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EX-32.1 - CERTIFICATION - Oncologix Tech Inc.oncologix5312011exh321.htm
EX-32.2 - CERTIFICATION - Oncologix Tech Inc.oncologix5312011exh322.htm
EX-31.2 - CERTIFICATION - Oncologix Tech Inc.oncologix5312011exh312.htm
EX-31.1 - CERTIFICATION - Oncologix Tech Inc.oncologix5312011exh311.htm


 
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q
 
(Mark One)
 
x
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
 
 
 
For the quarterly period ended May 31, 2011.
   
o TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
   
 
For the transition period from ____________________ to ___________________.

 
Commission File Number 0-15482
 
ONCOLOGIX TECH, INC.
(Name of Small Business Issuer as Specified in Its Charter)
 
Nevada
86-1006416
(State or other jurisdiction of
(I.R.S. Employer
incorporation or organization)
Identification No.)
 
P.O. Box 8832
Grand Rapids, MI  49518-8832
(Address of principal executive offices)
 
(616) 977-9933
(Issuer’s telephone number)
 
Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past twelve 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   o   No   x
 
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   o
Accelerated Filer   o
Non-accelerated Filer   o
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   o  No   x
 
As of June 6, 2011, there were 48,405,661 shares of common stock, par value $.001 per share, outstanding.
 
Transitional Small Business Disclosure Format (Check One):   Yes    o  No   x

 



 
 

 

 
 ONCOLOGIX TECH, INC. AND SUBSIDIARIES  
TABLE OF CONTENTS
 
   
PART I. FINANCIAL INFORMATION
 
   
ITEM 1. Financial Statements
 
   
Condensed Consolidated Balance Sheets as of May 31, 2011 (Unaudited) and August 31, 2010
3
   
Condensed Consolidated Statements of Operations (Unaudited) for the three and nine month periods
     ended May 31, 2011 and 2010
4
   
Condensed Consolidated Statements of Cash Flows (Unaudited) for the nine month periods
 
     ended May 31, 2011 and 2010
5
   
Notes to Condensed Consolidated Financial Statements (Unaudited)
6
   
ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
20
   
ITEM 3. Quantitative and Qualitative Disclosure about Market Risk
26
   
ITEM 4T. Controls and Procedures
26
   
PART II. OTHER INFORMATION
 
   
ITEM 1. Legal Proceedings
27
   
ITEM 1A. Risk Factors
27
   
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds
27
   
ITEM 3. Defaults Upon Senior Securities
27
   
ITEM 4. Removed and Reserved
27
   
ITEM 5. Other Information
28
   
ITEM 6. Exhibits
28
   
Signatures
28
   
   
   

 
2

 

PART I: FINANCIAL INFORMATION
ITEM 1.  Financial Statements
ONCOLOGIX TECH, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS


   
May 31,
   
August 31,
 
   
2011
   
2010
 
             
ASSETS 
Current Assets:             
Cash and cash equivalents
  $ 3,799     $ 10,596  
Prepaid expenses and other current assets
    5,381       6,163  
                 
Total current assets
    9,180       16,759  
                 
Property and equipment (net of accumulated depreciation
               
of $21,166 and $20,211)
    1,268       1,835  
                 
Total assets    $ 10,448     $ 18,594  
                 
LIABILITIES AND STOCKHOLDERS' DEFICIT
                 
Current liabilities:                 
Convertible notes payable (net of discount of $0 and $12,425)
  $ 152,712     $ 25,000  
Convertible notes payable - related parties
    235,025       -  
Notes payable      1,848       -  
Notes payable - related parties
    90,000       50,000  
Accounts payable and other accrued expenses
    174,187       131,069  
Accrued interest payable
    33,121       24,276  
Accrued interest payable - related parties
    31,968       22,210  
                 
Total current liabilities
    718,861       252,555  
                 
Long-term liabilities:                 
Convertible notes payable
    -       127,712  
Convertible notes payable - related parties
    -       235,025  
                 
Total long-term liabilities
    -       362,737  
                 
Total liabilities
    718,861       615,292  
                 
Stockholders' Deficit:                 
Preferred stock, par value $.001 per share; 10,000,000 shares authorized
         
261,762 and 261,762 shares issued and outstanding at
               
May 31, 2011 and August 31, 2010, respectively
    262       262  
Common stock, par value $.001 per share; 200,000,000 shares authorized;
         
48,405,661 and 47,155,660 shares issued and outstanding at
               
May 31, 2011 and August 31, 2010, respectively
    48,405       47,156  
Additional paid-in capital
    57,251,247       57,177,032  
Accumulated deficit      (58,004,869 )     (57,817,700 )
Noncontrolling interest
    (3,458 )     (3,448 )
Total stockholders' deficit
    (708,413 )     (596,698 )
Total liabilities and stockholders' deficit
  $ 10,448     $ 18,594  
                 
                 
 
See accompanying notes to condensed consolidated financial statements.

 
3

 

ONCOLOGIX TECH, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED MAY 31, 2011 AND 2010
 
 
 
For the Three Months Ended
   
For the Nine Months Ended
 
 
May 31,
   
May 31,
   
May 31,
   
May 31,
 
 
2011
   
2010
   
2011
   
2010
 
                       
Revenue
$ -     $ -     $ -     $ -  
                               
Cost of Revenues
  -       -       -       -  
                               
Gross margin
  -       -       -       -  
                               
Operating expenses:
                             
General and administrative
  68,496       42,557       161,042       152,126  
Depreciation and amortization
  318       375       954       1,063  
                               
Total operating expenses
  68,814       42,932       161,996       153,189  
                               
Loss from operations
  (68,814 )     (42,932 )     (161,996 )     (153,189 )
                               
Other income (expense):
                             
Interest and finance charges
  (3,117 )     (11,158 )     (11,707 )     (55,894 )
Interest and finance charges - related parties
  (4,679 )     (4,310 )     (13,429 )     (12,027 )
Conversion expense
  -       -       -       (413,841 )
Cancellation of debt
  -       -       -       73,000  
Other income (expense)
  -       (111 )     (47 )     (664 )
                               
Total other income (expense)
  (7,796 )     (15,579 )     (25,183 )     (409,426 )
                               
Loss from continuing operations
  (76,610 )     (58,511 )     (187,179 )     (562,615 )
                               
Less loss attributable to noncontrolling interest
  (4 )     -       (10 )     -  
                               
Net loss from continuing operations
  (76,606 )     (58,511 )     (187,169 )     (562,615 )
                               
Discontinued operations:
                             
Operating loss from discontinued operations
  -       (34 )     -       (2,888 )
                               
Loss from discontinued operations
  -       (34 )     -       (2,888 )
                               
Less loss attributable to noncontrolling interest
  -       (3 )     -       (289 )
                               
Net loss from discontinued operations
  -       (31 )     -       (2,599 )
                               
                               
Net loss before income taxes
  (76,606 )     (58,542 )     (187,169 )     (565,214 )
                               
Income taxes
  -       -       -       -  
                               
Net loss
$ (76,606 )   $ (58,542 )   $ (187,169 )   $ (565,214 )
                               
Loss per common share, basic and diluted:
                             
Continuing operations
$ (0.00 )   $ (0.00 )   $ (0.00 )   $ (0.01 )
Discontinued operations
  -       (0.00 )     -       (0.00 )
                               
  $ (0.00 )   $ (0.00 )   $ (0.00 )   $ (0.01 )
Weighted average number of shares
                             
outstanding - basic and diluted
  48,405,661       46,144,148       47,915,734       45,254,566  
                                
                               

See accompanying notes to condensed consolidated financial statements.

 
4

 

ONCOLOGIX TECH, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED MAY 31 2011 AND 2010

 
   
For the Nine Months Ended
 
   
May 31,
   
May 31,
 
   
2011
   
2010
 
Operating activities:
           
Net loss
  $ (187,179 )   $ (565,214 )
Net loss from discontinued operations      -       2,599  
Net loss form continuing operations      (187,179 )     (562,615 )
                 
Adjustments to reconcile net loss to net cash used
               
  in operating activities:
               
      954       1,063  
Depreciation and amortization      464       -  
Stock based compensation expense      -       12,425  
Amortization of discount on notes payable and warrants      -       413,840  
Induced conversion expense notes payable      -       12,500  
Issuance of stock and warrants for services                 
Changes in operating assets and liabilities:
               
Prepaid expenses and other current assets       8,860       14,715  
Prepaid commissions       -       2,691  
Accounts payable and other accrued expenses        43,118       (103,133 )
Accrued interest payable     18,629       24,135  
Net operating cash flows - continuing operations
    (115,154 )     (184,379 )
                 
Net operating cash flows - discontinued operations
    -       (2,219 )
                 
Net cash used in operating activities
    (115,154 )     (186,598 )
                 
Investing activities:
               
Purchase of property and equipment
    (387 )     (568 )
                 
Net investing cash flows - continuing operations
    (387 )     (568 )
                 
Net investing cash flows - discontinued operations
    -       2,150  
                 
Net cash used in investing activities
    (387 )     1,582  
                 
Financing activities:
               
Proceeds from issuance of convertible notes
               
payable - related parties      -       50,000  
Proceeds from issuance of notes payable - related parties
    60,000       25,000  
Proceeds from conversion of units
    -       6,820  
Proceeds from the issuance of common stock
    75,000       150,000  
Repayment of notes payable
    (6,230 )     (29,821 )
Repayment of notes payable - related parties
    (20,026 )     -  
                 
Net cash provided by financing activities - continuing operations
    108,744       201,999  
                 
Net increase (decrease) in cash and cash equivalents
    (6,797 )     16,983  
                 
Cash and cash equivalents, beginning of period
    10,596       743  
                 
Cash and cash equivalents, end of period
  $ 3,799     $ 17,726  
                 
                 

See accompanying notes to condensed consolidated financial statements.

