UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
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ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
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For the fiscal year ended June 30, 2012
OR
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
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For the transition period from ___________ to _____________
Commission file number:
001-31326
SENESCO
TECHNOLOGIES, INC.
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(Exact name of registrant as specified in its charter)
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Delaware
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84-1368850
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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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721 Route 202/206, Suite 130, Bridgewater, New Jersey
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08807
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(Address of principal executive offices)
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(Zip Code)
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(908) 864-4444
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(Registrant’s telephone number,
including area code)
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Securities registered under Section 12(b)
of the Act:
Title of each class
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Name of each exchange on which registered
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Common Stock, $0.01 par value per share.
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NYSE MKT
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Securities registered under Section 12(g) of the Act:
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None.
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Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes
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No
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Indicate
by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act . Yes
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No
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Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days. Yes
x
No
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Indicate
by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T
(§232.405
of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post
such files).
Yes
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No
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Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part
III of this Form 10-K or any amendment to this Form 10-K.
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Indicate by check mark
whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company.
See definitions of “accelerated filer”, “large accelerated filer” and “smaller reporting company”
in Rule 12b-2 of the Exchange Act.
Large
accelerated filer
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Accelerated filer
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Non-accelerated
filer
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Smaller reporting company
x
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
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No
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As of December 31,
2011, the aggregate market value of the registrant’s common stock held by non-affiliates of the registrant was
$17,813,515,
based on the closing sales price as reported on the NYSE MKT on that date.
The number of shares
outstanding of each of the registrant's classes of common stock, as of September 15, 2012:
Class
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Number of Shares
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Common Stock, $0.01 par value
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116,753,185
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Preferred Stock, $0.01 par value
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995
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TABLE OF CONTENTS
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Item
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Page
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PART I
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1.
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Business
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1
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1A.
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Risk Factors
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14
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1B.
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Unresolved Staff Comments
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30
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2.
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Properties
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30
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3.
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Legal Proceedings
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30
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4.
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Mine Safety Disclosures
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30
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PART II
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5.
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Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
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31
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6.
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Selected Financial Data
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34
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7.
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Management's Discussion and Analysis of Financial Condition and Results of Operations
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35
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7A.
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Quantitative and Qualitative Disclosures About Market Risk
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52
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8.
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Financial Statements and Supplementary Data
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53
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9.
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Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
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53
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9A.
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Controls and Procedures
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53
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9B.
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Other Information
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54
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PART III
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10.
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Directors, Executive Officers and Corporate Governance
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55
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11.
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Executive Compensation
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55
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12.
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Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
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55
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13.
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Certain Relationships and Related Transactions and Director Independence
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55
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14.
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Principal Accounting Fees and Services
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55
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PART IV
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15.
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Exhibits and Financial Statement Schedules
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56
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SIGNATURES
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57
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FINANCIAL STATEMENTS
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F-1
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PART I
Our Business
The primary business
of Senesco Technologies, Inc., a Delaware corporation incorporated in 1999, and its wholly-owned subsidiary, Senesco, Inc., a New
Jersey corporation incorporated in 1998, collectively referred to as “Senesco,” “we,” “us”
or “our,” is to utilize our patented and patent-pending technology related to certain genes, primarily eukaryotic translation
initiation Factor 5A, or Factor 5A, and deoxyhypusine synthase, or DHS, and related technologies for human therapeutic applications
to develop novel approaches to treat cancer and inflammatory diseases.
For agricultural applications,
we have licensed applications of the Factor 5A, DHS and Lipase platforms to enhance the quality, productivity and stress resistance
of fruits, flowers, vegetables, agronomic and biofuel feedstock crops through the control of cell death, referred to herein as
senescence, and growth in plants.
Human Therapeutic
Applications
We believe that our
Factor 5A gene regulatory technology could have broad applicability in the human therapeutic field, by either inducing or inhibiting
programmed cell death, also known as apoptosis, which is the natural process the human body goes through in order to eliminate
redundant or defective cells. Inducing apoptosis is useful in treating cancer where the defective cancer cells have failed to respond
to the body’s natural apoptotic signals. Conversely, inhibiting apoptosis may be useful in preventing, ameliorating or treating
an exaggerated, acute immune response in a wide range of inflammatory and ischemic diseases attributable to or aggravated by premature
apoptosis.
SNS01-T for Multiple
Myeloma
We have developed a
therapeutic candidate, SNS01-T, an improved formulation of SNS01, for the potential treatment of multiple myeloma and non-Hodgkin
B-cell lymplomas. SNS01-T utilizes our Factor 5A technology and comprises two active components: a DNA plasmid, or pDNA, expressing
human eIF5A containing a lysine to arginine substitution at amino acid position 50, or eIF5AK50R, and a small inhibitory RNA, or
siRNA. These two components are combined in a fixed ratio with a polymer, polyethyleneimine, or PEI, which enables self-assembly
of the DNA and RNA into nanoparticles with demonstrated enhanced delivery to tissues and protection from degradation in the blood
stream. Under the control of a B cell selective promoter, SNS01-T’s DNA plasmid up-regulates the apoptotic pathways within
cancer cells by preferentially expressing the stable arginine form of the Factor 5A death message in target cells. The siRNA, by
silencing the eIF5A gene, reduces expression of the hypusine form of Factor 5A that supports cell survival and proliferation. The
silencing of the eIF5A gene by an eIF5A siRNA also down-regulates anti-apoptotic proteins, such as NFkB, ICAM and pro-inflammatory
cytokines, which protect malignant cells from apoptosis and promote cell growth in multiple myeloma. The PEI, a cationic polymer,
promotes auto-assembly of a nanoparticle with the other two components for intravenous delivery and protects the combination from
degradation in the bloodstream until it is taken up by the tumor cell, where the siRNA and DNA plasmid are released.
We have performed efficacy,
toxicological and dose-finding studies
in vitro
in non-human and human cells and
in vivo
in mice with SNS01. Our
efficacy studies in severe combined immune-deficient, or SCID, mice with subcutaneous human multiple myeloma tumors tested SNS01
dose ranging from 0.15 mg/kg to 1.5 mg/kg. In these studies, mice treated with a dose of either 0.75 mg/kg or 1.5 mg/kg both showed,
compared to relevant controls, a 91% reduction in tumor volume and a decrease in tumor weight of 87% and 95%, respectively. For
mice that received smaller doses of either 0.38 mg/kg or 0.15 mg/kg, there was also a reduction in tumor volume of 73% and 61%,
respectively, and weight of 74% and 36%, respectively. All SNS01 treated mice survived. This therapeutic dose range study provided
the basis for a non-good laboratory practices, or GLP, 8-day maximum tolerated dose study in which normal mice received two intravenous
doses of increasing amounts of SNS01 (from 2.2 mg/kg). Body weight, organ weight and serum levels of liver enzymes were used as
clinical indices to assess toxicity. A dose between 2.2 mg/kg and 2.9 mg/kg was well tolerated with respect to these clinical indices,
and the survival rate at 2.9 mg/kg was 80%. Mice receiving above 2.9 mg/kg of SNS01 showed evidence of morbidity and up to 80%
mortality. The 2.9 mg/kg threshold was therefore determined to be the maximum tolerated dose in mice in this study. We have also
completed our pivotal GLP toxicology studies in mice and dogs, employing SNS01-T, an improved formulation of SNS01, and have an
open investigational new drug application, or IND, with the United States Food and Drug Administration, or FDA. We have also been
granted orphan drug status for SNS01-T by the FDA for the potential treatment of multiple myeloma, mantle cell lymphoma and diffuse
large B-cell lymphoma.
We are conducting a
Phase 1b/2a clinical study with SNS01-T in multiple myeloma patients. The clinical study is an open-label, multiple-dose, dose-escalation
study, which is evaluating the safety and tolerability of SNS01-T when administered by intravenous infusion to relapsed or refractory
multiple myeloma patients. The study design calls for four cohorts of three to six patients each. Patients in each cohort will
receive twice-weekly dosing for six weeks followed by up to a four-week safety data review period before escalating to a higher
dose level in the next cohort. While the primary objective of the initial study is to evaluate safety and tolerability, the effect
of SNS01-T on tumor response will also be evaluated using multiple, well-established criteria including measurement of the monoclonal
protein, or M-protein. We have selected Mayo Clinic, University of Arkansas for Medical Sciences and the Randolph Cancer Center
at West Virginia University as our clinical sites. The study is open and we have completed our first cohort. The results of the
first cohort showed that SNS01-T was safe and well tolerated and met the criteria for Stable Disease in 2 of the 3 evaluable patients.
We are now treating patients in the second cohort.
We have demonstrated in human multiple myeloma cell lines that
there may be an additional benefit to combining SNS01-T with other approved myeloma drugs, such as bortezomib and lenalidomide.
We have shown, in vitro, that these drugs are up to forty (40) times more effective in inhibiting cell growth when used in combination
with SNS01-T. These results further reinforce the significance of our target and will guide us in designing future clinical studies.
We have demonstrated that
a high level of tumor eradication in a mouse model of human multiple myeloma
was achieved with a combination of SNS01-T and lenalidomide. While SNS01-T alone performed well by completely eliminating tumors
in 40% of the animals, complete tumor eradication was achieved in five out of six or 83% of the treated animals that received SNS01-T
combined with the optimal study dose of lenalidomide. This effect lasted throughout 6 weeks of observation after the end of treatment.
Neither dose of lenalidomide used alone eliminated tumors in any of the treated mice. Most recently, we have demonstrated the benefits
of combining SNS01-T with bortezomib. In a mouse model of human multiple myeloma, SNS01-T as a monotherapy achieved 59% tumor growth
inhibition, which exceeded that of bortezomib alone at either the 0.2 mg/kg dose (22% inhibition) or at the 0.5 mg/kg dose (39%
inhibition). However, the combination of SNS01-T with 0.5 mg/kg of bortezomib resulted in 89% tumor inhibition, which was significantly
more effective than either SNS01-T or bortezomib alone.
SNS01-T for other
B-cell cancers
We have demonstrated
in mice that we can inhibit the growth of both human mantle cell and diffuse large B-cell lymphoma in a dose-dependent manner.
We have also
demonstrated that the combination of lenalidomide and SNS01-T performs better than either treatment alone in mouse xenograft
models of human mantle cell lymphoma. When SCID mice, implanted with an aggressive human mantle cell lymphoma cell line
(JVM2), were treated with either 15 mg/kg lenalidomide (5 times weekly by intra-peritoneal injection) or 0.375 mg/kg SNS01-T
(twice weekly by intravenous injection) there was a growth delay of 4 days and 14 days, respectively. Mice treated with a
combination of both drugs using the same dose levels and dosing regimens
exhibited a tumor growth
delay of 27 days (p value = 0.0008).
The median survival
of mice treated with control nanoparticles was 21 days. Mice treated with lenalidomide or SNS01-T had a median survival of 28 days
(33 % increase) and 37 days (76 % increase), respectively. Mice treated with the drug combination had a median survival of 52 days,
an increase in survival of 148 %. Survival analysis using the Kaplan-Meier method revealed that treatment of mice with the drug
combination resulted in statistically significant increases in survival compared to both SNS01-T (p value = 0.002) and lenalidomide
(p value = 0.007) alone. We believe that the results of these studies not only support moving forward in multiple myeloma, but
also support extending our clinical evaluation of SNS01-T in other B-cell cancers.
We may consider other
human diseases in order to determine the role of Factor 5A and SNS01-T.
We may further expand
our research and development program beyond the initiatives listed above to include other diseases and research centers.
Human Therapeutic
Target Markets
We believe that our
eIF5A platform technology may have broad applicability in the human therapeutic field, by either inducing or inhibiting apoptosis.
Inducing apoptosis may be useful in treating certain forms of cancer where tumor cells do not respond to immune system signals
to undergo apoptosis. Inhibiting apoptosis may be useful in preventing or treating a wide range of inflammatory and ischemic diseases
attributed to premature apoptosis, including diabetes, diabetic retinopathy and lung inflammation.
We have advanced our
research in multiple myeloma and are conducting a Phase 1b/2a clinical trial, and may select additional human therapeutic indications
to investigate in clinical trials. We believe that the success of our future operations will likely depend on our ability to transform
our research and development activities into commercial applications.
Human Therapeutic
Research Program
Our human therapeutic
research program, which consists of pre-clinical
in-vitro
and
in-vivo
experiments designed to assess the role and
mode of action of Factor 5A in human diseases and a phase 1a/2b clinical trial, is being performed by approximately eleven (11)
third party researchers, at our direction, at Criterium, the University of Waterloo and other facilities. Additionally, we outsource
certain projects, such as our clinical trial, to other third party research organizations.
Our research and development
expenses incurred on human therapeutic applications were approximately $2,286,511, or 89%, of our total research and development
expenses for the year ended June 30, 2012.
Our research and development
expenses incurred on human therapeutic applications were approximately $3,253,253, or 87%, of our total research and development
expenses for the year ended June 30, 2011.
Our research and development
expenses incurred on human therapeutic applications were approximately $2,083,787, or 79%, of our total research and development
expenses for the year ended June 30, 2010.
Since inception, the
proportion of our research and development expenses on human therapeutic applications has increased, as compared to our research
and development expenses on agricultural applications. This change is primarily due to the fact that our research focus on human
therapeutics has increased and some of our research costs for plant applications have shifted to our license partners.
Our planned future
research and development initiatives for human therapeutics include:
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Multiple Myeloma. Continue a Phase 1b/2a clinical trial. In connection with the clinical trial,
we have engaged Criterium to manage the operational aspects of the Phase 1b/2a clinical study. We have also entered into an agreement
with Mayo Clinic, University of Arkansas and University of West Virginia to be our clinical sites. The study opened in September
2011 and we are currently treating patients. We estimate that the study will be completed on or about June 30, 2013.
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Mantle Cell Lymphoma. We expect to evaluate SNS01-T in mantle cell lymphoma.
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Diffuse Large B-Cell Lymphoma. We expect to evaluate SNS01-T in diffuse large B-Cell lymphoma.
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We may consider cancers in other tissues by modifying the structure of SNS01-T to be able to target
other tumor types, e.g., liver cancer.
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Other. We may consider other human diseases in which Factor 5A, siRNA against Factor 5A and SNS01-T
may have a therapeutic effect.
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In order to pursue
the above research initiatives, as well as other research initiatives that may arise, we completed private placements of convertible
preferred stock and warrants on April 1, 2010 and June 2, 2010. In December 2010, we initiated an at-the-market, or ATM, offering
for the issuance of up to $5,500,000 of common stock and completed a public placement of common stock and warrants in January 2012
and March 2012. However, it will be necessary for us to raise a significant amount of additional working capital in the future.
If we are unable to raise the necessary funds, we may be required to significantly curtail the future development of some of our
research initiatives and we will be unable to pursue other possible research initiatives.
We may further expand
our research and development program beyond the initiatives listed above to include other diseases and research centers.
Human Therapeutic
Suppliers
The materials for our
lead therapeutic candidate, SNS01-T, for multiple myeloma consists of three parts: a pDNA expressing human eIF5A
K50R
;
a siRNA, whose sequence corresponds to an untranslated region of native eIF5A mRNA; and linear PEI which enables self-assembly
of the nucleic acids into nanoparticles. We have entered into supply agreements for the components as follows:
On June 27, 2008, we
entered into a supply agreement with VGXI, Inc., or VGXI, under which VGXI will supply us with the plasmid portion of the Company’s
combination therapy, hereinafter referred to as the VGXI Product. The agreement has an initial term that commenced on the date
of the agreement and runs for a period of five (5) years. The agreement shall, upon mutual agreement, renew for consecutive one
(1) year periods thereafter. Our financial obligation under the agreement is dependent upon the amount of VGXI Product ordered
by the Company.
On June 30, 2008, we
entered into a supply agreement with Polyplus-transfection, or POLYPLUS, under which POLYPLUS will supply the Company with its
“in vivo-jetPEI”, hereinafter referred to as the POLYPLUS Product, which is used in the formulation and systemic delivery
of the Company’s combination therapy. The agreement has an initial term which commenced on the date of the agreement and
runs until the eighth anniversary of the first sale of our product containing the POLYPLUS Product. The agreement shall automatically
renew for consecutive one (1) year periods thereafter, except if terminated by either party upon six (6) months written notice
prior to the initial or any subsequent renewal term. The Company’s financial obligation under the agreement is dependent
upon the amount of POLYPLUS Product ordered by the Company.
On September 4, 2008,
we entered into a supply agreement with Avecia Biotechnology, Inc., or AVECIA, under which AVECIA will supply the Company with
the siRNA portion of the Company’s combination therapy consisting of the Factor 5A gene and siRNA against Factor 5A, hereinafter
referred to as the siRNA Product. The agreement had a term which commenced on the date of the agreement and terminated on the later
of the completion of all services to be provided under the agreement or 30 days following delivery of the final shipment of the
siRNA Product.
Human Therapeutic
Competition
Our competitors in
human therapeutics that are presently attempting to distribute their technology have generally utilized one of the following distribution
channels:
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Entering into strategic alliances, including licensing technology to major marketing and distribution
partners; or
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Developing in-house production and marketing capabilities.
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In addition, some competitors
are established distribution companies, which alleviates the need for strategic alliances, while others are attempting to create
their own distribution and marketing channels.
There are many large
companies and development stage companies working in the field of apoptosis and multiple myeloma research including
Celgene, Inc., Takeda/Millennium, ONYX Pharmaceuticals, Inc., Amgen Inc., Janssen Biotech, Inc., Novartis AG, and Pharmacyclics,
Inc.
We do not currently
have any commercialized products, and therefore, it is difficult to assess our competitive position in the market. However, we
believe that if we are able to develop and commercialize a product or products under our patents to our Factor 5A platform technology,
we will have a competitive position in the markets in which we will operate.
Agricultural Applications
Our agricultural research
focuses on the discovery and development of certain gene technologies, which are designed to confer positive traits on fruits,
flowers, vegetables, forestry species and agronomic crops.
We have licensed this
technology to various strategic partners. We may continue to license this technology, as opportunities present themselves, to additional
strategic partners and/or enter into joint collaborations or ventures.
Our ongoing research
and development initiatives for agriculture include assisting our license partners to:
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further develop and implement the DHS and Factor 5A gene technology in banana, canola, cotton,
turfgrass, rice, alfalfa, corn, soybean and trees; and
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test the resultant crops for new beneficial traits such as increased yield, increased tolerance
to environmental stress, disease resistance and more efficient use of fertilizer.
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Agricultural
Target Markets
In order to address
the complexities associated with marketing and distribution in the worldwide market, we have adopted a multi-faceted commercialization
strategy, in which we have entered into and plan to enter into, as the opportunities present themselves, additional licensing agreements
or other strategic relationships with a variety of companies or other entities on a crop-by-crop basis. We anticipate revenues
from these relationships in the form of licensing fees, royalties, usage fees, or the sharing of gross profits. In addition, we
anticipate payments from certain of our partners upon their achievement of certain research and development benchmarks. This commercialization
strategy allows us to generate revenue at various stages of product development, while ensuring that our technology is incorporated
into a wide variety of crops. Our optimal partners combine the technological expertise to incorporate our technology into their
product line along with the ability to successfully market the enhanced final product, thereby eliminating the need for us to develop
and maintain a sales force.
Because the agricultural
market is dominated by privately held companies or subsidiaries of foreign owned companies, market size and market share data for
the crops under our license and development agreements is not readily available. Additionally, because we have entered into confidentiality
agreements with our license and development partners, we are unable to report the specific financial terms of the agreements as
well as any market size and market share data that our partners may have disclosed to us regarding their companies.
Agricultural Development
and License Agreements
Effective
December 22, 2011, we
re-structured our research and development agreement with Rahan Meristem (1998) Ltd (“Rahan”)
to reflect the priorities of both companies. The new agreement is an amendment to the original research and development agreement,
dated May 1999, that provided Rahan access to our proprietary technology enabling the two companies to engage in a jointly-funded
research and development program relating to the development and production of banana plants with improved traits. The new agreement
re-structures the collaboration from a cost and profit sharing arrangement to a license agreement, which provides us with a mid-
to upper-single digit royalty on incremental revenue, as defined in the agreement, from the sale of Rahan’s banana seedling
products containing our technology without any future payments by us for the costs of development and commercialization. If a product,
which incorporates our technology, is commercialized by Rahan, the royalties will be payable from first commercial sale for the
longer of ten (10) years or the expiration of the last valid patent on a country-by-country basis.
On
February 8, 2012,
we entered into a research and development agreement with
BioCorp
Ventures, LLC (“BCV”), a division of technology incubator US Equity Holdings,
to
use our proprietary eukaryotic translation initiation Factor 5A (eIF5A) technology platform for sustainable energy applications
(the “Agreement”). BCV, a newly formed start-up company, will have a license to evaluate our technology for the development
of plants and plant products suitable for use in the production of biofuel and biofuel feedstock, including all species of algae
and all species in the genus
Miscanthus
(perennial grasses)
.
Biofuels derived from these organisms include biodiesel
and bioethanol. The companies will continue ongoing research and development as BCV works on commercializing the technology. BCV
will be fully responsible for further assessing the potential of our technology for all biofuel applications and determining the
route to the commercialization of biofuel products. Through our significant know-how at the University of Waterloo, we will be
responsible for technology transfer and providing technical advice to facilitate BCV’s operations. After the initial evaluation
phase, the Agreement provides annual license maintenance payments to us and royalty payments in the mid-single digits if a product
is commercialized by BCV. As part of the Agreement, after the initial evaluation phase, we will have a 15% equity interest in BCV
and
the right to appoint one member to BCV’s advisory board
.
As of June 30, 2012,
we have nine (9) active license agreements with established agricultural biotechnology companies.
Agricultural Research
Program
Our agricultural research
and development is performed by one (1) researcher, at our direction, at the University of Waterloo, where the technology was developed.
Additional agricultural research and development is performed by our license or joint collaboration partners.
The discoverer of our
technology, John E. Thompson, Ph.D., is the Associate Vice President, Research and former Dean of Science at the University of
Waterloo in Ontario, Canada, and is our Executive Vice President and Chief Scientific Officer. Dr. Thompson is also one of our
directors and owns 1.1% of the outstanding shares of our common stock, $0.01 par value, as of June 30, 2012.
On September 1, 1998,
we entered into, and have extended through August 31, 2013, a research and development agreement with the University of Waterloo
and Dr. Thompson as the principal inventor. The Research and Development Agreement provides that the University of Waterloo will
perform research and development under our direction, and we will pay for the cost of this work and make certain payments to the
University of Waterloo. In return for payments made under the Research and Development Agreements, we have all rights to the intellectual
property derived from the research.
Agricultural
Competition
Our competitors in
agriculture that are presently attempting to distribute their technology have generally utilized one of the following distribution
channels:
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licensing technology to major marketing and distribution
partners;
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entering into strategic alliances; or
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developing in-house production and marketing capabilities.
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In addition, some
competitors are established distribution companies, which alleviates the need for strategic alliances, while others are attempting
to create their own distribution and marketing channels.
Our competitors in
the field of delaying plant senescence are companies that develop and produce transformed plants with a variety of enhanced traits.
Such companies include: Mendel Biotechnology; Renessen LLC; Exelixis Plant Sciences, Inc.; and Syngenta International AG; among
others.
We do not currently
have any commercialized products, and therefore, it is difficult to assess our competitive position in the market. However, we
believe that if we or our licensees are able to develop and commercialize a product or products using our technology, we will have
a competitive position in the markets in which we or our licensees operate.
Agricultural
Development
Program
Generally, projects
with our licensees begin by transforming seed or germplasm to incorporate our technology. Those seeds or germplasm are then grown
in our partners’ greenhouses. After successful greenhouse trials, our partners will transfer the plants to the field for
field trials. After completion of successful field trials, our partners may have to apply for and receive regulatory approval prior
to initiation of any commercialization activities.
Generally, the approximate
time to complete each sequential development step is as follows:
Seed Transformation
|
approximately 1 to 2 years
|
Greenhouse
|
approximately 1 to 2 years
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Field Trials
|
approximately 2 to 5 years
|
The actual amount of
time spent on each development phase depends on the crop, its growth cycle and the success of the transformation achieving the
desired results. As such, the amount of time for each phase of development could vary, or the time frames may change.
The status of each
of our projects with our partners is as follows:
Project
|
|
Partner
|
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Status
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Banana
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Rahan Meristem
|
|
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- Shelf Life
|
|
|
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Field trials
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- Disease Resistance
|
|
|
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Field trials
|
Trees
|
|
Arborgen
|
|
|
- Growth
|
|
|
|
Field trials
|
Alfalfa
|
|
Cal/West
|
|
Field trials
|
Corn
|
|
Monsanto
|
|
Field trials
|
Cotton
|
|
Bayer
|
|
Greenhouse
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Canola
|
|
Bayer
|
|
Field trials
|
Rice
|
|
Bayer
|
|
Greenhouse
|
Soybean
|
|
Monsanto
|
|
Field trials
|
Turfgrass
|
|
The Scotts Company
|
|
Greenhouse
|
Biofuels
|
|
BioCorp Ventures
|
|
Initial Evaluation
|
Commercialization by our partners may require
a combination of traits in a crop, such as both shelf life and disease resistance, or other traits.
Based upon our commercialization strategy,
we anticipate that there may be a significant period of time before plants enhanced using our technology reach consumers.
Intellectual Property
We
have twenty-seven (27) issued patents from the United States Patent and Trademark Office, or PTO, and sixty-six (66) issued patents
from foreign countries. Of our ninety-three (93) domestic and foreign issued patents, fifty-six (56) are for the use of our technology
in agricultural applications and thirty-seven (37) relate to human therapeutics applications.
In addition to our
ninety-three (93) patents, we have a wide variety of patent applications, including divisional applications and continuations
-in-part,
in process with the PTO and internationally. We intend to continue our strategy of enhancing these new patent applications through
the addition of data as it is collected.
Our
agricultural patents are generally set to expire in 2019 in the United States and 2025 outside the United States. Our core human
therapeutic technology patents are set to expire in 2021 in the United States and 2025 outside the United States, and our patents
related to multiple myeloma are set to expire, both in and outside the United States in 2029.
To the extent our patents
have different expiration dates abroad than in the United States, we are currently developing a strategy to extend the United States
expiration dates to the foreign expiration dates.
During our 2012 and
2011 fiscal years, we reviewed our patent portfolio in order to determine if we could reduce our cost of patent prosecution and
maintenance. We identified several patents and patents pending that we believe we no longer need to maintain without having a material
impact on the portfolio. We determined that we would no longer incur the cost to prosecute or maintain those patents or patents
pending.
Government Regulation
At present, the U.S.
federal government regulation of biotechnology is divided among three agencies: (i) the U.S. Department of Agriculture regulates
the import, field-testing and interstate movement of specific types of genetic engineering that may be used in the creation of
transformed plants; (ii) the Environmental Protection Agency regulates activity related to the invention of plant pesticides and
herbicides, which may include certain kinds of transformed plants; and (iii) the FDA regulates foods derived from new plant varieties.
The FDA requires that transformed plants meet the same standards for safety that are required for all other plants and foods in
general. Except in the case of additives that significantly alter a food’s structure, the FDA does not require any additional
standards or specific approval for genetically engineered foods but expects transformed plant developers to consult the FDA before
introducing a new food into the market place.
In addition, our ongoing
preclinical research with cell lines and lab animal models of human disease is not currently subject to the FDA requirements that
govern clinical trials. However, use of our technology, SNS01-T, for human therapeutic applications, is subject to FDA regulation.
Generally, the FDA must approve any drug or biologic product before it can be marketed in the United States. In addition, prior
to being sold outside of the U.S., any products resulting from the application of our human therapeutic technology must be approved
by the regulatory agencies of foreign governments. Prior to filing a new drug application or biologics license application with
the FDA, we would have to perform extensive clinical trials, and prior to beginning any clinical trial, we need to perform extensive
preclinical testing which could take several years and may require substantial expenditures.
Our current activities
in human therapeutics related to our clinical trial in multiple myeloma, requires approval by the FDA. We have an open IND with
the FDA for use of SNS01-T for the treatment of multiple myeloma and are subject to additional reporting to and monitoring by the
FDA. Additionally, federal, state and foreign regulations relating to crop protection products and human therapeutic applications
developed through biotechnology are subject to public concerns and political circumstances, and, as a result, regulations have
changed and may change substantially in the future. Accordingly, we may become subject to governmental regulations or approvals
or become subject to licensing requirements in connection with our research and development efforts. We may also be required to
obtain such licensing or approval from the governmental regulatory agencies described above, or from state agencies, prior to the
commercialization of our genetically transformed plants and human therapeutic technology. In addition, our marketing partners who
utilize our technology or sell products grown with our technology may be subject to government regulations. If unfavorable governmental
regulations are imposed on our technology or if we fail to obtain licenses or approvals in a timely manner, we may not be able
to continue our operations.
Employees
In
addition to the twelve (12) scientists and monitors performing funded research for us at our CRO, the University of Waterloo,
and other
commercial research facilities, we have four (4) employees and three (3) consultants, four
(4) of whom are executive officers and who are involved in our management. We do not anticipate hiring any additional employees
over the next 12 months.
The officers are assisted
by a Scientific Advisory Board that consists of prominent experts in the fields of plant and human cell biology as follows:
|
·
|
Alan Bennett, Ph.D., who serves as the Chairman of the Scientific Advisory Board, is the Associate
Vice Chancellor of the Office of Technology Transfer at the University of California. His research interests include the molecular
biology of tomato fruit development and ripening, the molecular basis of membrane transport, and cell wall disassembly.
|
|
·
|
Charles A. Dinarello, M.D., who serves as a member of the Scientific Advisory Board, is a Professor
of Medicine at the University of Colorado School of Medicine, a member of the U.S. National Academy of Sciences and the author
of over 500 published research articles. In addition to his active academic research career, Dr. Dinarello has held advisory positions
with two branches of the National Institutes of Health and positions on the Board of Governors of both the Weizmann Institute and
Ben Gurion University.
|
|
·
|
James E. Mier, M.D., who serves as a member of the Scientific Advisory Board, is an Associate Professor
of Medicine at Beth Israel Deaconess Medical Center, a teaching hospital of Harvard Medical School. He is also a practicing physician
in the Division of Hematology-Oncology at Beth Israel. Dr. Mier’s research is funded by the NIH and he is a member of numerous
professional societies.
|
Furthermore, pursuant
to the Research and Development Agreements, a substantial amount of our research and development activities are conducted at the
University of Waterloo under the supervision of Dr. Thompson, our Executive Vice President and Chief Scientific Officer. We utilize
the University’s research staff including graduate and post-graduate researchers.
