UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-Q
[X]
Quarterly report under Section 13 or 15(d) of the Securities Exchange Act of 1934
For
the quarterly period ended April 30, 2015.
[ ]
Transition report under Section 13 or 15(d) of the Exchange Act of 1934
For
the transition period from __________ to __________.
Commission
file number 000-28761
CARDIOGENICS
HOLDINGS INC.
(Exact
name of registrant as specified in its Charter)
Nevada |
|
88-0380546 |
(State
or other jurisdiction of
incorporation
or organization) |
|
(I.R.S.
Employer
Identification
No.) |
6295
Northam Drive, Unit 8
Mississauga,
Ontario L4V 1WB
(Address
of Principal Executive Offices)
(905)
673-8501
(Registrant’s
Telephone Number, Including Area Code)
Indicate
by check mark whether the Issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the past 12 months (or for such shorter period that the Registrant was required to file such reports) and (2)
has been subject to such filing requirements for the past 90 days.
Yes [X]
No [ ]
Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller
reporting company. See the definitions of “large accelerated filer”, “accelerated filer and “smaller reporting
company” in Rule 12b-2 or the Exchange Act. (Check one):
|
Large
Accelerated filer |
[ ] |
|
Accelerated
Filer |
[ ]
|
|
|
|
|
|
|
|
Non-Accelerated
Filer |
[ ]
|
|
Smaller Reporting
Company |
[X] |
(Do
not check if a smaller reporting company) |
|
|
|
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes [ ]
No [X]
Indicate
by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the
preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes [X]
No [ ]
As
of June 15, 2015 the Registrant had the following number of shares of its capital stock outstanding: 67,220,582 shares of Common
Stock and 1 share of Series 1 Preferred Voting Stock, par value $0.0001, representing 13 exchangeable shares of the Registrant’s
subsidiary, CardioGenics ExchangeCo Inc., which are exchangeable into 24,176,927 shares of the Registrant’s Common Stock.
CARDIOGENICS
HOLDINGS INC.
FORM
10-Q
For
the Quarter Ended April 30, 2015
INDEX
PART
I. FINANCIAL INFORMATION
Item
1. Financial Statements (Unaudited)
CardioGenics
Holdings Inc.
Condensed
Consolidated Balance Sheets
| |
April
30, 2015 | | |
October
30, 2014 | |
| |
(Unaudited) | | |
| |
Assets | |
| | | |
| | |
Current assets: | |
| | | |
| | |
Cash and Cash Equivalents | |
$ | 37,851 | | |
$ | 70,676 | |
Accounts Receivable | |
| 213 | | |
| 228 | |
Refundable Taxes Receivable | |
| 3,101 | | |
| 2,625 | |
Total current assets | |
| 41,165 | | |
| 73,529 | |
Property and Equipment, net | |
| 38,801 | | |
| 42,693 | |
| |
| | | |
| | |
Deposits and Prepaid Expenses | |
| 43,742 | | |
| 45,576 | |
| |
| | | |
| | |
Patents, net | |
| 105,528 | | |
| 108,132 | |
| |
| | | |
| | |
Totals | |
$ | 229,236 | | |
$ | 269,930 | |
| |
| | | |
| | |
Liabilities And Equity | |
| | | |
| | |
| |
| | | |
| | |
Current liabilities: | |
| | | |
| | |
Accounts Payable and Accrued Expenses | |
$ | 985,308 | | |
$ | 1,020,809 | |
Funds Held in Trust for Redemption of Class B Common Shares |
|
|
4 |
|
|
|
4 |
|
Due to Shareholders | |
| 100,000 | | |
| 131,052 | |
Notes Payable, net of debt discount | |
| 105,023 | | |
| 71,863 | |
Derivative Liabilities on Notes Payable | |
| 357,901 | | |
| 201,260 | |
Total current liabilities | |
| 1,548,236 | | |
| 1,424,988 | |
| |
| | | |
| | |
Commitments and contingencies | |
| | | |
| | |
| |
| | | |
| | |
Deficiency | |
| | | |
| | |
Preferred stock; par value $.0001 per share, 50,000,000 shares authorized, none issued |
|
|
- |
|
|
|
- |
|
Common stock; par value $.00001 per share; 150,000,000 shares authorized, 67,220,582 and 47,383,379
common shares and 24,176,927 and 24,176,927 exchangeable shares issued and outstanding as of April 30, 2015 and October 31,
2014 |
|
|
889 |
|
|
|
692 |
|
Additional paid-in capital | |
| 47,209,135 | | |
| 46,505,954 | |
Accumulated deficit | |
| (48,575,453 | ) | |
| (47,637,746 | ) |
Accumulated other comprehensive income (loss) | |
| 46,429 | | |
| (23,958 | ) |
| |
| | | |
| | |
Total deficiency | |
| (1,319,000 | ) | |
| (1,155,058 | ) |
| |
| | | |
| | |
Totals | |
$ | 229,236 | | |
$ | 269,930 | |
See
notes to condensed consolidated financial statements.
CardioGenics
Holdings Inc.
Condensed
Consolidated Statements of Operations (unaudited)
Three
and Six Months Ended April 30, 2015 and 2014
| |
Three
Months Ended
April 30, | | |
Six Months Ended
April 30, | |
| |
2015 | | |
2014 | | |
2015 | | |
2014 | |
| |
| | |
| | |
| | |
| |
Revenue | |
$ | - | | |
$ | - | | |
$ | - | | |
$ | - | |
| |
| | | |
| | | |
| | | |
| | |
Operating Expenses | |
| | | |
| | | |
| | | |
| | |
Depreciation and Amortization of Property and Equipment | |
| 1,906 | | |
| 2,685 | | |
| 3,892 | | |
| 5,428 | |
Amortization of Patent Application Costs | |
| 2,282 | | |
| 1,690 | | |
| 4,661 | | |
| 3,416 | |
General and Administrative | |
| 81,904 | | |
| 95,827 | | |
| 215,515 | | |
| 268,045 | |
Research and Product Development, Net of Investment
Tax Credits | |
| 68,717 | | |
| 105,192 | | |
| 136,437 | | |
| 190,675 | |
Total operating
expenses | |
| 154,809 | | |
| 205,394 | | |
| 360,505 | | |
| 467,564 | |
Operating Loss | |
| (154,809 | ) | |
| (205,394 | ) | |
| (360,505 | ) | |
| (467,564 | ) |
| |
| | | |
| | | |
| | | |
| | |
Other Expenses (Income) | |
| | | |
| | | |
| | | |
| | |
Interest Expense and Bank Charges (Net) | |
| 103,278 | | |
| 125,658 | | |
| 262,393 | | |
| 237,580 | |
Loss (Gain) on Change in Fair Value of Derivative Liability | |
| (323,499 | ) | |
| 23,465 | | |
| 328,849 | | |
| 819 | |
Loss (Gain) on Foreign Exchange Transactions | |
| (57,711 | ) | |
| (14,766 | ) | |
| (14,040 | ) | |
| 42,179 | |
| |
| | | |
| | | |
| | | |
| | |
Total
other expenses (income) | |
| (277,932 | ) | |
| 134,357 | | |
| 577,202 | | |
| 280,578 | |
| |
| | | |
| | | |
| | | |
| | |
Net Income (Loss) | |
$ | 123,123 | | |
$ | (339,751 | ) | |
$ | (937,707 | ) | |
$ | (748,142 | ) |
| |
| | | |
| | | |
| | | |
| | |
Basic and Fully Diluted Net Income
(Loss) per Common Share | |
$ | 0.00 | | |
$ | (0.01 | ) | |
$ | (0.01 | ) | |
$ | (0.01 | ) |
Weighted-average shares of Common Stock outstanding –
Basic | |
| 87,941,755 | | |
| 60,447,704 | | |
| 80,941,470 | | |
| 59,915,908 | |
| |
| | | |
| | | |
| | | |
| | |
Weighted-average shares of Common Stock outstanding –
Diluted | |
| 102,137,307 | | |
| 60,447,704 | | |
| 80,941,470 | | |
| 59,915,908 | |
See
notes to condensed consolidated financial statements.
