- Annual Report (10-K)
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2010
¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________ to ___________
Commission file number 000-28790
PHYTOMEDICAL TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
Nevada 87-0429962
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
100 Overlook Drive, 2 nd Floor
Princeton, New Jersey 08540
(Address of principal executive offices) (Zip Code)
(800) 611-3388
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Title of each class Name of each exchange on which registered
Common Stock, $0.00001 par value per share OTC Bulletin Board
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes ¨ No x
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act .
Yes ¨ No x
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes x No ¨
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ¨ Accelerated filer ¨
Non-accelerated filer (Do not check if a smaller
reporting company) ¨ Smaller reporting company x
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.).
Yes x No ¨
The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant as of the last business day of the registrant’s most recently completed second fiscal quarter, based upon the closing sale price of the registrant’s common stock on June 30, 2010 as reported on the OTC Bulletin Board was $6,223,661.
As of March 21, 2011, there were 241,487,995 shares of the registrant’s common stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
None.
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TABLE OF CONTENTS
PHYTOMEDICAL TECHNOLOGIES, INC.
ANNUAL REPORT ON FORM 10-K
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2010
PAGE
PART I
Item 1. Business 3
Item 2. Properties 6
Item 3. Legal Proceedings 6
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 7
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 8
Item 8. Financial Statements 18
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure 40
Item 9A. Controls and Procedures 40
Item 9B. Other Information 40
PART III
Item 10. Directors, Executive Officers, and Corporate Governance 41
Item 11. Executive Compensation 46
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 52
Item 13. Certain Relationships and Related Transactions, and Director Independence 53
Item 14. Principal Accounting Fees and Services 53
PART IV
Item 15. Exhibits, Financial Statement Schedules 55
SIGNATURES 56
EXHIBIT INDEX 57
CERTIFICATIONS
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PART I
Forward-Looking Statements
Except for the historical information presented in this document, the matters discussed in this Form 10-K for the fiscal year ended December 31, 2010 contain forward-looking statements which involve assumptions and our future plans, strategies, and expectations. These statements are generally identified by the use of words such as “may,” “will,” “should,” “expect,” “anticipate,” “estimate,” “believe,” “intend,” or “project” or the negative of these words or other variations on these words or comparable terminology. These statements are expressed in good faith and based upon a reasonable basis when made, but there can be no assurance that these expectations will be achieved or accomplished.
Such forward-looking statements include statements regarding, among other things, (a) the potential markets for our technologies, our potential profitability, and cash flows (b) our growth strategies (c) expectations from our ongoing research and development activities (d) anticipated trends in the technology industry (e) our future financing plans and (f) our anticipated needs for working capital. This information may involve known and unknown risks, uncertainties, and other factors that may cause our actual results, performance, or achievements to be materially different from the future results, performance, or achievements expressed or implied by any forward-looking statements. These statements may be found under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” as well as in this Form 10-K generally. Actual events or results may differ materially from those discussed in forward-looking statements as a result of various factors, including, without limitation, the matters described in this Form 10-K generally. In light of these risks and uncertainties, there can be no assurance that the forward-looking statements contained in this filing will in fact occur. In addition to the information expressly required to be included in this filing, we will provide such further material information, if any, as may be necessary to make the required statements, in light of the circumstances under which they are made, not misleading.
Although forward-looking statements in this report reflect the good faith judgment of our management, forward-looking statements are inherently subject to known and unknown risks, business, economic and other risks and uncertainties that may cause actual results to be materially different from those discussed in these forward-looking statements. Readers are urged not to place undue reliance on these forward-looking statements, which speak only as of the date of this report. We assume no obligation to update any forward-looking statements in order to reflect any event or circumstance that may arise after the date of this report, other than as may be required by applicable law or regulation. Readers are urged to carefully review and consider the various disclosures made by us in our reports filed with the Securities and Exchange Commission which attempt to advise interested parties of the risks and factors that may affect our business, financial condition, results of operation and cash flows. If one or more of these risks or uncertainties materialize, or if the underlying assumptions prove incorrect our actual results may vary materially from those expected or projected.