 
5

 

ONCOLOGIX TECH, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 — DESCRIPTION OF THE COMPANY

This report should be read in conjunction with our Annual report on Form 10-K for the fiscal year ended August 31, 2010.

We were originally formed in 1995 as "Wavetech, Inc." a New Jersey corporation and changed our corporate domicile to Nevada in December 1997, by merging into a Nevada corporation named, "Interpretel International, Inc." We subsequently changed our name, first to "Wavetech International, Inc." and then, in 2000, to "BestNet Communications Corp." Our business at the time was to provide worldwide long distance telephone communication and teleconferencing services to commercial and residential consumers through the internet. That business was never profitable and we were able to continue it only by repeated equity and debt financings. Accordingly, during December 2006, we determined to dispose of that business and sold it during February 2007.

We entered the medical device business at the end of July 2006 through the acquisition of JDA Medical Technologies, Inc. ("JDA"), a development stage company, which was merged into our wholly owned subsidiary, Oncologix Corporation. On January 22, 2007, we changed our name to Oncologix Tech, Inc., to reflect this new business. During June 2007, we moved our principal offices from Grand Rapids, Michigan, to our offices at 3725 Lawrenceville-Suwanee Road, Suite B-4, Suwanee, Georgia, 30024, telephone (770) 831-8818.  At that address, our business was the development of a medical device for brachytherapy (radiation therapy), called the “Oncosphere” (or “Oncosphere System”), for the advanced medical treatment of soft tissue cancers. It is a radioactive micro-particle designed to deliver therapeutic radiation directly to a tumor site by introducing the micro-particles into the artery that feeds the tumor tissue. Its first application is expected to be the treatment of liver cancer. Due to a lack of funding, we suspended these activities on December 31, 2007, whereupon we closed the offices in Suwanee Georgia.

Our new mailing address is P.O. Box 8832, Grand Rapids, MI  49518-8832, telephone (616) 977-9933.

During May 2008, we determined to dispose of most of the assets of the Oncosphere project.  This information is being presented as discontinued operations for all periods shown.

In February 2009, we entered into a Technology Agreement with Institut für Umwelttechnologien GmbH, a German Company (“IUT”) whereunder the parties have agreed that:

 
(a)
The Company has granted an exclusive license to a new IUT subsidiary, called “IUTM”, to develop and manufacture products based on the Company’s proprietary information. This proprietary information is not based on the technology that had been subject to the Master License Agreement with the University of Maryland – Baltimore. The Company has also transferred to IUTM a number of items of laboratory equipment and inventory useful in connection with the licensed information.
 
(b)
The Company retains rights to market products based on such information as well as first consideration for marketing rights for other possible IUTM products.
 
(c)
In consideration of the license, the Company has received a 10% equity interest in IUTM, which is organized as a private German limited liability company and IUT has assumed approximately $82,000 of the Company’s indebtedness.
 
(d)
The Company’s marketing rights have been transferred to its subsidiary, Oncologix Corporation and have issued IUTM 10% of the equity ownership of that subsidiary.

In addition, on April 7, 2009, the Company entered into a Termination Agreement with the University of Maryland – Baltimore, The Master License Agreement between the Company and the University has been formally terminated and each party has released the other from all liabilities arising under the Master License Agreement.

We have been advised that IUTM is continuing the development of a brachytherapy device generally as described above but based on proprietary technology not developed by the University of Maryland. During recent discussions with IUTM management, the prior understandings were reaffirmed. It is now our expectation that we will receive information on at least two potential product lines under consideration and/or development by IUTM. Upon receipt we plan to determine the extent to which we will be able to market them and to finance a marketing organization. While our Management is optimistic as to the outcome of those discussions and future success in financing, it is not possible to predict the probabilities of success with any degree of certainty. It was determined at August 31, 2010 the value of the investment in IUTM was impaired.  Accordingly, we recorded an impairment loss in the amount of $3,186.
 
 
 
6

 
 
 
On September 23, 2010, the Company signed a Memorandum of Understanding with Institut für Umwelttechnologien GmbH and IUT Medical GMBH confirming certain understandings among the parties with respect to their future relationships and business activities as originally contemplated in their Technology Agreement of February 27, 2009, which was reaffirmed.

On May 19, 2011, the Company effected a one-for-four reverse stock split.  All share and per share information have been restated to retroactively show the effect of this stock split.  The reverse split was previously approved by a majority of the Company’s shareholders on March 24, 2011.


NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

CONSOLIDATION

The consolidated financial statements for the three and nine months ended May 31, 2011 and 2010 include the accounts of Oncologix Tech, Inc. and its wholly owned subsidiaries, Oncologix Corporation (90% Owned), Interpretel (Canada) Inc. and Interpretel Inc., collectively the Company.  Oncologix Corporation is a Nevada corporation.  Interpretel Inc. is an inactive Arizona corporation.  Interpretel (Canada) Inc. is an inactive Canadian corporation.  All significant intercompany accounts and transactions have been eliminated in consolidation.

USE OF ESTIMATES

The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reportable amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.

REVENUE RECOGNITION

Revenue is recognized by the Company when all the following criteria are met:  persuasive evidence of an arrangement exists; delivery has occurred; the seller’s price to the buyer is fixed and determinable; and collectability is reasonably assured.  Currently the company does not have products to sell.

CASH AND CASH EQUIVALENTS

The Company considers all highly liquid instruments, with an initial maturity of three (3) months or less to be cash equivalents.

PROPERTY AND EQUIPMENT

Property and equipment is recorded at cost. Depreciation is provided for on the straight-line method over the estimated useful lives of the related assets as follows:

Furniture and fixtures
5 to 7 years
Computer equipment
5 years
Equipment
5 to 7 years
Software
3 to 5 years

The cost of maintenance and repairs is charged to expense in the period incurred. Expenditures that increase the useful lives of assets are capitalized and depreciated over the remaining useful lives of the assets.  When items are retired or disposed of, the cost and accumulated depreciation are removed from the accounts and any gain or loss is included in income.
 
 
 
7

 
 
 
LONG-LIVED ASSETS
 
     ASC 360 – Property, Plant and Equipment addresses financial accounting and reporting for the impairment or disposal of long-lived assets.  The Company periodically evaluates whether events and circumstances have occurred that may warrant revision of the estimated useful life of property and equipment or whether the remaining balance of property and equipment, or other long-lived assets, should be evaluated for possible impairment. Instances that may lead to an impairment include: (i) a significant decrease in the market price of a long-lived asset group; (ii) a significant adverse change in the extent or manner in which a long-lived asset or asset group is being used or in its physical condition; (iii) a significant adverse change in legal factors or in the business climate that could affect the value of a long-lived asset or asset group, including an adverse action or assessment by a regulatory agency; (iv) an accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of a long-lived asset or asset group; (v) a current-period operating or cash flow loss combined with a history of operating or cash flow losses or a projection or forecast that demonstrates continuing losses associated with the use of a long-lived asset or asset group; or (vi) a current expectation that, more likely than not, a long-lived asset or asset group will be sold or otherwise disposed of significantly before the end of its previously estimated useful life.
 
     An estimate of the related undiscounted cash flows, excluding interest, over the remaining life of the property and equipment and long-lived assets is used in assessing recoverability. Impairment loss is measured by the amount which the carrying amount of the asset(s) exceeds the fair value of the asset(s). The Company primarily employs two methodologies for determining the fair value of a long-lived asset: (i) the amount at which the asset could be bought or sold in a current transaction between willing parties or (ii) the present value of estimated expected future cash flows grouped at the lowest level for which there are identifiable independent cash flows.

NONCONTROLLING INTEREST

ASC 810 - Consolidation addresses the accounting and reporting standards for ownership interest in subsidiaries held by parties other than the parent, the amount of consolidated net income attributable to the parent and to the noncontrolling interest, changes in a parent’s ownership interest, and the valuation of retained noncontrolling equity investments when a subsidiary is deconsolidated. During fiscal 2009, the Company issued a ten percent interest in its subsidiary, Oncologix Corporation, to IUTM as required in a technology agreement.  The Company valued this interest at $212.  Through May 31, 2011, the Company has allocated $3,670 losses to its noncontrolling interest.  The Company has adopted ASC 810 to account for this noncontrolling interest.

ADVERTISING COSTS

Advertising costs included with selling, general and administrative expenses in the accompanying consolidated statements of operations were nil for the three and six months ended May 31, 2011 and 2010.  Such costs are expensed when incurred.

INCOME TAXES

The Company adopted the provisions of FASB ASC 740 -Income Taxes provides detailed guidance for the financial statement recognition, measurement and disclosure of uncertain tax positions recognized in the financial statements.  Income taxes are determined using the asset and liability method. This method gives consideration to the future tax consequences associated with temporary differences between the carrying amounts of assets and liabilities for financial statement purposes and the amounts used for income tax purposes.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The estimated fair values for financial instruments are determined at discrete points in time based on relevant market information. These estimates involve uncertainties and cannot be determined with precision. The carrying amounts of accounts payable, accrued expenses, and notes payable approximate fair value.
 