CardioGenics
Holdings Inc.
Condensed
Consolidated Statements of Comprehensive Income (Loss) (unaudited)
For
the Three and Six Months Ended April 30, 2015 and 2014
| |
Three Months Ended | | |
Six Months Ended | |
| |
April
30, | | |
April 30, | |
| |
2015 | | |
2014 | | |
2015 | | |
2014 | |
| |
| | |
| | |
| | |
| |
Net income (loss) | |
$ | 123,123 | | |
$ | (339,751 | ) | |
$ | (937,707 | ) | |
$ | (748,142 | ) |
| |
| | | |
| | | |
| | | |
| | |
Other comprehensive income (loss), currency translation adjustments | |
| 73,193 | | |
| (28,201 | ) | |
| 70,387 | | |
| 76,677 | |
| |
| | | |
| | | |
| | | |
| | |
Comprehensive income (loss) | |
$ | 196,316 | | |
$ | (367,952 | ) | |
$ | (867,320 | ) | |
$ | (671,465 | ) |
See notes
to condensed consolidated financial statements.
CardioGenics
Holdings Inc.
Condensed
Consolidated Statements of Changes in Deficiency (unaudited)
For
the Six Months Ended April 30,2015
| |
| | |
| | |
| | |
| | |
Accumulated | | |
| |
| |
| | |
| | |
| | |
| | |
Other | | |
| |
| |
| | |
| | |
Additional | | |
| | |
Comprehensive | | |
| |
| |
Common Stock | | |
Paid-in | | |
Accumulated | | |
Income | | |
Total | |
| |
Shares | | |
Amount | | |
Capital | | |
Deficit | | |
(Loss) | | |
(Deficiency) | |
Balance November 1, 2014 | |
| 71,560,306 | | |
$ | 692 | | |
$ | 46,505,954 | | |
$ | (47,637,746 | ) | |
$ | (23,958 | ) | |
$ | (1,155,058 | ) |
Issuance of common shares on conversion of notes payable November
2014 | |
| 589,679 | | |
| 6 | | |
| 22,528 | | |
| | | |
| | | |
| 22,534 | |
Issuance of common shares on conversion of notes payable December
2014 | |
| 2,977,637 | | |
| 30 | | |
| 32,230 | | |
| | | |
| | | |
| 32,260 | |
Issuance of common shares on conversion of notes payable January
2015 | |
| 7,349,902 | | |
| 73 | | |
| 83,051 | | |
| | | |
| | | |
| 83,124 | |
Issuance of common shares on conversion of shareholder’s
loan February 2015 | |
| 227,273 | | |
| 2 | | |
| 22,854 | | |
| | | |
| | | |
| 22,856 | |
Issuance of common shares on conversion of notes payable February
2015 | |
| 4,684,409 | | |
| 47 | | |
| 40,995 | | |
| | | |
| | | |
| 41,042 | |
Issuance of common shares on conversion of notes payable March
2015 | |
| 3,039,913 | | |
| 29 | | |
| 23,525 | | |
| | | |
| | | |
| 23,554 | |
Issuance of common shares for services rendered March 2015 | |
| 250,000 | | |
| 3 | | |
| 7,497 | | |
| | | |
| | | |
| 7,500 | |
Issuance of common shares on conversion of notes payable April
2015 | |
| 718,390 | | |
| 7 | | |
| 10,720 | | |
| | | |
| | | |
| 10,727 | |
Settlement of derivative value of notes
payable on conversion to common shares | |
| | | |
| | | |
| 459,778 | | |
| | | |
| | | |
| 459,778 | |
Net Loss | |
| | | |
| | | |
| | | |
| (937,707 | ) | |
| | | |
| (937,707 | ) |
Other Comprehensive Income | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Currency
Translation Adjustment | |
| | | |
| | | |
| | | |
| | | |
| 70,387 | | |
| 70,387 | |
Total
Comprehensive Income (Loss) | |
| | | |
| | | |
| | | |
| (937,707 | ) | |
| 70,387 | | |
| (867,320 | ) |
Balance April 30, 2015 | |
| 91,397,509 | | |
$ | 889 | | |
$ | 47,209,135 | | |
$ | (48,575,453 | ) | |
$ | 46,429 | | |
$ | (1,319,000 | ) |
See notes
to condensed consolidated financial statements.
CardioGenics
Holdings Inc.
Condensed
Consolidated Statements of Cash Flows (unaudited)
Six
Months Ended April 30, 2015 and 2014
| |
Six
Months Ended April 30, | |
| |
2015 | | |
2014 | |
| |
| | |
| |
Cash flows from operating activities: | |
| | | |
| | |
Net loss | |
$ | (937,707 | ) | |
$ | (748,142 | ) |
Adjustments to reconcile net (loss) to net cash used in operating activities: |
|
|
|
|
|
|
|
|
Depreciation and amortization | |
| 3,892 | | |
| 5,428 | |
Amortization of Patent Application Costs | |
| 4,661 | | |
| 3,416 | |
Loss on Change in Value of Derivative Liability | |
| 328,849 | | |
| 819 | |
Interest and Discount on Notes Payable | |
| 238,169 | | |
| 60,121 | |
Amortization of Discount on Debentures Payable | |
| - | | |
| 124,098 | |
Issue of Common Shares for Services Rendered | |
| 7,500 | | |
| 25,000 | |
Changes in working capital items: | |
| | | |
| | |
Accounts receivable | |
| 15 | | |
| 12 | |
Deposits and Prepaid Expenses | |
| 1,834 | | |
| 2,396 | |
Refundable Taxes Receivable | |
| (476 | ) | |
| (203 | ) |
Receivable | |
| - | | |
| (10,763 | ) |
Accounts Payable and Accrued Expenses | |
| 42,525 | | |
| 128,345 | |
Cash used in operating activities | |
| (310,738 | ) | |
| (409,473 | ) |
| |
| | | |
| | |
Cash flows from investing activities: | |
| | | |
| | |
Patent Application Costs | |
| (2,057 | ) | |
| - | |
Cash used in investing activities | |
| (2,057 | ) | |
| - | |
| |
| | | |
| | |
Cash flows from financing activities: | |
| | | |
| | |
Proceeds from Notes Payable | |
| 205,000 | | |
| 35,000 | |
Issue of Common Shares for Cash | |
| - | | |
| 50,000 | |
Cash provided by financing activities | |
| 205,000 | | |
| 85,000 | |
| |
| | | |
| | |
Effects of exchange rate changes on cash | |
| 74,970 | | |
| 63,345 | |
| |
| | | |
| | |
Net change in cash and cash equivalents | |
| (32,825 | ) | |
| (261,128 | ) |
| |
| | | |
| | |
Cash and cash equivalents, beginning of period | |
| 70,676 | | |
| 263,103 | |
| |
| | | |
| | |
Cash and cash equivalents, end of period | |
$ | 37,851 | | |
$ | 1,975 | |
See
notes to condensed consolidated financial statements.
