New York without reference to its rules regarding choice or conflict of laws. Any action brought by OBI or Tenor for breach of this Settlement Agreement shall be filed in the United States District Court for the Southern District of New York. Subsequent changes in New York law or federal law through legislation or judicial interpretation that creates or finds additional or different rights and obligations of the Parties shall not affect this Settlement Agreement.
|
d.
|
This Settlement Agreement, along with the Dismissal, is the entire agreement between the Parties with respect to the Released Claims or subject matter of this Settlement Agreement and supersedes all prior and contemporaneous oral and written agreements and discussions pertaining to the Released Claims or subject matter of this Settlement Agreement. Any representations, promise or condition in connection herewith not specifically incorporated herein shall not be binding upon any Party. This Settlement Agreement may not be modified except in a writing signed by authorized representative of all Parties.
|
e.
|
No breach of any provision of this Settlement Agreement can be waived unless in writing signed by the Party to be charged with such a waiver. Waiver of any one breach of any provision hereof, in whole or in part, shall not be deemed to be a waiver of any other breach of the same or any other provision hereof.
|
f.
|
This Settlement Agreement shall be binding upon and inure to the benefit of the successors and assigns of each Party; provided, however, that a Party may not assign this Settlement Agreement in whole or in part without obtaining the prior written approval of the other Party, except that a Party shall have the right to assign this Agreement without the consent of the other Party to any affiliate or to any purchaser of that Party's entire business or of substantially all of that Party's assets relating to the subject matter of this Settlement Agreement.
|
g.
|
The Parties each represent and warrant they have not assigned all or any portion of any claim pertaining to the Released Claims to any person or entity. In the event any claims are made by any third persons or entities based upon any purported assignment or any such liens or claims are asserted in connection with the Released Claims or proceeds of the Settlement Agreement, then the Party who has breached his representation or warranty contained herein agrees to indemnify and hold harmless the other Party from any said claims being made.
|
h.
|
If any one or more of the provisions of this Settlement Agreement shall be held to be invalid, illegal or unenforceable, the validity, legality or enforceability of the remaining provisions of this Settlement Agreement shall not in any way be affected or impaired thereby. If such condition, covenant or other provisions shall be deemed invalid due to its scope or breadth, such covenant, condition or other provision shall be deemed valid to the extent of the scope or breadth permitted by law.
|
i.
|
Each of the Parties represent and declare that in executing this Settlement Agreement, they relied solely upon their own judgment, belief and knowledge and on the advice and recommendations of their own independently selected counsel, concerning the nature, extent and duration of their rights and claims and that they have not been influenced to any extent whatsoever in executing the same by any representations or statements covering any matters made by any of the Parties hereto or by any person representing them. The Parties each acknowledge that neither they nor any of their representatives have made any promise, representation or warranty whatsoever, written or oral to any other Party, as any inducement to enter into this Settlement Agreement, except as expressly set forth in this Settlement Agreement.
|
j.
|
This Settlement Agreement is the result of negotiation and compromise among the Parties and no Party shall be prejudiced as having been the drafter of the Settlement Agreement or any related exhibits incorporated therein. Ambiguities shall not be construed against the interest of either Party solely by reason of it having drafted all or any part of this Settlement Agreement. Headings of sections and paragraphs are for convenience of the parties only and are not a part of this Settlement Agreement and shall not be considered in the interpretation or construction of this Settlement Agreement.
|
k.
|
Each Party further represents and warrants that it has carefully read this Settlement Agreement and knows and understands the contents and that it executed this Settlement Agreement freely and voluntarily and having had the benefit of the advice of legal counsel of its choosing.
|
l.
|
This Settlement Agreement may be executed in any number of identical counterparts, each of which shall be an original, which together constitute one and the same instrument, which shall be binding and effective as to all Parties. This Settlement Agreement may be executed via facsimile or other form of electronically transmitted signature, which shall have the same force and effect as if they were original signatures.
|
m.
|
Each Party warrants and represents that it has all necessary right, title and authority to enter into this Settlement Agreement, to grant the rights and interests herein granted and to perform all of its obligations under this Settlement Agreement and that any person executing this Agreement on its behalf is duly authorized to do so.
|
n.
|
The provisions and existence of this Settlement Agreement may not be cited by any Party as an admission of any issue of fact or law, except in an action to enforce or for breach of this Settlement Agreement. It is understood and agreed that if the foregoing provision is breached by either Party, the non-breaching Party may be entitled to injunctive or other equitable relief to prevent such a breach. Any non-breaching Party seeking such injunctive relief will not be obligated to secure any bond or give any security in connection with the application for such relief. The right to seek injunctive relief is in addition to all other rights, remedies and forms of relief which may be available. In furtherance of the foregoing, any and all press releases relating to the subject matter hereof shall be mutually agreed upon.
|
OXYGEN BIOTHERAPEUTICS, INC.
|
TENOR OPPORTUNITY MASTER FUND, LTD., ARIA OPPORTUNITY FUND, LTD. AND PARSOON OPPORTUNITY FUND, LTD.
