x
|
Quarterly Report pursuant to Section 13 or 15(d) of the Securities and Exchange Act of 1934
|
¨
|
Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|
DELAWARE
|
52-1412493
|
|
(State or other jurisdiction of
incorporation or organization)
|
(IRS Employer
Identification No.)
|
Large accelerated filer ¨
|
Accelerated filer ¨
|
Non-accelerated filer ¨
|
Smaller reporting company x
|
PART I FINANCIAL INFORMATION
|
||
Item 1. Financial Statements
|
||
Condensed Consolidated Balance Sheets (unaudited) as of August 31, 2011 and November 30, 2010
|
3
|
|
Condensed Consolidated Statements of Operations (unaudited) for the Three and Nine Months Ended August 31, 2011 and 2010
|
4
|
|
Condensed Consolidated Statements of Equity (Deficiency) (unaudited) for the Nine Months Ended August 31, 2010 and 2011
|
5
|
|
Condensed Consolidated Statements of Cash Flows (unaudited) for the Nine Months Ended August 31, 2011 and 2010
|
6
|
|
Notes to Condensed Consolidated Financial Statements (unaudited)
|
7
|
|
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
20
|
|
Item 3. Quantitative And Qualitative Disclosures About Market Risk
|
25
|
|
Item 4. Controls and Procedures
|
25
|
|
PART II OTHER INFORMATION
|
||
Item 1. Legal Proceedings
|
27
|
|
Item 1A. Risk Factors
|
27
|
|
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
|
43
|
|
Item 3. Defaults Upon Senior Securities
|
43
|
|
Item 4. Removed and Reserved
|
43
|
|
Item 5. Other Information
|
43
|
|
Item 6. Exhibits
|
44
|
|
SIGNATURES
|
45
|
August 31,
|
November 30,
|
|||||||
2011
|
2010
|
|||||||
ASSETS
|
||||||||
Current assets
|
||||||||
Cash and cash equivalents
|
$ | 667,299 | $ | 634,377 | ||||
Grant receivable
|
303,102 | 30,975 | ||||||
Other current assets
|
9,894 | 8,931 | ||||||
Total current assets
|
980,295 | 674,283 | ||||||
Property and equipment, net of accumulated depreciation of $66,398 and $65,380 at August 31, 2011 and November 30, 2010, respectively
|
69 | 1,087 | ||||||
Other assets
|
1,685 | 1,685 | ||||||
Total assets
|
$ | 982,049 | $ | 677,055 | ||||
LIABILITIES AND EQUITY (DEFICIENCY)
|
||||||||
Current liabilities
|
||||||||
Accounts payable and accrued expenses
|
$ | 1,440,845 | $ | 1,677,001 | ||||
Advance from debenture holder
|
436,000 | 237,850 | ||||||
Current portion of deferred revenue
|
49,318 | 49,318 | ||||||
Total current liabilities
|
1,926,163 | 1,964,169 | ||||||
Non-current liabilities
|
||||||||
Convertible debentures, net of discount
|
56,056 | 50,706 | ||||||
Deferred income, net of current portion
|
560,388 | 597,376 | ||||||
Derivative liability related to Series B convertible preferred stock
|
255,716 | 79,913 | ||||||
Total non-current liabilities
|
872,160 | 727,995 | ||||||
Total liabilities
|
2,798,323 | 2,692,164 | ||||||
Commitments and contingencies
|
- | - | ||||||
Equity (Deficiency)
|
||||||||
MultiCell Technologies, Inc. equity (deficiency)
|
||||||||
Undesignated preferred stock, $0.01 par value; 963,000 shares authorized
|
- | - | ||||||
Series B convertible preferred stock, 17,000 shares designated; 11,339 shares issued and outstanding; liquidation value of $1,377,735
|
1,349,844 | 1,349,844 | ||||||
Series I convertible preferred stock, 20,000 shares designated; 5,734 shares issued and outstanding; liquidation value of $573,400
|
573,400 | 573,400 | ||||||
Common stock, $0.01 par value; 1,250,000,000 shares authorized; 785,463,128 and 476,746,257 shares issued and outstanding at August 31, 2011 and November 30, 2010, respectively
|
7,854,631 | 4,767,463 | ||||||
Additional paid-in capital
|
30,115,978 | 31,317,428 | ||||||
Accumulated deficit
|
(40,795,387 | ) | (39,197,686 | ) | ||||
Total MultiCell Technologies, Inc. stockholders' equity (deficiency)
|
(901,534 | ) | (1,189,551 | ) | ||||
Noncontrolling interests
|
(914,740 | ) | (825,558 | ) | ||||
Total equity (deficiency)
|
(1,816,274 | ) | (2,015,109 | ) | ||||
Total liabilities and equity (deficiency)
|
$ | 982,049 | $ | 677,055 |
For the Three Months Ended
|
For the Nine Months Ended
|
|||||||||||||||
August 31,
|
August 31,
|
|||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
Revenue
|
$ | 12,329 | $ | 12,330 | $ | 36,988 | $ | 86,533 | ||||||||
Operating expenses
|
||||||||||||||||
Selling, general and administrative
|
382,860 | 207,116 | 1,392,557 | 613,201 | ||||||||||||
Research and development
|
204,906 | 81,962 | 441,348 | 215,392 | ||||||||||||
Depreciation and amortization
|
68 | 474 | 1,018 | 4,152 | ||||||||||||
Total operating expenses
|
587,834 | 289,552 | 1,834,923 | 832,745 | ||||||||||||
Loss from operations
|
(575,505 | ) | (277,222 | ) | (1,797,935 | ) | (746,212 | ) | ||||||||
Other income (expense)
|
||||||||||||||||
Grant revenue
|
73,715 | - | 303,102 | - | ||||||||||||
Interest expense
|
(5,871 | ) | (6,296 | ) | (17,724 | ) | (18,472 | ) | ||||||||
Change in fair value of derivative liability
|
381,517 | 95,204 | (175,803 | ) | 91,298 | |||||||||||
Interest income
|
617 | - | 1,477 | - | ||||||||||||
Total other income (expense)
|
449,978 | 88,908 | 111,052 | 72,826 | ||||||||||||
Net loss
|
(125,527 | ) | (188,314 | ) | (1,686,883 | ) | (673,386 | ) | ||||||||
Less net loss attributable to the noncontrolling interests
|
(19,052 | ) | (27,639 | ) | (89,182 | ) | (67,391 | ) | ||||||||
Net loss attributable to MultiCell Technologies, Inc.
|
(106,475 | ) | (160,675 | ) | (1,597,701 | ) | (605,995 | ) | ||||||||
Preferred stock dividends
|
- | (31,741 | ) | - | (105,733 | ) | ||||||||||
Net loss attributable to common stockholders
|
$ | (106,475 | ) | $ | (192,416 | ) | $ | (1,597,701 | ) | $ | (711,728 | ) | ||||
Basic and Diluted Loss Per Common Share Attributable to Common Stockholders
|
$ | (0.0001 | ) | $ | (0.0005 | ) | $ | (0.0024 | ) | $ | (0.0020 | ) | ||||
Basic and Diluted Weighted-Average Common Shares Outstanding
|
770,658,629 | 399,253,590 | 657,413,346 | 357,304,464 |
Preferred Stock
|
Additional
|
Total
|
||||||||||||||||||||||||||||||||||||||
Series B
|
Series I
|
Common stock
|
Paid in
|
Accumulated
|
Noncontrolling
|
Equity
|
||||||||||||||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
Shares
|
Par Value
|
Capital
|
Deficit
|
Interests
|
(Deficiency)
|
|||||||||||||||||||||||||||||||
Balance at November 30, 2009, prior to change in accounting principle
|
16,262 | $ | 1,830,035 | 5,734 | $ | 573,400 | 299,892,504 | $ | 2,998,925 | $ | 32,514,975 | $ | (38,917,068 | ) | $ | (703,234 | ) | $ | (1,702,967 | ) | ||||||||||||||||||||
Cumulative effect of a change in accounting principle for beneficial conversion feature of Series B preferred stock
|
- | - | - | - | - | - | (1,244,076 | ) | 1,017,859 | - | (226,217 | ) | ||||||||||||||||||||||||||||
Balance at December 1, 2009, as restated
|
16,262 | 1,830,035 | 5,734 | 573,400 | 299,892,504 | 2,998,925 | 31,270,899 | (37,899,209 | ) | (703,234 | ) | (1,929,184 | ) | |||||||||||||||||||||||||||
Issuance of common stock for conversion of 4.75% debentures
|
- | - | - | - | 118,260,762 | 1,182,608 | (1,174,595 | ) | - | - | 8,013 | |||||||||||||||||||||||||||||
Issuance of common stock for exercise of warrants
|
- | - | - | - | 801,330 | 8,013 | 865,437 | - | - | 873,450 | ||||||||||||||||||||||||||||||
Conversion of Series B preferred stock into common stock
|
(4,923 | ) | (480,191 | ) | - | - | 7,991,883 | 79,919 | 449,022 | - | - | 48,750 | ||||||||||||||||||||||||||||
Issuance of common stock for compensation to employees
|
- | - | - | - | 350,000 | 3,500 | 490 | - | - | 3,990 | ||||||||||||||||||||||||||||||
Stock-based compensation
|
- | - | - | - | - | - | 39,447 | - | - | 39,447 | ||||||||||||||||||||||||||||||
Dividends on Series B preferred stock
|
- | - | - | - | - | - | - | (105,733 | ) | - | (105,733 | ) | ||||||||||||||||||||||||||||
Net loss
|
- | - | - | - | - | - | - | (605,995 | ) | (67,391 | ) | (673,386 | ) | |||||||||||||||||||||||||||
Balance at August 31, 2010
|
11,339 | $ | 1,349,844 | 5,734 | $ | 573,400 | 427,296,479 | $ | 4,272,965 | $ | 31,450,700 | $ | (38,610,937 | ) | $ | (770,625 | ) | $ | (1,734,653 | ) | ||||||||||||||||||||
Balance at November 30, 2010
|