 
 
8

 
 

STOCK-BASED COMPENSATION

The Company has a stock-based compensation plan, which is described more fully in Note 5.  The Company accounts for stock-based compensation in accordance with ASC 718.  Under the fair value recognition provisions of this statement, share-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as expense over the vesting period.  The Company estimates the fair value of stock options granted using the Black-Scholes option valuation model.  The fair value of all awards is amortized on a straight-line basis over the vesting periods.  The expected term of awards granted represent the period of time they are expected to be outstanding.  The Company determines the expected term based on historical experience with similar awards, giving consideration to the contractual terms and vesting schedules.  The Company estimates the expected volatility of its common stock at the date of grant based on the historical volatility of its common stock.  The risk-free interest rate is based on the U.S. treasury security rate estimated for the expected life of the options at the date of grant.  If actual results differ significantly from estimates, stock-based compensation could be impacted.

CONVERTIBLE DEBT

Interest on convertible debt is calculated using the simple interest method.  The company recognizes a beneficial conversion feature to the extent the conversion price is less than the closing stock price on the issuance of the convertible notes.  The Company also follows ASC 470-50 and ASC 470-20 regarding changes in the terms of the convertible notes and the induced conversion of its convertible debt.


 
9

 


NET LOSS PER COMMON SHARE

On May 19, 2011, the Company effected a one-for-four reverse stock split.  All share and per share information have been restated to retroactively show the effect of this stock split.  The reverse split was previously approved by a majority of the Company’s shareholders on March 24, 2011.

Basic earnings (loss) per share is calculated under the provisions of ASC 260 which provides for calculation of “basic” and “diluted” earnings per share.  Basic earnings per share includes no dilution and is calculated by dividing income (loss) available to common shareholders by the weighted average number of common shares outstanding for the period.  Diluted earnings (loss) per share is calculated based on the weighted average number of common shares outstanding during the period plus the dilutive effect of common stock purchase warrants and stock options using the treasury stock method and the dilutive effects of convertible notes payable and convertible preferred stock using the if-converted method.  On Basic and diluted earnings per share for the three and six months ended May 31, 2011 and 2010 are as follows:
   
For the Three Months Ended
   
For the Nine Month Ended
 
   
May 31,
   
May 31,
   
May 31,
   
May 31,
 
   
2011
   
2010
   
2011
   
2010
 
                         
Net loss attributable to common shareholders
                       
Continuing operations
  $ (76,606 )   $ (58,511 )   $ (187,169 )   $ (562,615 )
Discontinued operations
    -       (31 )     -       (2,599 )
                                 
    $ (76,606 )   $ (58,542 )   $ (187,169 )   $ (565,214 )
                                 
Weighted average shares outstanding
    48,405,661       46,144,148       47,915,734       45,254,566  
                                 
Loss per common share, basic and diluted:
                               
Continuing operations
  $ (0.00 )   $ (0.00 )   $ (0.00 )   $ (0.01 )
Discontinued operations
  $ -       (0.00 )   $ -     $ (0.00 )
                                 
    $ (0.00 )   $ (0.00 )   $ (0.00 )   $ (0.01 )
                                 
                                 
                                 
Due to the net losses during the three and nine months ended May 31, 2011 and 2010, basic and diluted loss per share was the same, as the effect of potentially dilutive securities would have been anti-dilutive.  Shares attributable to convertible notes, stock options, preferred stock and warrants not included the diluted loss per share calculation.  As of May 31, 2011 and 2010 shares attributable to convertible notes were 525,355 and 525,355, respectively.  As of May 31, 2011 and 2010 shares attributable to preferred stock were 130,882 and 130,882, respectively. As of May 31, 2011 and 2010 shares attributable to stock options were 297,085 and 733,335, respectively. As of May 31, 2011 and 2010, there were no shares attributable to warrants.

SEGMENT INFORMATION

ASC 280-10 defines operating segments as components of a company about which separate financial information is available that is evaluated regularly by the chief decision maker in deciding how to allocate resources and in assessing performance. The Company currently has one operating segments: medical device.  Our medical device segment is presented as discontinued operations for all periods presented.

NOTE 3 — GOING CONCERN

The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. The Company has incurred losses from operations over the past several years and anticipates additional losses in fiscal 2011 and prior to achieving breakeven.

As of the date of this report, we will need approximately $250,000 to fund operations for the next twelve (12) months, without regard to repaying any short-term convertible or non-convertible notes payable as well as funding either of the joint ventures described in Note 9.  This funding will allow us to maintain basic operations and to bring our public filings current and keep them current.  Our Company has never been profitable and we have had to rely on debt and equity financings to fund operations.  Significant delays in development could affect the ability to obtain future debt and equity funding which may affect our ability to continue as a going concern.
 
 
 
10

 

On May 19, 2011, the Company effected a 1 for 4 reverse stock split.  This reverse split will give the Company the ability to raise additional operating funds for both our potential joint ventures, and to fund further ongoing operations.  While there is no guarantee that funds will be available, we believe this reverse split will allow us to consummate our joint ventures and move towards a positive cash flow position.

NOTE 4 – DISCONTINUED OPERATIONS

We entered the medical device business at the end of July 2006 through the acquisition of JDA Medical Technologies, Inc. ("JDA"), a development stage company, which was merged into our wholly owned subsidiary, Oncologix Corporation. On January 22, 2007, we changed our name to Oncologix Tech, Inc., to reflect this new business. During June 2007, we moved our principal offices from Grand Rapids, Michigan, to our offices at 3725 Lawrenceville-Suwanee Road, Suite B-4, Suwanee, Georgia, 30024, telephone (770) 831-8818.  At that address, our business was the development of a medical device for brachytherapy (radiation therapy), called the “Oncosphere” (or “Oncosphere System”), for the advanced medical treatment of soft tissue cancers. It is a radioactive micro-particle designed to deliver therapeutic radiation directly to a tumor site by introducing the micro-particles into the artery that feeds the tumor tissue. Its first application is expected to be the treatment of liver cancer. Due to a lack of funding, we had to suspend these activities on December 31, 2007, whereupon we closed the offices in Suwanee Georgia.  During fiscal 2010, we disposed of the remaining assets of our discontinued operations.  Any future expenses will be treated as expenses from continuing operations as we move toward marketing products with IUT and IUTM.

The expenses shown below are part of the discontinued operations of our Oncosphere business.
 
    For the Three Months Ended     For the Nine Months Ended  
    May 31,     May 31,     May 31,     May 31,  
    2011     2010     2011     2011  
                         
Operating expenses:                         
General and administrative    $ -     $ 34     $ -     $ 219  
Depreciation and amortization      -       -       -       2,669  
Total operating expenses      -       34       -       2,888  
Loss from operations      -       (34 ) -             (2,888
Other income (expense)                                 
Total other income (expense)      -       -       -       -  
Loss from discontinued operations      -       (34 )     -       (2,888 )
Gain on disposal of discontinued operations      -       -       -       -  
Loss from discontinued operations      -       (34 )     -       (2,888 )
Less loss attributable to noncontrolling interest      -       (3 )     -       (289 )
Net loss from discontinued operations    $ -     $ (31 )   $ -     $ (2,599 )
                                 
                                 
 
 
 
 
11

 


NOTE 5 — STOCKHOLDERS EQUITY
 
PREFERRED STOCK:

On May 19, 2011, the Company effected a one-for-four reverse stock split.  All share and per share information have been restated to retroactively show the effect of this stock split.  The reverse split was previously approved by a majority of the Company’s shareholders on March 24, 2011.

The Company is authorized to issue up to 10,000,000 shares of preferred stock, in one or more series, and to determine the price, rights, preferences and privileges of the shares of each such series without any further vote or action by the stockholders. The rights of the holders of common stock will be subject to, and may be adversely affected by, the rights of the holders of any shares of preferred stock that may be issued in the future.  In January 2003, our Board of Directors authorized up to 4,500,000 shares of Series A Convertible Preferred Stock.  Each share of Series A Convertible Preferred stock has a par value of $0.001 and is convertible into one-half share of common stock in upon a cash payment by the holder to the Company of $0.40 per common share.  The Series A Convertible Preferred Stock is entitled to receive, in preference to the common stock, of noncumulative dividends, if declared by the Board of Directors, and a claim on the Company's assets upon any liquidation of the Company senior to the common stock.  These preferred shares are not entitled to voting rights. There are presently outstanding 261,762 shares of Series A Preferred Stock.

On March 30, 2003, the Company completed the private placement of Units pursuant to the terms of a Unit Purchase Agreement (the “Units”) with accredited investors.  Each Unit consists of the following underlying securities:  (i) three shares of the Company’s common stock;  (ii) one share of Series A Convertible Preferred Stock, par value $.001 per share;  and (iii) one three-year warrant to purchase one share of common stock at a per share price of $0.30.  The warrants expired on March 31, 2006.  Each share of Series A Convertible Preferred Stock is convertible into one half share of the Company’s common stock in exchange for $0.40 per common share ($.20 for each Series A Convertible Preferred share converted).  The securities underlying the Units are not to be separately tradable or transferable apart from the Units until such time as determined by the Company’s Board of Directors.  A total of 4,032,743 Units were issued.  As of May 31, 2010 and August 31, 2010, there were 261,762 and 261,762 Units outstanding that had not been separated, respectively.  These units are presented as their underlying securities on our balance sheet and consist of 261,762 shares of Series A Preferred Stock and 196,322 shares of common stock which is included in the issued and outstanding shares.

Below is a table detailing the outstanding Series A Convertible Preferred Stock shares outstanding during the last two fiscal years:

 
         
Number of
         
Weighted Avg.
 
   
Preferreds
   
Common Shares
   
Proceeds if
   
Per Common Sh.
 