We may also contract
research to additional university laboratories or to other companies in order to advance the development of our technology.
Safe Harbor Statement
The statements contained
in this Annual Report on Form 10-K that are not historical facts are forward-looking statements within the meaning of Section 21E
of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. Such forward-looking
statements may be identified by, among other things, the use of forward-looking terminology such as “believes,” “expects,”
“may,” “will,” “should,” or “anticipates” or the negative thereof or other variations
thereon or comparable terminology, or by discussions of strategy that involve risks and uncertainties. In particular, our statements
regarding the anticipated growth in the markets for our technologies, the continued advancement of our research, the approval of
our patent applications, the possibility of governmental approval in order to sell or offer for sale to the general public a genetically
engineered plant or plant product, the successful implementation of our commercialization strategy, including the success of our
agricultural partners, statements relating to our patent applications, the anticipated long term growth of our business, the results
of our preclinical or clinical studies, if any, our ability to comply with the continued listing standards of the NYSE MKT, and
the timing of the projects and trends in future operating performance are examples of such forward-looking statements. The forward-looking
statements include risks and uncertainties, including, but not limited to, our ability to recruit patients for its clinical trial,
our limited operating history, our need for additional capital to fund our operations until we are able to generate a profit, the
current economic environment, our dependence on a single principal technology, our outsourcing of our research and development
activities, our significant future capital needs, our dependence on our patents and proprietary rights and the enforcement of these
rights, the potential for our competitors or third parties to allege that we are infringing upon their intellectual property rights,
the potential that our security measures may not adequately protect our unpatented technology, potential difficulty in managing
our growth and expanding our operations, our lack of marketing or sales history and dependence on third-party marketing partners,
our potential future dependence on joint ventures and strategic alliances to develop and market our technology, the intense competition
in the human therapeutic and agricultural biotechnology industries, the various government regulations that our business is subject
to, the potential that our preclinical studies and clinical trials of our human therapeutic applications may be unsuccessful, any
inability to license from third parties their proprietary technologies or processes which we use in connection with the development
of our technology, the length, expense and uncertainty associated with clinical trials for our human therapeutic technology, the
potential that, even if we receive regulatory approval, consumers may not accept products containing our technology, our dependence
on key personnel, the potential that certain provisions of our charter, by-laws and Delaware law could make a takeover difficult,
increasing political and social turmoil, the potential that our management and other affiliates, due to their significant control
of our common stock have the ability to significantly influence our actions, the potential that a significant portion of our total
outstanding shares of common stock may be sold in the market in the near future, the limited trading market of our common stock,
the potential that our common stock may be delisted from the NYSE MKT, fluctuations in the market price of our common stock, our
dividend policy and potential for our stockholders to be diluted.
The more prominent
risks and uncertainties inherent in our business are described below. However, additional risks and uncertainties may also impair
our business operations. If any of the following risks actually occur, our business, financial condition or results of operations
may suffer.
Risks Related to Our Business
Recurring losses and negative cash
flows from operations raise substantial doubt about our ability to continue as a going concern and we may not be able to continue
as a going concern.
Our recurring losses
from operations and negative cash flows from operations raise substantial doubt about our ability to continue as a going concern
and as a result, our independent registered public accounting firm included an explanatory paragraph in its report on our consolidated
financial statements for the fiscal year ended June 30, 2012 with respect to this uncertainty. Substantial doubt about our ability
to continue as a going concern may create negative reactions to the price of the common shares of our stock and we may have a more
difficult time obtaining financing.
We have prepared our
financial statements on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities
and commitments in the normal course of business. The financial statements do not include any adjustments relating to the recoverability
and classification of recorded asset amounts or amounts of liabilities that might be necessary should we be unable to continue
in existence.
We have a limited operating history
and have incurred substantial losses and expect to incur future losses
.
We
are a development stage biotechnology company with a limited operating history and limited assets and capital. We have incurred
losses each year since inception and had an accumulated deficit
of $67,440,295 at
June 30, 2012.
We have generated minimal revenues by licensing our technology for certain crops to companies willing to share in our development
costs. In addition, our technology may not be ready for commercialization for several years. We expect to continue to incur losses
for the next several years because we anticipate that our expenditures on research and development and administrative activities
will significantly exceed our revenues during that period. We cannot predict when, if ever, we will become profitable.
We will need additional capital to
fund our operations until we are able to generate a profit.
Our operations to date
have required significant cash expenditures. Our future capital requirements will depend on the results of our research and development
activities, preclinical and clinical studies, and competitive and technological advances.
We will need to obtain
more funding in the future through collaborations or other arrangements with research institutions and corporate partners, or public
and private offerings of our securities, including debt or equity financing. We may not be able to obtain adequate funds for our
operations from these sources when needed or on acceptable terms. Future collaborations or similar arrangements may require us
to license valuable intellectual property to, or to share substantial economic benefits with, our collaborators. If we raise additional
capital by issuing additional equity or securities convertible into equity, our stockholders may experience dilution and our share
price may decline. Any debt financing may result in restrictions on our spending.
If we are unable to
raise additional funds, we will need to do one or more of the following:
|
o
|
delay, scale-back or eliminate some or all of our research and product
development programs;
|
|
o
|
provide licenses to third parties to develop and commercialize products
or technologies that we would otherwise seek to develop and commercialize ourselves;
|
|
o
|
seek strategic alliances or business combinations;
|
|
o
|
attempt to sell our company;
|
We
believe that at the projected rate of spending we should have sufficient cash to maintain our present operations through
November
2012. However, we have the ability to raise additional capital through our ATM facility, utilize our unused line of credit and,
if necessary, delay certain costs which would provide us with sufficient cash to maintain our present operations through March
2013.
We may be adversely affected by the
current economic environment.
Our ability to obtain
financing, invest in and grow our business, and meet our financial obligations depends on our operating and financial performance,
which in turn is subject to numerous factors. In addition to factors specific to our business, prevailing economic conditions and
financial, business and other factors beyond our control can also affect our business and ability to raise capital. We cannot anticipate
all of the ways in which the current economic climate and financial market conditions could adversely impact our business.
Materials necessary to manufacture
some of our compounds currently under development may not be available on commercially reasonable terms, or at all, which may delay
our development and commercialization of these compounds.
Some of the materials necessary for the
manufacture of our compounds under development may, from time to time, be available either in limited quantities, or from a limited
number of manufacturers, or both. Our contract manufacturers need to obtain these materials for our clinical trials and, potentially,
for commercial distribution when and if we obtain marketing approval for these compounds. Suppliers may not sell us these materials
at the time we need them or on commercially reasonable terms. If we are unable to obtain the materials needed to conduct our clinical
trials, product testing and potential regulatory approval could be delayed, adversely affecting our ability to develop the product
candidates. Similarly, if we are unable to obtain critical manufacturing materials after regulatory approval has been obtained
for a product candidate, the commercial launch of that product candidate could be delayed or there could be a shortage in supply,
which could materially affect our ability to generate revenues from that product candidate. If suppliers increase the price of
manufacturing materials, the price for one or more of our products may increase, which may make our products less competitive in
the marketplace. If it becomes necessary to change suppliers for any of these materials or if any of our suppliers experience a
shutdown or disruption at the facilities used to produce these materials, due to technical, regulatory or other reasons, it could
harm our ability to manufacture our products.
We depend on
a single principal technology and, if our technology is not commercially successful, we will have no alternative source of revenue
.
Our primary business
is the development and licensing of technology to identify, isolate, characterize and promote or silence genes which control the
death of cells in humans and plants. Our future revenue and profitability critically depend upon our ability, or our licensees’
ability, to successfully develop apoptosis and senescence gene technology and later license or market such technology. We have
conducted experiments on certain crops with favorable results and have conducted certain preliminary cell-line and animal experiments,
which have provided us with data upon which we have designed additional research programs. However, we cannot give any assurance
that our technology will be commercially successful or economically viable for any crops or human therapeutic applications.
In addition, no assurance
can be given that adverse consequences might not result from the use of our technology such as the development of negative effects
on humans or plants or reduced benefits in terms of crop yield or protection. Our failure to obtain market acceptance of our technology
or the failure of our current or potential licensees to successfully commercialize such technology would have a material adverse
effect on our business.
We outsource
all of our research and development activities and, if we are unsuccessful in maintaining our alliances with these third parties,
our research and development efforts may be delayed or curtailed.
We
rely on third parties to perform all of our research and development activities. Our research and development efforts take place
at the University of Waterloo in Ontario, Canada, where our technology was
discovered, at other commercial research facilities
and with our comme
rcial partners. At this time, we do not have the internal capabilities to perform
our own research and development activities. Accordingly, the failure of third party research partners to perform under agreements
entered into with us, or our failure to renew important research agreements with these third parties, may delay or curtail our
research and development efforts.
We have significant
future capital needs and may be unable to raise capital when needed, which could force us to delay or reduce our research and development
efforts.
As
of June 30,
2012, we had a cash balance of $2,001,325 and working capital of $386,532. Using our available reserves as of
June 30, 2012, we believe that we can operate according to our current business plan through November 2012.
However, we have the ability to raise additional capital through our ATM facility, utilize our unused line of credit and,
if necessary, delay certain costs, which would provide us with sufficient cash to maintain our present operations through March
2013.
To date, we have generated
minimal revenues and anticipate that our operating costs will exceed any revenues generated over the next several years. Therefore,
we will be required to raise additional capital in the future in order to operate in accordance with our current business plan,
and this funding may not be available on favorable terms, if at all. If we are unable to raise additional funds, we will need to
do one or more of the following:
|
o
|
delay, scale back or eliminate some or all of our research and development
programs;
|
|
o
|
provide a license to third parties to develop and commercialize our
technology that we would otherwise seek to develop and commercialize ourselves;
|
|
o
|
seek strategic alliances or business combinations;
|
|
o
|
attempt to sell our company;
|
In
addition, in connection with any funding, if we need to issue more equity securities than our certificate of incorporation currently
authorizes, or more than 20% of the shares of our common stock outstanding, we may need stockholder approval. If stockholder approval
is not obtained or if adequate funds are not available, we may be required to curtail operations significantly or to obtain funds
through arrangements with collaborative partners or others that may require us to relinquish rights to certain of our technologies,
product candidates, products or potential markets. Investors may experience dilution in their investment from future offerings
of our common stock. For example, if we raise additional capital by issuing equity securities, such an issuance would reduce the
percentage ownership of existing stockholders. In addition, assuming the exercise of all options and warrants outstanding and the
conversion of the preferred stock into common stock, as of June 30, 2012, we
had 134,779,878 shares
of common stock authorized but unissued and unreserved, which may be issued from time to time by our board of directors. Furthermore,
we may need to issue securities that have rights, preferences and privileges senior to our common stock. Failure to obtain financing
on acceptable terms would have a material adverse effect on our liquidity.
Since our inception,
we have financed all of our operations through equity and debt financings. Our future capital requirements depend on numerous factors,
including:
|
o
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the scope of our research and development;
|
|
o
|
our ability to attract business partners willing to share in our development
costs;
|
|
o
|
our ability to successfully commercialize our technology;
|
|
o
|
competing technological and market developments;
|
|
o
|
our ability to enter into collaborative arrangements for the development,
regulatory approval and commercialization of other products; and
|
|
o
|
the cost of filing, prosecuting, defending and enforcing patent claims
and other intellectual property rights.
|
Our business
depends upon our patents and proprietary rights and the enforcement of these rights. Our failure to obtain and maintain patent
protection may increase competition and reduce demand for our technology.
As a result of the
substantial length of time and expense associated with developing products and bringing them to the marketplace in the biotechnology
and agricultural industries, obtaining and maintaining patent and trade secret protection for technologies, products and processes
is of vital importance. Our success will depend in part on several factors, including, without limitation:
|
o
|
our ability to obtain patent protection for our technologies and processes;
|
|
o
|
our ability to preserve our trade secrets; and
|
|
o
|
our ability to operate without infringing the proprietary rights of
other parties both in the United States and in foreign countries.
|
As of June 30, 2012,
we have been issued twenty-seven (27) patents by the PTO and sixty-six (66) patents from foreign countries
.
We have also filed numerous patent applications for our technology in the United States and in several foreign countries, which
technology is vital to our primary business, as well as several continuations in part on these patent applications. Our success
depends in part upon the grant of patents from our pending patent applications.
Although we believe
that our technology is unique and that it will not violate or infringe upon the proprietary rights of any third party, we cannot
assure you that these claims will not be made or if made, could be successfully defended against. If we do not obtain and maintain
patent protection, we may face increased competition in the United States and internationally, which would have a material adverse
effect on our business.
Since patent applications
in the United States are maintained in secrecy until patents are issued, and since publication of discoveries in the scientific
and patent literature tend to lag behind actual discoveries by several months, we cannot be certain that we were the first creator
of the inventions covered by our pending patent applications or that we were the first to file patent applications for these inventions.
In addition, among other things,
we cannot assure you that:
|
o
|
our patent applications will result in the issuance of patents;
|
|
o
|
any patents issued or licensed to us will be free from challenge and
if challenged, would be held to be valid;
|
|
o
|
any patents issued or licensed to us will provide commercially significant
protection for our technology, products and processes;
|
|
o
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other companies will not independently develop substantially equivalent
proprietary information which is not covered by our patent rights;
|
|
o
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other companies will not obtain access to our know-how;
|
|
o
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other companies will not be granted patents that may prevent the commercialization
of our technology; or
|
|
o
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we will not incur licensing fees and the payment of significant other
fees or royalties to third parties for the use of their intellectual property in order to enable us to conduct our business.
|
Our competitors
may allege that we are infringing upon their intellectual property rights, forcing us to incur substantial costs and expenses in
resulting litigation, the outcome of which would be uncertain.
Patent law is still
evolving relative to the scope and enforceability of claims in the fields in which we operate. We are like most biotechnology companies
in that our patent protection is highly uncertain and involves complex legal and technical questions for which legal principles
are not yet firmly established. In addition, if issued, our patents may not contain claims sufficiently broad to protect us against
third parties with similar technologies or products, or provide us with any competitive advantage.
The PTO and the courts
have not established a consistent policy regarding the breadth of claims allowed in biotechnology patents.
The allowance of broader claims may increase the incidence and cost of patent interference proceedings and the risk of infringement
litigation. On the other hand, the allowance of narrower claims may limit the scope and value of our proprietary rights.
The laws of some foreign
countries do not protect proprietary rights to the same extent as the laws of the United States, and many companies have encountered
significant problems and costs in protecting their proprietary rights in these foreign countries.
We could become involved
in infringement actions to enforce and/or protect our patents. Regardless of the outcome, patent litigation is expensive and time
consuming and would distract our management from other activities. Some of our competitors may be able to sustain the costs of
complex patent litigation more effectively than we could because they have substantially greater resources. Uncertainties resulting
from the initiation and continuation of any patent litigation could limit our ability to continue our operations.
If our technology
infringes the intellectual property of our competitors or other third parties, we may be required to pay license fees or damages.
The current patent
landscape surrounding siRNA technology is unclear due to the recent proliferation of siRNA-related patent litigation and grants
of third-party patents encompassing this technology. If any relevant claims of third party patents that are adverse to us are upheld
as valid and enforceable, we could be prevented from commercializing our technology or could be required to obtain licenses from
the owners of such patents. We cannot assure you that such licenses would be available or, if available, would be on acceptable
terms. Some licenses may be non-exclusive and, therefore, our competitors may have access to the same technology licensed to us.
In addition, if any parties successfully claim that the creation or use of our technology infringes upon their intellectual property
rights, we may be forced to pay damages, including treble damages.
Our security
measures may not adequately protect our unpatented technology and, if we are unable to protect the confidentiality of our proprietary
information and know-how, the value of our technology may be adversely affected.
Our success depends
upon know-how, unpatentable trade secrets, and the skills, knowledge and experience of our scientific and technical personnel.
As a result, all employees agreed to a confidentiality provision in their employment agreement that prohibited the disclosure of
confidential information to anyone outside of our company, during the term of employment and for five (5) years thereafter. The
employment agreements have since been terminated, but the period of confidentiality is still in effect. We also require all employees
to disclose and assign to us the rights to their ideas, developments, discoveries and inventions. We also attempt to enter into
similar agreements with our consultants, advisors and research collaborators. We cannot assure you that adequate protection for
our trade secrets, know-how or other proprietary information against unauthorized use or disclosure will be available.
We occasionally provide
information to research collaborators in academic institutions and request that the collaborators conduct certain tests. We cannot
assure you that the academic institutions will not assert intellectual property rights in the results of the tests conducted by
the research collaborators, or that the academic institutions will grant licenses under such intellectual property rights to us
on acceptable terms, if at all. If the assertion of intellectual property rights by an academic institution is substantiated, and
the academic institution does not grant intellectual property rights to us, these events could limit our ability to commercialize
our technology.
As we evolve
from a company primarily involved in the research and development of our technology into one that is also involved in the commercialization
of our technology, we may have difficulty managing our growth and expanding our operations.
As our business grows,
we may need to add employees and enhance our management, systems and procedures. We may need to successfully integrate our internal
operations with the operations of our marketing partners, manufacturers, distributors and suppliers to produce and market commercially
viable products. We may also need to manage additional relationships with various collaborative partners, suppliers and other organizations.
Although we do not presently conduct research and development activities in-house, we may undertake those activities in the future.
Expanding our business may place a significant burden on our management and operations. We may not be able to implement improvements
to our management information and control systems in an efficient and timely manner and we may discover deficiencies in our existing
systems and controls. Our failure to effectively respond to such changes may make it difficult for us to manage our growth and
expand our operations.
We have no marketing
or sales history and depend on third party marketing partners. Any failure of these parties to perform would delay or limit our
commercialization efforts.
We have no history
of marketing, distributing or selling biotechnology products, and we are relying on our ability to successfully establish marketing
partners or other arrangements with third parties to market, distribute and sell a commercially viable product both here and abroad.
Our business plan envisions creating strategic alliances to access needed commercialization and marketing expertise. We may not
be able to attract qualified sub-licensees, distributors or marketing partners, and even if qualified, these marketing partners
may not be able to successfully market agricultural products or human therapeutic applications developed with our technology. If
our current or potential future marketing partners fail to provide adequate levels of sales, our commercialization efforts will
be delayed or limited and we may not be able to generate revenue.
We will depend
on joint ventures and strategic alliances to develop and market our technology and, if these arrangements are not successful, our
technology may not be developed and the expenses to commercialize our technology will increase.
In its current state
of development, our technology is not ready to be marketed to consumers. We intend to follow a multi-faceted commercialization
strategy that involves the licensing of our technology to business partners for the purpose of further technological development,
marketing and distribution. We have and are seeking business partners who will share the burden of our development costs while
our technology is still being developed, and who will pay us royalties when they market and distribute products incorporating our
technology upon commercialization. The establishment of joint ventures and strategic alliances may create future competitors, especially
in certain regions abroad where we do not pursue patent protection. If we fail to establish beneficial business partners and strategic
alliances, our growth will suffer and the continued development of our technology may be harmed.
Competition
in the human therapeutic and agricultural biotechnology industries is intense and technology is changing rapidly. If our competitors
market their technology faster than we do, we may not be able to generate revenues from the commercialization of our technology.
Many
human therapeutic and agricultural biotechnology companies are engaged in research and development activities relating to apoptosis
and senescence. The market for plant protection and yield enhancement products is intensely competitive, rapidly changing and undergoing
consolidation. We may be unable to compete successfully against our current and future competitors, which may result in price reductions,
reduced margins and the inability to achieve market acceptance for products containing our technology. Our competitors in the field
of plant senescence gene technology are companies that develop and produce transgenic plants and include major international agricultural
companies, specialized biotechnology companies, research and academic institutions and, potentially, our joint venture and strategic
alliance partners. These companies
include: Mendel Biotechnology, Inc.; Ceres, Inc., Archer Daniels Midland and Syngenta
International AG; among others. Some of our competitors that are involved in apoptosis research include: Celgene, Inc.; Takeda/Millennium;
ONYX Pharmaceuticals, Inc.; Amgen Inc.; Janssen Biotech, Inc.; Novartis AG; and
Pharmacyclics,
Inc.
Many of these competitors have substantially greater financial, marketing, sales, distribution
and technical resources than us and have more experience in research and development, clinical trials, regulatory matters, manufacturing
and marketing. We anticipate increased competition in the future as new companies enter the market and new technologies become
available. Our technology may be rendered obsolete or uneconomical by technological advances or entirely different approaches developed
by one or more of our competitors, which will prevent or limit our ability to generate revenues from the commercialization of our
technology.
Our business
is subject to various government regulations and, if we or our licensees are unable to obtain regulatory approval, we may not be
able to continue our operations.
At present, the U.S.
federal government regulation of biotechnology is divided among three agencies:
|
o
|
the United States Department of Agriculture, or USDA, regulates the
import, field testing and interstate movement of specific types of genetic engineering that may be used in the creation of transgenic
plants;
|
|
o
|
the United States Environmental Protection Agency, or EPA, regulates
activity related to the invention of plant pesticides and herbicides, which may include certain kinds of transgenic plants; and
|
|
o
|
the FDA regulates foods derived from new plant varieties.
|
The FDA requires that
transgenic plants meet the same standards for safety that are required for all other plants and foods in general. Except in the
case of additives that significantly alter a food’s structure, the FDA does not require any additional standards or specific
approval for genetically engineered foods, but expects transgenic plant developers to consult the FDA before introducing a new
food into the marketplace.
Use of our technology,
if developed for human therapeutic applications, is also subject to FDA regulation. The FDA must approve any drug or biologic product
before it can be marketed in the United States. In addition, prior to being sold outside of the United States, any products resulting
from the application of our human therapeutic technology must be approved by the regulatory agencies of foreign governments. Prior
to filing a new drug application or biologics license application with the FDA, we would have to perform extensive clinical trials,
and prior to beginning any clinical trial, we would need to perform extensive preclinical testing which could take several years
and may require substantial expenditures.
We
believe that our current agricultural activities, which to date have been confined to research and development efforts, do not
require licensing or approval by any governmental regulatory agency. However, we
are
performing
clinical trials in connection with our human therapeutic applications, which is subject to FDA approval. Additionally, federal,
state and foreign regulations relating to crop protection products and human therapeutic applications developed through biotechnology
are subject to public concerns and political circumstances, and, as a result, regulations have changed and may change substantially
in the future. Accordingly, we may become subject to governmental regulations or approvals or become subject to licensing requirements
in connection with our research and development efforts. We may also be required to obtain such licensing or approval from the
governmental regulatory agencies described above, or from state agencies, prior to the commercialization of our genetically transformed
plants and human therapeutic technology. In addition, our marketing partners who utilize our technology or sell products grown
with our technology may be subject to government regulations. If unfavorable governmental regulations are imposed on our technology
or if we fail to obtain licenses or approvals in a timely manner, we may not be able to continue our operations.
Preclinical
studies of our human therapeutic applications may be unsuccessful, which could delay or prevent regulatory approval.
Preclinical studies
may reveal that our human therapeutic technology is ineffective or harmful, and/or may be unsuccessful in demonstrating efficacy
and safety of our human therapeutic technology, which would significantly limit the possibility of obtaining regulatory approval
for any drug or biologic product manufactured with our technology. The FDA requires submission of extensive preclinical, clinical
and manufacturing data to assess the efficacy and safety of potential products. Any delay in receiving approval for any applicable
IND from the FDA would result in a delay in the commencement of the related clinical trial. Additionally, we could be required
to perform additional preclinical studies prior to the FDA approving any applicable IND. Furthermore, the success of preliminary
studies does not ensure commercial success, and later-stage clinical trials may fail to confirm the results of the preliminary
studies.
Our success
will depend on the success of our clinical trials of our human therapeutic applications.
It may take several
years to complete the clinical trials of a product, and failure of one or more of our clinical trials can occur at any stage of
testing. We believe that the development of our product candidate involves significant risks at each stage of testing. If clinical
trial difficulties and failures arise, our product candidate may never be approved for sale or become commercially viable.
There are a number
of difficulties and risks associated with clinical trials. These difficulties and risks may result in the failure to receive regulatory
approval to sell our product candidate or the inability to commercialize our product candidate. The possibility exists that:
|
·
|
we may discover that the product candidate does not exhibit the expected therapeutic results in
humans, may cause harmful side effects or have other unexpected characteristics that may delay or preclude regulatory approval
or limit commercial use if approved;
|
|
·
|
the results from early clinical trials may not be statistically significant or predictive of results
that will be obtained from expanded advanced clinical trials;
|
|
·
|
institutional review boards or regulators, including the FDA, may hold, suspend or terminate our
clinical research or the clinical trials of our product candidate for various reasons, including noncompliance with regulatory
requirements or if, in their opinion, the participating subjects are being exposed to unacceptable health risks;
|
|
·
|
subjects may drop out of our clinical trials;
|
|
·
|
our preclinical studies or clinical trials may produce negative, inconsistent or inconclusive results,
and we may decide, or regulators may require us, to conduct additional preclinical studies or clinical trials; and
|
|
·
|
the cost of our clinical trials may be greater than we currently anticipate.
|
Clinical trials
for our human therapeutic technology will be lengthy and expensive and their outcome is uncertain.
Before obtaining regulatory
approval for the commercial sales of any product containing our technology, we must demonstrate through clinical testing that our
technology and any product containing our technology is safe and effective for use in humans. Conducting clinical trials is a time-consuming,
expensive and uncertain process and typically requires years to complete. In our industry, the results from preclinical studies
and early clinical trials often are not predictive of results obtained in later-stage clinical trials. Some products and technologies
that have shown promising results in preclinical studies or early clinical trials subsequently fail to establish sufficient safety
and efficacy data necessary to obtain regulatory approval. At any time during clinical trials, we or the FDA might delay or halt
any clinical trial for various reasons, including:
|
o
|
occurrence of unacceptable toxicities or side effects;
|
|
o
|
ineffectiveness of the product candidate;
|
|
o
|
negative or inconclusive results from the clinical trials, or results
that necessitate additional studies or clinical trials;
|
|
o
|
delays in obtaining or maintaining required approvals from institutions,
review boards or other reviewing entities at clinical sites;
|
|
o
|
delays in patient enrollment; or
|
|
o
|
insufficient funding or a reprioritization of financial or other resources.
|
Any failure or substantial
delay in successfully completing clinical trials and obtaining regulatory approval for our product candidates could severely harm
our business.
If our clinical
trials for our product candidates are delayed, we would be unable to commercialize our product candidates on a timely basis, which
would materially harm our business.
Planned clinical trials
may not begin on time or may need to be restructured after they have begun. Clinical trials can be delayed for a variety of reasons,
including delays related to:
|
·
|
obtaining an effective IND or regulatory approval to commence a clinical trial;
|
|
·
|
negotiating acceptable clinical trial agreement terms with prospective trial sites;
|
|
·
|
obtaining institutional review board approval to conduct a clinical trial at a prospective site;
|
|
·
|
recruiting qualified subjects to participate in clinical trials;
|
|
·
|
competition in recruiting clinical investigators;
|
|
·
|
shortage or lack of availability of supplies of drugs for clinical trials;
|
|
·
|
the need to repeat clinical trials as a result of inconclusive results or poorly executed testing;
|
|
·
|
the placement of a clinical hold on a study;
|
|
·
|
the failure of third parties conducting and overseeing the operations of our clinical trials to
perform their contractual or regulatory obligations in a timely fashion; and
|
|
·
|
exposure of clinical trial subjects to unexpected and unacceptable health risks or noncompliance
with regulatory requirements, which may result in suspension of the trial.
|
We believe that our
product candidate has significant milestones to reach, including the successful completion of clinical trials, before commercialization.
If we have significant delays in or termination of clinical trials, our financial results and the commercial prospects for our
product candidates or any other products that we may develop will be adversely impacted. In addition, our product development costs
would increase and our ability to generate revenue could be impaired.
Any inability
to license from third parties their proprietary technologies or processes which we use in connection with the development of our
technology may impair our business.
Other companies, universities
and research institutions have or may obtain patents that could limit our ability to use our technology in a product candidate
or impair our competitive position. As a result, we would have to obtain licenses from other parties before we could continue using
our technology in a product candidate. Any necessary licenses may not be available on commercially acceptable terms, if at all.
If we do not obtain required licenses, we may not be able to develop our technology into a product candidate or we may encounter
significant delays in development while we redesign methods that are found to infringe on the patents held by others.
Even if we receive
regulatory approval, consumers may not accept products containing our technology, which will prevent us from being profitable since
we have no other source of revenue.
We cannot guarantee
that consumers will accept products containing our technology. Recently, there has been consumer concern and consumer advocate
activism with respect to genetically-engineered agricultural consumer products. The adverse consequences from heightened consumer
concern in this regard could affect the markets for agricultural products developed with our technology and could also result in
increased government regulation in response to that concern. If the public or potential customers perceive our technology to be
genetic modification or genetic engineering, agricultural products grown with our technology may not gain market acceptance.
We face potential product liability
exposure far in excess of our limited insurance coverage.
We may be held liable
if any product we or our collaborators develop causes injury or is found otherwise unsuitable during product testing, manufacturing,
marketing or sale. Regardless of merit or eventual outcome, product liability claims could result in decreased demand for our product
candidates, injury to our reputation, withdrawal of patients from our clinical trials, substantial monetary awards to trial participants
and the inability to commercialize any products that we may develop. These claims might be made directly by consumers, health care
providers, pharmaceutical companies or others selling or testing our products. We have obtained limited product liability insurance
coverage for our clinical trials; however, our insurance may not reimburse us or may not be sufficient to reimburse us for expenses
or losses we may suffer. Moreover, if insurance coverage becomes more expensive, we may not be able to maintain insurance coverage
at a reasonable cost or in sufficient amounts to protect us against losses due to liability. If we obtain marketing approval for
any of our product candidates, we intend to expand our insurance coverage to include the sale of commercial products, but we may
be unable to obtain commercially reasonable product liability insurance for any products approved for marketing. On occasion, juries
have awarded large judgments in class action lawsuits for claims based on drugs that had unanticipated side effects. In addition,
the pharmaceutical and biotechnology industries, in general, have been subject to significant medical malpractice litigation. A
successful product liability claim or series of claims brought against us could harm our reputation and business and would decrease
our cash reserves.
