formposam.htm
As filed
with the Securities and Exchange Commission on June 17, 2008
Registration
No. 333-132797
UNITED
STATES SECURITIES AND EXCHANGE COMMISSION
Washington,
D.C. 20549
_______________
POST-EFFECTIVE
AMENDMENT NO. 2 TO
FORM
SB-2
ON
FORM S-1
REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OF 1933
_______________
VYTA
CORP
(Exact
name of small business issuer as specified in its charter)
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NEVADA
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84-0992908
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(State
or other jurisdiction of incorporation or organization)
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(I.R.S.
Employer Identification No.)
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370
17th Street, Suite 3640
Denver,
Colorado 80202
(303)
592-1010
(Address,
including zip code, and telephone number,
including
area code, of registrant’s principal executive offices)
Paul
H. Metzinger
President,
Chief Executive Officer and acting Chief Financial Officer
Vyta
Corp
370
17th Street, Suite 3640
Denver,
Colorado 80202
(303)
592-1010
(Name,
address, including zip code, and telephone number,
including
area code, of agent for service)
With
copies sent to:
Robert
J. Ahrenholz, Esq.
Joshua
M. Kerstein, Esq.
Kutak
Rock LLP
1801
California Street, Suite 3100
Denver,
Colorado 80202
(303)
297-2400
Approximate
date of commencement of the proposed sale to the public: From time to time after
this registration statement becomes effective.
_______________
If any of
the securities being registered on this Form are to be offered on a delayed or
continuous basis pursuant to Rule 415 under the Securities Act of 1933,
check the following box. þ
If this
Form is filed to register additional securities for an offering pursuant to
Rule 462(b) under the Securities Act, please check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. ¨
If this
Form is a post-effective amendment filed pursuant to Rule 462(c) under the
Securities Act, check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for the same
offering. ¨
If this
Form is a post-effective amendment filed pursuant to Rule 462(d) under the
Securities Act, check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for the same
offering. ¨
If
delivery of the prospectus is expected to be made pursuant to Rule 434, check
the following box. ¨
The
information in this prospectus is not complete and may be changed. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. This prospectus is not an offer to sell
securities and it is not soliciting an offer to buy these securities in any
state where the offer or sale is not permitted.
Subject
to completion, dated June 17, 2008
PROSPECTUS
VYTA
CORP
370 17th
Street, Suite 3640
Denver,
Colorado 80202
17,092,184
shares of common stock, including:
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·
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16,345,467 shares currently
outstanding
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·
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746,717 shares issuable upon
exercise of warrants
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The
sellers:
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All
of our common stock offered by this prospectus is offered from time to
time by the selling stockholders identified in this prospectus. These
shares of common stock may be sold at fixed prices, prevailing market
prices determined at the time of sale, varying prices determined at the
time of sale or at negotiated prices. We will not receive any proceeds
from the sale of our common stock offered by the selling
stockholders.
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securities:
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Our
common stock is presently quoted on the over-the-counter bulletin board
under the symbol “VYTC.OB.” Our common stock also is traded on the Berlin
Stock Exchange, the Frankfurt Stock Exchange, the Munich Stock Exchange
and the Xetra Stock Exchange. On June 2, 2008, the last reported sale
price of our common stock on the over-the-counter bulletin board was $0.24
per share (rounded to the nearest penny). See “DESCRIPTION OF COMMON
STOCK—Common Stock.”
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factors:
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Investing
in our common stock involves a high degree of risk. See “RISK FACTORS”
beginning on page 6.
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Neither
the Securities and Exchange Commission nor any state securities commission has
approved or disapproved any of these securities or determined if this prospectus
is truthful or complete. Any representation to the contrary is a criminal
offense.
The date
of this prospectus is __________ __, 2008
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This
prospectus includes “forward-looking statements” within the meaning of the
Private Securities Litigation Reform Act of 1995 and is subject to the safe
harbor created by that Act. We base these forward-looking statements on our
current expectations and projections about future events. These forward-looking
statements are subject to risks, uncertainties, and assumptions about our
company, including:
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the
operations and potential profitability of BioAgra, LLC, a company in which
we have a 50% interest;
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the
rate of market development and acceptance of our beta glucan products in
the animal and aquatic animal feed industry within which we are
concentrating our business
activities;
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the
rate of market development and acceptance of our beta glucan products for
human consumption;
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our
ability to compete successfully with growth promotion antibiotic
manufacturers and other providers of feed
additives;
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the
limited revenues and significant operating losses generated by us to
date;
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the
possibility of significant ongoing capital requirements and our ability to
secure financing as and when
necessary;
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our
ability to retain the services of our key management, and to attract new
members to the management team; and
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our
ability to obtain and retain appropriate patent, copyright and trademark
protection for our intellectual properties and any of our
products.
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You
should only rely on the information contained in this prospectus. We have not
authorized any person to provide you with different information. If anyone
provides you with different or inconsistent information, you should not rely on
it. The selling stockholders are not making an offer to sell these securities in
any jurisdiction where the offer or sale is not permitted. You should assume
that the information appearing in this prospectus is accurate as of the date on
the front cover of this prospectus only. Our business, financial condition,
results of operations and prospects may have changed since that
date.
The
following summary highlights certain information contained throughout this
prospectus. It is not complete and may not contain all of the information that
you should consider before investing in the securities offered by this
prospectus. To understand this offering fully, you should read this entire
prospectus carefully, including the risk factors. When used in this prospectus,
the terms “we,” “our,” “us,” “the company” and similar expressions refer to Vyta
Corp, BioAgra, LLC and our subsidiaries, unless the context otherwise
requires.
General
We were
incorporated on June 22, 1996 as a Nevada corporation. In January 2006, we
changed our name from NanoPierce Technologies, Inc. to Vyta Corp. Our corporate
offices are located at 370 17th Street, Suite 3640, Denver, Colorado 80202,
and our telephone number is (303) 592-1010. We maintain a website at www.vytacorp.com.
Information on our website is not part of this prospectus, and you should not
rely on it in deciding whether to invest in our common stock.
Description
of Business
In 2004,
we instituted steps to change our principal business from electronics technology
to biotechnology. In August 2005, we purchased a 50% equity interest in BioAgra,
LLC, a Georgia limited liability company. The remaining 50% was purchased by
Xact Resources International and later assigned to Justin Holdings, Inc., both
unaffiliated parties. BioAgra is engaged in the production, marketing and sale
of Agrastim®, a
natural, non-toxic purified beta-1,3/1,6-D glucan feed additive used to replace
growth promotion antibiotics that are currently in use in the animal feed
industry. In addition to its use as a feed additive, BioAgra intends to include
Agrastim® in
premixed feeds, such as in EquiForce™, a feed
targeted for the equine industry that contains Agrastim®,
vitamins and minerals formulated to supply nutrients to meet the physiological
needs of equine athletes and to boost their immune systems.
BioAgra
also is producing Purestim™, a
purified beta-1,3/1,6-D glucan intended for use by other companies that
manufacture neutraceuticals and dietary supplements for human consumption, and
is designing other products for human, animal and aquaculture consumption based
on beta glucan and other immunoenhancers. Purestim™,
together with Agrastim®, are
sometimes referred to herein as “beta glucan products.”
Prior to
our acquisition of an interest in BioAgra, we were primarily involved in our
patented particle interconnect technology. We acquired the particle technology
in February 1998 to pursue a more focused, strategic application and development
of the particle technology and to commercialize the technology as the NanoPierce
Connection System (NCS™). While
we do not plan, at this time, to continue efforts to manufacture or develop
products that utilize our particle technology, we entered into two provisional
technology license agreements for the manufacture, development and marketing of
products using our particle technology. Each of these licenses recently expired,
although we continue to negotiate with the prospective licensees. To date,
neither of the negotiations have matured into a full-scale commercial license
generating royalty and license revenues for us.
Recent
Developments
Sale of ExypnoTech,
Gmbh
On
December 27, 2007, we sold our 49% interest in ExypnoTech, Gmbh (“ExypnoTech”)
to TagStar Systems, GmbH for $250,000 cash pursuant to a share purchase
agreement. ExypnoTech is a company that manufactures and develops radio
frequency identification (“RFID”) components used in the production of, among
other things, smart labels, smart cards and smart tags. As a result of this
sale, we no longer have any interest in ExypnoTech, and TagStar Systems owns
100% of ExypnoTech.
Particle Interconnect
Technology License Agreements
In
November 2006, we signed a six-month technology license agreement to permit a
prospective licensee the non-exclusive opportunity to conduct a market survey
relating to our particle interconnect technology that was extended in May 2007
for an additional six-month period. In January 2007, we signed a separate
six-month technology license agreement to permit a different prospective, third
party licensee the non-exclusive opportunity to conduct a market survey relating
to our particle interconnect technology that was extended in July 2007 for an
additional six-month period. Each of these technology license agreements have
expired.
In
February 2008, we signed a technology license agreement to permit a prospective
licensee the non-exclusive opportunity to sell products using our particle
interconnect technology for an advance royalty payment. The license
covers the sale of 50 units of product using our particle interconnect
technology. Should the licensee sell 50 units, we will negotiate with
the licensee to enter into a license agreement covering the sale of products
using our particle interconnect technology.
Preferred Stock Private
Placement
On
March 2, 2007, in a private placement transaction, we issued to Arizcan
Properties, Ltd. a total of 500,000 shares of our newly-designated
series A nonconvertible preferred stock for a total purchase price of
$500,000, in cash. In addition to the purchase of the series A nonconvertible
preferred stock, Arizcan purchased for a price of $251,900 a warrant exercisable
for 6,000,000 shares of our common stock. This warrant has an exercise
price of $0.50 per share and provides for cashless exercise. As a result,
Arizcan acquired approximately 51% of our voting power, and, on a fully diluted
basis and as of June 1, 2008, Arizcan would have approximately 87.4% of our
voting power if it exercises the warrant.
AHD International Reseller
Agreement
On April
1, 2007, BioAgra, LLC and AHD International, LLC signed an
agreement whereby AHD International agreed to purchase beta glucan products from
BioAgra. The agreement has a term of five years with the right for
successive renewals provided minimum sales requirements are met. The agreement
provides that AHD International will purchase beta glucan products for
resale to various end users in thirteen countries. The agreement grants AHD
International the exclusive right to sell the beta glucan products to all users
in ten countries. In addition, the agreement grants the right to sell the beta
glucan products in an additional three countries, with the exclusivity of such
right dependant on the type of end user sold to and the country.
Progressive Bioactives
License Termination Agreement
On July
11, 2007, BioAgra, LLC entered into a Termination and Mutual General Release
Agreement with Progressive Bioactives, Inc. to terminate the parties’ Technology
License Agreement dated April 15, 2005 that had granted BioAgra the license to
produce and process a yeast beta glucan product. As consideration for
termination of the Technology License Agreement, BioAgra agreed to pay to
Progressive Bioactives 2.5% of its gross sales of beta glucan products from July
1, 2007 through June 30, 2017. Additionally, for a period of two years beginning
on July 1, 2007, BioAgra agreed to use its best efforts not to pursue marketing
and sales of its beta glucan products in the field of livestock, companion
animal, and aquaculture in Canada, South Africa, Australia, Chile, and South
Korea. BioAgra also agreed to indemnify and hold Progressive Bioactives harmless
from any third-party claim arising from any sale of beta glucan into the human
nutrition and cosmetic markets. See “THE COMPANY—Intellectual Property—BioAgra—Progressive
Bioactives License Termination Agreement” for more information.
This
offering includes 17,092,184 shares of our common stock,
including:
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·
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16,345,467
shares outstanding as of the date of this prospectus;
and
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·
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746,717
shares issuable upon the exercise of warrants owned by the stockholders
identified later in this
prospectus.
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We will
not receive any proceeds from the sale of the shares of our common stock offered
by this prospectus. Some of the shares of common stock that are being offered by
this prospectus are issuable upon the exercise of warrants owned by the
stockholders identified later in this prospectus. We will receive proceeds from
the exercise of these warrants. See “USE OF PROCEEDS” for more
information.
Your
investment in our common stock offered by this prospectus involves a high degree
of risk. See “RISK FACTORS” beginning on page 6.
The
following table presents our summary consolidated historical financial
information for the periods indicated. You should read this information together
with the consolidated financial statements for the fiscal year ended
June 30, 2007, 2006 and 2005, our unaudited quarterly financial statements
for the nine months ended March 31, 2008 and 2007 and related notes and the
information under “FINANCIAL STATEMENTS” and “MANAGEMENT’S DISCUSSION AND
ANALYSIS” included elsewhere in this prospectus.
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Nine
Months Ended March 31,
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Revenues
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$ |
- |
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$ |
- |
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$ |
- |
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$ |
- |
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Operating
expenses:
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General
and administrative
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(510,901 |
) |
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(1,425,825 |
) |
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(1,835,973 |
) |
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(893,061 |
) |
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Loss
from operations
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(510,901 |
) |
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(1,425,825 |
) |
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(1,835,973 |
) |
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(893,061 |
) |
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Other
income (expense):
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Interest
income
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13 |
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18 |
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22 |
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72,307 |
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Gain
on sale of investment in unconsolidated investee (1)
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164,234 |
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- |
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- |
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- |
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Extinguishment
of liabilities
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- |
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- |
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- |
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120,788 |
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Equity
losses of unconsolidated investees (2)
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(1,041,806 |
) |
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(921,715 |
) |
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(1,426,590 |
) |
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(1,398,202 |
) |
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Provision
for loss on note receivable, unconsolidated investee
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- |
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- |
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(1,198,000 |
) |
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- |
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Loss
on revaluation of derivative warrant liability
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- |
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- |
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- |
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(74,295 |
) |
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Interest
expense
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- |
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- |
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- |
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(235,139 |
) |
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Interest
expense, related party
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- |
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- |
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- |
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(219 |
) |
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(877,559 |
) |
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(921,697 |
) |
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(2,624,568 |
) |
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(1,514,760 |
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Net
loss
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(1,388,460 |
) |
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(2,347,522 |
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(4,460,541 |
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$ |
(2,407,821 |
) |
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Accumulated
dividends on preferred stock (3)
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(28,253 |
) |
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3,100 |
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(13,150 |
) |
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- |
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Beneficial
conversion feature, preferred stock
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- |
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- |
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- |
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1,500,000 |
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Net
loss applicable to common shareholders
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(841,211 |
) |
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(1,086,895 |
) |
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(4,473,691 |
) |
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(3,907,821 |
) |
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Net
loss per share, basic and diluted (4)
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$ |
(0.04 |
) |
|
$ |
(0.10 |
) |
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$ |
(0.19 |
) |
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$ |
(0.30 |
) |
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Weighted
average number of common shares outstanding (4)
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33,774,873 |
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22,688,913 |
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23,884,955 |
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12,984,849 |
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____________________
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(1)
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See
Note 3 to our unaudited financial statements for the nine months ended
March 31, 2008 in “FINANCIAL
STATEMENTS.”
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(2)
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See
Note 5 to our consolidated financial statements for the fiscal year
ended June 30, 2006, Note 5 to our consolidated financial statements
for the fiscal year ended June 30, 2007, and Note 2 to our unaudited
financial statements for the six months ended March 31, 2008 in “FINANCIAL
STATEMENTS.”
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(3)
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See
Note 5 to our unaudited financial statements for the nine months ended
March 31, 2008 in “FINANCIAL
STATEMENTS.”
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(4)
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Rounded
to the nearest share. See Note 1 to our consolidated financial
statements for the fiscal years ended June 30, 2006 and June 30, 2007, and
to our unaudited financial statements for the nine months ended March 31,
2008 in “FINANCIAL STATEMENTS.”
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An
investment in our common stock involves a number of risks. Before making an
investment decision, you should carefully consider all of the risks described in
this prospectus and the documents that are incorporated by reference into this
prospectus. The risks discussed in this prospectus could materially adversely
affect our business, financial condition and results of operations and cause the
trading price of our common stock to decline significantly. If this occurs, you
may lose all or part of your investment.
We
have a history of losses.
We expect
that the manufacturing, developing and marketing of Agrastim® as a
feed additive in the poultry, equine, cattle, swine and aquaculture industries
and Purestim™ for
human consumption will be expensive. We recently have incurred increased
operating expenses without any increase in revenues. We reported a net loss of
$4,460,541, $2,407,821, $1,388,460 and $2,347,522 for our fiscal years ended
June 30, 2007 and 2006 and for the nine months ended March 31, 2008 and
2007, respectively.
We
may not be able to continue as a going concern.
Our
independent registered public accounting firm’s report on our consolidated
financial statements as of June 30, 2007 includes an explanatory paragraph
expressing substantial doubt about our ability to continue as a going concern.
As a result of this going concern modification in our auditor’s report on our
financial statements, we may have a difficult time obtaining significant
additional financing. If we are unable to secure significant additional
financing, we may be obligated to seek protection under the bankruptcy laws and
our stockholders may lose their investment.
Our
joint venture investment could be adversely affected by our lack of sole
decision-making authority, our reliance on co-venturer’s financial condition and
disputes between our co-venturer and us.
Our
primary business is our 50% interest in BioAgra, LLC and our particle
interconnect technology. Investment in a joint venture involves risks that would
not be present were another party not involved, including the possibility that
our co-venturer, Justin Holdings, Inc. (an entity over which we have no
control), might become bankrupt, fail to fund their share of required capital
contributions or fail to perform its responsibilities under our agreements with
them. Our co-venturer and our licensees also may have economic or other business
interests or goals that are inconsistent with our business interests or goals,
and they may be in a position to make decisions or to take actions that are
contrary to our preferences, policies or objectives.
We do not
have sole decision making control regarding the BioAgra joint venture. We have a
50% interest in BioAgra and face the potential risk of impasses on decisions,
such as the business policies, practices and procedures relating to the
production and marketing of beta glucan products or a sale of the joint venture,
because neither we nor the other 50% owner, Justin Holdings, Inc., has full
control over the joint venture. Disputes between us and our co-venturer may
result in litigation or arbitration that would increase our expenses and prevent
our officers and/or directors from focusing their time and effort exclusively on
our business. Consequently, actions by or disputes with our co-venturer might
result in subjecting properties owned by the joint venture to additional risk.
In addition, we may, in certain circumstances, be liable for the actions of our
co-venturer.
If
our products infringe the intellectual property rights of others, we may pay
unexpected litigation costs or damages for selling our products.
We intend
to avoid infringing (and to cause entities in which we hold equity interests to
avoid infringing) the intellectual property rights of others; however, no
assurances can be given that the manufacture and sale of our products (or
products of entities in which we hold an equity interest) may not infringe or
otherwise violate the intellectual property rights of others. If this were to be
the case, we (or the entities in which we hold equity interests) may be subject
to legal proceedings and claims, including claims of alleged infringement by us
(or the entities in which we hold equity interests) of the patents and other
intellectual property rights of third parties. Intellectual property litigation
is expensive and time-consuming, regardless of the merits of any
claim.
If it
were to be found that our products (or the products of an entity in which we
hold an equity interest) potentially infringe or violate the intellectual
property rights of others, we may need to obtain licenses from these parties,
substantially re-engineer products in order to avoid infringement or renegotiate
existing licenses to avoid future infringement. We (or the applicable entity in
which we hold an equity interest) might not be able to obtain the necessary
licenses on acceptable terms, or at all, or be able to re-engineer products
successfully. Moreover, if we are (or an entity in which we hold an equity
interest is) sued for infringement and lose the suit, we (or such entity) could
be required to pay substantial damages and/or be enjoined from using or selling
the infringing products. Any of the foregoing could cause us to incur
significant costs and prevent us (or such entity) from selling the products
subject to any legal action.
BioAgra
entered into a Termination and Mutual General Release Agreement with Progressive
Bioactives, as discussed above under “PROSPECTUS SUMMARY—The Company—Recent
Developments—Progressive Bioactives License Termination Agreement.”
Pursuant to the termination agreement, BioAgra and Progressive Bioactives agreed
not to sue each other for infringement of any current or future intellectual
property rights based on each party’s use of its own methods and processes or
any reasonable modifications thereof, for the development and manufacture of
beta glucan products. However, we can provide no assurance that Progressive
Bioactives will not allege that BioAgra has violated its intellectual property
rights through the production and sale of the beta glucan product, which could
result in substantial monetary damages or injunctions prohibiting the production
of the beta glucan products.
If
BioAgra’s beta glucan products do not satisfy certain governmental regulations,
BioAgra may be unable to obtain regulatory approval or may be required to obtain
multiple licenses to sell the beta glucan products.
BioAgra
has self-certified that all components of its beta glucan products are generally
recognized as safe or GRAS according to the U.S. Food and Drug Administration
(“FDA”) regulations. A GRAS designation exempts the beta glucan products from
the regulations of the FDA and U.S. Department of Agriculture, permitting the
sale of the beta glucan products anywhere in the United States without obtaining
a license. Should the beta glucan products lose their GRAS designation, BioAgra
will be required to sell the beta glucan products as feed additives by obtaining
a license to sell from each individual state in which sales would occur. There
is no assurance that BioAgra would be able to successfully obtain or maintain
licenses in all states in which sales are expected to be made or that the cost
of obtaining and maintaining these licenses would not limit its ability to sell
the beta glucan products.
Operations
of BioAgra may be delayed or cost more than we anticipate.
Operations
at the beta glucan production plant commenced in March of 2006. BioAgra produced
approximately 7,600 kilograms of finished product, of which approximately 2,680
kilograms remains in inventory, and has halted production pending the sale of at
least 50% of the existing inventory. Once production is recommenced, there can
be no assurances that there will not be future delays in operations or that the
average cost to operate the plant will not be higher than
anticipated.
We
cannot guarantee the quality, performance or reliability of BioAgra’s
products.
Except as
described in the prior risk factor, we have no prior experience manufacturing or
producing beta glucan products or any other products. We are relying upon the
skill and experience of BioAgra’s managers and our co-venturer to timely and
cost effectively manufacture the beta glucan product. We expect that BioAgra’s
customers will demand quality, performance and reliability. We cannot assure you
that we or our co-venturer will be able to meet the quality control standards
that may be established by various industries for feed additives. BioAgra
intends to provide a written guarantee or other assurance to its customers that
its beta glucan products will have a bioactivity level of at least 80%.
“Bioactivity” is the ability to activate the cells of the immune system,
specifically white blood cells that help to kill and digest foreign materials
and infectious microorganisms. The greater the bioactivity level, the greater
the ability to activate the cells of the immune system. However, BioAgra cannot
guarantee that all batches of the beta glucan products produced for inclusion in
various animal feed products will meet that bioactivity level. Should BioAgra be
unable to meet the standard, it may lose existing customers and be unable to
acquire new customers.
There
may be insufficient demand for BioAgra’s beta glucan products.
Sales of
the beta glucan products have been limited to date. The market acceptance of new
products and technologies, including the beta glucan products, is subject to a
number of factors, including the ability of the product to more effectively and
efficiently meet potential customers’ needs than current products. Antibiotics
and growth hormone supplements are widely used in animal feed. BioAgra must
convince potential customers that Agrastim® is safe
and effective as a feed additive and can be manufactured efficiently and cost
effectively before animal producers will be willing to use the product rather
than existing products such as antibiotics and growth hormone supplements. In
addition, BioAgra must convince potential customers that Purestim™ is safe
for human consumption. To create this consumer demand, BioAgra will have to
successfully market and sell its products. BioAgra has been conducting
independent research studies and field trials as part of its overall marketing
efforts, which has delayed market acceptance of Agrastim® and
Purestim™. While
results in such research studies and field trials have been favorable, the beta
glucan products may not be viewed by consumers as an improvement over existing
products and may not achieve commercial acceptance.
We
may be unable to meet our ongoing needs for additional capital.
We cannot
accurately predict how much funding we will need to implement our strategic
business plan or to continue operations. Our future capital requirements, the
likelihood that we can obtain money and the terms of any financing will be
influenced by many different factors, including:
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our
revenues and the revenues of our joint
venture;
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·
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the
status of competing products in the
marketplace;
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our
performance in the marketplace;
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·
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our
overall financial condition;
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·
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our
business prospects;
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the
perception of our growth potential by the public, including potential
lenders;
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·
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our
ability to enter into joint venture or licensing relationships to achieve
a market presence; and
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·
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our
progress in developing, marketing and selling the beta glucan
products.
|
If we
cannot obtain adequate financing or if the terms on which we are able to acquire
financing are unfavorable, our business and financial condition could be
negatively affected. We may have to delay, scale back or eliminate some or all
of our development and marketing programs, if any. We may also have to go to
third parties to seek financing and, in exchange, we may have to give up rights
to some of our technologies, patents, patent applications, potential products or
other assets.
We
may be unable to hire and retain key personnel.
Our
future success depends on our ability to attract qualified personnel. We may be
unable to attract or retain these necessary personnel. If we fail to attract or
retain skilled employees, or if our key employee fails to perform in his current
position, we may be unable to assist in bringing the beta glucan products to the
marketplace and to generate sufficient revenues to offset operating
costs.
BioAgra
may be unable to hire and retain independent distributors.
BioAgra’s
future success depends on its ability to attract qualified independent
distributors for the beta glucan products. It may be unable to attract or retain
these independent distributors. If BioAgra fails to attract or retain
independent distributors, or if its existing independent distributors fail to
find end users for the beta glucan products, it may be unable to successfully
bring the beta glucan products to the marketplace and to generate sufficient
revenues to offset operating costs.
We
may be unable to obtain and retain appropriate patent, copyright and trademark
protection of our products or manufacturing process.
We
protect our intellectual property rights through patents, trademarks, trade
names, trade secrets and a variety of other measures. However, these measures
may be inadequate to protect our intellectual property or other proprietary
information. Should we encounter any of the following issues with our
intellectual property, our business and financial condition could be negatively
affected.
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Trade secrets may become known
by third parties. Our trade secrets or proprietary information may
become known or be independently developed by
competitors.
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Rights to patents and trade
secrets may be invalidated. Disputes may arise with third parties
over the ownership of our intellectual property rights. Our patents may be
invalidated, circumvented or challenged, and the rights granted under
those patents that provide us with a competitive advantage may be
nullified.
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Problems with future patent
applications. Our pending or future patent applications may not be
approved, or the scope of the granted patent may be less than the coverage
sought.
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Third parties may develop
similar products or manufacturing process. Competitors may develop
similar products, duplicate our products or may design around the patents
that are owned by us. Competitors may develop a similar manufacturing
process, duplicate our manufacturing process or may design around any
patents that are owned by us in relation to the manufacturing
process.
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Laws in other countries may
insufficiently protect intellectual property rights abroad. Foreign
intellectual property laws may not adequately protect our intellectual
property rights abroad. Our failure to protect these rights could
adversely affect our business and financial
condition.
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·
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Litigation may be required to
protect intellectual property rights. Litigation may be necessary
to protect our intellectual property rights and trade secrets, to
determine the validity of and scope of the rights of third parties or to
defend against claims of infringement or invalidity by third parties. This
litigation could be expensive, divert resources and management’s time from
our sales and marketing efforts, and could have a materially adverse
effect on our business, financial condition and results of operations and
on our ability to enter into joint ventures or partnerships with
others.
|
Economic
factors outside our control may have an adverse effect on BioAgra’s revenues and
our income.
BioAgra’s
revenues may be impacted by economic factors that are beyond its control such as
fluctuations in the price of animal feed and human dietary supplements,
outbreaks of diseases in animals, and demand for products related to cattle,
dairy, poultry, equine, swine, aquatic animals and human neutraceuticals and
dietary supplements. Rising animal feed prices and increases in production costs
for livestock producers may cause a reduction in demand, which, in turn, could
adversely impact BioAgra’s revenues. An outbreak of disease, such as avian
influenza or mad cow disease, could result in increased government regulation of
the livestock industry, a serious drop in demand for livestock products, and
adverse publicity materially affecting the animal producers for a significant
period of time, which could adversely impact BioAgra’s business, revenues,
prospects, financial condition, and results of operation.
The
market for feed additives is competitive.
The feed
additive market is competitive. BioAgra will compete with producers of growth
promotion antibiotic products, many of which are large companies with vast
resources allocated to the protection of brand recognition and market share of
their products. BioAgra may also compete with companies producing beta glucan
for other purposes, and companies that produce existing alternatives to growth
promotion antibiotic products, such as organic acids, plant extracts, and
mannoproteins. BioAgra has a competitive disadvantage against many of these
competitors in several different areas, including:
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manufacturing
capabilities;
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diversity
of revenue sources and business
opportunities;
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·
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personnel
and human resources; and
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·
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research
and development capabilities.
|
Larger
companies have long-term advantages over BioAgra in research and new product
development and have a greater ability to withstand periodic downturns in the
feed additive market because they have diverse product lines that can provide
revenue even when there is a downturn in the feed additive market.
If
BioAgra becomes unable to use its manufacturing facility, it may be unable to
manufacture its beta glucan products for an extended period of
time.
BioAgra
manufactures at a single location in Georgia, which currently runs a single
production line. Manufacturing products at a single site presents risks because
a disaster, such as a fire or hurricane, may interrupt manufacturing capability.
In such an event, BioAgra will have to resort to alternative sources of
manufacturing that could increase costs, as well as result in significant
delays. Any increase in costs of manufacturing, slowdowns or shutdowns by
BioAgra could have a material adverse effect on our future business, financial
condition and results of operations.
BioAgra’s
use of a single manufacturing facility may restrict its ability to attract
customers.
BioAgra
will fulfill the needs of varied livestock producers, human dietary supplement
producers and horse owners based on the use of a single manufacturing plant and
a single production line. BioAgra’s manufacturing limitations may restrict its
ability to attract large customers who require certainty in the production
process. If BioAgra is successful, it anticipates expanding manufacturing
operations. While our production area has enough space for three separate
production lines, there is no assurance that BioAgra will have the financial
resources required to expand its production facilities beyond the single
production line currently existing at the Georgia manufacturing
facility.
Manufacturing
capacity restraints and limited experience may have an adverse effect on
BioAgra.
BioAgra
has limited manufacturing capacity and experience. BioAgra may encounter some
difficulties, such as significant unexpected costs and delays, in scaling up the
manufacturing operations of BioAgra to produce quantities required for it to
achieve profitability. The failure to scale-up BioAgra’s manufacturing
operations in a timely and cost-effective manner may adversely affect our
income. We believe that we have adequate capacity to meet anticipated demand in
the near term. However, in the event the demand for the beta glucan products
rapidly increases or spikes in a certain period, BioAgra may not have the
manufacturing ability to fulfill demand, either in its own facilities or through
agreements with third parties. A potential lack of manufacturing capacity may
materially affect BioAgra’s and our reputation, prospects, revenue, income and
results of operation.
An
increase in the cost or a disruption in the flow of BioAgra’s imported yeast
product may decrease our sales and profits.
BioAgra
obtains its entire supply of spent yeast product, which is used to manufacture
the beta glucan products, from a Brazilian supplier. Risks associated with
BioAgra’s use of imported spent yeast include: disruptions in the flow of
imported goods because of factors such as electricity or raw material shortages,
work stoppages, strikes and political unrest; problems with oceanic shipping,
including shipping container shortages; economic crises and international
disputes; increases in the cost of purchasing or shipping foreign merchandise
resulting from the failure to maintain normal trade relations with source
countries; adverse fluctuations in currency exchange rates; and import duties,
import quotas, trade embargoes and other trade sanctions. A disruption in the
flow of spent yeast from the Brazilian supplier or an increase in the cost of
the spent yeast may limit or decrease our sales and profits.
Replacing
BioAgra’s sole supplier of key materials could result in unexpected delays and
expenses.
BioAgra
obtains key materials and services for the beta glucan products from sole source
suppliers, primarily with respect to spent brewer’s or distillery yeast.
Specifically, BioAgra obtains its spent yeast product from a sole source in
Brazil. Should the Brazilian supplier become unable to supply BioAgra with the
spent yeast product, BioAgra will be forced to purchase substitute products. All
of these materials are commercially available elsewhere. However, if BioAgra is
required to locate a new supplier, the substitute or replacement materials may
need to be tested for equivalency. The process of locating a new supplier and
any testing of materials, if necessary, may cause a delay in production of the
beta glucan products and may cause BioAgra to incur additional
expense.
We
have a single controlling shareholder, who has the power to elect a majority of
our board of directors and control our strategic direction.
As of
June 1, 2008, Arizcan Properties Ltd. owned approximately 37% of our outstanding
common stock on a fully diluted basis (assuming that all of our securityholders,
including Arizcan Properties, exercise or convert all of their securities that
are convertible into or exercisable for shares of our common stock). In
addition, as a result of the March 2007 private placement transaction described
under “PROSPECTUS SUMMARY—The Company—Recent Developments,” we
issued to Arizcan Properties warrants and shares of series A nonconvertible
preferred stock. As a result, Arizcan Properties acquired approximately 51% of
our voting power, and, on a fully diluted basis as of June 1, 2008, Arizcan
Properties would hold approximately 87.4% of our voting power if they exercise
the warrant. These shares give Arizcan Properties Ltd. the power to elect a
majority of our board of directors and, through that board control, control our
operations. The ability of other shareholders to influence our direction (for
example, through the election of directors) is therefore limited or not
available.
Sales
of common stock by our controlling shareholder may result in a change of
control.
Arizcan
Properties, Ltd. is our controlling shareholder. Arizcan Properties Ltd. is a
selling stockholder and may offer and sell the shares listed across from its
name as set forth below under “SELLING STOCKHOLDERS.” Arizcan Properties, Ltd.
may cause us to have a change of control if they sell enough of our common stock
by this prospectus or by other means. We are not aware of any present intention
of Arizcan Properties, Ltd. to cause us to have a change of control and we are
not aware of any other arrangements that may result in a change of
control.
We
have a thinly-traded stock and public sale of shares by our controlling
shareholder could cause the market price of our shares to drop
significantly.
As of
June 1, 2008, Arizcan Properties Ltd. owned approximately 37% of our outstanding
common stock on a fully diluted basis (assuming that all of our securityholders,
including Arizcan Properties, exercise or convert all of their securities that
are convertible into or exercisable for shares of our common stock). Arizcan
also holds an additional 51% of our voting power as a result of its ownership of
shares of our series A preferred stock. If Arizcan Properties, Ltd., our
controlling shareholder, holds the shares as p were to begin selling shares in
the market rather than holding all of those shares over a longer term, the added
available supply of shares could cause the market price of our shares to drop.
Furthermore, in light of the large number of shares that it holds and its
generally lower acquisition cost of those shares, Arizcan Properties, Ltd. could
be willing to sell it shares at a price lower than the currently-prevailing
market price, thereby depressing that price.
This
offering and the sale of securities by current stockholders could cause dilution
of existing holders of our common stock by decreasing the price of our common
stock.
The
market price of our common stock could be adversely affected by sales of
substantial amounts of common stock in the public market as a result of this
offering, by investor perception that substantial amounts of common stock could
be sold or by the fact or perception of other events that could have a dilutive
effect on the market for our common stock. As of June 1, 2008, we had 37,168,178
shares of our common stock outstanding, including shares of our common stock
issued as described under “THE COMPANY.” If all of our outstanding options and
warrants were exercised and all of our reserved shares of common stock were
issued, we could have up to 52,755,312 shares of common stock outstanding.
Future transactions with other investors could further depress the price of our
common stock because of additional dilution. See “DESCRIPTION OF COMMON
STOCK.”
The
price of our common stock could be affected by the ability of holders of our
common stock to sell their stock.
The
market price of our common stock will be influenced by the ability of common
stockholders to sell their stock. As of June 1, 2008, approximately 22,064,326
shares of our common stock were freely transferable and constitute the “float”
in the public market for our common stock, and approximately 15,103,852 shares
of our common stock were “restricted” or “control” securities within the meaning
of Rule 144 under the Securities Act of 1933. The restricted or control
securities cannot be sold unless they are registered under the Securities Act of
1933, or unless an exemption from registration is otherwise available, including
the exemption that is contained in Rule 144. All of the shares of our
common stock that are registered for resale under the registration statement to
which this prospectus relates are restricted or control securities.