   
Outstanding
   
Convertible
   
Converted
   
Exercise Price
 
                                 
Outstanding, August 31, 2009
    295,862       147,931     $ 59,172     $ 0.40  
                                 
Expired/Retired
    -       -       -     $ -  
Converted
    (34,100 )     (17,050 )     (6,820 )   $ 0.40  
Issued
    -       -       -     $ -  
Outstanding, August 31, 2010
    261,762       130,881     $ 52,352     $ 0.40  
                                 
Expired/Retired
    -       -       -     $ -  
Converted
    -       -       -     $ -  
Issued
    -       -       -     $ -  
Outstanding, May 31, 2011
    261,762       130,881     $ 52,352     $ 0.40  
                                 
                                 
Our Board of Directors authorized the separation of the Units into their component parts in July 2004, February 2005, April 2008 and March 2010.  The table below describes the proceeds received for the conversion of preferred shares into common stock:
 
 
 
12

 
 

Date of Conversion
Proceeds from Conversion
Further Description and Remarks
     
July-August 2004
$487,523
During July and August 2004, holders of 2,437,614 Units contributed $487,523 to convert 2,437,614 shares of Series A. Convertible Preferred stock into 4,875,228 (pre-split) shares of common stock.
February 2005
$230,393
During February 2005, holders of 1,151,967 Units contributed $230,393 to convert 1,151,967 shares of Series A. Convertible Preferred stock into 2,303,934 (pre-split) shares of common stock.
April/June 2008
$29,460
During April and June 2008, holders of 147,300 Units contributed $29,460 to convert 147,300 shares of Series A. Convertible Preferred stock into 294,600 (pre-split) shares of common stock.
March/April
$6,820
During March and April 2010, holders of 34,100 Units contributed $6,820 to convert 34,100 shares of Series A. Convertible Preferred stock into 68,200 (pre-split) shares of common stock.
 
 
SUBSCRIBED COMMON STOCK:

As of May 31, 2011 and August 31, 2010, there were no shares of subscribed stock issuable.

COMMON STOCK:

On May 19, 2011, the Company effected a one-for-four reverse stock split.  All share and per share information have been restated to retroactively show the effect of this stock split.  The reverse split was previously approved by a majority of the Company’s shareholders on March 24, 2011.

Under the terms of our acquisition of JDA, we issued 43,000,000 (pre-split) shares of our common stock to the previous owners of JDA.  Of these shares, 29,843,160 (pre-split) were placed into escrow pending the achievement of certain development and operating goals.  These escrowed shares were not included in the calculation of the purchase price of JDA and will be included in that calculation if and to the extent that the applicable contingencies are resolved and the shares are released from escrow.  The development and operating goals that relate to the release of these shares, and the number of shares to be released at the time the goal is achieved are as follows:  (i) 7,460,790 (pre-split) shares upon the completion of the “Development Phase”, as defined in the Merger Agreement between the Company and JDA (already released as stated below); (ii) 9,325,986 (pre-split) shares upon the completion of the “Pre-Clinical Testing Phase as defined in the merger agreement; and (iii) 13,056,382 (pre-split) shares upon the completion of the Clinical Approval Phase. On September 10, 2009, the remaining 22,382,368 (pre-split) shares in escrow were released back to the Company and subsequently retired.  Below is a listing of recent stock sales:

Date of Sale
Proceeds from Sale
Further Description and Remarks
     
September 30, 2009
$25,000
On September 30, 2009, the Company sold 1,250,000 (pre-split) shares of common stock to a non-related accredited investor at $0.02 per share.
November 3, 2009
$25,000
On November 3, 2009, the Company sold 1,250,000 (pre-split) shares of common stock to a non-related accredited investor at $0.02 per share.
February 1, 2010
$25,000
On February 1, 2010, the Company sold 1,000,000 (pre-split) shares of common stock to a non-related accredited investor at $0.025 per share.
March 22, 2010
$2,660
On March 22, 2010, Holders of 13,300 Units contributed $2,660 to convert 13,300 shares of preferred stock into 26,600 (pre-split) shares of common stock.
April 8, 2010
$4,160
On April 8, 2010, Holders of 20,800 Units contributed $4,160 to convert 20,800 shares of preferred stock into 41,600 (pre-split) shares of common stock.
April 16, 2010
$50,000
On April 16, 2010, the Company sold 1,666,667 (pre-split) shares of common stock to a non-related accredited investor at $0.03 per share.
May 13, 2010
$25,000
On May 13, 2010, the Company sold 833,333 (pre-split) shares of common stock to a non-related accredited investor at $0.03 per share.
June 17, 2010
$25,000
On June 17, 2010, the Company sold 833,333 (pre-split) shares of common stock to a non-related accredited investor at $0.03 per share.
August 11, 2010
$25,000
On August 11, 2010, the Company sold 1,666,667 (pre-split) shares of common stock to a non-related accredited investor at $0.015 per share.
October 11, 2010
$25,000
On October 11, 2010, the Company sold 1,666,667 (pre-split) shares of common stock to a non-related accredited investor at $0.015 per share.
January 18, 2011
$50,000
On January 18, 2011, the Company sold 3,333,333 (pre-split) shares of common stock to a non-related accredited investor at $0.015 per share.
 
 

 
 
13

 
 
 
 
NON-CONTROLLING INTEREST

On February 27, 2009, in connection with the Technology Agreement we entered into with Institut für Umwelttechnologien GmbH, a German Company (“IUT”) whereunder the parties have agreed that the Company’s marketing rights have been transferred to its subsidiary, Oncologix Corporation and have issued IUTM 10% of the equity ownership of that subsidiary.  As of February 27, 2009, the value of the noncontrolling interest was $212.  It was determined at August 31, 2010 the value of the investment in IUTM was impaired.  Accordingly, we recorded an impairment loss in the amount of $3,186 for the year ended August 31, 2010.  As of May 31, 2011, $3,670 cumulative net loss was attributable to the noncontrolling interest.

On September 23, 2010, the Company signed a Memorandum of Understanding with Institut für Umwelttechnologien GmbH and IUT Medical GMBH confirming certain understandings among the parties with respect to their future relationships and business activities as originally contemplated in their Technology Agreement of February 27, 2009, which was reaffirmed.

WARRANTS:

At May 31, 2011 and August 31, 2010, the Company did not have any outstanding warrants.

STOCK OPTIONS:

On May 19, 2011, the Company effected a one-for-four reverse stock split.  All share and per share information have been restated to retroactively show the effect of this stock split.  The reverse split was previously approved by a majority of the Company’s shareholders on March 24, 2011.

The Company is authorized to issue up to 4,600,000 shares of common stock under its 1997 Stock Incentive Plan. Shares may be issued as incentive stock options, non-statutory stock options, deferred shares or restricted shares. Options are granted at the fair market value of the common stock on the date of the grant and have terms of up to ten years.

The Company is authorized to issue up to 7,500,000 shares of common stock under its 2000 Stock Incentive Plan. Shares may be issued as incentive stock options, non-statutory stock options, deferred shares or restricted shares. Options are granted at the fair market value of the common stock on the date of the grant and have terms of up to ten years.  The 2000 Stock Incentive Plan also provides for an annual grant of options to members of our Board of Directors.  For fiscal years ended August 31, 2010, 2009 and 2008, our Board of Directors have elected to waive the grant of these annual options.

ASC 718 requires the estimation of forfeitures when recognizing compensation expense and that this estimate of forfeitures be adjusted over the requisite service period should actual forfeitures differ from such estimates. Changes in estimated forfeitures are recognized through a cumulative adjustment, which is recognized in the period of change and which impacts the amount of unamortized compensation expense to be recognized in future periods.  On January 7, 2011, the Company’s Board of Directors granted 53,750 options to current board members in exchange for the retirement of 268,750 stock options.  The Company recorded $465 in stock compensation expense as a result of this transaction.
 
 
 
14

 
 

 
ASC 718 requires that modification of the terms or conditions of an equity award is to be treated as an exchange of the original award for a new award.  This event is accounted for as if the entity repurchases the original instrument by issuing a new instrument of equal or greater value, incurring additional compensation cost for any incremental value.

During the three months ended May 31, 2011 and 2010, we granted nil options from the stock incentive plans described above, respectively. During the nine months ended May 31, 2011 and 2010, we granted 53,750 and zero options from the stock incentive plans described above, respectively.  During the three months ended May 31, 2011 and 2010, zero options were exercised, respectively; nil options were forfeited, respectively; and 43,750 and 13,965 options were expired, respectively. During the nine months ended May 31, 2011 and 2010, zero options were exercised, respectively; 268,750 and zero options were forfeited, respectively; and 221,250 and 6,250 options were expired, respectively.  During the three months ended May 31, 2011 and 2010, $0 and $0 was expensed as stock based compensation, respectively. During the nine months ended May 31, 2011 and 2010, $465 and $0 was expensed as stock based compensation, respectively. Additional information relative to our employee options outstanding at May 31, 2011 is summarized as follows:
 
               
Weighted Average
 
   
Number of
   
Option Price
   
Exercise Price
 
   
Options Granted
   
Per Share
   
Per Share
 
                   
Outstanding, August 31, 2009
    753,550     $ 0.66 - $29.50     $ 2.20  
Granted
    -       -       -  
Exercised
    -       -       -  
Cancelled
    (20,215 )   $ 1.20 - $29.50       8.85  
Outstanding, August 31, 2010
    733,335     $ 0.66 - $5.32     $ 2.02  
Granted
    53,750     $ 0.12       0.12  
Exercised
    -       -       -  
Cancelled
    (490,000 )   $ 0.17 - $1.33       2.16  
Outstanding, May 31, 2011
    297,085     $ 0.17 - $1.29     $ 1.43  
                         
 
The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the difference between our closing stock price on the last trading day of the second quarter of fiscal 2011 and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on May 31, 2011.
   
