Overview
Nuvilex, Inc. operates independently and through wholly-owned subsidiaries. We are dedicated to bringing to market scientifically derived products designed to improve the health, condition and well-being of those who use them. The Company’s current strategy is to focus on developing and marketing products it believes have potential for long-term corporate growth.
History of the Company
The Company was founded as DJH International, Inc., a Nevada corporation, on October 28, 1996, changing its name to eFoodSafety.com, Inc. following the October 16, 2000 acquisition of Global Procurement Systems, Inc. The Company acquired Ozone Safe Food, Inc. for Common Stock on October 29, 2003. The Company’s early mission provided methods and products to ensure safety of marketed fruits and vegetables worldwide. On February 4, 2004, the Company registered shares with the Securities and Exchange Commission and its Common Stock began publicly trading on the OTC Bulletin Board under the trading symbol EFSF. The Company did not issue shares of Common Stock pursuant to an initial public offering. With less than projected demand for its produce sterilization methods and software tracking products, the Company changed its strategy and acquired Knock-Out Technologies, Ltd. and MedElite, Inc. in May 2004 and August 2005, respectively, of which Knock-Out Technologies, Ltd. was a developer of products using organic, non-toxic, food based substances and MedElite, Inc. was the exclusive U.S. distributor of TalsynTM-CI Scar Cream (“Talsyn”), a topical scar- reducing cream. The Company’s strategy was to bring to market scientifically derived products. The Company sold its Ozone Safe Food, Inc. operations in August 2005. In November 2006, the Company formed Cinnergen, Inc., a wholly-owned subsidiary, to manufacture and market a non-prescription liquid nutritional supplement designed to promote healthy glucose metabolism, and purEffect, Inc., another wholly-owned subsidiary, to manufacture and market purEffectTM, a four-step non-prescription acne treatment. On March 10, 2006, the Company licensed the marketing rights for purEffectTM to Charlston Kentrist 41 Direct, Inc. (“CK41”). In July 2007, I-Boost, Inc., a wholly-owned subsidiary was formed to market products to support the immune system. In March 2008, Cinnechol, Inc. became a wholly-owned subsidiary to promote cardiovascular health. In February 2009, the Company sold the rights to the purEffectTM product to CK41 for an equity position in CK41 and future royalty compensation. In March 2009, Freedom2 Holdings, Inc. was acquired to manufacture and market products including Infinitink®, a permanent tattoo ink designed to be removed more easily using conventional laser light. The Company changed its name to Nuvilex, Inc. on March 18, 2009 as part of the process.
Current Business of the Company
The Company has been working diligently to become a biotechnology and life technology company over the past year. As a result, the Company made major efforts to work with the principals and acquire Austrianova Singapore Private Limited (“Austrianova Singapore” or ASPL), previously assets of SG Austria Private Limited or “SG Austria,”) to advance research and to develop and market new biotechnologies and medical therapies. The acquisition was completed in June 2012 and Austrianova Singapore and Bio Blue Bird (“BBB”) became wholly-owned subsidiaries of Nuvilex, Inc. The Company business is that of an emerging biotechnology and life technology company which also contains Consumer Healthcare and Environmental Solutions Divisions.
Going Concern
The Company's financial statements are prepared using accounting principles generally accepted in the United States of America (GAAP) applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has not yet established an ongoing source of revenue sufficient to cover its operating costs and allow it to continue as a going concern. In addition, as of April 30, 2012, the Company had an accumulated deficit of $39,848,005, incurred a net loss for the year ended April 30, 2012 of $1,899,312 and negative working capital of $2,728,628.
Funding has been provided by the Company’s CEO, Dr. Robert Ryan as well as old and new investors committed to make it possible to maintain, expand, and ensure the advancement of Nuvilex and help the Company see one of its visions through to providing a pancreatic cancer treatment in the future. Furthermore, although the Company’s current business plan includes funding requirements beyond the anticipated cash flows from operations, we continue to acquire such funds as the Company moves forward toward its pancreatic cancer treatment and the numerous other opportunities being advanced at this point. However, these factors raise potential doubt as to the Company's ability to continue as a going concern. We at Nuvilex are nonetheless committed to working with the myriad of personnel and interested investors to ensure our success.