We
could issue preferred stock that could adversely affect the rights of our common
stockholders.
We are
authorized to issue up to 5,000,000 shares of preferred stock, $.0001 par value
per share. Our articles of incorporation give our board of directors the
authority to issue preferred stock without the approval of our common
stockholders. We may issue preferred stock to finance our operations. We may
authorize the issuance of our preferred stock in one or more series. In
addition, we may set several of the terms of the preferred stock,
including:
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dividend
and liquidation preferences;
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·
|
other
privileges and rights of the shares of each authorized
series.
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The
issuance of large blocks of preferred stock could have a dilutive effect on our
existing stockholders and could negatively impact our existing stockholders’
liquidation preferences. In addition, while we include preferred stock in our
capitalization to improve our financial flexibility, we could possibly issue our
preferred stock to third parties as a method of discouraging, delaying or
preventing a change in control in our present management.
The
resale of our common stock by you may be limited because of its low price, which
could make it more difficult for broker/dealers to sell our common
stock.
The
Securities Enforcement and Penny Stock Reform Act of 1990, as amended, requires
additional disclosure relating to the market for penny stocks in connection with
trades in any stock defined as a penny stock. Regulations enacted by the SEC
generally define a penny stock as an equity security that has a market price of
less than $5.00 per share, subject to some exceptions. Unless an exception
applies, a disclosure schedule explaining the penny stock market and the risks
associated with investing in penny stocks must be delivered before any
transaction in penny stock can occur.
Our
common stock is not a reported security and is currently subject to the
Securities and Exchange Commission’s “penny stock” rules. It is anticipated that
trading in our common stock will continue to be subject to the penny stock rules
for the foreseeable future.
Until
such time as our common stock meets an exception to the penny stock regulations
cited above, trading in our securities is covered by Rule 15g-2 and Rule 15g-9
promulgated under the Securities Exchange Act of 1934. Under Rule 15g-2, before
a broker/dealer can consummate a trade in penny stock, the broker/dealer must
send an additional disclosure, receive a written acknowledgement of such
disclosure from the purchaser of the penny stock, and wait two business days
from the date the additional disclosure was sent. Under Rule 15g-9,
broker/dealers who recommend penny stocks to persons who are not established
customers or accredited investors must make a special determination in writing
for the purchaser that the investment is suitable, and must also obtain the
purchaser’s written agreement to a transaction before the sale.
The penny
stock regulations could limit the ability of broker/dealers to sell our
securities and, thus, the ability of purchasers of our securities to sell their
securities in the secondary market for so long as our common stock has a market
price of less than $5.00 per share.
We
do not expect to pay dividends in the foreseeable future.
We have
never paid cash dividends on our common stock. We do not expect to pay cash
dividends on our common stock at any time in the foreseeable future. The future
payment of dividends directly depends upon our future earnings, capital
requirements, financial requirements and other factors that our board of
directors will consider. Since we do not anticipate paying cash dividends on our
common stock, return on your investment, if any, will depend solely on an
increase, if any, in the market value of our common stock.
The
shares of our common stock offered by this prospectus are being registered for
the account of the selling stockholders named in this prospectus. Therefore, any
proceeds from the sale of our common stock will be received by the related
selling stockholders for their own account. We will not receive any proceeds
from the sale of our common stock offered by this prospectus.
With
respect to the shares of our common stock offered by this prospectus, we
previously received $1,500,000 ($400,000 in cash and an unsecured promissory
note for the remaining $1,100,000) from the sale of series A preferred stock
described in “THE COMPANY.” All of these shares were converted into shares of
our common stock and we did not receive any additional proceeds upon
conversion.
We are
also registering shares of our common stock that will be issued to investors
upon the exercise of warrants issued to a number of selling stockholders
described in “SELLING STOCKHOLDERS.” Assuming that all of these warrants are
exercised for cash, we expect to receive an additional $746,717, substantially
all of which we expect to use for general working capital purposes, to acquire a
revenue-generating company or to acquire technology complimentary to our current
technology and any other licensing agreements or joint venture agreements that
we may enter in the future. However, no assurance can be given that any of these
warrants will be exercised.
We will
incur all of the costs associated with the registration of the shares of our
common stock offered by this prospectus other than underwriting discounts and
selling commissions, if any. See “PLAN OF DISTRIBUTION.”
The
selling stockholders may sell all or a portion of their shares of our stock in
the over-the-counter market at prices prevailing at the time of sale, or related
to the market price at the time of sale, or at other negotiated prices. See
“PLAN OF DISTRIBUTION.”
Our
common stock is presently quoted on the over the counter bulletin board
maintained by the Financial Industry Regulatory Authority (formerly known as the
National Association of Securities Dealers, Inc.) (“FINRA”) under the symbol
“VYTC.OB.” Our common stock is also traded on the Berlin Stock Exchange, the
Frankfurt Stock Exchange, the Munich Stock Exchange and the Xetra Stock Exchange
under the symbols indicated in the table below:
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Foreign
Exchange
|
Trading
Symbol
|
|
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|
|
Berlin
Stock Exchange
|
NPI1.BE
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Frankfurt
Stock Exchange
|
NPI1.F
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Munich
Stock Exchange
|
NPI1.MU
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Xetra
Stock Exchange
|
NPI1.DE
|
The
following table sets forth the range of high and low quotations for our common
stock on the over-the-counter bulletin board for each full quarterly period
during the fiscal year or equivalent period for the fiscal periods ending on the
dates indicated below after giving effect to the reverse stock split of our
common stock that occurred on January 31, 2006 that is described elsewhere in
this prospectus. The quotations were obtained from information published by
FINRA and reflect interdealer prices, without retail mark up, markdown or
commission and may not represent actual transactions.
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High
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Low
|
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|
|
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|
2008
Fiscal Year
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|
|
|
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|
|
|
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|
September
30, 2007
|
|
$ |
0.47 |
|
|
$ |
0.32 |
|
|
December
31, 2007
|
|
|
0.45 |
|
|
|
0.15 |
|
|
March
31, 2008
|
|
|
0.17 |
|
|
|
0.17 |
|
|
June
1, 2008
|
|
|
0.29 |
|
|
|
0.14 |
|
|
|
|
|
|
|
|
|
|
|
|
2007
Fiscal Year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
September
30, 2006
|
|
|
0.49 |
|
|
|
0.41 |
|
|
December
31, 2006
|
|
|
0.41 |
|
|
|
0.41 |
|
|
March
31, 2007
|
|
|
0.32 |
|
|
|
0.32 |
|
|
June
30, 2007
|
|
|
0.42 |
|
|
|
0.35 |
|
|
|
|
|
|
|
|
|
|
|
|
2006
Fiscal Year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September
30, 2005
|
|
|
1.60 |
|
|
|
1.20 |
|
|
December
31, 2005
|
|
|
1.20 |
|
|
|
1.20 |
|
|
March
31, 2006
|
|
|
1.05 |
|
|
|
1.05 |
|
|
June
30, 2006
|
|
|
0.84 |
|
|
|
0.75 |
|
As of
June 1, 2008, there were approximately 557 holders of record of our common
stock.
Our board
of directors determines any payment of dividends. We have not paid any cash
dividends on our common stock in the past, and we do not anticipate paying any
dividends in the foreseeable future. Earnings, if any, are expected to be
retained to fund our future operations. There can be no assurance that we will
pay dividends at any time in the future.
The
following table provides information as of June 30, 2007 (after giving effect to
the reverse stock split of our common stock that occurred on January 31, 2006
that is described elsewhere in this prospectus) regarding compensation plans
(including individual compensation arrangements) under which shares of our
common stock are authorized for issuance. No class of our securities other than
our common stock or options to purchase our common stock is authorized for
issuance under any of our equity compensation plans.
|
Plan
Category
|
Number
of securities
to
be issued upon
exercise
of
outstanding
options,
warrants
and rights
(a)
|
Weighted-average
exercise
price of
outstanding
options,
warrants
and
rights
(b)
|
Number
of securities
remaining
available for
future
issuance under
equity
compensation plans
(excluding
securities
reflected
in column (a)
(c)
|
|
|
|
|
|
|
Equity
compensation plans approved by security holders
|
0
|
–
|
0
|
|
|
|
|
|
|
Equity
compensation plans not approved by security holders (1)
|
2,748,127
|
$3.00
|
226,173
|
|
|
|
|
|
|
Total
|
2,748,127
|
$3.00
|
226,173
|
____________________
(1) The
material features of the plans not approved by the security holders are
described herein under “MANAGEMENT—Director and Executive Officer
Compensation—Stock
Option
Plans.”
We were
incorporated on June 22, 1996 as a Nevada corporation. In January 2006, we
changed our name from NanoPierce Technologies, Inc. to Vyta Corp. Our corporate
offices are located at 370 17th Street, Suite 3640, Denver, Colorado 80202,
and our telephone number is (303) 592-1010. We maintain a website at www.vytacorp.com,
which is not incorporated in and is not a part of this prospectus and should not
be relied on in deciding whether to invest in our common stock.
General
In 2004,
we instituted steps to change our principal business from electronics technology
to biotechnology. In August 2005, we purchased a 50% equity interest in BioAgra,
LLC, a Georgia limited liability company. The remaining 50% was purchased by
Xact Resources International and later assigned to Justin Holdings, Inc., both
unaffiliated parties. BioAgra is engaged in the production, marketing and sale
of Agrastim®, a
natural, non-toxic purified beta-1,3/1,6-D glucan feed additive used to replace
growth promotion antibiotics that are currently in use in the animal feed
industry. In addition to its use as a feed additive, BioAgra intends to include
Agrastim® in
premixed feeds, such as in EquiForce™, a feed
targeted for the equine industry that contains Agrastim®,
vitamins and minerals formulated to supply nutrients to meet the physiological
needs of equine athletes and to boost their immune systems.
BioAgra
is also producing Purestim™, a
purified beta-1,3/1,6-D glucan intended for use by other companies that
manufacture neutraceuticals and dietary supplements for human consumption, and
is designing other products for human, animal and aquaculture consumption based
on beta glucan and other immunoenhancers. Purestim™,
together with Agrastim®, are
sometimes referred to herein as “beta glucan products.”
Prior to
our acquisition of an interest in BioAgra, we were primarily involved in our
patented particle interconnect technology. We acquired the particle technology
in February 1998 to pursue a more focused, strategic application and development
of the particle technology and to commercialize the technology as the NanoPierce
Connection System (NCS™). While
we do not plan, at this time, to continue efforts to manufacture or develop
products that utilize our particle technology, we entered into two provisional
technology license agreements for the manufacture, development and marketing of
products using our particle technology, which recently expired. In
addition, in February 2008, we signed a technology license agreement to permit a
prospective licensee the non-exclusive opportunity to sell products using our
particle interconnect technology for an advance royalty payment. The
license covers the sale of 50 units of product using our particle interconnect
technology. Should the licensee sell 50 units, we will negotiate with
the licensee to enter into a license agreement covering the sale of products
using our particle interconnect technology.
As a
result of our change in business focus from electronics technology to
biotechnology, we sold our interest in one joint venture, and we have several
inactive or discontinued subsidiaries and investments described
below.
|
|
·
|
Exypnotech,
Gmbh. On December 27, 2007, we sold our 49% interest in ExypnoTech,
Gmbh (“ExypnoTech”) to TagStar Systems, GmbH for $250,000 cash pursuant to
a share purchase agreement. ExypnoTech is a company that manufactures and
develops radio frequency identification (“RFID”) components used in the
production of, among other things, smart labels, smart cards and smart
tags. As a result of this sale, we no longer have any interest in
ExypnoTech, and TagStar Systems owns 100% of
ExypnoTech.
|
|
|
·
|
ExypnoTech,
LLC. On June 18, 2004, we organized ExypnoTech, LLC for the purpose
of marketing, primarily in the United States, the RFID components
manufactured by ExypnoTech. ExypnoTech, LLC has had no active operations
since the first calendar quarter of
2005.
|
|
|
·
|
Scimaxx
Solutions, LLC. On September 15, 2003, we entered into a joint
venture with Scimaxx, LLC. The purpose of the joint venture was to provide
the electronics industry with technical solutions to manufacturing
problems based on the need for electrical connectivity. In April 2005,
Scimaxx Solutions ceased
operations.
|
BioAgra,
LLC
BioAgra
Business Strategy
Governments
are currently urging, and consumers are demanding, producers to remove growth
promotion antibiotics from the human food chain supply to reduce the development
in humans of increasingly powerful and virulent strains of antibiotic-resistant
bacteria, which makes treatment for illnesses and diseases more difficult and
expensive. In addition, consumers are demanding more natural, organic,
antibiotic-free foods.
Animals
in the cattle, dairy, poultry, turkey, duck, equine, and swine industries and
aquatic animals, such as shrimp, are currently fed growth promotion antibiotics.
BioAgra is targeting the cattle, dairy, poultry, turkey, duck and swine
industries for the sale of Agrastim® as an
alternative to growth promotion antibiotics used in feed. BioAgra is targeting
the equine industry with a product called EquiForce™ that
contains Agrastim® and has
been formulated to supply nutrients to meet the physiological needs of equine
athletes and to boost their immune systems.
BioAgra
has also begun producing and marketing a new beta glucan product under the name
Purestim™. This
product is sold to companies that manufacture neutraceuticals and dietary
supplements for human consumption. BioAgra’s beta glucan products may be
targeted for other uses in the future.
Background
on Beta Glucan Products and the Need for Alternatives to Growth Promotion
Antibiotics
Agrastim® and
Purestim™ are
produced from spent brewer’s or distillery yeast. The beta glucan products are a
combination of bioactive nutrients and B-glucans that are extracted from the
cell walls of yeast using steam injection and a centrifuging extraction process.
Beta glucan is a natural, non-toxic product that has been shown to stimulate
immune systems in animal, poultry and other organisms. Independent test results
were published in an article titled “The Influence of B-Glucan on Immune
Responses in Broiler Chickens” (“Immunopharmacology and
Immunotoxicology,” Volume 25, 2003 (Marcel Dekker)), demonstrating the
stimulation of the broiler chicken’s immune systems by the B-glucan. BioAgra’s
beta glucan products are designed to enhance the immune system and to promote
accelerated growth in various organisms.
Antibiotics
have been added to animal feed in an effort to produce healthier animals and to
promote faster growth. Scientists, however, now believe that this practice may
lead to unforeseen and unwanted effects. Some studies and articles indicate that
growth promotion antibiotics contained in animal feeds may accumulate in the
animal body and can cause harm to humans, including causing allergic and
abnormal reactions.
The
excessive use of antibiotics, especially growth promotion antibiotics, in animal
feed may convert some bacteria into antibiotic-resistant strains of bacteria
that can infect humans through the consumption of meat products. When a human
develops a resistant strain of bacteria, it becomes difficult and expensive to
treat due to the bacteria’s resistance to antibiotics. The use of antibiotics in
animal feed has already affected many countries in Europe, which have banned the
use of growth promotion antibiotics in animal feed. It is expected that the
United States may also begin to ban or discourage the use of these antibiotics
in animal feed.
Alternatives
to antibiotics, including Agrastim®, are
increasingly in demand by animal farmers and other producers because they lack
the drawbacks of antibiotics and other chemical compounds. Agrastim® is a
natural, non-toxic product that has been proven to stimulate immune systems,
thereby eliminating the usage of antibiotics and growth hormone supplements in
animal feeds. Agrastim® is
designed to enhance the immune system and to promote accelerated growth. We
believe Agrastim® as a
feed additive can help resolve the harmful effects of growth promotion
antibiotics that can be toxic to humans and can produce safe and healthy animal
feed that may be claimed as “drug-free.”
Manufacturing
of the Beta Glucan Products
Raw
Materials
BioAgra
produces its beta glucan products from spent brewer’s or distillery yeast.
Brewer’s yeast is used in the production of alcoholic beverages. Currently,
yeast and other raw materials utilized in the production of the beta glucan
products are purchased from a Brazilian supplier pursuant to invoices
documenting each separate purchase. The yeast is consistent with BioAgra’s
production needs and such arrangements currently are not subject to any volume
limitations or import restrictions. Arrangements are being made with additional
commercial firms that purchase and distribute these types of yeast. BioAgra
believes that there is an adequate supply of these raw materials for the
foreseeable future for BioAgra’s proposed activities. BioAgra intends to
purchase these raw materials from other available worldwide suppliers that can
provide a cost efficient source of high quality raw materials that will permit
it to produce a purified beta glucan product that is at least 80%
pure.
Production
Plant
BioAgra’s
production plant is located at 103 Technology Drive, Hinesville, Georgia 31313.
BioAgra has leased the facility from the Liberty County Industrial Authority
pursuant to an Industrial Lease Agreement, dated March 1, 2005, for a period of
120 calendar months at $12,000 per month (of which certain amount have been paid
other than monthly as permitted by the lessor). At the expiration of the lease
term, BioAgra has the option to purchase the leased premises (real estate and
improvement) for $500,000. The facility is approximately 30,000 square feet,
consisting of both office space and a production area and is also expected to
include a research and development laboratory. The production area has enough
space to hold three separate production lines in its current configuration,
although as of this date, BioAgra only has a single production line. The
facility is located on approximately 7.29 acres.
The plant
commenced operations in March of 2006. The plant went through a shakedown period
in which BioAgra evaluated and better understood the controls and efficiencies
of the plant. BioAgra started operating at full-scale capacity in April of 2006.
The production line has a designed capacity of producing 10,000 kilograms of
Agrastim® per
month. BioAgra has approximately 2,800 kilograms of packaged and drummed pure
Agrastim® finished
and on the floor for sale and delivery. It has discontinued production at this
time until at least 50% of the Agrastim® in
inventory has been sold.
Production
Process
In
manufacturing the beta glucan product, the cell walls of the baker’s or
distillery yeast are exposed to high temperatures using steam injection. The
mixture is then separated into solid and liquid portions by a centrifuge, and
the liquid portion is discarded. The solid portion is thoroughly washed with
water and then exposed to elevated temperatures using stream injection
extracting a residue. The residue is separated again into solid and liquid
portions by a centrifuge and the liquid portion is discarded. Finally, the solid
portion is thoroughly washed with water and the residue is spray dried, which
results in the beta glucan product.
Agrastim® is a
concentrate that many farmers or producers will be unable to mix with feed in
the required proportions. Therefore, BioAgra expects to produce specialized
premixes containing Agrastim® and
vitamins and/or mannoproteins. Mannoproteins are purified from the yeast during
the manufacturing process. BioAgra will be able to sell to a broader array of
customers through the production of premixed products. EquiForce™, a
premixed product designed for and marketed to the racing and sport horse
industry, is one of BioAgra’s first premixed products and is a combination of
vitamins, minerals and Agrastim®.
Purestim™ is a
concentrate that is being marketed and sold as an additive to companies that
manufacture and sell neutraceuticals and dietary supplements. These companies
will purchase the Purestim™ as an
ingredient for inclusion in existing products. There has been limited sales of
Purestim™ to
customers of AHD International.
Employees
BioAgra
has three employees. In addition to its two managers and executive officers,
there is one employee employed as a Plant Manager, a Research and Development
Director and an Administrative Assistant. During production cycles, BioAgra
hires additional employees consisting of one manager and two crew members for
each of two 12 hour shifts. When BioAgra begins full-scale operations, these
temporary employees are expected to be hired on a full-time basis.
Marketing
and Distribution
BioAgra
is focusing its initial marketing efforts on the animal feed industry. BioAgra
has targeted its efforts in the State of Georgia and those states in which the
vast majority of poultry producers in the United States are located. The initial
marketing strategy was to penetrate the poultry industry by utilizing existing
industry distributors or direct sales on a national and international basis.
BioAgra also marketed Agrastim® by
attendance at various poultry-related conventions. After successful testing of
Agrastim® with
other animals, BioAgra has expanded the scope of its marketing to include the
cattle, dairy, swine, aquatic animal, equine and dietary supplement
industries.
In
addition to BioAgra’s agreement with AHD International, LLC, BioAgra has one
independent distributor, Agra Nutrition, LLC, that is marketing Agrastim® on a
national basis and in several foreign countries. Agra Nutrition, LLC is owned by
Mr. Warren Robold who also functions as Director of U.S. and International Sales
for BioAgra.
Poultry and Turkey
Industry
Poultry
is the largest worldwide source of protein food for human consumption. In
addition, poultry can be raised in small geographical areas. In the United
States, approximately 8 billion chickens and 275 million turkeys are farmed for
“broiler” production and processing each year. Each broiler chicken consumes an
average of 10 pounds of feed during its approximately 42 day life span for a
total of 40 million tons of feed for all the broiler chickens in the United
States each year. Each turkey consumes approximately 110 pounds of feed for a
total of 13.75 million tons of feed. In addition, there are approximately 450
million egg producing chickens raised in the United States each year, which
consume approximately 132 pounds of feed over a period of 1.5 years for a total
of 27 million tons of feed.
Cattle
Industry
The
United States has the largest fed-cattle industry in the world, and is the
world’s largest producer of beef for domestic and export use. According to the
National Cattleman’s Beef Association, there are roughly 800,000 beef producers
in the United States and approximately 97.1 million cattle in the United States.
During the production process, cattle usually spend four to six months in a
feedlot, during which time they are fed scientifically formulated rations.
Producers and veterinarians take great care to use only the optimal amount of
antibiotics needed to maintain an animal in good health. The United States
government through the National AntiMicrobal Resistance Monitoring System
strictly tracks antibiotic resistance as well as products and interventions to
assure the safety of the cattle as well as the beef supply.
Dairy
Industry
According
to Best Food Nation, a group of associations representing all levels of the food
chain, there are approximately 65,000 dairy farms and approximately 9,041,000
dairy cows in the United States. Each year, the United States produces over 1
billion pounds of butter, more than 7 billion pounds of cheese, over 1 billion
pounds of nonfat dry milk, 1.5 billion pounds of yogurts, and 1 billion gallons
of ice cream. Dairy cows eat roughly 100 pounds of feed each day. Dairy farmers
typically employ professional nutritionists to develop scientifically formulated
diets for their cows. If a cow is being treated with antibiotics, she is taken
out of the milking herd and not put back into the herd until her milk tests free
of antibiotics. Applicable regulations require every tank load of milk entering
dairy processing plants to be strictly tested for animal drug residues. The
United States dairy industry conducts more than 3.5 million tests each year to
ensure that antibiotics are kept out of the milk supply. Any tanker that tests
positive is disposed of immediately, never reaching the public.
Swine
Industry
Another
industry where the use of antibiotics among animals is of concern is the swine
industry. According to the United States Department of Agriculture, pork is the
number one meat consumed in the world and there are approximately 70,000 hog
farms in the United States today. Antibiotics may be given to prevent or treat
disease in hogs; however, a “withdrawal” period is required from the time
antibiotics are administered until it is legal to slaughter the animal. Pigs fed
antibiotics are segregated so that residues can exit the animal’s system and not
be present in the meat. Recently, the pork industry has established programs to
encourage producers to implement management practices that reduce the need for
antibiotics, and to use antibiotics only when other management practices do not,
or will not, succeed in managing a correctly diagnosed problem.
Aquaculture
Industry
Aquaculture
is defined as the production of aquatic animals and plants under controlled
conditions for all or part of their lifecycle. According to the United States
Department of Agriculture’s Economic Research Service, during the last two
decades, the value of United States aquaculture production rose to nearly $1
billion and is one of the fastest growing food-producing sectors. According to
the International Trade
Report produced in 2005 by the United States Department of Agriculture,
U.S. per-capita seafood consumption has remained around 15 pounds through the
late 1980s and 1990s, it is expected to increase as farm-raised products become
cheaper. Currently, the United States consumes nearly 12 billion pounds of fish
a year. By 2025, demand for seafood is projected to grow by another 4.4 billion
pounds above what is consumed today. In addition, it is estimated that by 2020,
50 percent of the U.S. seafood supply will come from aquaculture.
Equine
Industry
In
addition to the use of Agrastim® as an
alternative to antibiotics in animal feed, BioAgra has developed a product with
Agrastim® focused
on racing and performance horses. Racing and performance horses are subject to
the outbreak of debilitating and deadly diseases, such as the Equine Herpesvirus
type 1 that killed six horses in an outbreak in December 2006 in Wellington,
Florida. BioAgra’s EquiForce™ product
has been designed to supply vitamins and minerals needed to meet the
physiological needs of equine athletes. In addition, EquiForce™ contains
Agrastim® to boost
equine immune systems to aid in suppressing bacterial and viral infections and
increasing stamina and resistance to stress. A trial of the EquiForce™ product
was conducted by an equine veterinarian at Fort Valley State University in Fort
Valley, Georgia showing positive immune responses in a controlled study. BioAgra
expects to obtain its first commercial scale order for the product in the near
future.
Neutraceuticals and Dietary
Supplement Industry
Annual
sales of supplements, fortified foods and beverages and neutraceuticals for
human consumption in the United States, are estimated to be approximately $100
billion. The vitamins, minerals and supplements market reached its present size
due to a number of factors, including (i) interest in healthier lifestyles,
living longer and living well, (ii) the publication of research findings
supporting the positive health effects of certain nutritional supplements and
(iii) the aging of the “baby boom” generation combined with the tendency of
consumers to purchase more nutritional supplements and natural foods as they
age. BioAgra is considering the sale of Purestim™ as a
supplement for introduction by outside companies into packaged products for
human consumption.
Customers
BioAgra
is targeting a broad range of customers consisting of both large and small
consumers of animal feed both nationally and internationally to avoid dependency
on one or a small number of customers. In addition, BioAgra is beginning to
target neutraceutical and dietary supplement producers for the sale of
Purestim™ as an
additive in their existing products for human consumption.
On April
1, 2007, BioAgra and AHD International, LLC signed an agreement whereby AHD
International agreed to purchase beta glucan products from BioAgra. The
agreement has a term of five years with the right for successive renewals
provided minimum sales requirements are met. The agreement provides that AHD
International will purchase beta glucan products for resale to various end users
in thirteen countries. The agreement grants AHD International the exclusive
right to sell the beta glucan products to all users in ten countries, including,
Canada, Chile, Brazil, Japan, Vietnam, South Korea, Australia, New Zealand,
Germany and Denmark. In addition, the agreement grants the right to sell the
beta glucan products in an additional three countries (South Africa, Mexico and
the United States), with the exclusivity of such right dependant on the type of
end user sold to and the country involved.
Mid South
Feeds of Alma, Georgia began adding Agrastim® to its
top 5 premium lines of dog food and its top 2 premium brands of horse feed in
May 2006. In addition, Mid South Feeds has recently begun to add Agrastim® to its
equine vitamin supplement, Equi-Match, which has been designed to be fed as a
top-dress supplement for horses in training, competition and recovery. Mid South
Feeds has over 175 distributors in Florida, Georgia, Alabama, Virginia,
Kentucky, North Carolina and South Carolina. Besides manufacturing dog and horse
feed, Mid South also manufactures fish and shrimp feed, and starter feed for
dairy cattle and swine. To date, sales of Agrastim® by
MidSouth have been limited.
Management
Managers and
Officers
BioAgra
is a manager-managed Georgia limited liability company. The managers and
officers of BioAgra are as follows:
|
Name
|
Position
|
|
|
|
|
Neal
Bartoletta
|
Manager,
President and Chief Executive Officer
|
|
|
|
|
Paul
H. Metzinger
|
Manager,
Executive Vice President, Chief Financial Officer and
Secretary
|
Biographical
Information
Biographical
information regarding Mr. Metzinger is set forth in “MANAGEMENT.” The following
is biographical information about Mr. Bartoletta:
Mr.
Bartoletta has served as the President and a Manager of BioAgra, LLC since
December 2004. From 1980 to 1991, Mr. Bartoletta served as the President of Bart
Warehousing Corp in South Kearny, New Jersey, and from 1978 to 1999, as the
President of N.J. Bart Corp, Elizabeth, New Jersey. From 1998 to the present, he
has served as the President of Xact Resource International, Inc. of Boca Raton,
Florida. In 2006, Mr. Bartoletta was appointed the President of Justin Holdings,
Inc. of Boca Raton, Florida. Justin Holdings is the owner of the other 50%
equity interest in BioAgra. Mr. Bartoletta is a graduate of the Academy of
Advanced Traffic.
Joint
Venture Partner
As
described elsewhere in this prospectus, we own a 50% interest in BioAgra. The
remaining 50% of BioAgra is owned by Justin Holdings, Inc., a Florida
corporation. Justin Holdings, Inc. is a holding company that currently has no
other investments and no other substantial business activities other than its
ownership interest in BioAgra. All of the outstanding capital stock of Justin
Holdings is owned by Neal Bartoletta, who is also the sole officer and director
of Justin Holdings and is the manager, president and CEO of BioAgra. Justin
Holdings acquired a 50% ownership interest in BioAgra as the result of the
assignment by Xact Resources of its membership interest in BioAgra in February
2006.
Particle
Technology
On
February 26, 1998, we acquired the intellectual property rights related to our
particle interconnect technology from Particle Interconnect Corporation, a
Colorado corporation. We acquired the particle technology to pursue a more
focused, strategic application and development of the particle technology and to
commercialize the technology as the NanoPierce Connection System (NCS™). NCS is
an alternative method of providing temporary or permanent electrical connections
between different flexible, rigid, metallic and non-metallic surfaces. Through
the use of the particle technology, we can also attach semiconductors directly
to various surfaces. While we do not plan, at this time, to continue efforts to
manufacture or develop products that utilize our particle technology, we will
pursue the licensing of our technology to third parties.
In
November 2006, we signed a six-month technology license agreement to permit a
prospective licensee the non-exclusive opportunity to conduct a market survey
relating to our particle interconnect technology that was extended in May 2007
for an additional six-month period. In January 2007, we signed a separate
six-month technology licensing agreement to permit a different prospective
licensee the non-exclusive opportunity to conduct a market survey relating to
our particle interconnect technology that was extended in July 2007 for an
additional six-month period. Each of these technology license agreements has
expired.
In
February 2008, we signed a technology license agreement to permit a prospective
licensee the non-exclusive opportunity to sell products using our particle
interconnect technology for an advance royalty payment. The license
covers the sale of 50 units of product using our particle interconnect
technology. Should the licensee sell 50 units, we will negotiate with
the licensee to enter into a license agreement covering the sale of products
using our particle interconnect technology.
ExypnoTech,
Gmbh
As
described elsewhere in this prospectus, we sold our 49% interest in ExypnoTech
in December 2007. ExypnoTech is involved in the manufacture and development of
RFID components used in the manufacture of, among other things, smart labels,
smart cards and smart tags. RFID components are used to identify objects by
short-range radio over a few millimeters to distances as great as a meter. RFID
inlays consist of a small transponder chip bonded onto a metal foil antenna on
an exceptionally thin and small plastic or paper sheet. ExypnoTech offers RFID
components using a method of ultrasonic bonding originally developed by
us.
Our
research and development activities were formerly conducted through NanoPierce
Connection Systems, Inc., a subsidiary with no active operations since prior to
2005, and ExypnoTech, a joint investment until December 2007 as described
elsewhere in this prospectus. For the fiscal years ended June 30, 2007, 2006 and
2005 and for the nine months ended March 31, 2008, we incurred no research and
development expenses.
We
anticipate that a substantial amount of research and development activities will
occur at BioAgra, LLC. The expected activities include testing Agrastim® and
Purestim™ for
quality control and the development of new premixed products containing
Agrastim® that
will allow BioAgra to market and sell to a broader range of customers. BioAgra
expects to fund and build an extensive research and development laboratory at
its main facility and has adequate space at the facility to build such a
laboratory. The laboratory is currently in the design stages.
BioAgra
sponsors independent university research projects for Agrastim®. One
past research project was an equine study completed by Fort Valley State
University in Fort Valley, Georgia. Another research project was conducted by
the University of Georgia relating to the application of Agrastim® in
chicken feed as an alternative to antibiotics to treat necrotic enteritis, a
deadly disease affecting poultry and turkey.
BioAgra
and Agra Nutrition, LLC have conducted, in the past, and are currently
conducting numerous field trials of Agrastim® in all
market applications. These trials provide valuable data relating to the benefits
of using Agrastim® in the
feeds of animals. The dairy market is of particular interest to BioAgra and Agra
Nutrition, LLC because of the dramatic reduction on somatic cell count in milk
after application of Agrastim® in the
feed of dairy cattle. A reduction in somatic cell count is directly related to
an increase in overall milk production and can contribute to longer shelf life
of the milk.
BioAgra
Competition
for beta glucan products in the markets targeted by BioAgra is currently
limited. The United States and many other countries are in the process of
eliminating or plan to eliminate the use of growth promotion antibiotics in the
feed of animals intended for human consumption. There are a limited number of
alternatives to growth promotion antibiotics. Such alternatives include organic
acids, plant extracts such as oregano oil, and mannoproteins. These alternatives
have not experienced a great success rate to date.
Other
potential competitors to BioAgra include those companies already producing beta
glucan for human consumption. This type of “purified” beta glucan is considered
too expensive to use in markets other than for direct human consumption. Other
competitors are those producing beta glucan with a 60% or less bioactivity level
for the markets addressed by BioAgra. “Bioactivity” is the ability to activate
the cells of the immune system, specifically white blood cells that help to kill
and digest foreign materials and infectious microorganisms. The greater the
bioactivity level, the greater the ability to activate the cells of the immune
system. Based upon data provided to us, beta glucan having less than 80%
bioactivity is not effective in the animal feed markets chosen by BioAgra.
BioAgra intends to produce beta glucan with at least 80% bioactivity and intends
to provide a written guarantee to its customers that its beta glucan products
will have a bioactivity level of at least 80%.
Competition
will also consist of established producers of growth promotion antibiotic
products. These are large companies with vast resources allocated to the
protection of the brand recognition and market share of their products. Success
will require people switching from the artificial antibiotic growth products to
beta glucan products.
We are
also aware of one company, Fibona Health Products GmbH, which is promoting yeast
beta glucan products in Europe and the United Kingdom. We do not believe its
products will compete with BioAgra’s beta glucan products.
Particle
Technology
Competition
in the electronic connector and RFID market is fierce. The principal competitive
factors are product quality, performance, price and service. We and our
licensees face competition from well-established firms with other interconnect
technologies. We will face competition from the development of existing and
future competing technologies. There currently exists approximately 28 different
technologies that can be used to create interconnect solutions, including
dendrite crystals, gold dot technology, anisotropic technology (technologies
using materials whose behavior differs in the up/down and left/right
directions), elastomerics (rubber-like synthetic materials) and Z-axis
conductive adhesives. These technologies currently are produced by materials and
chemical suppliers, flexible and rigid printed circuit board manufacturers, as
well as electronics manufacturers who produce their own materials and
interconnect systems.
BioAgra
Progressive
Bioactives License Termination Agreement
On July
11, 2007, BioAgra, LLC entered into a Termination and Mutual General Release
Agreement with Progressive Bioactives, Inc. to terminate the parties’ Technology
License Agreement dated April 15, 2005 that had granted BioAgra the license to
produce and process a yeast beta glucan product. As consideration for
termination of the Technology License Agreement, BioAgra agreed to pay to
Progressive Bioactives 2.5% of its gross sales of beta glucan products from July
1, 2007 through June 30, 2017. Additionally, for a period of two years beginning
on July 1, 2007, BioAgra agreed to use its best efforts not to pursue marketing
and sales of its beta glucan products in the field of livestock, companion
animal, and aquaculture in Canada, South Africa, Australia, Chile, and South
Korea. BioAgra also agreed to indemnify and hold Progressive Bioactives harmless
from any third-party claim arising from any sale of beta glucan into the human
nutrition and cosmetic markets.