Options
   
Options
 
   
Outstanding
   
Exercisable
 
                 
Number of options
    297,085       297,085  
Aggregate intrinsic value of options
  $ -     $ -  
Weighted average remaining contractual term (years)
    3.07       3.07  
Weighted average exercise price
  $ 1.43     $ 1.43  
                 
 
Expected volatility is based primarily on historical volatility. Historical volatility is computed using weekly average pricing observations for an applicable historic period.  We believe this method produces an estimate that is representative of our expectations of the future volatility over the expected term of our options. We currently have no reason to believe future volatility over the expected life of these options is likely to differ materially from historical volatility. The weighted-average expected life is based upon share option exercises, pre and post vesting terminations and share option term expirations.  The risk-free interest rate is based on the U.S. treasury security rate estimated for the expected life of the options at the date of grant.
 
 
 
15

 
 

 
We have 6,362,418 and 4,525,000 shares of common stock available for future issuance under our 2000 Stock Incentive Plan and 1997 Stock Incentive Plan, respectively, as of May 31, 2011.   Under the 2000 Stock Incentive Plan and 1997 Stock Incentive Plan, the price of the granted common stock options are equal to the fair market value of such shares on the date of grant.  Both of these plans have been approved by our shareholders.

During the nine months ended May 31, 2011 we granted 53,750 options to employees and members’ of our Board of Directors.  During the nine months ended May 31, 2010, we did not grant any options to employees or members’ of our Board of Directors.

NOTE 6 — NOTES PAYABLE

CONVERTIBLE NOTES PAYABLE:

On May 19, 2011, the Company effected a one-for-four reverse stock split.  All share and per share information have been restated to retroactively show the effect of this stock split.  The reverse split was previously approved by a majority of the Company’s shareholders on March 24, 2011.

Convertible notes payable consist of the following as of May 31, 2011 and August 31, 2010:
 
    May 31,     August 31,  
    2011     2010  
             
 12.0% convertible note due March 31, 2012   $ 2,712     $ 2,712  
 8.0% convertible notes due March 31, 2012     125,000       125,000  
 6% convertible note due July 23, 2011     25,000       25,000  
                 
 Total unsecured convertible notes payable     152,712       152,712  
 Less: Current portion     (152,712 )     (25,000 )
 Long-term portion   $ -     $ 127,712  
 
During May and June 2007, we issued nine Convertible Promissory Notes in an aggregate principal amount of $700,000.  These Convertible Promissory Notes are due May 7, 2008, bear interest at the rate of 8% per annum and are convertible into our common stock at a rate of $1.00.  Eight of these notes were converted into common stock in fiscal 2009.  The remaining Convertible Promissory Note, in the principal amount of $125,000, was extended on January 28, 2010 to March 31, 2012.  In conjunction with the extension, the conversion price was reduced to $0.60.

On September 7, 2007, the Company issued to Stanley Schloz, a former member of the Company’s Board of Directors, a convertible promissory note for bridge financing in the principal amount of $150,000.  This note bears interest at a rate of 12% and is payable monthly.  Prior to fiscal 2009, $100,000 in principal was repaid and $50,000 in principal was converted into common stock.  Mr. Schloz elected to extend $2,712 in accrued interest until March 31, 2012 which is convertible at $0.60 per share.

On December 29, 2009, the Company issued a 60-Day Convertible promissory note in the principal amount of $25,000 to a non-related accredited investor who was not related to the Company.   This convertible note bears interest at 6% and is convertible into the Company’s common stock at $0.08 per share.  The Company recognized a beneficial conversion feature in the amount of $12,500 in connection with the issuance of this note.  This note has been extended several times and is currently due July 23, 2011.


 
16

 


CONVERTIBLE RELATED PARTY NOTES PAYABLE:
 
    May 31,     August 31,  
    2011     2010  
             
6% convertible note due March 31, 2012 (1)   $ 235,025     $ 235,025  
Outstanding unsecured related party convertible notes payable   $ 235,025     $ 235,025  
 
(1)  Note Due 3/31/12 payable to former CEO who resigned 4/1/09.

On April 1, 2009, we issued to Ms. Lindstrom, our former Chief Executive Officer and current member of our subsidiary’s Board of Directors, a convertible promissory note in lieu of payment of $235,025 in accrued salary owed to Ms. Lindstrom.  This note accrues interest at a rate of 6% per annum and is due on March 31, 2012.  The note is convertible into shares of the Company’s common stock at a rate of $0.20 per common share.  Ms. Lindstrom signed an abstention to convert this note until June 01, 2011.  There was no beneficial conversion feature recognized upon the issuance of this note.

RELATED PARTY NOTES PAYABLE:

On September 11, 2009, the Company issued a 90-Day promissory note to Anthony Silverman, its President and CEO, in the principal amount of $25,000.  The note bears an interest rate of 6%.  This note has been subsequently extended to July 6, 2011.  On February 1, 2011, the Company paid accrued interest of $2,084 to Mr. Silverman.

On February 22, 2010, the Company issued a 60-Day promissory note to Anthony Silverman, its President and CEO, in the principal amount of $25,000.  The note bears an interest rate of 6%.  This note has been subsequently extended to July 17, 2011.  On February 1, 2011, the Company paid accrued interest of $1,410 to Mr. Silverman.

On December 16, 2010, the Company issued a 30-Day promissory note to Anthony Silverman, its President and CEO, in the principal amount of $20,000.  The note bears an interest rate of 6%.  This note has been subsequently extended to July 14, 2011.  On February 1, 2011, the Company paid accrued interest of $151 to Mr. Silverman.

On January 20, 2011, the Company issued a 30-Day promissory note to Anthony Silverman, its President and CEO, in the principal amount of $20,000.  The note bears an interest rate of 6%.  This note was repaid on February 19, 2011 along with $26 in accrued interest.

On April 26, 2011, the Company issued a 30-Day promissory note to Anthony Silverman, its President and CEO, in the principal amount of $10,000.  The note bears an interest rate of 6%.  This note has been subsequently extended to July 25, 2011.

On May 26, 2011, the Company issued a 60-Day promissory note to Anthony Silverman, its President and CEO, in the principal amount of $10,000.  The note bears an interest rate of 6%.  This note is due on July 25, 2011.
 
    May 31,     August 31,  
    2011     2010  
             
 6% note payable due July 6, 2011 (1)   $ 25,000     $ 25,000  
 6% note payable due July 17, 2011 (1)     25,000       25,000  
 6% note payable due July 14, 2011 (1)     20,000       -  
 6% note payable due July 25, 2011 (1)     10,000       -  
 6% note payable due July 25, 2011 (1)     10,000       -  
 Outstanding unsecured related party convertible notes payable   $ 90,000     $ 50,000  
                 
 
(1)  Note payable to Anthony Silverman, the Company's President and CEO.

 
17

 


OTHER NOTES PAYABLE:

On October 31, 2010, the Company entered into a note payable agreement to finance $8,078 of directors and officer’s insurance premiums.  The note bears interest at a rate of 9.99% per annum and is due in nine monthly installments of $935, including principal and interest, beginning on November 30, 2010.
 
    May 31,     August 31,  
    2011     2010  
             
 9.99% note payable due July 31, 2011   $ 1,848     $ -  
 Outstanding unsecured related party convertible notes payable   $ 1,848     $ -  
 

NOTE 7 — COMMITMENTS AND CONTINGENCIES

CONSULTING CONTRACT

In September 2009, the company entered into a six month consulting agreement with its Chief Financial Officer, Michael Kramarz.  Mr. Kramarz is to perform all his regular duties he had previously performed as Chief Financial Officer including the preparation of the Company’s financial statements, SEC Filings, maintenance of corporate records, etc.  Mr. Kramarz is to be compensated $70 per hour worked and will turn in weekly time sheets for approval.  The Company entered into additional six month consulting contracts with Mr. Kramarz on March 1, 2010, September 1, 2010 and March 1, 2011 at an hourly rate of $70. During the nine months ended May 31, 2011 and 2010, we incurred an expense of $62,440 and $52,500 respectively, under these agreements.

NOTE 8 — RELATED PARTY TRANSACTIONS

FINANCING WITH RELATED PARTIES:

During fiscal 2011 and 2010, the Company entered into financing agreements with related parties of the Company.   Please see Note 6 for further descriptions of these transactions.

NOTE 9 – JOINT VENTURES

Institut für Umwelttechnologien GmbH (IUT)

In February 2009, we entered into a Technology Agreement with Institut für Umwelttechnologien GmbH, a German Company (“IUT”) whereunder the parties have agreed that:

 
(a)
The Company has granted an exclusive license to a new IUT subsidiary, called “IUTM”, to develop and manufacture products based on the Company’s proprietary information. This proprietary information is not based on the technology that had been subject to the Master License Agreement with the University of Maryland – Baltimore. The Company has also transferred to IUTM a number of items of laboratory equipment and inventory useful in connection with the licensed information.
 
(b)
The Company retains rights to market products based on such information as well as first consideration for marketing rights for other possible IUTM products.
 
(c)
In consideration of the license, the Company has received a 10% equity interest in IUTM, which is organized as a private German limited liability company and IUT has assumed approximately $82,000 of the Company’s indebtedness.
 
(d)
The Company’s marketing rights have been transferred to its subsidiary, Oncologix Corporation and have issued IUTM 10% of the equity ownership of that subsidiary.

We have been advised that IUTM is continuing the development of a brachytherapy device generally as described above but based on proprietary technology not developed by the University of Maryland. During recent discussions with IUTM management, the prior understandings were reaffirmed. It is now our expectation that we will receive information on at least two potential product lines under consideration and/or development by IUTM. Upon receipt we plan to determine the extent to which we will be able to market them and to finance a marketing organization. While our Management is optimistic as to the outcome of those discussions and future success in financing, it is not possible to predict the probabilities of success with any degree of certainty.  It was determined at August 31, 2010, the value of the investment in IUTM was impaired.  Accordingly, we recorded an impairment loss in the amount of $3,186.
 