11,339 | $ | 1,349,844 | 5,734 | $ | 573,400 | 476,746,257 | $ | 4,767,463 | $ | 31,317,428 | $ | (39,197,686 | ) | $ | (825,558 | ) | $ | (2,015,109 | ) | ||||||||||||||||||||
Issuance of common stock for conversion of 4.75% debentures
|
- | - | - | - | 307,751,871 | 3,077,518 | (3,067,868 | ) | - | - | 9,650 | |||||||||||||||||||||||||||||
Issuance of common stock for exercise of warrants
|
- | - | - | - | 965,000 | 9,650 | 1,042,200 | - | - | 1,051,850 | ||||||||||||||||||||||||||||||
Stock-based compensation
|
- | - | - | - | - | - | 824,218 | - | - | 824,218 | ||||||||||||||||||||||||||||||
Net loss
|
- | - | - | - | - | - | - | (1,597,701 | ) | (89,182 | ) | (1,686,883 | ) | |||||||||||||||||||||||||||
Balance at August 31, 2011
|
11,339 | $ | 1,349,844 | 5,734 | $ | 573,400 | 785,463,128 | $ | 7,854,631 | $ | 30,115,978 | $ | (40,795,387 | ) | $ | (914,740 | ) | $ | (1,816,274 | ) |
For the Nine Months Ended
|
||||||||
August 31,
|
||||||||
2011
|
2010
|
|||||||
Cash flows from operating activities
|
||||||||
Net loss
|
$ | (1,686,883 | ) | $ | (673,386 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities
|
||||||||
Depreciation and amortization
|
1,018 | 4,152 | ||||||
Stock-based compensation for services
|
824,218 | 43,437 | ||||||
Interest expense from amortization of discount on convertible debentures
|
15,000 | 15,000 | ||||||
Change in fair value of derivative liability
|
175,803 | (91,298 | ) | |||||
Changes in assets and liabilities
|
||||||||
Grant receivable
|
(272,127 | ) | - | |||||
Other current assets
|
(963 | ) | (2,009 | ) | ||||
Accounts payable and accrued liabilities
|
(236,156 | ) | (43,916 | ) | ||||
Deferred income
|
(36,988 | ) | (86,532 | ) | ||||
Net cash used in operating activities
|
(1,217,078 | ) | (834,552 | ) | ||||
Cash flows from investing activities
|
- | - | ||||||
Cash flows from financing activities
|
||||||||
Proceeds from the exercise of stock warrants
|
1,051,850 | 873,450 | ||||||
Advance from debenture holder
|
198,150 | - | ||||||
Payment of principal on notes payable - related parties
|
- | (30,000 | ) | |||||
Net cash provided by financing activities
|
1,250,000 | 843,450 | ||||||
Net increase in cash and cash equivalents
|
32,922 | 8,898 | ||||||
Cash and cash equivalents at beginning of period
|
634,377 | 396,554 | ||||||
Cash and cash equivalents at end of period
|
$ | 667,299 | $ | 405,452 | ||||
Supplemental Disclosures of Cash Flow Information:
|
||||||||
Cash paid for interest
|
$ | 1,986 | $ | 8,709 | ||||
Noncash Investing and Financing Activities:
|
||||||||
Issuance of common stock for conversion of 4.75% debentures
|
9,650 | 8,013 | ||||||
Conversion of Series B preferred stock into common stock and elimination of related derivative liability
|
- | 480,191 | ||||||
Accrual of dividends on Series B preferred stock
|
- | 105,733 |
|
·
|
$300,000 is payable upon the earlier to occur of (i) initiation of pivotal Generation 2 stent human clinical trials, (ii) execution of an agreement in which Xenogenics grants a third party rights to develop or exploit the purchased assets, valued at no less than $3,000,000 (including all up-front payments and the net present value of any future royalty/milestone payments), and (iii) a “change of control” of Xenogenics;
|
|
·
|
$1,000,000 is payable upon the earlier to occur of (i) regulatory approval by any regulatory authority in a European Union member country, (ii) execution of an agreement in which Xenogenics grants a third party rights to develop or exploit the purchased assets, valued at no less than $5,000,000 (including all up-front payments and the net present value of any future royalty/milestone payments); and (iii) a “change of control” of Xenogenics; and
|
|
·
|
$3,000,000 is payable upon the earlier to occur of (i) regulatory approval by the U.S. Food and Drug Administration, (ii) execution of an agreement in which Xenogenics grants a third party rights to develop or exploit the purchased assets, valued at no less than $5,000,000 (including all up-front payments and the net present value of any future royalty/milestone payments); and (iii) a “change of control” of Xenogenics.
|
|
·
|
$50,000 is payable upon initiation of first in-human clinical trials anywhere in the world;
|
|
·
|
$200,000 is payable upon initiation of pivotal human clinical trials anywhere in the world in connection with submitting an application for market approval to a regulatory authority;
|
|
·
|
$300,000 is payable upon submission of an application for market approval to a regulatory authority anywhere in the world.
|
August 31,
|
May 31,
|
November 30,
|
August 31,
|
May 31,
|
December 1,
|
|||||||||||||||||||
2011
|
2011
|
2010 | 2010 | 2010 | 2009 | |||||||||||||||||||
Fair value of common stock
|
$ | 0.0080 | $ | 0.0204 | $ | 0.0037 | $ | 0.0048 | $ | 0.0095 | $ | 0.0106 | ||||||||||||
Conversion price of preferred stock
|
$ | 0.0337 | $ | 0.0363 | $ | 0.0525 | $ | 0.0579 | $ | 0.0636 | $ | 0.0762 | ||||||||||||
Risk free interest rate
|
2.23 | % | 3.05 | % | 2.81 | % | 2.47 | % | 3.31 | % | 3.28 | % | ||||||||||||
Expected life
|
10 Years | 10 Years | 10 Years | 10 Years | 10 Years | 10 Years | ||||||||||||||||||
Dividend yield
|
- | - | - | - | - | - | ||||||||||||||||||
Volatility
|
140 | % | 140 | % | 140 | % | 140 | % | 140 | % | 150 | % |
Weighted
|
||||||||||||||
Weighted
|
Average
|
|||||||||||||
Shares
|
Average
|
Remaining
|
Aggregate
|
|||||||||||
Under
|
Exercise
|
Contractual
|
Intrinsic
|
|||||||||||
Option
|
Price
|
Life
|
Value
|
|||||||||||
Outstanding at November 30, 2010
|
13,148,947 | $ | 0.0178 |
3.9 years
|
$ | - | ||||||||
Granted
|
5,250,000 | $ | 0.0092 | |||||||||||
Exercised
|
- | $ | - | |||||||||||
Expired
|
(40,000 | ) | $ | 0.5600 | ||||||||||
Outstanding at August 31, 2011
|
18,358,947 | $ | 0.0141 |
3.7 years
|
$ | - | ||||||||
Exercisable at August 31, 2011
|
12,981,447 | $ | 0.0161 |
3.2 years
|
$ | - |
Weighted
|
||||||||||||||
Weighted
|
Average
|
|||||||||||||
Shares
|
Average
|
Remaining
|
Aggregate
|
|||||||||||
Under
|
Exercise
|
Contractual
|
Intrinsic
|
|||||||||||
Warrants
|
Price
|
Life
|
Value
|
|||||||||||
Outstanding at November 30, 2010
|
22,837,991 | $ | 0.5915 |
1.7 years
|
$ | - | ||||||||
Issued
|
- | $ | - | |||||||||||
Exercised
|
(965,000 | ) | $ | 1.0900 | ||||||||||
Expired
|
(10,934,961 | ) | $ | 0.3579 | ||||||||||
Outstanding at August 31, 2011
|
10,938,030 | $ | 0.7810 |
3.2 years
|
$ | - |
Stock warrants
|
10,938,030 | |||
Stock options
|
18,358,947 | |||
Series B Convertible Preferred Stock
|
33,646,884 | |||
Series I Convertible Preferred Stock
|
2,293,600 | |||
LJCI Debenture
|
1,188,491,723 | |||
1,253,729,184 |
|
•
|
|
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 Company and reflect those assumptions that a market participant would use.
|
August 31, 2011
|
November 30, 2010
|
|||||||||||||||||||||||||||||||
Level 1
|
Level 2
|
Level 3
|
Total
|
Level 1
|
Level 2
|
Level 3
|
Total
|
|||||||||||||||||||||||||
Derivative liability
|
$ | - | $ | 255,716 | $ | - | $ | 255,716 | $ | - | $ | 79,913 | $ | - | $ | 79,913 |
August 31, 2011
|
August 31, 2010
|
|||||||
Cash and cash equivalents
|
$ | 667,299 | $ | 405,452 | ||||
Current assets
|
$ | 980,295 | $ | 413,903 | ||||
Current liabilities
|
(1,926,163 | ) | (1,408,622 | ) | ||||
Working capital deficiency
|
$ | (945,868 | ) | $ | (994,719 | ) |
August 31, 2011
|
August 31, 2010
|
|||||||
Operating activities
|
$ | (1,217,078 | ) | $ | (834,552 | ) | ||
Investing activities
|
- | - | ||||||
Financing activities
|
1,250,000 | 843,450 | ||||||
Net increase in cash and cash equivalents
|
$ | 32,922 | $ | 8,898 |
1.
|
Entity-Level Controls: We did not maintain effective entity-level controls as defined by the framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control –Integrated Framework. Specifically, we did not effectively segregate certain accounting duties due to the small size of our accounting staff, and maintain a sufficient number of adequately trained personnel necessary to anticipate and identify risks critical to financial reporting.
