UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549 
 
 
 
  
FORM 10-K
(Mark One)
 
x ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
     
For the fiscal year ended June 30, 2013
    
OR 
 
¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
For the transition period from ___________ to _____________
 
Commission file number: 001-31326
 
    SENESCO TECHNOLOGIES, INC.   
(Exact name of registrant as specified in its charter)
 
Delaware
   
84-1368850
  
(State or other jurisdiction of
 incorporation or organization)		   (I.R.S. Employer Identification No.)
 
721 Route 202/206, Suite 130, Bridgewater, New Jersey 08807
(Address of principal executive offices) (Zip Code)
 
(908) 864-4444 
(Registrant’s telephone number,
including area code)
 
Securities registered under Section 12(b) of the Act:
 
Title of each class   Name of each exchange on which registered
None    
 
Securities registered under Section 12(g) of the Act:
 
Common Stock, $0.01 par value per share.
 
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.         Yes ¨          No x
 
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act .       Yes ¨          No x 
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.        Yes x           No ¨
 
Indicate by check mark 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 x           No ¨
 
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ¨
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definitions of “accelerated filer”, “large accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
 
Large accelerated filer  ¨ Accelerated filer ¨
   
Non-accelerated filer ¨ Smaller reporting company x
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).           Yes ¨          No x
 
As of December 31, 2012, the aggregate market value of the registrant’s common stock held by non-affiliates of the registrant was $15,723,026, based on the closing sales price as reported on the OTCQB Marketplace on that date.
 
The number of shares outstanding of each of the registrant's classes of common stock, as of August 31, 2013: 
 
Class
 
Number of Shares
 
 
 
 
Common Stock, $0.01 par value
 
 
231,901,368  
Preferred Stock, $0.01 par value
 
 
665  
 
 
 
TABLE OF CONTENTS
 
 
Item
 
Page
 
 
 
 
PART I
1.
Business
1
 
 
 
 
 
1A.
Risk Factors
14
 
 
 
 
 
1B.
Unresolved Staff Comments
30
 
 
 
 
 
2.
Properties
30
 
 
 
 
 
3.
Legal Proceedings
30
 
 
 
 
 
4.
Mine Safety Disclosures
30
 
 
 
 
PART II
5.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
31
 
 
 
 
 
6.
Selected Financial Data
34
 
 
 
 
 
7.
Management's Discussion and Analysis of Financial  Condition and Results of Operations
35
 
 
 
 
 
7A.
Quantitative and Qualitative Disclosures About Market Risk
51
 
 
 
 
 
8.
Financial Statements and Supplementary Data
52
 
 
 
 
 
9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
52
 
 
 
 
 
9A.
Controls and Procedures
52
 
 
 
 
 
9B.
Other Information
53
 
 
 
 
PART III
10.
Directors, Executive Officers and Corporate Governance
54
 
 
 
 
 
11.
Executive Compensation
63
 
 
 
 
 
12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
85
 
 
 
 
 
13.
Certain Relationships and Related Transactions and Director Independence
88
 
 
 
 
 
14.
Principal Accounting Fees and Services
91
 
 
 
 
PART IV
15.
Exhibits and Financial Statement Schedules
92
 
 
 
 
SIGNATURES
 
 
93
 
 
 
 
FINANCIAL STATEMENTS
F-1
 
 
i

PART I
 
Item 1.           Business.
 
Our Business
 
The primary business of Senesco Technologies, Inc., a Delaware corporation incorporated in 1999, and its wholly-owned subsidiary, Senesco, Inc., a New Jersey corporation incorporated in 1998, collectively referred to as “Senesco,” “we,” “us” or “our,” is to utilize our patented and patent-pending technology related to certain genes, primarily eukaryotic translation initiation Factor 5A, or Factor 5A, and deoxyhypusine synthase, or DHS, and related technologies for human therapeutic applications to develop novel approaches to treat cancer and inflammatory diseases.
 
For agricultural applications, we have licensed applications of the Factor 5A, DHS and Lipase platforms to enhance the quality, productivity and stress resistance of agronomic crops and biofuel feedstock crops through the control of cell death, referred to herein as senescence, and growth in plants.
 
Human Therapeutic Applications
 
We believe that our Factor 5A gene regulatory technology could have broad applicability in the human therapeutic field, by either inducing or inhibiting programmed cell death, also known as apoptosis, which is the natural process the human body goes through in order to eliminate redundant or defective cells. Inducing apoptosis is useful in treating cancer where the defective cancer cells have failed to respond to the body’s natural apoptotic signals. Conversely, inhibiting apoptosis may be useful in preventing, ameliorating or treating an exaggerated, acute immune response in a wide range of inflammatory and ischemic diseases attributable to or aggravated by premature apoptosis.
 
 
1
 
SNS01-T for Multiple Myeloma
 
We have developed a therapeutic candidate, SNS01-T, an improved formulation of SNS01, for the potential treatment of multiple myeloma and non-Hodgkin B-cell lymphomas. SNS01-T utilizes our Factor 5A technology and comprises two active components: a DNA plasmid, or pDNA, expressing human eIF5A containing a lysine to arginine substitution at amino acid position 50, or eIF5AK50R, and a small inhibitory RNA, or siRNA. These two components are combined in a fixed ratio with a polymer, polyethyleneimine, or PEI, which enables self-assembly of the DNA and RNA into nanoparticles with demonstrated enhanced delivery to tissues and protection from degradation in the blood stream. Under the control of a B cell selective promoter, SNS01-T’s DNA plasmid up-regulates the apoptotic pathways within cancer cells by preferentially expressing the stable arginine form of the Factor 5A death message in target cells. The siRNA, by silencing the eIF5A gene, reduces expression of the hypusine form of Factor 5A that supports cell survival and proliferation. The silencing of the eIF5A gene by an eIF5A siRNA also down-regulates anti-apoptotic proteins, such as NFkB, ICAM and pro-inflammatory cytokines, which protect malignant cells from apoptosis and promote cell growth in multiple myeloma. The PEI, a cationic polymer, promotes auto-assembly of a nanoparticle with the other two components for intravenous delivery and protects the combination from degradation in the bloodstream until it is taken up by the tumor cell, where the siRNA and DNA plasmid are released.
 
We have performed efficacy, toxicological and dose-finding studies in vitro in non-human and human cells and in vivo in mice with SNS01. We have also completed our pivotal GLP toxicology studies in mice and dogs, employing SNS01-T, an improved formulation of SNS01, and have an open investigational new drug application, or IND, with the United States Food and Drug Administration, or FDA.
 
We have been granted orphan drug status for SNS01-T by the FDA for the potential treatment of multiple myeloma, mantle cell lymphoma (MCL) and diffuse large B-cell lymphoma (DLBCL) and are conducting a Phase 1b/2a clinical study with SNS01-T in patients with those indications. The clinical study is an open-label, multiple-dose, dose-escalation study, which is evaluating the safety and tolerability of SNS01-T when administered by intravenous infusion to relapsed or refractory multiple myeloma patients. The study design calls for four cohorts of three to six patients each. Patients in each cohort will receive twice-weekly dosing for six weeks followed by up to a four-week safety data review period before escalating to a higher dose level in the next cohort.
 
While the primary objective of this study is to evaluate safety and tolerability, the effect of SNS01-T on tumor response and time to relapse or progression will be assessed using multiple well-established metrics including measurement of monoclonal protein in multiple myeloma and CT imaging in MCL and DLBCL .
 
We have selected Mayo Clinic, University of Arkansas for Medical Sciences, the Randolph Cancer Center at West Virginia University, the Fred Hutchinson Cancer Research Center and the John Theurer Cancer Center at Hackensack University Medical Center as our clinical sites. During the fiscal year ended June 30, 2013, the agreement with the Company’s contract research organization was amended to reflect the additional costs involved with adding the three additional clinical sites. We are also considering adding additional sites to increase the rate of enrollment. 
 
 
2
 
  We have completed our first and second cohorts and the third cohort is open for enrollment and dosing patients. The results of the first and second cohort showed that SNS01-T was safe and well tolerated and met the criteria for Stable Disease in 2 of the 6 evaluable patients.
 
We have demonstrated in human multiple myeloma cell lines that there may be an additional benefit to combining SNS01-T with other approved myeloma drugs, such as bortezomib and lenalidomide. We have shown, in vitro, that these drugs are up to forty (40) times more effective in inhibiting cell growth when used in combination with SNS01-T. These results further reinforce the significance of our target and will guide us in designing future clinical studies. We have demonstrated that a high level of tumor eradication in a mouse model of human multiple myeloma was achieved with a combination of SNS01-T and lenalidomide. While SNS01-T alone performed well by completely eliminating tumors in 40% of the animals, complete tumor eradication was achieved in five out of six or 83% of the treated animals that received SNS01-T combined with the optimal study dose of lenalidomide. This effect lasted throughout 6 weeks of observation after the end of treatment. Neither dose of lenalidomide used alone eliminated tumors in any of the treated mice. Most recently, we have demonstrated the benefits of combining SNS01-T with bortezomib. In a mouse model of human multiple myeloma, SNS01-T as a monotherapy achieved 59% tumor growth inhibition, which exceeded that of bortezomib alone at either the 0.2 mg/kg dose (22% inhibition) or at the 0.5 mg/kg dose (39% inhibition). However, the combination of SNS01-T with 0.5 mg/kg of bortezomib resulted in 89% tumor inhibition, which was significantly more effective than either SNS01-T or bortezomib alone.
 
SNS01-T used in combination with other drugs
 
We have demonstrated that the combination of lenalidomide and SNS01-T performs better than either treatment alone in mouse xenograft models of human mantle cell lymphoma. When SCID mice, implanted with an aggressive human mantle cell lymphoma cell line (JVM2), were treated with either 15 mg/kg lenalidomide (5 times weekly by intra-peritoneal injection) or 0.375 mg/kg SNS01-T (twice weekly by intravenous injection) there was a growth delay of 4 days and 14 days, respectively. Mice treated with a combination of both drugs using the same dose levels and dosing regimens exhibited a tumor growth delay of 27 days (p value = 0.0008).
 
The median survival of mice treated with control nanoparticles was 21 days. Mice treated with lenalidomide or SNS01-T had a median survival of 28 days (33 % increase) and 37 days (76 % increase), respectively. Mice treated with the drug combination had a median survival of 52 days, an increase in survival of 148 %. Survival analysis using the Kaplan-Meier method revealed that treatment of mice with the drug combination resulted in statistically significant increases in survival compared to both SNS01-T (p value = 0.002) and lenalidomide (p value = 0.007) alone. We believe that the results of these studies not only support moving forward in multiple myeloma, but also support extending our clinical evaluation of SNS01-T in other B-cell cancers.
 
We may consider other human diseases in order to determine the role of Factor 5A and SNS01-T. We may further expand our research and development program beyond the initiatives listed above to include other diseases and research centers.
 
 
3
 
Human Therapeutic Target Markets
 
We believe that our eIF5A platform technology may have broad applicability in the human therapeutic field, by either inducing or inhibiting apoptosis. Inducing apoptosis may be useful in treating certain forms of cancer where tumor cells do not respond to immune system signals to undergo apoptosis. Inhibiting apoptosis may be useful in preventing or treating a wide range of inflammatory and ischemic diseases attributed to premature apoptosis, including diabetes, diabetic retinopathy and lung inflammation.
 
We have advanced our research in multiple myeloma, MCL and DLBCL and are conducting a Phase 1b/2a clinical trial for those indications, and may select additional human therapeutic indications to investigate in clinical trials. We believe that the success of our future operations will likely depend on our ability to transform our research and development activities into commercial applications.
 
We anticipate that we may enter into a collaboration with a biotechnology or pharmaceutical company to support the further development of SNS01-T after we complete our Phase 1b/2a clinical trial in multiple myeloma, MCL and DLBCL. However, there can be no assurance that we will be able to enter into such a collaboration or that one will be available on terms satisfactory to us.
 
Human Therapeutic Research Program
 
Our human therapeutic research program, which consists of pre-clinical in-vitro and in-vivo experiments designed to assess the role and mode of action of Factor 5A in human diseases and a phase 1a/2b clinical trial, is being performed by third party researchers, at our direction, at Criterium, our contract research organization and the University of Waterloo and other facilities. Additionally, we outsource certain projects, such as our clinical trial, to other third party research organizations.
 
On September 1, 1998, we entered into, and have extended through August 31, 2013, a research and development agreement with the University of Waterloo and Dr. Thompson as the principal inventor. The Research and Development Agreement provides that the University of Waterloo will perform research and development under our direction, and we will pay for the cost of this work and make certain payments to the University of Waterloo. In return for payments made under the Research and Development Agreements, we have all rights to the intellectual property derived from the research.
 
Our research and development expenses incurred on human therapeutic applications were approximately $2,033,100, or 97%, of our total research and development expenses for the year ended June 30, 2013.
 
Our research and development expenses incurred on human therapeutic applications were approximately $2,286,511, or 89%, of our total research and development expenses for the year ended June 30, 2012.
 
Our research and development expenses incurred on human therapeutic applications were approximately $3,253,253, or 87%, of our total research and development expenses for the year ended June 30, 2011. 
 
 
4
 
Since inception, the proportion of our research and development expenses on human therapeutic applications has increased, as compared to our research and development expenses on agricultural applications. This change is primarily due to the fact that our research focus on human therapeutics has increased and most of our research costs for plant applications have shifted to our license partners.
 
  Our planned future research and development initiatives for human therapeutics include:
 
⋅ Multiple Myeloma, Mantle Cell Lymphoma and Diffuse Large B-Cell Lymphoma. Continue a Phase 1b/2a clinical trial. In connection with the clinical trial, we have engaged Criterium to manage the operational aspects of the Phase 1b/2a clinical study. We have also entered into an agreement with Mayo Clinic, University of Arkansas for Medical Sciences, the Randolph Cancer Center at West Virginia University, the Fred Hutchinson Cancer Research Center and the John Theurer Cancer Center at Hackensack University Medical Center to be our clinical sites. We may add additional clinical sites in order to accelerate patient enrollment into the trial. The trial opened in September 2011 and we are currently treating patients. We estimate that the trial will be completed in the first half of 2014.
 
⋅ We may consider targeting cancers in other tissues by modifying the structure of SNS01-T, e.g., liver cancer.
 
⋅ We are exploring the use of our Factor 5A technology in other disease applications in oncology and inflammation.
 
In order to pursue the above research initiatives, as well as other research initiatives that may arise, we completed placements common stock and warrants on January 4, 2013 and common stock on May 8, 2013. However, it will be necessary for us to raise a significant amount of additional working capital in the future. If we are unable to raise the necessary funds, we may be required to significantly curtail the future development of some or all of our research initiatives and we will be unable to pursue other possible research initiatives.
 
We may further expand our research and development program beyond the initiatives listed above to include other diseases and research centers.
 
Human Therapeutic Suppliers
 
The materials for our lead therapeutic candidate, SNS01-T, for multiple myeloma consists of three parts: a pDNA expressing human eIF5AK50R; an siRNA, whose sequence corresponds to an untranslated region of native eIF5A mRNA; and linear PEI which enables self-assembly of the nucleic acids into nanoparticles. We have entered into supply agreements for the components as follows:
 
On June 27, 2008, we entered into a supply agreement with VGXI, Inc., or VGXI, under which VGXI will supply us with the plasmid portion of the Company’s combination therapy, hereinafter referred to as the VGXI Product. The agreement has an initial term that commenced on the date of the agreement and runs for a period of five (5) years. The agreement shall, upon mutual agreement, renew for consecutive one (1) year periods thereafter. Our financial obligation under the agreement is dependent upon the amount of VGXI Product ordered by the Company. 
 
 
5
 
On June 30, 2008, we entered into a supply agreement with Polyplus-transfection, or POLYPLUS, under which POLYPLUS will supply the Company with its “in vivo-jetPEI”, hereinafter referred to as the POLYPLUS Product, which is used in the formulation and systemic delivery of the Company’s combination therapy. The agreement has an initial term which commenced on the date of the agreement and runs until the eighth anniversary of the first sale of our product containing the POLYPLUS Product. The agreement shall automatically renew for consecutive one (1) year periods thereafter, except if terminated by either party upon six (6) months written notice prior to the initial or any subsequent renewal term. The Company’s financial obligation under the agreement is dependent upon the amount of POLYPLUS Product ordered by the Company.
 
On September 4, 2008, we entered into a supply agreement with Avecia Biotechnology, Inc., or AVECIA, under which AVECIA will supply the Company with the siRNA portion of the Company’s combination therapy consisting of the siRNA against Factor 5A, hereinafter referred to as the siRNA Product. The agreement had a term which commenced on the date of the agreement and terminated on the later of the completion of all services to be provided under the agreement or 30 days following delivery of the final shipment of the siRNA Product.
 
Effective June 4, 2013, the Company entered into a clinical supply agreement with The University of Iowa, or IOWA, under which IOWA will provide manufacturing, vialing and testing services for certain reagents that are used in SNS01-T. The agreement will terminate upon delivery of the delivery of the reagents, which is estimated to be approximately six months. The Company’s remaining financial obligation under the agreement is approximately $156,000.
 
Human Therapeutic Competition
 
Our competitors in human therapeutics that are presently attempting to distribute their technology have generally utilized one of the following distribution channels:
 
⋅ Entering into strategic alliances, including licensing technology to major marketing and distribution partners; or
 
⋅ Developing in-house production and marketing capabilities.
 
In addition, some competitors are established distribution companies, which alleviates the need for strategic alliances, while others are attempting to create their own distribution and marketing channels.
 
There are many large companies and development stage companies working in the field of apoptosis and B-cell cancer research including Celgene, Inc., Takeda/Millennium, ONYX Pharmaceuticals, Inc., Amgen Inc., Janssen Biotech, Inc., Novartis AG, and Pharmacyclics, Inc.
 
We do not currently have any commercialized products, and therefore, it is difficult to assess our competitive position in the market. However, we believe that if we are able to develop and commercialize a product or products under our patents to our Factor 5A platform technology, we will have a competitive position in the markets in which we will operate. 
 
 
6
 
Agricultural Applications 
 
Our agricultural research focuses on the discovery and development of certain gene technologies, which are designed to confer positive traits on fruits, flowers, vegetables, forestry species and agronomic crops.
 
We have licensed this technology to various strategic partners. We may continue to license this technology, as opportunities present themselves, to additional strategic partners and/or enter into joint collaborations or ventures.
 
Our ongoing research and development initiatives for agriculture include assisting our license partners to:
 
⋅ further develop and implement the DHS and Factor 5A gene technology in banana, canola, cotton, turfgrass, rice, alfalfa, corn, soybean, biofuels and trees; and
 
⋅ test the resultant crops for new beneficial traits such as increased yield, increased tolerance to environmental stress, disease resistance and more efficient use of fertilizer.
 
Agricultural Target Markets
 
In order to address the complexities associated with marketing and distribution in the worldwide market, we have adopted a multi-faceted commercialization strategy, in which we have entered into and plan to enter into, as the opportunities present themselves, additional licensing agreements or other strategic relationships with a variety of companies or other entities on a crop-by-crop basis. We anticipate revenues from these relationships in the form of licensing fees, royalties, usage fees, or the sharing of gross profits. In addition, we anticipate payments from certain of our partners upon their achievement of certain research and development benchmarks. This commercialization strategy allows us to generate revenue at various stages of product development, while ensuring that our technology is incorporated into a wide variety of crops. Our optimal partners combine the technological expertise to incorporate our technology into their product line along with the ability to successfully market the enhanced final product, thereby eliminating the need for us to develop and maintain a sales force.
 
Because the agricultural market is dominated by privately held companies or subsidiaries of foreign owned companies, market size and market share data for the crops under our license and development agreements is not readily available. Additionally, because we have entered into confidentiality agreements with our license and development partners, we are unable to report the specific financial terms of the agreements as well as any market size and market share data that our partners may have disclosed to us regarding their companies. 
 
 
7
 
Agricultural Development and License Agreements
 
On February 8, 2012, we entered into a research and development agreement with BioCorp Ventures, LLC (“BCV”), a division of technology incubator US Equity Holdings, to use our proprietary eukaryotic translation initiation Factor 5A (eIF5A) technology platform for sustainable energy applications (the “Agreement”). BCV, a newly formed start-up company, will have a license to evaluate our technology for the development of plants and plant products suitable for use in the production of biofuel and biofuel feedstock, including all species of algae and all species in the genus Miscanthus (perennial grasses). Biofuels derived from these organisms include biodiesel and bioethanol. The companies will continue ongoing research and development as BCV works on commercializing the technology. BCV will be fully responsible for further assessing the potential of our technology for all biofuel applications and determining the route to the commercialization of biofuel products. Through our significant know-how at the University of Waterloo, we will be responsible for technology transfer and providing technical advice to facilitate BCV’s operations. After the initial evaluation phase, the Agreement provides annual license maintenance payments to us and royalty payments in the mid-single digits if a product is commercialized by BCV. As part of the Agreement, after the initial evaluation phase, we will have a 15% equity interest in BCV and the right to appoint one member to BCV’s advisory board.
 
In February 2013, BCV was in breach of the Agreement. Specifically, BCV did not make the payment required or issue our equity interest to us on the due date. On March 1, 2013, we sent BCV a notice of breach. As such breach had not been cured by April 1, 2013, the Agreement was terminated in its entirety. In May 2013, we entered into a new Biofuels Evaluation and License Agreement with the BCV under the same terms and conditions as the previous Biofuels Evaluation and License Agreement described above, except that the evaluation period was amended and the amount of the milestone payments was increased.
 
As of June 30, 2013, we have nine (9) active license agreements with established agricultural biotechnology companies.
 
Agricultural Research Program
 
Over the past year, our agricultural research and development has been performed by one (1) researcher, at our direction, at the University of Waterloo, where the technology was developed. Additional agricultural research and development is performed by our license or joint collaboration partners.
 
Agricultural Competition
 
Our competitors in agriculture that are presently attempting to distribute their technology have generally utilized one of the following distribution channels:
 
⋅ licensing technology to major marketing and distribution partners;
⋅ entering into strategic alliances; or
⋅ developing in-house production and marketing capabilities.
 
In addition, some competitors are established distribution companies, which alleviates the need for strategic alliances, while others are attempting to create their own distribution and marketing channels.
 
Our competitors in the field of delaying plant senescence are companies that develop and produce transformed plants with a variety of enhanced traits. Such companies include: Mendel Biotechnology; Renessen LLC; Exelixis Plant Sciences, Inc.; and Syngenta International AG; among others.
 
We do not currently have any commercialized products, and therefore, it is difficult to assess our competitive position in the market. However, we believe that if we or our licensees are able to develop and commercialize a product or products using our technology, we will have a competitive position in the markets in which we or our licensees operate.
 
 
8
 
Agricultural Development Program
 
Generally, projects with our licensees begin by transforming seed or germplasm to incorporate our technology. Those seeds or germplasm are then grown in our partners’ greenhouses. After successful greenhouse trials, our partners will transfer the plants to the field for field trials. After completion of successful field trials, our partners may have to apply for and receive regulatory approval prior to initiation of any commercialization activities.
 
Generally, the approximate time to complete each sequential development step is as follows: 
 
Seed Transformation
approximately 1 to 2 years
Greenhouse
approximately 1 to 2 years
Field Trials
approximately 2 to 5 years  
 
The actual amount of time spent on each development phase depends on the crop, its growth cycle and the success of the transformation achieving the desired results. As such, the amount of time for each phase of development could vary, or the time frames may change.
 
The status of each of our projects with our partners is as follows:
 
Project
 
Partner
 
Status
 
 
 
 
 
Banana
 
Rahan Meristem
 
 
  - Shelf Life
 
 
 
Field trials
  - Disease Resistance
 
 
 
Field trials
Trees
 
Arborgen
 
 
  - Growth
 
 
 
Field trials
Alfalfa
 
Cal/West
 
Field trials
Corn
 
Monsanto
 
Field trials
Cotton
 
Bayer
 
Greenhouse
Canola
 
Bayer
 
Field trials
Rice
 
Bayer
 
Greenhouse
Soybean
 
Monsanto
 
Field trials
Turfgrass
 
The Scotts Company
 
Greenhouse
Biofuels
 
BioCorp Ventures
 
Initial Evaluation
 
Commercialization by our partners may require a combination of traits in a crop, such as both shelf life and disease resistance, or other traits.
 
Based upon our commercialization strategy, we anticipate that there may be a significant period of time before plants enhanced using our technology reach consumers, if at all.
 
 
9
 
Intellectual Property
 
We have twenty-eight (28) issued patents from the United States Patent and Trademark Office, or PTO, and seventy-three (73) issued patents from foreign countries. Of our one hundred and one (101) domestic and foreign issued patents, sixty-two (62) are for the use of our technology in agricultural applications and thirty-nine (39) relate to human therapeutics applications.
 
In addition to our one hundred and one (101) patents, we have a wide variety of patent applications, including divisional applications and continuations-in-part, in process with the PTO and internationally. We intend to continue our strategy of enhancing these new patent applications through the addition of data as it is collected.
 
Our agricultural patents are generally set to expire in 2019 in the United States and 2025 outside the United States. Our core human therapeutic technology patents are set to expire in 2021 in the United States and 2025 outside the United States, and our patents related to multiple myeloma are set to expire, both in and outside the United States in 2029.
 
On June 13, 2013, the Supreme Court of the United States of America ruled that naturally-occurring DNA sequences are unpatentable since they are products of nature. The Court further found that cDNA sequences, which are copies of non-intron containing mRNA sequences created in the laboratory, are patent eligible. We believe that the Supreme Court ruling has little impact on our patent portfolio overall and no impact on our human patents, which do not rely on claims on naturally-occurring DNA sequences. SNS01-T comprises two synthetic constructs, siRNA and a DNA plasmid, which are protected by composition of matter and method of use patent claims.
 
During our 2013, 2012 and 2011 fiscal years, we reviewed our patent portfolio in order to determine if we could reduce our cost of patent prosecution and maintenance. We identified several patents and patents pending that we believe we no longer need to maintain without having a material impact on the portfolio. We determined that we would no longer incur the cost to prosecute or maintain those patents or patents pending.
 
Government Regulation
 
At present, the U.S. federal government regulation of biotechnology is divided among three agencies: (i) the U.S. Department of Agriculture regulates the import, field-testing and interstate movement of specific types of genetic engineering that may be used in the creation of transformed plants; (ii) the Environmental Protection Agency regulates activity related to the invention of plant pesticides and herbicides, which may include certain kinds of transformed plants; and (iii) the FDA regulates foods derived from new plant varieties. The FDA requires that transformed plants meet the same standards for safety that are required for all other plants and foods in general. Except in the case of additives that significantly alter a food’s structure, the FDA does not require any additional standards or specific approval for genetically engineered foods but expects transformed plant developers to consult the FDA before introducing a new food into the market place.
 
 
10

In addition, our ongoing preclinical research with cell lines and lab animal models of human disease is not currently subject to the FDA requirements that govern clinical trials. However, use of our technology, SNS01-T, for human therapeutic applications, is subject to FDA regulation. Generally, the FDA must approve any drug or biologic product before it can be marketed in the United States. In addition, prior to being sold outside of the U.S., any products resulting from the application of our human therapeutic technology must be approved by the regulatory agencies of foreign governments. Prior to filing a new drug application or biologics license application with the FDA, we would have to perform extensive clinical trials, and prior to beginning any clinical trial, we need to perform extensive preclinical testing which could take several years and may require substantial expenditures.
 
Our current activities in human therapeutics related to our clinical trial in multiple myeloma, requires approval by the FDA. We have an open IND with the FDA for use of SNS01-T for the treatment of multiple myeloma and are subject to additional reporting to and monitoring by the FDA. Additionally, federal, state and foreign regulations relating to crop protection products and human therapeutic applications developed through biotechnology are subject to public concerns and political circumstances, and, as a result, regulations have changed and may change substantially in the future. Accordingly, we may become subject to governmental regulations or approvals or become subject to licensing requirements in connection with our research and development efforts. We may also be required to obtain such licensing or approval from the governmental regulatory agencies described above, or from state agencies, prior to the commercialization of our genetically transformed plants and human therapeutic technology. In addition, our marketing partners who utilize our technology or sell products grown with our technology may be subject to government regulations. If unfavorable governmental regulations are imposed on our technology or if we fail to obtain licenses or approvals in a timely manner, we may not be able to continue our operations.
 
Employees
 
In addition to the seven (7) scientists and monitors performing funded research for us at our CRO, the University of Waterloo, and other commercial research facilities, we have four (4) employees and five (5) consultants, four (4) of whom are executive officers and who are involved in our management. We do not anticipate hiring any additional employees over the next 12 months.
 
The officers are assisted by a Scientific Advisory Board that consists of prominent experts in the fields of plant and human cell biology as follows:
 
⋅ Alan Bennett, Ph.D., who serves as the Chairman of the Scientific Advisory Board, is the Associate Vice Chancellor of the Office of Technology Transfer at the University of California. His research interests include the molecular biology of tomato fruit development and ripening, the molecular basis of membrane transport, and cell wall disassembly.
 
⋅ Charles A. Dinarello, M.D., who serves as a member of the Scientific Advisory Board, is a Professor of Medicine at the University of Colorado School of Medicine, a member of the U.S. National Academy of Sciences and the author of over 500 published research articles. In addition to his active academic research career, Dr. Dinarello has held advisory positions with two branches of the National Institutes of Health and positions on the Board of Governors of both the Weizmann Institute and Ben Gurion University.
 
 
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⋅ James E. Mier, M.D., who serves as a member of the Scientific Advisory Board, is an Associate Professor of Medicine at Beth Israel Deaconess Medical Center, a teaching hospital of Harvard Medical School. He is also a practicing physician in the Division of Hematology-Oncology at Beth Israel. Dr. Mier’s research is funded by the NIH and he is a member of numerous professional societies.
 
Furthermore, pursuant to the Research and Development Agreements, a substantial amount of our research and development activities are conducted at the University of Waterloo under the supervision of Dr. Thompson, our Executive Vice President and Chief Scientific Officer. We utilize the University’s research staff including graduate and post-graduate researchers.
 
We may also contract research to additional university laboratories or to other companies in order to advance the development of our technology. 
 
 
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Safe Harbor Statement
 
The statements contained in this Annual Report on Form 10-K that are not historical facts are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. Such forward-looking statements may be identified by, among other things, the use of forward-looking terminology such as “believes,” “expects,” “may,” “will,” “should,” or “anticipates” or the negative thereof or other variations thereon or comparable terminology, or by discussions of strategy that involve risks and uncertainties. In particular, our statements regarding the anticipated growth in the markets for our technologies, the continued advancement of our research, the approval of our patent applications, the possibility of governmental approval in order to sell or offer for sale to the general public a genetically engineered plant or plant product, the successful implementation of our commercialization strategy, including the success of our agricultural partners, statements relating to our patent applications, the anticipated long term growth of our business, the results of our preclinical or clinical studies, if any, the quotation of the Company’s common stock on an over-the-counter securities market, and the timing of the projects and trends in future operating performance are examples of such forward-looking statements. The forward-looking statements include risks and uncertainties, including, but not limited to, our ability to recruit patients for its clinical trial, our limited operating history, our need for additional capital to fund our operations until we are able to generate a profit, the current economic environment, our dependence on a single principal technology, our outsourcing of our research and development activities, our significant future capital needs, our dependence on our patents and proprietary rights and the enforcement of these rights, the potential for our competitors or third parties to allege that we are infringing upon their intellectual property rights, the potential that our security measures may not adequately protect our unpatented technology, potential difficulty in managing our growth and expanding our operations, our lack of marketing or sales history and dependence on third-party marketing partners, our potential future dependence on joint ventures and strategic alliances to develop and market our technology, the intense competition in the human therapeutic and agricultural biotechnology industries, the various government regulations that our business is subject to, the potential that our preclinical studies and clinical trials of our human therapeutic applications may be unsuccessful, any inability to license from third parties their proprietary technologies or processes which we use in connection with the development of our technology, the length, expense and uncertainty associated with clinical trials for our human therapeutic technology, the potential that, even if we receive regulatory approval, consumers may not accept products containing our technology, our dependence on key personnel, the potential that certain provisions of our charter, by-laws and Delaware law could make a takeover difficult, increasing political and social turmoil, the potential that our management and other affiliates, due to their significant control of our common stock have the ability to significantly influence our actions, the potential that a significant portion of our total outstanding shares of common stock may be sold in the market in the near future, the limited trading market of our common stock, fluctuations in the market price of our common stock, our dividend policy and potential for our stockholders to be diluted.
 
 
 
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ITEM 1A:    Risk Factors
 
The more prominent risks and uncertainties inherent in our business are described below. However, additional risks and uncertainties may also impair our business operations. If any of the following risks actually occur, our business, financial condition or results of operations may suffer.
 
Risks Related to Our Business
 
Recurring losses and negative cash flows from operations raise substantial doubt about our ability to continue as a going concern and we may not be able to continue as a going concern.
 
Our recurring losses from operations and negative cash flows from operations raise substantial doubt about our ability to continue as a going concern and as a result, our independent registered public accounting firm included an explanatory paragraph in its report on our consolidated financial statements for the fiscal year ended June 30, 2013 Substantial doubt about our ability to continue as a going concern may create negative reactions to the price of the common shares of our stock and we may have a more difficult time obtaining financing.
 
We have prepared our financial statements on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts of liabilities that might be necessary should we be unable to continue in existence.
 
We have a limited operating history and have incurred substantial losses and expect to incur future losses.
 
We are a development stage biotechnology company with a limited operating history and limited assets and capital. We have incurred losses each year since inception and had an accumulated deficit of $74,425,835 at June 30, 2013. We have generated minimal revenues by licensing our technology for certain crops to companies willing to share in our development costs. In addition, our technology may not be ready for commercialization for several years. We expect to continue to incur losses for the next several years because we anticipate that our expenditures on research and development and administrative activities will significantly exceed our revenues during that period. We cannot predict when, if ever, we will become profitable.
 
We will need additional capital to fund our operations until we are able to generate a profit.
 
Our operations to date have required significant cash expenditures. Our future capital requirements will depend on the results of our research and development activities, preclinical and clinical studies, and competitive and technological advances.
 
We will need to obtain more funding in the future through collaborations or other arrangements with research institutions and corporate partners, or public and private offerings of our securities, including debt or equity financing. We may not be able to obtain adequate funds for our operations from these sources when needed or on acceptable terms. Future collaborations or similar arrangements may require us to license valuable intellectual property to, or to share substantial economic benefits with, our collaborators. If we raise additional capital by issuing additional equity or securities convertible into equity, our stockholders may experience dilution and our share price may decline. Any debt financing may result in restrictions on our spending. 
 
 
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If we are unable to raise additional funds, we will need to do one or more of the following:
 
⋅ delay, scale-back or eliminate some or all of our research and product development programs;
⋅ provide licenses to third parties to develop and commercialize products or technologies that we would otherwise seek to develop and commercialize ourselves;
⋅ seek strategic alliances or business combinations;
⋅ attempt to sell our company;
⋅ cease operations; or
⋅ declare bankruptcy.
 
We believe that at the projected rate of spending we should have sufficient cash to maintain our present operations through November 2013.
 
We may be adversely affected by the current economic environment.
 
Our ability to obtain financing, invest in and grow our business, and meet our financial obligations depends on our operating and financial performance, which in turn is subject to numerous factors. In addition to factors specific to our business, prevailing economic conditions and financial, business and other factors beyond our control can also affect our business and ability to raise capital. We cannot anticipate all of the ways in which the current economic climate and financial market conditions could adversely impact our business.
 
Materials necessary to manufacture some of our compounds currently under development may not be available on commercially reasonable terms, or at all, which may delay our development and commercialization of these compounds.
 
Some of the materials necessary for the manufacture of our compounds under development may, from time to time, be available either in limited quantities, or from a limited number of manufacturers, or both. Our contract manufacturers need to obtain these materials for our clinical trials and, potentially, for commercial distribution when and if we obtain marketing approval for these compounds. Suppliers may not sell us these materials at the time we need them or on commercially reasonable terms. If we are unable to obtain the materials needed to conduct our clinical trials, product testing and potential regulatory approval could be delayed, adversely affecting our ability to develop the product candidates. Similarly, if we are unable to obtain critical manufacturing materials after regulatory approval has been obtained for a product candidate, the commercial launch of that product candidate could be delayed or there could be a shortage in supply, which could materially affect our ability to generate revenues from that product candidate. If suppliers increase the price of manufacturing materials, the price for one or more of our products may increase, which may make our products less competitive in the marketplace. If it becomes necessary to change suppliers for any of these materials or if any of our suppliers experience a shutdown or disruption at the facilities used to produce these materials, due to technical, regulatory or other reasons, it could harm our ability to manufacture our products.
 
 
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We depend on a single principal technology and, if our technology is not commercially successful, we will have no alternative source of revenue.
 
Our primary business is the development and licensing of technology to identify, isolate, characterize and promote or silence genes which control the death of cells in humans and plants. Our future revenue and profitability critically depend upon our ability, or our licensees’ ability, to successfully develop apoptosis and senescence gene technology and later license or market such technology. We have conducted experiments on certain crops with favorable results and have conducted certain preliminary cell-line and animal experiments, which have provided us with data upon which we have designed additional research programs. However, we cannot give any assurance that our technology will be commercially successful or economically viable for any crops or human therapeutic applications.
 
In addition, no assurance can be given that adverse consequences might not result from the use of our technology such as the development of negative effects on humans or plants or reduced benefits in terms of crop yield or protection. Our failure to obtain market acceptance of our technology or the failure of our current or potential licensees to successfully commercialize such technology would have a material adverse effect on our business.
 
We outsource all of our research and development activities and, if we are unsuccessful in maintaining our alliances with these third parties, our research and development efforts may be delayed or curtailed.
 
We rely on third parties to perform all of our research and development activities. Our research and development efforts take place at the University of Waterloo in Ontario, Canada, where our technology was discovered, at other commercial research facilities and with our commercial partners. At this time, we do not have the internal capabilities to perform our own research and development activities. Accordingly, the failure of third party research partners to perform under agreements entered into with us, or our failure to renew important research agreements with these third parties, may delay or curtail our research and development efforts.
 
We have significant future capital needs and may be unable to raise capital when needed, which could force us to delay or reduce our research and development efforts.
 
As of June 30, 2013, we had a cash balance of $1,602,294 and working capital of $309,572. Using our available reserves as of June 30, 2013, we believe that we can operate according to our current business plan through November 2013.
 
To date, we have generated minimal revenues and anticipate that our operating costs will exceed any revenues generated over the next several years. Therefore, we will be required to raise additional capital in the future in order to operate in accordance with our current business plan, and this funding may not be available on favorable terms, if at all. If we are unable to raise additional funds, we will need to do one or more of the following:
 
⋅ delay, scale back or eliminate some or all of our research and development programs;
⋅ provide a license to third parties to develop and commercialize our technology that we would otherwise seek to develop and commercialize ourselves;
⋅ seek strategic alliances or business combinations;
⋅ attempt to sell our company;
⋅ cease operations; or
⋅ declare bankruptcy.
 
 
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In addition, in connection with any funding, if we need to issue more equity securities than our certificate of incorporation currently authorizes we will need stockholder approval. If stockholder approval is not obtained or if adequate funds are not available, we may be required to curtail operations significantly or to obtain funds through arrangements with collaborative partners or others that may require us to relinquish rights to certain of our technologies, product candidates, products or potential markets. Investors may experience dilution in their investment from future offerings of our common stock. For example, if we raise additional capital by issuing equity securities, such an issuance would reduce the percentage ownership of existing stockholders. In addition, assuming the exercise of all options and warrants outstanding and the conversion of the preferred stock into common stock, as of June 30, 2013, we had 113,332,828 shares of common stock authorized but unissued and unreserved, which may be issued from time to time by our board of directors. Furthermore, we may need to issue securities that have rights, preferences and privileges senior to our common stock. Failure to obtain financing on acceptable terms would have a material adverse effect on our liquidity.
 
Since our inception, we have financed all of our operations through equity and debt financings. Our future capital requirements depend on numerous factors, including:
 
⋅ the scope of our research and development;
⋅ our ability to attract business partners willing to share in our development costs;
⋅ our ability to successfully commercialize our technology;
⋅ competing technological and market developments;
⋅ our ability to enter into collaborative arrangements for the development, regulatory approval and commercialization of other products; and
⋅ the cost of filing, prosecuting, defending and enforcing patent claims and other intellectual property rights.
 
Our business depends upon our patents and proprietary rights and the enforcement of these rights. Our failure to obtain and maintain patent protection may increase competition and reduce demand for our technology.
 
As a result of the substantial length of time and expense associated with developing products and bringing them to the marketplace in the biotechnology and agricultural industries, obtaining and maintaining patent and trade secret protection for technologies, products and processes is of vital importance. Our success will depend in part on several factors, including, without limitation:
 
⋅ our ability to obtain patent protection for our technologies and processes;
⋅ our ability to preserve our trade secrets; and
⋅ our ability to operate without infringing the proprietary rights of other parties both in the United States and in foreign countries.
 
