Notes to Condensed Consolidated Financial
Statements (unaudited)
July 31, 2013 and 2012
CardioGenics
Inc. (“CardioGenics”) was incorporated on November 20, 1997 in the Province of Ontario, Canada, and carries on the
business of development and commercialization of diagnostic test products to the In Vitro Diagnostics testing market. CardioGenics
has several test products that are in various stages of development.
CardioGenics’
business is that of a development-stage company, with a limited history of operations and whose revenues, to date, have been primarily
comprised of grant revenue and Scientific Research Tax Credits from government agencies. There can be no assurance that the Company
will be successful in obtaining regulatory approval for the marketing of any of the existing or future products that the Company
will succeed in developing.
On
October 27, 2009, the name of the Company was changed from JAG Media Holdings, Inc. to CardioGenics Holdings, Inc.
In
the opinion of management, the unaudited condensed interim consolidated financial statements reflect all adjustments, consisting
of normal recurring adjustments, necessary to present fairly the condensed interim consolidated financial position of CardioGenics
Holdings Inc. and its Subsidiaries under generally accepted accounting principles in the United States (“U.S. GAAP”)
as of July 31, 2013, their results of operations for the three and nine months ended July 31, 2013 and 2012, and the period from
November 20, 1997 (date of inception) to July 31, 2013, changes in comprehensive loss for the three and nine months ended July
31, 2013 and 2012, and the period from November 20, 1997 (date of inception) to July 31, 2013, changes in deficiency for the nine
months ended July 31, 2013 and cash flows for the nine months ended July 31, 2013 and 2012, and the period from November 20, 1997
(date of inception) to July 31, 2013. CardioGenics Holdings Inc. and its Subsidiaries are referred to together herein as the “Company”.
Pursuant to rules and regulations of the SEC, certain information and disclosures normally included in financial statements prepared
in accordance with U.S. GAAP have been condensed or omitted from these consolidated financial statements unless significant changes
have taken place since the end of the most recent fiscal year. Accordingly, these condensed interim consolidated financial statements
should be read in conjunction with the consolidated financial statements, notes to consolidated financial statements and the other
information in the audited consolidated financial statements of the Company as of October 31, 2012 and 2011 (the “Audited
Financial Statements”) included in the Company’s Form 10-K that was previously filed with the SEC on January 29, 2013
and from which the October 31, 2012 consolidated balance sheet was derived.
The
results of the Company’s operations for the nine months ended July 31, 2013 are not necessarily indicative of the results
of operations to be expected for the full year ending October 31, 2013.
The
accompanying condensed interim consolidated financial statements have been prepared using U.S. GAAP applicable to a going concern,
which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business.
The
Company has incurred operating losses and has experienced negative cash flows from operations since inception. The Company has
an accumulated deficit at July 31, 2013 of approximately $42.8 million. The Company has not yet established an ongoing source
of revenues sufficient to cover its operating costs and to allow it to continue as a going concern. The Company has funded its
activities to date almost exclusively from debt and equity financings. These conditions raise substantial doubt about the Company’s
ability to continue as a going concern.
CardioGenics Holdings Inc.
(A Development Stage Company)
Notes to Condensed Consolidated Financial Statements (unaudited)
July 31, 2013 and 2012
The Company will continue to require
substantial funds to continue research and development, including preclinical studies and clinical trials of its products, and
to commence sales and marketing efforts, if the FDA and other regulatory approvals are obtained. In order to meet its operating
cash flow requirements Management’s plans include financing activities such as private placements of its common stock and
issuances of convertible debt instruments. Management is also actively pursuing industry collaboration activities including product
licensing and specific project financing.
While the Company believes it will
be successful in obtaining the necessary financing to fund its operations, meet revenue projections and manage costs, there are
no assurances that such additional funding will be achieved and that it will succeed in its future operations. The accompanying
condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of
recorded asset amounts or amounts of liabilities that might be necessary should the Company be unable to continue in existence.
|
3.
|
Summary
of Significant
Accounting
Policies
.
|
Recent Accounting Pronouncements
In December 2011, the FASB issued
ASU No. 2011-11, Balance Sheet (Topic 210): Disclosures about Offsetting Assets and Liabilities. ASU 2011-11 requires an entity
to disclose information about offsetting and related arrangements to enable users of financial statements to understand the effect
of those arrangements on its financial position, and to allow investors to better compare financial statements prepared under
U.S. GAAP with financial statements prepared under International Financial Reporting Standards (IFRS). The new standards are effective
for annual periods beginning January 1, 2013, and interim periods within those annual periods. Retrospective application is required.