|
2.
|
Information Technology: We did not maintain effective controls over the segregation of duties and access to financial reporting systems. Specifically, key financial reporting systems were not appropriately configured to ensure that certain transactions were properly processed with segregated duties among personnel and to ensure that unauthorized individuals did not have access to add or change key financial data.
|
|
·
|
delays in obtaining regulatory approvals to commence a clinical trial;
|
|
·
|
delays in identifying and reaching agreement on acceptable terms with prospective clinical trial sites;
|
|
·
|
slower than expected rates of patient recruitment and enrollment, including as a result of the introduction of alternative therapies or drugs by others;
|
|
·
|
lack of effectiveness during clinical trials;
|
|
·
|
unforeseen safety issues;
|
|
·
|
adequate supply of clinical trial material;
|
|
·
|
uncertain dosing issues;
|
|
·
|
introduction of new therapies or changes in standards of practice or regulatory guidance that render our clinical trial endpoints or the targeting of our proposed indications obsolete;
|
|
·
|
inability to monitor patients adequately during or after treatment; and
|
|
·
|
inability or unwillingness of medical investigators to follow our clinical protocols.
|
|
·
|
we or our licensors might not have been the first to make the inventions covered by each of our pending patent applications and issued patents;
|
|
·
|
we or our licensors might not have been the first to file patent applications for these inventions;
|
|
·
|
others may independently develop similar or alternative technologies or duplicate any of our technologies;
|
|
·
|
it is possible that none of our pending patent applications or the pending patent applications of our licensors will result in issued patents;
|
|
·
|
our issued patents and issued patents of our licensors may not provide a basis for commercially viable drugs, or may not provide us with any competitive advantages, or may be challenged and invalidated by third parties; and
|
|
·
|
we may not develop additional proprietary technologies or drug candidates that are patentable.
|
|
·
|
infringement and other intellectual property claims that, with or without merit, can be costly and time consuming to litigate and can delay the regulatory approval process and divert management’s attention from our core business strategy;
|
|
·
|
substantial damages for past infringement which we may have to pay if a court determines that our drugs or technologies infringe upon a competitor’s patent or other proprietary rights;
|
|
·
|
a court prohibiting us from selling or licensing our drugs or technologies unless the holder licenses the patent or other proprietary rights to us, which it is not required to do; and
|
|
·
|
if a license is available from a holder, we may have to pay substantial royalties or grant cross licenses to our patents or other proprietary rights.
|
|
·
|
raise at least $5 million in equity funding by March 31, 2011, which, despite our good faith efforts, we were not able to raise;
|
|
·
|
restart manufacturing and produce a device by September 30, 2011, which, despite our good faith efforts, we were not able to do;
|
|
·
|
initiate an animal study by March 31, 2012;
|
|
·
|
make a regulatory submission to support a human use clinical trial by September 30, 2012;
|
|
·
|
initiate a human use clinical trial by September 30, 2013; and
|
|
·
|
make a submission or equivalent for marketing approval for use in humans by September 30, 2014 in at least one of Canada, the European Union Member States, Japan or the United States.
|
|
·
|
restart manufacturing and produce a device by September 30, 2012;
|
|
·
|
initiate an animal study by March 31, 2013;
|
|
·
|
make a regulatory submission to support a human use clinical trial by September 30, 2013; and
|
|
·
|
initiate a human use clinical trial by September 30, 2014.
|
|
·
|
expand our research and development and technologies;
|
|
·
|
fund clinical trials and seek regulatory approvals;
|
|
·
|
build or access manufacturing and commercialization capabilities;
|
|
·
|
implement additional internal systems and infrastructure;
|
|
·
|
maintain, defend and expand the scope of our intellectual property; and
|
|
·
|
hire and support additional management and scientific personnel.
|
|
·
|
the rate of progress and cost of our clinical trials and other research and development activities;
|
|
·
|
the costs and timing of seeking and obtaining regulatory approvals;
|
|
·
|
the costs associated with establishing manufacturing and commercialization capabilities;
|
|
·
|
the costs of filing, prosecuting, defending and enforcing any patent claims and other intellectual property rights;
|
|
·
|
the costs of acquiring or investing in businesses, products and technologies;
|
|
·
|
the effect of competing technological and market developments; and
|
|
·
|
the payment and other terms and timing of any strategic alliance, licensing or other arrangements that we may establish.
|
|
·
|
develop products and drug candidates and market products and drugs that are less expensive or more effective than our future drugs;
|
|
·
|
commercialize competing products and drugs before we or our partners can launch any products and drugs developed from our drug candidates;
|
|
·
|
obtain proprietary rights that could prevent us from commercializing our products;
|
|
·
|
initiate or withstand substantial price competition more successfully than we can;
|
|
·
|
have greater success in recruiting skilled scientific workers from the limited pool of available talent;
|
|
·
|
more effectively negotiate third-party licenses and strategic alliances;
|
|
·
|
take advantage of acquisition or other opportunities more readily than we can;
|
|
·
|
develop products and drug candidates and market products and drugs that increase the levels of safety or efficacy or alter other product and drug candidate profile aspects that our products and drug candidates need to show in order to obtain regulatory approval; and
|
|
·
|
introduce technologies or market products and drugs that render the market opportunity for our potential products and drugs obsolete.
|
|
·
|
developing products and drug candidates;
|
|
·
|
undertaking preclinical testing and clinical trials;
|
|
·
|
building relationships with key customers and opinion-leading physicians;
|
|
·
|
obtaining and maintaining FDA and other regulatory approvals;
|
|
·
|
formulating and manufacturing; and
|
|
·
|
launching, marketing and selling products and drugs.
|
|
·
|
a drug candidate may not be safe or effective;
|
|
·
|
FDA officials may not find the data from preclinical testing and clinical trials sufficient;
|
|
·
|
the FDA might not approve our or our contract manufacturer’s processes or facilities; or
|
|
·
|
the FDA may change its approval policies or adopt new regulations.
|
|
·
|
timing of market introduction of competitive drugs;
|
|
·
|
clinical safety and efficacy of alternative drugs or treatments;
|
|
·
|
cost-effectiveness;
|
|
·
|
availability of reimbursement from health maintenance organizations and other third-party payors;
|
|
·
|
convenience and ease of administration;
|
|
·
|
prevalence and severity of adverse side effects;
|
|
·
|
other potential disadvantages relative to alternative treatment methods; and
|
|
·
|
insufficient marketing and distribution support.
|
|
·
|
results from, and any delays in, the clinical trials programs for our products and drug candidates;
|
|
·
|
delays in or discontinuation of the development of any of our products and drug candidates;
|
|
·
|
failure or delays in entering additional drug candidates into clinical trials;
|
|
·
|
failure or discontinuation of any of our research programs;
|
|
·
|
failure to achieve milestones required by our current licensing or other agreements;
|
|
·
|
delays or other developments in establishing new strategic alliances;
|
|
·
|
announcements concerning our existing or future strategic alliances;
|
|
·
|
issuance of new or changed securities analysts’ reports or recommendations;
|
|
·
|
market conditions in the pharmaceutical and biotechnology sectors;
|
|
·
|
actual or anticipated fluctuations in our quarterly financial and operating results;
|
|
·
|
the exercise of outstanding options and warrants, the conversion of outstanding convertible preferred stock and debt and the issuance of additional options, warrants, preferred stock and convertible debt;
|
|
·
|
developments or disputes concerning our intellectual property or other proprietary rights;
|
|
·
|
introduction of technological innovations or new commercial products by us or our competitors;
|
|
·
|
issues in manufacturing our drug candidates or drugs;
|
|
·
|
market acceptance of our products and drugs;
|
|
·
|
third-party healthcare reimbursement policies;
|
|
·
|
FDA or other United States or foreign regulatory actions affecting us or our industry;
|
|
·
|
litigation or public concern about the safety of our products, drug candidates or drugs;
|
|
·
|
additions or departures of key personnel; and
|
|
·
|
volatility in the stock prices of other companies in our industry.
|
Exhibit
|
||
Number
|
Exhibit Description
|
|
3.1 (1)
|
Certificate of Incorporation, as filed on April 28, 1970.
|
|
3.2 (1)
|
Certificate of Amendment, as filed on October 27, 1986.
|
|
3.3 (1)
|
Certificate of Amendment, as filed on August 24, 1989.
|
|
3.4 (1)
|
Certificate of Amendment, as filed on July 31, 1991.
|
|
3.5 (1)
|
Certificate of Amendment, as filed on August 14, 1991.
|
|
3.6 (1)
|
Certificate of Amendment, as filed on June 13, 2000.
|
|
3.7 (1)
|
Certificate of Amendment, as filed May 18, 2005.
|
|
3.8 (1)
|
Certificate of Correction, as filed June 2, 2005.
|
|
3.9 (2)
|
Certificate of Amendment, as filed September 1, 2010.
|
|
3.10 (3)
|
Certificate of Amendment, as filed July 13, 2011.
|
|
3.11 (1)
|
Bylaws, as amended May 18, 2005.
|
|
3.12 (1)
|
Specimen Stock Certificate.
|
|
4.1 (4)
|
Certificate of Designations of Preferences and Rights of Series I Convertible Preferred Stock, as filed on July 13, 2004.
|
|
4.2 (5)
|
Certificate of Designation of Series B Convertible Preferred Stock, as filed on July 14, 2006.
|
|
4.3 (6)
|
Debenture Purchase Agreement between Multicell Technologies, Inc. and La Jolla Cove Investors, Inc. dated February 28, 2007.
|
|
4.4 (6)
|
Registration Rights Agreement between Multicell Technologies, Inc. and La Jolla Cove Investors, Inc. dated February 28, 2007.
|
|
4.5 (6)
|
Stock Pledge Agreement dated February 28, 2007.