|
|
By: ____________________________
|
|
By: ____________________________
|
Name: ____________________________ | Name: ____________________________ | |
Title: ____________________________ | Title: ____________________________ |
Christmas through New Years:
|
December 23, 2013 through January 1, 2014
|
|
(reopen January 2, 2014)
|
Dated: | New York, New York
March __, 2013
|
GUSRAE KAPLAN NUSBAUM PLLC | HOGAN LOVELLS US LLP | |
By:_____________________________ | By:___________________________ | |
Martin P. Russo, Esq. (MR-4130) | David Dunn, Esq. (DD-1823) | |
mrusso@gkblaw.com | david.dunn@hoganlovells.com | |
120 Wall Street | 875 Third Avenue | |
New York, NY 10005 | New York, NY 10022 | |
Phone: 212-269-1400 | Phone: 212-918-3000 | |
Fax: 212-804-5449 | Fax: 212-918-3100 | |
Attorney for Defendant | Attorney for Plaintiffs |
Date: June 26, 2013
|
OXYGEN BIOTHERAPEUTICS, INC.
|
||
By:
|
/s/ Michael B. Jebsen
|
||
Michael B. Jebsen
|
|||
Chief Financial Officer and Interim Chief Executive Officer
|
|||
Date: June 26, 2013
|
/s/ Michael B. Jebsen
|
||
Michael B. Jebsen
|
|||
Interim Chief Executive Officer,
President and Chief Financial Officer (Principal Executive Officer)
(Principal Financial Officer)
|
|||
K. 401(k) BENEFIT PLAN
|
12 Months Ended |
---|---|
Apr. 30, 2013
|
|
Compensation and Retirement Disclosure [Abstract] | |
K. 401(k) BENEFIT PLAN |
NOTE K401(k) BENEFIT PLAN
The Company sponsors a 401(k) Retirement Savings Plan (the Plan) for all eligible employees. Full-time employees over the age of 18 are eligible to participate in the Plan after 90 days of continuous employment. Participants may elect to defer earnings into the Plan up to the annual IRS limits and the Company provides a matching contribution up to 5% of the participants annual salary in accordance with the Plan documents. The Plan is managed by a third-party trustee. For the periods ended April 30, 2013 and 2012, the Company recorded $46,847 and $52,217 respectively, for matching contributions expense.
|
H. STOCKHOLDERS EQUITY (Details 1)
|
12 Months Ended | |
---|---|---|
Apr. 30, 2013
|
Apr. 30, 2012
|
|
H. Stockholders Equity Details 1 | ||
1999 Amended Stock Plan Shares available for grant beginning balance | 276,582 | 12,192 |
Additional shares reserved | 260,000 | |
Options granted | (1,595) | (5,366) |
Options cancelled/forfeited | 7,851 | 13,162 |
Restricted stock granted | (5,318) | (10,474) |
Restricted stock cancelled/forfeited | 5,206 | 7,068 |
1999 Amended Stock Plan Shares available for grant ending balance | 282,726 | 276,582 |
Statements of Operations (USD $)
|
12 Months Ended | 545 Months Ended | |
---|---|---|---|
Apr. 30, 2013
|
Apr. 30, 2012
|
Apr. 30, 2013
|
|
Statements Of Operations | |||
Product Revenue | $ 92,683 | $ 100,519 | $ 562,937 |
Cost of sales | 43,111 | 51,253 | 352,579 |
Net product revenue | 49,572 | 49,266 | 210,358 |
Government grant revenue | 1,141,356 | 314,515 | 1,455,871 |
Total net revenue | 1,190,928 | 363,781 | 1,666,229 |
Operating expenses | |||
Selling, general, and administrative | 3,676,145 | 6,091,806 | 50,585,212 |
Research and development | 2,455,816 | 2,462,638 | 24,531,128 |
Restructuring expense | 220,715 | 220,715 | |
Loss on impairment of long-lived assets | 27,279 | 29,534 | 390,970 |
Total operating expenses | 6,379,955 | 8,583,978 | 75,728,025 |
Net operating loss | 5,189,027 | 8,220,197 | 74,061,796 |
Interest expense | 4,238,456 | 7,412,054 | 43,962,019 |
Loss on extinguishment of debt | 250,097 | ||
Other (income) expense | (11,683) | 80,159 | (1,229,828) |
Net loss | 9,415,800 | 15,712,410 | 117,044,084 |
Preferred stock dividend | 958,071 | 958,071 | |
Net loss attributable to common stockholders | $ 10,373,871 | $ 15,712,410 | $ 118,002,155 |
Net loss per share, basic | $ (6.29) | $ (12.12) | |
Weighted average number of common shares outstanding, basic | 1,650,280 | 1,296,414 | |
Net loss per share, diluted | $ (6.68) | $ (14.07) | |
Weighted average number of common shares outstanding, diluted | 1,759,025 | 1,387,621 |
D. NOTES PAYABLE
|
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Apr. 30, 2013
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
D. NOTES PAYABLE | NOTE DNOTES PAYABLE
The following table summarizes the Companys outstanding notes payable as of April 30, 2013 and 2012:
Convertible Note
On June 16, 2011, the Company entered into a Convertible Note and Warrant Purchase Agreement with an institutional investor pursuant to which the Company agreed to issue and sell to the Purchaser in a private placement a subordinated convertible promissory note (the Note) with a principal amount of $4.6 million and warrants (the Warrants) to purchase 101,996 shares of Common Stock. On June 29, 2011, the Company increased the offering with an additional institutional investor by approximately $0.3 million and additional Warrants to purchase 6,652 shares of common stock; for a total offering size of approximately $4.9 million (the Offering) and Warrants to purchase an aggregate of 108,648 shares of Common Stock.