CardioGenics
Holdings Inc.
Notes
to Condensed Consolidated Financial Statements (unaudited)
April
30, 2015 and 2014
CardioGenics
Inc. (“CardioGenics”) was incorporated on November 20, 1997 in the Province of Ontario, Canada, and carries on the
business of development and commercialization of diagnostic test products to the In Vitro Diagnostics testing market. CardioGenics
has several test products that are in various stages of development.
CardioGenics’
revenues, to date, have been primarily comprised of grant revenue and Scientific Research Tax Credits from government agencies.
There can be no assurance that the Company will be successful in obtaining regulatory approval for the marketing of any of the
existing or future products that the Company will succeed in developing.
On
October 27, 2009, the name of the Company was changed from JAG Media Holdings, Inc. to CardioGenics Holdings, Inc.
In
the opinion of management, the unaudited condensed interim consolidated financial statements reflect all adjustments, consisting
of normal recurring adjustments, necessary to present fairly the condensed interim consolidated financial position of CardioGenics
Holdings Inc. and its subsidiaries under generally accepted accounting principles in the United States (“US GAAP”)
as of April 30, 2015, their results of operations for the three and six months ended April 30, 2015 and 2014, changes in deficiency
for the six months ended April 30, 2015 and cash flows for the six months ended April 30, 2015 and 2014. CardioGenics Holdings
Inc. and its subsidiaries are referred to together herein as the “Company”. Pursuant to rules and regulations of the
SEC, certain information and disclosures normally included in financial statements prepared in accordance with US GAAP have been
condensed or omitted from these consolidated financial statements unless significant changes have taken place since the end of
the most recent fiscal year. Accordingly, these condensed interim consolidated financial statements should be read in conjunction
with the consolidated financial statements, notes to consolidated financial statements and the other information in the audited
consolidated financial statements of the Company as of October 31, 2014 and 2013 (the “Audited Financial Statements”)
included in the Company’s Form 10-K that was previously filed with the SEC on February 12, 2015 and from which the October
31, 2014 consolidated balance sheet was derived.
The
results of the Company’s operations for the six months ended April 30, 2015 are not necessarily indicative of the results
of operations to be expected for the full year ending October 31, 2015.
The
accompanying condensed interim consolidated financial statements have been prepared using the accounting principles generally
accepted in the United States of America applicable to a going concern, which contemplates the realization of assets and the satisfaction
of liabilities and commitments in the normal course of business.
The
Company has incurred operating losses and has experienced negative cash flows from operations since inception. The Company has
an accumulated deficit at April 30, 2015 of approximately $48.6 million. The Company has not yet established an ongoing source
of revenues sufficient to cover its operating costs and to allow it to continue as a going concern. The Company has funded its
activities to date almost exclusively from debt and equity financings. These conditions raise substantial doubt about the Company’s
ability to continue as a going concern.
CardioGenics
Holdings Inc.
Notes
to Condensed Consolidated Financial Statements (unaudited)
April
30, 2015 and 2014
The
Company will continue to require substantial funds to continue research and development, including preclinical studies and clinical
trials of its products, and to commence sales and marketing efforts, if the FDA and other regulatory approvals are obtained. In
order to meet its operating cash flow requirements, management’s plans include financing activities such as private placements
of its common stock and issuances of convertible debt instruments. Management is also actively pursuing industry collaboration
activities including product licensing and specific project financing.
While
the Company believes it will be successful in obtaining the necessary financing to fund its operations, meet revenue projections
and manage costs, there are no assurances that such additional funding will be achieved and that it will succeed in its future
operations. The accompanying condensed consolidated 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 the Company be unable to
continue in existence.
3. | Summary
of Significant Accounting Policies. |
Derivative
Instruments
The
Company’s derivative liabilities are related to embedded conversion features of the Notes Payable. For derivative instruments
that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued
at each reporting date, with changes in fair value recognized in earnings each reporting period. The Company uses the Black-Scholes
model to value the derivative instruments at inception and subsequent valuation dates and the value is re-assessed at the end
of each reporting period, in accordance with Accounting Standards Codification (“ASC”) 815. Derivative instrument
liabilities are classified in the consolidated balance sheet as current or non-current based on whether or not the net-cash settlement
of the derivative instrument could be required within twelve months of the consolidated balance sheet date.
Beneficial
Conversion Charge
The
intrinsic value of beneficial conversion features arising from the issuance of convertible debentures with conversion rights that
are in-the-money at the commitment date is recorded as debt discount and amortized to interest expense over the term of the debentures.
The intrinsic value of a beneficial conversion feature is determined after initially allocating an appropriate portion of the
proceeds received from the sale of the debentures to any detachable instruments, such as warrants, included in the sale or exchange
based on relative fair values.
Based
on the Company’s evaluation, management has concluded that there are no significant tax positions requiring recognition
in the condensed interim consolidated financial statements.
The
Company has incurred losses in Canada since inception, which have generated net operating loss carryforwards for income tax purposes.
The net operating loss carryforwards arising from Canadian sources as of April 30, 2015 approximated $7,502,000 which will expire
from 2015 through 2033. All fiscal years as originally filed have been assessed. Claims relating to research and development credits
are open for review for the fiscal years ended October, 2014 and 2013.
A
research and development tax credit for 2012 for which the Company received a refund of $81,460 is being refuted by Canadian taxation
authorities. The Company is disputing the position taken by the taxation authorities, but has established a reserve against possible
repayment.
CardioGenics
Holdings Inc.
Notes
to Condensed Consolidated Financial Statements (unaudited)
April
30, 2015 and 2014
Returns
for the years 2008 through 2014 are yet to be filed. As of April 30, 2015, the Company believes it has net operating loss carryforwards
from US sources of approximately $45,374,000 available to reduce future Federal taxable income which will expire from 2020 through
2033.
For
the six months ended April 30, 2015 and 2014, the Company’s effective tax rate differs from the statutory rate principally
due to the net operating losses for which no benefit was recorded.