We depend on
our key personnel and, if we are not able to attract and retain qualified scientific and business personnel, we may not be able
to grow our business or develop and commercialize our technology.
We are highly dependent
on our scientific advisors, consultants and third-party research partners. Our success will also depend in part on the continued
service of our key employees and our ability to identify, hire and retain additional qualified personnel in an intensely competitive
market. Although we have a research agreement with Dr. John Thompson, this agreement may be terminated upon short or no notice.
Additionally, we do not have employment agreements with our key employees. We do not maintain key person life insurance on any
member of management. The failure to attract and retain key personnel could limit our growth and hinder our research and development
efforts.
Certain provisions
of our charter, by-laws, Delaware law and stock plans could make a takeover difficult.
Certain provisions
of our certificate of incorporation and by-laws could make it more difficult for a third party to acquire control of us, even if
the change in control would be beneficial to stockholders. Our certificate of incorporation authorizes our board of directors to
issue, without stockholder approval, except as may be required by the rules of the NYSE MKT, 5,000,000 shares of preferred stock
with voting, conversion and other rights and preferences that could adversely affect the voting power or other rights of the holders
of our common stock.
In addition, we are
subject to the Business Combination Act of the Delaware General Corporation Law which, subject to certain exceptions, restricts
certain transactions and business combinations between a corporation and a stockholder owning 15% or more of the corporation’s
outstanding voting stock for a period of three years from the date such stockholder becomes a 15% owner. These provisions may have
the effect of delaying or preventing a change of control of us without action by our stockholders and, therefore, could adversely
affect the value of our common stock.
Furthermore, in the
event of our merger or consolidation with or into another corporation, or the sale of all or substantially all of our assets in
which the successor corporation does not assume our outstanding equity awards or issue equivalent equity awards, our current equity
plans require the accelerated vesting of such outstanding equity awards.
Risks Related to Our Common Stock
We currently
do not meet the NYSE MKT continued listing standards. If our common stock is delisted from the NYSE MKT, we may not be able to
list on any other stock exchange, and our common stock may be subject to the “penny stock” regulations which may affect
the ability of our stockholders to sell their shares.
The NYSE MKT requires
us to meet minimum financial requirements in order to maintain our listing. Currently, we do not meet the $6,000,000 minimum net
worth continued listing requirement of the NYSE MKT
and have received a notice of noncompliance from
the NYSE MKT. We submitted a plan of compliance on November 17, 2011 to the NYSE MKT discussing how we intend to regain compliance
with the continued listing requirements. The NYSE MKT has accepted our plan and granted us an extension until July 20, 2012 to
regain compliance with the NYSE MKTs’s continuing listing standards.
On July 20, 2012, we were still not in compliance
with the NYSE MKT’s continued listing requirements and requested an extension of time to regain compliance. On August 22,
2012, we received a notice from NYSE Regulation, Inc. on behalf of NYSE MKT providing notification that NYSE MKT has determined
not to grant us an extension of time to cure the non-compliance and therefore, the NYSE MKT intends to file a delisting application
with the Securities and Exchange Commission striking our common stock from the NYSE MKT. We have requested an appeal to the NYSE
MKT’s determination and have been granted a hearing with a committee of NYSE MKT in accordance with our rights as set forth
in Sections 1203 and 1009(d) of the NYSE MKT Company Guide. The date of the appeal hearing is scheduled for October 24, 2012.
If
we are not successful with our appeal, it is likely that we will be delisted.
If we are delisted from the NYSE MKT, our
common stock likely will become a “penny stock.” In general, regulations of the SEC define a “penny stock”
to be an equity security that is not listed on a national securities exchange and that has a market price of less than $5.00 per
share or with an exercise price of less than $5.00 per share, subject to certain exceptions. If our common stock becomes a penny
stock, additional sales practice requirements would be imposed on broker-dealers that sell such securities to persons other than
certain qualified investors. For transactions involving a penny stock, unless exempt, a broker-dealer must make a special suitability
determination for the purchaser and receive the purchaser’s written consent to the transaction prior to the sale. In addition,
the rules on penny stocks require delivery, prior to and after any penny stock transaction, of disclosures required by the SEC.
If our stock is not
accepted for listing on the NYSE MKT, we will make every possible effort to have it listed on the Over the Counter Bulletin Board,
or the OTC Bulletin Board. If our common stock was to be traded on the OTC Bulletin Board, the Securities Exchange Act of 1934,
as amended, and related SEC rules would impose additional sales practice requirements on broker-dealers that sell our securities.
These rules may adversely affect the ability of stockholders to sell our common stock and otherwise negatively affect the liquidity,
trading market and price of our common stock.
We
believe that the listing of our common stock on a recognized national trading market, such as the NYSE MKT, is an important part
of our business and strategy. Such a listing helps our stockholders by providing a readily available trading market with current
quotations. Without that, stockholders may have a difficult time getting a quote for the sale or purchase of our stock, the sale
or purchase of our stock would likely be made more difficult and the trading volume and liquidity of our stock would likely decline.
The absence of such a listing may adversely affect the acceptance of our common stock as currency or the value accorded it by other
parties.
In that regard, the absence of a listing on a recognized national trading market will also affect our ability to
benefit from the use of our operations and expansion plans, including for use in licensing agreements, joint ventures, the development
of strategic relationships and acquisitions, which are critical to our business and strategy and none of which is currently the
subject of any agreement, arrangement or understanding, with respect to any future financing or strategic relationship we may undertake.
A delisting from the NYSE MKT could result in negative publicity and could negatively impact our ability to raise capital in the
future.
Our management
and other affiliates have significant control of our common stock and could significantly influence our actions in a manner that
conflicts with our interests and the interests of other stockholders.
As
of June 30, 2012, our executive officers and directors together beneficially own
approximately 30.8% of
the outstanding shares of our common stock, assuming the conversion of preferred stock and exercise of options and warrants which
are currently exercisable or will become exercisable within 60 days of June 30, 2012, held by these stockholders. As a result,
these stockholders, acting together, will be able to exercise significant influence over matters requiring approval by our stockholders,
including the election of directors, and may not always act in the best interests of other stockholders. Such a concentration of
ownership may have the effect of delaying or preventing a change in control of us, including transactions in which our stockholders
might otherwise receive a premium for their shares over then-current market prices.
A significant
portion of our total outstanding shares of common stock may be sold in the market in the near future, which could cause the market
price of our common stock to drop significantly.
As
of June 30 2012, we
had 94,112,483 shares of our common stock issued and outstanding and 4,579 shares of convertible preferred
stock outstanding which can convert into 17,611,538 shares of common stock. Approximately 34,164,431 shares of such shares are
registered pursuant to registration statements on Form S-3 and 77,559,590 of which are either eligible to be sold under SEC Rule
144 or are in the public float. In addition, we have registered 35,890,007 shares of our common stock underlying warrants previously
issued on Form S-3 registration statements
and we registered
25,215,260
shares of our common stock underlying options granted or to be granted under our stock option plan. Consequently, sales of substantial
amounts of our common stock in the public market, or the perception that such sales could occur, may have a material adverse effect
on our stock price.
Our common stock
has a limited trading market, which could limit your ability to resell your shares of common stock at or above your purchase price.
Our
common stock is quoted on the NYSE MKT and currently has a limited trading market. The NYSE MKT requires us to meet minimum financial
requirements in order to maintain
our listing. Currently, we do not meet the continued listing requirements of the NYSE
MKT. If
we do not regain compliance with the continued listing standards, we could be delisted. We cannot
assure you that an active trading market will develop or, if developed, will be maintained. As a result, our stockholders may find
it difficult to dispose of shares of our common stock and, as a result, may suffer a loss of all or a substantial portion of their
investment.
The market price
of our common stock may fluctuate and may drop below the price you paid.
We cannot assure you
that you will be able to resell the shares of our common stock at or above your purchase price. The market price of our common
stock may fluctuate significantly in response to a number of factors, some of which are beyond our control. These factors include:
|
o
|
quarterly variations in operating results;
|
|
o
|
the progress or perceived progress of our research and development efforts;
|
|
o
|
changes in accounting treatments or principles;
|
|
o
|
announcements by us or our competitors of new technology, product and
service offerings, significant contracts, acquisitions or strategic relationships;
|
|
o
|
additions or departures of key personnel;
|
|
o
|
future offerings or resales of our common stock or other securities;
|
|
o
|
stock market price and volume fluctuations of publicly-traded companies
in general and development companies in particular; and
|
|
o
|
general political, economic and market conditions.
|
For example, during
the quarter ended June 30, 2012, our common stock traded between $0.16 and $0.31 per share
.
Because we do
not intend to pay, and have not paid, any cash dividends on our shares of common stock, our stockholders will not be able to receive
a return on their shares unless the value of our common stock appreciates and they sell their shares.
We have never paid
or declared any cash dividends on our common stock, and we intend to retain any future earnings to finance the development and
expansion of our business. We do not anticipate paying any cash dividends on our common stock in the foreseeable future. Therefore,
our stockholders will not be able to receive a return on their investment unless the value of our common stock appreciates and
they sell their shares.
Our stockholders
may experience substantial dilution as a result of the conversion of convertible preferred stock, the exercise of options and warrants
to purchase our common stock, or due to anti-dilution provisions relating to any on the foregoing.
As of June 30, 2012,
we have outstanding 4,579 shares of convertible preferred stock which may convert into 17,611,538 shares of our common stock and
warrants to purchase 57,225,981 shares of our common stock. In addition, as of June 30, 2012, we have reserved 25,215,260
shares of our common stock for issuance upon the exercise of options granted or available to be granted pursuant to our stock option
plan, all of which may be granted in the future. Furthermore, in connection with the preferred stock agreements, we are required
to reserve an additional 16,999,084 shares of common stock. The conversion of the convertible preferred stock and the exercise
of these options and warrants will result in dilution to our existing stockholders and could have a material adverse effect on
our stock price. The conversion price of the convertible preferred stock and certain warrants are also subject to certain anti-dilution
adjustments.
Item 1B.
|
Unresolved Staff Comments.
|
None.
Effective May 19, 2011,
we lease office space in Bridgewater, New Jersey for a current monthly rental fee of $5,703, subject to certain escalations for
our proportionate share of increases, over the base year of 2011, in the building's operating costs. The lease expires on May 31,
2013 but can be extended at our option for one additional year. The space is in good condition, and we believe it will adequately
serve as our headquarters over the term of the lease. We also believe that this office space is adequately insured by the lessor.
Item 3.
|
Legal Proceedings.
|
We are
not currently a party to any legal proceedings; however, we may become involved in various claims and legal actions arising in
the ordinary course of business.
Item 4.
|
Mine Safety Disclosures.
|
None.
PART II
Item 5.
|
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
|
Our common stock trades
on the NYSE MKT under the symbol SNT.
The following table
sets forth the range of the high and low sales price for our common stock for each of the quarters since the quarter ended September
30, 2010, as reported on the NYSE MKT.
Quarter
Ended
|
|
Common
Stock
|
|
|
|
High
|
|
|
Low
|
|
|
|
|
|
|
|
|
September 30, 2010
|
|
$
|
0.42
|
|
|
$
|
0.25
|
|
December 31, 2010
|
|
$
|
0.33
|
|
|
$
|
0.22
|
|
March 31, 2011
|
|
$
|
0.36
|
|
|
$
|
0.23
|
|
June 30, 2011
|
|
$
|
0.32
|
|
|
$
|
0.24
|
|
September 30, 2011
|
|
$
|
0.31
|
|
|
$
|
0.18
|
|
December 31, 2011
|
|
$
|
0.29
|
|
|
$
|
0.16
|
|
March 31, 2012
|
|
$
|
0.28
|
|
|
$
|
0.21
|
|
June 30, 2012
|
|
$
|
0.31
|
|
|
$
|
0.18
|
|
As
of
September 1, 2012, the approximate number of holders of record of our common stock was 290
.
This
number does not include “street name” or beneficial holders, whose shares are held of record by banks, brokers and
other financial institutions.
We have neither paid
nor declared dividends on our common stock since our inception, and we do not plan to pay dividends on our common stock in the
foreseeable future. We expect that any earnings, which we may realize, will be retained to finance the growth of our company.
The following table
provides information about the securities authorized for issuance under our equity compensation plans as of June 30, 2012.
EQUITY COMPENSATION PLAN INFORMATION
|
|
Number of securities
to be issued upon
exercise of outstanding
options, warrants
and rights and restricted
stock units
|
|
|
Weighted-average
exercise price of
outstanding options,
warrants and rights and
restricted stock units
|
|
|
Number of securities
remaining
available for future
issuance
under equity
compensation plans
|
|
Equity compensation plans approved by security holders
|
|
|
15,647,742
|
(1)
|
|
$
|
0.50
|
|
|
|
11,588,876
|
(2)
|
Equity compensation plans not approved by security holders
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Total
|
|
|
15,647,742
|
(1)
|
|
$
|
0.50
|
|
|
|
11,588,876
|
(2)
|
|
(1)
|
Issued pursuant to our 1998 Stock Plan and 2008 Stock Plan.
|
|
(2)
|
Available for future issuance pursuant to our 2008 Stock Plan.
|
RECENT SALES OF UNREGISTERED SECURITIES;
USE OF PROCEEDS FROM REGISTERED SECURITIES
None, except as previously disclosed on
our Quarterly reports on Forms 10-Q and Current Reports on Forms 8-K.
PERFORMANCE GRAPH
The
following graph compares the cumulative total stockholder return on our common stock with the cumulative total return on the NYSE
Amex Market Value (U.S.) Index and the RDG Microcap Biotechnology Index for the period beginning July 1, 2007 and ending on
the last day of our last completed fiscal year. The stock performance shown on the graph below is not indicative of future price
performance.
|
|
7/1/07
|
|
|
6/30/08
|
|
|
6/30/09
|
|
|
6/30/10
|
|
|
6/30/11
|
|
|
6/30/12
|
|
Senesco Technologies, Inc.
|
|
$
|
100.00
|
|
|
$
|
160,87
|
|
|
$
|
72.17
|
|
|
$
|
27.39
|
|
|
$
|
24.35
|
|
|
$
|
18.09
|
|
NYSE Amex Composite Index
|
|
$
|
100.00
|
|
|
$
|
101.05
|
|
|
$
|
77.20
|
|
|
$
|
91.05
|
|
|
$
|
126.03
|
|
|
$
|
131.42
|
|
RDG Microcap Biotechnology Index
|
|
$
|
100.00
|
|
|
$
|
56.60
|
|
|
$
|
44.14
|
|
|
$
|
40.01
|
|
|
$
|
34.94
|
|
|
$
|
31.26
|
|
Item 6.
|
Selected Financial Data.
|
The following Selected
Financial Data should be read in conjunction with “Item 7. Management’s Discussion and Analysis of Financial Condition
and Results of Operations” and “Item 8. Financial Statements and Supplementary Data” included elsewhere in this
Annual Report on Form 10-K.
SELECTED FINANCIAL DATA
|
|
Fiscal Year Ended June 30,
|
|
|
|
2012
|
|
|
2011
|
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
|
(In thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Statement of Operations Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
200
|
|
|
$
|
-
|
|
|
$
|
140
|
|
|
$
|
275
|
|
|
$
|
457
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative
|
|
|
2,724
|
|
|
|
2,610
|
|
|
|
2,349
|
|
|
|
2,206
|
|
|
|
2,291
|
|
Research and development
|
|
|
2,566
|
|
|
|
3,720
|
|
|
|
2,637
|
|
|
|
2,354
|
|
|
|
1,765
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
5,290
|
|
|
|
6,330
|
|
|
|
4,986
|
|
|
|
4,560
|
|
|
|
4,056
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from operations
|
|
|
(5,090
|
)
|
|
|
(6,330
|
)
|
|
|
(4,846
|
)
|
|
|
(4,285
|
)
|
|
|
(3,599
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Grant income
|
|
|
-
|
|
|
|
244
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Fair value – warrant liability
|
|
|
472
|
|
|
|
609
|
|
|
|
2,517
|
|
|
|
-
|
|
|
|
-
|
|
Other noncash expense
|
|
|
-
|
|
|
|
(116
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Loss on extinguishment of debt
|
|
|
-
|
|
|
|
-
|
|
|
|
(362
|
)
|
|
|
-
|
|
|
|
-
|
|
Write off of patents abandoned
|
|
|
(321
|
)
|
|
|
(1,588
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Amortization of debt discount and financing costs
|
|
|
-
|
|
|
|
-
|
|
|
|
(10,081
|
)
|
|
|
(478
|
)
|
|
|
(668
|
)
|
Interest expense – convertible notes
|
|
|
-
|
|
|
|
-
|
|
|
|
(587
|
)
|
|
|
(1,007
|
)
|
|
|
(434
|
)
|
Interest (expense) income, net
|
|
|
(127
|
)
|
|
|
(88
|
)
|
|
|
(24
|
)
|
|
|
43
|
|
|
|
100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
(5,066
|
)
|
|
|
(7,269
|
)
|
|
|
(13,383
|
)
|
|
|
(5,727
|
)
|
|
|
(4,601
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred dividends
|
|
|
(1,626
|
)
|
|
|
(2,638
|
)
|
|
|
(6,240
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss available to common shares
|
|
$
|
(6,692
|
)
|
|
$
|
(9,907
|
)
|
|
$
|
(19,623
|
)
|
|
$
|
(5,727
|
)
|
|
$
|
(4,601
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted net loss per common share
|
|
$
|
(0.08
|
)
|
|
$
|
(0.14
|
)
|
|
$
|
(0.67
|
)
|
|
$
|
(0.30
|
)
|
|
$
|
(0.26
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted weighted average number of common shares outstanding
|
|
|
85,703
|
|
|
|
69,332
|
|
|
|
29,113
|
|
|
|
18,888
|
|
|
|
17,660
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash, cash equivalents and investments
|
|
$
|
2,001
|
|
|
$
|
3,610
|
|
|
$
|
8,026
|
|
|
$
|
1,431
|
|
|
$
|
6,176
|
|
Working capital
|
|
|
387
|
|
|
|
1,788
|
|
|
|
6,002
|
|
|
|
1,259
|
|
|
|
5,673
|
|
Total assets
|
|
|
6,955
|
|
|
|
8,597
|
|
|
|
13,912
|
|
|
|
7,122
|
|
|
|
10,643
|
|
Accumulated deficit
|
|
|
(67,440
|
)
|
|
|
(60,748
|
)
|
|
|
(50,841
|
)
|
|
|
(35,950
|
)
|
|
|
(30,223
|
)
|
Total stockholders’ equity
|
|
|
3,453
|
|
|
|
4,517
|
|
|
|
7,981
|
|
|
|
5,668
|
|
|
|
9,836
|
|
Item 7.
|
Management's Discussion and Analysis of Financial Condition and Results of
Operations.
|
The discussion in “Management’s
Discussion and Analysis of Financial Condition and Results of Operations” contains trend analysis, estimates and other forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange
Act of 1934, as amended. These forward-looking statements include, without limitation, statements containing the words “believes,”
“anticipates,” “expects,” “continue,” and other words of similar import or the negative of
those terms or expressions. Such forward-looking statements are subject to known and unknown risks, uncertainties, estimates and
other factors that may cause our actual results, performance or achievements, or industry results, to be materially different from
any future results, performance or achievements expressed or implied by such forward-looking statements. Actual results could differ
materially from those set forth in such forward-looking statements as a result of, but not limited to, the “Risk Factors”
described in Part I, Item 1A. You should read the following discussion and analysis along with the “Selected Financial Data”
and the financial statements and notes attached to those statements included elsewhere in this report.
Overview
We are a development
stage company. We do not expect to generate significant revenues for several years, during which time we will engage in significant
research and development efforts.
Our human therapeutic
research program, which has consisted of clinical and pre-clinical in-vitro and in-vivo experiments designed to assess the role
and method of action of the Factor 5A genes in human diseases, is performed by approximately twelve (12) third party researchers
at our direction, at the University of Waterloo and other commercial research facilities.
We
have developed a therapeutic candidate, SNS01-T, for the potential treatment of multiple myeloma.
We have performed efficacy,
toxicological and dose-finding studies
in vitro
in non-human and human cells and
in-vivo
in mice for SNS01. We have
also completed our pivotal GLP toxicology studies in mice and dogs, employing SNS01-T, a slightly modified formulation of SNS01,
and have an open IND, with the FDA. We have also been granted orphan drug status for SNS01-T by the FDA for the potential treatment
of multiple myeloma, mantle cell lymphoma and diffuse large B-cell lymphoma.
We have initiated a
Phase 1b/2a clinical study with SNS01-T in multiple myeloma patients. The clinical study is an open-label, multiple-dose, dose-escalation
study, which will evaluate the safety and tolerability of SNS01-T when administered by intravenous infusion to relapsed or refractory
multiple myeloma patients. The study design calls for four cohorts of three to six patients each. Patients in each cohort will
receive twice-weekly dosing for six weeks followed by a four-week safety data review period before escalating to a higher dose
level in the next cohort. While the primary objective of the initial study is to evaluate safety and tolerability, the effect of
SNS01-T on tumor response will also be evaluated using multiple, well-established criteria including measurement of the monoclonal
protein, or M-protein. We have selected Mayo Clinic, University of Arkansas for Medical Sciences and West Virginia University as
our clinical sites. The study is open and we have begun treating patients.
We may consider other
human diseases in order to determine the role of Factor 5A and SNS01-T.
Additionally, we have
nine active agricultural license agreements to develop and commercialize our technology in corn, soy, cotton, rice, canola, trees,
banana, alfalfa, biofuels and turf grass. The licenses provide for upfront payments, milestone payments and royalty payments to
us upon commercial introduction.
Consistent with our
commercialization strategy, we may license our technology for human health applications or for additional crops, as the opportunities
may arise, that may result in additional license fees, revenues from contract research and other related revenues. Successful future
operations will depend on our and our partners’ ability to transform our research and development activities into a commercially
feasible technology.
Critical Accounting Policies and Estimates
Revenue Recognition
We record revenue under
technology license and development agreements related to the following. Actual fees received may vary from the recorded estimated
revenues.
|
·
|
Nonrefundable upfront license fees that are received in exchange for the transfer of our technology
to licensees, for which no further obligations to the licensee exist with respect to the basic technology transferred, are recognized
as revenue on the earlier of when payments are received or collections are assured.
|
|
·
|
Nonrefundable upfront license fees that are received in connection with agreements that include
time-based payments are, together with the time-based payments, deferred and amortized ratably over the estimated research period
of the license.
|
|
·
|
Milestone payments, which are contingent upon the achievement of certain research goals, are recognized
as revenue when the milestones, as defined in the particular agreement, are achieved.
|
The effect of any change
in revenues from technology license and development agreements would be reflected in revenues in the period such determination
was made. Historically, no such adjustments have been made.
Estimates of Expenses
Our research and development
agreements with third parties provide for an estimate of our expenses and costs, which are variable and are based on the actual
services performed by the third party. We estimate the aggregate amount of the expenses based upon the projected amounts that are
set forth in the agreements, and we accrue the expenses for which we have not yet been invoiced or prepay the expenses that have
been invoiced but the services have not yet been performed. In estimating the expenses, we consider, among other things, the following
factors:
|
·
|
the existence of any prior relationship between us and the third party provider;
|
|
·
|
the past results of prior research and development services performed by the third party provider;
and
|
|
·
|
the scope and timing of the research and development services set forth in the agreement with the
third party provider.
|
After the research
services are
performed and we are invoiced, we make any adjustments that are necessary to accurately
report research and development expense for the period.
Income Taxes
We account for income
taxes in accordance with an asset and liability approach requiring the recognition of deferred tax assets and liabilities for the
expected tax consequences of events that have been recognized in the financial statements or tax returns. Deferred tax assets and
liabilities are recorded without consideration as to their ability to be realized. The deferred tax asset includes net operating
loss and credit carryforwards, and the cumulative temporary differences related to stock-based compensation. The portion of any
deferred tax asset, for which it is more likely than not that a tax benefit will not be realized, must then be offset by recording
a valuation allowance against the asset.
In assessing the realizability
of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets
will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income
during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred
tax liabilities, projected future taxable income and tax planning strategies in making this assessment. Management believes it
is more likely than not that we will not realize the deferred tax assets in excess of deferred tax liabilities, and as such, a
full valuation allowance is maintained against the net deferred tax assets.
While we believe that
our tax positions are fully supportable, there is a risk that certain positions could be challenged successfully. In these instances,
we look to establish reserves. If we determine that a tax position is more likely than not of being sustained upon audit, based
solely on the technical merits of the position, we recognize the benefit. We measure the benefit by determining the amount that
has likelihood greater than 50% of being realized upon settlement. We presume that all tax positions will be examined by a taxing
authority with full knowledge of all relevant information. We regularly monitor our tax positions, tax assets and tax liabilities.
We reevaluate the technical merits of our tax positions and recognize an uncertain tax benefit or derecognize a previously recorded
tax benefit when (i) there is a completion of a tax audit, (ii) there is a change in applicable tax law including a tax case or
legislative guidance, or (iii) there is an expiration of the statute of limitations. Significant judgment is required in accounting
for tax reserves.
Stock-based Compensation
We measure all employee
stock-based compensation awards using a fair value method and record such expense in our consolidated financial statements. Such
expense is amortized on a straight line basis over the requisite service period of the award.
We estimate the grant
date fair value of stock options using the Black-Scholes option-pricing model which requires the input of highly subjective assumptions.
These assumptions include estimating the expected term of the award and the estimated volatility of our stock price over the expected
term. Changes in these assumptions and in the estimated forfeitures of stock option awards may materially affect the amount of
stock-based compensation recognized in our consolidated statements of operations.
In connection with
our short-term and long-term incentive plans, our management reviews the specific goals of such plans to determine if such goals
have been achieved or are probable that they will be achieved. If the goals have been achieved or are probable of being achieved,
then the amount of compensation expense determined on the date of grant related to those specific goals is charged to compensation
expense at such time.
Intangible Assets
We test all intangible
assets for recoverability whenever events or changes in circumstances indicate that we may not be able to recover an asset’s
carrying amount. We evaluate the recoverability of an asset by comparing its carrying amount to the undiscounted cash flows expected
to result from the use and eventual disposition of that asset. If the undiscounted cash flows are not sufficient to recover the
carrying amount, we measure any impairment loss as the excess of the carrying amount of the asset over its fair value. Events which
could trigger asset impairment include significant underperformance relative to historical or projected future operating results,
significant changes in the manner or use of an asset or in our overall business strategy, significant negative industry or economic
trends, shortening of product life-cycles, negative changes in third party reimbursement, or changes in technology.
As of June 30, 2012,
we have determined that market value of our one asset group is in excess of its carrying value and therefore there was no impairment.
Warrant Liability
We
compute valuations each quarter using the Black-Scholes model
,
which
requires the input of subjective assumptions for volatility,
for warrants that have an exercise price reset feature
to account for the various possibilities that could occur due to changes in the inputs to the Black-Scholes model as a result of
contractually-obligated changes. We effectively weight each calculation based on the likelihood of occurrence to determine the
value of the derivative at the reporting date. The fair value of the warrants that have cash settlement features is estimated using
the Black-Scholes model.
Changes in these assumptions may materially affect the amount of the warrant
liability recorded on our consolidated balance sheet.
Convertible Preferred Stock
During
the year ended June 30, 2010, we issued convertible preferred stock and warrants for gross proceeds in the amount of $11,497,000.
The proceeds have been allocated between convertible preferred stock and warrants based upon their fair values, whereby the fair
value of the warrants have been determined using the Black-Scholes model. Such amount was recorded as a liability. The remaining
amounts were allocated to the convertible preferred stock and were recorded as equity.
Liquidity and Capital Resources
Overview
As
of June 30, 2012, our cash balance totaled $2,001,325, and we had working capital of $386,532.
Contractual Obligations
The following table
lists our cash contractual obligations as of June 30, 2012:
|
|
Payments Due by Period
|
|
Contractual
Obligations
|
|
Total
|
|
|
Less than
1 year
|
|
|
1
-
3
years
|
|
|
3
-
5
years
|
|
|
More than
5 years
|
|
Research and Development Agreements
(1)
|
|
$
|
573,676
|
|
|
$
|
468,071
|
|
|
$
|
105,605
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Facility, Rent and Operating Leases
(2)
|
|
$
|
62,733
|
|
|
$
|
62,733
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Employment, Consulting and Scientific Advisory Board Agreements
(3)
|
|
$
|
67,500
|
|
|
$
|
67,500
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Total Contractual Cash Obligations
|
|
$
|
703,909
|
|
|
$
|
598,304
|
|
|
$
|
105,605
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
(1)
|
Certain of our research and development agreements disclosed herein provide that payment is to
be made in Canadian dollars and, therefore, the contractual obligations are subject to fluctuations in the exchange rate.
|
|
(2)
|
The lease for our office space in Bridgewater, New Jersey is subject to certain escalations for
our proportionate share of increases in the building’s operating costs.
|
|
(3)
|
Certain of our consulting agreements provide for automatic renewal, which is not reflected in the
table, unless terminated earlier by the parties to the respective agreements.
|
Effective June 20,
2011, we entered into a Master Services Agreement with Criterium under which CRITERIUM will provide professional and technical
services in connection with the management of our planned Phase 1b/2a clinical trial for the treatment of multiple myeloma. The
agreement, as amended, has an initial term that commences on the date of the agreement and runs for a period of twenty-nine (29)
months. Our remaining financial obligation under the agreement is estimated to be $289,890 and is included in the above table.
Effective August 15,
2011, we entered into a Clinical Trial Research Agreement with Mayo Clinic, or MAYO, under which MAYO will perform our planned
Phase 1b/2a clinical trial for the treatment of multiple myeloma. The agreement has an initial term that commences on the date
of the agreement and continues until the study is completed and all final study documentation required to be provided is received
and accepted by us. Our financial obligation under the agreement includes a fixed cost and a cost per patient and is not included
in the above table.
