Attached files

file filename
EXCEL - IDEA: XBRL DOCUMENT - Stevia First Corp.Financial_Report.xls
XML - IDEA: XBRL DOCUMENT - Stevia First Corp.R1.htm
EX-32 - CERT - Stevia First Corp.stva_ex32.htm
EX-31 - CERT - Stevia First Corp.stva_ex31.htm

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM 10-Q


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


For the quarterly period ended September 30, 2012


£  TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934


For the transition period from _____ to _____


Commission File Number:  000-53832


STEVIA FIRST CORP.

(Exact name of registrant as specified in its charter)


Nevada

 

75-3268988

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer Identification No.)

 

 

 

5225 Carlson Rd.

Yuba City, CA

 

95993

(Address of principal executive offices)

 

(Zip Code)


(530) 231-7800

Registrant’s telephone number, including area code

 

 


Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  T   No  £  


Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes  T   No  £  


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,” “non-accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer £

Accelerated filer   £

Non-accelerated filer £

(Do not check if a smaller reporting company)

Smaller reporting company T


Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes  £   No  T


As of October 29, 2012, there were 53,839,008 shares of the registrant’s common stock outstanding.  







STEVIA FIRST CORP.


Quarterly Report On Form 10-Q

For The Quarterly Period Ended

September 30, 2012


INDEX


PART I - FINANCIAL INFORMATION

3

 

 

Item 1. Financial Statements

3

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

16

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

23

Item 4. Controls and Procedures.

23

 

 

PART II - OTHER INFORMATION

26

 

 

Item 1. Legal Proceedings

26

Item 1A. Risk Factors

26

Item 6. Exhibits

27

 




















2






PART I - FINANCIAL INFORMATION


Item 1.  Financial Statements (unaudited)































3





STEVIA FIRST CORP.

 (A Development Stage Company)

CONDENSED FINANCIAL STATEMENTS

SEPTEMBER 30, 2012

(Unaudited)





CONDENSED UNAUDITED BALANCE SHEETS


CONDENSED UNAUDITED STATEMENTS OF OPERATIONS


CONDENSED UNAUDITED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)


CONDENSED UNAUDITED STATEMENTS OF CASH FLOWS


NOTES TO THE CONDENSED UNAUDITED FINANCIAL STATEMENTS
















4






STEVIA FIRST CORP

(A DEVELOPMENT STAGE COMPANY)

CONDENSED BALANCE SHEETS

 

 

September 30,

 

March 31,

 

2012

 

2012

Assets

 

 

 

 

(unaudited)

 

 

Current Assets:

 

 

 

 

 

Cash

$

533,490

 

$

532,206

Security deposit

 

2,500

 

 

1,500

Prepaid Expense

 

96,586

 

 

1,200

Advance payment on related party lease, current

 

124,992

 

 

-

Total Current Assets

 

757,568

 

 

534,906

 

 

 

 

 

 

Advance payment on related party lease, net of current portion

 

72,925

 

 

-

 

 

 

 

 

 

Total Assets

$

830,493

 

$

534,906

 

 

 

 

 

 

Liabilities and Stockholders' Equity (Deficit)

 

 

 

 

 

 

 

 

 

 

 

Current Liabilities

 

 

 

 

 

Accounts payable and accrued liabilities

$

28,322

 

$

79,763

Accounts Payable - Related Party

 

2,428

 

 

10,920

Notes Payable

 

-

 

 

196,800

Accrued Interest

 

13,233

 

 

19,130

Total Current Liabilities

 

43,983

 

 

306,613

 

 

 

 

 

 

Notes Payable, Convertible, long term

 

875,000

 

 

450,000

Less discount

 

(142,909)

 

 

(172,476)

Notes Payable, Convertible, long term, net of discount

 

732,091

 

 

277,524

Total liabilities

 

776,074

 

 

584,137

 

 

 

 

 

 

Stockholders' Equity (Deficit)

 

 

 

 

 

Common stock, par value $0.001 per shares;

 

 

 

 

 

525,000,000 shares authorized; 53,839,008 and 51,650,000

 

 

 

 

 

shares issued and outstanding

 

53,839

 

 

51,650

Unvested, issued common stock

 

(180,000)

 

 

-

Additional paid-in-capital

 

2,797,372

 

 

1,330,634

Deficit accumulated during the development stage

 

(2,616,792)

 

 

(1,431,515)

Total stockholders' equity (deficit)

 

54,419

 

 

(49,231)

Total liabilities and stockholders' equity (deficit)

$

830,493

 

$

534,906



The Accompanying Notes are an Integral Part of These Condensed Financial Statements.




5






STEVIA FIRST CORP

(A DEVELOPMENT STAGE COMPANY)

CONDENSED STATEMENTS OF OPERATIONS

(Unaudited)

 

 

 

 

 

 From July 1, 2007

 

Three Months Ended

 

Six Months Ended

 

(Inception) to

 

September 30,

 

September 30,

 

September 30,

 

2012

 

2011

 

2012

 

2011

 

2012

 

 

 

 

 

 

 

 

 

 

Revenue

$

-

 

$

-

 

$

-

 

$

-

 

$

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

General and administrative

 

797,939

 

 

75,160

 

 

1,083,586

 

 

79,863

 

 

2,466,457

Rent and other related party costs

 

39,517

 

 

6,548

 

 

66,450

 

 

9,548

 

 

88,498

Research & development

 

-

 

 

-

 

 

89,090

 

 

-

 

 

89,090

Total operating expenses

 

837,456

 

 

81,708

 

 

1,239,126

 

 

89,411

 

 

2,644,045

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss from operations

 

(837,456)

 

 

(81,708)

 

 

(1,239,126)

 

 

(89,411)

 

 

(2,644,045)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation

 

(301)

 

 

-

 

 

(202)

 

 

-

 

 

(2,725)

Interest expense

 

(28,016)

 

 

(2,651)

 

 

(52,953)

 

 

(3,888)

 

 

(77,026)

Gain on settlement of debt

 

-

 

 

-

 

 

107,004

 

 

-

 

 

107,004

Net loss

 

(865,773)

 

 

(84,359)

 

 

(1,185,277)

 

 

(93,299)

 

 

(2,616,792)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss per share - basic and diluted

$

(0.02)

 

$

(0.00)

 

$

(0.02)

 

$

(0.00)

 

 

 

Weighted average number of common

 

 

 

 

 

 

 

 

 

 

 

 

 

 

shares outstanding

 

52,625,421

 

 

51,450,000

 

 

52,291,978

 

 

51,450,000

 

 

 




The Accompanying Notes are an Integral Part of These Condensed Financial Statements.