 
 
18

 
 
On September 23, 2010, the Company signed a Memorandum of Understanding with Institut für Umwelttechnologien GmbH and IUT Medical GMBH confirming certain understandings among the parties with respect to their future relationships and business activities as originally contemplated in their Technology Agreement of February 27, 2009, which was reaffirmed.

On April 1, 2010, Oncologix Tech Inc. announced today that it had entered into a non-binding agreement with AirWare® International Corp., the manufacturer of the popular new nasal breathing aid, Brez®, for the purpose of launching a version of the Brez product that will be infused with essential oils in the Asian market including China.  This non-binding letter of intent extends to May 15, 2010.  On May 17, 2010, the Company determined that discussions with AirWare® International Corp. for the purpose of the formation of a joint venture have been terminated.  No further action is contemplated at this time.

WatchMe Profile Media Services, Inc.

On February 4, 2011, we entered into a Pre-Incorporation Agreement with Mr. Melvin Brown, of Gilbert, Arizona, providing for our joint entry into a new business enterprise. The Pre-Incorporation Agreement is subject to the condition that we provide a minimum of $150,000 in cash to fund the new enterprise not later than May 30, 2011. On April 2, 2011, an amendment to the Pre-Incorporation Agreement was signed to extend the funding requirement date.  These funds are not now available and we will seek to obtain them from investors. There are presently no agreements providing for such investments and no assurance that they can be obtained. Even if the funds are obtained, however, there is no assurance of any success in the conduct of the new enterprise. In addition to the receipt of funds of $150,000, the Pre-Incorporation Agreement is subject to a series of agreements with Mr. Brown.
 
The new enterprise is to be conducted by a newly formed Nevada corporation, called WatchMe Profile Media Services, Inc. (“WatchMe”). Initially, and unless and until new investments are made, we will own 60% and Mr. Brown 40% of the outstanding capital stock.  Upon the formation of WatchMe, we and Mr. Brown will enter into the Employment Agreement, Shareholders' Agreement and License Agreement.
 
Our entry into this Agreement and the business operations to be pursued pursuant thereto are not expected to affect our plans with respect to future participation in the medical radiation business, as previously reported in our filings under the Securities Exchange Act of 1934.

NOTE 10 – RECENT ACCOUNTING PRONOUNCEMENTS

We have evaluated all Accounting Standards Updates through the date the financial statements were issued and do not believe any will have a material impact on our financial condition or results of operations.
 
NOTE 11 — SUBSEQUENT EVENTS

In accordance with ASC 855-10, Company management reviewed all material events through the date of this report and there are no other material subsequent events to report except the following:
 
On June 15, 2011, the Company issued a 30-Day promissory note to Anthony Silverman, its President and CEO, in the principal amount of $15,000. The note bears an interest rate of 6%. This note was paid off together with accrued interest of $64.11 on July 11, 2011.
 
On June 30, 2011, the Company sold 2,500,000 (post-split) shares of common stock to a non-related accrredited investor at $0.04 per share.
 
On July 6, 2011, the Pre-Incorporation Agreement, executed in February, 2011, that we had entered into with Mr. Melvin Brown, of Gilbert, Arizona was terminated because we were not successful in meeting our agreement to provide certain funding for the new "WatchMe" enterprise.
 
On July 11, 2011, the Company paid off the two $10,000 promissory notes issued to Anthony Silverman, our President and CEO together with accrued interest of $200.54. In addition, the Company paid Anthony Silverman $1,726.06 in accrued interest on the remaining three promissory notes totaling $70,000 in accregate principal.


 
19

 
 
 
ITEM 2. Management’s Discussion And Analysis of Financial Condition and Results of Operation
 
THIS QUARTERLY REPORT ON FORM 10-QSB CONTAINS CERTAIN STATEMENTS WHICH ARE FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF THE SAFE HARBOR PROVISIONS OF SECTION 27A OF THE SECURITIES ACT OF 1993, AS AMENDED, AND SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. THESE STATEMENTS RELATE TO FUTURE EVENTS, INCLUDING THE FUTURE FINANCIAL PERFORMANCE OF ONCOLOGIX. IN SOME CASES, YOU CAN IDENTIFY FORWARD-LOOKING STATEMENTS BY TERMINOLOGY SUCH AS “MAY,” “WILL,” “SHOULD,” “EXPECTS,” “PLANS,” “ANTICIPATES,” “BELIEVES,” “ESTIMATES,” “PREDICTS,” “POTENTIAL,” OR “CONTINUE” OR THE NEGATIVE OF SUCH TERMS AND OTHER COMPARABLE TERMINOLOGY. THESE STATEMENTS ONLY REFLECT MANAGEMENT’S EXPECTATIONS AND ESTIMATES AS OF THE DATE OF THIS REPORT. ACTUAL EVENTS OR RESULTS MAY DIFFER MATERIALLY FROM THESE EXPECTATIONS. IN EVALUATING THOSE STATEMENTS, YOU SHOULD SPECIFICALLY CONSIDER VARIOUS FACTORS, INCLUDING THE RISKS INCLUDED IN THE REPORTS FILED BY ONCOLOGIX WITH THE SEC. THESE FACTORS MAY CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM ANY FORWARD-LOOKING STATEMENTS. ONCOLOGIX IS NOT UNDERTAKING ANY OBLIGATION TO UPDATE ANY FORWARD-LOOKING STATEMENTS CONTAINED IN THIS REPORT.
 
This report should be read in conjunction with our Annual report on Form 10-K for the fiscal year ended August 31, 2010.
 
FORWARD LOOKING STATEMENTS

This Current Report contains forward-looking statements as that term is defined in Section 27A of the United States Securities Act of 1933 and Section 21E of the Securities and Exchange Act of 1934. These statements relate to future events or future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may”, “should”, “expects”, “plans”, “anticipates”, “believes”, “estimates”, “predicts”, “potential” or “continue” or the negative of these terms or other comparable terminology. Such statements are based on currently available financial and competitive information and are subject to various risks and uncertainties that could cause actual results to differ materially from historical experience and present expectations. Undue reliance should not be placed on such forward-looking statements as such statements speak only as of the date on which they are made. These statements are only predictions and involve known and unknown risks, uncertainties and other factors that may cause our or our industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.

Forward-looking statements are predictions and not guarantees of future performance or events. The forward-looking statements are based on current industry, financial and economic information, which we have assessed but which by its nature, is dynamic and subject to rapid and possibly abrupt changes. Our actual results could differ materially from those stated or implied by such forward-looking statements due to risks and uncertainties associated with our business. We hereby qualify all our forward-looking statements by these cautionary statements. We undertake no obligation to amend this report or revise publicly these forward looking statements (other than pursuant to reporting obligations imposed on registrants pursuant to the Securities Exchange Act of 1934) to reflect subsequent events or circumstances.

These forward-looking statements speak only as of their dates and should not be unduly relied upon. We undertake no obligation to amend this report or revise publicly these forward-looking statements (other than pursuant to reporting obligations imposed on registrants pursuant to the Securities Exchange Act of 1934) to reflect subsequent events or circumstances, whether as the result of new information, future events or otherwise.

Throughout this report, unless otherwise indicated by the context, references herein to the “Company”, “Oncologix”, “we”, our” or “us” means Oncologix Tech, Inc.., a Nevada corporation and its corporate subsidiaries and predecessors.
 
GENERAL DISCUSSION
 
We were originally formed in 1995 as "Wavetech, Inc." a New Jersey corporation and changed our corporate domicile to Nevada in December 1997, by merging into a Nevada corporation named, "Interpretel International, Inc." We subsequently changed our name, first to "Wavetech International, Inc." and then, in 2000, to "BestNet Communications Corp." Our business at the time was to provide worldwide long distance telephone communication and teleconferencing services to commercial and residential consumers through the internet. That business was never profitable and we were able to continue it only by repeated equity and debt financings. Accordingly, during December 2006, we determined to dispose of that business and sold it during February 2007.
 
 
 
20

 

We entered the medical device business at the end of July 2006 through the acquisition of JDA Medical Technologies, Inc. ("JDA"), a development stage company, which was merged into our wholly owned subsidiary, Oncologix Corporation. On January 22, 2007, we changed our name to Oncologix Tech, Inc., to reflect this new business. During June 2007, we moved our principal offices from Grand Rapids, Michigan, to our offices at 3725 Lawrenceville-Suwanee Road, Suite B-4, Suwanee, Georgia, 30024, telephone (770) 831-8818.  At that address, our business was the development of a medical device for brachytherapy (radiation therapy), called the “Oncosphere” (or “Oncosphere System”), for the advanced medical treatment of soft tissue cancers. It is a radioactive micro-particle designed to deliver therapeutic radiation directly to a tumor site by introducing the micro-particles into the artery that feeds the tumor tissue. Its first application is expected to be the treatment of liver cancer. Due to a lack of funding, we suspended these activities on December 31, 2007, whereupon we closed the offices in Suwanee Georgia.

Our new mailing address is P.O. Box 8832, Grand Rapids, MI  49518-8832, telephone (616) 977-9933.

During May 2008, we determined to dispose of most of the assets of the Oncosphere project.  This information is being presented as discontinued operations for all periods shown.

In February 2009, we entered into a Technology Agreement with Institut für Umwelttechnologien GmbH, a German Company (“IUT”) whereunder the parties have agreed that:

 
(a)
The Company has granted an exclusive license to a new IUT subsidiary, called “IUTM”, to develop and manufacture products based on the Company’s proprietary information. This proprietary information is not based on the technology that had been subject to the Master License Agreement with the University of Maryland – Baltimore. The Company has also transferred to IUTM a number of items of laboratory equipment and inventory useful in connection with the licensed information.
 