As of June 30, 2013, we have been issued twenty-eight (28) patents by the PTO and seventy-three (73) patents from foreign countries. We have also filed numerous patent applications for our technology in the United States and in several foreign countries, which technology is vital to our primary business, as well as several continuations in part on these patent applications. Our success depends in part upon the grant of patents from our pending patent applications.
 
 
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Although we believe that our technology is unique and that it will not violate or infringe upon the proprietary rights of any third party, we cannot assure you that these claims will not be made or if made, could be successfully defended against. If we do not obtain and maintain patent protection, we may face increased competition in the United States and internationally, which would have a material adverse effect on our business. 
 
Since patent applications in the United States are maintained in secrecy until patents are issued, and since publication of discoveries in the scientific and patent literature tend to lag behind actual discoveries by several months, we cannot be certain that we were the first creator of the inventions covered by our pending patent applications or that we were the first to file patent applications for these inventions.
 
In addition, among other things, we cannot assure you that:
 
⋅ our patent applications will result in the issuance of patents;
⋅ any patents issued or licensed to us will be free from challenge and if challenged, would be held to be valid;
⋅ any patents issued or licensed to us will provide commercially significant protection for our technology, products and processes;
⋅ other companies will not independently develop substantially equivalent proprietary information which is not covered by our patent rights;
⋅ other companies will not obtain access to our know-how;
⋅ other companies will not be granted patents that may prevent the commercialization of our technology; or
⋅ we will not incur licensing fees and the payment of significant other fees or royalties to third parties for the use of their intellectual property in order to enable us to conduct our business.
 
Our competitors may allege that we are infringing upon their intellectual property rights, forcing us to incur substantial costs and expenses in resulting litigation, the outcome of which would be uncertain.
 
Patent law is still evolving relative to the scope and enforceability of claims in the fields in which we operate. We are like most biotechnology companies in that our patent protection is highly uncertain and involves complex legal and technical questions for which legal principles are not yet firmly established. In addition, if issued, our patents may not contain claims sufficiently broad to protect us against third parties with similar technologies or products, or provide us with any competitive advantage.
 
The PTO and the courts have not established a consistent policy regarding the breadth of claims allowed in biotechnology patents. The allowance of broader claims may increase the incidence and cost of patent interference proceedings and the risk of infringement litigation. On the other hand, the allowance of narrower claims may limit the scope and value of our proprietary rights.
 
The laws of some foreign countries do not protect proprietary rights to the same extent as the laws of the United States, and many companies have encountered significant problems and costs in protecting their proprietary rights in these foreign countries.
 
 
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We could become involved in infringement actions to enforce and/or protect our patents. Regardless of the outcome, patent litigation is expensive and time consuming and would distract our management from other activities. Some of our competitors may be able to sustain the costs of complex patent litigation more effectively than we could because they have substantially greater resources. Uncertainties resulting from the initiation and continuation of any patent litigation could limit our ability to continue our operations.
 
If our technology infringes the intellectual property of our competitors or other third parties, we may be required to pay license fees or damages.
 
The current patent landscape surrounding siRNA technology is unclear due to the recent proliferation of siRNA-related patent litigation and grants of third-party patents encompassing this technology. If any relevant claims of third party patents that are adverse to us are upheld as valid and enforceable, we could be prevented from commercializing our technology or could be required to obtain licenses from the owners of such patents. We cannot assure you that such licenses would be available or, if available, would be on acceptable terms. Some licenses may be non-exclusive and, therefore, our competitors may have access to the same technology licensed to us. In addition, if any parties successfully claim that the creation or use of our technology infringes upon their intellectual property rights, we may be forced to pay damages, including treble damages.
 
Our security measures may not adequately protect our unpatented technology and, if we are unable to protect the confidentiality of our proprietary information and know-how, the value of our technology may be adversely affected.
 
Our success depends upon know-how, unpatentable trade secrets, and the skills, knowledge and experience of our scientific and technical personnel. As a result, all employees agreed to a confidentiality provision in their employment agreement that prohibited the disclosure of confidential information to anyone outside of our company, during the term of employment and for five (5) years thereafter. The employment agreements have since been terminated, but the period of confidentiality is still in effect. We also require all employees to disclose and assign to us the rights to their ideas, developments, discoveries and inventions. We also attempt to enter into similar agreements with our consultants, advisors and research collaborators. We cannot assure you that adequate protection for our trade secrets, know-how or other proprietary information against unauthorized use or disclosure will be available.
 
We occasionally provide information to research collaborators in academic institutions and request that the collaborators conduct certain tests. We cannot assure you that the academic institutions will not assert intellectual property rights in the results of the tests conducted by the research collaborators, or that the academic institutions will grant licenses under such intellectual property rights to us on acceptable terms, if at all. If the assertion of intellectual property rights by an academic institution is substantiated, and the academic institution does not grant intellectual property rights to us, these events could limit our ability to commercialize our technology.
 
 
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 As we evolve from a company primarily involved in the research and development of our technology into one that is also involved in the commercialization of our technology, we may have difficulty managing our growth and expanding our operations.
 
As our business grows, we may need to add employees and enhance our management, systems and procedures. We may need to successfully integrate our internal operations with the operations of our marketing partners, manufacturers, distributors and suppliers to produce and market commercially viable products. We may also need to manage additional relationships with various collaborative partners, suppliers and other organizations. Although we do not presently conduct research and development activities in-house, we may undertake those activities in the future. Expanding our business may place a significant burden on our management and operations. We may not be able to implement improvements to our management information and control systems in an efficient and timely manner and we may discover deficiencies in our existing systems and controls. Our failure to effectively respond to such changes may make it difficult for us to manage our growth and expand our operations.
 
We have no marketing or sales history and depend on third party marketing partners. Any failure of these parties to perform would delay or limit our commercialization efforts.
 
We have no history of marketing, distributing or selling biotechnology products, and we are relying on our ability to successfully establish marketing partners or other arrangements with third parties to market, distribute and sell a commercially viable product both here and abroad. Our business plan envisions creating strategic alliances to access needed commercialization and marketing expertise. We may not be able to attract qualified sub-licensees, distributors or marketing partners, and even if qualified, these marketing partners may not be able to successfully market agricultural products or human therapeutic applications developed with our technology. If our current or potential future marketing partners fail to provide adequate levels of sales, our commercialization efforts will be delayed or limited and we may not be able to generate revenue.
 
We will depend on joint ventures and strategic alliances to develop and market our technology and, if these arrangements are not successful, our technology may not be developed and the expenses to commercialize our technology will increase.
 
In its current state of development, our technology is not ready to be marketed to consumers. We intend to follow a multi-faceted commercialization strategy that involves the licensing of our technology to business partners for the purpose of further technological development, marketing and distribution. We have and are seeking business partners who will share the burden of our development costs while our technology is still being developed, and who will pay us royalties when they market and distribute products incorporating our technology upon commercialization. The establishment of joint ventures and strategic alliances may create future competitors, especially in certain regions abroad where we do not pursue patent protection. If we fail to establish beneficial business partners and strategic alliances, our growth will suffer and the continued development of our technology may be harmed.
 
 
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Competition in the human therapeutic and agricultural biotechnology industries is intense and technology is changing rapidly. If our competitors market their technology faster than we do, we may not be able to generate revenues from the commercialization of our technology.
 
Many human therapeutic and agricultural biotechnology companies are engaged in research and development activities relating to apoptosis and senescence. The market for plant protection and yield enhancement products is intensely competitive, rapidly changing and undergoing consolidation. We may be unable to compete successfully against our current and future competitors, which may result in price reductions, reduced margins and the inability to achieve market acceptance for products containing our technology. Our competitors in the field of plant senescence gene technology are companies that develop and produce transgenic plants and include major international agricultural companies, specialized biotechnology companies, research and academic institutions and, potentially, our joint venture and strategic alliance partners. These companies include: Mendel Biotechnology, Inc.; Ceres, Inc., Archer Daniels Midland and Syngenta International AG; among others. Some of our competitors that are involved in apoptosis research include: Celgene, Inc.; Takeda/Millennium; ONYX Pharmaceuticals, Inc.; Amgen Inc.; Janssen Biotech, Inc.; Novartis AG; and Pharmacyclics, Inc. Many of these competitors have substantially greater financial, marketing, sales, distribution and technical resources than us and have more experience in research and development, clinical trials, regulatory matters, manufacturing and marketing. We anticipate increased competition in the future as new companies enter the market and new technologies become available. Our technology may be rendered obsolete or uneconomical by technological advances or entirely different approaches developed by one or more of our competitors, which will prevent or limit our ability to generate revenues from the commercialization of our technology.
 
Our business is subject to various government regulations and, if we or our licensees are unable to obtain regulatory approval, we may not be able to continue our operations.
 
At present, the U.S. federal government regulation of biotechnology is divided among three agencies:
 
⋅ the United States Department of Agriculture, or USDA, regulates the import, field testing and interstate movement of specific types of genetic engineering that may be used in the creation of transgenic plants;
⋅ the United States Environmental Protection Agency, or EPA, regulates activity related to the invention of plant pesticides and herbicides, which may include certain kinds of transgenic plants; and
⋅ the FDA regulates foods derived from new plant varieties.
 
The FDA requires that transgenic plants meet the same standards for safety that are required for all other plants and foods in general. Except in the case of additives that significantly alter a food’s structure, the FDA does not require any additional standards or specific approval for genetically engineered foods, but expects transgenic plant developers to consult the FDA before introducing a new food into the marketplace.
 
 
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Use of our technology, if developed for human therapeutic applications, is also subject to FDA regulation. The FDA must approve any drug or biologic product before it can be marketed in the United States. In addition, prior to being sold outside of the United States, any products resulting from the application of our human therapeutic technology must be approved by the regulatory agencies of foreign governments. Prior to filing a new drug application or biologics license application with the FDA, we would have to perform extensive clinical trials, and prior to beginning any clinical trial, we would need to perform extensive preclinical testing which could take several years and may require substantial expenditures.
 
We believe that our current agricultural activities, which to date have been confined to research and development efforts, do not require licensing or approval by any governmental regulatory agency. However, we are performing clinical trials in connection with our human therapeutic applications, which is subject to FDA approval. Additionally, federal, state and foreign regulations relating to crop protection products and human therapeutic applications developed through biotechnology are subject to public concerns and political circumstances, and, as a result, regulations have changed and may change substantially in the future. Accordingly, we may become subject to governmental regulations or approvals or become subject to licensing requirements in connection with our research and development efforts. We may also be required to obtain such licensing or approval from the governmental regulatory agencies described above, or from state agencies, prior to the commercialization of our genetically transformed plants and human therapeutic technology. In addition, our marketing partners who utilize our technology or sell products grown with our technology may be subject to government regulations. If unfavorable governmental regulations are imposed on our technology or if we fail to obtain licenses or approvals in a timely manner, we may not be able to continue our operations.
 
Preclinical studies of our human therapeutic applications may be unsuccessful, which could delay or prevent regulatory approval.
 
Preclinical studies may reveal that our human therapeutic technology is ineffective or harmful, and/or may be unsuccessful in demonstrating efficacy and safety of our human therapeutic technology, which would significantly limit the possibility of obtaining regulatory approval for any drug or biologic product manufactured with our technology. The FDA requires submission of extensive preclinical, clinical and manufacturing data to assess the efficacy and safety of potential products. Any delay in receiving approval for any applicable IND from the FDA would result in a delay in the commencement of the related clinical trial. Additionally, we could be required to perform additional preclinical studies prior to the FDA approving any applicable IND. Furthermore, the success of preliminary studies does not ensure commercial success, and later-stage clinical trials may fail to confirm the results of the preliminary studies.
 
Our success will depend on the success of our clinical trials of our human therapeutic applications.
 
It may take several years to complete the clinical trials of a product, and failure of one or more of our clinical trials can occur at any stage of testing. We believe that the development of our product candidate involves significant risks at each stage of testing. If clinical trial difficulties and failures arise, our product candidate may never be approved for sale or become commercially viable.
 
 
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There are a number of difficulties and risks associated with clinical trials. These difficulties and risks may result in the failure to receive regulatory approval to sell our product candidate or the inability to commercialize our product candidate. The possibility exists that:
 
⋅ we may discover that the product candidate does not exhibit the expected therapeutic results in humans, may cause harmful side effects or have other unexpected characteristics that may delay or preclude regulatory approval or limit commercial use if approved;
⋅ the results from early clinical trials may not be statistically significant or predictive of results that will be obtained from expanded advanced clinical trials;
⋅ institutional review boards or regulators, including the FDA, may hold, suspend or terminate our clinical research or the clinical trials of our product candidate for various reasons, including noncompliance with regulatory requirements or if, in their opinion, the participating subjects are being exposed to unacceptable health risks;
⋅ subjects may drop out of our clinical trials;
⋅ our preclinical studies or clinical trials may produce negative, inconsistent or inconclusive results, and we may decide, or regulators may require us, to conduct additional preclinical studies or clinical trials; and
⋅ the cost of our clinical trials may be greater than we currently anticipate.
 
Clinical trials for our human therapeutic technology will be lengthy and expensive and their outcome is uncertain.
 
Before obtaining regulatory approval for the commercial sales of any product containing our technology, we must demonstrate through clinical testing that our technology and any product containing our technology is safe and effective for use in humans. Conducting clinical trials is a time-consuming, expensive and uncertain process and typically requires years to complete. In our industry, the results from preclinical studies and early clinical trials often are not predictive of results obtained in later-stage clinical trials. Some products and technologies that have shown promising results in preclinical studies or early clinical trials subsequently fail to establish sufficient safety and efficacy data necessary to obtain regulatory approval. At any time during clinical trials, we or the FDA might delay or halt any clinical trial for various reasons, including:
 
⋅ occurrence of unacceptable toxicities or side effects;
⋅ ineffectiveness of the product candidate;
⋅ negative or inconclusive results from the clinical trials, or results that necessitate additional studies or clinical trials;
⋅ delays in obtaining or maintaining required approvals from institutions, review boards or other reviewing entities at clinical sites;
⋅ delays in patient enrollment; or
⋅ insufficient funding or a reprioritization of financial or other resources.
 
Any failure or substantial delay in successfully completing clinical trials and obtaining regulatory approval for our product candidates could severely harm our business.
 
 
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If our clinical trials for our product candidates are delayed, we would be unable to commercialize our product candidates on a timely basis, which would materially harm our business.
  
Planned clinical trials may not begin on time or may need to be restructured after they have begun. Clinical trials can be delayed for a variety of reasons, including delays related to:
 
⋅ obtaining an effective IND or regulatory approval to commence a clinical trial;
⋅ negotiating acceptable clinical trial agreement terms with prospective trial sites;
⋅ obtaining institutional review board approval to conduct a clinical trial at a prospective site;
⋅ recruiting qualified subjects to participate in clinical trials;
⋅ competition in recruiting clinical investigators;
⋅ shortage or lack of availability of supplies of drugs for clinical trials;
⋅ the need to repeat clinical trials as a result of inconclusive results or poorly executed testing;
⋅ the placement of a clinical hold on a study;
⋅ the failure of third parties conducting and overseeing the operations of our clinical trials to perform their contractual or regulatory obligations in a timely fashion; and
⋅ exposure of clinical trial subjects to unexpected and unacceptable health risks or noncompliance with regulatory requirements, which may result in suspension of the trial.
 
We believe that our product candidate has significant milestones to reach, including the successful completion of clinical trials, before commercialization. If we have significant delays in or termination of clinical trials, our financial results and the commercial prospects for our product candidates or any other products that we may develop will be adversely impacted. In addition, our product development costs would increase and our ability to generate revenue could be impaired.
 
Any inability to license from third parties their proprietary technologies or processes which we use in connection with the development of our technology may impair our business.
 
Other companies, universities and research institutions have or may obtain patents that could limit our ability to use our technology in a product candidate or impair our competitive position. As a result, we would have to obtain licenses from other parties before we could continue using our technology in a product candidate. Any necessary licenses may not be available on commercially acceptable terms, if at all. If we do not obtain required licenses, we may not be able to develop our technology into a product candidate or we may encounter significant delays in development while we redesign methods that are found to infringe on the patents held by others.
 
 
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Even if we receive regulatory approval, consumers may not accept products containing our technology, which will prevent us from being profitable since we have no other source of revenue.
 
We cannot guarantee that consumers will accept products containing our technology. Recently, there has been consumer concern and consumer advocate activism with respect to genetically-engineered agricultural consumer products. The adverse consequences from heightened consumer concern in this regard could affect the markets for agricultural products developed with our technology and could also result in increased government regulation in response to that concern. If the public or potential customers perceive our technology to be genetic modification or genetic engineering, agricultural products grown with our technology may not gain market acceptance.
 
We face potential product liability exposure far in excess of our limited insurance coverage.
 
We may be held liable if any product we or our collaborators develop causes injury or is found otherwise unsuitable during product testing, manufacturing, marketing or sale. Regardless of merit or eventual outcome, product liability claims could result in decreased demand for our product candidates, injury to our reputation, withdrawal of patients from our clinical trials, substantial monetary awards to trial participants and the inability to commercialize any products that we may develop. These claims might be made directly by consumers, health care providers, pharmaceutical companies or others selling or testing our products. We have obtained limited product liability insurance coverage for our clinical trials; however, our insurance may not reimburse us or may not be sufficient to reimburse us for expenses or losses we may suffer. Moreover, if insurance coverage becomes more expensive, we may not be able to maintain insurance coverage at a reasonable cost or in sufficient amounts to protect us against losses due to liability. If we obtain marketing approval for any of our product candidates, we intend to expand our insurance coverage to include the sale of commercial products, but we may be unable to obtain commercially reasonable product liability insurance for any products approved for marketing. On occasion, juries have awarded large judgments in class action lawsuits for claims based on drugs that had unanticipated side effects. In addition, the pharmaceutical and biotechnology industries, in general, have been subject to significant medical malpractice litigation. A successful product liability claim or series of claims brought against us could harm our reputation and business and would decrease our cash reserves.
 
We depend on our key personnel and, if we are not able to attract and retain qualified scientific and business personnel, we may not be able to grow our business or develop and commercialize our technology.
 
We are highly dependent on our scientific advisors, consultants and third-party research partners. Our success will also depend in part on the continued service of our key employees and our ability to identify, hire and retain additional qualified personnel in an intensely competitive market. Although we have a research agreement with Dr. John Thompson, this agreement may be terminated upon short or no notice. Additionally, we do not have employment agreements with our key employees. We do not maintain key person life insurance on any member of management. The failure to attract and retain key personnel could limit our growth and hinder our research and development efforts.
 
 
25
 
Certain provisions of our charter, by-laws, Delaware law and stock plans could make a takeover difficult.
 
Certain provisions of our certificate of incorporation and by-laws could make it more difficult for a third party to acquire control of us, even if the change in control would be beneficial to stockholders. Our certificate of incorporation authorizes our board of directors to issue, without stockholder approval, 5,000,000 shares of preferred stock with voting, conversion and other rights and preferences that could adversely affect the voting power or other rights of the holders of our common stock.
 
In addition, we are subject to the Business Combination Act of the Delaware General Corporation Law which, subject to certain exceptions, restricts certain transactions and business combinations between a corporation and a stockholder owning 15% or more of the corporation’s outstanding voting stock for a period of three years from the date such stockholder becomes a 15% owner. These provisions may have the effect of delaying or preventing a change of control of us without action by our stockholders and, therefore, could adversely affect the value of our common stock.
 
Furthermore, in the event of our merger or consolidation with or into another corporation, or the sale of all or substantially all of our assets in which the successor corporation does not assume our outstanding equity awards or issue equivalent equity awards, our current equity plans require the accelerated vesting of such outstanding equity awards.
 
 
26
 
  Risks Related to Our Common Stock
 
Penny stock regulations may impose certain restrictions on marketability of our securities.
 
The SEC has adopted regulations which generally define a “penny stock” to be any equity security that has a market price of less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exceptions. As a result, our common stock is subject to rules that impose additional sales practice requirements on broker dealers who sell such securities to persons other than established customers and accredited investors (generally those with assets in excess of $1,000,000 or annual income exceeding $200,000, or $300,000 together with their spouse). For transactions covered by such rules, the broker dealer must make a special suitability determination for the purchase of such securities and have received the purchaser’s written consent to the transaction prior to the purchase. Additionally, for any transaction involving a penny stock, unless exempt, the rules require the delivery, prior to the transaction, of a risk disclosure document mandated by the SEC relating to the penny stock market. The broker dealer must also disclose the commission payable to both the broker dealer and the registered representative, current quotations for the securities and, if the broker dealer is the sole market maker, the broker dealer must disclose this fact and the broker dealer’s presumed control over the market.
 
Finally, monthly statements must be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks. Broker-dealers must wait two business days after providing buyers with disclosure materials regarding a security before effecting a transaction in such security. Consequently, the “penny stock” rules restrict the ability of broker dealers to sell our securities and affect the ability of investors to sell our securities in the secondary market and the price at which such purchasers can sell any such securities, thereby affecting the liquidity of the market for our common stock.
 
Stockholders should be aware that, according to the SEC, the market for penny stocks has suffered in recent years from patterns of fraud and abuse. Such patterns include:
 
⋅ control of the market for the security by one or more broker-dealers that are often related to the promoter or issuer;
 
⋅ manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases;
 
⋅ “boiler room” practices involving high pressure sales tactics and unrealistic price projections by inexperienced sales persons;
 
⋅ excessive and undisclosed bid-ask differentials and markups by selling broker-dealers; and
 
⋅ the wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level, along with the inevitable collapse of those prices with consequent investor losses.
 
Our management is aware of the abuses that have occurred historically in the penny stock market. 
 
 
27
 
Our management and other affiliates have significant control of our common stock and could significantly influence our actions in a manner that conflicts with our interests and the interests of other stockholders.
 
As of June 30, 2013, our executive officers and directors together beneficially own approximately 16% of the outstanding shares of our common stock, assuming the exercise of options and warrants which are currently exercisable or will become exercisable within 60 days of June 30, 2013, held by these stockholders. As a result, these stockholders, acting together, will be able to exercise significant influence over matters requiring approval by our stockholders, including the election of directors, and may not always act in the best interests of other stockholders. Such a concentration of ownership may have the effect of delaying or preventing a change in control of us, including transactions in which our stockholders might otherwise receive a premium for their shares over then-current market prices.
 
A significant portion of our total outstanding shares of common stock may be sold in the market in the near future, which could cause the market price of our common stock to drop significantly.
 
As of June 30, 2013, we had 227,206,174 shares of our common stock issued and outstanding and 800 shares of convertible preferred stock outstanding which can convert into 26,666,667 shares of common stock. Except for 24,750,000 shares of our common stock which cannot be sold until January 9, 2014, all of such shares are registered pursuant to registration statements on Form S-3 or are either eligible to be sold under SEC Rule 144 or are in the public float. In addition, we have registered 35,890,007 shares of our common stock underlying warrants previously issued on Form S-3 registration statements and we registered 26,081,023 shares of our common stock underlying options granted or to be granted under our stock option plan. Consequently, sales of substantial amounts of our common stock in the public market, or the perception that such sales could occur, may have a material adverse effect on our stock price.
 
Our common stock has a limited trading market, which could limit your ability to resell your shares of common stock at or above your purchase price.
 
Our common stock is currently quoted on the OTCQB Marketplace, operated by the OTC Markets Group, or OTCQB, and our common stock currently has a limited trading market. We cannot assure you that an active trading market will develop or, if developed, will be maintained. As a result, our stockholders may find it difficult to dispose of shares of our common stock and, as a result, may suffer a loss of all or a substantial portion of their investment.
 
 
28
 
The market price of our common stock may fluctuate and may drop below the price you paid.
 
We cannot assure you that you will be able to resell the shares of our common stock at or above your purchase price. The market price of our common stock may fluctuate significantly in response to a number of factors, some of which are beyond our control. These factors include:
 
  ⋅ quarterly variations in operating results;
  ⋅ the progress or perceived progress of our research and development efforts;
  ⋅ changes in accounting treatments or principles;
  ⋅ announcements by us or our competitors of new technology, product and service offerings, significant contracts, acquisitions or strategic relationships;
  ⋅ additions or departures of key personnel;
  ⋅ future offerings or resales of our common stock or other securities;
  ⋅ stock market price and volume fluctuations of publicly-traded companies in general and development companies in particular; and
  ⋅ general political, economic and market conditions.
 
For example, during the year ended June 30, 2013, our common stock traded between $0.02 and $0.31 per share.
 
Because we do not intend to pay, and have not paid, any cash dividends on our shares of common stock, our stockholders will not be able to receive a return on their shares unless the value of our common stock appreciates and they sell their shares.
 
We have never paid or declared any cash dividends on our common stock, and we intend to retain any future earnings to finance the development and expansion of our business. We do not anticipate paying any cash dividends on our common stock in the foreseeable future. Therefore, our stockholders will not be able to receive a return on their investment unless the value of our common stock appreciates and they sell their shares.
 
Our stockholders may experience substantial dilution as a result of the conversion of convertible preferred stock, the exercise of options and warrants to purchase our common stock, or due to anti-dilution provisions relating to any on the foregoing.
 
As of June 30, 2013, we have outstanding 800 shares of convertible preferred stock which may convert into 26,667,777 shares of our common stock and warrants to purchase 28,315,612 shares of our common stock. In addition, as of June 30, 2013, we have reserved 26,081,023 shares of our common stock for issuance upon the exercise of options granted or available to be granted pursuant to our stock option plan, all of which may be granted in the future. Furthermore, in connection with the preferred stock agreements, we are required to reserve an additional 13,923,594 shares of common stock. Additionally, under a securities purchase agreement dated May 8, 2013, which contains a price protection provision, we are required to reserve an additional 62,750,003 shares of common stock. The conversion of the convertible preferred stock and the exercise of these options and warrants will result in dilution to our existing stockholders and could have a material adverse effect on our stock price. The conversion price of the convertible preferred stock and certain warrants are also subject to certain anti-dilution adjustments. 
 
 
29
  
Item 1B. Unresolved Staff Comments.
 
None.
 
Item 2. Properties.
 
Effective May 19, 2011, we lease office space in Bridgewater, New Jersey for a current monthly rental fee of $5,703, subject to certain escalations for our proportionate share of increases, over the base year of 2011, in the building's operating costs. The lease expires on May 31, 2014. The space is in good condition, and we believe it will adequately serve as our headquarters over the term of the lease. We also believe that this office space is adequately insured by the lessor.
 
Item 3. Legal Proceedings.
 
We are not currently a party to any legal proceedings; however, we may become involved in various claims and legal actions arising in the ordinary course of business.
 
Item 4. Mine Safety Disclosures.
 
None.
 
 
30
 

PART II
 
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
 
Our common stock currently trades on the OTCQB Marketplace under the symbol SNTI.
 
The following table sets forth, for each of the quarters since the quarter ended September 30, 2011, the range of the high and low bid information or sales price, as applicable, for our common shares quoted on the OTCQB Marketplace or the NYSE MKT, as applicable. The prices in the table represent prices between dealers and do not include adjustments for retail mark-up, markdown or commission and may not represent actual transactions.
 
Quarter
Ended
 
Common
Stock
 
 
 
High
 
Low
 
September 30, 2011
 
$
0.31
 
$
0.18
 
December 31, 2011
 
$
0.29
 
$
0.16
 
March 31, 2012
 
$
0.28
 
$
0.21
 
June 30, 2012
 
$
0.31
 
$
0.18
 
September 30, 2012
 
$
0.32
 
$
0.17
 
December 31, 2012
 
$
0.23
 
$
0.11
 
March 31, 2013
 
$
0.17
 
$
0.08
 
June 30, 2013
 
$
0.09
 
$
0.02
 
____________________ 
 
As of August 31, 2013, the approximate number of holders of record of our common stock was 223. This number does not include “street name” or beneficial holders, whose shares are held of record by banks, brokers and other financial institutions.
 
We have neither paid nor declared dividends on our common stock since our inception, and we do not plan to pay dividends on our common stock in the foreseeable future. We expect that any earnings, which we may realize, will be retained to finance the growth of our company.
 
 
31
 
The following table provides information about the securities authorized for issuance under our equity compensation plans as of June 30, 2013.
 
EQUITY COMPENSATION PLAN INFORMATION
 
 
 
Number of securities
to be issued upon
exercise of outstanding
options, warrants
and rights and restricted
stock units
 
 
Weighted-average
exercise price of
outstanding options,
warrants and rights and
restricted stock units
 
Number of securities
remaining
available for future
issuance
under equity
compensation plans
 
Equity compensation plans approved by security holders
 
 
23,174,770
(1)
 
$
0.35
 
 
4,630,353
(2)
 
 
 
 
 
 
 
 
 
 
 
 
Equity compensation plans not approved by security holders
 
 
—
 
 
 
—
 
 
—
 
 
 
 
 
 
 
 
 
 
 
 
 
Total
 
 
23,174,770
(1)
 
$
0.35
 
 
4,630,353
(2)
_____________________
 
(1) Issued pursuant to our 1998 Stock Plan and 2008 Stock Plan.
   
(2) Available for future issuance pursuant to our 2008 Stock Plan.
 
RECENT SALES OF UNREGISTERED SECURITIES; USE OF PROCEEDS FROM REGISTERED SECURITIES
 
None, except as previously disclosed on our Quarterly Reports on Forms 10-Q and Current Reports on Forms 8-K. 
 
 
32
 
PERFORMANCE GRAPH
 
The following graph compares the cumulative total stockholder return on our common stock with the cumulative total return on the NYSE MKT Composite (U.S.) Index and the RDG Microcap Biotechnology Index for the period beginning July 1, 2008 and ending on the last day of our last completed fiscal year. The stock performance shown on the graph below is not indicative of future price performance.
 
 
 
 
7/1/07
 
6/30/08
 
6/30/09
 
6/30/10
 
6/30/11
 
6/30/12
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Senesco Technologies, Inc.
 
$
100.00
 
$
44.86
 
$
17.03
 
$
15.14
 
$
11.24
 
$
1.46
 
NYSE MKT Composite Index
 
$
100.00
 
$
74.74
 
$
88.00
 
$
118.81
 
$
119.29
 
$
116.47
 
RDG Microcap Biotechnology Index
 
$
100.00
 
$
77.50
 
$
70.52
 
$
67.59
 
$
68.68
 
$
50.31
 
 
 
33
 
Item 6. Selected Financial Data.
 
The following Selected Financial Data should be read in conjunction with “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Item 8. Financial Statements and Supplementary Data” included elsewhere in this Annual Report on Form 10-K.
 
SELECTED FINANCIAL DATA
 
 
 
Fiscal Year Ended June 30,
 
 
 
2013
 
2012
 
2011
 
2010
 
2009
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(In thousands, except per share data)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Statement of Operations Data:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue
 
$
-
 
$
200
 
$
-
 
$
140
 
$
275
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating expenses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
General and administrative
 
 
2,500
 
 
2,724
 
 
2,610
 
 
2,349
 
 
2,206
 
Research and development
 
 
2,086
 
 
2,566
 
 
3,720
 
 
2,637
 
 
2,354
 
Write off of patents abandoned
 
 
64
 
 
321
 
 
1,588
 
 
-
 
 
-
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total operating expenses
 
 
4,650
 
 
5,611
 
 
7,918
 
 
4,986
 
 
4,560
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loss from operations
 
 
(4,650)
 
 
(5,411)
 
 
(7,918)
 
 
(4,846)
 
 
(4,285)
 
Grant income
 
 
-
 
 
-
 
 
244
 
 
-
 
 
-
 
Fair value – warrant liability
 
 
371
 
 
472
 
 
609
 
 
2,517
 
 
-
 
Other noncash expense
 
 
-
 
 
-
 
 
(116)
 
 
-
 
 
-
 
Loss on extinguishment of debt
 
 
(1,725)
 
 
-
 
 
-
 
 
(362)
 
 
-
 
Amortization of debt discount and financing costs
 
 
-
 
 
-
 
 
-
 
 
(10,081)
 
 
(478)
 
Interest expense – convertible notes
 
 
-
 
 
-
 
 
-
 
 
(587)
 
 
(1,007)
 
Interest (expense) income, net
 
 
(119)
 
 
(127)
 
 
(88)
 
 
(24)
 
 
43
 
Net loss
 
 
(6,123)
 
 
(5,066)
 
 
(7,269)
 
 
(13,383)
 
 
(5,727)
 
Preferred dividends
 
 
(863)
 
 
(1,626)
 
 
(2,638)
 
 
(6,240)
 
 
-
 
Net loss available to common shares
 
$
(6,986)
 
$
(6,692)
 
$
(9,907)
 
$
(19,623)
 
$
(5,727)
 
Basic and diluted net loss per common share
 
$
(0.05)
 
$
(0.08)
 
$
(0.14)
 
$
(0.67)
 
$
(0.30)
 
Basic and diluted weighted average number of common shares outstanding
 
 
136,638
 
 
85,703
 
 
69,332
 
 
29,113
 
 
18,888
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance Sheet Data:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash, cash equivalents and investments
 
$
1,602
 
$
2,001
 
$
3,610
 
$
8,026
 
$
1,431
 
Working capital
 
 
310
 
 
387
 
 
1,788
 
 
6,002
 
 
1,259
 
Total assets
 
 
7,097
 
 
6,955
 
 
8,597
 
 
13,912
 
 
7,122
 
Accumulated deficit
 
 
(74,426)
 
 
(67,440)
 
 
(60,748)
 
 
(50,841)
 
 
(35,950)
 
Total stockholders’ equity
 
 
3,786
 
 
3,453
 
 
4,517
 
 
7,981
 
 
5,668
 
   
 
34
 
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.
 
The discussion in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contains trend analysis, estimates and other forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements include, without limitation, statements containing the words “believes,” “anticipates,” “expects,” “continue,” and other words of similar import or the negative of those terms or expressions. Such forward-looking statements are subject to known and unknown risks, uncertainties, estimates and other factors that may cause our actual results, performance or achievements, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Actual results could differ materially from those set forth in such forward-looking statements as a result of, but not limited to, the “Risk Factors” described in Part I, Item 1A. You should read the following discussion and analysis along with the “Selected Financial Data” and the financial statements and notes attached to those statements included elsewhere in this report.
 
Overview
 
We are a development stage company. We do not expect to generate significant revenues for several years, during which time we will engage in significant research and development efforts.
 
Our human therapeutic research program, which has consisted of clinical and pre-clinical in-vitro and in-vivo experiments designed to assess the role and method of action of the Factor 5A genes in human diseases, is performed, at our direction, at the University of Waterloo and other commercial research facilities.
 
We have developed a therapeutic candidate, SNS01-T, for the potential treatment of multiple myeloma, mantle cell lymphoma and diffuse large b-cell lymphoma and have been granted orphan drug status for SNS01-T by the FDA for the potential treatment of multiple myeloma, mantle cell lymphoma and diffuse large B-cell lymphoma.
 
We have initiated a Phase 1b/2a clinical study with SNS01-T in multiple myeloma, mantle cell and diffuse large b-cell lymphoma patients. The clinical study is an open-label, multiple-dose, dose-escalation study, which will evaluate the safety and tolerability of SNS01-T when administered by intravenous infusion to relapsed or refractory multiple myeloma patients. The study design calls for four cohorts of three to six patients each. Patients in each cohort will receive twice-weekly dosing for six weeks followed by a safety data review period before escalating to a higher dose level in the next cohort. While the primary objective of the initial study is to evaluate safety and tolerability, the effect of SNS01-T on tumor response will also be evaluated using multiple, well-established criteria including measurement of the monoclonal protein, or M-protein. We have selected Mayo Clinic, University of Arkansas for Medical Sciences, the Randolph Cancer Center at West Virginia University and the John Theurer Cancer Center at Hackensack University Medical Center as our clinical sites. We have completed the first and second cohorts of the study and the third cohort is open for enrollment and treating patients.
 
 
35
 
We may consider other human diseases in order to determine the role of Factor 5A and SNS01-T.
 
Additionally, we have nine active agricultural license agreements to develop and commercialize our technology in corn, soy, cotton, rice, canola, trees, banana, alfalfa, biofuels and turf grass. The licenses provide for upfront payments, milestone payments and royalty payments to us upon commercial introduction.
 
Consistent with our commercialization strategy, we may license our technology for human health applications or for additional crops, as the opportunities may arise, that may result in additional license fees, revenues from contract research and other related revenues. Successful future operations will depend on our and our partners’ ability to transform our research and development activities into a commercially feasible technology. 
 
 
36
 
Critical Accounting Policies and Estimates
 
Revenue Recognition
 
We record revenue under technology license and development agreements related to the following. Actual fees received may vary from the recorded estimated revenues.
 
 
⋅
Nonrefundable upfront license fees that are received in exchange for the transfer of our technology to licensees, for which no further obligations to the licensee exist with respect to the basic technology transferred, are recognized as revenue on the earlier of when payments are received or collections are assured.
 
⋅
Nonrefundable upfront license fees that are received in connection with agreements that include time-based payments are, together with the time-based payments, deferred and amortized ratably over the estimated research period of the license.
 
⋅
Milestone payments, which are contingent upon the achievement of certain research goals, are recognized as revenue when the milestones, as defined in the particular agreement, are achieved.
 
The effect of any change in revenues from technology license and development agreements would be reflected in revenues in the period such determination was made. Historically, no such adjustments have been made.
 
Estimates of Expenses
 
Our research and development agreements with third parties provide for an estimate of our expenses and costs, which are variable and are based on the actual services performed by the third party. We estimate the aggregate amount of the expenses based upon the projected amounts that are set forth in the agreements, and we accrue the expenses for which we have not yet been invoiced or prepay the expenses that have been invoiced but the services have not yet been performed. In estimating the expenses, we consider, among other things, the following factors:
 
 
⋅
the existence of any prior relationship between us and the third party provider;
 
⋅
the past results of prior research and development services performed by the third party provider; and
 
⋅
the scope and timing of the research and development services set forth in the agreement with the third party provider.
 
After the research services are performed and we are invoiced, we make any adjustments that are necessary to accurately report research and development expense for the period.
 
Income Taxes
 
We account for income taxes in accordance with an asset and liability approach requiring the recognition of deferred tax assets and liabilities for the expected tax consequences of events that have been recognized in the financial statements or tax returns. Deferred tax assets and liabilities are recorded without consideration as to their ability to be realized. The deferred tax asset includes net operating loss and credit carryforwards, and the cumulative temporary differences related to stock-based compensation. The portion of any deferred tax asset, for which it is more likely than not that a tax benefit will not be realized, must then be offset by recording a valuation allowance against the asset.
 
 
37

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. Management believes it is more likely than not that we will not realize the deferred tax assets in excess of deferred tax liabilities, and as such, a full valuation allowance is maintained against the net deferred tax assets.
 
While we believe that our tax positions are fully supportable, there is a risk that certain positions could be challenged successfully. In these instances, we look to establish reserves. If we determine that a tax position is more likely than not of being sustained upon audit, based solely on the technical merits of the position, we recognize the benefit. We measure the benefit by determining the amount that has likelihood greater than 50% of being realized upon settlement. We presume that all tax positions will be examined by a taxing authority with full knowledge of all relevant information. We regularly monitor our tax positions, tax assets and tax liabilities. We reevaluate the technical merits of our tax positions and recognize an uncertain tax benefit or derecognize a previously recorded tax benefit when (i) there is a completion of a tax audit, (ii) there is a change in applicable tax law including a tax case or legislative guidance, or (iii) there is an expiration of the statute of limitations. Significant judgment is required in accounting for tax reserves.
 
Stock-based Compensation
 
We measure all employee stock-based compensation awards using a fair value method and record such expense in our consolidated financial statements. Such expense is amortized on a straight line basis over the requisite service period of the award.
 
We estimate the grant date fair value of stock options using the Black-Scholes option-pricing model which requires the input of highly subjective assumptions. These assumptions include estimating the expected term of the award, the estimated volatility of our stock price over the expected term and the probability of achievement of any performance goals that may be required to be achieved in order for the stock options to vest. Changes in these assumptions and in the estimated forfeitures of stock option awards may materially affect the amount of stock-based compensation recognized in our consolidated statements of operations.
 
In connection with any performance goals that may be required to be achieved in order for the stock options to vest, our management reviews the specific goals of such plans to determine if such goals have been achieved or are probable that they will be achieved. If the goals have been achieved or are probable of being achieved, then the amount of compensation expense determined on the date of grant related to those specific goals is charged to compensation expense at such time.
 
 
38
  
Intangible Assets
 
We test all intangible assets for recoverability whenever events or changes in circumstances indicate that we may not be able to recover an asset’s carrying amount. We evaluate the recoverability of an asset by comparing its carrying amount to the undiscounted cash flows expected to result from the use and eventual disposition of that asset. If the undiscounted cash flows are not sufficient to recover the carrying amount, we measure any impairment loss as the excess of the carrying amount of the asset over its fair value. Events which could trigger asset impairment include significant underperformance relative to historical or projected future operating results, significant changes in the manner or use of an asset or in our overall business strategy, significant negative industry or economic trends, shortening of product life-cycles, negative changes in third party reimbursement, or changes in technology.
 
As of June 30, 2013, we have determined that market value of our two asset groups is in excess of its carrying value and therefore there was no impairment.
 