Interest on the Notes accrues at a rate of 15% annually and will be paid in quarterly installments commencing on the third month anniversary of issuance. The Notes will mature 36 months from the date of issuance. The Note may be converted into shares of Common Stock at a conversion price of $45.10 per share (subject to adjustment for stock splits, dividends and combinations, recapitalizations and the like) (the Conversion Price) at any time, in whole or in part, at any time at the option of the holders of the Notes. The Notes also will automatically convert into shares of Common Stock at the Conversion Price at the election of a majority-in-interest of the holders of notes issued under the purchase agreement or upon the acquisition or sale of all or substantially all of the assets of the Company. The Company may make each applicable interest payment or payment of principal in cash, shares of Common Stock at the Conversion Price, or any combination thereof. The Company may elect to prepay all or any portion of the Note without prepayment penalties only with the approval of a majority-in-interest of the note holders under the Purchase Agreement at the time of the election. The Notes contain various events of default such as failing to timely make any payment under the Note when due, which may result in all outstanding obligations under the Note becoming immediately due and payable. The Warrants were issued in three approximately equal tranches, with exercise prices of $43.00, $52.00 and $57.00, respectively, per share of Common Stock (in each case subject to adjustment for stock splits, dividends and combinations, recapitalizations and the like). The Warrants are exercisable on or after the date of issuance and expire on the earlier to occur of the five year anniversary of the date of issuance or an acquisition or sale of all or substantially all of the assets of the Company. The exercise prices of shares of Common Stock underlying the Warrants are subject to adjustment in the event of future issuances of Common Stock or equivalents by the Company at a price less than the applicable exercise price, but in no event shall a Warrant exercise price be adjusted to less than $45.10 per share (subject to adjustment for stock splits, dividends and combinations, recapitalizations and the like) of Common Stock.
On June 29, 2011, the Company issued a Note with a principal amount of approximately $300,000 and Warrants to purchase 6,652 shares of Common Stock. On July 1, 2011, the Company issued a separate Note with a principal amount of $4,600,000 and Warrants to purchase 101,996 shares of Common Stock. The aggregate gross proceeds to the Company from the Offering were approximately $4.9 million, excluding any proceeds from the exercise of any Warrants. The aggregate placement agent fees were $297,000 and legal fees associated with the offering were $88,839. These costs have been capitalized as debt issue costs and will be amortized as interest expense over the life of the Note. The total value allocated to the Warrants was approximately $1,960,497 and was recorded as a debt discount against the proceeds of the Notes. In addition, the beneficial conversion features related to the Notes were determined to be approximately $2,939,504. As a result, the aggregate discount on the Notes totaled $4.9 million, and is being amortized over term of the Notes.
The Company recorded interest expense of $2,507,156 and $2,089,205 for the twelve months ended April 30, 2013 and 2012, respectively. The amount includes amortization of the associated debt issue costs of $128,616 and $107,180 and accretion of the debt discount of $1,633,332 and $1,361,110 for the years ended April 30, 2013 and 2012, respectively.
Note Purchase Agreement
On October 12, 2010 the Company entered into a Note Purchase Agreement with JP SPC 1 Vatea, Segregated Portfolio (Vatea Fund), as amended on December 29, 2010, whereby it agreed to issue and sell to Vatea Fund an aggregate of $5,000,000 of senior unsecured promissory notes (the Vatea Notes) on or before April 30, 2011. The Vatea Notes will mature on October 31, 2013, unless the holders of a majority of the Vatea Notes consent in writing to a later maturity date. Interest does not accrue on the outstanding principal balance of the Vatea Notes (other than following the maturity date or earlier acceleration). Instead, on the maturity date, the Company must pay the holders of the Vatea Notes a final payment premium aggregating $3,000,000, in addition to the principal balance then otherwise outstanding under the Vatea Notes. The Vatea Notes provide that the Company has the option, at its sole discretion and without penalty, to prepay the outstanding balance under the Vatea Notes plus the amount of the final payment premium prior to the maturity date. In addition, the holders of majority of the Vatea Notes may request that the Company prepay the Vatea Notes in an amount equal to the proceeds of any subsequent closings under the Securities Purchase Agreement with Vatea Fund, dated June 8, 2009, and subsequently amended.
As further discussed in Note H below, on November 14, 2011 the Company delivered 2,807,018 shares of its common stock to the holders of the SPA against payment to the Company of an aggregate of $8,000,000. Pursuant to the terms of the Note Purchase Agreement, the Company used the proceeds from the Final Closing to prepay the outstanding balance under the notes, including $2,367,574 of unaccreted final payment premium thereunder.
For the year ended April 30, 2012, the Company recorded interest expense of $2,836,366, for the accretion of the final payment premium.
|
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E. SERIES A CONVERTIBLE PREFERRED STOCK (Tables)
|
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Apr. 30, 2013
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Preferred Stock Conversion Activity |
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Summary of the non-cash interest related to the Series A Convertible Preferred Stock |
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H. STOCKHOLDERS EQUITY (Details 4) (USD $)
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12 Months Ended |
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Apr. 30, 2013
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H. Stockholders Equity Details 4 | |
Number of Option Shares Vested | 9,311 |
Weighted Average Exercise Price Vested | $ 61.5 |
Aggregate Intrinsic Value Vested | |
Weighted Average Remaining Contractual Life (Years) Vested | 6 years 4 months 24 days |
Number of Option Shares Vested and expected to vest | 11,113 |
Weighted Average Exercise Price Vested and expected to vest | $ 57.42 |
Aggregate Intrinsic Value Vested and expected to vest | $ 20 |
Weighted Average Remaining Contractual Life (Years) Vested and expected to vest | 6 years 9 months 18 days |
L. INCOME TAXES
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12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Apr. 30, 2013
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
L. INCOME TAXES | NOTE LINCOME TAXES
The Company has not recorded any income tax expense or benefit for the periods ended April 30, 2013 and 2012 due to its history of net operating losses.