On
November 19, 2012, the Company entered into an agreement (“Line”) with JMJ Financial (“Lender”) whereby
the Company may borrow up to $350,000 from the Lender in increments of $50,000. The Line is subject to an original issue discount
of $50,000. Advances under the Line (“Notes”) have a maturity date of one year from the date of the advance. If the
advance is repaid within three months, the advance is interest free. If not repaid within three months, the advance may not be
repaid before maturity and carries interest at 5%. The Lender has the right at any time to convert all or part of the outstanding
principal and accrued interest (and any other fees) into shares of fully paid and non-assessable shares of common stock of the
Company at a price equal to the lesser of $0.23 and 60% of the lowest trade price in the 25 trading days previous to the conversion.
Unless agreed in writing by the parties, at no time will the Lender convert any amount owing under the Line into common stock
that would result in the Lender owing more than 4.99% of the common stock outstanding.
On
May 23, 2014, the Company issued promissory notes (the “LG Notes”) to LG Capital Funding, LLC and Adar Bays, LLC (collectively
the “Holders”) in the amount of $52,500 each bearing interest at 8% annually due May 23, 2015. The LG Notes and accrued
interest may be converted into shares of the Common Stock of the Company at a 42% discount to the lowest closing bid with a 12
day look back. The LG Notes may be prepaid with the following penalties: (i) if the Notes are prepaid within 60 days of the issue
date, then at 130% of the face amount plus any accrued interest; and, (ii) if the LG Notes are prepaid after 60 days after the
issue date but less than 181 days after the issue date, then at 140% of the face amount plus any accrued interest. The LG Notes
may not be prepaid after the 180th day after issue.
The
LG Notes were all converted to common shares in the period.
On
November 12, 2014, the Company received $50,000 from Chicago Ventures in exchange for a note payable bearing interest at 10% due
in one year, convertible into shares in the Company’s common stock at a 40% discount from the lowest closing price of the
common shares over the prior 15 days.
On
November 20, 2014, the Company reached a settlement with IBC Funds, LLC (“IBC”) whereby IBC agreed to pay $78,026
of the Company’s debts in exchange for the right to purchase shares in the Company’s common stock at a 40% discount
from the lowest closing price of the common shares over the prior 15 days.
On
December 15, 2014, the Company received $52,500 from LG Capital in exchange for a note payable bearing interest at 8% due in one
year, convertible into shares in the Company’s common stock at a 42% discount from the lowest closing price of the common
shares over the prior 15 days.
On
March 5, 2015, the Company received $55,250 from Activus Private Equity Fund, LLC in exchange for a note payable bearing interest
at 8% due November 26, 2015, convertible into shares in the Company’s common stock at a 40% discount from the average of
the lowest two trading prices of the common shares over the prior 10 trading days.
On
March 25, 2015, the Company received $52,500 from Adar Bays in exchange for a note payable bearing interest at 8% due in one year,
convertible into shares in the Company’s common stock at a 42% discount from the lowest closing price of the common shares
over the prior 15 days.
CardioGenics
Holdings Inc.
Notes
to Condensed Consolidated Financial Statements (unaudited)
April
30, 2015 and 2014
A
summary of the Notes Payable at April 30, 2015 and October 31, 2014 follows:
| |
April 30, 2015 | | |
October 31, 2014 | |
Convertible Note Payable, due February 20, 2015 | |
$ | – | | |
$ | 12,529 | |
Convertible Notes Payable, due May 23, 2015 | |
| – | | |
| 105,000 | |
Convertible Note Payable, due June 23, 2015 | |
| 25,360 | | |
| 40,000 | |
Convertible Note Payable, due October 22, 2015 | |
| 35,000 | | |
| 35,000 | |
Convertible Note Payable, due November 12, 2015 | |
| 50,000 | | |
| – | |
Convertible IBC Funds, LLC Payable, due November 21, 2015 | |
| 16,421 | | |
| – | |
Convertible Note Payable, due December 15, 2015 | |
| 52,500 | | |
| – | |
Convertible Note Payable, due November 26, 2015 | |
| 55,250 | | |
| – | |
Convertible Note Payable, due March 25, 2016 | |
| 42,500 | | |
| – | |
Debt Discount - value attributable to conversion feature attached to Notes,
net of accumulated amortization of $105,023 and $71,863 | |
| (171,508 | ) | |
| (120,666 | ) |
Total | |
| 105,023 | | |
| 71,863 | |
Less: Current portion | |
| 105,023 | | |
| 71,863 | |
Total Long-term portion | |
$ | – | | |
$ | – | |
As
described in further detail in Note 6, “Derivative Liabilities”, the Company determines the fair value of the embedded
derivatives and records them as a discount to the Notes and as a derivative liability. Upon conversion of the Notes to Common
Stock, any remaining unamortized discount is charged to financing expense.
6. |
Derivative
Liabilities |
Convertible
notes-embedded conversion features:
The
Notes meet the definition of a hybrid instrument, as defined in ASC 815. The hybrid instrument is comprised of i) a debt instrument,
as the host contract and ii) an option to convert the debentures into common stock of the Company, as an embedded derivative.
The embedded derivatives derive their value based on the underlying fair value of the Company’s common stock. The embedded
derivatives are not clearly and closely related to the underlying host debt instrument since the economic characteristics and
risk associated with these derivatives are based on the common stock fair value.
The
Company determines the fair value of the embedded derivatives and records them as a discount to the Notes and a derivative liability.
The Company has recognized a derivative liability of $357,901 at April 30, 2015. Accordingly, changes in the fair value of the
embedded derivative are immediately recognized in earnings and classified as a gain or loss on the embedded derivative financial
instrument in the accompanying condensed consolidated statements of operations. The Company recognized a gain of $323,499 in the
fair value for the three months ended April 30, 2015 and a loss of $328,849 in the fair value for the six months ended April 30,
2015.
The
Company estimated the fair value of the embedded derivatives using a Black Scholes model with the following assumptions: conversion
price $0.012 per share according to the agreements; risk free interest rate of .11%; expected life of 1 year; expected dividend
of zero; a volatility factor of 245% to 342%, as of April 30, 2015. The expected lives of the instruments are equal to the contractual
term of the conversion option. The expected volatility is based on the historical price volatility of the Company’s common
stock. The risk-free interest rate represents the U.S. Treasury constant maturities rate for the expected life of the related
conversion option. The dividend yield represents anticipated cash dividends to be paid over the expected life of the conversion
option.
CardioGenics
Holdings Inc.