The
termination and mutual release agreement further provided that BioAgra has the
right to manufacture beta glucan products utilizing its own intellectual
property, methods and processes, such methods and processes being independent of
and separate from any patent or other intellectual property rights of
Progressive Bioactives. BioAgra and Progressive Bioactives (and its affiliates)
each acknowledged and agreed that their respective beta glucan technology does
not infringe on the technology of the other party and agreed not to sue each
other or any agent, customer, affiliate, representative distributor or other
person acting on behalf of such party for infringement of any current or future
intellectual property rights based on each party’s use of its own methods and
processes for producing beta glucan or any reasonable modifications
thereof.
Progressive
Bioactives and BioAgra each unconditionally released and discharged each other
from any and all claims, defenses, demands, causes of action, liability,
damages, costs and expenses arising from or related to the subject matter of the
license agreement, which they have or may have up through and including the date
of execution of the termination and mutual release agreement, whether such
claims were known or unknown at the time of the agreement.
Development
of Beta Glucan Products
BioAgra
has developed, and continues to work towards new modifications to, its beta
glucan manufacturing process. BioAgra may file for patent protection for its
beta glucan products or may keep its processes and procedures as a trade
secret.
Particle
Technology
We are
currently in the process of attempting to license our NCS™
technology to third parties. NCS™ is a
method where metallized, hard, microscopic particles are deposited onto one of
two contact surfaces, through electrolytic or electro-less plating methods or
other methods. When the two surfaces are pressed together, the conductive
particles penetrate the second contact surface and create an electrical
connection. Bonding of the contact surfaces can be achieved using nonconductive
adhesives or ultrasonic welding. NCS provides advantages to potential users
including lower costs through the usage of less expensive materials, the
elimination of manufacturing steps, improved thermal and electrical properties,
elimination of special environments for application, decreased production time,
easy integration into existing production lines, increased design
miniaturization, adaptability for specific applications, and RF (radio
frequency) performance.
Other
Intellectual Property
We
currently hold 11 patents with the U.S. Patent and Trademark Office. To reduce
expenses, during the fiscal years ended June 30, 2006 and 2005, we abandoned
several of our patent applications. We also hold several trademarks with the
U.S. Patent and Trademark Office in connection with our former name, logo and
services.
BioAgra
has self-certified that all components of its beta glucan products are generally
recognized as safe or GRAS according to the FDA regulations. A GRAS designation
exempts the beta glucan products from the regulations of the FDA and U.S.
Department of Agriculture, permitting the sale of the beta glucan products
anywhere in the United States without obtaining a license. Should BioAgra
determine that the beta glucan products can no longer be recognized as GRAS, it
will be required to sell the beta glucan products as food additives by obtaining
a license to sell from each individual state in which sales would occur. There
is no assurance that BioAgra will be able to successfully obtain or maintain
licenses in all states in which sales are expected to be made or that the cost
of obtaining and maintaining these licenses will not limit BioAgra’s ability to
sell the beta glucan products.
We
believe that we are in compliance with all federal and state laws and
regulations governing our limited operations. Further, we believe that we are in
compliance with all German laws and regulations governing our limited operations
in Germany. Compliance with federal and state environmental laws and regulations
did not have a material effect on our capital expenditures, earnings or
competitive position during the fiscal years ended June 30, 2007 or 2006 or the
nine months ended March 31, 2008.
As of
June 1, 2008, we and our subsidiaries had one employee. Mr. Metzinger is our
only executive officer and has a signed employment agreement with
us.
Our
corporate headquarters are located at 370 17th Street, Suite 3640, Denver,
Colorado 80202. We moved into our current office space on June 27, 2001 and had
a five-year lease on the property, which expired September 2006 and was extended
for a five-year term expiring December 2011. The base rent is approximately
$3,110 per month for the first year of the lease, with annual increases of
approximately $100 per month for each successive year of the lease, plus certain
occupancy costs.
Harvest
Court Litigation
U. S.
District Court Case:
In
connection with a financing obtained in October 2000, we filed various actions
in the United States District Court for the District of Colorado against, among
others, Harvest Court, LLC, Southridge Capital Investments, LLC, Daniel Pickett,
Patricia Singer and Thomson Kernaghan, Ltd. for violations of federal and state
securities laws, conspiracy, aiding and abetting and common law fraud among
other claims. As a result of various procedural rulings, in January 2002, the
United States District Court for the District of Colorado transferred the case
to the United States District Court for the Southern District of New
York.
In this
litigation, Harvest Court, LLC filed counterclaims against us, Paul Metzinger,
Kristi Kampmann, Dr. Neuhaus, Dr. Shaw, a former director Albert Capote and a
number of unrelated third parties. The counterclaims allege violations of
federal securities laws and other laws. Harvest Court, LLC is seeking various
forms of relief including compensatory and punitive damages. Discovery has been
completed and a trial date is expected to be set by the court.
On
January 28, 2008, United States District Court for the Southern District of New
York issued an opinion regarding motions for summary judgment filed by both
parties involved in the law suit. The Court granted Harvest Court’s motion for
summary judgment and denied the motions for summary judgment filed by certain of
our officers in respect to certain counts and granted the motion for summary
judgment in respect to another count.
At this
time, we and our attorneys are reviewing the opinion, considering our options,
and most likely, planning an appeal. The effect of this ruling has no financial
impact on us; however, it is possible that the ultimate outcome of this matter
could result in a material adverse impact on our financial position, results of
operations and/or cash flows.
We intend
to vigorously prosecute this case and does not believe the outcome of this case
will have a material adverse effect on the financial condition, results of
operations or liquidity of the Company. However, it is too early at this time to
determine the ultimate outcome of this case.
In May
2001, Harvest Court, LLC filed suit against us in the Supreme Court of the State
of New York, County of New York. The suit alleges that we breached an October
20, 2000 Stock Purchase Agreement by not issuing 370,945 free trading shares of
our common stock in connection with the reset provisions of the Purchase
Agreement due on the second reset date and approximately 227,265 shares due in
connection with the third reset date. Harvest Court, LLC is seeking the delivery
of such shares or damages in the alternative. In August 2001, the Supreme Court
of the State of New York, County of New York issued a preliminary injunction
ordering us to reserve and not transfer the shares allegedly due to Harvest
Court, LLC. In February 2006, in connection with the reverse stock split of our
common stock described elsewhere in this prospectus, the Supreme Court of the
State of New York, County of New York issued an injunction ordering us to
reserve 3.7% of our issued and outstanding common stock (832,290 shares at
February 13, 2006). We have set aside these shares. We have filed counterclaims
seeking various forms of relief against Harvest Court, LLC. The Supreme Court of
the State of New York, County of New York granted Harvest Court, LLC summary
judgment eliminating our affirmative claims against them. No trial
date has been set.
Depository
Trust Lawsuit
In
May 2004, we filed suit against the Depository Trust and Clearing
Corporation (“DTCC”), the Depository Trust Company (“DTC”), and the National
Securities Clearing Corporation (“NSCC”) in the Second Judicial District Court
of the County of Washoe, State of Nevada. The suit alleges multiple claims under
the Nevada Revised Statutes 90.570, 90.580, 90.660 and 598A.060 and on
other legal bases. The complaint alleges, among other things, that the DTCC, DTC
and NSCC acted in concert to operate the “Stock Borrow Program,” originally
created to address short term delivery failures by sellers of securities in the
stock market. According to the complaint, the DTCC, NSCC and DTC conspired to
maintain significant open fail deliver positions of millions of shares of our
common stock for extended periods of time by using the Stock Borrow Program to
cover these open and unsettled positions. We were seeking damages in the amount
of $25,000,000 and treble damages. Responsive pleadings have been filed by the
defendants. In April 2005, the court granted a motion to dismiss the
lawsuit. We filed an appeal to the Supreme Court of the State of Nevada to
overturn the motion to dismiss the lawsuit. Oral argument on the appeal was
presented before the Nevada State Supreme Court in February 2007. In
September 2007, the Nevada Supreme Court ruled that all of our claims were
preempted by federal law and affirmed the district court’s dismissal of our
complaint. We have petitioned the United States Supreme Court for a writ of
certiorari in this matter. As of this date, we have not been advised of any
ruling.
Other
Litigation
Other
than the above mentioned lawsuits, to the knowledge of our management, there are
no material legal proceedings pending or threatened (other than routine
litigation incidental to business) to which we (or any officer, director,
affiliate of beneficial owner of more than 5% of our voting securities) is
party, or to which our property is subject.
In
connection with our change in business focus from electronics technology to
biotechnology, we completed a corporate restructuring consisting of a private
placement of a new series of convertible preferred stock, which resulted in a
change of who controls us, a reverse stock split of our common stock, and a
subsequent increase in our authorized capital in early 2006. We also changed our
name from NanoPierce Technologies, Inc. to Vyta Corp. Additionally, we
completed an additional private placement of preferred stock in March 2007,
which increased the holdings of our majority stockholder. Lastly, we sold our
49% interest in ExypnoTech.
Private
Placements
On
January 17, 2006, in a private placement transaction exempt from registration
under the Securities Act of 1933, pursuant to Section 4(2) of the Securities Act
of 1933 and Regulation D promulgated thereunder, we issued to Arizcan
Properties, Ltd. a total of 200,000 shares of our newly-designated series A
convertible preferred stock, par value $0.0001 per share, for a purchase price
of $1,500,000. Arizcan Properties is wholly-owned by Triumphant Partners, LLC, a
Colorado limited liability company, which is owned by Stan Richards. For
purposes of acquiring the shares of our series A preferred stock, Arizcan
Properties paid us $400,000 in cash and executed and delivered an unsecured
promissory note bearing interest at 7% for the remaining $1,100,000 payable on
or before one year from the date the series A preferred stock was issued. The
note was paid in full on April 18, 2006. Each share of series A preferred stock
was convertible into 1,500 shares of our common stock, votes as a single class
with our common stock, with each share entitled to 1,200 votes. Arizcan
Properties converted all of the shares of series A preferred stock into
15,000,000 shares of our common stock on February 2, 2006.
On
March 2, 2007, in a private placement transaction, we issued to Arizcan
Properties a total of 500,000 shares of our newly-designated series A
nonconvertible preferred stock for a total purchase price of $500,000 in cash.
In addition to the purchase of the series A nonconvertible preferred stock,
Arizcan Properties purchased for a purchase price of $251,900 a warrant
exercisable for 6,000,000 shares of common stock. This warrant has an
exercise price of $0.50 per share and provides for cashless exercise. As a
result, Arizcan Properties acquired approximately 51% of our voting power, and,
on a fully diluted basis, Arizcan Properties would hold approximately 87.4% of
our voting power if they exercise the warrant.
Reverse
Split
On
January 31, 2006, we affected a reverse stock split of our common stock, whereby
each 20 shares of our common stock, either issued and outstanding or held as
treasury stock was reclassified and changed into one fully-paid and
nonassessable share of our common stock. Our authorized capital with respect to
our common stock was reduced in like manner from 200,000,000 shares to
10,000,000 shares. Our authorized capital with respect to our preferred stock
remained unchanged at 5,000,000 shares. No fractional shares were issued as a
result of the reverse split, and any fractional share interests were rounded up
to the nearest whole share. The reverse split was approved by our board of
directors without stockholder approval in accordance with the requirements of
Nevada law.
Increase
of Authorized Capital
On
January 31, 2006, following the reverse split, our authorized capital with
respect to our common stock was increased from 10,000,000 shares to 200,000,000
shares. Our authorized capital with respect to our preferred stock remained
unchanged. The increase in our authorized capital was recommended by our board
of directors to our stockholders for approval and the stockholders representing
at least a majority of our voting power approved the increase to our authorized
capital by written consent in lieu of a special meeting in accordance with the
requirements of Nevada law.
Name
Change
Concurrently
with the increase to our authorized capital, we changed our name from NanoPierce
Technologies, Inc. to Vyta Corp. The name change was approved by the
stockholders in the same manner as the increase to our authorized capital. As a
result of the name change, our trading symbol changed to “VYTC.”
Sale
of ExypnoTech
On
December 27, 2007, we sold our 49% interest in ExypnoTech, Gmbh to TagStar
Systems, GmbH for $250,000 cash pursuant to a share purchase agreement.
ExypnoTech is a company that manufactures and develops RFID components used in
the production of, among other things, smart labels, smart cards and smart tags.
As a result of this sale, we no longer have any interest in ExypnoTech, and
TagStar Systems owns 100% of ExypnoTech.
The
following discussion should be read in conjunction with, and is qualified in its
entirety by reference to, our consolidated financial statements for the fiscal
years ended June 30, 2007 and 2006 and the unaudited financial statements for
the nine months ended March 31, 2008 and the related notes included elsewhere in
this prospectus. The discussions in this section contain forward-looking
statements that involve risks and uncertainties, and actual results could differ
materially from those discussed below. See “Risk Factors” and “Forward-Looking
Statements” for a discussion of these risks and uncertainties.
Nine
Months Ended March 31, 2008
At March
31, 2008, we had cash, on hand, of $6,431. We intend to use our cash funds to
continue to support operations. We intend to continue to develop the business
opportunity presented by our equity investee, BioAgra and the AgriStim® product.
The development of the business opportunity includes continued marketing efforts
and product testing over the next twelve months.
In the
continuance of our business operations, we do not intend to purchase or sell any
significant assets, and we do not expect a significant change in the number of
employees of the Company.
We are
dependent on raising additional equity and/or debt to fund any negotiated
settlements with our outstanding creditors and meet our ongoing operating
expenses. There is no assurance that we will be able to raise the necessary
equity and/or debt that we will need to be able to negotiate acceptable
settlements with our outstanding creditors or fund our ongoing operating
expenses. We cannot make any assurances that we will be able to raise funds
through such activities.
Fiscal
Year Ended June 30, 2007
At June
30, 2007, we had cash on hand of $354,702, which we do not believe is sufficient
to fund our operations for the next twelve months. We intend to use our cash
funds to continue to support operations. We intend to continue to develop the
business opportunity presented by our investment in an unconsolidated investee,
BioAgra and the Agrastim® product.
The development of this business opportunity includes continued marketing
efforts and product testing over the next twelve months.
In the
continuance of our business operations, we do not intend to purchase or sell any
significant assets and we do not expect a significant change in the number of
our employees.
We are
dependent on raising additional equity and/or, debt to fund any negotiated
settlements with our outstanding creditors and meet our ongoing operating
expenses. There is no assurance that we will be able to raise the necessary
equity and/or debt that we will need to be able to negotiate acceptable
settlements with our outstanding creditors or fund our ongoing operating
expenses. We cannot make any assurances that we will be able to raise funds
through such activities.
Nine
Months Ended March 31, 2008
During
the nine months ended March 31, 2008 and 2007, we did not have any revenues from
operations.
General
and administrative expenses during the nine months ended March 31, 2008 were
$510,901 compared to $1,425,825 for the nine months ended March 31, 2008
($188,633 and $879,058 for the three months ended March 31, 2008 and 2007,
respectively). The decrease of $914,924 is mainly attributable to a decrease of
$350,483 in consulting expenses, a $13,125 decrease in payroll expenses and a
$625,250 decrease in other stock based compensation.
During
the nine months ended March 31, 2008, we recognized a net loss of $1,388,460
compared to a net loss of $2,347,522 during the nine months ended March 31, 2007
($562,842 and $1,260,626 during the three months ended March 31, 2008 and 2007,
respectively). The $959,062 decrease is primarily a result of the $164,234 gain
on the sale of the investment in ExypnoTech, GmbH and the $914,924 decrease in
general and administrative expenses, discussed above, and offset by the $120,091
increase in equity losses of unconsolidated investees.
We
recorded a net loss applicable to common shareholders of $1,416,713 during the
nine months ended March 31, 2008 compared to $2,350,622 during the nine months
ended March 31, 2007 ($572,191 and $1,263,726 for the three months ended March
31, 2008 and 2007, respectively). The decrease of $933,909 was a result of the
decrease in general and administrative expenses of $914,924 and the gain on the
sale of the investment in ExypnoTech, GmbH of $164,234, offset by the $25,153
increase in the accumulated dividends recognized in connection with the
outstanding Series A Preferred Stock.
Fiscal
Year Ended June 30, 2007
During
the fiscal years ended June 30, 2007 and 2006, we did not have any revenues from
operations.
We
recognized $22 in interest income during the fiscal year ended June 30, 2007
compared to $72,307 during the fiscal year ended June 30, 2006. The decrease of
$72,285 is due primarily to our decision to not accrue interest on a loan made
to one of our equity investees, BioAgra, during the year ended June 30, 2007,
due to BioAgra’s inability to make scheduled payments on the note.
General
and administrative expenses during the fiscal year ended June 30, 2007 were
$1,835,973 compared to $893,061 for the fiscal year ended June 30, 2006. The
increase of $942,912 is mainly attributable to an increase in stock-based
compensation expense of $743,750 due to the issuance of 2,350,000 shares under
our stock option plan and the $427,209 increase in consulting expenses offset by
decreases in rent expense, commission expenses, public relations expenses, legal
expenses and payroll expenses.
During
the fiscal year ended June 30, 2007, we recognized a net loss of $4,460,541
compared to a net loss of $2,407,821 during the fiscal year ended June 30, 2006.
The increase of $2,052,720 primarily resulted from the increase of $942,912 in
general and administrative expenses, discussed above and the $1,198,000
provision for loss on the note receivable owed by BioAgra. This increase is
offset by the $235,139 decrease in interest expense during the fiscal year ended
June 30, 2007.
We
recorded a net loss applicable to common shareholders of $4,473,691 during the
year ended June 30, 2007 compared to $3,907,821 during the fiscal year ended
June 30, 2006. The increase of $565,870 was a result of the $1,198,000 provision
for loss on the note receivable offset by the conversion of the preferred stock
during the fiscal year ended June 30, 2006. We recognized a $13,150 deemed
dividend on preferred stock issued during the fiscal year ended June 30,
2007.
Fiscal
Year Ended June 30, 2006
During
the years ended June 30, 2006 and 2005, we did not have any revenues from
operations.
We
recognized $72,307 in interest income during the fiscal year ended June 30,
2006 compared to $17,672 during the fiscal year ended June 30, 2005. The
increase of $54,635 is due primarily to the interest earned on loans to our
equity investee, BioAgra.
General
and administrative expenses during the fiscal year ended June 30, 2006 were
$893,061 compared to $872,203 for the fiscal year ended June 30, 2005. The
increase of $20,858 is mainly attributable to decreases in consulting expenses,
rent expenses, commission expenses and public relations expenses, offset by an
increase in legal expenses and accounting expenses.
During
the fiscal year ended June 30, 2006, we recognized a net loss of $2,407,821
compared to a net loss of $997,616 during the fiscal year ended June 30,
2005. The increase of $1,410,205 primarily resulted from the increase of
$1,253,879 in the equity losses of affiliates, as a result of our recording 100%
of the losses incurred by BioAgra, combined with the $225,978 increase in
interest expense resulting primarily from non-cash expense recorded for warrants
and common stock issued with notes payable, offset by a $120,788 gain on the
extinguishment of liabilities during the fiscal year ended June 30,
2006.
We
recorded a net loss applicable to common shareholders of $3,907,821 during the
year ended June 30, 2006. As a result of the beneficial conversion feature,
net loss applicable to common shareholders was increased by $1,500,000 during
the year ended June 30, 2006.
Nine
Months Ended March 31, 2008
Net cash
used in operating activities during the nine months ended March 31, 2008 was
$518,881, compared to net cash used in operating activities during the nine
months ended March 31, 2007 of $428,096. During the nine months ended March 31,
2008, the net cash used represented a net loss of $1,338,460, adjusted for
certain non-cash items consisting of depreciation expense of $3,459, equity in
losses of unconsolidated investees of $1,041,806, and a gain on the sale of our
investment in unconsolidated investee (ExypnoTech, GmbH) of
$164,234.
During
the nine months ended March 31, 2007, the net cash used represented a net loss
of $2,347,522, adjusted for certain non-cash items consisting of the
amortization and depreciation expense of $353,109, equity in losses of
unconsolidated investees of $921,715 and options issued for compensation of
$625,250.
During
the nine months ended March 31, 2008, we raised $670,625 cash through the sale
of 4,438,338 shares of restricted common stock. Subsequent to March 31, 2008, we
issued an additional 1,380,000 shares of our common stock for $207,000
cash.
During
the nine months ended March 31, 2007, we received $651,900 cash, which was a
prepayment on a series of preferred stock, which was issued in March
2007.
During
the year ended June 30, 2006, we loaned $1,686,570 to BioAgra through a series
of secured, 7.5% promissory notes, which were due over the period from June 30
through October 31, 2006. On June 26, 2006, we agreed to combine all of the
promissory notes and accrued interest of $40,257 into a $1,726,827 secured, 7.5%
promissory note with payments to be made monthly starting October 31, 2006,
through October 31, 2007. The funds were loaned to facilitate BioAgra's
completion of its first production line and to support operations. The
promissory note is collateralized by all BioAgra assets. Additionally, the
promissory note is to be paid in full prior to any distributions being made to
the members of the joint venture. During the year ended June 30, 2007, the note
was reduced by $1,478,584, which represents our equity investment in BioAgra
remaining at June 30, 2007.
During
the year ended June 30, 2007, we advanced an additional $1,182,784 to BioAgra.
In October 2007, we executed a second, 7.5% promissory note for $1,182,784 with
BioAgra with the same terms as the note above, but the note did not provide for
scheduled payments. We have classified these notes receivable as non-current
assets on the balance sheet and are not accruing interest on these notes
receivable, as they are currently in default and non-performing.
During
the nine months ended March 31, 2008, we advanced an additional $750,074 to
BioAgra at 7.5% interest. In October 2007, we executed a second, 7.5% promissory
note for $1,182,784 with BioAgra with the same terms as the note above, but the
note did not provide for scheduled payments. On March 31, 2008, we executed a
third, 7.5% promissory note for $486,939 with BioAgra with the same terms as the
note above, but did not provide for scheduled payments. We have classified these
notes receivable as non-current assets on the balance sheet and are not accruing
interest on these notes receivable, as they are currently in default and
non-performing.
During
the fourth quarter of the year ended June 30, 2007, we made a decision to impair
the value of the note receivable. This decision was based on factors including
our evaluation of past and current operating results, failure of BioAgra to make
scheduled payments and our continuing support of the operational efforts of
BioAgra. We also considered the fair value of BioAgra’s assets and liabilities
in making the decision. As a result of this decision, we recorded an impairment
charge of $1,198,000 in the fourth quarter ended June 30, 2007.
On
December 27, 2007, we executed a Share Purchase Agreement with TagStar, GmbH,
the holder of the 51% equity interest in ExypnoTech, GmbH, to sell our 49%
equity interest to TagStar for cash of $250,000. We received the funds on
January 2, 2008. At December 27, 2007, our investment in ExypnoTech, GmbH was
$217,649. We recorded a gain of $164,234 on the sale (which includes a $131,883
reduction to other comprehensive income related to the ExypnoTech, GmbH
cumulative translation adjustment) of ExypnoTech, GmbH.
During
the 2008 fiscal year, we intend to continue our efforts to aid BioAgra with the
continuing development of its sales, nationally and internationally in other
animal feed markets, such as the equine and the swine markets. In addition, in
January 2007, we signed a six-month technology agreement to permit a prospective
licensee the opportunity to conduct a market survey relating to its NCOS™
technology. The agreement was not renewed. However, we believe that if the
market survey is favorable the technology agreement may mature into a royalty
paying commercial license the terms and conditions of which are under
negotiation with the perspective licensee.
To the
extent our operations are not sufficient to fund our capital requirements; we
may enter into a revolving loan agreement with financial institutions or attempt
to raise capital through the sale of additional capital stock or through the
issuance of debt. At the present time we do not have a revolving loan agreement
with any financial institution nor can we provide any assurance that we will be
able to enter into any such agreement in the future or be able to raise funds
through the further issuance of debt or equity.
Fiscal
Year Ended June 30, 2007
Net cash
used in operating activities in 2007 was $612,724, compared to net cash used in
operating activities in 2006 of $878,306. In 2007, the net cash used represented
a net loss of $4,460,541, adjusted for certain non-cash items consisting of
amortization and depreciation expense of $441,584, equity in net losses of
unconsolidated investees of $1,426,590, a provision for loss on a note
receivable of $1,198,000, and $743,750 in options issued for
compensation.
In 2006,
the net cash used represented a net loss of $2,407,821, adjusted certain
non-cash items consisting of the amortization and depreciation expense of
$34,571, equity in net losses of unconsolidated invested of $1,398,202, gain on
the extinguishment of liabilities of $120,788, amortization of discounts on
notes payable of $213,860 and a loss on the revaluation of derivative warrant
liabilities of $74,295.
During
the fiscal year ended June 30, 2007, we raised $1,255,950 cash through the sale
of 8,373,000 shares of its restricted common stock.
During
the fiscal year ended June 30, 2007, we raised $251,900 through the sale of a
warrant to purchase 6,000,000 shares of restricted common stock. The warrant has
an exercise price of $0.50 per share and provides for a cashless
exercise.
During
the fiscal year ended June 30, 2007, we raised $500,000 through the sale of
500,000 shares of our Series A nonconvertible preferred stock to Arizcan. The
shares provide that when voting as a single class, the shares have the votes and
voting power that at all times is greater by 1% than the combined voting power
of all other classes of securities entitled to vote on any matter. As a result
of the issuance, Arizcan acquired approximately 51% of our voting power. We have
the right, solely at our discretion, to redeem the shares in ten years at 130%
of deemed par value.
During
the fiscal year ended June 30, 2007, we raised $50,000 through an unsecured, 8%
promissory note, due in March 2008. In June 2007, the holder of the note agreed
to accept 333,333 shares of our common stock as payment on the
note.
During
the fiscal year ended June 30, 2006, we raised $632,372 cash through the sale of
790,467 shares of our restricted common stock and warrants to purchase 746,717
shares of our restricted common stock.
During
the fiscal year ended June 30, 2006, we raised $1,535,000 cash through the
exercise of 1,535,000 warrants with an exercise price of $1.00 per
share.
During
the fiscal year ended June 30, 2006, we purchased a 50% equity interest in
BioAgra for $905,000 cash (which includes the $405,000 advanced to Exact
Resources during the fiscal year ended June 30, 2005) and a note payable of
$595,000 which was paid in full in September 2005.
During
the fiscal year ended June 30, 2006, we completed the sale of 200,000 shares of
our series A preferred stock for $1,500,000 cash. In February 2006, Arizcan
converted the 200,000 shares of preferred stock into 15,000,000 shares of our
restricted common stock. Upon conversion, Arizcan held approximately 67% of our
issued and outstanding common stock.
During
the year ended June 30, 2006, we loaned $1,686,570 to BioAgra through a series
of secured, 7.5% promissory notes, which were due over the period from June 30
through October 31, 2006. On June 26, 2006, we agreed to combine all of the
promissory notes and accrued interest of $40,257 into a $1,726,827 secured, 7.5%
promissory note with payments to be made monthly starting October 31, 2006,
through October 31, 2007. The funds were loaned to facilitate BioAgra’s
completion of its first production line and to support operations. The
promissory note is collateralized by all BioAgra assets. Additionally, the
promissory note is to be paid in full prior to any distributions being made to
the members of the joint venture. During the year ended June 30, 2007, the note
was reduced by $1,371,269, which represents the excess of the BioAgra losses
recognized by us over the adjusted basis of our equity investment in BioAgra
remaining at June 30, 2007.
During
the year ended June 30, 2007, we advanced an additional $1,182,784 to BioAgra at
7.5% interest. We have classified these notes receivable as non-current assets
on the balance sheet and is not accruing interest on these notes receivable, as
they are currently in default and non-performing.
During
the fourth quarter of the year ended June 30, 2007, we made a decision to
provide for a loss on the value of the note receivable. This decision was based
on factors including our evaluation of past and current operating results,
failure of BioAgra to make scheduled payments and our continuing support of the
operational efforts of BioAgra. We also considered the estimated fair value of
BioAgra’s assets and liabilities in making the decision. As a result of this
decision, we recorded a provision for loss of $1,198,000 in the fourth quarter
ended June 30, 2007.
During
the year ended June 30, 2007, we did not have any significant operations, and
our management spent a majority of the fiscal year raising additional funds for
the BioAgra investment and supporting it marketing and sales efforts. During the
2008 fiscal year, we intend to continue our efforts to aid BioAgra with the
continuing development of its sales, nationally and internationally in other
animal feed markets, such as the equine and the swine markets. In addition, in
January 2007, we signed a six-month technology agreement to permit a prospective
licensee the opportunity to conduct a market survey relating to its NCOS™
technology. We believe that if the market survey is favorable the technology
agreement may mature into a royalty paying commercial license the terms and
conditions of which are under negotiation with the perspective
licensee.
To the
extent our operations are not sufficient to fund our capital requirements, we
may enter into a revolving loan agreement with financial institutions or attempt
to raise capital through the sale of additional capital stock or through the
issuance of debt. At the present time we do not have a revolving loan agreement
with any financial institution nor can we provide any assurance that we will be
able to enter into any such agreement in the future or be able to raise funds
through the further issuance of debt or equity.
Fiscal
Year Ended June 30, 2006
Net cash
used in operating activities in 2006 was $878,306, compared to net cash used in
operating activities in 2005 of $544,194. In 2006, the net cash used represented
a net loss of $2,407,821, adjusted certain non-cash items consisting of the
amortization and depreciation expense of $34,571, equity in losses of equity
investees of $1,398,202, gain on the extinguishment of liabilities of $120,788,
amortization of discounts on notes payable of $213,860 and a loss on the
revaluation of derivative warrant liabilities of $74,295.
In 2005,
the net cash used represented a net loss of $997,616, adjusted certain non-cash
items consisting of amortization and depreciation expense of $14,758, equity in
losses of equity investees of $144,323, amortization of discounts on notes
payable of $7,272 and a provision for a loss on a note receivable of
$35,000.
During
the fiscal year ended June 30, 2006, we raised $632,372 cash through the
sale of 790,467 shares of our restricted common stock and warrants to purchase
746,717 shares of our restricted common stock.
During
the fiscal year ended June 30, 2006, we raised $1,535,000 cash through the
exercise of 1,535,000 warrants with an exercise price of $1.00 per
share.
During
the fiscal year ended June 30, 2006, we purchased a 50% equity interest in
BioAgra for $905,000 cash (which includes the $405,000 advanced to Xact
Resources during the fiscal year ended June 30, 2005) and a note payable of
$595,000 which was paid in full in September 2005.
During
the fiscal year ended June 30, 2006, we completed the sale of 200,000
shares of our Series A preferred stock for $1,500,000 cash. In
February 2006, Arizcan converted the 200,000 shares of preferred stock into
15,000,000 shares of our restricted common stock. Upon conversion, Arizcan held
approximately 67% of our issued and outstanding common stock.
During
the fiscal year ended June 30, 2006, we loaned $1,686,570 to BioAgra
through a series of secured, 7.5% promissory notes, which were due over a period
from June 30, 2006 through October 31, 2006. On June 26, 2006, we
agreed to combine all of the promissory notes and accrued interest of $40,257
into a $1,726,827 secured, 7.5% promissory note with payments to be made monthly
starting October 31, 2006. Through October 31, 2007, the entire loan
balance is classified as a non-current asset at June 30, 2006 as BioAgra
has not generated cash flow since its inception. The funds were loaned to
facilitate BioAgra’s completion of its first production line and to support
operations as product is sold. The promissory note is collateralized by all
equipment, furnishings, present and future accounts, collateral securing such
accounts, tangible and intangible personal property and any proceeds from any of
the foregoing located on BioAgra’s premises. Additionally, the promissory note
is to be paid in full prior to any disbursements being made to the members of
the joint venture. At June 30, 2006, interest of $1,064 was accrued. During
the quarter ended September 30, 2006, we advanced an additional $191,250 to
BioAgra.
During
the fiscal year ended June 30, 2005, we loaned $314,000 to an unrelated
third party and received a payment of $50,000, which included interest of
$11,442 during the same period. During the fiscal year ended June 30, 2005,
we loaned Intercell $35,000. In March 2005, Intercell filed for protection under
Chapter 11 of the U.S. Bankruptcy Code. We have recorded a provision
for this note receivable of $35,000.
During
the fiscal year ended June 30, 2005, in connection with an investment in
BioAgra, we advanced Xact Resources International $405,000 to be used for the
purchase of a 50% equity interest in BioAgra, LLC for $1.5 million
cash. The purchase was completed in August 2005.
During
the fiscal year ended June 30, 2005, we received $112,800 (net of $7,200 of
offering costs) in connection with the exercise of warrants for 1,200,000 shares
of our common stock.
During
the fiscal year ended June 30, 2005, we received $41,000 in exchange for an
unsecured 5% note payable from Mr. Metzinger, our officer and director. In
August 2005, the note was paid in full.
During
the fiscal year ended June 30, 2005, we received $150,000 in exchange for
an unsecured 15% per quarter, note payable from an unrelated third party. In
connection with the note, we issued 2,000,000 shares of our restricted common
stock (1,000,000 shares were issued in June 2005 and the remaining
1,000,000 shares were issued in July 2005) with a relative fair value of
$81,718, to be amortized over the term of the note. The note was repaid in full
in September 2005.
During
the fiscal year ended June 30, 2005, we received $25,000 in exchange for an
unsecured 8% per annum note payable, from an unrelated third party. In
connection with the note, we issued 1,500,000 shares of our restricted common
stock (issued in July 2005) with a relative value of $21,428, to be
amortized over the term of the note. The note was paid in full in
August 2005.
During
the year ended June 30, 2006, we did not have any significant operations,
and our management spent a majority of the fiscal year, restructuring and
raising additional funds for the BioAgra investment. During the 2007 fiscal
year, we intend to continue our efforts to aid BioAgra with the continuing
development of its sales, nationally and internationally in other animal feed
markets, such as the equine and the swine markets.
We intend
to raise additional funds to support our operations during the 2007 fiscal year.
Such funds are to be raised through a private offering of preferred stock, the
terms of which are in the process of being finalized.
To the
extent our operations are not sufficient to fund our capital requirements, we
may enter into a revolving loan agreement with financial institutions or attempt
to raise capital through the sale of additional capital stock or through the
issuance of debt. At the present time, we do not have a revolving loan agreement
with any financial institution nor can we provide any assurance that it will be
able to enter into any such agreement in the future or be able to raise funds
through the further issuance of our debt or equity.
Fiscal
Year Ended June 30, 2007
The
discussion and analysis of our financial condition and results of operations are
based upon our consolidated financial statements, which 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 judgments that affect the reported amounts of assets and
liabilities, revenues and expenses and related disclosures of contingent assets
and liabilities. On an on-going basis, we evaluate our estimates, including
those related to deferred revenues; depreciation or property and equipment,
intangible assets such as our intellectual property, financing operations,
currency valuations and contingencies and litigation. We base our estimates on
historical experience and on various other assumptions that are believed to be
reasonable under the circumstances, the results of which form the basis for
making judgments about the carrying values of assets and liabilities that are
not readily apparent from other sources. Actual results may differ from these
estimates under different assumptions or conditions.
We
believe that the following are some of the more critical accounting policies and
estimates (that is those that require the application of significant judgments
by management as to their selection and valuation) used by us:
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·
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stock
based compensation;
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|
·
|
value
of long-lived assets;
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|
|
·
|
investments
in and notes and advances receivable from unconsolidated
investees;
|
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|
·
|
international
operations;
|
|
|
·
|
revenue
recognition and deferred revenue;
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|
·
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contractual
obligations.
|
Stock-based
compensation
Beginning
July 1, 2006, we adopted the provisions of and account for stock-based
compensation in accordance with the Statement of Financial Accounting standards
No. 123 – revised 2004 (“SFAS 123R”), Share-Based Payment, which
replaced Statement of Financial Accounting Standards No. 123 (“SFAS 123”), Accounting for Stock-based
Compensation, and supersedes APB Opinion No. 25 (“APB 25”), Accounting for Stock Issued to
Employees. Under the fair value recognition provisions of this statement,
stock-based compensation cost is measured at the grant date based on the fair
value of the award and is recognized as expense on a straight-line basis over
the requisite service period, which is the vesting period. We elected the
modified-prospective method, under which prior periods are not revised for
comparative purposes. The valuation provisions of SFAS 123R apply to new grants
and to grants that were outstanding as of the effective date and are
subsequently modified. All options granted prior to the adoption of SFAS 123R
and outstanding during the periods presented were fully-vested.
