Item 1. Description of Business
OVERVIEW
We were originally formed in 1995 as "Wavetech, Inc." a New Jersey corporation and changed our corporate domicile to Nevada in December 1997, by merging into a Nevada corporation named, "Interpretel International, Inc." We subsequently changed our name, first to "Wavetech International, Inc." and then, in 2000, to "BestNet Communications Corp." Our business at the time was to provide worldwide long distance telephone communication and teleconferencing services to commercial and residential consumers through the internet. That business was never profitable and we were able to continue it only by repeated equity and debt financings. Accordingly, during December 2006, we determined to dispose of that business and sold it during February 2007.
We entered the medical device business at the end of July 2006 through the acquisition of JDA Medical Technologies, Inc. ("JDA"), a development stage company, which was merged into our wholly owned subsidiary, Oncologix Corporation. On January 22, 2007, we changed our name to Oncologix Tech, Inc., to reflect this new business. During June 2007, we moved our principal offices from Grand Rapids, Michigan, to our offices at 3725 Lawrenceville-Suwanee Road, Suite B-4, Suwanee, Georgia, 30024, telephone (770) 831-8818. At that address, our business was the development of a medical device for brachytherapy (radiation therapy), called the “Oncosphere” (or “Oncosphere System”), for the advanced medical treatment of soft tissue cancers. It is a radioactive micro-particle designed to deliver therapeutic radiation directly to a tumor site by introducing the micro-particles into the artery that feeds the tumor tissue. Its first application is expected to be the treatment of liver cancer. Due to a lack of funding, we suspended these activities on December 31, 2007, whereupon we closed the offices in Suwanee Georgia.
Our new mailing address is P.O. Box 8832, Grand Rapids, MI 49518-8832, telephone (616) 977-9933.
During May 2008, we determined to dispose of most of the assets related to the development of the Oncosphere.
In February 2009, we entered into a Technology Agreement with Institut für Umwelttechnologien GmbH, a German Company (“IUT”) whereunder the parties have agreed that:
(a)The Company has granted an exclusive license to a new IUT subsidiary, called “IUTM”, to develop and manufacture products based on the Company’s proprietary information. This proprietary information is not based on the technology that had been subject to the Master License Agreement with the University of Maryland - Baltimore. The Company has also transferred to IUTM a number of items of laboratory equipment and inventory useful in connection with the licensed information.
(b)The Company retains rights to market products based on such information as well as first consideration for marketing rights for other possible IUTM products.
(c)In consideration of the license, the Company has received a 10% equity interest in IUTM, which is organized as a private German limited liability company and IUT has assumed approximately $82,000 of the Company’s indebtedness.
(d)The Company’s marketing rights have been transferred to its subsidiary, Oncologix Corporation and have issued IUTM 10% of the equity ownership of that subsidiary.
In addition, on April 7, 2009, the Company entered into a Termination Agreement with the University of Maryland - Baltimore, The Master License Agreement between the Company and the University has been formally terminated and each party has released the other from all liabilities arising under the Master License Agreement.
We have been advised that IUTM is continuing the development of a brachytherapy device generally as described above but based on proprietary technology not developed by the University of Maryland. During recent discussions with IUTM management, the prior understandings were reaffirmed. It is now our expectation that we will receive information on at least two potential product lines under consideration and/or development by IUTM. Upon receipt we plan to determine the extent to which we will be able to market them and to finance a marketing organization. While our Management is optimistic as to the outcome of those discussions and future success in financing, it is not possible to predict the probabilities of success with any degree of certainty.
On May 19, 2011, the Company effected a one-for-four reverse stock split. All share and per share information has been restated to retroactively show the effect of this stock split. The reverse split was approved by a majority of the Company’s shareholders on March 24, 2011.
Because the development of the brachytherapy device is not complete and it cannot be marketed at this time, the Company’s management and Board of Directors have determined that the Company has reentered the development stage effective June 1, 2011. Since the Company has limited operations at this point in time, the Company will be considered a development stage company. The Company is advised and believes that IUTM continues the development of that and other medical products that we would market under the terms of the Agreement described above.
MICROSPHERE PRODUCT
The following terms which are used throughout this Report have the following meanings:
“Brachytherapy” refers to the process of placing therapeutic radiation sources in or near diseased tissue.
“FDA” refers to the United States Food and Drug Administration.
“Investigational Device Exemption” or “IDE” refers to a procedure whereby the FDA grants permission to test a new product with human patients in the United States.
“Micro-arterial brachytherapy” refers to the delivery of radiation into or near a tumor through the artery carrying the blood supply to the tumor.
“Microsphere” refers to a spherical microparticle, approximately one-quarter the width of a human hair, capable of containing or binding a radioisotope for the purpose of delivering radiation treatment directly to a tumor through the system of arteries (vasculature) supplying blood to the tumor. Our product is an innovative version of a microsphere that we call the “Oncosphere.”
The Microsphere Product
The product being developed by IUTM is a microsphere intended for use as a means of micro-arterial brachytherapy in the treatment of soft tissue cancer tumors in the liver. Soft tissue tumors are connected to the blood supply and this kind of therapy is administered through the patient’s blood supply system.
Soft tissue tumors are among the most difficult forms of cancer to treat. If not cured by initial therapy, these tumors eventually become unresponsive to chemotherapy and spread (metastasize) throughout the body. While there has been some progress in recent years in treating these cancers with surgery and chemotherapy, the five-year survival rates remain less than five percent. We believe that there is a strong demand from patients and physicians confronting this type of cancer for effective, easy-to-use therapies with acceptable side effects. We believe that if and when it is fully developed and approved for use the IUTM product will provide such a therapy if developed.
Currently the standard treatment for patients with advanced cancerous tumors is chemotherapy, which is not specific to (that is, does not discriminate as to) various types of cancer and has side effects that damage or destroy many normal cells as well as the cancer cells. Thus, chemotherapy may result in additional illness and even death. High doses of chemotherapy have typically resulted in extended, unpleasant and sometimes life-threatening hospital stays. Patients often require expensive, invasive medical attention before they recover and are discharged to their homes.
An alternative therapy, radiation, is most often administered by delivering a beam from outside of the patient’s body (“external beam radiation”) through the patient's body to the cancer tumor. Cells do not become resistant to radiation as they do to chemotherapy. Therefore, radiation delivered to the cell in sufficient doses will cause the death of the cell. However, because the radiation originates from outside the body, the healthy tissues surrounding the tumor and those between the source and the tumor also receive radiation and suffer damage that can cause significant adverse side effects.
Micro-arterial brachytherapy is an improvement over both chemotherapy and external beam radiation. In this form of treatment, microspheres bearing radiation are delivered directly through the bloodstream to the site of a cancer tumor, thereby avoiding healthy tissues. Micro-arterial brachytherapy has the additional significant advantage of being administered in an outpatient procedure, with most patients being able to return home the day of treatment.
We believe that if and when the development of the IUTM product has been completed and it is approved by the FDA and used in the treatment of patients, it will have significant competitive advantages over microspheres now in the market.
GOVERNMENT REGULATION
All activities in the development, manufacture and sale of cancer therapy products are and will be subject to extensive laws, regulations, regulatory approvals and guidelines. Within the United States, therapeutic radiological devices must comply with the U.S. Federal Food, Drug and Cosmetic Act, which is enforced by the FDA. All those who are engaged in the manufacture of such products are required to adhere to applicable FDA regulations for Good Manufacturing Practices, including extensive record keeping and periodic inspections of manufacturing facilities. Medical devices such as the Oncosphere cannot be used or sold unless they are approved for specified purposes by the FDA. There are two levels of FDA approval. The first is the granting of approval to test the device in human subjects through an IDE; the second is obtaining approval to market the device to the public for the treatment of specified diseases through a PMA. Separate FDA approval will be required for each such stage.
If our discussions with IUTM and subsequent financing are successful, our business is expected to involve the importing, exporting, design, manufacture, distribution, use and storage of beta- and gamma-emitting radioisotopes. These activities in the United States are subject to federal, state and local rules relating to radioactive material promulgated by the Nuclear Regulatory Commission ("NRC"), and states that have subscribed to certain standards and local authorities, known as “Agreement States.” In addition, we must comply with NRC, state and U.S. Department of Transportation requirements for labeling and packaging shipments of radiation sources to hospitals or others users of our devices. In order to market our devices commercially in the U.S., we will be required to obtain a sealed source device registration from Agreement States and/or the NRC, depending on the states in which the device will be distributed.
Additionally, hospitals in the United States are required to have radiation licenses to hold, handle and use radiation. Many hospitals and/or physicians in the United States will be required to amend their radiation licenses to include our isotopes before receiving and using them. Depending on the state in which the hospital is located, the license amendment will be processed by the responsible subscribing state department or agency or by the NRC.
Obtaining such registration, approvals and licenses can be complicated and time consuming and there is no assurance that any of them can be obtained.
COMPETITION
We are aware of several companies that have developed competing products to address soft tissue cancers: DS Nordion a Canadian company whose microsphere product is named "Therasphere”; Sirtex, an Australian company with approximately $11,000,000 in assets, whose microsphere product is named "SIR-Spheres"; and pSivida, a British company.
We believe that other companies are capable of developing technology that could, if embodied in a suitable product, compete with the IUTM product. We also believe that one of those companies may have developed specifications for such a product but that its plans for further development are now dormant. As with any technology-based product, there is a risk that other, more advanced, products will appear on the market.
INTELLECTUAL PROPERTY PROTECTION
We have been advised by IUTM that it intends to rely on patent laws, software security measures, license agreements and nondisclosure agreements to protect its products. No patent has yet been granted and there is no assurance that any will be granted or that any part of the technology will be patentable. Even if granted however, any patent may be limited in scope and patents issued to others, or technologies owned by them, may result in competitive products that do not infringe any patent and that may employ software for dose calculation without infringing any patent that may be granted for the Oncosphere technology.
EMPLOYEES
We currently have two employees: our Chief Financial Officer, who is located in Michigan and our Chief Executive Officer who is located in Arizona. We do not anticipate hiring additional employees until we begin the marketing efforts referred to above.
Item 1A.
Item 1A. Risk Factors
We are a “smaller reporting company” as defined by Regulation S-K and as such, are not required to provide the information contained in this item pursuant to Regulation S-K.
Item 1B.
Item 1B. Unresolved Staff Comments
None.
Item 2.
Item 2. Properties
We do not own any real property. The Company’s headquarters are located in the offices of our Chief Financial Officer, located in Grand Rapids, Michigan. Our Chief Executive Officer works from his home in Scottsdale, Arizona. Currently we have no lease obligations for any premises.
Item 3.
Item 3. Legal Proceedings
None.
Item 4.
Item 4. Mine Safety Disclosures
Not applicable.
PART II
Item 5.
Item 5. Market for Registrant’s Common Equity, Related Stockholder matters and Issuer Purchases of Equity Securities
Market for Common Stock
On May 19, 2011, the Company effected a one-for-four reverse stock split. All share and per share information have been restated to retroactively show the effect of this stock split. The reverse split was previously approved by a majority of the Company’s shareholders on March 24, 2011.
Our common stock is traded on the Pink Sheets beginning January 2009 when we were delisted from the OTC Bulletin Board. Our common shares trade on the Pink Sheets under the symbol “OCLG”. Prior to January 2009, the Company's common stock was quoted on the OTC Bulletin Board under the symbol “OCLG” The high and low close prices of the Company's common stock as reported for the last two fiscal years, by fiscal quarter (i.e. first quarter = September 1 through November 30) were as follows:
The closing stock price of our common stock on November 1, 2012, was $0.01.
Recent Sales of Unregistered Securities
The following table contains information regarding our sales of unregistered securities during the past two fiscal years. We have made additional sales of unregistered securities subsequent to our year end. See “LIQUIDITY AND CAPITAL RESOURCES.” The securities sold were a combination of promissory notes convertible into shares of our common stock and sales of common stock to accredited investors. The principal amount of each Note is equal to the amount borrowed from the investor.