The reconciliations of income tax expenses (benefit) at the statutory federal income tax rate of 34% for the periods ended April 30, 2013 and 2012 are as follows:
The components of deferred tax assets and deferred tax liabilities for 2013 and 2012 are as follows:
At April 30, 2012 the Company had Federal and State net operating loss carryforwards of approximately $71.0 million and $54.0 million available to offset future federal and state taxable income, respectively. The net operating loss carryforwards began to expire in 2011 and 2016 respectively and valuation allowances have been provided.
At April 30, 2013 the Company had Federal and State net operating loss carryforwards of approximately $74.4 million and $59.3 million available to offset future federal and state taxable income, respectively. The net operating loss carryforwards began to expire in 2011 and 2016 respectively and valuation allowances have been provided.
Utilization of the net operating loss carryforwards may be subject to an annual limitation due to the ownership percentage change limitations provided by the Internal Revenue Code of 1986 and similar state provisions. The annual limitations may result in the expiration of the net operating losses before utilization.
The Company adopted ASC 740-10 on May 1, 2007. As of April 30, 2013, it had no unrecognized tax benefits and does not expect any material change during the next year. As of April 30, 2013, the Company has not recorded any interest or penalties under this pronouncement.
Management has evaluated all other tax positions that could have a significant effect on the financial statements and determined the Company had no uncertain income tax positions at April 30, 2013.
The Company files U.S. and state income tax returns with varying statutes of limitations. The tax years 1998 and forward remain open to examination due to the carryover of unused net operating losses or tax credits.
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H. STOCKHOLDERS EQUITY (Details 5)
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12 Months Ended | |
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Apr. 30, 2013
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Apr. 30, 2012
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H. Stockholders Equity Details 5 | ||
Risk-free interest rate (weighted average) | 1.29% | 1.79% |
Expected volatility (weighted average) | 79.62% | 78.88% |
Expected term (in years) | 7 years | 7 years |
Expected dividend yield | 0.00% | 0.00% |
C. BALANCE SHEET COMPONENTS (Details 1) (USD $)
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Apr. 30, 2013
|
Apr. 30, 2012
|
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C. Balance Sheet Components Details 1 | ||
R&D materials | $ 159,892 | $ 116,936 |
Other | 7,090 | 11,394 |
Dermacyte samples | 3,428 | 19,529 |
Unbilled government grant expenses | 14,950 | |
Total Other Assets | $ 170,410 | $ 162,809 |
H. STOCKHOLDERS EQUITY (Tables)
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12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Apr. 30, 2013
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Warrant Activity | The following table summarizes the Companys warrant activity for the years ended April 30, 2013 and 2012:
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Shares available for grant under the Plan | The following table summarizes the shares available for grant under the Plan for the years ended April 30, 2013 and 2012:
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Options Activity | The following table summarizes the outstanding stock options under the Plan for the years ended April 30, 2013 and 2012:
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Outstanding stock options | The following table summarizes all options outstanding as of April 30, 2013:
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Options vested and expected to vest | The following table summarizes options outstanding that have vested and are expected to vest based on options outstanding as of April 30, 2013:
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Fair Value Assumptions | We used the following assumptions to estimate the fair value of options granted under our stock option plans for the years ended April 30, 2013and 2012:
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Restricted Stock Grants | The following table summarizes the restricted stock grants under the Plan for the year ended April 30, 2013:
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G. SEGMENT REPORTING (Tables)
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12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Apr. 30, 2013
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Revenue by Product | Net revenues and segment profit, classified by the Company's reportable segments are as follows:
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Segment Revenue by Geography |
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E. SERIES A CONVERTIBLE PREFERRED STOCK (Details 1) (USD $)
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12 Months Ended | |
---|---|---|
Apr. 30, 2013
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Apr. 30, 2012
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E. Series Convertible Preferred Stock Details 1 | ||
Dividends paid in common stock | $ 309,938 | $ 81,890 |
Fair value of warrants issued with preferred shares | 656,535 | 1,170,322 |
Interest expense on conversion of preferred stock | 762,738 | 530,943 |
Fair value adjustment to preferred stock | 678,661 | |
Accrued dividends payable | 21,479 | |
Non-cash interest expense | $ 1,729,211 | $ 2,483,295 |
B. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 2) (USD $)
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Apr. 30, 2013
|
Apr. 30, 2012
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Apr. 30, 2011
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Nov. 25, 1967
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Current Assets | ||||
Cash and cash equivalents | $ 783,528 | $ 1,879,872 | $ 951,944 | |
Current Liabilities | ||||
Series A convertible preferred stock | 1,247,266 | |||
Level 1
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Current Assets | ||||
Cash and cash equivalents | 783,528 | 1,879,872 | ||
Level 3
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Current Liabilities | ||||
Series A convertible preferred stock | $ 1,247,266 |
C. BALANCE SHEET COMPONENTS (Details 3) (USD $)
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Apr. 30, 2013
|
Apr. 30, 2012
|
---|---|---|