6






STEVIA FIRST CORP

(A DEVELOPMENT STAGE COMPANY)

CONDENSED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deficit

 

 

 

 

 

 

 

 

 

accumulated

 

Unvested,

 

 

 

 

 

Additional

 

During the

 

issued

 

 

 

Common Stock

 

Paid-in-

 

exploration

 

Common

 

 

Description

Shares

 

Amount

 

Capital

 

Stage

 

Stock

 

Total

Balance- July 1, 2007

-

 

$

-

 

$

-

 

$

-

 

$

-

 

$

-

November 28, 2007

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Subscribed for cash

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

at $0.0001

31,500,000

 

 

31,500

 

 

(27,000)

 

 

-

 

 

 

 

 

4,500

December 18, 2007

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Subscribed for cash

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

at $0.0001

11,200,000

 

 

11,200

 

 

(3,200)

 

 

-

 

 

 

 

 

8,000

January 18, 2008

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Subscribed for cash

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

at $0.0001

8,750,000

 

 

8,750

 

 

3,750

 

 

-

 

 

 

 

 

12,500

Net loss

-

 

 

-

 

 

-

 

 

(8,583)

 

 

 

 

 

(8,583)

Balance- March 31, 2008

51,450,000

 

 

51,450

 

 

(26,450)

 

 

(8,583)

 

 

-

 

 

16,417

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

-

 

 

-

 

 

-

 

 

(38,112)

 

 

 

 

 

(38,112)

Balance- March 31, 2009 (restated)

51,450,000

 

 

51,450

 

 

(26,450)

 

 

(46,695)

 

 

-

 

 

(21,695)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

-

 

 

-

 

 

-

 

 

(28,292)

 

 

 

 

 

(28,292)

Balance- March 31, 2010

51,450,000

 

 

51,450

 

 

(26,450)

 

 

(74,987)

 

 

-

 

 

(49,987)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

-

 

 

-

 

 

-

 

 

(35,275)

 

 

 

 

 

(35,275)

Balance- March 31, 2011

51,450,000

 

 

51,450

 

 

(26,450)

 

 

(110,262)

 

 

-

 

 

(85,262)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Subscribed for cash at $1.00

200,000

 

 

200

 

 

199,800

 

 

-

 

 

 

 

 

200,000

Beneficial Conversion Feature of convertible Debt

-

 

 

-

 

 

177,404

 

 

-

 

 

 

 

 

177,404

Stock based compensation

-

 

 

-

 

 

979,880

 

 

 

 

 

 

 

 

979,880

Net loss

-

 

 

-

 

 

 

 

 

(1,321,253)

 

 

 

 

 

(1,321,253)

Balance- March 31, 2012

51,650,000

 

 

51,650

 

 

1,330,634

 

 

(1,431,515)

 

 

-

 

 

(49,231)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Subscribed for cash at $1.00

425,000

 

 

425

 

 

424,575

 

 

-

 

 

-

 

 

425,000

Common stock issued upon May 25, 2012 conversion of notes payable

214,008

 

 

214

 

 

106,790

 

 

-

 

 

-

 

 

107,004

Common stock issued to employees and director, unvested

700,000

 

 

700

 

 

188,300

 

 

 

 

 

(180,000)

 

 

9,000

Common stock issued upon exercise of options

850,000

 

 

850

 

 

174,150

 

 

-

 

 

-

 

 

175,000

Stock based compensation

-

 

 

-

 

 

572,923

 

 

-

 

 

-

 

 

572,923

Net loss

-

 

 

-

 

 

-

 

 

(1,185,277)

 

 

-

 

 

(1,185,277)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance- September 30, 2012 (unaudited)

53,839,008

 

$

53,839

 

$

2,797,372

 

$

(2,616,792)

 

$

(180,000)

 

$

54,419



The Accompanying Notes are an Integral Part of These Condensed Financial Statements.




7






STEVIA FIRST CORP

(A DEVELOPMENT STAGE COMPANY)

CONDENSED STATEMENTS OF CASH FLOWS

(Unaudited)

 

 

 

 

 

 

 

 

 

From July 1, 2007

 

 

Six Months Ended

 

(Inception) to

 

 

September 30,

 

September 30,

 

 

2012

 

2011

 

2012

 

 

 

 

 

 

 

Operating activities

 

 

 

 

 

 

 

 

 

Net loss

 

$

(1,185,277)

 

$

(93,299)

 

$

(2,616,792)

Adjustments to reconcile net loss to net cash

 

 

 

 

 

 

 

 

 

Loan

 

 

-

 

 

-

 

 

5,000

Stock based compensation

 

 

581,923

 

 

-

 

 

1,561,803

Gain on settlement of debt

 

 

(107,004)

 

 

-

 

 

(107,004)

Amortization of debt discount

 

 

29,567

 

 

-

 

 

34,495

Prepaid expense

 

 

(95,386)

 

 

(2,765)

 

 

(96,586)

Advance payment on related party lease

 

 

(197,917)

 

 

-

 

 

(197,917)

Accrued interest

 

 

11,311

 

 

3,875

 

 

30,441

Accounts payable - related party

 

 

(8,493)

 

 

5,548

 

 

2,428

Accounts payable and accrued liabilities

 

 

88,560

 

 

30,564

 

 

163,322

Net cash used in operating activities

 

 

(882,716)

 

 

(56,077)

 

 

(1,220,810)

 

 

 

 

 

 

 

 

 

 

Financing activities

 

 

 

 

 

 

 

 

 

Loans from third party

 

 

425,000

 

 

100,000

 

 

1,071,800

Proceeds from exercise of options

 

 

35,000

 

 

-

 

 

60,000

Shares subscribed for cash

 

 

425,000

 

 

-

 

 

625,000

Net cash provided by financing activities

 

 

885,000

 

 

100,000

 

 

1,756,800

 

 

 

 

 

 

 

 

 

 

Investing activities

 

 

 

 

 

 

 

 

 

Security deposit

 

 

(1,000)

 

 

-

 

 

(2,500)

Net cash used in investing activities

 

 

(1,000)

 

 

-

 

 

(2,500)

 

 

 

 

 

 

 

 

 

 

Net increase (decrease) in cash

 

 

1,284

 

 

43,923

 

 

533,490

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalent - beginning of period

 

 

532,206

 

 

10,596

 

 

-

Cash and cash equivalent - end of period

 

$

533,490

 

$

54,519

 

$

533,490

Supplemental disclosure of cash flow information:

 

 

 

 

 

 

 

$

-

Cash paid during the period for:

 

 

 

 

 

 

 

 

 

Interest

 

$

-

 

$

-

 

$

-

Income taxes

 

 

 

 

 

 

 

 

 

 

 

$

-

 

$

-

 

$

-

 

 

 

 

 

 

 

 

 

 

Non-cash activities:

 

 

 

 

 

 

 

 

 

Loan (expenses paid on behalf of the Company by third party)

 

$

-

 

$

-

 

$

5,000

Cancellation of payable applied to option exercise price

 

$

140,000

 

$

-

 

$

140,000

Issuance of common stock upon conversion of notes payable and accrued interest

 

$

107,004

 

$

-

 

$

107,004

Fair value of beneficial conversion feature of convertible notes

 

$

-

 

$

-

 

$

177,404



The Accompanying Notes are an Integral Part of These Condensed Financial Statements.


 

8






STEVIA FIRST CORP.

 (A Development Stage Company)

NOTES TO CONDENSED FINANCIAL STATEMENTS

THREE AND SIX MONTHS ENDED SEPTEMBER 30, 2012

(Unaudited)


1.  BUSINESS AND BASIS OF PRESENTATION


Stevia First Corp. (the “Company”, “we”, “us”, or “our”) formerly Legend Mining Inc., was incorporated under the laws of the State of Nevada on June 29, 2007. During the period from July 1, 2007 (inception) to June 30, 2011, the Company commenced operations by issuing shares and acquiring a mineral property located in the Province of Saskatchewan, Canada. The Company was unable to keep the mineral claim in good standing due to lack of funding, and accordingly its interest in it has expired. On October 10, 2011, the Company completed a merger with its wholly-owned subsidiary, Stevia First Corp., whereby it changed its name from “Legend Mining Inc.” to “Stevia First Corp.” In connection with a related change in management, the addition of key personnel, and the lease of property for laboratory and office space in California, the Company is now pursuing its new business as an agricultural biotechnology company engaged in the cultivation and harvest of stevia leaf and the development of stevia products.  The Company has not produced any revenues and is considered a development stage company.  The Company's fiscal year end is March 31.  


Going Concern


These financial statements have been prepared on a going concern basis, which assumes the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future.  The Company has incurred losses since inception resulting in an accumulated deficit of $2,616,792 as at September 30, 2012, and further losses are anticipated in the development of its business, raising substantial doubt about the Company's ability to continue as a going concern.  The condensed financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern.