Date of Issuance Principal Amount of Note(s) Further Description and Remarks
October 6, 2011 $70,000 On October 6, 2011, the Company issued a convertible promissory note to its CEO, Anthony Silverman in the principal amount of $71,128. This note bore interest at 6% and was convertible into common stock at $0.04 per share. On October 6, 2011, Mr. Silverman elected to convert this note into 1,778,193 shares of common stock.
August 23, 2012 $45,516 On August 23, 2012, the Company issued a convertible promissory note to its CEO, Anthony Silverman in the principal amount of $45,516. This note bore interest at 6% and was convertible into common stock at $0.02 per share. On August 24, 2012, Mr. Silverman elected to convert this note plus accrued interest of $8 into 2,276,182 shares of common stock.
Date of Sale Proceeds from Sale Further Description and Remarks
October 11, 2010 $25,000 On October 11, 2010, the Company sold 416,667 shares of common stock to a non-related accredited investor at $0.06 per share.
January 18, 2011 $50,000 On January 18, 2011, the Company sold 833,333 shares of common stock to a non-related accredited investor at $0.06 per share.
July 05, 2011 $100,000 On July 05, 2011, the Company sold 2,500,000 shares of common stock to a non-related accredited investor at $0.04 per share.
October 19, 2011 $25,000 On October 19, 2011, the Company sold 625,000 shares of common stock to a non-related accredited investor at $0.04 per share.
January 26, 2012 $40,000 On January 26, 2012, the Company sold 1,000,000 shares of common stock to a non-related accredited investor at $0.04 per share.
April 26, 2012 $10,000 On April 26, 2012, the Company sold 250,000 shares of common stock to a non-related accredited investor at $0.04 per share.
Issuer Repurchases of Equity Securities
We did not repurchase any of our equity securities during the fourth quarter of the year ended August 31, 2012.
Holders
As of November 1, 2012, the Company had 260 shareholders of record of its common stock. As of November 1, 2012, 1,107 owners of our common stock held them in the names of various broker-dealers. As of November 1, 2012, the Company had one Unit holder of record. As of November 1, 2012, the Company had ten owners of Units who held them in the names of various brokers.
Dividend Policy
The Company has never declared any cash dividends on any of the Company’s equity securities and currently plans to retain future earnings, if any, for business growth.
Stock Performance Graph
We are a “smaller reporting company”, as defined by regulation S-K and as such, are not required to provide the information contained in this item pursuant to Regulation S-K.
Equity Compensation Plan Information
The following table sets forth information regarding the number of shares of our common stock that may be issued pursuant to our equity compensation plans or arrangements as of the end of fiscal 2012.
(1) We maintain a 2000 Stock Incentive Plan under which we have 6,362,418 shares of common stock available for future issuance as of August 31, 2012. Under the 2000 Stock Incentive Plan, the sale price of the shares of common stock is equal to the fair market value of such shares on the date of the option grant. In January 2007, our shareholders approved an increase in the number of shares authorized for our 2000 Stock Incentive Plan to 7,500,000 from 5,000,000. We also maintain a 1997 Stock Incentive Plan under which we have 4,525,000 shares of common stock available for future issuance as of August 31, 2012. The sale price of the shares of common stock available under our 1997 Stock Incentive Plan is equal to the fair market value of such shares on the date of grant. Both of these plans have been approved by our shareholders.
For a description of our 1997 and 2000 Stock Incentive Plans, please see the description set forth in Note 6 of our Consolidated Financial Statements.
Transfer Agent
Our transfer agent and registrar are American Stock Transfer and Trust Co., 6201 15th Avenue, 3rd Floor, Brooklyn, NY 11219, Telephone (718) 921-8210.
Item 6.
Item 6. Selected Financial Data
We are a “smaller reporting company”, as defined by regulation S-K and as such, are not required to provide the information contained in this item pursuant to Regulation S-K.
Item 7.
Item 7. Management’s discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis should be read in conjunction with our Consolidated Financial Statements and notes appearing elsewhere in this Report.
CRITICAL ACCOUNTING POLICIES
“Management's Discussion and Analysis of Financial Condition and Results of Operations ” (“MDA”) discusses our consolidated financial statements that have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amount of assets and liabilities at the date of the financial statements, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On an on-going basis, we evaluate our estimates and judgments, including those related to research and development costs, deferred income taxes and the impairment of long-lived assets. We base our estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances. The result of these estimates and judgments form the basis for making conclusions about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions; changes in these estimates as a result of future events may have a material effect on the Company’s financial condition. The SEC suggests that all registrants list their most “critical accounting policies” in MDA. A critical accounting policy is one which is both important to the portrayal of the Company’s financial condition and results of operations and requires management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. Management believes the following critical accounting policies affect its more significant judgments and estimates in the preparation of its consolidated financial statements: The impairment of long-lived assets, stock based compensation, deferred income tax valuation allowances, pending or threatening litigation and the allocation of assets acquired and liabilities assumed in acquisitions.
Impairment or Disposal of long-lived assets. In accordance with ASC 360 “Impairment or Disposal of Long-lived Assets”, the Company periodically evaluates whether events and circumstances have occurred that may indicate that the carrying amount of such assets may not be recoverable. If the carrying amount of an asset or group of assets exceeds its net realizable value, the asset will be written down to its fair market value. In the period when the plan of sale criteria of ASC 360 are met, long-lived assets are reported as held for sale, depreciation and amortization cease, and the assets are reported at the lower of carrying value or fair value less costs to sell.
Deferred tax assets. In assessing the realizability of deferred tax assets, management assesses the likelihood that deferred tax assets will be recovered from future taxable income, and to the extent that recovery is not likely a valuation allowance is established. We adjust the valuation allowance in the period management determines it is more likely than not that deferred tax assets will or will not be realized. To date, we have fully reserved for our deferred tax assets based primarily on our history of recurring losses.
Use of Estimates. The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reportable amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Convertible Debt. Interest on convertible debt is calculated using the simple interest method. The company recognizes a beneficial conversion feature to the extent the conversion price is less than the closing stock price on the issuance of the convertible notes. The Company also follows ASC 470-50 and ASC 470-20 regarding changes in the terms of the convertible notes and the induced conversion of its convertible debt.
RESULTS OF OPERATIONS
Comparison of the fiscal years ended August 31, 2012 and 2011
Revenue
There are no revenues reflected in our financial statements for the years ended August 31, 2012 and 2011.
General and Administrative Expense
General and administrative expenses included in our results from continuing operations include legal and accounting fees, license fees, travel, payroll and related expenses, directors and officers insurance, and public relations expenses. These expenses relate primarily to general corporate overhead.
General and administrative expense decreased to $130,769 during fiscal 2012, from $195,067, a decrease of 33% or $64,298 from the comparable period in fiscal 2011. Payroll and related expenses decreased to $79,646 during the fiscal 2012, from $89,977 in the comparable period in fiscal 2011, due primarily to fewer hours worked from our CFO in preparing our SEC filings of our 10-K, 10-Q, SEC Correspondence and income and payroll tax returns. Legal expense decreased to $494 fiscal 2012, from $30,578 in the comparable period in fiscal 2011, due primarily to legal fees incurred in fiscal 2011 regarding a potential new joint venture with Watchme Media as well as documents related to our 2011 reverse stock split. Accounting expense increased to $13,046 during fiscal 2012, from $10,290 in the comparable period in fiscal 2011, as a result of an increase in audit and review fees from our registered accounting firm. Insurance expense decreased to $10,628 during fiscal 2012, from $13,016 in the comparable period in fiscal 2011, due primarily to better pricing on our Directors and Officers Insurance policy. Investor relations and press release expenses decreased to $0 during fiscal 2012, from $14,994 in the comparable period in fiscal 2011, due primarily to printing, mailing and processing charges for our definitive information statement regarding our reverse stock split mailed to our shareholders in fiscal 2011 Outside services decreased to $5,694 during fiscal 2012, from $10,195 in the comparable period in fiscal 2011, due primarily to additional SEC filings in fiscal 2011 related to our reverse stock split.
Depreciation and Amortization
Depreciation and amortization decreased to $450 during fiscal 2012, from $1,471 during fiscal 2011. The decrease in depreciation and amortization was the result of impairing the value of our software assets at the end of fiscal 2011.
Interest Income
We had no interest income in fiscal 2012 or fiscal 2011.
Interest and Finance Charges
Interest and finance charges decreased to $10,768 during fiscal 2012 from $14,707, a decrease of 27% from fiscal 2011. The decrease is primarily attributable to conversions of convertible promissory note during the first quarter of fiscal 2012 as well as no finders’ fees paid in fiscal 2012 for financings obtained.
Interest and finance charges - related parties increased to $25,312 during fiscal 2012, from $18,241, an increase of 39% or $7,071 for the comparable period in fiscal 2011. The increase is primarily attributable to amortization of a discount related to beneficial conversion feature recorded in the issuance of a related party convertible promissory note to the Company’s CEO in fiscal 2012.
A summary of interest and finance charges is as follows:
Induced Conversion Expense
Induced conversion expense increased to $25,402 during fiscal 2012, from $6,076, an increase of more than 100% for the comparable period in fiscal 2011. The increase was due to the issuance of shares of common stock for the conversion of a convertible promissory note during the first quarter of fiscal 2012, as a result of reducing the conversion price from $0.08 to $0.04 per share for these conversions.
Loss on Conversion of Notes Payable
Loss on conversion of notes payable increased to $92,758 for fiscal 2012, from $0, an increase of more than 100% for the comparable period in fiscal 2011. The increase was due to the issuance of shares of common stock for the conversion of two related party convertible promissory notes during fiscal 2012 at below market value.
Income Taxes
At August 31, 2012, the Company had federal net operating loss carryforwards totaling approximately $29,000,000. At August 31, 2012, the Company did not have any state net operating loss carryforwards. The federal net operating loss carryforwards expire in various amounts beginning in 2004 and ending in 2032. Due to our history of incurring losses from operations, we have provided a valuation allowance for our net operating loss carryforward.
LIQUIDITY AND CAPITAL RESOURCES
We were unable to obtain the financing necessary to continue development operations after December 31, 2007. Consequently, we terminated the employment of all of our personnel, effective as of that date, with the exception of our CFO who is working on a consulting basis. We anticipate that we will require $200,000 to operate for the next twelve months. During recent discussions with IUTM management, the prior understandings were reaffirmed. It is now our expectation that we will receive information on at least two potential product lines under consideration and/or development by IUTM. Upon receipt we plan to determine the extent to which we will be able to market them and to finance a marketing organization.
On August 31, 2012, we had cash and cash equivalents of $1,931. Our historical and current operating losses to date have been covered by equity and debt financing obtained from private investors, including certain present and former members of our Board of Directors. We never achieved positive cash flow or profitability while we operated our telephone business because we did not generate a volume of business sufficient to cover our overhead costs. We stopped development of our Oncosphere on December 31, 2007 due to a lack of funding.
As of August 31, 2012, we had no outstanding short term notes which would require minimum cash payments other than normal accounts payable. We do have two long term convertible payable which are due September 30, 2012. Please see Note 5 for further information.
INFLATION AND OTHER FACTORS
The Company’s operations are influenced by general economic trends and technology advances in the medical industries.
Our activities in the marketing of cancer therapy products are, and will be subject to extensive laws, regulations, regulatory approvals and guidelines. Within the United States, therapeutic radiological devices must comply with the U.S. Federal Food, Drug and Cosmetic Act, which is enforced by the FDA. We are also required to adhere to applicable FDA regulations for Good Manufacturing Practices, including extensive record keeping and periodic inspections of manufacturing facilities. Medical devices such as the Oncosphere cannot be used or sold unless they are approved for specified purposes by the FDA. There are two levels of FDA approval. The first is the granting of approval to evaluate use of the device in human subjects (through an IDE); the second is obtaining approval to market the device to the public for the treatment of specified diseases (PMA).