C. Balance Sheet Components Details 3 | ||
Prepaid Royalty Fee | $ 50,000 | $ 50,000 |
Other | 8,262 | 15,666 |
Total | $ 58,262 | $ 65,666 |
F. INTANGIBLE ASSETS (Details 1) (USD $)
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Apr. 30, 2013
|
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Goodwill and Intangible Assets Disclosure [Abstract] | |
2014 | $ 57,490 |
2015 | 57,125 |
2016 | 56,549 |
2017 | 52,632 |
2018 | 51,446 |
Therafter | 539,299 |
Total expected amortization | $ 814,541 |
A. DESCRIPTION OF BUSINESS (Details Narrative) (USD $)
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12 Months Ended | 545 Months Ended | |
---|---|---|---|
Apr. 30, 2013
|
Apr. 30, 2012
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Apr. 30, 2013
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A. Description Of Business Details Narrative | |||
Accumulated deficit | $ (117,044,084) | $ (107,628,284) | $ (117,044,084) |
Cash used in operations | $ (4,921,283) | $ (8,278,366) | $ (57,221,835) |
K. 401(k) BENEFIT PLAN (Details Narrative) (USD $)
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12 Months Ended | |
---|---|---|
Apr. 30, 2013
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Apr. 30, 2012
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K. 401K Benefit Plan Details Narrative | ||
Matching contributions expense for Retirement Savings Plan | $ 46,847 | $ 52,217 |
J. COMMITMENTS AND CONTINGENCIES (Details Narrative) (USD $)
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12 Months Ended | |
---|---|---|
Apr. 30, 2013
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Apr. 30, 2012
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J. Commitments And Contingencies Details Narrative | ||
Amortization expense related to VCU agreement | $ 70,000 | $ 70,000 |
Total rent expense | 151,125 | 286,536 |
Litigation liability | 500,000 | |
Credit recorded against general and administrative expense due to change in option related contingent liability | $ 532,500 |
D. NOTES PAYABLE (Details) (USD $)
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Apr. 30, 2013
|
Apr. 30, 2012
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D. Notes Payable Details | ||
Current portion of convertible notes payable | $ 7,195 | |
Current portion of notes payable | 57,539 | 55,763 |
Current portion of notes payable, net | 57,539 | 62,958 |
Long-term portion of convertible notes payable | 4,900,001 | 4,900,001 |
Less: Unamortized discount | (1,905,559) | (3,538,891) |
Long-term portion of notes payable, net | $ 2,994,442 | $ 1,361,110 |
F. INTANGIBLE ASSETS (Tables)
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Apr. 30, 2013
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Intangible Assets |
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Expected amortization expense |
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B. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Apr. 30, 2013
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Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
B. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE BSUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Development Stage
The Company has not commenced its planned principal operations, and has not earned significant revenues; therefore it is considered a Development Stage Enterprise.
Use of Estimates
The preparation of the accompanying financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of expenses during the reporting period. Actual results could differ from those estimates.
Cash and Cash Equivalents
The Company considers all highly liquid instruments with a maturity date of three months or less, when acquired, to be cash equivalents.
Cash Concentration Risk
On July 21, 2010, the Wall Street Reform and Consumer Protection Act permanently increased the FDIC insurance limits to $250,000 per depositor per insured bank. At April 30, 2013, the Company had $283,528 of cash balances uninsured by the FDIC.
Deferred financing costs
Deferred financing costs represent legal, due diligence and other direct costs incurred to raise capital or obtain debt. Direct costs include only out-of-pocket or incremental costs directly related to the effort, such as a finders fee and accounting and legal fees. These costs will be capitalized if the efforts are successful, or expensed when unsuccessful. Indirect costs are expensed as incurred. Deferred financing costs related to debt are amortized over the life of the debt. Deferred financing costs related to issuing equity are charged to Paid in Capital. The treatment of issuance costs on liabilities for which the Company has elected the fair value option is further described in Debt or derivative liabilities recorded at fair value below.
Derivative financial instruments
The Company does not use derivative instruments to hedge exposures to cash flow, market or foreign currency risk. Terms of convertible promissory note instruments and other convertible equity instruments are reviewed to determine whether or not they contain embedded derivative instruments that are required under FASB ASC 815, Derivatives and Hedging (ASC 815) to be accounted for separately from the host contract, and recorded on the balance sheet at fair value. The fair value of derivative liabilities, if any, is required to be revalued at each reporting date, with corresponding changes in fair value recorded in current period operating results.
Freestanding warrants issued by the Company in connection with the issuance or sale of debt and equity instruments are considered to be derivative instruments, and are evaluated and accounted for in accordance with the provisions of ASC 815. Pursuant to ASC 815, an evaluation of specifically identified conditions is made to determine whether the fair value of warrants issued is required to be classified as equity or as a derivative liability.
In February 2013, the Company issued warrants to purchase an aggregate of 630,000 shares of Common Stock as part of the Series B Preferred stock offering. In accordance with ASC 815, these warrants are classified as equity and their calculated fair-value was considered as a discount on the preferred shares and $958,057 was recognized as a deemed dividend on the Series B Preferred Stock during the year ended April 30, 2013.
In June 2012, the Company issued warrants to purchase 28,154 shares of Common Stock as part of the Series A Preferred Stock offering. In accordance with ASC 815, these warrants are classified as equity and their calculated fair value of $656,535 was recognized as a discount on the related preferred stock in the current period.
