UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

For the quarterly period ended January 31, 2014

or

For the transition period from __________ to __________

Commission file number 333-68008

NUVILEX, INC.

(Exact name of registrant as specified in its charter)

12510 Prosperity Drive, Suite 310, Silver Spring, Maryland 20904

(Address of principal executive offices)

(917) 595-2850

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such 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 o

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) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

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

As of March 17, 2014, the registrant had 638,283,214 outstanding shares of common stock, with a par value of $0.0001.

NUVILEX, INC.

INDEX TO QUARTERLY REPORT ON FORM 10-Q

FOR THE SIX MONTHS ENDED JANUARY 31, 2014

PART I – FINANCIAL INFORMATION

Item 1.  Financial Statements.

NUVILEX, INC.

CONSOLIDATED BALANCE SHEETS

The accompanying notes are an integral part of these consolidated financial statements.

NUVILEX, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

The accompanying notes are an integral part of these consolidated financial statements.

NUVILEX, INC.

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)

The accompanying notes are an integral part of these consolidated financial statements.

NUVILEX, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

The accompanying notes are an integral part of these consolidated financial statements.

NUVILEX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JANUARY 31, 2014

(UNAUDITED)

NOTE 1 – BACKGROUND, ACQUISITION AND LIQUIDITY

History of the Company

History of Past Nutraceutical Company

The Company was founded as DJH International, Inc. (“DJH”) on October 28, 1996. DJH was formed for the creation of software tracking for fresh fruits and vegetables. The Company changed its name to eFoodSafety.com, Inc. following its October 2000 acquisition of Global Procurement Systems, Inc. This company was in a similar business as DJH. In October 2003, the Company acquired Ozone Safe Food, Inc., a similar company to the other two. The early mission of eFoodSafety.com, Inc. was to provide methods and products to ensure safety of marketed fruits and vegetables worldwide. On February 4, 2004, shares of the common stock of the Company (“Common Stock”) were registered with the SEC. The Common Stock began publicly trading on the OTC Bulletin Board^® quotation service under the trading symbol EFSF.

With low demand for its produce safety and software tracking products, the Company acquired Knock-Out Technologies, Ltd. in May 2004. This company was a developer of products using organic, non-toxic food based substances. In August 2005, the Company acquired MedElite, Inc. This company was the exclusive U.S. distributor of Talsyn^™-CI Scar Cream, a topical scar-reducing cream.

The Company sold Ozone Safe Food, Inc. in August 2005. In November 2006, the Company formed Cinnergen, Inc., a wholly owned subsidiary, to manufacture and market a nutritional supplement designed to promote healthy glucose metabolism. At or about the same time, the Company formed another wholly-owned subsidiary, purEffect, Inc., to manufacture and market four-step acne treatment trademarked purEffect™. The Company licensed the marketing rights for purEffect^™ to Charleston Kentrist 41 Direct, Inc. (“CK41”) in March 2006.

The Company next formed I-Boost, Inc. in July 2007 to manufacture and market a food bar designed to improve the immune system. In March 2008, the Company formed another wholly owned subsidiary, Cinnechol, Inc., to market non-prescription nutritional supplements. In February 2009, the Company sold the purEffect^TM rights to CK41 for equity and future royalties. Freedom-2 Holdings, Inc. was acquired in March 2009 to manufacture and market regular tattoo ink and Infinitink®, a permanent tattoo ink designed to be removed more easily using conventional laser removal methods. These products were marketed through a wholly owned subsidiary, Freedom-2.

On January 20, 2009, the Company changed its name to Nuvilex, Inc. to better reflect its business operations. Its trading symbol on the OTC Bulletin Board^® was also changed to NVLX.

History of Current Biotechnology Company

On May 26, 2011, the Company entered into an Asset Purchase Agreement (“SG Austria APA”) with SG Austria Private Limited (“SG Austria”) to purchase 100% of the assets and liabilities of SG Austria. As a result, Austrianova Singapore Private Limited ("Austrianova Singapore") and Bio Blue Bird AG ("Bio Blue Bird"), wholly-owned subsidiaries of SG Austria, were to become wholly owned subsidiaries of the Company on the condition that the Company pay SG Austria $2.5 million and 100,000,000 shares of the Company’s Common Stock and for the Company to receive 100,000 shares of Austrianova Singapore’s common stock and nine Bio Blue Bird bearer shares.