If we are successful in implementing our plans, our business will involve the marketing of beta and gamma emitting radioisotopes. These activities in the United States are subject to federal, state and local rules relating to radioactive material promulgated by the Nuclear Regulatory Commission ("NRC"), and states that have subscribed to certain standards and local authorities, known as “Agreement States” In addition, we must comply with NRC, state and U.S. Department of Transportation requirements for labeling and packaging shipments of radiation sources to hospitals or others users of our devices. In order to market our devices commercially, we will be required to obtain a sealed source device registration from Agreement States and/or the NRC, depending on the states in which the device will be distributed.
Additionally, hospitals in the United States are required to have radiation licenses to hold, handle and use radiation. Many hospitals and/or physicians in the United States will be required to amend their radiation licenses to include our isotopes before receiving and using them. Depending on the state in which the hospital is located, the license amendment will be processed by the responsible subscribing state department or agency or by the NRC.
Obtaining such registration, approvals, and licenses can be complicated and time consuming and there is no assurance that any of them can be obtained.
CODE OF ETHICS
Our Board of Directors has adopted a code of ethics that applies to our principal executive officer, principal financial officer and to other persons performing similar functions. The code of ethics is designed to deter wrongdoing and to promote honest and ethical conduct, full, fair, accurate, timely and understandable disclosure, compliance with applicable laws, rules and regulations, prompt internal reporting of violations of the code and accountability for adherence to the code. We will provide a copy of our code of ethics, without charge, to any person upon receipt of written request for such delivered to our corporate headquarters. All such requests should be send to Oncologix Tech, Inc., P.O. Box 8832, Grand Rapids, MI 49518-8832.
OFF-BALANCE SHEET ARRANGEMENTS
As of August 31, 2012 and 2011, we had no off-balance sheet arrangements.
Recent Accounting Pronouncements
We have evaluated all Accounting Standards Updates through the date the financial statements were issued and do not believe any will have a material impact.
Item 7A.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
We are a “smaller reporting company”, as defined by regulation S-K and as such, are not required to provide the information contained in this item pursuant to Regulation S-K.
Item 8.
Item 8. Financial Statements and Supplementary Data
Oncologix Tech, Inc. and Subsidiaries
(A Development Stage Company)
Consolidated Financial Statements
Year Ended August 31, 2012 and 2011
Contents
Report of Seale and Beers, CPAs, Independent Registered Public Accounting Firm
Audited Financial Statements
Consolidated Balance Sheets
Consolidated Statements of Operations
Consolidated Statements of Changes in Stockholders' Deficit
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
SEALE AND BEERS, CPAs
PCAOB & CPAB REGISTERED AUDITORS
www.sealebeers.com
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of
Oncologix Tech, Inc.
(A Development Stage Company)
We have audited the accompanying balance sheets of Oncologix Tech, Inc. (A Development Stage Company) as of August 31, 2012, and 2011, and the related statements of income, stockholders’ equity (deficit), and cash flows for each of the years in the two-year period ended August 31, 2012 and 2011 and since reentering development stage on June 1, 2011 through August 31, 2012. Oncologix Tech Inc.’s management is responsible for these financial statements. 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 audit 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 financial statements referred to above present fairly, in all material respects, the financial position of Oncologix Tech Inc. (A Development Stage Company) as of August 31, 2012 and 2011, and the related statements of income, stockholders’ equity (deficit), and cash flows for each of the years in the two-year period ended August 31, 2012 and 2011 and since reentering development stage on June 1, 2011 through August 31, 2012, in conformity with accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the financial statements, the Company has no revenues, has negative working capital at August 31, 2012, has incurred recurring losses and recurring negative cash flow from operating activities, and has an accumulated deficit which raises substantial doubt about its ability to continue as a going concern. Management’s plans concerning these matters are also described in Note 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ Seale and Beers, CPAs
Seale and Beers, CPAs
Las Vegas, Nevada
November 29, 2012
50 S. Jones Blvd. Suite 202 Las Vegas, NV 89107 Phone: (888)727-8251 Fax: (888)782-2351
ONCOLOGIX TECH, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEETS
AUGUST 31, 2012 AND 2011
The accompanying notes are an integral part of these consolidated financial statements.
ONCOLOGIX TECH, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF OPERATIONS
The accompanying notes are an integral part of these consolidated financial statements.
ONCOLOGIX TECH, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT
FOR THE PERIOD SEPTEMBER 1, 2010 THROUGH AUGUST 31, 2012
The accompanying notes are an integral part of these consolidated financial statements
ONCOLOGIX TECH, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOWS
The accompanying notes are an integral part of these consolidated financial statements.
ONCOLOGIX TECH, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
Supplemental disclosure of cash flow information (continued):
The accompanying notes are an integral part of these consolidated financial statements.
ONCOLOGIX TECH, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - ORGANIZATION AND DESCRIPTION OF THE COMPANY
We were originally formed in 1995 as "Wavetech, Inc." a New Jersey corporation and changed our corporate domicile to Nevada in December 1997, by merging into a Nevada corporation named, "Interpretel International, Inc." We subsequently changed our name, first to "Wavetech International, Inc." and then, in 2000, to "BestNet Communications Corp." Our business at the time was to provide worldwide long distance telephone communication and teleconferencing services to commercial and residential consumers through the internet. That business was never profitable and we were able to continue it only by repeated equity and debt financings. Accordingly, during December 2006, we determined to dispose of that business and sold it during February 2007.
We entered the medical device business at the end of July 2006 through the acquisition of JDA Medical Technologies, Inc. ("JDA"), a development stage company, which was merged into our wholly owned subsidiary, Oncologix Corporation. On January 22, 2007, we changed our name to Oncologix Tech, Inc., to reflect this new business. During June 2007, we moved our principal offices from Grand Rapids, Michigan, to our offices at 3725 Lawrenceville-Suwanee Road, Suite B-4, Suwanee, Georgia, 30024, telephone (770) 831-8818. At that address, our business was the development of a medical device for brachytherapy (radiation therapy), called the “Oncosphere” (or “Oncosphere System”), for the advanced medical treatment of soft tissue cancers. It is a radioactive micro-particle designed to deliver therapeutic radiation directly to a tumor site by introducing the micro-particles into the artery that feeds the tumor tissue. Its first application is expected to be the treatment of liver cancer. Due to a lack of funding, we suspended these activities on December 31, 2007, whereupon we closed the offices in Suwanee Georgia.
Our correct mailing address is P.O. Box 8832, Grand Rapids, MI 49518-8832, telephone (616) 977-9933.
During May 2008, we determined to dispose of most of the assets related to the development of the Oncosphere.
In February 2009, we entered into a Technology Agreement with Institut für Umwelttechnologien GmbH, a German Company (“IUT”) whereunder the parties have agreed that:
(a)The Company has granted an exclusive license to a new IUT subsidiary, called “IUTM”, to develop and manufacture products based on the Company’s proprietary information. This proprietary information is not based on the technology that had been subject to the Master License Agreement with the University of Maryland - Baltimore. The Company has also transferred to IUTM a number of items of laboratory equipment and inventory useful in connection with the licensed information.
(b)The Company retains rights to market products based on such information as well as first consideration for marketing rights for other possible IUTM products.
(c)In consideration of the license, the Company has received a 10% equity interest in IUTM, which is organized as a private German limited liability company and IUT has assumed approximately $82,000 of the Company’s indebtedness.
(d)The Company’s marketing rights have been transferred to its subsidiary, Oncologix Corporation and have issued IUTM 10% of the equity ownership of that subsidiary.
In addition, on April 7, 2009, the Company entered into a Termination Agreement with the University of Maryland - Baltimore, The Master License Agreement between the Company and the University has been formally terminated and each party has released the other from all liabilities arising under the Master License Agreement.
We have been advised that IUTM is continuing the development of a brachytherapy device generally as described above but based on proprietary technology not developed by the University of Maryland. During recent discussions with IUTM management, the prior understandings were reaffirmed. It is now our expectation that we will receive information on at least two potential product lines under consideration and/or development by IUTM. Upon receipt we plan to determine the extent to which we will be able to market them and to finance a marketing organization. While our Management is optimistic as to the outcome of those discussions and future success in financing, it is not possible to predict the probabilities of success with any degree of certainty.
ONCOLOGIX TECH, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
On September 23, 2010, the Company signed a Memorandum of Understanding with Institut für Umwelttechnologien GmbH and IUT Medical GMBH confirming certain understandings among the parties with respect to their future relationships and business activities as originally contemplated in their Technology Agreement of February 27, 2009, which was reaffirmed.
On May 19, 2011, the Company effected a one-for-four reverse stock split. All share and per share information has been restated to retroactively show the effect of this stock split. The reverse split was approved by a majority of the Company’s shareholders on March 24, 2011.
Because the development of the brachytherapy device is not complete and it cannot be marketed at this time, the Company’s management and Board of Directors have determined that the Company has reentered the development stage effective June 1, 2011. Since the Company has limited operations at this point in time, the Company will be considered a development stage company. The Company is advised and believes that IUTM continues the development of that and other medical products that we would market under the terms of the Agreement described above.
NOTE 2- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
In the opinion of management, the accompanying balance sheets and related interim statements of income, cash flows, and stockholders' equity include all adjustments, consisting only of normal recurring items, necessary for their fair presentation in conformity with accounting principles generally accepted in the United States of America ("U.S. GAAP"). Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses. Actual results and outcomes may differ from management's estimates and assumptions. Interim results are not necessarily indicative of results for a full year.
CONSOLIDATION
The consolidated financial statements for the fiscal years ended August 31, 2012 and 2011 include the accounts of Oncologix Tech, Inc. and its wholly owned subsidiaries, Oncologix Corporation (90% Owned), Interpretel Inc., Telplex International and International Environment Corporation collectively the Company. Oncologix Corporation is a Nevada corporation. Interpretel Inc., Telplex International and International Environment Corporation are inactive corporations. All significant intercompany accounts and transactions have been eliminated in consolidation.
USE OF ESTIMATES
The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reportable amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
REVENUE RECOGNITION
Revenue is recognized by the Company when all the following criteria are met: persuasive evidence of an arrangement exists; delivery has occurred; the seller’s price to the buyer is fixed and determinable; and collectability is reasonably assured. Currently the company does not have products to sell.
ONCOLOGIX TECH, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid instruments, with an initial maturity of three (3) months or less to be cash equivalents.
PROPERTY AND EQUIPMENT
Property and equipment is recorded at cost. Depreciation is provided for on the straight-line method over the estimated useful lives of the related assets as follows:
The cost of maintenance and repairs is charged to expense in the period incurred. Expenditures that increase the useful lives of assets are capitalized and depreciated over the remaining useful lives of the assets. When items are retired or disposed of, the cost and accumulated depreciation are removed from the accounts and any gain or loss is included in income.
LONG-LIVED ASSETS
ASC 360 - Property, Plant and Equipment addresses financial accounting and reporting for the impairment or disposal of long-lived assets. The Company periodically evaluates whether events and circumstances have occurred that may warrant revision of the estimated useful life of property and equipment or whether the remaining balance of property and equipment, or other long-lived assets, should be evaluated for possible impairment. Instances that may lead to an impairment include: (i) a significant decrease in the market price of a long-lived asset group; (ii) a significant adverse change in the extent or manner in which a long-lived asset or asset group is being used or in its physical condition; (iii) a significant adverse change in legal factors or in the business climate that could affect the value of a long-lived asset or asset group, including an adverse action or assessment by a regulatory agency; (iv) an accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of a long-lived asset or asset group; (v) a current-period operating or cash flow loss combined with a history of operating or cash flow losses or a projection or forecast that demonstrates continuing losses associated with the use of a long-lived asset or asset group; or (vi) a current expectation that, more likely than not, a long-lived asset or asset group will be sold or otherwise disposed of significantly before the end of its previously estimated useful life.