(b)
The Company retains rights to market products based on such information as well as first consideration for marketing rights for other possible IUTM products.
 
(c)
In consideration of the license, the Company has received a 10% equity interest in IUTM, which is organized as a private German limited liability company and IUT has assumed approximately $82,000 of the Company’s indebtedness.
 
(d)
The Company’s marketing rights have been transferred to its subsidiary, Oncologix Corporation and have issued IUTM 10% of the equity ownership of that subsidiary.

In addition, on April 7, 2009, the Company entered into a Termination Agreement with the University of Maryland – Baltimore, The Master License Agreement between the Company and the University has been formally terminated and each party has released the other from all liabilities arising under the Master License Agreement.

We have been advised that IUTM is continuing the development of a brachytherapy device generally as described above but based on proprietary technology not developed by the University of Maryland. During recent discussions with IUTM management, the prior understandings were reaffirmed. It is now our expectation that we will receive information on at least two potential product lines under consideration and/or development by IUTM. Upon receipt we plan to determine the extent to which we will be able to market them and to finance a marketing organization. While our Management is optimistic as to the outcome of those discussions and future success in financing, it is not possible to predict the probabilities of success with any degree of certainty. It was determined at August 31, 2010, the value of the investment in IUTM was impaired.  Accordingly, we recorded an impairment loss in the amount of $3,186.

On September 23, 2010, the Company signed a Memorandum of Understanding with Institut für Umwelttechnologien GmbH and IUT Medical GMBH confirming certain understandings among the parties with respect to their future relationships and business activities as originally contemplated in their Technology Agreement of February 27, 2009, which was reaffirmed.
 
 
 
21

 

 
On May 19, 2011, the Company effected a one-for-four reverse stock split.  All share and per share information have been restated to retroactively show the effect of this stock split.  The reverse split was previously approved by a majority of the Company’s shareholders on March 24, 2011.

CRITICAL ACCOUNTING POLICIES

“Management's Discussion and Analysis or Plan of Operation” (“MDA”) discusses our condensed consolidated financial statements that have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amount of assets and liabilities at the date of the financial statements, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On an on-going basis, we evaluate our estimates and judgments, including those related to research and development costs, deferred income taxes and the carrying value of long-lived assets.
 
We base our estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances. The result of these estimates and judgments form the basis for making conclusions about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions; changes in these estimates as a result of future events may have a material effect on the Company’s financial condition.

For a summary of all our significant accounting policies, including the critical accounting policies discussed above, see Note 2 – Summary of Significant Accounting Policies in this quarterly report.

COMPARISON OF THE THREE AND NINE MONTH PERIODS ENDED MAY 31, 2011 TO THE THREE AND NINE MONTH PERIODS ENDED MAY 31, 2010

General and Administrative Expense

General and administrative expenses included in our results from continuing operations include legal and accounting fees, license fees, travel, payroll and related expenses, directors and officers insurance, and public relations expenses.  These expenses relate primarily to general corporate overhead and accordingly are segregated from general and administrative expenses that related directly to our medical device business, which are included in the results from discontinued operations through fiscal 2010.  General and administrative expenses that are specific to our medical device business include primarily bank fees.
 
General and administrative expense increased to $68,496 during the three-month period ended May 31, 2011, from $42,557, an increase of 61% or $25,939 in the comparable period in fiscal 2010.  Payroll and related expenses increased to $22,740 during the three-month period ended May 31, 2011, from $18,386 in the comparable period in fiscal 2010, due primarily to increased hours from our CFO due to SEC filings of our 10Q, SEC Correspondence and a proxy and information statement.  Legal expense increased to $15,256 during the three-month period ending May 31, 2011, from $3,458 in the comparable period in fiscal 2010, due primarily to increased legal fees regarding our new joint venture with Watchme.  Accounting expense decreased to $1,750 during the three-month period ended May 31, 2011, from $5,930 in the comparable period in fiscal 2010, as a result of reduced audit and review fees from changing our registered accounting firm.  Insurance expense decreased to $2,655 during the three-month period ended May 31, 2011, from $6,233 in the comparable period in fiscal 2010, due primarily to a less expensive Directors and Officers Insurance policy.  Investor relations and press release expenses increased to $14,695 during the three-month period ended May 31, 2011, from $235 in the comparable period in fiscal 2010, due primarily to a printing, mailing and processing charges for our definitive information statement mailed to our shareholders and our reverse stock split.

General and administrative expense increased to $16,042 during the nine-month period ended May 31, 2011, from $152,126, a increase of 6% or $8,916 in the comparable period in fiscal 2010.  Payroll and related expenses increased to $68,270 during the nine-month period ended May 31, 2011, from $57,556 in the comparable period in fiscal 2010, due primarily to increased hours from our CFO due to SEC filings of our 10-K, 10-Q, SEC Correspondence,  a proxy statement and an information statement.  Legal expense increased to $29,449 during the nine-month period ending May 31, 2011, from $8,394 in the comparable period in fiscal 2010, due primarily to increased legal fees regarding our new joint venture with Watchme.  Accounting expense decreased to $8,540 during the nine-month period ended May 31, 2011, from $43,214 in the comparable period in fiscal 2010, as a result of reduced audit and review fees from changing our registered accounting firm. Insurance expense decreased to $10,361 during the nine-month period ended May 31, 2011, from $18,687 in the comparable period in fiscal 2010, due primarily to a less expensive Directors and Officers Insurance policy.  Investor relations and press release expenses increased to $14,994 during the nine-month period ended May 31, 2011, from $235 in the comparable period in fiscal 2010, due primarily to a printing, mailing and processing charges for our definitive information statement mailed to our shareholders and our reverse stock split.
 
 
 
22

 

Depreciation and Amortization

Depreciation and amortization decreased to $318 during the three-month period ended May 31, 2011, from $375 in the comparable period in fiscal 2010. Depreciation and amortization decreased to $955 during the nine-month period ended May 31, 2011, from $1,063 in the comparable period in fiscal 2010. The decrease in depreciation and amortization was the result of assets becoming fully depreciated during fiscal 2010, respectively.

Interest Income

There was no reportable interest income during the three or nine-month periods ended May 31, 2011 or 2010.

Interest and Finance Charges

Interest and finance charges decreased to $7,796 for the three-month period ended May 31, 2011, from $15,468, a decrease of 50% or $7,672 for the comparable period in fiscal 2010.  The decrease is primarily attributable to reduced finders’ fees associated with funds raised in fiscal 2011.

  Interest and finance charges decreased to $25,136 for the nine-month period ended May 31, 2011, from $67,921, a decrease of 63% or $42,785 for the comparable period in fiscal 2010.  The decrease is primarily attributable to reduced finders’ fees associated with funds raised in fiscal 2011 as well as no amortization of note discounts in fiscal 2011.

A summary of interest and finance charges is as follows:
 
   
For the Three Months Ended
   
For the Nine Months Ended
 
   
May 31,
   
May 31,
   
May 31,
   
May 31,
 
   
2011
   
2010
   
2011
   
2010
 
                                 
Interest expense on non-convertible notes
  $ 1,216     $ 951     $ 3,199     $ 2,168  
Interest expense on convertible notes payable
    6,535       6,535       19,392       22,655  
Amortization of note payable discounts
    -       -       -       24,925  
Other interest and finance charges
    45       7,982       2,545       18,173  
                                 
Total interest and finance charges
  $ 7,796     $ 15,468     $ 25,136     $ 67,921  
 
Conversion Expense

There was no conversion expense for the three-month periods ended May 31, 2011 and 2010.

Conversion expense decreased to $0 for the nine-month period ended May 31, 2011, from $413,841, a decrease of more than 100% for the comparable period in fiscal 2010.  The decrease was due to the issuance of shares of common stock for the conversion of a convertible promissory note during the first and second quarters of fiscal 2010, as a result of reducing the conversion price from $0.30 to $0.05 per share for these conversions.

Discontinued Operations

During fiscal 2010, we disposed of the remaining assets of our discontinued operations.  Any future expenses will be treated as expenses from continuing operations as we move toward marketing products with IUT and IUTM.

Loss from discontinued operations for our medical device business decreased to nil for the three and nine-month periods ended May 31, 2011 from $31 and $2,599, respectively, during the comparable periods during fiscal 2010.  The decrease was due to the disposal of the remaining discontinued assets during fiscal 2010.
 
 
 
23

 
 
 
   
For the Three Months Ended
   
For the Nine Months Ended
 
   
May 31,
   
May 31,
   
May 31,
   
May 31,
 
   
2011
   
2010
   
2011
   
2010
 
                         
Operating expenses:
                       
General and administrative
  $ -     $ 34     $ -     $ 219  
Depreciation and amortization
    -       -       -       2,669  
                                 
Total operating expenses
    -       34       -       2,888  
                                 
Loss from operations
    -       (34 )     -       (2,888 )
                                 
Other income (expense):
                               
                                 
Total other income (expense)
    -       -       -       -  
                                 
Loss from discontinued operations
    -       (34 )     -       (2,888 )
Gain on disposal of discontinued operations
    -       -       -       -  
                                 
Loss from discontinued operations
    -       (34 )     -       (2,888 )
                                 
Less loss attributable to noncontrolling interest
    -       (3 )     -       (289 )
                                 
Net loss from discontinued operations
  $ -     $ (31 )   $ -     $ (2,599 )
                                 

WatchMe Profile Media Services, Inc.