|
|
4.6 (6)
|
7 ¾ % Convertible Debenture for $1,000,000 issued by Multicell Technologies, Inc. to La Jolla Cove Investors, Inc.
|
|
4.7 (6)
|
Escrow Letter dated February 28, 2007 from La Jolla Cove Investors, Inc.
|
|
4.8 (6)
|
Letter dated February 28, 2007 from La Jolla Cove Investors, Inc.
|
|
4.9 (6)
|
Securities Purchase Agreement between Multicell Technologies, Inc. and La Jolla Cove Investors, Inc. dated February 28, 2007.
|
|
4.10 (6)
|
4 ¾ % Convertible Debenture for $100,000 issued by Multicell Technologies, Inc. to La Jolla Cove Investors, Inc.
|
|
4.11 (6)
|
Warrant to Purchase Common Stock dated February 28, 2007.
|
|
4.12 (6)
|
Letter dated February 28, 2007 to Multicell Technologies, Inc. from La Jolla Cove Investors, Inc.
|
|
4.13 (7)
|
Warrant for the purchase of 1,572,327 Shares of Common Stock of Multicell Technologies, Inc. issued to and Fusion Capital Fund II, LLC dated May 3, 2006.
|
|
4.14 (8)
|
Amended and Restated Registration Rights Agreement, dated as of October 5, 2006, by and between Multicell Technologies, Inc. and Fusion Capital Fund II, LLC.
|
|
4.15 (9)
|
Form of Warrant to Purchase Common Stock (Cashless Exercise) dated July 14, 2006 issued by Multicell Technologies, Inc. to Monarch Pointe Fund, Ltd., Mercator Momentum Fund III, L.P., Asset Managers International Ltd. and Pentagon Special Purpose Fund Ltd.
|
|
4.16 (9)
|
Form of Warrant to Purchase Common Stock (Cash Exercise), dated July 14, 2006, issued by Multicell Technologies, Inc. to Monarch Pointe Fund, Ltd., Mercator Momentum Fund III, L.P., Asset Managers International Ltd. and Pentagon Special Purpose Fund Ltd.
|
|
4.17 (9)
|
Form of Registration Rights Agreement dated July 14, 2006 by and between Multicell Technologies, Inc. and Monarch Pointe Fund, Ltd., Mercator Momentum Fund III, L.P., Asset Managers International Ltd. and Pentagon Special Purpose Fund Ltd.
|
|
4.18 (9)
|
Form of Shares of Series B Convertible Preferred Stock and Common Stock Warrants Subscription Agreement dated July 14, 2006 by and between Multicell Technologies, Inc. and Monarch Pointe Fund, Ltd., Mercator Momentum Fund III, L.P., Asset Managers International Ltd. and Pentagon Special Purpose Fund Ltd.
|
|
4.19 (10)
|
Amended and Restated Warrant to Purchase Common Stock issued to Anthony Cataldo dated July 25, 2006.
|
|
4.20 (11)
|
Form of Warrant to Purchase Common Stock dated February 1, 2006 issued by the Company to Trilogy Capital Partners, Inc.
|
|
4.21 (12)
|
Mutual Termination Agreement between Multicell Technologies, Inc. and Fusion Capital Fund II, LLC, dated as of July 18, 2007.
|
|
10.1 (6)
|
Debenture Purchase Agreement between Multicell Technologies, Inc. and La Jolla Cove Investors, Inc. dated February 28, 2007.
|
|
10.2 (6)
|
Warrant to Purchase Common Stock dated February 28, 2007.
|
10.3 (13)
|
Addendum to Convertible Debenture and Equity Investment Agreement, by and between MultiCell Technologies, Inc. and La Jolla Cove Investors, dated as of August 16, 2011.
|
|
10.4 (14)
|
Sponsored Research Agreement, dated as of July 5, 2011, by and between MultiCell Technologies, Inc., and University Health Network. +
|
|
10.5 (15)
|
Amendment to Foreclosure Sale Agreement, dated as of September 30, 2010, by and among Xenogenics Corporation, Venture Lending & Leasing IV, Inc., Venture Lending & Leasing V, Inc. and Silicon Valley Bank, dated as of September 30, 2011.
|
|
31.1
|
Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 302. *
|
|
32.1
|
Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350.*
|
|
101 INS
|
XBRL Instance Document**
|
|
101 SCH
|
XBRL Schema Document**
|
|
101 CAL
|
XBRL Calculation Linkbase Document**
|
|
101 LAB
|
XBRL Labels Linkbase Document**
|
|
101 PRE
|
XBRL Presentation Linkbase Document**
|
|
101 DEF
|
XBRL Definition Linkbase Document**
|
MULTICELL TECHNOLOGIES, INC.
|
||
October 17, 2011
|
By:
|
/s/ W. Gerald Newmin
|
W. Gerald Newmin
|
||
(Chief Executive Officer and Chief Financial Officer)
|
||
1.
|
I have reviewed this quarterly report on Form 10-Q of MultiCell Technologies, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to me by others within those entities, particularly during the period in which this report is being prepared;
|
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report my conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and
|
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Dated: October 17, 2011
|
|
By:
|
/s/ W. Gerald Newmin
|
Name
|
W. Gerald Newmin
|
Chief Executive Officer and Chief Financial Officer
|
|
1.
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Dated: October 17, 2011
|
|
By:
|
/s/ W. Gerald Newmin
|
Name:
|
W. Gerald Newmin
|
Chief Executive Officer and Chief Financial Officer
|
CONDENSED CONSOLIDATED BALANCE SHEETS [Parentheticals] (USD $) | Aug. 31, 2011 | Nov. 30, 2010 |
---|---|---|
Property and equipment, net of accumulated depreciation (in dollars) | $ 66,398 | $ 65,380 |
Undesignated preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares designated | 963,000 | 963,000 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock shares authorized | 1,250,000,000 | 1,250,000,000 |
Common stock shares issued | 785,463,128 | 476,746,257 |
Common stock shares outstanding | 785,463,128 | 476,746,257 |
Series B Convertible Preferred Stock [Member] | ||
Preferred stock, shares designated | 17,000 | 17,000 |
Preferred stock, shares issued | 11,339 | 11,339 |
Preferred stock, shares outstanding | 11,339 | 11,339 |
Preferred stock, liquidation value (in dollars) | 1,377,735 | 1,377,735 |
Series I Convertible Preferred Stock [Member] | ||
Preferred stock, shares designated | 20,000 | 20,000 |
Preferred stock, shares issued | 5,734 | 5,734 |
Preferred stock, shares outstanding | 5,734 | 5,734 |
Preferred stock, liquidation value (in dollars) | $ 573,400 | $ 573,400 |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) | 3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Aug. 31, 2011 | Aug. 31, 2010 | Aug. 31, 2011 | Aug. 31, 2010 | |
Revenue | $ 12,329 | $ 12,330 | $ 36,988 | $ 86,533 |
Operating expenses | ||||
Selling, general and administrative | 382,860 | 207,116 | 1,392,557 | 613,201 |
Research and development | 204,906 | 81,962 | 441,348 | 215,392 |
Depreciation and amortization | 68 | 474 | 1,018 | 4,152 |
Total operating expenses | 587,834 | 289,552 | 1,834,923 | 832,745 |
Loss from operations | (575,505) | (277,222) | (1,797,935) | (746,212) |
Other income (expense) | ||||
Grant revenue | 73,715 | 0 | 303,102 | 0 |
Interest expense | (5,871) | (6,296) | (17,724) | (18,472) |
Change in fair value of derivative liability | 381,517 | 95,204 | (175,803) | 91,298 |
Interest income | 617 | 0 | 1,477 | 0 |
Total other income (expense) | 449,978 | 88,908 | 111,052 | 72,826 |
Net loss | (125,527) | (188,314) | (1,686,883) | (673,386) |
Less net loss attributable to the noncontrolling interests | (19,052) | (27,639) | (89,182) | (67,391) |
Net loss attributable to MultiCell Technologies, Inc. | (106,475) | (160,675) | (1,597,701) | (605,995) |
Preferred stock dividends | 0 | (31,741) | 0 | (105,733) |
Net loss attributable to common stockholders | $ (106,475) | $ (192,416) | $ (1,597,701) | $ (711,728) |
Basic and Diluted Loss Per Common Share Attributable to Common Stockholders (in dollars per share) | $ (0.0001) | $ (0.0005) | $ (0.0024) | $ (0.0020) |
Basic and Diluted Weighted-Average Common Shares Outstanding (in shares) | 770,658,629 | 399,253,590 | 657,413,346 | 357,304,464 |
Document And Entity Information | 9 Months Ended | |
---|---|---|
Aug. 31, 2011 | Oct. 12, 2011 | |
Entity Registrant Name | MultiCell Technologies, Inc. | |
Entity Central Index Key | 0000811779 | |
Current Fiscal Year End Date | --11-30 | |
Entity Filer Category | Smaller Reporting Company | |
Trading Symbol | mcet | |
Entity Common Stock, Shares Outstanding | 785,463,128 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Aug. 31, 2011 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2011 |
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NOTES PAYABLE - RELATED PARTIES | 9 Months Ended |
---|---|
Aug. 31, 2011 | |
Related Party Transactions [Abstract] | |
Related Party Transactions Disclosure [Text Block] | NOTE 5. NOTES PAYABLE – RELATED PARTIES
The Company issued notes payable totaling $50,000 to two related parties during August 2008 and an additional $5,000 in November 2008. The notes accrued interest at 8.5% per year and were secured by all of the Company’s assets, including its intellectual property. Prior to November 30, 2009, the Company repaid all except for $30,000 of the outstanding principal on the original notes. The remaining balance, plus related accrued interest, was repaid in full in December 2009.
|
STOCK OPTIONS AND WARRANTS | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Aug. 31, 2011 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Text Block] | NOTE 10. STOCK OPTIONS AND WARRANTS
On July 11, 2011, at the Company’s Annual Meeting of Stockholders, the stockholders approved an amendment to increase the number of shares reserved under the 2004 Equity Incentive Plan to a total of 70,974,213 shares. Additionally, an annual increase in the number of shares reserved under the plan was approved and certain prior increases in the number of shares reserved for issuance under the plan were ratified. The purpose of the 2004 Plan is to provide a means by which eligible recipients of stock awards may be given the opportunity to benefit from increases in the value of the common stock through granting of incentive stock options (ISO), non-statutory stock options, stock purchase awards, stock bonus awards, stock appreciation rights, stock unit awards and other stock awards. As amended, there are 52,615,266
shares of common stock available for future awards under the 2004 Plan at August 31, 2011.