An estimate of the related undiscounted cash flows, excluding interest, over the remaining life of the property and equipment and long-lived assets is used in assessing recoverability. Impairment loss is measured by the amount which the carrying amount of the asset(s) exceeds the fair value of the asset(s). The Company primarily employs two methodologies for determining the fair value of a long-lived asset: (i) the amount at which the asset could be bought or sold in a current transaction between willing parties or (ii) the present value of estimated expected future cash flows grouped at the lowest level for which there are identifiable independent cash flows.
NONCONTROLLING INTEREST
ASC 810 - Consolidation addresses the accounting and reporting standards for ownership interest in subsidiaries held by parties other than the parent, the amount of consolidated net income attributable to the parent and to the non-controlling interest, changes in a parent’s ownership interest, and the valuation of retained non-controlling equity investments when a subsidiary is deconsolidated. During fiscal 2009, the Company issued a ten percent interest in its subsidiary, Oncologix Corporation, to IUTM as required in a technology agreement. The Company valued this interest at $212. Through August 31, 2012, the Company has allocated $3,687 losses to its non-controlling interest. The Company has adopted ASC 810 to account for this non-controlling interest.
ONCOLOGIX TECH, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
ADVERTISING COSTS
Advertising costs included with selling, general and administrative expenses in the accompanying consolidated statements of operations were nil for fiscal 2012 and fiscal 2011. Such costs are expensed when incurred.
INCOME TAXES
The Company adopted the provisions of FASB ASC 740 - Income Taxes provides detailed guidance for the financial statement recognition, measurement and disclosure of uncertain tax positions recognized in the financial statements. Income taxes are determined using the asset and liability method. This method gives consideration to the future tax consequences associated with temporary differences between the carrying amounts of assets and liabilities for financial statement purposes and the amounts used for income tax purposes.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The estimated fair values for financial instruments are determined at discrete points in time based on relevant market information. These estimates involve uncertainties and cannot be determined with precision. The carrying amounts of accounts payable, accrued expenses, and notes payable approximate fair value.
STOCK-BASED COMPENSATION
The Company has a stock-based compensation plan, which is described more fully in Note 5. The Company accounts for stock-based compensation in accordance with ASC 718. Under the fair value recognition provisions of this statement, share-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as expense over the vesting period. The Company estimates the fair value of stock options granted using the Black-Scholes option valuation model. The fair value of all awards is amortized on a straight-line basis over the vesting periods. The expected term of awards granted represent the period of time they are expected to be outstanding. The Company determines the expected term based on historical experience with similar awards, giving consideration to the contractual terms and vesting schedules. The Company estimates the expected volatility of its common stock at the date of grant based on the historical volatility of its common stock. The risk-free interest rate is based on the U.S. treasury security rate estimated for the expected life of the options at the date of grant. If actual results differ significantly from estimates, stock-based compensation could be impacted.
CONVERTIBLE DEBT
Interest on convertible debt is calculated using the simple interest method. The company recognizes a beneficial conversion feature to the extent the conversion price is less than the closing stock price on the issuance of the convertible notes. The Company also follows ASC 470-50 and ASC 470-20 regarding changes in the terms of the convertible notes and the induced conversion of its convertible debt.
RECLASSIFICATIONS
Certain prior year amounts have been reclassified to conform to the current year presentation.
ONCOLOGIX TECH, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NET LOSS PER COMMON SHARE
Basic earnings (loss) per share is calculated under the provisions of ASC 260 which provides for calculation of “basic” and “diluted” earnings per share. Basic earnings per share includes no dilution and is calculated by dividing income (loss) available to common shareholders by the weighted average number of common shares outstanding for the period. Diluted earnings (loss) per share is calculated based on the weighted average number of common shares outstanding during the period plus the dilutive effect of common stock purchase warrants and stock options using the treasury stock method and the dilutive effects of convertible notes payable and convertible preferred stock using the if-converted method. On Basic and diluted earnings per share for the two years ended August 31, 2012 and 2011 are as follows:
Due to the net losses during the fiscal 2012 and 2011, basic and diluted loss per share was the same, as the effect of potentially dilutive securities would have been anti-dilutive. Shares attributable to convertible notes, stock options, preferred stock and warrants not included the diluted loss per share calculation. Below lists all dilutive securities as of August 31, 2012 and 2011:
SEGMENT INFORMATION
ASC 280-10 defines operating segments as components of a company about which separate financial information is available that is evaluated regularly by the chief decision maker in deciding how to allocate resources and in assessing performance. The Company currently has one operating segments: medical device.
RECENT ACCOUNTING PRONOUNCEMENTS
We have evaluated all Accounting Standards Updates through the date the financial statements were issued and do not believe any will have a material impact.
ONCOLOGIX TECH, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3 - GOING CONCERN
The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. The Company has incurred losses from operations over the past several years and anticipates additional losses in fiscal 2012 and prior to achieving breakeven.
As of the date of this report, we will need approximately $200,000 to fund operations for the next twelve (12) months, without regard to repaying any outstanding accounts payable, convertible or non-convertible notes payable as well as funding the marketing for our joint venture with IUTM as described in Notes 5 and 9. This funding will allow us to maintain basic operations and to keep our public filings current. Our Company has never been profitable and we have had to rely on debt and equity financings to fund operations. Significant delays in development could affect the ability to obtain future debt and equity funding. These factors raise substantial doubt about the Company’s ability to continue as a going concern. After auditing our financial statements, our independent auditor issued a going concern opinion and our ability to continue is dependent on our ability to raise additional capital. Currently there is a substantial doubt in the Company’s ability to continue as a going concern.
NOTE 4 - PROPERTY AND EQUIPMENT
Property and equipment is composed of the following at August 31, 2012 and 2011:
NOTE 5 - NOTES PAYABLE
CONVERTIBLE NOTES PAYABLE:
Convertible notes payable consist of the following as of August 31, 2012 and August 31, 2011:
ONCOLOGIX TECH, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following is a summary of future minimum payments on convertible notes payable as of August 31, 2012:
During May and June 2007, we issued nine Convertible Promissory Notes in an aggregate principal amount of $700,000. All but one of these notes were converted in fiscal 2009. The remaining Convertible Promissory Note, in the principal amount of $125,000, was extended on January 28, 2010 initially to March 31, 2012 and then extended to September 30, 2013. In conjunction with the initial extension, the conversion price was reduced to $0.60. As of August 31, 2012, the Company has accrued interest in the amount of $42,576.
On December 29, 2009, the Company issued a 60-Day Convertible promissory note in the principal amount of $25,000 to a non-related accredited investor. This convertible note bore interest at 6% and was convertible into the Company’s common stock at $0.08 per share. The Company recognized a beneficial conversion feature in the amount of $12,500 in connection with the issuance of this note. This note has been extended several times and was due November 30, 2011. On October 5, 2011, the Company’s Board of Directors authorized the reduction of the per share conversion price of this note from $0.08 to $0.04. On October 6, 2011, the holder elected to convert the principal amount of the note plus accrued interest of $403 into 635,069 shares of the Company’s common stock. In accordance with the reduction of the conversion price, the Company recognized $25,402 in induced conversion expense
CONVERTIBLE RELATED PARTY NOTES PAYABLE:
On April 1, 2009, we issued to Ms. Lindstrom, our former Chief Executive Officer and current member of our subsidiary’s Board of Directors, a convertible promissory note in lieu of payment of $235,025 in accrued salary owed to Ms. Lindstrom. This note accrues interest at a rate of 6% per annum and was originally due on March 31, 2012. The note is convertible into shares of the Company’s common stock at a rate of $0.20 per common share. Ms. Lindstrom signed an abstention to convert this note until June 01, 2011. On March 16, 2012, Ms. Lindstrom agreed to extend the due date of the note to September 30, 2013. There was no beneficial conversion feature recognized upon the issuance of this note. As of August 31, 2012, the Company has accrued interest in the amount of $48,216.
On October 6, 2011, the Company issued a convertible promissory note in principal amount of $70,000 to its President, Anthony Silverman, who is also a member of the Board of Directors. This note was issued as payment in full of the principal and accrued interest of three outstanding promissory notes in that aggregate amount. The newly issued convertible promissory note bore interest at 6% per annum and was convertible into the Company's common stock at $0.04 per share. On the same date, Mr. Silverman elected to convert this note plus accrued interest of $1,128 into 1,778,193 shares of the Company’s Common Stock. The company recognized a $70,000 loss upon the conversion of this note as it was converted at below market value.
ONCOLOGIX TECH, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
On October 7, 2011, the Company issued a 90-day convertible promissory note in the principal amount of $10,000 to our President, Anthony Silverman, who is also a member of the Board of Directors. This note, which was issued for operating capital, bore interest at 6% per annum and was convertible into the Company’s common stock at $0.04 per share. The Company recognized a $10,000 beneficial conversion feature upon the issuance of this note. During the fiscal year ended August 31, 2012, $10,000 was expensed as interest and finance charges as a result of amortizing the discount from the beneficial conversion feature. This note was extended 90 days to April 4, 2012. On January 26, 2012 this note was paid off together with accrued interest of $182.
On December 26, 2011, the Company issued a 90-day convertible promissory note in the principal amount of $10,000 to our President, Anthony Silverman, who is also a member of the Board of Directors. This note, which was issued for operating capital, bore interest at 6% per annum and was convertible into the Company’s common stock at $0.04 per share. The Company did not recognized any beneficial conversion feature upon the issuance of this note. This note was extended 90 days to April 4, 2012. On January 26, 2012 this note was paid off together with accrued interest of $51.
On August 23, 2012, the Company issued a convertible promissory note in principal amount of $45,000 to its President, Anthony Silverman, who is also a member of the Board of Directors. This note was issued as payment in full of the principal and accrued interest of three outstanding promissory notes in that aggregate amount. The newly issued convertible promissory note bore interest at 6% per annum and was convertible into the Company's common stock at $0.04 per share. On August 24, 2012, Mr. Silverman elected to convert this note plus accrued interest of $524 into 2,276,182 shares of the Company’s Common Stock. The company recognized a $22,758 loss upon the conversion of this note.
RELATED PARTY NOTES PAYABLE:
On September 11, 2009, the Company issued a 90-Day promissory note to Anthony Silverman, its President and CEO, in the principal amount of $25,000. The note bore an interest rate of 6%. This note has been subsequently extended to July 6, 2011. On February 1, 2011, the Company paid accrued interest of $2,084 to Mr. Silverman. This note was paid off on October 6, 2011. This note was paid off with the issuance of a $70,000 convertible promissory note to Mr. Silverman.
On February 22, 2010, the Company issued a 60-Day promissory note to Anthony Silverman, its President and CEO, in the principal amount of $25,000. The note bore an interest rate of 6%. This note has been subsequently extended to July 17, 2011. On February 1, 2011, the Company paid accrued interest of $1,410 to Mr. Silverman. This note was paid off on October 6, 2011. This note was paid off with the issuance of a $70,000 convertible promissory note to Mr. Silverman.
On December 16, 2010, the Company issued a 30-Day promissory note to Anthony Silverman, its President and CEO, in the principal amount of $20,000. The note bore an interest rate of 6%. This note has been subsequently extended to July 14, 2011. On February 1, 2011, the Company paid accrued interest of $151 to Mr. Silverman. This note was paid off on October 6, 2011. This note was paid off with the issuance of a $70,000 convertible promissory note to Mr. Silverman.