Except where the context otherwise requires and for purposes of this 10-K only, “we,” “us,” “our,” “Company,” “our Company,” and “PhytoMedical” refer to PhytoMedical Technologies, Inc., a Nevada corporation, and its consolidated subsidiaries.
ITEM 1. BUSINESS
Description of Business
We were incorporated in the State of Nevada on July 25, 2001. The accompanying consolidated financial statements include the accounts of the Company and our wholly owned subsidiaries PhytoMedical Technologies Corporation (“PhytoMedical Corp.”), PolyPhenol Technologies Corporation (“PolyPhenol”) and PhytoMedical Technologies Ltd. (“PhytoMedical Ltd.”).
PhytoMedical Corp. was incorporated on March 10, 2004 in the State of Nevada and has no assets and liabilities.
PolyPhenol was incorporated on August 24, 2004, in the State of Nevada and has no assets and liabilities.
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PhytoMedical Ltd. was incorporated on April 11, 2007 in the Province of British Columbia, Canada for providing administrative services to our Canada office. We ceased to conduct business in Canada on August 31, 2008 and closed this office. As a result, we dissolved PhytoMedical Ltd. and eliminated all intercompany balances, effective January 1, 2009.
Since our incorporation we have focused our activities on the development of new technologies (in particular pharmaceutical technologies and products) and, where warranted, acquisition of rights to obtain licenses to technologies and products that are being developed by third parties, primarily universities and government agencies, through sponsored research and development agreements.
On May 31, 2010, our then President and Chief Executive Officer, James Lynch, resigned both as an officer and as a director, and Mr. Amit S. Dang was appointed in his place. On June 3, 2010, Mr. Jeet Sidhu was appointed to our Board of Directors. In June 2010 Messrs. Gary Branning, Greg Wujek, and Raymond Krauss resigned as directors. Mr. Krauss also resigned as our Chief Financial Officer, a position currently held by Mr. Dang.
Following the management changes which occurred in June 2010, our Board of Directors determined that it was in our shareholders best interest to refocus our business in activities in a manner which may more fully enhance shareholder value. As a result, on August 25, 2010, we entered into a non-binding Memorandum of Intent (the “MOI”) with Standard Gold Corp., a Nevada corporation (“SGC”), relating to continuing discussions and the negotiation of a definitive agreement regarding our possible acquisition of all of the issued and outstanding shares of SGC.
SGC is a natural resource exploration company engaged in the exploration of precious metals in the western United States on properties that may contain economic concentrations of mineralization. As of the date of this report, none of SGC’s properties are known to contain any reserves. SGC’s strategy is to acquire properties that are prospective for mineral exploration and may have undergone some degree of mineral exploration and exploitation. To date, SGC has acquired interests in gross acres of State Leases and Federal lode claims in the State of Nevada.
Pursuant to the MOI, we loaned SGC $30,000 (the “SGC Loan”) so that it could maintain its mineral claims, in good standing, pending on-going negotiations. The SGC Loan bore interest at an annual rate of 8.5%. Both the principal and the accrued interest on the SGC Loan were repaid in January 2011.
On October 22, 2010 we entered into a Share Exchange Agreement (the “Share Exchange Agreement”) with SGC and its shareholders, pursuant to which we would acquire all of the issued and outstanding shares of SGC in exchange for 607,539,940 shares of our common stock (the “SGC Acquisition”). Consummation of the transactions contemplated by the Share Exchange Agreement were subject to the satisfaction of a number of conditions, including, but not limited to, our receipt of subscriptions for an aggregate of 150,000,000 Units that were previously being offered by us at $0.01 per unit. If the conditions to closing were not satisfied by December 31, 2010 the Share Exchange Agreement would automatically terminate.
Each of the parties to the Share Exchange Agreement, no longer believing that the conditions to closing of the transactions contemplated by the Share Exchange Agreement in fact could be satisfied, entered into the Termination Agreement and Mutual Release (the “Termination Agreement”), dated as of December 24, 2010. The Termination Agreement provides for the earlier termination of the Share Exchange Agreement and a release (except as otherwise provided) by SGC and its shareholders on the one hand, and us on the other hand, of any claims arising from or related to the Share Exchange Agreement and any agreements delivered pursuant thereto.