In December 2011, the Company issued warrants to purchase 39,415 shares of Common Stock as part of the Series A Preferred Stock offering. In accordance with ASC 815, these warrants are classified as equity and their calculated fair value of $1,170,311 was recognized as a discount on the related preferred stock during the year ended April 30, 2012.
Debt or derivative liabilities recorded at fair value
The Series A Convertible Preferred Stock, par value $0.0001 per share (the Series A Preferred Stock) has mandatorily redeemable installments with the remainder outstanding at maturity also subject to mandatory redemption, which meets the definition of a mandatorily redeemable financial instrument and thus is recorded as a liability at fair value in accordance with ASC 480, Distinguishing Liabilities From Equity. Costs related to the issuance of debt for which management has elected the fair value option are recognized in current earnings. Management determines fair value of the outstanding Series A Preferred Stock as of the end of each reporting period and reduces the amount outstanding for any redemptions, exercises, or conversions at the fair value determined at the end of the prior reporting period. The fair value adjustment is charged or credited to Interest expense. For the years ended April 30, 2013 and 2012, the Company recognized $0 and $678,661 as non-cash interest expense for the adjustment to fair value of the outstanding Series A Preferred Stock on that date.
The certificate of designations governing the rights and preferences of the Series A Preferred Stock contains several embedded features that would be required to be considered for bifurcation. The Company has elected the fair value option, and as such, will value the host Series A Preferred Stock certificate of designations and embedded features as one instrument. Changes in the fair value of the Series A Preferred Stock will be recorded as interest expense on the Statement of Operations.
Redemptions
The Company expects to redeem the Series A Preferred Stock by issuing shares of the Companys common stock, par value $0.0001 (the Common Stock). The difference between the fair value of the Series A Preferred Stock and the fair value of the Common Stock on the date the Common Stock is issued is charged or credited to interest expense.
Conversions
Investors in the Series A Preferred Stock can voluntarily convert their preferred shares to Common Stock at a conversion price defined in the Preferred Stock certificate of designations. The difference between the fair value of the Series A Preferred Stock and the fair value of the Common Stock given in conversion is recognized as a gain or loss on the extinguishment of debt.
Dividends
Dividends paid with scheduled redemptions are expected to be paid in Common Stock. When an investor voluntarily converts its preferred shares, we are required to pay the investor for the dividends that would have been earned had the shares been held to maturity. The portion of those dividends that have not been accrued may be paid in cash or Common Stock, and are referred to as make whole payments. Dividends paid in stock are valued at the fair value of the Common Stock as of the date of issuance and are charged to interest expense.
Beneficial conversion and warrant valuation
In accordance with FASB ASC 470-20, Debt with Conversion and Other Options, the Company records a beneficial conversion feature (BCF) related to the issuance of convertible debt that have conversion features at fixed rates that are in-the-money when issued and the fair value of warrants issued in connection with those instruments. The BCF for the convertible instruments is recognized and measured by allocating a portion of the proceeds to warrants, based on their relative fair value, and as a reduction to the carrying amount of the convertible debt equal to the intrinsic value of the conversion feature. The discount recorded in connection with the BCF and warrant valuation is recognized as non-cash interest expense and is amortized over the life of the convertible note. For the year ended April 30, 2012, the company recorded $1,960,497 and $2,939,504 for the calculated fair value of the warrants and BCF, respectively in conjunction with the convertible notes issued on June 29, 2011 and July 1, 2011.
Preclinical Study and Clinical Accruals
The Company estimates its preclinical study and clinical trial expenses based on the services received pursuant to contracts with several research institutions and contract research organizations (CROs) that conduct and manage preclinical and clinical trials on its behalf. The financial terms of the agreements vary from contract to contract and may result in uneven expenses and payment flows. Preclinical study and clinical trial expenses include the following:
Property and Equipment, Net
Property and equipment are stated at cost, subject to adjustments for impairment, less accumulated depreciation and amortization. Depreciation and amortization are computed using the straight-line method over the following estimated useful lives:
Maintenance and repairs are charged to expense as incurred, improvements to leased facilities and equipment are capitalized.
Impairment of Long-Lived Assets
The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.
Revenue Recognition
Revenues from merchandise sales are recognized upon transfer of ownership, including passage of title to the customer and transfer of the risk of loss related to those goods. Revenues are reported on a net sales basis, which is computed by deducting from gross sales the amount of actual product returns received, discounts, incentive arrangements with retailers and an amount established for anticipated product returns. The Company's practice is to accept product returns from retailers only if properly requested, authorized and approved. As a percentage of gross sales, returns were less than 5% in fiscal years 2013 and 2012.
Revenues from a cost-reimbursement grant sponsored by the United States Army, or Grant Revenue, are recognized as milestones under the Grant program are achieved. Grant Revenue is earned through reimbursements for the direct costs of labor, travel, and supplies, as well as the pass-through costs of subcontracts with third-party CROs.
Research and Development Costs
Research and development costs include, but are not limited to, (i) expenses incurred under agreements with contract research organizations and investigative sites, which conduct our clinical trials and a substantial portion of our preclinical studies; (ii) the cost of manufacturing and supplying clinical trial materials; (iii) payments to contract service organizations, as well as consultants; (iv) employee-related expenses, which include salaries and benefits; and (v) facilities, depreciation and other allocated expenses, which include direct and allocated expenses for rent and maintenance of facilities and equipment, depreciation of leasehold improvements and equipment and laboratory and other supplies. All research and development expenses are expensed as incurred.