Warrant Liability
 
We compute valuations each quarter using the Black-Scholes model, which requires the input of subjective assumptions for volatility, for warrants that have an exercise price reset feature to account for the various possibilities that could occur due to changes in the inputs to the Black-Scholes model as a result of contractually-obligated changes. We effectively weight each calculation based on the likelihood of occurrence to determine the value of the derivative at the reporting date. The fair value of the warrants that have cash settlement features is estimated using the Black-Scholes model. Changes in these assumptions may materially affect the amount of the warrant liability recorded on our consolidated balance sheet.
 
Convertible Preferred Stock
 
During the year ended June 30, 2010, we issued convertible preferred stock and warrants for gross proceeds in the amount of $11,497,000. The proceeds have been allocated between convertible preferred stock and warrants based upon their fair values, whereby the fair value of the warrants have been determined using the Black-Scholes model. Such amount was recorded as a liability. The remaining amounts were allocated to the convertible preferred stock and were recorded as equity.
 
 
39
 
Liquidity and Capital Resources
 
Overview
 
As of June 30, 2013, our cash balance totaled $1,602,294, and we had working capital of $309,572.
 
Contractual Obligations
 
The following table lists our cash contractual obligations as of June 30, 2013:
 
 
 
Payments Due by Period
 
Contractual Obligations
 
Total
 
Less than
1 year
 
1 - 3 years
 
3 - 5 years
 
More than
5 years
 
Research and Development Agreements (1)
 
$
819,771
 
$
819,771
 
$
—
 
$
—
 
$
—
 
Facility, Rent andOperating Leases (2)
 
$
62,733
 
$
62,733
 
$
—
 
$
—
 
$
—
 
Employment, Consultingand Scientific Advisory Board Agreements (3)
 
$
67,500
 
$
67,500
 
$
—
 
$
—
 
$
—
 
Total ContractualCash Obligations
 
$
950,004
 
$
950,004
 
$
—
 
$
—
 
$
—
 
 
(1)
Certain of our research and development agreements disclosed herein provide that payment is to be made in Canadian dollars and, therefore, the contractual obligations are subject to fluctuations in the exchange rate.
(2)
The lease for our office space in Bridgewater, New Jersey is subject to certain escalations for our proportionate share of increases in the building’s operating costs.
(3)
Certain of our consulting agreements provide for automatic renewal, which is not reflected in the table, unless terminated earlier by the parties to the respective agreements.
 
Effective June 20, 2011, we entered into a Master Services Agreement with Criterium under which CRITERIUM will provide professional and technical services in connection with the management of our planned Phase 1b/2a clinical trial for the treatment of multiple myeloma. The agreement, as amended, has an initial term that commences on the date of the agreement and runs for a period of twenty-nine (29) months. Our remaining financial obligation under the agreement, as amended, is estimated to be $455,000 and is included in the above table.
 
Effective August 15, 2011, we entered into a Clinical Trial Research Agreement with Mayo Clinic, or MAYO, under which MAYO will perform our planned Phase 1b/2a clinical trial for the treatment of multiple myeloma. The agreement has an initial term that commences on the date of the agreement and continues until the study is completed and all final study documentation required to be provided is received and accepted by us. Our financial obligation under the agreement includes a fixed cost and a cost per patient and is not included in the above table.
 
 
40
 
Effective February 28, 2012, we entered into a Clinical Trial Research Agreement with University of Arkansas for Medical Sciences, or ARKANSAS, under which ARKANSAS will perform our planned Phase 1b/2a clinical trial for the treatment of multiple myeloma. The agreement has an initial term that commences on the date of the agreement and continues until the study is completed and all final study documentation required to be provided is received and accepted by us. Our financial obligation under the agreement includes a fixed cost and a cost per patient and is not included in the above table.
 
Effective March 5, 2012, we entered into a Clinical Trial Research Agreement with West Virginia University Research Corporation, or WVU, under which WVU will perform our planned Phase 1b/2a clinical trial for the treatment of multiple myeloma. The agreement has an initial term that commences on the date of the agreement and continues until the study is completed and all final study documentation required to be provided is received and accepted by us. Our financial obligation under the agreement includes a fixed cost and a cost per patient and is not included in the above table.
 
Effective June 15, 2012, we entered into a Clinical Trial Research Agreement with the John Theurer Cancer Center at Hackensack University Medical Center, or HACKENSACK, under which HACKENSACK will perform our planned Phase 1b/2a clinical trial for the treatment of multiple myeloma. The agreement has an initial term that commences on the date of the agreement and continues until the study is completed and all final study documentation required to be provided is received and accepted by us. Our financial obligation under the agreement includes a fixed cost and a cost per patient and is not included in the above table.
 
Effective September 1, 2012, we extended our research and development agreement with the University of Waterloo for an additional one-year period through August 31, 2013, in the amount of CAD $611,550, or approximately USD $612,000. Effective July 1, 2013, the budget for the research and development agreement was amended to reduce the monthly amount from $50,962 to $38,038 through August 31, 2013. Research and development expenses under this agreement for the fiscal years ended June 30, 2013, 2012 and 2011 aggregated U.S. $628,995, U.S. $573,368 and U.S. $622,872, respectively, and U.S. $7,778,296 for the cumulative period through June 30, 2013. Future obligations to be paid under the agreement through August 31, 2013 equal approximately U.S. $76,076.
 
Effective June 4, 2013, the Company entered into a clinical supply agreement with The University of Iowa, or IOWA, under which IOWA will provide manufacturing, vialing and testing services for certain reagents that are used in SNS01-T. The agreement will terminate upon delivery of the reagents, which is estimated to be approximately six months after the effective date of the agreement. The Company’s remaining financial obligation under the agreement is approximately $156,000.
 
We expect our capital requirements to increase significantly over the next several years as we commence new research and development efforts, increase our business and administrative infrastructure and embark on developing in-house business capabilities and facilities. Our future liquidity and capital funding requirements will depend on numerous factors, including, but not limited to, the levels and costs of our research and development initiatives and the cost and timing of the expansion of our business development and administrative staff.
 
 
41
 
Capital Resources
 
Since inception, we have generated revenues of $1,790,000 in connection with the initial fees and milestone payments received under our license and development agreements. We have also received $244,479 in grants. We have not been profitable since inception, we will continue to incur additional operating losses in the future, and we will require additional financing to continue the development and subsequent commercialization of our technology. While we do not expect to generate significant revenues from the licensing of our technology for several years, we may enter into additional licensing or other agreements with marketing and distribution partners that may result in additional license fees, receive revenues from contract research, or other related revenue.
 
Financing
 
On December 22, 2010, the Company entered into an At Market Issuance Sales Agreement (the “ATM”) under which the Company, from time to time, may issue and sell shares of its common stock, with an aggregate offering price of up to $5,500,000. Such common stock will be offered and sold pursuant to a prospectus supplement filed with the Securities and Exchange Commission in connection with the Company’s shelf registration statement on Form S-3 (File No. 333-170140), which became effective on November 9, 2010. During the fiscal year ended June 30, 2013, the Company issued 353,895 shares of common stock under the ATM for gross proceeds in the amount of $100,570. In November 2012, the Company was delisted from the NYSE MKT exchange and is now quoted on the OTCQB. Since the Company is no longer listed on the NYSE MKT exchange, the Company is no longer able to issue and sell shares of its common stock under the ATM.
 
In January 2013, we issued an aggregate of 30,000,000 shares of common stock and 30,000,000 warrants in a public offering for gross proceeds in the amount of $3,000,000.
 
In May 2013, we issued an aggregate of 41,833,334 shares of common stock in a public offering for gross proceeds in the amount of $1,255,000.
 
We anticipate that, based upon our current cash balance at June 30, 2013, we will be able to fund our operations through November 2013.
 
Over the next 12 months, we plan to fund our research and development and commercialization activities by:
 
 
⋅
utilizing our current cash balance and investments,
 
⋅
achieving some of the milestones set forth in our current licensing agreements,
 
⋅
through the execution of additional licensing agreements for our technology, and
 
⋅
through the placement of equity or debt instruments.  
 
We cannot assure you that we will be able to raise money through any of the foregoing transactions, or on favorable terms, if at all.
 
 
42
 
Results of Operations
 
Fiscal Year ended June 30, 2013
 
Revenue
 
We did not earn any revenue during the fiscal year ended June 30, 2013
 
During the fiscal year ended June 30, 2012, we earned revenue in the amount of $200,000, which consisted of a milestone payment in connection with an agricultural license agreement.
 
We anticipate that we will receive future milestone payments in connection with our current agricultural development and license agreements. Additionally, we anticipate that we may receive future royalty payments from our license agreements when and if our partners commercialize their crops containing our technology. However, it is difficult for us to determine our future revenue expectations because we are a development stage biotechnology company with a limited history of receiving development milestone payments or royalties, and the timing and outcome of our experiments, the timing of signing new partners and the timing and success of our partners moving through the development process into commercialization is difficult to accurately predict.
 
Operating expenses
 
 
 
Fiscal Year Ended June 30,
 
 
 
2013
 
2012
 
Change
 
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
General and administrative
 
$
2,499,624
 
$
2,724,144
 
$
(224,520)
 
 
(8.2)
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Research and development
 
 
2,086,666
 
 
2,566,247
 
 
(479,581)
 
 
(18.7)
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Write - off of patents abandoned
 
 
64,210
 
 
321,137
 
 
(256,927)
 
 
(80.0)
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total operating expenses
 
$
4,650,500
 
$
5,611,528
 
$
(961,028)
 
 
(17.1)
%
 
We expect operating expenses to increase over the next 12 months as we anticipate that research and development expenses will increase as we continue to expand our research and development activities.
 
 
43
 
General and administrative expenses
 
General and administrative expenses consist of the following:
 
 
 
Fiscal Year ended June 30,
 
 
 
2013
 
2012
 
Change
 
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stock-based compensation
 
$
639,828
 
$
721,197
 
$
(81,369)
 
 
(11.3)
%
Payroll and benefits
 
 
594,456
 
 
588,407
 
 
6,049
 
 
1.0
%
Investor relations
 
 
103,816
 
 
203,871
 
 
(100,055)
 
 
(49.0)
%
Professional fees
 
 
475,274
 
 
518,473
 
 
(43,199)
 
 
(8.3)
%
Director fees
 
 
62,375
 
 
44,625
 
 
17,750
 
 
39.8
%
Depreciation and amortization
 
 
293,629
 
 
258,023
 
 
35,606
 
 
13.8
%
Other general and administrative expenses
 
 
330,246
 
 
389,548
 
 
(59,302)
 
 
(15.2)
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total general and administrative expenses
 
$
2,499,624
 
$
2,724,144
 
$
(224.520)
 
 
(8.2)
%
 
  ⋅ Stock-based compensation for the fiscal years ended June 30, 2013 and June 30, 2012 consisted of the amortized portion of the Black-Scholes value of options, restricted stock units and warrants granted to directors, employees and consultants.  During the fiscal years ended June 30, 2013 and 2012, 8,966,978 and 5,274,428 options, respectively, were granted to such individuals.
     
    Stock-based compensation for the fiscal year ended June 30, 2013 was lower than the fiscal year ended June 30, 2012 primarily due to management’s assessment of the probability of the vesting of the goal based options granted during the fiscal year ended June 30, 2013 being lower than for the fiscal year ended June 30, 2012.  Additionally, the options granted during the fiscal year ended June 30, 2012, vested at a lower percentage than had been estimated at June 30, 2012.  Therefore, stock-based compensation for the fiscal year ended June 30, 2013 was further reduced.
     
  ⋅ Payroll and benefits for the fiscal year ended June 30, 2013 was higher than for the fiscal year ended June 30, 2012, primarily as a result of a 401K contribution made during the fiscal year ended June 30, 2012.  There was no 401K contribution during the fiscal year ended June, 2013.  This was partially offset by salary increases effective July 1, 2012.  
     
  ⋅ Investor relations fees for the fiscal year ended June 30, 2013 was lower than for the fiscal year ended June 30, 2012 primarily as a result of lower consultant fees.  
     
  ⋅ Professional fees for the fiscal year ended June 30, 2013 was lower than for the fiscal year ended June 30, 2012 primarily as a result of a decrease in legal and accounting fees.  Legal fees decreased primarily due to higher discounts received during the fiscal year ended June 30, 2013 and a decrease in fees incurred in connection with the exploration of alternative uses of our technology. Accounting fees decreased primarily due to the use of a consultant to prepare a valuation of the Company’s intangible assets during the fiscal year ended June 30, 2012.
     
  ⋅ Director fees for the fiscal year ended June 30, 2013 were higher than for the fiscal year ended June 30, 2012, primarily as a result of more meetings being held during the fiscal year ended June 30, 2013.
 
 
44

⋅ Depreciation and amortization for the fiscal year ended June 30, 2013 was higher than for the fiscal year ended June 30, 2012 primarily as a result of an increase in amortization of patent costs.
     
  ⋅ Other general and administrative expenses for the fiscal year ended June 30, 2013 were lower than for the fiscal year ended June 30, 2012 primarily due to a decrease in conferences and travel, office supplies, state taxes and transfer agent fees.  
 
We expect cash-based general and administrative expenses to increase slightly over the next twelve months.
 
Research and development expenses
 
 
 
Fiscal Year Ended June 30,
 
 
 
2013
 
2012
 
Change
 
%
 
Stock-based compensation
 
$
84,865
 
$
44,807
 
$
40,058
 
 
8.9
%
Payroll
 
 
174,360
 
 
167,834
 
 
6,526
 
 
3.9
%
Research contract with the University of Waterloo
 
 
628,997
 
 
573,368
 
 
55,629
 
 
9.7
%
Other research and development
 
 
1,198,444
 
 
1,780,238
 
 
(581,794)
 
 
(32.7)
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total research and development
 
$
2,086,666
 
$
2,566,247
 
$
(479,581)
 
 
(18.7)
%
 
  ⋅ Stock-based compensation for the fiscal year ended June 30, 2013 was higher than the fiscal year ended June 30, 2012 primarily because the number of options granted during the fiscal year ended June 30, 2013 was higher than the fiscal year ended June 30, 2012.
     
  ⋅ Payroll for the fiscal year ended June 30, 2013 was higher than for the fiscal year ended June 30, 2012 primarily as a result of a salary increases effective July 1, 2012.  
     
  ⋅ The cost associated with the research contract with the University of Waterloo for the fiscal year ended June 30, 2013 were higher than for the fiscal year ended June 30, 2012 primarily due to an increase in amount being funded for human health research.
     
  ⋅ Other research and development costs for the fiscal year ended June 30, 2013 was lower than for the fiscal year ended June 30, 2012 primarily due to a decrease in the costs in connection with agricultural research programs and formulation studies.
 
The breakdown of our research and development expenses between our agricultural and human therapeutic research programs are as follows:
 
 
 
Fiscal Year ended June 30,
 
 
 
2013
 
%
 
 
2012
 
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Agricultural research programs
 
$
53,566
 
3
%
 
$
279,736
 
11
%
Human therapeutic research programs
 
 
2,033,100
 
97
%
 
 
2,286,511
 
89
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Total research and development expenses
 
$
2,086,666
 
100
%
 
$
2,566,247
 
100
%
 
  ⋅
Agricultural research expenses for the fiscal year ended June 30, 2013 were lower than for the fiscal year ended June 30, 2012 primarily due to a reduction in the funding for agricultural research at the University of Waterloo and the amendment to the Rahan Meristem agreement for the development of bananas.  Effective January 1, 2012, we amended the Rahan Meristem agreement whereby we no longer incur costs related to such development.
 
 
45
  
  ⋅
Human therapeutic research expenses for the fiscal year ended June 30, 2013 were lower than for the fiscal year ended June 30, 2012 primarily as a result of the timing of certain aspects of the development of our drug candidate, SNS01-T, for treating multiple myeloma.  Specifically, during the nine months ended March 31, 2012, we incurred costs related to the formulation of SNS01-T, which we did not incur during the nine months ended March 31, 2013.
 
We expect our human therapeutic research program to modestly increase as a percentage of the total research and development expenses as we continue our current research projects and begin new human therapeutic initiatives, in particular as they relate to the clinical development of our drug candidate, SNS01-T, for treating multiple myeloma and other cancers.
 
Write-off of patents abandoned
 
During the fiscal years ended June 30, 2013 and June 30, 2012, we reviewed our patent portfolio in order to determine if we could reduce our cost of patent prosecution and maintenance. We identified several patents and patents pending that we believe we no longer need to maintain without having a material impact on the portfolio. We determined that we would no longer incur the cost to prosecute or maintain those patents or patents pending. Therefore, we wrote-off the net book value of those patents and patents pending in the amounts of $64,210 and $321,137, respectively.
 
Other non-operating income and expense
 
Change in fair value of warrant liability
 
The amounts represent the change in the fair value of the warrant liability for the fiscal years ended June 30, 2013 and 2012. During the fiscal year ended June 30, 2013 the fair value of the warrant liability decreased due to the expiration of certain warrants and a decrease in the Black-Scholes values of the remaining warrants as the expected term was shorter in 2013 and there was greater disparity between the market price of our common stock and the exercise price of the warrants.
 
Loss on settlement of warrant liabilities
 
During the fiscal year ended June 30, 2013, certain warrants that were recorded as liabilities were exchanged for common stock. The loss on the settlement of warrant liabilities represents the fair value of the common stock received by the warrant holders less the Black-Scholes value of the warrants exchanged on the date of the exchange.
 
 
46
 
Fiscal Year ended June 30, 2012
 
Revenue
 
During the fiscal year ended June 30, 2012, we earned revenue in the amount of $200,000, which consisted of a milestone payment in connection with an agricultural license agreement.
 
We did not earn any revenue during the fiscal year ended June 30, 2011.
 
Operating expenses
 
 
 
Fiscal Year Ended June 30,
 
 
 
2012
 
2011
 
Change
 
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
General and administrative
 
$
2,724,144
 
$
2,610,222
 
$
113,922
 
 
4.4
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Research and development
 
 
2,566,247
 
 
3,720,394
 
 
(1,154,147)
 
 
(31.0)
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Write - off of patents abandoned
 
 
321,137
 
 
1,588,087
 
 
(1,266,950)
 
 
(79.8)
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total operating expenses
 
$
5,611,528
 
$
7,918,703
 
$
(2,307,175)
 
 
(29.1)
%
 
General and administrative expenses
 
General and administrative expenses consist of the following:
 
 
 
Fiscal Year ended June 30,
 
 
 
2012
 
2011
 
Change
 
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stock-based compensation
 
$
721,197
 
$
709,207
 
 
11,990
 
 
1.7
%
Payroll and benefits
 
 
588,407
 
 
568,597
 
 
19,810
 
 
3.5
%
Investor relations
 
 
203,871
 
 
260.455
 
 
(56,584)
 
 
(21.7)
%
Professional fees
 
 
518,473
 
 
425,640
 
 
92,833
 
 
21.8
%
Depreciation and amortization
 
 
258,023
 
 
143,274
 
 
114,749
 
 
80.0
%
Other general and administrative expenses
 
 
434,173
 
 
503,049
 
 
(68,876)
 
 
(13.7)
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total general and administrative expenses
 
$
2,724,144
 
$
2,610,222
 
 
113,922
 
 
4.4
%
 
  ⋅
Stock-based compensation for the fiscal years ended June 30, 2012 and June 30, 2011 consisted of the amortized portion of the Black-Scholes value of options, restricted stock units and warrants granted to directors, employees and consultants.  During the fiscal years ended June 30, 2012 and 2011, the following options and warrants were granted to such individuals:
 
 
 
June 30, 2012
 
June 30, 2011
 
 
 
 
 
 
 
 
 
Options
 
 
5,274,428
 
 
4,579,142
 
Warrants
 
 
None
 
 
305,000
 
 
Stock-based compensation for the fiscal year ended June 30, 2012 was higher than the fiscal year ended June 30, 2011 primarily due to the greater number of options and warrants granted.
 
 
47
 
  ⋅
Payroll and benefits for the fiscal year ended June 30, 2012 was higher than for the fiscal year ended June 30, 2011 primarily as a result of a 401K contribution made during the fiscal year ended June 30, 2012 and salary increases effective July 1, 2011.  There was no 401K contribution during the fiscal year ended June 30, 2011.  
     
  ⋅ Investor relations fees for the fiscal year ended June 30, 2012 was lower than for the fiscal year ended June 30, 2011 primarily as a result of lower consultant fees.  
     
  ⋅ Professional fees for the fiscal year ended June 30, 2012 was higher than for the fiscal year ended June 30, 2011 primarily as a result of an increase in legal and accounting fees.  Legal fees increased primarily due to fees incurred in connection with the exploration of alternative uses of our technology and discounts on legal fees that were recorded during the fiscal year ended June 30, 2011 but were not available during the fiscal year ended June 30, 2012. Accounting fees increased primarily due to the use of a consultant to prepare a valuation of the Company’s intangible assets.
     
  ⋅ Depreciation and amortization for the fiscal year ended June 30, 2012 was higher than for the fiscal year ended June 30, 2011 primarily as a result of an increase in amortization of patent costs.
     
  ⋅ Other general and administrative expenses for the fiscal year ended June 30, 2012 was lower than for the fiscal year ended June 30, 2011 primarily due to a decrease in consultant costs, rent and telecom, which was partially offset by an increase in insurance costs.
 
Research and development expenses
 
 
 
Fiscal Year Ended June 30,
 
 
 
2012
 
2011
 
Change
 
%
 
Stock-based compensation
 
$
44,807
 
$
41,159
 
$
3,648
 
 
8.9
%
Payroll
 
 
167,834
 
 
176,646
 
 
(8,812)
 
 
(5.0)
%
Research contract with the University of Waterloo
 
 
573,368
 
 
622,872
 
 
(49,504)
 
 
(8.0)
%
Other research and development
 
 
1,780,238
 
 
2,879,717
 
 
(1,099,479)
 
 
(38.2)
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total research and development
 
$
2,566,247
 
$
3,720,394
 
$
(1,154,147)
 
 
(31.0)
%
 
  ⋅ Stock-based compensation for the fiscal year ended June 30, 2012 was higher than the fiscal year ended June 30, 2011 primarily because the number of options granted during the fiscal year ended June 30, 2012 was higher than the fiscal year ended June 30, 2011.
     
  ⋅ Payroll for the fiscal year ended June 30, 2012 was lower than for the fiscal year ended June 30, 2011 primarily as a result of a bonus that was paid to the VP-Research during the fiscal year ended June 30, 2011.  There were no bonuses paid during the fiscal year ended June 30, 2012.
     
  ⋅ The cost associated with the research contract with the University of Waterloo for the fiscal year ended June 30, 2012 were lower than for the fiscal year ended June 30, 2011 primarily due to a reduction in the amount being funded for agricultural research, effective, March 1, 2011.
 
 
48
 
  ⋅
Other research and development costs for the fiscal year ended June 30, 2012 was lower than for the fiscal year ended June 30, 2011 primarily due to a decrease in the costs incurred in connection with our development of SNS01-T for multiple myeloma.  Specifically, during the fiscal year ended June 30, 2011, we incurred significant costs related to our filing and follow-up of our investigational new drug application, pivotal toxicology study and other preclinical work that we did not incur during the fiscal year ended June 30, 2012.  This was partially offset by costs incurred related to the performance of the Phase 1b/2a clinical trial for multiple myeloma which were not incurred during the fiscal year ended June 30, 2011.
 
The breakdown of our research and development expenses between our agricultural and human therapeutic research programs are as follows:
 
 
 
Fiscal Year ended June 30,
 
 
 
2012
 
%
 
 
2011
 
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Agricultural research programs
 
$
279,736
 
11
%
 
$
467,141
 
13
%
Human therapeutic research programs
 
 
2,286,511
 
89
%
 
 
3,253,253
 
87
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Total research and development expenses
 
$
2,566,247
 
100
%
 
$
3,720,394
 
100
%
 
  ⋅
Agricultural research expenses for the fiscal year ended June 30, 2012 were lower than for the fiscal year ended June 30, 2011 primarily due to a reduction in the funding for agricultural research at the University of Waterloo and a reduction in the funding for banana field trials due to the conversion of the joint collaboration agreement with Rahan Meristem into a license agreement in December 2011.
     
  ⋅ Human therapeutic research expenses for the fiscal year ended June 30, 2012 were lower than for the fiscal year ended June 30, 2011 primarily as a result of the timing of certain aspects of the development of our drug candidate, SNS01-T, for treating multiple myeloma.  Specifically, during the fiscal year ended June 30, 2011, we incurred costs related to our filing and follow-up of our investigational new drug application, pivotal toxicology studies and other pre-clinical work that we did not incur during the fiscal year ended June 30, 2012. This was partially offset by costs incurred related to the performance of the Phase 1b/2a clinical trial for multiple myeloma which were not incurred during the fiscal year ended June 30, 2011.
 
 
49
 
Write-off of patents abandoned
 
During the fiscal years ended June 30, 2012 and June 30, 2011, we reviewed our patent portfolio in order to determine if we could reduce our cost of patent prosecution and maintenance. We identified several patents and patents pending that we believe we no longer need to maintain without having a material impact on the portfolio. We determined that we would no longer incur the cost to prosecute or maintain those patents or patents pending. Therefore, we wrote-off the net book value of those patents and patents pending in the amounts of $321,137 and $1,588,087, respectively.
 
Other non-operating income and expense
 
Grant income
 
We did not receive any grant income during the fiscal year ended June 30, 2012.
 
We received grant income under the Qualified Therapeutic Discovery Project in the amount of $244,479 during the fiscal year ended June 30, 2011. The funds were granted in connection with our program for the use of our lead therapeutic candidate, SNS01-T, in multiple myeloma.
 
Change in fair value of warrant liability
 
The amounts represent the change in the fair value of the warrant liability for the fiscal years ended June 30, 2012 and 2011. During the fiscal year ended June 30, 2012 the fair value of the warrant liability decreased due to a decrease in the Black-Scholes values of the remaining warrants as the expected term was shorter in 2011 and there was greater disparity between the market price of our common stock and the exercise price of the warrants.
 
Other noncash expense or income
 
During the fiscal year ended June 30, 2011, the exercise price of 4,088,540 warrants was adjusted from $0.50 to $0.32 in exchange for those warrant holders giving up their right to future adjustments to the exercise price. This resulted in a charge to stock-based compensation of $115,869.
 
 
50
   
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
 
Foreign Currency Risk
 
Our financial statements are denominated in United States dollars and, except for our agreement with the University of Waterloo, which is denominated in Canadian dollars, all of our contracts are denominated in United States dollars. Therefore, we believe that fluctuations in foreign currency exchange rates will not result in any material adverse effect on our financial condition or results of operations. In the event we derive a greater portion of our revenues from international operations or in the event a greater portion of our expenses are incurred internationally and denominated in a foreign currency, then changes in foreign currency exchange rates could affect our results of operations and financial condition.
 
Interest Rate Risk
 
Our exposure to market risks for interest rate changes is not significant. Interest rates on our short-term debt are subject to change, however, the effect of interest rate changes would not be material.
 
Our investments in cash represent high-quality financial instruments, primarily money market funds, with an effective duration of the portfolio of less than one year which we believe are subject to limited credit risk. We currently do not hedge our interest rate exposure. Due to the short-term nature of our investments, which we plan to hold until maturity, we do not believe that we have any material exposure to interest rate risk arising from our investments.
 
 
51
 
Item 8. Financial Statements and Supplementary Data.  
 
The financial statements required to be filed pursuant to this Item 8 are included in this Annual Report on Form 10-K. A list of the financial statements filed herewith is found at "Item 15. Exhibits, Financial Statement Schedules."
 
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
 
None.
 
Item 9A. Controls and Procedures.
 
Disclosure Controls and Procedures
 
Our management, with the participation of our chief executive officer and chief financial officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this Annual Report on Form 10-K. Based on this evaluation, our chief executive officer and chief financial officer have concluded that, as of the end of such period, our disclosure controls and procedures were effective.
 
Internal Control Over Financial Reporting
 
Management’s Annual Report on Internal Control Over Financial Reporting
 
Our company’s management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act as a process designed by, or under the supervision of, our company’s principle executive and principal financial officers and effected by our company’s board of directors, management and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles in the U.S. and includes those policies and procedures that:
 
 
⋅
Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of our company;
 
⋅
Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of our company are being made only in accordance with authorization of management and directors of our company; and
 
⋅
Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our company’s assets that could have a material effect on the financial statements.
 
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risks that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
 
 
52
 
Management assessed the effectiveness of our company’s internal control over financial reporting as of June 30, 2013. In making this assessment, management used the criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission, or COSO.
 
Based on this assessment, management has concluded that, as of June 30, 2013 our company’s internal control over financial reporting is effective.
 
Management’s report was not subject to attestation by the company’s registered public accounting firm pursuant to applicable law that permits the Company to provide only management’s report in this annual report.
 
Changes in Internal Controls Over Financial Reporting
 
No change in our internal controls over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) occurred during the fiscal year ended June 30, 2013 that has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.
 
Item 9B. Other Information.
 
None.
 
 
53

PART III
 
Item 10. Directors, Executive Officers and Corporate Governance.
 
The following is a list of our current directors and executive officers, as of August 31, 2013, together with their ages and business backgrounds:
 
Name
 
Age
 
Capacities in
Which Served
 
In Current
Position Since
 
Leslie J. Browne, Ph.D.
 
63
 
President and Chief Executive Officer, Director
 
May 2010
 
John E. Thompson, Ph.D.
 
72
 
Executive Vice President and Chief Scientific Officer, Director
 
July 2004
 
Joel P. Brooks
 
54
 
Chief Financial Officer, Treasurer and Secretary
 
December 2000
 
Richard Dondero
 
63
 
Vice President of Research and Development
 
July 2004
 
Harlan W. Waksal, M.D.
 
60
 
Chairman of the Board of Directors
 
June 2009
 
John. N. Braca (1) (2)
 
55
 
Director
 
October 2003
 
Christopher Forbes (3)
 
62
 
Director
 
January 1999
 
Warren J. Isabelle
 
61
 
Director
 
June 2009
 
Thomas C. Quick (3)
 
58
 
Director
 
February 1999
 
David Rector (1) (2)
 
66
 
Director
 
February 2002
 
Rudolf Stalder (2) (3)
 
72
 
Director
 
February 1999
 
Jack Van Hulst
 
74
 
Director
 
January 2007
 
 
    (1) Member of the Compensation Committee
    (2) Member of the Audit Committee
    (3) Member of the Nominating and Corporate Governance Committee
 
None of our current executive officers are related to any other executive officer or to any of our directors. Our executive officers are elected annually by our board and serve until their successors are duly elected and qualified.
 
Leslie J. Browne, Ph.D. was appointed our President and Chief Executive Officer in May 2010 and has been our director since March 2011. Dr. Browne has over 30 years of experience in the pharmaceutical industry. Prior to joining Senesco in May 2010, he served from October 2008 to May 2010 as President and CEO, and is currently chair, of Phrixus Pharmaceuticals, Inc., a private biotech working on muscular dystrophy and heart failure. He recently served from January 2007 to January 2009 as chair of the New Jersey Technology Council, where he continues as a member of the board. He also served from April 2007 to January 2009 as an independent director of Genelabs Technologies, which was sold to GSK, and from September 2004 to May 2008 as President, CEO and Director of Pharmacopeia, a Nasdaq listed company, where he transformed the company from a discovery contract research organization to a clinical development stage biopharmaceutical company with multiple internal development programs. Prior to joining Pharmacopeia, Dr. Browne was the Chief Operating Officer at Iconix Pharmaceuticals, Inc., a privately-held chemogenomics company from October 2001 to July 2004. Before Iconix, Dr. Browne held key positions at Berlex/Schering AG from 1990 to 2000, including Corporate Vice President, Berlex Laboratories, Inc. and President of Schering Berlin Venture Corporation. In 1979, Dr. Browne began his industrial career at Ciba-Geigy, now Novartis, where he invented fadrozole, for the treatment of breast cancer and was closely involved in the discoveries of Femaraâ and Diovanâ, which became major products for Novartis. Dr. Browne received his Bachelor of Science degree in Chemistry in 1972 from the University of Strathclyde, Glasgow Scotland. He received his Ph.D. in Organic Chemistry in 1978 from the University of Michigan and his postdoctoral training as a National Institutes of Health Postdoctoral Fellow at Harvard University from January 1978 to April 1979. Dr. Browne is an experienced executive with former CEO experience and senior executive level experience at large multinational, as well as development stage, life sciences companies. He also has corporate governance experience through service on boards of other companies and organizations. Dr. Browne’s educational background also provides him with the tools necessary to understand the science underlying our technology and how it relates to human health and agricultural applications.
 
 
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John E. Thompson, Ph.D. has been our director since October 2001. Dr. Thompson was appointed our President and Chief Executive Officer in January 1999, and he continued in that capacity until September 1999 when he was appointed Executive Vice President of Research and Development. In July 2004, Dr. Thompson became our Executive Vice President and Chief Scientific Officer. Dr. Thompson is the inventor of the technology that we develop. Since July 2001, he has been the Associate Vice President, Research and, from July 1990 to June 2001, he was the Dean of Science at the University of Waterloo in Waterloo, Ontario, Canada. Dr. Thompson has a Ph.D. in Biology from the University of Alberta, Edmonton, and he is a Fellow of the Royal Society of Canada. Dr. Thompson is also the recipient of a Lady Davis Visiting Fellowship, the Sigma Xi Award for Excellence in Research, the CSPP Gold Medal and the Technion Visiting Fellowship. Dr. Thompson has an in-depth knowledge and understanding of the science underlying our technology and how it relates to human health and agricultural applications.
 
Joel Brooks was appointed our Chief Financial Officer and Treasurer in December 2000. Mr. Brooks was appointed our Secretary in May 2010. From September 1998 until November 2000, Mr. Brooks was the Chief Financial Officer of Blades Board and Skate, LLC, a retail establishment specializing in the action sports industry. Mr. Brooks was Chief Financial Officer from 1997 until 1998 and Controller from 1994 until 1997 of Cable and Company Worldwide, Inc. He also held the position of Controller at USA Detergents, Inc. from 1992 until 1994, and held various positions at several public accounting firms from 1983 through 1992. Mr. Brooks is also a director and chairman of the audit committee of USA Technologies, Inc. Mr. Brooks received his Bachelor of Science degree in Commerce with a major in Accounting from Rider University in February 1983.
 
Richard Dondero was appointed our Vice President of Research and Development in July 2004. From July 2002 until July 2004, Mr. Dondero was a Group Leader in the Proteomics Reagent Manufacturing division of Molecular Staging, Inc., a biotech firm engaged in the measurement and discovery of new biomarkers. From 1985 through June 2001, Mr. Dondero served in several roles of increasing responsibility through Vice President of Operations and Product Development at Cistron Biotechnology, Inc. From 1977 through 1985, Mr. Dondero served as a senior scientist at Johnson and Johnson, and from 1975 through 1977, as a scientist at Becton Dickinson. Mr. Dondero received his Bachelor of Arts degree from New Jersey State University in 1972 and his Master of Science degree from Seton Hall University in 1976.
 
 
55
 
Harlan W. Waksal, M.D. has been our chairman of the board of directors since June 2009 and a director since October 2008. From July 2003 to present, Dr. Waksal has been the President and Sole Proprietor of Waksal Consulting L.L.C., which provides strategic business and clinical development counsel to biotechnology companies. Dr. Waksal co-founded the biotechnology company ImClone Systems Inc. in 1984. From July 2011 to present, Dr. Waksal has served as the Executive Vice-President, Business and Scientific Affairs of Acasti Pharma, Inc., which is a subsidiary of Neptune Technologies & Bioresources, Inc. From March 1987 through July 2003, Dr. Waksal had served in various senior roles for ImClone Systems Inc. as follows: March 1987 through April 1994 – President; April 1994 through May 2002 – Executive Vice President and Chief Operating Officer; May 2002 through July 2003 – President, Chief Executive Officer and Chief Operating Officer. Dr. Waksal also served as a director of ImClone Systems Inc. from March 1987 through January 2005. Dr. Waksal is currently a member of the Board of Trustees of Oberlin College. Dr. Waksal received a Bachelor of Arts in Biology from Oberlin College and an M.D. from Tufts University School of Medicine. Dr. Waksal is knowledgeable in science, drug development, regulatory and clinical affairs. In addition, he ran and operated a public biotechnology company and is familiar with the issues of corporate governance.
 
John N. Braca has been our director since October 2003. Mr. Braca has also served as a director and board observer for other healthcare, technology and biotechnology companies over the course of his career. Since April 2013, Mr. Braca has been the President and sole proprietor of JNB Consulting, which provides strategic business development counsel to biotechnology companies. From August 2010 through April 2013, Mr. Braca had been the executive director controller for Iroko Pharmaceuticals, a privately-held global pharmaceutical company based in Philadelphia. From April 2006 through July 2010, Mr. Braca was the managing director of Fountainhead Venture Group, a healthcare information technology venture fund based in the Philadelphia area, and has been working with both investors and developing companies to establish exit and business development opportunities. From May 2005 through March 2006, Mr. Braca was a consultant and advisor to GlaxoSmithKline management in their research operations. From 1997 to April 2005, Mr. Braca was a general partner and director of business investments for S.R. One, Limited, or S.R. One, the venture capital subsidiary of GlaxoSmithKline. In addition, from January 2000 to July 2003, Mr. Braca was a general partner of Euclid SR Partners Corporation, an independent venture capital partnership. Prior to joining S.R. One, Mr. Braca held various finance and operating positions of increasing responsibility within several subsidiaries and business units of GlaxoSmithKline. Mr. Braca is a licensed Certified Public Accountant in the state of Pennsylvania and is affiliated with the American Institute of Certified Public Accountants and the Pennsylvania Institute of Certified Public Accountants. Mr. Braca received a Bachelor of Science in Accounting from Villanova University and a Master of Business Administration in Marketing from Saint Joseph’s University. Mr. Braca’s financial background, operating experience with both large pharmaceutical companies and developing biotechnology companies, provides the board with practical experience for issues facing the Company. In addition, Mr. Braca also has a strong corporate governance background through his experience with other company boards.
 
 
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Christopher Forbes has been our director since January 1999. From September 2011 to present, Mr. Forbes has been the Vice Chairman of Forbes Media LLC and Forbes Family Holdings, and Vice President of Forbes Management Co. Inc. From 1989 through September 2011, Mr. Forbes had been Vice Chairman of Forbes, Inc. From 1981 to 1989, Mr. Forbes was Corporate Secretary at Forbes. Prior to 1981, he held the position of Vice President and Associate Publisher. Mr. Forbes is the Chairman of the American Friends of the Louvre, and he also sits on the boards of The Friends of New Jersey State Museum and The New York Academy of Art. He is also a member of the board of advisors of The Princeton University Art Museum. Mr. Forbes received a Bachelor of Arts degree in Art History from Princeton University in 1972. In 1986, he was awarded the honorary degree of Doctor of Humane Letters by New Hampshire College and in 2003 was appointed a Chevalier of the Legion of Honor by the French Government. Mr. Forbes’s knowledge regarding corporate operations as well as his business acumen, provide the board with experience in running a corporation and addressing the issues that face a growing company, such as ours.
 
Warren J. Isabelle has been our director since June 2009. Mr. Isabelle is a founder and principal of Ironwood Investment Management L.L.C., located in Boston, MA. Mr. Isabelle founded Ironwood Investment Management L.L.C in August 1997. From 1983 until 1997, Mr. Isabelle was with Pioneer Management Corporation where he served most recently as Director of Research and Head of U.S. Equities. Mr. Isabelle has also, since January 2004, served as a member of the Public Board and Vice-Chairman of the Investment Committee of the University of Massachusetts Foundation. Mr. Isabelle is a Chartered Financial Analyst and member of the CFA institute and the American Chemical Society. Mr. Isabelle received a Bachelor of Science degree in chemistry from Lowell Technological Institute, a Master of Science degree in Polymer Science and Engineering from the University of Massachusetts, and a MBA from the Wharton School, University of Pennsylvania. Mr. Isabelle’s experience as an investment analyst and portfolio manager provides the Company with valuable insight into the biotechnology industry and the publicly-traded capital markets.
 
Thomas C. Quick has been our director since February 1999. Since 2003, Mr. Quick has been the President of First Palm Beach Properties, Inc. From 2001 through 2003, Mr. Quick was the Vice Chairman of Quick & Reilly/Fleet Securities, Inc., successor to The Quick & Reilly Group, Inc., a holding company for four (4) major financial services businesses. From 1996 until 2001, Mr. Quick was the President and Chief Operating Officer and a director of Quick & Reilly/Fleet Securities, Inc. From 1985 to 1996, he was President of Quick & Reilly, Inc., a Quick & Reilly subsidiary and a national discount brokerage firm. Mr. Quick serves as a member of the board of directors and compensation committee of B.F. Enterprises. He is also a member of the board of directors of Best Buddies, The American Ireland Fund and Venetian Heritage, Inc. He is a trustee of the National Corporate Theater Fund, Cold Spring Harbor Laboratories, the Norton Museum and the Inter-City Scholarship Foundation of New York City. Mr. Quick is a graduate of Fairfield University. As a result of his professional and other experiences, Mr. Quick has a deep understanding of corporate operations and strategy, and operations in both the US and internationally. Mr. Quick also has significant corporate governance experience through his service on other company boards.
 