Stock Options
Generally accepted accounting principles for stock options requires the recognition of the cost of employee services received in exchange for an award of equity instruments in the financial statements, is measured based on the grant date fair value of the award, and requires the stock option compensation expense to be recognized over the period during which an employee is required to provide service in exchange for the award (the vesting period), net of estimated forfeitures. The estimation of forfeitures requires significant judgment, and to the extent actual results or updated estimates differ from the current estimates, such resulting adjustment will be recorded in the period estimates are revised. No income tax benefit has been recognized for stock-based compensation arrangements and no compensation cost has been capitalized in the accompanying condensed consolidated balance sheet.
A summary of stock option activity for the nine-month period ended August 31, 2011 is presented below:
On July 11, 2011, the Board of Directors granted an option to each of the five directors to purchase one million shares of the Company’s common stock at $.0092 per share. The options vest quarterly over one year and expire five years after grant. On July 11, 2011, the Board of Directors also granted an option to an employee to purchase 250,000 shares of the Company’s common stock at $.0092 per share. This option vests monthly over three years and expires five years after grant. On June 28, 2010, the Board of Directors granted an option to each of the five directors to purchase one million shares of the Company’s common stock at $.008 per share. These options vest quarterly over one year and expire five years after grant. The fair value of stock option grants is estimated on the date of grant using the Black-Scholes option pricing model. The weighted-average fair value of stock options granted during the nine months ended August 31, 2011 was $0.0087. The weighted-average assumptions used for options granted during the nine months ended August 31, 2011 were risk-free interest rate of 1.5%, volatility of 170%, expected life of 5.0 years, and dividend yield of zero. The weighted-average fair value of stock options granted during the nine months ended August 31, 2010 was $0.0075. The weighted-average assumptions used for options granted during the nine months ended August 31, 2010 were risk-free interest rate of 1.8%, volatility of 165%, expected life of 5.0 years, and dividend yield of zero. The assumptions employed in the Black-Scholes option pricing model include the following. The expected life of stock options represents the period of time that the stock options granted are expected to be outstanding prior to exercise. The expected volatility is based on the historical price volatility of the Company’s common stock. The risk-free interest rate represents the U.S. Treasury constant maturities rate for the expected life of the related stock options. The dividend yield represents anticipated cash dividends to be paid over the expected life of the stock options.
For the three-month periods ended August 31, 2011 and 2010, the Company reported compensation expense related to stock options of $9,545 and $10,821, respectively. For the nine-month periods ended August 31, 2011 and 2010, the Company reported compensation expense related to stock options of $29,421 and $39,447, respectively. As of August 31, 2011, there was $41,906 of unrecognized compensation cost related to stock options that will be recognized over a weighted average period of approximately 1.0 years. The intrinsic values at August 31, 2011 are based on a closing price of $0.0080.
In October 2010, Xenogenics adopted the 2010 Stock Incentive Plan (the 2010 Plan) which authorized the granting of stock awards to employees, directors, and consultants. As originally adopted, the 2010 Plan provided that the number of shares of common stock that could be issued pursuant to stock awards could not exceed 5,000,000 shares of common stock. On February 3, 2011, the 2010 Plan was amended such that the number of shares of
common stock that could be issued pursuant to stock awards could not exceed 8,000,000 shares of common stock. The purpose of the 2010 Plan is to provide a means by which eligible recipients of stock awards may be given the opportunity to benefit from increases in the value of the common stock through granting of incentive stock options (ISO), non-statutory stock options, stock bonus awards, stock appreciation rights, and rights to acquire restricted stock. Incentive stock options may be granted only to employees. The exercise price of each ISO granted under the plan must equal 100% of the market price of the Company’s stock on the date of the grant. A 10% stockholder shall not be granted an incentive stock option unless the exercise price of such option is at least 110% of the fair market value of the common stock on the date of the grants and the option is not exercisable after the expiration of five years from the date of the grant. The Board, in its discretion, shall determine the exercise price of each nonstatutory stock option. An option’s maximum term is 10 years.
In November 2010, Xenogenics granted an option to a prospective executive officer to purchase an aggregate of 2,500,000 shares of its common stock, exercisable at $0.246 per share of common stock and having an expiration date in November 2015. The option to acquire 500,000 of the shares vested on the grant date and the remaining 2,000,000 shares vest in the future upon the achievement of specified milestones. The fair value of these options was estimated to be $576,250, or $0.2305 per share, as estimated using the Black-Scholes option-pricing model, using a risk-free interest rate of 1.23%, volatility of 165%, expected life of five years, and dividend yield of zero.
In March 2011, Xenogenics granted options to prospective officers and to the members of its scientific advisory board to purchase an aggregate of 3,000,000 shares of its common stock, exercisable at $0.246 per share of common stock and having a term of approximately five years. 50% of the options vested immediately and the remaining 50% vest upon the closing of a Qualified Financing, which means a single sale, or a related series of sales in a single transaction, by Xenogenics of its common stock (or common stock equivalents) in which the aggregate gross proceeds (before costs and commissions) received by Xenogenics are equal to or exceed $5,000,000. The fair value of these options was estimated to be $692,700, or $0.2309 per share, as estimated using the Black-Scholes option-pricing model, using a risk-free interest rate of 2.20%, volatility of 165%, expected lives of five years, and dividend yield of zero.
For the three months and nine months ended August 31, 2011, Xenogenics reported stock-based compensation expense for these options of $163,745 and $794,797, respectively. As of August 31, 2011, there is approximately $335,000 of unrecognized compensation cost related to stock-based payments that will be recognized over a weighted average period of approximately 1.1 years.
Stock Warrants
In connection with the issuance of common stock, preferred stock, notes payable, and debentures, and as compensation for services provided, the Company has issued warrants to purchase shares of the Company’s common stock. The Company did not issue warrants during the nine months ended August 31, 2011 or 2010.
A summary of stock warrant activity for the nine-month period ended August 31, 2011 is presented below:
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ORGANIZATION AND NATURE OF OPERATIONS, BASIS OF PRESENTATION, AND RECENT ACCOUNTING PRONOUNCEMENTS | 9 Months Ended |
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Aug. 31, 2011 | |
Accounting Policies [Abstract] | |
Organization and Nature of Operations, Basis of Presentation and Recent Accounting Pronouncements [Text Block] | NOTE 1. ORGANIZATION AND NATURE OF OPERATIONS, BASIS OF PRESENTATION, AND RECENT ACCOUNTING PRONOUNCEMENTS
ORGANIZATION AND NATURE OF OPERATIONS
MultiCell Technologies, Inc. (“MultiCell”), operates three subsidiaries, MCT Rhode Island Corp., Xenogenics Corporation (“Xenogenics”), and MultiCell Immunotherapeutics, Inc. (“MCTI”). MCT Rhode Island Corp. (“MCT”), is a 100%-owned subsidiary that has been inactive since its formation in 2004. Prior to October 14, 2010, MultiCell owned 56.4% of Xenogenics. Commencing October 14, 2010, MultiCell has increased its ownership of Xenogenics to 95.3% (on an as-if-converted basis). MultiCell holds approximately 67% of the outstanding shares (on an as-if-converted basis) of MCTI. As used herein, the “Company” refers to MultiCell, together with MCT, Xenogenics, and MCTI.
The Company is a biopharmaceutical company developing novel therapeutics and discovery tools to address unmet medical needs for the treatment of neurological disorders, hepatic disease, cancer and interventional cardiology and peripheral vessel applications.
BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements and related notes of MultiCell Technologies, Inc. and its subsidiaries have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim financial statements. Accordingly, they do not include all of the information and disclosures required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments consisting of normal recurring adjustments considered necessary for a fair presentation have been included. It is suggested that these condensed consolidated financial statements be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s annual report on Form 10-K for the year ended November 30, 2010 previously filed with the SEC. The results of operations for the three-month and nine-month periods ended August 31, 2011 are not necessarily indicative of the operating results for the fiscal year ending November 30, 2011. The condensed consolidated balance sheet as of November 30, 2010 has been derived from the Company’s audited financial statements.
RECENT ACCOUNTING PRONOUNCEMENTS
In June 2008, the FASB ratified accounting guidance for determining whether an instrument, or an embedded feature, is indexed to an entity's own stock. The guidance provides that an entity should use a two step approach to evaluate whether an equity-linked financial instrument (or embedded feature) is indexed to its own stock, including evaluating the instrument's contingent exercise and settlement provisions. It also clarifies the impact of foreign currency denominated strike prices and market-based employee stock option valuation instruments on the evaluation. The guidance was effective for fiscal years beginning after December 15, 2008. The Company adopted this new accounting guidance effective December 1, 2009. As more fully discussed in Note 6 to these condensed consolidated financial statements, the Company determined that the fair value of the beneficial conversion feature related to the Series B convertible preferred stock is required to be accounted for as an embedded derivative as of December 1, 2009 under this new accounting guidance. The accounting implications of this determination is that the fair value of the derivative, calculated to be $226,217 as of December 1, 2009, was recorded as a noncurrent liability with a corresponding adjustment to equity on that date. The Company is also required to record the change in the fair value of the derivative liability at each subsequent balance sheet date, with a corresponding adjustment to other income or expense. The change in the fair value of the derivative was a decrease of $381,517 for the three months ended August 31, 2011 and an increase of $175,803 for the nine months ended August 31, 2011, respectively. The change in the fair value of the derivative was a decrease of $95,204 and $91,298 for the three months and the nine months ended August 31, 2010.