Effective February
28, 2012, we entered into a Clinical Trial Research Agreement with University of Arkansas for Medical Sciences, or ARKANSAS, under
which ARKANSAS will perform our planned Phase 1b/2a clinical trial for the treatment of multiple myeloma. The agreement has an
initial term that commences on the date of the agreement and continues until the study is completed and all final study documentation
required to be provided is received and accepted by us. Our financial obligation under the agreement includes a fixed cost and
a cost per patient and is not included in the above table.
Effective March 5,
2012, we entered into a Clinical Trial Research Agreement with West Virginia University Research Corporation, or WVU, under which
WVU will perform our planned Phase 1b/2a clinical trial for the treatment of multiple myeloma. The agreement has an initial term
that commences on the date of the agreement and continues until the study is completed and all final study documentation required
to be provided is received and accepted by us. Our financial obligation under the agreement includes a fixed cost and a cost per
patient and is not included in the above table.
Effective September
1, 2012, we extended our research and development agreement with the University of Waterloo for an additional one-year period through
August 31, 2013, in the amount of CAD $611,550, or approximately USD $612,000 and is not included in the above table. Research
and development expenses under this agreement aggregated USD $573,368 for the year ended June 30, 2012, USD $622,872 for the year
ended June 30, 2011, USD $672,693 for the year ended June 30, 2010, and USD $7,149,301 for the cumulative period from inception
through June 30, 2012.
We expect our capital
requirements to increase significantly over the next several years as we commence new research and development efforts, increase
our business and administrative infrastructure and embark on developing in-house business capabilities and facilities. Our future
liquidity and capital funding requirements will depend on numerous factors, including, but not limited to, the levels and costs
of our research and development initiatives and the cost and timing of the expansion of our business development and administrative
staff.
Capital Resources
Since
inception, we have generated
revenues of $1,790,000 in
connection with the initial fees and milestone
payments received under our license and development agreements. We have also received $244,479 in grants. We have not been profitable
since inception, we will continue to incur additional operating losses in the future, and we will require additional financing
to continue the development and subsequent commercialization of our technology. While we do not expect to generate significant
revenues from the licensing of our technology for several years, we may enter into additional licensing or other agreements with
marketing and distribution partners that may result in additional license fees, receive revenues from contract research, or other
related revenue.
Financing
On December 22, 2010,
we initiated an ATM offering pursuant to which we, from time to time, may issue and sell shares of our common stock, par value
$0.01 per share, with an aggregate offering price of up to $5,500,000. Such common stock will be offered and sold pursuant to a
prospectus supplement filed with the Securities and Exchange Commission in connection with our shelf registration statement on
Form S-3 (File No. 333-170140), which became effective on November 9, 2010.
Upon delivery of a
placement notice by us, if any, the placement agent may sell the common stock in any method permitted by law deemed to be an “at
the market” offering as defined in Rule 415 promulgated under the Securities Act of 1933, as amended, at prices prevailing
at the time of sale or at prices related to such prevailing market prices, including sales made directly on the NYSE MKT, or NYSE
MKT, or sales made through a market maker other than on an exchange. The placement agent will make all sales using commercially
reasonable efforts consistent with its normal sales and trading practices on mutually agreed upon terms between the placement agent
and us. We will pay the placement agent a commission of up to 6% of the gross proceeds from the sale of shares of the common stock,
depending on the per share sales price. We have agreed to reimburse a portion of the placement agent’s expenses in connection
with the offering, up to an aggregate amount of $25,000. In addition, we granted customary indemnification rights to the placement
agent.
The ATM will terminate
upon the earlier of (1) the sale of all of the common stock subject to the ATM, or (2) upon termination by us or the placement
agent. The placement agent may terminate the ATM in certain circumstances, including the occurrence of a material adverse change
that, in the placement agent’s reasonable judgment, may impair its ability to sell the common stock, our failure to satisfy
any condition under the ATM or a suspension or limitation of trading of the common stock on the NYSE MKT. In addition, either we
or the placement agent may terminate the ATM at any time and for any reason upon 10 days prior notice to the other party.
During the fiscal year
ended June 30, 2012, we issued 1,834,557 shares of common stock under the ATM for gross proceeds in the amount of $509,670. From
July 1, 2012 through September 1, 2012, we issued an additional 117,965 shares of common stock under the ATM for gross proceeds
in the amount of $100,571. From inception of the ATM through September 15, 2012, we issued 8,099,909 shares of common stock for
gross proceeds in the amount of $2,463,661.
In January 2012 and
March 2012, we issued an aggregate of 11,007,739 shares of common stock and 4,926,949 warrants in a public offering for gross proceeds
in the amount of $2,862,012.
We
anticipate that, based upon our current cash balance at June 30, 2012 and the funds received under the ATM subsequent to June 30,
2012, we will be able to fund our operations
through November 2012.
However, we have the
ability to raise additional capital through our ATM facility, utilize our unused line of credit and, if necessary, delay certain
costs which will provide us with enough cash to fund our operations at least through March 31, 2013.
Over the next 12 months,
we plan to fund our research and development and commercialization activities by:
|
·
|
utilizing our current cash balance and investments,
|
|
·
|
achieving some of the milestones set forth in our current licensing agreements,
|
|
·
|
through the execution of additional licensing agreements for our technology, and
|
|
·
|
through the placement of equity or debt instruments.
|
We cannot assure you
that we will be able to raise money through any of the foregoing transactions, or on favorable terms, if at all.
Results of Operations
Fiscal Year ended
June 30, 2012
Revenue
During
the fiscal year ended June 30, 2012, we earned revenue in the amount of
$200,000
, which consisted
of a milestone payment in connection with an agricultural license agreement.
We did not earn any
revenue during the fiscal year ended June 30, 2011.
We anticipate that
we will receive future milestone payments in connection with our current agricultural development and license agreements. Additionally,
we anticipate that we may receive future royalty payments from our license agreements when our partners commercialize their crops
containing our technology. However, it is difficult for us to determine our future revenue expectations because we are a development
stage biotechnology company with no history of receiving development milestone payments or royalties, and the timing and outcome
of our experiments, the timing of signing new partners and the timing of our partners moving through the development process into
commercialization is difficult to accurately predict.
Operating expenses
|
|
Fiscal Year Ended June 30,
|
|
|
|
2012
|
|
|
2011
|
|
|
Change
|
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative
|
|
$
|
2,724,144
|
|
|
$
|
2,610,222
|
|
|
$
|
113,922
|
|
|
|
4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development
|
|
|
2,566,247
|
|
|
|
3,720,394
|
|
|
|
(1,154,147
|
)
|
|
|
(31
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
$
|
5,290,391
|
|
|
$
|
6,330,616
|
|
|
$
|
(1,040,225
|
)
|
|
|
(16
|
)%
|
We expect operating
expenses to increase over the next 12 months as we anticipate that research and development expenses will increase as we continue
to expand our research and development activities.
General and administrative
expenses
General and administrative
expenses consist of the following:
|
|
Fiscal Year ended June 30,
|
|
|
|
2012
|
|
|
2011
|
|
|
|
|
|
|
|
|
Stock-based compensation
|
|
$
|
721,197
|
|
|
$
|
709,207
|
|
Payroll and benefits
|
|
|
588,407
|
|
|
|
568,597
|
|
Investor relations
|
|
|
203,871
|
|
|
|
260.455
|
|
Professional fees
|
|
|
518,473
|
|
|
|
425,640
|
|
Depreciation and amortization
|
|
|
258,023
|
|
|
|
143,274
|
|
Other general and administrative expenses
|
|
|
434,173
|
|
|
|
503,049
|
|
|
|
|
|
|
|
|
|
|
Total general and administrative expenses
|
|
$
|
2,724,144
|
|
|
$
|
2,610,222
|
|
|
·
|
Stock-based compensation for the fiscal years ended June 30, 2012 and June 30, 2011 consisted of
the amortized portion of the Black-Scholes value of options, restricted stock units and warrants granted to directors, employees
and consultants. During the fiscal years ended June 30, 2012 and 2011, the following options and warrants were granted to such
individuals:
|
|
|
June 30, 2012
|
|
|
June 30, 2011
|
|
|
|
|
|
|
|
|
Options
|
|
|
5,274,428
|
|
|
|
4,579,142
|
|
|
|
|
|
|
|
|
|
|
Warrants
|
|
|
None
|
|
|
|
305,000
|
|
Stock-based compensation for
the fiscal year ended June 30, 2012 was higher than the fiscal year ended June 30, 2011 primarily due to the greater number of
options and warrants granted.
|
·
|
Payroll and benefits for the fiscal year ended June 30, 2012 was higher than for the fiscal year
ended June 30, 2011 primarily as a result of a 401K contribution made during the fiscal year ended June 30, 2012 and salary increases
effective July 1, 2011. There was no 401K contribution during the fiscal year ended June 30, 2011.
|
|
|
|
|
·
|
Investor relations fees for the fiscal year ended June 30, 2012 was lower than for the fiscal year
ended June 30, 2011 primarily as a result of lower consultant fees.
|
|
|
|
|
·
|
Professional fees for the fiscal year ended June 30, 2012 was higher than for the fiscal year ended
June 30, 2011 primarily as a result of an increase in legal and accounting fees. Legal fees increased primarily due to fees incurred
in connection with the exploration of alternative uses of our technology and discounts on legal fees that were recorded during
the fiscal year ended June 30, 2011 but were not available during the fiscal year ended June 30, 2012. Accounting fees increased
primarily due to the use of a consultant to prepare a valuation of the Company’s intangible assets.
|
|
|
|
|
·
|
Depreciation and amortization for the fiscal year ended June 30, 2012 was higher than for the fiscal
year ended June 30, 2011 primarily as a result of an increase in amortization of patent costs.
|
|
·
|
Other general and administrative expenses for the fiscal year ended June 30, 2012 was lower than
for the fiscal year ended June 30, 2011 primarily due to a decrease in consultant costs, rent and telecom, which was partially
offset by an increase in insurance costs.
|
We expect cash-based
general and administrative expenses to remain relatively unchanged over the next twelve months.
Research and development
expenses
|
|
Fiscal Year Ended June 30,
|
|
|
|
|
|
|
|
|
|
2012
|
|
|
2011
|
|
|
Change
|
|
|
%
|
|
Stock-based compensation
|
|
$
|
44,807
|
|
|
$
|
41,159
|
|
|
$
|
3,648
|
|
|
|
9
|
%
|
Payroll
|
|
|
167,834
|
|
|
|
176,646
|
|
|
|
(8,812
|
)
|
|
|
(5
|
)%
|
Research contract with the University of Waterloo
|
|
|
573,368
|
|
|
|
622,872
|
|
|
|
(49,504
|
)
|
|
|
(8
|
)%
|
Other research and development
|
|
|
1,780,238
|
|
|
|
2,879,717
|
|
|
|
(1,099,479)
|
|
|
|
(38
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total research and development
|
|
$
|
2,566,247
|
|
|
$
|
3,720,394
|
|
|
$
|
(1,154,147
|
)
|
|
|
(31
|
)%
|
|
·
|
Stock-based compensation for the fiscal year ended June 30, 2012 was higher than the fiscal year
ended June 30, 2011 primarily because the number of options granted during the fiscal year ended June 30, 2012 was higher than
the fiscal year ended June 30, 2011.
|
|
·
|
Payroll for the fiscal year ended June 30, 2012 was lower than for the fiscal year ended June 30,
2011 primarily as a result of a bonus that was paid to the VP-Research during the fiscal year ended June 30, 2011. There were no
bonuses paid during the fiscal year ended June 30, 2012.
|
|
·
|
The cost associated with the research contract with the University of Waterloo for the fiscal year
ended June 30, 2012 were lower than for the fiscal year ended June 30, 2011 primarily due to a reduction in the amount being funded
for agricultural research, effective, March 1, 2011.
|
|
·
|
Other research and development costs for the fiscal year ended June 30, 2012 was lower than for
the fiscal year ended June 30, 2011 primarily due to a decrease in the costs incurred in connection with our development of SNS01-T
for multiple myeloma. Specifically, during the fiscal year ended June 30, 2011, we incurred significant costs related to our filing
and follow-up of our investigational new drug application, pivotal toxicology study and other preclinical work that we did not
incur during the fiscal year ended June 30, 2012. This was partially offset by costs incurred related to the performance of the
Phase 1b/2a clinical trial for multiple myeloma which were not incurred during the fiscal year ended June 30, 2011.
|
The breakdown of our
research and development expenses between our agricultural and human therapeutic research programs are as follows:
|
|
Fiscal Year ended June 30,
|
|
|
|
|
|
|
|
|
|
2012
|
|
|
%
|
|
|
2011
|
|
|
%
|
|
Agricultural research programs
|
|
$
|
279,736
|
|
|
|
11
|
%
|
|
$
|
467,141
|
|
|
|
13
|
%
|
Human therapeutic research programs
|
|
|
2,286,511
|
|
|
|
89
|
%
|
|
|
3,253,253
|
|
|
|
87
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total research and development expenses
|
|
$
|
2,566,247
|
|
|
|
100
|
%
|
|
$
|
3,720,394
|
|
|
|
100
|
%
|
|
o
|
Agricultural research expenses for the fiscal year ended June 30, 2012
were lower than for the fiscal year ended June 30, 2011 primarily due to a reduction in the funding for agricultural research at
the University of Waterloo and a reduction in the funding for banana field trials due to the conversion of the joint collaboration
agreement with Rahan Meristem into a license agreement in December 2011.
|
|
o
|
Human therapeutic research expenses for the fiscal year ended June 30,
2012 were lower than for the fiscal year ended June 30, 2011 primarily as a result of the timing of certain aspects of the development
of our drug candidate, SNS01-T, for treating multiple myeloma. Specifically, during the fiscal year ended June 30, 2011, we incurred
costs related to our filing and follow-up of our investigational new drug application, pivotal toxicology studies and other pre-clinical
work that we did not incur during the fiscal year ended June 30, 2012. This was partially offset by costs incurred related to the
performance of the Phase 1b/2a clinical trial for multiple myeloma which were not incurred during the fiscal year ended June 30,
2011.
|
We expect our human
therapeutic research program to increase as a percentage of the total research and development expenses as we continue our current
research projects and begin new human therapeutic initiatives, in particular as they relate to the clinical development of our
drug candidate, SNS01-T, for treating multiple myeloma and other cancers.
Other non-operating
income and expense
Grant income
We did not receive
any grant income during the fiscal year ended June 30, 2012.
We
received grant income
under the Qualified Therapeutic Discovery Project
in the amount of $244,479
during the fiscal year ended June 30, 2011
. The funds were granted in connection with our program for the use of our lead
therapeutic candidate, SNS01-T, in multiple myeloma.
Fair value –
warrant liability
The amounts represent
the change in the fair value of the warrant liability for the
fiscal
years ended June 30, 2012
and 2011.
Other noncash expense
or income
During
the fiscal year ended June 30, 2011, the exercise price of 4,088,540 warrants was adjusted from $0.50 to $0.32 in exchange for
those warrant holders giving up their right to future adjustments to the exercise price. This resulted in a charge to stock-based
compensation
of $115,869.
Write-off of patents
abandoned
During the
fiscal
years ended June 30, 2012 and June 30, 2011, we reviewed our patent portfolio in order to determine if we could reduce our
cost of patent prosecution and maintenance. We identified several patents and patents pending that we believe we no longer need
to maintain without having a material impact on the portfolio. We determined that we would no longer incur the cost to prosecute
or maintain those patents or patents pending. Therefore, we wrote-off the net book value of those patents and patents pending in
the amounts of $321,137 and $1,588,087, respectively.
Fiscal Year ended
June 30, 2011
Revenue
We did not earn any
revenue during the fiscal year ended June 30, 2011.
During
the fiscal year ended June 30, 2010, we earned revenue in the amount of
$140,000
, which consisted
of milestone payments in connection with certain agricultural license agreements.
Operating expenses
|
|
Fiscal Year Ended June 30,
|
|
|
|
|
|
|
|
|
|
2011
|
|
|
2010
|
|
|
Change
|
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative
|
|
$
|
2,610,222
|
|
|
$
|
2,349,116
|
|
|
$
|
261,106
|
|
|
|
11
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development
|
|
|
3,720,394
|
|
|
|
2,637,407
|
|
|
|
1,082,987
|
|
|
|
41
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
$
|
6,330,616
|
|
|
$
|
4,986,523
|
|
|
$
|
1,344,093
|
|
|
|
27
|
%
|
General and administrative
expenses
General and administrative
expenses consist of the following:
|
|
Fiscal Year ended June 30,
|
|
|
|
2011
|
|
|
2010
|
|
Stock-based compensation
|
|
$
|
709,207
|
|
|
$
|
433,414
|
|
Payroll and benefits
|
|
|
568,597
|
|
|
|
655,958
|
|
Investor relations
|
|
|
260,455
|
|
|
|
250,893
|
|
Professional fees
|
|
|
425,640
|
|
|
|
509,838
|
|
Depreciation and amortization
|
|
|
143,274
|
|
|
|
126,567
|
|
Other general and administrative expenses
|
|
|
503,049
|
|
|
|
372,446
|
|
|
|
|
|
|
|
|
|
|
Total general and administrative expenses
|
|
$
|
2,610,222
|
|
|
$
|
2,349,116
|
|
|
·
|
Stock-based compensation in for the fiscal years ended June 30, 2011 and 2010 consisted of the amortized portion of the Black-Scholes
value of options, restricted stock units and warrants granted to directors, employees and consultants. During the fiscal years
ended June 30, 2011 and 2010, the following options and warrants were granted to such individuals:
|
|
|
June 30, 2011
|
|
|
June 30, 2010
|
|
Options
|
|
|
4,579,142
|
|
|
|
2,951,760
|
|
Warrants
|
|
|
305,000
|
|
|
|
154,184
|
|
Stock-based compensation for
the fiscal year ended June 30, 2011 was higher than the fiscal year ended June 30, 2010 primarily due to the greater number of
options and warrants granted.
|
·
|
Payroll and benefits for the fiscal year ended June 30, 2011 was lower than the fiscal year ended
June 30, 2010 primarily due to the resignation of the VP-Corporate Development during the fiscal year ended June 30, 2010.
|
|
·
|
Investor relations expense for the fiscal year ended June 30, 2011 was higher than the fiscal year
ended June 30, 2010 primarily as a result of an increase in investor relations consulting costs.
|
|
·
|
Professional fees for the fiscal year ended June 30, 2011 were lower than the fiscal year ended
June 30, 2010 primarily as a result of a decrease in legal fees. Legal fees decreased primarily due to discounts negotiated with
our law firm and not incurring fees related to the resignation of our former President and CEO and the VP-Corporate Development,
the redemption of our convertible notes, the Stanford bankruptcy and other regulatory issues which were during the fiscal year
ended June 30, 2010.
|
|
·
|
Depreciation and amortization for the fiscal year ended
June 30, 2011 was higher than the fiscal year ended June 30, 2010 primarily as a result of an increase in amortization of patent
costs.
|
Research and development
expenses
|
|
Fiscal Year Ended June 30,
|
|
|
|
|
|
|
|
|
|
2011
|
|
|
2010
|
|
|
Change
|
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation
|
|
$
|
41,159
|
|
|
$
|
7,025
|
|
|
$
|
34,134
|
|
|
|
486
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other research and development
|
|
|
3,679,235
|
|
|
|
2,630,382
|
|
|
|
1,048,853
|
|
|
|
40
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total research and development
|
|
$
|
3,720,394
|
|
|
$
|
2,637,407
|
|
|
$
|
1,082,987
|
|
|
|
41
|
%
|
|
·
|
Stock-based compensation for the fiscal year ended June 30, 2011 was higher than the fiscal year
ended June 30, 2010 primarily because the number of options granted during the fiscal year ended June 30, 2011 was higher than
during the fiscal year ended June 30, 2010.
|
|
·
|
Other research and development costs for the fiscal year ended June 30, 2011 was higher than the
fiscal year ended June 30, 2010 primarily as a result of the expansion of our human therapeutic programs, specifically performing
the pivotal toxicology study and submitting the IND for our multiple myeloma project.
|
The breakdown of our
research and development expenses between our agricultural and human therapeutic research programs are as follows:
|
|
Fiscal Year ended June 30,
|
|
|
|
2011
|
|
|
%
|
|
|
2010
|
|
|
%
|
|
Agricultural research programs
|
|
$
|
467,141
|
|
|
|
13
|
%
|
|
$
|
553,620
|
|
|
|
21
|
%
|
Human therapeutic research programs
|
|
|
3,253,253
|
|
|
|
87
|
%
|
|
|
2,083,787
|
|
|
|
79
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total research and development expenses
|
|
$
|
3,720,394
|
|
|
|
100
|
%
|
|
$
|
2,637,407
|
|
|
|
100
|
%
|
|
·
|
Agricultural research expenses for the fiscal year ended June 30, 2011 were lower than the fiscal
year ended June 30, 2010 primarily as a result of a decrease in the allocation of payroll from agriculture to human therapeutics.
|
|
·
|
Human therapeutic research expenses for the fiscal year ended June 30, 2011 were higher than the
fiscal year ended June 30, 2010 primarily as a result of the progress of the ongoing multiple myeloma project.
|
Other non-operating
income and expense
Grant income
We
received grant income
under the Qualified Therapeutic Discovery Project
in the amount of $244,479
during the fiscal year ended June 30, 2011
. The funds were granted in connection with our program for the use of our lead
therapeutic candidate, SNS01-T, in multiple myeloma.
Fair value –
warrant liability
This decrease of $1,782,535
was primarily due to a decrease in the number of warrants that are accounted for as a liability as the terms that gave rise to
liability accounting for these warrants were modified by the holders during the
fiscal
year ended
June 30, 2011. Accordingly, $1,173,296 of the decrease was recorded as an increase to capital in excess of par with the balance
of the decrease in the amount of $609,239 being recorded as income from the change in the Black-Scholes value of the remaining
warrants.
Other noncash expense
or income
During
the fiscal year ended June 30, 2011, the exercise price of 4,088,540 warrants was adjusted from $0.50 to $0.32 in exchange for
those warrant holders giving up their right to future adjustments to the exercise price. This resulted in a charge to stock-based
compensation
of $115,869.
Write-off of patents
abandoned
During the
fiscal
year ended June 30, 2011, we reviewed our patent portfolio in order to determine if we could reduce our cost of patent prosecution
and maintenance. We identified several patents and patents pending that we believe we no longer need to maintain without having
a material impact on the portfolio. We determined that we would no longer incur the cost to prosecute or maintain those patents
or patents pending. Therefore, we wrote-off the net book value of those patents and patents pending in the amount of $1,588,087.
Item 7A.
|
Quantitative and Qualitative Disclosures About Market Risk.
|
Foreign Currency Risk
Our financial statements
are denominated in United States dollars and, except for our agreement with the University of Waterloo, which is denominated in
Canadian dollars, all of our contracts are denominated in United States dollars. Therefore, we believe that fluctuations in foreign
currency exchange rates will not result in any material adverse effect on our financial condition or results of operations. In
the event we derive a greater portion of our revenues from international operations or in the event a greater portion of our expenses
are incurred internationally and denominated in a foreign currency, then changes in foreign currency exchange rates could affect
our results of operations and financial condition.
Interest Rate Risk
We invest in high-quality
financial instruments, primarily money market funds, with an effective duration of the portfolio of less than one year which we
believe are subject to limited credit risk. We currently do not hedge our interest rate exposure. Due to the short-term nature
of our investments, which we plan to hold until maturity, we do not believe that we have any material exposure to interest rate
risk arising from our investments.
Item 8.
|
Financial
Statements and Supplementary Data.
|
The financial statements
required to be filed pursuant to this Item 8 are included in this Annual Report on Form 10-K. A list of the financial statements
filed herewith is found at "Item 15. Exhibits, Financial Statement Schedules."
Item 9.
|
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
|
None.
Item 9A.
|
Controls and Procedures.
|
Disclosure Controls and Procedures
Our management, with
the participation of our chief executive officer and chief financial officer, evaluated the effectiveness of our disclosure controls
and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this
Annual Report on Form 10-K. Based on this evaluation, our chief executive officer and chief financial officer have concluded that,
as of the end of such period, our disclosure controls and procedures were effective.
Internal Control Over Financial Reporting
Management’s
Annual Report on Internal Control Over Financial Reporting
Our company’s
management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control
over financial reporting is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act as a process designed by, or under
the supervision of, our company’s principle executive and principal financial officers and effected by our company’s
board of directors, management and other personnel 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 in
the U.S. and includes those policies and procedures that:
|
·
|
Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the
transactions and dispositions of the assets of our company;
|
|
·
|
Provide reasonable assurance that transactions are recorded as necessary to permit preparation
of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of our
company are being made only in accordance with authorization of management and directors of our company; and
|
|
·
|
Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition,
use or disposition of our company’s assets that could have a material effect on the financial statements.
|
Because of its inherent
limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of
effectiveness to future periods are subject to the risks that controls may become inadequate because of changes in conditions,
or that the degree of compliance with the policies or procedures may deteriorate.
Management assessed
the effectiveness of our company’s internal control over financial reporting as of June 30, 2012. In making this assessment,
management used the criteria established in
Internal Control-Integrated Framework
issued by the Committee of Sponsoring
Organizations of the Treadway Commission, or COSO.
Based on this assessment,
management has concluded that, as of June 30, 2012 our company’s internal control over financial reporting is effective.
Management’s
report was not subject to attestation by the company’s registered public accounting firm pursuant to applicable law that
permits the Company to provide only management’s report in this annual report.
Changes in Internal
Controls Over Financial Reporting
No change in our internal
controls over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) occurred during the fiscal
year ended June 30, 2012 that has materially affected, or is reasonably likely to materially affect, our internal controls over
financial reporting.
Item 9B.
|
Other Information.
|
None.
PART III
Item 10.
|
Directors, Executive Officers and Corporate Governance.
|
The information relating
to our directors, nominees for election as directors and executive officers under the headings "Election of Directors"
and "Executive Officers" in our definitive proxy statement for the 2013 Annual Meeting of Stockholders is incorporated
herein by reference to such proxy statement.
Item 11.
|
Executive Compensation.
|
The discussion under
the heading "Executive Compensation" in our definitive proxy statement for the 2013 Annual Meeting of Stockholders is
incorporated herein by reference to such proxy statement.
Item 12.
|
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
|
The discussion under
the heading "Security Ownership of Certain Beneficial Owners and Management" in our definitive proxy statement for the
2013 Annual Meeting of Stockholders is incorporated herein by reference to such proxy statement.
Item 13.
|
Certain Relationships and Related Transactions, and Director Independence.
|
The discussion under
the heading "Certain Relationships and Related Transactions" in our definitive proxy statement for the 2013 Annual Meeting
of Stockholders is incorporated herein by reference to such proxy statement.
Item 14.
|
Principal Accounting Fees and Services.
|
The discussion under
the heading "Principal Accountant Fees and Services" in our definitive proxy statement for the 2013 Annual Meeting of
Stockholders is incorporated herein by reference to such proxy statement.
PART IV
Item 15.
|
Exhibits and Financial Statement Schedules.
|
|
(a)
|
(1) Financial Statements.
|
|
|
|
|
|
Reference is made
to the Index to Financial Statements on Page F-1.
|
|
|
|
|
(a)
|
(2) Financial Statement Schedules.
|
|
|
|
|
|
None.
|
|
|
|
|
(a)
|
(3) Exhibits.
|
|
|
|
|
|
Reference is made to the Exhibit Index on Page 59.
|
SIGNATURES
Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized
this 28th
day of September
2012.
|
SENESCO TECHNOLOGIES, INC.
|
|
|
|
By:
|
/s/ Leslie J. Browne
|
|
|
Leslie J. Browne, Ph.D., President and
|
|
|
Chief Executive Officer
|
|
|
(principal executive officer)
|
|
|
|
|
By:
|
/s/ Joel Brooks
|
|
|
Joel Brooks, Chief Financial Officer,
|
|
|
Secretary and Treasurer
|
|
|
(principal financial and accounting officer)
|
Pursuant to the requirements of the Securities
Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities
and on the dates indicated.