Long-lived
assets
We assess
the impairment of long-lived assets whenever events or changes in circumstances
indicate that the carrying value may not be recoverable. Factors we consider
important that could trigger an impairment review include negative projected
operating performance by us and significant negative industry or economic
trends. We do not believe that there has been any impairment to long-lived
assets as of June 30, 2007.
Investments
in and notes and advances receivable from unconsolidated investees
Entities
where we can exercise significant influence, but not control, are accounted for
under the equity method of accounting. Whether or not we exercise significant
influence with respect to a company depends on an evaluation of several factors
including, among others, representation on the company’s board of directors and
ownership level, generally 20% to 50% interest in the voting securities of the
company including voting rights associated with our holdings in common,
preferred and other convertible instruments in the company. Under the equity
method of accounting, our share of the earnings or losses of these companies is
included in the equity income (loss) section of the consolidated statements of
operations.
A loss in
value of an investment in or in the expected relizability of notes and advances
receivable from an unconsolidated investee that is other than a temporary
decline is recognized as a charge to operations. Evidence of a loss in value
might include, but would not necessarily be limited to, absence of an ability to
recover the carrying amount of the investment or notes and advances receivable
or inability of the investee to sustain an earnings capacity that would justify
the carrying amount of the investment or notes and advances
receivable.
International
operations
Operations
of ExypnoTech (which we maintained a 49% interest in until December 2007) are
located in Germany. ExypnoTech transactions are conducted in currencies other
than the U.S. dollar, (the currency into which the subsidiaries’ historical
financial statements have been translated) primarily the Euro. As a result, we
were previously exposed to adverse movements in foreign currency exchange rates,
foreign political and economic environment, trade barriers, managing foreign
operations and potentially adverse tax consequences. Any of these factors
previously could have a material adverse effect on our financial condition or
results of operations. As described elsewhere in this prospectus, we sold our
interest in ExypnoTech in December 2007.
Revenue
recognition and deferred revenue
Our
revenue recognition policy is significant because future revenue could be a key
component of our results or operations. Revenue results are difficult to
predict, and any shortfall in revenue or delay in recognizing revenue could
cause operating results to vary significantly.
Litigation
We are
involved in certain legal proceedings, as described in “THE COMPANY—Legal
Proceedings” of this prospectus and Note 9 to the consolidated financial
statements included in this prospectus.
We intend
to vigorously prosecute these legal proceedings and does not believe the outcome
of these proceedings will have a material adverse effect on the financial
condition, results of operations or our liquidity. However, it is too early at
this time to determine the ultimate outcome of these matters.
Contractual
obligations
For more
information on our contractual obligations on operating leases, refer to Note 9
of the consolidated financial statements included in this prospectus. At June
30, 2007, our commitments under these obligations were as follows:
|
Year
ending June 30,
|
|
Operating
Leases
|
|
|
|
|
|
|
|
2008
|
|
$ |
38,211 |
|
|
2009
|
|
|
39,415 |
|
|
2010
|
|
|
40,618 |
|
|
2011
|
|
|
20,761 |
|
|
|
|
$ |
139,005 |
|
Off-Balance
Sheet Arrangements
We do not
maintain any off-balance sheet arrangements that have, or that are reasonably
likely to have, a material current or future effect on our financial condition,
changes in financial condition, revenues or expenses, results of operations,
liquidity, capital expenditures or capital resources.
Fiscal
Year Ended June 30, 2006
The
discussion and analysis of our financial condition and results of operations are
based upon our consolidated financial statements, which 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 judgments that affect the reported amounts of assets and
liabilities, revenues and expenses and related disclosures of contingent assets
and liabilities. On an on-going basis, we evaluate our estimates, including
those related to deferred revenues; depreciation or fixed assets, valuation of
intangible assets such as our intellectual property, financing operations,
currency valuations and contingencies and litigation. We base our estimates on
historical experience and on various other assumptions that are believed to be
reasonable under the circumstances, the results of which form the basis for
making judgments about the carrying values of assets and liabilities that are
not readily apparent from other sources. Actual results may differ from these
estimates under different assumptions or conditions. We believe that the
following are some of the more significant accounting policies and methods used
by us:
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|
·
|
stock
based compensation;
|
|
|
·
|
value
of long-lived assets;
|
|
|
·
|
equity
method investments;
|
|
|
·
|
international
operations;
|
|
|
·
|
revenue
recognition and deferred revenue;
|
|
|
·
|
contractual
obligations.
|
Stock-Based
Compensation
SFAS
No. 123, Accounting for Stock Based Compensation, defines a
fair-value-based method of accounting for stock-based employee compensation
plans and transactions in which an entity issues its equity instruments to
acquire goods or services from non-employees, and encourages but does not
require companies to record compensation cost for stock-based employee
compensation plans at fair value.
We have
chosen to account for employee stock-based compensation using the intrinsic
value method prescribed in Accounting Principles Board Opinion No. 25 (APB
No. 25), Accounting for Stock Issued to Employees, and related
interpretations. Accordingly, employee compensation cost for stock options is
measured as the excess, if any, of the estimated fair value of our stock at the
date of the grant over the amount an employee must pay to acquire the
stock.
In
December 2004, the Financial Accounting Standards Board (“FASB”) issued SFAS
No. 123(R), Share-Based Payment, which addresses the accounting for
share-based payment transactions. SFAS No. 123(R) eliminates the ability to
account for share-based compensation transactions using APB 25, and
generally requires instead that such transactions be accounted and recognized in
the statement of operations based on their fair value. SFAS No. 123(R) will
be effective for us beginning with the first fiscal quarter of the fiscal year
ended June 30, 2007. Depending upon the number of and terms of options that
may be granted in future periods, the implementation of this standard could have
a significant impact on our financial position and results of operations in
future periods.
Valuation
of Long-Lived Assets
We assess
the impairment of long-lived assets whenever events or changes in circumstances
indicate that the carrying value may not be recoverable. Factors we consider
important that could trigger an impairment review include negative projected
operating performance by us and significant negative industry or economic
trends. We do not believe that there has been any impairment to long-lived
assets as of June 30, 2006.
Equity
Method Investments
Entities
where we can exercise significant influence, but not control, are accounted for
under the equity method of accounting. Whether or not we exercise significant
influence with respect to a company depends on an evaluation of several factors
including, among others, representation on the company’s board of directors and
ownership level, generally 20% to 50% interest in the voting securities of the
company including voting rights associated with our holdings in common,
preferred and other convertible instruments in the company. Under the equity
method of accounting, our share of the earnings or losses of these companies is
included in the equity income (loss) section of the consolidated statements of
operations.
A loss in
value of an investment that is other than a temporary decline is recognized as a
charge to operations. Evidence of a loss in value might include, but would not
necessarily be limited to, absence of an ability to recover the carrying amount
of the investment or inability of the investee to sustain an earnings capacity
that would justify the carrying amount of the investment.
International
Operations
Operations
of ExypnoTech (which we maintained a 49% interest in until December 2007) are
located in Germany. ExypnoTech transactions are conducted in currencies other
than the U.S. dollar, (the currency into which the subsidiaries’ historical
financial statements have been translated) primarily the Euro. As a result, we
were previously exposed to adverse movements in foreign currency exchange rates,
foreign political and economic environment, trade barriers, managing foreign
operations and potentially adverse tax consequences. Any of these factors
previously could have a material adverse effect on our financial condition or
results of operations. As described elsewhere in this prospectus, we sold our
interest in ExypnoTech in December 2007.
Revenue
Recognition and Deferred Revenue
Our
revenue recognition policy is significant because future revenue could be a key
component of our results or operations. Revenue results are difficult to
predict, and any shortfall in revenue or delay in recognizing revenue could
cause operating results to vary significantly.
Litigation
We are
involved in certain legal proceedings, as described in “THE COMPANY—Legal
Proceedings” and Note 9 to the consolidated financial statements included
herein.
We intend
to vigorously prosecute these legal proceedings and do not believe the outcome
of these proceedings will have a material adverse effect on our financial
condition, results of operations or our liquidity. However, it is too early at
this time to determine the ultimate outcome of these matters.
Contractual
Obligations
For more
information on our contractual obligations on operating leases, refer to
Note 9 of the consolidated financial statements included herein. At June
30, 2006, our commitments under these obligations were as follows:
|
Operating
Leases
|
|
|
|
|
|
|
|
Year
ending June 30,
|
|
|
|
|
|
|
|
|
|
2007
|
|
$ |
39,822 |
|
|
2008
|
|
|
38,211 |
|
|
2009
|
|
|
39,415 |
|
|
2010
|
|
|
40,618 |
|
|
2011
|
|
|
20,761 |
|
|
|
|
$ |
178,827 |
|
In
February 2006, the Financial Accounting Standards Board (“FASB”) issued SFAS
155, Accounting for Certain
Hybrid Financial Instruments. SFAS 155 allows financial instruments that
contain an embedded derivative and that otherwise would require bifunction to
be accounted for as a whole on a fair value basis, at the holder’s
election. SFAS 155 also clarifies and amends certain other provisions of SFAS
133 and SFAS 140. SFAS 155 is effective for us for all financial instruments
issued or acquired after July 1, 2007. The adoption of SFAS 155 did not have an
impact on our financial statements.
In June
2006, the FASB issued Interpretation No. 48, Accounting for Uncertainty in Income
Taxes - An Interpretation of FASB Statement No. 109, (“FIN 48”). FIN 48
clarifies the accounting for uncertainty in income taxes recognized in an
enterprise’s financial statements in accordance with FASB Statement No. 109,
Accounting for Income Taxes. FIN 48 also prescribes a recognition threshold and
measurement attribute for the financial statement recognition and measurement of
a tax position taken or expected to be taken in a tax return that results in a
tax benefit. Additionally, FIN 48 provides guidance on de-recognition, income
statement classification of interest and penalties, accounting in interim
periods, disclosure, and transition. We adopted this statement effective for our
fiscal year beginning July 1 2007. We have described the impact of adopting FIN
48 in our condensed consolidated financial statements in Note 1, Recently Issued
Accounting Pronouncements.
In
December 2007, the FASB issued SFAS No. 141R (Revised 2007), Business Combinations. SFAS
No. 141R will change the accounting for business combinations. Under SFAS No.
141R, an acquiring entity will be required to recognize all the assets acquired
and liabilities assumed in a transaction at the acquisition-date fair value with
limited exceptions. SFAS No. 141R will change the accounting treatment and
disclosure for certain specific items in a business combination. SFAS No. 141R
applies prospectively to business combinations for which the acquisition date is
on or after the beginning of the first annual reporting period beginning on or
after December 15, 2008. Accordingly, any business combinations we engage in
will be recorded and disclosed following existing GAAP until July 1, 2009. We
expect SFAS No. 141R to have an impact on accounting for business combinations
once adopted, but the effect is dependent upon acquisitions at that
time.
In
December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in
Consolidated Financial Statements—An Amendment of ARB No. 51, or SFAS No.
160. SFAS No. 160 establishes new accounting and reporting standards for
the noncontrolling interest in a subsidiary and for the deconsolidation of a
subsidiary. SFAS No. 160 is effective for fiscal years beginning on or after
December 15, 2008. We believe that SFAS 160 will not have a material impact on
our financial position or results of operations.
In
September 2006, the FASB issued SFAS No. 157, Fair Value Measurements. This
statement defines fair value, establishes a framework for measuring fair value
in generally accepted accounting principles, and expands disclosures about fair
value measurements. This statement applies under other accounting pronouncements
that require or permit fair value measurements. SFAS No. 157 will be effective
for us for our fiscal year beginning on July 1, 2008. In November 2007, the FASB
announced that it would defer the effective date of SFAS No. 157 for one year
for all non-financial assets and liabilities, except those that are recognized
or disclosed at fair value in the financial statements on a recurring basis. We
are currently assessing the impact the adoption of SFAS No. 157 may have on our
consolidated financial statements.
In
February 2007, FASB issued SFAS No. 159, The Fair Value Option for Financial
Assets and Financial Liabilities - Including an Amendment of FASB Statement No.
115. This statement will be effective for us for our fiscal year
beginning on July 1, 2008, and will permit entities to choose to measure many
financial instruments and certain other items at fair value. Most of the
provisions of SFAS No. 159 apply only to entities that elect the fair value
option. The possible adoption of this statement is not expected to have a
material effect on our financial statements.
In
September 2006, the SEC issued Staff Accounting Bulletin (SAB) No. 108 in order
to eliminate the diversity of practice surrounding how public companies quantify
financial statement misstatements. In SAB 108, the SEC staff established an
approach that requires quantification of financial statement misstatements based
on the effects of the misstatements on each of our financial statements and the
related financial statement disclosures. SAB No. 108 is effective for our
current 2007 fiscal year end. The adoption of SAB No. 108 did not have an impact
on our consolidated financial statements.
In March
2008, the FASB issued SFAS No. 161 Disclosures about Derivative Instruments and
Hedging Activities. SFAS No. 161 requires additional disclosure related to
derivatives instruments and hedging activities. The provisions of SFAS No. 161
are effective as of July 1, 2009 and the Company is currently evaluating the
impact of adoption.
We are
registering the shares of our common stock offered for resale by this prospectus
in order to satisfy our obligations to the selling stockholders named below
under “—Selling Stockholders Table.” The background for the registration for
each selling stockholder is set forth below.
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|
·
|
In
January 2006, we sold 200,000 shares of our series A preferred stock to
Arizcan Properties as described in “THE COMPANY—Corporate Restructuring.”
Based on the subscription agreement between us and Arizcan Properties, we
are obligated to register for resale under the Securities Act of 1933 a
total of 15,000,000 shares of our common stock that were issued to Arizcan
Properties upon conversion of all 200,000 shares of our series A preferred
stock.
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|
|
·
|
Between
June 2005 and August 2005, we issued 505,000 shares of our common stock to
various business associates as additional consideration for lending us
$325,000 in the form of notes payable and we agreed to register these
shares for resale by this
prospectus.
|
|
|
·
|
Between
October 2005 and December 31, 2005, we issued 43,751 shares of our common
stock to various business associates for $35,000 and we agreed to register
these shares for resale by this
prospectus.
|
|
|
·
|
Between
November 2005 and January 31, 2006, we issued 746,716 shares of our common
stock, together with warrants to purchase 746,716 shares of our common
stock to various business associates for a total of $572,373 and we agreed
to register the shares of our common stock that will be held by each of
these stockholders assuming they exercise all of these
warrants.
|
|
|
·
|
In
June 2005, we agreed to issue 50,000 shares of our common stock to
business associates for a commission on efforts in aiding our capital
raising efforts and we agreed to register the shares for resale by this
prospectus.
|
The
shares of our common stock offered by this prospectus are being sold for the
account of the selling stockholders identified in the following table. The
information in the following table and footnotes is based solely on information
furnished to us by the selling stockholders which, for each selling stockholder,
includes:
(a) the
name and address of the selling stockholder;
(b) any
position, office or other material relationship, if any, which the selling
stockholder has had with us, our predecessors or our affiliates within the past
three years;
(c) the
number of shares of our common stock currently beneficially owned by the selling
stockholder and the percentage that those shares of our common stock represent
of all of our outstanding common stock as of June 1, 2008 (on a fully-diluted
basis);
(d) the
number of shares of our common stock offered by the selling stockholder;
and
(e) the
amount and, if 1% or more, the percentage of shares of our common stock that
will be beneficially owned by the selling stockholder after completion of the
offering, assuming the sale of all of the shares of our common stock as shown in
(d) above as of June 1, 2008 (on a fully-diluted basis).
Except as
indicated in the footnotes to this table, the persons named in the table have
sole voting and investment power with respect to all shares of our common stock
shown as beneficially owned by them. Each selling stockholder has represented to
us that it is not a broker-dealer nor is affiliated with a
broker-dealer.
|
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
|
Name
and address of
Selling
stockholder
|
Material
relationship with Vyta Corp within the last
3
years
|
Amount
of common stock/percentage of common stock owned before
offering
|
Amount
of common stock offered
|
Amount of common
stock/percentage of common stock owned after offering(1)
|
|
|
|
|
|
|
|
Arizcan
Properties, Ltd.(2)
77
South Adams, Suite 906
Denver,
CO 80209
|
(2)
|
19,565,770
/ 36.47%
|
15,000,000
|
4,565,770
/ 8.65%
|
|
|
|
|
|
|
|
Terry
Allen
10414
Ashcroft Way
Fairfax,
VA 22032
|
None
|
30,000(3)/*
|
30,000(3)
|
0 /
-
|
|
|
|
|
|
|
|
Steve
Anderson
6770
E. Exposition Avenue
Denver,
CO 80224
|
None
|
250,000(3)
/ *
|
250,000(3)
|
0 /
-
|
|
|
|
|
|
|
|
Dr.
Robert Belihar
912
Saddleview Court
Franklin,
TN 37067
|
None
|
12,500(3)
/ *
|
12,500(3)
|
0 /
-
|
|
|
|
|
|
|
|
Bottom
Line Advisors Inc.(4)
13314
Lost Key Place
Bradenton,
FL 34202-5002
|
None
|
62,500(3)
/ *
|
62,500(3)
|
0 /
-
|
|
|
|
|
|
|
|
Dennis
Cionetti and Jeanette Cionetti, JTTEN
334
Clermont Street Parkway
Denver,
CO 80220
|
None
|
25,000(3)
/ *
|
25,000(3)
|
0 /
-
|
|
|
|
|
|
|
|
Vic
Cionetti
94
South Rosemary Street
Denver,
CO 80230
|
None
|
25,000(3)
/ *
|
25,000(3)
|
0 /
-
|
|
|
|
|
|
|
|
Zuni
Kitchen LLC(5)
450
Dahlia Street
Denver,
CO 80220
|
None
|
12,500(3)
/ *
|
12,500(3)
|
0 /
-
|
|
|
|
|
|
|
|
Jose
Davila
2183
Pamplona Court
Escondido,
CA 92025
|
None
|
25,000
/ *
|
25,000
|
0 /
-
|
|
|
|
|
|
|
|
Marty
Estes
6753
Norris Farm Road
Trussville,
AL 35173
|
None
|
25,000
/ *
|
25,000
|
0 /
-
|
|
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
|
Name
and address of
Selling
stockholder
|
Material
relationship with Vyta Corp within the last
3
years
|
Amount
of common stock/percentage of common stock owned before
offering
|
Amount
of common stock offered
|
Amount of common
stock/percentage of common stock owned after offering(1)
|
|
|
|
|
|
|
|
Gerald
Dooher
PO
Box 2408
Edwards,
CO 81635
|
None
|
29,167(3)
/ *
|
25,000(3)
|
4,167/
*
|
|
|
|
|
|
|
|
Terrence
Dooher
5939
S. Franklin Street
Littleton,
CO 80121
|
None
|
26,250(3)
/ *
|
25,000(3)
|
1,250
/ *
|
|
|
|
|
|
|
|
Dennis
Ferraro
11643
Shoshone Way
Denver,
CO 80294-2630
|
None
|
69,600(3)
/ *
|
62,500(3)
|
7,100
/ *
|
|
|
|
|
|
|
|
Christopher
Gilbert
2963
Albion Street
Denver,
CO 80207
|
None
|
12,500(3)
/ *
|
12,500(3)
|
0 /
-
|
|
|
|
|
|
|
|
Marty
Ida
8776
N. 107th Street, PO Box 94
Longmont,
CO 80502-0094
|
None
|
194,000(3)
/ *
|
187,500(3)
|
6,500
/ *
|
|
|
|
|
|
|
|
Robert
Ida
1615
W. 113th Avenue
Denver,
CO 80234-2603
|
None
|
187,500(3)
/ *
|
187,500(3)
|
0 /
-
|
|
|
|
|
|
|
|
Leigh
Kalin
541
High Street
Denver,
CO 80218
|
None
|
25,000(3)
/ *
|
25,000(3)
|
0 /
-
|
|
|
|
|
|
|
|
Kent
Kloock
82
Glenwood Terrace Ext.
Stuart,
VA 24171
|
None
|
131,384(3)
/ *
|
118,434(3)
|
12,950
/ *
|
|
|
|
|
|
|
|
John
Krupa
c/o
Mallory Smith
11211
E. Arapahoe Road, Ste. 116
Centennial,
CO 80112
|
None
|
112,500
/ *
|
100,000
|
12,500
/ *
|
|
|
|
|
|
|
|
LZF,
LLC(6)
c/o
Robert S. Hoover
Krabacher
& Sanders, P.C.
201
N. Mill Street, Ste. 201
Aspen,
CO 81611-1557
|
None
|
50,000(3) /
*
|
50,000(3)
|
0 /
-
|
|
|
|
|
|
|
|
James
T. McDonnell
801
Garfield Street
Denver,
CO 80206
|
None
|
12,500(3)
/ *
|
12,500(3)
|
0 /
-
|
|
|
|
|
|
|
|
Jeff
Ploen
6590
E. Lake Place
Centennial,
CO 80111
|
None
|
107,500(3)
/ *
|
107,500(3)
|
0 /
-
|
|
|
|
|
|
|
|
John
Provazek
6510
50th Avenue Dr. NE
Marysville,
WA 98270
|
None
|
126,107
/ *
|
50,000
|
76,107
/ *
|
|
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
|
Name
and address of
Selling
stockholder
|
Material
relationship with Vyta Corp within the last
3
years
|
Amount
of common stock/percentage of common stock owned before
offering
|
Amount
of common stock offered
|
Amount of common
stock/percentage of common stock owned after offering(1)
|
|
|
|
|
|
|
|
Blanche
Richards
14001
E. Marina Drive
Aurora,
CO 80014
|
None
|
78,112(3)
/ *
|
57,500(3)
|
20,612
/ *
|
|
|
|
|
|
|
|
Irrevocable
Trust of Blanche Richards(7)
PO
Box 388
Hudson,
CO 80642
|
None
|
60,000
/ *
|
60,000
|
0 /
-
|
|
|
|
|
|
|
|
Ralph
Riggs
1520
Wazee Street
Denver,
CO 80202
|
None
|
93,750(3) /
*
|
93,750(3)
|
0 /
-
|
|
|
|
|
|
|
|
Dan
Rudden
5200
S. Ulster Street, Unit 1319
Englewood,
CO 80111
|
None
|
62,500(3) /
*
|
62,500(3)
|
0 /
-
|
|
|
|
|
|
|
|
Dr.
Ben Sandoval
PO
Box 6295
Santa
Fe, NM 87502-6295
|
None
|
20,000(3) /
*
|
20,000(3)
|
0 /
-
|
|
|
|
|
|
|
|
Allen
G. Schroeder
PO
Box 1646
Janesville,
WI 53547
|
None
|
8,375(3) /
*
|
6,250(3)
|
2,125
/ *
|
|
|
|
|
|
|
|
Stephen
G. Schroeder
PO
Box 1646
Janesville,
WI 53547
|
None
|
35,625(3) /
*
|
18,750(3)
|
16,875
/ *
|
|
|
|
|
|
|
|
Stephen
Seitz
1117
County Highway 5
Otega,
NY 13825
|
None
|
129,535
/ *
|
62,500
|
67,035
/ *
|
|
|
|
|
|
|
|
Michael
Sheppard
4229
Warren Road
Franklin,
Tennessee 37067
|
None
|
272,500
/ *
|
100,000
|
172,500
/ *
|
|
|
|
|
|
|
|
Leslie
G. Smith and Randy Smith, JTTEN
3004
N.E. 47th Avenue
Portland,
OR 97213
|
None
|
25,000(3)
/ *
|
25,000(3)
|
0 /
-
|
|
|
|
|
|
|
|
Beverly
Sweeney
2400
E. Alameda Avenue
Denver,
CO 80209
|
None
|
5,000(3)
/ *
|
5,000(3)
|
0 /
-
|
|
|
|
|
|
|
|
David
Weilage
285
Potato Patch Circle
Evergreen,
CO 80439
|
None
|
271,339(3)
/ *
|
150,000(3)
|
121,339
/ *
|
____________________
*Less
than 1%
(1) There
is no assurance that the selling stockholders will exercise all or any of their
warrants or that they will sell any or all of their shares of common stock
offered by this prospectus.
(2)
Arizcan Properties is wholly-owned by Triumphant Partners, LLC, a Colorado
limited liability company that is owned by Stan Richards. Mr. Richards has
voting and dispositive power over the shares of common stock being offered. As a
result of the March 2007 private placement transaction described under
“PROSPECTUS SUMMARY—The Company—Recent Developments,” and certain other
transactions, Arizcan Properties is now our controlling stockholder. The
transactions among Arizcan Properties, its principals and us are described
elsewhere in this prospectus. See “RELATIONSHIPS AND RELATED TRANSACTIONS,”
“MANAGEMENT’S DISCUSSION AND ANALYSIS” and “FINANCIAL STATEMENTS.”
(3)
Assumes the exercise of all of the warrants to purchase shares of our common
stock at an exercise price of $1.00 per share expiring on February 2, 2009
issued to the named selling stockholder.
(4) Bottom
Line Advisors Inc. is beneficially owned by Bobbi A. Norris. David L. Norris and
Bobbi A. Norris have voting and dispositive power over the shares of common
stock being offered.
(5) Zuni
Kitchen LLC is beneficially owned by Todd Coleman, who has voting and
dispositive power over the shares of common stock being offered.
(6) LZF,
LLC is beneficially owned by Robert S. Hoover, who has voting and dispositive
power over the shares of common stock being offered.
(7) The
beneficiaries of the Irrevocable Trust of Blanche Richards include Rochelle M.
Richards, Danielle Richards, Ethan Smith and Jasper Smith. R. Mark Richards,
Trustee, has voting and dispositive power over the shares of common stock being
offered.
The
selling stockholders may, from time to time, use this prospectus to sell all or
a portion of the shares of our common stock offered by this prospectus. These
sales and transfers of our common stock may be effected from time to time in one
or more transactions on the over-the-counter bulletin board, in the
over-the-counter market, in negotiated transactions or otherwise, at a fixed
price or prices, which may be changed, at market prices prevailing at the time
of sale, at negotiated prices, or without consideration, or by any other legally
available means.
These
transfers or sales may occur directly or by or through brokers, dealers, agents
or underwriters who may receive compensation in the form of underwriting
discounts, concessions or commissions from the selling holders and/or from
purchasers of the common stock for whom they may act as agent. Any or all of the
shares of common stock may be sold or transferred from time to time by means
of:
|
|
·
|
a
block trade in which the broker or dealer so engaged will attempt to sell
the common stock as agent, but may position and resell a portion of the
block as principal to facilitate the
transaction;
|
|
|
·
|
purchases
by a broker or dealer as principal and resale by that broker or dealer for
its account based on this
prospectus;
|
|
|
·
|
ordinary
brokerage transactions and transactions in which the broker solicits
purchasers;
|
|
|
·
|
the
writing of options on the common
stock;
|
|
|
·
|
pledges
as collateral to secure loans, credit or other financing arrangements and
any subsequent foreclosure, if any, under those
arrangements;
|
|
|
·
|
gifts,
donations and contributions; and
|
|
|
·
|
any
other legally available means.
|
To the
extent required by the Securities Act of 1933, the number of shares of common
stock to be sold or transferred, the purchase price, the name of any agent,
broker, dealer or underwriter and any applicable discounts or commissions and
any other required information with respect to a particular offer will be shown
in an accompanying prospectus supplement or post-effective
amendment.
In the
event of the transfer by any selling stockholder of shares of our common stock
offered by this prospectus to any pledge, donee or other transferee, we will
supplement or amend this prospectus (as required by the Securities Act of 1933)
and the registration statement of which this prospectus forms a part in order to
have the pledge, donee or other transferee included as a selling
stockholder.
If
necessary to comply with state securities laws, the common stock will be sold
only through registered or licensed brokers or dealers. In addition, the common
stock may not be sold unless it has been registered or qualified for sale in the
applicable state or an exemption from the registration or qualification
requirement is available and is complied with.
The
selling stockholders and any brokers, dealers, agents or underwriters that
participate in the distribution of the common stock may be deemed to be
“underwriters” within the meaning of the Securities Act of 1933, in which event
any discounts, concessions and commissions received by those brokers, dealers,
agents or underwriters and any profit on the resale of the common stock
purchased by them may be deemed to be underwriting commissions or discounts
under the Securities Act of 1933.
No
underwriter, broker, dealer or agent has been engaged by us or, to our
knowledge, any of the selling stockholders, in connection with the distribution
of the common stock.
We and
the selling stockholders will be subject to the applicable provisions of the
Securities Exchange Act of 1934 and the rules and regulations under it,
including, without limitation, Rule 10b-5 and, insofar as the selling
stockholders are distributors and we, under certain circumstances, may be a
distribution participant, under Regulation M.
The
anti-manipulation provisions of Regulation M under the Securities Exchange Act
of 1934 will apply to purchases and sales of shares of our common stock by the
selling stockholders, and there are restrictions on market-making activities by
persons engaged in the distribution of the shares of our common stock. Under
Regulation M, a selling stockholder or its agents may not bid for, purchase, or
attempt to induce any person to bid for or purchase, shares of our common stock
while they are distributing shares of our common stock covered by this
prospectus. Accordingly, the selling stockholders are not permitted to cover
short sales by purchasing shares of our common stock while the distribution is
taking place.
Any
common stock covered by this prospectus that also qualify for sale based on
Rule 144 under the Securities Act of 1933 may be sold under Rule 144
rather than based on this prospectus. There is no assurance that the selling
stockholders identified in this prospectus will sell any or all of the common
stock. The selling stockholders may transfer, devise or gift common stock by
other means not described in this prospectus.
We will
pay all of the expenses incident to the registration of the common stock, other
than underwriting discounts and selling commissions, if any. The aggregate
proceeds to the selling holders from the sale of the common stock will be the
purchase price of that common stock less any of these discounts or
commissions.
Our
authorized capital stock consists of 200,000,000 shares of common stock, $.0001
par value per share, and 5,000,000 shares of preferred stock, $.0001 par value
per share. As of June 1, 2008, we had 37,168,178 shares of common stock and
500,000 shares of preferred stock issued and outstanding. We have outstanding
warrants, options, and convertible privileges which, if exercised, would total
14,754,844 shares of common stock. We have also reserved 832,290 shares of our
common stock in connection with our ongoing litigation with Harvest
Court, LLC described above under “THE COMPANY—Legal Proceedings.” Overall,
we would have a total of 52,755,312 shares of common stock issued and
outstanding if all of our outstanding warrants and options were exercised and
all of our reserved shares of common stock were issued.
Each
share of our common stock is entitled to one vote on each matter submitted to a
vote of the stockholders and is equal to each other share of our common stock
with respect to voting, liquidation and dividend rights. Holders of our common
stock are entitled to receive the dividends, if any, as may be declared by our
board of directors out of assets legally available therefor and to receive net
assets in liquidation after payment of all amounts due to creditors and any
liquidation preference due to preferred stockholders. Holders of our common
stock have no conversion rights and are not entitled to any preemptive or
subscription rights. Our common stock is not subject to redemption or any
further calls or assessments. Our common stock does not have cumulative voting
rights in the election of directors.
Dividend
Policy
While
there currently are no restrictions prohibiting us from paying dividends to our
stockholders, we have not paid any cash dividends on our common stock in the
past, and we do not anticipate paying any dividends in the foreseeable future.
Earnings, if any, are expected to be retained to fund our future operations.
There can be no assurance that we will pay dividends at any time in the
future.
Trading
of Our Common Stock
Our
common stock presently is quoted on the over-the-counter bulletin board
maintained by FINRA under the symbol “VYTC.OB.” Our common stock also is traded
on the Berlin Stock Exchange, the Frankfurt Stock Exchange, the Munich Stock
Exchange and the Xetra Stock Exchange under the symbols indicated under “MARKET
FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.”
The board
of directors designated 500,000 shares of preferred stock as series A
nonconvertible preferred stock. The series A nonconvertible preferred stock
shall rank senior to all of our common stock as to distributions of assets upon
liquidation, dissolution or winding up of the company, whether voluntary or
involuntary. Each share of series A nonconvertible preferred stock shall be
paid a dividend equal to eight percent (8%) per annum of the deemed par value of
$1.00 per share. The dividends shall be cumulative from the date of issuance.
The holders of the series A nonconvertible preferred stock shall have no
conversion rights. On or after ten years after the date of issuance, we shall
have the right, in our sole discretion, to redeem any or all of series A
nonconvertible preferred stock. The redemption price for redeeming each share of
series A nonconvertible preferred stock is 130% of the deemed par value,
together with the accrued but unpaid dividends. The holders of the series A
nonconvertible preferred stock shall have the right to vote on any matter with
holders of common stock voting together as one class.
The
transfer agent for our common stock is Corporate Stock Transfer, Inc., 3200
South Cherry Creek Drive, Suite 430, Denver, Colorado 80209.
One of
the effects of the existence of authorized but unissued shares of our common
stock or preferred stock may be to enable our board of directors to render it
more difficult or to discourage an attempt to obtain control of us and thereby
protect the continuity of or entrench our management, which may adversely effect
the market price of our common stock. If in the due exercise of its fiduciary
obligations, for example, our board of directors were to determine that a
takeover proposal were not in our best interests, such shares could be issued by
the board of directors without stockholder approval in one or more private
placements or other transactions that might prevent or render more difficult or
make more costly the completion of any attempted takeover transaction by
diluting voting or other rights of the proposed acquirer or insurgent
stockholder group, by creating a substantial voting block in institutional or
other hands that might support the position of the incumbent board of directors,
by effecting an acquisition that might complicate or preclude the takeover, or
otherwise. See “RISK FACTORS—We could issue preferred stock that could adversely
affect the rights of our common stockholders.”
Our
business, property and affairs are managed under the direction of our board of
directors. The board of directors held one regular and special meeting
during the 2006 fiscal year and held no meetings in the 2007 fiscal year. All of
our directors attended at least 75% of the meetings held while they were
directors (including meetings held by all committees of the Board on which such
director served). In addition to meetings, the board acted several times during
2006 by unanimous written consent after telephonic discussion among the
members.
We have
voluntarily adopted the NASDAQ Marketplace Rules for determining whether a
director is independent and our board of directors has determined that three of
our four directors, Messrs. Neuhaus, Shaw and Hoback, are “independent” within
the meaning of Rule 4200(a) (15) of the NASDAQ Manual. Mr. Metzinger
is not independent under those standards.
We have
no committees of the board of directors.
Audit Committee. All members
of our board of directors perform the responsibilities of the audit committee;
providing oversight of our accounting functions and internal controls. Our board
of directors has not designated a Financial Expert, as defined by the SEC, due
to factors including but not limited to our operational status and the limited
number of transactions, accounts and balances that we maintain. Our board of
directors has determined that it is not in our best interests at this time to
incur the costs associated with identifying and designating a Financial
Expert.
Compensation Committee. All
members of our board of directors performed the responsibilities of the
compensation committee, and participated in deliberations and made decisions
concerning executive officer compensation during the course of regular board
meetings or board activities conducted through unanimous consent board
resolutions in lieu of meetings. Mr. Metzinger did not deliberate and vote on
matters relating to his compensation as our President and Chief Executive
Officer.
Nominating Committee. All
members of our board of directors acted as the nominating committee, and
participated in deliberations and made decisions concerning director nominations
during the course of regular board meetings or board activities conducted
through unanimous consent board resolutions in lieu of meetings.
|
Name,
Age and Year First Elected or Appointed
|
Principal
Occupation and Business Experience
|
|
|
|
|
Paul H.