Notes
to Condensed Consolidated Financial Statements (unaudited)
April
30, 2015 and 2014
7. |
Fair Value
Measurements |
As
defined by the ASC, fair value measurements and disclosures establish a hierarchy that prioritizes fair value measurements based
on the type of inputs used for the various valuation techniques (market approach, income approach and cost approach). The levels
of hierarchy are described below:
|
● |
Level
1: Observable inputs such as quoted market prices in active markets for identical assets or liabilities. |
|
|
|
|
● |
Level
2: Inputs other than quoted market prices that are observable for the asset or liability, either directly or indirectly; these
include quoted prices for similar assets or liabilities in active markets, such as interest rates and yield curves that are
observable at commonly-quoted intervals. |
|
|
|
|
● |
Level
3: Unobservable inputs that reflect the reporting entity’s own assumptions, as there is little, if any, related market
activity. |
The
following table summarizes the financial liabilities measured at fair value on a recurring basis as of April 30, 2015, segregated
by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value:
| |
Quoted Prices in | |
| |
| | |
| | Total
Increase (Reduction) |
| |
Active Markets for | |
Significant Other | |
Significant | | |
| | in
Fair Value |
Balance Sheet | |
Identical Assets or | |
Observable Inputs | |
Unobservable | | |
April 30, 2015 | | Recorded
at |
Location | |
Liabilities (Level 1) | |
(Level 2) | |
Inputs (Level 3) | | |
Total | | April
30, 2015 |
Liabilities: | |
|
| |
|
| |
| | | |
| | | |
|
Derivative liability – on Notes
Payable | |
$ |
- | |
$ |
- | |
$ | 357,901 | | |
$ | 357,901 | | $ |
328,849 |
The
table below sets forth a summary of changes in the fair value of the Company’s Level 3 financial liability, or derivative
liabilities related to the senior secured convertible notes and warrants, for the six months ended April 30, 2015:
| |
2015 | | |
2014 | |
| |
| | |
| |
Balance at beginning of period | |
$ | 201,260 | | |
$ | 99,702 | |
Additions to derivative instruments | |
| 287,570 | | |
| 35,000 | |
Change in fair value of derivative liabilities | |
| 328,849 | | |
| 819 | |
Settlements | |
| (459,778 | ) | |
| (61,076 | ) |
Balance at end of period | |
$ | 357,901 | | |
$ | 74,445 | |
CardioGenics
Holdings Inc.
Notes
to Condensed Consolidated Financial Statements (unaudited)
April
30, 2015 and 2014
8. |
Stock Based
Compensation |
Stock-based
employee compensation related to stock options for the six months ended April 30, 2015 and 2014 amounted to $-0-.
The
following is a summary of the common stock options outstanding, granted, forfeited or expired and exercised under the Plan:
| |
| | |
Weighted | |
| |
| | |
Average | |
| |
| | |
Exercise | |
| |
Options | | |
Price | |
| |
| | |
| |
Outstanding – October
31, 2013 | |
| 30,000 | | |
$ | 0.90 | |
Granted | |
| – | | |
| – | |
Forfeited/Expired | |
| – | | |
| – | |
Exercised | |
| – | | |
| – | |
Outstanding – October 31, 2014 | |
| 30,000 | | |
$ | 0.90 | |
Granted | |
| – | | |
| – | |
Forfeited/Expired | |
| – | | |
| – | |
Exercised | |
| – | | |
| – | |
Outstanding –
April 30, 2015 | |
| 30,000 | | |
$ | 0.90 | |
Options
typically vest immediately on the date of grant. As such, the Company does not have any unvested options or unrecognized compensation
expense at April 30, 2015.
Outstanding
warrants are as follows:
| |
April 30, 2015 | | |
October 31, 2014 | |
| |
| | |
| |
Issued to Flow Capital Advisors Inc. on settlement of lawsuit in August 2011, entitling
the holder to purchase 1 common share in the Company at an exercise price of $0.30 per common share up to and including August
23, 2016 | |
| 250,000 | | |
| 250,000 | |
Issued to Flow Capital Advisors Inc. on settlement of lawsuit August 2011, entitling the holder
to purchase 1 common share in the Company at an exercise price of $0.50 per common share up to and including August 23, 2016 | |
| 250,000 | | |
| 250,000 | |
Issued to Flow Capital Advisors Inc. on settlement of lawsuit August 2011, entitling the holder
to purchase 1 common share in the Company at an exercise price of $0.75 per common share up to and including August 23, 2016 | |
| 500,000 | | |
| 500,000 | |
Issued to Flow Capital Advisors Inc. on settlement of lawsuit August 2011, entitling the holder
to purchase 1 common share in the Company at an exercise price of $1.00 per common share up to and including August 23, 2016 | |
| 500,000 | | |
| 500,000 | |
Issued to Flow Capital Advisors Inc. on settlement of lawsuit August 2011, entitling the holder
to purchase 1 common share in the Company at an exercise price of $0.75 per common share up to and including August 23, 2016 | |
| 500,000 | | |
| 500,000 | |
Issued to debenture holders February 2013 entitling the holders to purchase 1 common share in
the Company at an exercise price of $0.25 per common share up to and including February 27, 2016 | |
| 600,000 | | |
| 600,000 | |
Issued to debenture holders May 2013 entitling the holders to purchase 1 common share in the
Company at an exercise price of $0.15 per common share up to and including June 3, 2016 | |
| 750,000 | | |
| 750,000 | |
Issued to debenture holders June 2013 entitling the holders to purchase 1 common share in the
Company at an exercise price of $0.15 per common share up to and including June 3, 2016 | |
| 232,500 | | |
| 232,500 | |
Issued to consultants on August 5, 2013 entitling the holders to purchase 1 common share in the
Company at an exercise price of $0.15 per common share up to and including August 4, 2023 | |
| 2,500,000 | | |
| 2,500,000 | |
Issued to consultants on August 5, 2013 entitling the holders to purchase 1 common share in the
Company at an exercise price of $0.10 per common share up to and including August 4, 2023 | |
| 1,500,000 | | |
| 1,500,000 | |
Issued to consultant on September 3, 2013 entitling the holder to purchase 1 common share in
the Company at an exercise price of $0.50 per common share up to and including July 31, 2018 | |
| 500,000 | | |
| 500,000 | |
Issued to shareholder on October 29, 2013 entitling the holder to purchase 1 common share in
the Company at an exercise price of $0.15 per common share up to and including October 29, 2016 | |
| 250,000 | | |
| 250,000 | |
Issued to shareholder on November 7, 2013 entitling the holder to purchase
1 common share in the Company at an exercise price of $0.15 per common share up to and including November 7, 2016 | |
| 125,000 | | |
| - | |
Total Warrants outstanding | |
| 8,457,500 | | |
| 8,332,500 | |
CardioGenics
Holdings Inc.