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/ Harlan W. Waksal, M.D.
|
|
Chairman and Director
|
|
September 28, 2012
|
Harlan W. Waksal, M.D.
|
|
|
|
|
|
|
|
|
|
/s/ Leslie J. Browne, Ph.D.
|
|
President, Chief Executive Officer
|
|
September 28, 2012
|
Leslie J. Browne, Ph.D.
|
|
and Director (principal executive officer)
|
|
|
|
|
|
|
|
/s/ Joel Brooks
|
|
Chief Financial Officer, Secretary
|
|
September 28, 2012
|
Joel Brooks
|
|
and Treasurer (principal financial
|
|
|
|
|
and accounting officer)
|
|
|
|
|
|
|
|
/s/ John E. Thompson
|
|
Executive Vice President, Chief
|
|
September 28, 2012
|
John E. Thompson
|
|
Scientific Officer and Director
|
|
|
|
|
|
|
|
/s/ John Braca
|
|
Director
|
|
September 28, 2012
|
John Braca
|
|
|
|
|
|
|
|
|
|
/s/ Christopher Forbes
|
|
Director
|
|
September 28, 2012
|
Christopher Forbes
|
|
|
|
|
|
|
|
|
|
/s/ Warren J. Isabelle
|
|
Director
|
|
September 28, 2012
|
Warren J. Isabelle
|
|
|
|
|
|
|
|
|
|
/s/ Thomas C. Quick
|
|
Director
|
|
September 28, 2012
|
Thomas C. Quick
|
|
|
|
|
|
|
|
|
|
/s/ David Rector
|
|
Director
|
|
September 28, 2012
|
David Rector
|
|
|
|
|
|
|
|
|
|
/s/ Rudolf Stalder
|
|
Director
|
|
September 28, 2012
|
Rudolf Stalder
|
|
|
|
|
|
|
|
|
|
/s/ Jack Van Hulst
|
|
Director
|
|
September 28, 2012
|
Jack Van Hulst
|
|
|
|
|
EXHIBIT INDEX
Exhibit
|
|
|
No.
|
|
Description of Exhibit
|
|
|
|
2.1
|
|
Merger Agreement and Plan of Merger by and among Nava Leisure USA, Inc., an Idaho corporation, the Principal Stockholders (as defined therein), Nava Leisure Acquisition Corp., and Senesco, Inc., dated October 9, 1998. (Incorporated by reference to Senesco Technologies, Inc. definitive proxy statement on Schedule 14A dated January 11, 1999.)
|
|
|
|
2.2
|
|
Merger Agreement and Plan of Merger by and between Senesco Technologies, Inc., an Idaho corporation, and Senesco Technologies, Inc., a Delaware corporation, dated September 30, 1999. (Incorporated by reference to Senesco Technologies, Inc. quarterly report on Form 10-QSB for the period ended September 30, 1999.)
|
|
|
|
3.1
|
|
Amended and Restated Certificate of Incorporation of Senesco Technologies, Inc. filed with the State of Delaware on January 22, 2007. (Incorporated by reference to Senesco Technologies, Inc. quarterly report on Form 10-Q for the period ended December 31, 2006.)
|
|
|
|
3.2
|
|
Certificate of Amendment to the Amended and Restated Certificate of Incorporation of Senesco Technologies, Inc. filed with the State of Delaware on January 22, 2008. (Incorporated by reference to Exhibit 3.1 of Senesco Technologies, Inc. quarterly report on Form 10-Q for the period ended December 31, 2007.)
|
|
|
|
3.3
|
|
Certificate of Amendment to the Amended and Restated Certificate of Incorporation of Senesco Technologies, Inc. filed with the State of Delaware on September 22, 2009. (Incorporated by reference to Exhibit 3.3 of Senesco Technologies, Inc. annual report on Form 10-K/A for the period ended June 30, 2009.)
|
|
|
|
3.4
|
|
Certificate of Amendment to the Amended and Restated Certificate of Incorporation of Senesco Technologies, Inc. filed with the State of Delaware on May 25, 2010. (Incorporated by reference to Exhibit 3.1 to Senesco Technologies, Inc. current report on Form 8-K filed on May 28, 2010.)
|
|
|
|
3.5
|
|
Certificate of Amendment to the Amended and Restated Certificate of Incorporation of Senesco Technologies, Inc. filed with the State of Delaware on December 22, 2011. (Incorporated by reference to Exhibit 3.1 to Senesco Technologies, Inc. quarterly report on Form 10-Q for the period ended December 31, 2011.)
|
|
|
|
3.6
|
|
Amended and Restated By-laws of Senesco Technologies, Inc. as adopted on October 2, 2000. (Incorporated by reference to Senesco Technologies, Inc. quarterly report on Form 10-QSB for the period ended December 31, 2000.)
|
|
|
|
3.7
|
|
Certificate of Designations to the Company’s Certificate of Incorporation (Series A)(Incorporated by reference to Exhibit 3.1 to Senesco Technologies, Inc. current report on Form 8-K filed on March 29, 2010)
|
|
|
|
3.8
|
|
Certificate of Designations to the Company’s Certificate of Incorporation (Series B)(Incorporated by reference to Exhibit 3.2 to Senesco Technologies, Inc. current report on Form 8-K filed on March 29, 2010)
|
Exhibit
|
|
|
No.
|
|
Description of Exhibit
|
|
|
|
4.1
|
|
Form of Series A Warrant issued to YA Global Investments, L.P. (Incorporated by reference to Exhibit 4.15 of Senesco Technologies, Inc. annual report on Form 10-K for the period ended June 30, 2007.)
|
|
|
|
4.2
|
|
Form of Series A Warrant issued to Stanford Venture Capital Holdings, Inc. (Incorporated by reference to Exhibit 4.16 of Senesco Technologies, Inc. annual report on Form 10-K for the period ended June 30, 2007.)
|
|
|
|
4.3
|
|
Form of Series B Warrant issued to YA Global Investments, L.P. (Incorporated by reference to Exhibit 4.19 of Senesco Technologies, Inc. annual report on Form 10-K for the period ended June 30, 2007.)
|
|
|
|
4.4
|
|
Form of Series B Warrant issued to Stanford Venture Capital Holdings, Inc. (Incorporated by reference to Exhibit 4.20 of Senesco Technologies, Inc. annual report on Form 10-K for the period ended June 30, 2007.)
|
|
|
|
4.5
|
|
Form of Warrant issued to H.C. Wainwright & Co., Inc or its designees. (Incorporated by reference to Exhibit 4.21 of Senesco Technologies, Inc. annual report on Form 10-K for the period ended June 30, 2008.)
|
|
|
|
4.6
|
|
Form of Series A Warrant issued to Partlet Holdings Ltd. (Incorporated by reference to Exhibit 4.1 of Senesco Technologies, Inc. current report on Form 8-K, filed on July 10, 2009.)
|
|
|
|
4.7
|
|
Form of Series B Warrant issued to Partlet Holdings Ltd. (Incorporated by reference to Exhibit 4.2 of Senesco Technologies, Inc. current report on Form 8-K, filed on July 10, 2009.)
|
|
|
|
4.8
|
|
Form of Series A Warrant issued to each of Robert Forbes, Timothy Forbes, Harlan W. Waksal, M.D., Rudolf Stalder, Christopher Forbes, David Rector, John N. Braca, Jack Van Hulst, Warren Isabelle and the Thomas C. Quick Charitable Foundation. (Incorporated by reference to Exhibit 4.1 of Senesco Technologies, Inc. current report on Form 8-K, filed on July 30, 2009.)
|
|
|
|
4.9
|
|
Form of Series B Warrant issued to each of Robert Forbes, Timothy Forbes, Harlan W. Waksal, M.D., Rudolf Stalder, Christopher Forbes, David Rector, John N. Braca, Jack Van Hulst, Warren Isabelle and the Thomas C. Quick Charitable Foundation. (Incorporated by reference to Exhibit 4.1 of Senesco Technologies, Inc. current report on Form 8-K, filed on July 30, 2009.)
|
|
|
|
4.10
|
|
Form of Series A Warrant issued to Cato Holding Company. (Incorporated by reference to Exhibit 4.1 of Senesco Technologies, Inc. current report on Form 8-K, filed on July 30, 2009.)
|
|
|
|
4.11
|
|
Form of Series B Warrant issued to Cato Holding Company. (Incorporated by reference to Exhibit 4.1 of Senesco Technologies, Inc. current report on Form 8-K, filed on July 30, 2009.)
|
|
|
|
4.12
|
|
Form of Series A Common Stock Purchase Warrant issued to certain accredited investors (Incorporated by reference to Exhibit 4.1 of Senesco Technologies, Inc. current report on Form 8-K filed on March 29, 2010.)
|
Exhibit
|
|
|
No.
|
|
Description of Exhibit
|
|
|
|
4.13
|
|
Form of Series B Common Stock Purchase Warrant issued to certain affiliated investors (Incorporated by reference to Exhibit 4.2 of Senesco Technologies, Inc. current report on Form 8-K filed on March 29, 2010.)
|
|
|
|
4.14
|
|
Form of Warrant (
Incorporated by reference to Exhibit 4.1 of Senesco Technologies, Inc. current report on Form 8-K filed on January 9, 2012.)
|
|
|
|
4.15
|
|
Form of Warrant (Incorporated by reference to Exhibit 4.1 of Senesco Technologies, Inc. current report on Form 8-K filed on March 2, 2012.)
|
|
|
|
4.16 †
|
|
Form of Warrant Clarification Letter (filed herewith.)
|
|
|
|
10.1
|
|
Indemnification Agreement by and between Senesco Technologies, Inc. and Christopher Forbes, dated January 21, 1999. (Incorporated by reference to Senesco Technologies, Inc. quarterly report on Form 10-QSB for the period ended December 31, 1998.)
|
|
|
|
10.2
|
|
Indemnification Agreement by and between Senesco Technologies, Inc. and Thomas C. Quick, dated February 23, 1999. (Incorporated by reference to Senesco Technologies, Inc. quarterly report on Form 10-QSB for the period ended March 31, 1999.)
|
|
|
|
10.3
|
|
Indemnification Agreement by and between Senesco Technologies, Inc. and Ruedi Stalder, dated March 1, 1999. (Incorporated by reference to Senesco Technologies, Inc. quarterly report on Form 10-QSB for the period ended March 31, 1999.)
|
|
|
|
10.4
|
|
Indemnification Agreement by and between Senesco Technologies, Inc. and Jack Van Hulst, dated January 16, 2007. (Incorporated by reference to Exhibit 10.13 of Senesco Technologies, Inc. annual report on Form 10-K for the period ended June 30, 2007)
|
|
|
|
10.5
|
|
Indemnification Agreement by and between Senesco Technologies, Inc. and John Braca, dated October 8, 2003. (Incorporated by reference to Exhibit 10.38 of Senesco Technologies, Inc. annual report on Form 10-KSB for the period ended June 30, 2004.)
|
|
|
|
10.6
|
|
Indemnification Agreement by and between Senesco Technologies, Inc. and David Rector dated as of April, 2002. (Incorporated by reference to Exhibit 10.1 of Senesco Technologies, Inc. quarterly report on Form 10-QSB for the period ended September 30, 2004.)
|
|
|
|
10.7
|
|
Indemnification Agreement by and between Senesco Technologies, Inc. and Harlan W. Waksal, M.D. dated as of October 24, 2008. (Incorporated by reference to Exhibit 10.8 of Senesco Technologies, Inc. annual report on Form 10-K for the period ended June 30, 2009.)
|
|
|
|
10.8
|
|
Indemnification Agreement by and between Senesco Technologies, Inc. and Warren Isabelle dated as of June 8, 2009. (Incorporated by reference to Exhibit 10.9 of Senesco Technologies, Inc. annual report on Form 10-K for the period ended June 30, 2009.)
|
|
|
|
10.9
|
|
Indemnification Agreement by and between Senesco Technologies, Inc. and Leslie J. Browne, Ph.D. dated as of May 25, 2010. (Incorporated by reference to Exhibit 10.2 of Senesco Technologies, Inc. current report on Form 8-K filed on May 25, 2010.)
|
Exhibit
|
|
|
No.
|
|
Description of Exhibit
|
|
|
|
10.10
|
|
Nondisclosure, Noncompetition and Invention Assignment Agreement by and between Leslie J. Browne, Ph.D. and Senesco Technologies, Inc. dated May 25, 2010. (Incorporated by reference to Exhibit 10.3 of Senesco Technologies, Inc. current report on Form 8-K filed on May 25, 2010.)
|
|
|
|
10.11*
|
|
Consulting Agreement by and between Senesco Technologies, Inc. and John E. Thompson, Ph.D., dated July 12, 1999. (Incorporated by reference to Senesco Technologies, Inc. annual report on Form 10-KSB for the period ended June 30, 2000.)
|
|
|
|
10.12*
|
|
Amendment to Consulting Agreement of July 12, 1999, as modified on February 8, 2001, by and between Senesco, Inc. and John E. Thompson, Ph.D., dated December 13, 2002. (Incorporated by reference to Exhibit 10.1 of Senesco Technologies, Inc. quarterly report on Form 10-QSB for the period ended December 31, 2002.)
|
|
|
|
10.13 *
|
|
Amendment # 5 to Consulting Agreement of July 12, 1999, as modified, by and between Senesco, Inc. and John E. Thompson, Ph.D., dated June 15, 2007. (Incorporated by reference to Exhibit 10.49 of Senesco Technologies, Inc. annual report on Form 10-K for the period ended June 30, 2007.)
|
|
|
|
10.14 *
|
|
Amendment # 6 to Consulting Agreement of July 12, 1999, as modified, by and between Senesco, Inc. and John E. Thompson, Ph.D., dated June 25, 2009. (Incorporated by reference to Exhibit 10.17 of Senesco Technologies, Inc. annual report on Form 10-K for the period ended June 30, 2009.)
|
|
|
|
10.15 *
|
|
Amendment # 7 to Consulting Agreement of July 12, 1999, as modified, by and between Senesco, Inc. and John E. Thompson, Ph.D., dated June 20, 2011.
|
|
|
|
10.16 +
|
|
Development Agreement by and between Senesco Technologies, Inc. and ArborGen, LLC, dated June 28, 2002. (Incorporated by reference to Exhibit 10.31 of Senesco Technologies, Inc. annual report on Form 10-KSB for the year ended June 30, 2002.)
|
|
|
|
10.17 +
|
|
Commercial License Agreement by and between Senesco Technologies, Inc. and ArborGen, LLC dated as of December 21, 2006. (Incorporated by reference to Senesco Technologies, Inc. quarterly report on Form 10-Q for the period ended December 31, 2006.)
|
|
|
|
10.18 +
|
|
Development and License Agreement by and between Senesco Technologies, Inc. and Calwest Seeds, dated September 14, 2002. (Incorporated by reference to Exhibit 10.1 of Senesco Technologies, Inc. quarterly report on Form 10-QSB for the period ended September 30, 2002.)
|
|
|
|
10.19 +
|
|
Development and License Agreement by and between Senesco Technologies, Inc. and The Scotts Company, dated
March 8, 2004. (Incorporated by reference to Exhibit 10.1 of Senesco Technologies, Inc. quarterly report on Form 10-QSB for the period ended March 31, 2004.)
|
|
|
|
10.20 +
|
|
Development and License Agreement with Broin and Associates, Inc. (currently known as Poet) dated as of October 14, 2004. (Incorporated by reference to Exhibit 10.2 of Senesco Technologies, Inc. quarterly report on Form 10-QSB for the period ended September 30, 2004.)
|
Exhibit
|
|
|
No.
|
|
Description of Exhibit
|
|
|
|
10.21 +
|
|
License Agreement by and between Senesco Technologies, Inc. and Bayer CropScience GmbH, dated as of November 8, 2006. (Incorporated by reference to Senesco Technologies, Inc. quarterly report on Form 10-Q for the quarterly period ended December 31, 2006.)
|
|
|
|
10.22 +
|
|
License Agreement with Bayer CropScience AG dated as of July 23, 2007. (Incorporated by reference to Exhibit 10.1 of Senesco Technologies, Inc. quarterly report on Form 10-Q for the period ended September 30, 2007.)
|
|
|
|
10.23 +
|
|
Patent License Agreement with Monsanto Company dated as of August 6, 2007. (Incorporated by reference to Exhibit 10.2 of Senesco Technologies, Inc. quarterly report on Form 10-Q for the period ended September 30, 2007.)
|
|
|
|
10.24 +
|
|
License Agreement with Bayer CropScience AG dated as of September 17, 2007. (Incorporated by reference to Exhibit 10.3 of Senesco Technologies, Inc. quarterly report on Form 10-Q for the period ended September 30, 2007.)
|
|
|
|
10.25 +
|
|
Biofuels Evaluation and License Agreement by and between BioCorp Ventures LLC, Senesco Technologies, Inc. and Senesco, Inc. dated February 8, 2012. (Incorporated by reference Exhibit 10.1 of Senesco Technologies, Inc. quarterly report on Form 10-Q for the period ended March 31, 2012.)
|
|
|
|
10.26+
|
|
Amended and Restated Agreement by and between Rahan Meristem (1998) LTD., Senesco Technologies, Inc. and Senesco, Inc. dated December 22, 2011. (Incorporated by reference to Exhibit 10.1 of Senesco Technologies, Inc. quarterly report on Form 10-Q for the period ended December 31, 2011.)
|
|
|
|
10.27
|
|
Research Agreement by and among Senesco Technologies, Inc., Dr. John E. Thompson and the University of Waterloo, dated September 1, 1998, as amended. (Incorporated by reference to Senesco Technologies, Inc. quarterly report on Form 10-QSB for the period ended December 31, 1998.)
|
|
|
|
10.28
|
|
Amendment to Research Agreement by and among the University of Waterloo, Senesco, Inc. and Dr. John E. Thompson, Ph.D., dated September 1, 2010. (Incorporated by reference to Senesco Technologies, Inc. annual report on Form 10-K for the period ended June 30, 2010.)
|
|
|
|
10.29
|
|
Amendment to Research Agreement by and among the University of Waterloo, Senesco, Inc. and Dr. John E. Thompson, Ph.D., dated December 1, 2010. (Incorporated by reference to Exhibit 10.1 of Senesco Technologies, Inc. quarterly report on Form 10-Q for the period ended December 31, 2010.)
|
|
|
|
10.30
|
|
Amendment to Research Agreement by and among the University of Waterloo, Senesco, Inc. and Dr. John E. Thompson, Ph.D., dated September 1, 2011. (
Incorporated by reference to Exhibit 10.29 of Senesco Technologies, Inc. annual report on Form 10-K for the period ended June 30, 2011.)
|
|
|
|
10.31 †
|
|
Amendment to Research Agreement by and among the University of Waterloo, Senesco, Inc., and Dr. John E. Thompson, Ph.D., dated June 11, 2012. (filed herewith.)
|
Exhibit
|
|
|
No.
|
|
Description of Exhibit
|
|
|
|
10.32 †
|
|
Amendment to Research Agreement by and among the University of Waterloo, Senesco, Inc. and Dr. John E. Thompson, Ph.D., dated September 1, 2012. (filed herewith.)
|
|
|
|
10.33 +
|
|
Master Product Sale Agreement with VGXI, Inc. dated as of June 27, 2008. (Incorporated by reference to Exhibit 10.29 of Senesco Technologies, Inc. annual report on Form 10-K for the period ended June 30, 2008.)
|
|
|
|
10.34
|
|
Master Product Sale Agreement with Polyplus-transfection dated as of June 30, 2008. (Incorporated by reference to Exhibit 10.30 of Senesco Technologies, Inc. annual report on Form 10-K for the period ended June 30, 2008.)
|
|
|
|
10.35
|
|
Proposal for Manufacture and Supply by and between Avecia Biotechnology, Inc. and Senesco Technologies, Inc. dated as of September 4, 2008. (Incorporated by reference to Exhibit 10.1 of Senesco Technologies, Inc. quarterly report on Form 10-Q for the period ended September 30, 2008.)
|
|
|
|
10.36
|
|
Master Services Agreement by and between Criterium, Inc. and Senesco Technologies, Inc. dated June 20, 2011. (Incorporated by reference to Exhibit 10.35 of Senesco Technologies, Inc. annual report on Form 10-K for the period ended June 30, 2011.)
|
|
|
|
10.37
|
|
Clinical Trial Research Agreement by and between Mayo Clinic and Senesco Technologies, Inc. dated August 15, 2011. (Incorporated by reference to Exhibit 10.36 of Senesco Technologies, Inc. annual report on Form 10-K for the period ended June 30, 2011.)
|
|
|
|
10.38
|
|
Agreement for Service on Senesco Technologies, Inc. Scientific Advisory Board by and between Senesco Technologies, Inc. and Dr. Charles A. Dinarello, dated February 12, 2002. (Incorporated by reference to Exhibit 10.6 of Senesco Technologies, Inc. quarterly report on Form 10-QSB for the period ended March 31, 2002.)
|
|
|
|
10.39
|
|
Agreement for Service on Senesco Technologies, Inc. Scientific Advisory Board by and between Senesco Technologies, Inc. and James W. Mier, M.D., dated April 2, 2007. (Incorporated by reference to Exhibit 10.43 of Senesco Technologies, Inc. annual report on Form 10-K for the period ended June 30, 2007.)
|
|
|
|
10.40
|
|
Securities Purchase Agreement by and between Senesco Technologies, Inc. and Partlet Holdings Ltd. Dated as of July 9, 2009. (Incorporated by reference to Exhibit 10.1 of Senesco Technologies, Inc. current report on Form 8-K, filed on July 10, 2009.)
|
|
|
|
10.41
|
|
Securities Purchase Agreement by and between Senesco Technologies, Inc. and each of Robert Forbes, Timothy Forbes, Harlan W. Waksal, M.D., Rudolf Stalder, Christopher Forbes, David Rector, John N. Braca, Jack Van Hulst, Warren Isabelle and the Thomas C. Quick Charitable Foundation dated as of July 29, 2009. (Incorporated by reference to Exhibit 10.1 of Senesco Technologies, Inc. current report on Form 8-K , filed on July 30, 2009.)
|
Exhibit
|
|
|
No.
|
|
Description of Exhibit
|
|
|
|
10.42
|
|
Securities Purchase Agreement by and between Senesco Technologies, Inc. and Cato Holding Company dated as of July 29, 2009. (Incorporated by reference to Exhibit 10.2 of Senesco Technologies, Inc. current report on Form 8-K , filed on July 30, 2009.)
|
|
|
|
10.43
|
|
Securities Purchase Agreement by and between Senesco Technologies, Inc. and certain investors (Non-Affiliates). (Incorporated by reference to Exhibit 10.2 of Senesco Technologies, Inc. current report on Form 8-K filed on March 29, 2010.)
|
|
|
|
10.44
|
|
Securities Purchase Agreement by and between Senesco Technologies, Inc. and certain investors (Non-Affiliates). (Incorporated by reference to Exhibit 10.3 of Senesco Technologies, Inc. current report on Form 8-K filed on March 29, 2010.)
|
|
|
|
10.45
|
|
Securities Purchase Agreement by and between Senesco Technologies, Inc. and certain investors (Affiliates). (Incorporated by reference to Exhibit 10.4 of Senesco Technologies, Inc. current report on Form 8-K filed on March 29, 2010.)
|
|
|
|
10.46
|
|
Form of Securities Purchase Agreement (
Incorporated by reference to Exhibit 10.1 of Senesco Technologies, Inc. current report on Form 8-K filed on January 9, 2012.)
|
|
|
|
10.47
|
|
Form of Securities Purchase Agreement (
Incorporated by reference to Exhibit 10.1 of Senesco Technologies, Inc. current report on Form 8-K filed on March 2, 2012.)
|
|
|
|
10.48
|
|
Registration Rights Agreement dated March 26, 2010 by and between Senesco Technologies, Inc. and certain investors. (Incorporated by reference to Exhibit 10.1 of Senesco Technologies, Inc. current report on Form 8-K filed on March 29, 2010.)
|
|
|
|
10.49
|
|
Sublease Agreement, dated as of May 16, 2011 and effective as of May 19, 2011, by and between Norris, McLaughlin & Marcus, P.A., as Sublandlord, and Senesco Technologies, Inc., as Subtenant. (Incorporated by reference to Senesco Technologies, Inc. current report on Form 8-K filed on May 25, 2011.)
|
|
|
|
10.50
|
|
Credit Agreement dated as of February 17, 2010 by and between Senesco Technologies, Inc. and JMP Securities. (Incorporated by reference to Exhibit 10.1 of Senesco Technologies, Inc. quarterly report on Form 10-Q for the period ended March 31, 2010.)
|
|
|
|
10.51
|
|
Promissory Note by and among J.P. Morgan Clearing Corp. and Senesco Technologies, Inc., dated April 8, 2011. (Incorporated by reference to Exhibit 10.2 of Senesco Technologies, Inc. quarterly report on Form 10-Q for the period ended March 31, 2011.)
|
|
|
|
10.52
|
|
At Market Issuance Sales Agreement by and between Senesco Technologies Inc. and McNicoll, Lewis & Vlak LLC dated December 22, 2010.
(Incorporated by reference to Exhibit 10.1 of Senesco Technologies, Inc. current report on Form 8-K filed on December 22, 2010.)
|
|
|
|
10.53 *
|
|
1998 Stock Incentive Plan, as amended on December 13, 2002. (Incorporated by reference to Exhibit 10.7 of Senesco Technologies, Inc. quarterly report on Form 10-QSB for the period ended December 31, 2002.)
|
Exhibit
|
|
|
No.
|
|
Description of Exhibit
|
|
|
|
10.54*
|
|
Senesco Technologies, Inc. 2008 Incentive Compensation Plan. (Incorporated by reference to Exhibit 10.1 of Senesco Technologies, Inc. quarterly report on Form 10-Q for the period ended December 31, 2008.)
|
|
|
|
10.55*
|
|
Amendment to Senesco Technologies, Inc. 2008 Incentive Compensation Plan. (Incorporated by reference to Exhibit 10.1 of Senesco Technologies, Inc. current report on Form 8-K filed on May 28, 2010.)
|
|
|
|
10.56*
|
|
Form of Stock Option Agreement under the Senesco Technologies, Inc. 2008 Stock Incentive Plan. (Incorporated by reference to Exhibit 10.5 of Senesco Technologies, Inc. quarterly report on Form 10-Q for the period ended September 30, 2009.)
|
|
|
|
10.57*
|
|
Form of Restricted Stock Unit Issuance Agreement under the Senesco Technologies, Inc. 2008 Stock Incentive Plan. (Incorporated by reference to exhibit 10.6 of Senesco Technologies, Inc. quarterly report on Form 10-Q for the period ended September 30, 2009.)
|
|
|
|
21
|
|
Subsidiaries of the Registrant. (Incorporated by reference to Senesco Technologies, Inc. annual report on Form 10-KSB for the period ended June 30, 1999.)
|
|
|
|
23.1 †
|
|
Consent of McGladrey, LLP.
|
|
|
|
31.1 †
|
|
Certification of the principal executive officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
31.2 †
|
|
Certification of the principal financial and accounting officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
32.1 †
|
|
Certification of the principal executive officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
32.2 †
|
|
Certification of the principal financial and accounting officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
*
|
A management contract or compensatory plan or arrangement required to be filed as an exhibit pursuant
to Item 13(a) of Form 10-K.
|
|
+
|
The SEC granted Confidential Treatment for portions of this Exhibit.
|
SENESCO
TECHNOLOGIES, INC.
AND SUBSIDIARY
(a development
stage company)
CONSOLIDATED
FINANCIAL STATEMENTS
JUNE 30,
2012
SENESCO TECHNOLOGIES, INC
AND SUBSIDIARY
(a development stage company)
INDEX TO CONSOLIDATED FINANCIAL
STATEMENTS
Reports of Independent Registered Public Accounting Firm
|
F-2
|
|
|
Consolidated Financial Statements:
|
|
|
|
Balance Sheets
|
F-3
|
Statements of Operations
|
F-4
|
Statements of Stockholders' Equity
|
F-5 - F-10
|
Statements of Cash Flows
|
F-11
|
Notes to Consolidated Financial Statements
|
F-12 - F-32
|
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders
Senesco Technologies, Inc.
We have audited the accompanying consolidated
balance sheets of Senesco Technologies, Inc. and Subsidiary (a development stage company) as of June 30, 2012 and June 30, 2011,
and the related consolidated statements of operations, stockholders' equity and cash flows for each of the three years in the period
ended June 30, 2012 and cumulative amounts from July 1, 1998 (inception) to June 30, 2012. These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with
the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company
is not required to have, nor were we engaged to perform an audit of its internal control over financial reporting. Our audits included
consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over
financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable
basis for our opinion.
In our opinion, the consolidated financial
statements referred to above present fairly, in all material respects, the financial position of Senesco Technologies, Inc. and
Subsidiary as of June 30, 2012 and June 30, 2011, and the results of their operations and their cash flows for each of the three
years in the period ended June 30, 2012 and cumulative amounts from July 1, 1998 (inception) to June 30, 2012, in conformity with
U.S. generally accepted accounting principles.