The Company will implement the provisions of ASU 2011-11 as of November 1, 2013.
In February 2013, the Financial
Accounting Standards Board (“FASB”) issued guidance requiring disclosure of amounts reclassified out of accumulated
other comprehensive income by component. In addition, an entity is required to present either on the face of the statement of
operations or in the notes, significant amounts reclassified out of accumulated other comprehensive income (loss) by the respective
line items of net income (loss) but only if the amount reclassified is required to be reclassified to net income (loss) in its
entirety in the same reporting period. For amounts not reclassified in their entirety to net income (loss), an entity is required
to cross-reference to other disclosures that provide additional detail about those amounts. This guidance is effective prospectively
for the Company for annual and interim periods beginning January 1, 2013. The Company believes that the impact of this standard
has not had a material impact on its condensed interim consolidated financial statements.
Derivative Instruments
The Company’s derivative liabilities
are related to embedded conversion features of the Notes Payable. For derivative instruments that are accounted for as liabilities,
the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in
fair value recognized in earnings each reporting period. The Company uses the Black-Scholes model to value the derivative instruments
at inception and subsequent valuation dates and the value is re-assessed at the end of each reporting period, in accordance with
Accounting Standards Codification (“ASC”) 815. Derivative instrument liabilities are classified in the condensed consolidated
balance sheets as current or non-current based on whether or not the net-cash settlement of the derivative instrument could be
required within twelve months of the condensed consolidated balance sheet date.
CardioGenics Holdings Inc.
(A Development Stage Company)
Notes to Condensed Consolidated Financial Statements (unaudited)
July 31, 2013 and 2012
Beneficial Conversion Charge
The intrinsic value of beneficial
conversion features arising from the issuance of convertible debentures with conversion rights that are in-the-money at the commitment
date is recorded as debt discount and amortized to interest expense over the term of the debentures. The intrinsic value of a
beneficial conversion feature is determined after initially allocating an appropriate portion of the proceeds received from the
sale of the debentures to any detachable instruments, such as warrants, included in the sale or exchange based on relative fair
values.
Based on the Company’s evaluation,
management has concluded that there are no significant tax positions requiring recognition in the condensed interim consolidated
financial statements.
The Company has incurred losses
in Canada since inception, which have generated net operating loss carryforwards for income tax purposes. The net operating loss
carryforwards arising from Canadian sources as of July 31, 2013, approximated $6,816,000 (2012 - $6,362,000) which will expire
from 2014 through 2032. All fiscal years as originally filed have been assessed. Claims relating to research and development credits
are open for review for the fiscal years ended October 2012, 2011, 2010, 2009, 2008 and 2007 and July 2009.
As of July 31, 2013, the Company
had net operating loss carryforwards from US sources of approximately $40,809,000 (2012 - $40,647,000) available to reduce future
Federal taxable income which will expire from 2019 through 2032. Returns for the years 2008 through 2012 are yet to be filed.
For the nine months ended July 31,
2013 and 2012, the Company’s effective tax rate differs from the statutory rate principally due to the net operating losses
for which no benefit was recorded.
During the three months ended
January 31, 2013 two shareholder/directors advanced $200,000 to the Company. On February 27, 2013, those advances together with
$100,000 advanced by a shareholder to the Company prior to October 31, 2012 were exchanged on a dollar for dollar basis for Series
A Convertible Debenture Units (the “Units”). Each unit includes a debenture having a term of three years, bearing
interest at 10%, and a warrant having a term of three years. The debentures are convertible at any time into common shares of
the Company’s stock at a price of $0.25 per share. The warrants entitle the holder to purchase 2 times the number of common
shares of the Company’s stock allowed in conjunction with the debentures at a price of $0.25 per share at any time up to
three years.
During the three months ended July
31, 2013, the Company received from officer/directors $155,000 from officer/directors for the subscription of 155,000 of the Company’s
Series B Convertible Debentures. Each unit includes a debenture having a term of three years, bearing interest at 10%, and a warrant
having a term of three years. The debentures are convertible at any time into common shares of the Company’s stock at a
price of $0.25 per share. The warrants entitle the holder to purchase 1.5 times the number of common shares of the Company’s
stock allowed in conjunction with the debentures at a price of $0.25 per share at any time up to three years.