The ability to continue as a going concern is dependent upon the Company generating profitable operations in the future and/or obtaining the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. Management believes that it has sufficient cash to fund operations for at least one year.  Management intends to finance operating costs over the next twelve months with existing cash on hand, loans and private placements of equity or debt securities. There is no assurance that the Company will be able to obtain further loans, or that the Company will be able to raise sufficient funds through private placements or otherwise.   


Basis of Presentation


The unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (the “U.S.”) for interim financial information and with the instructions to Securities and Exchange Commission (“SEC”) Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the U.S. for complete financial statements. The unaudited condensed financial statements contain all normal recurring accruals and adjustments that, in the opinion of the Company’s management, are necessary to present fairly the condensed financial position of the Company as of September 30, 2012, the unaudited condensed results of its operations for the three and six months ended September 30, 2012 and 2011, and the unaudited condensed cash flows for the six months ended September 30, 2012 and 2011.




9






2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


Use of Estimates and Assumptions


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


It is management's opinion that all adjustments necessary for the fair statement of the results for the interim period have been made. All adjustments are of normal recurring nature, or a description is included in these notes of the nature and amount of any adjustments other than normal recurring adjustments.


Fair Value of Financial Instruments


The carrying value of cash and accounts payable and accrued liabilities approximates their fair value because of the short maturity of these instruments. Unless otherwise noted, it is management's opinion that the Company is not exposed to significant interest, currency or credit risks arising from these financial instruments.


Income Taxes


The Company follows the liability method of accounting for income taxes.  Under this method, deferred income tax assets and liabilities are recognized for the estimated tax consequences attributable to differences between the financial statement carrying values and their respective income tax basis (temporary differences). The effect on deferred income tax assets and liabilities of a change in tax rates is recognized as income (loss) in the period that includes the enactment date.


Stock-Based Compensation


The Company periodically issues stock options and warrants to employees and non-employees in capital raising transactions, for services and for financing costs. The Company accounts for share-based payments under the guidance as set forth in the Share-Based Payment Topic of the FASB Accounting Standards Codification (“ASC”), which requires the measurement and recognition of compensation expense for all share-based payment awards made to employees, officers, directors, and consultants, including employee stock options, based on estimated fair values. The Company estimates the fair value of share-based payment awards to employees and directors on the date of grant using an option-pricing model, and the value of the portion of the award that is ultimately expected to vest is recognized as expense over the required service period in the Company's Statements of Operations. The Company accounts for stock option and warrant grants issued and vesting to non-employees in accordance with the authoritative guidance whereas the value of the stock compensation is based upon the measurement date as determined at either a) the date at which a performance commitment is reached, or b) the date at which the necessary performance to earn the equity instruments is complete. Stock-based compensation is based on awards ultimately expected to vest and is reduced for estimated forfeitures. Forfeitures are estimated at the time of grant and revised, as necessary, in subsequent periods if actual forfeitures differ from those estimates.   




10






Basic and Diluted Loss Per Share


The Company computes loss per share in accordance with ASC 260, “Earnings per Share” which requires presentation of both basic and diluted earnings per share on the face of the statement of operations. Basic loss per share is computed by dividing net loss available to common shareholders by the weighted average number of outstanding common shares during the period. Diluted loss per share gives effect to all dilutive potential common shares outstanding during the period.  Dilutive loss per share excludes all potential common shares if their effect is anti-dilutive.


As of September 30, 2012, the Company has no potential dilutive instruments and accordingly basic loss and diluted loss per share are the same. Options to acquire 3,050,000 shares of common stock and 1,193,773 common shares issuable under convertible note agreements at September 30, 2012 have been excluded from the calculation at September 30, 2012 as the effect would have been anti-dilutive. The company has also excluded 663,333 shares of common stock that were issued but unearned from its calculation at September 30, 2012 (see Note 5).  

 

Recent Accounting Pronouncements


The Company’s management has evaluated the recently issued accounting pronouncements through the date of this report and has determined that their adoption will not have a material impact on the financial position, results of operations, or cash flows of the Company.


3.  NOTES PAYABLE


From inception  through March 31, 2012, the Company issued 11 separate unsecured promissory notes with an aggregate principal amount of $196,800.  Each of the unsecured promissory notes was payable upon demand and bore interest at 6.0% per annum.


On May 25, 2012, the Company entered into Note Exchange Agreements (each, “Note Exchange Agreement”) with each of two holders of an aggregate of the eleven outstanding promissory notes issued by the Company, pursuant to which the outstanding principal, totaling $196,800, and accrued but unpaid interest, totaling $17,208, under all such promissory notes was canceled in exchange for the Company’s issuance to such holders of shares of the Company’s common stock at a conversion rate of $1.00 per share. At the closing under the Note Exchange Agreements on May 25, 2012, the Company issued an aggregate of 214,800 shares of its common stock to the two holders of such promissory notes.  As the market price of the Company’s stock at the date of the exchange was less than the conversion rate, the Company recognized a gain from the settlement of the debt of $107,400 on the Company’s accompanying statement of operations for the six months ended September 30, 2012.   













11






4. CONVERTIBLE NOTES PAYABLE


On February 7, 2012, the Company entered into a Subscription Agreement (the “Subscription Agreement”) with one investor, pursuant to which such investor irrevocably agreed to purchase $1,250,000 in common stock and convertible debentures from us over a twelve month period beginning on March 1, 2012.  Under the Subscription Agreement, the investor agreed to purchase an aggregate of 625,000 shares of common stock and convertible debentures with an aggregate principal amount of $625,000 in five tranches, for proceeds to us of $250,000 per tranche, convertible into a total of 693,774 shares of our common stock at prices ranging from $0.65 to $1.25. The conversion price of the common stock underlying each of the convertible debentures is subject to adjustment upon a reclassification or other change in our outstanding common stock and certain distributions to all holders of our common stock.  As of March 31, 2012, the Company had received $200,000 in proceeds attributable to the issuance of convertible debentures under the Subscription Agreement. On May 22, 2012, the Company received proceeds for the issuance of convertible debentures with an aggregate principal amount of $425,000, which was the remaining balance due under the Subscription Agreement (in addition to $425,000 from the issuance of its common shares - see Note 5).  Each convertible debenture bears interest at the rate of 6.0% per annum, payable semi-annually in arrears on June 30 and December 31 of each year. Interest accrued in aggregate for these convertible debentures as of September 30, 2012, was $25,308.  As of September 30, 2012, $625,000 of these convertible debentures were outstanding. If the outstanding principal on all of those convertible debentures were converted into common shares, as of September 30, 2012, the holders thereof would receive 1,193,773 shares of common stock.


During the period ended September 30, 2012, the conversion price of notes issued was greater the market value of our common stock as of the date of issuance.  As such, the Company did not recognize any beneficial conversion feature upon issuance.  In the prior years, the Company had issued convertible notes where the market price of our common shares was in excess of the conversion price, creating a beneficial conversion feature of $177,404 upon issuance.  The beneficial conversion feature was recorded as a discount to the notes payable and is being amortized over the life of the notes, the balance of which was $172,476 at March 31, 2012.  During the period ended September 30, 2012, the Company recognized interest expense of $29,567 relating to the amortization of this discount, resulting in an unamortized balance of $142,909 as of September 30, 2012.  


5.  EQUITY


Common stock


During the six months ended September 30, 2012, the Company sold 425,000 shares of its common stock for proceeds of $425,000 under a Subscription Agreement with one investor (See Note 4).

 

2012 Stock Incentive Plan


The Company has adopted a stock option and incentive plan (the “2012 Stock Incentive Plan”). Pursuant to the terms of the 2012 Stock Incentive Plan, the exercise price for all equity awards issued under the 2012 Stock Incentive Plan is based on the market price per share of the Company’s common stock on the date of grant of the applicable award..