The accompanying financial statements have
been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the
Company has suffered recurring losses from operations, generated minimal revenues, and continues to incur significant expenses
that exceed revenue streams. This raises substantial doubt about the Company’s ability to continue as a going concern. Management’s
plans in regard to these matters are also described in Note 1. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
/s/ McGladrey LLP
|
|
|
New York, New York
|
|
|
September 28, 2012
|
|
|
SENESCO TECHNOLOGIES, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONDENSED CONSOLIDATED BALANCE SHEETS
|
|
June 30,
|
|
|
June 30,
|
|
|
|
2012
|
|
|
2011
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT ASSETS:
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
2,001,325
|
|
|
$
|
3,609,954
|
|
Prepaid research services and supplies and expenses
|
|
|
1,548,524
|
|
|
|
1,446,064
|
|
|
|
|
|
|
|
|
|
|
Total Current Assets
|
|
|
3,549,849
|
|
|
|
5,056,018
|
|
|
|
|
|
|
|
|
|
|
Equipment, furniture and fixtures, net
|
|
|
5,857
|
|
|
|
3,782
|
|
Intangibles, net
|
|
|
3,393,992
|
|
|
|
3,524,731
|
|
Deferred income tax assets, net
|
|
|
-
|
|
|
|
-
|
|
Security deposit
|
|
|
5,171
|
|
|
|
12,358
|
|
|
|
|
|
|
|
|
|
|
TOTAL ASSETS
|
|
$
|
6,954,869
|
|
|
$
|
8,596,889
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES:
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
594,514
|
|
|
$
|
559,525
|
|
Accrued expenses
|
|
|
369,695
|
|
|
|
509,806
|
|
Line of credit
|
|
|
2,199,108
|
|
|
|
2,199,108
|
|
|
|
|
|
|
|
|
|
|
Total Current Liabilities
|
|
|
3,163,317
|
|
|
|
3,268,439
|
|
|
|
|
|
|
|
|
|
|
Warrant liabilities
|
|
|
238,796
|
|
|
|
711,259
|
|
Grant payable
|
|
|
99,728
|
|
|
|
99,728
|
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES
|
|
|
3,501,841
|
|
|
|
4,079,426
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS' EQUITY:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock, $0.01 par value, authorized 5,000,000 shares
|
|
|
|
|
|
|
|
|
Series A 10,297 shares issued and 3,379 and 3,690 shares outstanding, respectively (liquidation preference of $3,463,475 and $3,782,250 at June 30, 2012 and June 30, 2011, respectively)
|
|
|
34
|
|
|
|
37
|
|
Series B 1,200 shares issued and outstanding (liquidation preference of $1,230,000 and $1,230,000 at June 30, 2012 and June 30, 2011, respectively)
|
|
|
12
|
|
|
|
12
|
|
Common stock, $0.01 par value, authorized 350,000,000 shares, issued and outstanding 94,112,483 and 77,769,677, respectively
|
|
|
941,125
|
|
|
|
777,697
|
|
Capital in excess of par
|
|
|
69,952,152
|
|
|
|
64,488,152
|
|
Deficit accumulated during the development stage
|
|
|
(67,440,295
|
)
|
|
|
(60,748,435
|
)
|
|
|
|
|
|
|
|
|
|
Total Stockholders' Equity
|
|
|
3,453,028
|
|
|
|
4,517,463
|
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
$
|
6,954,869
|
|
|
$
|
8,596,889
|
|
See Notes to Consolidated Financial Statements
SENESCO TECHNOLOGIES, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONDENSED CONSOLIDATED STATEMENTS
OF OPERATIONS
|
|
|
|
|
|
|
|
|
|
|
Cumulative
|
|
|
|
Fiscal Year Ended June 30,
|
|
|
Amounts from
|
|
|
|
2012
|
|
|
2011
|
|
|
2010
|
|
|
Inception
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
200,000
|
|
|
$
|
-
|
|
|
$
|
140,000
|
|
|
$
|
1,790,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative
|
|
|
2,724,144
|
|
|
|
2,610,222
|
|
|
|
2,349,116
|
|
|
|
31,614,677
|
|
Research and development
|
|
|
2,566,247
|
|
|
|
3,720,394
|
|
|
|
2,637,407
|
|
|
|
21,235,605
|
|
Total operating expenses
|
|
|
5,290,391
|
|
|
|
6,330,616
|
|
|
|
4,986,523
|
|
|
|
52,850,282
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from operations
|
|
|
(5,090,391
|
)
|
|
|
(6,330,616
|
)
|
|
|
(4,846,523
|
)
|
|
|
(51,060,282
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other non-operating income (expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Grant income
|
|
|
-
|
|
|
|
244,479
|
|
|
|
-
|
|
|
|
244,479
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value – warrant liability
|
|
|
472,463
|
|
|
|
609,239
|
|
|
|
2,516,661
|
|
|
|
8,330,130
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sale of state income tax loss – net
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
586,442
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other noncash (expense) income, net
|
|
|
-
|
|
|
|
(115,869
|
)
|
|
|
-
|
|
|
|
205,390
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss on extinguishment of debt
|
|
|
-
|
|
|
|
-
|
|
|
|
(361,877
|
)
|
|
|
(361,877
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Write-off of patents abandoned
|
|
|
(321,137
|
)
|
|
|
(1,588,087
|
)
|
|
|
-
|
|
|
|
(1,909,224
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of debt discount and financing costs
|
|
|
-
|
|
|
|
-
|
|
|
|
(10,081,107
|
)
|
|
|
(11,227,870
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense – convertible notes
|
|
|
-
|
|
|
|
-
|
|
|
|
(586,532
|
)
|
|
|
(2,027,930
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest (expense) income - net
|
|
|
(127,068
|
)
|
|
|
(88,122
|
)
|
|
|
(24,135
|
)
|
|
|
283,988
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
(5,066,133
|
)
|
|
|
(7,268,976
|
)
|
|
|
(13,383,513
|
)
|
|
|
(56,936,754
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred dividends
|
|
|
(1,625,727
|
)
|
|
|
(2,638,300
|
)
|
|
|
(6,239,514
|
)
|
|
|
(10,503,541
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss applicable to common shares
|
|
$
|
(6,691,860
|
)
|
|
$
|
(9,907,276
|
)
|
|
$
|
(19,623,027
|
)
|
|
$
|
(67,440,295
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted net loss per common share
|
|
$
|
(0.08
|
)
|
|
$
|
(0.14
|
)
|
|
$
|
(0.67
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted weighted-average number of common shares outstanding
|
|
|
85,703,291
|
|
|
|
69,332,477
|
|
|
|
29,112,976
|
|
|
|
|
|
See Notes to Consolidated Financial Statements
SENESCO TECHNOLOGIES, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENT OF STOCKHOLDERS’
EQUITY
Period from July 1, 1998 (date of inception) to June 30,
2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deficit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
During the
|
|
|
Stockholders'
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital in Excess
|
|
|
Development
|
|
|
Equity
|
|
|
|
Preferred Stock
|
|
|
Common Stock
|
|
|
of Par Value
|
|
|
Stage
|
|
|
(Deficiency)
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
|
|
|
|
|
|
|
|
Common stock outstanding
|
|
|
-
|
|
|
$
|
-
|
|
|
|
2,000,462
|
|
|
$
|
20,005
|
|
|
$
|
(20,005
|
)
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contribution of capital
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
85,179
|
|
|
|
-
|
|
|
|
85,179
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock in reverse merger on January 22, 1999 at $0.01 per share
|
|
|
-
|
|
|
|
-
|
|
|
|
3,400,000
|
|
|
|
34,000
|
|
|
|
(34,000
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock for cash on May 21, 1999 at $2.63437 per share
|
|
|
-
|
|
|
|
-
|
|
|
|
759,194
|
|
|
|
7,592
|
|
|
|
1,988,390
|
|
|
|
-
|
|
|
|
1,995,982
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock for placement fees on May 21, 1999 at $0.01 per share
|
|
|
-
|
|
|
|
-
|
|
|
|
53,144
|
|
|
|
531
|
|
|
|
(531
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,168,995
|
)
|
|
|
(1,168,995
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at June 30, 1999
|
|
|
-
|
|
|
|
-
|
|
|
|
6,212,800
|
|
|
|
62,128
|
|
|
|
2,019,033
|
|
|
|
(1,168,995
|
)
|
|
|
912,166
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock for cash on January 26, 2000 at $2.867647 per share
|
|
|
-
|
|
|
|
-
|
|
|
|
17,436
|
|
|
|
174
|
|
|
|
49,826
|
|
|
|
-
|
|
|
|
50,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock for cash on January 31, 2000 at $2.87875 per share
|
|
|
-
|
|
|
|
-
|
|
|
|
34,737
|
|
|
|
347
|
|
|
|
99,653
|
|
|
|
-
|
|
|
|
100,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock for cash on February 4, 2000 at $2.924582 per share
|
|
|
-
|
|
|
|
-
|
|
|
|
85,191
|
|
|
|
852
|
|
|
|
249,148
|
|
|
|
-
|
|
|
|
250,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock for cash on March 15, 2000 at $2.527875 per share
|
|
|
-
|
|
|
|
-
|
|
|
|
51,428
|
|
|
|
514
|
|
|
|
129,486
|
|
|
|
-
|
|
|
|
130,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock for cash on June 22, 2000 at $1.50 per share
|
|
|
-
|
|
|
|
-
|
|
|
|
1,471,700
|
|
|
|
14,718
|
|
|
|
2,192,833
|
|
|
|
-
|
|
|
|
2,207,551
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commissions, legal and bank fees associated with issuances for the year ended June 30, 2000
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(260,595
|
)
|
|
|
-
|
|
|
|
(260,595
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair market value of options and warrants vested during the year ended June 30, 2000
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,475,927
|
|
|
|
-
|
|
|
|
1,475,927
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(3,346,491
|
)
|
|
|
(3,346,491
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at June 30, 2000
|
|
|
-
|
|
|
|
-
|
|
|
|
7,873,292
|
|
|
|
78,733
|
|
|
|
5,955,311
|
|
|
|
(4,515,486
|
)
|
|
|
1,518,558
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair market value of options and warrants vested during the year ended June 30, 2001
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
308,619
|
|
|
|
-
|
|
|
|
308,619
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(2,033,890
|
)
|
|
|
(2,033,890
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at June 30, 2001
|
|
|
-
|
|
|
|
-
|
|
|
|
7,873,292
|
|
|
|
78,733
|
|
|
|
6,263,930
|
|
|
|
(6,549,376
|
)
|
|
|
(206,713
|
)
|
continued
SENESCO TECHNOLOGIES, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENT OF STOCKHOLDERS’
EQUITY
Period from July 1, 1998 (date of inception) to June 30,
2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deficit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
During the
|
|
|
Stockholders'
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital in Excess
|
|
|
Development
|
|
|
Equity
|
|
|
|
Preferred Stock
|
|
|
Common Stock
|
|
|
of Par Value
|
|
|
Stage
|
|
|
(Deficiency)
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock and warrants for cash from November 30, 2001 through April 17, 2002 at $1.75 per unit
|
|
|
-
|
|
|
$
|
-
|
|
|
|
3,701,430
|
|
|
$
|
37,014
|
|
|
$
|
6,440,486
|
|
|
$
|
-
|
|
|
$
|
6,477,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock and warrants associated with bridge loan conversion on December 3, 2001
|
|
|
-
|
|
|
|
-
|
|
|
|
305,323
|
|
|
|
3,053
|
|
|
|
531,263
|
|
|
|
-
|
|
|
|
534,316
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commissions, legal and bank fees associated with issuances during the year ended June 30, 2002
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(846,444
|
)
|
|
|
-
|
|
|
|
(846,444
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair market value of options and warrants vested during the year ended June 30, 2002
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,848,726
|
|
|
|
-
|
|
|
|
1,848,726
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(3,021,709
|
)
|
|
|
(3,021,709
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at June 30, 2002
|
|
|
-
|
|
|
|
-
|
|
|
|
11,880,045
|
|
|
|
118,800
|
|
|
|
14,237,961
|
|
|
|
(9,571,085
|
)
|
|
|
4,785,676
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair market value of options and warrants vested during the year ended June 30, 2003
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
848,842
|
|
|
|
-
|
|
|
|
848,842
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(2,778,004
|
)
|
|
|
(2,778,004
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at June 30, 2003
|
|
|
-
|
|
|
|
-
|
|
|
|
11,880,045
|
|
|
|
118,800
|
|
|
|
15,086,803
|
|
|
|
(12,349,089
|
)
|
|
|
2,856,514
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock and warrants for cash from January 15, 2004 through February 12, 2004 at $2.37 per unit
|
|
|
-
|
|
|
|
-
|
|
|
|
1,536,922
|
|
|
|
15,369
|
|
|
|
3,627,131
|
|
|
|
-
|
|
|
|
3,642,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allocation of proceeds to warrants
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(2,099,090
|
)
|
|
|
-
|
|
|
|
(2,099,090
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reclassification of warrants
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,913,463
|
|
|
|
-
|
|
|
|
1,913,463
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commissions, legal and bank fees associated with issuances for the year ended June 30, 2004
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(378,624
|
)
|
|
|
-
|
|
|
|
(378,624
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair market value of options and warrants vested during the year ended June 30, 2004
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,826,514
|
|
|
|
-
|
|
|
|
1,826,514
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options and warrants exercised during the year ended June 30, 2004 at exercise prices ranging from $1.00 to $3.25
|
|
|
-
|
|
|
|
-
|
|
|
|
370,283
|
|
|
|
3,704
|
|
|
|
692,945
|
|
|
|
-
|
|
|
|
696,649
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(3,726,951
|
)
|
|
|
(3,726,951
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at June 30, 2004
|
|
|
-
|
|
|
|
-
|
|
|
|
13,787,250
|
|
|
|
137,873
|
|
|
|
20,669,142
|
|
|
|
(16,076,040
|
)
|
|
|
4,730,975
|
|
continued
SENESCO TECHNOLOGIES, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENT OF STOCKHOLDERS’
EQUITY
Period from July 1, 1998 (date of inception) to June 30,
2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deficit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
During the
|
|
|
Stockholders'
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital in Excess
|
|
|
Development
|
|
|
Equity
|
|
|
|
Preferred Stock
|
|
|
Common Stock
|
|
|
of Par Value
|
|
|
Stage
|
|
|
(Deficiency)
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock and warrants for cash on May 9, 2005 at $2.11 per unit
|
|
|
-
|
|
|
$
|
-
|
|
|
|
1,595,651
|
|
|
$
|
15,957
|
|
|
$
|
3,350,872
|
|
|
$
|
-
|
|
|
$
|
3,366,829
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allocation of proceeds to warrants
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,715,347
|
)
|
|
|
-
|
|
|
|
(1,715,347
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reclassification of warrants
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,579,715
|
|
|
|
-
|
|
|
|
1,579,715
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commissions, legal and bank fees associated with the issuance on May 9, 2005
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(428,863
|
)
|
|
|
-
|
|
|
|
(428,863
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options and warrants exercised during the year ended June 30, 2005 at exercise prices ranging from $1.50 to $3.25
|
|
|
-
|
|
|
|
-
|
|
|
|
84,487
|
|
|
|
844
|
|
|
|
60,281
|
|
|
|
-
|
|
|
|
61,125
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair market value of options and warrants vested during the year ended June 30, 2005
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
974,235
|
|
|
|
-
|
|
|
|
974,235
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(2,978,918
|
)
|
|
|
(2,978,918
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at June 30, 2005
|
|
|
-
|
|
|
|
-
|
|
|
|
15,467,388
|
|
|
|
154,674
|
|
|
|
24,490,035
|
|
|
|
(19,054,958
|
)
|
|
|
5,589,751
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrants exercised during the year ended June 30, 2006 at an exercise price of $0.01
|
|
|
-
|
|
|
|
-
|
|
|
|
10,000
|
|
|
|
100
|
|
|
|
-
|
|
|
|
-
|
|
|
|
100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair market value of options and warrants vested during the year ended June 30, 2006
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
677,000
|
|
|
|
-
|
|
|
|
677,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(3,314,885
|
)
|
|
|
(3,314,885
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at June 30, 2006
|
|
|
-
|
|
|
|
-
|
|
|
|
15,477,388
|
|
|
|
154,774
|
|
|
|
25,167,035
|
|
|
|
(22,369,843
|
)
|
|
|
2,951,966
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock and warrants for cash on October 10, 2006 at $1.135 per unit
|
|
|
-
|
|
|
|
-
|
|
|
|
1,986,306
|
|
|
|
19,863
|
|
|
|
2,229,628
|
|
|
|
-
|
|
|
|
2,249,491
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commissions, legal and bank fees associated with the issuance on October 10, 2006
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(230,483
|
)
|
|
|
-
|
|
|
|
(230,483
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrants exercised during the year ended June 30, 2007 at an exercise price of $0.01
|
|
|
-
|
|
|
|
-
|
|
|
|
10,000
|
|
|
|
100
|
|
|
|
-
|
|
|
|
-
|
|
|
|
100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair market value of options and warrants vested during the year ended June 30, 2007
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
970,162
|
|
|
|
-
|
|
|
|
970,162
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(3,251,697
|
)
|
|
|
(3,251,697
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at June 30, 2007
|
|
|
-
|
|
|
|
-
|
|
|
|
17,473,694
|
|
|
|
174,737
|
|
|
|
28,136,342
|
|
|
|
(25,621,540
|
)
|
|
|
2,689,539
|
|
continued
SENESCO TECHNOLOGIES, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENT OF STOCKHOLDERS’
EQUITY
Period from July 1, 1998 (date of inception) to June 30,
2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deficit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
During the
|
|
|
Stockholders'
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital in Excess
|
|
|
Development
|
|
|
Equity
|
|
|
|
Preferred Stock
|
|
|
Common Stock
|
|
|
of Par Value
|
|
|
Stage
|
|
|
(Deficiency)
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
|
|
|
|
|
|
|
|
Fair market value of options and warrants vested during the year ended June 30, 2008
|
|
|
-
|
|
|
$
|
-
|
|
|
|
-
|
|
|
$
|
-
|
|
|
$
|
1,536,968
|
|
|
$
|
-
|
|
|
$
|
1,536,968
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allocation of proceeds, net of fees paid to holder, from the issuance of convertible notes and warrants on September 21, 2007, October 16, 2007, December 20, 2007, and June 30, 2008
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
9,340,000
|
|
|
|
-
|
|
|
|
9,340,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Convertible notes converted into common stock during the year ended June 30, 2008
|
|
|
-
|
|
|
|
-
|
|
|
|
555,556
|
|
|
|
5,556
|
|
|
|
430,952
|
|
|
|
-
|
|
|
|
436,508
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock in lieu of cash payment for interest during the year ended June 30, 2008
|
|
|
-
|
|
|
|
-
|
|
|
|
345,867
|
|
|
|
3,458
|
|
|
|
430,696
|
|
|
|
-
|
|
|
|
434,154
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(4,601,490
|
)
|
|
|
(4,601,490
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at June 30, 2008
|
|
|
-
|
|
|
|
-
|
|
|
|
18,375,117
|
|
|
|
183,751
|
|
|
|
39,874,958
|
|
|
|
(30,223,030
|
)
|
|
|
9,835,679
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair market value of options and warrants vested during the year ended June 30, 2009
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
506,847
|
|
|
|
-
|
|
|
|
506,847
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrants exercised during the year ended June 30, 2009 at an exercise price of $0.01
|
|
|
-
|
|
|
|
-
|
|
|
|
2,395
|
|
|
|
24
|
|
|
|
(24
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock in lieu of cash payment for interest during the year ended June 30, 2009
|
|
|
-
|
|
|
|
-
|
|
|
|
1,271,831
|
|
|
|
12,718
|
|
|
|
994,526
|
|
|
|
-
|
|
|
|
1,007,244
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Convertible notes converted into common stock during the year ended June 30, 2009
|
|
|
-
|
|
|
|
-
|
|
|
|
50,000
|
|
|
|
500
|
|
|
|
44,433
|
|
|
|
-
|
|
|
|
44,933
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock in connection with Short-Term Incentive Plan during the year ended June 30, 2009
|
|
|
-
|
|
|
|
-
|
|
|
|
112,700
|
|
|
|
1,127
|
|
|
|
(1,127
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(5,726,869
|
)
|
|
|
(5,726,869
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at June 30, 2009
|
|
|
-
|
|
|
|
-
|
|
|
|
19,812,043
|
|
|
|
198,120
|
|
|
|
41,419,613
|
|
|
|
(35,949,899
|
)
|
|
|
5,667,834
|
|
continued
SENESCO TECHNOLOGIES, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENT OF STOCKHOLDERS’
EQUITY
Period from July 1, 1998 (date of inception) to June 30,
2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deficit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
During the
|
|
|
Stockholders'
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital in Excess
|
|
|
Development
|
|
|
Equity
|
|
|
|
Preferred Stock
|
|
|
Common Stock
|
|
|
of Par Value
|
|
|
Stage
|
|
|
(Deficiency)
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
|
|
|
|
|
|
|
|
Cumulative effect of change in accounting principle- implementation of FASB ASC Topic 815-40
|
|
|
-
|
|
|
$
|
-
|
|
|
|
-
|
|
|
$
|
-
|
|
|
$
|
(7,931,875
|
)
|
|
$
|
4,731,767
|
|
|
$
|
(3,200,108
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock and warrants for cash on July 9, 2009 and September 30, 2009 at $0.90 per unit
|
|
|
-
|
|
|
|
-
|
|
|
|
1,700,000
|
|
|
|
17,000
|
|
|
|
1,513,000
|
|
|
|
-
|
|
|
|
1,530,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock and warrants for satisfaction of accounts payable on September 30, 2009
|
|
|
-
|
|
|
|
-
|
|
|
|
194,444
|
|
|
|
1,944
|
|
|
|
259,588
|
|
|
|
-
|
|
|
|
261,532
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Legal and regulatory fees associated with the issuances on July 9, 2009 and September 30, 2009
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(180,862
|
)
|
|
|
-
|
|
|
|
(180,862
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of preferred stock and warrants for cash on April 1, 2010 and June 2, 2010
|
|
|
11,497
|
|
|
|
115
|
|
|
|
-
|
|
|
|
-
|
|
|
|
11,496,885
|
|
|
|
-
|
|
|
|
11,497,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deemed dividend- Preferred Stock
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
5,330,039
|
|
|
|
(5,330,039
|
)
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Legal and regulatory fees associated with the issuances of preferred stock and warrants on April 1, 2010 and June 2, 2010
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(793,498
|
)
|
|
|
-
|
|
|
|
(793,498
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value of warrants issued on April 1, 2010 and June 2, 2010
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,759,008
|
)
|
|
|
-
|
|
|
|
(1,759,008
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock converted into common stock during the year ended June 30, 2010
|
|
|
(2,262
|
)
|
|
|
(23
|
)
|
|
|
7,068,750
|
|
|
|
70,688
|
|
|
|
(70,665
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrants exercised during the year ended June 30, 2010 at an exercise price of $0.01
|
|
|
-
|
|
|
|
-
|
|
|
|
1,005,000
|
|
|
|
10,050
|
|
|
|
-
|
|
|
|
-
|
|
|
|
10,050
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock in lieu of cash payment for interest during the year ended June 30, 2010
|
|
|
-
|
|
|
|
-
|
|
|
|
1,353,132
|
|
|
|
13,531
|
|
|
|
539,142
|
|
|
|
-
|
|
|
|
552,673
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock in lieu of cash payment for dividends during the year ended June 30, 2010
|
|
|
-
|
|
|
|
-
|
|
|
|
3,029,465
|
|
|
|
30,295
|
|
|
|
648,305
|
|
|
|
(678,600
|
)
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Convertible notes converted into common stock during the year ended June 30, 2010
|
|
|
-
|
|
|
|
-
|
|
|
|
15,659,186
|
|
|
|
156,592
|
|
|
|
7,462,768
|
|
|
|
-
|
|
|
|
7,619,360
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock in connection with Short-Term Incentive Plan during the year ended June 30, 2010
|
|
|
-
|
|
|
|
-
|
|
|
|
116,000
|
|
|
|
1,160
|
|
|
|
(1,160
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock for services during the year ended June 30, 2010
|
|
|
-
|
|
|
|
-
|
|
|
|
154,184
|
|
|
|
1,542
|
|
|
|
52,258
|
|
|
|
-
|
|
|
|
53,800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair market value of options and warrants vested during the year ended June 30, 2010
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
386,639
|
|
|
|
-
|
|
|
|
386,639
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Repurchase of warrants during the year ended June 30, 2010
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(50,000
|
)
|
|
|
-
|
|
|
|
(50,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends accrued for the period from April 1, 2010 through June 30, 2010
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(230,875
|
)
|
|
|
(230,875
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(13,383,513
|
)
|
|
|
(13,383,513
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at June 30, 2010
|
|
|
9,235
|
|
|
$
|
92
|
|
|
|
50,092,204
|
|
|
$
|
500,922
|
|
|
$
|
58,321,169
|
|
|
$
|
(50,841,159
|
)
|
|
$
|
7,981,024
|
|
continued
SENESCO TECHNOLOGIES, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENT OF STOCKHOLDERS’
EQUITY
Period from July 1, 1998 (date of inception) to June 30,
2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deficit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
During the
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital in Excess
|
|
|
Development
|
|
|
Stockholders'
|
|
|
|
Preferred Stock
|
|
|
Common Stock
|
|
|
of Par Value
|
|
|
Stage
|
|
|
Equity
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock at prices ranging from $0.30 per share to $0.36 per share
|
|
|
-
|
|
|
|
-
|
|
|
|
5,911,457
|
|
|
|
59,114
|
|
|
|
1,794,305
|
|
|
|
-
|
|
|
|
1,853,419
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commissions and other fees related to the issuance of common stock
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(197,908
|
)
|
|
|
-
|
|
|
|
(197,908
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock converted into common stock
|
|
|
(4,345
|
)
|
|
|
(43
|
)
|
|
|
13,668,750
|
|
|
|
136,687
|
|
|
|
(136,644
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrants converted into common stock
|
|
|
|
|
|
|
|
|
|
|
175,000
|
|
|
|
1,750
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,750
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock in lieu of cash payment for dividends
|
|
|
-
|
|
|
|
-
|
|
|
|
7,912,266
|
|
|
|
79,124
|
|
|
|
2,307,066
|
|
|
$
|
(2,155,315
|
)
|
|
|
230,875
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair market value of options and warrants vested and amended
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
866,235
|
|
|
|
-
|
|
|
|
866,235
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reclassification of warrant liability
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,173,296
|
|
|
|
-
|
|
|
|
1,173,296
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock under the Company's the Company's long-term incentive plan
|
|
|
-
|
|
|
|
-
|
|
|
|
10,000
|
|
|
|
100
|
|
|
|
(100
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deemed dividend - Preferred Stock
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
360,733
|
|
|
|
(360,733
|
)
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends accrued and unpaid at June 30, 2011
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(122,252
|
)
|
|
|
(122,252
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(7,268,976
|
)
|
|
|
(7,268,976
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at June 30, 2011
|
|
|
4,890
|
|
|
$
|
49
|
|
|
|
77,769,677
|
|
|
$
|
777,697
|
|
|
$
|
64,488,152
|
|
|
$
|
(60,748,435
|
)
|
|
$
|
4,517,463
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock at prices ranging from $0.26 per share to $0.31 per share
|
|
|
-
|
|
|
|
-
|
|
|
|
12,842,296
|
|
|
|
128,423
|
|
|
|
3,243,258
|
|
|
|
-
|
|
|
|
3,371,681
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commissions and other fees related to the issuance of common stock
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(143,765
|
)
|
|
|
-
|
|
|
|
(143,765
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock converted into common stock
|
|
|
(311
|
)
|
|
|
(3
|
)
|
|
|
1,178,633
|
|
|
|
11,786
|
|
|
|
(11,783
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock in lieu of cash payment for dividends
|
|
|
-
|
|
|
|
-
|
|
|
|
2,321,877
|
|
|
|
23,219
|
|
|
|
533,931
|
|
|
|
(434,898
|
)
|
|
|
122,252
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deemed dividend - Preferred Stock
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,076,355
|
|
|
|
(1,076,355
|
)
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair market value of options and warrants vested
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
766,004
|
|
|
|
-
|
|
|
|
766,004
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends accrued and unpaid at June 30, 2012
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(114,474
|
)
|
|
|
(114,474
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(5,066,133
|
)
|
|
|
(5,066,133
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance July 1, 1998 (inception) through June 30, 2012
|
|
|
4,579
|
|
|
$
|
46
|
|
|
|
94,112,483
|
|
|
$
|
941,125
|
|
|
$
|
69,952,152
|
|
|
$
|
(67,440,295
|
)
|
|
$
|
3,453,028
|
|
See Notes to Consolidated Financial Statements
SENESCO TECHNOLOGIES, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENT OF CASH FLOWS
|
|
|
|
|
|
|
|
|
|
|
Cumulative
|
|
|
|
Fiscal Year Ended June 30,
|
|
|
Amounts from
|
|
|
|
2012
|
|
|
2011
|
|
|
2010
|
|
|
Inception
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(5,066,133
|
)
|
|
$
|
(7,268,976
|
)
|
|
$
|
(13,383,513
|
)
|
|
$
|
(56,936,754
|
)
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noncash capital contribution
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
85,179
|
|
Noncash conversion of accrued expenses into equity
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
131,250
|
|
Noncash income related to change in fair value of warrant liability
|
|
|
(472,463
|
)
|
|
|
(609,239
|
)
|
|
|
(2,516,661
|
)
|
|
|
(8,651,389
|
)
|
Noncash charge for change in warrant terms
|
|
|
-
|
|
|
|
115,869
|
|
|
|
-
|
|
|
|
115,869
|
|
Issuance of common stock and warrants for interest
|
|
|
-
|
|
|
|
-
|
|
|
|
552,673
|
|
|
|
2,003,386
|
|
Issuance of common stock for services
|
|
|
-
|
|
|
|
-
|
|
|
|
53,800
|
|
|
|
53,800
|
|
Stock-based compensation expense
|
|
|
766,004
|
|
|
|
750,366
|
|
|
|
386,639
|
|
|
|
12,105,953
|
|
Depreciation and amortization
|
|
|
258,023
|
|
|
|
143,274
|
|
|
|
126,567
|
|
|
|
1,100,305
|
|
Write-off of intangibles
|
|
|
321,137
|
|
|
|
1,588,087
|
|
|
|
-
|
|
|
|
1,909,224
|
|
Deferred rent
|
|
|
-
|
|
|
|
(8,060
|
)
|
|
|
(7,957
|
)
|
|
|
-
|
|
Amortization of convertible note discount
|
|
|
-
|
|
|
|
-
|
|
|
|
9,448,783
|
|
|
|
10,000,000
|
|
Amortization of deferred financing costs
|
|
|
-
|
|
|
|
-
|
|
|
|
632,324
|
|
|
|
1,227,869
|
|
Loss on extinguishment of debt
|
|
|
-
|
|
|
|
-
|
|
|
|
361,877
|
|
|
|
361,877
|
|
(Increase) decrease in operating assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prepaid expenses and other current assets
|
|
|
(102,460
|
)
|
|
|
(141,269
|
)
|
|
|
(143,447
|
)
|
|
|
(1,548,524
|
)
|
Security deposit
|
|
|
7,187
|
|
|
|
(5,171
|
)
|
|
|
-
|
|
|
|
(5,171
|
)
|
Increase (decrease) in operating liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
|
34,989
|
|
|
|
2,105
|
|
|
|
(419,260
|
)
|
|
|
594,514
|
|
Accrued expenses
|
|
|
(132,333
|
)
|
|
|
41,572
|
|
|
|
165,046
|
|
|
|
430,222
|
|
Net cash used in operating activities
|
|
|
(4,386,049
|
)
|
|
|
(5,391,442
|
)
|
|
|
(4,743,129
|
)
|
|
|
(37,022,390
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Patent costs
|
|
|
(446,035
|
)
|
|
|
(684,399
|
)
|
|
|
(807,915
|
)
|
|
|
(6,224,712
|
)
|
Redemption of investments, net
|
|
|
-
|
|
|
|
-
|
|
|
|
1,050,000
|
|
|
|
-
|
|
Purchase of equipment, furniture and fixtures
|
|
|
(4,461
|
)
|
|
|
(2,026
|
)
|
|
|
(1,116
|
)
|
|
|
(184,666
|
)
|
Net cash used in investing activities
|
|
|
(450,496
|
)
|
|
|
(686,425
|
)
|
|
|
240,969
|
|
|
|
(6,409,378
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from grant
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
99,728
|
|
Proceeds from draw-down on line of credit
|
|
|
-
|
|
|
|
4,264
|
|
|
|
2,194,844
|
|
|
|
2,199,108
|
|
Proceeds from issuance of bridge notes
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
525,000
|
|
Proceeds from issuance of preferred stock and warrants, net
|
|
|
-
|
|
|
|
-
|
|
|
|
10,754,841
|
|
|
|
10,754,841
|
|
Redemption of convertible notes and warrants
|
|
|
-
|
|
|
|
-
|
|
|
|
(2,160,986
|
)
|
|
|
(2,160,986
|
)
|
Proceeds from issuance of convertible notes
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
9,340,000
|
|
Deferred financing costs
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(651,781
|
)
|
Proceeds from issuance of common stock and warrants, net and exercise of warrants and options
|
|
|
3,227,916
|
|
|
|
1,657,261
|
|
|
|
1,359,188
|
|
|
|
25,327,183
|
|
Net cash provided by financing activities
|
|
|
3,227,916
|
|
|
|
1,661,525
|
|
|
|
12,147,887
|
|
|
|
45,433,093
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (decrease) increase in cash and cash equivalents
|
|
|
(1,608,629
|
)
|
|
|
(4,416,342
|
)
|
|
|
7,645,727
|
|
|
|
2,001,325
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at beginning of period
|
|
|
3,609,954
|
|
|
|
8,026,296
|
|
|
|
380,569
|
|
|
|
-
|
|
Cash and cash equivalents at end of period
|
|
$
|
2,001,325
|
|
|
$
|
3,609,954
|
|
|
$
|
8,026,296
|
|
|
$
|
2,001,325
|
|
See Notes to Consolidated Financial Statements
SENESCO TECHNOLOGIES, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
1.
|
Principal Business Activity:
|
The Company
The Company is a development
stage biotechnology company whose mission is to develop novel approaches to treat programmed cell death diseases in humans (apoptosis),
and to enhance the quality and productivity of fruits, flowers, vegetables and agronomic crops through the control of cell death
in plants (senescence).