 
57
 
David Rector has been our director since February 2002. Mr. Rector also serves as a director and member of the compensation and audit committee of the Dallas Gold and Silver Exchange (formerly Superior Galleries, Inc.) Mr. Rector also serves on the board of directors of Valor Gold Corp. Since 1985, Mr. Rector has been the Principal of The David Stephen Group, which provides enterprise consulting services to emerging and developing companies in a variety of industries. Since November 2012 through present, Mr. Rector has served as the CEO and President of Valor Gold. Since February 2012 through present, Mr. Rector has served as the VP Finance & Administration of Pershing Gold Corp. From May 2011 through February 2012, Mr. Rector served as the President of Sagebrush Gold, Ltd. From October 2009 through August 2011, Mr. Rector had served as President and CEO of Li3 Energy, Inc. From July 2009 through May 2011, Mr. Rector had served as President and CEO of Nevada Gold Holdings, Inc. From September 2008 through November 2010, Mr. Rector served as President and CEO Universal Gold Mining Corp. Since October 2007 through present, Mr. Rector has served as President and CEO of Standard Drilling, Inc. From May 2004 through December 2006, Mr. Rector had served in senior management positions with Nanoscience Technologies, Inc., a development stage company engaged in the development of DNA Nanotechnology. From 1983 until 1985, Mr. Rector served as President and General Manager of Sunset Designs, Inc., a domestic and international manufacturer and marketer of consumer product craft kits, and a wholly-owned subsidiary of Reckitt & Coleman N.A. From 1980 until 1983, Mr. Rector served as the Director of Marketing of Sunset Designs. From 1971 until 1980, Mr. Rector served in progressive roles in the financial and product marketing departments of Crown Zellerbach Corporation, a multi-billion dollar pulp and paper industry corporation. Mr. Rector received a Bachelor of Science degree in Business/Finance from Murray State University in 1969. As a result of these professional and other experiences, Mr. Rector has a deep business understanding of developing companies. Mr. Rector also brings corporate governance experience through his service on other company boards.
 
Rudolf Stalder has been our director since February 1999 and was appointed as our Chairman and Chief Executive Officer on January 10, 2000. On October 4, 2001, Mr. Stalder resigned as our Chief Executive Officer. On June 8, 2009, Mr. Stalder resigned as our Chairman. Mr. Stalder is a former member of the executive boards of Credit Suisse Group and Credit Suisse First Boston and former Chief Executive Officer of the Americas Region of Credit Suisse Private Banking. Mr. Stalder joined Credit Suisse in 1980 as a founding member and Deputy Head of the Multinational Services Group. In 1986, he became Executive Vice President. He was named to Credit Suisse’s Executive Board in 1989. In 1990, he became Head of the Commercial Banking Division and a Member of the Executive Committee. From 1991 to 1995, Mr. Stalder was Chief Financial Officer of Credit Suisse First Boston and a Member of the Executive Boards of Credit Suisse Group and Credit Suisse First Boston. He became head of the Americas Region of Credit Suisse Private Banking in 1995 and retired in 1998. Prior to moving to the United States, Mr. Stalder was a member of the Board of Directors for several Swiss subsidiaries of major corporations including AEG, Bayer, BTR, Hoechst, Saint Gobain, Solvay and Sony. He is a fellow of the World Economic Forum. He was a member of the Leadership Committee of the Consolidated Corporate Fund of Lincoln Center for the Performing Arts, Board of The American Ballet Theatre and a Trustee of Carnegie Hall. From 1991 through 1998, Mr. Stalder was Chairman of the New York Chapter of the Swiss-American Chamber of Commerce. He continues to serve as an advisory board member of the American-Swiss Foundation. Mr. Stalder received a diploma in advanced finance management at the International Management Development Institute in Lausanne, Switzerland in 1976. He completed the International Senior Managers Program at Harvard University in 1985. Mr. Stalder is an experienced executive with former CEO experience and senior executive level experience at large multinational companies. He also has corporate governance experience through service on other public company boards.
 
 
58
 
Jack Van Hulst has been our director since January 2007. Mr. Van Hulst was appointed as our President and Chief Executive Officer effective November 16, 2009. Mr. Van Hulst was further appointed as our Secretary effective February 1, 2010. Mr. Van Hulst resigned as our President and Chief Executive Officer and Secretary effective May 25, 2010. Since June 2010, Mr. Van Hulst has been the operating partner of SK Capital Partners. Mr. Van Hulst also serves as a director and member of the compensation and audit committees of HiTech Pharmacal, Inc. He has more than 42 years of international experience in the pharmaceutical industry. He began his career in 1968 at Organon, which was subsequently acquired by AKZO, N.V., the multinational human and animal healthcare company, where he was based in Europe and the US and responsible for establishing AKZO’s position in the US in the manufacturing and sales and marketing of fine chemicals. Mr. Van Hulst later became President of AKZO’s US Pharmaceutical Generic Drug Business and was responsible for establishing AKZO in the US generic drug industry. From 1989 to 1999, Mr. Van Hulst successively owned and led two generic pharmaceutical companies, improving their operations and then selling them to a private equity group and a pharmaceutical company. From 1999 to 2005, he was Executive Vice President at Puerto Rico-based MOVA Pharmaceutical Corporation, a contract manufacturer to the pharmaceutical industry that recently merged with Canadian-based Patheon. Mr. Van Hulst also serves as Chairman of the Board of The International Center in New York, a non-profit organization. Mr. Van Hulst received a Masters degree in law from the University in Utrecht, Netherlands in 1968. Mr. Van Hulst possesses management experience as a result of his prior positions. Mr. Van Hulst spent years holding a number of management roles at other pharmaceutical companies and this experience assists the Company in working though the similar issues that it may face in its own operations.
 
Section 16(a) Beneficial Ownership Reporting Compliance
 
Section 16(a) of the Exchange Act requires a company’s directors, officers and stockholders who beneficially own more than 10% of any class of equity securities of the company registered pursuant to Section 12 of the Exchange Act, collectively referred to herein as the Reporting Persons, to file initial statements of beneficial ownership of securities and statements of changes in beneficial ownership of securities with respect to the company’s equity securities with the SEC. All Reporting Persons are required by SEC regulation to furnish us with copies of all reports that such Reporting Persons file with the SEC pursuant to Section 16(a).
 
Based solely on our review of the copies of such forms received by us and upon written representations of the Reporting Persons received by us, we believe that there has been compliance with all Section 16(a) filing requirements applicable to our Reporting Persons, with the following exceptions: Dr. Waksal filed a Form 4 on October 5, 2012 to report the conversion of Series B Convertible Preferred Stock into shares of Common Stock on August 8, 2012; and Mr. Forbes filed a Form 4 on October 5, 2012 to report the conversion of Series B Convertible Preferred Stock into shares of Common Stock on August 8, 2012.
 
 
59
 
Code of Business Ethics and Conduct
 
On March 17, 2003, our board adopted a Code of Business Ethics and Conduct, which may also be found on our website at www.senesco.com. Our Code of Ethics contains written standards designed to deter wrongdoing and to promote:
 
 
 
⋅
 
honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;
 
 
 
⋅
 
full, fair, accurate, timely, and understandable disclosure in reports and documents filed with the SEC and in other public communications made by the Company;
 
 
 
⋅
 
compliance with applicable governmental laws, rules and regulations;
 
 
 
⋅
 
the prompt internal reporting of violations of our Code of Ethics to an appropriate person or persons identified in our Code of Ethics; and
 
 
 
⋅
 
accountability for adherence to our Code of Ethics.
 
 
Each of our employees, officers and directors completed a signed certification to document his or her understanding of and compliance with our Code of Ethics.
 
 
60
 
Audit Committee
 
Our Audit Committee was established in July 1999. On March 11, 2011, our board adopted an Amended and Restated Audit Committee Charter. The primary responsibilities of our Audit Committee include: 
 
 
⋅
appointing, approving the compensation of, and assessing the independence of our independent registered public accounting firm;  
 
 
 
 
⋅
overseeing the work of our independent registered public accounting firm, including through the receipt and consideration of certain reports from our independent registered public accounting firm;  
 
 
 
 
⋅
reviewing and discussing with management and our independent registered public accounting firm our annual and quarterly financial statements and related disclosures;  
 
 
 
 
⋅
monitoring our internal control over financial reporting, disclosure controls and procedures and code of business conduct and ethics;  
 
 
 
 
⋅
discussing our risk management policies;  
 
 
 
 
⋅
establishing policies regarding hiring employees from our independent registered public accounting firm and procedures for the receipt and retention of accounting related complaints and concerns;  
 
 
 
 
⋅
meeting independently with our independent registered public accounting firm and management; and  
 
 
 
 
⋅
preparing the audit committee report required by SEC rules.  
 
Our Audit Committee is currently comprised of John N. Braca, David Rector and Rudolf Stalder. Mr. Braca currently serves as the chairman of the Audit Committee. Although we are not currently subject to audit committee independence requirements, we have, nevertheless,, in determining whether our Audit Committee members are independent, we use the definition of independence provided under Section 803 of the NYSE MKT Company Guide. The NYSE MKT currently requires an Audit Committee comprised solely of independent directors. Messrs. Braca, Rector and Stalder are “independent” members of our board as defined in Rule 10A-3 under the Securities Exchange Act of 1934, as amended, or the Exchange Act, and Section 803 of the NYSE MKT Company Guide. In addition, our board of directors has determined that Mr. Braca satisfies the definition of an audit committee “financial expert” as set forth in Item 407(d) (5) of Regulation S-K promulgated by the SEC. Our Audit Committee held four (4) meetings during Fiscal 2013.
 
Director Candidates
 
The process followed by our Nominating and Corporate Governance Committee to identify and evaluate director candidates includes requests to board members and others for recommendations, meetings from time to time to evaluate biographical information and background material relating to potential candidates and interviews of selected candidates by members of the committee and the board.
 
 
61
 
In considering whether to recommend any particular candidate for inclusion in the board’s slate of recommended director nominees, our Nominating and Corporate Governance Committee will apply the criteria contained in the committee’s charter. These criteria include, but are not limited to, the candidate’s integrity, business acumen, knowledge of our business and industry, age, experience, diligence, conflicts of interest and the ability to act in the interests of all stockholders. Our Nominating and Corporate Governance Committee does not assign specific weights to particular criteria and no particular criterion is a prerequisite for each prospective nominee. In addition, although we do not have a formal diversity policy, we review diversity as one of the criteria for nomination. We believe that the backgrounds and qualifications of our directors, considered as a group, should provide a composite mix of experience, knowledge and abilities that will allow the board to fulfill its responsibilities.
 
Stockholders may recommend individuals to our Nominating and Corporate Governance Committee for consideration as potential director candidates by submitting their names, together with appropriate biographical information and background materials and a statement as to whether the stockholder or group of stockholders making the recommendation has beneficially owned more than $2,000 in market value, or 1%, of our common stock for at least one (1) year as of the date such recommendation is made, to: Nominating and Corporate Governance Committee, c/o Corporate Secretary, Senesco Technologies, Inc., 721 Route 202/206, Suite 130, Bridgewater, NJ 08807. Assuming that appropriate biographical and background material has been provided on a timely basis, the committee will evaluate stockholder-recommended candidates by following substantially the same process, and applying substantially the same criteria, as it follows for candidates submitted by others.
 
 
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Item 11.     Executive Compensation.
 
Compensation Discussion and Analysis
 
This Compensation Discussion and Analysis explains the principles underlying our compensation policies and decisions and the principal elements of compensation paid to our executive officers during Fiscal 2013 and as anticipated for Fiscal 2014. Our Chief Executive Officer, Chief Financial Officer and all of our other executive officers included in the Summary Compensation Table will be referred to as the “named executive officers” for purposes of this discussion.
 
Compensation Objectives and Philosophy
 
The Compensation Committee, also referred to herein as the Committee, of the board is responsible for the following:
 
  ⋅ annually reviewing and approving, or recommending for approval by our board, the corporate goals and objectives relevant to executive officer compensation;
     
  ⋅ reviewing and approving, or recommending for approval by our board, the salaries and incentive compensation of our executive officers;
     
  ⋅ preparing the Compensation Committee report, including the Compensation Discussion and Analysis;
     
  ⋅ administering our 2008 Incentive Compensation Plan, or similar stock plan adopted by our stockholders; and
     
  ⋅ reviewing and making recommendations to our board with respect to director compensation.
 
As part of this process, the Committee seeks to accomplish the following objectives with respect to our executive compensation programs:
 
  ⋅ to motivate, recruit and retain executives capable of meeting our strategic objectives;
     
  ⋅ to provide incentives to ensure superior executive performance and successful financial results for us; and
     
  ⋅ to align the interests of executives with the long-term interests of our stockholders.
 
The Committee seeks to achieve these objectives by:
 
  ⋅
linking a substantial portion of compensation to our achievement of long-term and short-term research and development objectives and financial objectives and the individual’s contribution to the attainment of those objectives;
     
  ⋅
providing long-term equity-based incentives and encouraging direct share ownership by executives with the intention of providing incentive-based compensation to encourage a long-term focus on company profitability and stockholder value; and
 
 
63
 
  ⋅
understanding the marketplace and establishing a compensation structure that is adjusted for our position in the marketplace and our current financial condition and limited capital resources.
 
Setting Executive Compensation
 
For Fiscal 2013, the Committee’s objective was to target each component of compensation listed below to be competitive with comparable positions at peer group companies, and to target the total annual compensation of each named executive officer at the appropriate level for comparable positions at the competitive peer group companies.
 
During the compensation review process for Fiscal 2013, the Committee engaged J. Richard and Co., also referred to herein as J. Richard, a nationally recognized compensation consulting firm, as its compensation consultant, on an as needed basis regarding its proposed programs and approaches to compensation during Fiscal 2013, for which J. Richard was compensated. Other than as described above, J. Richard did not provide any additional services to the Committee or Senesco for Fiscal 2013, and compensation to J. Richard for services rendered in Fiscal 2013 was less than $120,000.
 
The Committee elected to identify various companies in the biotech sector it felt were somewhat close in scope of operation to Senesco. It became evident, as in prior years, that due to the key banner points listed above (the breadth of operations in general, executive officers scope of duties and responsibilities, position in the life cycle, financial responsibilities, capitalization and size of management staff) it is very difficult to identify such public entities for comparative purposes. For Fiscal 2013, the companies we elected to evaluate were as follows: Access Pharmaceuticals (ACCP); Adventrx (ANX); Poniard (PARD); Cortex Pharmaceuticals (CORX.OB); Callisto Pharmaceuticals (CLSP.OB); RXi Pharmaceuticals (RXII); Titan Pharmaceuticals (TTNP.OB); Oxigene (OXGN); Entremed (ENMD); and Silence Therapeutics (SLNCF). For Fiscal 2014, the companies we elected to evaluate were as follows: Access Pharmaceuticals (ACCP); Mast Therapeutics (MSTX); Cortex Pharmaceuticals (CORX); RXi Pharmaceuticals (RXII); Titan Pharmaceuticals (TTNP); Oxigene (OXGN); Entremed (ENMD); and Silence Therapeutics (SLN). In selecting companies to survey for such compensation purposes, the Committee considered many factors not directly associated with the stock price performance of those companies, such as geographic location, development stage, organizational structure and market capitalization. For this reason, there is not a meaningful correlation between the companies included within the peer group identified for comparative compensation purposes and the companies included within the RDG Micro Biotechnology Index. Because the biotechnology industry is a dynamic industry, our comparator group is periodically updated to ensure that companies continue to meet established criteria and remain similar in scope of operation to us.
 
 
64
 
In determining the compensation of each named executive officer, the Committee also considers a number of other factors, including our recent performance and the named executive officer’s individual performance, the Chief Executive Officer’s recommendations and the importance of the executive’s position and role in relation to execution of our strategic plan. There is no pre-established policy for allocation of compensation between cash and non-cash components or between short-term and long-term components. Instead, the Committee determines the mix of compensation for each named executive officer based on its review of the competitive data, its subjective analysis of that individual’s performance and contribution to our financial performance, the financial strength and outlook of Senesco and, most of all, what is considered fair and reasonable based on the scope of operations and responsibilities of the officer. For the Chief Executive Officer, for Fiscal 2013, the Committee set his performance targets and compensation levels based upon the Committee’s review and analysis of his performance and the factors described above. For other named executive officers, the Committee sets performance targets and compensation levels after taking into consideration recommendations from the Chief Executive Officer. As part of this process, the Committee considers a number of factors important to our stockholders, including ongoing concerns over the dilutive effect of option grants on our outstanding shares, the compensation expense we must take for financial accounting purposes in accordance with FASB Accounting Standards Codification Topic 718 (ASC 718, Compensation-Stock Compensation) with respect to option grants in relation to the actual value anticipated to be delivered to our executive officers from such awards, and the market volatility of our stock.
 
Impact of 2013 Say-on-Pay Vote: The most recent stockholder advisory vote on executive officer compensation required under the federal securities laws was held on March 28, 2013. More than 93 percent of the votes cast on such proposal were in favor of the compensation of the named executive officers, as that compensation was disclosed in the Compensation Discussion and Analysis and the various compensation tables and narrative that appeared in the Company’s proxy statement dated February 26, 2013. Based on that level of stockholder approval, the Committee decided not to make any material changes to the Corporation’s compensation philosophies, policies and practices for the remainder of the 2013 fiscal year or for compensation decisions made in August 2013 with respect to the 2014 fiscal year compensation of the named executive officers. However, the Committee will continue to take into account future stockholder advisory votes on executive compensation and other relevant market developments affecting executive officer compensation in order to determine whether any subsequent changes to the Corporation’s executive compensation programs and policies would be warranted to reflect any stockholder concerns reflected in those advisory votes or to address market developments. Based on the voting preference of our stockholders, the frequency of future Say-on-Pay votes will be every three years. Accordingly, the next stockholder advisory vote on executive officer compensation will occur at the 2016 annual meeting.
 
Components of Compensation
 
For Fiscal 2013, our executive compensation program included the following components:
 
  ⋅ base salary; and
  ⋅ annual short-term equity incentives.
 
Currently, for Fiscal 2014, our executive compensation program includes the following components:
 
  ⋅ base salary; and
  ⋅ annual short-term equity incentives.
 
 
65
  
The Committee seeks to align the named executive officers’ and stockholders’ interests in a pay for performance environment. The Committee also reviews the compensation metrics of the Chief Executive Officer versus the other named executive officers. Although certain percentages and allocations may differ, the overall cash and equity compensation package of the CEO is not materially greater than the overall cash and equity compensation package of each other named executive officer. On average, a large portion of an executive officer's total compensation is at risk, with the amount actually paid tied to achievement of pre-established objectives and individual goals.
 
The Committee wishes to provide additional compensation to all of the named executive officers, including the Chief Executive Officer, through the development of incentive programs based on the named executives performance and attainment of stated objectives that enhance stockholder value in order to (i) link a substantial portion of their compensation to the achievement of short-term objectives and (ii) to save cash given our limited capital resources.
 
Base Salary
 
In General – It is the Committee’s objective to set a competitive rate of annual base salary or consulting fees for each named executive officer. The Committee believes competitive base salaries are necessary to attract and retain top quality executives, since it is common practice for public companies to provide their executive officers with a guaranteed annual component of compensation that is not subject to performance risk. However, the Committee recognizes that we are still a development stage company, with little to no revenue currently and believes that developing too rigid of a compensation structure can become detrimental to our progress.
 
When compared to comparable positions at the competitive peer group companies, it is the Committee’s objective to target the base compensation level of executive officers approximately around the 50th percentile because of our current financial position. However, historically, the base compensation level for our executive officers has been below the 25th percentile of competitive peer group companies. In determining the compensation of each executive officer, the Committee also considers a number of other factors, including recent Senesco and individual performance, the officer’s position and responsibilities and the CEO’s recommendations (with respect to officers other than the CEO).   
 
Base Salary for Fiscal 2013 – For Fiscal 2013, after review of the factors discussed above, the following named executive officers’ salaries were increased as follows:
 
 
 
 
 
2013
 
2012
 
%
 
Name
 
Title
 
Salary
 
Salary
 
Increase
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Leslie J. Browne, Ph.D.
 
President and Chief Executive Officer
 
$
271,000
 
$
262,500
 
 
3.5
%
 
 
 
 
 
 
 
 
 
 
 
 
 
John E. Thompson, Ph.D.
 
Executive Vice-President and Chief
 
 
 
 
 
 
 
 
 
 
 
 
Scientific Officer
 
$
70,000
(1)
$
67,500
(1)
 
3.5
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Joel P. Brooks
 
Chief Financial Officer, Secretary
 
 
 
 
 
 
 
 
 
 
 
 
and Treasurer
 
$
176,000
 
$
170,000
 
 
3.5
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Richard Dondero
 
Vice-President of Research and
 
 
 
 
 
 
 
 
 
 
 
 
Development
 
$
159,000
 
$
153,200
 
 
3.5
%
 
  (1) Represents consulting fees paid under a consulting agreement.
 
 
66

Base Salary for Fiscal 2014 – For Fiscal 2014, after a review of the factors discussed above, the following named executive officer’s salaries were increased as follows.
 
 
 
 
 
2014
 
 
2013
 
 
%
 
Name
 
Title
 
Salary
 
 
Salary
 
 
Increase
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Leslie J. Browne, Ph.D.
 
President and Chief Executive Officer
 
$
271,000
 
 
$
271,000
 
 
 
0
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
John E. Thompson, Ph.D.
 
Executive Vice-President and Chief
Scientific Officer
 
$
70,000
(1)
 
$
70,000
(1)
 
 
0
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Joel P. Brooks
 
Chief Financial Officer, Secretary and
Treasurer
 
$
176,000
 
 
$
176,000
 
 
 
0
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Richard Dondero
 
Vice-President of Research and
Development
 
$
159,000
 
 
$
159,000
 
 
 
0
%
 
  (1) Represents consulting fees paid under a consulting agreement.
 
In light of the Company’s performance and financial position, the Committee determined that it would not award salary increases to management at this time for Fiscal 2014, but reserved the right to increase salaries at a later date.
 
Annual Bonuses for Fiscal 2013– There were no bonuses granted for Fiscal 2013.
 
Annual Bonuses for Fiscal 2014– Bonuses will be determined at the discretion of the board after the end of the fiscal year based upon the recommendation of the Committee.
 
Short Term Incentive Equity Awards
 
In General – A portion of each named executive officer’s compensation is provided in the form of short-term equity awards. It is the Committee’s belief that properly structured equity awards are an effective method of aligning the short-term interests of our named executive officers with those of our stockholders.
 
Short-term equity awards were made in the form of incentive stock options, also referred to herein as ISO’s, for tax purposes. The Committee has followed a grant practice of tying equity awards to its annual year-end review of individual performance, its assessment of our performance and our operational results.
 
Short-Term Incentive Plan for Fiscal 2013 – The Committee, in coordination with our Chief Executive Officer, established our short-term goals and objectives for Fiscal 2013, which include the following: 
 
⋅      Contributions relating to the development of our SNS01-T assets:  
 
o      Maintain schedule to complete multiple myeloma study in the second half of fiscal 2013;  
o      Plan a clinical study for SNS01-T in B cell cancers in addition to multiple myeloma;  
o      Validate preclinical candidate for approval for IND preparation; and  
o      Develop an improved SNS01-T formulation;
 
 
 
67
 
⋅      Contributions relating to finance objectives:  
 
o      Improve the capital resources of the company through a financing transaction; and  
o      Regain and maintain NYSE MKT compliance;  
 
⋅      Contributions relating to corporate development:  
 
o      Expand product portfolio; and  
o      Integrate business acquisitions. 
 
The foregoing goals and objectives were generally weighted as follows: 50% for contributions relating to the development of our SNS01-T assets; 25% to contributions relating to finance objectives; and 25% to contributions relating to corporate development. However, the specific weighting varied from executive officer to executive officer, in order to reflect that officer’s specific duties and responsibilities.
 
The Committee identified additional individual performance goals and objectives for Fiscal 2013 for Messrs. Brooks and Dondero, Dr. Browne and Dr. Thompson. Mr. Brooks’s goals and objectives primarily include raising capital through financings, regaining and maintaining NYSE MKT compliance and increasing Senesco’s trading volume. Mr. Dondero’s goals and objectives primarily include management of Senesco’s clinical trials, initiation of new clinical trials for our SNS01-T assets and expanding our product portfolio. Dr. Browne’s goals and objectives primarily include the completion of the current clinical trial for SNS01-T, planning of the upcoming Phase 2 clinical trial and the expansion of Senesco’s product portfolio. Dr. Thompson’s goals primarily include demonstrating the pre-clinical effects of SNS01-T in combination with certain approved therapeutic products and developing an improved SNS01-T formulation.
 
In October 2012, the Committee determined to award the following options to purchase shares of our common stock, par value $0.01, to the following named executive officers in connection with the short-term goals and objectives for Fiscal 2013:
 
Leslie J. Browne, Ph.D.
 
1,365,000
 
Joel Brooks
 
780,000
 
Richard Dondero
 
780,000
 
John E. Thompson, Ph.D.
 
780,000
 
 
The option awards allotted for completion of Fiscal 2013 goals and objectives were allocated to the following named executive officers as follows – Dr. Browne: 35%, Mr. Brooks: 20%, Mr. Dondero: 20%, Dr. Thompson: 20%, and 5% of the option awards will be allocated at the Committee’s discretion for outstanding performance to assist Senesco in reaching such goals. Such options were granted on November 16, 2012, which was two days after the filing of our quarterly report on Form 10-Q for the quarter ended September 30, 2012, and had an exercise price equal to the closing price of the common stock on November 16, 2012. The options vest on the basis of a two-step process. First, options vest based on attainment of the pre-established corporate and individual performance goals. Second, the options that are earned based on attainment of performance will vest with respect to twenty-five percent (25%) of such options on the first anniversary of the date of grant with the balance vesting at a rate of 1/36 for each month thereafter, subject to the executive officer’s continued service through each applicable vesting date. No options will vest if the Committee has determined that the performance metrics have not been met.
 
 
68
 
In August 2013, the Committee determined that the performance metrics had not been fully met. Therefore, a percentage of the options granted in November 2012 were forfeited as follows:
 
Name
 
Initial Grant
 
Performance
Adjustment
Percentage
 
 
Options
Retained
 
Options
Forfeited
 
Leslie J. Browne, Ph.D.
 
 
1,365,000
 
 
75
%
 
 
341,250
 
 
1,023,750
 
Joel Brooks
 
 
780,000
 
 
75
%
 
 
195.000
 
 
585,000
 
Richard Dondero
 
 
780,000
 
 
75
%
 
 
195,000
 
 
585,000
 
John E. Thompson, Ph.D.
 
 
780,000
 
 
75
%
 
 
195,000
 
 
585,000
 
 
The remaining retained options will continue to vest pursuant to the vesting schedule set forth above.
 
Short-Term Incentive Plan for Fiscal 2014 – The Committee, in coordination with our Chief Executive Officer, established our short-term goals and objectives for Fiscal 2014, which include the following:
 
⋅      Contributions relating to the development of our SNS01-T assets:
   
o  Complete the current phase 1b/2a study in multiple myeloma; 
o  Plan a clinical study for SNS01-T in B cell cancers in addition to multiple myeloma;  
o  Develop an eIF5A based therapy for another indication; and  
o  Develop an effective follow-up SNS01-T formulation;  
 
⋅      Contributions relating to finance objectives:
 
o  Improve the capital resources of the company; and  
o  Regain a listing on a major stock exchange;  
 
⋅      Contributions relating to corporate development: 
 
o  Expand product portfolio; and  
o  Integrate business acquisitions.  
 
The foregoing goals and objectives were generally weighted as follows: 40% for contributions relating to the development of our SNS01-T assets; 40% to contributions relating to finance objectives; and 20% to contributions relating to corporate development. However, the specific weighting varied from executive officer to executive officer, in order to reflect that officer’s specific duties and responsibilities.
 
 
69
 
The Committee identified additional individual performance goals and objectives for Fiscal 2014 for Dr. Browne, Messrs. Brooks and Dondero and Dr. Thompson. Dr. Browne’s goals and objectives primarily include the completion of the current clinical trial for SNS01-T, raising capital through financings, planning of the upcoming Phase 2 clinical trial and the expansion of Senesco’s product portfolio. Mr. Brooks’s goals and objectives primarily include raising capital through financings, regaining a listing on a major stock exchange, developing relationships with brokers, funding organizations and health organizations and developing certain financial planning models for Senesco. Mr. Dondero’s goals and objectives primarily include management of Senesco’s clinical trials, planning of new clinical trials for our SNS01-T assets, development of an improved and more cost effective formulation of SNS01-T and expanding our product portfolio. Dr. Thompson’s goals primarily include developing an eIF5A based therapy for another cancer indication and developing an improved and more cost effective SNS01-T formulation.
 
In August 2013, the Committee determined to award the following options to purchase shares of our common stock, par value $0.01, to the following named executive officers in connection with the short-term goals and objectives for Fiscal 2014:
 
Leslie J. Browne, Ph.D.
 
1,723,000
 
Joel Brooks
 
985,000
 
Richard Dondero
 
985,000
 
John E. Thompson, Ph.D.
 
985,000
 
 
The option awards allotted for completion of Fiscal 2014 goals and objectives will be allocated to the following named executive officers as follows – Dr. Browne: 35%, Mr. Brooks: 20%, Mr. Dondero: 20%, Dr. Thompson: 20%, and 5% of the option awards will be allocated at the Committee’s discretion for outstanding performance to assist Senesco in reaching such goals. Such options will be granted two days after the filing of our annual report on Form 10-K for the year ended June 30, 2013, and will have an exercise price equal to the closing price of the common stock on such date. The options vest on the basis of a two-step process. First, options vest based on attainment of the pre-established corporate and individual performance goals. Second, the options that are earned based on attainment of performance will vest with respect to twenty-five percent (25%) of such options on the first anniversary of the date of grant with the balance vesting at a rate of 1/36 for each month thereafter, subject to the executive officer’s continued service through each applicable vesting date. No options will vest if the Committee has determined that the performance metrics have not been met.
 
Market Timing of Equity Awards
 
The Compensation Committee does not engage in any market timing of the equity awards made to the executive officers or other award recipients, and accordingly, there is no established practice of timing our awards in advance of the release of favorable financial results or adjusting the award date in connection with the release of unfavorable financial developments affecting our business. In general, we will attempt, when possible, to make equity awards to our executive officers and directors promptly after the release of our financial results.
 
 
70
 
Clawback Policy
 
We are reviewing our current “clawback” policy which provides for recoupment of incentive compensation in certain circumstances in connection with the enactment of recent regulations in that regard and are awaiting final SEC rules and regulations in order to revise our “clawback” policy in compliance with such rules and regulations.
 
Analysis of Risk Associated with our Compensation Plans
 
In making decisions regarding compensation program design and pay levels, our Compensation Committee and senior management, working with our Audit Committee, consider many factors, including any potential risks to Senesco and our stockholders. Although a significant portion of our executives’ compensation is performance-based and “at-risk,” we believe our compensation plans are appropriately structured and are not reasonably likely to have a material adverse effect on us.
 
We do not believe that the performance-based nature of the executive compensation program encourages excessive risk-taking by our executive officers that would threaten our economic viability. In Fiscal 2013, the Compensation Committee’s performance milestones under the stock option grants for certain clinical objectives were focused on the achievement of specific milestones, rather than a successful outcome. The Compensation Committee believes that this strategy protects against the potential of short-term incentives to encourage excessive risk taking. In addition, long-term equity awards tied to the value of our common stock represent a significant component of an executive officer’s total direct compensation, as evidenced by the compensation breakdown contained in the Summary Compensation Table that follows. Those awards promote a commonality of interest between the executive officers and our stockholders in sustaining and increasing stockholder value. Because the equity awards are typically made on an annual basis to the executive officers, those officers always have unvested awards outstanding that could decrease significantly in value if our business is not managed to achieve its long term goals. Accordingly the overall compensation structure is not overly-weighted toward short-term incentives, and we have taken what we believe are reasonable steps to protect against the potential of disproportionately large short-term incentives that might encourage excessive risk taking.
 
Executive Benefits and Perquisites
 
In General – The named executive officers are also provided with certain market competitive benefits, described below. It is the Committee’s belief that such benefits are necessary for us to remain competitive and to attract and retain top caliber executive officers, since such benefits are typically provided by companies in the biotechnology industry and with other companies with which we compete for executive talent.
 
Retirement Benefits – The named executive officers may participate in the company-wide 401(k) plan. Generally, we do not make any contributions to the 401(k) plan and do not have any additional retirement benefits. During Fiscal 2012, due to an anomaly in the rules, the Company contributed $9,800 to the 401(k) plan for the benefit of Leslie J. Browne, Ph.D. Due to the plan structure and the rules regarding 401K plans, since Dr. Browne began his employment with the Company in May 2010 and our plan year ended June 30, 2010, he only was compensated for two months during the plan year ended June 30, 2010. As the rules do not provide for annualizing his compensation for purposes of determining whether he is a highly or non-highly compensated participant, he was deemed a non-highly compensated participant for that year and the Company was required to make a contribution on his behalf.
 
 
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Other Benefits and Perquisites – All administrative employees, including the named executive officers, are eligible to receive standard health, disability, and life insurance. We do not provide any additional benefits and perquisites.
 
Executive Compensation Agreements
 
None of our named executive officers have a current employment agreement with us.
 
On October 9, 2012, our board of directors approved a Retention Policy for officers of the Company (the “Policy”). Pursuant to the terms and provisions of the Policy, in the event that an officer of the Company is terminated or resigns for good reason (as such term is defined in the Policy) in connection with a change of control transaction (as such term is defined in the Policy), such officer will be entitled to receive the following (subject to the limitation discussed below):
 
(i)          The involuntary termination benefits provided in the officer’s employment agreement, if any, including unpaid compensation and benefits.
(ii)         The full incentive bonus allocated to the officer for the calendar year in which termination occurs, as determined by the Board.
(iii)        A multiple of the officer’s annual base salary: (CEO=2x, CFO=1.5x, VP R&D=1.5x, VP Clinical=1.5x, other officers=1x);
(iv)        Medical coverage with term equal to base salary continuation under the Company’s group health insurance.
(v)         Allowance for all vested options to be exercisable for the remainder of each such vested option’s full remaining exercise period.
(vi)        Immediate vesting of all unvested options granted to the officer.
 
Notwithstanding the foregoing, if the aggregate compensation set forth in clauses (i), (ii), (iii) and (iv) above to be paid to all officers exceeds 10% of the value of the transaction as determined by the parties (as reflected in a definitive agreement, including the fair market value of any publicly traded securities), or if not reflected in a definitive agreement, then as determined by a qualified, independent third party selected by the board of directors of the Company, then the board of directors shall have the discretion to reduce such compensation pro-rata to the extent necessary to consummate the change of control transaction.
 
The Policy also provides that our board of directors shall have discretion to grant a termination package in the event an officer is terminated by the board without cause (as such term is defined in the Policy) or resigns for good reason (as such term is defined in the Policy).
 
 
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The Compensation Committee believes that the severance benefits under the Policy provide financial protection against the potential loss of employment in designated circumstances and will allow our executive officers to focus attention on changes that are in the best interests of the stockholders, without undue concern as to each officer’s own financial situation. The Compensation Committee also believes the accelerated vesting of equity awards is justified because those awards are designed to serve as the primary vehicle for the executives to accumulate financial resources for retirement. Finally, given the time periods and risks involved in pharmaceutical development, the Compensation Committee believes that the extended exercise period is an appropriate way to provide the officers with an opportunity to realize financial gains from decisions made during his or her tenure as an officer. J. Richard advised the Compensation Committee that the Policy is within the competitive range of comparable executive officer severance packages at other companies in the comparator group.
 
IRC Section 162(m) compliance
 
As a result of Section 162(m) of the Internal Revenue Code, publicly-traded companies such as us are not allowed a federal income tax deduction for compensation, paid to the Chief Executive Officer and the three other highest paid executive officers, to the extent that such compensation exceeds $1 million per officer in any one year and does not otherwise qualify as performance-based compensation. Currently, our stock option compensation packages are structured so that compensation deemed paid to an executive officer in connection with the exercise of a stock option should qualify as performance-based compensation that is not subject to the $1 million limitation. However, other awards, like restricted stock units (“RSU’s”) that may be granted under our stock incentive plans may or may not so qualify. In establishing the cash and equity incentive compensation programs for the executive officers, it is the Committee’s view that the potential deductibility of the compensation payable under those programs should be only one of a number of relevant factors taken into consideration, and not the sole governing factor. For that reason the Committee may deem it appropriate to continue to provide one or more executive officers with the opportunity to earn incentive compensation, including cash bonus programs tied to our financial performance and RSU awards, which may be in excess of the amount deductible by reason of Section 162(m) or other provisions of the Internal Revenue Code. It is the Committee’s belief that cash and equity incentive compensation must be maintained at the requisite level to attract and retain the executive officers essential to our financial success, even if part of that compensation may not be deductible by reason of the Section 162(m) limitation.
 
It is important to note that as of June 30, 2013, the Company had net operating loss carryforwards for federal income tax purposes. These loss carryforwards would defer the impact of any deductions that the Company might lose under Section 162(m) for one or more of those carryforward years.
 
For Fiscal 2013, none of our executive officer’s compensation reached the $1 million limitation. The Committee will continue to evaluate such $1 million limitation in Fiscal 2014.
 
 
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Report of the Compensation Committee
 
The Compensation Committee has reviewed and discussed the Compensation, Discussion and Analysis with management, and based on this review and these discussions, the Compensation Committee recommended to the board that the Compensation, Discussion and Analysis be included in Senesco’s Annual Report on Form 10-K.
 
  This report is submitted on behalf of the
  Compensation Committee
  David Rector, Chairman
  John N. Braca
 
 
74
 
Other Compensation
 
Summary Compensation Table
 
The following table sets forth information concerning compensation for services rendered in all capacities during the fiscal years ended June 30, 2013, June 30, 2012 and June 30, 2011 awarded to, earned by or paid to: (i) our Chief Executive Officer; (ii) our Chief Financial Officer; and (iii) each of our two other executive officers whose total compensation for Fiscal 2013 was in excess of $100,000, collectively referred to herein as the named executive officers. No other executive officers who would have otherwise been includable in such table on the basis of total compensation for Fiscal 2013 have been excluded by reason of their termination of employment or change in executive status during that year.
 
Name
and Principal
Position
 
Year
(1)
 
Salary
($) (2)
 
Bonus
($)
 
Stock
Awards
($) (3)
 
Option
Awards
($) (4)
 
Non-
Equity
Incentive
Plan
Compensation
($)
 
Change in
Pension Value
and
Nonqualified
Deferred
Compensation
Earnings ($)
 
All
Other
Compensation
($) (5)
 
Total
($)
 
(a)
 
(b)
 
(c)
 
(d)
 
(e)
 
(f)
 
(g)
 
(h)
 
(i)
 
(j)
 
Leslie J. Browne, Ph.D.
 
 
2013
 
$
273,860
 
 
-
 
 
-
 
$
180,180
 
 
-
 
 
-
 
 
-
 
$
454,040
 
(President and Chief Executive Officer)
 
 
2012
 
$
266,322
 
 
-
 
 
-
 
$
151,515
 
 
-
 
 
-
 
$
9,800
 
$
427,637
 
 
 
 
2011
 
$
250,468
 
 
-
 
 
-
 
$
154,425
 
 
-
 
 
-
 
 
-
 
$
404,893
 
Joel Brooks
 
 
2013
 
$
178,045
 
 
-
 
 
-
 
$
102,960
 
 
-
 
 
-
 
 
-
 
$
281,005
 
(Chief Financial Officer , Secretary and Treasurer)
 
 
2012
 
$
172,682
 
 
-
 
 
-
 
$
86,580
 
 
-
 
 
-
 
 
-
 
$
259,262
 
 
 
 
2011
 
$
165,976
 
 
-
 
$
2,600
 
$
90,525
 
 
-
 
 
-
 
 
-
 
$
259,101
 
Richard Dondero
 
 
2013
 
$
161,041
 
 
-
 
 
-
 
$
102,960
 
 
-
 
 
-
 
 
-
 
$
264,001
 
(Vice-President of Research and Development)
 
 
2012
 
$
155,775
 
 
-
 
 
-
 
$
86,580
 
 
-
 
 
-
 
 
-
 
$
242,355
 
 
 
 
2011
 
$
148,827
 
 
-
 
 
-
 
$
90,525
 
 
-
 
 
-
 
 
-
 
$
239,352
 
John E. Thompson Ph.D.
 
 
2013
 
$
67,500
 
 
-
 
 
-
 
$
102,960
 
 
-
 
 
-
 
 
-
 
$
170,460
 
(Executive Vice-President and Chief Scientific Officer)
 
 
2012
 
$
67,500
 
 
-
 
 
-
 
$
86,580
 
 
-
 
 
-
 
 
-
 
$
154,080
 
 
 
 
2011
 
$
65,000
 
 
-
 
 
-
 
$
90,525
 
 
-
 
 
-
 
 
-
 
$
155,525
 
_______________
 
(1) Senesco’s fiscal year ends on June 30.
   
