SensiVida Medical Technologies, Inc. - FORM 10-Q/A

Attached files

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EX-32 - SensiVida Medical Technologies, Inc.	v212090_ex32.htm
EX-31.1 - SensiVida Medical Technologies, Inc.	v212090_ex31-1.htm
EX-31.2 - SensiVida Medical Technologies, Inc.	v212090_ex31-2.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q/A

Amendment No. 1

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES ACT OF 1934

For the quarterly period ended November 30, 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 000-07405

SENSIVIDA MEDICAL TECHNOLOGIES, INC.

(Exact name of registrant as specified in its charter)

New Jersey	22-1937826
(State or other jurisdiction of	(I.R.S. Employer Identification No.)
incorporation or organization

150 Lucius Gordon Drive, Suite 110
West Henrietta, New York	14586
(Address of principal executive offices)	(Zip Code)

(585) 214-2407

(Registrant’s telephone number, including area code)

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 short period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, and 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	¨	Smaller reporting company x
(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-c of the Act).

Yes ¨ No x

As of November 30, 2010, there were outstanding 15,998,112 shares of the registrant’s common stock, $.01 par value.

Explanatory Note

On January 18, 2011, SensiVida Medical Technologies, Inc., a New Jersey corporation (“SensiVida”) filed its quarterly report on Form 10-Q. This Amendment No. 1 to the Form 10-Q for the quarter ended November 30, 2010 hereby amends and restates the prior Form 10-Q’s Evaluation of Disclosure Controls and Procedures, Management’s Report on Internal Control Over Financial Reporting and Changes in Internal Control Over Financial Reporting. There are no changes to the financial statements or the Company’s financial results for the quarter ended November 30, 2010.

This Form 10-Q/A speaks as of the original filing date of the Form 10-Q and does not reflect events that may have occurred subsequent to the original filing date.

SENSIVIDA MEDICAL TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS

NOVEMBER 30, 2010

INDEX

		PAGE

PART 1.	Financial Information

Item 1.	Financial Statements

	Consolidated Balance Sheets as of November 30, 2010 (Unaudited) and February 28, 2010 (Audited)	1

	Consolidated Statements of Operations for the Nine and Three Months Ended November 30, 2010 (Unaudited) and November 30, 2009 (Unaudited)	2

	Consolidated Statement of Changes in Stockholders’ Deficit for the Nine Months Ended November 30, 2010 (Unaudited)	3

	Consolidated Statements of Cash Flows for the Nine Months Ended November 30, 2010 (Unaudited) and November 30, 2009 (Unaudited)	4

	Notes to Consolidated Financial Statements	5-14

Item 2.	Management’s Discussion and Analysis	15-17

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	18

Item 4T.	Controls and Procedures	18

PART 11.	Other Information

Item 1.	Legal Proceedings	19

Item 1A.	Risk Factors	19

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	19

Item 3.	Defaults Upon Senior Securities	19

Item 4.	Submission of Matters to a Vote of Security Holders	19

Item 5.	Other Information	19

Item 6.	Exhibits	20

	Signatures	21

	Exhibits

SENSIVIDA MEDICAL TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

	November 30,			February 28,
	2010			2010
	(Unaudited)			(Audited)
ASSETS
CURRENT ASSETS
Cash and Cash Equivalents	$	14,479		$	12,002
Total Current Assets		14,479			12,002

PROPERTY AND EQUIPMENT
Net of Accumulated Depreciation of $214,342 (November 30, 2010)
and $207,322 (February 28, 2010)		20,158			-

OTHER ASSETS
Intellectual Property - Net of Accumulated Amortization of
$327,665 (November 30, 2010) and $187,237 (February 28, 2010)		2,480,899			2,621,327
Other Assets		32,760			3,016
Restricted Cash		16,691			18,727
Deferred Costs		6,667			49,167

TOTAL ASSETS	$	2,571,654		$	2,704,239

LIABILITIES AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES
Convertible Debt	$	401,500		$	451,500
Accounts Payable		204,350			255,189
Other Loans Payable		49,828			99,828
Officer Loan		5,524			5,524
Accrued Liabilities		2,482,362			2,315,680
Preferred Stock Subscribed		-			250,000
Total Current Liabilities		3,143,564			3,377,721

STOCKHOLDERS' DEFICIT
Preferred Stock, $.01 Par Value, 11,000,000 and 5,000 Shares
Authorized; Issued and Outstanding 2,021,728 Shares November 30,
2010; -0- Shares February 28, 2010		20,217			-
Common Stock $.01 Par Value, 89,000,000 and 19,995,000
Shares Authorized; Issued and Outstanding Shares - 15,998,112
Shares November 30, 2010; 15,980,612 Shares February 28, 2010		159,981			159,806
Common Stock Subscribed		140,800			140,800
Additonal Paid-in Capital		35,892,950			34,153,453
Accumulated Deficit		(36,785,858	)		(35,127,541	)
Total Stockholders' Deficit		(571,910	)		(673,482	)

TOTAL LIABILITIES & STOCKHOLDERS' DEFICIT	$	2,571,654		$	2,704,239

See Notes to Consolidated Financial Statements.

SENSIVIDA MEDICAL TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE NINE AND THREE MONTHS ENDED NOVEMBER 30, 2010 AND 2009

(UNAUDITED)

	NINE MONTHS						THREE MONTHS
	2010			2009			2010			2009

Net Sales	$	-		$	-		$	-		$	-

Cost of Sales		-			-			-			-

Gross Profit		-			-			-			-

General and Administrative Expense		921,169			896,916			376,577			248,969

Product Development Expense		547,040			248,437			209,415			36,023

Total Expenses		1,468,209			1,145,353			585,992			284,992

Other Income		44			74			12			18

Cancellation of Indebtedness		-			43,597			-			-

Interest Expense		(190,152	)		(125,049	)		(77,239	)		(24,769	)

Accretion of Interest on Convertible Debt					(86,036	)					-

Total Other Expense		(190,108	)		(167,414	)		(77,227	)		(24,751	)

Net Loss	$	(1,658,317	)	$	(1,312,767	)	$	(663,219	)	$	(309,743	)

Basic and Diluted Loss Per Common Share	$	(0.104	)	$	(0.101	)	$	(0.041	)	$	(0.020	)

Weighted Average Common Shares Outstanding		15,996,757			13,356,671			15,998,112			15,854,733

See Notes to Consolidated Financial Statements.