Strategy
The Company has been in existence for more than a decade. During this time many different products were brought into the Company with the intention to work toward seeing them become household names and products. Several of these products have become well used, but the challenge with all products is to make them well recognized, useful, important, and valuable enough that the everyday consumers use them without fail. On a daily basis, the Company receives different inquiries for the Nuvilex products. As a result, the overall Company structure of Nuvilex has changed in many ways over the years. From those humble beginnings we are now working to move this Company forward into a modern one with clarity and vision.
Since June 2011, we have been working with the Chief Executives of Austrianova Singapore across a wide swath of areas. Much of the effort has been on establishing plans for our future. Therefore, and in conjunction with maintenance of the company, funding has been provided to ASPL and its personnel in order to ensure ASPL’s functionality and maintain its ability to accomplish numerous goals over the year. After many months worth of accomplishments and planning and upon completion of our fiscal year in April 2012, Nuvilex and ASPL finally were able to bring ASPL onboard as one of its subsidiaries. This first vision has been noted as one of the most valuable advances for this company, enabling the creation of a biotechnology/life technology company. Unlike most companies of this type and entirely due to the Company’s extensive array of products already in-house, Nuvilex exists as a Biotech Company with a broad company base, much like that of larger biotechnology or pharmaceutical companies after years of advances and purchasing of products from the outside. Thus, with an overall goal of long-term growth, the Company is poised to be thrust into a very different position, particularly as a result of the stabilizing of its financial condition that has been occurring over the past year.
Management believes its vision to become an important industry-leading Biotechnology company, with a multi-part strategy like those of larger pharmaceutical companies will strengthen the Company’s position in both the short and long term. Notwithstanding and as the financial experts accurately point out, Nuvilex may seek to raise capital to fund growth opportunities and provide for its working capital needs as the vision of the company is executed. The Company’s efforts to achieve financial stability and enable carrying out the strategy of the company include several primary components:
1. Continued elimination of prior operation-associated debt from the Parent Company and all subsidiaries;
2. Advance and develop the biotechnology through ongoing research;
3. Acquisition of new contracts utilizing the biotechnology;
4. Expand and Market products and their uses.
Biotechnology Division
Our newly created Biotechnology Division of the Company is under the capable management of ASPL who have been working in this area for decades. The live cell encapsulation technology can be viewed as the equivalent to a modern computer operating system. We have created the hardware and operating platform to envelop or encapsulate our own or other company’s “software products,” or cells. These cells are then packaged in our live cell encapsulation operating system.
From extensive studies and research, we believe any cell type can be encapsulated, allowing the use of live cell encapsulation for a multitude of purposes. This opens numerous possibilities for co-development activities, manufacturing and licensing with other companies and cell systems they would like to encapsulate.
Living cell encapsulation or the Cell-in-a-Box® technology enables living cells to be used as a miniature factory in which cells can be grown and maintained, or desired components can be created or converted for treatment of diseases or isolating products for subsequent marketing:
In the Biotechnology setting, which involves the large scale amplification and production of useful biotech products outside the body of a person or an animal, the proprietary live cell encapsulation technology creates a micro-environment in which delicate cells survive and are protected from environmental challenges such as the sheer forces associated with bioreactors, enabling greater growth and production
In the Biomedicine application, the aim is for production of biological products inside the body of a person or an animal after the living encapsulated cells have been specifically placed there, the technology enables cells to survive and be controlled like any other living cell in the body. As the structure of the capsule is permeable, small molecules such as nutrients and oxygen can pass through its pores enabling the encapsulated therapeutic cells to ‘live’ in the body – thereby becoming “new” cells or miniature organs of the body.
The Cell-in-a-Box® and Bac-in-a-Box® brings significant new advantages and opportunities to market, namely:
·
One of the key uses of our technology is in the treatment of solid tumors where the ability to release the active agent directly at the source of the disease facilitates localized or systemic treatment as needed, thus having the value of increasing efficacy as the treatment agent is delivered directly to the critical site. Increased efficacy can also allow for lower dosages, thereby reducing side effects. The technology also holds great potential for the treatment of systemic diseases, including but not limited to diabetes.
This technology allows for confinement and maintenance of therapeutic cells at the site of implantation, an important characteristic for local treatment.
Being able to encapsulate and maintain the cells inside the capsule at the site of implantation provides a safety mechanism for regulating cells that are introduced, including stem cells that would be desired to be maintained at specific site(s) in the body as a part of therapy.