Senesco, Inc. (“SI”),
a New Jersey corporation, was incorporated on November 24, 1998 and is the successor entity to Senesco, L.L.C., a New Jersey limited
liability company that was formed on June 25, 1998 but commenced operations on July 1, 1998.
Liquidity
As shown in
the accompanying consolidated financial statements, the Company has a history of losses with a deficit accumulated during the development
stage from July 1, 1998 (inception) through June 30, 2012 of $67,440,295. Additionally, the Company has generated minimal revenues
by licensing its technology for certain crops to companies willing to share in its development costs. In addition, the Company’s
technology may not be ready for commercialization for several years. The Company expects to continue to incur losses for the next
several years because it anticipates that its expenditures on research and development, and administrative activities will significantly
exceed its revenues during that period. The Company cannot predict when, if ever, it will become profitable.
As of June 30, 2012, the Company
had cash and cash equivalents in the amount of $2,001,325, which consisted of checking accounts and money market funds. In December
2010, the Company entered into an At Market Issuance Sales Agreement (“ATM”) whereby it may issue up to $5,500,000
of the Company’s common stock, par value $0.01 per share, (the “Common Stock”) under this facility. The Company
estimates that its cash and cash equivalents and the net proceeds from its ATM facility will cover its expenses through November
2012. The Company has the ability to raise additional capital through its ATM facility, draw down on its unused line of credit
and delay certain costs, if necessary, which will provide the Company with enough cash to fund its operations at least through
March 31, 2013. In order to provide the Company with the cash resources necessary to fund operations through at least June 30,
2013, the Company plans on raising additional capital through a private or public placement of its Common Stock in the near future.
The Company will need additional
capital and plans to raise additional capital through the placement of debt instruments or equity or both. However, the Company
may not be able to obtain adequate funds for its operations when needed or on acceptable terms. If the Company is unable to raise
additional funds, it will need to do one or more of the following:
|
·
|
delay, scale-back or eliminate some or all of its research and product development programs;
|
|
·
|
license third parties to develop and commercialize products or technologies that it would otherwise
seek to develop and commercialize itself;
|
|
·
|
seek strategic alliances or business combinations;
|
|
·
|
attempt to sell the Company;
|
Risks and Uncertainties
The Company operates in an industry
that is subject to intense competition, government regulation and rapid technological change. The Company's operations are subject
to significant risk and uncertainties including financial, operational, technological, regulatory and other risks, including the
potential risk of business failure.
SENESCO TECHNOLOGIES, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Our limited capital resources
and operations to date have been funded primarily with the proceeds from public and private equity and debt financings and milestone
payments on license agreements. Based on our currently available cash, we do not have adequate cash on hand to cover our anticipated
expenses for the next 12 months. If we fail to raise a significant amount of capital, we may need to significantly curtail operations,
cease operations or seek federal bankruptcy protection in the near future. These conditions have caused our auditors to raise substantial
doubt about our ability to continue as a going concern. Consequently, the audit report prepared by our independent public accounting
firm relating to our financial statements for the year ended June 30, 2012 includes a going concern explanatory paragraph.
|
2.
|
Summary of Significant Accounting Policies:
|
Principles of consolidation
The accompanying consolidated
financial statements include the accounts of Senesco Technologies, Inc. ("ST") and its wholly owned subsidiary, SI (collectively,
the "Company"). All significant intercompany accounts and transactions have been eliminated in consolidation.
Management Estimates and
Judgments
The preparation of financial
statements in conformity with accounting principles generally accepted in the United States of America requires management to make
estimates and judgments that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. The critical
accounting policies that require management's most significant estimate and judgment are the assessment of the recoverability of
intangible assets, the variables and method used to calculate stock-based compensation and warrant liabilities, and the valuation
allowance on deferred tax assets. Actual results experienced by the Company may differ from management's estimates.
Cash and Cash Equivalents and Short-Term Investments
The Company considers all highly
liquid instruments with an original maturity of 90 days or less at the time of purchase to be cash equivalents. Cash and cash equivalents
consist of deposits that are readily convertible into cash.
Fair Value Measurements
ASC Topic 820, Fair Value Measurements,
defines fair value, establishes a framework for measuring fair value and expands the related disclosure requirements. The guidance
applies under other accounting pronouncements that require or permit fair value measurements. The statement indicates, among other
things, that a fair value measurement assumes that the transaction to sell an asset or transfer a liability occurs in the principal
market for the asset or liability or, in the absence of a principal market, the most advantageous market for the asset or liability.
ASC 820 defines fair value based upon an exit price model.
The Company categorizes our
financial instruments into a three-level fair value hierarchy that prioritizes the inputs to valuation techniques used to measure
fair value into three broad levels. The fair value hierarchy gives the highest priority to quoted prices in active markets for
identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). If the inputs used to measure
fair value fall within different levels of the hierarchy, the category level is based on the lowest priority level input that is
significant to the fair value measurement of the instrument. Financial assets recorded at fair value on our consolidated balance
sheets are categorized as follows:
|
•
|
Level 1: Observable inputs such as quoted prices in active
markets;
|
|
•
|
Level 2: Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and
|
|
•
|
Level 3: Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its
own assumptions.
|
SENESCO TECHNOLOGIES, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The fair value of the warrant
liabilities is based on the Black-Scholes Merton and Modified Black-Scholes Merton option pricing models (“Black-Scholes
model”) (Level 3). (See note 8).
The carrying value of prepaid
expenses and other current assets, accounts payable, accrued expenses, and line of credit reported in the consolidated balance
sheets equal or approximate fair value due to their short maturities.
Concentrations of Credit
Risk
The Company maintains its cash
primarily in investment accounts within one large financial institution. The Federal Deposit Insurance Corporation insures these
balances up to $250,000 per bank. The Company has not experienced any losses on its bank deposits and believes these deposits do
not expose the Company to any significant credit risk.
Prepaid Research Services
and Supplies
Prepaid research services and
supplies are carried at cost and are included in prepaid expenses and other current assets on the accompanying consolidated balance
sheet. When such services are performed and supplies are used, the carrying value of the supplies are expensed in the period that
they are performed or used for the development of proprietary applications and processes.
Equipment, Furniture and
Fixtures, Net
Equipment, furniture and fixtures
are recorded at cost. Depreciation is calculated on a straight-line basis over the estimated useful life of each asset, generally
four to seven years. Expenditures for major renewals and improvements are capitalized, and expenditures for maintenance and repairs
are charged to operations as incurred. (See note 4).
Intangibles, Net
The Company conducts research
and development activities, the cost of which is expensed as incurred, in order to generate patents that can be licensed to third
parties in exchange for license fees and royalties. Because the patents are the basis of the Company’s future revenue, the
patent costs are capitalized. The capitalized patent costs represent the outside legal fees incurred by the Company to submit and
undertake all necessary efforts to have such patent applications issued as patents.
The length of time that it takes
for an initial patent application to be approved is generally between four to six years. However, due to the unique nature of each
patent application, the actual length of time may vary. If a patent application is denied, the associated cost of that application
would be written off. However, the Company has not had any patent applications denied as of June 30, 2012. Additionally, should
a patent application become impaired during the application process, the Company would write down or write off the associated cost
of that patent application.
Issued patents and agricultural
patent applications pending are being amortized over a period of 17 years from inception, the expected economic life of the patent.
(See note 5).
Impairment of Long-lived
Assets
The Company assesses the impairment
in value of intangible assets whenever events or circumstances indicate that their carrying value may not be recoverable. Factors
the Company considers important which could trigger an impairment review include the following:
|
•
|
significant negative industry trends;
|
|
•
|
significant underutilization of the assets;
|
SENESCO TECHNOLOGIES, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
•
|
significant changes in how the Company uses the assets
or its plans for their use; and
|
|
•
|
changes in technology and the appearance of competing
technology.
|
If a triggering event occurs
and if the Company's review determines that the future discounted cash flows related to the groups, including these assets, will
not be sufficient to recover their carrying value, the Company will reduce the carrying values of these assets down to its estimate
of fair value and continue amortizing them over their remaining useful lives. To date, except for certain patents and patents pending
that the Company abandoned during the fiscal years ended June 30, 2012 and 2011, the Company has not recorded any impairment of
intangible assets. During the fiscal years ended June 30, 2012 and 2011, in order to reduce its cost of patent prosecution and
maintenance the Company reviewed its patent portfolio and identified several patents and patent applications that it believed it
no longer needed to maintain without having a material impact on the patent portfolio. Accordingly, during the fiscal years ended
June 30, 2012 and 2011, the Company wrote off patent costs in the net amount of $321,137 and $1,588,087, respectively.
Net Loss per Common Share
Basic earnings (loss) per share
is computed by dividing net income (loss) available to common shareholders by the weighted average number of common shares assumed
to be outstanding during the period of computation. Diluted earnings per share is computed similar to basic earnings per share
except that the denominator is increased to include the number of additional common shares that would have been outstanding if
the potential common shares had been issued and if the additional common shares were dilutive.
For all periods presented, basic
and diluted loss per share are the same, as any additional common stock equivalents would be anti-dilutive. Potentially dilutive
shares of Common Stock have been excluded from the calculation of the weighted average number of dilutive common shares.
As of June 30, 2012, there were
90,485,261 additional potentially dilutive shares of common stock. These additional shares include 17,611,538 shares issuable upon
conversion of the Preferred Stock, and 72,873,723 shares issuable upon the exercise of outstanding options and warrants. As of
June 30, 2011, there were 82,949,540 additional potentially dilutive shares of common stock. These additional shares include 16,300,000
shares issuable upon conversion of the Preferred Stock, and 66,649,540 issuable upon the exercise of outstanding options and warrants.
As of June 30, 2010, there were 91,299,773 additional potentially dilutive shares of common stock. These additional shares include
28,859,375 shares issuable upon conversion of the Preferred Stock and 62,440,398 shares issuable upon the exercise of outstanding
options and warrants.
Income Taxes
Income taxes are accounted for
under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable
to the differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax
bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.
The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes
the enactment date.
The asset and liability method
requires that deferred tax assets and liabilities be recorded without consideration as to their realizability. The deferred tax
asset primarily includes net operating loss carryforwards. The portion of any deferred tax asset for which it is more likely than
not that a tax benefit will not be realized must then be offset by recording a valuation allowance. A valuation allowance has been
established against all of the deferred tax assets as it is more likely than not that these assets will not be realized given the
history of operating losses.
SENESCO TECHNOLOGIES, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
While the Company believes that
its tax positions are fully supportable, there is a risk that certain positions could be challenged successfully. In these instances,
the Company looks to establish reserves. If the Company determined that a tax position is more likely than not of being sustained
upon audit, based solely on the technical merits of the position, the Company would recognize the benefit. The Company measures
the benefit by determining the amount that has a likelihood greater than 50% of being realized upon settlement. The Company presumes
that all tax positions will be examined by a taxing authority with full knowledge of all relevant information. The Company regularly
monitors its tax positions, tax assets and tax liabilities. The Company reevaluates the technical merits of its tax positions and
would recognize an uncertain tax benefit or derecognize a previously recorded tax benefit when (i) there is a completion of a tax
audit, (ii) there is a change in applicable tax law including a tax case or legislative guidance, or (iii) there is an expiration
of the statute of limitations. Significant judgment is required in accounting for tax reserves. As of June 30, 2012, the Company
determined that it had no liability for uncertain income taxes. The Company’s policy is to recognize potential accrued interest
and penalties related to the liability for uncertain tax benefits, if applicable, in income tax expense. The Company’s tax
returns for the fiscal years ended June 30, 2012, 2011, 2010 and 2009 are open for examination. (See note 11).
Revenue Recognition
The Company has received certain
nonrefundable upfront fees in exchange for the transfer of its technology to licensees. Upon delivery of the technology, the Company
had no further obligations to the licensee with respect to the basic technology transferred and, accordingly, recognized revenue
at that time. The Company has and may continue to receive additional payments from its licensees in the event such licensees achieve
certain development or commercialization milestones in their particular field of use. Milestone payments, which are contingent
upon the achievement of certain research goals, are recognized as revenue when the milestones, as defined in the particular agreement,
are achieved.
Stock-based Payments
The Company accounts for stock-based
compensation under the provisions of FASB ASC Topic 718, Compensation—Stock Compensation (“ASC 718”), which requires
the measurement and recognition of compensation expense for all stock-based awards made to employees and directors based on estimated
fair values on the grant date. The Company estimates the fair value of stock-based awards on the date of grant using the Black-Scholes
model. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service
periods using the straight-line method. The Company estimates forfeitures at the time of grant and revises its estimate in subsequent
periods if actual forfeitures differ from those estimates.
The Company accounts for stock-based
compensation awards to non-employees in accordance with FASB ASC Topic 505-50, Equity-Based Payments to Non-Employees (“ASC
505-50”). Under ASC 505-50, the Company determines the fair value of the warrants or stock-based compensation awards granted
as either the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably
measurable.
All issuances of stock options
or other equity instruments to non-employees as consideration for goods or services received by the Company are accounted for based
on the fair value of the equity instruments issued. Any stock options issued to non-employees are recorded as an expense and additional
paid-in capital in stockholders’ equity over the applicable service periods using variable accounting through the vesting
dates based on the fair value of the options at the end of each period.
SENESCO TECHNOLOGIES, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following table sets forth
the total stock-based compensation expense and issuance of common stock for services included in the consolidated statements of
operations for the fiscal years ended June 30, 2012, 2011 and 2010 and from inception to date.
|
|
Fiscal Year Ended June 30,
|
|
|
Cummulative
|
|
|
|
2012
|
|
|
2011
|
|
|
2010
|
|
|
From Inception
|
|
General and administrative
|
|
|
721,197
|
|
|
|
709,207
|
|
|
|
433,414
|
|
|
|
10,595,114
|
|
Research and development
|
|
|
44,807
|
|
|
|
41,159
|
|
|
|
7,025
|
|
|
|
1,564,639
|
|
Total
|
|
$
|
766,004
|
|
|
$
|
750,366
|
|
|
$
|
440,439
|
|
|
$
|
12,159,753
|
|
The Company estimated the fair
value of each warrant and option grant throughout the year using the Black-Scholes option-pricing model using the following assumptions:
|
|
Fiscal Year Ended June 30,
|
|
|
2012
|
|
2011
|
|
2010
|
|
|
|
|
|
|
|
Risk-free interest rate (1)
|
|
0.4%-1.9%
|
|
1.3%-2.9%
|
|
2.0%-3.9%
|
Expected volatility
|
|
78-105%
|
|
103-104%
|
|
100-106%
|
Dividend yield
|
|
None
|
|
None
|
|
None
|
Expected life (2)
|
|
2.5 - 10.0
|
|
5.0 - 10.0
|
|
3.5-6.2
|
(1) Represents the interest
rate on a U.S. Treasury security with a maturity date corresponding to that of the option term.
(2) Expected life for employee
based stock options was estimated using the “simplified” method, as allowed under the provisions of the Securities
and Exchange Commission Staff Accounting Bulletin No. 110.
The economic values of the options
will depend on the future price of the Company's Common Stock, par value $0.01, which cannot be forecast with reasonable accuracy.
Research and Development
Research and development costs
are expensed as incurred.
Recent Accounting Pronouncements
Applicable to the Company
The Company does not believe
that the following recent accounting pronouncements or any other recently issued, but not yet effective accounting standards will
have a material effect on the Company’s consolidated financial position, results of operations, or cash flows.
In September 2011, the Financial
Accounting Standards Board issued ASU 2011-08 Intangibles – Goodwill and Other (Topic 350): Testing Goodwill for Impairment.
This will be effective for the Company beginning with the fiscal year ending June 30, 2013.
In December 2011, the Financial
Accounting Standards Board issued ASU 2011-11 Balance Sheet (Topic 210): Disclosures about Offsetting Assets and Liabilities. This
will be effective for the Company beginning with the fiscal year ending June 30, 2014.
In December 2011, The Financial
Accounting Standards Board issued ASU 2011-12 Comprehensive Income (Topic 220): Deferral of the Effective Date for Amendments to
the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No.
2011-05. This will be effective for the Company beginning with the fiscal year ending June 30, 2013.
SENESCO TECHNOLOGIES, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In July 2012, the Financial
Accounting Standards Board issued ASU 2012-02 Intangibles-Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets
for Impairment. This will be effective for the Company beginning with the fiscal year ending June 30, 2013.
|
3.
|
Fair Value Measurements:
|
The following tables provide the assets and liabilities
carried at fair value measured on a recurring basis as of June 30, 2012 and 2011:
|
|
Carrying
|
|
|
Fair Value Measurement at June 30, 2012
|
|
|
|
Value
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
2,001,325
|
|
|
$
|
2,001,325
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrant liabilities
|
|
$
|
238,796
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
238,796
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carrying
|
|
|
Fair Value Measurement at June 30, 2011
|
|
|
|
Value
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
3,609,954
|
|
|
$
|
3,609,954
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrant liabilities
|
|
$
|
711,259
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
711,259
|
|
The following table summarizes the changes
in fair value of the Company’s Level 3 financial instruments:
|
|
Fiscal Year ended June 30,
|
|
|
|
2012
|
|
|
2011
|
|
|
|
|
|
|
|
|
Beginning Balance
|
|
$
|
711,259
|
|
|
$
|
2,493,794
|
|
Reclassification to equity due to change in terms of common stock warrants exercisable at $0.35
|
|
|
-
|
|
|
|
(1,173,296
|
)
|
Gain due to change in fair value of warrant liabilities, net
|
|
|
(472,463
|
)
|
|
|
(609,239
|
)
|
Ending Balance
|
|
$
|
238,796
|
|
|
$
|
711,259
|
|
SENESCO TECHNOLOGIES, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
4.
|
Equipment, Furniture and Fixtures:
|
Equipment, Furniture and Fixtures
consist of the following:
|
|
June 30,
|
|
|
|
2012
|
|
|
2011
|
|
|
|
|
|
|
|
|
Equipment
|
|
$
|
31,053
|
|
|
$
|
26,592
|
|
Furniture and fixtures
|
|
|
67,674
|
|
|
|
67,674
|
|
|
|
|
98,727
|
|
|
|
94,266
|
|
Less—Accumulated depreciation
|
|
|
(92,870
|
)
|
|
|
(90,484
|
)
|
|
|
$
|
5,857
|
|
|
$
|
3,782
|
|
Depreciation expense aggregated $2,386, $2,798, $2,548
and $178,809 for the fiscal years ended June 30, 2012, 2011, 2010, and cumulatively from inception through June 30, 2012, respectively.
Intangible assets consist of
the following:
|
|
June 30,
|
|
|
|
2012
|
|
|
2011
|
|
|
|
|
|
|
|
|
Patents approved
|
|
$
|
2,209,286
|
|
|
$
|
2,059,323
|
|
Patents pending
|
|
|
1,912,526
|
|
|
|
1,979,246
|
|
|
|
|
4,121,812
|
|
|
|
4,038,569
|
|
Accumulated amortization
|
|
|
(727,820
|
)
|
|
|
(513,838
|
)
|
|
|
$
|
3,393,992
|
|
|
$
|
3,524,731
|
|
Amortization expense amounted
to $255,637, $140,476, $124,019 and $921,496 for the fiscal years ended June 30, 2012, 2011, 2010, and cumulatively from inception
through June 30, 2012, respectively.
During the fiscal years ended
June 30, 2012 and 2011, the Company abandoned certain patents and patents pending. Accordingly, intangible assets were reduced
by the net carrying value of those patents and patents pending in the amount of $321,137 and $1,588,087, respectively.
Estimated amortization expense for the next five
fiscal years is as follows:
Fiscal Year ended June 30,
|
|
|
|
|
2013
|
|
$
|
300,000
|
|
2014
|
|
|
300,000
|
|
2015
|
|
|
300,000
|
|
2016
|
|
|
300,000
|
|
2017
|
|
|
300,000
|
|
SENESCO TECHNOLOGIES, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Accrued expenses were comprised of the following:
|
|
June 30,
|
|
|
|
2012
|
|
|
2011
|
|
|
|
|
|
|
|
|
Accrued research
|
|
$
|
113,264
|
|
|
$
|
195,992
|
|
Accrued dividends payable
|
|
|
114,474
|
|
|
|
122,252
|
|
Accrued other
|
|
|
141,957
|
|
|
|
191,562
|
|
|
|
$
|
369,695
|
|
|
$
|
509,806
|
|
On February 17, 2010, the Company
entered into a credit agreement with JMP Securities LLC. The agreement provides the Company with, subject to certain restrictions,
including the existence of suitable collateral, up to a $3.0 million line of credit upon which the Company may draw at any time
(the “Line of Credit”). Any draws upon the Line of Credit accrue interest at an annual rate of (i) the broker rate
in effect at the interest date (which was 3.75% at June 30, 2012), plus (ii) 2.0%. There are no other conditions or fees associated
with the Line of Credit. The Line of Credit is not secured by any assets of the Company, but it is secured by certain assets of
one of a member of the Company’s Board of Directors, Harlan W. Waksal, M.D., which is currently held by JMP Securities. The
balance outstanding as of June 30, 2012 and 2011 was $2,199,108 and $2,199,108, respectively. In April 2011, we were required to
enter into a new demand note with the clearing agent for JMP Securities in connection with the Line of Credit.
Total interest expense recorded
under the Line of Credit for the fiscal years ended June 30, 2012 and 2011 amounted to $134,549 and $110,649, respectively.
The warrant liabilities represent
the fair value of Common Stock purchase warrants, which have exercise price reset features and cash settlement features.
The fair value of the warrants
that have exercise price reset features is estimated using an adjusted Black-Scholes model. The Company computes valuations, each
quarter, using the Black-Scholes model for such warrants to account for the various possibilities that could occur due to changes
in the inputs to the Black-Scholes model as a result of contractually-obligated changes. The Company effectively weights each calculation
based on the likelihood of occurrence to determine the value of the derivative at the reporting date. The Company has an unobservable
input for the estimation of the likelihood of a reset occurring, which was estimated to be 75% made up of various reset amounts
with probabilities ranging between 10% and 25% per occurrence. These estimates of the likelihood of completing an equity raise
that would meet the criteria to trigger the reset provisions are based on numerous factors, including the remaining term of the
financial instruments and the Company’s overall financial condition.
The fair value of the warrants
that have cash settlement features is estimated using a probability –weighted Black-Scholes model. The unobservable input
used by the Company on certain warrants was the estimation of the likelihood of a fundamental transaction, as defined in the related
agreements, which was estimated to be 15% at June 30, 2012 and 2011.
Changes in the unobservable
input values would likely cause material changes in the fair value of the Company’s Level 3 financial instruments. The significant
unobservable input used in the fair value measurement is the estimation of the likelihood of the occurrence of a change to the
strike price of the warrants or the occurrence of a fundamental transaction. A significant increase (decrease) in the this likelihood
would result in a higher (lower) fair value measurement.
SENESCO TECHNOLOGIES, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
During the fiscal year ended
June 30, 2011, the holders of an aggregate of 22,641,665 warrants amended the terms of their warrants. As of the dates of the amendments
to the warrants, the Black-Scholes value in the amount of $1,173,296 was reclassified from warrant liabilities to equity with the
change in fair value from June 30, 2010 through the dates of the amendments being recorded in the consolidated statement of operations.
The Company also recorded a
charge of $115,869 during the fiscal year ended June 30, 2011, as a result of the amendment to certain of the warrants that had
an exercise price reset feature, whereby the exercise price of $0.50, subject to future adjustments, was reset to $0.32 and would
no longer be subject to future adjustments and accordingly are no longer deemed to be liabilities. The charge of $115,869 represents
the difference in the Black-Scholes value of the warrants immediately prior to the amendment and the Black-Scholes value of the
warrants immediately after the amendment.
During the fiscal years ended
June 30, 2012, 2011 and 2010, the Company revalued all of the remaining warrant liabilities, using the adjusted Black-Scholes and
standard Black-Scholes models. A gain on the change in fair value of the warrant liabilities in the amount of $472,463, $609,239
and $2,516,661 was recorded in the Condensed Consolidated Statement of Operations for the fiscal years ended June 30, 2012, 2011
and 2010, respectively.
At June 30, 2012 and 2011, there
were an aggregate of 21,307,814 warrants included in the fair value of the warrant liabilities.
SENESCO TECHNOLOGIES, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The assumptions used to value
the warrants were as follows:
|
|
June 30, 2012
|
|
June 30, 2011
|
Warrants issued on December 20, 2007
|
|
|
|
|
|
|
|
|
|
Estimated life in years
|
|
0.50
|
|
1.50
|
Risk-free interest rate
(1)
|
|
0.15%
|
|
0.45%
|
Volatility
|
|
75%
|
|
79%
|
Dividend paid
|
|
None
|
|
None
|
Range of estimated strike prices
|
|
$0.33 - $0.36
|
|
$0.41 - $0.49
|
Range of estimated probabilities
|
|
10% - 50%
|
|
25% - 50%
|
|
|
|
|
|
Warrants issued on June 30, 2008
|
|
|
|
|
|
|
|
|
|
Estimated life in years
|
|
1.00
|
|
2.00
|
Risk-free interest rate
(1)
|
|
0.21%
|
|
0.45%
|
Volatility
|
|
75%
|
|
79%
|
Dividend paid
|
|
None
|
|
None
|
Range of estimated strike prices
|
|
$0.33 - $0.36
|
|
$0.41 - $0.49
|
Range of estimated probabilities
|
|
10% - 50%
|
|
25% - 50%
|
|
|
|
|
|
Warrants issued on April 1, 2010
|
|
|
|
|
|
|
|
|
|
Estimated life in years
|
|
2.75
|
|
3.75
|
Risk-free interest rate
(1)
|
|
0.39%
|
|
1.29%
|
Volatility
|
|
78%
|
|
107%
|
Dividend paid
|
|
None
|
|
None
|
Estimated probability of fundamental transaction
|
|
15%
|
|
15%
|
|
(1)
|
Represents the interest rate on a U.S. Treasury security with a maturity date corresponding to that of the warrant term.
|
Preferred Stock
On April 1, 2010, the Company
sold 10,297 shares of 10% Series A preferred stock to non-affiliated purchasers for cash. On June 2, 2010, the Company sold 1,200
shares of 10% Series B preferred stock (together with the Series A preferred stock, the “Preferred Stock”) to affiliated
purchasers for cash. The Company received gross proceeds in the aggregate amount of $11,497,000 and net proceeds in the amount
of $10,754,841.
Pursuant to the terms of the
Series A and Series B preferred stock, the Series A and Series B preferred stock was initially convertible into approximately 35,928,125
shares of the Company’s Common Stock, subject to adjustment. In addition, the Series A and Series B Preferred stockholders
received immediately exercisable warrants to purchase up to approximately 35,928,125 shares.
SENESCO TECHNOLOGIES, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Each share of Preferred Stock
has a stated value of $1,000 (the “Stated Value”). Each holder of shares of Preferred Stock is entitled to receive
semi-annual dividends at the rate of 10% per annum of the Stated Value for each share of preferred stock held by such holder. Except
in limited circumstances, the Company can elect to pay the dividends in cash or shares of Common Stock. If the dividends are paid
in shares of Common Stock, such shares will be priced at the lower of 90% of the average volume weighted-average price for the
20 days immediately preceding the payment date or $0.224. The dividends were subject to a 30% make whole provision. At June 30,
2012 the dividends are subject to a remaining 10% make whole provision.
The shares of preferred stock
were convertible into shares of Common Stock at an initial conversion price of $0.32 per share and are convertible at any time.
The conversion price is subject to adjustment if the Company sells or grants any Common Stock or Common Stock equivalents, subject
to certain exclusions, at an effective price per share that is lower than the conversion price of the preferred stock. After 18
months from the date of issuance of the preferred stock, if the Company’s Common Stock trades above $0.80 for 20 out of 30
consecutive trading days, the preferred stock will no longer be subject to adjustment.
On December 27, 2010, in connection
with the Company’s ATM facility (see below), the conversion price on the then outstanding 5,325 shares of Preferred Stock
was adjusted from $0.32 to $0.30, resulting in an additional 1,109,375 shares of Common Stock that will be issued upon conversion
of the then outstanding Preferred Stock. In connection with the adjustment of the conversion price, due to a beneficial conversion
feature, an additional dividend in the amount of $360,733 was recorded as an increase to both additional paid-in capital and accumulated
deficit. As a result of the reset of the conversion price, each share of Preferred Stock is convertible into 3,333 shares of Common
Stock (a conversion price of $0.30).
On July 18, 2011, in connection with the Company’s
ATM facility, the conversion price on the then outstanding 4,860 shares of Preferred Stock was adjusted from $0.30 to $0.27, resulting
in an additional 1,800,000 shares of Common Stock that would be issued upon conversion of the then outstanding Preferred Stock.