ONCOLOGIX TECH, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
On January 20, 2011, the Company issued a 30-Day promissory note to Anthony Silverman, its President and CEO, in the principal amount of $20,000. The note bore an interest rate of 6%. This note was repaid on February 19, 2011 along with $26 in accrued interest.
On April 26, 2011, the Company issued a 30-Day promissory note to Anthony Silverman, its President and CEO, in the principal amount of $10,000. The note bore an interest rate of 6%. This note was repaid on July 11, 2011 along with $125 in accrued interest.
On May 26, 2011, the Company issued a 60-Day promissory note to Anthony Silverman, its President and CEO, in the principal amount of $10,000. The note bore an interest rate of 6%. This note was repaid on July 11, 2011 along with $76 in accrued interest.
On June 15, 2011, the Company issued a 30-Day promissory note to Anthony Silverman, its President and CEO, in the principal amount of $15,000. The note bore an interest rate of 6%. This note was repaid on July 11, 2011 along with accrued interest.
On March 26, 2012, the Company issued a 60-Day promissory note to Anthony Silverman, its President and CEO, in the principal amount of $10,000. The note bore an interest rate of 6%. This note was extended to August 23, 2012. This note was paid off with the issuance of a $45,000 convertible promissory note to Mr. Silverman.
On May 26, 2012, the Company issued a 90-Day promissory note to Anthony Silverman, its President and CEO, in the principal amount of $10,000. The note bore an interest rate of 6%. This note was paid off with the issuance of a $45,000 convertible promissory note to Mr. Silverman.
On June 30, 2012, the Company issued a 60-Day promissory note to Anthony Silverman, its President and CEO, in the principal amount of $5,000. The note bore an interest rate of 6%. This note was paid off with the issuance of a $45,000 convertible promissory note to Mr. Silverman.
On July 16, 2012, the Company issued a 60-Day promissory note to Anthony Silverman, its President and CEO, in the principal amount of $10,000. The note bore an interest rate of 6%. This note was paid off with the issuance of a $45,000 convertible promissory note to Mr. Silverman.
On August 13, 2012, the Company issued a 60-Day promissory note to Anthony Silverman, its President and CEO, in the principal amount of $10,000. The note bore an interest rate of 6%. This note was paid off with the issuance of a $45,000 convertible promissory note to Mr. Silverman.
OTHER NOTES PAYABLE:
On October 31, 2010, the Company entered into a note payable agreement to finance $8,078 of directors and officer’s insurance premiums. The note bore an interest rate of 9.99% per annum and is due in nine monthly installments of $935, including principal and interest, beginning on November 30, 2010. This note was paid in full on July 31, 2011.
On October 31, 2011, the Company entered into a note payable agreement to finance $8,078 of directors and officer’s insurance premiums. The note bore an interest rate of 8.99% per annum and is due in nine monthly installments of $932, including principal and interest, beginning on November 30, 2011. This note was paid in full on July 31, 2012.
ONCOLOGIX TECH, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 6 - STOCKHOLDERS' EQUITY
PREFERRED STOCK:
The Company is authorized to issue up to 10,000,000 shares of preferred stock, in one or more series, and to determine the price, rights, preferences and privileges of the shares of each such series without any further vote or action by the stockholders. The rights of the holders of common stock will be subject to, and may be adversely affected by, the rights of the holders of any shares of preferred stock that may be issued in the future.
In January 2003, our Board of Directors authorized up to 4,500,000 shares of Series A Convertible Preferred Stock. Each share of Series A Convertible Preferred stock has a par value of $0.001 and is convertible into one-half share of common stock in upon a cash payment by the holder to the Company of $0.40 per common share. The Series A Convertible Preferred Stock is entitled to receive, in preference to the common stock, of noncumulative dividends, if declared by the Board of Directors, and a claim on the Company's assets upon any liquidation of the Company senior to the common stock. These preferred shares are not entitled to voting rights. There are presently outstanding 129,062 shares of Series A Preferred Stock.
On March 30, 2003, the Company completed the private placement of Units pursuant to the terms of a Unit Purchase Agreement (the “Units”) with accredited investors. Each Unit consists of the following underlying securities: (i) three shares of the Company’s common stock; (ii) one share of Series A Convertible Preferred Stock, par value $.001 per share; and (iii) one three-year warrant to purchase one share of common stock at a per share price of $0.30. The warrants expired on March 31, 2006. Each share of Series A Convertible Preferred Stock is convertible into one half share of the Company’s common stock in exchange for $0.40 per common share ($.20 for each Series A Convertible Preferred share converted). The securities underlying the Units are not to be separately tradable or transferable apart from the Units until such time as determined by the Company’s Board of Directors. A total of 4,032,743 Units were issued. As of August 31, 2012 and August 31, 2011, there were 129,062 and 129,062 Units outstanding that had not been separated, respectively. These units are presented as their underlying securities on our balance sheet and consist of 64,531 shares of Series A Preferred Stock and 96,797 shares of common stock which is included in the issued and outstanding shares.
Below is a table detailing the outstanding Series A Convertible Preferred Stock shares outstanding during the last two fiscal years:
ONCOLOGIX TECH, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Our Board of Directors authorized the separation of the Units into their component parts in July 2004, February 2005, April 2008, March 2010 and July 2011. The table below describes the proceeds received for the conversion of preferred shares into common stock:
Date of Conversion Proceeds from Conversion Further Description and Remarks
July-August 2004 $487,523 During July and August 2004, holders of 2,437,614 Units contributed $487,523 to convert 2,437,614 shares of Series A. Convertible Preferred stock into 4,875,228 shares of common stock.
February 2005 $230,393 During February 2005, holders of 1,151,967 Units contributed $230,393 to convert 1,151,967 shares of Series A. Convertible Preferred stock into 2,303,934 shares of common stock.
April/June 2008 $29,460 During April and June 2008, holders of 147,300 Units contributed $29,460 to convert 147,300 shares of Series A. Convertible Preferred stock into 294,600 shares of common stock.
March/April 2010 $6,820 During March and April 2010, holders of 34,100 Units contributed $6,820 to convert 34,100 shares of Series A. Convertible Preferred stock into 68,200 shares of common stock.
July 2011 $0 During July 2011, holders of 132,700 Units elected to relinquish conversion of 132,700 shares of Convertible Preferred stock as part of splitting their Units.
SUBSCRIBED COMMON STOCK:
As of August 31, 2012 and 2011, there were no shares of subscribed stock issuable.
COMMON STOCK:
Under the terms of our acquisition of JDA, we issued 43,000,000 (pre-split) shares of our common stock to the previous owners of JDA. Of these shares, 29,843,160 were placed into escrow pending the achievement of certain development and operating goals. These escrowed shares were not included in the calculation of the purchase price of JDA and will be included in that calculation if and to the extent that the applicable contingencies are resolved and the shares are released from escrow. The development and operating goals that relate to the release of these shares, and the number of shares to be released at the time the goal is achieved are as follows: (i) 7,460,790 shares upon the completion of the “Development Phase”, as defined in the Merger Agreement between the Company and JDA (already released as stated below); (ii) 9,325,986 shares upon the completion of the “Pre-Clinical Testing Phase as defined in the merger agreement; and (iii) 13,056,382 shares upon the completion of the Clinical Approval Phase. On September 10, 2009, the remaining 22,382,368 shares in escrow were released back to the Company and subsequently retired. Below is a listing of recent stock sales:
ONCOLOGIX TECH, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Date of Sale Proceeds from Sale Further Description and Remarks
October 11, 2010 $25,000 On October 11, 2010, the Company sold 416,667 shares of common stock to a non-related accredited investor at $0.06 per share.
January 18, 2011 $50,000 On January 18, 2011, the Company sold 833,333 shares of common stock to a non-related accredited investor at $0.06 per share.
July 05, 2011 $100,000 On July 05, 2011, the Company sold 2,500,000 shares of common stock to a non-related accredited investor at $0.04 per share.
October 19, 2011 $25,000 On October 19, 2011, the Company sold 625,000 shares of common stock to a non-related accredited investor at $0.04 per share.
January 26, 2012 $40,000 On January 26, 2012, the Company sold 1,000,000 shares of common stock to a non-related accredited investor at $0.04 per share.
April 26, 2012 $10,000 On April 26, 2012, the Company sold 250,000 shares of common stock to a non-related accredited investor at $0.04 per share.
During the year ended August 31, 2012 and 2011, we recognized no financing expense related to the sales of discounted stock to non-related accredited investors.
NON-CONTROLLING INTEREST
On February 27, 2009, in connection with the Technology Agreement we entered into with Institut für Umwelttechnologien GmbH, a German Company (“IUT”) whereunder the parties have agreed that the Company’s marketing rights have been transferred to its subsidiary, Oncologix Corporation and have issued IUTM 10% of the equity ownership of that subsidiary. As of February 27, 2009, the value of the non-controlling interest was $212. It was determined at August 31, 2010 the value of the investment in IUTM was impaired. Accordingly, we recorded an impairment loss in the amount of $3,186 for the year ended August 31, 2010. As of August 31, 2012, $3,687 cumulative net loss was attributable to the non-controlling interest.
On September 23, 2010, the Company signed a Memorandum of Understanding with Institut für Umwelttechnologien GmbH and IUT Medical GMBH confirming certain understandings among the parties with respect to their future relationships and business activities as originally contemplated in their Technology Agreement of February 27, 2009, which was reaffirmed.
WARRANTS:
The Company had no outstanding warrants at August 31, 2012 or 2011.
ONCOLOGIX TECH, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
STOCK OPTIONS:
The Company is authorized to issue up to 4,600,000 shares of common stock under its 1997 Stock Incentive Plan. Shares may be issued as incentive stock options, non-statutory stock options, deferred shares or restricted shares. Options are granted at the fair market value of the common stock on the date of the grant and have terms of up to ten years.
The Company is authorized to issue up to 7,500,000 shares of common stock under its 2000 Stock Incentive Plan. Shares may be issued as incentive stock options, non-statutory stock options, deferred shares or restricted shares. Options are granted at the fair market value of the common stock on the date of the grant and have terms of up to ten years. The 2000 Stock Incentive Plan also provides for an annual grant of options to members of our Board of Directors. For fiscal years ended August 31, 2011, 2010, 2009 and 2008, our Board of Directors have elected to waive the grant of these annual options.
ASC 718 requires the estimation of forfeitures when recognizing compensation expense and that this estimate of forfeitures be adjusted over the requisite service period should actual forfeitures differ from such estimates. Changes in estimated forfeitures are recognized through a cumulative adjustment, which is recognized in the period of change and which impacts the amount of unamortized compensation expense to be recognized in future periods.
ASC 718 requires that modification of the terms or conditions of an equity award is to be treated as an exchange of the original award for a new award. This event is accounted for as if the entity repurchases the original instrument by issuing a new instrument of equal or greater value, incurring additional compensation cost for any incremental value. On January 7, 2011, the Company’s Board of Directors granted 53,750 options to current board members in exchange for the retirement of 268,750 stock options. The Company recorded $465 in stock compensation expense as a result of this transaction.
During the fiscal years ended August 31, 2012 and 2011, we granted nil and 53,750 options from the stock incentive plans described above, respectively. During the fiscal years ended August 31, 2012 and 2011, zero options were exercised, respectively; nil and 268,750 options were forfeited, respectively; and nil and 221,250 options were expired, respectively. During the fiscal years ended August 31, 2012 and 2011, $0 and $465 was expensed as stock based compensation, respectively. Additional information relative to our employee options outstanding at August 31, 2012 is summarized as follows:
The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the difference between our closing stock price on the last trading day of the fourth quarter of fiscal 2012 and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on August 31, 2012.