Notes
to Condensed Consolidated Financial Statements (unaudited)
April
30, 2015 and 2014
10. | Issuance
of Common Stock |
During
the six months ended April 30, 2015, the Company issued the following common shares:
Issued for services rendered |
| 250,000 | |
Issued to shareholder on conversion of shareholders loan at $0.11 per share |
| 227,273 | |
Issued on conversion of Notes Payable |
| 19,359,930 | |
|
| 19,837,203 | |
The
following table sets forth the computation of weighted-average shares outstanding for calculating basic and diluted earnings (loss)
per share (EPS):
| |
Three Months Ended April 30, | | |
Six Months Ended April 30, | |
| |
2015 | | |
2014 | | |
2015 | | |
2014 | |
| |
| | |
| | |
| | |
| |
Weighted-average shares - basic | |
| 87,941,755 | | |
| 60,447,704 | | |
| 80,941,470 | | |
| 59,915,908 | |
Effect of dilutive securities | |
| 14,195,552 | | |
| – | | |
| – | | |
| – | |
Weighted-average shares - diluted | |
| 102,137,307 | | |
| 60,447,704 | | |
| 80,941,470 | | |
| 59,915,908 | |
Basic
earnings (loss) per share “EPS” and diluted EPS for the three and six months ended April 30, 2015 and 2014 have been
computed by dividing the net income (loss) available to common stockholders for each respective period by the weighted average
shares outstanding during that period. All outstanding options and warrants to be issued upon the exercise of the outstanding
option and warrants representing 8,487,500 incremental shares have been excluded from the three months ended April 30, 2015 computation
of earnings per share as they are antidilutive. All outstanding options, warrants and shares to be issued upon the exercise of
the outstanding options and warrants and conversion of debt representing 31,543,416 and 12,918,436 incremental shares, respectively,
have been excluded from the six months ended April 30, 2015 and the three and six months ended April 30, 2014 computation of diluted
EPS as they would not affect the EPS for the three months ended April 30, 2015 and are antidilutive given the net losses generated
for the other periods presented.
12. |
Supplemental
Disclosure of Cash Flow Information |
| |
For the Six Months Ended | |
| |
April 30, | |
| |
2015 | | |
2014 | |
| |
| | |
| |
Cash paid during the year for: | |
| | | |
| | |
Interest | |
$ | 11,336 | | |
$ | 7,834 | |
Income taxes | |
$ | – | | |
$ | – | |
Non-cash financing activities | |
| | | |
| | |
Conversion of Notes Payable | |
$ | 208,106 | | |
$ | 58,001 | |
Settlement of derivative liability | |
$ | 459,778 | | |
$ | 61,076 | |
Issuance of shares on settlement of suit | |
$ | – | | |
$ | 189,000 | |
Common share issued for services | |
$ | 35,000 | | |
$ | – | |
Common shares issued for shareholder’s loan | |
$ | 31,052 | | |
$ | – | |
CardioGenics
Holdings Inc.
Notes
to Condensed Consolidated Financial Statements (unaudited)
April
30, 2015 and 2014
13. |
Commitments
and contingent liabilities |
On
June 3, 2015, JMJ Financial filed a suit in Florida court demanding payment of its outstanding note payable in the amount of $77,235
for failure to convert a portion of its note into 1,800,000 common shares. The parties have agreed to resolve the matter by the
Company agreeing with JMJ Financial to repay the $77,235 in equal monthly installments of $6,436 over twelve (12) months commencing
June 23, 2015. The Company may elect to pay any of the scheduled payments in the form of common stock calculated using the lowest
closing price of the common stock in the five trading days prior to the Company delivering the common stock. The suit was subsequently
withdrawn June 19, 2015.
|
(i) |
On
May 11, 2015, the Company was served with a default notice from JMJ Financial under its note payable, the parties have reached
a settlement. See Note 13. |
|
|
|
|
(ii) |
On June 3, 2015,
the Company issued 1,116,667 common shares to an investor in exchange for $ 35,000. |
Item
2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
You
should read this Management’s Discussion and Analysis (“MD&A”) in combination with the accompanying unaudited
condensed interim consolidated financial statements and related notes as well as the audited consolidated financial statements
and the accompanying notes to the consolidated financial statements prepared in accordance with accounting principles generally
accepted in the United States (“U.S. GAAP”) included within the Company’s Annual Report on Form 10-K filed on
February 12, 2015.
Critical
Accounting Policies and Estimates
Our
discussion and analysis of our financial condition and results of operations are based upon our unaudited condensed interim consolidated
financial statements, which have been prepared in accordance with U.S. GAAP for interim financial statements filed with the Securities
and Exchange Commission.
The
preparation of these unaudited condensed interim consolidated financial statements requires us to make estimates and judgments
that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and
liabilities. On an on-going basis, we evaluate our estimates, including those related to accounts receivable, equipment, stock-based
compensation, income taxes and contingencies. We base our estimates on historical experience and on various other assumptions
that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the
carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these
estimates under different assumptions or conditions.
The
accounting policies and estimates used as of October 31, 2014, as outlined in our previously filed Form 10-K, have been applied
consistently for the six months ended April 30, 2015.
Related
Party Transactions
None
Off-Balance
Sheet arrangements
We
are not party to any off-balance sheet arrangements.
Results
of operations
Six
months ended April 30, 2015 as compared to six months ended April 30, 2014
| |
Six
Months Ended
April 30, | | |
| |
| |
2015 | | |
2014 | | |
$
Change | |
| |
| | |
| | |
| |
Revenue | |
$ | – | | |
$ | – | | |
$ | – | |
| |
| | | |
| | | |
| | |
Operating expenses: | |
| | | |
| | | |
| | |
Depreciation and amortization
of property and equipment | |
| 3,892 | | |
| 5,428 | | |
| (1,536 | ) |
Amortization of patent application costs | |
| 4,661 | | |
| 3,416 | | |
| 1,245 | |
General and administrative expenses | |
| 215,515 | | |
| 268,045 | | |
| (52,530 | ) |
Research and product
development, net of investment tax credits | |
| 136,437 | | |
| 190,675 | | |
| (54,238 | ) |
Total operating
expenses | |
| 360,505 | | |
| 467,564 | | |
| (107,059 | ) |
Operating Loss | |
| (360,505 | ) | |
| (467,564 | ) | |
| 107,059 | |
Other expenses (income) | |
| | | |
| | | |
| | |
Interest expense and
bank charges, net | |
| 262,393 | | |
| 237,580 | | |
| (24,813 | ) |
Loss (gain) on change
in value of derivative liability | |
| 328,849 | | |
| 819 | | |
| (328,030 | ) |
Loss
(gain) on foreign exchange transactions | |
| (14,040 | ) | |
| 42,179 | | |
| (56,219 | ) |
| |
| | | |
| | | |
| | |
Net loss | |
$ | (937,707 | ) | |
$ | (748,142 | ) | |
$ | (189,565 | ) |
Revenues
During
the six months ended April 30, 2015 and 2014 we generated no revenues.
Operating
expenses
Operating
expenses include the costs to a) develop and patent a method for controlling the delivery of compounds to a chemical reaction;
b) develop the QL Care Analyzer, a small, automated, robust and proprietary point of care testing device; and, c) custom paramagnetic
beads through our proprietary method which improves their light collection. In addition, the Company is in the process of adapting
test products for the Point Of Care (“POC”) disposable, single-use cartridge-format. Detailed manufacturing specifications
and costing have been created and custom manufacturers have been sourced.
General
and administrative expenses
General
and administrative expenses consist primarily of compensation to officers, occupancy costs, professional fees, listing costs and
other office expenses. The decrease in general and administrative expenses is attributable primarily to a decrease in consulting
fees and personnel costs.
Research
and product development, net of investment tax credits
Research
and development expenses consist primarily of salaries and wages paid to officers and employees engaged in those activities and
supplies consumed therefor. Research and development expenses have reduced from the previous year through a reduction in staff.