(2) Such amount represents actual salary paid, including such amounts deferred in connection with our 401K plan.
  
(3)     The amounts shown are the grant date fair value of RSU’s awarded to each named executive officer in each year. The fair values of the RSU’s awarded were calculated based on the fair market value of the underlying shares of common stock on the respective grant dates in accordance with FASB ASC Topic 718 and were not adjusted to take into account any estimated forfeitures.
 
(4)    The amounts shown are the grant date fair value of stock options granted to each named executive officer, in accordance with FASB ASC Topic 718 pursuant to the Black-Scholes pricing model. For a discussion of valuation assumptions used in the calculations, see Notes 2 and 10 of Notes to Consolidated Financial Statements included in Part II, Item 8 of our 2013 Form 10-K. The grant date fair values used to calculate such compensation costs were not adjusted to take into account any estimated forfeitures. In October 2012, the Committee determined that the performance metrics for the 2012 grants had not been fully met. Therefore, a percentage of the options granted in Fiscal 2012 were forfeited as follows:
 
 
75
  
 
 
Original
 
Percentage
 
 
Options
 
Grant Date
 
 
 
Grant
 
Forfeited
 
 
Forfeited
 
Fair Value
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Leslie J. Browne, Ph.D.
 
 
819,000
 
 
55
%
 
 
450,450
 
$
83,333
 
Joel Brooks
 
 
468,000
 
 
60
%
 
 
280,800
 
$
51,948
 
Richard Dondero
 
 
468,000
 
 
60
%
 
 
280,800
 
$
51,948
 
John E. Thompson, Ph.D.
 
 
468,000
 
 
30
%
 
 
140,400
 
$
25,974
 
 
In August 2013, the Committee determined that the performance metrics for the Fiscal 2013 grants had not been fully met. Therefore, a percentage of the options granted in Fiscal 2013 were forfeited as follows:
 
 
 
Original
 
Percentage
 
 
Options
 
Grant Date
 
 
 
Grant
 
Forfeited
 
 
Forfeited
 
Fair Value
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Leslie J. Browne, Ph.D.
 
 
1,365,000
 
 
75
%
 
 
1,023,750
 
$
135,135
 
Joel Brooks
 
 
780,000
 
 
75
%
 
 
585,000
 
$
77,220
 
Richard Dondero
 
 
780,000
 
 
75
%
 
 
585,000
 
$
77,220
 
John E. Thompson, Ph.D.
 
 
780,000
 
 
75
%
 
 
585,000
 
$
77,220
 
 
The grant date fair values used to calculate such compensation costs were not adjusted to take into account the effect of the forfeitures.
 
(5) Represents company contribution to the 401(k) plan.
 
Grants of Plan-Based Awards
 
The following Grants of Plan Based Awards table provides additional information about stock and option awards and equity incentive plan awards granted to our named executive officers during the fiscal year ended June 30, 2013.
 
 
 
 
 
Estimated Future Payouts
Under Non-Equity Incentive
Plan Awards
 
Estimated Future Payouts Under
Equity Incentive Plan Awards
 
All Other
Stock
Awards:
Number
of
Shares
of Stock
 
All Other
Option
Awards:
Number of
Securities
Under-
lying
 
Exercise
or Base
Price of
Option
 
Grant
Date Fair
Value of
Equity
 
Name
 
Grant
Date
 
Threshold
($)
 
Target
($)
 
Maximum ($)
 
Threshold(#)
 
Target
(#)
 
Maximum
(#)
 
or Units
(#)
 
Options
(#)
 
Awards
($/Sh)
 
Awards
($)(1)
 
(a)
 
(b)
 
(c)
 
(d)
 
(e)
 
(f)
 
(g)
 
(h)
 
(i)
 
(j)
 
(k)
 
 
 
 
Leslie J. Browne, Ph.D.
 
11/16/2012
 
 
-
 
 
-
 
 
-
 
 
-
 
 
1,365,000
 
 
1,365,000
 
 
-
 
 
-
 
$
0.165
 
$
180,180
 
John E. Thompson, Ph.D.
 
11/16/2012
 
 
-
 
 
-
 
 
-
 
 
-
 
 
780,000
 
 
780,000
 
 
-
 
 
-
 
$
0.165
 
$
102,960
 
Joel P. Brooks
 
11/16/2012
 
 
-
 
 
-
 
 
-
 
 
-
 
 
780,000
 
 
780,000
 
 
-
 
 
-
 
$
0.165
 
$
102,960
 
Richard Dondero
 
11/16/2012
 
 
-
 
 
-
 
 
-
 
 
-
 
 
780,000
 
 
780,000
 
 
-
 
 
-
 
$
0.165
 
$
102,960
 
 
(1) The amounts shown are the grant date fair value of stock options granted to each named executive officer, in accordance with FASB ASC Topic 718 pursuant to the Black Scholes pricing model. For a discussion of valuation assumptions used in the calculations, see Notes 2 and 10 of Notes to Consolidated Financial Statements included in Part II, Item 8 of our 2013 Form 10-K. The grant date fair values used to calculate such compensation costs were not adjusted to take into account any estimated forfeitures. In August 2013, the Committee determined that the performance metrics had not been fully met. Therefore, a percentage of the options granted in Fiscal 2013 were forfeited as follows:
 
 
76
 
 
 
Original
 
Percentage
 
 
Options
 
Grant Date
 
 
 
Grant
 
Forfeited
 
 
Forfeited
 
Fair Value
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Leslie J. Browne, Ph.D.
 
 
1,365,000
 
 
75
%
 
 
1,023,750
 
$
135,135
 
Joel Brooks
 
 
780,000
 
 
75
%
 
 
585,000
 
$
77,220
 
Richard Dondero
 
 
780,000
 
 
75
%
 
 
585,000
 
$
77,220
 
John E. Thompson, Ph.D.
 
 
780,000
 
 
75
%
 
 
585,000
 
$
77,220
 
 
The grant date fair values used to calculate such compensation costs were not adjusted to take into account the effect of the forfeitures.
 
Outstanding Equity Awards at Fiscal Year-End
 
The following table summarizes the equity awards we have made to our named executive officers which are outstanding as of June 30, 2013.
 
 
 
Option Awards
 
Stock Awards
 
Name
 
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
 
Number of
Securities
Underlying
Unexercised
Options (#)
Unexer-
cisable
 
Equity Incentive
Plan Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options (#)
 
Option
Exercise
Price ($)
 
Option
Expiration
Date
 
Number of
Shares or
Units of Stock
That Have Not
Vested (#)
 
Market
Value of
Shares or
Units of
Stock That
Have Not
Vested ($)
 
Equity
Incentive Plan
Awards:
Number of
Unearned
Shares, Units or
Other Rights
That Have Not
Vested (#)
 
Equity Incentive
Plan Awards:
Market or Payout
Value of
Unearned Shares,
Units or Other
Rights That Have
Not Vested ($)
 
(a)
 
(b)
 
(c)
 
(d)
 
(e)
 
(f)
 
(g)
 
(h)
 
(i)
 
(j)
 
Leslie J. Browne, Ph.D.
 
 
-
 
 
-
 
 
1,365,000
(1)(5)
$
0.165
 
11/16/2022
 
 
-
 
 
-
 
 
-
 
 
-
 
 
 
 
122,850
(1)
 
-
 
 
245,700
(1)
$
0.23
 
09/30/2021
 
 
-
 
 
-
 
 
-
 
 
-
 
 
 
 
256,772
(1)
 
-
 
 
468,228
(1)
$
0.26
 
11/17/2020
 
 
-
 
 
-
 
 
-
 
 
-
 
 
 
 
222,219
(1)
 
-
 
 
777,781
(1)
$
0.55
 
05/25/2020
 
 
-
 
 
-
 
 
-
 
 
-
 
Joel P. Brooks
 
 
-
 
 
-
 
 
780,000
(1)(5)
$
0.165
 
11/16/2022
 
 
-
 
 
-
 
 
-
 
 
-
 
 
 
 
52,650
(1)
 
-
 
 
134,550
(1)
$
0.23
 
9/30/2021
 
 
-
 
 
-
 
 
-
 
 
-
 
 
 
 
150,522
(1)
 
-
 
 
274,478
(1)
$
0.26
 
11/17/2020
 
 
-
 
 
-
 
 
-
 
 
-
 
 
 
 
300,000
(2)
 
-
 
 
-
 
$
0.29
 
02/19/2020
 
 
-
 
 
-
 
 
-
 
 
-
 
 
 
 
15,000
(3)
 
-
 
 
-
 
$
3.15
 
12/16/2013
 
 
-
 
 
-
 
 
-
 
 
-
 
 
 
 
20,000
(3)
 
-
 
 
-
 
$
3.45
 
12/16/2014
 
 
-
 
 
-
 
 
-
 
 
-
 
 
 
 
25,000
(3)
 
-
 
 
-
 
$
1.40
 
12/14/2015
 
 
-
 
 
-
 
 
-
 
 
-
 
 
 
 
25,000
(3)
 
-
 
 
-
 
$
1.08
 
12/14/2016
 
 
-
 
 
-
 
 
-
 
 
-
 
Richard Dondero
 
 
-
 
 
-
 
 
780,000
(1)(5)
$
0.165
 
11/16/2022
 
 
-
 
 
-
 
 
-
 
 
-
 
 
 
 
52,650
(1)
 
-
 
 
134,550
(1)
$
0.23
 
09/30/2021
 
 
-
 
 
-
 
 
-
 
 
-
 
 
 
 
150,522
(1)
 
-
 
 
274,478
(1)
$
0.26
 
11/17/2020
 
 
-
 
 
-
 
 
-
 
 
-
 
 
 
 
300,000
(2)
 
-
 
 
-
 
$
0.29
 
02/19/2020
 
 
-
 
 
-
 
 
-
 
 
-
 
 
 
 
10,000
(3)
 
-
 
 
-
 
$
3.45
 
12/16/2014
 
 
-
 
 
-
 
 
-
 
 
-
 
 
 
 
25,000
(3)
 
-
 
 
-
 
$
1.40
 
12/14/2015
 
 
-
 
 
-
 
 
-
 
 
-
 
 
 
 
25,000
(3)
 
-
 
 
-
 
$
1.08
 
12/14/2016
 
 
-
 
 
-
 
 
-
 
 
-
 
 
 
 
71,924
(4)
 
-
 
 
-
 
$
0.99
 
12/13/2017
 
 
-
 
 
-
 
 
-
 
 
-
 
 
 
 
60,000
(4)
 
-
 
 
-
 
$
0.99
 
12/13/2017
 
 
-
 
 
-
 
 
-
 
 
-
 
 
 
 
76,000
(4)
 
-
 
 
-
 
$
0.60
 
11/19/2018
 
 
-
 
 
-
 
 
-
 
 
-
 
John E. Thompson Ph.D.
 
 
-
 
 
-
 
 
780,000
(1)(5)
$
0.165
 
11/16/2022
 
 
-
 
 
-
 
 
-
 
 
-
 
 
 
 
157,950
(1)
 
-
 
 
169,650
(1)
$
0.23
 
09/30/2021
 
 
-
 
 
-
 
 
-
 
 
-
 
 
 
 
150,522
(1)
 
-
 
 
274,478
(1)
$
0.26
 
11/17/2020
 
 
-
 
 
-
 
 
-
 
 
-
 
 
 
 
20,000
(3)
 
-
 
 
-
 
$
3.15
 
12/16/2013
 
 
-
 
 
-
 
 
-
 
 
-
 
 
 
 
55,000
(3)
 
-
 
 
-
 
$
3.45
 
12/16/2014
 
 
-
 
 
-
 
 
-
 
 
-
 
 
 
 
20,000
(3)
 
-
 
 
-
 
$
1.40
 
12/14/2015
 
 
-
 
 
-
 
 
-
 
 
-
 
 
 
 
25,000
(3)
 
-
 
 
-
 
$
1.08
 
12/14/2016
 
 
-
 
 
-
 
 
-
 
 
-
 
 
 
 
52,676
(4)
 
-
 
 
-
 
$
0.99
 
12/13/2017
 
 
-
 
 
-
 
 
-
 
 
-
 
 
 
 
50,000
(4)
 
-
 
 
-
 
$
0.99
 
12/13/2017
 
 
-
 
 
-
 
 
-
 
 
-
 
 
 
 
48,000
(4)
 
-
 
 
-
 
$
0.60
 
11/19/2018
 
 
-
 
 
-
 
 
-
 
 
-
 
 
 
77
 
(1) One-quarter of such options will vest on the first anniversary of the date of grant with one-thirty-sixth of the balance vesting each month thereafter.
(2) 60,000 of such options vested on the date of grant and an additional 60,000 of such options vested on each of June 30, 2010 and June 30, 2011.  An additional 60,000 of such options will vest on each of June 30, 2012 and June 30, 2013.
(3) One-third of such options vested on the date of grant and an additional one-third of such options vested on each of the first and second anniversary of the date of grant.
(4) Such amounts consist of performance based options which vest upon the achievement of certain milestones under our long-term incentive plan and continued service.
(5) Such amounts consist of performance based options which vest upon the achievement of certain milestones under our stock incentive plan and continued service.  In August 2013, the Committee determined that the performance metrics had not been fully met.  Therefore, a percentage of the options granted in Fiscal 2013 were forfeited as follows:
 
 
 
Original
 
Percentage
 
 
Options
 
 
 
Grant
 
Forfeited
 
 
Forfeited
 
 
 
 
 
 
 
 
 
 
 
 
 
Leslie J. Browne, Ph.D.
 
 
1,365,000
 
 
75
%
 
 
1,023,750
 
Joel Brooks
 
 
780,000
 
 
75
%
 
 
585,000
 
Richard Dondero
 
 
780,000
 
 
75
%
 
 
585,000
 
John E. Thompson, Ph.D.
 
 
780,000
 
 
75
%
 
 
585,000
 
 
The equity awards outstanding as of June 30, 2013 were not adjusted to take into account the effect of the forfeitures.
 
Option Exercises and Stock Vested
 
There were no option exercises and stock vested activity for our named executive officers during the year ended June 30, 2013.
 
Employment Contracts, Termination of Employment, and Change-in-Control Arrangements
 
None of our named executive officers have a current employment agreement with us.
 
Executive Severance. On October 9, 2012, our board of directors approved a Retention Policy for officers of the Company (the “Policy”). Pursuant to the terms and provisions of the Policy, in the event that an officer of the Company is terminated or resigns for good reason (as such term is defined in the Policy) in connection with a change of control transaction (as such term is defined in the Policy), such officer will be entitled to receive the following (subject to the limitation discussed below):
 
(i)         The involuntary termination benefits provided in the officer’s employment agreement, if any, including unpaid compensation and benefits.
 
(ii)        The full incentive bonus allocated to the officer for the calendar year in which termination occurs, as determined by the Board.
 
(iii)       A multiple of the officer’s annual base salary: (CEO=2x, CFO=1.5x, VP R&D=1.5x, VP Clinical=1.5x, other officers=1x);
 
(iv)       Medical coverage with term equal to base salary continuation under the Company’s group health insurance.
 
(v)        Allowance for all vested options to be exercisable for the remainder of each such vested option’s full remaining exercise period.
 
(vi)       Immediate vesting of all unvested options granted to the officer.
 
 
78
 
Notwithstanding the foregoing, if the aggregate compensation set forth in clauses (i), (ii), (iii) and (iv) above to be paid to all officers exceeds 10% of the value of the transaction as determined by the parties (as reflected in a definitive agreement, including the fair market value of any publicly traded securities), or if not reflected in a definitive agreement, then as determined by a qualified, independent third party selected by the board of directors of the Company, then the board of directors shall have the discretion to reduce such compensation pro-rata to the extent necessary to consummate the change of control transaction.
 
The Policy also provides that our board of directors shall have discretion to grant a termination package in the event an officer is terminated by the board without cause (as such term is defined in the Policy) or resigns for good reason (as such term is defined in the Policy).
 
 
79

Compensation of Directors
 
We use a combination of cash and equity-based compensation to attract and retain qualified individuals to serve on our board. Dr. Thompson has received compensation for providing research and development management services to us and does not receive any additional compensation for his services as a board member. See “Certain Relationships and Related Transactions” which sets forth the details of the compensation for Dr. Thompson.
 
Equity Grants Fiscal 2013:
 
We do not automatically grant options or other equity to our board. Our Compensation Committee reviews the equity program each year with its compensation consultant and determines the appropriate level of the equity awards.
 
Effective November 16, 2012, the Committee granted the following options to the non-employee directors for their service during Fiscal 2012:
 
Director
 
Total # of Options
Granted
 
Harlan W. Waksal, M.D.
 
 
420,000
(1)
Rudolf Stalder
 
 
210,000
(1)
Christopher Forbes
 
 
252,000
(1)
Thomas C. Quick
 
 
210,000
(1)
John N. Braca
 
 
294,000
(1)
David Rector
 
 
294,000
(1)
Jack Van Hulst
 
 
210,000
(1)
Warren J. Isabelle
 
 
210,000
(1)
___________________
 
(1) Such grants vest as follows: one-half (1/2) upon the date of grant and the remaining one-half (1/2) will vest one (1) year from the date of grant, subject to continued board service through the vesting date.
 
In addition, certain board members received additional equity awards in lieu of cash compensation as more fully described below.
 
 
80
 
Cash Compensation
 
Commencing in Fiscal 2009, after review and consultation with the Compensation Committee’s compensation consultant, we implemented a new cash compensation plan for our directors pursuant to which we pay each non-employee director cash compensation as consideration for their service on our board for each fiscal year as follows:
 
Annual (Base) Retainer
 
$
10,000
 
Per Scheduled Board Meeting Fee
 
$
1,500
(1)
Per Committee Meeting Fee
 
$
750
(2)
Additional Annual Retainer:
 
 
 
 
Chairman of the Board
 
$
5,000
 
Audit Committee Chair
 
$
3,500
 
Compensation Committee Chair
 
$
3,500
 
Nominating and Corporate Governance Committee Chair
 
$
1,500
 
Non-Chair Committee Member Additional Retainer (All Committees)
 
$
1,000
 
Maximum Per Diem For All Meetings
 
$
2,000
 
___________________
 
  (1) $750 for telephonic meetings (less than 30 minutes: $375).
     
  (2) $375 for telephonic meetings.
 
Such cash compensation is paid in quarterly increments. A director may elect to receive, in lieu of such cash payments, either (i) restricted stock units, or RSU’s, covering that number of shares having a fair market value on the grant date equal to such cash award or (ii) options in an amount equal to twice the number of RSU’s that would have been received. Such election to receive (y) cash or (z) equity in the form of RSU’s or options applies for the entire year. In Fiscal 2013, Messrs. Braca and Rector, elected to receive their retainer fees in cash and their meeting fees in options, and Mr. Isabelle, elected to receive his fees in cash. All other directors elected to receive options in lieu of retainer and meeting fees. The options for each quarter are granted effective two (2) days following the filing of our quarterly reports on Form 10-Q for that quarter and are fully vested as of the grant date. The exercise price of the options will be the closing price on the grant date.
 
In August 2013, the compensation committee decided to keep director compensation for Fiscal 2014 consistent with the compensation program for 2013. The directors have all elected to receive options in lieu of cash for Fiscal 2014, except for Mr. Isabelle who elected to receive his fees in cash. We provide reimbursement to directors for reasonable and necessary expenses incurred in connection with attendance at meetings of the board of directors and other Senesco business.
 
 
81
 
Director Compensation
 
The table below shows the compensation paid or awarded to our non-employee directors (other than Dr. Thompson) during the fiscal year ended June 30, 2013.
 
Name
 
Fees
Earned
or Paid
in Cash
($)
 
Stock
Awards
($)
 
Option
Awards (1)
($)
 
Non-Equity
Incentive Plan
Compensation
($)
 
Change in
Pension Value
and
Nonqualified
Deferred
Compensation
Earnings
 
All Other
Compensation
($)
 
Total ($)
 
(a)
 
(b)
 
(c)
 
(d)
 
(e)
 
(f)
 
(g)
 
(h)
 
Rudolf Stalder
 
 
—
 
 
—
 
$
63,953
 
 
—
 
 
—
 
 
—
 
$
63,953
 
Christopher Forbes
 
 
—
 
 
—
 
$
39,232
 
 
—
 
 
—
 
 
—
 
$
39,232
 
Thomas C. Quick
 
 
—
 
 
—
 
$
51,559
 
 
—
 
 
—
 
 
—
 
$
51,559
 
John N. Braca
 
$
14,500
 
 
—
 
$
56,546
 
 
—
 
 
—
 
 
—
 
$
71,046
 
David Rector
 
$
14,500
 
 
—
 
$
61,390
 
 
—
 
 
—
 
 
—
 
$
75,890
 
Jack Van Hulst
 
 
—
 
 
—
 
$
54,448
 
 
—
 
 
—
 
 
—
 
$
54,448
 
Harlan W. Waksal, M.D.
 
 
—
 
 
—
 
$
95,960
 
 
—
 
 
—
 
 
—
 
$
95,960
 
Warren J. Isabelle
 
$
24,250
 
 
—
 
$
26,670
 
 
—
 
 
—
 
 
—
 
$
50,920
 
 
______________________
  (1)
Represents the aggregate grant date fair value for stock options granted in Fiscal 2013 as described below calculated in accordance with the FASB ASC Topic 718 and were not adjusted to take into account any estimated forfeitures. For information regarding assumptions underlying the FASB ASC Topic 718 valuation of equity awards, see Notes 2 and 10 of the Notes to the Consolidated Financial Statements in our Annual Report on Form 10-K for the fiscal year ended June 30, 2013.
 
As described above, our non-employee directors (other than Mr. Isabelle and Messrs. Braca and Rector (only with respect to their retainer fees)) have elected to receive option grants in lieu of their cash compensation. Accordingly, on November 16, 2012, February 16, 2013, and May 17, 2013, each of these non-employee directors received options to purchase shares of our common stock pursuant to the provisions of the 2008 Stock Plan. Additionally, on November 16, 2012, the non-employee directors were granted additional options for their service during Fiscal 2012. The options have an exercise price of $0.165 per share, $0.165 per share, $0.135 per share and $0.043 per share, respectively, the fair market value of the common stock on the grant dates (except for the grants to Christopher Forbes, which have exercise prices of $0.18 per share, $0.18 per share, $0.15 per share and $0.043 per share, respectively (110% of the fair market value of the common stock on the grant date).
 
 
82
  
The following table sets forth information relating to options granted to the directors during Fiscal 2013.
 
Director
 
Option Grant
Date
 
Exercise
Price
 
# of Shares
 
 
Grant Date Fair
Value
 
Rudolf Stalder
 
05/17/2013
 
$
0.043
 
 
296,512
 
 
$
9,192
 
 
 
02/16/2013
 
$
0.135
 
 
119,318
 
 
$
11,455
 
 
 
11/16/2012
 
$
0.165
 
 
136,364
 
 
$
16,636
 
 
 
11/16/2012
 
$
0.165
 
 
210,000
*
 
$
26,670
 
Christopher Forbes
 
05/17/2013
 
$
0.043
 
 
238,372
 
 
$
7,390
 
 
 
02/16/2013
 
$
0.15
 
 
89,016
 
 
$
4,362
 
 
 
11/16/2012
 
$
0.18
 
 
124,242
 
 
$
8,076
 
 
 
11/16/2012
 
$
0.18
 
 
252,000
*
 
$
19,404
 
Thomas C. Quick
 
05/17/2013
 
$
0.043
 
 
162,790
 
 
$
5,046
 
 
 
02/16/2013
 
$
0.135
 
 
75,758
 
 
$
7,273
 
 
 
11/16/2012
 
$
0.165
 
 
103,030
 
 
$
12,570
 
 
 
11/16/2012
 
$
0.165
 
 
210,000
*
 
$
26,670
 
John N. Braca
 
05/17/2013
 
$
0.043
 
 
139,534
 
 
$
4,326
 
 
 
02/16/2013
 
$
0.135
 
 
56,818
 
 
$
5,455
 
 
 
11/16/2012
 
$
0.165
 
 
77,272
 
 
$
9,427
 
 
 
11/16/2012
 
$
0.165
 
 
294,000
*
 
$
37,338
 
David Rector
 
05/17/2013
 
$
0.043
 
 
244,186
 
 
$
7,570
 
 
 
02/16/2013
 
$
0.135
 
 
96,590
 
 
$
9,273
 
 
 
11/16/2012
 
$
0.165
 
 
59,090
 
 
$
7,209
 
 
 
11/16/2012
 
$
0.165
 
 
294,000
*
 
$
37,338
 
Jack Van Hulst
 
05/17/2013
 
$
0.043
 
 
255,814
 
 
$
7,930
 
 
 
02/16/2013
 
$
0.135
 
 
71,970
 
 
$
6,909
 
 
 
11/16/2012
 
$
0.165
 
 
106,060
 
 
$
12,939
 
 
 
11/16/2012
 
$
0.165
 
 
210,000
*
 
$
26,670
 
Harlan W. Waksal, M.D.
 
05/17/2013
 
$
0.043
 
 
273,256
 
 
$
8,471
 
 
 
02/16/2013
 
$
0.135
 
 
145,834
 
 
$
14,000
 
 
 
11/16/2012
 
$
0.165
 
 
165,152
 
 
$
20,149
 
 
 
11/16/2012
 
$
0.165
 
 
420,000
*
 
$
53,340
 
Warren J. Isabelle
 
11/16/2012
 
$
0.165
 
 
210,000
*
 
$
26,670
 
  ____________
 
(*) Represents additional options granted for service during Fiscal 2013, not for cash compensation for Fiscal 2013.
 
The following table shows the total number of shares of our common stock subject to option awards (vested and unvested) held by each non-employee director as of June 30, 2013:
 
Director
 
Total # of Options
Outstanding
 
Rudolf Stalder
 
 
2,214,851
 
Christopher Forbes
 
 
1,684,193
 
Thomas C. Quick
 
 
1,372,763
 
John N. Braca
 
 
1,621,215
 
David Rector
 
 
1,709,765
 
Jack Van Hulst
 
 
1,611,761
 
Harlan W. Waksal, M.D.
 
 
2,706,572
 
Warren J. Isabelle
 
 
490,000
 
 
 
83
 
Compensation Committee Interlocks and Insider Participation
 
No member of the Compensation Committee is or has been an officer or employee of our company or any of our subsidiaries. In addition, no member of the Compensation Committee had any relationships with us or any other entity that requires disclosure under the regulations promulgated by the SEC and none of our executive officers served on the Compensation Committee or board of any company that employed any member of our board.
 
 
84
   
Item 12.          Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
 
The following table sets forth, as of August 31, 2013, the beneficial ownership of the common stock by (i) each person known by us to be the beneficial owner of more than 5% of the total number of shares of our common stock outstanding as of such date; (ii) each of our directors, and our named executive officers; and (iii) all of our directors and our current executive officers as a group.
 
Name and Address of Beneficial Owner (1)
 
Amount and Nature of
Beneficial Ownership(2)
 
 
Percent  of Class(3)
 
 
 
 
 
 
 
 
 
 
(i) Certain Beneficial Owners:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Paul E. Klaver
 
 
 
 
 
 
 
 
134 Columbia Street W
 
 
 
 
 
 
 
 
Unit 18
 
 
 
 
 
 
 
 
Waterloo, Ontario N2L 3K8
 
 
24,449,780
(4)
 
 
10.4
%
 
 
 
 
 
 
 
 
 
(ii) Directors (which includes all nominees),
Named Executive Officers and Chief Executive Officer:
 
 
 
 
 
 
 
 
Harlan W. Waksal, M.D.
 
 
5,819,097
(5)
 
 
2.5
%
John N. Braca
 
 
1,614,207
(6)
 
 
*
 
Jack Van Hulst
 
 
1,535,317
(7)
 
 
*
 
Christopher Forbes
 
 
17,617,733
(8)
 
 
7.5
%
Warren J. Isabelle
 
 
490,792
(9)
 
 
*
 
Thomas C. Quick
 
 
2,096,767
(10)
 
 
*
 
David Rector
 
 
1,918,592
(11)
 
 
*
 
Rudolf Stalder
 
 
3,047,227
(12)
 
 
1.3
%
John E. Thompson, Ph.D.
 
 
1,394,370
(13)
 
 
*
 
Joel P. Brooks
 
 
936,875
(14)
 
 
*
 
Richard Dondero
 
 
1,068,924
(15)
 
 
*
 
Leslie J. Browne, Ph.D.
 
 
1,787,973
(16)
 
 
*
 
(iii) All Directors and current executive officers as a group (12 persons)
 
 
39,327,874
(17)
 
 
15.6
%
____________ 
  * Less than 1%
 
  (1) Unless otherwise provided, all addresses should be care of Senesco Technologies, Inc., 721 Route 202/206, Suite 130, Bridgewater, New Jersey 08807.
     
  (2) Except as otherwise indicated, all shares of common stock are beneficially owned and sole investment and voting power is held by the persons named.  
     
  (3) Applicable percentage of ownership is based on 231,735,174, shares of our common stock outstanding as of August 15, 2013, plus any common stock equivalents and options or warrants held by such holder which are presently or will become exercisable within sixty (60) days after August 15, 2013.
     
  (4) Represents 6,000,000 shares of common stock held by Urantia Outreach, of which Mr. Klaver is the President.  Represents 7,360,036 shares of common stock, 4,423,077 shares of common stock issuable pursuant to presently exercisable warrants and  6,666,667 shares of common stock issuable pursuant to the conversion of convertible preferred stock at a conversion rate of $0.03 held by Mr. Klaver.  
 
 
85
 
  (5) Includes 2,999,847 shares of common stock issuable pursuant to presently exercisable warrants and options or options which will become exercisable within sixty (60) days after August 15, 2013. Excludes 345,413 shares of common stock issuable pursuant to options which become exercisable after sixty (60) days from August 15, 2013.
     
  (6) Includes 1,476,243 shares of common stock issuable pursuant to presently exercisable warrants and options or options which will become exercisable within sixty (60) days after August 15, 2013.  Excludes 147,000 shares of common stock issuable pursuant to options which become exercisable after sixty (60) days from August 15, 2013.
     
  (7) Includes 1,495,249 shares of common stock issuable pursuant to presently exercisable warrants and options or options which will become exercisable within sixty (60) days after August 15, 2013.   Excludes 118,526 shares of common stock issuable pursuant to options which become exercisable after sixty (60) days from August 15, 2013.  
     
  (8) Includes 4,860,415 shares of common stock issuable pursuant to presently exercisable warrants and options or options which will become exercisable within sixty (60) days after August 15, 2013.  Excludes 126,000 shares of common stock issuable pursuant to options which become exercisable after sixty (60) days from August 15, 2013.
     
  (9) Includes 387,028 shares of common stock issuable pursuant to presently exercisable options or options which will become exercisable within sixty (60) days after August 15, 2013.  Excludes 105,000 shares of common stock issuable pursuant to options which become exercisable after sixty (60) days from August 15, 2013.
     
  (10) Represents 675,173 shares of common stock and 14,097 shares of common stock issuable pursuant to warrants issued to Thomas C. Quick Charitable Foundation, of which Mr. Quick is the sole trustee.  Represents 139,734 shares of common stock and 1,267,763 shares of common stock issuable pursuant to presently exercisable options or options which will become exercisable within sixty (60) days after August 15, 2013 issued to Thomas C. Quick.  Excludes 105,000 shares of common stock issuable pursuant to options issued to Thomas C. Quick which become exercisable after sixty (60) days from August 15, 2013.  
     
  (11) Includes 1,565,807 shares of common stock issuable pursuant to presently exercisable warrants and options or options which will become exercisable within sixty (60) days after August 15, 2013.  Excludes 147,000 shares of common stock issuable pursuant to options which become exercisable after sixty (60) days from August 15, 2013.
     
  (12) Includes 1,979,789 shares of common stock issuable pursuant to presently exercisable warrants and options or options which will become exercisable within sixty (60) days after August 15, 2013.  Excludes 248,750 shares of common issuable pursuant to options which will become exercisable after sixty (60) days from August 15, 2013.
     
  (13) Represents 572,000 shares of common stock held by 2091794 Ontario Ltd., of which Dr. Thompson is the sole owner, and 822,370 shares of common stock issuable pursuant to presently exercisable options or options which will become exercisable within sixty (60) days after August 15, 2013 issued to John E. Thompson, Ph.D.  Excludes 395,906 shares of common issuable pursuant to options which will become exercisable after sixty (60) days from August 15, 2013.
     
  (14) Includes 886,000 shares of common stock issuable pursuant to presently exercisable options or options which will become exercisable within sixty (60) days after August 15, 2013.  Excludes 306,200 shares of common stock issuable pursuant to options which will become exercisable after sixty (60) days from August 15, 2013.
     
  (15) Includes 1,068,924 shares of common stock issuable pursuant to presently exercisable options or options which will become exercisable within sixty (60) days after August 15, 2013.  Excludes 306,200 shares of common stock issuable pursuant to options which will become exercisable after sixty (60) days from August 15, 2013.
     
  (16) Includes 1,738,973 shares of common stock issuable pursuant to presently exercisable options or options which will become exercisable within sixty (60) days after August 15, 2013.  Excludes 695,827 shares of common stock issuable pursuant to options which will become exercisable after sixty (60) days from August 15, 2013.
 
 
86
 
  (17) See Notes 5 through 16.
 
Equity Compensation Plans
 
The following table reflects information relating to equity compensation plans as of June 30, 2013.
 
 
 
Number of securities
to be issued upon
exercise of outstanding
options, warrants
and rights
 
 
Weighted-average
exercise price of
outstanding options,
warrants and rights
 
Number of securities remaining
available for future issuance
under equity compensation plans
 
Stock Option plans approved by security holders
 
 
23,174,770
(1)
 
$
0.35
 
 
4,630,353
(2)
Equity compensation plans not approved by security holders
 
 
—
 
 
 
—
 
 
—
 
Total
 
 
23,174,770
(1)
 
$
0.35
 
 
4,630,353
(2)
____________ 
  (1) Issued pursuant to our 1998 Stock Plan and 2008 Stock Plan.
     
  (2) Available for future issuance pursuant to our 2008 Stock Plan.
 
 
87
  
Item 13.        Certain Relationships and Related Transactions, and Director Independence.
 
Contractual Relationships
 
Service Agreements
 
Christopher Forbes, our director, is Vice Chairman of Forbes Media LLC, Vice Chairman of Forbes Family Holdings, Inc. and Vice President of Forbes Management Co., Inc. Mr. Forbes was also Vice Chairman of Forbes Inc. Forbes, Inc. and Forbes Management Company, Inc. have provided and will continue to provide us with introductions to strategic alliance partners and, from time to time, use of its office space. In recognition of these services, during Fiscal 2012, we granted to Forbes Management Company, Inc. an option to purchase shares of our common stock. The awards to the Forbes entities are described in the table below.
 
Date of Grant
 
# of Option Shares
 
Exercise Price
 
Value of Services
on Date of Grant
 
# of Option Shares
Vested
 
September 30, 2011
 
 
10,000
 
$
0.23
 
$
1,780
 
 
6,666
 
 
The exercise price of the option granted to Forbes Management Company, Inc. represented the fair market value of our common stock on the respective dates of grant.
 
Research and Development Agreements
 
Effective September 1, 1998, we entered into a three-year research and development agreement, which has been extended for successive periods through August 31, 2013, with John E. Thompson, Ph.D. and the University of Waterloo in Waterloo, Ontario, Canada, referred to as the University. Dr. Thompson is our director and officer and beneficially owns approximately 0.9% of our common stock. Dr. Thompson is the Associate Vice President, Research and former Dean of Science of the University. Dr. Thompson and the University will provide research and development under our direction. Research and development expenses under this agreement for the years ended June 30, 2013 and 2012 aggregated US $628,995 and US $573,368, respectively. Effective September 1, 2012, we, Dr. Thompson and the University extended the agreement for an additional one-year period through August 31, 2013 in the amount of CAN $611,500. Effective September 1, 2013, we, Dr. Thompson and the University extended the agreement for an additional one-year period through August 31, 2014 in the amount of CAN $371,400. As of August 31, 2013, such amount represented approximately US $371,400.
 
Consulting Agreement
 
Effective May 1, 1999, we entered into a three-year consulting agreement, which has been extended for successive periods through June 30, 2014, for research and development with Dr. Thompson. This agreement provided for monthly payments of $3,000 through June 2004. However, effective January 1, 2003, 2006, 2007 and 2011, the agreement was amended to increase the monthly payments from $3,000 to $5,000, from $5,000 to $5,200, from $5,200 to $5,417, and from $5,417 to $5,625, respectively.
 
 
88
  
Debt / Equity Transactions
 
Line of Credit
 
On February 17, 2010, we entered into a credit agreement with JMP Securities LLC. The agreement provides us with, subject to certain restrictions, including the existence of suitable collateral, up to a $3.0 million line of credit upon which we may draw at any time (the “Line of Credit”). Any draws upon the Line of Credit accrue at a monthly interest rate of the broker rate in effect at the interest date (which was 3.75% at June 30, 2013), plus 2.0%. There are no other conditions or fees associated with the Line of Credit. The Line of Credit is not secured by any of our assets, but it is secured by certain assets of a member of our board of directors, Harlan W. Waksal, M.D., which security interest is currently held by JMP Securities. The balance outstanding as of June 30, 2013 was $2,187,082.
 
January 2012 Transaction with Christopher Forbes and Harlan W. Waksal, M.D.
 
On January 6, 2012, in connection with a public placement of our common stock, we entered into securities purchase agreements with, among others, certain of our directors, Christopher Forbes and Harlan Waksal, pursuant to which such directors purchased an aggregate of 1,153,846 shares of our common stock at a purchase price of $0.26 per share, for an approximate aggregate value of $300,000.
 
Conversion of Preferred Stock
 
On August 8, 2012, in connection with a warrant exchange, certain of our directors, Christopher Forbes and Harlan Waksal, converted their 1,200 shares of Series B preferred stock into 4,615,385 shares of our common stock, as determined pursuant to the terms set forth in the Certificate of Designation of Preferences, Rights and Limitations of 10% Series B Convertible Preferred Stock. The aggregate value of such shares of common stock was approximately $1,292,308 on the date of conversion based upon the closing price of $0.28 per share on August 8, 2012. Such conversions were not made pursuant to warrant exchange agreements and therefore such directors did not receive any additional Common Stock. Following this conversion, no shares of Series B Preferred Stock remain outstanding.
 
Review and Approval of Related Person Transactions
 
Our Audit Committee Charter requires that our Audit Committee review and approve or ratify transactions involving us and any executive officer, director, director nominee, 5% stockholder and certain of their immediate family members, also referred to herein as a related person. The policy and procedures cover any transaction involving a related person, also referred to herein as a related person transaction, in which the related person has a material interest and which does not fall under an explicitly stated exception set forth in the applicable disclosure rules of the SEC.
 
A related person transaction will be considered approved or ratified if it is authorized by the Audit Committee after full disclosure of the related person’s interest in the transaction. In considering related person transactions, the Audit Committee will consider any information considered material to investors and the following factors:
 
 
89
 
  ⋅ the related person’s interest in the transaction;
  ⋅ the approximate dollar value of the transaction;
  ⋅ whether the transaction was undertaken in the ordinary course of our business;
  ⋅ whether the terms of the transaction are no less favorable to us than terms that we could have reached with an unrelated third party; and
  ⋅ the purpose and potential benefit to us of the transaction.
 
Board Determination of Independence
 
Although we are no longer listed on the NYSE MKT, we use the definition of independence provided under the current rules set forth in the NYSE MKT Company Guide, which state that a director will, among other things, qualify as an “independent director” if, in the determination of our board, that person does not have a relationship that would interfere with his or her exercise of independent judgment in carrying out the responsibilities of a director. Our board currently consists of Rudolf Stalder, John E. Thompson, Ph.D., John N. Braca, Christopher Forbes, Warren J. Isabelle, Thomas C. Quick, David Rector, Jack Van Hulst, Leslie. J. Browne, Ph.D. and Harlan W. Waksal, M.D. Our board has determined that each of Messrs. Stalder, Braca, Forbes, Isabelle, Quick and Rector is an “independent director” as defined under Section 803 of the NYSE MKT Company Guide.
 
 
90
  
Item 14.  Principal Accounting Fees and Services.
 
The aggregate fees billed by McGladrey LLP and RSM McGladrey, Inc. for services performed for the fiscal years ended June 30, 2013 and 2012 are as follows: 
 
 
 
2013
 
2012
 
Audit Fees
 
$
98,121
 
$
101,118
 
Audit Related Fees
 
 
2,500
 
 
4,000
 
Tax Fees
 
 
-
 
 
-
 
All Other Fees
 
 
-
 
 
-
 
Total Fees
 
$
100,621
 
$
105,118
 
 
AUDIT FEES
 
The aggregate audit fees for the fiscal years ended June 30, 2013 and 2012 were primarily related to the audit of the our annual financial statements and review of those financial statements included in our quarterly reports on Form 10-Q and fees for professional services rendered in connection with documents filed with the Securities and Exchange Commission.
 
AUDIT RELATED FEES
 
Audit related fees for the fiscal years ended June 30, 2013 and 2012 were primarily incurred in connection with our equity offerings and registration statements.
 