Metzinger
Age: 69
|
Mr. Metzinger
was our President and Chief Executive Officer from February 26, 1998
to May 6, 1998 and has served in that same capacity from
December 1, 1998 to present. He has been a director since
February 26, 1998. He has served as a Manager and Vice President of
BioAgra since August 15, 2005. He served as the General Manager of
NanoPierce Card from January 2000 to June 2003. Prior to becoming a
director, Mr. Metzinger practiced securities law in Denver, Colorado
for over 32 years. Mr. Metzinger received his J.D. degree
in 1967 from Creighton University Law School and his L.L.M. from
Georgetown University in 1969.
|
|
|
|
|
Herbert J.
Neuhaus
Age: 46
|
Dr. Neuhaus
has been a director since January 1, 1999. Since January 1999, he has
been our Executive Vice President of Marketing and Technology. He was the
President and Chief Executive Officer of NanoPierce Connection from
January 2002 to September 2003. Dr. Neuhaus previously served as
the Managing Director of Particle Interconnect Corporation from
August 18, 1997 to November 1, 1997. From August 1989 to
August 1997, he was associated with the Electronic Material Venture
Group in the New Business Development Department of Amoco Chemical
Company, Naperville, Illinois. While associated with Amoco Chemical
Company he held among other positions: Business Development Manager/Team
Leader; Project Manager--High Density Interconnect; Product Manager
MCM Products and as a research scientist. Dr. Neuhaus received
his Ph.D. degree in Physics from the Massachusetts Institute of
Technology, Cambridge, Massachusetts in 1989 and his BS in Physics from
Clemson University, Clemson, South Carolina in
1980.
|
|
Name,
Age and Year First Elected or Appointed
|
Principal
Occupation and Business Experience
|
|
|
|
|
Robert
Shaw, Ph.D.
Age: 69
|
Dr. Shaw
has been our director since October 31, 2000. Dr. Shaw currently
is an Assistant Professor of Physics at Farleigh Dickinson University
where he has served on the faculty since September 1988.
Dr. Shaw also performs professional research in his academic areas of
specialty, and has held, among others, the positions of Research Chemist
at the American Cyanamid Research Laboratories, Stamford; Senior Research
Physicist at Exxon Research and Engineering Company; Manager of New
Business Development at Exxon Enterprises, Exxon Corporation, New York,
NY; and President of Robert Shaw Associates, Inc., Chatham, NJ.
Dr. Shaw received his Ph.D. in Solid State Physics form Cambridge
University, Cambridge, England. He was among the first to conduct academic
research on electronic conduction mechanisms in amorphous semiconductors.
He received a B.S. in Inorganic Chemistry with a minor in Nuclear Physics
from North Carolina State University, Raleigh, NC.
|
|
|
|
|
John
Hoback
Age: 69
|
Mr. Hoback
has been our director since April 2002. Mr. Hoback currently serves
as the President of Z&H Enterprises Solutions, Ltd., which
position he has held since 2000. Among other positions, Mr. Hoback
was the Director of Marketing and Sales of CTS from 1999 to 2000 and was
the Venture Manager of Electronics with Amoco Chemical from 1988 to
1999.
|
Compensation
Discussion and Analysis
General
Philosophy and Objectives
In 2004,
we began changing our principal business from electronics technology to
biotechnology. Through our 50% interest in BioAgra, LLC, we hope to generate
revenue through the production and sale of Agrastim® and
Purestim™. While
BioAgra has recently signed its first agreement for the sale of Agrastim®, BioAgra
has generated no revenue and are currently incurring net losses in each quarter.
Due to our lack of revenue and continuing net losses, the board of directors has
not established a general philosophy pertaining to the compensation of our
executive officers. However, should we begin to generate revenue in the future,
the board will establish formal objectives and policies for the compensation of
our executives that is tied to the generation of value for our
stockholders.
Base
Salaries
We
believe that the base salary level of our executive officer is reasonably
related to our current revenue levels. Base salaries are reviewed annually, and
any increases in base salary take into account such factors as individual past
performance, changes in responsibilities, changes in pay levels of companies
deemed comparable by us, inflation and our overall financial position. The
annual base salary for Mr. Metzinger was $150,000 as required by the terms of
his employment agreement with us. However, due to our net losses, Mr. Metzinger
has voluntarily chosen to reduce his annual salary to $105,000 until such time
as we begin generating revenues.
Annual
Cash Bonuses
At this
time, we do not pay annual cash bonuses to our Named Executive
Officers.
Long-Term
Incentive Compensation
At this
time, we do not award equity compensation to our Named Executive
Officers.
Participation
of Named Executive Officers in Compensation Decisions Relating to
Them
Compensation
decisions for the Named Executive Officers are made by the board of directors.
To the extent that a Named Executive Officer is a member of the board, they
recuse themselves from the discussions or and do not participate in compensation
decisions that relate to them.
Tax
Deductibility of Executive Compensation
Section
162(m) of the Code disallows a tax deduction for any publicly held corporation
for individual compensation of more than $1.0 million in any taxable year to any
named executive officers, other than compensation that is performance-based
under a plan that is approved by the Stockholders and that meets certain other
technical requirements. Our policy with respect to Section 162(m) is to
make every reasonable effort to ensure that compensation is deductible to the
extent permitted while simultaneously providing our executives with appropriate
rewards for their performance. In the appropriate circumstances, however, we are
prepared to exceed the limit on deductibility under Section 162(m) to the
extent necessary to ensure our executive officers are compensated in a manner
consistent with our best interests and those of our Stockholders.
Executive
Compensation
The
following table sets forth information with respect to the compensation paid or
earned during the fiscal year ended June 30, 2007 by our Chief Executive
Officer and Chief Financial Officer who served in such capacities during the
fiscal year ended June 30, 2007 (“Named Executive Officers”).
2007
Summary Compensation Table
|
Name
and Principal Position
|
Year
|
|
Salary
($)
|
|
|
Bonus
($)
|
|
|
Stock
Awards
($)
|
|
|
Option
Awards
($)
|
|
|
Non-Equity
Incentive Plan Compensation
($)
|
|
|
Change
in Pension Value and Non-Qualified Deferred Compensation
Earnings
($)
|
|
|
All
Other
Compensation
($)
|
|
|
Total
($)
|
|
|
(a)
|
(b)
|
|
(c)
|
|
|
(d)
|
|
|
(e)
|
|
|
(f)
|
|
|
(g)
|
|
|
(h)
|
|
|
(i)
|
|
|
(j)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Paul
Metzinger
|
2006
|
|
$ |
105,000 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
$ |
105,000 |
|
|
CEO,
President, Acting CFO
|
2007
|
|
$ |
105,000 |
|
|
|
— |
|
|
|
— |
|
|
$ |
305,000 |
(2) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
$ |
410,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kristi
J. Kampmann(1)
|
2006
|
|
$ |
78,125 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
$ |
78,125 |
|
|
CFO
|
2007
|
|
$ |
50,800 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
$ |
50,800 |
|
____________________
(1) Ms.
Kampmann served as our Chief Financial Officer until February 28,
2007.
(2) Please
see Note 8 in the notes to the consolidated financial statements for the fiscal
year ended June 30, 2007 in “FINANCIAL STATEMENTS” for the relevant assumptions
used in calculating the fair value of the option awards using FAS
123R.
2007
Grants of Plan-Based Awards
|
|
|
|
Estimated
Future Payouts Under
Non-Equity
Incentive Plan Awards
|
|
|
Estimated
Future Payouts Under
Equity
Incentive Plan Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
Grant
Date
|
|
Threshold
($)
|
|
|
Target
($)
|
|
|
Maximum
($)
|
|
|
Threshold
(#)
|
|
|
Target
(#)
|
|
|
Maximum
(#)
|
|
|
All
Other Stock Awards: Number of Shares of Stock or Units
(#)
|
|
|
All
Other Option Awards: Number of Securities Underlying Options
(#)
|
|
|
Exercise
or Base Price of Option Awards
($/Sh)
|
|
Grant
Date Fair Value of Stock and Option Awards
|
|
(a)
|
(b)
|
|
(c)
|
|
|
(d)
|
|
|
(e)
|
|
|
(f)
|
|
|
(g)
|
|
|
(h)
|
|
|
(i)
|
|
|
(j)
|
|
|
(k)
|
|
(l)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Paul
Metzinger
|
3/27/2007
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,000,000 |
|
|
$ |
0.32 |
|
3/27/2007
|
|
Kristi
J. Kampmann(1)
|
—
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
—
|
____________________
(1) Ms.
Kampmann served as our Chief Financial Officer until February 28,
2007.
Employment
Contracts and Termination of Employment and
Change
in Control Arrangements
On
March 15, 2004, we entered into an employment agreement with Paul H.
Metzinger to serve as our President and Chief Executive Officer. The employment
agreement with Mr. Metzinger expired March 14, 2008. The disinterested
members of the board of directors extended Mr. Metzinger’s employment agreement
upon the same terms for an additional five-year term ending March 13,
2013. Pursuant to his employment agreement, we agreed to pay
Mr. Metzinger an annual salary of $150,000. In March 2005,
Mr. Metzinger took a salary cut to receive an annual salary of
$105,000.
In
connection with the employment agreements, generally, we or the employee may
terminate the employment agreement at any time with or without cause. In the
event we terminate an employment agreement for cause or the employee terminates
his or her employee agreement without cause, all of such employee’s rights to
compensation would cease upon the date of such termination. If we terminate an
employment agreement without cause, then such employee terminates his or her
employment agreement for cause, or in the event of a change in control, we are
required to pay to such employee all compensation and other benefits that would
have accrued and/or been payable to that employee during the full term of the
employment agreement.
A change
of control is considered to have occurred when, as a result of any type of
corporate reorganization, execution of proxies, voting trusts or similar
arrangements, a person or group of persons (other than incumbent officers,
directors and our principal stockholders) acquires sufficient control to elect
more than a majority of our board of directors, acquires 50% or more of our
voting shares, or we adopts a plan of dissolution of liquidation. The employment
agreement also include a non-compete and nondisclosure provisions in which each
employee agrees not to compete with or disclose confidential information
regarding us and our business during the term of the employment agreement and
for a period of one year thereafter.
2007
Outstanding Equity Awards at Fiscal Year-End
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Number
of Securities Underlying Unexercised Options
(#)
|
|
|
Number
of Securities Underlying Unexercised Options
(#)
|
|
|
Equity
Incentive Plan Awards: Number of Securities Underlying Unexercised
Unearned Options
(#)
|
|
|
Option
Exercise Price
($)
|
|
Option
Expiration Date
|
|
Number
of Shares or Units of Stock That Have Not Vested
(#)
|
|
|
Market
Value of Shares or Units of Stock That Have Not Been Vested
($)
|
|
|
Equity
Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights
That Have Not Vested
(#)
|
|
|
Equity
Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or
Other Rights That Have Not Vested
($)
|
|
|
(a)
|
|
(b)
|
|
|
(c)
|
|
|
(d)
|
|
|
(e)
|
|
(f)
|
|
(g)
|
|
|
(h)
|
|
|
(i)
|
|
|
(j)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Paul
Metzinger
|
|
|
50,000 |
|
|
|
— |
|
|
|
— |
|
|
$ |
6.50 |
|
2/26/98-2/26/08
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Paul
Metzinger
|
|
|
25,000 |
|
|
|
— |
|
|
|
— |
|
|
|
6.50 |
|
2/27/98-2/27/08
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Paul
Metzinger
|
|
|
15,000 |
|
|
|
— |
|
|
|
— |
|
|
|
10.40 |
|
3/12/99-3/12/09
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Paul
Metzinger
|
|
|
1,000,000 |
|
|
|
— |
|
|
|
— |
|
|
|
0.32 |
|
3/17/07-3/17/17
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Kristi
J.
Kampmann(1)
|
|
|
2,500 |
|
|
|
— |
|
|
|
— |
|
|
|
6.50 |
|
2/26/98-2/26/08
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Kristi
J.
Kampmann(1)
|
|
|
2,500 |
|
|
|
— |
|
|
|
— |
|
|
|
10.40 |
|
3/12/99-3/12/09
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Kristi
J.
Kampmann(1)
|
|
|
5,000 |
|
|
|
— |
|
|
|
— |
|
|
|
16.80 |
|
10/6/00-10/6/10
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
____________________
(1) Ms.
Kampmann served as our Chief Financial Officer until February 28,
2007.
2007
Option Exercises and Stock Vested
There
were no exercises of options or vesting of stock awards by any of the Named
Executive Officers during the fiscal year ended June 30, 2007.
2007
Pension Benefits
We do not
have a benefit pension plan.
2007
Non-Qualified Deferred Compensation
We do not
have a nonqualified defined contribution or other nonqualified deferred
compensation plans.
Stock
Option Plans
We have
two Stock Option Plans. As of June 1, 2008, 206,127 options are outstanding
under the 1998 Compensatory Stock Option Plan and 2,437,000 options are
outstanding under the 2000 Compensatory Stock Option Plan, for a total of
2,643,127 options outstanding. A total of 2,643,127 options are exercisable at
June 1, 2008, under these plans. On March 27, 2007, we issued 2,000,000 options
under the 2000 Compensatory Stock Option Plan to officers, directors and one
employee. We have reserved 375,000 shares of common stock for issuance under the
1998 Compensatory Stock Option Plan. In January 2002, our board of directors
passed a resolution closing the 1998 Compensatory Stock Option Plan for issuance
of new options. We have reserved 250,000 shares of common stock for issuance
under the 2000 Compensatory Stock Option Plan. During the fiscal years ended
June 30, 2006 and 2007, there was no action taken to reprice any options held by
any officers, directors or employees.
Director
Compensation
We hold
quarterly meetings of the board of directors. Although we do not have any
standard arrangements pursuant to which our directors are compensated for any
services provided as a director or for attendance at meetings of the board of
directors, if our financial situation is adequate, we compensate directors
$1,000 per meeting, plus reasonable travel expenses. During the fiscal years
ended June 30, 2007 and 2006, our officers and directors were not
compensated for attendance at board meetings. On March 27, 2007, our officers
and directors were issued 1,750,000 options under the 2000 Compensatory Stock
Option Plan. These options have a term of 10 years, an exercise price of $0.32
per share and are fully-vested.
|
Director
Compensation in Fiscal 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Fees
Earned or Paid in Cash
($)
|
|
|
Stock
Awards
($)
|
|
|
Option
Awards
($)
|
|
|
Non-Equity
Incentive Plan Compensation
($)
|
|
|
Change
in Pension Value and Nonqualified Deferred Compensation
Earnings
($)
|
|
|
All
Other Compensation
($)
|
|
|
Total
($)
|
|
|
(a)
|
|
(b)
|
|
|
(c)
|
|
|
(d)
|
|
|
(e)
|
|
|
(f)
|
|
|
(g)
|
|
|
(h)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Paul
Metzinger
|
|
$ |
— |
|
|
|
— |
|
|
$ |
305,000 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
$ |
305,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Herbert
Neuhaus
|
|
|
— |
|
|
|
— |
|
|
|
77,500 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
77,500 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert
Shaw
|
|
|
— |
|
|
|
— |
|
|
|
77,500 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
77,500 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John
Hoback
|
|
|
— |
|
|
|
— |
|
|
|
77,500 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
77,500 |
|
____________________
Please
see Note 8 in the notes to the consolidated financial statements for the fiscal
year ended June 30, 2007 in “FINANCIAL STATEMENTS” for the relevant assumptions
used in calculating the fair value of the option awards using FAS
123R.
The
following table sets forth certain information regarding the beneficial
ownership of outstanding shares of our common stock as of June 1,
2008, by (a) each person known by us to own beneficially 5% or more of our
outstanding shares of common stock, (b) our directors, Chief Executive
Officer, Chief Financial Officer and executive officers named in
“MANAGEMENT—Director and Executive Compensation,” and (c) all our directors
and executive officers as a group (in each case after giving effect to the
reverse stock split of our common stock that occurred on January 31, 2006 that
is described elsewhere in this prospectus).
|
Name,
Address & Nature of
Beneficial
Owner
|
Amount
|
Percent of Class(7)
|
|
|
|
|
|
Arizcan
Properties, Ltd.
77
South Adams, Suite 906
Denver,
CO 80209
|
19,565,770(1)
|
36.47%
|
|
|
|
|
|
The
Paul H. Metzinger Trust
Paul
H. Metzinger
President,
CEO & CFO, Director
370
Seventeenth Street
Suite
3640
Denver,
CO 80202
|
1,189,536(2)
|
2.25
|
|
|
|
|
|
The
Cheri L. Metzinger Trust
Cheri
L. Metzinger
Wife
of Paul H. Metzinger
3236
Jellison Street
Wheatridge,
CO 80033
|
1,189,536(3)
|
2.25
|
|
|
|
|
|
Dr.
Herbert J. Neuhaus
Director
770
Maroonglen Court
Colorado
Springs, CO 80906
|
317,500(4)
|
0.6
|
|
|
|
|
|
Dr.
Robert E. Shaw, Director
8
Nicklaus Court
Florham
Park, NJ 07932
|
270,000(5)
|
0.51
|
|
|
|
|
|
John
Hoback, Director
20
White Heron Lake
East
Stroudsburg, PA 18301
|
270,000(6)
|
0.51
|
|
|
|
|
|
All
Officers & Directors as a Group
(4
persons)
|
1,969,085
|
3.73
|
____________________
(1)
Arizcan Properties is wholly-owned by Triumphant Partners, LLC, a Colorado
limited liability company, which is owned by Stan Richards. Includes 13,558,000
common shares held directly and beneficially and a warrant exercisable for
6,000,000 shares of common stock at $0.50 per share) and 7,770 common shares
that are held by Stan Richards. On March 2, 2007, Arizcan Properties also
acquired 500,000 shares of our newly-designated series A nonconvertible
preferred stock that entitles them to 51% of our voting power, which, on a fully
diluted basis, gives them approximately 87.4% of our voting
power.
(2)
Includes 56,648 common shares held directly and beneficially; 47,888 common
shares that Mr. Metzinger owns beneficially though his wife and options
held by Mr. Metzinger consisting of options to purchase 10,000 shares
exercisable at $10.40 per share, options to purchase 75,000 shares exercisable
at $6.50 per share and options to purchase 1,000,000 shares exercisable at $0.32
per share.
(3) Cheri
L. Metzinger is the wife of Mr. Paul H. Metzinger, our Chief Executive Officer,
Chief Financial Officer and President. This includes 47,888 shares held directly
and beneficially and 56,648 common shares, 1,085,000 common shares
subject to options owned beneficially by her husband.
(4) Based
on options to purchase 25,000 shares exercisable at $42.50 per share, options to
purchase 5,000 shares exercisable at $55.00 per share, options to purchase
12,500 shares exercisable at $10.40 per share, options to purchase 25,000 shares
exercisable at $4.00 per share and options to purchase 250,000 shares
exercisable at $0.32 per share.
(5) Based
on options to purchase 12,500 shares exercisable at $19.40 per share, options to
purchase 2,500 shares exercisable at $13.40 per share, options to purchase 5,000
shares exercisable at $40.00 per share and options to purchase 250,000 shares
exercisable at $0.32 per share.
(6) Based
on options to purchase 15,000 shares exercisable at $14.00 per share, options to
purchase 5,000 shares exercisable at $14.00 per share and options to purchase
250,000 shares exercisable at $0.32 per share.
(7) Shares
of our common stock subject to options and warrants currently exercisable or
convertible, or exercisable or convertible within 60 days of June 1, 2008, are
deemed outstanding for purposes of computing the percentage beneficially owned
by the person or entity holding those securities, but are not deemed outstanding
for purposes of computing the percentage beneficially owned by any other person
or entity. Percentage of beneficial ownership is based on 37,168,178 shares of
our common stock outstanding as of the close of business on June 1,
2008.
Between
March 27, 2007 and December 28, 2007, we issued to Arizcan Properties a total of
12,569,666 shares of our restricted common stock for cash of $1,885,450, at a
price of $0.15 per share.
On
March 2, 2007, in a private placement transaction, we issued to Arizcan
Properties a total of 500,000 shares of our newly-designated series A
nonconvertible preferred stock for a total purchase price of $500,000, in cash.
In addition to the purchase of the series A nonconvertible preferred stock,
Arizcan Properties purchased for a purchase price of $251,900 a warrant
exercisable for 6,000,000 shares of common stock. This warrant has an
exercise price of $0.50 per share and provides for cashless exercise. As a
result, Arizcan Properties acquired approximately 51% of our voting power, and,
on a fully diluted basis, Arizcan Properties would have approximately 89% of our
voting power if they exercise the warrant.
During
the year ended June 30, 2006, Arizcan Properties purchased 8,373,000 shares of
restricted common stock for cash of $1,255,950 at a price of $0.15, a discount
from the closing market price of the stock on the date of purchase.
Mr.
Metzinger, an officer and director, during the year ended June 30, 2007,
advanced us a total of $25,203. During the six months ended December 31, 2007,
he advanced an additional $4,108. During January 2008, he advanced an additional
$1,051. We have repaid $28,829 of the funds at January 31,
2008.
During
the year ended June 30, 2007, we issued options to purchase 2,350,000 shares of
common stock to our officer and directors. The options are fully vested, have a
term of 10 years and an exercise price of $0.41 per share. The options were
determined to have a value of $743,750 using the Black-Scholes Model of
valuation and certain assumptions considered appropriate by
management.
Related
Party Transaction Policy
The board
of directors recognizes that related party transactions can present conflicts of
interest and questions as to whether the transactions are in our best interests.
Accordingly, effective in September 2007, the board of directors adopted a
written policy formalizing the policy for the review, approval and ratification
of transactions with related persons. For the purposes of the policy, a “related
party transaction” is a transaction or relationship involving a director,
executive officer or 5% stockholder or their immediate family members that is
reportable under the SEC’s rules regarding such transactions.
Under the
policy, a related party transaction should be approved or ratified based upon a
determination that the transaction is in, or not opposed to, our best interests
and on terms no less favorable to us than those available with other parties.
The policy provides for the board of directors to review and approve all related
party transactions, other than transactions involving amounts less than $100,000
in aggregate. Pursuant to the policy, management shall recommend any related
party transaction, including the proposed aggregate value of the transaction, if
applicable. After review, the board of directors shall approve or disapprove of
such transaction.
The
General Corporation Law of the State of Nevada and our articles of incorporation
provide for indemnification of our directors for liabilities and expenses that
they may incur in such capacities. In general, our directors and officers are
indemnified with respect to actions taken in good faith and in a manner such
person believed to be in our best interests, and with respect to any criminal
action or proceedings, actions that such person has no reasonable cause to
believe were unlawful. Furthermore, the personal liability of our directors is
limited as provided in our articles of incorporation.
Insofar
as indemnification for liabilities arising under the Securities Act of 1933 may
be permitted to directors, officers or persons controlling us pursuant to the
foregoing provisions, or otherwise, we have been advised that in the opinion of
the SEC, such indemnification is against public policy as expressed in the
Securities Act of 1933 and is therefore unenforceable.
Our
consolidated financial statements for each of the two years ended June 30, 2007
and 2006 included in this prospectus and registration statement have been
audited by GHP Horwath, P.C. (“GHP”), an independent registered public
accounting firm, for the periods and to the extent set forth in their report,
which describes an uncertainty related to our ability to continue as a going
concern, appearing herein and elsewhere in the registration statement. Such
financial statements have been so included in reliance upon the report of such
firm given upon their authority as experts in auditing and
accounting.
We are
subject to the informational requirements of the Securities Exchange Act of 1934
and, in compliance with the Securities Exchange Act of 1934, file periodic
reports and other information with the Securities and Exchange Commission. These
reports and the other information we file with the SEC can be inspected and
copied at the Public Reference Room maintained by the SEC in Washington, D.C. at
100 F Street, N.E., Washington, D.C. 20549. The SEC’s telephone number to obtain
information on the operation of the public reference room is
(800) SEC-0330. In addition, the SEC maintains an Internet site that
contains reports, proxy statements and other information regarding registrants
like us that file electronically with the SEC at the following Internet address:
http://www.sec.gov. The SEC’s telephone number is
(800) SEC-0330.
We have
filed with the SEC in Washington, D.C. a registration statement on Form S-1
under the Securities Act of 1933 with respect to the shares of our common stock
offered by this prospectus.
We file
annual, quarterly and other reports, and other information with the SEC. You may
read and copy the materials we file at the SEC’s Public Reference Room at 100 F
Street, N.E., Washington, D.C. 20549. Please call the SEC at (800) SEC-0330 for
further information on the operation of the Public Reference Rooms. Our SEC
filings are also available to the public from the SEC’s Internet site on the
Internet at http://www.sec.gov. This site contains reports, proxy and
information statements and other information regarding issuers that file
electronically with the SEC. Our commission file number is
033-19598-D.
We
maintain a site on the Internet at www.vytacorp.com. The information contained
on our website is not part of this prospectus and you should not rely on it in
deciding whether to invest in our common stock.
VYTA
CORP AND SUBSIDIARIES
On
January 19, 2006, our board of directors approved an amendment to our Articles
of Incorporation to affect a one-for-twenty reverse stock split of our common
stock effective January 31, 2006. All references to shares, options,
warrants and conversion and exercise prices in the Financial Statements have
been adjusted to reflect the post-reverse split amounts.
|
Audited
Financial Statements
|
|
|
For
the Years ended June 30, 2007 and 2006
|
Page
|
|
|
|
|
Report
of Independent Registered Public Accounting Firm
|
F-1
|
|
Consolidated
Financial Statements:
|
|
|
Consolidated
Balance Sheet – June 30, 2007
|
F-2
|
|
Consolidated
Statements of Operations –
Years
ended June 30, 2007 and 2006
|
F-3
|
|
Consolidated
Statements of Comprehensive Loss –
Years
ended June 30, 2007 and 2006
|
F-4
|
|
Consolidated
Statement of Changes in Shareholders’ Equity –
Years
ended June 30, 2007 and 2006
|
F-5
|
|
Consolidated
Statements of Cash Flows –
Years
ended June 30, 2007 and 2006
|
F-8
|
|
Notes
to Consolidated Financial Statements
|
F-10
|
|
|
|
|
Unaudited
Financial Statements
|
|
|
For
the Nine months ended March 31, 2008 and 2007
|
|
|
|
|
|
Condensed
Consolidated Balance Sheet –
March 31,
2008
|
F-25
|
|
Condensed
Consolidated Statements of Operations –
Nine
and three months ended March 31, 2008 and 2007
|
F-26
|
|
Condensed
Consolidated Statements of Comprehensive Loss –
Nine
and three months ended March 31, 2008 and 2007
|
F-27
|
|
Condensed
Consolidated Statement of Changes in Shareholders’ Deficit –
Nine
months ended March 31, 2008
|
F-28
|
|
Condensed
Consolidated Statements of Cash Flows –
Nine
months ended March 31, 2008 and 2007
|
F-29
|
|
Notes
to Condensed Consolidated Financial Statements
|
F-30
|
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of
Directors
Vyta
Corp
Denver,
Colorado
We have
audited the accompanying consolidated balance sheet of Vyta Corp and
subsidiaries (the “Company”) as of June 30, 2007, and the related consolidated
statements of operations, comprehensive loss, changes in shareholders’ equity
and cash flows for each of the years in the two-year period ended June 30, 2007.
These financial statements are the responsibility of the Company’s management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our
opinion, the consolidated financial statements referred to above present fairly,
in all material respects, the financial position of Vyta Corp and subsidiaries
as of June 30, 2007, and the results of their operations and their cash flows
for each of the years in the two-year period ended June 30, 2007, in conformity
with accounting principles generally accepted in the United States of
America.
The
accompanying consolidated financial statements have been prepared assuming that
the Company will continue as a going concern. As discussed in Note 2 to the
consolidated financial statements, the Company reported a net loss applicable to
common shareholders of approximately $4,474,000, substantially all derived from
its equity in development stage net losses of its principal investee, a 50%
joint venture, whose ability to continue as a going concern is in substantial
doubt, and significant cash outflows from operations for the year ended June 30,
2007, and an accumulated deficit of approximately $30,498,000 as of June 30,
2007. These factors raise substantial doubt about the Company’s ability to
continue as a going concern. Management’s plans in regard to these matters,
which do not include any direct revenue-producing activities in the foreseeable
future, are also described in Note 2. The consolidated financial statements do
not include any adjustments that might result from the outcome of this
uncertainty.
As
discussed in Notes 1 and 8 to the consolidated financial statements, effective
July 1, 2006, the Company adopted Statement of Financial Accounting Standards
No. 123(R), Share Based Payment.
/s/ GHP
HORWATH, P.C.
Denver,
Colorado
October
12, 2007
VYTA
CORP AND SUBSIDIARIES
CONSOLIDATED
BALANCE SHEET
JUNE 30,
2007
|
Assets
|
|
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash
and cash equivalents
|
|
$ |
354,702 |
|
|
Prepaid
expenses
|
|
|
1,840 |
|
|
Total
current assets
|
|
|
356,542 |
|
|
|
|
|
|
|
|
Property
and equipment:
|
|
|
|
|
|
Office
equipment and furniture
|
|
|
67,107 |
|
|
Less
accumulated depreciation
|
|
|
(61,670 |
) |
|
|
|
|
5,437 |
|
|
|
|
|
|
|
|
Other
assets:
|
|
|
|
|
|
Investments
in unconsolidated investee (Note 5)
|
|
|
205,196 |
|
|
Note
and advances receivable, net, unconsolidated investee (Note
4)
|
|
|
340,344 |
|
|
Deposits
and other
|
|
|
19,562 |
|
|
|
|
|
565,102 |
|
|
|
|
|
|
|
|
Total
assets
|
|
$ |
927,081 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
and Shareholders’ Equity
|
|
|
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
Accounts
payable
|
|
$ |
76,797 |
|
|
Advances
payable, officer (Note 6)
|
|
|
24,612 |
|
|
Accrued
expenses
|
|
|
7,063 |
|
|
Total
liabilities (all current)
|
|
|
108,472 |
|
|
|
|
|
|
|
|
Commitments
and contingencies (Notes 3, 6, 7 and 9)
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders’
equity (Note 8):
|
|
|
|
|
|
Preferred
stock; $0.0001 par value; 5,000,000 shares authorized; Series A, 8%;
deemed par value $1.00 per share; 500,000 shares issued and outstanding;
liquidation preference of $513,150
|
|
|
513,150 |
|
|
Common
stock; $0.0001 par value; 200,000,000 shares authorized;
|
|
|
|
|
|
31,349,845
shares issued and outstanding
|
|
|
3,135 |
|
|
Additional
paid-in capital
|
|
|
30,678,462 |
|
|
Accumulated
other comprehensive income
|
|
|
121,543 |
|
|
Accumulated
deficit
|
|
|
(30,497,681 |
) |
|
Total
shareholders’ equity
|
|
|
818,609 |
|
|
|
|
|
|
|
|
Total
liabilities and shareholders’ equity
|
|
$ |
927,081 |
|
See notes
to consolidated financial statements.
VYTA
CORP AND SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF OPERATIONS
YEARS
ENDED JUNE 30, 2007 AND 2006
|
|
|
2007
|
|
|
2006
|
|
|
|
|
|
|
|
|
|
|
General
and administrative expense
|
|
$ |
(1,835,973 |
) |
|
$ |
(893,061 |
) |
|
|
|
|
|
|
|
|
|
|
|
Loss
from operations
|
|
|
(1,835,973 |
) |
|
|
(893,061 |
) |
|
|
|
|
|
|
|
|
|
|
|
Other
income (expense):
|
|
|
|
|
|
|
|
|
|
Interest
income
|
|
|
22 |
|
|
|
72,307 |
|
|
Extinguishment
of liabilities (Note 6)
|
|
|
- |
|
|
|
120,788 |
|
|
Equity
losses of unconsolidated investees (Note 5)
|
|
|
(1,426,590 |
) |
|
|
(1,398,202 |
) |
|
Provision
for loss on note receivable, unconsolidated investee (Note
4)
|
|
|
(1,198,000 |
) |
|
|
- |
|
|
Loss
on revaluation of derivative warrant liability (Note 7)
|
|
|
- |
|
|
|
(74,295 |
) |
|
Interest
expense
|
|
|
- |
|
|
|
(235,139 |
) |
|
Interest
expense, related party
|
|
|
- |
|
|
|
(219 |
) |
|
|
|
|
(2,624,568 |
) |
|
|
(1,514,760 |
) |
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
|
(4,460,541 |
) |
|
|
(2,407,821 |
) |
|
|
|
|
|
|
|
|
|
|
|
Accumulated
dividends on preferred stock (Note 8)
|
|
|
(13,150 |
) |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
Beneficial
conversion feature (Note 8)
|
|
|
- |
|
|
|
(1,500,000 |
) |
|
|
|
|
|
|
|
|
|
|
|
Net
loss applicable to common shareholders
|
|
$ |
(4,473,691 |
) |
|
$ |
(3,907,821 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss per common share, basic and diluted (Note 1)
|
|
$ |
(0.19 |
) |
|
$ |
(0.30 |
) |
|
|
|
|
|
|
|
|
|
|
|
Weighted
average number of common shares outstanding (Note 1)
|
|
|
23,884,955 |
|
|
|
12,984,849 |
|
See notes
to consolidated financial statements.
VYTA
CORP AND SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF COMPREHENSIVE LOSS
YEARS
ENDED JUNE 30, 2007 AND 2006
|
|
|
2007
|
|
|
2006
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
$ |
(4,460,541 |
) |
|
$ |
(2,407,821 |
) |
|
|
|
|
|
|
|
|
|
|
|
Change
in unrealized gain on securities
|
|
|
(619 |
) |
|
|
59 |
|
|
|
|
|
|
|
|
|
|
|
|
Change
in foreign currency translation adjustments
|
|
|
(8,197 |
) |
|
|
7,457 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive
loss
|
|
$ |
(4,469,357 |
) |
|
$ |
(2,400,305 |
) |
See notes
to consolidated financial statements.