Interest
expense and bank charges
Interest
expense consists primarily of interest on Notes and debt discount amortization on those Notes. Debentures issued in the third
quarter of 2013 were retired in the fourth quarter of 2014 and hence the interest was substantially lower than that in 2014.
Three
months ended April 30, 2015 as compared to three months ended April 30, 2014
| |
Three
Months Ended April 30, | | |
| |
| |
2015 | | |
2014 | | |
$
Change | |
| |
| | |
| | |
| |
Revenue | |
$ | ▬ | | |
$ | ▬ | | |
$ | ▬ | |
| |
| | | |
| | | |
| | |
Operating expenses: | |
| | | |
| | | |
| | |
Depreciation of property and
equipment | |
| 1,906 | | |
| 2,685 | | |
| (779 | ) |
Amortization of patent application costs | |
| 2,282 | | |
| 1,690 | | |
| 592 | |
General and administrative expenses | |
| 81,904 | | |
| 95,827 | | |
| (13,923 | ) |
Research and product
development, net of investment tax credits | |
| 68,717 | | |
| 105,192 | | |
| (36,475 | ) |
Total operating
expenses | |
| 154,809 | | |
| 205,394 | | |
| (50,585 | ) |
Operating Loss | |
| (154,809 | ) | |
| (205,394 | ) | |
| 50,585 | |
Other expenses (income) | |
| | | |
| | | |
| | |
Interest expense and
bank charges, net | |
| 103,278 | | |
| 125,658 | | |
| 22,380 | |
Loss (gain) on change
in value of derivative liability | |
| (323,499 | ) | |
| 23,465 | | |
| 346,964 | |
Loss
(gain) on foreign exchange transactions | |
| (57,711 | ) | |
| (14,766 | ) | |
| 42,945 | |
| |
| | | |
| | | |
| | |
Net Income (loss) | |
$ | 123,123 | | |
$ | (339,751 | ) | |
$ | 462,874 | |
Revenues
During
the three months ended April 30, 2015 and 2014 we generated no revenues.
Operating
expenses
Operating
expenses include the costs to a) develop and patent a method for controlling the delivery of compounds to a chemical reaction;
b) develop the QL Care Analyzer, a small, automated, robust and proprietary point of care testing device; and, c) custom paramagnetic
beads through our proprietary method which improves their light collection. In addition, the Company is in the process of adapting
test products for the POC disposable, single-use cartridge-format. Detailed manufacturing specifications and costing have been
created and custom manufacturers have been sourced.
General
and administrative expenses
General
and administrative expenses consist primarily of compensation to officers, occupancy costs, professional fees, listing costs and
other office expenses. The decrease in general and administrative expenses is attributable primarily to a decrease in personnel
cost.
Research
and product development, net of investment tax credits
Research
and development expenses consist primarily of salaries and wages paid to officers and employees engaged in those activities and
supplies consumed therefor. Research and development expenses in 2015 are lower than for the same period in 2014 due to the reduction
in staff in the current period.
Interest
expense and bank charges
Interest
expense consists primarily of interest on Notes and debt discount amortization on those Notes. Debentures issued in the third
quarter of 2013 were retired in the fourth quarter of 2014 and hence the interest expense was substantially lower than that in
2014.
Liquidity
and Capital Resources
We
have not generated significant revenues since inception. We incurred a net loss of approximately $938,000 and a cash flow deficiency
from operating activities of $310,738 for the six months ended April 30, 2015. We have not yet established an ongoing source of
revenues sufficient to cover our operating costs and allow us to continue as a going concern. We have funded our activities to
date almost exclusively from debt and equity financings. These matters raise substantial doubt about our ability to continue as
a going concern.
We
will continue to require substantial funds to continue research and development, including preclinical studies and clinical trials
of our products, to fund the ongoing operations and to commence sales and marketing efforts. Our plans include financing activities
such as private placements of our common stock and issuances of convertible debt instruments. We are also actively pursuing industry
collaboration, including product licensing and specific project financing.
We
believe we will be successful in obtaining the necessary financing to fund our operations, meet revenue projections and manage
costs; however, there are no assurances that such additional funding will be achieved and that we will succeed in obtaining the
funding to support our future operations.
Seasonality
We
do not believe that our business is subject to seasonal trends or inflation. On an ongoing basis, we will attempt to minimize
any effect of inflation on our operating results by controlling operating costs.
Recent
Accounting Pronouncements
In
June 2014, the FASB issued ASU 2014-10, Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements.
ASU 2014-10 eliminates the distinction of a development stage entity and certain related disclosure requirements, including the
elimination of the inception-to-date information on the statements of operations, cash flows and stockholders’ equity. The
amendments in ASU 2014-10 will be effective prospectively for annual reporting periods beginning after December 15, 2014, and
interim periods within those annual periods, however early adoption is permitted. The Company has effective early adoption of
ASU 2014-10 in these interim condensed consolidated financial statements.
Item
3. Quantitative and Qualitative Disclosure About Market Risk
N/A.
Item
4. Controls and Procedures
(a) Evaluation
of Disclosure Controls and Procedures:
Management
is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f)
of the Exchange Act) to provide reasonable assurance regarding the reliability of our financial reporting and preparation of financial
statements for external purposes in accordance with U.S. generally accepted accounting principles. A control system, no matter
how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. Because of
the inherent limitations in all control systems, internal control over financial reporting may not prevent or detect misstatements.
The design and operation of a control system must also reflect that there are resource constraints and management is necessarily
required to apply its judgment in evaluating the cost-benefit relationship of possible controls.
Our
management assessed the effectiveness of our internal control over disclosure controls and procedures for the quarter ended April
30, 2015 based on the criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission. Based on such assessment, our management concluded that during the period covered by
this report, our internal control over financial reporting was not effective. Management has identified the following material
weaknesses in our internal control over financial reporting:
|
● |
Lack
of documented policies and procedures; |
|
|
|
|
● |
Lack
of effective separation of duties, which includes monitoring controls, between the members of management; |
|
|
|
|
● |
Lack
of resources to account for complex and unusual transactions; and |
|
|
|
|
● |
Lack
of effective review of consolidated financial statements. |
Management
is currently evaluating what steps can be taken in order to address these material weaknesses.
(b) Changes
in Internal Control over Financial Reporting:
During
the fiscal quarter ended April 30, 2015, there were no changes in our internal control over financial reporting that have materially
affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART
II. OTHER INFORMATION
Item
1. Legal Proceedings
On
June 3, 2015, JMJ Financial filed a suit in Florida court demanding payment of its outstanding note payable in the amount of $77,235
for failure to convert a portion of its note into 1,800,000 common shares. The parties have agreed to resolve the matter by the
Company agreeing with JMJ Financial to repay the $77,235 in equal monthly installments of $6,436 over twelve (12) months commencing
June 23, 2015. The Company may elect to pay any of the scheduled payments in the form of common stock calculated using the lowest
closing price of the common stock in the five trading days prior to the Company delivering the common stock. The suit was subsequently
withdrawn June 19, 2015.
Item
1A. Risk Factors
Not Applicable.