In December 2010, the FASB issued accounting guidance which specifies that if a public entity presents
comparative financial statements, the entity should disclose revenue and earnings of the combined entity as though the business combination(s) that occurred during the current year had occurred as of the beginning of the comparable prior annual reporting period only. This guidance also expands supplemental pro forma disclosures to include a description of the nature and amount of material, nonrecurring pro forma adjustments directly attributable to the business combination included in reported pro forma revenue and earnings. This guidance will be effective prospectively for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2010. Early adoption is permitted. Other than requiring additional disclosures for business combinations that the Company enters into in the future, the adoption of this guidance will not have a material impact on the Company’s financial statements.
In May 2011, the FASB issued updated accounting guidance related to fair value measurements and disclosures that result in common fair value measurements and disclosures between GAAP and International Financial Reporting Standards. This guidance includes amendments that clarify the intent about the application of existing fair value measurements and disclosures, while other amendments change a principle or requirement for fair value measurements or disclosures. This guidance is effective for interim and annual periods beginning after December 15, 2011. The new guidance is to be adopted prospectively and early adoption is not permitted. The Company does not believe the adoption of this guidance will have a material impact on its consolidated financial statements.
In June 2011, the FASB issued guidance regarding the presentation of comprehensive income. The new standard requires the presentation 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. The new standard also requires presentation of adjustments for items that are reclassified from other comprehensive income to net income in the statement where the components of net income and the components of other comprehensive income are presented. The updated guidance is effective on a retrospective basis for financial statements issued for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2011. The adoption of this guidance will not have a material impact on the Company’s consolidated financial statements.
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SERIES I CONVERTIBLE PREFERRED STOCK | 9 Months Ended |
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Aug. 31, 2011 | |
Disclosure - Convertible Preferred Stock Series I [Abstract] | |
Series I Convertible Preferred Stock [Text Block] | NOTE 7. SERIES I CONVERTIBLE PREFERRED STOCK
The Company’s Board of Directors has the authority, without further action by the stockholders, to issue up to 1,000,000 shares of preferred stock in one or more series and to fix the rights, preferences, privileges and restrictions of these shares of preferred stock. The Board of Directors originally designated 20,000 shares as Series I convertible preferred stock.
The Series I shares are convertible at any time into common stock at 80% of the average trading price of the lowest three inter-day trading prices of the common stock for the ten days preceding the conversion date, but at an exercise price of no more than $1.00 per share and no less than $.25 per share. The conversion of the Series I preferred stock is limited to 9.99% of the Company’s common stock outstanding on the date of conversion.
The Series I preferred stock does not have voting rights. In the event of any dissolution or winding up of the Company, whether voluntary or involuntary, holders of each outstanding share of Series I convertible preferred stock shall be entitled to be paid first out of the assets of the Company available for distribution to stockholders, an amount equal to $100 per share of Series I preferred stock held. After such payment has been made in full, such holders of Series I convertible preferred stock shall be entitled to no further participation in the distribution of the assets of the Company.
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QUALIFYING THERAPEUTIC DISCOVERY PROJECT GRANT | 9 Months Ended |
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Aug. 31, 2011 | |
Qualifying Therapeutic Discovery Project Grant [Abstract] | |
Qualifying Therapeutic Discovery Project Grant [Text Block] | NOTE 12. QUALIFYING THERAPEUTIC DISCOVERY PROJECT GRANT
On October 29, 2010, the Company received notification from the Department of Treasury that it had been awarded a total cash grant of $733,437 under the Qualifying Therapeutic Discovery Project (“QTDP”) program. The QTDP program was created by Congress as part of the Patient Protection and Affordable Care Act, and provides a grant or tax credit equal to 50% of qualified investment for the Company’s fiscal years ending November 30, 2010 and 2011. Of the total grant, $430,335 relates to qualifying expenses incurred during the year ended November 30, 2010 and the remainder of $303,102 will be received and recognized during the year ending November 30, 2011. For the year ended November 30, 2010, the Company recognized $430,335 as grant revenue under “other income” in the consolidated statement of operations. Of the amount that was recognized in the year ended November 30, 2010, $399,360 was received in cash during that fiscal year and the balance of $30,975 was collected during the three months ended February 28, 2011. For the year ending November 30, 2011, the grant revenue will be recognized as other income during the period in which the corresponding expenses are incurred. During the three months and nine months ended August 31, 2011, management of the Company has identified $73,715 and $303,102, respectively, of qualifying expense and recognized an equal amount of grant revenue.
The funds were granted in connection with the Company’s projects MCT-465 and MCT-475 drug development programs for the treatment of cancer and MCT-125 drug development for the treatment of fatigue in multiple sclerosis patients.
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COMMON STOCK | 9 Months Ended |
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Aug. 31, 2011 | |
Stockholders' Equity Note [Abstract] | |
Stockholders' Equity Note Disclosure [Text Block] | NOTE 8. COMMON STOCK
On July 11, 2011, the Company held its Annual Meeting of Stockholders. At the meeting, the stockholders approved an amendment to increase the number of shares of common stock authorized under the Company’s Amended and Restated Certificate of Incorporation to 1.25 billion shares. Additionally, certain prior increases in the number of authorized shares were ratified
In March 2010, the Company issued a total of 350,000 shares of common stock to its two employees. On the date that issuance was authorized, the closing price of the common stock was $0.0115, representing compensation of $3,990.
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Disclosure - Convertible Preferred Stock Series B [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Series B Convertible Preferred Stock [Text Block] | NOTE 6. SERIES B CONVERTIBLE PREFERRED STOCK
The Company’s Board of Directors has the authority, without further action by the stockholders, to issue up to 1,000,000 shares of preferred stock in one or more series and to fix the rights, preferences, privileges and restrictions of these shares of preferred stock. The Board of Directors has designated 17,000 shares as Series B convertible preferred stock. The Series B preferred stock does not have voting rights.
Commencing on the date of issuance of the Series B preferred stock until the date a registration statement registering the common shares underlying the preferred stock and warrants issued is declared effective by the SEC, the Company was required to pay on each outstanding share of Series B preferred stock a preferential cumulative dividend at an annual rate equal to the product of multiplying $100 per share by the higher of the Wall Street Journal Prime Rate plus 1%, or 9%. In no event was the dividend rate to be greater than 12% per annum. The dividend was payable monthly in arrears in cash on the last day of each month based on the number of shares of Series B preferred stock outstanding as of the first day of that month. In the event the Company did not pay the Series B preferred dividends when due, the conversion price of the Series B preferred shares was reduced to 85% of the otherwise applicable conversion price. The Company did not pay the required monthly Series B preferred dividends since November 30, 2006, which, in part, has caused the conversion price to be reduced. During the nine months ended August 31, 2010, the Company accrued preferred dividends in the amount of $105,733 on the Series B preferred stock. Subsequent to November 30, 2010, the Company received an opinion of outside counsel providing for the removal of the restrictive legend on the Series B preferred stock, which in turn terminated the requirement to accrue the related dividends. Accordingly, no dividends were accrued during the nine months ended August 31, 2011. Total accrued but unpaid preferred dividends recorded in the accompanying condensed consolidated balance sheet as of August 31, 2011 and November 30, 2010 are $580,672, of which $243,835 are recorded in permanent equity with the Series B preferred stock and $336,837 are recorded as a current liability with accounts payable and accrued expenses.
The Series B shares are convertible at any time into common stock at a conversion price determined by dividing the purchase price per share of $100 by the conversion price. The conversion price was originally $0.32 per share. Upon the occurrence of an event of default (as defined in the agreement), the conversion price of the Series B shares shall be reduced to 85% of the then applicable conversion price of such shares. The conversion price is subject to equitable adjustment in the event of any stock splits, stock dividends, recapitalizations and the like. In addition, the conversion price is subject to weighted average anti-dilution adjustments in the event the Company sells common stock or other securities convertible into or exercisable for common stock at a per share price, exercise price or conversion price lower than the conversion price then in effect in any transaction (other than in connection with an acquisition of the securities, assets or business of another company, joint venture and employee stock options). As a result of the Company issuing common stock upon conversion of convertible debentures and upon the exercise of warrants effectively at prices lower than the conversion price, and due to the Company not paying Series B dividends on a monthly basis, the conversion price of the Series B preferred stock has been reduced to $0.0337 per share as of August 31, 2011. The conversion of the Series B preferred stock is limited for each investor to 9.99% of the Company’s common stock outstanding on the date of conversion.
In July 2010, the Company received notice from one of the preferred shareholders that it was converting 4,923 shares of Series B preferred stock. The carrying value of the converted Series B preferred stock was $480,191, consisting of the original proceeds from the issuance of the preferred stock of $492,300 ($100 per share) less allocated issuance costs of $12,109. On the date that the notice was received, the conversion price of the Series B preferred stock was $0.0616. Accordingly, the conversion resulted in the issuance of 7,991,883 shares of common stock.