In June 2012, the Company and SG Austria entered into a First Addendum to the SG Austria APA to extend the due date for the sums to be paid to SG Austria. In October 2012, the Company and SG Austria entered into the Second Addendum to the SG Austria APA for the same purpose. In July 2013, the Company and SG Austria entered into a Third Addendum to the SG Austria APA. Under the terms of the Third Addendum, the transaction contemplated by the SG Austria APA was materially changed. The Third Addendum provided that the Company was to acquire 100% of the equity interests in Bio Blue Bird and receive a 14.5% equity interest in SG Austria. In addition, the Company received nine bearer shares of Bio Blue Bird. Under the Third Addendum, the Company paid: (i) $500,000 to retire all outstanding debt of Bio Blue Bird; and (ii) $1.0 million to SG Austria. The Company paid SG Austria $1,572,195 in cash in exchange for its 14.5% equity interest. Funding was accomplished through a private placement sale to accredited investors of 12,000,000 shares of restricted Common Stock for $0.125 per share. The Third Addendum returned the original 100,000,000 shares of Common Stock to the Company treasury and the 100,000 Austrianova Singapore shares to SG Austria.

The acquisition of Bio Blue Bird provided the Company with exclusive, worldwide licenses to use a proprietary cellulose-based live-cell encapsulation technology for the development of treatments for all forms of cancer. As of January 31, 2014 the cost of these licenses of $1,549,427 has been recorded on the balance sheet as a long term asset. The licenses are pursuant to patents licensed from Bavarian Nordic A/S and GSF-Forschungszentrum fur Umwelt u. Gesundeit GmbH. These licenses enable the Company to carry out the research and development of cancer treatments that are based upon the live-cell encapsulation technology known as “Cell-in-a-Box^®.

The first use of the cellulose-based live-cell encapsulation technology has been in the development of a treatment for advanced, inoperable pancreatic cancer. In Phase 1/2 clinical trials carried out under the sponsorship of SG Austria’s predecessor, live cells capable of converting the well-known anti-cancer prodrug ifosfamide into its cancer-killing form were encapsulated using this novel technology. The capsules containing the ifosfamide-activating cells were locally implanted near the pancreatic tumor, and then ifosfamide was administered at one-third of its “normal” dose. By proceeding in this way, the amount of the active anti-cancer drug was increased directly in the tumor tissue. This ensured high efficacy with lower than usual doses of the chemotherapeutic agent; in turn, the lower than usual doses of ifosfamide used allowed for significant reductions in the unpleasant and sometime adverse side-effects normally associated with chemotherapy using this drug. This resulted in improved quality-of-life for the patients.

In July 2013, the Company also acquired from Austrianova Singapore the exclusive, worldwide license to use the cellulose-based live-cell encapsulation technology for the treatment of diabetes and the use of Austrianova Singapore’s “Cell-In-A-Box^®” trademark for this technology. The Company secured $1.5 million in funding through the sale of restricted stock to accredited investors at a fixed price of $0.15 per share, a premium to the market price per share at the time of the funding, to complete this acquisition. The Company utilized $1,000,000 of those funds to secure its exclusive, worldwide license to use the encapsulation technology for the treatment of diabetes by making its first required payment on October 30, 2013. The balance of the funds was used for on-going preparations for the Company’s late-stage clinical trials in advanced, inoperable pancreatic cancer. In addition, a second and final payment of $1,000,000 for the licensing rights for diabetes was required to be paid to Austrianova Singapore by April 30, 2014. As of January 31, 2014, licenses of $1,000,000 have been recorded on the balance sheet as a long term asset. On February 25, 2014, the Company made the second required payment to Austrianova Singapore, thereby fulfilling all financial obligations required to be met by the Company under the licensing agreement.

In using the Cell-in-a-Box^® cellulose-based live-cell encapsulation technology, the Company believes that diabetes can be treated by encapsulating insulin-producing cells and then implanting these encapsulated cells into insulin-dependent individuals. The basis for this belief comes from preclinical animal studies carried out prior to the Company’s acquisition of the licensing rights to the technology for diabetes. In those studies, insulin-producing cells were encapsulated using the technology and the capsules were then implanted into diabetic animals. Shortly thereafter, the blood glucose levels of the animals became normal. In one study, the levels remained normal for six months. Because the insulin-producing cells were encapsulated in the cellulose-based capsules, they were protected from attack and rejection by the animals’ immune systems.