SENSIVIDA MEDICAL TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)

FOR THE NINE MONTHS ENDED NOVEMBER 30, 2010

	Series A Convertible
	Preferred Stock				Common Stock				Additional Paid-		Common Stock		Accumulated
	Shares		Amount		Shares		Amount		In Capital		Subscribed		Deficit

BALANCE, FEBRUARY 28, 2010 (Audited)		-	$	-		15,980,612	$	159,806	$	34,153,453	$	140,800	$	(35,127,541	)

Common Stock Issued for Services		-		-		17,500		175		8,925		-		-

Series A Preferred Stock - Net of
Expenses of $254,714		2,021,728		20,217		-		-		1,718,312		-		-
Fair Value of Employee Stock Option Grants		-		-		-		-		12,260		-		-

Net Loss		-		-		-		-		-		-		(1,658,317	)

BALANCE, NOVEMBER 30, 2010 (Unaudited)		2,021,728	$	20,217		15,998,112	$	159,981	$	35,892,950	$	140,800	$	(36,785,858	)

See Notes to Consolidated Financial Statements.

SENSIVIDA MEDICAL TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED NOVEMBER 30, 2010 AND 2009

(UNAUDITED)

	2010			2009

CASH FLOWS FROM OPERATING ACTIVITIES
Adjustments to Reconcile Net Loss to Net Cash Used In
Operating Activities:
Net Loss	$	(1,658,317	)	$	(1,312,767	)
Fair Value of Options Issued in Exchange for Services		12,260			-
Accretion of Interest on Convertible Debt		-			86,036
Common Stock Issued for Services		9,100			19,586
Depreciation and Amortization		147,448			140,428
Amortization of Deferred Costs		42,500			138,672
Subtotal		(1,447,009	)		(928,045	)
Changes in Assets and Liabilities, Net of Acquisition
(Increase) Decrease in Other Assets and Restricted Cash		(27,708	)		16,072
Increase (Decrease) in Accounts Payable		(50,839	)		199,286
Increase in Accrued Liabilities		267,960			437,517
Net Cash Used for Operating Activities		(1,257,596	)		(275,170	)

CASH FLOWS FROM INVESTING ACTIVITIES

Acquisition of Property and Equipment		(27,178	)		-

CASH FLOWS FROM FINANCING ACTIVITIES
Increase in Loan Payable		-			50,000
Common Stock Subscribed		-			90,800
Redemption of Convertible Debt		(50,000	)		-
Preferred Stock Subscribed		-			100,000
Net Proceeds from Issuance of Series A Preferred Stock		1,337,251			-
Net Cash Provided by Financing Activities		1,287,251			240,800

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		2,477			(34,370	)

CASH AND CASH EQUIVALENTS
Beginning Balance		12,002			76,797
Ending Balance	$	14,479		$	42,427

SUPPLEMENTAL SCHEDULE OF NON-CASH FINANCING ACTIVITIES:

Common Stock Issued in Acquisition of Intellectual Property and
Other Liabilities	$	-		$	2,751,332
Common Stock Issued in Cancellation of Shareholder Debt	$	-		$	2,147,187
Preferred Stock Issued in Cancellation of Preferred Stock Subscription	$	250,000		$	-
Preferred Stock Issued in Cancellation of Other Loans Payable	$	50,000		$	-
Preferred Stock Issued in Cancellation of Accrued Liabilities	$	101,278		$	-
Common Stock Issued for Future Services	$	-		$	37,500
Common Stock Issued in Conversion of Debt and Accrued Interest	$	-		$	1,454,325

See Notes to Consolidated Financial Statements.

SENSIVIDA MEDICAL TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOVEMBER 30, 2010

NOTE 1 – NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of the Business

The consolidated financial statements include the accounts of SensiVida Medical Technologies, Inc. and its wholly-owned subsidiaries, Laser Diagnostic Instruments, Inc. (“Laser”), Photonics for Women’s Oncology, LLC (“Photonics”), Mediphotonics Development, LLC (“Mediphotonics”), and Bioscopix, Inc. (“Bioscopix”), (collectively the “Company”). All significant intercompany transactions and balances have been eliminated in consolidation. All wholly-owned subsidiaries are currently inactive.

The Company had operated in one business segment encompassing in the design and development of medical diagnostic instruments that detect cancer in vivo in humans by using light to excite the molecules contained in tissue and measuring the differences in the resulting natural fluorescence between cancerous and normal tissue. Effective March 3, 2009, with the merger of SensiVida Medical Systems, Inc. into the Company’s wholly-owned subsidiary BioScopix, Inc., the Company’s technology has primarily focused on the automation of analysis and data acquisition for allergy testing, glucose monitoring, blood coagulation testing, new tuberculosis testing, and cholesterol monitoring.

The consolidated financial statements as of and for the nine and three month periods ended November 30, 2010 and 2009 are unaudited and are presented pursuant to the rules and regulations of the Securities and Exchange Commission. Certain financial information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the accompanying disclosures are adequate to make the information presented not misleading. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for fair presentation have been included and have been prepared on a consistent basis using the accounting policies described in the Summary of Accounting Policies included in the Annual Report of Form 10-K for the fiscal year ended February 28, 2010. The interim operating results for the nine months ended November 30, 2010 may not necessarily be indicative of the operating results expected for the full year.

Management’s Plan

The Company is subject but not limited to a number of risks similar to those of other companies at this stage of development, including dependence on key individuals, the development of commercially usable products and processes, competition from substitute products or alternative processes, the impact of research and product development activity, competitors of the Company, many of whom have greater financial or other resources than those of the Company, the uncertainties related to technological improvements and advances, the ability to obtain adequate additional financing necessary to fund continuing operations and product development and the uncertainties of future profitability. The Company expects to incur substantial additional costs before beginning to generate income from product sales, including costs related to ongoing research and development activities, preclinical studies and regulatory compliance. Substantial additional financing is needed by the Company.

The Company has no revenues, incurred significant losses from operations, has an accumulated deficit and a highly leveraged position that raises substantial doubt about the Company’s ability to continue as a going concern. The consolidated financial statements do not include any adjustments relating to recoverability and classification of recorded asset amounts or the amount and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. The Company expects to incur substantial expenditures to further the development and commercialization of its products. To achieve this, on October 1, 2010 management entered into an agreement with a financial consulting firm to be an advisor and placement agent for the Company to seek additional financing through private placements or other financing alternatives, and might also seek to sell the Company or its technology. There can be no assurance that continued financings will be available to the Company or that, if available, the amounts will be sufficient or that the terms will be acceptable to the Company. The financial consulting firm has done an extensive Due Diligence Process which is nearing completion as of January 14, 2011. A Private Placement Memorandum (“PPM”) has been drafted but not yet approved by both companies. Financing activities will not commence until the financial consulting firm finishes its Due Diligence Process, deems it to be acceptable, and a PPM document is agreed to and signed by both parties.

SENSIVIDA MEDICAL TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOVEMBER 30, 2010

NOTE 1 – NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)

Use of Estimates

The preparation of 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 period. Actual results could differ from those estimates.