VYTA
CORP AND SUBSIDIARIES
CONSOLIDATED
STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY
YEARS
ENDED JUNE 30, 2007 AND 2006
(NOTE
1)
|
|
|
|
|
|
|
|
|
Additional
|
|
|
Accumulated
other
|
|
|
|
|
|
Total
|
|
|
|
|
Preferred
stock
|
|
|
Common
stock
|
|
|
paid-in
|
|
|
comprehensive
|
|
|
Accumulated
|
|
|
shareholders’
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
capital
|
|
|
income
|
|
|
deficit
|
|
|
equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances,
July 1, 2005
|
|
|
- |
|
|
$ |
- |
|
|
|
4,663,045 |
|
|
$ |
466 |
|
|
$ |
24,059,377 |
|
|
$ |
122,843 |
|
|
$ |
(23,629,319 |
) |
|
$ |
553,367 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock issued upon exercise of warrants, net of offering costs (Note
8)
|
|
|
- |
|
|
|
- |
|
|
|
1,535,000 |
|
|
|
154 |
|
|
|
734,846 |
|
|
|
- |
|
|
|
- |
|
|
|
735,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forgiveness
of offering cost liability (Note 8)
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
800,000 |
|
|
|
- |
|
|
|
- |
|
|
|
800,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock issued with notes payable (Notes 6 and 8)
|
|
|
- |
|
|
|
- |
|
|
|
455,000 |
|
|
|
45 |
|
|
|
117,841 |
|
|
|
- |
|
|
|
- |
|
|
|
117,886 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock and warrants issued for cash (Notes 7 and 8)
|
|
|
- |
|
|
|
- |
|
|
|
790,467 |
|
|
|
79 |
|
|
|
453,067 |
|
|
|
- |
|
|
|
- |
|
|
|
453,146 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock issued as payment of accrued commissions (Note 8)
|
|
|
- |
|
|
|
- |
|
|
|
50,000 |
|
|
|
5 |
|
|
|
89,995 |
|
|
|
- |
|
|
|
- |
|
|
|
90,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Series
A preferred stock issued for cash (Note 8)
|
|
|
200,000 |
|
|
|
1,500,000 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1,500,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock issued upon conversion of Series A preferred stock (Note
8)
|
|
|
(200,000 |
) |
|
|
(1,500,000 |
) |
|
|
15,000,000 |
|
|
|
1,500 |
|
|
|
1,498,500 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock originally issued for services, returned for non- performance (Note
8)
|
|
|
- |
|
|
|
- |
|
|
|
(50,000 |
) |
|
|
(5 |
) |
|
|
(89,995 |
) |
|
|
- |
|
|
|
- |
|
|
|
(90,000 |
) |
VYTA
CORP AND SUBSIDIARIES
CONSOLIDATED
STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY
YEARS
ENDED JUNE 30, 2007 AND 2006
(NOTE
1)
(CONTINUED)
|
|
|
|
|
|
|
|
|
Additional
|
|
|
Accumulated
other
|
|
|
|
|
|
Total
|
|
|
|
|
Preferred
stock
|
|
|
Common
stock
|
|
|
paid-in
|
|
|
comprehensive
|
|
|
Accumulated
|
|
|
shareholders’
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
capital
|
|
|
income
|
|
|
deficit
|
|
|
equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock and warrants issued for services (Notes 1 and 8)
|
|
|
- |
|
|
$ |
- |
|
|
|
200,000 |
|
|
$ |
20 |
|
|
$ |
464,980 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
465,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reclassification
of derivative warrant liability to equity (Note 7)
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
253,522 |
|
|
|
- |
|
|
|
- |
|
|
|
253,522 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital
contribution of accrued payroll owed to and forgiven by officer
/shareholder (Note 8)
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
8,750 |
|
|
|
- |
|
|
|
- |
|
|
|
8,750 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(2,407,821 |
) |
|
|
(2,407,821 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
comprehensive loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change
in unrealized gain on securities
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
59 |
|
|
|
- |
|
|
|
59 |
|
|
Change
in foreign currency translation adjustments
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
7,457 |
|
|
|
- |
|
|
|
7,457 |
|
|
Balances,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June
30, 2006
|
|
|
- |
|
|
|
- |
|
|
|
22,643,512 |
|
|
$ |
2,264 |
|
|
$ |
28,390,883 |
|
|
$ |
130,359 |
|
|
$ |
(26,037,140 |
) |
|
$ |
2,486,366 |
|
VYTA
CORP AND SUBSIDIARIES
CONSOLIDATED
STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY
YEARS
ENDED JUNE 30, 2007 AND 2006
(NOTE
1)
(CONTINUED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional
|
|
|
Accumulated
other
|
|
|
|
|
|
Total
|
|
|
|
|
Preferred
stock
|
|
|
Common
stock
|
|
|
paid
in
|
|
|
comprehensive
|
|
|
Accumulated
|
|
|
shareholders’
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
capital
|
|
|
income
|
|
|
deficit
|
|
|
equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances,
July 1, 2006
|
|
|
- |
|
|
$ |
- |
|
|
|
22,643,512 |
|
|
$ |
2,264 |
|
|
$ |
28,390,883 |
|
|
$ |
130,359 |
|
|
$ |
(26,037,140 |
) |
|
$ |
2,486,366 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Series
A preferred stock issued for cash, of which $100,000 was received in
advance as of June 30, 2006 (Note 8)
|
|
|
500,000 |
|
|
|
500,000 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
500,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrant
issued for cash (Note 8)
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
251,900 |
|
|
|
- |
|
|
|
- |
|
|
|
251,900 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock issued for cash (Note 8)
|
|
|
- |
|
|
|
- |
|
|
|
8,373,000 |
|
|
|
838 |
|
|
|
1,255,112 |
|
|
|
- |
|
|
|
- |
|
|
|
1,255,950 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock issued in settlement of note payable, shareholder (Note
6)
|
|
|
- |
|
|
|
- |
|
|
|
333,333 |
|
|
|
33 |
|
|
|
49,967 |
|
|
|
- |
|
|
|
- |
|
|
|
50,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options
issued for compensation (Note 8)
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
743,750 |
|
|
|
- |
|
|
|
- |
|
|
|
743,750 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
dividends on Series A preferred stock (Note 8)
|
|
|
- |
|
|
|
13,150 |
|
|
|
- |
|
|
|
- |
|
|
|
(13,150 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(4,460,541 |
) |
|
|
(4,460,541 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change
in unrealized gain on securities
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(619 |
) |
|
|
- |
|
|
|
(619 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change
in foreign currency translation adjustments
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(8,197 |
) |
|
|
- |
|
|
|
(8,197 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances,
June 30, 2007
|
|
|
500,000 |
|
|
$ |
513,150 |
|
|
|
31,349,845 |
|
|
$ |
3,135 |
|
|
$ |
30,678,462 |
|
|
$ |
121,543 |
|
|
$ |
(30,497,681 |
) |
|
$ |
818,609 |
|
See notes
to consolidated financial statements.
VYTA
CORP AND SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF CASH FLOWS
YEARS
ENDED JUNE 30, 2007 AND 2006
|
|
|
2007
|
|
|
2006
|
|
|
Cash
flows from operating activities:
|
|
|
|
|
|
|
|
Net
loss
|
|
$ |
(4,460,541 |
) |
|
$ |
(2,407,821 |
) |
|
Adjustments
to reconcile net loss to net cash used in operating
activities:
|
|
|
|
|
|
|
|
|
|
Consulting
expense
|
|
|
436,197 |
|
|
|
28,803 |
|
|
Depreciation
expense
|
|
|
5,387 |
|
|
|
5,768 |
|
|
Provision
for loss on note receivable, equity investee
|
|
|
1,198,000 |
|
|
|
- |
|
|
Equity in
net losses of unconsolidated investees
|
|
|
1,426,590 |
|
|
|
1,398,202 |
|
|
Options
issued for compensation
|
|
|
743,750 |
|
|
|
- |
|
|
Gain
on extinguishment of liabilities
|
|
|
- |
|
|
|
(120,788 |
) |
|
Amortization
of discounts on notes payable
|
|
|
- |
|
|
|
213,860 |
|
|
Loss
on revaluation of derivative warrant liability
|
|
|
- |
|
|
|
74,295 |
|
|
Changes
in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
Decrease
(increase) in prepaid expenses
|
|
|
14,742 |
|
|
|
(52,777 |
) |
|
Increase
(decrease) in accounts payable and accrued expenses
|
|
|
23,151 |
|
|
|
(17,848 |
) |
|
Total
adjustments
|
|
|
3,847,817 |
|
|
|
1,529,515 |
|
|
|
|
|
|
|
|
|
|
|
|
Net
cash used in operating activities
|
|
|
(612,724 |
) |
|
|
(878,306 |
) |
|
|
|
|
|
|
|
|
|
|
|
Cash
flows from investing activities:
|
|
|
|
|
|
|
|
|
|
Purchase
of equipment
|
|
|
- |
|
|
|
(750 |
) |
|
Advances
to unconsolidated investee
|
|
|
(1,182,784 |
) |
|
|
(1,686,570 |
) |
|
Payment
on note receivable
|
|
|
- |
|
|
|
275,442 |
|
|
Investment
in joint venture
|
|
|
- |
|
|
|
(500,000 |
) |
|
Net
cash used in investing activities
|
|
|
(1,182,784 |
) |
|
|
(1,911,878 |
) |
|
|
|
|
|
|
|
|
|
|
|
Cash
flows from financing activities:
|
|
|
|
|
|
|
|
|
|
Common
stock and warrants issued for cash
|
|
|
1,255,950 |
|
|
|
2,167,372 |
|
|
Proceeds
applied to preferred stock and warrant purchase
|
|
|
651,900 |
|
|
|
1,500,000 |
|
|
Proceeds
from subscribed preferred stock
|
|
|
- |
|
|
|
100,000 |
|
|
Payment
of notes payable
|
|
|
- |
|
|
|
(960,663 |
) |
|
Proceeds
from issuance of notes payable and common stock
|
|
|
50,000 |
|
|
|
150,000 |
|
|
Net
cash provided by financing activities
|
|
|
1,957,850 |
|
|
|
2,956,709 |
|
|
|
|
|
|
|
|
|
|
|
|
Net
increase in cash and cash equivalents
|
|
|
162,342 |
|
|
|
166,525 |
|
|
|
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents, beginning
|
|
|
192,360 |
|
|
|
25,835 |
|
|
|
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents, ending
|
|
$ |
354,702 |
|
|
$ |
192,360 |
|
VYTA
CORP AND SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF CASH FLOWS
YEARS
ENDED JUNE 30, 2007 AND 2006
(CONTINUED)
|
|
|
2007
|
|
|
2006
|
|
|
Supplemental
disclosure of cash flow information:
|
|
|
|
|
|
|
|
Cash
paid for interest
|
|
$ |
- |
|
|
$ |
23,569 |
|
|
Supplemental
disclosure of non-cash investing and financing activities:
|
|
|
|
|
|
|
|
|
|
Subscription
payable converted to preferred stock
|
|
$ |
100,000 |
|
|
$ |
- |
|
|
Conversion
of Series A Preferred Stock to common stock
|
|
$ |
- |
|
|
$ |
1,500,000 |
|
|
Beneficial
conversion feature
|
|
$ |
- |
|
|
$ |
1,500,000 |
|
|
Issuance
of common stock for payment of note payable
|
|
$ |
50,000 |
|
|
$ |
117,886 |
|
|
Issuance
of common stock in exchange for accrued commissions
|
|
$ |
- |
|
|
$ |
90,000 |
|
|
Issuance
of common stock in exchange for deferred consulting costs
|
|
$ |
- |
|
|
$ |
465,000 |
|
|
Notes
receivable applied to investment in unconsolidated
investee
|
|
$ |
- |
|
|
$ |
405,000 |
|
|
Investment
in unconsolidated investee acquired in exchange for note
payable
|
|
$ |
- |
|
|
$ |
595,000 |
|
|
Liability
recorded for offering costs of common stock issuance
|
|
$ |
- |
|
|
$ |
800,000 |
|
|
Forgiveness
of offering costs owed in connection with common stock
issuance
|
|
$ |
- |
|
|
$ |
(800,000 |
) |
|
Forgiveness
of accrued payroll owed to officer/shareholder
|
|
$ |
- |
|
|
$ |
8,750 |
|
|
Capitalization
of derivative warrant liability as equity
|
|
$ |
- |
|
|
$ |
253,522 |
|
See notes
to consolidated financial statements.
VYTA
CORP AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS
ENDED JUNE 30, 2007 AND 2006
1. BASIS
OF PRESENTATION, BUSINESS, AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES:
BASIS
OF PRESENTATION:
The
accompanying consolidated financial statements include the accounts of Vyta
Corp, a Nevada corporation, and its wholly-owned subsidiaries, NanoPierce
Connection Systems, Inc., a Nevada corporation (NCOS), which was incorporated in
November 2001 and ExypnoTech, LLC (ET LLC), a Colorado limited liability
company, which was formed in June 2004 (collectively referred to as the
“Company”). All significant intercompany accounts and transactions have been
eliminated in consolidation.
On
January 19, 2006, the Company’s Board of Directors approved an amendment to the
Company’s Articles of Incorporation to effect a one-for-twenty reverse stock
split effective January 31, 2006. All references to shares, options, and
warrants in the year ended June 30, 2006 and in prior periods, have been
retroactively adjusted to reflect the reverse split amounts.
As a
result of the reverse split, the Company’s authorized capital was reduced from
200,000,000 shares to 10,000,000 shares. As part of the reverse split, the
Company amended and restated its Articles of Incorporation to increase the
authorized capital of the Company to 200,000,000 shares.
BUSINESS:
NCOS and
ET LLC had no revenues or operations in 2007 and 2006. The Company has two
unconsolidated investees which are accounted for using the equity method of
accounting, ExypnoTech, GmbH (EPT), and BioAgra, LLC (BioAgra), which operate in
two segments, the RFID industry and the animal feed industry, respectively.
EPT’s activities primarily consist of manufacturing inlay components used in,
among other things, Smart Labels, which is a paper sheet holding a
chip-containing module that is capable of memory storage and/or processing.
BioAgra (a development stage enterprise) manufactures and plans to sell a beta
glucan product, Agrastim®, to be
used as a replacement for hormone growth steroids and antibiotics in products
such as poultry feed.
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES:
Use
of Estimates in the Financial Statements:
The
preparation of the financial statements in conformity 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 reported amounts of revenues and expenses
during the reporting periods. Actual results could differ from those
estimates.
Fair
Value of Financial Instruments:
The fair
values of the Company’s cash and cash equivalents and accounts payable
approximate their carrying amounts due to the short maturities of these
instruments. The fair values of the note and advances receivable from the
unconsolidated investee and advances payable to an officer of the Company are
not subject to reasonable estimation, based upon the related party nature of the
underlying transactions.
VYTA
CORP AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS
ENDED JUNE 30, 2007 AND 2006
Cash
and Cash Equivalents:
The
Company considers all highly liquid investments with an original maturity of
three months or less and money market instruments to be cash
equivalents.
Deferred
Consulting Costs:
In June
2006, the Company entered into a one year consulting services agreement with two
unrelated parties, in which the parties agreed to provide lobbying and public
relations services. Compensation consisted of 200,000 shares of the Company’s
common stock with a market value of approximately $182,000 (based on a closing
market price of $0.91 per share at the date the transaction was entered into)
and a warrant to purchase 500,000 shares of the Company’s common stock, with an
exercise price of $0.91 per share and a term of 3 years. The warrant was valued
at $283,000 using the Black-Scholes pricing model. The deferred cost was
amortized on a straight-line basis as earned over the one year period from the
date of the agreement. During the year ended June 30, 2007, the value of the
shares and warrant was amortized in full, and the Company recognized an expense
of $436,197. During the year ended June 30, 2006, $28,803 was
expensed.
Available
for Sale Securities:
Available
for sale securities consist of 1,180 shares of common stock of Intercell
International Corporation (Intercell). These securities are carried at estimated
fair value ($291 at June 30, 2007) based upon quoted market prices, and are
included in other long-term assets in the Company’s June 30, 2007 consolidated
balance sheet. During the years ended June 30, 2007 and 2006, the Company did
not sell any available for sale securities.
Equity
Method Investments:
Investee
entities in which the Company can exercise significant influence, but not
control, are accounted for under the equity method of accounting. Whether the
Company exercises significant influence with respect to an investee depends on
an evaluation of several factors including, among others, representation on the
company’s board of directors and ownership level, generally 20% to 50% interest
in the voting securities of the company including voting rights associated with
the Company’s holdings in common, preferred and other convertible instruments in
the company. Under the equity method of accounting, the Company’s share of the
earnings or losses of these companies is included in the equity income (loss)
section of the consolidated statements of operations.
A loss in
value of an investment that is other than a temporary decline is recognized as a
charge to operations. Evidence of a loss in value might include, but would not
necessarily be limited to, absence of an ability to recover the carrying amount
of the investment or inability of the investee to sustain an earnings capacity
that would justify the carrying amount of the investment.
Property
and Equipment:
Property
and equipment are stated at cost. Depreciation expense is provided by use of
accelerated and straight-line methods over the estimated useful lives of the
assets, which range from five to seven years.
VYTA
CORP AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS
ENDED JUNE 30, 2007 AND 2006
Accounting
For Obligations and Instruments Potentially Settled in the Company’s Common
Stock:
The
Company accounts for obligations and instruments potentially to be settled in
the Company’s stock in accordance with Emerging Issues Task Force (EITF) Issue
No. 00-19, Accounting For
Derivative Financial Instruments Indexed to, and Potentially Settled in a
Company’s Own Stock. This issue addresses the initial balance sheet
classification and measurement of contracts that are indexed to, and potentially
settled in, the Company’s stock. Under EITF 00-19, contracts are initially
classified as equity or as either assets or liabilities, depending on the
situation. All contracts are initially measured at fair value and subsequently
accounted for based on the then current classification. Contracts initially
classified as equity do not recognize subsequent changes in fair value as long
as the contracts continue to be classified as equity. For contracts classified
as assets or liabilities, the Company reports changes in fair value in earnings
and discloses these changes in the financial statements as long as the contracts
remain classified as assets or liabilities. If contracts classified as assets or
liabilities are ultimately settled in shares, any previously reported gains or
losses on those contracts continue to be included in earnings. The
classification of a contract is reassessed at each balance sheet
date.
Legal
Defense Costs:
The
Company does not accrue for estimated future legal and related defense costs, if
any, to be incurred in connection with outstanding or threatened litigation and
other disputed matters but rather, records such as period costs when the
services are rendered.
Stock-Based
Compensation:
Beginning
July 1, 2006, the Company adopted the provisions of and accounts for stock-based
compensation in accordance with Statement of Financial Accounting Standards
(SFAS) No. 123 – revised 2004 (SFAS 123R), Share-Based Payment, which
replaced SFAS No. 123 (SFAS 123), Accounting for Stock-based
Compensation, and supersedes APB Opinion No. 25 (APB 25), Accounting for Stock Issued to
Employees. Under the fair value recognition provisions of this statement,
stock-based compensation cost is measured at the grant date based on the fair
value of the award and is recognized as expense on a straight-line basis over
the requisite service period, which generally is the vesting period. The Company
elected the modified-prospective method, under which prior periods are not
revised for comparative purposes. The valuation provisions of SFAS 123R apply to
new grants and to grants that were outstanding as of the effective date and are
subsequently modified. All options granted prior to the adoption of SFAS 123R
and outstanding during the periods presented were fully-vested at the date of
adoption.
Foreign
Currency Translation:
The
financial statements of the Company’s foreign equity investment (EPT) are
measured using the local currency (the Euro) as the functional currency. Assets
and liabilities of EPT are translated at exchange rates as of the balance sheet
date. Revenues and expenses are translated at average rates of exchange in
effect during the period. The resulting cumulative translation adjustments have
been recorded as a component of comprehensive income (loss), included as a
separate item in shareholders’ equity.
VYTA
CORP AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS
ENDED JUNE 30, 2007 AND 2006
Loss
Per Share:
Basic
loss per share of common stock is computed based on the average number of common
shares outstanding during the year. Stock options and warrants are not
considered in the calculation, as the impact of the potential common shares
(14,859,844 shares at June 30, 2007 and 6,519,469 shares at June 30, 2006) would
be to decrease loss per share (anti-dilutive). Therefore, diluted loss per share
is equivalent to basic loss per share.
Recently
Issued Accounting Pronouncements:
In
February 2006, the Financial Accounting Standards Board (FASB) issued SFAS No.
155, Accounting for Certain
Hybrid Financial Instruments. SFAS No. 155 allows financial instruments
that contain an embedded derivative and that otherwise would require bifurcation
to be accounted for as a whole on a fair value basis, at the holder’s election.
SFAS No. 155 also clarifies and amends certain other provisions of SFAS No. 133
and SFAS No. 140. SFAS No. 155 is effective for the Company for all financial
instruments issued or acquired after the beginning its fiscal year ending June
30, 2008. The adoption of SFAS No. 155 is not expected to have an impact on the
Company’s financial statements.
In June
2006, the FASB issued Interpretation No. 48, Accounting for Uncertainty in Income
Taxes - An Interpretation of FASB Statement No. 109, (FIN 48). FIN 48
clarifies the accounting for uncertainty in income taxes recognized in an
enterprise’s financial statements in accordance with FASB Statement No. 109,
Accounting for Income
Taxes. FIN 48 also prescribes a recognition threshold and measurement
attribute for the financial statement recognition and measurement of a tax
position taken or expected to be taken in a tax return that results in a tax
benefit. Additionally, FIN 48 provides guidance on de-recognition, income
statement classification of interest and penalties, accounting in interim
periods, disclosure, and transition. This interpretation will be effective for
the Company on July 1, 2007, but is not expected to have a material impact on
the Company’s consolidated financial statements, with the possible exception of
certain disclosures relative to the Company’s net operating loss carry forwards
and the related valuation allowance.
In
September 2006, the FASB issued SFAS No. 157, Fair Value Measurements. This
statement defines fair value, establishes a framework for measuring fair value
in generally accepted accounting principles, and expands disclosures about fair
value measurements. This statement applies under other accounting pronouncements
that require or permit fair value measurements. SFAS No. 157 will be effective
for the Company for its fiscal year beginning on July 1, 2008. The Company is
currently assessing the impact the adoption of SFAS No. 157 may have on its
consolidated financial statements.
In
February 2007, FASB issued SFAS No. 159, The Fair Value Option for Financial
Assets and Financial Liabilities - Including an Amendment of FASB Statement No.
115. This statement permits entities to choose to measure many financial
instruments and certain other items at fair value. Most of the provisions of
SFAS No. 159 apply only to entities that elect the fair value option. The
possible adoption of this statement is not expected to have a material effect on
the Company’s financial statements.
In
September 2006, the Securities and Exchange Commission (SEC) issued Staff
Accounting Bulletin (SAB) No. 108 in order to eliminate the diversity of
practice surrounding how public companies quantify financial statement
misstatements. In SAB 108, the SEC staff established an approach that requires
quantification of financial statement misstatements based on the effects of the
misstatements on each of the Company’s financial statements and the related
financial statement disclosures. SAB No. 108 was effective for the Company’s
current 2007 fiscal year end. The adoption of SAB No. 108 did not have an impact
on the Company’s consolidated financial statements.
VYTA
CORP AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS
ENDED JUNE 30, 2007 AND 2006
2.
GOING CONCERN UNCERTAINTY AND MANAGEMENT’S PLANS:
The
Company’s financial statements for the year ended June 30, 2007 have been
prepared on a going concern basis, which contemplates the realization of assets
and the settlement of liabilities and commitments in the normal course of
business. The Company reported a net loss of $4,460,541 (net loss applicable to
common shareholders of $4,473,691) for the year ended June 30, 2007, and an
accumulated deficit of $30,497,681 as of June 30, 2007. Cash flows used in
operations for 2007 substantially exceeded its working capital remaining at year
end, and the Company had no revenues from its activities during the year ended
June 30, 2007.
The
Company’s ability to continue as a going concern may be dependent on the success
of management’s plan discussed below. The financial statements do not include
any adjustments relating to the recoverability and classification of assets or
the amounts and classification of liabilities that might be necessary should the
Company be unable to continue as a going concern.
During
the 2008 fiscal year, the Company intends to continue its efforts to assist
BioAgra with the continuing development of its sales, nationally and
internationally in other animal feed markets, such as the equine and the swine
markets. The Company intends to continue to raise funds to support the efforts
through the sale of its equity securities.
To the
extent the Company’s operations are not sufficient to fund the Company’s capital
requirements, the Company may attempt to enter into a revolving loan agreement
with financial institutions or attempt to raise capital through the sale of
additional capital stock or through the issuance of debt. At the present time,
the Company does not have a revolving loan agreement with any financial
institution nor can the Company provide any assurance that it will be able to
enter into any such agreement in the future or be able to raise funds through
the further issuance of debt or equity in the Company.
3.
INTERNATIONAL OPERATIONS:
Since the
Company’s foreign equity investment’s (EPT) operations (Note 5) are located in
Germany, its transactions are conducted in currencies other than the U.S. dollar
(the currency into which EPT’s historical financial statements have been
translated) primarily the Euro. As a result, the Company is exposed to adverse
movements in foreign currency exchange rates.
In
addition, the Company is subject to risks including adverse developments in the
foreign political and economic environment, trade barriers, managing foreign
operations and potentially adverse tax consequences that could have a material
adverse effect on the Company’s financial condition or results of operations in
the future.
4. NOTES
AND ADVANCES RECEIVABLE – UNCONSOLIDATED INVESTEE:
During
the year ended June 30, 2006, the Company loaned $1,686,570 to BioAgra through a
series of secured, 7.5% promissory notes, which were due from June 30 through
October 31, 2006. On June 26, 2006, the Company agreed to combine all of the
promissory notes and accrued interest of $40,257 into a $1,726,827 secured, 7.5%
promissory note with payments to be made monthly beginning October 31, 2006,
through October 31, 2007. The funds were loaned to BioAgra to facilitate
completion of its first production line and to support its development stage
activities. The promissory note is collateralized by all BioAgra assets.
Additionally, the promissory note is to be paid in full prior to any
distributions being made to the members of the joint venture. During the year
ended June 30, 2007, the note was reduced by $1,371,269, which represents the
excess of the BioAgra losses recognized by the Company over the adjusted equity
method basis of the Company’s investment in BioAgra (Note 5).
VYTA
CORP AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS
ENDED JUNE 30, 2007 AND 2006
During
the year ended June 30, 2007, the Company advanced an additional $1,182,784 to
BioAgra at 7.5% interest. The Company has classified the note and advances
receivable as non-current assets and is not accruing interest on these
receivables, as they are currently in default and non-performing. During the
quarter ended September 30, 2007, the Company advanced an additional $284,135 to
BioAgra.
During
the fourth quarter of the year ended June 30, 2007, the Company made a decision
to provide for a loss on the value of the note receivable. This decision was
based on factors including the Company’s evaluation of past and current
operating results, failure of BioAgra to make scheduled payments, and the
Company’s continuing support of the development stage activities of BioAgra. The
Company also considered the estimated fair value of BioAgra’s assets and
liabilities in making the decision. As a result of this decision, the Company
recorded provision for loss of $1,198,000 in the fourth quarter ended June 30,
2007.
5.
INVESTMENTS IN UNCONSOLIDATED INVESTEES:
EPT:
At June
30, 2007, the Company’s investment in EPT is $205,196. During the years ended
June 30, 2007 and 2006, the Company’s proportionate income was approximately
$43,800 and $1,900, respectively. Financial information of EPT as of June 30,
2007, and for the years ended June 30, 2007 and 2006 is as follows:
|
|
|
June
30, 2007
|
|
|
|
|
|
|
|
Assets:
|
|
|
|
|
Current
assets (1)
|
|
$ |
300,888 |
|
|
Equipment
|
|
|
3,587 |
|
|
|
|
$ |
304,475 |
|
|
|
|
|
|
|
|
Liabilities
and members’ equity:
|
|
|
|
|
|
Current
liabilities
|
|
$ |
11,267 |
|
|
Members’
equity
|
|
|
293,208 |
|
|
|
|
$ |
304,475 |
|
____________________
(1) Current
assets include receivables in the amount of $280,674 due from the 51% owner of
EPT.
|
|
|
Year
ended
|
|
|
Year
ended
|
|
|
|
|
June
30, 2007
|
|
|
June
30, 2006
|
|
|
|
|
|
|
|
|
|
|
Revenues
(1)
|
|
$ |
3,714,845 |
|
|
$ |
2,492,828 |
|
|
Expenses
(2)
|
|
|
(3,625,463 |
) |
|
|
( 2,489,249 |
) |
|
Net
income
|
|
$ |
89,382 |
|
|
$ |
3,579 |
|
____________________
(1) Revenues
include $1,842,199 and $2,492,751 of sales to the 51% owner of EPT for the years
ended June 30, 2007 and 2006, respectively.
(2) Expenses
include $229,754 and $97,155 of charges paid to the 51% owner of EPT for the
years ended June 30, 2007 and 2006, respectively.
VYTA
CORP AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS
ENDED JUNE 30, 2007 AND 2006
BIOAGRA
On August
15, 2005, the Company entered into a joint venture with Xact Resources
International, Inc., a privately held company. The Company purchased a 50%
equity interest in the joint venture, BioAgra, for $1,500,000. BioAgra
manufactures and plans to sell a beta glucan product, YBG-2000 also known as
Agrastim®, which
can be used as a replacement for hormone growth steroids and antibiotics in
animal feed products such as poultry feed. As of June 30, 2007, BioAgra (a
development stage company) has completed construction of a production line;
however BioAgra has not yet recognized any significant revenues from product
sales.
The terms
of the joint venture provide for the Company to share in 50% of joint venture
net income, if any, or net losses. The Company is accounting for its investment
in BioAgra as an equity method investment. Net losses incurred by BioAgra have
exceeded the underlying equity attributed to BioAgra’s other joint venture
investor. As a result, the excess of the losses attributable to the other joint
venture investor have been charged to the Company. BioAgra losses during the
years ended June 30, 2006, recorded by the Company as equity losses and a
reduction to the BioAgra equity investment were $1,392,684. At June 30, 2006,
the investment balance of BioAgra was $107,316. During the quarter ended
September 30, 2006, BioAgra losses were applied to the equity investment and
reduced the balance to $0. Since September 30, 2006 and through June 30, 2007,
the carrying value of the Company’s investment in BioAgra was $0. BioAgra losses
for the year ended June 30, 2007 in excess of the carrying value of the
Company’s investment in BioAgra ($1,371,269) were applied to reduce the value of
the note receivable due from BioAgra.
VYTA
CORP AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS
ENDED JUNE 30, 2007 AND 2006
Financial
information of BioAgra as of June 30, 2007, for the year ended June 30, 2007 and
for the period from August 15, 2005 through June 30, 2006, is as
follows:
|
|
|
June
30, 2007
|
|
|
|
|
|
|
|
Assets:
|
|
|
|
|
Current
assets
|
|
$ |
223,135 |
|
|
Land,
building and equipment, net (2)
|
|
|
2,680,799 |
|
|
|
|
$ |
2,903,934 |
|
|
|
|
|
|
|
|
Liabilities
and members’ deficiency:
|
|
|
|
|
|
Current
liabilities (1)
|
|
$ |
3,317,256 |
|
|
Obligation
under capital lease (2)
|
|
|
957,942 |
|
|
Total
liabilities
|
|
|
4,275,198 |
|
|
|
|
|
|
|
|
Members’
deficiency
|
|
|
( 1,371,264 |
) |
|
|
|
$ |
2,903,934 |
|
___________________
(1) Includes
$2,909,611 owed to the Company.
(2) BioAgra
leases land and a building under a ten-year lease expiring in February 2015,
which requires a monthly lease payment of $12,000.
|
|
|
|
|
|
August
15, 2005
|
|
|
|
|
Year
ended
June
30, 2007
|
|
|
through
June
30, 2006
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$ |
68,754 |
|
|
$ |
5,340 |
|
|
Expenses
|
|
|
(1,547,339 |
) |
|
|
(1,398,024 |
) |
|
Net
loss
|
|
$ |
(1,478,585 |
) |
|
$ |
(1,392,684 |
) |
6. NOTES
AND ADVANCES PAYABLE:
SHAREHOLDER:
In March
2007, a non-related party shareholder of the Company loaned $50,000 to the
Company for an unsecured, 8% note payable due in March 2008. In June 2007, the
shareholder agreed to accept 333,333 shares of the Company’s common stock as
payment on the note (Note 8).
RELATED
PARTY:
At June
30, 2007, the Company owes its President $24,612 for amounts advanced to the
Company or for reimbursements. This amount is unsecured, non-interest bearing
and due on demand.
VYTA
CORP AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS
ENDED JUNE 30, 2007 AND 2006
OTHER
PARTIES:
Prior to
July 1, 2005, an unrelated third party loaned $150,000 to the Company in
exchange for an unsecured promissory note due in September 2005 with interest at
15% per quarter and 100,000 shares of the Company’s restricted common stock
(50,000 shares were issued in June 2005 and the remaining 50,000 shares were
issued in July 2005). At the date of issuance, the common stock had a market
value of $180,000 (based on the closing market price of $1.80 per share on the
date of the transaction). The relative fair value of the common stock, ($81,718)
was accounted for as a discount applied against the face amount of the note. The
effective interest rate on this note was 54%. As of July 1, 2005, $7,272 of the
discount had been amortized to interest expense. In September 2005, the Company
paid the $150,000, plus accrued interest of $22,500. Through that date, the
remaining discount of $74,446 was fully amortized to interest
expense.
Prior to
and during the year ended June 30, 2006, various third parties loaned the
Company $175,000 in exchange for unsecured 8% promissory notes due in December
of 2005 and 405,000 shares of the Company’s restricted common stock. The common
stock had a market value of $724,000 (based on closing market prices which
ranged from $1.60 to $2.00 per share at the date of each transaction). The
relative fair value of the common stock ($139,314) was accounted for as a
discount against the face amount of the notes. The discount was amortized over
the terms of the promissory notes as additional interest expense. The effective
interest rate on these notes was 85%. In August 2005, the Company paid the
$175,000, plus accrued interest of $850. Through that date, the discount of
$139,314 was fully amortized to interest expense.
During
the year ended June 30, 2006, four vendors agreed to forgive payment on $120,788
of liabilities owed, and as a result, the Company recognized a gain of $120,788
on the extinguishment of liabilities.
7.
DERIVATIVE WARRANT LIABILITY:
During
the year ended June 30, 2006, the Company sold 746,717 shares of its restricted
common stock for $597,372. In connection with the sale of the restricted common
shares, the Company issued five year warrants exercisable into 746,717 shares of
the Company’s common stock. The common stock had a total market value of
$1,058,153 (based on the closing market prices which ranged from $1.00 to $1.60
per share at the date of each transaction). The warrants had an aggregate
estimated fair value of $462,965 (using the Black-Scholes pricing model
utilizing an expected volatility of 83%, a risk-free interest rate of 3.8% and a
dividend yield of 0%).
The
relative fair value of the warrants ($179,227) was accounted for as a liability
in accordance with EITF 00-19, as the Company’s authorized and unissued shares
available to settle the warrants (after considering all other commitments that
could have required the issuance of stock during the maximum period the warrant
could remain outstanding) were determined to be insufficient.
Through
January 2006, the Company’s authorized and unissued common shares were
insufficient to settle these warrant contracts. As a result, the value of these
warrants was classified as a liability. As a result of the one-for-twenty
reverse stock split in February 2006 and the increase in authorized shares,
there are now sufficient authorized and unissued common shares to settle these
contracts. Accordingly, the fair value of the warrants at the effective date of
the stock split ($253,522) was reclassified to additional paid-in capital.
During the year ended June 30, 2006, the Company recorded a loss of $74,295 on
these contracts. The appropriateness of the classification of these contracts is
reassessed at each balance sheet date.
VYTA
CORP AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS
ENDED JUNE 30, 2007 AND 2006
8.
SHAREHOLDERS’ EQUITY:
PREFERRED
STOCK:
In
February 2007, the Company sold 500,000 shares of Series A, cumulative,
non-convertible preferred stock (the “Series A”) for $500,000 cash to Arizcan
Properties, Ltd. (Arizcan), the Series A majority shareholder of the Company.
Arizcan had previously advanced (as of June 30, 2006) $100,000 to the Company
under a subscription agreement, prior to the issuance of the shares. The Series
A shares provide that when voting as a single class, the shares have the votes
and the voting power that at all times is 1% greater than the combined votes and
voting power of all other classes of securities entitled to vote on any matter.
As a result of the issuance, Arizcan acquired approximately 51% of the voting
power of the Company. The Company has a right, solely at its discretion, to
redeem the shares in 2017 at 130% of then deemed par value.
The
holder of the Series A is entitled to a dividend equal to 8% per annum of the
deemed par value ($1.00 per share). Accumulated dividends for the period from
Series A issuance (February 2007) through June 30, 2007, were $13,150, which
have been recorded as an increase in the net loss per common shareholder. Also,
the holder is entitled to a liquidation preference of the then deemed par value
for each outstanding share and any accrued but unpaid dividends upon the
liquidation of the Company.
COMMON
STOCK:
Fiscal
2007 Transactions:
Between
March and June 2007, the Company issued an aggregate of 8,373,000 shares of its
restricted common stock for cash proceeds of $1,255,950. The shares were sold
for $0.15 per share (based upon an approximate 38% discount from the closing
market price, ranging from $0.37-$0.46 per share on the dates of the
transactions).
In June
2007, the Company issued 333,000 shares of its restricted common stock to a
non-related party shareholder as payment on a $50,000 promissory note. The
shares were issued for $0.15 per share, based on the cash proceeds per share in
the transactions noted above.
Fiscal
2006 Transactions:
In
connection with the issuance of $175,000 in promissory notes in June 2005, the
Company agreed to issue 175,000 shares of its restricted common stock, valued at
$103,146, of which 50,000 shares were issued in June 2005, and 125,000 shares
were issued in July 2005. Also in July and August 2005, in connection with the
issuance of promissory notes totaling $150,000, the Company issued 450,000
shares of its restricted common stock, valued at $117,886.