 

 

12






 


On May 14, 2012 one consultant exercised an option to purchase 100,000 shares of the Company’s common stock at an exercise price of $0.10.  On August 31, 2012 one consultant exercised an option to purchase 250,000 shares of the Company’s common stock at an exercise price of $0.10. On September 3, 2012 500,000 options were exercised by two consultants in exchange for $140,000 in fees owed pursuant to their six months consulting service agreement.

 

In July and August 2012, the Company issued an aggregate of 700,000 shares of its common stock to employees and a director of the Company vesting over a period ranging from 16 months to 60 months from the date of grant under the Company's 2012 Stock Incentive Plan. These shares of common stock issued to employees and a director were valued based upon the trading prices of the Company’s stock at the dates of grant for an aggregate fair value of $189,000. As the shares were issued, but not yet earned, the aggregate fair value of these shares was accounted for as a contra-equity account that is being amortized over the vesting term of the common stock award. As of September 30, 2012, 36,667 shares were earned, and 663,333 shares remained unvested. During the six months ended September 30, 2012, the Company amortized $9,000 of the fair value of the common stock and recognized as stock compensation in their statement of operations, and $180,000 remained unamortized as of the period then ended..

 

At September 30, 2012, options to purchase common shares were outstanding as follows:

 

 

 

Shares

 

 

Weighted

Average

Exercise

Price

 

Balance at March 31, 2012

 

 

2,100,000

 

 

$

0.10

 

Granted

 

 

1,800,000

 

 

 

0.27

 

Exercised

 

 

(850,000)

 

 

 

 

 

Cancelled

 

 

 

 

 

$

 

 

Balance outstanding at September 30, 2012

 

 

3,050,000

 

 

$

0.18

 

Balance exercisable at September 30, 2012

 

 

1,162,500

 

 

$

 

 


A summary of the Company’s stock option activity for the period ended September 30, 2012 is presented below:


 

 

 

 

 

 

Number of

options

Weighted

Average Exercise

Price

Weighted Average

Grant-date Stock

Price

Volatility

 

 

 

 

 

Options Outstanding, September 30, 2012

1,750,000

$0.10

$1.00

183.83%

 

300,000

$0.27

$0.27

228.36%

 

1,000,000

$0.28

$0.27

228.36%

 

3,050,000

 

 

 

Vested, September 30, 2012

912,500

$0.10

$1.00

183.83%

 

250,000

$0.28

$0.27

228.36%

1,162,500


From inception through September 30, 2012, we had expensed total stock-based compensation of $1,552,803 and the remaining unamortized cost of the outstanding stock-based awards was $668,136. This cost will be amortized on a straight line basis over a weighted average remaining vesting period of 2 years and will be adjusted for subsequent changes in estimated forfeitures. Future option grants will increase the amount of compensation expense that will be recorded.


The intrinsic value of all outstanding stock options at September 30, 2012, was $1,052,500.



13






During the period ended September 30, 2012, the Company granted 200,000 options to employees and 1,600,000 options to consultants that expire ten years from date of grant. Assumptions used in valuing stock options granted during the six months ended September 30, 2012 are as follows:  (i) volatility rate of 228%, (ii) discount rate of 4.3%, (iii) expected life of 10 years, and (iv) zero expected dividend yield.  


6.  INCOME TAXES


The Company has no tax provision for any period presented due to our history of operating losses.  As of September 30, 2012, the Company had net operating loss carry forwards of approximately $2,616,792 that may be available to reduce future years' taxable income through 2028. Future tax benefits which may arise as a result of these losses have not been recognized in these financial statements, as management has determined that their realization is not likely to occur and accordingly, the Company has recorded a valuation allowance for the deferred tax asset relating to these tax loss carry-forwards.



7.  RELATED PARTY TRANSACTIONS AND LEASE OBLIGATIONS


Advance payment of related party lease


On April 23, 2012, the Company entered into a lease agreement (the “Sutter Lease”) with Sutter Buttes LLC (“Sutter Buttes”), pursuant to which the Company has agreed to lease from Sutter Buttes approximately 1,000 acres of land in Sutter County, California on which the Company intends to cultivate and harvest the stevia plant.  The Sutter Lease begins on May 1, 2012 and expires on May 1, 2014 and the Company has paid the aggregate amount of all rent payments thereunder, totaling $250,000. One World Ranches and Sutter Buttes, the landlords under the Carlson Lease and the Sutter Lease, respectively, are each jointly-owned  by Dr. Avtar Dhillon, the Chairman of the Board of Directors of the Company, and his wife, Diljit Bains.


The amount of all rent payments under the Sutter Lease of $250,000 was accounted for by the Company as an asset, under Advance payment of related party lease, and is being amortized over the term of the lease of 24 months.  During the six months ended September 30, 2012, the Company recognized rent expense of $52,083 on the Sutter Lease.  As of September 30, 2012, the unamortized Advance payment of the related party lease of $197,917 was allocated between current portion of $124,992 and noncurrent portion of $72,925.


Other related party lease obligations


Effective as of September 1, 2011, the Company entered into an unsecured lease agreement with World Ranches LLC (“One World Ranches”), which is jointly-owned by Dr. Avtar Dhillon, the Chairman of the Board of Directors of the Company, and his wife, Diljit Bains, for office and laboratory space located at 5225 Carlson Rd., Yuba City, CA 95993 for a term of five years expiring on September 1, 2016 at a rate of $1,000 per month.  Effective as of January 1, 2012, the Company modified the lease agreement to provide for additional office and laboratory space for an additional $500 per month, for a total rental payment of $1,500 per month.


On April 23, 2012, the Company entered into a further lease agreement  with One World Ranches, pursuant to which the Company has agreed to lease from One World Ranches certain office and laboratory space located at 5225 Carlson Road, Yuba City, California , which supersedes and replaces the prior lease (such current lease agreement, the “Carlson Lease”) .  The Carlson Lease began on May 1, 2012 and expires on May 1, 2017, and the Company’s rent payments thereunder are $2,300 per month. The Company has paid $1,500 as a refundable security deposit under the Carlson Lease.    




14






On August 18, 2012, the Company entered into a lease agreement (the “Sacramento Lease”) with Sacramento Valley Real Estate, which is jointly-owned by Dr. Avtar Dhillon, the Chairman of the Board of Directors of the Company, and his wife, Diljit Bains, pursuant to which the Company has agreed to lease space located at 33-800 Clark Avenue, Yuba City, California. The month to month lease began on August 20, 2012 and the Company’s rent payment is $1,000 per month.  On August 22, 2012, the Company paid $1,000 as a refundable security deposit under the Sacramento lease.  


Aggregate payments under the above leases for the six months ended September 30, 2012 and 2011 were $66,450 and  $1,000, respectively.


8.  SUBSEQUENT EVENT


On October 29, 2012, we entered into a Securities Purchase Agreement (the “Securities Purchase Agreement”) with two investors providing for the issuance and sale of an aggregate of $500,000 in convertible debentures and warrants to purchase 1,000,000 shares of our common stock, for proceeds to us of $500,000. The financing closed on November 1, 2012.  After deducting for fees and expenses, the aggregate net proceeds from the sale of the debentures and warrants are expected to be approximately $445,000.