ONCOLOGIX TECH, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Expected volatility is based primarily on historical volatility. Historical volatility is computed using weekly average pricing observations for an applicable historic period. We believe this method produces an estimate that is representative of our expectations of the future volatility over the expected term of our options. We currently have no reason to believe future volatility over the expected life of these options is likely to differ materially from historical volatility. The weighted-average expected life is based upon share option exercises, pre and post vesting terminations and share option term expirations. The risk-free interest rate is based on the U.S. treasury security rate estimated for the expected life of the options at the date of grant.
We have 6,362,418 and 4,525,000 shares of common stock available for future issuance under our 2000 Stock Incentive Plan and 1997 Stock Incentive Plan, respectively, as of August 31, 2012. Under the 2000 Stock Incentive Plan and 1997 Stock Incentive Plan, the price of the granted common stock options are equal to the fair market value of such shares on the date of grant. Both of these plans have been approved by our shareholders.
ASC 718 requires that modification of the terms or conditions of an equity award is to be treated as an exchange of the original award for a new award. This event is accounted for as if the entity repurchases the original instrument by issuing a new instrument of equal or greater value, incurring additional compensation cost for any incremental value. During fiscal 2011 we granted 53,750 options to current board members in exchange for the retirement of 268,750 stock options. Due to this stock option modification, the Company recorded $465 in stock based compensation expense. During fiscal 2012, we did not grant any options to employees or members’ of our Board of Directors.
NOTE 7 - COMMITMENTS AND CONTINGENCIES
LEASES:
In an effort to streamline costs, we do not have a main corporate office. Our Chief Executive Officer works out of him home in Scottsdale, Arizona and our Chief Financial Officer maintains all the corporate records out of his home in Grand Rapids, Michigan. Currently we have no monthly lease requirements. We had no rent expense under operating leases in fiscal 2012 or 2011. There are no future minimum lease payments on these operating leases as of August 31, 2012.
ONCOLOGIX TECH, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
EMPLOYMENT AGREEMENTS:
Currently there are no employment agreements as of August 31, 2012.
CONSULTING CONTRACT
On September 1, 2011, Michael Kramarz, the Company’s Chief Financial Officer, signed an additional twelve month consulting agreement. Mr. Kramarz is to perform all his regular duties he had previously performed as Chief Financial Officer including the preparation of the Company’s financial statements, SEC Filings, maintenance of corporate records, etc. Mr. Kramarz is to be compensated $70 per hour worked and will turn in weekly time sheets for approval. Mr. Kramarz had previously had consulting contracts for the period of January 2008 through August 2011. During the fiscal year ended August 31, 2012 and 2011, we incurred an expense of $72,870 and $82,600 respectively, under these agreements.
NOTE 8 - RELATED PARTY TRANSACTIONS AND CONTINGENCIES:
FINANCING WITH RELATED PARTIES:
During fiscal 2012 and 2011, the Company entered into financing agreements with related parties of the Company. Please see Notes 5 and 14 for further descriptions of these transactions.
NOTE 9 - JOINT VENTURE
Institut für Umwelttechnologien GmbH (IUT)
In February 2009, we entered into a Technology Agreement with Institut für Umwelttechnologien GmbH, a German Company (“IUT”) whereunder the parties have agreed that:
(a)The Company has granted an exclusive license to a new IUT subsidiary, called “IUTM”, to develop and manufacture products based on the Company’s proprietary information. This proprietary information is not based on the technology that had been subject to the Master License Agreement with the University of Maryland - Baltimore. The Company has also transferred to IUTM a number of items of laboratory equipment and inventory useful in connection with the licensed information.
(b)The Company retains rights to market products based on such information as well as first consideration for marketing rights for other possible IUTM products.
(c)In consideration of the license, the Company has received a 10% equity interest in IUTM, which is organized as a private German limited liability company and IUT has assumed approximately $82,000 of the Company’s indebtedness.
(d)The Company’s marketing rights have been transferred to its subsidiary, Oncologix Corporation and have issued IUTM 10% of the equity ownership of that subsidiary.
We have been advised that IUTM is continuing the development of a brachytherapy device generally as described above but based on proprietary technology not developed by the University of Maryland. During recent discussions with IUTM management, the prior understandings were reaffirmed. It is now our expectation that we will receive information on at least two potential product lines under consideration and/or development by IUTM. Upon receipt we plan to determine the extent to which we will be able to market them and to finance a marketing organization. While our Management is optimistic as to the outcome of those discussions and future success in financing, it is not possible to predict the probabilities of success with any degree of certainty. It was determined at August 31, 2010, the value of the investment in IUTM was impaired. Accordingly, we recorded an impairment loss in the amount of $3,186.
ONCOLOGIX TECH, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
On September 23, 2010, the Company signed a Memorandum of Understanding with Institut für Umwelttechnologien GmbH and IUT Medical GMBH confirming certain understandings among the parties with respect to their future relationships and business activities as originally contemplated in their Technology Agreement of February 27, 2009, which was reaffirmed.
NOTE 10 - RETIREMENT PLAN
Currently, the Company does not have a retirement plan in place.
NOTE 11 - INCOME TAXES
As of August 31, 2012, the Company has federal net operating loss carryforwards totaling approximately $29,000,000. Currently there are no state net operating loss carryforwards. The federal net operating loss carryforwards expire in various amounts beginning in 2004 and ending in 2032. The Company does not have any current state net operating loss carryforwards. Certain of the Company's net operating loss carryforwards may be subject to annual restrictions limiting their utilization in accordance with Internal Revenue Code Section 382, which include limitations based on changes in control. Due to our history of losses from operations, we have provided a valuation allowance for our net operating loss carryforwards and deferred tax assets, net of certain deferred tax liabilities.
ASC 740 requires a company to determine whether it is more likely than not that a tax position will be sustained upon examination based upon the technical merits of the position. If the more-likely-than-not threshold is met, a company must measure the tax position to determine the amount to recognize in the financial statements. As a result of the implementation of ASC 740 - Income Taxes, the Company performed a review of its material tax positions. At the adoption date of ASC 740, the Company had no unrecognized tax benefit which would affect the effective tax rate. As of August 31, 2012 and 2011, the Company had no accrued interest and penalties related to uncertain tax positions. The Company is primarily subject to U.S. and Michigan income taxes. The tax years 2009 to current remain open to examination by U.S. federal and state tax authorities.
ONCOLOGIX TECH, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A reconciliation of the beginning and ending accrual for uncertain tax positions is as follows:
The income tax benefit for the years ended August 31, 2012 and 2011 is comprised of the following amounts:
The Company's tax benefit differs from the benefit calculated using the federal statutory income tax rate for the following reasons:
The components of the net deferred tax assets (liabilities) are as follows:
ASC 740 - Income Taxes, requires a valuation allowance to reduce the deferred tax assets if, based on the weight of the evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. After consideration of all the evidence, both positive and negative, management has determined that an $9,875,000 valuation allowance as of August 31, 2012 is necessary to reduce the net deferred tax assets to the amount that will more likely than not be realized. The decrease in the valuation allowance for the current year is $612,000.
ONCOLOGIX TECH, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 12 - RECENT ACCOUNTING PRONOUNCEMENTS
We have evaluated all Accounting Standards Updates through the date the financial statements were issued and do not believe any will have a material impact on our financial condition or results of operations.
NOTE 13 - STATEMENTS OF CASH FLOWS
During fiscal 2012 and 2011, the Company recognized investing and financing activities that affected the balance sheet, but did not result in cash receipts or payments.
For the fiscal year ended August 31, 2012, these supplemental non-cash investing and financing activities are summarized as follows:
ONCOLOGIX TECH, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For fiscal 2011, these non-cash investing and financing activities are summarized as follows:
ONCOLOGIX TECH, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the period since reentering the development stage on June 1, 2011 to August 31, 2012, these supplemental non-cash investing and financing activities are summarized as follows:
ONCOLOGIX TECH, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 14 - SUBSEQUENT EVENTS
On September 1, 2012, Michael Kramarz, the Company’s Chief Financial Officer, signed an additional twelve month consulting agreement. Mr. Kramarz is to perform all his regular duties he had previously performed as Chief Financial Officer including the preparation of the Company’s financial statements, SEC Filings, maintenance of corporate records, etc. Mr. Kramarz is to be compensated $70 per hour worked and will turn in weekly time sheets for approval. Mr. Kramarz had previously had consulting contracts for the period of January 2008 through August 2012.
On September 14, 2012, the Company issued a 90-Day promissory note to Anthony Silverman, its President and CEO, in the principal amount of $10,000. The note bears interest at 6% per annum. This note was further extended to February 11, 2013.
On October 11, 2012, the Company issued a 30-Day promissory note to Anthony Silverman, its President and CEO, in the principal amount of $5,000. The note bore an interest rate of 6%. This note was paid off, together with accrued interest of $5 on October 17, 2012.
On October 16, 2012, the Company sold 1,000,000 shares of common stock to a non-related accredited investor at $0.02 per share. This sale generated gross proceeds to the Company of $20,000.
On October 29, 2012, the Company entered into a note payable agreement to finance $10,404 of directors and officer’s insurance premiums. The note bears an interest rate of 9.27% per annum and is due in ten monthly installments of $1,085, including principal and interest, beginning on November 30, 2012.
On November 23, 2012 the Company issued a 90-Day promissory note to Anthony Silverman, its President and CEO, in the principal amount of $5,000. The note bears interest at 6% per annum.
Item 9.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None
Item 9A.
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, the Company conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) and Rule 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended (Exchange Act), as of August 31, 2012. Based on this evaluation, our principal executive officer and principal financial officer have concluded that the Company’s disclosure controls and procedures were effective to ensure that information required to be disclosed by the Company in the reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and that the Company’s disclosure and controls are designed to ensure that information required to be disclosed by the Company in the reports that we file or submit under the Exchange Act is accumulated and communicated to management, including our principal executive officer and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure, except for the lack of segregation of accounting duties as a result of limited personnel resources.
Lack of Segregation of Duties
Management is aware that there is a lack of segregation of accounting duties as a result of limited personnel. However, at this time management has decided that considering the abilities of the personnel now involved and the control procedures in place, the risks associated with such lack of segregation are low and the potential benefits of adding employees to clearly segregate duties do not justify the substantial expenses associated with such increases. Management will periodically reevaluate this situation.
Lack of Functioning Audit Committee
We have a lack of a functioning Audit Committee as we only have one independent director is not considered a Financial Expert within the meaning of Section 407 of the Sarbanes-Oxley Act. Currently, our Board of Directors acts as the Audit Committee.
Management’s Report on Internal Control over Financial Reporting
Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting. As defined in Rules 13a-15(f) under the Securities Exchange Act of 1934, internal control over financial reporting is a process designed by, or under the supervision of, the Company’s principal executive, principal operating and principal financial officers, or persons performing similar functions, and effected by the 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 accounting principles generally accepted in the United States of America.
The Company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records, that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the Company’s assets; (2) 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 the Company are being made only in accordance with authorizations of the Company’s management and directors; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the 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. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Oncologix’s CEO and CFO conducted an evaluation of the effectiveness of our internal control over financial reporting based on the criteria for effective internal control over financial reporting established in “Internal Control - Integrated Framework,” issued by the Committee of Sponsoring Organizations (COSO) of the Treadway Commission. Based upon this assessment, we concluded that Oncologix did not maintain effective internal control over financial reporting as of August 31, 2012. The material weaknesses are as follows:
· Oncologix lacks the necessary corporate accounting resources to maintain adequate segregation of duties. We currently rely heavily on our only employee, our principal financial officer, for almost every key financial duty and he has access to all of the Company’s financial information. Such a lack of segregation of duties is typical in a company with limited resources. Although the Company’s CEO and Board of Directors review the financial statements and would most likely discover any misappropriation of funds, this cannot be assured by the existing system.
· In addition, we have a lack of a functioning Audit Committee as we only have one independent director is not considered a Financial Expert within the meaning of Section 407 of the Sarbanes-Oxley Act. Currently, our Board of Directors acts as the Audit Committee.