The capsules allow cells implanted to evade the body’s immune system, potentially permanently, without suppressive therapy. ‘Foreign’ cells are not recognized by the immune system as they sit within the capsule (and cells carrying out immune recognition functions are too large to pass through the capsule’s pores). Therefore, the encapsulated cells are not rejected by the body’s immune system, eliminating the need for immunosuppressive drugs as part of the treatment.
The safety of the Cell-in-a-Box® technology and the cells used for those studies has already been proven in clinical trials for two years. In addition, the technology enjoys multi-layered patent protection which is being expanded.
The same technology has also been used to encapsulate prokaryotic cells (bacteria). The use of encapsulation with bacteria is called Bac-in-a-Box®. Nuvilex and ASPL are working together to bring this to fruition.
Consumer Healthcare and Environmental Solutions Division (in alphabetical order)
This new Division of Nuvilex is comprised of the natural products that have been a part of Nuvilex for several years and are in one of the many stages of development including initial research, product development, initial production or established
customer base. As the Company continues to develop, any changes in this Division or its products will be driven by numerous factors and management working to determine the best disposition for each as we move the Company forward. The products in this Division currently owned by Nuvilex directly or in a specific subsidiary are: Cinnechol™, Cinnergen™, Cinnsational™, Citroxin™, Cyclosurface3™ Cosmetics, Infinitink™, Talsyn™, Oraphyte, and PurEffect™ which is currently under management by another company. Each is described briefly below.
CinnecholÔ, a gluten free/wheat free all-natural supplement designed to help maintain normal cholesterol levels and support normal cardiovascular function through a healthy diet and regular exercise and to help individuals manage cardiovascular and metabolic disorders. CinnecholÔ may provide a natural alternative for those with high cholesterol and intolerant of, or elect not to take statins.
CinnergenÔ, a gluten free/wheat free all-natural liquid whole food nutritional supplement that provides nutrients to help the body efficiently process glucose, is made from natural ingredients. Clinical studies using CinnergenÔ as well as peer reviewed research suggest constituents of CinnergenÔ may help to reduce glucose absorption in the small intestine, limit glucose synthesis and increase its metabolism and prevent conditions associated with pre-diabetes or diabetes types 1 and 2 by delivering amino acids, vitamins, minerals, enzymes, antioxidants, and plant based extracts to the body thus helping control glucose levels.
Cinnsational™, a gluten free/wheat free all-natural calorie-free, liquid nutritional supplement contains concentrated blend vitamins, essential amino acids, and other beneficial ingredients to help the body combat symptoms associated with alcohol sensitivity, including nausea, fatigue and headaches.
CitroxinÔ is an all-natural, eco-friendly surface cleaner (previously Big 6 Plus). Laboratory testing showed a 100% kill rate for the "big six" bacterial health threats, including E. coli, Listeria, Pseudomonas, Salmonella, Staphylococcus, Streptococcus, and Black Mold and is an effective antiviral cleaner against swine flu virus [swine influenza virus (H1N1 subtype)] and bird flu virus [avian influenza viruses (H5N1, H9N1 and H9N9) viral subtypes]. Citroxin Ô is protected by patents in the United States and worldwide.
Nuvilex’s patent-pending Cyclosurface3™ color enhancement technology provides formulators and manufacturers of cosmetics and other consumer products the ability to use less wax and other potentially detrimental additives in their products through a lipophilic surface treatment that improves pigment dispersion enabling products that feel lighter on the skin and make the skin look more radiant while maintaining or enhancing the color and durability of the cosmetic product.
I-Boost™ Immune Bar
I-BoostÔ Immune Bar, a gluten free/wheat free all-natural nutritional bar designed to protect, stimulate, and boost the immune system was reformulated and contains a proprietary blend of vitamins, minerals, and other ingredients designed to enhance the body’s natural ability to defend itself.
Infinitink®, a permanent, yet removable tattoo ink, was engineered specifically for removal in fewer laser treatments than standard tattoo ink, typically shown to be two treatments. Typically, lasers used for removal of tattoos use 532 and 1064 nm wavelengths which closely match the InfinitinkÒ tattoo pigments, enabling more easily removed tattoos. A clinical study confirmed InfinitinkÒ was more easily removed, with participants averaging removal in two treatments.