On November 19, 2012, the Company
entered into an agreement (“Line”) with JMJ Financial (“Lender”) whereby the Company may borrow up to
$350,000 from the Lender in increments of $50,000. The Line is subject to an original issue discount of $50,000. Advances under
the Line (“Notes”) have a maturity date of one year from the date of the advance. If the advance is repaid within
three months, the advance is interest free. If not repaid within three months, the advance may not be repaid before maturity and
carries interest at 5%. The Lender has the right at any time to convert all or part of the outstanding principal and accrued interest
(and any other fees) into shares of fully paid and non-assessable shares of common stock of the Company at a price equal to the
lesser of $0.23 and 60% of the lowest trade price in the 25 trading days previous to the conversion. Unless agreed in writing
by the parties, at no time will the Lender convert any amount owing under the Line into common stock that would result in the
Lender owing more than 4.99% of the common stock outstanding.
CardioGenics Holdings Inc.
(A Development Stage Company)
Notes to Condensed Consolidated Financial Statements (unaudited)
July 31, 2013 and 2012
A summary of the Notes at July 31, 2013 is as follows:
|
|
|
July 31, 2013
|
|
|
October 31, 2012
|
|
|
Convertible Note Payable, interest
at 5% per annum to maturity at November 19, 2013
|
|
$
|
50,000
|
|
|
$
|
-
|
|
|
Convertible Note Payable, interest at 5% per
annum to maturity at March 27, 2014
|
|
|
25,000
|
|
|
|
-
|
|
|
Convertible Note Payable, interest at 5% per
annum to maturity at June 28, 2014
|
|
|
25,000
|
|
|
|
-
|
|
|
Debt Discount – value attributable
to conversion feature attached to notes, net of accumulated amortization of $45,685
|
|
|
(54,315
|
)
|
|
|
-
|
|
|
Total
|
|
|
45,685
|
|
|
|
-
|
|
|
Less: Current portion
|
|
|
45,685
|
|
|
|
-
|
|
|
Total Long-term portion
|
|
$
|
-
|
|
|
$
|
-
|
|
As described in further detail in
Note 7, “Derivative Liabilities”, the Company determines the fair value of the embedded derivatives and records them
as a discount to the Notes and as a derivative liability. Upon conversion of the Notes to Common Stock, any remaining unamortized
discount is charged to financing expense.
Convertible notes - embedded conversion
features:
The Notes meet the definition of
a hybrid instrument, as defined in ASC 815. The hybrid instrument is comprised of a i) a debt instrument, as the host contract
and ii) an option to convert the debentures into common stock of the Company, as an embedded derivative. The embedded derivatives
derive their value based on the underlying fair value of the Company’s common stock. The embedded derivatives are not clearly
and closely related to the underlying host debt instrument since the economic characteristics and risk associated with these derivatives
are based on the common stock fair value.
The Company determines the fair
value of the embedded derivatives and records them as a discount to the Notes and a derivative liability. Accordingly, changes
in the fair value of the embedded derivative are immediately recognized in earnings and classified as a gain or loss on the embedded
derivative financial instrument in the accompanying condensed consolidated statements of operations. The change in fair value
for the nine months ended July 31, 2013 was $7,250.
The Company estimated the fair
value of the embedded derivatives using a Black Scholes model with the following assumptions: conversion price of $0.12
per share according to the agreements; risk free interest rate of .11%; expected life of 1 year; expected dividend of zero; a
volatility factor of 166% as of July 31, 2013. The expected lives of the instruments are equal to the contractual term of the
conversion option. The expected volatility is based on the historical price volatility of the Company’s common stock.
The risk-free interest rate represents the U.S. Treasury constant maturities rate for the expected life of the related
conversion option. The dividend yield represents anticipated cash dividends to be paid over the expected life of the
conversion option.
CardioGenics Holdings Inc.