 

The debentures are non-interest bearing and mature on November 1, 2014. The debentures are convertible at the purchaser’s option into shares of the Company’s common stock (the “Conversion Shares”) at an initial conversion price of $0.50 per share, subject to adjustment for stock dividends and splits, subsequent rights offerings and pro rata distributions to the Company’s common stockholders. Upon the earlier of the effectiveness of a registration statement registering the Conversion Shares and Warrant Shares or the date the Conversion Shares and Warrant Shares may be sold pursuant to Rule 144 under the Securities Act of 1933 (the “Securities Act”) without volume or manner-of-sale restrictions (such earlier date, the “Trigger Date”), the conversion price of the debentures shall be reduced to the lesser of (i) the then conversion price or (ii) 90% of the average of the volume weighted average price of the Company’s common stock for the five trading days immediately prior to the Trigger Date, provided that the conversion price shall not be reduced to less than $0.35 per share (such adjusted conversion price, the “Reset Conversion Price”). The Company may force conversion of the debentures into Conversion Shares if, at any time following the Trigger Date, the volume weighted average price of the Company’s common stock for each of any five consecutive trading days exceeds 120% of the Reset Conversion Price. The debentures provide for certain restrictive covenants and events of default which, if any of them occurs, would permit or require the principal amount of the debentures to become or to be declared due and payable.

 

Each of the purchasers was issued a warrant to purchase up to a number of shares of the Company’s common stock equal to 100% of the Conversion Shares initially issuable to such purchaser pursuant to the Securities Purchase Agreement (the “Warrant Shares”). The warrants will have an initial exercise price of $0.70 per share, are exercisable immediately upon issuance and have a term of exercise equal to five years. Effective upon the Trigger Date, the exercise price of the each warrant shall be reduced to the lesser of (i) the then exercise price or (ii) 110% of the Reset Conversion Price. The warrants are subject to adjustment for subsequent equity sales by the Company, as well as for stock dividends and splits, subsequent rights offerings and pro rata distributions to the Company’s common stockholders.

 

As a condition of the closing of the financing, the Company entered into a Registration Rights Agreement with the purchasers (the “Registration Rights Agreement”) pursuant to which the Company is obligated to file with the Securities and Exchange Commission one or more registration statements relating to the resale of Conversion Shares and Warrant Shares.

 

Dawson James Securities, Inc. (“Dawson”) acted as placement agent for the Financing. Pursuant to the terms of a Placement Agent Agreement entered into by the Company and Dawson on October 29, 2012, the Company agreed (a) to pay to Dawson placement agent fees equal to 8% of the aggregate purchase price paid by each purchaser, (b) to issue to Dawson warrants to purchase 8% of the aggregate number of Conversion Shares issued in the financing, and (c) to reimburse Dawson for certain expenses.

 

The Company is in the process of analyzing the accounting effect of the issuance and sale of the debentures and warrants.

 



15






Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations


Cautionary Statement


The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our Unaudited Condensed Financial Statements and the related notes thereto contained in Part I, Item 1 of this Report. The information contained in this Quarterly Report on Form 10-Q is not a complete description of our business or the risks associated with an investment in our common stock. We urge you to carefully review and consider the various disclosures made by us in this Quarterly Report and in our other reports filed with the Securities and Exchange Commission (the “SEC”), including our Annual Report on Form 10-K for the fiscal year ended March 31, 2012 filed on July 13, 2012, and the related audited consolidated financial statements and notes included thereto.


Certain statements made in this Quarterly Report on Form 10-Q constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 (the “Exchange Act”). Forward-looking statements are projections in respect of future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “intend,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” or “continue” or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, which may cause our or our industry’s actual results, levels of activity or performance to be materially different from any future results, levels of activity or performance expressed or implied by these forward-looking statements. These risks and uncertainties include: general economic and financial market conditions; our ability to obtain additional financing as necessary; our ability to continue operating as a going concern; any adverse occurrence with respect to our intended business;  our ability to bring out intended product to market; market demand for our intended product; shifts in industry capacity; product development or other initiatives by our competitors; fluctuations in the availability of raw materials and costs associated with growing raw materials for our intended product; poor growing conditions for the stevia plant;;  other factors beyond our control ; and the other risks described under the heading “Risk Factors” in our Annual Report on Form 10-K filed with the SEC on July 13, 2012.    


Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity or performance.  In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.  These forward-looking statements speak only as of the date on which they are made.  Except as required by law, we undertake no obligation to revise or update publicly any forward-looking statements for any reason.


Overview of our Business


We were incorporated in the State of Nevada on June 29, 2007 and commenced operations as a development stage exploration company.  On October 10, 2011, we completed a merger with our wholly-owned subsidiary, Stevia First Corp., whereby we changed our name from “Legend Mining Inc.” to “Stevia First Corp.” As a result of our management change, the addition of key personnel, and the lease of property for laboratory and office space and agricultural land in California, we are pursuing our new business as an agricultural biotechnology company engaged in the cultivation and harvest of stevia leaf and the development of stevia products. We are in the early stages of establishing a vertically-integrated enterprise that controls the process of stevia production from plant breeding through propagation, planting, cultivation, and harvesting, and which also develops, markets, and sells stevia products.  Unless the context otherwise requires, all references in this Report to “we,” “us,” “our,” “the Company,” or “Stevia First” refer to Stevia First Corp.




16






Our new stock symbol “STVF.OB” became effective with the Over-the-Counter Bulletin Board at the opening of trading on November 23, 2011.


Plan of Operations


We have not yet generated or realized any revenues from our business operations. In their report on the annual consolidated financial statements for the fiscal year ended March 31, 2012, our independent auditors included an explanatory paragraph regarding concerns about our ability to continue as a going concern. This means that there is substantial doubt that we can continue as an on-going business unless we obtain additional capital or generate sufficient cash from our operations. We do not expect to generate cash from our operations for the foreseeable future. The continuation of our business is dependent upon our ability to obtain loans or sell securities to new and existing investors.


As described further under the heading “Liquidity and Capital Resources” below, (i) on January 31, 2012, we issued a $250,000 convertible debenture to an investor in a private placement (the “January Private Placement”) and (ii) on February 7, 2012, we entered into a subscription agreement (the “February Subscription Agreement”) with one investor, pursuant to which such investor irrevocably agreed to pay us $1,250,000 over a 12 month period beginning on March 1, 2012, in consideration for our issuance of 625,000 shares of common stock and convertible debentures with an aggregate principal amount of $625,000.  On May 22, 2012, we received advance payment from the investor for all remaining tranches under the February Subscription Agreement and issued the remaining shares of common stock and convertible debentures thereunder.


Our current strategy is to build a vertically integrated stevia enterprise in North America through our internal research and development, cultivation of stevia in California’s Central Valley, product development activities combined with acquiring rights to additional land suitable for stevia planting, and forming alliances with leading California growers, current manufacturers and distributors of high-grade but low-cost stevia extracts with superior taste profiles.


Over the 12 months following the date of this report, we expect to continue to review potential acquisitions and alliances, and to increase the scale of research and development operations. We currently have two full-time employees and two part-time employees. Total expenditures over the next 12 months are expected to be approximately $1,000,000. After giving effect to the funds raised in the recent private placements as of the date of this report we expect to have sufficient funds to operate our business for at least 12 months. However, our estimate of total expenditures could increase if we encounter unanticipated difficulties. In addition, our estimates of the amount of cash necessary to fund our business may prove to be wrong, and we could spend our available financial resources much faster than we currently expect. If we cannot raise the money that we need in order to continue to develop our business, we will be forced to delay, scale back or eliminate some or all of our proposed operations. If any of these were to occur, there is a substantial risk that our business would fail. We expect to continue to seek funding from our stockholders and other qualified investors in order to pursue our business plan. We do not have any arrangements in place for any future financing. Sources of additional funds may not be available on acceptable terms or at all.


As further discussed under the heading “Liquidity and Capital Resources” below, we will need to raise additional funds in order to continue operating our business.