This annual report does not include an attestation report of the Company’s independent registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to temporary rules of the SEC that permit the Company to provide only management’s report in this annual report.
Implemented or Planned Remedial Actions in response to the Material Weaknesses
In response to the material weaknesses discussed above, we have implemented or plan to implement the following measures:
Our management believes the weaknesses identified above have not had a material effect on our financial results. Our present management will continue to address our need for additional financial personnel and other independent members for our Board of Directors and identify an “expert” for the Audit Committee to advise other members as to accounting and reporting procedures.
We have written internal control policies in place to address the inadequate segregation of duties including a complete review of all cash receipts and cash disbursements by our principal executive officer on a monthly basis.
We will continue to strive to correct the above noted weaknesses in internal control once we have adequate funds to do so. When funds become are available, we will be able to hire additional financial personnel. Appointing additional independent members to our Board and finding of a financial expert to serve on our Audit Committee will improve the overall performance of Company’s controls over our financial reporting. With the addition of other Board Members and staff, the segregation of duties issue will be addressed and will no longer be a concern to management. We will continue to update our written policy manual outlining our control procedures.
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 risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal controls over financial reporting that occurred during the three months ended August 31, 2012 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.
The Company’s management, including the chief executive officer and principal financial officer, do not expect that its disclosure controls or internal controls will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. In addition, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake.
Item 9B.
Item 9B. Other Information
None
PART III
Item 10.
Item 10. Directors, Executive Officers and Corporate Governance
The following table sets forth our directors, and executive officers, their ages and all offices and positions held. Directors are elected and serve thereafter until their successors are duly elected by the stockholders. Officers and other employees serve at the will of the Board of Directors. The information is presented as of November 1, 2012:
ANTHONY SILVERMAN, who resigned as a member of our Board of Directors on October 12, 2007, was appointed President and CEO on April 3, 2009 and is also Chairman of the board. Mr. Silverman also manages his personal investments. Mr. Silverman has been a shareholder of BestNet since April 2002. Mr. Silverman was Founder, Chairman and CEO of Paradise Valley Securities from 1987 to 1999. For most of his 40-year career in the securities business, Mr. Silverman concentrated in transactions for the financing of micro-cap and small-cap companies. Mr. Silverman has led financings aggregating over $500 million for close to 100 companies, including diverse industries such as airlines, food products, telecommunications, retail, media and life sciences.
MICHAEL A. KRAMARZ has served as Chief Financial Officer of the Company since July 15, 2004. Mr. Kramarz was first employed by the Company in September 2002, as its Controller. Mr. Kramarz is responsible for all financial statement, accounting, SEC compliance, payroll and tax functions. From 1995 to 2002, Mr. Kramarz was employed as Accounting Manager for Assurant Group, where he was responsible for the accounting and payroll functions for two inbound call centers. In addition, Mr. Kramarz was responsible for quarterly consolidations into the parent company. From 1992 to 1995, Mr. Kramarz was a staff accountant at VandenToorn & Associates CPA firm where his was responsible for compilations and reviews of financial statements, as well as tax return preparation. Mr. Kramarz holds a Certified Management Accountant Designation (CMA) and a Certified Public Accountant Designation (CPA). Mr. Kramarz holds a Bachelor of Science and Business Administration in Accounting from Aquinas College and a Masters in the Science of Taxation from Grand Valley State University.
BARRY GRIFFITH has been a director of the company since December of 2004. Mr. Griffith brings 20 years of early stage and upstart medical device company experience to Oncologix. Mr. Griffith has been involved in the introduction of novel medical devices in the Orthopedic, Vascular, Neurological and Cancer markets for companies such as Mitek, Schneider, Novoste and Medtronic. His present position is founder and principal of The Bench which is and executive search firm within the medical device industry based out of Newport Beach Ca. Prior to that, he was Director of Sales with Cardiovascular Systems, Inc., Director of Sales for Calypso Medical Technologies and held the Western Area Director roles with Novoste and Isoray.
JUDY LINDSTROM was appointed to our Board of Directors on June 25, 2007. On January 4, 2008 Ms. .Lindstrom was elected Chairman of the Board. On February 18, 2008, Ms. Lindstrom was appointed President and Chief Executive Officer. On April 1, 2009, Ms. Lindstrom resigned her positions but still serves as President and Director on the Board of our Subsidiary, Oncologix Corporation. Prior to Oncologix, Ms. Lindstrom was Chief Operating Officer of the U.S. division of Portland Orthopedics. A privately-held company headquartered in Sydney, Australia. She has also been a director and business consultant for Genis, a private company in Iceland, developing bone regeneration technology. Ms Lindstrom was Executive Vice President, Global Sales and Marketing, for Wright Medical Technology, Inc. She was President and Chief Executive Officer of Neovision. Ms Lindstrom was President for MicroAire Surgical Instruments, Inc. Ms. Lindstrom also served as General Manager for two operating divisions of Baxter International, V. Mueller Endoscopy and Edward Orthopedics. She was the first woman promoted to General Manager for a Baxter operating unit. Ms. Lindstrom served on the board of directors of Everest Medical Corporation (a NASDAQ listed company prior to its acquisition in April, 2000), Novoste (a NASDAQ listed company) and served on the board of AdvaMed (formerly the Health Industry Manufacturers Association).
STEVEN KURTZMAN, MD. was elected to our Board of Directors on June 25, 2007. On April 1, 2009, Dr. Kurtzman resigned his position but still serves as Director on the Board of our Subsidiary, Oncologix Corporation. He has been an advisor to our Company and has been the Medical Director of IsoRay Medical, Inc. a publicly traded company since January 2006. IsoRay manufactures and markets radiation devices for brachytherapy primarily for the treatment of prostate cancer. He has, since 1998, been practicing medicine in the San Francisco, California, Bay area specializing in radiation oncology. He is currently the Director of Brachytherapy for Western Radiation Oncology, P.C. He is considered an expert in the management of prostate cancer and has lectured on and taught prostate brachytherapy nationally. He holds a BA from Cornell University and is a graduate of Case Western Reserve University School of Medicine. He completed his residency training in radiation oncology at the Hospital of the University of Pennsylvania.
Compliance with Section 16(a) of the Exchange Act
Directors, executive officers and holders of more than 10% of our outstanding common stock are required to comply with Section 16(a) of the Securities Exchange Act of 1934, which requires generally that such persons file reports regarding ownership of transactions in securities of the Company on Forms 3, 4, and 5. Based solely on its review of such forms received by it, or written representations from certain reporting persons, the Company believes that all Section 16(a) filing requirements applicable to its officers and directors were complied with during the fiscal year ended August 31, 2012.
Code of Ethics
Our Board of Directors has adopted a code of ethics that applies to our principal executive officer, principal financial officer and to other persons performing similar functions. The code of ethics is designed to deter wrongdoing and to promote honest and ethical conduct, full, fair, accurate, timely and understandable disclosure, compliance with applicable laws, rules and regulations, prompt internal reporting of violations of the code and accountability for adherence to the code. We will provide a copy of our code of ethics, without charge, to any person upon receipt of written request for such delivered to our corporate headquarters. All such requests should be send to Oncologix Tech, Inc., P.O. Box 8832, Grand Rapids, MI 49518-8832.
Item 11.
Item 11. Executive Compensation
The following table summarizes all compensation paid for services rendered to Oncologix for the fiscal years ended August 31, 2012 and 2011 by our Principal Executive Officer and our two most highly compensated executive officers other than our principal executive officer. None of the Company's other employees received compensation in excess of $100,000 during the last completed fiscal year.
(1)Mr. Kramarz was hired by Oncologix as our Controller on September 16, 2002. Mr. Kramarz was appointed Chief Financial Officer on July 15, 2004. Mr. Kramarz salary was set at $76,000 annually on June 25, 2007. Effective January 1, 2008, Mr. Kramarz has been serving as Chief Financial Officer and is being compensated on a consulting basis.
EMPLOYMENT AGREEMENTS
On September 1, 2011, Michael Kramarz, the Company’s Chief Financial Officer, signed an additional twelve month consulting agreement. Mr. Kramarz is to perform all his regular duties he had previously performed as Chief Financial Officer including the preparation of the Company’s financial statements, SEC Filings, maintenance of corporate records, etc. Mr. Kramarz is to be compensated $70 per hour worked and will turn in weekly time sheets for approval. Mr. Kramarz had previously had consulting contracts for the period of January 2008 through August 2011. During the fiscal year ended August 31, 2012 and 2011, we incurred an expense of $72,870 and $82,600 respectively, under these agreements. An additional 12 month consulting agreement, with the same terms, was signed on September 1, 2012.
Options Grants
No options were granted to any members of our Board of Directors during fiscal 2012. During fiscal 2011 we granted 53,750 options to current board members in exchange for the retirement of 268,750 stock options.
Option Exercise
There were no other options exercised by the Named Executive Officers and the Company did not amend or adjust the exercise price of any stock options during fiscal 2012 or 2011.
All directors are reimbursed for their reasonable out-of-pocket expenses incurred in connection with attendance of board meetings and advising and consulting with the officers and management from time to time. In addition, each director receives options to purchase 20,000 shares of common stock upon election to the board and annual grants of 10,000 options for each year of service thereafter. The board of directors elected to waive the annual options due for fiscal years 2011, 2010 and 2009. The options vest one year from the date of the grant and terminate upon the earlier of 10 years from the date of grant or six months after the director ceases to be a member of the Board.
Since suspension of its research operations on December 31, 2007, no compensation has been paid to any members of the Company’s Board of Directors.
Item 12.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The following table sets forth as of November 1, 2012, certain information with regard to the beneficial ownership of our common stock held by (i) each shareholder known by us to beneficially own 5% or more of our outstanding common stock, (ii) each director individually, (iii) the named executive officers and (iv) all of our officers and directors as a group:
Less than 1%
(1)Unless otherwise noted, the address of each holder is P.O. Box 8832, Grand Rapids, MI 49518-8832.
(2)A person is deemed to be the beneficial owner of securities that can be acquired within 60 days from November 1, 2012 through the exercise of any option, warrant or other right. Shares of Common Stock subject to options, warrants or rights which are currently exercisable or exercisable within 60 days are deemed outstanding solely for computing the percentage of the person holding such options, warrants or rights, but are not deemed outstanding for computing the percentage of any other person.
(3)The amounts and percentages in the table are based upon 58,563,258 shares of Common Stock outstanding as of November 1, 2012
(4)Includes 3,500 shares subject to vested options, direct ownership of 6,218,895 shares
(5)Includes 12,750 shares subject to vested options.
(6)Includes 5,000 shares subject to vested options.
(7)Includes 25,000 shares subject to vested options, direct ownership of 200,000 shares of stock underlying units held.
(8)Includes 50,000 shares subject to vested options.
Item 13.
Item 13. Certain Relationships and Related Transactions, and Director Independence
On April 1, 2009, we issued to Ms. Lindstrom, our former Chief Executive Officer and current member of our subsidiary’s Board of Directors, a convertible promissory note in lieu of payment of $235,025 in accrued salary owed to Ms. Lindstrom. This note accrues interest at a rate of 6% per annum and was originally due on March 31, 2012. The note is convertible into shares of the Company’s common stock at a rate of $0.20 per common share. Ms. Lindstrom signed an abstention to convert this note until June 01, 2011. On March 16, 2012, Ms. Lindstrom agreed to extend the due date of the note to September 30, 2013. There was no beneficial conversion feature recognized upon the issuance of this note. As of August 31, 2012, the Company has accrued interest in the amount of $48,216.
On September 11, 2009, the Company issued a 90-Day promissory note to Anthony Silverman, its President and CEO, in the principal amount of $25,000. The note bore an interest rate of 6%. This note has been subsequently extended to July 6, 2011. On February 1, 2011, the Company paid accrued interest of $2,084 to Mr. Silverman. This note was paid off on October 6, 2011. This note was paid off with the issuance of a $70,000 convertible promissory note to Mr. Silverman.