(A Development Stage Company)
Notes to Condensed Consolidated Financial Statements (unaudited)
July 31, 2013 and 2012
|
8.
|
Fair
Value Measurements
|
As defined by the ASC, fair value
measurements and disclosures establish a hierarchy that prioritizes fair value measurements based on the type of inputs used for
the various valuation techniques (market approach, income approach and cost approach). The levels of hierarchy are described below:
|
|
●
|
Level
1:
Observable
inputs
such
as
quoted
market
prices
in
active
markets
for
identical
assets
or
liabilities.
|
|
|
●
|
Level
2:
Inputs
other
than
quoted
market
prices
that
are
observable
for
the
asset
or
liability,
either
directly
or
indirectly;
these
include
quoted
prices
for
similar
assets
or
liabilities
in
active
markets,
such
as
interest
rates
and
yield
curves
that
are
observable
at
commonly-quoted
intervals.
|
|
|
●
|
Level
3:
Unobservable
inputs
that
reflect
the
reporting
entity’s
own
assumptions,
as
there
is
little,
if
any,
related
market
activity.
|
The following table summarizes the
financial liabilities measured at fair value on a recurring basis as of July 31, 2013, segregated by the level of the valuation
inputs within the fair value hierarchy utilized to measure fair value:
|
|
|
Quoted Prices
in
|
|
|
|
|
|
|
|
|
|
Total decrease
|
|
|
|
|
Active Markets
for
|
|
Significant
Other
|
|
Significant
|
|
|
|
|
|
in Fair Value
|
|
|
Balance Sheet
|
|
Identical
Assets or
|
|
Observable Inputs
|
|
Unobservable
|
|
|
July 31,
2013
|
|
|
Recorded
at
|
|
|
Location
|
|
Liabilities (Level
1)
|
|
(Level
2)
|
|
Inputs
(Level 3)
|
|
|
Total
|
|
|
July
31, 2013
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative
liability – on Notes Payable
|
|
$
|
-
|
|
$
|
-
|
|
$
|
92,750
|
|
|
$
|
92,750
|
|
|
$
|
(7,250
|
)
|
The Company utilizes the Black-Scholes
Option Pricing model to estimate the fair value of the derivative liability associated with the convertible note obligation. The
Company considers them to be Level 3 instruments. The following table shows the weighted average assumptions the Company used
to develop the fair value estimates for the determination of the derivative liability at July 31, 2013:
|
|
Fair value
|
|
$
|
0.12
|
|
|
|
Expected volatility
|
|
|
166-170
|
%
|
|
|
Dividend yield
|
|
|
-
|
|
|
|
Expected term (in years)
|
|
|
.33-.91
|
|
|
|
Risk-free interest rate
|
|
|
.11%-.18
|
%
|
The table below sets forth a summary
of changes in the fair value of the Company’s Level 3 financial liability, or derivative liabilities related to the senior
secured convertible notes and warrants, for the nine month period ended July 31, 2013.
|
Balance at beginning of period
|
|
$
|
-
|
|
|
Additions to derivative instruments
|
|
|
100,000
|
|
|
Change in fair value of derivative liabilities
|
|
|
(7,250
|
)
|
|
Balance at end of period
|
|
$
|
92,750
|
|
CardioGenics Holdings Inc.
(A Development Stage Company)
Notes to Condensed Consolidated Financial Statements (unaudited)
July 31, 2013 and 2012
In February 2013, shareholder loans
were converted on a dollar-for-dollar basis for Series A Convertible Debenture Units (the “A Units”). Each A Unit
includes a debenture having a term of three years, bearing interest at 10%, and a warrant having a term of three years. The debentures
are convertible at any time into common shares of the Company’s stock at a price of $0.25 per share. The warrants entitle
the holder to purchase 2 times the number of common shares of the Company’s stock allowed in conjunction with the debentures
at a price of $0.25 per share at any time up to three years.
In May and June 2013 the Company
sold Series B Convertible Debenture Units (the “B Units”). Each B Unit includes a debenture having a term of three
years, bearing interest at 10%, and a warrant having a term of three years. The debentures are convertible at any time into common
shares of the Company’s stock at a price of $0.25 per share. The warrants entitle the holder to purchase 1.5 times the number
of common shares of the Company’s stock allowed in conjunction with the debentures at a price of $0.15 at any time up to
three years.
The Company recorded an increase
in additional paid in capital and debt discount of $95,760 in connection with the warrants issued with the Series A Convertible
Debentures. The Company allocated proceeds of $306,900 to the fair value of the warrants and the remaining $343,996 to the fair
value of the Series B Convertible Debentures. Based on the excess of the aggregate fair value of the common shares that would
have been issued if the Series B Convertible Debentures had been converted immediately over the proceeds allocated to the Series
B Convertible Debentures, the investors received a beneficial conversion feature that had an aggregate intrinsic value of $343,996
as of the commitment date. Accordingly, the Company recorded an increase in additional paid-in capital and debt discount of $650,896
in connection with the issuance of the Series B Convertible Debentures and warrants.