17






Results of Operations


Three Months Ended September 30, 2012 Compared to Three Months Ended September 30, 2011


Our net loss during the three months ended September 30, 2012 was $865,773 compared to a net loss of $84,359 for the three months ended September 30, 2011, an increase in net loss of $781,414. During the three months ended September 30, 2012 and 2011, respectively, we did not generate any revenue.


During the three months ended September 30, 2012, we incurred general and administrative expenses of $797,939 compared to $75,160 incurred during the three months ended September 30, 2011 an increase of $722,779. General and administrative expenses generally include salary, rent, stock based compensation cost, financial and administrative contracted services and travel expenses. During the three months ended September 30, 2012, we incurred $413,273 in stock based compensation, compared to $0 for the three months ended September 30, 2011.  In addition, during the three months ended September 30, 2012, we incurred related party rent for $39,517 compared to $1,000 incurred during the three months ended September 30, 2011, an increase of $38,517.  During the three months ended September 30, 2012, we incurred related party consulting fees of $0 compared to $3,000 incurred during the three months ended September 30, 2011.   


During the three months ended September 30, 2012, we recorded interest expense in the amount of $28,016 compared to $2,651 for the three months ended September 30, 2011.


The increase in net loss during the three months ended September 30, 2012 compared to the three months ended September 30, 2011 is attributable primarily to higher general and administrative expenses incurred in the transition of our business from one with nominal operations to an agricultural biotechnology company engaged in the cultivation and harvest of stevia leaf and the development of stevia products, including expenses related to consulting and professional fees as we underwent a change of control and management as well as a name change and forward stock split. In addition, we instituted a stock incentive plan and granted options to employees and consultants, which has resulted in an increase in stock-based compensation expenses.


Six Months Ended September 30, 2012 Compared to Six Months Ended September 30, 2011


Our net loss during the six months ended September 30, 2012 was $1,185,277 compared to a net loss of $93,299 for the six months ended September 30, 2011, an increase in net loss of $1,091,978. During the six months ended September 30, 2012 and 2011, respectively, we did not generate any revenue.


During the six months ended September 30, 2012, we incurred general and administrative expenses of $1,083,586 compared to $79,863 incurred during the six months ended September 30, 2011 an increase of $1,003,723. General and administrative expenses generally include salary, rent; stock based compensation cost, financial and administrative contracted services and travel expenses. During the six months ended September 30, 2012, we incurred $581,923 in stock based compensation, compared to $0 for the six months ended September 30, 2011.  In addition, during the six months ended September 30, 2012, we incurred related party rent for $66,450 compared to $1,000 incurred during the six months ended September 30, 2011, an increase of $65,450.  During the six months ended September 30, 2012, we incurred related party consulting fees of $0 compared to $6,000 incurred during the six months ended September 30, 2011.   




18






During the six months ended September 30, 2012, we recorded interest expense in the amount of $52,953 compared to $3,888 for the six months ended September 30, 2011.


We recorded a gain of $107,004 related to the conversion of notes payable and accrued interest for common stock on May 25, 2012.  The notes and interest were converted at a price of $1.00 per share.  The gain represents the difference between the conversion price and the trading price of our common stock on the conversion date.


The increase in net loss during the six months ended September 30, 2012 compared to the six months ended September 30, 2011 is attributable primarily to higher general and administrative expenses incurred in the transition of our business from one with nominal operations to an agricultural biotechnology company engaged in the cultivation and harvest of stevia leaf and the development of stevia products, including expenses related to consulting and professional fees as we underwent a change of control and management as well as a name change and forward stock split. In addition, we instituted a stock incentive plan and granted options to employees and consultants, which has resulted in an increase in stock-based compensation expenses.


Liquidity and Capital Resources


Our financial statements have been prepared assuming that we will continue as a going concern and, accordingly, do not include adjustments relating to the recoverability and realization of assets and classification of liabilities that might be necessary should we be unable to continue in operation.


As of September 30, 2012, we had total current assets of $757,568. Our total current assets as of September 30, 2012 were comprised of cash in the amount of $533,490, a security deposit of $2,500, prepaid expense of $96,586, and advance payment on related party lease of $124,992. Our total current liabilities as of September 30, 2012 were $43,983 represented primarily by accounts payable and accrued liabilities of $28,322, accrued interest of $13,233 and accounts payable to a related party of $2,428. As a result, on September 30, 2012, we had a working capital of $713,585.


As of September 30, 2012 our long term liabilities were $732,091, which consisted of convertible notes payable in the amount of $875,000, net of a discount of $142,909.


Recent Financings


On January 31, 2012, we issued a $250,000 convertible debenture to a single investor in the January Private Placement. The debenture bears interest at the rate of 6.0% per annum, payable semi-annually in arrears on June 30 and December 31 of each year beginning on June 30, 2012. The debenture is convertible at the holder’s option into our common stock at an initial conversion price of $0.50 per share. We may elect to make interest payments in common stock valued at the conversion price. The entire principal balance of the debenture is due and payable three years following its issuance unless earlier redeemed by us in accordance with its terms. We may repay the principal and interest owing under the debenture in common stock at maturity or upon redemption of the debenture. The debenture also provides for customary events of default which, if any of them occurs, would permit or require the principal of and accrued interest on the debenture to become or to be declared due and payable.





19






On February 7, 2012, we entered into the February Subscription Agreement pursuant to which, beginning on March 1, 2012, the investor thereunder irrevocably agreed to pay $1,250,000 in consideration for our issuance of 625,000 shares of our common stock and convertible debentures with an aggregate principal amount of $625,000. Pursuant to the terms of the February Subscription Agreement, the investor agreed to purchase such shares and such convertible debentures in five tranches, for proceeds to us of $250,000 per tranche, under the following schedule: (i) on March 1, 2012, 125,000 shares of common stock and a $125,000 debenture convertible into shares of our common stock at a conversion price of $0.65; (ii) on June 1, 2012, 125,000 shares of common stock and a $125,000 debenture convertible into shares of our common stock at a conversion price of $0.80; (iii) on September 1, 2012, 125,000 shares of common stock and a $125,000 note convertible into shares of our common stock at a conversion price of $0.95; (iv) on December 1, 2012, 125,000 shares of common stock and a $125,000 note convertible into shares of our common stock at a conversion price of $1.10; and (v) on March 1, 2013, 125,000 shares of common stock and a $125,000 note convertible into shares of our common stock at a conversion price of $1.25. The conversion price of the common stock underlying each of the convertible debentures is subject to adjustment upon a reclassification or other change in our outstanding common stock and certain distributions to all holders of our common stock, and the conversion prices for all tranches may be set to $1.50 in the event that funding does not occur pursuant to the defined schedule.  On May 22, 2012, we received an advance payment of $850,000 from the investor under the February Subscription Agreement, which represented all remaining amounts owed by the investor under the February Subscription Agreement.  After our receipt of the investor’s advance payment of $850,000, the investor has purchased common stock and convertible debentures under the February Subscription Agreement for total proceeds to us of $1,250,000.  


Each convertible debenture issued pursuant to the February Subscription Agreement bears interest at the rate of 6.0% per annum, payable semi-annually in arrears on June 30 and December 31 of each year, and is  convertible at the holder’s option into our common stock at the applicable conversion price. We may elect to make interest payments in common stock valued at the conversion price. The entire principal balance of each debenture is due and payable three years following its date of issuance unless earlier redeemed by us in accordance with its terms. We may repay the principal and interest owing under each of the debentures in common stock at maturity or upon redemption of the debenture. The debenture also provides for customary events of default which, if any of them occurs, would permit or require the principal of and accrued interest on the debenture to become or to be declared due and payable.