In anticipation that we would consummate the SGC Acquisition and pursue the exploration and development of the mineral claims held by SGC, we did not pay the $20,000 license maintenance fee that was due on September 1, 2010 to the Trustees of Dartmouth College (the “Dartmouth Trustees”). We had an exclusive license, granted pursuant to a license agreement dated September 1, 2008 (the “Dartmouth License Agreement”), between us and the Dartmouth Trustees, to develop, market and distribute a novel class of synthesized compounds known as bis-intercalators. Pursuant to Section 5.01(e) of the Dartmouth License Agreement, a $20,000 license maintenance fee was due and payable to the Dartmouth Trustees on September 1, 2010. Pursuant to Section 9.02 of the Dartmouth License Agreement, the Dartmouth Trustees provided us notice that it has terminated the Dartmouth License Agreement for a breach under Section 5.01(e).
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We had originally commenced our research and development activities relating to D11B, the anti-cancer compound licensed by us from Dartmouth College (“Dartmouth”), through a Sponsored Research Agreement (the “Sponsored Research Agreement”) with Dartmouth. As of September 30, 2009, the termination date of the Sponsored Research Agreement, Dartmouth concluded its research and development activities, and provided us with, what it believes is, a key anti-cancer compound for glioblastoma, D11B. Based upon results of in vivo efficacy and toxicity tests, we had entered into a fee-for-services agreement with Latitude Pharmaceuticals, Inc. (“Latitude”) to assist us in our development of an IV formulation of D11B, in order to conduct additional tests. Further development of the IV formulation for D11B was ceased in anticipation of the SGC Acquisition.
Because the transactions contemplated by the Share Exchange Agreement were not consummated, we are undertaking efforts to identify new commercial opportunities. We do not expect to generate any revenues for the foreseeable future and expect to continue to incur losses. Our independent registered public accountant has issued an audit opinion which includes a statement expressing substantial doubt as to our ability to continue as a going concern.
Research and Development
Research and development costs represent costs incurred to develop our technologies and were incurred pursuant to our former sponsored research agreements with Dartmouth and other third party providers. These agreements include salaries and benefits for research and development personnel, allocated overhead and facility occupancy costs, contract services and other costs. Research and development costs are expensed when incurred, except for nonrefundable advance payments for future research and development activities which are capitalized and recognized as expense as the related services are performed.
Research and development expense for the years ended December 31, 2010 and 2009 were $8,764 and $113,826.
Employees
As of December 31, 2010, we did not have any employees.
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ITEM 2. PROPERTIES
Our corporate office is located at 100 Overlook Drive, 2nd Floor, Princeton, New Jersey, 08540. Rent for this month-to-month operating lease is $119 per month plus tax and variable charges. Pursuant to the lease terms, we are provided with a bundle of services, including, but not limited to, reception, phone and mail service.
We also maintain an office at 2000 Town Center, Suite 1900, Southfield, Michigan, 48075. We have a three month lease, which began August 1, 2010 and automatically renews in three month intervals. We may terminate this lease agreement by giving written notice to the landlord not less than two months prior to the expiration of the term of the lease. The rent for the office in Southfield, MI is $715 per month plus tax and variable charges. We share this office space with another company for whom Mr. Amit S. Dang, our Chief Executive Officer and Chief Financial Officer provides executive consulting services. As a result, we evenly share the total monthly rent cost with the aforementioned company. Pursuant to the lease terms, we are provided with a bundle of services, including, but not limited to, reception, phone and mail service for one gross price.
ITEM 3. LEGAL PROCEEDINGS
As of the date of this report, we are not a party to any material pending legal proceedings or government actions, including any bankruptcy, receivership, or similar proceedings. In addition, management is not aware of any known litigation or liabilities involving the operators of our properties that could affect our operations. Should any liabilities incur in the future, they will be accrued based on management’s best estimate of the potential loss. As such, there is no adverse effect on our financial position, results of operations or cash flow at this time. Furthermore, we do not believe that there are any proceedings to which any of our directors, officers, or affiliates, any owner of record of the beneficially or more than five percent of our common stock, or any associate of any such director, officer, affiliate, or security holder is a party adverse or has a material interest adverse to us.