In August
2005, warrants to purchase 1,535,000 shares of common stock were exercised for
cash of $1,535,000 in exchange for 1,535,000 shares of common stock. The
exercise price of these warrants was lowered from $2.00 and $3.00 per share to
$1.00 per share in connection with the exercise. The Company had recorded an
$800,000 payable to Arizcan, which represents the costs incurred in connection
with this offering of equity securities. In March 2006, Arizcan terminated the
agreement and forgave the payment of this liability. As a result, in March 2006,
the Company accounted for the forgiveness of the liability as a contribution to
equity.
VYTA
CORP AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS
ENDED JUNE 30, 2007 AND 2006
In
September 2005, the Company executed a subscription agreement with Arizcan to
sell shares of the Company’s preferred stock. In January 2006, Arizcan purchased
200,000 shares of the Company’s Series A Convertible Preferred Stock
(“Convertible Preferred Stock”) for $400,000 cash and an unsecured promissory
note for $1,100,000. The promissory note had an interest rate of 8% per annum
and was due in January 2007. In February 2006, Arizcan converted the 200,000
shares of Convertible Preferred Stock into 15,000,000 shares of the Company’s
restricted common stock. Upon the conversion, Arizcan held approximately 67% of
the issued and outstanding common stock of the Company. In May 2006, Arizcan
then paid the Company cash of $1,100,000 plus interest to repay the note in
full. The conversion feature was deemed beneficial and accordingly resulted in a
beneficial conversion feature valued at $1,500,000. The intrinsic value assigned
to the beneficial conversion feature was limited to the total amount of the
proceeds received. As a result of the beneficial conversion feature, net loss
applicable to common shareholders was increased by $1,500,000 during the year
ended June 30, 2006.
In
October 2005, the Company issued 50,000 shares of its restricted common stock,
valued at $90,000, in satisfaction of a $90,000 liability previously incurred in
connection with the Company’s financing efforts.
Between
October 2005 and January 2006, the Company issued 790,467 shares of its
restricted common stock and warrants to purchase 746,717 shares of its
restricted common stock for $632,372 in cash. The warrants have an exercise
price of $1.00 per share and a term of three years. The shares of common stock
were sold for $0.80 per share (based on a 50% discount from the closing market
price, $1.60 per share, on the date of each transaction).
In May
2006, 50,000 shares of the Company’s restricted stock, that had been issued in
June 2005 to an unrelated party for services were returned to the Company and
were cancelled.
In June
2006, in connection with two, twelve-month consulting agreements, the Company
issued 200,000 shares of its restricted common stock to unrelated third parties.
The market value of the shares was $182,000 (based on a closing market price of
$0.91 per share at the date of the transaction). In addition, the Company issued
a warrant exercisable for 500,000 shares of the Company’s common stock with an
exercise price of $0.91 per share and a term of 3 years. The warrant was deemed
to have a value of $283,000 using the Black-Scholes option pricing model
utilizing a contractual term of 3 years, an expected volatility of 97%, a
risk-free interest rate of 3.93%, and a dividend yield of 0%.
STOCK
OPTIONS:
Stock
Options:
The
Company has two stock option plans which permit the grant of shares to attract,
retain and motivate employees, directors and consultants of up to 2,863,000
shares of common stock. Options are generally granted with an exercise price
equal to the Company’s market price of its common stock on the date of the grant
and with vesting rates as determined by the Board of Directors. The maximum
contractual term of stock options under the plan is 10 years. All options
outstanding at July 1, 2006 and June 30, 2007 are fully-vested and
exercisable.
VYTA
CORP AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS
ENDED JUNE 30, 2007 AND 2006
During
the year ended June 30, 2007, the Company granted 2,350,000 stock options to an
officer, directors and an employee at exercise prices ranging from $0.32 to
$0.41 per share. The fair value of stock options at the date of grant was
$743,750 based on the Black-Scholes option pricing model and was recorded as
compensation expense. The weighted average grant date fair value of the stock
options granted was $0.32 per option. The Company used the following assumptions
to determine the fair value of stock option grants during the year ended June
30, 2007:
|
Expected
term
|
5
years
|
|
Expected
volatility
|
183%
- 172%
|
|
Risk-free
interest rate
|
4.82%
- 4.94%
|
|
Dividend
yield
|
0%
|
The
Company did not grant any options during the year ended June 30,
2006.
The
expected term of stock options represents the period of time that the stock
options granted are expected to be outstanding based on historical exercise
trends. 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 bill rate for the expected term of the related stock options. The
dividend yield represents our anticipated cash dividend over the expected term
of the stock options.
At June
30, 2007, all outstanding and exercisable options were fully vested. The
aggregate intrinsic value of outstanding fully-vested options as of June 30,
2007 was approximately $185,000.
A summary
of the option plans are as follows:
|
|
|
|
|
|
|
|
|
|
|
Shares
|
|
|
Weighted
Average
Exercise
Price
|
|
|
Shares
|
|
|
Weighted-Average
Exercise
Price
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding,
Beginning of Year
|
|
|
398,127 |
|
|
$ |
20.00 |
|
|
|
439,377 |
|
|
$ |
20.00 |
|
|
Granted
|
|
|
2,350,000 |
|
|
|
0.33 |
|
|
|
- |
|
|
|
- |
|
|
Cancelled
|
|
|
- |
|
|
|
- |
|
|
|
(41,250 |
) |
|
|
2.00 |
|
|
Expired
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
Exercised
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
Outstanding,
End of Year
|
|
|
2,748,127 |
|
|
$ |
3.00 |
|
|
|
398,127 |
|
|
$ |
22.00 |
|
|
Options
Exercisable at End of Year
|
|
|
2,748,127 |
|
|
$ |
3.00 |
|
|
|
398,127 |
|
|
$ |
22.00 |
|
The
following table summarizes information about stock options outstanding as of
June 30, 2007:
| |
|
|
|
|
|
|
|
|
Range
of
Exercise
Prices
|
|
|
Number
of
Options
|
|
|
Weighted-Average
Remaining
Contractual
Life
(years)
|
|
|
Weighted-Average
Exercise
Price
|
|
|
Number
of
Options
|
|
|
Weighted-Average
Exercise
Price
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ |
0.32–3.99 |
|
|
|
2,350,000 |
|
|
|
9.86 |
|
|
$ |
0.33 |
|
|
|
2,350,000 |
|
|
$ |
0.33 |
|
| |
4.00–10.00 |
|
|
|
162,750 |
|
|
|
1.37 |
|
|
|
6.41 |
|
|
|
162,750 |
|
|
|
6.41 |
|
| |
10.20–20.00 |
|
|
|
114,777 |
|
|
|
4.74 |
|
|
|
13.65 |
|
|
|
114,777 |
|
|
|
13.36 |
|
| |
20.20–40.00 |
|
|
|
43,000 |
|
|
|
3.66 |
|
|
|
30.39 |
|
|
|
43,000 |
|
|
|
30.39 |
|
| |
40.20–60.00 |
|
|
|
77,100 |
|
|
|
2.23 |
|
|
|
62.21 |
|
|
|
77,100 |
|
|
|
62.21 |
|
| |
100.20–120.00 |
|
|
|
500 |
|
|
|
2.69 |
|
|
|
120.00 |
|
|
|
500 |
|
|
|
120.00 |
|
| |
|
|
|
|
2,748,127 |
|
|
|
3.89 |
|
|
$ |
3.00 |
|
|
|
2,748,127 |
|
|
$ |
3.00 |
|
During
the year ended June 30, 2006, officers and a director of the Company agreed to
cancel options under the Company’s 1998 Compensatory Stock Option Plan
exercisable for 41,250 shares of the Company’s stock.
VYTA
CORP AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS
ENDED JUNE 30, 2007 AND 2006
The
officers and director did not receive any consideration in return for the
cancellations.
WARRANTS:
At June
30, 2007, the following warrants to purchase common stock were
outstanding:
|
Number
of common
shares
covered by warrants
|
|
|
Exercise
Price
|
|
Expiration
Date
|
| |
|
|
|
|
|
| |
22,500 |
|
|
$ |
12.00 |
|
January
2010
|
| |
1,250,000 |
|
|
|
3.00 |
|
January
2009
|
| |
92,500 |
|
|
|
1.00 |
|
January
2009
|
| |
4,246,717 |
|
|
|
1.00 |
|
February
2009
|
| |
6,000,000 |
|
|
|
0.50 |
|
March
2012
|
| |
500,000 |
|
|
|
0.91 |
|
June
2009
|
| |
12,111,717 |
|
|
|
|
|
|
Fiscal
2007 Transactions:
In
February 2007, the Company sold to Arizcan, a warrant exercisable immediately
for up to 6,000,000 shares of restricted common stock for $251,900 in cash. The
warrant has an exercise price of $0.50 per share and provides for cashless
exercise. The warrant has a term of 5 years.
In
January 2007, warrants to purchase 9,625 shares of common stock expired
unexercised.
Fiscal
2006 Transactions:
During
the year ended June 30, 2006, warrants to purchase 202,709 shares of common
stock expired unexercised.
In August
2005, warrants to purchase 1,535,000 shares of common stock were exercised for
cash of $1,535,000 in exchange for 1,535,000 shares of common stock. The
proceeds were used to purchase a 50% equity interest in BioAgra. The warrants’
exercise price was lowered from $2.00 and $3.00 per share to $1.00 per share in
connection with the exercise.
In
December 2005, warrants to purchase 238,667 shares of common stock were canceled
by their holders. The warrants were cancelled to reduce the total dilutive
securities below the authorized share limit, to allow the Company to enter into
additional equity financing in December 2005. In return for the cancellation of
such warrants, the Company agreed to issue warrants to purchase 3,500,000 common
shares. The warrants have an exercise price of $1.00 and have a term of 3 years.
These warrants were issued in February 2006.
In
February 2006, the Company issued warrants to purchase 746,717 shares of common
stock. The warrants were issued to fulfill commitments made with the sale of
common stock from November 2005 through January 2006, as discussed above. The
warrants have an exercise price of $1.00 per share and a term of 3
years.
OTHER
CAPITAL TRANSACTION:
In August
2005, an officer/shareholder of the Company forgave $8,750 of accrued salary,
which has been accounted for as a capital contribution and has resulted in an
increase in additional paid in capital.
VYTA
CORP AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS
ENDED JUNE 30, 2007 AND 2006
9. COMMITMENTS
AND CONTINGENCIES
LITIGATION:
Depository
Trust Suit:
In May
2004, the Company filed suit against the Depository Trust and Clearing
Corporation (“DTCC”), the Depository Trust Company (“DTC”), and the National
Securities Clearing Corporation (“NSCC”) alleging, among other things, that the
DTCC, DTC and NSCC acted in concert to operate the “Stock Borrow Program,”
originally created to address short term delivery failures by sellers of
securities in the stock market. According to the complaint, the DTCC, NSCC and
DTC conspired to maintain significant open fail deliver positions of millions of
shares of the Company’s common stock for extended periods of time by using the
Stock Borrow Program to cover these open and unsettled positions. The Company
was seeking damages of $25,000,000 and treble damages. In April 2005, the court
granted a motion to dismiss the lawsuit. The Company filed an appeal to overturn
the motion to dismiss the lawsuit; however, in September 2007, the court ruled
that all of the Company’s claims were pre-empted by federal law and affirmed the
dismissal of the Company’s complaint.
Financing
Agreement Suit:
In
connection with a financing obtained in October 2000, the Company filed various
against, among others, Harvest Court, LLC, Southridge Capital Investments, LLC,
Daniel Pickett, Patricia Singer and Thomson Kernaghan, Ltd. for violations of
federal and state securities laws, conspiracy, aiding and abetting and common
law fraud among other claims.
In May
2001, Harvest Court, LLC filed suit against the Company alleging that the
Company breached an October 20, 2000 Stock Purchase Agreement, by not issuing
370,945 free trading shares of the Company’s common stock in connection with the
reset provisions of the Purchase Agreement due on the second reset date and
approximately 225,012 shares due in connection with the third reset date.
Harvest Court, LLC is seeking the delivery of such shares or damages in the
alternative. In August 2001, the Supreme Court of the State of New York, County
of New York issued a preliminary injunction ordering the Company to reserve and
not transfer the shares allegedly due to Harvest Court, LLC. The Company has
filed counterclaims seeking various forms of relief against Harvest Court, LLC.
Discovery has been completed in these cases and a trial date is expected to be
set by the court.
In this
litigation, Harvest Court, LLC also filed counterclaims against the Company and
certain officers and former board members of the Company, and a number of
unrelated third parties. The counterclaims allege violations of federal
securities laws and other laws. Harvest Court, LLC is seeking various forms of
relief including compensatory and punitive damages. Responsive pleadings have
been filed and the litigation is currently in the discovery stage.
The
Company intends to vigorously prosecute all litigation and does not believe the
outcome of the litigation will have a material adverse effect on the financial
condition, results of operations or liquidity of the Company. However, it is too
early at this time to determine the ultimate outcome of these
matters.
VYTA
CORP AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS
ENDED JUNE 30, 2007 AND 2006
LEASES:
The
Company has entered into certain facilities and equipment leases. The leases are
non-cancelable operating leases that expire through December 31, 2011. Future
minimum lease payments under these operating leases are as follows:
|
Year
ending
June
30,
|
|
Amount
|
|
|
|
|
|
|
|
2008
|
|
$ |
38,211 |
|
|
2009
|
|
|
39,415 |
|
|
2010
|
|
|
40,618 |
|
|
2011
|
|
|
20,761 |
|
|
|
|
$ |
139,005 |
|
Rental
expense was $54,396 and $86,783 for the years ended June 30, 2007 and 2006,
respectively.
10. INCOME
TAXES:
The
Company and its subsidiaries did not incur income tax expense for the years
ended June 30, 2007 and 2006. The reconciliation between income taxes computed
at the statutory federal tax rate of 34% and the effective tax rate for the
years ended June 30, 2007 and 2006 is as follows:
|
|
|
2007
|
|
|
2006
|
|
|
|
|
|
|
|
|
|
|
Expected
income tax benefit
|
|
$ |
(1,517,000 |
) |
|
$ |
(818,000 |
) |
|
Increase
in valuation allowance
|
|
|
1,517,000 |
|
|
|
818,000 |
|
|
|
|
$ |
- |
|
|
$ |
- |
|
The tax
effects of temporary differences that would give rise to substantially all
deferred tax assets subject to the valuation allowance at June 30, 2007 are as
follows:
|
Deferred
tax assets, non-current:
|
|
|
|
|
Net
operating loss carry forwards
|
|
$ |
4,724,000 |
|
|
Receivables
|
|
|
407,000 |
|
|
Stock-based
compensation
|
|
|
253,000 |
|
|
Losses
in unconsolidated investees
|
|
|
221,000 |
|
|
|
|
|
5,605,000 |
|
|
Less
valuation allowance
|
|
|
(5,605,000 |
) |
|
Net
deferred tax assets
|
|
$ |
- |
|
As of
June 30, 2007, the Company has net operating loss carryforwards of approximately
$13,890,000, which expire between 2013 and 2027, and may be subject to annual
limitations, which could reduce or defer the utilization of the losses as a
result of an ownership change as provided in Section 382 of the Internal Revenue
Code.
VYTA
CORP AND SUBSIDIARIES
CONDENSED
CONSOLIDATED BALANCE SHEET
MARCH 31,
2008
(UNAUDITED)
|
Assets
|
|
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash
and cash equivalents
|
|
$ |
6,431 |
|
|
Advances
receivable, officer (Note 4)
|
|
|
4,834 |
|
|
Prepaid
expenses and other
|
|
|
550 |
|
|
Total
current assets
|
|
|
11,815 |
|
|
|
|
|
|
|
|
Property
and equipment:
|
|
|
|
|
|
Office
equipment and furniture
|
|
|
67,107 |
|
|
Less
accumulated depreciation
|
|
|
(65,129 |
) |
|
|
|
|
|
|
|
Other
assets:
|
|
|
|
|
|
Deposits
and other
|
|
|
19,272 |
|
|
Notes
and advances receivable, net, unconsolidated investee (Note
2)
|
|
|
45,652 |
|
|
|
|
|
|
|
|
Total
assets
|
|
$ |
78,717 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
and Shareholders’ Deficit
|
|
|
|
|
|
|
|
|
|
|
|
Accounts
payable
|
|
$ |
96,190 |
|
|
Accrued
expenses
|
|
|
3,296 |
|
|
Total
liabilities (all current)
|
|
$ |
99,486 |
|
|
|
|
|
|
|
|
Commitments
and contingencies (Note 6)
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders’
deficit:
|
|
|
|
|
|
Preferred
stock; $0.0001 par value; 5,000,000 shares authorized; Series A, 8%;
deemed par value $1.00 per share; 500,000 shares issued and outstanding;
liquidation preference of $541,403
|
|
|
541,403 |
|
|
Common
stock; $0.0001 par value; 200,000,000 shares authorized; 35,788,178 shares
issued and outstanding
|
|
|
3,579 |
|
|
Additional
paid-in capital
|
|
|
31,320,390 |
|
|
Accumulated
deficit
|
|
|
(31,886,140 |
) |
|
Total
shareholders’ deficit
|
|
$ |
(20,769 |
) |
|
|
|
|
|
|
|
Total
liabilities and shareholders’ deficit
|
|
$ |
78,717 |
|
See notes
to condensed consolidated financial statements.
VYTA
CORP AND SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
NINE
AND THREE MONTHS ENDED MARCH 31, 2008 AND 2007
(UNAUDITED)
|
|
|
Three
Months Ended
March 31,
|
|
|
Nine
Months Ended
March 31,
|
|
|
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General
and administrative expense
|
|
$ |
(188,633 |
) |
|
$ |
(879,058 |
) |
|
$ |
(510,901 |
) |
|
$ |
(1,425,825 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
from operations
|
|
|
(188,633 |
) |
|
|
(879,058 |
) |
|
|
(510,901 |
) |
|
|
(1,425,825 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
income
|
|
|
3 |
|
|
|
6 |
|
|
|
13 |
|
|
|
18 |
|
|
Gain
on sale of investment in unconsolidated investee (Note 3)
|
|
|
- |
|
|
|
- |
|
|
|
164,234 |
|
|
|
- |
|
|
Equity
losses of unconsolidated investees (Note 2)
|
|
|
(374,212 |
) |
|
|
(381,574 |
) |
|
|
(1,041,806 |
) |
|
|
(921,715 |
) |
|
|
|
|
(374,209 |
) |
|
|
(381,568 |
) |
|
|
(877,559 |
) |
|
|
(921,697 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
|
(562,842 |
) |
|
|
(1,260,626 |
) |
|
|
(1,388,460 |
) |
|
|
(2,347,522 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
dividends on Series A preferred stock (Note 5)
|
|
|
(9,349 |
) |
|
|
(3,100 |
) |
|
|
(28,253 |
) |
|
|
(3,100 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss applicable to common shareholders
|
|
$ |
(572,191 |
) |
|
$ |
(1,263,726 |
) |
|
$ |
(1,416,713 |
) |
|
$ |
(2,350,622 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss per share, basic and diluted (Note 1)
|
|
$ |
(0.02 |
) |
|
$ |
(0.05 |
) |
|
$ |
(0.04 |
) |
|
$ |
(0.10 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average number of common shares outstanding (Note 1)
|
|
|
35,379,387 |
|
|
|
22,781,734 |
|
|
|
33,774,893 |
|
|
|
22,688,913 |
|
See notes
to condensed consolidated financial statements.
VYTA
CORP AND SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
NINE
AND THREE MONTHS ENDED MARCH 31, 2008 AND 2007
(UNAUDITED)
|
|
|
Three
Months Ended
March 31,
|
|
|
Nine
Months Ended
March 31,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
$ |
(562,842 |
) |
|
$ |
(1,260,626 |
) |
|
$ |
(1,388,460 |
) |
|
$ |
(2,347,522 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change
in unrealized gain on securities
|
|
|
- |
|
|
|
189 |
|
|
|
- |
|
|
|
360 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change
in foreign currency translation adjustments, net of reclassification
adjustment for gain included in net loss (Note 3)
|
|
|
- |
|
|
|
- |
|
|
|
(10,340 |
) |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive
loss
|
|
$ |
(562,842 |
) |
|
$ |
(1,260,437 |
) |
|
$ |
(1,398,800 |
) |
|
$ |
(2,347,162 |
) |
See notes
to condensed consolidated financial statements.
VYTA
CORP AND SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ DEFICIT
NINE
MONTHS ENDED MARCH 31, 2008
(UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional
|
|
|
Accumulated
other
|
|
|
|
|
|
Total
|
|
|
|
|
Preferred
stock
|
|
|
Common
stock
|
|
|
paid
in
|
|
|
comprehensive
|
|
|
Accumulated
|
|
|
shareholders’
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
capital
|
|
|
income
|
|
|
deficit
|
|
|
equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances,
July 1, 2007
|
|
|
500,000 |
|
|
$ |
513,150 |
|
|
|
31,349,845 |
|
|
$ |
3,135 |
|
|
$ |
30,678,462 |
|
|
$ |
121,543 |
|
|
$ |
(30,497,681 |
) |
|
$ |
818,609 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock issued for cash
|
|
|
- |
|
|
|
- |
|
|
|
4,438,333 |
|
|
|
444 |
|
|
|
670,181 |
|
|
|
- |
|
|
|
- |
|
|
|
670,625 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(1,388,460 |
) |
|
|
(1,388,460 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
dividends on Series A preferred stock
|
|
|
- |
|
|
|
28,253 |
|
|
|
- |
|
|
|
- |
|
|
|
(28,253 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change
in foreign currency translation adjustment (Note 3)
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(121,543 |
) |
|
|
- |
|
|
|
(121,543 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances,
March 31, 2008
|
|
|
500,000 |
|
|
$ |
541,403 |
|
|
|
35,788,178 |
|
|
$ |
3,579 |
|
|
$ |
31,320,390 |
|
|
$ |
- |
|
|
$ |
(31,886,141 |
) |
|
$ |
(20,769 |
) |
See notes
to condensed consolidated financial statements.
VYTA
CORP AND SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE
MONTHS ENDED MARCH, 31, 2008 AND 2007
(UNAUDITED)
|
|
|
2008
|
|
|
2007
|
|
|
Cash
flows from operating activities:
|
|
|
|
|
|
|
|
Net
loss
|
|
$ |
(1,388,460 |
) |
|
$ |
(2,347,522 |
) |
|
Adjustments
to reconcile net loss to net cash used in operating
activities:
|
|
|
|
|
|
|
|
|
|
Amortization
expense
|
|
|
- |
|
|
|
349,068 |
|
|
Depreciation
expense
|
|
|
3,459 |
|
|
|
4,041 |
|
|
Equity
losses of unconsolidated investees
|
|
|
1,041,806 |
|
|
|
921,715 |
|
|
Gain
on sale of investment in unconsolidated investee
|
|
|
(164,234 |
) |
|
|
- |
|
|
Options
issued for compensation
|
|
|
- |
|
|
|
625,250 |
|
|
Changes
in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
Decrease
in prepaid expenses and other
|
|
|
1,684 |
|
|
|
14,435 |
|
|
(Decrease)
increase in accounts payable and accrued expenses
|
|
|
(13,136 |
) |
|
|
4,917 |
|
|
Total
adjustments
|
|
|
869,579 |
|
|
|
1,919,426 |
|
|
|
|
|
|
|
|
|
|
|
|
Net
cash used in operating activities
|
|
|
(518,881 |
) |
|
|
(428,096 |
) |
|
|
|
|
|
|
|
|
|
|
|
Cash
flows from investing activities:
|
|
|
|
|
|
|
|
|
|
Sale
of marketable securities
|
|
|
59 |
|
|
|
- |
|
|
Sale
of investment in unconsolidated investee
|
|
|
250,000 |
|
|
|
- |
|
|
Increase
in notes and advances receivable, unconsolidated investee
|
|
|
(750,074 |
) |
|
|
(682,975 |
) |
|
Net
cash used in investing activities
|
|
|
(500,015 |
) |
|
|
(682,975 |
) |
|
|
|
|
|
|
|
|
|
|
|
Cash
flows from financing activities:
|
|
|
|
|
|
|
|
|
|
Proceeds
from advance and note payable
|
|
|
50,000 |
|
|
|
50,000 |
|
|
Payment
of advance
|
|
|
(50,000 |
) |
|
|
- |
|
|
Common
stock issued for cash
|
|
|
670,625 |
|
|
|
- |
|
|
Proceeds
applied to preferred stock and warrant purchase
|
|
|
- |
|
|
|
651,900 |
|
|
Exercise
of warrants and common stock and warrants issued for cash
|
|
|
- |
|
|
|
466,500 |
|
|
Net
cash provided by financing activities
|
|
|
670,625 |
|
|
|
1,168,400 |
|
| |
|
|
|
|
|
|
|
|
|
Net
decrease in cash and cash equivalents
|
|
|
(348,271 |
) |
|
|
57,329 |
|
|
|
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents, beginning
|
|
|
354,702 |
|
|
|
192,359 |
|
|
|
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents, ending
|
|
$ |
6,431 |
|
|
$ |
249,688 |
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental
disclosure of non-cash investing activities:
|
|
|
|
|
|
|
|
|
|
Advances,
related party converted to preferred stock
|
|
$ |
- |
|
|
$ |
100,000 |
|
See notes
to condensed consolidated financial statements.
VYTA
CORP AND SUBSIDIARIES
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NINE
MONTHS ENDED MARCH 31, 2008 AND 2007
(UNAUDITED)
1. BASIS
OF PRESENTATION, MANAGEMENT’S PLANS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES:
BASIS
OF PRESENTATION:
Presentation
of Interim Information:
The
accompanying condensed consolidated financial statements include the accounts of
Vyta Corp, a Nevada corporation (the Company), its wholly-owned subsidiaries,
NanoPierce Connection Systems, Inc., a Nevada corporation (NCOS), and
ExypnoTech, LLC (ET LLC), a Colorado limited liability company. NCOS and ET LLC
had no revenues or operations in 2008 and 2007. The Company has two investments
which are accounted for using the equity method of accounting. These equity
method investments consist of BioAgra, LLC (BioAgra) and through December 27,
2007, ExypnoTech, GmbH (EPT) (Note 3). The Company’s equity investees, EPT and
BioAgra, operate in two segments, the RFID industry and the animal feed
industry, respectfully. All significant intercompany accounts and transactions
have been eliminated in consolidation.
On
December 27, 2007, the Company sold its 49% equity interest in EPT to TagStar,
GmbH (TagStar), the 51% equity interest owner of EPT, for cash of $250,000 (Note
3).
In the
opinion of the management of the Company, the accompanying unaudited condensed
consolidated financial statements include all material adjustments, including
all normal and recurring adjustments, considered necessary to present fairly the
financial position and operating results of the Company for the periods
presented. The financial statements and notes are presented as permitted by Form
10-QSB, and do not contain certain information included in the Company’s Annual
Report on Form 10-KSB for the fiscal year ended June 30, 2007. It is the
Company’s opinion that when the interim financial statements are read in
conjunction with the June 30, 2007 Annual Report on Form 10-KSB, the disclosures
are adequate to make the information presented not misleading. Interim results
are not necessarily indicative of results for a full year or any future
period.
Management’s
Plans:
In the
Company’s Annual Report on Form 10-KSB for the fiscal year ended June 30, 2007,
the Report of the Independent Registered Public Accounting Firm includes an
explanatory paragraph that describes substantial doubt about the Company’s
ability to continue as a going concern. The Company’s interim financial
statements for the nine months ended March 31, 2008 have been prepared on a
going concern basis, which contemplates the realization of assets and the
settlement of liabilities and commitments in the normal course of business. The
Company reported a net loss of $1,388,460 and a net loss applicable to common
shareholders of $1,416,713 for the nine months ended March 31, 2008, and an
accumulated deficit of $31,886,140 as of March 31, 2008. The Company has not
recognized any revenues from its business operations.
During
the 2008 fiscal year, the Company has continued its efforts to assist BioAgra
with the continuing development of its sales, nationally and internationally in
other animal feed markets, such as the equine and the swine markets. The Company
intends to continue to raise funds to support the efforts through the sale of
its equity securities.
VYTA
CORP AND SUBSIDIARIES
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NINE
MONTHS ENDED MARCH 31, 2008 AND 2007
(UNAUDITED)
Currently,
the Company does not have a revolving loan agreement with any financial
institution, nor can the Company provide any assurance it will be able to enter
into any such agreement in the future, or be able to raise funds through a
further issuance of debt or equity in the Company.
These
factors raise substantial doubt about the Company’s ability to continue as a
going concern. The financial statements do not contain any adjustments relating
to the recoverability and classification of assets or the amounts and
classification of liabilities that might be necessary should the Company be
unable to continue as a going concern.
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES:
STOCK-BASED
COMPENSATION:
Beginning
July 1, 2006, the Company adopted the provisions of and accounts for stock-based
compensation in accordance with the Statement of Financial Accounting Standards
(“SFAS”) No. 123 – revised 2004 (“SFAS 123R”), Share-Based Payment. Under
the fair value recognition provisions of this statement, stock-based
compensation cost is measured at the grant date based on the fair value of the
award and is recognized as expense on a straight-line basis over the requisite
service period, which is the vesting period. The Company elected the
modified-prospective method, under which prior periods are not revised for
comparative purposes. The valuation provisions of SFAS 123R apply to new grants
and to grants that were outstanding as of the effective date and are
subsequently modified. All options granted prior to the adoption of SFAS 123R
and outstanding during the periods presented were fully-vested. The Company did
not grant any options during the nine months ended March 31, 2008. The Company
granted 2,050,000 options during the nine months ended March 31, 2007 (Note
5).
LOSS
PER SHARE:
Basic
loss per share of common stock is computed based on the average number of common
shares outstanding during the year. Stock options and warrants are not
considered in the calculation, as the impact of the potential common shares
(14,754,844 shares at March 31, 2008 and 15,392,134 shares at March 31, 2007)
would be to decrease loss per share (anti-dilutive). Therefore, diluted loss per
share is equivalent to basic loss per share.
RECENTLY
ISSUED ACCOUNTING PRONOUNCEMENTS:
The
Company adopted FASB Interpretation No. 48, “Accounting for Uncertainty in Income
Taxes” (“FIN 48”) on July 1, 2007. The Company did not identify any
controversial tax positions taken on open tax years and did not have any
unrecognized tax benefits, and there was no effect on the Company’s financial
condition or results of operations as a result of implementing FIN 48. The
Company files income tax returns in the U.S. federal jurisdiction and various
state jurisdictions. The Company is no longer subject to U.S. federal tax
examinations for years before 2003. State jurisdictions that remain subject to
examination range from 2002 to 2006. The Company does not believe there will be
any material changes in its unrecognized tax positions over the next 12 months.
The Company’s policy is to recognize interest and penalties accrued on
unrecognized tax benefits as a component of income tax expense. As of the date
of adoption of FIN 48, the Company did not have any accrued interest or
penalties associated with any unrecognized tax benefits and no interest expense
or penalties were recognized.
VYTA
CORP AND SUBSIDIARIES
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NINE
MONTHS ENDED MARCH 31, 2008 AND 2007
(UNAUDITED)
In
December 2007, the FASB issued SFAS No. 141 (Revised 2007), Business Combinations, (“SFAS
No. 141R”). SFAS No. 141R will change the accounting for business combinations.
Under SFAS No. 141R, an acquiring entity will be required to recognize all the
assets acquired and liabilities assumed in a transaction at the acquisition-date
fair value with limited exceptions. SFAS No. 141R will also change the
accounting treatment and disclosure for certain specific items in a business
combination. SFAS No. 141R applies prospectively to business combinations for
which the acquisition date is on or after the beginning of the first annual
reporting period beginning on or after December 15, 2008. Accordingly, any
business combinations the Company engages in will be recorded and disclosed
following existing GAAP until July 1, 2009. The Company’s management expects
SFAS No. 141R will have an impact on accounting for business combinations once
adopted, but the effect is dependent upon acquisitions at that
time.
In
December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in
Consolidated Financial Statements—An Amendment of ARB No. 51, or SFAS No.
160. SFAS No. 160 establishes new accounting and reporting standards for the
noncontrolling interest in a subsidiary and for the deconsolidation of a
subsidiary. SFAS No. 160 is effective for fiscal years beginning on or after
December 15, 2008. Management believes that SFAS 160 will not have a material
impact on the Company’s financial position or results of
operations.
In March
2008, the FASB issued SFAS No. 161 Disclosures about Derivative
Instruments and Hedging Activities. SFAS No. 161 requires additional
disclosure related to derivatives instruments and hedging activities. The
provisions of SFAS No. 161 are effective as of July 1, 2009 and the Company’s
management is currently evaluating the impact of adoption.
2. NOTES
AND ADVANCES RECEIVABLE – UNCONSOLIDATED INVESTEE:
During
the year ended June 30, 2006, the Company loaned $1,686,570 to BioAgra through a
series of secured, 7.5% promissory notes, which were due over the period from
June 30 through October 31, 2006. On June 26, 2006, the Company agreed to
combine all of the promissory notes and accrued interest of $40,257 into a
$1,726,827 secured, 7.5% promissory note with payments to be made monthly
starting October 31, 2006, through October 31, 2007. The funds were loaned to
facilitate BioAgra’s completion of its first production line and to support
operations. The promissory note is collateralized by all BioAgra assets.
Additionally, the promissory note is to be paid in full prior to any
distributions being made to the members of the joint venture. During the year
ended June 30, 2007, the note was reduced by $1,371,269, which represents the
excess of the BioAgra losses recognized by the Company over the adjusted basis
of the Company’s equity investment in BioAgra.
During
the year ended June 30, 2007, the Company advanced an additional $1,182,784 to
BioAgra. During the nine months ended March 31, 2008, the Company advanced an
additional $750,074 to BioAgra at 7.5% interest. In October 2007, the Company
executed a second, 7.5% promissory note for $1,182,784 with BioAgra with the
same terms as the note above, but the note did not provide for scheduled
payments. On March 31, 2008, the Company executed a third, 7.5% promissory note
for $486,939 with BioAgra with the same terms as the note above, but did not
provide for scheduled payments. The Company has classified these notes
receivable as non-current assets on the balance sheet and is not accruing
interest on these notes receivable, as they are currently in default and
non-performing.
The notes
and advances receivable were reduced to $45,652 at March 31, 2008 by applying
the losses of BioAgra (Note 3).
VYTA
CORP AND SUBSIDIARIES
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NINE
MONTHS ENDED MARCH 31, 2008 AND 2007
(UNAUDITED)
3. INVESTMENTS
IN UNCONSOLIDATED INVESTEES:
INVESTMENT
IN EPT:
On
December 27, 2007, the Company executed a Share Purchase Agreement with TagStar,
GmbH, the holder of the 51% equity interest in EPT, pursuant to which the
Company sold its 49% equity interest to TagStar for cash of $250,000. The
Company recorded a gain of $164,234 in connection with the sale of the equity
interest in EPT.
At
December 27, 2007, the Company’s investment in EPT was $217,649. The Company’s
proportionate income was $2,960 and $68,503 for the nine months ended March 31,
2008 and 2007, respectively ($__________ and $12,224 for the three
months ended March 31, 2008 and 2007, respectively). The cumulative
translation adjustment was $121,543 and $131,883 at July 1, 2007 and
December 27, 2007, respectively. On December 27, 2007, a $131,883 reduction to
other comprehensive income was recorded and recognized as a component of the
gain on the sale of EPT. Financial information of EPT for the period from July
1, 2007 through December 27, 2007, and the three and nine months ended March 31,
2007 is as follows:
|
|
|
Period
from October 1, 2007 through
December
27, 2007
|
|
|
Three
Months
Ended
December
31, 2006
|
|
|
Period
from
July
1, 2007
through
December
27, 2007
|
|
|
Six
Months
Ended
December
31, 2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues(1)
|
|
$ |
1,330,057 |
|
|
$ |
1,271,198 |
|
|
$ |
2,158,689 |
|
|
$ |
1,839,740 |
|
|
Expenses(2)
|
|
|
(1,296,241 |
) |
|
|
(1,182,660 |
) |
|
|
(2,152,831 |
) |
|
|
(1,674,991 |
) |
|
Net
income
|
|
$ |
33,816 |
|
|
$ |
88,538 |
|
|
$ |
5,858 |
|
|
$ |
164,749 |
|
(1)
Revenues include $2,155,669 and $1,839,740 for the period
from July 1, 2007 through December 27, 2007 and the six months ended December
31, 2006, respectively ($1,329,980 and $1,271,198 for the period from October 1,
2007 through ended December 27, 2007 and the three months ended December 31,
2006, respectively), of sales to
the 51% owner of EPT.