Effective December 1, 2009, the Company adopted new accounting provisions for determining whether an instrument (or embedded feature) is indexed to an entity’s own stock. These provisions apply to any freestanding financial instruments or embedded features that have the characteristics of a derivative, as defined by standards for accounting for derivative instruments and hedging activities, and to any freestanding financial instruments that are potentially settled in an entity’s own common stock. As of December 1, 2009, there were 16,262 shares of Series B preferred stock that were convertible into 21,341,207 shares of common stock. The Company determined that the conversion feature to allow the holders of the Series B
convertible preferred stock to acquire common shares is an embedded derivative that no longer qualifies as equity under the new accounting guidance. As a result of adopting these standards, the Company evaluated the conversion feature as though it was accounted for as a derivative liability since the issuance of the Series B convertible preferred stock in July 2006 and has recorded, as a cumulative effect adjustment on December 1, 2009, a noncurrent derivative liability of $226,217 with a corresponding reduction in other components of equity on that date. The derivative liability is recorded in the accompanying condensed consolidated balance sheet at $255,716 and $79,913 as of August 31, 2011 and November 30, 2010, respectively. The fair value of the conversion feature decreased by $381,517 during the three months ended August 31, 2011, which has been recorded as a gain from the change in the fair value of the derivative liability. The fair value of the conversion feature increased by $175,803 during the nine months ended August 31, 2011, which has been recorded as a loss from the change in the fair value of the derivative liability. The fair value of the conversion feature decreased by $95,204 and $91,298 during the three months and the nine months ended August 31, 2010, which has been recorded as a gain from the change in the fair value of the derivative liability.
The estimate of the fair value of the embedded conversion feature and the underlying assumptions used to determine the estimate are as follows:
In the event of any dissolution or winding up of the Company, whether voluntary or involuntary, holders of each outstanding share of Series B preferred stock shall be entitled to be paid second in priority to the Series I preferred stock holders out of the assets of the Company available for distribution to stockholders, an amount equal to $100 per share of Series B convertible preferred stock held plus any declared but unpaid dividends. After such payment has been made in full, such holders of Series B convertible preferred stock shall be
entitled to no further participation in the distribution of the assets of the Company.
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GOING CONCERN | 9 Months Ended |
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Aug. 31, 2011 | |
Disclosure - Going Concern [Abstract] | |
Going Concern [Text Block] | NOTE 2. GOING CONCERN
These condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As of August 31, 2011, the Company has operating and liquidity concerns and, as a result of recurring losses, has incurred an accumulated deficit of $40,795,387. The Company will have to raise additional capital in order to initiate Phase IIb/III clinical trials for MCT-125, the Company’s therapeutic for the treatment of fatigue in multiple sclerosis patients. Management is evaluating several sources of financing for its clinical trial program. Additionally, with its strategic shift in focus to therapeutic programs and technologies, management expects the Company’s future cash requirements to increase significantly as it advances the Company’s therapeutic programs into clinical trials. Until the Company is successful in raising additional funds, it may have to prioritize its therapeutic programs and delays may be necessary in some of the Company’s development programs.
Since March 2008, the Company has operated on working capital provided by La Jolla Cove Investors (LJCI). As further described in Note 4 to these condensed consolidated financial statements, under terms of the agreement, LJCI can convert a portion of the convertible debenture by simultaneously exercising a warrant at $1.09 per share. As of August 31, 2011, there are 6,605,629 shares remaining on the stock purchase warrant and a balance of $66,056 remaining on the convertible debenture. Should LJCI continue to exercise all of its remaining warrants, approximately $7.2 million of cash would be provided to the Company. The agreement limits LJCI’s investment to an aggregate ownership that does not exceed 9.9% of the outstanding shares of the Company. The Company expects that LJCI will continue to exercise the warrants and convert the debenture through February 28, 2014, the date that the debenture is due and the warrants expire, subject to the limitations of the agreement and the availability of authorized common stock of the Company.
These factors, among others, create an uncertainty about the Company’s ability to continue as a going concern. There can be no assurance that LJCI will continue to exercise its warrant to purchase the Company’s common stock, or that the Company will be able to successfully acquire the necessary capital to continue its on-going research efforts and bring its products to the commercial market. Management’s plans to acquire future funding include the potential sale of common and/or preferred stock, the sale of warrants, and continued sales of our proprietary media, immortalized cells and primary cells to the pharmaceutical industry. Additionally, the Company continues to pursue research projects, government grants and capital investment. The accompanying condensed consolidated financial statements do not include any adjustments related to the recoverability and classification of assets or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
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IDEAL BIOSTENT AND RELATED AGREEMENTS | 9 Months Ended | ||||||||||||||||||
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Aug. 31, 2011 | |||||||||||||||||||
Ideal Biostent and Related Agreements [Abstract] | |||||||||||||||||||
Ideal Biostent and Related Agreements [Text Block] | NOTE 3. IDEAL BIOSTENT
AND RELATED AGREEMENTS
Purchase of Ideal BioStent — Foreclosure Sale Agreement
On September 30, 2010, Xenogenics entered into a Foreclosure Sale Agreement (“Foreclosure Sale Agreement”) with Venture Lending & Leasing IV, Inc., Venture Lending & Leasing V, Inc. and Silicon Valley Bank (collectively, the “Sellers”). Pursuant to the Foreclosure Sale Agreement, Xenogenics acquired all of the Sellers’ interests in certain bioabsorbable stent assets (known as “Ideal BioStent”) and related technologies. In consideration for the purchase of the assets, Xenogenics made cash payments to the Sellers in the aggregate amount of $400,000, payable in three tranches as follows: (i) $135,000 was paid on October 12, 2010; (ii) $135,000 was paid on November 15, 2010; and (iii) $130,000 was paid on December 31, 2010.
Xenogenics is also required to make cash payments to the Sellers as follows based on the achievement of certain milestones:
None of these milestones have been achieved as of August 31, 2011 and, accordingly, none of these obligations have been recorded. On September 30, 2011, the Company, entered into an amendment to the Foreclosure Sale Agreement which extends the deadlines for the achievement of these milestones under the Foreclosure Sale Agreement by twelve months. The failure to achieve any of these milestones would result in all milestone payments, totaling $4.3 million, becoming immediately due and payable.
In
addition, as additional consideration under the Foreclosure Sale Agreement, Xenogenics issued to the Sellers warrants to purchase an aggregate of 490,000 shares of its common stock, exercisable at $0.038 per share of common stock. The fair value of these warrants was estimated to be $18,179 as estimated using the Black-Scholes option-pricing model, using a risk-free interest rate of 2.53%, volatility of 140%, expected life of 10 years, and dividend yield of zero.
The costs related to the acquisition of this technology, including the purchase price of $400,000 payable to the Sellers, the fair value of the warrants ($18,179) issued to the Sellers, and the obligation to pay Rutgers $136,000 for patent related costs under the Rutgers License Agreement, as discussed below, have been accounted for as in-process research and development costs and were expensed immediately in the quarter ended November 30, 2010 because the technologies had no alternative future use.
Rutgers License Agreement
Effective September 30, 2010, Xenogenics entered into a license agreement (the “Rutgers License Agreement”) with Rutgers, The State University of New Jersey (“Rutgers”).
Pursuant to the Rutgers License Agreement, Rutgers granted Xenogenics a worldwide exclusive license to exploit and commercialize certain patents and other intellectual property rights, as further described in the Rutgers License Agreement, relating to bioabsorbable stents for interventional cardiology and peripheral vascular applications. In consideration for the license and other rights granted under the Rutgers License Agreement, Xenogenics paid Rutgers a license fee of $50,000. In addition, under the Rutgers License Agreement, Xenogenics is obligated to pay Rutgers a license maintenance fee of $25,000 on the third anniversary of the Rutgers License Agreement, and $50,000 on the fourth anniversary. Additionally, Xenogenics agreed to pay Rutgers for unpaid costs of $136,000 incurred by Rutgers prior to the effective date of the Rutgers License Agreement for preparing, filing, prosecuting, defending, and maintaining all United States patent applications and patents covered under the Rutgers License Agreement, of which $135,000 was paid in March 2011.
Xenogenics is also required to make cash payments to Rutgers as follows based on the achievement of certain milestones with respect to products to be commercialized using the Licensed IP:
None of these milestones have been achieved as of August 31, 2011 and, accordingly, none of these obligations have been recorded.
Upon the sale of products commercialized using the licensed technology, Xenogenics is required to make royalty payments to Rutgers in an amount equal to three percent of the annual aggregate gross amounts charged for such products less deductions for expenses such as sales/use taxes, transportation charges and trade discounts. Beginning with the first year of sales of products commercialized with the licensed technology, Xenogenics will make certain minimum royalty payments to Rutgers, which payments will be applied against any royalty payments earned by Rutgers for the relevant calendar year. Further, 50% of the Rutgers milestone payments actually paid to Rutgers will be offset against any future royalty payments earned under the Rutgers License Agreement.
The term of the Rutgers License Agreement commences on the effective date of the agreement and terminates on the earlier of (i) the expiration of all valid patents granted with respect to the licensed technology (or products commercialized therefrom) in a country, and (ii) ten years from the date of first commercial sale in a country. However, if either party breaches the agreement, the non-breaching party may terminate the agreement upon written notice to the other party of such breach and the failure of the other party to cure the breach within 90 days of such notice. Xenogenics also has the right to terminate the agreement at anytime and for any reason upon 120 days’ advance written notice to Rutgers.
Series B Preferred Stock Agreement
On October 14, 2010, pursuant to a Series B Preferred Stock Purchase Agreement, Xenogenics agreed to sell to MultiCell shares of its newly created Series B Convertible Preferred Stock. The funds provided to Xenogenics under the agreement were used to pay Xenogenics’ obligations under the Foreclosure Sale Agreement and to settle an intercompany obligation of Xenogenics to MultiCell. The purchase of the Series B Preferred Stock increased MultiCell’s interest in Xenogenics from 56.4% to 95.3% (on an as-if-converted basis). The Series B Preferred Stock may, at the option of MultiCell, be converted at any time or from time to time into shares of Xenogenics’ Common Stock. This intercompany transaction has been eliminated in consolidation.