In connection with the adjustments to the conversion price, due to a beneficial conversion feature, an additional dividend in the
amount of $778,000 was recorded as an increase to both additional paid-in capital and accumulated deficit. As a result of the resets
to the conversion price, each share of Preferred Stock was convertible into 3,704 shares of Common Stock (a conversion price of
$0.27). On January 6, 2012, in connection with the Company’s placement of Common Stock and warrants discussed in Note 12,
the conversion price on the then outstanding 4,845 shares of Preferred Stock was adjusted from $0.27 to $0.26, resulting in an
additional 690,171 shares of Common Stock that will be issued upon conversion of the then outstanding Preferred Stock. In connection
with the adjustments to the conversion price, due to a beneficial conversion feature, an additional dividend in the amount of $298,355
was recorded as an increase to both additional paid-in capital and accumulated deficit. As a result of the resets to the conversion
price, each share of Preferred Stock was convertible into 3,846 shares of Common Stock (a conversion price of $0.26).
On August 8, 2012, in connection
with a warrant exchange, 2,384 shares of Series A preferred stock were converted into 9,169,231 shares of Common Stock. Additionally,
certain directors of the Company converted their 1,200 shares of Series B preferred stock into 4,615,385 of Common Stock. Subsequent
to August 8, 2012, there were 995 shares of Series A preferred stock outstanding and no shares of Series B preferred stock outstanding.
The Company may force conversion
of the remaining Preferred Stock if the Company’s Common Stock trades above $0.80 for 20 out of 30 consecutive trading days
and there is an effective registration statement for the underlying Common Stock or such underlying Common Stock is freely tradable
under Rule 144.
Warrants
Pursuant to the purchase agreements,
the Company delivered a Warrant to purchase shares of Common Stock to the Series A Non-Affiliate Investors and a Warrant to purchase
shares of Common Stock to the Series B Affiliate Investors (the “Warrants”). Each Warrant has an initial exercise price
of $0.35 per share of Common Stock. The Warrants are immediately exercisable and have a five year term. The Warrants issued to
the Series A Non-Affiliate Investors also contain a provision which limits the holder’s beneficial ownership to a maximum
of 4.99% (which percentage may be increased to 9.99% upon 60 days notice to the Company).
SENESCO TECHNOLOGIES, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
On August 8, 2012, pursuant
to a warrant exchange agreement, 17,262,500 warrants were exchanged for 6,902,192 shares of Common Stock.
Placement Agent Warrants
On April 1, 2010, in connection
with the issuance of the Series A preferred stock, the Company issued warrants to purchase 1,079,688 shares of the Company’s
Common Stock as partial compensation for services related to the raising of the capital. Each warrant has an initial exercise price
of $0.35 per share of Common Stock. The warrants are immediately exercisable and have a five year term. In accordance with ASC
480-10, Distinguishing Liabilities from Equity, the Company determined that such warrants are to be accounted for as a liability.
Accordingly, using the Black Scholes model, the Company recorded a warrant liability in the amount of $51,339 related to the warrants
on the issuance date. The Company recorded a charge to additional paid in capital as an additional cost of capital.
As discussed in note 8 above,
the Company is required to record the warrants as liabilities. As a result, the Company must allocate the proceeds to the warrants
based upon their fair value with the remainder of the proceeds allocated to the Preferred Stock. The Company allocated the gross
proceeds of the offering as follows:
|
|
Series A
|
|
|
Series B
|
|
|
|
|
|
|
Preferred Stock
|
|
|
Preferred Stock
|
|
|
Total
|
|
Total gross proceeds
|
|
$
|
10,297,000
|
|
|
$
|
1,200,000
|
|
|
$
|
11,497,000
|
|
Allocated to warrants
|
|
|
(1,530,070
|
)
|
|
|
(228,938
|
)
|
|
|
(1,759,008
|
)
|
Allocated to preferred stock
|
|
$
|
8,766,930
|
|
|
$
|
971,062
|
|
|
$
|
9,737,992
|
|
Due to the allocation of the
proceeds to the fair value of the warrant at the issuance dates, the convertible feature of the Preferred Stock was below market
value. Such feature, as it specifically relates to the convertible feature of the Preferred Stock, is characterized as a “Beneficial
Conversion Feature” (“BCF”). Pursuant to existing accounting standards, FASB ASC topic 470.20 – Debt with
Conversion and Other Options”, the estimated relative fair value of the BCF was $15,068,031. The value of the BCF which amounted
to $5,330,039 was determined utilizing an intrinsic value method with the fair value of the warrants determined using the Black-Scholes
model at the date of issuance. Per the guidance of accounting standards, the value of the BCF is treated as a deemed dividend to
the Preferred stockholders and, due to the potential immediate convertibility of the Preferred Stock at issuance, this value is
recorded as an increase to both additional-paid-in-capital and accumulated deficit at the time of issuance.
During fiscal year ended June
30, 2012, 311 shares of Preferred Stock were converted into 1,178,634 shares of Common Stock. During the fiscal year ended June
30, 2012, the Company issued an additional 2,321,877 shares of Common Stock for the payment of dividends in the amount of $557,150.
Total dividends payable on the outstanding 4,579 shares of Preferred Stock at June 30, 2012 amounted to $114,474.
During the fiscal year ended
June 30, 2011, 4,345 shares of Preferred Stock were converted into 13,668,750 shares of Common Stock. During the fiscal year ended
June 30, 2011, the Company issued an additional 7,912,266 shares of Common Stock for the payment of dividends in the amount of
$2,277,567. Total dividends payable on the outstanding 4,890 shares of Preferred Stock at June 30, 2011 amounted to $122,252.
During the fiscal year ended
June 30, 2010, 2,262 shares of Preferred Stock were converted into 7,068,750 shares of Common Stock. During the fiscal year ended
June 30, 2010, the Company issued an additional 3,029,465 shares of Common Stock for the payment of dividends in the amount of
$678,600. Total dividends payable on the outstanding 9,235 shares of Preferred Stock at June 30, 2010 amounted to $230,875.
SENESCO TECHNOLOGIES, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Common Stock
On September 22, 2009, the stockholders
approved a proposal to increase the authorized Common Stock of the Company from 100,000,000 shares to 120,000,000 shares. On May
25, 2010, the stockholders approved a proposal to increase the authorized Common Stock of the Company from 120,000,000 shares to
250,000,000 shares. On December 14, 2011, the stockholders approved a proposal to increase the authorized Common Stock of the Company
from 250,000,000 shares to 350,000,000 shares.
At the Market Sales Agreement
On December 22, 2010, the Company
entered into an At Market Issuance Sales Agreement (the “ATM”) under which the Company, from time to time, may issue
and sell shares of its Common Stock, with an aggregate offering price of up to $5,500,000. Such Common Stock will be offered and
sold pursuant to a prospectus supplement filed with the Securities and Exchange Commission in connection with the Company’s
shelf registration statement on Form S-3 (File No. 333-170140), which became effective on November 9, 2010.
Upon delivery of a placement
notice by the Company, if any, the placement agent may sell the Common Stock in any method permitted by law deemed to be an “at
the market” offering as defined in Rule 415 promulgated under the Securities Act of 1933, as amended, at prices prevailing
at the time of sale or at prices related to such prevailing market prices, including sales made directly on the NYSE MKT LLC, or
NYSE MKT, or sales made through a market maker other than on an exchange. The placement agent will make all sales using commercially
reasonable efforts consistent with its normal sales and trading practices on mutually agreed upon terms between the placement agent
and the Company. The Company will pay the placement agent a commission of up to 6% of the gross proceeds from the sale of shares
of the Common Stock, depending on the per share sales price. The Company has agreed to reimburse a portion of the placement agent’s
expenses in connection with the offering, up to an aggregate amount of $25,000. In addition, the Company granted customary indemnification
rights to the placement agent.
The ATM will terminate upon
the earlier of (1) the sale of all of the Common Stock subject to the ATM, or (2) upon termination by the Company or the placement
agent. The placement agent may terminate the ATM in certain circumstances, including the occurrence of a material adverse change
that, in the placement agent’s reasonable judgment, may impair its ability to sell the Common Stock, the Company’s
failure to satisfy any condition under the ATM or a suspension or limitation of trading of the Common Stock on the NYSE MKT. In
addition, either the Company or the placement agent may terminate the ATM at any time and for any reason upon 10 days prior notice
to the other party.
During the fiscal year ended
June 30, 2012, the Company issued 1,834,557 shares of Common Stock under the ATM for gross proceeds in the amount of $509,670.
During the fiscal year ended
June 30, 2011, the Company issued 5,911,457 shares of Common Stock under the ATM for gross proceeds in the amount of $1,853,421.
Private Placements of Common
Stock and Warrants
On September 30, 2009, the Company
issued 194,444 shares of the Company’s Common Stock at $0.90 per share, as well as a Series A Warrant and a Series B Warrant
in exchange for the extinguishment of an accounts payable due to the vendor amounting to $175,000. The Series A Warrant entitles
the holder to purchase in the aggregate, up to 175,000 shares of the Company’s Common Stock at $0.01 per warrant share, has
a term of seven years and was exercisable immediately after the date of grant. The Series B Warrant entitles the holder to purchase,
up to 177,431 shares of the Company’s Common Stock at $0.60 per warrant share, has a term of seven years and was not exercisable
until after the six-month anniversary from the date of grant. The transaction was accounted for as an extinguishment of debt. The
Company valued the Common Stock and warrants issued at fair value on the date of the closing which amounted to $261,532 and recorded
a loss on the extinguishment of debt in the amount of $86,532 for the fiscal year ended June 30, 2010.
SENESCO TECHNOLOGIES, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Public Placements of Common
Stock and Warrants
On January 6, 2012 and March
1, 2012, the Company entered into securities purchase agreements to raise an aggregate of $2,862,012 in gross proceeds through
the sale of an aggregate of 11,007,738 shares of its Common Stock. The investors, excluding officers and directors of Senesco or
funds affiliated with such officers or directors participating in the offering, also received 50% warrant coverage at an exercise
price of $0.286 per share. The common stock and 50% warrant coverage (the “Unit”) was priced at $0.26 per Unit.
|
10.
|
Stock-Based Compensation
|
In December 2008, the Company
adopted the 2008 Incentive Compensation Plan (the "2008 Plan"), which provides for the grant of stock options, stock
grants and stock purchase rights to certain designated employees and certain other persons performing services for the Company,
as designated by the board of directors. Pursuant to the 2008 Plan, an aggregate of 5,137,200 shares of Common Stock had been reserved
for issuance. On May 25, 2010, the Company increased the aggregate shares of Common Stock reserved for issuance under the 2008
Plan to 11,137,200. On March 11, 2011, the Company increased the aggregate shares of Common Stock reserved for issuance under the
2008 Plan to 23,005,003. Additionally, on January 1 of each calendar year beginning with the calendar year 2012 and ending with
the calendar year 2015, the share reserve will automatically increase so that the total number of shares available for issuance
under the 2008 Plan is 15% of the fully diluted shares as of the date of such increase, but in no event will such annual increase
exceed 7,000,000 shares per year. On January 1, 2012, the increase in Common Stock reserved for issuance under the 2008 Plan was
2,210,257. The 2008 Plan is intended to serve as a successor to the Amended and Restated 1998 Stock Incentive Plan (the “1998
Plan”), which terminated in December 2008. On February 19, 2009, the Company filed a registration statement with the SEC
to register all of the 6,137,200 shares of Common Stock underlying the 2008 Plan. On June 8, 2010, the Company filed with the SEC
an amendment to the registration statement to register the additional 5,000,000 shares of Common Stock underlying the 2008 Plan.
On January 4, 2012, the Company filed with the SEC an amendment to the registration statement to register the additional 2,210,257
shares of Common Stock underlying the 2008 Plan. The registration statement and amendments were deemed effective upon filing.
The terms and vesting schedules
for share-based awards vary by type of grant and the employment status of the grantee. Generally, the awards vest based upon time-based
conditions or achievement of specified goals and milestones.
SENESCO TECHNOLOGIES, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Stock option activity under
the 2008 Plan and 1998 Plan is summarized as follows:
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
Aggregate
|
|
|
Average
|
|
|
Exercise Price
|
|
|
|
Number
|
|
|
Exercise Price
|
|
|
Range
|
|
Outstanding, July 31, 2009
|
|
|
4,550,412
|
|
|
$
|
1.70
|
|
|
$
|
1.69 – 11.25
|
|
Granted
|
|
|
2,951,760
|
|
|
|
0.43
|
|
|
|
2.60 – 6.73
|
|
Exercised
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Cancelled
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Expired
|
|
|
(233,000
|
)
|
|
|
3.45
|
|
|
|
4.75 – 6.60
|
|
Outstanding, June 30, 2010
|
|
|
7,269,172
|
|
|
|
1.13
|
|
|
$
|
1.69 – 11.25
|
|
Granted
|
|
|
4,579,142
|
|
|
|
0.26
|
|
|
|
0.26 – 0.32
|
|
Exercised
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Cancelled
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Expired
|
|
|
(500,000
|
)
|
|
|
1.14
|
|
|
|
0.99 – 2.25
|
|
Outstanding, June 30, 2011
|
|
|
11,348,314
|
|
|
|
0.78
|
|
|
$
|
0.26 – 4.00
|
|
Granted
|
|
|
5,274,428
|
|
|
|
0.23
|
|
|
|
0.20 – 0.26
|
|
Exercised
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Cancelled
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Expired
|
|
|
(975,000
|
)
|
|
|
2.32
|
|
|
|
1.50 – 4.00
|
|
Outstanding, June 30, 2012
|
|
|
15,647,742
|
|
|
$
|
0.50
|
|
|
$
|
0.20 – 3.45
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options exercisable at June 30, 2012
|
|
|
10,101,055
|
|
|
$
|
0.62
|
|
|
|
|
|
Options exercisable at June 30, 2011
|
|
|
7,274,422
|
|
|
$
|
1.04
|
|
|
|
|
|
Options exercisable at June 30, 2010
|
|
|
5,146,671
|
|
|
$
|
1.34
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average fair value of options granted during the fiscal year ended June 30, 2012
|
|
$
|
0.17
|
|
|
|
|
|
|
|
|
|
Weighted average fair value of options granted during the fiscal year ended June 30, 2011
|
|
$
|
0.33
|
|
|
|
|
|
|
|
|
|
Weighted average fair value of options granted during the fiscal year ended June 30, 2010
|
|
$
|
0.45
|
|
|
|
|
|
|
|
|
|
Non-vested stock option activity under the Plan is
summarized as follows:
|
|
|
|
|
Weighted-average
|
|
|
|
Number of
|
|
|
Grant-Date
|
|
|
|
Options
|
|
|
Fair Value
|
|
Non-vested stock options at July 1, 2011
|
|
|
4,073,892
|
|
|
$
|
0.25
|
|
Granted
|
|
|
5,274,428
|
|
|
|
0.17
|
|
Vested
|
|
|
(3,801,633
|
)
|
|
|
0.20
|
|
Forfeited
|
|
|
-
|
|
|
|
-
|
|
Non-vested stock options at June 30, 2012
|
|
|
5,546,687
|
|
|
$
|
0.25
|
|
As of June 30, 2012, the aggregate
intrinsic value of stock options outstanding was $6,473, with a weighted-average remaining term of 7.6 years. The aggregate intrinsic
value of stock options exercisable at that same date was $6,473, with a weighted-average remaining term of 7.0 years. As of June
30, 2012, the Company has 11,588,876 shares available for future stock option grants.
SENESCO TECHNOLOGIES, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2012, total estimated
compensation expense not yet recognized related to stock option grants amounted to $1,037,905, which will be recognized over the
next 39 months.
Warrants
Total outstanding warrants at June 30, 2012 were
as follows:
Strike Price
|
|
|
Warrants
|
|
$
|
3.45
|
|
|
|
15,000
|
|
$
|
3.15
|
|
|
|
20,000
|
|
$
|
2.35
|
|
|
|
15,000
|
|
$
|
1.40
|
|
|
|
5,000
|
|
$
|
1.08
|
|
|
|
2,500
|
|
$
|
1.01
|
|
|
|
4,150,000
|
|
$
|
0.99
|
|
|
|
1,000
|
|
$
|
0.90
|
|
|
|
388,889
|
|
$
|
0.74
|
|
|
|
151,314
|
|
$
|
0.60
|
|
|
|
2,770,850
|
|
$
|
0.45
|
|
|
|
2,853,126
|
|
$
|
0.35
|
|
|
|
37,007,813
|
|
$
|
0.32
|
|
|
|
4,388,540
|
|
$
|
0.29
|
|
|
|
4,926,949
|
|
$
|
0.26
|
|
|
|
5,000
|
|
$
|
0.01
|
|
|
|
525,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
57,225,981
|
|
As of June 30, 2012, 57,224,314
of the above warrants are exercisable expiring at various dates through 2017. At June 30, 2012, the weighted-average exercise price
on the above warrants was $0.43.
On August 8, 2012, pursuant
to a warrant exchange agreement, 17,262,500 of the warrants with a strike price of $0.35 were exchanged for 6,902,192 shares of
Common Stock.
Short-Term Incentive Program
In November 2008, the Company
adopted a Short-Term Equity Incentive Program for key employees in which shares of the Company’s Common Stock, or options
to acquire shares of the Company’s Common Stock would be awarded, if the Company achieved certain target goals relating to
research, financing, licensing, investor relations and other administrative items during the fiscal year ending June 30, 2009.
The number of eligible shares and options to be awarded to the employees was based upon certain performance criteria as defined
in the incentive program.
As of June 30, 2009, the Company
had determined that the achievement of the target goals was probable and issued 116,000 Restricted Stock Units (“RSU”)
and 124,000 options to purchase Common Stock with a fair value based upon the Black-Scholes model of $140,480. As a result, the
Company recognized the fair value of the awards as compensation expense ratably over the seven and one-half month period from November
19, 2008 through June 30, 2009. In October 2009, it was determined that the executive officers had partially achieved the previously
granted short-term performance milestones and the number of RSU’s and options to purchase Common Stock which vested were
reduced. As a result, compensation expense was reduced by $13,840 during the fiscal year ended June 30, 2010.
Long-Term Incentive Program
SENESCO TECHNOLOGIES, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
On December 13, 2007, the Company
adopted a Long-Term Equity Incentive Program for the members of the executive management team in which key employees will be awarded
shares of the Company’s Common Stock and options to acquire shares of the Company’s Common Stock if the Company achieves
certain target goals relating to its multiple myeloma research project over the three fiscal year period from the date of adoption.
During the fiscal year ended
June 30, 2011, the Company determined that the first target goal under the Long-Term Equity Incentive Program had been met and,
therefore, recognized $93,500 of compensation. The Company also determined that the second and third target goals under the Long-Term
Equity Incentive Program would not be met. As such, the eligible shares and options related thereto will not vest and the remaining
$374,000 of potential compensation expense will not be recognized.
Since the Company has recurring losses and a valuation
allowance against deferred tax assets, there is no tax expense (benefit) for all periods presented.
The Company files a consolidated
federal income tax return. The subsidiary files separate state and local income tax returns.
The reconciliation of the effective
income tax rate to the federal statutory rate is as follows:
|
|
June 30,
|
|
|
|
2012
|
|
|
2011
|
|
|
2010
|
|
Federal income tax provision at statutory rate
|
|
|
(34.0
|
)%
|
|
|
(34.0
|
)%
|
|
|
(34.0
|
)%
|
Fair value - warrant liability
|
|
|
(3.2
|
)%
|
|
|
(2.8
|
)%
|
|
|
(6.4
|
)%
|
Amortization of debt discount and finance costs
|
|
|
-
|
|
|
|
-
|
|
|
|
23.0
|
%
|
Other
|
|
|
(0.6
|
)%
|
|
|
(1.9
|
)%
|
|
|
(0.5
|
)%
|
Change in valuation allowance
|
|
|
37.8
|
%
|
|
|
38.7
|
%
|
|
|
17.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Actual income tax provision (benefit) effective tax rate
|
|
|
- %
|
|
|
|
- %
|
|
|
|
- %
|
|
The deferred income tax asset consists of the following
at:
|
|
June 30,
|
|
|
|
2012
|
|
|
2011
|
|
|
|
|
|
|
|
|
Net operating loss carryforwards
|
|
$
|
17,738,000
|
|
|
$
|
15,931,894
|
|
Stock-based compensation
|
|
|
2,243,000
|
|
|
|
2,101,085
|
|
Other
|
|
|
(42,000
|
)
|
|
|
(95,928
|
)
|
|
|
|
19,939,000
|
|
|
|
17,937,051
|
|
Valuation allowance
|
|
|
(19,939,000
|
)
|
|
|
(17,937,051
|
)
|
Net deferred tax asset
|
|
$
|
-
|
|
|
$
|
-
|
|
At June 30, 2012, the Company
has federal and state net operating loss carryforwards of approximately $45,451,000 and $38,084,000, respectively, available to
offset future taxable income expiring on various dates through 2032. The timing and extent to which the Company can utilize future
tax deductions in any year may be limited by provisions of the Internal Revenue Code regarding changes in ownership of Corporations
(i.e. IRS Code Section 382).
SENESCO TECHNOLOGIES, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Research Agreement
Effective September 1, 1998,
the Company entered into a research and development agreement, which has subsequently been renewed, with The University of Waterloo
which Dr. John Thompson, who is an officer, director and stockholder of the Company, is affiliated with. Pursuant to the agreement,
the university provides research and development under the direction of the researcher and the Company. The agreement is renewable
annually by the Company which has the right of termination upon 30 days' advance written notice. Effective September 1, 2010, the
Company extended the research and development agreement for an additional three-month period through November 30, 2010, in the
amount of Can $164,200, or approximately U.S. $164,200. Effective December 1, 2010, the Company extended the research and development
agreement for an additional nine-month period through August 31, 2011, in the amount of Can $434,687. Effective September 1, 2011,
the Company extended the research and development agreement for an additional one-year period through August 31, 2012 in the amount
of Can $555,900. Effective September 1, 2012, the Company extended the research and development agreement for an additional one-year
period through August 31, 2013 in the amount of Can $611,550. Research and development expenses under this agreement for the fiscal
years ended June 30, 2012, 2011 and 2010 aggregated U.S. $573,368, U.S. $622,872 and U.S. $672,693, respectively, and U.S. $7,149,301
for the cumulative period through June 30, 2012. Future obligations to be paid under the agreement through August 31, 2013 equal
approximately U.S. $705,000.
Supply and service agreements
Effective June 20, 2011, the
Company entered into an agreement with Criterium, Inc. (“Criterium”) under which Criterium will provide monitoring,
project and data management services in connection with the Company’s Phase 1b/2a clinical trial. The agreement, as amended,
has an initial term that commences on the date of the agreement and runs for a period of seventeen (17) months. The Company’s
remaining financial obligation under the agreement is estimated to be approximately $289,890.
Consulting and other Agreements
Effective May 1, 1999, the Company
entered into a consulting agreement for research and development with Dr. John Thompson. The agreement was renewed for an additional
two-year term through June 30, 2013. Future obligations to be paid under the agreement equal $67,500.
The Company is obligated under
a non-cancelable operating lease of office space expiring on May 31, 2013. The aggregate minimum future payments are $62,733. Rent
expense charged to operations aggregated $69,174, $88,766, $86,215 and $914,732 for the fiscal years ended June 30, 2012, 2011,
2010, and from inception through June 30, 2012, respectively.
|
13.
|
Collaborative Arrangements:
|
On May 14, 1999, the Company
entered into an agreement (the "Collaboration") with an Israeli partnership that is engaged in the worldwide marketing
of tissue culture plants. The purpose of the Collaboration is to develop enhanced banana plants which will result in banana fruit
with improved consumer- and grower-driven traits. The program had been performed as a joint collaboration whereby the Company paid
for 50% of the research costs of the program. The Company's portion of the expenses of the collaboration approximated $100,000,
$205,000 and $214,000 for the fiscal years ended June 30, 2012, 2011 and 2010, respectively, and is included in research and development
expenses.
In July 1999, the Collaboration
applied for and received a conditional grant from the Israel - United States Binational Research and Development Foundation (the
"BIRD Foundation"). This agreement, as amended, allowed the Collaboration to receive $340,000 over a five-year period
ending May 31, 2004. Grants received from the BIRD Foundation will be paid back only upon the commercial success of the Collaborations
technology, as defined. The Company has received a total of $99,728, all of which was received prior to the fiscal years ended
June 30, 2012, June 30, 2011, June 30, 2010 and June 30, 2009.
SENESCO TECHNOLOGIES, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Effective December 22, 2011,
the Company re-structured the Collaboration with the Israeli partnership to reflect the priorities of both Companies. The new agreement
is an amendment to the original research and development agreement, dated May 14, 1999, that provided the Israeli company access
to the Company’s proprietary technology enabling the two Companies to engage in a jointly-funded research and development
program relating to the development and production of banana plants with improved traits. The new agreement re-structures the collaboration
from a cost and profit sharing arrangement to a license agreement, which provides the Company with a mid- to upper-single digit
royalty on incremental revenue as defined in the agreement, from the sale of the Israeli company’s banana seedling products
containing the Company’s technology without any future payments by the Company for the costs of development and commercialization.
If a product, which incorporates the Company’s technology, is commercialized by the Israeli partnership, the royalties will
be payable from first commercial sale for the longer of ten (10) years or the expiration of the last valid patent on a country-by-country
basis.
On October 29, 2010, the Company
was approved for a grant in the amount of $244,479 in connection with the Qualified Therapeutic Discovery Project, which is Section
48D of the Internal Revenue Code. The funds were granted in connection with the Company’s program for the use of its lead
therapeutic candidate, SNS01-T, in multiple myeloma.
On August 8, 2012, the Company
completed an exchange (the “Exchange”) of certain five-year warrants issued by the Company in 2010 (the “Warrants”)
to purchase 17,262,500 shares of Common Stock (the “Warrant Shares”) for 6,902,192 shares of Common Stock, and 2,384
shares of the Company’s 10% Series A Convertible Preferred Stock, par value $0.01 per share (the “Series A Preferred
Stock”) were converted into 9,169,231 shares of Common Stock, pursuant to warrant exchange agreements (the “Warrant
Exchange Agreements”) by and between the Company and certain holders of the Warrants (the “Warrant Holders”).
Following the Exchange, Warrants to purchase 19,745,313 Warrant Shares and 995 shares of Series A Preferred Stock remain outstanding.
Pursuant to the terms of the
Warrant Exchange Agreements, the Company and each Warrant Holder agreed to exchange the Warrant held by such Warrant Holder for
a number of shares of Common Stock equal to the product of (i) the number of Warrant Shares underlying the Warrant, multiplied
by (ii) 0.35; provided, that if such Warrant Holder also owned shares of the Company’s Series A Preferred Stock, such Warrant
Holder additionally converted such shares of Series A Preferred Stock into the number of shares of Common Stock as determined pursuant
to the terms set forth in the Certificate of Designation of Preferences, Rights and Limitations of 10% Series A Convertible Preferred
Stock and the Company exchanged the Warrant held by such Warrant Holder for a number of shares of Common Stock equal to the product
of (i) the number of Warrant Shares underlying the Warrant, multiplied by (ii) 0.45.
Additionally, certain members
of the Company’s board of directors that owned shares of the Company’s 10% Series B Convertible Preferred Stock, par
value $0.01 per share (the “Series B Preferred Stock”), agreed to convert 1,200 shares of Series B Preferred Stock
into 4,615,385 shares of Common Stock, as determined pursuant to the terms set forth in the Certificate of Designation of Preferences,
Rights and Limitations of 10% Series B Convertible Preferred Stock. Such conversions were not made pursuant to Warrant Exchange
Agreements and therefore such directors did not receive any additional Common Stock. Following this conversion, no shares of Series
B Preferred Stock remain outstanding.
SENESCO TECHNOLOGIES, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The shares of the Company’s
Common Stock were issued solely to former holders of the Warrants upon exchange and the Series A Preferred Stock and Series B Preferred
Stock upon conversion pursuant to the exemption from registration provided under Section 3(a)(9) of the Securities Act of 1933,
as amended. This exemption is available to the Company because the shares of the Company’s Common Stock were exchanged by
the Company with its existing security holders with no commission or other remunerations being paid or given for soliciting such
an exchange.
|
17.
|
Supplemental Cash Flow Information
|
|
|
|
|
|
|
|
|
|
|
|
Cumulative
|
|
|
|
Fiscal Year Ended June 30,
|
|
|
Amounts from
|
|
|
|
2012
|
|
|
2011
|
|
|
2010
|
|
|
Inception
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosure of non-cash transactions:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conversion of convertible note into common stock
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
7,619,360
|
|
|
$
|
10,000,000
|
|
Conversion of bridge notes into common stock
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
534,316
|
|
Conversion of preferred stock into common stock
|
|
|
11,783
|
|
|
|
136,644
|
|
|
|
-
|
|
|
|
219,114
|
|
Allocation of preferred stock proceeds to warrants and beneficial conversion feature
|
|
|
1,076,355
|
|
|
|
360,733
|
|
|
|
-
|
|
|
|
8,526,135
|
|
Allocation of convertible debt proceeds to warrants and beneficial conversion feature
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
9,340,000
|
|
Warrants issued for financing costs
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
690,984
|
|
Issuance of common stock for interest payments on convertible notes
|
|
|
-
|
|
|
|
-
|
|
|
|
552,673
|
|
|
|
2,003,386
|
|
Issuance of common stock for dividend payments on preferred stock
|
|
|
557,153
|
|
|
|
2,155,315
|
|
|
|
-
|
|
|
|
3,621,943
|
|
Issuance of common stock in settlement of accounts payable
|
|
|
-
|
|
|
|
-
|
|
|
|
175,000
|
|
|
|
175,000
|
|
Dividends accrued on preferred stock
|
|
|
114,474
|
|
|
|
122,252
|
|
|
|
-
|
|
|
|
236,726
|
|
Supplemental disclosure of cash flow information:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid for interest
|
|
|
134,549
|
|
|
|
110,649
|
|
|
|
59,645
|
|
|
|
371,683
|
|
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