Equipment and Leasehold Improvements

Equipment and leasehold improvements are stated at cost. Depreciation is computed using the straight-line method over an estimated useful life of five years for equipment and the shorter of the lease term or fifteen years for leasehold improvements. Depreciation expense was $7,020 and $-0- for the nine months and $6,239 and $-0- for the three months ended November 30, 2010 and 2009, respectively.

Intellectual Property

Intellectual property consists of technology with patents pending approval that was included in the acquisition of SensiVida Medical Systems, Inc. and is stated at cost. Amortization is computed using the straight-line method over an estimated useful life of fifteen years. Amortization expense was $140,428 and $140,428 for the nine months and $46,809 and $46,809 for the three months ended November 30, 2010 and 2009, respectively.

Income Taxes

The Company accounts for income taxes under FASB ASC 740, Income Taxes, which requires an asset and liability approach to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed annually for temporary differences between the financial statement and tax bases of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. Income tax expense is the tax payable or refundable for the period plus or minus the change during the period in deferred tax assets and liabilities.

Research and Development

Research and development costs are charged to operations when incurred as product development expenses.

Loss per Common Share

In accordance with FASB ASC 260, Earnings per Share, basic and diluted net loss per share is computed using net income or loss divided by the weighted average number of shares of common stock outstanding for the period presented. Because the Company reported a net loss for the nine and three months ended November 30, 2010 and 2009, common stock equivalents consisting of options and warrants were anti-dilutive; therefore, the basic and diluted net loss per share were the same.

Accounting for Stock-Based Compensation

FASB ASC 718, Share-Based Payment requires measurement of all employee stock-based compensation awards using a fair value method and the recording of such expense in the consolidated financial statements. In addition, this topic requires additional accounting related to the income tax effects and additional disclosure regarding the cash flow effects resulting from share-based payment arrangements. See Note 8 regarding issuance of options associated with new employment agreements.

Concentration of Credit Risk Involving Cash

The Company may have deposits with major financial institutions which exceed Federal Deposit Insurance limits during the year.

Reclassifications

The 2009 financial statements have been reclassified to conform to the 2010 financial statement presentation.

SENSIVIDA MEDICAL TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOVEMBER 30, 2010

NOTE 1 – NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)

Recently Adopted Accounting Pronouncements

As of November 30, 2010 and for the period then ended, there were no recently adopted accounting pronouncements that had a material effect on the Company’s financial statement.

Recently Issued Accounting Pronouncements Not Yet Adopted

As of November 30, 2010 there are no recently issued accounting standards not yet adopted which would have a material effect on the Company’s financial statements.

As of November 30, 2010, the FASB has issued Accounting Standards Update (ASU) through No. 2010-26. None of the ASUs have had a material impact on the Company’s financial statements.

NOTE 2 - RELATED PARTY TRANSACTIONS

Legal services rendered by Mr. Peter Katevatis amounted to $-0- and $45,000 for the nine months and $-0- and $15,000 for the three months ended November 30, 2010 and 2009, respectively. These amounts are recorded in general and administrative expense. Effective November 2008, Mr. Katevatis’ legal service agreement was amended to $60,000 per year. On February 3, 2010 the legal service agreement with Mr. Katevatis terminated and was not renewed by the Company.

See Note 8 for details regarding the Company’s consulting agreement with one of its principal stockholders and Note 4 for related party loans and accrued liabilities.

NOTE 3 – DEFERRED CHARGES

Expected future amortization of deferred charges is as follows:

Years Ending

February 28, 2011	$	6,667

NOTE 4 – ACCRUED LIABILITIES

Accrued liabilities consist of the following:

	November 30, 2010		February 28, 2010
Legal and professional fees	$	245,246	$	301,247
Consulting and university fees		1,397,019		1,397,019
Salaries and wages		435,916		346,500
Accrued Interest		311,946		178,479
Expense Reimbursements and Other		92,235		92,435
Totals	$	2,482,362	$	2,315,680

Accrued legal and professional fees include services rendered by Mr. Peter Katevatis. The amount of the accrual was $2,500 and $65,000 as of November 30, 2010 and February 28, 2010, respectively (Note 2). During the nine months ended, Mr. Katevatis converted $62,500 of accrued professional fees into 62,500 shares of Series A preferred stock.

Accrued consulting and university fees include costs owed for Dr. Robert R. Alfano, a principal stockholder and former chairman of the Company’s Scientific Advisory Board (Note 8), with respect to his prior consulting agreement, of $1,397,019 as of November 30, 2010 and February 28, 2010, which fees the Company is contesting in litigation between Dr. Alfano and the Company.

SENSIVIDA MEDICAL TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOVEMBER 30, 2010

NOTE 4 – ACCRUED LIABILITIES (CONT.)

Accrued expense reimbursements of $92,235 were due to Dr. Alfano at November 30, 2010 and February 28, 2010. The Company has accrued these costs in conjunction with Dr. Alfano’s prior consulting agreement.

Accrued salaries and wages include amounts due to Frank D. Benick, Chief Financial Officer, of $15,500 and $29,000 as of November 30, 2010 and February 28, 2010, respectively.

Accrued salaries and wages include amounts due to Kamal Sarbadhikari, former Chief Executive Officer, of $66,250 and $106,250 as of November 30, 2010 and February 28, 2010, respectively.

Accrued salaries and wages include amounts due to Jose Mir, President of $212,500 and $131,250 as of November 30, 2010 and February 28, 2010, respectively.

Accrued salaries and wages include amounts due to David R. Smith, Chairman of the Board, of $100,000 and $80,000 as of November 30, 2010 and February 28, 2010, respectively.

Accrued salaries and wages include amounts due to Margaret Lydon, Chief Operating Officer of $20,833 and John Spoonhower, Chief Technical Officer of $20, 833 as of November 30, 2010.

Accrued interest includes interest accrued on convertible debt of $161,617 (see Note 5), and $141,431 as of November 30, 2010 and February 28, 2010, respectively.

Accrued interest on the Series A preferred stock was $143,054 and $0 as of November 30, 2010 and February 28, 2010, respectively.

Accrued interest on other debt was $7,275 and $4,286 as of November 30, 2010 and February 28, 2010, respectively.