Item
2. Unregistered Sales of Equity Securities and Use of Proceeds
The following table summarizes sales of unregistered securities
by the Company during the fiscal quarter ended April 30, 2015:
Investor | |
Investment
Type | |
Am't
of Debt
Converted ($) | | |
Conversion
Price/Share | | |
Conversion
Date | |
Shares
issued
Pursuant to
Conversion | |
| |
| |
| | |
| | |
| |
| |
JMJ Capital | |
Convertible Note | |
$ | 14,640 | | |
$ | 0.007 | | |
| 3/13/2015 | |
| 2,000,000 | |
Sub-Total | |
| |
$ | 14,640 | | |
| | | |
| | |
| 2,000,000 | |
| |
| |
| | | |
| | | |
| | |
| | |
LG Capital | |
Convertible Note | |
$ | 10,000 | | |
$ | 0.007 | | |
| 2/20/2015 | |
| 1,456,703 | |
LG Capital | |
Convertible Note | |
$ | 9,500 | | |
$ | 0.009 | | |
| 3/12/2015 | |
| 1,039,913 | |
Sub-Total | |
| |
$ | 19,500 | | |
| | | |
| | |
| 2,496,616 | |
| |
| |
| | | |
| | | |
| | |
| | |
Adar Bays | |
Convertible Note | |
$ | 7,000 | | |
$ | 0.008 | | |
| 2/9/2015 | |
| 921,295 | |
Adar Bays | |
Convertible Note | |
$ | 14,700 | | |
$ | 0.006 | | |
| 2/23/2015 | |
| 2,306,411 | |
Adar Bays | |
Convertible Note | |
$ | 5,000 | | |
$ | 0.017 | | |
| 4/21/2015 | |
| 287,356 | |
Adar Bays | |
Convertible Note | |
$ | 5,000 | | |
$ | 0.012 | | |
| 4/23/2015 | |
| 431,034 | |
Sub-Total | |
| |
$ | 31,700 | | |
| | | |
| | |
| 3,946,096 | |
| |
| |
| | | |
| | | |
| | |
| | |
TOTALS | |
| |
$ | 65,840 | | |
| | | |
| | |
| 8,442,712 | |
All of the above-referenced sales were exempt from registration
pursuant to Section 4 (a)(2) of the Securities Act of 1933.
Item
3. Defaults Upon Senior Securities
None.
Item
4. Mine Safety Disclosures
None.
Item
5. Other Information
None.
Item
6. Exhibits
31.1
|
Section
302 Certification of Chief Executive Officer. |
|
|
31.2 |
Section
302 Certification of Chief Financial Officer. |
|
|
32.1 |
Section
906 Certification of Chief Executive Officer and Chief Financial Officer. |
|
|
101 INS |
XBRL
Instance Document |
|
|
101 SCH |
XBRL
Schema Document |
|
|
101 CAL |
XBRL
Calculation Linkbase Document |
|
|
101 LAB |
XBRL
Label Linkbase Document |
|
|
101 PRE |
XBRL
Presentation Linkbase Document |
|
|
101 DEF |
XBRL
Definition Linkbase Document |
SIGNATURES
In
accordance with the requirements of the Exchange Act, the Registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
|
CARDIOGENICS
HOLDINGS INC. |
|
|
Date:
June 22, 2015 |
By:
|
/s/
Yahia Gawad |
|
Name: |
Yahia Gawad |
|
Title: |
Chief Executive
Officer |
|
|
|
Date: June 22,
2015 |
By: |
/s/
James Essex |
|
Name: |
James Essex |
|
Title: |
Chief Financial
Officer |
EXHIBIT
INDEX
31.1
|
Section
302 Certification of Chief Executive Officer. |
|
|
31.2 |
Section
302 Certification of Chief Financial Officer. |
|
|
32.1 |
Section
906 Certification of Chief Executive Officer and Chief Financial Officer. |
|
|
101 INS |
XBRL
Instance Document |
|
|
101 SCH |
XBRL
Schema Document |
|
|
101 CAL |
XBRL
Calculation Linkbase Document |
|
|
101 LAB |
XBRL
Label Linkbase Document |
|
|
101 PRE |
XBRL
Presentation Linkbase Document |
|
|
101 DEF |
XBRL
Definition Linkbase Document |
EXHIBIT
31.1
SECTION
302 CERTIFICATION
I, Yahia
Gawad, certify that:
1.
I have reviewed this Quarterly Report on Form 10-Q for the period ended April 30, 2015 of CardioGenics Holdings Inc.;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect
to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all
material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods
presented in this report;
4.
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
(a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision,
to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in which this report is being prepared;
(b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed
under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted accounting principles;
(c)
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions
about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on
such evaluation; and
(d)
Disclosed in the report any change in the registrant’s internal control over financial reporting that occurred during the
registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that
has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial
reporting.
5.
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control
over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors
(or persons performing the equivalent functions):
(a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which
are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information;
and
(b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s
internal control over financial reporting.
Date: June 22,
2015 |
|
|
|
|
/s/
Yahia Gawad |
|
Yahia Gawad |
|
Chief Executive
Officer |
EXHIBIT
31.2
SECTION
302 CERTIFICATION
I, James
Essex, certify that:
1.
I have reviewed this Quarterly Report on Form 10-Q for the period ended April 30, 2015 of CardioGenics Holdings Inc.;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect
to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all
material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods
presented in this report;
4.
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
(a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision,
to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in which this report is being prepared;
(b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed
under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted accounting principles;
(c)
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions
about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on
such evaluation; and
(d)
Disclosed in the report any change in the registrant’s internal control over financial reporting that occurred during the
registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that
has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial
reporting.
5.
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control
over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors
(or persons performing the equivalent functions):
(a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which
are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information;
and
(b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s
internal control over financial reporting.
Date: June 22, 2015 |
|
|
|
|
/s/
James Essex |
|
James Essex |
|
Chief Financial Officer |
EXHIBIT
32.1
Section
906 Certification by the Chief Executive Officer and Chief Financial Officer
Each
of Yahia Gawad, Chief Executive Officer, and James Essex, Chief Financial Officer, of CardioGenics Holdings Inc., a Nevada corporation
(the “Company”) hereby certifies pursuant to 18 U.S.C. ss. 1350, as added by ss. 906 of the Sarbanes-Oxley Act of
2002, that, to their knowledge:
(1)
The Company’s periodic report on Form 10-Q for the period ended April 30, 2015 (“Form 10-Q”) fully complies
with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
(2)
The information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operation
of the Company.
By: |
/s/
Yahia Gawad |
|
By: |
/s/
James Essex |
Name: |
Yahia Gawad |
|
Name: |
James Essex |
Title: |
Chief Executive
Officer |
|
Title: |
Chief Financial
Officer |
|
|
|
|
|
Date: |
June 22, 2015 |
|
|
|
CardioGenics (CE) (USOTC:CGNH)
Historical Stock Chart
From Jun 2024 to Jul 2024
CardioGenics (CE) (USOTC:CGNH)
Historical Stock Chart
From Jul 2023 to Jul 2024