(2) Expenses include $211,508
and $80,677 for the period from July 1, 2007 through December 27, 2007 and the
six months ended December 31, 2006, respectively ($114,837 and $42,399, for the
period from October 1, 2007 through December 27, 2007 and the three months ended
December 31, 2006, respectively), of charges paid to the 51% owner of
EPT.
INVESTMENT
IN BIOAGRA
The
Company has a 50% equity interest in the joint venture, BioAgra, which
manufactures and sells a beta glucan product, YBG-2000 also known as
AgraStim(TM),
which can be used as a replacement for hormone growth steroids and antibiotics
in animal feed products such as poultry feed. As of March 31, 2008, BioAgra (a
development stage company) has completed construction of a production line;
however BioAgra has not yet recognized any significant revenues from product
sales. At each reporting period, management makes an assessment to determine if
the investment in BioAgra represents a variable interest entity subject to
consolidation. Through March 31, 2008, management has determined that BioAgra
was not subject to consolidation.
The terms
of the joint venture provide for the Company to share in 50% of joint venture
net income, if any, or net losses. The Company is accounting for its investment
in BioAgra as an equity method investment. Net losses incurred by BioAgra have
exceeded the underlying equity attributed to BioAgra’s other joint venture
investor. As a result, the excess of the losses attributable to the other joint
venture investor have been charged to the Company. Since September 30, 2006 and
through March 31, 2008, the carrying value of the Company’s investment in
BioAgra was $0. BioAgra losses for the nine months ended March 31, 2008 and 2007
were $1,044,766 and $990,219, respectively ($374,212, and $369,351, for the
three months ended March 31, 2008 and 2007, respectively). Losses of $1,044,766
and $882,903, respectively, were applied to reduce the value of the notes
receivable from BioAgra.
VYTA
CORP AND SUBSIDIARIES
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NINE
MONTHS ENDED MARCH 31, 2008 AND 2007
(UNAUDITED)
Financial
information of BioAgra as of March 31, 2008 and for the nine and three
months ended March 31, 2008 and 2007, is as follows:
|
|
|
March
31, 2008
|
|
|
|
|
|
|
|
Assets:
|
|
|
|
|
Current
assets
|
|
$ |
163,625 |
|
|
Land,
building and equipment, net
|
|
|
2,445,379 |
|
|
Total
assets
|
|
$ |
2,609,004 |
|
|
|
|
|
|
|
|
Liabilities
and members’ deficiency:
|
|
|
|
|
|
Current
liabilities(1)
|
|
$ |
4,101,796 |
|
|
Obligation
under capital lease(2)
|
|
|
923,238 |
|
|
Total
liabilities
|
|
|
5,025,034 |
|
|
|
|
|
|
|
|
Members’
deficiency
|
|
|
(2,416,030 |
) |
|
Total
liabilities and members’ deficiency
|
|
$ |
2,609,004 |
|
____________________
(1) Includes
$3,709,685 owed to the Company.
(2) BioAgra
leases land and a building under a ten-year lease expiring in February 2015,
which requires a monthly lease payment of $12,000.
|
|
|
Three
Months Ended
March
31, 2008
|
|
|
Three
Months Ended
March
31, 2007
|
|
|
Nine
Months Ended
March
31, 2008
|
|
|
Nine
Months Ended
March
31, 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$ |
21,406 |
|
|
$ |
1,675 |
|
|
$ |
104,661 |
|
|
$ |
33,317 |
|
|
Expenses
|
|
|
(395,618 |
) |
|
|
(371,026 |
) |
|
|
(1,149,427 |
) |
|
|
(1,023,536 |
) |
|
Net
loss
|
|
$ |
(374,212 |
) |
|
$ |
(369,351 |
) |
|
$ |
(1,044,766 |
) |
|
$ |
(990,219 |
) |
4. ADVANCES
RECEIVABLE, OFFICER:
At March
31, 2008, the Company’s President owes the Company $4,834 for reimbursements.
This amount is unsecured, non-interest bearing and is due on
demand.
5. SHAREHOLDERS’
DEFICIT:
PREFERRED
STOCK:
In
February 2007, the Company sold 500,000 shares of Series A nonconvertible
preferred stock for $500,000 cash to Arizcan Properties, Ltd. (Arizcan). Arizcan
had advanced the funds to the Company, prior to the issuance of the shares. The
shares provide that when voting as a single class, the shares have the votes and
the voting power that at all times is greater by 1% than the combined votes and
voting power of all other classes of securities entitled to vote on any matter.
As a result of the issuance, Arizcan acquired approximately 51% of the voting
power of the Company. The Company has a right, solely at the Company’s
discretion, to redeem the shares in ten years at 130% of deemed par
value.
VYTA
CORP AND SUBSIDIARIES
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NINE
MONTHS ENDED MARCH 31, 2008 AND 2007
(UNAUDITED)
The
holder of the Series A is entitled to a dividend equal to 8% per annum of the
deemed par value ($1.00 per share). Accumulated dividends for the period from
Series A issuance (February 2007) through March 31, 2008, were $41,403 ($28,253
and $9,349 for the nine and three months ended March 31, 2008, respectively),
which have been recorded as an increase to net loss per common shareholder.
Also, the holder is entitled to a liquidation preference of the deemed par value
for each outstanding share and any accrued but unpaid dividends upon the
liquidation of the Company.
COMMON
STOCK:
Between
July 1, 2007 and March 31, 2008, the Company issued an aggregate of 4,438,333
shares of its restricted common stock for $670,625 cash. The shares were sold
for $0.15 per share (based upon an approximate 55% discount from the closing
market price at the time of sale, ranging from $0.39-$0.40 per share on the
dates of the transactions).
During
April 2008, the Company issued an aggregate of 1,380,000 shares of its
restricted common stock for $207,000 cash. The shares were sold for $0.15 per
share (based upon an approximate 55% discount from the closing market price at
the time of sale, ranging from $0.22 - $0.24 per share on the dates of the
transactions).
STOCK
OPTIONS:
The
Company has two stock option plans which permit the grant of shares to attract,
retain and motivate employees, directors and consultants of up to 2,863,000
shares of common stock. Options are generally granted with an exercise price
equal to the Company’s market price of its common stock on the date of the grant
and with vesting rates, as determined by the Board of Directors. All options
outstanding at July 1, 2007 and March 31, 2008 are fully-vested and exercisable.
The aggregate intrinsic value of outstanding fully-vested options as of March
31, 2008 was approximately $155.
The
Company did not grant any options during the nine months ended March 31, 2008.
During the nine months ended March 31, 2007, the Company granted 2,050,000 stock
options to an officer, directors and an employee at an exercise price of $0.32
per share. The fair value of stock options at the date of grant was $625,250 and
was recorded as compensation expense. The Company used the following assumptions
to determine the fair value of stock option grants during the nine months ended
March 31, 2007:
|
Risk-free
interest rate
|
4.94%
|
VYTA
CORP AND SUBSIDIARIES
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NINE
MONTHS ENDED MARCH 31, 2008 AND 2007
(UNAUDITED)
A summary
of the stock option activity for the nine months ended March 31, 2008 is as
follows:
|
|
|
Shares
Under Option
|
|
|
Weighted
Average Exercise Price
|
|
|
Weighted
Average Remaining Contractual Life
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding
at July 1, 2007
|
|
|
2,748,127 |
|
|
$ |
3.00 |
|
|
3.89
years
|
|
|
Granted
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
Exercised
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
Expired
|
|
|
(105,000 |
) |
|
|
(6.50 |
) |
|
|
- |
|
|
Outstanding
at March 31, 2008
|
|
|
2,643,127 |
|
|
$ |
3.00 |
|
|
3.10 years
|
|
|
Exercisable
at March 31, 2008
|
|
|
2,643,127 |
|
|
$ |
3.00 |
|
|
3.10 years
|
|
6. COMMITMENTS
AND CONTINGENCIES
LITIGATION:
Financing
Agreement Suit, U. S. District Court Case:
In
connection with a financing obtained in October 2000, the Company filed various
actions in the United States District Court for the District of Colorado
against, among others, Harvest Court, LLC, Southridge Capital Investments, LLC,
Daniel Pickett, Patricia Singer and Thomson Kernaghan, Ltd. for violations of
federal and state securities laws, conspiracy, aiding and abetting and common
law fraud among other claims. As a result of various procedural rulings, in
January 2002, the United States District Court for the
District of Colorado transferred the case to
the United States District Court
for the Southern District of New York, New York City, New York.
In this
litigation, Harvest Court, LLC filed counterclaims against the Company and
certain officers and former board members of the Company, and a number of
unrelated third parties. The counterclaims allege violations of federal
securities laws and other laws. Harvest Court, LLC is seeking various forms of
relief including compensatory and punitive damages.
On
January 28, 2008, United States District Court for the Southern District of New
York, New York City, New York issued an opinion regarding motions for summary
judgment filed by both parties involved in the law suit. The Court granted
Harvest Court’s motion for summary judgment and denied the motions for summary
judgment filed by certain officers of the Company in respect to certain counts
and granted the motion for summary judgment in respect to another
count.
At this
time, the Company and its attorneys are reviewing the opinion, considering its
options, and most likely, planning an appeal. The effect of this ruling had no
immediate financial impact on the Company; however, it is possible that the
ultimate outcome of this matter could result in a material adverse impact on the
Company’s financial position, results of operations and/or cash
flows.
Financing
Agreement Suit, State Court Case:
In May
2001, Harvest Court, LLC filed suit against the Company in the Supreme Court of
the State of New York, County of New York. The suit alleges that the Company
breached an October 20, 2000 Stock Purchase Agreement, by not issuing 370,945
free trading shares of the Company’s common stock in connection with the reset
provisions of the Purchase Agreement due on the second reset date and
approximately 225,012 shares due in connection with the third reset date.
Harvest Court, LLC is seeking the delivery of such shares or damages in the
alternative. In August 2001, the Supreme Court of the State of New York, County
of New York issued a preliminary injunction ordering the Company to reserve and
not transfer the shares allegedly due to Harvest Court, LLC. The Company has
filed counterclaims seeking various forms of relief against Harvest Court,
LLC.
VYTA
CORP AND SUBSIDIARIES
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NINE
MONTHS ENDED MARCH 31, 2008 AND 2007
(UNAUDITED)
The
Company intends to vigorously prosecute this case and does not believe the
outcome of this case will have a material adverse effect on the financial
condition, results of operations or liquidity of the Company. However, it is too
early at this time to determine the ultimate outcome of this
case.
|
The
only sources of information given to you by us about your investment
decision are this prospectus and any documents referred to in this
prospectus. We did not authorize anyone to give you any other information
about your investment decision.
This
prospectus is not an offer to sell securities and is not meant to induce
the sale of securities if it would violate state law. If the persons who
are trying to offer the securities for sale, or the persons who receive
those offers for sale are prohibited from doing so under state law, this
prospectus is not meant to induce sale of the securities described in this
prospectus.
|
|
17,092,184
shares of common stock
VYTA
CORP
COMMON
STOCK
_____________________
PROSPECTUS
_____________________
_________
__, 2008
|
|
PART
II
|
|
INFORMATION
NOT REQUIRED IN PROSPECTUS
|
|
|
|
|
|
Item
24.
Indemnification
of Directors and Officers.
|
|
Article
VII of the registrant’s Articles of Incorporation, as amended, provides
that the registrant shall indemnify its directors, officers, employees and
agents to the maximum extent and in accordance with the provisions of the
Nevada General Corporation Law, as in effect from time to time. Sections
78.7502 and 78.751 of the Nevada General Corporation Law provide generally
and in pertinent part that a Nevada corporation may indemnify its
directors and officers against expenses, judgments, fines and settlements
actually and reasonably incurred by them in connection with any civil suit
or action or any administrative or investigative proceeding, except
actions by or in the right of the corporation, if, in connection with the
matters in issue, they acted in good faith and in a manner they reasonably
believed to be in, or not opposed to, the best interests of the
corporation, and in connection with any criminal suit or proceeding, if in
connection with the matters in issue, they had no reasonable cause to
believe their conduct was unlawful. Section 78.7502 further provides that
in connection with the defense or settlement of any action by or in the
right of the corporation, a Nevada corporation may indemnify its directors
and officers against expenses actually and reasonably incurred by them in
connection therewith, provided that they acted in good faith and in a
manner they reasonably believed to be in, or not opposed to, the best
interests of the corporation. Section 78.751 permits a Nevada corporation
to grant its directors and officers additional rights of indemnification
through bylaw provisions and otherwise and Section 78.752 permits a Nevada
corporation to purchase indemnity insurance or make other financial
arrangements on behalf of its directors and officers.
Article
VIII of the registrant’s Articles of Incorporation provides that directors
shall not be liable to the registrant or its stockholders for monetary
damages for breach of fiduciary duty as a director, except for liability
arising from (a) any breach of the director’s loyalty to the registrant or
its stockholders, (b) acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (c) any transaction
from which the director receives an improper personal benefit, or (d) any
other act expressly proscribed or for which directors are otherwise liable
under the Nevada General Corporation Law. See Item 28 “Undertakings”
herein.
|
|
|
|
|
|
Item
25. Other Expenses of
Issuance and Distribution.
|
|
The following are the estimated
expenses in connection with the original registration and distribution of
the shares of the registrant’s common stock (excluding the fees and
expenses relating to post-effective amendments to the registration
statement):
|
|
|
Securities
and Exchange Commission
|
|
|
|
|
|
Registration
Fee
|
|
$ |
2,076 |
|
|
|
Printing
and Engraving Expenses
|
|
|
2,000 |
|
|
|
Accounting
Fees and Expenses
|
|
|
15,000 |
|
|
|
Legal
Fees and Expenses
|
|
|
75,000 |
|
|
|
Miscellaneous
|
|
|
1,000 |
|
|
|
|
|
|
|
|
|
|
Total
|
|
$ |
95,076 |
|
|
|
|
|
|
|
|
|
|
All
the expenses have been or will be incurred by the registrant and not by
the selling stockholders.
|
|
Item
26. Recent Sales of
Unregistered Securities
|
|
The
following table sets forth unregistered sales of the Company’s securities for
the three fiscal years ended June 30, 2005, 2006 and 2007 and the period from
July 1, 2007 through the date hereof (all share numbers prior to
January 31, 2006 do not reflect the 1 for 20 reverse split of our common
stock that occurred on January 31, 2006):
|
Date
|
Title
|
Number
of Shares
|
Purchase/Holder
|
Consideration
|
|
|
|
|
|
|
|
6/27/2005
|
Common
Stock
|
50,000
|
Lyons
Capital
|
Consulting
Agreement
|
|
6/27/2005
|
Common
Stock
|
1,000,000
|
Davila
Marketing & Capital Group
|
$150,000
promissory note
|
|
7/8/2005
|
Common
Stock
|
1,000,000
|
Business
Associate
|
Additional
Consideration for Promissory Note for $150,000
|
|
7/11/2005
|
Common
Stock
|
1,500,000
|
Business
Associate
|
Additional
Consideration for Promissory Note for $25,000
|
|
7/11/2005
|
Common
Stock
|
1,000,000
|
Business
Associate
|
Additional
Consideration for Promissory Note for $25,000
|
|
7/15/2005
|
Common
Stock
|
1,200,000
|
Business
Associate
|
Additional
Consideration for Promissory Note for $15,000
|
|
7/22/2005
|
Common
Stock
|
400,000
|
Business
Associate
|
Additional
Consideration for Promissory Note for $10,000
|
|
7/25/2005
|
Common
Stock
|
1,000,000
|
Business
Associate
|
Additional
Consideration for Promissory Note for $25,000
|
|
8/4/2005
|
Common
Stock
|
2,000,000
|
Business
Associate
|
Additional
Consideration for Promissory Note for $50,000
|
|
8/12/2005
|
Common
Stock
|
1,000,000
|
Business
Associate
|
Additional
Consideration for Promissory Note for $25,000
|
|
10/28/2005
|
Common
Stock
|
625,000
|
Business
Associate
|
$25,000
|
|
10/31/2005
|
Common
Stock
|
250,000
|
Business
Associate
|
$10,000
|
|
11/2/2005
|
Common
Stock Warrant
|
250,000
12,500
|
Business
Associate
|
$10,000
|
|
11/10/2005
|
Common
Stock Warrant
|
125,000
6,250
|
Business
Associate
|
$5,000
|
|
11/30/2005
|
Common
Stock Warrant
|
1,250,000
62,500
|
Business
Associate
|
$50,000
|
|
12/2/2005
|
Common
Stock Warrant
|
625,000
31,250
|
Business
Associate
|
$25,000
|
|
Date
|
Title
|
Number
of Shares
|
Purchase/Holder
|
Consideration
|
|
|
|
|
|
|
|
12/2/2005
|
Common
Stock Warrant
|
625,000
31,250
|
Business
Associate
|
$25,000
|
|
12/2/2005
|
Common
Stock Warrant
|
625,000
31,250
|
Business
Associate
|
$25,000
|
|
12/6/2005
|
Common
Stock Warrant
|
1,875,000
93,750
|
Business
Associate
|
$75,000
|
|
12/6/2005
|
Common
Stock Warrant
|
1,875,000
93,750
|
Business
Associate
|
$75,000
|
|
12/7/2005
|
Common
Stock Warrant
|
625,000
31,250
|
Business
Associate
|
$25,000
|
|
12/7/2005
|
Common
Stock Warrant
|
250,000
12,500
|
Business
Associate
|
$10,000
|
|
12/12/2005
|
Common
Stock Warrant
|
200,000
10,000
|
Business
Associate
|
$8,000
|
|
12/20/2005
|
Common
Stock Warrant
|
375,000
18,750
|
Business
Associate
|
$15,000
|
|
12/22/2005
|
Common
Stock Warrant
|
125,000
6,250
|
Business
Associate
|
$5,000
|
|
12/22/2005
|
Common
Stock Warrant
|
937,500
46,875
|
Business
Associate
|
$37,500
|
|
12/22/2005
|
Common
Stock Warrant
|
250,000
12,500
|
Business
Associate
|
$10,000
|
|
1/3/2006
|
Common
Stock Warrant
|
250,000
12,500
|
Business
Associate
|
$10,000
|
|
1/3/2006
|
Common
Stock Warrant
|
250,000
12,500
|
Business
Associate
|
$10,000
|
|
1/3/2006
|
Common
Stock Warrant
|
250,000
12,500
|
Business
Associate
|
$10,000
|
|
1/3/2006
|
Common
Stock Warrant
|
250,000
12,500
|
Business
Associate
|
$10,000
|
|
1/3/2006
|
Common
Stock Warrant
|
250,000
12,500
|
Business
Associate
|
$10,000
|
|
1/3/2006
|
Common
Stock Warrant
|
1,250,000
62,500
|
Business
Associate
|
$50,000
|
|
1/5/2006
|
Common
Stock Warrant
|
450,000
22,500
|
Business
Associate
|
$18,000
|
|
1/5/2006
|
Common
Stock Warrant
|
625,000
31,250
|
Business
Associate
|
$25,000
|
|
1/5/2006
|
Common
Stock Warrant
|
187,500
9,375
|
Business
Associate
|
$7,500
|
|
1/10/2006
|
Common
Stock Warrant
|
300,000
15,000
|
Business
Associate
|
$12,000
|
|
1/13/2006
|
Common
Stock Warrant
|
62,500
3,125
|
Business
Associate
|
$2,500
|
|
1/17/2006
|
Common
Stock Warrant
|
371,823
18,592
|
Business
Associate
|
$14,873
|
|
1/17/2006
|
Preferred
Stock(1)
|
200,000
|
Arizcan
Properties, Ltd.
|
$400,000
|
|
Date
|
Title
|
Number
of Shares
|
Purchase/Holder
|
Consideration
|
|
|
|
|
|
|
|
1/26/2006
|
Common
Stock Warrant
|
250,000
12,500
|
Business
Associate
|
$10,000
|
|
2/27/2007
|
Preferred
Stock
|
500,000
|
Arizcan
Properties, Ltd.
|
$500,000
|
|
3/2/2007
|
Warrant
|
6,000,000
|
Arizcan
Properties, Ltd.
|
$251,900
|
|
3/27/2007
|
Common
Stock
|
3,110,000
|
Arizcan
Properties, Ltd.
|
$466,500
|
|
4/1/2007
|
Common
Stock
|
5,263,000
|
Arizcan
Properties, Ltd.
|
$789,450
|
|
6/30/2007
|
Common
Stock
|
333,333
|
Business
Associate
|
$50,000
|
|
7/9/2007
|
Common
Stock
|
180,000
|
Arizcan
Properties, Ltd.
|
$27,000
|
|
8/1/2007
|
Common
Stock
|
150,000
|
Arizcan
Properties, Ltd.
|
$22,500
|
|
8/2/2007
|
Common
Stock
|
150,000
|
Arizcan
Properties, Ltd.
|
$22,500
|
|
8/7/2007
|
Common
Stock
|
300,000
|
Arizcan
Properties, Ltd.
|
$45,000
|
|
8/8/2007
|
Common
Stock
|
150,000
|
Arizcan
Properties, Ltd.
|
$22,500
|
|
8/17/2007
|
Common
Stock
|
150,000
|
Arizcan
Properties, Ltd.
|
$22,500
|
|
9/28/2007
|
Common
Stock
|
450,000
|
Arizcan
Properties, Ltd.
|
$67,500
|
|
10/11/2007
|
Common
Stock
|
600,000
|
Arizcan
Properties, Ltd.
|
$90,000
|
|
11/23/2007
|
Common
Stock
|
200,000
|
Arizcan
Properties, Ltd.
|
$30,000
|
|
11/26/2007
|
Common
Stock
|
600,000
|
Arizcan
Properties, Ltd.
|
$90,000
|
|
12/3/2007
|
Common
Stock
|
600,000
|
Arizcan
Properties, Ltd.
|
$90,000
|
|
12/28/2007
|
Common
Stock
|
333,333
|
Arizcan
Properties, Ltd.
|
$50,000
|
|
2/12/2008
|
Common
Stock
|
125,000
|
Arizcan
Properties, Ltd.
|
$23,625
|
|
3/11/2008
|
Common
Stock
|
300,000
|
Arizcan
Properties, Ltd.
|
$45,000
|
|
3/14/2008
|
Common
Stock
|
150,000
|
Arizcan
Properties, Ltd.
|
$22,500
|
____________________
(1) Each
share of preferred stock is convertible into 75 shares of common stock (the
conversion ratio as adjusted from the reverse stock split of our common stock
that occurred in January of 2006). Arizcan Properties converted the preferred
stock into 15,000,000 shares of common stock in February of 2006.
The above
issuances by us of our unregistered securities was made in reliance upon Section
4(2) of the Securities Act of 1933 and/or Regulation D promulgated thereunder.
The entities/individuals that purchased the unregistered securities were known
to us and our management, through pre-existing business relationships, friends
and employees. All purchasers were provided access to all material information
that they requested, and all information necessary to verify such information
and was afforded access to our management in connection with their purchases.
All holders of the unregistered securities acquired such securities for
investment and not with a view toward distribution, acknowledging such intent to
us. All certificates or agreements representing such securities that were issued
contained restrictive legends, prohibiting further transfer of the certificates
or agreements representing such securities, without such securities either being
first registered or otherwise exempt from registration under the Securities Act
of 1933 in any further resale or disposition.
|
Item
27.
|
|
|
Exhibits.
|
The
following is a complete list of exhibits filed as part of this
registration statement and this list is intended to comprise the exhibit
index. Exhibit numbers correspond to the numbers in the exhibit table of
Item 601 of Regulation S-B.
|
|
|
|
|
Exhibit
No.
|
Description
|
|
|
|
|
3.01
|
Amended
and Restated Articles of Incorporation filed with the Nevada Secretary of
State on January 31, 2006 (Incorporated by reference to the Company’s
Current Report on Form 8-K, dated January 31, 2006)
|
|
|
|
|
3.02
|
Certificate
of Designation of Rights and Preferences of the Series A Convertible
Preferred Stock (Incorporated by reference to the Company’s Current Report
on Form 8-K, dated January 17, 2006)
|
|
|
|
|
3.03
|
Certificate
of Designation of Series A Nonconvertible Preferred Stock
(Incorporated by reference to the Company’s Current Report on
Form 8-K, dated March 6, 2007)
|
|
|
|
|
3.04
|
Amended
and Restated By-laws of the Company (Incorporated by reference to
Amendment No. 1 to the Company’s Annual Report on Form 10-KSB for the
fiscal year ended June 30, 2003)
|
|
|
|
|
4.01
|
Form
of Common Stock Certificate (Incorporated by reference to the Company’s
Annual Report on Form 10-KSB for the fiscal year ended June 30,
1998)
|
|
|
|
|
*5.01
|
Opinion
of Kutak Rock LLP
|
|
|
|
|
10.01
|
1998
Compensatory Stock Option Plan dated February 26, 1998 (Incorporated by
reference to the Company’s Registration Statement on Form S-8, dated
November 21, 2000)
|
|
|
|
|
10.02
|
2000
Compensatory Stock Option Plan dated October 31, 2000 (Incorporated by
reference to the Company’s Registration Statement on Form S-8, dated
November 21, 2000)
|
|
|
|
|
10.03
|
Employment
Agreement, dated March 15, 2004, between Paul H. Metzinger and the Company
(Incorporated by reference to the Company’s Quarterly Report on Form 10-
QSB for the fiscal quarter ended March 31, 2004)
|
|
|
|
|
10.04
|
Operating
Agreement, dated August 15, 2005, between the Company and Xact Resources
International (now Justin Holdings, Inc. as a result of the assignment by
Xact Resources in February 2006), Inc. for BioAgra, LLC (Incorporated by
reference to the Company’s Current Report on Form 8-K, dated August 12,
2005)
|
|
|
|
|
10.05
|
Investment
Agreement, dated December 11, 2003, by and between TagStar Systems, GmbH,
NanoPierce Technologies, Inc. and ExypnoTech, GmbH (Incorporated by
reference to the Company’s Current Report on Form 8-K, dated December 11,
2003)
|
|
|
|
|
10.06
|
Consulting
Agreement, effective as of June 1, 2006, between the Company and Edwin
Buckham (Incorporated by reference to the Company’s Registration Statement
on Form S-8, dated August 23, 2006)
|
|
10.07
|
Consulting
Agreement, effective as of June 1, 2006, between the Company and Terry
Allen (Incorporated by reference to the Company’s Registration Statement
on Form S-8, dated August 23, 2006)
|
|
10.08
|
Technology
License Agreement dated April 18, 2005 by and between Progressive
Bioactives, Inc. and BioAgra LLC (Incorporated by reference to the
Company’s Registration Statement on Form SB-2, dated March 29,
2006)
|
|
10.09
|
Termination
and Mutual General Release Agreement dated July 11, 2007 by and between
Progressive Bioactives, Inc. and BioAgra LLC (Incorporated by reference to
the Company’s Current Report on Form 8-K, dated July 11,
2007)
|
|
10.10
|
Agreement,
dated April 1, 2007 by and between AHD International, Inc. and BioAgra LLC
(Incorporated by reference to the Company’s Current Report on Form 8-K,
dated April 18, 2007)
|
|
10.11
|
Share
Purchase Agreement, dated December 27, 2007 by and between the Company and
TagStar Systems, GmbH relating to the sale of the Company’s interest in
ExypnoTech, Gmbh (Incorporated by reference to the Company’s Quarterly
Report on Form 10-Q for the fiscal quarter ended December 31,
2007)
|
|
*21.01
|
Subsidiaries
of the Company
|
|
#23.01
|
Consent
of independent registered public accounting firm, GHP Horwath,
P.C.
|
|
*23.03
|
Consent
of Kutak Rock LLP (included in Exhibit 5.01)
|
|
*24.00
|
Power
of Attorney
|
____________________
*Previously
filed.
# Filed
herewith.
Item 28.
Undertakings.
|
|
(a)
|
The
undersigned registrant hereby undertakes
to:
|
(i) File,
during any period in which it offers or sells securities, a post-effective
amendment to this registration statement to:
(1) include
any prospectus required by section 10(a)(3) of the Securities Act of 1933, as
amended (the “Securities Act”);
(2) reflect
in the prospectus any facts or events which, individually or together, represent
a fundamental change in the information in the registration statement; and
Notwithstanding the forgoing, any increase or decrease in volume of securities
offered (if the total dollar value of securities offered (if the total dollar
value of securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range may
be reflected in the form of prospects filed with the Commission pursuant to Rule
424(b) if, in the aggregate, the changes in the volume and price represent no
more than a 20% change in the maximum aggregate offering price set forth in the
“Calculation of Registration Fee” table in the effective registration
statement;
(3) include
any additional or changed material information on the plan of
distribution.
(ii) For
determining liability under the Securities Act, treat each post-effective
amendment as a new registration statement of the securities offered, and the
offering of the securities at that time to be the initial bona fide
offering.
(iii) File
a post-effective amendment to remove from registration any of the securities
that remain unsold at the end of the offering.
(b) Insofar
as indemnification for liabilities arising under the Securities Act may be
permitted to directors, officers and controlling persons of the registrant
pursuant to the foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable.
In the
event that a claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such
issue.
SIGNATURES
Pursuant
to the requirements of the Securities Act of 1933, as amended, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-1 and has duly caused this post-effective
amendment no. 2 on Form S-1 to the registration statement on Form SB-2 to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Denver, State of Colorado, on June 17, 2008.
|
|
VYTA
CORP
|
|
|
|
|
|
|
|
|
|
|
By
|
/s/ Paul H. Metzinger
|
| |
|
Paul
H. Metzinger, President, Chief Executive Officer, acting Chief
Financial Officer and
Director
|
Pursuant
to the requirements of the Securities Act of 1933, as amended, this
post-effective amendment no. 2 on Form S-1 to the registration statement on Form
SB-2 is signed by the following persons in the capacities and on the dates
indicated.
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
|
|
/s/ Paul H. Metzinger
|
|
President,
Chief Executive Officer, acting Chief Financial Officer and Director
(Principal Executive Officer, Principal Financial Officer and Principal
Accounting Officer)
|
|
June
17, 2008
|
|
Paul
H. Metzinger
|
|
|
|
|
|
|
|
|
|
|
***
|
|
Director
|
|
June
17, 2008
|
|
Herbert
J. Neuhaus
|
|
|
|
|
|
|
|
|
|
|
|
***
|
|
Director
|
|
June
17, 2008
|
|
Robert
Shaw
|
|
|
|
|
|
|
|
|
|
|
|
***
|
|
Director
|
|
June
17, 2008
|
|
John
Hoback
|
|
|
|
|
|
|
|
|
|
|
|
*** By:
|
/s/ Paul H.
Metzinger
|
|
|
|
|
|
|
Paul
H. Metzinger
|
|
|
|
|
|
|
As
attorney-in-fact
|
|
|
|
|
INDEX
TO EXHIBITS
|
Exhibit
No.
|
Description
|
|
|
|
|
3.01
|
Amended
and Restated Articles of Incorporation filed with the Nevada Secretary of
State on January 31, 2006 (Incorporated by reference to the Company’s
Current Report on Form 8-K, dated January 31, 2006)
|
|
|
|
|
3.02
|
Certificate
of Designation of Rights and Preferences of the Series A Convertible
Preferred Stock (Incorporated by reference to the Company’s Current Report
on Form 8-K, dated January 17, 2006)
|
|
|
|
|
3.03
|
Certificate
of Designation of Series A Nonconvertible Preferred Stock
(Incorporated by reference to the Company’s Current Report on
Form 8-K, dated March 6, 2007)
|
|
|
|
|
3.04
|
Amended
and Restated By-laws of the Company (Incorporated by reference to
Amendment No. 1 to the Company’s Annual Report on Form 10-KSB for the
fiscal year ended June 30, 2003)
|
|
|
|
|
4.01
|
Form
of Common Stock Certificate (Incorporated by reference to the Company’s
Annual Report on Form 10-KSB for the fiscal year ended June 30,
1998)
|
|
|
|
|
*5.01
|
Opinion
of Kutak Rock LLP
|
|
|
|
|
10.01
|
1998
Compensatory Stock Option Plan dated February 26, 1998 (Incorporated by
reference to the Company’s Registration Statement on Form S-8, dated
November 21, 2000)
|
|
|
|
|
10.02
|
2000
Compensatory Stock Option Plan dated October 31, 2000 (Incorporated by
reference to the Company’s Registration Statement on Form S-8, dated
November 21, 2000)
|
|
|
|
|
10.03
|
Employment
Agreement, dated March 15, 2004, between Paul H. Metzinger and the Company
(Incorporated by reference to the Company’s Quarterly Report on Form 10
QSB for the fiscal quarter ended March 31, 2004)
|
|
|
|
|
10.04
|
Operating
Agreement, dated August 15, 2005, between the Company and Xact Resources
International (now Justin Holdings, Inc. as a result of the assignment by
Xact Resources in February 2006), Inc. for BioAgra, LLC (Incorporated by
reference to the Company’s Current Report on Form 8-K, dated August 12,
2005)
|
|
|
|
|
10.05
|
Investment
Agreement, dated December 11, 2003, by and between TagStar Systems, GmbH,
NanoPierce Technologies, Inc. and ExypnoTech, GmbH (Incorporated by
reference to the Company’s Current Report on Form 8-K, dated December 11,
2003)
|
|
|
|
|
10.06
|
Consulting
Agreement, effective as of June 1, 2006, between the Company and Edwin
Buckham (Incorporated by reference to the Company’s Registration Statement
on Form S-8, dated August 23, 2006)
|
|
|
|
|
10.07
|
Consulting
Agreement, effective as of June 1, 2006, between the Company and Terry
Allen (Incorporated by reference to the Company’s Registration Statement
on Form S-8, dated August 23, 2006)
|
|
|
|
|
10.08
|
Technology
License Agreement dated April 18, 2005 by and between Progressive
Bioactives, Inc. and BioAgra LLC (Incorporated by reference to the
Company’s Registration Statement on Form SB-2, dated March 29,
2006)
|
|
10.09
|
Termination
and Mutual General Release Agreement dated July 11, 2007 by and between
Progressive Bioactives, Inc. and BioAgra LLC (Incorporated by reference to
the Company’s Current Report on Form 8-K, dated July 11,
2007)
|
|
|
|
|
10.10
|
Agreement,
dated April 1, 2007 by and between AHD International, Inc. and BioAgra LLC
(Incorporated by reference to the Company’s Current Report on Form 8-K,
dated April 18, 2007)
|
|
|
|
|
10.11
|
Share
Purchase Agreement, dated December 27, 2007 by and between the Company and
TagStar Systems, GmbH relating to the sale of the Company’s interest in
ExypnoTech, Gmbh (Incorporated by reference to the Company’s Quarterly
Report on Form 10-Q for the fiscal quarter ended December 31,
2007)
|
|
|
|
|
*21.01
|
Subsidiaries
of the Company
|
|
|
|
|
|
Consent
of independent registered public accounting firm, GHP Horwath,
P.C.
|
|
|
|
|
*23.03
|
Consent
of Kutak Rock LLP (included in Exhibit 5.01)
|
|
|
|
|
*24.00
|
Power
of Attorney
|
____________________
*
Previously filed.
# Filed
herewith.