Pre-Approval Policies and Procedures
 
In accordance with its charter, the Audit Committee is required to approve all audit and non-audit services provided by the independent auditors and shall not engage the independent auditors to perform the specific non-audit services prescribed by law or regulation.
 
The Audit Committee has adopted policies and procedures relating to the pre-approval of all audit and non-audit services that are to be performed by our independent registered public accounting firm. This policy generally provides that we will not engage our independent registered public accounting firm to render audit or non-audit services unless the service is specifically approved in advance by the Audit Committee or the engagement is entered into pursuant to one of the pre-approval procedures described below.
 
From time to time, the Audit Committee may pre-approve specified types of services that are expected to be provided to us by our independent registered public accounting firm during the next 12 months. Any such pre-approval is detailed as to the particular service or type of services to be provided and is also generally subject to a maximum dollar amount.
 
The Audit Committee has also delegated to the chairman of the Audit Committee the authority to approve any audit or non-audit services to be provided to us by our independent registered public accounting firm. Any approval of services by a member of the Audit Committee pursuant to this delegated authority is reported on at the next meeting of the Audit Committee.
 
 
91

PART IV
 
Item 15. Exhibits and Financial Statement Schedules.
 
  (a) (1) Financial Statements.
 
  Reference is made to the Index to Financial Statements on Page F-1.
 
  (a) (2) Financial Statement Schedules.
 
  None.
 
  (a) (3) Exhibits.
 
  Reference is made to the Exhibit Index on Page 95.  
 
 
92
 
SIGNATURES
 
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized this 11th day of September 2013.
  
  SENESCO TECHNOLOGIES, INC.
 
  By:  /s/ Leslie J. Browne
    Leslie J. Browne, Ph.D., President and
    Chief Executive Officer
    (principal executive officer)
     
  By:  /s/ Joel Brooks
    Joel Brooks, Chief Financial Officer,
    Secretary and Treasurer
    (principal financial and accounting
officer)
 
 
93
 
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
 
Signature   Title   Date
         
/s/ Harlan W. Waksal, M.D.   Chairman and Director   September 11, 2013
Harlan W. Waksal, M.D.        
         
/s/ Leslie J. Browne, Ph.D.   President, Chief Executive Officer   September 11, 2013
Leslie J. Browne, Ph.D.   and Director (principal executive officer)    
         
/s/ Joel Brooks   Chief Financial Officer, Secretary   September 11, 2013
Joel Brooks   and Treasurer (principal financial    
    and accounting officer)    
         
/s/ John E. Thompson   Executive Vice President, Chief   September 11, 2013
John E. Thompson   Scientific Officer and Director    
         
/s/ John Braca   Director   September 11, 2013
John Braca        
         
/s/ Christopher Forbes   Director   September 11, 2013
Christopher Forbes        
         
/s/ Warren J. Isabelle   Director   September 11, 2013
Warren J. Isabelle        
         
/s/ Thomas C. Quick   Director   September 11, 2013
Thomas C. Quick        
         
/s/ David Rector   Director   September 11, 2013
David Rector        
         
/s/ Rudolf Stalder   Director   September 11, 2013
Rudolf Stalder        
         
/s/ Jack Van Hulst   Director   September 11, 2013
Jack Van Hulst        
 
 
94
 
EXHIBIT INDEX
 
Exhibit
No.
   Description of Exhibit
     
2.1   Merger Agreement and Plan of Merger by and among Nava Leisure USA, Inc., an Idaho corporation, the Principal Stockholders (as defined therein), Nava Leisure Acquisition Corp., and Senesco, Inc., dated October 9, 1998.  (Incorporated by reference to Senesco Technologies, Inc. definitive proxy statement on Schedule 14A dated January 11, 1999.)
     
2.2   Merger Agreement and Plan of Merger by and between Senesco Technologies, Inc., an Idaho corporation, and Senesco Technologies, Inc., a Delaware corporation, dated September 30, 1999.  (Incorporated by reference to Senesco Technologies, Inc. quarterly report on Form 10-QSB for the period ended September 30, 1999.)
     
3.1   Amended and Restated Certificate of Incorporation of Senesco Technologies, Inc. filed with the State of Delaware on January 22, 2007.  (Incorporated by reference to Senesco Technologies, Inc. quarterly report on Form 10-Q for the period ended December 31, 2006.)
     
3.2   Certificate of Amendment to the Amended and Restated Certificate of Incorporation of Senesco Technologies, Inc. filed with the State of Delaware on January 22, 2008. (Incorporated by reference to Exhibit 3.1 of Senesco Technologies, Inc. quarterly report on Form 10-Q for the period ended December 31, 2007.)
     
3.3   Certificate of Amendment to the Amended and Restated Certificate of Incorporation of Senesco Technologies, Inc. filed with the State of Delaware on September 22, 2009. (Incorporated by reference to Exhibit 3.3 of Senesco Technologies, Inc. annual report on Form 10-K/A for the period ended June 30, 2009.)
     
3.4   Certificate of Amendment to the Amended and Restated Certificate of Incorporation of Senesco Technologies, Inc. filed with the State of Delaware on May 25, 2010. (Incorporated by reference to Exhibit 3.1 to Senesco Technologies, Inc. current report on Form 8-K filed on May 28, 2010.)
     
3.5   Certificate of Amendment to the Amended and Restated Certificate of Incorporation of Senesco Technologies, Inc. filed with the State of Delaware on December 22, 2011. (Incorporated by reference to Exhibit 3.1 to Senesco Technologies, Inc. quarterly report on Form 10-Q for the period ended December 31, 2011.)
     
3.6   Certificate of Amendment to the Amended and Restated Certificate of Incorporation of Senesco Technologies, Inc. filed with the State of Delaware on April 1, 2013. (Incorporated by reference to Exhibit 3.1 to Senesco Technologies, Inc. quarterly report on Form 10-Q for the period ended March 31, 2013.)
     
3.7   Amended and Restated By-laws of Senesco Technologies, Inc. as adopted on October 2, 2000. (Incorporated by reference to Senesco Technologies, Inc. quarterly report on Form 10-QSB for the period ended December 31, 2000.)
     
3.8   Certificate of Designations to the Company’s Certificate of Incorporation (Series A)(Incorporated by reference to Exhibit 3.1 to Senesco Technologies, Inc. current report on Form 8-K filed on March 29, 2010)
 
 
95
 
Exhibit
No.
   Description of Exhibit
     
4.1   Form of Series B Warrant issued to Partlet Holdings Ltd. (Incorporated by reference to Exhibit 4.2 of Senesco Technologies, Inc. current report on Form 8-K, filed on July 10, 2009.)
     
4.2   Form of Series A Warrant issued to each of Robert Forbes, Timothy Forbes, Harlan W. Waksal, M.D., Rudolf Stalder, Christopher Forbes, David Rector, John N. Braca, Jack Van Hulst, Warren Isabelle and the Thomas C. Quick Charitable Foundation. (Incorporated by reference to Exhibit 4.1 of Senesco Technologies, Inc. current report on Form 8-K, filed on July 30, 2009.)
     
4.3   Form of Series B Warrant issued to each of Robert Forbes, Timothy Forbes, Harlan W. Waksal, M.D., Rudolf Stalder, Christopher Forbes, David Rector, John N. Braca, Jack Van Hulst, Warren Isabelle and the Thomas C. Quick Charitable Foundation. (Incorporated by reference to Exhibit 4.1 of Senesco Technologies, Inc. current report on Form 8-K, filed on July 30, 2009.)
     
4.4   Form of Series B Warrant issued to Cato Holding Company. (Incorporated by reference to Exhibit 4.1 of Senesco Technologies, Inc. current report on Form 8-K, filed on July 30, 2009.)
     
4.5   Form of Series A Common Stock Purchase Warrant issued to certain accredited investors (Incorporated by reference to Exhibit 4.1 of Senesco Technologies, Inc. current report on Form 8-K filed on March 29, 2010.)
     
4.6   Form of Series B Common Stock Purchase Warrant issued to certain affiliated investors (Incorporated by reference to Exhibit 4.2 of Senesco Technologies, Inc. current report on Form 8-K filed on March 29, 2010.)
     
4.7   Form of Warrant (Incorporated by reference to Exhibit 4.1 of Senesco Technologies, Inc. current report on Form 8-K filed on January 9, 2012.)
     
4.8   Form of Warrant (Incorporated by reference to Exhibit 4.1 of Senesco Technologies, Inc. current report on Form 8-K filed on March 2, 2012.)
     
4.9   Form of Warrant Clarification Letter (Incorporated by reference to Exhibit 4.16 of Senesco Technologies, Inc. annual report on Form 10-K for the period ended June 30, 2012.)
     
4.10   Form of January 2013 Warrant (Incorporated by reference to Exhibit 4.1 of Senesco Technologies, Inc. current report on Form 8-K filed on January 4, 2013.)
     
10.1   Indemnification Agreement by and between Senesco Technologies, Inc. and Christopher Forbes, dated January 21, 1999.  (Incorporated by reference to Senesco Technologies, Inc. quarterly report on Form 10-QSB for the period ended December 31, 1998.)
     
10.2   Indemnification Agreement by and between Senesco Technologies, Inc. and Thomas C. Quick, dated February 23, 1999.  (Incorporated by reference to Senesco Technologies, Inc. quarterly report on Form 10-QSB for the period ended March 31, 1999.)
   
 
96
   
 
Exhibit
No.
   Description of Exhibit
     
10.3   Indemnification Agreement by and between Senesco Technologies, Inc. and Ruedi Stalder, dated March 1, 1999.  (Incorporated by reference to Senesco Technologies, Inc. quarterly report on Form 10-QSB for the period ended March 31, 1999.)
     
10.4   Indemnification Agreement by and between Senesco Technologies, Inc. and Jack Van Hulst, dated January 16, 2007. (Incorporated by reference to Exhibit 10.13 of Senesco Technologies, Inc. annual report on Form 10-K for the period ended June 30, 2007)
     
10.5   Indemnification Agreement by and between Senesco Technologies, Inc. and John Braca, dated October 8, 2003.  (Incorporated by reference to Exhibit 10.38 of Senesco Technologies, Inc. annual report on Form 10-KSB for the period ended June 30, 2004.)
     
10.6   Indemnification Agreement by and between Senesco Technologies, Inc. and David Rector dated as of April, 2002.  (Incorporated by reference to Exhibit 10.1 of Senesco Technologies, Inc. quarterly report on Form 10-QSB for the period ended September 30, 2004.)
     
10.7   Indemnification Agreement by and between Senesco Technologies, Inc. and Harlan W. Waksal, M.D. dated as of October 24, 2008.  (Incorporated by reference to Exhibit 10.8 of Senesco Technologies, Inc. annual report on Form 10-K for the period ended June 30, 2009.)
     
10.8   Indemnification Agreement by and between Senesco Technologies, Inc. and Warren Isabelle dated as of June 8, 2009.  (Incorporated by reference to Exhibit 10.9 of Senesco Technologies, Inc. annual report on Form 10-K for the period ended June 30, 2009.)
     
10.9   Indemnification Agreement by and between Senesco Technologies, Inc. and Leslie J. Browne, Ph.D. dated as of May 25, 2010.  (Incorporated by reference to Exhibit 10.2 of Senesco Technologies, Inc. current report on Form 8-K filed on May 25, 2010.)
     
10.10   Nondisclosure, Noncompetition and Invention Assignment Agreement by and between Leslie J. Browne, Ph.D. and Senesco Technologies, Inc. dated May 25, 2010. (Incorporated by reference to Exhibit 10.3 of Senesco Technologies, Inc. current report on Form 8-K filed on May 25, 2010.)
     
10.11*   Consulting Agreement by and between Senesco Technologies, Inc. and John E. Thompson, Ph.D., dated July 12, 1999.  (Incorporated by reference to Senesco Technologies, Inc. annual report on Form 10-KSB for the period ended June 30, 2000.)
     
10.12*   Amendment to Consulting Agreement of July 12, 1999, as modified on February 8, 2001, by and between Senesco, Inc. and John E. Thompson, Ph.D., dated December 13, 2002.  (Incorporated by reference to Exhibit 10.1 of Senesco Technologies, Inc. quarterly report on Form 10-QSB for the period ended December 31, 2002.)
     
10.13 *   Amendment # 7 to Consulting Agreement of July 12, 1999, as modified, by and between Senesco, Inc. and John E. Thompson, Ph.D., dated June 20, 2011.(Incorporated by reference to Exhibit 10.16 of Senesco Technologies, Inc. annual report on Form 10-K for the period ended June 30, 2011.)
   
 
97
 
Exhibit
No.
   Description of Exhibit
     
10.14 †*   Amendment # 8 to Consulting Agreement of July 12, 1999, as modified, by and between Senesco, Inc. and John E. Thompson, Ph.D., dated June 20, 2013. (Filed herewith.)
     
10.15 +   Development Agreement by and between Senesco Technologies, Inc. and ArborGen, LLC, dated June 28, 2002.  (Incorporated by reference to Exhibit 10.31 of Senesco Technologies, Inc. annual report on Form 10-KSB for the year ended June 30, 2002.)
     
10.16 +   Commercial License Agreement by and between Senesco Technologies, Inc. and ArborGen, LLC dated as of December 21, 2006.  (Incorporated by reference to Senesco Technologies, Inc. quarterly report on Form 10-Q for the period ended December 31, 2006.)
     
10.17 +   Development and License Agreement by and between Senesco Technologies, Inc. and Calwest Seeds, dated September 14, 2002.  (Incorporated by reference to Exhibit 10.1 of Senesco Technologies, Inc. quarterly report on Form 10-QSB for the period ended September 30, 2002.)
     
10.18 +   Development and License Agreement by and between Senesco Technologies, Inc. and The Scotts Company, dated March 8, 2004.  (Incorporated by reference to Exhibit 10.1 of Senesco Technologies, Inc. quarterly report on Form 10-QSB for the period ended March 31, 2004.)
     
10.19 +   Development and License Agreement with Broin and Associates, Inc. (currently known as Poet) dated as of October 14, 2004.  (Incorporated by reference to Exhibit 10.2 of Senesco Technologies, Inc. quarterly report on Form 10-QSB for the period ended September 30, 2004.)
     
10.20 +   License Agreement by and between Senesco Technologies, Inc. and Bayer CropScience GmbH, dated as of November 8, 2006.  (Incorporated by reference to Senesco Technologies, Inc. quarterly report on Form 10-Q for the quarterly period ended December 31, 2006.)
     
10.21 +   License Agreement with Bayer CropScience AG dated as of July 23, 2007. (Incorporated by reference to Exhibit 10.1 of Senesco Technologies, Inc. quarterly report on Form 10-Q for the period ended September 30, 2007.)
     
10.22 +   Patent License Agreement with Monsanto Company dated as of August 6, 2007. (Incorporated by reference to Exhibit 10.2 of Senesco Technologies, Inc. quarterly report on Form 10-Q for the period ended September 30, 2007.)
     
10.23 +   License Agreement with Bayer CropScience AG dated as of September 17, 2007. (Incorporated by reference to Exhibit 10.3 of Senesco Technologies, Inc. quarterly report on Form 10-Q for the period ended September 30, 2007.)
     
10.24† ++   Biofuels Evaluation and License Agreement by and between BioCorp Ventures LLC, Senesco Technologies, Inc. and Senesco, Inc. dated May 14, 2013. (Filed herewith.)
   
 
98
 
Exhibit
No.
   Description of Exhibit
     
10.25+   Amended and Restated Agreement by and between Rahan Meristem (1998) LTD., Senesco Technologies, Inc. and Senesco, Inc. dated December 22, 2011. (Incorporated by reference to Exhibit 10.1 of Senesco Technologies, Inc. quarterly report on Form 10-Q for the period ended December 31, 2011.)
     
10.26   Research Agreement by and among Senesco Technologies, Inc., Dr. John E. Thompson and the University of Waterloo, dated September 1, 1998, as amended. (Incorporated by reference to Senesco Technologies, Inc. quarterly report on Form 10-QSB for the period ended December 31, 1998.)
     
10.27   Amendment to Research Agreement by and among the University of Waterloo, Senesco, Inc., and Dr. John E. Thompson, Ph.D., dated June 11, 2012. (Incorporated by reference to Exhibit 10.31 of Senesco Technologies, Inc. annual report on Form 10-K for the period ended June 30, 2012.)
     
10.28   Amendment to Research Agreement by and among the University of Waterloo, Senesco, Inc. and Dr. John E. Thompson, Ph.D., dated September 1, 2012. (Incorporated by reference to Exhibit 10.32 of Senesco Technologies, Inc. annual report on Form 10-K for the period ended June 30, 2012.)
     
10.29 †   Amendment to Research Agreement by and among the University of Waterloo, Senesco, Inc. and Dr. John E. Thompson, Ph.D., dated May 16, 2013. (Filed herewith.)
     
10.30 +   Master Product Sale Agreement with VGXI, Inc. dated as of June 27, 2008. (Incorporated by reference to Exhibit 10.29 of Senesco Technologies, Inc. annual report on Form 10-K for the period ended June 30, 2008.)
     
10.31   Master Product Sale Agreement with Polyplus-transfection dated as of June 30, 2008. (Incorporated by reference to Exhibit 10.30 of Senesco Technologies, Inc. annual report on Form 10-K for the period ended June 30, 2008.)
     
10.32   Proposal for Manufacture and Supply by and between Avecia Biotechnology, Inc. and Senesco Technologies, Inc. dated as of September 4, 2008. (Incorporated by reference to Exhibit 10.1 of Senesco Technologies, Inc. quarterly report on Form 10-Q for the period ended September 30, 2008.)
     
10.33   Master Services Agreement by and between Criterium, Inc. and Senesco Technologies, Inc. dated June 20, 2011. (Incorporated by reference to Exhibit 10.35 of Senesco Technologies, Inc. annual report on Form 10-K for the period ended June 30, 2011.)
     
10.34   Clinical Trial Research Agreement by and between Mayo Clinic and Senesco Technologies, Inc. dated August 15, 2011. (Incorporated by reference to Exhibit 10.36 of Senesco Technologies, Inc. annual report on Form 10-K for the period ended June 30, 2011.)
     
10.35   Securities Purchase Agreement by and between Senesco Technologies, Inc. and Partlet Holdings Ltd. Dated as of July 9, 2009. (Incorporated by reference to Exhibit 10.1 of Senesco Technologies, Inc. current report on Form 8-K, filed on July 10, 2009.)
 
 
99
 
Exhibit
No.
   Description of Exhibit
     
10.36   Securities Purchase Agreement by and between Senesco Technologies, Inc. and each of Robert Forbes, Timothy Forbes, Harlan W. Waksal, M.D., Rudolf Stalder, Christopher Forbes, David Rector, John N. Braca, Jack Van Hulst, Warren Isabelle and the Thomas C. Quick Charitable Foundation dated as of July 29, 2009. (Incorporated by reference to Exhibit 10.1 of Senesco Technologies, Inc. current report on Form 8-K , filed on July 30, 2009.)
     
10.37   Securities Purchase Agreement by and between Senesco Technologies, Inc. and Cato Holding Company dated as of July 29, 2009. (Incorporated by reference to Exhibit 10.2 of Senesco Technologies, Inc. current report on Form 8-K , filed on July 30, 2009.)
     
10.38   Securities Purchase Agreement by and between Senesco Technologies, Inc. and certain investors (Non-Affiliates). (Incorporated by reference to Exhibit 10.2 of Senesco Technologies, Inc. current report on Form 8-K filed on March 29, 2010.)
     
10.39   Securities Purchase Agreement by and between Senesco Technologies, Inc. and certain investors (Non-Affiliates). (Incorporated by reference to Exhibit 10.3 of Senesco Technologies, Inc. current report on Form 8-K filed on March 29, 2010.)
     
10.40   Securities Purchase Agreement by and between Senesco Technologies, Inc. and certain investors (Affiliates). (Incorporated by reference to Exhibit 10.4 of Senesco Technologies, Inc. current report on Form 8-K filed on March 29, 2010.)
     
10.41   Form of Securities Purchase Agreement (Incorporated by reference to Exhibit 10.1 of Senesco Technologies, Inc. current report on Form 8-K filed on January 9, 2012.)
     
10.42   Form of Securities Purchase Agreement (Incorporated by reference to Exhibit 10.1 of Senesco Technologies, Inc. current report on Form 8-K filed on March 2, 2012.)
     
10.43   Registration Rights Agreement dated March 26, 2010 by and between Senesco Technologies, Inc. and certain investors. (Incorporated by reference to Exhibit 10.1 of Senesco Technologies, Inc. current report on Form 8-K filed on March 29, 2010.)
     
10.44   Sublease Agreement, dated as of May 16, 2011 and effective as of May 19, 2011, by and between Norris, McLaughlin & Marcus, P.A., as Sublandlord, and Senesco Technologies, Inc., as Subtenant. (Incorporated by reference to Senesco Technologies, Inc. current report on Form 8-K filed on May 25, 2011.)
     
10.45 †   Notice of extension of sublease agreement by and between Norris, McLaughlin & Marcus, P.A., as Sublandlord, and Senesco Technologies, Inc., as Subtenant, dated November 26, 2012. (Filed herewith.)
     
10.46   Credit Agreement dated as of February 17, 2010 by and between Senesco Technologies, Inc. and JMP Securities. (Incorporated by reference to Exhibit 10.1 of Senesco Technologies, Inc. quarterly report on Form 10-Q for the period ended March 31, 2010.)
     
10.47   Promissory Note by and among J.P. Morgan Clearing Corp. and Senesco Technologies, Inc., dated April 8, 2011. (Incorporated by reference to Exhibit 10.2 of Senesco Technologies, Inc. quarterly report on Form 10-Q for the period ended March 31, 2011.)
 
 
100
 
Exhibit
No.
   Description of Exhibit
     
10.48   At Market Issuance Sales Agreement by and between Senesco Technologies Inc. and McNicoll, Lewis & Vlak LLC dated December 22, 2010. (Incorporated by reference to Exhibit 10.1 of Senesco Technologies, Inc. current report on Form 8-K filed on December 22, 2010.)
     
10.49 *   1998 Stock Incentive Plan, as amended on December 13, 2002. (Incorporated by reference to Exhibit 10.7 of Senesco Technologies, Inc. quarterly report on Form 10-QSB for the period ended December 31, 2002.)
     
10.50*   Senesco Technologies, Inc. 2008 Incentive Compensation Plan. (Incorporated by reference to Exhibit 10.1 of Senesco Technologies, Inc. quarterly report on Form 10-Q for the period ended December 31, 2008.)
     
10.51*   Amendment to Senesco Technologies, Inc. 2008 Incentive Compensation Plan. (Incorporated by reference to Exhibit 10.1 of Senesco Technologies, Inc. current report on Form 8-K filed on May 28, 2010.)
     
10.52*   Form of Stock Option Agreement under the Senesco Technologies, Inc. 2008 Stock Incentive Plan. (Incorporated by reference to Exhibit 10.5 of Senesco Technologies, Inc. quarterly report on Form 10-Q for the period ended September 30, 2009.)
     
10.53*   Form of Restricted Stock Unit Issuance Agreement under the Senesco Technologies, Inc. 2008 Stock Incentive Plan. (Incorporated by reference to Exhibit 10.6 of Senesco Technologies, Inc. quarterly report on Form 10-Q for the period ended September 30, 2009.)
     
10.54*   Retention Policy. (Incorporated by reference to Exhibit 10.1 of Senesco Technologies, Inc. current report on Form 8-K filed on October 9, 2012.)
     
10.55   Form of Warrant Exchange Agreement (Incorporated by reference to Exhibit 10.1 of Senesco Technologies, Inc. current report on Form 8-K filed on August 10, 2012.)
     
10.56   Securities Purchase Agreement, dated as of January 4, 2013, by and among the Company and the investors set forth therein. (Incorporated by reference to Exhibit 10.1 of Senesco Technologies, Inc. current report on Form 8-K filed on January 4, 2013.)
     
10.57   Form of April 2013 Warrant Exchange Agreement (Incorporated by reference to Exhibit 10.1 of Senesco Technologies, Inc. current report on Form 8-K filed on May 1, 2013.)
     
10.58   Form of Securities Purchase Agreement, dated as of May 9, 2013, by and among the Company and the investors set forth therein (Incorporated by reference to Exhibit 10.1 of Senesco Technologies, Inc. current report on Form 8-K filed on May 9, 2013.)
     
10.59   Placement Agent Agreement, dated as of April 29, 2013, by and between the Company and Chardan Capital Markets, LLC (Incorporated by reference to Exhibit 10.2 of Senesco Technologies, Inc. current report on Form 8-K filed on May 9, 2013.)
 
 
101
 
Exhibit
No.
   Description of Exhibit
     
10.60   Form of June 2013 Warrant Exchange Agreement (Incorporated by reference to Exhibit 10.1 of Senesco Technologies, Inc. current report on Form 8-K filed on June 25, 2013.)
     
10.61   Form of June 2013 Preferred Stock Exchange Agreement (Incorporated by reference to Exhibit 10.2 of Senesco Technologies, Inc. current report on Form 8-K filed on June 25, 2013.)
     
10.62   Agreement for Service on Senesco Technologies, Inc. Scientific Advisory Board by and between Senesco Technologies, Inc. and Dr. Charles A. Dinarello, dated February 12, 2002.  (Incorporated by reference to Exhibit 10.6 of Senesco Technologies, Inc. quarterly report on Form 10-QSB for the period ended March 31, 2002.)
     
10.63   Agreement for Service on Senesco Technologies, Inc. Scientific Advisory Board by and between Senesco Technologies, Inc. and James W. Mier, M.D., dated April 2, 2007. (Incorporated by reference to Exhibit 10.43 of Senesco Technologies, Inc. annual report on Form 10-K for the period ended June 30, 2007.)
     
23.1 † Consent of McGladrey LLP.
     
31.1 †   Certification of the principal executive officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
     
31.2 †   Certification of the principal financial and accounting officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
     
32.1 †   Certification of the principal executive officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
     
32.2 †   Certification of the principal financial and accounting officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
     
101.1 †   Financial Statements from the Annual Report on Form 10-K of Senesco Technologies, Inc. for the fiscal year ended June 30, 2013, filed on September 11, 2013, formatted in XBRL (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Operations, (iii) the Condensed Consolidated Statements of Stockholders’ Equity, (iv)the Condensed Consolidated Statements of Cash Flows and (v) the Notes to the Condensed Consolidated Financial Statements.
 
  
*  A management contract or compensatory plan or arrangement required to be filed as an exhibit pursuant to Item 13(a) of Form 10-K.
†  Filed herewith.
+  The SEC granted Confidential Treatment for portions of this Exhibit.
++ Portions of this Exhibit have been redacted pursuant to a confidential treatment request filed with the SEC.
 
 
102

 
SENESCO TECHNOLOGIES, INC.
 
AND SUBSIDIARY
 
(a development stage company)
 
CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2013
 
 
 
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
SENESCO TECHNOLOGIES, INC AND SUBSIDIARY
(A Development Stage Company)
 
Reports of Independent Registered Public Accounting Firm
 
F-2
 
 
 
Consolidated Financial Statements:
 
 
 
 
 
Balance Sheets
 
F-3
Statements of Operations
 
F-4
Statements of Stockholders' Equity
 
F-5
Statements of Cash Flows
 
F-12
Notes to Consolidated Financial Statements
 
F-13
 
 
F-1
 
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
To the Board of Directors and Stockholders
Senesco Technologies, Inc.
 
We have audited the accompanying consolidated balance sheets of Senesco Technologies, Inc. and Subsidiary (a development stage company) as of June 30, 2013 and June 30, 2012, and the related consolidated statements of operations, stockholders' equity and cash flows for each of the three years in the period ended June 30, 2013 and cumulative amounts from July 1, 1998 (inception) to June 30, 2013. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. 
 
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
 
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Senesco Technologies, Inc. and Subsidiary as of June 30, 2013 and June 30, 2012, and the results of their operations and their cash flows for each of the three years in the period ended June 30, 2013 and cumulative amounts from July 1, 1998 (inception) to June 30, 2013, in conformity with U.S. generally accepted accounting principles.
 
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has suffered recurring losses from operations, generated minimal revenues, and continues to incur significant expenses that exceed revenue streams. This raises substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
 
/s/ McGladrey LLP
New York, New York
September 11, 2013
 
 
F-2
 

SENESCO TECHNOLOGIES, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEETS
 
 
 
June 30,
 
June 30,
 
 
 
2013
 
2012
 
ASSETS
 
 
 
 
 
 
 
CURRENT ASSETS:
 
 
 
 
 
 
 
Cash and cash equivalents
 
$
1,602,294
 
$
2,001,325
 
Prepaid research supplies and expenses
 
 
1,919,220
 
 
1,548,524
 
Total Current Assets
 
 
3,521,514
 
 
3,549,849
 
 
 
 
 
 
 
 
 
Equipment, furniture and fixtures, net
 
 
4,555
 
 
5,857
 
Intangible assets, net
 
 
3,566,497
 
 
3,393,992
 
Security deposit
 
 
5,171
 
 
5,171
 
TOTAL ASSETS
 
$
7,097,737
 
$
6,954,869
 
 
 
 
 
 
 
 
 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
 
 
 
 
 
 
CURRENT LIABILITIES:
 
 
 
 
 
 
 
Accounts payable
 
$
637,320
 
$
594,514
 
Accrued expenses
 
 
387,540
 
 
369,695
 
Line of credit
 
 
2,187,082
 
 
2,199,108
 
Total Current Liabilities
 
 
3,211,942
 
 
3,163,317
 
 
 
 
 
 
 
 
 
Warrant liabilities
 
 
-
 
 
238,796
 
Other liabilities
 
 
99,728
 
 
99,728
 
TOTAL LIABILITIES
 
 
3,311,670
 
 
3,501,841
 
 
 
 
 
 
 
 
 
COMMITMENTS (Note 12)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
STOCKHOLDERS' EQUITY:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Convertible preferred stock, $0.01 par value, authorized 5,000,000 shares
 
 
 
 
 
 
 
Series A 10,297 shares issued and 800 and 3,379 shares outstanding, respectively
    (liquidation preference of $820,000 and $3,463,475
    at June 30, 2013 and June 30, 2012, respectively)
 
 
8
 
 
34
 
Series B 1,200 shares issued and 0 and 1,200 outstanding, respectively
    (liquidation preference of $0 and $1,230,000
    at June 30, 2013 and June 30, 2012, respectively)
 
 
-
 
 
12
 
Common stock, $0.01 par value, authorized 500,000,000 shares,
    issued and outstanding 227,206,174 and 94,112,483, respectively
 
 
2,272,062
 
 
941,125
 
Capital in excess of par
 
 
75,939,832
 
 
69,952,152
 
Deficit accumulated during the development stage
 
 
(74,425,835)
 
 
(67,440,295)
 
 
 
 
 
 
 
 
 
Total Stockholders' Equity
 
 
3,786,067
 
 
3,453,028
 
 
 
 
 
 
 
 
 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
 
$
7,097,737
 
$
6,954,869
 
 
See Notes to Consolidated Financial Statements
 
 
F-3

  SENESCO TECHNOLOGIES, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS 
 
 
 
 
 
 
 
 
 
 
 
 
Cumulative
 
 
 
Fiscal Year Ended June 30,
 
Amounts from
 
 
 
2013
 
2012
 
2011
 
Inception
 
Licensing Revenue
 
$
-
 
$
200,000
 
$
-
 
$
1,790,000
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating expenses:
 
 
 
 
 
 
 
 
 
 
 
 
 
General and administrative
 
 
2,499,624
 
 
2,724,144
 
 
2,610,222
 
 
34,114,301
 
Research and development
 
 
2,086,666
 
 
2,566,247
 
 
3,720,394
 
 
23,322,271
 
Write-off of patents abandoned
 
 
64,210
 
 
321,137
 
 
1,588,087
 
 
1,973,434
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total operating expenses
 
 
4,650,500
 
 
5,611,528
 
 
7,918,703
 
 
59,410,006
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loss from operations
 
 
(4,650,500)
 
 
(5,411,528)
 
 
(7,918,703)
 
 
(57,620,006)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other non-operating income (expense)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Grant income
 
 
-
 
 
-
 
 
244,479
 
 
244,479
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Change in fair value of warrant liability
 
 
371,591
 
 
472,463
 
 
609,239
 
 
8,701,721
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Sale of state income tax loss – net
 
 
-
 
 
-
 
 
-
 
 
586,442
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other noncash (expense) income, net
 
 
-
 
 
-
 
 
(115,869)
 
 
205,390
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loss on settlement of warrant liabilities
 
 
(1,724,546)
 
 
-
 
 
-
 
 
(1,724,546)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loss on extinguishment of debt
 
 
-
 
 
-
 
 
-
 
 
(361,877)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Amortization of debt discount and financing costs
 
 
-
 
 
-
 
 
-
 
 
(11,227,870)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest expense – convertible notes
 
 
-
 
 
-
 
 
-
 
 
(2,027,930)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest (expense) income - net
 
 
(119,087)
 
 
(127,068)
 
 
(88,122)
 
 
164,901
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net loss
 
 
(6,122,542)
 
 
(5,066,133)
 
 
(7,268,976)
 
 
(63,059,296)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Preferred dividends
 
 
(862,998)
 
 
(1,625,727)
 
 
(2,638,300)
 
 
(11,366,539)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loss applicable to common shares
 
 
(6,985,540)
 
 
(6,691,860)
 
 
(9,907,276)
 
 
(74,425,835)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other comprehensive loss
 
 
-
 
 
-
 
 
-
 
 
-
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Comprehensive loss
 
$
(6,985,540)
 
$
(6,691,860)
 
$
(9,907,276)
 
$
(74,425,835)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic and diluted net loss per common share
 
$
(0.05)
 
$
(0.08)
 
$
(0.14)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic and diluted weighted-average number of
    common shares outstanding
 
 
136,638,419
 
 
85,703,291
 
 
69,332,447
 
 
 
 
 
See Notes to Consolidated Financial Statements
 
 
F-4

SENESCO TECHNOLOGIES, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY
 
Period from July 1, 1998 (date of inception) to June 30, 2013
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Deficit
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Accumulated
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
During the
 
Stockholders'
 
 
 
Preferred Stock
 
Common Stock
 
Capital in Excess
 
Development
 
Equity
 
 
 
Shares
 
Amount
 
Shares
 
Amount
 
of Par Value
 
Stage
 
(Deficiency)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Common stock outstanding
 
 
-
 
$
-
 
 
2,000,462
 
$
20,005
 
$
(20,005)
 
$
-
 
$
-
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Contribution of capital
 
 
-
 
 
-
 
 
-
 
 
-
 
 
85,179
 
 
-
 
 
85,179
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Issuance of common stock in reverse merger on January 22, 1999 at $0.01 per share
 
 
-
 
 
-
 
 
3,400,000
 
 
34,000
 
 
(34,000)
 
 
-
 
 
-
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Issuance of common stock for cash on May 21, 1999 at $2.63437 per share
 
 
-
 
 
-
 
 
759,194
 
 
7,592
 
 
1,988,390
 
 
-
 
 
1,995,982
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Issuance of common stock for placement fees on May 21, 1999 at $0.01 per share
 
 
-
 
 
-
 
 
53,144
 
 
531
 
 
(531)
 
 
-
 
 
-
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net loss
 
 
-
 
 
-
 
 
-
 
 
-
 
 
-
 
 
(1,168,995)
 
 
(1,168,995)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at June 30, 1999
 
 
-
 
 
-
 
 
6,212,800
 
 
62,128
 
 
2,019,033
 
 
(1,168,995)
 
 
912,166
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Issuance of common stock for cash on January 26, 2000 at $2.867647 per share
 
 
-
 
 
-
 
 
17,436
 
 
174
 
 
49,826
 
 
-
 
 
50,000
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Issuance of common stock for cash on January 31, 2000 at $2.87875 per share
 
 
-
 
 
-
 
 
34,737
 
 
347
 
 
99,653
 
 
-
 
 
100,000
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Issuance of common stock for cash on February 4, 2000 at $2.924582 per share
 
 
-
 
 
-
 
 
85,191
 
 
852
 
 
249,148
 
 
-
 
 
250,000
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Issuance of common stock for cash on March 15, 2000 at $2.527875 per share
 
 
-
 
 
-
 
 
51,428
 
 
514
 
 
129,486
 
 
-
 
 
130,000
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Issuance of common stock for cash on June 22, 2000 at $1.50 per share
 
 
-
 
 
-
 
 
1,471,700
 
 
14,718
 
 
2,192,833
 
 
-
 
 
2,207,551
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commissions, legal and bank fees associated with issuances for the year ended June 30, 2000
 
 
-
 
 
-
 
 
-
 
 
-
 
 
(260,595)
 
 
-
 
 
(260,595)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fair market value of options and warrants vested during the year ended June 30, 2000
 
 
-
 
 
-
 
 
-
 
 
-
 
 
1,475,927
 
 
-
 
 
1,475,927
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net loss
 
 
-
 
 
-
 
 
-
 
 
-
 
 
-
 
 
(3,346,491)
 
 
(3,346,491)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at June 30, 2000
 
 
-
 
 
-
 
 
7,873,292
 
 
78,733
 
 
5,955,311
 
 
(4,515,486)
 
 
1,518,558
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fair market value of options and warrants vested during the year ended June 30, 2001
 
 
-
 
 
-
 
 
-
 
 
-
 
 
308,619
 
 
-
 
 
308,619
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net loss
 
 
-
 
 
-
 
 
-
 
 
-
 
 
-
 
 
(2,033,890)
 
 
(2,033,890)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at June 30, 2001
 
 
-
 
 
-
 
 
7,873,292
 
 
78,733
 
 
6,263,930
 
 
(6,549,376)
 
 
(206,713)
 
 
continued
 
See Notes to Consolidated Financial Statements
 
 
F-5
 
 SENESCO TECHNOLOGIES, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY
 
Period from July 1, 1998 (date of inception) to June 30, 2013
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Deficit
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Accumulated
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
During the
 
Stockholders'
 
 
 
Preferred Stock
 
Common Stock
 
Capital in Excess
 
Development
 
Equity
 
 
 
Shares
 
Amount
 
Shares
 
Amount
 
of Par Value
 
Stage
 
(Deficiency)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Issuance of common stock and warrants for cash from November 30, 2001 through April 17, 2002 at $1.75 per unit
 
 
-
 
$
-
 
 
3,701,430
 
$
37,014
 
$
6,440,486
 
$
-
 
$
6,477,500
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Issuance of common stock and warrants associated with bridge loan conversion on December 3, 2001
 
 
-
 
 
-
 
 
305,323
 
 
3,053
 
 
531,263
 
 
-
 
 
534,316
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commissions, legal and bank fees associated with issuances during the year ended June 30, 2002
 
 
-
 
 
-
 
 
-
 
 
-
 
 
(846,444)
 
 
-
 
 
(846,444)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fair market value of options and warrants vested during the year ended June 30, 2002
 
 
-
 
 
-
 
 
-
 
 
-
 
 
1,848,726
 
 
-
 
 
1,848,726
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net loss
 
 
-
 
 
-
 
 
-
 
 
-
 
 
-
 
 
(3,021,709)
 
 
(3,021,709)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at June 30, 2002
 
 
-
 
 
-
 
 
11,880,045
 
 
118,800
 
 
14,237,961
 
 
(9,571,085)
 
 
4,785,676
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fair market value of options and warrants vested during the year ended June 30, 2003
 
 
-
 
 
-
 
 
-
 
 
-
 
 
848,842
 
 
-
 
 
848,842
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net loss
 
 
-
 
 
-
 
 
-
 
 
-
 
 
-
 
 
(2,778,004)
 
 
(2,778,004)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at June 30, 2003
 
 
-
 
 
-
 
 
11,880,045
 
 
118,800
 
 
15,086,803
 
 
(12,349,089)
 
 
2,856,514
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Issuance of common stock and warrants for cash from January 15, 2004 through February 12, 2004 at $2.37 per unit
 
 
-
 
 
-
 
 
1,536,922
 
 
15,369
 
 
3,627,131
 
 
-
 
 
3,642,500
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Allocation of proceeds to warrants
 
 
-
 
 
-
 
 
-
 
 
-
 
 
(2,099,090)
 
 
-
 
 
(2,099,090)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reclassification of warrants
 
 
-
 
 
-
 
 
-
 
 
-
 
 
1,913,463
 
 
-
 
 
1,913,463
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commissions, legal and bank fees associated with issuances for the year ended June 30, 2004
 
 
-
 
 
-
 
 
-
 
 
-
 
 
(378,624)
 
 
-
 
 
(378,624)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fair market value of options and warrants vested during the year ended June 30, 2004
 
 
-
 
 
-
 
 
-
 
 
-
 
 
1,826,514
 
 
-
 
 
1,826,514
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Options and warrants exercised during the year ended June 30, 2004 at exercise prices ranging from $1.00 to $3.25
 
 
-
 
 
-
 
 
370,283
 
 
3,704
 
 
692,945
 
 
-
 
 
696,649
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net loss
 
 
-
 
 
-
 
 
-
 
 
-
 
 
-
 
 
(3,726,951)
 