NOTE 5 – CONVERTIBLE DEBT AND OTHER LOANS PAYABLE

On January 10, 2007, the Company commenced a Private Placement Offering for $2,000,000 of 12% convertible promissory notes (“the Notes”) in amounts of not less than $25,000. The Notes shall be due and payable, together with accrued and unpaid interest, on the earlier of April 15, 2008 for the first $1,000,000 tranche and April 15, 2009 for the second $1,000,000 tranche (of which $656,500 had been raised as of February 28, 2009) or three months after the completion of the initial public offering (“the IPO”) of the shares of BioScopix (now SensiVida Medical Technologies, Inc. as a result of the merger of BioScopix into Mediscience Technology Corp. and subsequent name changes of the Company to BioScopix and then SensiVida Medical Technologies, Inc. (SensiVida), after the merger of BioScopix and SensiVida Medical Technologies, Inc. Holders of the Notes may convert the notes into (i) cash in the amount of the principal and accrued and unpaid interest due and a warrant exercisable until April 15, 2009 to purchase shares of BioScopix (now SensiVida) in an amount equal to 50% of the principal of the Notes at an exercise price of 120% of the five day volume weighted average preceding the effective date of the IPO of SensiVida or (ii) shares of SensiVida at a price equal to 50% of the IPO price of the SensiVida shares of common stock in an amount equal to the principal and accrued and unpaid interest due on the Notes. In accordance with EITF 00-27 (codified in FASB ASC 470.2), under option (ii), the carrying value of the Notes was reduced by the intrinsic value of the beneficial conversion option resulting in a carrying value of $-0-. On January 29, 2008, the Notes were modified to provide for two additional options. In addition to options (i) and (ii), holders of the notes may now also convert the notes into (iii) SensiVida stock with a six month lockup in the amount of principal and accrued interest and receive 50% warrant coverage at 75% of the SensiVida stock IPO price and (iv) combination of alternatives (ii) and (iii). The additional options did not require an adjustment to the value of the Notes.

As of May 31, 2009, the notes have been accreted to their maturity value. Accretion of discount on convertible debt amounted to $-0- and $86,036 for the nine months and $-0- and $-0- for the three months ended November 30, 2010 and 2009, respectively.

SENSIVIDA MEDICAL TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 5 – CONVERTIBLE DEBT AND OTHER LOANS PAYABLE (CONT.)

Accrued interest payable on the notes as of November 30, 2010 and February 28, 2010 was $161,617 and $141,431, respectively. Interest expense was $37,774 and $114,757 for the nine months and $12,013 and $13,509 for the three months ended November 30, 2010 and 2009, respectively.

Effective April 15, 2008, the first $1,000,000 tranche of the Notes were in default. Under the terms of the Notes, in the event of default, the entire principal and unpaid accrued interest is immediately due and payable. The January 29, 2008 modification of the Notes provided two additional options of the Note holders as compensation for the delay of the IPO which was expected to take place prior to April 15, 2009.

Effective April 15, 2009, the second tranche of the Notes in the amount of $656,500 were in default. Under the terms of the Notes, in the event of default, the entire principal and unpaid accrued interest is immediately due and payable.

On July 31, 2009, certain note holders converted the note and accrued interest through July 31, 2009 into common stock of the Company at the net price of $.35 per share which represents 50% of the opening market value of the stock on this date. Principal of $1,205,000 and accrued interest of $249,325 were converted into 4,155,222 shares of the Company’s common stock.

As of May 19, 2010, one convertible note holder demanded repayment of principal of $50,000 with a subsequent demand for accrued interest approximating $17,588. As of June 1, 2010, both principal and interest had been satisfied. The remaining notes are in default.

Other Loans Payable

On September 1, 2005, SensiVida issued a $50,000 convertible subordinated note to the order of Excell Partners, Inc. (Holder). Principal and accrued interest was due and payable in one installment on September 1, 2008, the maturity date. Interest was accruable at 2% per annum on the unpaid principal amount of the Note. Upon any default of this Note, the Holder has the right to convert the Note to common stock of SensiVida. The number of shares of common stock would be determined by dividing the outstanding principal and accrued interest to the date of conversion by the conversion price or fair market value paid in a most recent Qualified Transaction by SensiVida. The note was in default upon acquisition (by the Company) and was amended as of December 1, 2009. Commencing January 1, 2010, interest accrues on the balance at a rate of 8% compounded annually. The Note has a maturity date of January 1, 2011. If the entire unpaid balance of the note is not paid when due, then the amount unpaid shall bear interest at the current rate plus 1% and such rate shall increase by an additional one percent each year until the note is paid in full. The amount drawn on the note at November 30, 2010 and February 28, 2010 was $49,828. Interest accrued on the note was $7,275 and $4,286 as of November 30, 2010 and February 28, 2010, respectively.

On September 1, 2009, the Company borrowed $50,000 from a shareholder. The loan called for interest at 12% per annum. The principal and accrued interest was convertible into the company’s common stock at $.66 per share after six months at the discretion of the note holder. Proceeds of the loan were to be used for the company’s patient allergy clinical trial and related clinical expenses. As of November 30, 2010, $16,691 of the original loan remains in a restricted cash account for its intended use as approved by the lender. In April 2010, the terms of the loan were modified to provide for an option to convert principal and accrued interest into Series A Preferred stock which was completed on May 1, 2010. Principal of $50,000 and accrued interest of $3,929 were converted to 53,929 shares of Series A Preferred stock.

NOTE 6 - PREFERRED STOCK SUBSCRIBED

Preferred Stock Subscribed

During February 2009, a current shareholder advanced $150,000 plus an additional $100,000 received in March 2009 in exchange for 2,500 of Series A Preferred stock having a par value of $100 (the shares). Each Series A Preferred share is convertible into 150 shares of common stock for a total of 375,000 shares of common stock together with warrants to purchase up to 50,000 shares of common stock with an exercise price of $1.00. Because the Company did not have the required authorized Preferred Stock to execute this transaction, the Company had recorded the advances as a liability.

SENSIVIDA MEDICAL TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOVEMBER 30, 2010

NOTE 6 - PREFERRED STOCK SUBSCRIBED (CONT.)

On April 13, 2010, the Company and the preferred stock subscriber mutually agreed to revised terms on the prior $250,000 unissued preferred stock subscription agreement. The new terms call for a “ratcheted” conversion to common stock, at a price of $0.35 from $0.66. In addition, accrued interest of $34,849 as of May 1, 2010, on the $250,000 subscription, the subscription, plus a 10% premium of $28,485 on the principal and accrued interest all totaling $313,334, were available at the option of subscriber to roll over the total into the Company’s current Series A subscription agreement. On May 1, 2010, principal of $250,000, interest of $34,849 plus the premium of $28,485 were converted to 313,334 shares of Series A Preferred stock.

NOTE 7 - INCOME TAXES

There is no income tax benefit for the losses for the nine and three months ended November 30, 2010 and 2009 because the Company has determined that the realization of the net deferred tax asset is not assured. The Company has created a valuation allowance for the entire amount of such. There was no change in unrecognized tax benefits during the period ended November 30, 2010 and there was no accrual for uncertain tax positions as of November 30, 2010.