La Jolla Cove Investors (LJCI) agreed to increase the amount of its debenture that it converted and the number of warrants that it exercised during October through December of 2010 in order to assist MultiCell in funding its purchase of Series B Convertible Preferred Stock from Xenogenics. As additional consideration to LJCI under this arrangement, Xenogenics issued LJCI warrants to purchase an aggregate of 490,000 shares of its common stock, exercisable at $0.038 per share of common stock. The fair value of these warrants was estimated to be $18,179 as estimated using the Black-Scholes option-pricing model, using a risk-free interest rate of 2.53%, volatility of 140%, expected life of 10 years, and dividend yield of zero. The fair value of the warrants was recorded as additional interest expense under the debentures during the three months ended November 30, 2010.
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LOSS PER SHARE | 9 Months Ended | |||||||||||||||||||||||||||||||||||
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Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||
Earnings Per Share [Text Block] | NOTE 11. LOSS PER SHARE
Basic loss per share is computed on the basis of the weighted-average number of common shares outstanding during the period. Diluted loss per share is computed on the basis of the weighted-average number of common shares and all dilutive potentially issuable common shares outstanding during the year. Common stock issuable upon conversion of debt and preferred stock, or exercise of stock options and stock warrants have not been included in the loss per share for the three month or nine month periods ended August 31, 2011 and 2010 as they are anti-dilutive.
The potential common shares as of August 31, 2011 are as follows:
The Company does not currently have sufficient authorized shares of common stock to meet the commitments entered into under the Debenture and the related LJCI Warrants. As further discussed in Note 4, upon the conversion of any portion of the remaining $66,056 principal amount of the Debenture, LJCI is required to simultaneously exercise and purchase that same percentage of the remaining 6,605,629 warrant shares equal to the percentage of the dollar amount of the Debenture being converted. The agreement limits LJCI’s investment to an aggregate common stock ownership that does not exceed 9.99% of the outstanding common shares of the Company. Furthermore, the Company has the right to redeem that portion of the Debenture that the holder may elect to convert and also has the right to redeem the outstanding principal amount of the Debenture not yet converted by the holder into common stock, plus accrued and unpaid interest thereon.
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CONVERTIBLE DEBENTURES | 9 Months Ended |
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Aug. 31, 2011 | |
Debt Disclosure [Abstract] | |
Long-term Debt [Text Block] | NOTE 4. CONVERTIBLE DEBENTURES
The Company entered into a Securities Purchase Agreement with LJCI on February 28, 2007 pursuant to which the Company agreed to sell a convertible debenture in the principal amount of $100,000 and maturing on February 28, 2012 (the “Debenture”). On August 16, 2011, the Company and LJCI amended the Debenture to extend the maturity date to February 28, 2014. The Debenture accrues interest at 4.75% per year, payable at each conversion date, in cash or common stock at the option of LJCI. In connection with the Debenture, the Company issued LJCI a warrant to purchase up to 10 million shares of our common stock (the “LJCI Warrant”) at an exercise price of $1.09 per share, exercisable over the next five years according to a schedule described in a letter agreement dated February 28, 2007. On August 16, 2011, the Company and LJCI amended the LJCI Warrant to extend the expiration date to February 28, 2014. Pursuant to the terms of the LJCI Warrant, upon the conversion of any portion of the principal amount of the Debenture, LJCI is required to simultaneously exercise and purchase that same percentage of the warrant shares equal to the percentage of the dollar amount of the Debenture being converted. Therefore, for each $1,000 of the principal converted, LJCI would be required to simultaneously purchase 100,000 shares under the LJCI Warrant at $1.09 per share.
The Debenture is convertible at the option of LJCI at any time up to maturity into the number of shares determined by the dollar amount of the Debenture being converted multiplied by 110, minus the product of the Conversion Price multiplied by 100 times the dollar amount of the Debenture being converted, with the entire result divided by the Conversion Price. The Conversion Price is equal to the lesser of $1.00 or 80% of the average of the three lowest volume-weighted average prices during the twenty trading days prior to the election to convert. LJCI converted $9,650 and $8,013 of the Debenture into 307,751,871 and 118,260,762 shares, respectively, of common stock during the nine months ended August 31, 2011 and 2010. Simultaneously with these conversions, LJCI exercised warrants to purchase 965,000 shares and 801,330 shares of the Company’s common stock during the nine months ended August 31, 2011 and 2010, respectively. Proceeds from the exercise of the warrants were $1,051,850 and $873,450 for the nine months ended August 31, 2011 and 2010, respectively. At times, LJCI makes advances to the Company prior to the exercise of warrants. At August 31, 2011 and November 30, 2010, LJCI had advanced $436,000 and $237,850, respectively, to the Company in advance of LJCI’s exercise of warrants.
As of August 31, 2011, the remainder of the Debenture in the amount of $66,056 could have been converted by LJCI into approximately 1.2 billion shares of common stock, which would require LJCI to simultaneously exercise and purchase all of the remaining 6,605,629 shares of common stock under the LJCI Warrant at $1.09 per share. As of November 30, 2010, the balance of the Debenture was $75,706. For the Debenture, upon receipt of a conversion notice from the holder, the Company may elect to immediately redeem that portion of the debenture that the holder elected to convert in such conversion notice, plus accrued and unpaid interest. After February 28, 2008, the Company, at its sole discretion, has the right, without limitation or penalty, to redeem the outstanding principal amount of this debenture not yet converted by the holder into common stock, plus accrued and unpaid interest thereon.
A discount representing the value of 10 million warrants issued in the amount of $73,727 was recorded as a reduction to the note. The discount was calculated based on the relative fair values of the convertible debenture and the warrants. The fair value of the warrants used in the above calculation was determined under the Black-Scholes option-pricing model. Additionally, based on the excess of the aggregate fair value of the common shares that would have been issued if the Debenture had been converted immediately over the proceeds allocated to the convertible debenture, the investors received a beneficial conversion feature for which the Company recorded an increase in additional paid-in-capital of $26,273 and a corresponding discount to the debenture. These discounts, in the aggregate amount of $100,000, are being amortized over the original 60-month term of the debenture as a charge to interest expense. The balance of the unamortized discount is $10,000 and $25,000 at August 31, 2011 and November 30, 2010, respectively.
|
SPONSORED RESEARCH AGREEMENT | 9 Months Ended |
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Aug. 31, 2011 | |
Sponsored Research Agreement [Abstract] | |
Sponsored Research Agreement [Text Block] | NOTE 14. SPONSORED RESEARCH AGREEMENT
On July 5, 2011, the Company, entered into a sponsored research agreement with the University Health Network (UHN), a not-for-profit corporation incorporated under the laws of Canada. Under this agreement UHN will evaluate the Company’s product candidates, MCT-465 and MCT-485, in in vitro
models for the treatment of primary liver cancer. The mechanism of action of MCT-465 and MCT-485 and their potential selective effect on liver cancer stem cells will also be evaluated. Under the terms of the agreement, the Company will retain exclusive access to the research findings and intellectual property resulting from the research activities preformed by UHN.
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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS [Parentheticals] (Debentures [Member]) | 9 Months Ended | |
---|---|---|
Aug. 31, 2011 | Aug. 31, 2010 | |
Debentures [Member] | ||
Rate of interest of debentures converted | 4.75% | 4.75% |
LICENSE AGREEMENTS AND DEFERRED REVENUE | 9 Months Ended |
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Aug. 31, 2011 | |
Disclosure - Deferred Revenue and License Agreements [Abstract] | |
Deferred Revenue and License Agreements [Text Block] | NOTE 9. LICENSE AGREEMENTS AND DEFERRED REVENUE
On October 9, 2007, MultiCell Technologies, Inc. (“MultiCell”) executed an exclusive license and purchase agreement (the “Agreement”) with Corning Incorporated (“Corning”) of Corning, New York. Under the terms of the Agreement, Corning has the right to develop, use, manufacture, and sell MultiCell’s Fa2N-4 cell lines and related cell culture media for use as a drug discovery assay tool, including biomarker identification for the development of drug development assay tools, and for the performance of absorption, distribution, metabolism, elimination and toxicity assays (ADME/Tox assays). MultiCell retained and will continue to support all of its existing licensees, including Pfizer and Bristol-Myers Squibb. MultiCell retains the right to use the
Fa2N-4 cells for use in applications not related to drug discovery or ADME/Tox assays. MultiCell also retains rights to use the Fa2N-4 cell lines and other cell lines to further develop its Sybiol® liver assist device, to produce therapeutic proteins using the Company’s BioFactories technology, to identify drug targets and for other applications related to the Company’s internal drug development programs. Corning paid MultiCell $750,000 in consideration for the license granted. The Company is recognizing the income ratably over a 17 year period. The Company recognized $11,029 and $33,088, respectively, in income for the three months and nine months ended August 31, 2011 and 2010. The balance of deferred revenue from this license is $577,206 at August 31, 2011 and will be amortized into revenue through October 2024.
The Company had a license agreement with Eisai, for which revenue was being deferred. On May 1, 2009, Eisai notified the Company of its plan to terminate the license agreement effective March 31, 2010. The Company recognized revenue from the agreement with Eisai in the amounts of zero and $49,544 for the three months and the nine months ended August 31, 2010, respectively. The balance of deferred revenue from the agreement with Eisai is zero at August 31, 2011, and no further revenue has been or will be recognized since the termination of the license agreement effective March 31, 2010.
The Company has another license agreement with Pfizer, for which revenue is being deferred. The Company recognized revenue from the agreement with Pfizer in the amount of $1,300 and $3,900 for the three months and the nine months ended August 31, 2011 and 2010, respectively. The balance of deferred revenue from the agreement with Pfizer is $32,500 at August 31, 2011, which will be amortized into revenue through January 2018.
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