On February 11, 2013, Medical Marijuana Sciences, Inc. was incorporated in the State of Nevada and became a wholly-owned subsidiary of the Company. Medical Marijuana Sciences, Inc. is dedicated to the development of cancer treatments based upon the well-known chemical constituents of marijuana.  Nuvilex is exploring ways in which the Cell-in-a-Box^® technology may play a role in these efforts.

NOTE 2 – GOING CONCERN AND MANAGEMENT'S PLANS

Going Concern

The Company's financial statements are prepared using 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 a regular source of revenue sufficient to maintain its operating costs and allow it to continue as a going concern. As of January 31, 2014, the Company has an accumulated deficit of $52,229,316 and incurred a net loss for the nine months ended January 31, 2014 of $10,783,209.

Over the past year, funding was provided by management and investors to maintain and expand the Company and acquire Bio Blue Bird. As of January 31, 2014, new investors enabled the completion of the acquisition of Bio Blue Bird which provided the Company the ability to begin preparations toward further clinical trials in patients with advanced, inoperable pancreatic cancer. The remaining challenges, beyond the regulatory and clinical aspects, include accessing funding for the Company to cover its future cash flow needs. The Company continues to acquire additional funds through management's efforts. On February 14, 2014, the Company entered into a stock purchase agreement with Lincoln Park Capital Fund, LLC (“Lincoln Park Capital”), an institutional investor. Lincoln Park Capital initially purchased 8 million shares of Common Stock at $0.25 per share for $2 million and has committed to invest up to an additional $25 million of equity capital over the term of the stock purchase agreement. The proceeds from this investment will be used for the Company’s late-stage clinical trials in advanced inoperable pancreatic cancer, for research into the use of constituents of marijuana in the emerging medical marijuana arena and for general operating purposes. See Note 11 for further discussion on the Lincoln Park Capital transaction.

The Company requires substantial additional capital to finance its planned business operations and expects to incur operating losses in future periods due to the expenses related to the Company’s core businesses. The Company has not realized material revenue since it commenced doing business in the biotechnology sector, and it is not without doubt that it will be successful in generating revenues in the future in this sector.

If the Company is not able to raise substantial additional capital in a timely manner, the Company may not be able to complete its required clinical trials and may be forced to cease operations.

The Company will continue to be dependent on outside capital to fund its research and operating expenditures for the foreseeable future. If the Company fails to generate positive cash flows or fails to obtain additional capital when required, the Company may need to modify, delay or abandon some or all of its business plans.

Management’s Plans

The Company continues to work with the Executive Officers of SG Austria and Austrianova Singapore across a number of areas in an effort to advance the use of its cellulose-based live-cell encapsulation technology for the development of treatments for all forms of cancer and for diabetes.  

The Company's initial strategy was to ensure that the previously successful Phase 1/2 pancreatic cancer trials move forward to their next logical steps – a Phase 2b, two-armed, clinical trial in a relatively small number of patients where the Company’s pancreatic cancer treatment will be compared “head to head” with the best available chemotherapy for the disease in order to validate the results of the previous Phase 1/2 clinical trials. This will be closely followed by a large-scale Phase 3 clinical trial to obtain the large amounts of data required by drug regulatory authorities so that the Company’s pancreatic cancer treatment can be considered for marketing approval by those authorities. The Company’s acquisition of Bio Blue Bird was the first step in moving this strategy forward because it afforded the Company the exclusive, worldwide license to use the cellulose-based live-cell encapsulation technology for the development of treatments for all forms of cancer.

The Company’s planned treatment for advanced, inoperable pancreatic cancer couples the anti-cancer prodrug, ifosfamide, with encapsulated live cells that effectively convert ifosfamide into a “cancer-killing” form. Briefly, the encapsulated ifosfamide-activating cells are implanted, using radiography, in close proximity to the pancreas, and hence to the tumor itself. A single, one-time implantation is used. Following this, ifosfamide is administered by its usual route of administration, but only one-third of the usual dose of the chemotherapeutic agent is given. By using this combination treatment, significantly fewer side effects from ifosfamide can be realized than with standard administration of the prodrug.