NOTE 8 – COMMITMENTS AND CONTINGENCIES

Dr. Robert R. Alfano

The Company had a consulting agreement (the “Agreement”) through March 2007 with Dr. Robert R. Alfano, a principal stockholder of the Company and prior Chairman of its Scientific Advisory Board. Pursuant to the terms of the Agreement, Dr. Alfano was paid a consulting fee of not less than $150,000 per annum in exchange for services to be rendered for approximately fifty days per annum in connection with the company’s medical photonics business. The Agreement further provided that Dr. Alfano was to be paid a bonus and fringe benefits in accordance with policies and formulas provided to key executives of the Company. The agreement expired on March 5, 2007.

In October 2009, a civil action was entered against the Company by Dr. Robert Alfano, alleging that he is owed $1,487,053 in consulting fees and expenses. The Company had accrued the consulting fees and expenses in conjunction with a consulting agreement (Note 4). In addition, Dr. Alfano is contesting the termination of his anti-dilution rights and claims the Company owes him 132,000 shares of common stock (Note 9). The Company does not believe the case has merit and has filed a motion to dismiss. The Company intends to vigorously defend against these claims.

In connection with the acquisition of patent rights to its cancer detection technology, the Company assumed an obligation to pay to Dr. Alfano’s daughter a royalty of one percent of the gross sales derived from any equipment made, leased or sold which utilizes the concepts described in the Company’s cancer detection patent. Since there has been no revenue, no amounts have been paid during the nine and three months ended November 30, 2010 and 2009.

Other Royalties

The Company obtained worldwide licensing rights for patents from Yale University and has agreed to pay royalties based on net sales of all products generated from the patents and fifty percent of any income received from sublicensing of the patents. The Company has not recorded any revenues since the inception of this agreement and therefore has not recorded or paid any royalties during the nine and three months ended November 30, 2010 and 2009.

Employment Agreements

On November 15, 2005, the Company entered into a two year employment agreement with Frank D. Benick as Chief Financial Officer. Mr. Benick will be paid a monthly salary of $3,000 per month for the first two months, then increasing to $4,000 per month for the remaining term of the agreement and received an option to purchase 30,000 shares of common stock at $10.00 per share. This agreement has not been formally updated. Mr. Benick’s employment is continuing under the terms of the expired agreement.

SENSIVIDA MEDICAL TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOVEMBER 30, 2010

NOTE 8 – COMMITMENTS AND CONTINGENCIES (CONT.)

On November 5, 2008, the Company entered into a three year employment contracts with Kamal Sarbadhikari as Chief Executive Officer and Jose Mir as Chief Technical Officer. Mr. Sarbadhikari and Mr. Mir will each be paid a base salary of $150,000 per annum. On November 2, 2009, Mr. Kamal Sarbadhikari resigned for health reasons effective December 31, 2009. Jose Mir has been appointed interim President effective December 31, 2009.

On November 10, 2008, the Company entered into a three year employment contract with David R. Smith as Chairman of the Board. Mr. Smith will be paid $60,000 per annum.

On August 15, 2010, the Company entered into three year employment contracts with Margaret Lydon as Chief Operating Officer and John P. Spoonhower as Chief Technology Officer. Ms. Lydon and Mr. Spoonhower will each be paid a base salary of $125,000 per annum. Both Ms. Lydon and Mr. Spoonhower were each granted 400,000 options, for a total of 800,000 options, to acquire 400,000 shares each, of the company’s common stock over a three year vesting period with an exercise price of $0.36. The Company uses the Black-Scholes option pricing model to calculate the grant-date fair value of the options, with the following assumptions: no dividend yield, expected volatility of 28.6%, risk free interest rate of 2.68% and expected option life of three years. The total estimated employer cost associated with these options approximates $126,100, which is being amortized over the life of the employment agreements. In the interim vesting period, the Company’s 1999 stock incentive plan will require revision as the plan previously had a limitation on the aggregate number of shares it may issue.

The Company entered into a lease agreement for office space in West Henrietta, NY. The term of the lease runs from July 2010 to June 2011. Base rent and expenses total $1819 per month. The Company also entered into a lease agreement for laboratory space in Rochester, NY. The term of the lease runs from October 2010 to September 2011. The rental is approximately $1,053 per month. Previously the Company renewed its Henrietta office space on a month to month basis for the period May 2010 to February 2013 at $1,100 per month. The agreement has been terminated as of September 30, 2010.

NOTE 9 – STOCKHOLDERS’ DEFICIT

Reverse Stock Split

The consolidated balance sheets, statements of changes in stockholders’ equity (deficit), and related notes to consolidated financial statements have been adjusted to reflect a 10 for 1 reverse stock split that was effective May 18, 2009.

Preferred Stock

The Company was previously authorized to issue 5,000 shares of preferred stock, $.01 par value per share, which may be issued from time-to-time in one or more series, the terms of which may be designated by the Board of Directors without further action by stockholders. Any preferred stock issued will have preferences with respect to dividends, liquidation and other rights, but will not have preemptive rights.

On March 1, 2010, the Company amended its Certificate of Incorporation to provide for 10,000,000 shares of Series A convertible preferred stock and 1,000,000 shares of preferred stock with preferences and characteristics to be determined by the board of Directors. See Note 10 - Amendment of Certificate of Incorporation.

Series A Convertible Preferred Stock Offering

During March 2010, the Company began an offering of a maximum of $10,000,000 of Series A Preferred stock at $1.00 per share. The Series A Preferred stock is convertible into shares of the Company’s common stock, par value $.01 per share at $0.35 per share for a period of three years from the date of issuance and bears interest at 12% per annum, such interest to accrue and be paid in cash at the end of three years from the date of issuance of the Series A Preferred stock or in shares of common stock if the investor elects to convert the Series A Preferred stock. The investor also will receive warrants to acquire shares of common stock in an amount equal to 50% of the number of shares of common stock into which the Series A Preferred stock converts. The exercise price of the warrant is at $1.00 per share. As of November 30, 2010, 2,888,182 warrants were granted.

Common Stock

On March 1, 2010, the Company amended its Certificate of Incorporation to provide for 89,000,000 shares of common stock, $.01 par value.

SENSIVIDA MEDICAL TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOVEMBER 30, 2010

NOTE 9 – STOCKHOLDERS’ EQUITY (CONT.)

Common Stock Issued for Services

During March 2010, the Company issued 17,500 restricted shares of its common stock with a value of $9,100 to two consultants in exchange for professional services, as per their agreements. The transactions were recognized based on the fair market value of the services rendered.

Common Stock Issued in Acquisition of SensiVida Medical Systems, Inc.

On March 3, 2009, the Company (formerly known as Mediscience Technology Corp.) and SensiVida Medical Systems, Inc. completed a merger of the two companies, with Mediscience changing its name to SensiVida Medical Technologies, Inc. As consideration for the merger, the Company issued 3,333,333 shares of the Company’s common stock, valued at $2,751,332 to the three stockholders of SensiVida Medical Systems, Inc. as consideration for the transaction.