Oraphyte™
Oraphyte™, the Company’s all-natural nematocide, is a non-toxic, biodegradable proprietary formulation that damages a nematode’s skin surface, compromising its immune system, enabling it to be killed by the environment. In field tests,
Oraphyte™ significantly reduced nematodes compared to non-treated controls.
purEffect™
PurEffect™ is a three part, all-in-one acne treatment designed to cleanse, tone, and heal skin combining ingredients to help maintain a radiant, blemish-free complexion. Benzoyl peroxide, the active ingredient in purEffect™ is the safest, most widely recommended ingredient used to treat acne. This line of products completed pre-marketing testing by CK41. The Company maintains royalties and other rights (described elsewhere herein).
Specialty, Private Label Inks
The Company has the potential to manufacture specialty inks for private label customers derived from the Company’s Virgin™ and Infinitink™ product lines and are formulated to specific customer needs. The Company’s specialty inks are formulated to be all natural, heavy metal and toxin-free.
TalsynÔ Scar Cream
TalsynÔ Scar Cream is a unique composition that delivers lipids, peptides, and botanical extracts to the skin and was clinically proven to improve appearance of keloids, surgical incisions, and scars through decreasing their width, length, depth, and redness for both old and new scars. TalsynÔ Scar Cream has been endorsed and used by leading plastic and reconstructive surgeons.
All Divisions
Marketing, Sales and Distribution
The new biotechnology based products being developed are beginning to be planned for marketing, sales and distribution. In the not too distant future, we plan to provide more information about their status and how they can be acquired.
Historically, Nuvilex’s products have been marketed, sold and distributed directly by the Company and through third party marketing and distribution partners. Presently, Cinnergen and Cinnechol can be purchased directly from Nuvilex using the Nuvilex website (www.nuvilex.com) or the subsidiary websites, such as that for Cinnergen (www.cinnergen.com). Whether or not we continue these products, or outside third parties achieve market penetration is based on their commitment to invest in the marketing and sales of the various products. In part, the future maintenance and/or success is dependent upon the efforts of the Parent Company or its subsidiary’s direct internet sales, resellers and third party distribution partners and their ability or inability to successfully market the Company’s products, any of which could adversely affect the business of the Company.
Competition
There is competition for the biotechnology products being developed by the Company and our subsidiary ASPL at present and intense competition exists among providers of products similar to the Company’s other products. Many of these latter competitors have substantially greater financial and marketing resources than Nuvilex, stronger name recognition, brand loyalty and long-standing relationships with target customers. Both the Biotechnology Division and the Consumer Healthcare and Environmental Solution Division’s future success continues to be dependent upon the Company’s ability to compete and its failure to do so could adversely affect its success.
Government Regulations
The FDA ensures safety of the entire community through its regulations as disparate as biologics to drugs to some meats and dietary supplements. As we develop additional products, some of these will require clinical trials and FDA approval. In addition, some of our products are considered dietary supplements which fall under different regulations than "conventional" food and drug products. The dietary supplement manufacturer is responsible for ensuring a dietary supplement is safe before marketing and the FDA is responsible after the products reach the market. Generally, domestic and foreign facilities manufacturing, processing, packing, or holding such foods for human or animal consumption in the United States are required to register their facility with the FDA. The facility that Nuvilex utilizes is FDA registered and inspected. Nonetheless, manufacturers must make certain product label information is truthful and not misleading, which Nuvilex and its subsidiaries concur with and follow. FDA's post-marketing responsibilities, to which Nuvilex subscribes, include monitoring safety, voluntary supplement adverse event reporting and product information, labeling, claims, package inserts, and accompanying literature and the Federal Trade Commission regulates dietary supplement advertising.
The FDA also regulates cosmetics, although differently than other products they regulate. Cosmetic products and ingredients are not subject to FDA premarket approval authority, with the exception of color additives. However, the FDA may pursue enforcement action against products, firms or individuals who violate regulatory laws. Increased federal, state, local or international regulation could adversely affect its business, financial condition and operations by requiring additional or new testing of products and imposing different or new licensing requirements. Therefore, Nuvilex has and continues to expend effort to ensure its products are safe and follow regulatory guidelines, requirements, and laws.