A summary of the Debentures at July
31, 2013 is as follows:
|
|
|
July 31, 2013
|
|
|
October 31, 2012
|
|
|
Series A Convertible Debentures
Payable, interest at 10% per annum to maturity at February 27, 2016
|
|
$
|
294,704
|
|
|
$
|
-
|
|
|
Series B Convertible Debentures Payable, interest
at 10% per annum to maturity at May 31, 2016
|
|
|
500,000
|
|
|
|
-
|
|
|
Series B Convertible Debentures Payable, interest
at 10% per annum to maturity at June 3, 2016
|
|
|
150,896
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt Discount
|
|
|
(697,124
|
)
|
|
|
-
|
|
|
Totals
|
|
|
248,476
|
|
|
|
-
|
|
|
Less: Current portion
|
|
|
-
|
|
|
|
-
|
|
|
Total Long-term portion
|
|
$
|
248,476
|
|
|
$
|
-
|
|
|
10.
|
Stock
Based Compensation
|
Stock-based employee compensation
related to stock options for the nine months ended July 31, 2013 and 2012 amounted to $-0-.
The following is a summary of the
common stock options granted, forfeited or expired and exercised under the Plan:
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
|
Average
|
|
|
|
|
|
|
|
Exercise
|
|
|
|
|
Options
|
|
|
Price
|
|
|
Outstanding
– October 31, 2011
|
|
|
30,000
|
|
|
$
|
0.90
|
|
|
Granted
|
|
|
—
|
|
|
|
—
|
|
|
Forfeited/Expired
|
|
|
—
|
|
|
|
—
|
|
|
Exercised
|
|
|
—
|
|
|
|
—
|
|
|
Outstanding –
October 31, 2012
|
|
|
30,000
|
|
|
$
|
0.90
|
|
|
Granted
|
|
|
—
|
|
|
|
—
|
|
|
Forfeited/Expired
|
|
|
—
|
|
|
|
—
|
|
|
Exercised
|
|
|
—
|
|
|
|
—
|
|
|
Outstanding
– July 31, 2013
|
|
|
30,000
|
|
|
$
|
0.90
|
|
Options typically vest immediately
at the date of grant. As such, the Company does not have any unvested options or unrecognized compensation expense at July 31,
2013.
CardioGenics Holdings Inc.
(A Development Stage Company)
Notes to Condensed Consolidated Financial Statements (unaudited)
July 31, 2013 and 2012
Outstanding warrants are as follows:
|
|
|
July 31, 2013
|
|
|
October 31, 2012
|
|
|
Issued to consultant August 1, 2009,
entitling the holder to purchase 1 common share in the company at an exercise price of $0.90 per common share up to and including
July 31, 2017.
|
|
|
287,085
|
|
|
|
287,085
|
|
|
Issued to Flow Capital Advisors Inc. on settlement
of lawsuit in August 2011, entitling the holder to purchase 1 common share in the Company at an exercise price of $0.30 per
common share up to and including August 23, 2016.
|
|
|
250,000
|
|
|
|
250,000
|
|
|
Issued to Flow Capital Advisors Inc. on settlement
of lawsuit August 2011, entitling the holder to purchase 1 common share in the Company at an exercise price of $0.50 per common
share up to and including August 23, 2016.
|
|
|
250,000
|
|
|
|
250,000
|
|
|
Issued to Flow Capital Advisors Inc. on settlement
of lawsuit August 2011, entitling the holder to purchase 1 common share in the Company at an exercise price of $0.75 per common
share up to and including August 23, 2016.
|
|
|
500,000
|
|
|
|
500,000
|
|
|
Issued to Flow Capital Advisors Inc. on settlement
of lawsuit August 2011, entitling the holder to purchase 1 common share in the Company at an exercise price of $1.00 per common
share up to and including August 23, 2016.
|
|
|
500,000
|
|
|
|
500,000
|
|
|
Issued to Flow Capital Advisors Inc. on settlement
of lawsuit August 2011, entitling the holder to purchase 1 common share in the Company at an exercise price of $0.75 per common
share up to and including August 23, 2016.
|
|
|
500,000
|
|
|
|
500,000
|
|
|
Issued to consultants in September 2011 entitling
the holders to purchase 1 common share in the Company at an exercise price of $0.10 per common share up to and including March
20, 2013.