Common Stock Issued in Cancellation of Shareholder Debt

In March 2009, the Company issued 1,172,510 shares of its common stock to Mr. Katevatis in settlement of all his accrued fees and salary to include termination of his employment agreement as Chief Executive Officer and Chairman, along with cancellation of his anti-dilution rights.

Common Stock Subscribed

In August 2009, the Company received $30,000 for 30,000 shares of the Company’s common stock. As of November 30, 2010, the shares have not yet been issued. The Company anticipates the shares to be issued in January 2011.

In December 2009, the Company received $110,800 for 221,600 shares of the company’s common stock. As of November 30, 2010, the shares have not yet been issued. The Company anticipates the shares to be issued in January 2011.

2003 Consultants Stock Plan

The Board of Directors previously adopted, subject to stockholder approval, a 2003 Consultants Stock Plan (“Consultants Plan”). The Consultants Plan was subsequently approved by the stockholders on February 17, 2004. The aggregate number of shares that may be issued under the options shall not exceed 700,000. No options were issued prior to stockholder approval and no options were outstanding under this plan as of November 30, 2010 and 2009.

1999 Incentive Stock Option Plan

The Board of Directors previously adopted, subject to stockholder approval, a 1999 Incentive Stock Option Plan (the “Plan”) for officers and employees of the Company. The stockholders subsequently approved the Plan on February 17, 2004. Accordingly awards issued under the Plan prior to February 17, 2004 were deemed not to be granted until that date. The aggregate number of shares that may be issued under the options shall not exceed 300,000, however, the plan will require revision to accommodate the granting of options to Mrs. Lydon and Mr. Spoohhower.

Stock Options

Activity related to stock options during the nine months ended November 30, 2010 is as follows:

				Exercise			Weighted
				Price			Avg. Exercise
	Shares			Range			Price

Outstanding, February 28, 2010		30,000		$	10.00		$	10.00
Granted		800,000			0.36			0.36
Exercised		-
Forfeited or Expired		(30,000	)		(10.00	)	$	(10.00	)
Outstanding, November 30, 2010		800,000		$	0.36		$	0.36

Weighted average remaining life of options approximates 2.71 years at November 30, 2010.

Options issued in November 2005 expired November 15, 2010.

SENSIVIDA MEDICAL TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOVEMBER 30, 2010

NOTE 9 – STOCKHOLDERS’ EQUITY (CONT.)

Stock Warrants

Stock warrant activity during the nine months ended November 30, 2010 was as follows:

				Exercise		Weighted
	Shares			Price		Avg. Exercise
	Outstanding			Range		Price
Outstanding, February 28, 2010		595,733			$.60 - 30.00	$	6.32
Granted		2,895,682			1.00
Exercised		-			-
Forfeited		(100,000	)		30.00
Outstanding and Exercisable, November 30, 2010		3,391,415			$.60 - $2.50	$	1.08

Stock warrants issued in 2004 expired in November 2010.

Weighted average remaining life of warrants approximates 2.41 years at November 30, 2010.

Anti-Dilution Rights

The Company and Dr. Robert Alfano had an anti-dilution rights agreement which provided that Dr. Alfano’s ownership interest would at all times represent 4% of the issued and outstanding shares of the Company. The anti-dilution rights were exercisable at Dr. Alfano’s sole discretion. As of February 28, 2007, the Company was obligated to issue an additional 1,400 shares to Dr. Alfano in connection with the anti-dilution rights. As a result of the completion of Dr. Alfano’s consulting agreement as of March 5, 2007, the anti-dilution rights terminated. Subsequent to March 5, 2007, Dr. Alfano was issued 6,400 shares of the Company’s common stock in connection with the anti-dilution rights of which 5,000 shares were issued in error. The Company has placed a stop order and requested the 5,000 shares be returned by Dr. Alfano for cancellation. Dr. Alfano’s anti-dilution rights are currently in the process of litigation along with amounts owed to him for consulting and related expenses.

NOTE 10 – AMENDMENT OF CERTIFICATE OF INCORPORATION

On March 1, 2010, the Board of Directors approved and on March 1, 2010, the holders of a majority of the voting capital stock approved an amendment to restate the Certificate of Incorporation to provide for the increase in the total number of authorized shares of the Company’s common and preferred stock.

The aggregate number of shares which the Company shall have authority to issue is 100,000,000, 89,000,000 of which shall be common stock, $.01 par value per share and 11,000,000 of which shall be preferred stock, $.01 par value per share. 10,000,000 shares of preferred stock are designated Series A, convertible preferred stock and 1,000,000 shares of preferred stock shall have all preferences and characteristics to be determined by the Company’s Board of Directors on a case-by-case basis, prior to issuance.

The Series A Preferred stock shall have the following relative rights, preferences and limitations:

a). The Series A Preferred stock shall bear interest at 12% per annum, such interest to accrue and be paid in cash at the end of three years from the date of issuance of the Series A Preferred stock or in shares of common stock if the holder of the Series A Preferred stock elects to convert the Series A Preferred stock.

b). The holders of the Series A Preferred stock shall be entitled to receive, when, as and if declared by the Board of Directors out of funds legally available therefore, dividends, whether in cash or stock, in preference to the holders of common stock.

c). The holders of the Series A Preferred stock shall be entitled to a preference over holders of common stock with regard to distribution of assets in the event of any liquidation, dissolution or winding-up of the Company, whether voluntary or involuntary.

d). The shares of Series A Preferred stock shall not entitle the holder thereof to have any right to vote or to receive any notice of any meeting of the holders of the Company’s stock or to exercise any voting power.

SENSIVIDA MEDICAL TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOVEMBER 30, 2010

NOTE 10 – AMENDMENT OF CERTIFICATE OF INCORPORATION (CONT.)

e). The Series A Preferred stock may, at any time for a period of three years from the date of its issuance, at the option of the holders thereof, be converted into common stock at a price of $0.35 per share (as adjusted for subsequent stock dividends, stock splits, combinations, recapitalizations or the like).

NOTE 11 - RETIREMENT PLAN

During July 2010, the Company adopted a 401-K plan for its employees. As of November 30, 2010, the Company has not recognized any employer retirement costs associated with the plan.

NOTE 12 - SUBSEQUENT EVENTS

The Company entered into a placement agent agreement with J.P. Turner & Company, LLC (agent) to serve as exclusive placement agent and financial advisor in connection with the best efforts sale of new securities of the Company for purposes of execution of its business plan. The term of the agreement shall continue for twelve months. The agreement requires a $50,000 non-refundable retainer to cover pre-offering expenses. The Company has agreed to replenish the retainer should expenses exceed the retainer. Upon the initial closing, which consists of the placement agent’s sale of securities, the Company shall issue to agent a non-refundable retainer warrant to purchase up to 450,000 common shares with an exercise price equal to the initial conversion price of the securities issued in the offering for a term of five years from the date of issuance.