Patents, Intellectual Property and Trade Secrets
Nuvilex has determined that intellectual property (IP) and patent protection are of paramount important to our business. Although the Company takes reasonable measures to protect its IP, the Company cannot guarantee it will be able to protect and enforce its IP or obtain international patent protection for its products as needed. Nuvilex and its subsidiaries own trademarks and own, co-own or have exclusive worldwide licensing rights to numerous patents in multiple countries over four technical areas: live cell encapsulation, pigment modification, microencapsulation, and disinfectant/germicidal compositions. Litigation may be required to enforce the Company’s products, IP rights, trade secrets, or determine the validity and scope of the proprietary rights of others. Maintenance of these utilizes financial and operational resources and the possibility exists wherein the Company’s IP could be discovered to be owned by others, invalid, or unenforceable, potentially bringing unforeseen challenges to the Company.
The Consumer Healthcare and Environmental Solutions Division
The overall company structure has enabled the creation of a broad company base, much like that of larger biotechnology or pharmaceutical companies. Nonetheless, as a result of the intense competition across the many areas of products the Company has, there is the possibility that either the Company may move them forward into greater use, brand exposure and sales or may divest itself of the products as appropriate circumstances present themselves.
Sources and Availability of Raw Materials
We have for many years been successful at procuring the necessary raw materials to maintain and produce our products. Both the old and new products depend extensively on the ability to procure the basic materials to make them. Thus, since all raw materials in our products could at any time in the future be difficult to obtain in large quantities and could have potential negative impact on the Company and or its subsidiaries.
Employees
Nuvilex, as of April 30, 2012, had eight employees including all subsidiaries and has increased due to the subsequent event acquisition of ASPL to a total of sixteen employees. Nuvilex also utilizes consultants, independent contractors and temporary employees in finance and accounting, and other capacities.
ITEM 1A. RISK FACTORS
You should carefully consider these factors that may affect future results, together with all of the other information included in this Form 10-K, in evaluating the business and the Company. The risks and uncertainties described below are those that the Company currently believes may materially affect its business and results of operations. Additional risks and uncertainties that Nuvilex is unaware of or that it currently deems immaterial also may become important factors that affect its business and result of operations. Nuvilex’ common shares involve a high degree of risk and should be purchased only by investors who can afford a loss of their entire investment. Prospective investors should carefully consider the following risk factors concerning the Company’s business before making an investment.
In addition, you should carefully consider these risks when you read “forward-looking” statements elsewhere in this Form 10-K. These are statements that relate to the Company’s expectations for future events and time periods. Generally, the words “anticipate,” “expect,” “intend,” and similar expressions identify forward-looking statements. Forward-looking statements involve risks and uncertainties, and future events and circumstances could differ significantly from those anticipated in the forward-looking statements.
Doubt Regarding Ability to Continue as a Going Concern
Nuvilex’s financial statements have been presented on the basis that Nuvilex is and will remain a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company had
minimal revenues and incurred net operating losses for the period October 1999 (inception) through April 30, 2012, and as such, the Company’s independent auditors have concluded these factors create an uncertainty about Nuvilex’s ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent, among other factors, on its continued success in marketing its products, containing costs, establishing a credit facility, and/or raising additional equity capital. The financial statements of Nuvilex do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
Early Revenue Stage Company: Generation of Revenues
Nuvilex is an early revenue stage company and an investor cannot readily determine if the Company will become profitable. Nuvilex is likely to continue to experience financial difficulties during this early revenue stage and beyond. The Company may be unable to operate profitably, even if it generates additional revenues. Nuvilex may not obtain the necessary working capital to continue developing and marketing its products. Furthermore, the present products may not receive sufficient interest to generate revenues or achieve profitability.
Need for Future Capital: Long-Term Viability of Company
Nuvilex will need additional capital to continue its operations.
There can be no assurance that the Company will generate revenues from present operations or obtain sufficient capital on acceptable terms, if at all. Failure to obtain such capital or generate such operating revenues would have an adverse impact on the Company’s financial position, operations and ability to continue as a going concern. Nuvilex’ operating and capital requirements during the next fiscal year and thereafter will vary based on a number of factors, including the level of sales and marketing activities for its services and products. There can be no assurance that additional private or public financing, including debt or equity financing, will be available as needed or if available, on terms favorable to the Company. Additionally, any future equity financing may be dilutive to stockholders present ownership levels and such additional equity securities may have rights, preferences, or privileges that are senior to those of Nuvilex’ existing common stock.