The Company has acquired certain cells that will be utilized in the late-stage clinical trials in advanced pancreatic cancer and is in the process of cloning them to obtain the large numbers of cells that will be needed for encapsulation to conduct and complete future clinical trials. When this initial cloning process is completed, the clones will be amplified with the goal of having a Master Cell Bank and a Working Cell Bank to utilize in connection with the Phase 2b and Phase 3 clinical trials. The cells will be stored at several locations around the world, including at a Fisher BioServices, Inc. facility in Rockville, Maryland, so that adverse effects of any unforeseen consequences that could occur during the cloning and expansion processes can be minimized.

The Company and Austrianova Singapore are finalizing a manufacturing agreement pursuant to which Austrianova Singapore will perform the cellulose-based cell encapsulation process and supply the Company with sufficient numbers of encapsulated ifosfamide-activating cells to conduct its Phase 2b and Phase 3 clinical trials.

The Company’s next logical step in its plans to become a major biotechnology company capable of providing dramatic changes in the way diseases will be treated in the future, through the use of the cellulose-based live-cell encapsulation technology, was to acquire from Austrianova Singapore the exclusive, worldwide license to use this technology for the treatment of diabetes. The acquisition of these licensing rights was a critical step for the Company to create a pipeline of products for additional clinical trials that may lead to a major medical breakthrough utilizing the cellulose-based live-cell encapsulation technology. The Company plans to perform preclinical research in the diabetes area using encapsulated insulin-producing cells with the goal of using the data obtained from such studies for the design and conduct of clinical trials in those suffering from insulin-dependent diabetes.

Management's objective is to become a world-class and industry leading biotechnology company with a multi-part strategy. The Company's efforts to carry out this strategy include several components:

1. Elimination of the remaining operating debt of the Company and all of its subsidiaries;

2. Continuation of preparations for late-stage clinical trials in advanced, inoperable pancreatic cancer;

3. Enhancement of the Company's ability to expand the biotechnology through research and partnering;

4. Acquisition of new contracts and revenue utilizing newly acquired biotechnology licensing rights;

5. Further development of uses of the cellulose-based live-cell encapsulation technology platform through contracts, licensing and joint ventures with other companies; and

6. Expansion of the use of the cellulose-based live-cell encapsulation technology to address the vast opportunities emerging in the medical marijuana arena through the Company’s subsidiary Medical Marijuana Sciences, Inc.

In August 2013, the Company restructured corporate operations in an effort to focus on its biotechnology core businesses. The restructuring was precipitated by the Third Addendum to the SG Austria APA and the Company’s acquisition of Bio Blue Bird. The Company restructured itself and created three new divisions, two of which are biotechnology divisions. The first of these houses the cellulose-based live-cell encapsulation (“Cell-in-a-Box^®”) technology and all of its associated licenses in the Company. The second division, Medical Marijuana Sciences, Inc., focuses on ways to exploit the benefits of the Cell-in-a-Box^® technology in optimizing the anticancer effectiveness of cannabinoids against cancers while minimizing or outright eliminating the debilitating side effects usually associated with cancer treatments. This strategy provides Medical Marijuana Sciences a unique opportunity to develop "green" approaches to fighting deadly cancers, such as those of the pancreas, brain, breast, and prostate that affect hundreds of thousands of individuals worldwide every year. The third division consists of the Company’s nutraceutical formulations and their associated product names and information technology. This plan for this division is to sell its names, nutraceutical formulations and associated information technology to one or more third parties.

NOTE 3 – SIGNIFICANT ACCOUNTING POLICIES

Unaudited Financial Statements

The accompanying unaudited consolidated financial statements have been prepared in accordance with GAAP for interim financial information and pursuant to the instructions to Form 10-Q and Article 10 of Regulation S-X.  While these statements reflect all normal recurring adjustments which are, in the opinion of management, necessary for fair presentation of the results of the interim period, they do not include all of the information and footnotes required by GAAP for complete financial statements. The unaudited interim financial statements should be read in conjunction with the Company’s annual report on Forms 10-K and 10-K/A which contain the audited financial statements and notes thereto, together with Management’s Discussion and Analysis, for the fiscal year ended April 30, 2013. The interim results for the nine months ended January 31, 2014 are not necessarily indicative of the results for the full fiscal year.