Additional terms call for an offering fee of 16% of the gross proceeds of the offering, plus a warrant to purchase a number of the Company’s shares of common stock equal to 16% of the gross proceeds provided by the offering at an exercise price equal to the initial conversion price of the securities issued in the offering. In addition, the Company shall also pay the placement agent a cash fee equal to 7% of the gross proceeds as received by the Company from exercising of the investors’ warrants. The financial consulting firm has done an extensive Due Diligence Process which is nearing completion as of January 14, 2011. A Private Placement Memorandum (“PPM”) has been drafted but not yet approved by both companies. Financing activities will not commence until the financial consulting firm finishes its Due Diligence Process, deems it to be acceptable, and a PPM document is agreed to and signed by both parties.

Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operation

Results of Operations

Nine and Three Months Ending November 30, 2010 Compared to

Nine and Three Months Ending November 30, 2009

Revenues

We had no revenues during the nine and three months ending November 30, 2010 and November 30, 2009. Previously, our primary focus was our continued development of our light-based technology. Effective March 3, 2009, with the merger of SensiVida Medical Systems, Inc. into the Company’s wholly-owned subsidiary BioScopix, Inc., the Company’s technology has focused on the automation of analysis and data acquisition for allergy testing, glucose monitoring, blood coagulation testing, tuberculosis testing, and cholesterol monitoring.

General and Administrative Expense

General and administrative expenses increased approximately $24,000, or 3%, during the current nine month period ended November 30, 2010 as compared to the nine month period ended November 30, 2009. The increase was the net of increases and decreases in major expense components. Salaries, wages and related expenses approximating $293,000 decreased approximately $17,000 from the prior year period, primarily as a result of the resignation of the former CEO, Kamal Sarbadhikari effective December 31, 2009. The decrease in salary and related costs was offset with the recent hiring of Ms. Margaret Lydon as Chief Operating Officer and Mr. John P. Spoonhower as Chief Technology Officer with salaries to date approximating $73,000 plus stock option costs of $12,000. In addition, professional fees decreased approximately $90,000 during the current nine month period. In the prior year nine month period there was increased professional activities associated with the merger of the Company and SensiVida Medical Systems, Inc. on March 3, 2009 and related matters. In October 2009, a civil action was entered against the company by Dr. Robert Alfano. The litigation centers around payment for accrued consulting fees and expenses totaling approximately $1,490,000. In addition, Dr. Alfano is contesting the termination of his anti-dilution rights and the transfer of his former Mediscience Technology Corp. stock into SensiVida Medical Technologies, Inc. stock. The Company does not believe the case has merit and has filed a motion to dismiss. The Company intends to vigorously contest these claims. As an offset to the above decreases in general and administrative expenses, consulting and marketing expenses increased approximately $47,000 over the prior nine month period. These costs represent investor and media public relations along with strategic corporate development and financing. Placement agent fees and fund raising consultant costs increased approximately $75,000 during the current nine month period ended November 30, 2010 when compared to the prior nine month period ended November 30, 2009. Also, adding to the increase in general and administrative expense was approximately $9,000 in all other general and administrative expenses.

General and administrative expenses increased approximately $127,000 or 51% during the current three month period ended November 30, 2010 as compared to the three month period ended November 30, 2009. The increase was the net of increases and decreases in major expense components. Salaries, wages and related expenses approximating $144,000 increased approximately $42,000 over the prior year three month period. With the resignation of the former CEO, Kamal Sarbadhikari effective December 31, 2009, the increase in salary related costs is associated with the recent hiring of Ms. Margaret Lydon as Chief Operating Officer and Mr. John P. Spoonhower as Chief Technology Officer. In addition, professional fees increased approximately $31,000 during the current three month period. The increase was primarily associated with the costs associated with the engagement of a new placement agent for the Company’s securities. Placement agent fees and fund raising consultant costs increased approximately $53,000 during the current three month period ended November 30, 2010 when compared to the prior three month period ended November 30, 2009. Also, adding to the net increase in general and administrative expense was approximately $1,000 in all other general and administrative expenses.

Product Development Expense

Product development expense increased approximately $299,000, or 120%, during the current nine month period ended November 30, 2010 when compared to the prior nine month period ended November 30, 2009. The increase is net of an increase of approximately $399,000 in costs for product design and development plus clinical studies for allergy research being conducted in Rochester, NY by the Company and its consultants, less a decrease of approximately $100,000 of deferred charges amortized during the current nine month period, as compared to the nine month period ended November 30, 2009.

Product development expense increased approximately $173,000 or 481% during the current three month period ended November 30, 2010 when compared to the prior three month period ended November 30, 2009. The increase is net of an increase of approximately $198,000 in costs for product design and development by the Company and its consultants, less a decrease of approximately $25,000 of deferred charges amortized during the current three month period, as compared to the three month period ended November 30, 2009.

Cancellation of Indebtedness

The Company in the prior year had written off certain accrued outside consulting fees totaling $43,597 that had been outstanding for a number of years due to lack of completion of the engagement by the consultant.

Liquidity and Capital Resources

We had a deficiency in working capital as of November 30, 2010 of approximately $3,131,000 compared to a deficiency of approximately $3,365,000 at February 28, 2010 representing a decrease in the deficiency of approximately $234,000 for the current nine month period ended November 30, 2010. The decrease in the deficiency consisted of an increase of approximately $2,000 in cash and a decrease of approximately $232,000 in current liabilities. The principal reason for the increase in cash is during March 2010, the Company began an offering of a maximum of $10,000,000 of Series A Preferred stock at $1.00 per share. The Series A Preferred stock is convertible into shares of the Company’s common stock, par value $.01 per share at $0.35 per share for a period of three years from the date of issuance and bears interest at 12% per annum, such interest to accrue and be paid in cash at the end of three years from the date of issuance of the Series A Preferred stock or in shares of common stock if the investor elects to convert the Series A Preferred stock. The investor also will receive warrants to acquire shares of common stock in an amount equal to 50% of the number of shares of common stock into which the Series A Preferred stock converts. The exercise price of the warrant is $1.00 per share. Series A Preferred stock subscriptions to date have exceeded approximately $1,738,000, net of expenses approximating $255,000. The principal reason for a decline in current liabilities of approximately $232,000 was the result of the payment of trade payables approximating $51,000, the redemption of a convertible noteholder of $50,000 and conversion of a prior preferred stock subscription of $250,000, a related loan of $50,000, plus accrued interest of approximately $39,000 during the quarter ended May 31, 2010. In addition, $62,500 of accrued liabilities were converted to Series A preferred stock during the year. The decline was offset by a net increase of approximately $270,000 of accrued liabilities.