Income Taxes
Deferred tax assets and liabilities are recorded for differences between the financial statement and tax bases of the assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. Income tax expense is recorded for the amount of income tax payable or refundable for the period increased or decreased by the change in deferred tax assets and liabilities during the period.
Stock-Based Compensation
We account for stock based compensation in accordance with ASC 718 Compensation Stock Compensation, using the prospective transition method, which requires the measurement and recognition of compensation expense for all stock-based payment awards granted, modified and settled to our employees and directors after May 1, 2005. Our financial statements reflect the impact of ASC 718. We chose the straight-line attribution method for allocating compensation costs of each stock option on a straight-line basis over the requisite service period using the Black-Scholes Option Pricing Model to calculate the grant date fair value.
Loss Per Share
Basic loss per share, which excludes antidilutive securities, is computed by dividing loss available to common shareholders by the weighted-average number of common shares outstanding for that particular period. In contrast, diluted loss per share considers the potential dilution that could occur from other equity instruments that would increase the total number of outstanding shares of common stock. Such amounts include shares potentially issuable under outstanding options, warrants and convertible debentures. A reconciliation of the numerator and denominator used in the calculation of basic and diluted net loss per share follows.
The following outstanding options, convertible note shares and warrants were excluded from the computation of basic and diluted net loss per share for the periods presented because including them would have had an anti-dilutive effect.
Operating Leases
The Company maintains operating leases for its office and laboratory facilities. The lease agreements may include rent escalation clauses and tenant improvement allowances. We recognize scheduled rent increases on a straight-line basis over the lease term beginning with the date we take possession of the leased space. Differences between rental expense and actual rental payments are recorded as deferred rent liabilities and are included in Other liabilities on the balance sheets.
Fair Value
The company records its financial assets and liabilities in accordance with ASC 820 Fair Value Measurements. The Company's balance sheet includes the following financial instruments: cash and cash equivalents, short-term notes payable, convertible preferred stock and convertible notes. The Company considers the carrying amount of its cash and cash equivalents and short-term notes payable to approximate fair value due to the short-term nature of these instruments. The Company did not elect the fair value option and records the carrying value of its convertible notes at amortized cost in accordance with ASC 470-20.
Accounting for fair value measurements involves a single definition of fair value, along with a conceptual framework to measure fair value, with a fair value defined as "the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date." The fair value measurement hierarchy consists of three levels:
We apply valuation techniques that (1) place greater reliance on observable inputs and less reliance on unobservable inputs and (2) are consistent with the market approach, the income approach and/or the cost approach, and include enhanced disclosures of fair value measurements in our financial statements.
The following tables show information regarding assets and liabilities measured at fair value on a recurring basis as of April 30, 2013 and 2012:
There were no significant transfers between levels in the years ended April 30 2013 and 2012.
Financial assets or liabilities are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable. The following table provides a summary of the changes in fair value of our financial liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the years ended April 30, 2013and 2012, respectively:
The Preferred Stock is recorded at fair value with changes in fair value recorded as gains or losses within Non-cash-interest expense. The estimate of the fair value of the securities noted above, as of the valuation date, is based on the rights and privileges afforded to the Preferred Stock. The fair value of the Preferred Stock is determined at each reporting period by calculating the number of conversion shares underlying the outstanding Preferred Stock as described in the Series A Convertible Preferred Stock Certificate of Designations at the average volume weighted average price of our common stock on the valuation date (unobservable inputs).
Recent Accounting Pronouncements
On May 1, 2012 the Company adopted ASU 2011-05, Comprehensive Income (Topic 220): Presentation of Comprehensive Income. Under the amendments to Topic 220, Comprehensive Income, an entity has the option to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. In both choices, an entity is required to present each component of net income along with total net income, each component of other comprehensive income along with a total for other comprehensive income, and a total amount for comprehensive income. This update eliminates the option to present the components of other comprehensive income as part of the statement of changes in stockholders' equity. The amendments in this update do not change the items that must be reported in other comprehensive income or when an item of other comprehensive income must be reclassified to net income. The adoption of ASU 2011-05 did not have a material impact on its financial statements.
On May 1, 2012 the Company adopted ASU 2011-04, Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs. The amendments in this update result in common fair value measurement and disclosure requirements in accounting principles generally accepted in the United States of America and IFRSs. Consequently, the amendments change the wording used to describe many of the requirements in accounting principles generally accepted in the United States of America for measuring fair value and for disclosing information about fair value measurements. The amendments in this update will not result in a change in the application of the requirements in Topic 820. The adoption of ASU 2011-04 did not have a material impact on its financial statements.
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E. SERIES A CONVERTIBLE PREFERRED STOCK
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Apr. 30, 2013
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E. SERIES A CONVERTIBLE PREFERRED STOCK |
Under the Companys Certificate of Incorporation, the Board of Directors is authorized, without further stockholder action, to provide for the issuance of up to 10,000,000 shares of preferred stock, par value $0.0001 per share, in one or more series, to establish from time to time the number of shares to be included in each such series, and to fix the designation, powers, preferences and rights of the shares of each such series and the qualifications, limitations and restrictions thereof.
On December 8, 2011, the Company filed a Certificate of Designation with the Secretary of State of the State of Delaware designating 7,500 shares of our authorized but unissued shares of preferred stock as Series A Convertible Preferred Stock.