Management further acknowledges it is solely responsible for adopting sound accounting practices, establishing and maintaining a system of internal accounting controls and preventing and detecting fraud. The Company's system of internal accounting control is designed to ensure, among other items, that transactions are recorded and valid and in the proper period in a timely manner to produce financial statements which present fairly the financial condition, results of operations and cash flows of the Company for the respective periods being presented.

Principles of Consolidation

The accompanying unaudited financial statements include the accounts of the Company and its subsidiaries as of January 31, 2014: Freedom-2 Holdings, Inc., Freedom-2, Inc., MedElite, Inc., Bio Blue Bird and Medical Marijuana Sciences, Inc. All significant inter-company balances and transactions have been eliminated in consolidation. See Note 4 for further discussion on consolidation.

Cash and Cash Equivalents

For purposes of the statement of cash flows, the Company considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents to the extent the funds are not being held for investment purposes. There were no cash equivalents as of January 31, 2014.

Use of Estimates

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

Property and Equipment

Property and equipment are recorded at cost. Expenditures that increase the useful lives or capacities of the plant and equipment are capitalized. Expenditures for repairs and maintenance are charged to income as incurred. Depreciation is provided using the straight-line method over the estimated useful lives as follows:

Goodwill and other Indefinite-Lived Intangibles

The Company records the excess of purchase price over the fair value of the identifiable net assets acquired as goodwill and other indefinite-lived intangibles. The Fair Accounting Standards Board ("FASB") standard on goodwill and other intangible assets prescribes a two-step process for impairment testing of goodwill and indefinite-lived intangibles, which is performed annually, as well as when an event triggering impairment may have occurred. The first step tests for impairment, while the second step, if necessary, measures the impairment. The Company has elected to perform its annual analysis at the end of its reporting year.

Valuation of Long-Lived Assets

The Company accounts for the valuation of long-lived assets under the FASB standard for accounting for the impairment or disposal of Long-Lived Assets. The FASB standard requires that long-lived assets and certain identifiable intangible assets be reviewed for impairment whenever events or circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of the long-lived assets is measured by a comparison of the carrying amount of the asset to future undiscounted net cash flows generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the estimated fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value, less cost to sell.

Basic and Diluted Earnings (Loss) per Share

Basic and diluted earnings per share is calculated using the weighted-average number of common shares outstanding during the period without consideration of the dilutive effect of stock warrants, convertible notes and convertible preferred shares. All outstanding warrants are convertible into 59,433,600 shares of Common Stock.

Fair Value of Financial Instruments

For certain of the Company’s non-derivative financial instruments, including cash and cash equivalents, receivables, accounts payable and other accrued liabilities, the carrying amount approximates fair value due to the short-term maturities of these instruments. The estimated fair value of long-term debt is based primarily on borrowing rates currently available to the Company for similar debt issues. The fair value approximates the carrying value of long-term debt.

Accounting Standards Codification ("ASC") Topic 820, “Fair Value Measurements and Disclosures,” requires disclosure of the fair value of financial instruments held by the Company. ASC Topic 825, “Financial Instruments,” defines fair value, and establishes a three-level valuation hierarchy for disclosures of fair value measurement that enhances disclosure requirements for fair value measures. The carrying amounts reported in the consolidated balance sheets for receivables and current liabilities each qualify as financial instruments and are a reasonable estimate of their fair values because of the short period of time between the origination of such instruments and their expected realization and their current market rate of interest. The three levels of valuation hierarchy are defined as follows:

The following presents the gross value of assets and liabilities that were measured and recognized at fair value as of January 31, 2014.

Effective October 1, 2008, the Company adopted ASC subtopic 820-10, Fair Value Measurements and Disclosures ("ASC 820-10") and Accounting Standards Codification subtopic 825-10, Financial Instruments ("ASC 825-10"), which permits entities to choose to measure many financial instruments and certain other items at fair value. Neither of these statements had an impact on the Company's financial position, results of operations or cash flows. The carrying value of cash, accounts payable and accrued expenses, as reflected in the balance sheets, approximate fair value because of the short-term maturity of these instruments.