Our ability to continue our operations is largely dependent upon obtaining regulatory approval for the commercialization of our diagnostic technology for allergy testing, glucose monitoring, blood coagulation testing, tuberculosis testing and cholesterol monitoring. There can be no assurance as to whether or when the various requisite government approvals will be obtained or the terms or scope of these approvals, if granted. We intend to defray the costs of obtaining regulatory approval for the commercialization of such technology by the establishment of clinical trial arrangements with medical institutions. We intend to continue to pursue the establishment of co-promotional arrangements for the marketing, distribution and commercial exploitation of our technology. Such arrangements, if established, may include up-front payments, sharing of sales revenues after deduction of certain expenses, and/or product development funding. Our management anticipates that substantial resources will be committed to a continuation of our research and development efforts and to finance government regulatory applications. While management believes that we will obtain sufficient funds to satisfy our liquidity and capital resources needs for the short term from the private placement of our securities and short term borrowings, no assurances can be given that additional funding or capital from other sources, such as co-promotion arrangements, will be obtained on a satisfactory basis, if at all. In the absence of the availability of financing on a timely basis, we may be forced to materially curtail or cease our operations. Our operating and capital requirements, as described above, may change depending upon several factors, including: (i) results of research and development activities; (ii) competitive and technological developments; (iii) the timing and cost of obtaining required regulatory approvals for our products; (iv) the amount of resources which we devote to clinical evaluation and the establishment of marketing and sales capabilities; and (v) our success in entering into, and cash flows derived from, co-promotion arrangements.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

Recent Accounting Pronouncement

Reference is made to the summary or significant accounting policies included in the consolidated financial statements for a discussion and analysis of recently issued accounting pronouncements and their impact on the Company.

Critical Accounting Policies

The preparation of financial statements requires management to make estimates and assumptions that affect amounts reported herein. The most significant of these involve the use of estimates. In each situation, management is required to make estimates about the effects of matters or future events that are inherently uncertain.

The financial statements are prepared in conformity with accounting principles generally accepted in the United States of America, and, as such, include amounts based on informed estimates and judgments of management, such as:

Determining accruals and contingencies;

Valuing options and other equity instruments;

Reviewing the realization/recoverability of deferred costs resulting from the issuance of common stock to acquire certain consulting services to be rendered in future periods.

Deferred tax valuation allowance.

Measurement of effects on business combinations.

The Company used what it believes are reasonable assumptions where applicable, established valuation techniques in making its estimates. Actual results could differ from those estimates.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Not Applicable

Item 4T. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our President and Chief Financial Officer evaluated the effectiveness of our disclosure controls and procedures as of November 30, 2010, the end of the period covered by this report. Based on that evaluation, the President and Chief Financial Officer concluded that our disclosure controls and procedures as of November 30, 2010, the end of the period covered by this report are not effective due to the existence of material weaknesses in our internal control over financial reporting, discussed below.

Management's Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting for the Company. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

Our system of internal control over financial reporting includes those policies and procedures that: pertain to the maintenance of records that, in reasonable detail,

i. We do not have an independent board of directors or audit committee to oversee our internal control over financial reporting.

ii. We have a limited number of personnel and as a result, there is limited segregation of duties amongst the Company's employees with respect to preparation and review of the Company's financial statements.

iii. We have limited ability to account for complex equity transactions, such that our controls relating to disclosure and related assertions in the financial statements in the area of non-routine transactions were not adequate.

iv. We have informal policies and procedures and we lack a formal budgeting process.

These material weaknesses may affect management's ability to effectively review and analyze elements of the financial statement closing process and prepare financial statements in accordance with generally accepted accounting principles.

Changes in Internal Control Over Financial Reporting

During the last fiscal quarter, there was no change in our internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

In October 2009, a civil action was entered against the Company by Dr. Robert Alfano, alleging that he is owed approximately $1,490,000 in consulting fees and expenses. The Company had accrued the consulting fees in conjunction with a consulting agreement. In addition, Dr. Alfano is contesting the termination of his anti-dilution rights and claims the Company owes him 132,000 shares of common stock. The Company does not believe the case has merit and has filed a motion to dismiss. The Company intends to vigorously contest these claims.

Item 1A. Risk Factors

Not Applicable

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Series A Convertible Preferred Stock Offering

During March 2010, the Company began an offering of a maximum of $10,000,000 of Series A Preferred stock at $1.00 per share. The Series A Preferred stock is convertible into shares of the Company’s common stock, par value $.01 per share, at $0.35 per share for a period of three years from the date of issuance and bears interest at 12% per annum, such interest to accrue and be paid in cash at the end of three years from the date of issuance of the Series A Preferred stock or in shares of common stock if the investor elects to convert the Series A Preferred stock. The investor will also receive warrants to acquire shares of common stock in an amount equal to 50% of the number of shares of common stock into which the Series A Preferred stock converts. The exercise price of the warrant is $1.00 per share. The Company received gross proceeds of $1,591,965 and $-0- in Series A preferred stock subscriptions during the nine and three month periods ended November 30, 2010, respectively. Proceeds from the offering will assist the Company in its current business plan.

Item 3. Defaults Upon Senior Securities

Effective April 15, 2008, the first $1,000,000 tranche of the Company’s 12% convertible promissory notes (the “Notes”) were in default. Under the terms of the Notes, in the event of default, the entire principal and unpaid accrued interest is immediately due and payable. The January 29, 2008 modification of the Notes provided two additional options to the Note holders as compensation for the delay of the secondary offering which is expected to take place prior to April 15, 2009. As of July 15, 2009, there have been no demands for repayment by the Note holders.

Effective April 15, 2009, the second tranche of the Notes in the amount of $656,500 were also in default. Under the terms of the Notes, in the event of default, the entire principal and unpaid accrued interest is immediately due and payable. As of May 19, 2010, one convertible note holder demanded repayment of principal of $50,000 with a subsequent demand for accrual interest approximating $17,588. As of June 1, 2010, both principal and interest had been satisfied. The remaining notes are in default.

Item 4. Submission of Matters to a Vote of Security Holders

Not Applicable

Item 5. Other Information

Not Applicable

Item 6. Exhibits

31.1

Certification of the President required by Rule 13a-14(a) or Rule 15d-14(a)

31.2

Certification of the Chief Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a)

Certification of the President and Chief Financial Officer required by Rule 13a-14(b) or Rule 15d-14(b) and 18 U.S.C. 1350

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	SENSIVIDA MEDICAL TECHNOLOGIES, INC.

February 22, 2011	/s/ Jose Mir
	Jose Mir
	President

February 22, 2011	/s/ Frank D. Benick
	Frank D. Benick, CPA
	Chief Financial Officer
	Principal Financial and Accounting Officer

SensiVida Medical Technologies, Inc. - FORM 10-Q/A - February 22, 2011

Attached files

SensiVida Medical Technologies, Inc. Reports