|
|
|
—
|
|
|
|
1,500,000
|
|
|
Issued to consultants in September 2011 entitling
the holders to purchase 1 common share in the Company at an exercise price of $0.34 per common share up to and including March
20, 2013.
|
|
|
—
|
|
|
|
1,500,000
|
|
|
Issued to consultants in September 2011 entitling
the holders to purchase 1 common share in the Company at an exercise price of $0.50 per common share up to and including March
20, 2013.
|
|
|
—
|
|
|
|
1,000,000
|
|
|
Issued to debenture holders February 2013 entitling
the holders to purchase 1 common share in the Company at an exercise price of $0.25 per common share up to and including February
27, 2016.
|
|
|
600,000
|
|
|
|
—
|
|
|
Issued to debenture
holders May 2013 entitling the holders to purchase 1 common share in the Company at an exercise price of $0.15 per common
share up to and including June 3, 2016
.
|
|
|
750,000
|
|
|
|
—
|
|
|
Issued to debenture holders June 2013
entitling the holders to purchase 1 common share in the Company at an exercise price of $0.15 per common share up to and including
June 3, 2016.
|
|
|
232,500
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Warrants outstanding
|
|
|
3,869,585
|
|
|
|
6,287,085
|
|
CardioGenics Holdings Inc.
(A Development Stage Company)
Notes to Condensed Consolidated Financial Statements (unaudited)
July 31, 2013 and 2012
|
12.
|
Issuance of Common Stock
|
On January 17, 2013, the Company’s
articles of incorporation were amended to increase the total number of common and preferred shares authorized for issuance from
65,000,000 shares to 150,000,000 shares and 5,000,000 shares to 50,000,000, respectively, par value $0.00001 per share.
During the nine months ended July
31, 2013, the Company issued no common shares.
The following table sets forth the
computation of weighted-average shares outstanding for calculating basic and diluted earnings per share (EPS):
|
|
|
Three Months Ended
July 31,
|
|
|
Nine Months Ended
July 31,
|
|
|
|
|
2013
|
|
|
2012
|
|
|
2013
|
|
|
2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average shares - basic
|
|
|
56,676,166
|
|
|
|
55,626,166
|
|
|
|
56,676,166
|
|
|
|
55,626,166
|
|
|
Effect of dilutive securities
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Weighted-average shares - diluted
|
|
|
56,676,166
|
|
|
|
55,626,166
|
|
|
|
56,676,166
|
|
|
|
55,626,166
|
|
Basic earnings per share “EPS”
and diluted EPS for the three and nine months ended July 31, 2013 and 2012 have been computed by dividing the net loss available
to common stockholders for each respective period by the weighted average shares outstanding during that period. All outstanding
options, warrants and shares to be issued upon the exercise of the outstanding options and warrants and conversion of debentures
and notes payable representing 8,532,918 and 6,317,085 incremental shares, respectively, have been excluded from the three and
nine months ended July 31, 2013 and 2012 computation of diluted EPS as they are anti-dilutive given the net losses generated.
CardioGenics Holdings Inc.
(A Development Stage Company)
Notes to Condensed Consolidated Financial Statements (unaudited)
July 31, 2013 and 2012
|
14.
|
Commitments
and Contingencies
|
Lawsuits
On April 22, 2009, the Company was
served with a statement of claim from a former employee claiming compensation for wrongful dismissal and ancillary causes of action
including payment of monies in realization of his investment in the Company, with an aggregate claim of $514,000. The Company
considers all the claims to be without any merit, has already delivered a statement of defense and intends to vigorously defend
the action. If the matter eventually proceeds to trial, the Company does not expect to be found liable on any ground or for any
cause of action.
|
15.
|
Supplemental
Disclosure
of Cash Flow
Information
|
|
|
|
For the Nine Months Ended
|
|
|
|
|
July 31,
|
|
|
|
|
2013
|
|
|
2012
|
|
|
|
|
|
|
|
|
|
|
Cash paid during the period for:
|
|
|
|
|
|
|
|
|
|
Interest
|
|
$
|
26,085
|
|
|
$
|
11,420
|
|
|
Income taxes
|
|
|
—
|
|
|
|
—
|
|
|
Non-cash financing activity:
|
|
|
|
|
|
|
|
|
|
Value of beneficial conversion feature and warrants issued
with debentures during the period
|
|
|
746,656
|
|
|
|
—
|
|