Series A Convertible Preferred Stock
On December 12, 2011, the Company sold 3,500 units for net proceeds of approximately $3.2 million. Each unit sold consisted of (i) one share of the Companys Preferred Stock and (ii) a warrant representing the right to purchase 11.275 shares of Common Stock (the 2011 Warrants), at a price of $1,000 per unit, less issuance costs. The shares of Preferred Stock were immediately convertible and the 2011 Warrants are exercisable on the one-year anniversary of the closing date.
The table below sets forth a summary of the designation, powers, preferences and rights of the Preferred Stock.
The Company will not affect any conversion of the Series A Preferred Stock, nor shall a holder convert its shares of Series A Preferred Stock, to the extent that such conversion would cause the holder to have acquired, through conversion of the Preferred Stock or otherwise, beneficial ownership of a number shares of Common Stock in excess of 4.99% of the Common Stock outstanding immediately preceding the conversion.
While the Series A Preferred Stock is outstanding, we may not incur any additional indebtedness, with the exception of ordinary course equipment leases, obligations to vendors and similar exceptions. The Company is also prohibited from issuing additional or other capital stock or from issuing variable rate securities, without the consent of holders of the Series A Preferred Stock then outstanding.
The scheduled conversions and actual activity for the Series A Preferred Stock as of April 30, 2013 and 2012 are as follows:
For the year ended April 30, 2013, 3,668 shares of Series A Preferred Stock were converted into 191,934 shares of Common Stock. The Company recorded interest expense of $762,738 related to these conversions. The interest expense was calculated as the difference between the fair value of the preferred shares converted and the fair value of the Common Stock on the date of the conversion. As of April 30, 2013 there were no shares of Series A Preferred Stock outstanding.
For the year ended April 30, 2012, 2,332 shares of Series A Preferred Stock were converted into 79,167 shares of Common Stock. The Company recorded interest expense of $530,943 related to these conversions. The interest expense was calculated as the difference between the fair value of the preferred shares converted and the fair value of the Common Stock on the date of the conversion. As of April 30, 2013 and 2012, respectively, the following is a summary of the non-cash interest related to the Series A Convertible Preferred Stock:
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C. BALANCE SHEET COMPONENTS
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C. BALANCE SHEET COMPONENTS | NOTE CBALANCE SHEET COMPONENTS
Inventory
The Company operates in an industry characterized by rapid improvements and changes to its technology and products. The introduction of new products by the Company or its competitors can result in its inventory being rendered obsolete or requiring it to sell items at a discount. The Company evaluates the recoverability of its inventory by reference to its internal estimates of future demands and product life cycles. If the Company incorrectly forecasts demand for its products or inadequately manages the introduction of new product lines, this could materially impact its financial statements by having excess inventory on hand. The Company's future estimates are subjective and actual results may vary.
Inventories are recorded at cost using the First-In-First-Out (FIFO) method. Ending inventories are comprised of raw materials and direct costs of manufacturing and valued at the lower of cost or market. Inventories consisted of the following as of April 30, 2013 and 2012:
Other current assets
Other current assets consist of the following:
Property and equipment, net
Property and equipment consist of the following:
Depreciation and amortization expense was $92,959 and $161,494 for the years ended April 30, 2013 and 2012, respectively.
Other assets
Other assets consist of the following:
Accrued liabilities
Accrued liabilities consist of the following:
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C. BALANCE SHEET COMPONENTS (Details 4) (USD $)
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Apr. 30, 2013
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Apr. 30, 2012
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C. Balance Sheet Components Details 4 | ||
Accrued settlement costs | $ 500,000 | |
Deferred revenue | 185,068 | 244,013 |
Employee related | 66,632 | 352,400 |
Convertible note interest payable | 59,583 | 59,583 |
Restructuring liability | 43,728 | |
Other operating costs | 19,865 | 64,012 |
Contingent liability | 532,350 | |
Preferred stock dividend payable | 21,479 | |
Total | $ 874,876 | $ 1,273,837 |
I. RESTRUCTURING EXPENSE (Tables)
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Apr. 30, 2013
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Impact of the work force reductions and other associated costs on operating expenses and payments |
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B. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) (USD $)
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12 Months Ended | 545 Months Ended | |
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Apr. 30, 2013
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Apr. 30, 2012
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Apr. 30, 2013
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Numerator | |||
Net loss, attributable to common stockholders | $ (10,373,871) | $ (15,712,410) | $ (118,002,155) |
Less: Effect of amortization of interest expense on convertible notes | (1,382,537) | (3,817,550) | |
Net loss attributable to common stockholders (diluted) | (11,756,408) | (19,529,960) | |
Denominator | |||
Weighted-average common shares outstanding | 1,650,280 | 1,296,414 | |
Effect of dilutive securities | $ 108,745 | $ 91,207 | |
Denominator for diluted net loss per share | 1,759,025 | 1,387,621 | |
Basic net loss per share | $ (6.29) | $ (12.12) | |
Diluted net loss per share | $ (6.68) | $ (14.07) |
C. BALANCE SHEET COMPONENTS (Details) (USD $)
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Apr. 30, 2013
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Apr. 30, 2012
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C. Balance Sheet Components Details | ||
Raw materials | $ 28,779 | $ 25,579 |
Finished goods | 70,425 | 57,791 |
Total Inventory | $ 99,204 | $ 83,370 |