 
(3,726,951)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at June 30, 2004
 
 
-
 
 
-
 
 
13,787,250
 
 
137,873
 
 
20,669,142
 
 
(16,076,040)
 
 
4,730,975
 
 
continued
 
See Notes to Consolidated Financial Statements
 
 
F-6
 
SENESCO TECHNOLOGIES, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY
 
Period from July 1, 1998 (date of inception) to June 30, 2013
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Deficit
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Accumulated
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
During the
 
Stockholders'
 
 
 
Preferred Stock
 
Common Stock
 
Capital in Excess
 
Development
 
Equity
 
 
 
Shares
 
Amount
 
Shares
 
Amount
 
of Par Value
 
Stage
 
(Deficiency)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Issuance of common stock and warrants for cash on May 9, 2005 at $2.11 per unit
 
 
-
 
$
-
 
 
1,595,651
 
$
15,957
 
$
3,350,872
 
$
-
 
$
3,366,829
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Allocation of proceeds to warrants
 
 
-
 
 
-
 
 
-
 
 
-
 
 
(1,715,347)
 
 
-
 
 
(1,715,347)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reclassification of warrants
 
 
-
 
 
-
 
 
-
 
 
-
 
 
1,579,715
 
 
-
 
 
1,579,715
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commissions, legal and bank fees associated with the issuance on May 9, 2005
 
 
-
 
 
-
 
 
-
 
 
-
 
 
(428,863)
 
 
-
 
 
(428,863)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Options and warrants exercised during the year ended June 30, 2005 at exercise prices ranging from $1.50 to $3.25
 
 
-
 
 
-
 
 
84,487
 
 
844
 
 
60,281
 
 
-
 
 
61,125
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fair market value of options and warrants vested during the year ended June 30, 2005
 
 
-
 
 
-
 
 
-
 
 
-
 
 
974,235
 
 
-
 
 
974,235
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net loss
 
 
-
 
 
-
 
 
-
 
 
-
 
 
-
 
 
(2,978,918)
 
 
(2,978,918)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at June 30, 2005
 
 
-
 
 
-
 
 
15,467,388
 
 
154,674
 
 
24,490,035
 
 
(19,054,958)
 
 
5,589,751
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Warrants exercised during the year ended June 30, 2006 at an exercise price of $0.01
 
 
-
 
 
-
 
 
10,000
 
 
100
 
 
-
 
 
-
 
 
100
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fair market value of options and warrants vested during the year ended June 30, 2006
 
 
-
 
 
-
 
 
-
 
 
-
 
 
677,000
 
 
-
 
 
677,000
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net loss
 
 
-
 
 
-
 
 
-
 
 
-
 
 
-
 
 
(3,314,885)
 
 
(3,314,885)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at June 30, 2006
 
 
-
 
 
-
 
 
15,477,388
 
 
154,774
 
 
25,167,035
 
 
(22,369,843)
 
 
2,951,966
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Issuance of common stock and warrants for cash on October 10, 2006 at $1.135 per unit
 
 
-
 
 
-
 
 
1,986,306
 
 
19,863
 
 
2,229,628
 
 
-
 
 
2,249,491
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commissions, legal and bank fees associated with the issuance on October 10, 2006
 
 
-
 
 
-
 
 
-
 
 
-
 
 
(230,483)
 
 
-
 
 
(230,483)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Warrants exercised during the year ended June 30, 2007 at an exercise price of $0.01
 
 
-
 
 
-
 
 
10,000
 
 
100
 
 
-
 
 
-
 
 
100
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fair market value of options and warrants vested during the year ended June 30, 2007
 
 
-
 
 
-
 
 
-
 
 
-
 
 
970,162
 
 
-
 
 
970,162
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net loss
 
 
-
 
 
-
 
 
-
 
 
-
 
 
-
 
 
(3,251,697)
 
 
(3,251,697)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at June 30, 2007
 
 
-
 
 
-
 
 
17,473,694
 
 
174,737
 
 
28,136,342
 
 
(25,621,540)
 
 
2,689,539
 
 
continued
 
See Notes to Consolidated Financial Statements
 
 
F-7
 
SENESCO TECHNOLOGIES, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY
 
Period from July 1, 1998 (date of inception) to June 30, 2013
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Deficit
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Accumulated
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
During the
 
Stockholders'
 
 
 
Preferred Stock
 
Common Stock
 
Capital in Excess
 
Development
 
Equity
 
 
 
Shares
 
Amount
 
Shares
 
Amount
 
of Par Value
 
Stage
 
(Deficiency)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fair market value of options and warrants vested during the year ended June 30, 2008
 
 
-
 
$
-
 
 
-
 
$
-
 
$
1,536,968
 
$
-
 
$
1,536,968
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Allocation of proceeds, net of fees paid to holder, from the issuance of convertible notes and warrants on September 21, 2007, October 16, 2007, December 20, 2007, and June 30, 2008
 
 
-
 
 
-
 
 
-
 
 
-
 
 
9,340,000
 
 
-
 
 
9,340,000
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Convertible notes converted into common stock during the year ended June 30, 2008
 
 
-
 
 
-
 
 
555,556
 
 
5,556
 
 
430,952
 
 
-
 
 
436,508
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Issuance of common stock in lieu of cash payment for interest during the year ended June 30, 2008
 
 
-
 
 
-
 
 
345,867
 
 
3,458
 
 
430,696
 
 
-
 
 
434,154
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net loss
 
 
-
 
 
-
 
 
-
 
 
-
 
 
-
 
 
(4,601,490)
 
 
(4,601,490)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at June 30, 2008
 
 
-
 
 
-
 
 
18,375,117
 
 
183,751
 
 
39,874,958
 
 
(30,223,030)
 
 
9,835,679
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fair market value of options and warrants vested during the year ended June 30, 2009
 
 
-
 
 
-
 
 
-
 
 
-
 
 
506,847
 
 
-
 
 
506,847
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Warrants exercised during the year ended June 30, 2009 at an exercise price of $0.01
 
 
-
 
 
-
 
 
2,395
 
 
24
 
 
(24)
 
 
-
 
 
-
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Issuance of common stock in lieu of cash payment for interest during the year ended June 30, 2009
 
 
-
 
 
-
 
 
1,271,831
 
 
12,718
 
 
994,526
 
 
-
 
 
1,007,244
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Convertible notes converted into common stock during the year ended June 30, 2009
 
 
-
 
 
-
 
 
50,000
 
 
500
 
 
44,433
 
 
-
 
 
44,933
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Issuance of common stock in connection with Short-Term Incentive Plan during the year ended June 30, 2009
 
 
-
 
 
-
 
 
112,700
 
 
1,127
 
 
(1,127)
 
 
-
 
 
-
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net loss
 
 
-
 
 
-
 
 
-
 
 
-
 
 
-
 
 
(5,726,869)
 
 
(5,726,869)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at June 30, 2009
 
 
-
 
 
-
 
 
19,812,043
 
 
198,120
 
 
41,419,613
 
 
(35,949,899)
 
 
5,667,834
 
 
continued
 
See Notes to Consolidated Financial Statements
 
 
F-8
  
SENESCO TECHNOLOGIES, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY
 
Period from July 1, 1998 (date of inception) to June 30, 2013
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Deficit
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Accumulated
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
During the
 
Stockholders'
 
 
 
Preferred Stock
 
Common Stock
 
Capital in Excess
 
Development
 
Equity
 
 
 
Shares
 
Amount
 
Shares
 
Amount
 
of Par Value
 
Stage
 
(Deficiency)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cumulative effect of change in accounting principle- implementation of FASB ASC Topic 815-40
 
 
-
 
$
-
 
 
-
 
$
-
 
$
(7,931,875)
 
$
4,731,767
 
$
(3,200,108)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Issuance of common stock and warrants for cash on July 9, 2009 and September 30, 2009 at $0.90 per unit
 
 
-
 
 
-
 
 
1,700,000
 
 
17,000
 
 
1,513,000
 
 
-
 
 
1,530,000
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Issuance of common stock and warrants for satisfaction of accounts payable on September 30, 2009
 
 
-
 
 
-
 
 
194,444
 
 
1,944
 
 
259,588
 
 
-
 
 
261,532
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Legal and regulatory fees associated with the issuances on July 9, 2009 and September 30, 2009
 
 
-
 
 
-
 
 
-
 
 
-
 
 
(180,862)
 
 
-
 
 
(180,862)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Issuance of preferred stock and warrants for cash on April 1, 2010 and June 2, 2010
 
 
11,497
 
 
115
 
 
-
 
 
-
 
 
11,496,885
 
 
-
 
 
11,497,000
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Deemed dividend- Preferred Stock
 
 
-
 
 
-
 
 
-
 
 
-
 
 
5,330,039
 
 
(5,330,039)
 
 
-
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Legal and regulatory fees associated with the issuances of preferred stock and warrants on April 1, 2010 and June 2, 2010
 
 
-
 
 
-
 
 
-
 
 
-
 
 
(793,498)
 
 
-
 
 
(793,498)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fair value of warrants issued on April 1, 2010 and June 2, 2010
 
 
-
 
 
-
 
 
-
 
 
-
 
 
(1,759,008)
 
 
-
 
 
(1,759,008)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Preferred stock converted into common stock during the year ended June 30, 2010
 
 
(2,262)
 
 
(23)
 
 
7,068,750
 
 
70,688
 
 
(70,665)
 
 
-
 
 
-
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Warrants exercised during the year ended June 30, 2010 at an exercise price of $0.01
 
 
-
 
 
-
 
 
1,005,000
 
 
10,050
 
 
-
 
 
-
 
 
10,050
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Issuance of common stock in lieu of cash payment for interest during the year ended June 30, 2010
 
 
-
 
 
-
 
 
1,353,132
 
 
13,531
 
 
539,142
 
 
-
 
 
552,673
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Issuance of common stock in lieu of cash payment for dividends during the year ended June 30, 2010
 
 
-
 
 
-
 
 
3,029,465
 
 
30,295
 
 
648,305
 
 
(678,600)
 
 
-
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Convertible notes converted into common stock during the year ended June 30, 2010
 
 
-
 
 
-
 
 
15,659,186
 
 
156,592
 
 
7,462,768
 
 
-
 
 
7,619,360
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Issuance of common stock in connection with Short-Term Incentive Plan during the year ended June 30, 2010
 
 
-
 
 
-
 
 
116,000
 
 
1,160
 
 
(1,160)
 
 
-
 
 
-
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Issuance of common stock for services during the year ended June 30, 2010
 
 
-
 
 
-
 
 
154,184
 
 
1,542
 
 
52,258
 
 
-
 
 
53,800
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fair market value of options and warrants vested during the year ended June 30, 2010
 
 
-
 
 
-
 
 
-
 
 
-
 
 
386,639
 
 
-
 
 
386,639
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Repurchase of warrants during the year ended June 30,
    2010
 
 
-
 
 
-
 
 
-
 
 
-
 
 
(50,000)
 
 
-
 
 
(50,000)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Dividends accrued for the period from April 1, 2010 through June 30, 2010
 
 
-
 
 
-
 
 
-
 
 
-
 
 
-
 
 
(230,875)
 
 
(230,875)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net loss
 
 
-
 
 
-
 
 
-
 
 
-
 
 
-
 
 
(13,383,513)
 
 
(13,383,513)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at June 30, 2010
 
 
9,235
 
 
92
 
 
50,092,204
 
 
500,922
 
 
58,321,169
 
 
(50,841,159)
 
 
7,981,024
 
 
continued
 
See Notes to Consolidated Financial Statements
 
 
F-9
 
 
SENESCO TECHNOLOGIES, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY
 
Period from July 1, 1998 (date of inception) to June 30, 2013 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Deficit
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Accumulated
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
During the
 
Stockholders'
 
 
 
Preferred Stock
 
Common Stock
 
Capital in Excess
 
Development
 
Equity
 
 
 
Shares
 
Amount
 
Shares
 
Amount
 
of Par Value
 
Stage
 
(Deficiency)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Issuance of common stock at prices ranging from $0.30 per share to $0.36 per share
 
 
-
 
$
-
 
 
5,911,457
 
$
59,114
 
$
1,794,305.0
 
$
-
 
$
1,853,419
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commissions and other fees related to the issuance of common stock
 
 
-
 
 
-
 
 
-
 
 
-
 
 
(197,908)
 
 
-
 
 
(197,908)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Preferred stock converted into common stock
 
 
(4,345)
 
 
(43)
 
 
13,668,750
 
 
136,687
 
 
(136,644)
 
 
-
 
 
-
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Warrants converted into common stock
 
 
 
 
 
 
 
 
175,000
 
 
1,750
 
 
-
 
 
-
 
 
1,750
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Issuance of common stock in lieu of cash payment for dividends
 
 
-
 
 
-
 
 
7,912,266
 
 
79,124
 
 
2,307,066
 
$
(2,155,315)
 
 
230,875
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fair market value of options and warrants vested and amended
 
 
-
 
 
-
 
 
-
 
 
-
 
 
866,235
 
 
-
 
 
866,235
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reclassification of warrant liability
 
 
-
 
 
-
 
 
-
 
 
-
 
 
1,173,296
 
 
-
 
 
1,173,296
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Issuance of common stock under the Company's the Company's long-term incentive plan
 
 
-
 
 
-
 
 
10,000
 
 
100
 
 
(100)
 
 
-
 
 
-
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Deemed dividend - Preferred Stock
 
 
-
 
 
-
 
 
-
 
 
-
 
 
360,733
 
 
(360,733)
 
 
-
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Dividends accrued and unpaid at June 30, 2011
 
 
-
 
 
-
 
 
-
 
 
-
 
 
-
 
 
(122,252)
 
 
(122,252)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net loss
 
 
-
 
 
-
 
 
-
 
 
-
 
 
-
 
 
(7,268,976)
 
 
(7,268,976)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at June 30, 2011
 
 
4,890
 
 
49
 
 
77,769,677
 
 
777,697
 
 
64,488,152
 
 
(60,748,435)
 
 
4,517,463
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Issuance of common stock at prices ranging from $0.26 per share to $0.31 per share
 
 
-
 
 
-
 
 
12,842,296
 
 
128,423
 
 
3,243,258
 
 
-
 
 
3,371,681
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commissions and other fees related to the issuance of common stock
 
 
-
 
 
-
 
 
-
 
 
-
 
 
(143,765)
 
 
-
 
 
(143,765)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Preferred stock converted into common stock
 
 
(311)
 
 
(3)
 
 
1,178,633
 
 
11,786
 
 
(11,783)
 
 
-
 
 
-
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Issuance of common stock in lieu of cash payment for dividends
 
 
-
 
 
-
 
 
2,321,877
 
 
23,219
 
 
533,931
 
 
(434,898)
 
 
122,252
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Deemed dividend - Preferred Stock
 
 
-
 
 
-
 
 
-
 
 
-
 
 
1,076,355
 
 
(1,076,355)
 
 
-
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fair market value of options and warrants vested
 
 
-
 
 
-
 
 
-
 
 
-
 
 
766,004
 
 
-
 
 
766,004
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Dividends accrued and unpaid at June 30, 2012
 
 
-
 
 
-
 
 
-
 
 
-
 
 
-
 
 
(114,474)
 
 
(114,474)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net loss
 
 
-
 
 
-
 
 
-
 
 
-
 
 
-
 
 
(5,066,133)
 
 
(5,066,133)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at June 30, 2012
 
 
4,579
 
 
46
 
 
94,112,483
 
 
941,125
 
 
69,952,152
 
 
(67,440,295)
 
 
3,453,028
 
 
continued
 
 
See Notes to Consolidated Financial Statements
 
 
 
F-10
 
SENESCO TECHNOLOGIES, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY
 
Period from July 1, 1998 (date of inception) to June 30, 2013
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Deficit
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Accumulated
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
During the
 
Stockholders'
 
 
 
Preferred Stock
 
Common Stock
 
Capital in Excess
 
Development
 
Equity
 
 
 
Shares
 
Amount
 
Shares
 
Amount
 
of Par Value
 
Stage
 
(Deficiency)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Issuance of common stock for cash at $0.26 per share in July 2012
 
 
-
 
$
-
 
 
353,895
 
$
3,539
 
$
97,031
 
$
-
 
$
100,570
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commissions and other fees related to the issuance of common stock in July 2012
 
 
-
 
 
-
 
 
-
 
 
-
 
 
(6,387)
 
 
-
 
 
(6,387)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Issuance of common stock and warrants for cash at $0.10 per unit on January 8, 2013
 
 
-
 
 
-
 
 
30,000,000
 
 
300,000
 
 
2,700,000
 
 
-
 
 
3,000,000
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fees related to the issuance of common stock and warrants on January 8, 2013
 
 
-
 
 
-
 
 
-
 
 
-
 
 
(151,202)
 
 
-
 
 
(151,202)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Issuance of common stock for cash at $0.03 on May 8, 2013
 
 
-
 
 
-
 
 
41,833,334
 
 
418,333
 
 
836,667
 
 
-
 
 
1,255,000
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fees related to the issuance of common stock on May 8, 2013
 
 
-
 
 
-
 
 
-
 
 
-
 
 
(153,318)
 
 
-
 
 
(153,318)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fair value of warrants issued on January 8, 2013
 
 
-
 
 
-
 
 
-
 
 
-
 
 
(459,000)
 
 
-
 
 
(459,000)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Preferred stock converted into common stock
 
 
(3,779)
 
 
(38)
 
 
20,284,615
 
 
202,846
 
 
(202,808)
 
 
-
 
 
-
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Issuance of common stock in lieu of cash payment for dividends
 
 
-
 
 
-
 
 
3,719,655
 
 
37,197
 
 
554,124
 
 
(476,847)
 
 
114,474
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Issuance of common stock in exchange for warrants
 
 
-
 
 
-
 
 
36,902,192
 
 
369,022
 
 
1,355,524
 
 
-
 
 
1,724,546
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Deemed dividend - preferred stock
 
 
-
 
 
-
 
 
-
 
 
-
 
 
366,151
 
 
(366,151)
 
 
-
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reclassification of warrant liability
 
 
-
 
 
-
 
 
-
 
 
-
 
 
326,205
 
 
-
 
 
326,205
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stock-based compensation
 
 
-
 
 
-
 
 
-
 
 
-
 
 
724,693
 
 
-
 
 
724,693
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Dividends accrued and upaid at June 30, 2013
 
 
-
 
 
-
 
 
-
 
 
-
 
 
-
 
 
(20,000)
 
 
(20,000)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net loss
 
 
-
 
 
-
 
 
-
 
 
-
 
 
-
 
 
(6,122,542)
 
 
(6,122,542)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance July 1, 1998 (inception) through June 30, 2013
 
 
800
 
$
8
 
 
227,206,174
 
$
2,272,062
 
$
75,939,832
 
$
(74,425,835)
 
$
3,786,067
 
 
See Notes to Consolidated Financial Statements
 
 
F-11

SENESCO TECHNOLOGIES, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENT OF CASH FLOWS
 
 
 
 
 
 
 
 
 
 
 
 
Cumulative
 
 
 
Fiscal Year Ended June 30,
 
Amounts from
 
 
 
2013
 
2012
 
2011
 
Inception
 
Cash flows from operating activities:
 
 
 
 
 
 
 
 
 
 
 
 
 
Net loss
 
$
(6,122,542)
 
$
(5,066,133)
 
$
(7,268,976)
 
$
(63,059,296)
 
Adjustments to reconcile net loss to net cash
    used in operating activities:
 
 
 
 
 
 
 
 
 
 
 
 
 
Noncash capital contribution
 
 
-
 
 
-
 
 
-
 
 
85,179
 
Noncash conversion of accrued expenses into equity
 
 
-
 
 
-
 
 
-
 
 
131,250
 
Noncash income related to change in fair
    value of warrant liability
 
 
(371,591)
 
 
(472,463)
 
 
(609,239)
 
 
(9,022,980)
 
Noncash charge for change in warrant terms
 
 
-
 
 
-
 
 
115,869
 
 
115,869
 
Issuance of common stock and warrants for interest
 
 
-
 
 
-
 
 
-
 
 
2,003,386
 
Issuance of common stock for services
 
 
-
 
 
-
 
 
-
 
 
53,800
 
Stock-based compensation expense
 
 
724,693
 
 
766,004
 
 
750,366
 
 
12,830,646
 
Depreciation and amortization
 
 
293,629
 
 
258,023
 
 
143,274
 
 
1,393,934
 
Write-off of intangibles
 
 
64,210
 
 
321,137
 
 
1,588,087
 
 
1,973,434
 
Deferred rent
 
 
-
 
 
-
 
 
(8,060)
 
 
-
 
Amortization of convertible note discount
 
 
-
 
 
-
 
 
-
 
 
10,000,000
 
Amortization of deferred financing costs
 
 
-
 
 
-
 
 
-
 
 
1,227,869
 
Loss on settlement of warrant liabilities
 
 
1,724,546
 
 
-
 
 
-
 
 
1,724,546
 
Loss on extinguishment of debt
 
 
-
 
 
-
 
 
-
 
 
361,877
 
(Increase) decrease in operating assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
Prepaid expenses and other current assets
 
 
(370,696)
 
 
(102,460)
 
 
(141,269)
 
 
(1,919,220)
 
Security deposit
 
 
-
 
 
7,187
 
 
(5,171)
 
 
(5,171)
 
Increase (decrease) in operating liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
 
Accounts payable
 
 
42,806
 
 
34,989
 
 
2,105
 
 
637,320
 
Accrued expenses
 
 
112,319
 
 
(132,333)
 
 
41,572
 
 
542,541
 
Net cash used in operating activities
 
 
(3,902,626)
 
 
(4,386,049)
 
 
(5,391,442)
 
 
(40,925,016)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash flows from investing activities:
 
 
 
 
 
 
 
 
 
 
 
 
 
Patent costs
 
 
(527,761)
 
 
(446,035)
 
 
(684,399)
 
 
(6,752,473)
 
Purchase of equipment, furniture and fixtures
 
 
(1,281)
 
 
(4,461)
 
 
(2,026)
 
 
(185,947)
 
Net cash used in investing activities
 
 
(529,042)
 
 
(450,496)
 
 
(686,425)
 
 
(6,938,420)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash flows from financing activities:
 
 
 
 
 
 
 
 
 
 
 
 
 
Proceeds from grant
 
 
-
 
 
-
 
 
-
 
 
99,728
 
Proceeds (repayments) from line of credit
 
 
(12,026)
 
 
-
 
 
4,264
 
 
2,187,082
 
Proceeds from issuance of bridge notes
 
 
-
 
 
-
 
 
-
 
 
525,000
 
Proceeds from issuance of preferred stock and warrants, net
 
 
-
 
 
-
 
 
-
 
 
10,754,841
 
Redemption of convertible notes and warrants
 
 
-
 
 
-
 
 
-
 
 
(2,160,986)
 
Proceeds from issuance of convertible notes
 
 
-
 
 
-
 
 
-
 
 
9,340,000
 
Deferred financing costs
 
 
-
 
 
-
 
 
-
 
 
(651,781)
 
Proceeds from issuance of common stock
    and warrants, net and exercise of warrants
    and options
 
 
4,044,663
 
 
3,227,916
 
 
1,657,261
 
 
29,371,846
 
Net cash provided by financing activities
 
 
4,032,637
 
 
3,227,916
 
 
1,661,525
 
 
49,465,730
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net (decrease) increase in cash and cash equivalents
 
 
(399,031)
 
 
(1,608,629)
 
 
(4,416,342)
 
 
1,602,294
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents at beginning of period
 
 
2,001,325
 
 
3,609,954
 
 
8,026,296
 
 
-
 
Cash and cash equivalents at end of period
 
$
1,602,294
 
$
2,001,325
 
$
3,609,954
 
$
1,602,294
 
 
See Notes to Consolidated Financial Statements
 
 
F-12

 SENESCO TECHNOLOGIES, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
1.     Principal Business Activity:
 
The Company
 
Senesco Technologies, Inc. (“ST”) is a development stage biotechnology company whose mission is to develop novel approaches to treat programmed cell death diseases in humans (apoptosis), and to enhance the quality and productivity of fruits, flowers, vegetables and agronomic crops through the control of cell death in plants (senescence).
 
Senesco, Inc. (“SI” and together with SI, the “Company”), a New Jersey corporation, was incorporated on November 24, 1998 and is the successor entity to Senesco, L.L.C., a New Jersey limited liability company that was formed on June 25, 1998 but commenced operations on July 1, 1998.
 
Liquidity 
 
As shown in the accompanying consolidated financial statements, the Company has a history of losses with a deficit accumulated during the development stage from July 1, 1998 (inception) through June 30, 2013 of $74,425,835.  Additionally, the Company has generated minimal revenues by licensing its technology for certain crops to companies willing to share in its development costs. In addition, the Company’s technology may not be ready for commercialization for several years. The Company expects to continue to incur losses for the next several years because it anticipates that its expenditures on research and development, and administrative activities will significantly exceed its revenues during that period. The Company cannot predict when, if ever, it will become profitable.
 
As of June 30, 2013, the Company had cash and cash equivalents in the amount of $1,602,294, which consisted of checking accounts and money market funds.  The Company estimates that its cash and cash equivalents will cover its expenses through November 2013.  In order to provide the Company with the cash resources necessary to fund operations through at least June 30, 2014, the Company will continue its efforts to raise additional capital through a private or public equity placement in the near future.  To that goal, the Company has received approval from the Company’s stockholders for up to a 1:100 reverse stock split and the Company has filed a preliminary S-1 registration statement.
 
The Company will need additional capital and plans to raise additional capital through the placement of debt instruments or equity or both.  However, the Company may not be able to obtain adequate funds for its operations when needed or on acceptable terms.  If the Company is unable to raise additional funds, it will need to do one or more of the following:
 
⋅      delay, scale-back or eliminate some or all of its research and product development programs;
⋅      license third parties to develop and commercialize products or technologies that it would otherwise seek to develop and commercialize itself;
⋅      seek strategic alliances or business combinations;
⋅      attempt to sell the Company;
⋅      cease operations; or
⋅      declare bankruptcy.
 
Risks and Uncertainties
 
The Company operates in an industry that is subject to intense competition, government regulation and rapid technological change. The Company's operations are subject to significant risk and uncertainties including financial, operational, technological, regulatory and other risks, including the potential risk of business failure.
 
The Company’s limited capital resources and operations to date have been funded primarily with the proceeds from public and private equity and debt financings and milestone payments on license agreements. The Company does not have adequate cash on hand to cover its anticipated expenses for the next 12 months. If the Company fails to raise a significant amount of capital, it may need to significantly curtail operations, cease operations or seek federal bankruptcy protection in the near future. These conditions raise substantial doubt about its ability to continue as a going concern. Consequently, the audit report prepared by the Company’s independent public accounting firm relating to its financial statements for the year ended June 30, 2013 includes a going concern explanatory paragraph.
 
 
F-13

SENESCO TECHNOLOGIES, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
2.    Summary of Significant Accounting Policies:
 
Principles of consolidation
 
The accompanying consolidated financial statements include the accounts of Senesco Technologies, Inc. and its wholly owned subsidiary, Senesco, Inc. All significant intercompany accounts and transactions have been eliminated in consolidation.
  
Management Estimates and Judgments
 
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and judgments 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 revenue and expenses during the reporting period. The critical accounting policies that require management's most significant estimate and judgment are the assessment of the recoverability of intangible assets, the variables and method used to calculate stock-based compensation and warrant liabilities, and the valuation allowance on deferred tax assets. Actual results experienced by the Company may differ from management's estimates.
  
Cash and Cash Equivalents and Short-Term Investments
 
The Company considers all highly liquid instruments with an original maturity of 90 days or less at the time of purchase to be cash equivalents. Cash and cash equivalents consist of deposits that are readily convertible into cash.
  
Fair Value Measurements
 
ASC Topic 820, Fair Value Measurements, defines fair value, establishes a framework for measuring fair value and expands the related disclosure requirements. The guidance applies under other accounting pronouncements that require or permit fair value measurements. The statement indicates, among other things, that a fair value measurement assumes that the transaction to sell an asset or transfer a liability occurs in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market for the asset or liability. ASC 820 defines fair value based upon an exit price model.
 
The Company categorizes its financial instruments into a three-level fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). If the inputs used to measure fair value fall within different levels of the hierarchy, the category level is based on the lowest priority level input that is significant to the fair value measurement of the instrument. Financial assets recorded at fair value on the Company’s consolidated balance sheets are categorized as follows:
 
⋅            Level 1: Observable inputs such as quoted prices in active markets;
⋅            Level 2: Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and
⋅            Level 3: Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.
 
The fair value of the warrant liabilities is based on the Black-Scholes Merton and Modified Black-Scholes Merton option pricing models (“Black-Scholes model”) (Level 3). (See note 8).
 
The carrying value of prepaid research supplies and expenses, accounts payable, accrued expenses, and line of credit reported in the consolidated balance sheets equal or approximate fair value due to their short maturities.
 
 
 
F-14
 
SENESCO TECHNOLOGIES, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
Concentrations of Credit Risk
 
The Company maintains its cash primarily in investment accounts within one large financial institution. The Federal Deposit Insurance Corporation insures these balances up to $250,000 per bank. The Company has not experienced any losses on its bank deposits and believes these deposits do not expose the Company to any significant credit risk.
 
Prepaid Research Services and Supplies
 
Prepaid research services and supplies are carried at cost and are included in prepaid expenses and other current assets on the accompanying consolidated balance sheet. When such services are performed and supplies are used, the carrying value of the supplies are expensed in the period that they are performed or used for the development of proprietary applications and processes.
 
Equipment, Furniture and Fixtures, Net
 
Equipment, furniture and fixtures are recorded at cost. Depreciation is calculated on a straight-line basis over four years for equipment and seven years for furniture and fixtures. Expenditures for major renewals and improvements are capitalized, and expenditures for maintenance and repairs are charged to operations as incurred. (See note 4).
 
Intangibles, Net
 
The Company conducts research and development activities, the cost of which is expensed as incurred, in order to generate patents that can be licensed to third parties in exchange for license fees and royalties. Because the patents are the basis of the Company’s future revenue, the patent costs are capitalized.  The capitalized patent costs represent the outside legal fees incurred by the Company to submit and undertake all necessary efforts to have such patent applications issued as patents. 
 
The length of time that it takes for an initial patent application to be approved is generally between four to six years. However, due to the unique nature of each patent application, the actual length of time may vary. If a patent application is denied, the associated cost of that application would be written off. However, the Company has not had any patent applications denied as of June 30, 2013. Additionally, should a patent application become impaired during the application process, the Company would write down or write off the associated cost of that patent application. 
 
Issued patents and agricultural patent applications pending are being amortized over a period of 17 years from inception, the expected economic life of the patent. (See note 5).
 
Impairment of Long-lived Assets
 
The Company assesses the impairment in value of intangible assets whenever events or circumstances indicate that their carrying value may not be recoverable. Factors the Company considers important which could trigger an impairment review include the following:
 
⋅     significant negative industry trends;
⋅     significant underutilization of the assets;
⋅     significant changes in how the Company uses the assets or its plans for their use; and
⋅     changes in technology and the appearance of competing technology.
 
 
F-15
 
SENESCO TECHNOLOGIES, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
If a triggering event occurs and if the Company's review determines that the future discounted cash flows related to the groups, including these assets, will not be sufficient to recover their carrying value, the Company will reduce the carrying values of these assets down to its estimate of fair value and continue amortizing them over their remaining useful lives. To date, except for certain patents and patents pending that the Company abandoned during the fiscal years ended June 30, 2013, 2012 and 2011, the Company has not recorded any impairment of intangible assets. During the fiscal years ended June 30, 2013, 2012 and 2011, in order to reduce its cost of patent prosecution and maintenance, the Company reviewed its patent portfolio and identified several patents and patent applications that it believed it no longer needed to maintain without having a material impact on the patent portfolio. Accordingly, during the fiscal years ended June 30, 2013, 2012 and 2011, the Company wrote off patent costs in the net amount of $64,210, $321,137 and $1,588,087, respectively.
 
Net Loss per Common Share
 
Basic loss per share is computed by dividing net loss available to common stockholders by the weighted average number of shares of the Company’s common stock, par value $0.01 per share (the “Common Stock”) assumed to be outstanding during the period of computation. Diluted earnings per share is computed similar to basic earnings per share except that the denominator is increased to include the number of additional shares of Common Stock that would have been outstanding if the potential shares of Common Stock had been issued and if the additional shares of Common Stock were dilutive.
 
For all periods presented, basic and diluted loss per share are the same, as any additional Common Stock equivalents would be anti-dilutive. Potentially dilutive shares of Common Stock have been excluded from the calculation of the weighted average number of dilutive shares of Common Stock as follows:
 
 
 
June 30,
 
 
 
2013
 
2012
 
2011
 
Common Stock to be issued upon conversion of
    convertible preferred stock
 
26,666,667
 
17,611,538
 
16,300,000
 
Outstanding warrants
 
28,315,612
 
57,225,981
 
55,301,226
 
Outstanding options
 
23,174,770
 
15,647,742
 
11,348,314
 
 
 
 
 
 
 
 
 
Total potentially dilutive shares of Common Stock
 
78,157,049
 
90,485,261
 
82,949,540
 
  
Income Taxes
 
Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to the differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
 
The asset and liability method requires that deferred tax assets and liabilities be recorded without consideration as to their realizability. The deferred tax asset primarily includes net operating loss carryforwards. The portion of any deferred tax asset for which it is more likely than not that a tax benefit will not be realized must then be offset by recording a valuation allowance. A valuation allowance has been established against all of the deferred tax assets as it is more likely than not that these assets will not be realized given the history of operating losses.
 
 
F-16
 
SENESCO TECHNOLOGIES, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
While the Company believes that its tax positions are fully supportable, there is a risk that certain positions could be challenged successfully. In these instances, the Company looks to establish reserves. If the Company determined that a tax position is more likely than not of being sustained upon audit, based solely on the technical merits of the position, the Company would recognize the benefit. The Company measures the benefit by determining the amount that has a likelihood greater than 50% of being realized upon settlement. The Company presumes that all tax positions will be examined by a taxing authority with full knowledge of all relevant information.  The Company regularly monitors its tax positions, tax assets and tax liabilities. The Company reevaluates the technical merits of its tax positions and would recognize an uncertain tax benefit or derecognize a previously recorded tax benefit when (i) there is a completion of a tax audit, (ii) there is a change in applicable tax law including a tax case or legislative guidance, or (iii) there is an expiration of the statute of limitations. Significant judgment is required in accounting for tax reserves. As of June 30, 2013, the Company determined that it had no liability for uncertain income taxes. The Company’s policy is to recognize potential accrued interest and penalties related to the liability for uncertain tax benefits, if applicable, in income tax expense. The Company’s tax returns for periods prior to the fiscal year ended June 30, 2010 are no longer open for examination. (See note 11).
 
Revenue Recognition
 
The Company has received certain nonrefundable upfront fees in exchange for the transfer of its technology to licensees. Upon delivery of the technology, the Company had no further obligations to the licensee with respect to the basic technology transferred and, accordingly, recognized revenue at that time. The Company has and may continue to receive additional payments from its licensees in the event such licensees achieve certain development or commercialization milestones in their particular field of use. Milestone payments, which are contingent upon the achievement of certain research goals, are recognized as revenue when the milestones, as defined in the particular agreement, are achieved.
 
Stock-based Payments
 
The Company accounts for stock-based compensation under the provisions of FASB ASC Topic 718, Compensation—Stock Compensation  (“ASC 718”), which requires the measurement and recognition of compensation expense for all stock-based awards made to employees and directors based on estimated fair values on the grant date. The Company estimates the fair value of stock-based awards on the date of grant using the Black-Scholes model. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods using the straight-line method. The Company estimates forfeitures at the time of grant and revises its estimate in subsequent periods if actual forfeitures differ from those estimates.
 
The Company accounts for stock-based compensation awards to non-employees in accordance with FASB ASC Topic 505-50, Equity-Based Payments to Non-Employees  (“ASC 505-50”). Under ASC 505-50, the Company determines the fair value of the warrants or stock-based compensation awards granted as either the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable.
 
All issuances of stock options or other equity instruments to non-employees as consideration for goods or services received by the Company are accounted for based on the fair value of the equity instruments issued. Any stock options issued to non-employees are recorded as an expense and additional paid-in capital in stockholders’ equity over the applicable service periods using variable accounting through the vesting dates based on the fair value of the options at the end of each period.
 
The following table sets forth the total stock-based compensation expense and issuance of Common Stock for services included in the consolidated statements of operations for the fiscal years ended June 30, 2013, 2012 and 2011 and from inception to date.
 
 
 
Fiscal Year Ended June 30,
 
Cummulative
 
 
 
2013
 
2012
 
2011
 
From Inception
 
General and administrative
 
$
639,828
 
$
721,197
 
$
709,207
 
$
11,234,942
 
Research and development
 
 
84,865
 
 
44,807
 
 
41,159
 
 
1,649,504
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total
 
$
724,693
 
$
766,004
 
$
750,366
 
$
12,884,446
 
 
 
 
F-17
 
SENESCO TECHNOLOGIES, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
The Company estimated the fair value of each option grant throughout the year using the Black-Scholes option-pricing model using the following assumptions:
 
 
 
Fiscal Year Ended June 30,
 
 
 
2013
 
2012
 
2011
 
 
 
 
 
 
 
 
 
Risk-free interest rate (1)
 
0.3-0.8
%
0.4-1.9
%
1.3-2.9
%
Expected volatility
 
67-102
%
78-105
%
103-104
%
Dividend yield
 
None
 
None
 
None
 
Expected life (2)
 
2.5 - 10.0
 
2.5 - 10.0
 
5.0 - 10.0
 
  
(1)  Represents the interest rate on a U.S. Treasury security with a maturity date corresponding to that of the option term. 
(2)  Expected life for employee based stock options was estimated using the “simplified” method, as allowed under the provisions of the Securities and Exchange Commission Staff Accounting Bulletin No. 110.
  
The economic values of the options will depend on the future price of the Company's Common Stock which cannot be forecast with reasonable accuracy.
 
Research and Development
 
Research and development costs are expensed as incurred.
 
Recent Accounting Pronouncements Applicable to the Company
 
The Company does not believe that the following recent accounting pronouncements or any other recently issued, but not yet effective accounting standards will have a material effect on the Company’s consolidated financial position, results of operations, or cash flows.
 
Effective July 1, 2012, the Company adopted Financial Accounting Standards Board’s (“FASB”) ASU No. 2011-05, Comprehensive Income (Topic 220): Presentation of Comprehensive Income and ASU No. 2011-12, Comprehensive Income (Topic 220): Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in ASU No. 2011-5 . In these updates, an entity has the option to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. In both choices, an entity is required to present each component of net income along with total net income, each component of other comprehensive income along with a total for other comprehensive income, and a total amount for comprehensive income. ASU No. 2011-05 eliminates the option to present the components of other comprehensive income as part of the statement of changes in stockholders’ equity. The amendments in ASU No. 2011-05 do not change the items that must be reported in other comprehensive income or when an item of other comprehensive income must be reclassified to net income. The adoption of ASU Nos. 2011-05 and 2011-12 did not have a material impact on the Company’s consolidated financial statements. The Company has presented comprehensive loss in the accompanying consolidated statements of operations and comprehensive loss.
 
In February 2013, the FASB issued ASU No. 2013-02, Other Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income. ASU No. 2013-02 does not change the current requirements for reporting net income or other comprehensive income in financial statements, however, it does require an entity to report the effect of significant reclassifications out of accumulated other comprehensive income on the respective line items in net income if the amounts are required to be reclassified in their entirety to net income. For other amounts that are not required to be reclassified in their entirety to net income in the same reporting period, an entity is required to cross-reference to other disclosures that provide additional detail about those amounts. This guidance will be effective for reporting periods beginning after December 15, 2012, which will be the Company’s fiscal year 2014 (or July 1, 2013). The Company does not expect the adoption of this guidance to have a material impact on its consolidated financial statements.
 
Reclassifications
 
Certain accounts in the prior year financial statements have been reclassified, for comparative purposes, in order to conform with the presentation in the current year financial statements. These reclassifications have no effect on the previously reported net loss.
 
 
F-18

SENESCO TECHNOLOGIES, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
3.    Fair Value Measurements:
 
The following tables provide the assets and liabilities carried at fair value measured on a recurring basis as of June 30, 2013 and 2012:
 
 
 
Carrying
 
Fair Value Measurement at June 30, 2013
 
 
 
Value
 
Level 1
 
Level 2
 
Level 3
 
Assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
$
1,602,294
 
$
1,602,294
 
$
-
 
$
-
 
 
 
 
Carrying
 
Fair Value Measurement at June 30, 2012
 
 
 
Value
 
Level 1
 
Level 2
 
Level 3
 
Assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
$
2,001,325
 
$
2,001,325
 
$
-
 
$
-
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
 
Warrant liabilities
 
$
238,796
 
$
-
 
$
-
 
$
238,796
 
 
The following table summarizes the changes in fair value of the Company’s Level 3 financial instruments:
 
 
 
Fiscal Year ended June 30,
 
 
 
2013
 
2012
 
Beginning Balance
 
$
238,796
 
$
711,259
 
Issuance of common stock warrants
 
 
459,000
 
 
-
 
Change in fair value of warrant liabilities, net
 
 
(371,591)
 
 
(472,463)
 
Reclassification to equity due to exchange of
    common stock warrants into common
    stock
 
 
(326,205)
 
 
-
 
Ending Balance
 
$
-
 
$
238,796
 
 
 
F-19

SENESCO TECHNOLOGIES, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
4.     Equipment, Furniture and Fixtures:
 
Equipment, Furniture and Fixtures consist of the following:
 
 
 
June 30,
 
 
 
2013
 
2012
 
Equipment
 
$
32,334
 
$
31,053
 
Furniture and fixtures
 
 
67,674
 
 
67,674
 
 
 
 
100,008
 
 
98,727
 
Less—Accumulated depreciation
 
 
(95,453)
 
 
(92,870)
 
 
 
$
4,555
 
$
5,857
 
 
Depreciation expense aggregated $2,583, $2,386, $2,798 and $181,392 for the fiscal years ended June 30, 2013, 2012, 2011, and cumulatively from inception through June 30, 2013, respectively.
 