On February 22, 2010, the Company issued a 60-Day promissory note to Anthony Silverman, its President and CEO, in the principal amount of $25,000. The note bore an interest rate of 6%. This note has been subsequently extended to July 17, 2011. On February 1, 2011, the Company paid accrued interest of $1,410 to Mr. Silverman. This note was paid off on October 6, 2011. This note was paid off with the issuance of a $70,000 convertible promissory note to Mr. Silverman.
On December 16, 2010, the Company issued a 30-Day promissory note to Anthony Silverman, its President and CEO, in the principal amount of $20,000. The note bore an interest rate of 6%. This note has been subsequently extended to July 14, 2011. On February 1, 2011, the Company paid accrued interest of $151 to Mr. Silverman. This note was paid off on October 6, 2011. This note was paid off with the issuance of a $70,000 convertible promissory note to Mr. Silverman.
On January 20, 2011, the Company issued a 30-Day promissory note to Anthony Silverman, its President and CEO, in the principal amount of $20,000. The note bore an interest rate of 6%. This note was repaid on February 19, 2011 along with $26 in accrued interest.
On April 26, 2011, the Company issued a 30-Day promissory note to Anthony Silverman, its President and CEO, in the principal amount of $10,000. The note bore an interest rate of 6%. This note was repaid on July 11, 2011 along with $125 in accrued interest.
On May 26, 2011, the Company issued a 60-Day promissory note to Anthony Silverman, its President and CEO, in the principal amount of $10,000. The note bore an interest rate of 6%. This note was repaid on July 11, 2011 along with $76 in accrued interest.
On June 15, 2011, the Company issued a 30-Day promissory note to Anthony Silverman, its President and CEO, in the principal amount of $15,000. The note bore an interest rate of 6%. This note was repaid on July 11, 2011 along with accrued interest.
On October 6, 2011, the Company issued a convertible promissory note in principal amount of $70,000 to its President, Anthony Silverman, who is also a member of the Board of Directors. This note was issued as payment in full of the principal and accrued interest of three outstanding promissory notes in that aggregate amount. The newly issued convertible promissory note bore interest at 6% per annum and was convertible into the Company's common stock at $0.04 per share. On the same date, Mr. Silverman elected to convert this note plus accrued interest of $1,128 into 1,778,193 shares of the Company’s Common Stock. The company recognized a $70,000 loss upon the conversion of this note.
On October 7, 2011, the Company issued a 90-day convertible promissory note in the principal amount of $10,000 to our President, Anthony Silverman, who is also a member of the Board of Directors. This note, which was issued for operating capital, bore interest at 6% per annum and was convertible into the Company’s common stock at $0.04 per share. The Company recognized a $10,000 beneficial conversion feature upon the issuance of this note. During the fiscal year ended August 31, 2012, $10,000 was expensed as interest and finance charges as a result of amortizing the discount from the beneficial conversion feature. This note was extended 90 days to April 4, 2012. On January 26, 2012 this note was paid off together with accrued interest of $182.
On December 26, 2011, the Company issued a 90-day convertible promissory note in the principal amount of $10,000 to our President, Anthony Silverman, who is also a member of the Board of Directors. This note, which was issued for operating capital, bore interest at 6% per annum and was convertible into the Company’s common stock at $0.04 per share. The Company did not recognized any beneficial conversion feature upon the issuance of this note. This note was extended 90 days to April 4, 2012. On January 26, 2012 this note was paid off together with accrued interest of $51.
On March 26, 2012, the Company issued a 60-Day promissory note to Anthony Silverman, its President and CEO, in the principal amount of $10,000. The note bears an interest rate of 6%. This note was extended to August 23, 2012. This note was paid off with the issuance of a $45,000 convertible promissory note to Mr. Silverman.
On May 26, 2012, the Company issued a 90-Day promissory note to Anthony Silverman, its President and CEO, in the principal amount of $10,000. The note bears an interest rate of 6%. This note was paid off with the issuance of a $45,000 convertible promissory note to Mr. Silverman.
On June 30, 2012, the Company issued a 60-Day promissory note to Anthony Silverman, its President and CEO, in the principal amount of $5,000. The note bore interest at a rate of 6%. This note was paid off with the issuance of a $45,000 convertible promissory note to Mr. Silverman.
On July 16, 2012, the Company issued a 60-Day promissory note to Anthony Silverman, its President and CEO, in the principal amount of $10,000. The note bore interest at a rate of 6%. This note was paid off with the issuance of a $45,000 convertible promissory note to Mr. Silverman.
On August 13, 2012, the Company issued a 60-Day promissory note to Anthony Silverman, its President and CEO, in the principal amount of $10,000. The note bore interest at a rate of 6%. This note was paid off with the issuance of a $45,000 convertible promissory note to Mr. Silverman.
On August 23, 2012, the Company issued a convertible promissory note in principal amount of $45,000 to its President, Anthony Silverman, who is also a member of the Board of Directors. This note was issued as payment in full of the principal and accrued interest of three outstanding promissory notes in that aggregate amount. The newly issued convertible promissory note bore interest at 6% per annum and was convertible into the Company's common stock at $0.04 per share. On August 24, 2012, Mr. Silverman elected to convert this note plus accrued interest of $524 into 2,276,182 shares of the Company’s Common Stock. The company recognized a $22,758 loss upon the conversion of this note.
Director Independence
The board has determined that one of the current directors would qualify as independent director as that term is defined in the listing standards of the NYSE Amex. Such independence definition includes a series of objective tests, including that the director is not an employee of the company and has not engaged in various types of business dealings with the company.
Item 14.
Item 14. Principal Accountant Fees and Services
The following table sets forth approximate fees billed to us by our auditors during the fiscal years ended August 31, 2012 and 2011 for: (i) services rendered for the audit of our annual financial statements and the review of our quarterly financial statements; (ii) services by our auditor that are reasonably related to the performance of the audit or review of our financial statements and that are not reported as Audit Fees; (iii) services rendered in connection with tax compliance, tax advice and tax planning; and (iv) all other fees for services rendered.
PART IV
Item 15.
Item 15. Exhibits, Financial Statement Schedules
(a)(1) The financial statements listed in the index set forth in Item 7 of this Form 10-K is filed as part of this report.
(a)(2) Exhibits
Number Description of Filing Method
2.1 Agreement of Merger and Plan of Reorganization between BestNet Communications Corp, Oncologix Corporation and JDA Medical Technologies, Inc. (9)
3.1 Articles of Incorporation, as originally filed with the Nevada Secretary of State on February 19, 1998, and as amended to date (1)
3.3 Certificate of Amendment to Articles of Incorporation, as originally filed with the Nevada Secretary of State. (6)
3.4 Amended Certificate of Designations, Rights, Preferences and Limitations of Series A Convertible Preferred Stock, as originally filed with the Nevada Secretary of State on November 19, 2003. (6)
3.5 Amended Certificate of Designations, Rights, Preferences and Limitations of Series B Convertible Preferred Stock, as originally filed with the Nevada Secretary of State on November 19, 2003. (6)
3.6 Amended Certificate of Designations, Rights, Preferences and Limitations of Series C Convertible Preferred Stock, as originally filed with the Nevada Secretary of State on November 19, 2003. (6)
3.7 Amended and Restated Bylaws of BestNet Communications Corp. (8)
3.8 Certificate of Amendment of Articles of Incorporation, as originally filed with the Nevada Secretary of State. (11)
2000 Incentive Stock Plan (2)
4.1 Form of Unit Purchase Agreement (7)
10.1 Securities Purchase Agreement between Wavetech and the investor and the Placement Agent (3)
10.2 Registration Rights Agreement between Wavetech, the Investor and the Placement Agent (3)
10.3 Registration Right Agreement (3)
10.4 Securities Purchase Agreement (3)
10.5 Product Customization Agreement (4)
10.6 Purchase Agreement by and among Softalk, Inc., Interpretel (Canada) Inc. and Wavetech International, Inc. dated October 25, 1999 (5)
10.7 Amendment No. 1 to Amended and Restated License Agreement (5)
10.8 Amended and Restated License Agreement (5)
10.9 Share Exchange Agreement by and among Wavetech International, Inc., Interpretel (Canada) Inc. and Softalk, Inc. dated November 13, 1999 (5)
10.10 Minutes of Settlement between BestNet Communications Corp. and Softalk, Inc. (8)
10.11 Lease Agreement Dated November 1, 2005, by and between Noto’s Properties LLC. and BestNet (10)
10.12 Lease Agreement Dated July 25, 2006, by and between R & J Ventures LLC. and Oncologix Corporation (10)
10.13 Lease Agreement Dated July 12, 2006, by and between Office Suites Plus and Oncologix Corporation (10)
10.14 Form of Note and Warrant Purchase Agreement between BestNet and Mountainview Opportunistic Growth Fund LP (10)
10.15 Form of Note Purchase Agreement Issued July 7, 2006 (10)
10.16 Franco Consulting Agreement (9)
10.17 Kennedy Employment Agreement (9)
10.18 Green Employment Agreement (9)
10.19 Lowe Employment Agreement (9)
10.20 License to Fountain Pharmaceuticals, Inc. (11)
14.1 Oncologix Tech, Inc. Code of Ethics (6)
Subsidiaries of the Registrant *
32.1 Section 906 Certification of Andrew M. Green *
32.2 Section 906 Certification of Michael A. Kramarz *
31.1 Certification of Chief Executive Officer *
31.2 Certification of Chief Financial Officer *
Consent of Seale and Beers, CPAs *
*Filed herewith
(1)Incorporated by reference to the like numbered exhibit to Form 10-QSB for the quarter ended February 28, 1998.
(2)Incorporated by reference to the like numbered exhibit to Form S-8 as filed on May 29, 2001.
(3)Incorporated by reference to exhibit 4.2 to Form 8-K filed on May 16, 2000.
(4)Incorporated by reference to exhibit 10.1 to the Form 10-K for the fiscal year ended August 31, 2000.
(5)Incorporated by reference to the Form 10-KSB for the fiscal year ended August 31, 1999, exhibits 10.6, 10.7, 10.8 and 10.9 were numbered exhibits 10.1, 10.2, 10.3 and 10.4 respectively in the Form 10-KSB for the year ended August 31, 1999.
(6)Incorporated by reference to the Form 10-KSB for the fiscal year ended August 31, 2003.
(7)Incorporated by reference to the Form 10-QSB for the quarter ended May 31, 2003, exhibit 4.4 was exhibit 10.1 in the Form 10-QSB for the quarter ended May 31, 2003.
(8)Incorporated by reference to the Form 10-KSB for the fiscal year ended August 31, 2004.
(9)Incorporated by reference to the Current Report on Form 8-K, dated July 26, 2006.
(10)Incorporated by reference to the Form 10-KSB for the fiscal year ended August 31, 2006.
(11)Incorporated by reference to the Form 10-KSB for the fiscal year ended August 31, 2007
(b)Reports on Form 8-K Filed during the Last Quarter of The Period Covered by This Report are as Follows:
	None.
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
ONCOLOGIX TECH, INC.
Date: December 7, 2012 By:	 /s/ Anthony Silverman	
Name: Anthony Silverman
Title: Chief Executive Officer and President
Date: December 7, 2012 By:	 /s/ Michael A. Kramarz	
Name: Michael A. Kramarz
Title: Chief Financial Officer
In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By: /s/ Anthony Silverman	 Date: December 7, 2012
Anthony Silverman, Chief Executive Officer, President and Director
By: /s/ Michael A. Kramarz	 Date: December 7, 2012
Michael A. Kramarz, Chief Financial Officer
By: /s/ Barry Griffith	 Date: December 7, 2012
Barry Griffith, Director