On October 29, 2012, we entered into a Securities Purchase Agreement (the “Securities Purchase Agreement”) with two investors providing for the issuance and sale of an aggregate of $500,000 in convertible debentures and warrants to purchase 1,000,000 shares of our common stock, for proceeds to us of $500,000.  The financing closed on November 1, 2012.  After deducting for fees and expenses, the aggregate net proceeds from the sale of the debentures and warrants are expected to be approximately $445,000.







20






We are a development stage company and have not generated any revenue to date from our activities. We believe that if we do generate revenues in the foreseeable future, such revenues would be sparse and irregular and they would be less than necessary to carry our business forward without additional financing. We had cash in the amount of $533,490 as of September 30, 2012.  As we discuss under the heading “Plan of Operations” above, our total expenditures over the next 12 months are expected to be approximately $1,000,000. After giving effect to the funds raised in the private placements we describe above, as of the date of this report we expect to have sufficient funds to operate our business for at least 12 months. However, our estimate of total expenditures could increase if we encounter unanticipated difficulties. In addition, our estimates of the amount of cash necessary to fund our business may prove to be wrong, and we could spend our available financial resources much faster than we currently expect.  If we cannot raise the money that we need in order to continue to develop our business, we will be forced to delay, scale back or eliminate some or all of our proposed operations. If any of these were to occur, there is a substantial risk that our business would fail. Management’s plans are to continue to seek funding from our stockholders and other qualified investors in order to pursue our business plan.  We do not have any arrangements in place for any future financing. Sources of additional funds may not be available on acceptable terms or at all.


Net Cash Used in Operating Activities


We have not generated positive cash flows from operating activities. For the six months ended September 30, 2012, net cash used in operating activities was $882,716 compared to net cash used in operating activities of $85,621 for the six months ended September 30, 2011.  This increase is due to the increase in our operations as we began transitioning to our new business as an agricultural biotechnology company during the second half of the fiscal year ended March 31, 2012. Net cash used in operating activities during the six months ended September 30, 2012 consisted primarily of a net loss of $1,185,277 and an increase of $197,917 related to advance payments on related party lease, offset by $581,923 related to stock-based compensation. Net cash used in operating activities during the six months ended September 30, 2011 consisted of a net loss of $84,359 offset by $1,224 increase in accrued interest on loans and $250 for prepaid expense and $1,736 decrease for accounts payable and accrued liabilities and $1,000 decrease for accounts payable to related party.


Net Cash Provided By Financing Activities


During the six months ended September 30, 2012, net cash provided by financing activities was $885,000 compared to net cash provided by financing activities of $0 for the six months ended September 30, 2011. Net cash provided from financing activities during the six months ended September 30, 2012 was primarily attributable to our receipt of an advance payment of $850,000 from the investor under the February Subscription Agreement entered into on February 7, 2012, which represents all remaining amounts owed by the investor under in connection with the February Subscription Agreement.


Net Cash Used in Investing Activities


During the six months ended September 30, 2012, net cash used in investing activities was $1,000 compared to net cash used in investing activities of $0 for the six months ended September 30, 2011. Net cash used in investing activities during the six months ended September 30, 2012 was solely a security deposit paid on a lease.





21






Loan Obligations


On May 24, 2012, we entered into note exchange agreements (each, a “Note Exchange Agreement”) with two holders of eleven separate outstanding promissory notes with an aggregate principal amount of $196,800 that were issued between December 23, 2008 and October 26, 2011.  Pursuant to the Note Exchange Agreements, on May 25, 2012, all principal and accrued but unpaid interest under these outstanding promissory notes, totaling approximately $214,008, were canceled in exchange for our issuance to the holders of such notes of 214,008 shares of our common stock at a conversion rate of $1.00 per share.  


Off-Balance Sheet Arrangements


None.


Going Concern Statement


We have not yet received revenues from sales of products or services, and have recurring losses from operations.  The continuation of our company as a going concern is dependent upon our company attaining and maintaining profitable operations and raising additional capital.  The financial statements do not include any adjustment relating to the recovery and classification of recorded asset amounts or the amount and classification of liabilities that might be necessary should our company discontinue operations.


Due to the uncertainty of our ability to meet our current operating expenses and the capital expenses noted above, in their report on the annual financial statements for the year ended March 31, 2012, our independent auditors included an explanatory paragraph regarding substantial doubt about our ability to continue as a going concern.  Our financial statements contain additional note disclosures describing the circumstances that lead to this disclosure by our independent auditors.


The continuation of our business is dependent upon us raising additional financial support.  The issuance of additional equity securities by us could result in a significant dilution in the equity interests of our current stockholders.  Obtaining commercial loans, assuming those loans would be available, will increase our liabilities and future cash commitments.


Critical Accounting Policies


Our financial statements and accompanying notes have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis. The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, 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 periods.


We regularly evaluate the accounting policies and estimates that we use to prepare our financial statements. In general, management’s estimates are based on historical experience, on information from third party professionals, and on various other assumptions that are believed to be reasonable under the facts and circumstances. Actual results could differ from those estimates made by management.


We believe the following critical accounting policies require us to make significant judgments and estimates in the preparation of our consolidated financial statements.




22






Basis of Presentation


The financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America and are presented in U.S. dollars.


Use of Estimates and Assumptions


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


It is management's opinion that all adjustments necessary for the fair statement of the results for the interim period have been made. All adjustments are of normal recurring nature, or a description is included of the nature and amount of any adjustments other than normal recurring adjustments.


Stock-Based Compensation


We periodically issue stock options and warrants to employees and non-employees in non-capital raising transactions for services and for financing costs. We account for stock option and warrant grants issued and vesting to employees based on the authoritative guidance provided by the Financial Accounting Standards Board whereas the value of the award is measured on the date of grant and recognized over the vesting period. We account for stock option and warrant grants issued and vesting to non-employees in accordance with the authoritative guidance of the Financial Accounting Standards Board whereas the value of the stock compensation is based upon the measurement date as determined at either a) the date at which a performance commitment is reached, or b) at the date at which the necessary performance to earn the equity instruments is complete. Non-employee stock-based compensation charges generally are amortized over the vesting period on a straight-line basis. In certain circumstances where there are no future performance requirements by the non-employee, option grants are immediately vested and the total stock-based compensation charge is recorded in the period of the measurement date.


The fair value of our common stock option and warrant grant is estimated using the Black-Scholes-Merton option pricing model, which uses certain assumptions related to risk-free interest rates, expected volatility, expected life of the common stock options, and future dividends. Compensation expense is recorded based upon the value derived from the Black-Scholes-Merton option pricing model, and based on actual experience. The assumptions used in the Black-Scholes-Merton option pricing model could materially affect compensation expense recorded in future periods.”


Recent Accounting Pronouncements


Management has evaluated the recently issued accounting pronouncements through the date of this report and has determined that their adoption will not have a material impact on the financial position, results of operations, or cash flows of the Company.


Item 3. Quantitative and Qualitative Disclosures About Market Risk


Not Applicable.


Item 4.

Controls and Procedures



23






Disclosure Controls and Procedures


Under the supervision and with the participation of our management, including our principal executive and financial officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined in Rule 13a-15(e) under the Exchange Act, as of the end of the period covered by this report. Based on this evaluation, our principal executive and financial officer concluded that as of September 30, 2012, these disclosure controls and procedures were not effective to ensure that the information required to be disclosed by our company in reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission. The conclusion that our disclosure controls and procedures were not effective was due to the presence of material weaknesses in internal control over financial reporting, as that term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, as previously disclosed in Item 9A of our Annual Report on Form 10-K for the fiscal year ended March 31, 2012. In light of the material weaknesses identified by management, we performed additional analyses and procedures in order to conclude that our consolidated financial statements for the interim period ended September 30, 2012 are fairly presented, in all material respects, in accordance with GAAP.