On February 4, 2011, we entered into a Pre-Incorporation Agreement with Mr. Melvin Brown, of Gilbert, Arizona, providing for our joint entry into a new business enterprise. The Pre-Incorporation Agreement is subject to the condition that we provide a minimum of $150,000 in cash to fund the new enterprise not later than May 30, 2011. On April 2, 2011, an amendment to the Pre-Incorporation Agreement was signed to extend the funding requirement date.  These funds are not now available and we will seek to obtain them from investors. There are presently no agreements providing for such investments and no assurance that they can be obtained. Even if the funds are obtained, however, there is no assurance of any success in the conduct of the new enterprise. In addition to the receipt of funds of $150,000, the Pre-Incorporation Agreement is subject to a series of agreements with Mr. Brown.
 
The new enterprise is to be conducted by a newly formed Nevada corporation, called WatchMe Profile Media Services, Inc. (“WatchMe”). Initially, and unless and until new investments are made, we will own 60% and Mr. Brown 40% of the outstanding capital stock.  Upon the formation of WatchMe, we and Mr. Brown will enter into the Employment Agreement, Shareholders' Agreement and License Agreement.
 
Our entry into this Agreement and the business operations to be pursued pursuant thereto are not expected to affect our plans with respect to future participation in the medical radiation business, as previously reported in our filings under the Securities Exchange Act of 1934.

LIQUIDITY AND CAPITAL RESOURCES

We were unable to obtain the financing necessary to continue development operations after December 31, 2007. Consequently, we terminated the employment of all of our personnel, effective as of that date.  We anticipate that we will require $250,000 to operate for the next twelve months.  Additional funds will have to be raised for the Watchme joint venture.  These funds are expected to be raised through small private placements, although there is no assurance of any success in doing so.  During recent discussions with IUTM management, the prior understandings were reaffirmed. It is now our expectation that we will receive information on at least two potential product lines under consideration and/or development by IUTM. Upon receipt we plan to determine the extent to which we will be able to market them and to finance a marketing organization.

Our operating losses to date have been covered by equity and debt financing obtained from private investors, including certain present and former members of our Board of Directors. We never achieved positive cash flow or profitability in our telephone business because we did not generate a volume of business sufficient to cover our overhead costs.
 
 
 
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On May 31, 2011, we had cash and cash equivalents of $3,799. We have historically relied upon the issuance of debt or equity in order to finance our operations.  Our operating losses to date have been covered by equity and debt financing obtained from private investors, including certain current and former members of our Board of Directors.
 
Below is a summary listing for the next 12 months, as of May 31, 2011, of our required minimum cash payments including our short-term notes payable, short-term convertible notes payable and their respective due dates.  To the extent the convertible notes are not converted, funds for repayment will have to be raised through additional debt or equity financings.
 
Due Date
 
Interest Rate
   
Amount
   
Accrued Interest***
   
Total Owed
 
Convertible/Non-Convertible
                           
7/06/2011 (1)
    6.00 %   $ 25,000     $ 641     $ 25,641  
Non-convertible
7/14/2011 (1)
    6.00 %     20,000       539       20,539  
Non-convertible
7/17/2011 (1)
    6.00 %     25,000       686       25,686  
Non-convertible
7/23/2011
    6.00 %     25,000       2,347       27,347  
Convertible at $0.08 per share
7/25/2011 (1)
    6.00 %     10,000       148       10,148  
Non-convertible
7/25/2011 (1)
    6.00 %     10,000       99       10,099  
Non-convertible
3/31/2012 (2)
    6.00 %     235,025       42,304       277,329  
Convertible at $0.20 per share
3/31/2012
    12.00 %     2,712       1,237       3,949  
Convertible at $0.60 per share
3/31/2012
    8.00 %     125,000       38,384       163,384  
Convertible at $0.60 per share
                                   
                                   
                                   
            $ 477,737     $ 86,385     $ 564,122    
                                   
(1) Note payable to Anthony Silverman, our President and CEO.
           
(2) Note payable to Judy Lindstrom, former CEO and board member of Oncologix Corporation.
*** Interest calculated to maturity or conversion
                   
                                   

INFLATION AND OTHER FACTORS
 
The Company’s operations are influenced by general economic trends and technology advances in the medical industries.

Our activities in the development, manufacture and sale of cancer therapy products are, and will be subject to extensive laws, regulations, regulatory approvals and guidelines. Within the United States, therapeutic radiological devices must comply with the U.S. Federal Food, Drug and Cosmetic Act, which is enforced by the FDA. We are also required to adhere to applicable FDA regulations for Good Manufacturing Practices, including extensive record keeping and periodic inspections of manufacturing facilities. Medical devices such as the Oncosphere cannot be used or sold unless they are approved for specified purposes by the FDA. There are two levels of FDA approval. The first is the granting of approval to evaluate use of the device in human subjects (through an IDE); the second is obtaining approval to market the device to the public for the treatment of specified diseases (PMA).

If we are successful in implementing our plans, our business will involve the importing, exporting, design, manufacture, distribution, use and storage of beta and gamma emitting radioisotopes. These activities in the United States are subject to federal, state and local rules relating to radioactive material promulgated by the Nuclear Regulatory Commission ("NRC"), and states that have subscribed to certain standards and local authorities, known as “Agreement States” In addition, we must comply with NRC, state and U.S. Department of Transportation requirements for labeling and packaging shipments of radiation sources to hospitals or others users of our devices. In order to market our devices commercially, we will be required to obtain a sealed source device registration from Agreement States and/or the NRC, depending on the states in which the device will be distributed.
 
 
 
25

 

Additionally, hospitals in the United States are required to have radiation licenses to hold, handle and use radiation. Many hospitals and/or physicians in the United States will be required to amend their radiation licenses to include our isotopes before receiving and using them. Depending on the state in which the hospital is located, the license amendment will be processed by the responsible subscribing state department or agency or by the NRC.

Obtaining such registration, approvals, and licenses can be complicated and time consuming and there is no assurance that any of them can be obtained.

ITEM 3. Quantitative and Qualitative Disclosure about Market Risk

We are a smaller reporting company, as defined in Rule 12b-2 promulgated under the Securities Exchange Act of 1934, and accordingly, we are not required to provide the information required by this Item.

ITEM 4T. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Based on an evaluation under the supervision and with the participation of the Company’s management, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that, due to the material weaknesses disclosed in its Annual Report on Form 10-K for the year ended August 31, 2010 that remain unremediated, the Company’s disclosure controls and procedures were not effective as of May 31, 2011.  As a result of this conclusion, the financial statements for the periods covered by this report were prepared with particular attention to the material weaknesses previously disclosed.  Accordingly, management believes that the condensed consolidated financial statements included in the Quarterly Report present fairly, in all material respects, the Company’s financial condition, results of operations and cash flows as of and for the periods presented.
 
Changes in Internal Control Over Financial Reporting

There were no changes in our internal controls over financial reporting that occurred during the three months ended May 31, 2011 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.


 
26

 


PART II – OTHER INFORMATION
 
ITEM 1. Legal Proceedings
 
None
 
 
ITEM 1A. Risk Factors
 
No changes since filing of our Form 10-K for the year ended August 31, 2010.

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds
 
September 30, 2009
$25,000
On September 30, 2009, the Company sold 1,250,000 (pre-split) shares of common stock to a non-related accredited investor at $0.02 per share.
November 3, 2009
$25,000
On November 3, 2009, the Company sold 1,250,000 (pre-split) shares of common stock to a non-related accredited investor at $0.02 per share.
February 1, 2010
$25,000
On February 1, 2010, the Company sold 1,000,000 (pre-split) shares of common stock to a non-related accredited investor at $0.025 per share.
March 22, 2010
$2,660
On March 22, 2010, Holders of 13,300 Units contributed $2,660 to convert 13,300 shares of preferred stock into 26,600 (pre-split) shares of common stock.
April 8, 2010
$4,160
On April 8, 2010, Holders of 20,800 Units contributed $4,160 to convert 20,800 shares of preferred stock into 41,600 (pre-split) shares of common stock.
April 16, 2010
$50,000
On April 16, 2010, the Company sold 1,666,667 (pre-split) shares of common stock to a non-related accredited investor at $0.03 per share.
May 13, 2010
$25,000
On May 13, 2010, the Company sold 833,333 (pre-split) shares of common stock to a non-related accredited investor at $0.03 per share.
June 17, 2010
$25,000
On June 17, 2010, the Company sold 833,333 (pre-split) shares of common stock to a non-related accredited investor at $0.03 per share.
August 11, 2010
$25,000
On August 11, 2010, the Company sold 1,666,667 (pre-split) shares of common stock to a non-related accredited investor at $0.015 per share.
October 11, 2010
$25,000
On October 11, 2010, the Company sold 1,666,667 (pre-split) shares of common stock to a non-related accredited investor at $0.015 per share.
January 18, 2011
$50,000
On January 18, 2011, the Company sold 3,333,333 (pre-split) shares of common stock to a non-related accredited investor at $0.015 per share.

ITEM 3. Defaults Upon Senior Securities
 
None.
 
ITEM 4. Reserved
 

 
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ITEM 5. Other Information
 
None.
 
ITEM 6. Exhibits
 
 
 Exhibits.  Description
   
 31.1  Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
   
 31.2  Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
   
 32.1   Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
   
 32.2  Certification pursuant to Section 906 of the Sarbanes-OxleyAct of 2002.
   
 
 
            

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


Dated:     July 15, 2011
ONCOLOGIX TECH, INC.
   
   
 
By:           /s/ Anthony Silverman
 
Anthony Silverman, President and Chief Executive Officer
   
 
By:           /s/ Michael A. Kramarz
 
Michael A. Kramarz, Chief Financial Officer






 




 
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