5.    Intangible assets:
 
Intangible assets consist of the following: 
 
 
 
June 30,
 
 
 
2013
 
2012
 
Patents approved
 
$
2,665,436
 
$
2,209,286
 
Patents pending
 
 
1,919,360
 
 
1,912,526
 
 
 
 
4,584,796
 
 
4,121,812
 
Accumulated amortization
 
 
(1,018,299)
 
 
(727,820)
 
 
 
$
3,566,497
 
$
3,393,992
 
 
During the fiscal years ended June 30, 2013 and 2012, the Company incurred $527,761 and $446,035 of legal fees related to the prosecution of patent costs.
 
During the fiscal years ended June 30, 2013 and 2012, the Company abandoned certain patents and patents pending. Accordingly, intangible assets were reduced by the net carrying value of those patents and patents pending in the amount of $64,210 and $321,137, respectively.
 
Amortization expense amounted to $291,046, $255,637, $140,476 and $1,212,542 for the fiscal years ended June 30, 2013, 2012, 2011, and cumulatively from inception through June 30, 2013, respectively.
 
Estimated amortization expense for the next five fiscal years is as follows:
 
Fiscal Year ended June 30,
 
 
 
 
2014
 
$
300,000
 
2015
 
 
300,000
 
2016
 
 
300,000
 
2017
 
 
300,000
 
2018
 
 
300,000
 
 
 
F-20

SENESCO TECHNOLOGIES, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
6.    Accrued Expenses:
 
Accrued expenses were comprised of the following:
 
 
 
June 30,
 
 
 
2013
 
2012
 
Accrued research
 
$
210,696
 
$
113,264
 
Accrued dividends payable
 
 
20,000
 
 
114,474
 
Accrued other
 
 
156,844
 
 
141,957
 
 
 
$
387,540
 
$
369,695
 
 

7.    Line of Credit:
 
On February 17, 2010, the Company entered into a credit agreement with JMP Securities LLC. The agreement provides the Company with, subject to certain restrictions, including the existence of suitable collateral, up to a $3.0 million line of credit upon which the Company may draw at any time (the “Line of Credit”). Any draws upon the Line of Credit accrue interest at an annual rate of (i) the broker rate in effect at the interest date (which was 3.75% at June 30, 2013), plus (ii) 2.0%. There are no other conditions or fees associated with the Line of Credit. The Line of Credit is not secured by any assets of the Company, but it is secured by certain assets of one of a member of the Company’s Board of Directors, Harlan W. Waksal, M.D., which is currently held by JMP Securities. The balance outstanding as of June 30, 2013 and 2012 was $2,187,082 and $2,199,108, respectively. In April 2011, we were required to enter into a new demand note with the clearing agent for JMP Securities in connection with the Line of Credit. 
 
Total interest expense recorded under the Line of Credit for the fiscal years ended June 30, 2013, 2012 and 2011 amounted to $122,453, $134,549 and $110,649, respectively.

8.    Warrant Liabilities:
 
The warrant liabilities represent the fair value of Common Stock purchase warrants, which have exercise price reset features and cash settlement features.
 
The fair value of the warrants that have exercise price reset features is estimated using an adjusted Black-Scholes model. The Company computes valuations, each quarter, using the Black-Scholes model for such warrants to account for the various possibilities that could occur due to changes in the inputs to the Black-Scholes model as a result of contractually-obligated changes. The Company effectively weights each calculation based on the likelihood of occurrence to determine the value of the derivative at the reporting date. The Company has an unobservable input for the estimation of the likelihood of a reset occurring, which was estimated to be 75% made up of various reset amounts with probabilities ranging between 10% and 25% per occurrence. These estimates of the likelihood of completing an equity raise that would meet the criteria to trigger the reset provisions are based on numerous factors, including the remaining term of the financial instruments and the Company’s overall financial condition. As of June 30, 2013, all warrants that had an exercise price reset feature had been exchanged for Common Stock or had expired.  
 
The fair value of the warrants that have cash settlement features were estimated using a probability –weighted Black-Scholes model.  The unobservable input used by the Company on certain warrants was the estimation of the likelihood of a fundamental transaction, as defined in the related agreements, which was estimated to be 50% at June 30, 2013 and 15% at June 30, 2012 and 2011.
 
Changes in the unobservable input values would have likely cause material changes in the fair value of the Company’s Level 3 financial instruments. The significant unobservable input used in the fair value measurement was the estimation of the likelihood of the occurrence of a change to the strike price of the warrants or the occurrence of a fundamental transaction. A significant increase (decrease) in the this likelihood would have resulted in a higher (lower) fair value measurement.
 
 
F-21
 
SENESCO TECHNOLOGIES, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
During the year ended June 30, 2013, the Company issued 36,902,192 shares of Common Stock in exchange for 39,687,500 warrants that were included in the computation of warrant liabilities. In connection with the exchanges, the Company compared the value of the Common Stock issued with the adjusted Black-Scholes value of the warrants exchanged. The difference in these values resulted in a loss on the settlement of warrant liabilities in the aggregate amount of $1,724,546. Additionally, the value of the warrants on the dates of the exchanges, in the aggregate amount of $326,205, was reclassified from warrant liabilities to additional paid in capital.
 
During the fiscal year ended June 30, 2011, the holders of an aggregate of 22,641,665 warrants amended the terms of their warrants. As of the dates of the amendments to the warrants, the Black-Scholes value in the amount of $1,173,296 was reclassified from warrant liabilities to equity with the change in fair value from June 30, 2010 through the dates of the amendments being recorded in the consolidated statement of operations.
 
The Company also recorded a charge of $115,869 during the fiscal year ended June 30, 2011, as a result of the amendment to certain of the warrants that had an exercise price reset feature, whereby the exercise price of $0.50, subject to future adjustments, was reset to $0.32 and would no longer be subject to future adjustments and accordingly are no longer deemed to be liabilities. The charge of $115,869 represents the difference in the Black-Scholes value of the warrants immediately prior to the amendment and the Black-Scholes value of the warrants immediately after the amendment.
 
During the fiscal years ended June 30, 2013, 2012 and 2011, the Company revalued all of the remaining warrant liabilities, using the adjusted Black-Scholes and probability-weighted Black-Scholes models. A gain on the change in fair value of the warrant liabilities in the amount of $371,591, $472,463 and $609,239 was recorded in the Consolidated Statement of Operations for the fiscal years ended June 30, 2013, 2012 and 2011, respectively. 
 
At June 30, 2013 and 2012, there were an aggregate of 8,767,188 and 21,307,814 warrants, respectively, included in the fair value of the warrant liabilities. However, the value of the warrants outstanding at June 30, 2013 was de minimis.
 
 
F-22
 
SENESCO TECHNOLOGIES, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
The assumptions used to value the warrants were as follows:
 
 
 
 
June 30, 2013
 
 
June 30, 2012
 
Warrants issued on December 20, 2007
 
 
 
 
 
 
 
 
Estimated life in years
 
 
-
 
 
 
0.50
 
Risk-free interest rate (1)
 
 
-
 
 
 
0.15
%
Volatility
 
 
-
 
 
 
75
%
Dividend paid
 
 
-
 
 
 
None
 
Range of estimated strike prices
 
 
-
 
 
$
0.33-$0.36
 
Range of estimated probabilities
 
 
-
 
 
 
10% - 50
%
 
 
 
 
 
 
 
 
 
Warrants issued on June 30, 2008
 
 
 
 
 
 
 
 
Estimated life in years
 
 
-
 
 
 
1.00
 
Risk-free interest rate (1)
 
 
-
 
 
 
0.21
%
Volatility
 
 
-
 
 
 
75
%
Dividend paid
 
 
-
 
 
 
None
 
Range of estimated strike prices
 
 
-
 
 
$
0.33-$0.36
 
Range of estimated probabilities
 
 
-
 
 
 
10% - 50
%
 
 
 
 
 
 
 
 
 
Warrants issued on April 1, 2010
 
 
 
 
 
 
 
 
Estimated life in years
 
 
1.75
 
 
 
2.75
 
Risk-free interest rate (1)
 
 
0.36
%
 
 
0.39
%
Volatility
 
 
72
%
 
 
78
%
Dividend paid
 
 
None
 
 
 
None
 
Estimated probability of a fundamental transaction
 
 
50
%
 
 
15
%
 
(1)  Represents the interest rate on a U.S. Treasury security with a maturity date corresponding to that of the warrant term.

9.  Stockholders’ Equity:
 
Preferred Stock
 
On April 1, 2010, the Company sold 10,297 shares of 10% Series A convertible preferred stock to non-affiliated purchasers for $10,297,000. On June 2, 2010, the Company sold 1,200 shares of 10% Series B convertible preferred stock (together with the Series A preferred stock, the “Convertible Preferred Stock”) to affiliated purchasers for $1,200,000. After deducting cash closing costs of $742,159, the Company received aggregate net cash proceeds from the sale of the Convertible Preferred Stock in the amount of $10,754,841.
 
Pursuant to the terms of the Convertible Preferred Stock, the Convertible Preferred Stock was initially convertible into approximately 35,928,125 shares of the Company’s Common Stock, subject to adjustment. In addition, the holders of the Convertible Preferred Stock received immediately exercisable warrants to purchase up to approximately 35,928,125 shares of the Company’s Common Stock.
 
Each share of Convertible Preferred Stock has a stated value of $1,000 (the “Stated Value”). Each holder of shares of Convertible Preferred Stock is entitled to receive semi-annual dividends at the rate of 10% per annum of the Stated Value for each share of Convertible Preferred Stock held by such holder. Except in limited circumstances, the Company can elect to pay the dividends in cash or shares of Common Stock. If the dividends are paid in shares of Common Stock, such shares will be priced at the lower of 90% of the average volume weighted-average price for the 20 trading days immediately preceding the payment date or $0.224. The dividends were subject to a 30% make whole provision.   At June 30, 2013 the make whole provision had been satisfied.
 
 
F-23
 
SENESCO TECHNOLOGIES, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
The shares of Convertible Preferred Stock were convertible into shares of Common Stock at an initial conversion price of $0.32 per share and are convertible at any time. The conversion price is subject to adjustment if the Company sells or grants any Common Stock or Common Stock equivalents, subject to certain exclusions, at an effective price per share that is lower than the conversion price of the Convertible Preferred Stock. After 18 months from the date of issuance of the Convertible Preferred Stock, if the Company’s Common Stock trades above $0.80 for 20 out of 30 consecutive trading days, the Convertible Preferred Stock will no longer be subject to adjustment.    
 
On December 27, 2010, in connection with the Company’s ATM facility, discussed below, the conversion price on the then outstanding 5,325 shares of Convertible Preferred Stock was adjusted from $0.32 to $0.30, resulting in an additional 1,109,375 shares of Common Stock that would be issued upon conversion of the then outstanding Convertible Preferred Stock.  In connection with the adjustment of the conversion price, due to a beneficial conversion feature, an additional dividend in the amount of $360,733 was recorded as an increase to both additional paid-in capital and accumulated deficit.
 
On July 18, 2011, in connection with the Company’s ATM facility, the conversion price on the then outstanding 4,860 shares of Convertible Preferred Stock was adjusted from $0.30 to $0.27, resulting in an additional 1,800,000 shares of Common Stock that would be issued upon conversion of the then outstanding Convertible Preferred Stock. In connection with the adjustments to the conversion price, due to a beneficial conversion feature, an additional dividend in the amount of $778,000 was recorded as an increase to both additional paid-in capital and accumulated deficit.
 
On January 6, 2012, in connection with the Company’s placement of Common Stock and warrants, the conversion price on the then outstanding 4,845 shares of Convertible Preferred Stock was adjusted from $0.27 to $0.26, resulting in an additional 690,171 shares of Common Stock that would be issued upon conversion of the then outstanding Convertible Preferred Stock. In connection with the adjustments to the conversion price, due to a beneficial conversion feature, an additional dividend in the amount of $298,355 was recorded as an increase to both additional paid-in capital and accumulated deficit.
 
On January 4, 2013, in connection with the Company’s placement of Common Stock and warrants, the conversion price on the then outstanding 995 shares of Convertible Preferred Stock was adjusted from $0.26 to $0.10, resulting in an additional 6,123,077 shares of Common Stock that would be issued upon conversion of the then outstanding Convertible Preferred Stock. In connection with the adjustments to the conversion price, due to a beneficial conversion feature, an additional dividend in the amount of $125,260 was recorded as an increase to both additional paid-in capital and accumulated deficit.
 
On May 9, 2013, in connection with the Company’s placement of Common Stock, the conversion price on the then outstanding 965 shares of Convertible Preferred Stock was adjusted from $0.10 to $0.03, resulting in an additional 23,216,667 shares of Common Stock that would be issued upon conversion of the then outstanding Convertible Preferred Stock. As a result of the resets to the conversion price, each share of Preferred Stock was convertible into 33,333 shares of Common Stock (a conversion price of $0.03).
 
On August 8, 2012, in connection with a warrant exchange, 2,384 shares of Series A convertible preferred stock were converted into 9,169,231 shares of Common Stock. Additionally, certain directors of the Company converted their 1,200 shares of Series B convertible preferred stock into 4,615,385 of Common Stock. 
 
On June 24, 2013, in connection with an exchange offer, 135 shares of Series A convertible preferred stock were converted into 5,625,000 shares of Common Stock. Subsequent to June 24, 2013, there were 800 shares of Series A convertible preferred stock outstanding and no shares of Series B convertible preferred stock outstanding.
 
 
F-24
 
SENESCO TECHNOLOGIES, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  
During the fiscal year ended June 30, 2011, 4,345 shares of Convertible Preferred Stock were converted into 13,668,750 shares of Common Stock. During the fiscal year ended June 30, 2011, the Company issued an additional 7,912,266 shares of Common Stock for the payment of dividends in the amount of $2,277,567. Total dividends payable on the outstanding 4,890 shares of Convertible Preferred Stock at June 30, 2011 amounted to $122,252.
 
During the fiscal year ended June 30, 2012, 311 shares of Convertible Preferred Stock were converted into 1,178,634 shares of Common Stock. During the fiscal year ended June 30, 2012, the Company issued an additional 2,321,877 shares of Common Stock for the payment of dividends in the amount of $557,150. Total dividends payable on the outstanding 4,579 shares of Convertible Preferred Stock at June 30, 2012 amounted to $114,474.
 
During the fiscal year ended June 30, 2013, 3,779 shares of Convertible Preferred Stock were converted into 20,284,615 shares of Common Stock. Additionally, in connection with a convertible preferred stock conversion agreement entered into on June 24, 2013, an additional 1,125,000 shares of Common Stock were issued to the holders of 135 shares of Convertible Preferred Stock. During the fiscal year ended June 30, 2013, the Company issued an additional 3,719,635 shares of Common Stock for the payment of dividends in the amount of $591,321. Total dividends payable on the outstanding 800 shares of Convertible Preferred Stock at June 30, 2012 amounted to $20,000.
 
Warrants
 
Pursuant to the purchase agreements, the Company delivered a Warrant to purchase shares of Common Stock to the Series A Non-Affiliate Investors and a Warrant to purchase shares of Common Stock to the Series B Affiliate Investors (the “Warrants”). Each Warrant has an initial exercise price of $0.35 per share of Common Stock. The Warrants are immediately exercisable and have a five year term. The Warrants issued to the Series A Non-Affiliate Investors also contain a provision which limits the holder’s beneficial ownership to a maximum of 4.99% (which percentage may be increased to 9.99% upon 60 days notice to the Company).
 
On August 8, 2012, pursuant to a warrant exchange agreement, 17,262,500 warrants were exchanged for 6,902,192 shares of Common Stock.
 
As discussed in Note 8 above, the Company is required to record the warrants as liabilities. As a result, the Company must allocate the proceeds to the warrants based upon their fair value with the remainder of the proceeds allocated to the Preferred Stock. The Company allocated the gross proceeds of the offering as follows: 
 
 
 
Series A
 
Series B
 
 
 
 
 
 
Convertible
 
Convertible
 
 
 
 
 
 
Preferred Stock
 
Preferred Stock
 
Total
 
Total gross proceeds
 
$
10,297,000
 
$
1,200,000
 
$
11,497,000
 
Allocated to warrants
 
 
(1,530,070)
 
 
(228,938)
 
 
(1,759,008)
 
Allocated to Convertible Preferred Stock
 
$
8,766,930
 
$
971,062
 
$
9,737,992
 
 
Due to the allocation of the proceeds to the fair value of the warrant at the issuance dates, the convertible feature of the Preferred Stock was below market value. Such feature, as it specifically relates to the convertible feature of the Preferred Stock, is characterized as a “Beneficial Conversion Feature” (“BCF”). Pursuant to existing accounting standards, FASB ASC topic 470.20 – Debt with Conversion and Other Options”, the estimated relative fair value of the BCF was $15,068,031. The value of the BCF which amounted to $5,330,039 was determined utilizing an intrinsic value method with the fair value of the warrants determined using the Black-Scholes model at the date of issuance.
 
 
F-25
 
SENESCO TECHNOLOGIES, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
Placement Agent Warrants
 
On April 1, 2010, in connection with the issuance of the Series A convertible preferred stock, the Company issued warrants to purchase 1,079,688 shares of the Company’s Common Stock as partial compensation for services related to the raising of the capital. Each warrant has an initial exercise price of $0.35 per share of Common Stock. The warrants are immediately exercisable and have a five year term. In accordance with ASC 480-10, Distinguishing Liabilities from Equity, the Company determined that such warrants are to be accounted for as a liability. Accordingly, using the Black-Scholes model, the Company recorded a warrant liability in the amount of $51,339 related to the warrants on the issuance date. The Company recorded a charge to additional paid in capital as an additional cost of capital.
 
Common Stock
 
On September 22, 2009, the stockholders approved a proposal to increase the authorized Common Stock of the Company from 100,000,000 shares to 120,000,000 shares. On May 25, 2010, the stockholders approved a proposal to increase the authorized Common Stock of the Company from 120,000,000 shares to 250,000,000 shares. On December 14, 2011, the stockholders approved a proposal to increase the authorized Common Stock of the Company from 250,000,000 shares to 350,000,000 shares. On March 25, 2013, the stockholders approved a proposal to increase the authorized Common Stock of the Company from 350,000,000 shares to 500,000,000 shares.
 
At the Market Sales Agreement
 
On December 22, 2010, the Company entered into an At Market Issuance Sales Agreement (the “ATM”) under which the Company, from time to time, may issue and sell shares of its Common Stock, with an aggregate offering price of up to $5,500,000. Such Common Stock will be offered and sold pursuant to a prospectus supplement filed with the Securities and Exchange Commission in connection with the Company’s shelf registration statement on Form S-3 (File No. 333-170140), which became effective on November 9, 2010. 
 
During the fiscal year ended June 30, 2013, the Company issued 353,895 shares of Common Stock under the ATM for gross proceeds in the amount of $100,570. 
 
During the fiscal year ended June 30, 2012, the Company issued 1,834,557 shares of Common Stock under the ATM for gross proceeds in the amount of $509,670. 
 
During the fiscal year ended June 30, 2011, the Company issued 5,911,457 shares of Common Stock under the ATM for gross proceeds in the amount of $1,853,421.
 
From the inception of the ATM through June 30, 2013, the Company has issued 8,099,909 shares of Common Stock under the ATM for gross proceeds in the amount of $2,463,661.
 
In November 2012, the Company was delisted from the NYSE MKT exchange and is now quoted on the OTCQB. Since the Company is no longer listed on the NYSE MKT exchange, the Company is no longer be able to issue and sell shares of its Common Stock under the ATM.
 
Public Placements of Common Stock and Warrants
 
January 6, 2012 and March 1, 2012 Placement
 
On January 6, 2012 and March 1, 2012, the Company entered into securities purchase agreements to raise an aggregate of $2,862,012 in gross proceeds through the sale of an aggregate of 11,007,738 shares of its Common Stock. The investors, excluding officers and directors of Senesco or funds affiliated with such officers or directors participating in the offering, also received 50% warrant coverage at an exercise price of $0.286 per share. The Common Stock and 50% warrant coverage (the “Unit”) was priced at $0.26 per Unit. 
 
 
F-26
 
SENESCO TECHNOLOGIES, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
January 4, 2013 Placement
 
On January 4, 2013, the Company entered into definitive agreements to issue 30,000,000 shares of Common Stock (the “Shares”) and five year warrants (the “Warrants”) to purchase 30,000,000 shares of Common Stock with an exercise price of $0.12 per share (the shares underlying the Warrants, the “Warrant Shares”, together with the Shares and Warrants, the “Securities”) (the “Offering”) for gross proceeds of $3,000,000, before deducting estimated offering expenses, in a registered direct offering. The Warrants are exercisable from the date that is one year and one day following the issuance date until the fifth anniversary of the issuance date and contain standard anti-dilution provisions and adjustment provisions in the event of stock splits, combinations, dividends, distributions or reorganizations. Additionally, the Warrants contain exercise price reset features for a period of eighteen months from the date of issuance and cash settlement features in the event of a fundamental transaction. Due to the cash settlement features in the Warrants, $459,000 of the net proceeds was recorded as a warrant liability. Each Share, together with the Warrant, was sold at a price of $0.10 per unit. In April and June 2013, all the warrants were exchanged for common stock. (See Note 8) Therefore, these warrants are not included in the calculation of the warrant liability at June 30, 2013. 
 
The net offering proceeds to the Company from the sale of the Common Stock and Warrants, after deducting the offering expenses payable by the Company of $151,202, were $2,848,798. Six hundred thousand dollars of the net proceeds of the offering are being used for investor relations purposes and the remainder was used for working capital, research and development and general corporate purposes.
 
The Offering closed on January 8, 2013. 
 
May 9, 2013 Placement
 
On May 9, 2013, the Company entered into definitive agreements to issue 41,833,335 shares of Common Stock (the “Shares”) (the “Offering”) at an offering price of $0.03 per share for gross proceeds of $1,255,000, before deducting estimated offering expenses, in a registered direct offering. Additionally, the Shares contain exercise price reset features for a period of one year from the date of issuance.
 
The net offering proceeds to the Company from the sale of the Common Stock, after deducting the offering expenses payable by the Company of $153,318, were $1,101,682. The net proceeds of the offering are being used for working capital, research and development and general corporate purposes.
 
The Offering closed on May 10, 2013.

10.  Stock-Based Compensation
 
In December 2008, the Company adopted the 2008 Incentive Compensation Plan (the "2008 Plan"), which provides for the grant of stock options, stock grants and stock purchase rights to certain designated employees and certain other persons performing services for the Company, as designated by the board of directors. Pursuant to the 2008 Plan, an aggregate of 5,137,200 shares of Common Stock had been reserved for issuance. On May 25, 2010, the Company increased the aggregate shares of Common Stock reserved for issuance under the 2008 Plan to 11,137,200. On March 11, 2011, the Company increased the aggregate shares of Common Stock reserved for issuance under the 2008 Plan to 23,005,003. Additionally, on January 1 of each calendar year beginning with the calendar year 2012 and ending with the calendar year 2015, the share reserve will automatically increase so that the total number of shares available for issuance under the 2008 Plan is 15% of the fully diluted shares as of the date of such increase, but in no event will such annual increase exceed 7,000,000 shares per year. On January 1, 2012, the increase in Common Stock reserved for issuance under the 2008 Plan was 2,210,257. On January 1, 2013, the increase in Common Stock reserved for issuance under the 2008 Plan was 865,763. The 2008 Plan is intended to serve as a successor to the Amended and Restated 1998 Stock Incentive Plan (the “1998 Plan”), which terminated in December 2008. On February 19, 2009, the Company filed a registration statement with the SEC to register all of the 6,137,200 shares of Common Stock underlying the 2008 Plan. On June 8, 2010, the Company filed with the SEC an amendment to the registration statement to register the additional 5,000,000 shares of Common Stock underlying the 2008 Plan. On January 4, 2012, the Company filed with the SEC an amendment to the registration statement to register the additional 2,210,257 shares of Common Stock underlying the 2008 Plan. On March 8, 2013, the Company filed with the SEC an amendment to the registration statement to register the additional 865,763 shares of Common Stock underlying the 2008 Plan. The registration statement and amendments were deemed effective upon filing.
 
 
F-27
 
SENESCO TECHNOLOGIES, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
The terms and vesting schedules for share-based awards vary by type of grant and the employment status of the grantee. Generally, the awards vest based upon time-based conditions or achievement of specified goals and milestones.
 
On November 16, 2012, the Company issued 3,705,000 options that are subject to vesting first based upon specified goals and milestones and then based upon time-based conditions. On the issuance date, such options had an aggregate Black-Scholes value of $489,060. As of June 30, 2013, the Company reviewed the specified goals and milestones on an employee by employee basis. Based upon the review, the Company has estimated that it was probable that, on average, the employees would achieve 55% of the target goals. As a result, the Company is recognizing 55% of the aggregate fair value of the options ratably over the time-based vesting period.
 
 
F-28
 
SENESCO TECHNOLOGIES, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
Stock option activity under the 2008 Plan and 1998 Plan is summarized as follows:
 
 
 
 
 
Weighted
 
 
 
 
 
Aggregate
 
Average
 
Exercise Price
 
 
 
Number
 
Exercise Price
 
Range
 
Outstanding, July 31, 2010
 
 
7,269,172
 
$
1.13
 
$
0.29 – 4.00
 
Granted
 
 
4,579,142
 
 
0.26
 
 
0.26 – 0.32
 
Exercised
 
 
-
 
 
-
 
 
-
 
Cancelled
 
 
-
 
 
-
 
 
-
 
Expired
 
 
(500,000)
 
 
1.14
 
 
0.99 – 2.25
 
Outstanding, June 30, 2011
 
 
11,348,314
 
 
0.78
 
 
0.26 – 4.00
 
Granted
 
 
5,274,428
 
 
0.23
 
 
0.20 – 0.26
 
Exercised
 
 
-
 
 
-
 
 
-
 
Cancelled
 
 
-
 
 
-
 
 
-
 
Expired
 
 
(975,000)
 
 
2.32
 
 
1.50 – 4.00
 
Outstanding, June 30, 2012
 
 
15,647,742
 
 
0.50
 
 
0.20 – 3.45
 
Granted
 
 
8,966,978
 
 
0.14
 
 
0.04 - 0.18
 
Exercised
 
 
-
 
 
-
 
 
-
 
Cancelled
 
 
(1,152,450)
 
 
0.23
 
 
0.23
 
Expired
 
 
(287,500)
 
 
2.02
 
 
1.09 - 2.35
 
Outstanding, June 30, 2013
 
 
23,174,770
 
$
0.35
 
$
0.04 - 3.45
 
 
 
 
 
 
 
 
 
 
 
 
Options exercisable at June 30, 2013
 
 
16,612,179
 
$
0.41
 
 
 
 
Options exercisable at June 30, 2012
 
 
10,101,055
 
$
0.62
 
 
 
 
Options exercisable at June 30, 2011
 
 
7,274,422
 
$
1.04
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average fair value of options granted during the fiscal year ended June 30, 2013
 
$
0.11
 
 
 
 
 
 
 
Weighted average fair value of options granted during the fiscal year ended June 30, 2012
 
$
0.17
 
 
 
 
 
 
 
Weighted average fair value of options granted during the fiscal year ended June 30, 2011
 
$
0.33
 
 
 
 
 
 
 
 
Non-vested stock option activity under the Plan is summarized as follows:
 
 
 
 
 
 
Weighted-average
 
 
 
Number of
 
Grant-Date
 
 
 
Options
 
Fair Value
 
Non-vested stock options at July 1, 2012
 
 
5,546,687
 
$
0.25
 
Granted
 
 
8,966,978
 
 
0.11
 
Vested
 
 
(6,798,624)
 
 
0.13
 
Forfeited
 
 
(1,152,450)
 
 
0.18
 
Non-vested stock options at June 30, 2013
 
 
6,562,591
 
$
0.16
 
 
As of June 30, 2013, the aggregate intrinsic value of stock options outstanding was $0, with a weighted-average remaining term of 7.6 years. The aggregate intrinsic value of stock options exercisable at that same date was $0, with a weighted-average remaining term of 7.1 years. As of June 30, 2013, the Company has 4,630,353 shares available for future stock option grants.
 
 
F-29
 
SENESCO TECHNOLOGIES, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
As of June 30, 2013, total estimated compensation expense not yet recognized related to stock option grants amounted to $739,008, which will be recognized over the next 42 months.
 
Warrants
 
Total outstanding warrants at June 30, 2013 were as follows:
 
Strike Price
 
Warrants
 
$
3.45
 
 
15,000
 
$
3.15
 
 
20,000
 
$
1.40
 
 
5,000
 
$
1.08
 
 
2,500
 
$
0.60
 
 
2,770,850
 
$
0.35
 
 
19,745,313
 
$
0.32
 
 
300,000
 
$
0.29
 
 
4,926,949
 
$
0.26
 
 
5,000
 
$
0.01
 
 
525,000
 
 
 
 
 
28,315,612
 
 
As of June 30, 2013, all of the above warrants are exercisable expiring at various dates through 2017. At June 30, 2013, the weighted-average exercise price on the above warrants was $0.36.
 
On August 8, 2012, pursuant to a warrant exchange agreement, 17,262,500 of the warrants with an exercise price of $0.35 were exchanged for 6,902,192 shares of Common Stock.
 
On April 8, 2013 and June 24, 2013, pursuant to warrant exchange agreements, an aggregate of 30,000,000 of the warrants with an initial exercise price of $0.12, which was subsequently reset to $0.03, were exchanged for an aggregate of 30,000,000 shares of Common Stock.
 
Long-Term Incentive Program
 
On December 13, 2007, the Company adopted a Long-Term Equity Incentive Program for the members of the executive management team in which key employees will be awarded shares of the Company’s Common Stock and options to acquire shares of the Company’s Common Stock if the Company achieves certain target goals relating to its multiple myeloma research project over the three fiscal year period from the date of adoption.
 
During the fiscal year ended June 30, 2011, the Company determined that the first target goal under the Long-Term Equity Incentive Program had been met and, therefore, recognized $93,500 of compensation. The Company also determined that the second and third target goals under the Long-Term Equity Incentive Program would not be met. As such, the eligible shares and options related thereto did not vest and the remaining $374,000 of potential compensation expense was not recognized.

11.  Income Taxes:
 
Since the Company has recurring losses and a valuation allowance against deferred tax assets, there is no tax expense (benefit) for all periods presented.
 
The Company files a consolidated federal income tax return. The subsidiary files separate state and local income tax returns.
 
 
F-30
 
SENESCO TECHNOLOGIES, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
The Company accounts for income taxes under FASB ASC 740 ("ASC 740"). Deferred income tax assets and liabilities are determined based upon differences between financial reporting and tax bases of assets and liabilities, which are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse.
 
As of June 30, 2013, the Company had federal net operating loss (“NOL”) carry forwards of $49,277,000 and state NOL carry forwards of approximately $41,910,000, which are available to reduce future taxable income. The federal NOL carry forwards will begin to expire in 2019. The state NOL carry forwards will begin to expire at various dates starting in 2019. The NOL carry forwards are subject to review and possible adjustment by the Internal Revenue Service and state tax authorities. NOL carry forwards may become subject to an annual limitation in the event of certain cumulative changes in the ownership interest of significant shareholders over a three-year period in excess of 50%, as defined under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, as well as similar state tax provisions. This could limit the amount of NOLs that the Company can utilize annually to offset future taxable income or tax liabilities. The amount of the annual limitation, if any, will be determined based on the value of the Company immediately prior to the ownership change. Subsequent ownership changes may further affect the limitation in future years.
 
The Company's reserves related to taxes are based on a determination of whether and how much of a tax benefit taken by the Company in its tax filings or positions is more likely than not to be realized. The Company recognized no material adjustment for unrecognized income tax benefits. Through June 30, 2013, the Company had no unrecognized tax benefits or related interest and penalties accrued.
 
ASC 740 requires a valuation allowance to reduce the deferred tax assets reported if, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. After consideration of all the evidence, both positive and negative, the Company has recorded a full valuation allowance against its deferred tax assets at June 30, 2013 and 2012, respectively, because the Company's management has determined that is it more likely than not that these assets will not be fully realized.
 
The reconciliation of the effective income tax rate to the federal statutory rate is as follows:
 
 
 
June 30,
 
 
 
2013
 
 
2012
 
 
2011
 
Federal income tax provision at statutory rate
 
(34.0)
%
 
(34.0)
%
 
(34.0)
%
Fair value - warrant liability
 
(2.0)
%
 
(3.2)
%
 
(2.8)
%
Loss on settlement of warrant liabilities
 
1.0
%
 
-
 
 
-
 
Other
 
(4.0)
%
 
(0.6)
%
 
(1.9)
%
Change in valuation allowance
 
39.0
%
 
37.8
%
 
38.7
%
 
 
 
 
 
 
 
 
 
 
Actual income tax provision (benefit) effective tax rate
 
-
%
 
-
%
 
-
%
 
 
F-31
 
SENESCO TECHNOLOGIES, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
The principal components of deferred income tax assets consists of the following:
 
 
 
June 30,
 
 
 
2013
 
2012
 
Net operating loss carryforwards
 
$
19,269,000
 
$
17,738,000
 
Stock-based compensation
 
 
2,507,000
 
 
2,243,000
 
Other
 
 
44,000
 
 
(42,000)
 
 
 
 
21,820,000
 
 
19,939,000
 
Valuation allowance
 
 
(21,820,000)
 
 
(19,939,000)
 
Net deferred tax asset
 
$
-
 
$
-
 

12. Commitments:
 
Research Agreement
 
Effective September 1, 1998, the Company entered into a research and development agreement, which has subsequently been renewed, with The University of Waterloo which Dr. John Thompson, who is an officer, director and stockholder of the Company, is affiliated with. Pursuant to the agreement, the university provides research and development under the direction of the researcher and the Company. The agreement is renewable annually by the Company which has the right of termination upon 30 days' advance written notice. Effective September 1, 2011, the Company extended the research and development agreement for an additional one-year period through August 31, 2012 in the amount of 555,900 Canadian dollars. Effective September 1, 2012, the Company extended the research and development agreement for an additional one-year period through August 31, 2013 in the amount of Can $611,550. Effective July 1, 2013, the budget for the research and development agreement was amended to reduce the monthly amount from $50,962 to $38,038 through August 31, 2013. Research and development expenses under this agreement for the fiscal years ended June 30, 2013, 2012 and 2011 aggregated U.S. $628,995, U.S. $573,368 and U.S. $622,872, respectively, and U.S. $7,778,296 for the cumulative period through June 30, 2013. Future obligations to be paid under the agreement through August 31, 2013 equal approximately U.S. $76,076.
 
Supply and service agreements
 
Effective June 20, 2011, the Company entered into an agreement with Criterium, Inc. (“Criterium”) under which Criterium will provide monitoring, project and data management services in connection with the Company’s Phase 1b/2a clinical trial.  The agreement, as amended, has an initial term that commences on the date of the agreement and runs for a period of seventeen (17) months. The Company’s remaining financial obligation under the agreement is estimated to be approximately $455,000.
 
Effective June 4, 2013, the Company entered into a clinical supply agreement with The University of Iowa (“Iowa”) under which Iowa will provide manufacturing, vialing and testing services for certain reagents that are used in SNS01-T. The agreement will terminate upon delivery of the delivery of the reagents, which is estimated to be approximately six months. The Company’s remaining financial obligation under the agreement is approximately $156,000.
 
Consulting and other Agreements
 
Effective May 1, 1999, the Company entered into a consulting agreement for research and development with Dr. John Thompson. The agreement was renewed for an additional one-year term through June 30, 2014. Future obligations to be paid under the agreement equal $67,500.
 
 
F-32
 
SENESCO TECHNOLOGIES, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
The Company is obligated under a non-cancelable operating lease of office space expiring on May 31, 2014. The aggregate minimum future payments are $63,261. Rent expense charged to operations aggregated $69,538, $69,174, $88,766 and $984,270 for the fiscal years ended June 30, 2013, 2012, 2011, and from inception through June 30, 2013, respectively.
 

13. Collaborative Arrangements:
 
On May 14, 1999, the Company entered into an agreement (the "Collaboration") with an Israeli partnership that is engaged in the worldwide marketing of tissue culture plants. The purpose of the Collaboration is to develop enhanced banana plants which will result in banana fruit with improved consumer- and grower-driven traits. The program had been performed as a joint collaboration whereby the Company paid for 50% of the research costs of the program. 
 
In July 1999, the Collaboration applied for and received a conditional grant from the Israel - United States Binational Research and Development Foundation (the "BIRD Foundation"). This agreement, as amended, allowed the Collaboration to receive $340,000 over a five-year period ending May 31, 2004. Grants received from the BIRD Foundation will be paid back only upon the commercial success of the Collaborations technology, as defined. The Company has received a total of $99,728, all of which was received prior to the fiscal years ended June 30, 2013, June 30, 2012 and June 30, 2011.
 
Effective December 22, 2011, the Company re-structured the Collaboration with the Israeli partnership to reflect the priorities of both Companies. The new agreement is an amendment to the original research and development agreement, dated May 14, 1999, that provided the Israeli company access to the Company’s proprietary technology enabling the two Companies to engage in a jointly-funded research and development program relating to the development and production of banana plants with improved traits. The new agreement re-structures the collaboration from a cost and profit sharing arrangement to a license agreement, which provides the Company with a mid- to upper-single digit royalty on incremental revenue as defined in the agreement, from the sale of the Israeli company’s banana seedling products containing the Company’s technology without any future payments by the Company for the costs of development and commercialization. If a product, which incorporates the Company’s technology, is commercialized by the Israeli partnership, the royalties will be payable from first commercial sale for the longer of ten (10) years or the expiration of the last valid patent on a country-by-country basis.
 
The Company's portion of the expenses of the collaboration approximated $0, $100,000 and $205,000 for the fiscal years ended June 30, 2013, 2012 and 2011, respectively, and is included in research and development expenses.

14.  Grant Income:
 
On October 29, 2010, the Company was approved for a grant in the amount of $244,479 in connection with the Qualified Therapeutic Discovery Project, which is Section 48D of the Internal Revenue Code. The funds were granted in connection with the Company’s program for the use of its lead therapeutic candidate, SNS01-T, in multiple myeloma.
 
 
F-33

SENESCO TECHNOLOGIES, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
15. Supplemental Cash Flow Information:
 
 
 
 
 
 
 
 
 
 
 
 
Cumulative
 
 
 
Fiscal Year Ended June 30,
 
Amounts from
 
 
 
2013
 
2012
 
2011
 
Inception
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Supplemental disclosure of non-cash transactions:
 
 
 
 
 
 
 
 
 
 
 
 
 
Conversion of convertible note into common stock
 
$
-
 
$
-
 
$
-
 
$
10,000,000
 
Conversion of bridge notes into common stock
 
 
-
 
 
-
 
 
-
 
 
534,316
 
Conversion of preferred stock into common stock
 
 
202,808
 
 
11,783
 
 
136,644
 
 
421,922
 
Allocation of common stock proceeds to warrants
 
 
459,000
 
 
-
 
 
-
 
 
459,000
 
Allocation of preferred stock proceeds to warrants
    and beneficial conversion feature
 
 
-
 
 
1,076,355
 
 
360,733
 
 
8,526,135
 
Allocation of convertible debt proceeds to warrants
    and beneficial conversion feature
 
 
-
 
 
-
 
 
-
 
 
9,340,000
 
Warrants issued for financing costs
 
 
-
 
 
-
 
 
-
 
 
690,984
 
Issuance of common stock for interest payments
    on convertible notes
 
 
-
 
 
-
 
 
-
 
 
2,003,386
 
Issuance of common stock for dividend payments
    on preferred stock
 
 
591,321
 
 
557,153
 
 
2,155,315
 
 
4,213,264
 
Issuance of common stock in settlement of
    accounts payable
 
 
-
 
 
-
 
 
-
 
 
175,000
 
Dividends accrued on preferred stock
 
 
20,000
 
 
114,474
 
 
122,252
 
 
20,000
 
Supplemental disclosure of cash flow information:
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash paid for interest
 
 
122,454
 
 
134,549
 
 
110,649
 
 
494,137
 
 
 
F-34