Description of Material Weaknesses and Management’s Remediation Initiatives


As of the date of this report, our remediation efforts continue related to each of the material weaknesses and additional time and resources will be required in order to fully address these material weaknesses. We have not been able to complete all actions necessary and test the remediated controls in a manner that would enable us to conclude that such controls are effective. We are committed to implementing the necessary controls to remediate the material weaknesses described below. These material weaknesses will not be considered remediated until (1) the new processes are designed, appropriately controlled and implemented for a sufficient period of time and (2) we have sufficient evidence that the new processes and related controls are operating effectively. The following is a list of the material weaknesses as of September 30, 2012:


(1)  Insufficient segregation of duties in our finance and accounting functions due to limited personnel. During the six months ended September 30, 2012, we internally performed all aspects of our financial reporting process, including, but not limited to, access to the underlying accounting records and systems, the ability to post and record journal entries and responsibility for the preparation of the financial statements. Due to the fact that these duties were often performed by the same person, there was a lack of review over the financial reporting process that might result in a failure to detect errors in spreadsheets, calculations, or assumptions used to compile the financial statements and related disclosures as filed with the SEC. These control deficiencies could result in a material misstatement to our interim or annual financial statements that would not be prevented or detected.


(2) Insufficient corporate governance policies. The Company does not have a majority of independent members on our board of directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures.


Changes in Internal Control over Financial Reporting


There were no changes in our internal control over financial reporting during the three months ended September 30, 2012, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.




24






Inherent Limitations on Internal Control


A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision making can be faulty, and that breakdowns can occur because of simple errors. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.


In addition, projections of any evaluation of effectiveness to future periods are subject to risks that controls may become inadequate because of changes in conditions or the degree of compliance with the policies or procedures may deteriorate.





















25





PART II - OTHER INFORMATION


Item 1. Legal Proceedings


None.


Item 1A. Risk Factors


Not applicable.


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


As previously disclosed on a Form 8-K filed on October 31, 2012, on October 29, 2012, we entered into a Securities Purchase Agreement (the “Securities Purchase Agreement”) with the purchasers identified therein (collectively, the “Purchasers”) providing for the issuance and sale of an aggregate of $500,000 in convertible debentures (collectively, the “Debentures”) and warrants to purchase 1,000,000 shares of common stock (the “Warrants” and the shares issuable upon exercise of the Warrants, the “Warrant Shares”), for proceeds to us of $500,000 (the “Financing”).  The Financing closed on November 1, 2012.  After deducting for fees and expenses, the aggregate net proceeds from the sale of the Debentures and Warrants are expected to be approximately $445,000.


Effective as of the Closing, we entered into a Registration Rights Agreement with the Purchasers (the “Registration Rights Agreement”) pursuant to which we are obligated to file with the Securities and Exchange Commission one or more registration statements relating to the resale of Conversion Shares and Warrant Shares.  


In connection with the closing of the Financing, we issued the Debentures to the Purchasers.  The Debentures are non-interest bearing and mature two years following their issuance date.  The Debentures are convertible at the Purchaser’s option into shares of our common stock (the “Conversion Shares”) at an initial conversion price of $0.50 per share, subject to adjustment for stock dividends and splits, subsequent rights offerings and pro rata distributions to our common stockholders.  Upon the earlier of the effectiveness of a registration statement registering the Conversion Shares and Warrant Shares or the date the Conversion Shares and Warrant Shares may be sold pursuant to Rule 144 under the Securities Act of 1933 (the “Securities Act”) without volume or manner-of-sale restrictions (such earlier date, the “Trigger Date”), the conversion price of the Debentures shall be reduced to the lesser of (i) the then conversion price or (ii) 90% of the average of the volume weighted average price of the Company’s common stock for the five trading days immediately prior to the Trigger Date, provided that the conversion price shall not be reduced to less than $0.35 per share (such adjusted conversion price, the “Reset Conversion Price”).  We may force conversion of the Debentures into Conversion Shares if, at any time following the Trigger Date, the volume weighted average price of the Company’s common stock for each of any five consecutive trading days exceeds 120% of the Reset Conversion Price.  The Debentures provide for certain restrictive covenants and events of default which, if any of them occurs, would permit or require the principal amount of the Debentures to become or to be declared due and payable.    


Upon the closing of the Financing, each of the Purchasers was issued a Warrant to purchase up to a number of shares of common stock equal to 100% of the Conversion Shares initially issuable to such Purchaser pursuant to the Securities Purchase Agreement. The Warrants have an initial exercise price of $0.70 per share, are exercisable immediately upon issuance and have a term of exercise equal to five years.  Effective upon the Trigger Date, the exercise price of the Warrant shall be reduced to the lesser of (i) the then exercise price or (ii) 110% of the Reset Conversion Price.  The Warrants are subject to adjustment for subsequent equity sales by the Company, as well as for stock dividends and splits, subsequent rights offerings and pro rata distributions to the Company’s common stockholders.



26






Effective upon the closing of the Financing, we issued warrants to purchase 80,000 shares of its common stock to Dawson James Securities, Inc. (“Dawson”) as placement agent for the Financing (the “Placement Agent Warrants”). The Placement Agent Warrants have an exercise price of $0.625 per share and a term of five years and are exercisable immediately.  The other terms of the Placement Agent Warrants are substantially the same as the Warrants issued to the Purchasers in the Financing.


The issuance and sale of the Debentures, Warrants, Placement Agent Warrants, Conversion Shares and Warrant Shares (the “Securities”) has not been registered under the Securities Act. The Securities were sold in reliance upon exemptions from registration under Rule 506 of Regulation D under the Securities Act. The Securities may not be offered or sold in the United States absent registration under or exemption from the Securities Act and any applicable state securities laws.  Each of the Purchasers has represented that it is an accredited investor as defined in Regulation D and that it is acquiring the Securities for investment only and not with a view towards, or for resale in connection with, the public sale or distribution thereof.


Item 5. Other Information.  See the description of the Financing in Item 2 above.


Item 6. Exhibits

 

Exhibit Number

Description of Exhibit

 

 

31.1*

Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act*

31.2*

Certification of the Chief Financial Officer Pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act*

32.1*†

Certification of Chief Executive Officer and Chief Financial officer Under Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act*

101.INS

XBRL Instance Document *†

101.SCH

XBRL Taxonomy Extension Schema Document *†

101.CAL

XBRL Taxonomy Extension Calculation Linkbase *†

101.DEF

XBRL Taxonomy Extension Definition Linkbase Document *†

101.LAB

XBRL Taxonomy Extension Label Linkbase Document *†

101.PRE

XBRL Taxonomy Extension Presentation Linkbase Document *†

 

*

Filed herewith.

These exhibits are being “furnished” and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall they be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.









27






SIGNATURES

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


STEVIA FIRST CORP.




By: /s/ Robert Brooke

Robert Brooke

Chief Executive Officer

(Principal Executive Officer and Principal Financial Officer)


Date:   November 5, 2012






















28





EXHIBIT INDEX


 

 

Exhibit Number

Description of Exhibit

 

 

31.1*

Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act*

31.2*

Certification of the Chief Financial Officer Pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act*

32.1*†

Certification of Chief Executive Officer and Chief Financial officer Under Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act*

101.INS

XBRL Instance Document *†

101.SCH

XBRL Taxonomy Extension Schema Document *†

101.CAL

XBRL Taxonomy Extension Calculation Linkbase *†

101.DEF

XBRL Taxonomy Extension Definition Linkbase Document *†

101.LAB

XBRL Taxonomy Extension Label Linkbase Document *†

101.PRE

XBRL Taxonomy Extension Presentation Linkbase Document *†

 

*

Filed herewith.

These exhibits are being “furnished” and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall they be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.















29