Recent Accounting Pronouncements

In July 2013, the FASB issued Accounting Standards Update 2013-11 Income Taxes (Topic 740) Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carry-forward, a Similar Tax Loss, or a Tax Credit Carry-forward Exists. An unrecognized tax benefit, or a portion of an unrecognized tax benefit, should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carry-forward, a similar tax loss or a tax credit carry-forward, except as follows. To the extent a net operating loss carry-forward, a similar tax loss or a tax credit carry-forward is not available at the reporting date under the tax law of the applicable jurisdiction to settle any additional income taxes that would result from the disallowance of a tax position or the tax law of the applicable jurisdiction does not require the entity to use, and the entity does not intend to use the deferred tax asset for such purpose, the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets. The assessment of whether a deferred tax asset is available is based on the unrecognized tax benefit and deferred tax asset that exist at the reporting date and should be made presuming disallowance of the tax position at the reporting date. This Update applies to all entities that have unrecognized tax benefits when a net operating loss carry-forward, a similar tax loss, or a tax credit carry-forward exists at the reporting date. The amendments in this Update are effective for fiscal years, and interim periods within those years, beginning after December 15, 2013.

In October 2012, the FASB issued Accounting Standards Update (“ASU”) 2012-04, ''Technical Corrections and Improvements" in Accounting Standards Update No. 2012-04. The amendments in this Update cover a wide range of Topics in the ASC. These amendments include technical corrections and improvements to the ASC and conforming amendments related to fair value measurements. The amendments in this Update will be effective for fiscal periods beginning after December 15, 2012. The adoption of ASU 2012-04 did not have a material impact on our financial position or results of operations.

In August 2012, the FASB issued ASU 2012-03, "Technical Amendments and Corrections to SEC Sections: Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin (“SAB”) No. 114, Technical Amendments Pursuant to SEC Release No. 33-9250, and Corrections Related to FASB Accounting Standards Update 2010-22 (“SEC Update”)" in Accounting Standards Update No. 2012-03. This Update amends various SEC paragraphs pursuant to the issuance of SAB No. 114. The adoption of ASU 2012-03 did not have a material impact on the Company’s financial position or results of operations.

In July 2012, the FASB issued ASU 2012-02, "Intangibles -Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment" in ASU No. 2012-02. This Update amends ASU 2011-08, Intangibles -Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment and permits an entity first to assess qualitative factors to determine whether it is more likely than not that an indefinite-lived intangible asset is impaired as a basis for determining whether it is necessary to perform the quantitative impairment test in accordance with Subtopic 350-30, Intangibles -Goodwill and Other -General Intangibles Other than Goodwill. The amendments are effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012. Early adoption is permitted, including for annual and interim impairment tests performed as of a date before July 27, 2012, if a public entity's financial statements for the most recent annual or interim period have not yet been issued or, for nonpublic entities, have not yet been made available for issuance. The adoption of ASU 2012-02 did not have a material impact on the Company’s financial position or results of operations.

The Company has implemented all new accounting pronouncements that are in effect.  These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.

Revenue Recognition

Sales of products and related costs of products sold are recognized when: (i) persuasive evidence of an arrangement exists; (ii) delivery has occurred; (iii) the price is fixed or determinable; and (iv) collectability is reasonably assured. These terms are typically met upon the prepayment or invoicing and shipment of products.

Income Taxes

Deferred taxes are calculated using the liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carry forwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases.  Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

In June 2006, the FASB interpreted its standard for accounting for uncertainty in income taxes, an interpretation of accounting for income taxes.  This interpretation clarifies the accounting for uncertainty in income taxes recognized in an entity’s financial statements in accordance the minimum recognition threshold and measurement attributable to a tax position taken on a tax return is required to be met before being recognized in the financial statements.

The FASB’s interpretation had no material impact on the Company’s financial statements for the quarter ended January 31, 2014 or the year ended April 30, 2013. Current tax laws limit the amount of loss available to be offset against future taxable income when a substantial change in ownership occurs. Therefore, the amount available to offset future taxable income may be limited. No tax benefit has been reported in the financial statements because the Company believes the carry forwards may expire unused, although acquisition of sufficient operating capital to complete the acquisition of all of the assets of SG Austria may change this. Accordingly, the potential tax benefits of the loss carry forwards are offset by a valuation allowance of the same amount.

Research and Development Costs

Expenditures for research and development are expensed as incurred. Such costs are required to be expensed until the point that technological feasibility is established.

Concentration of Credit Risk

The Company has no significant off-balance-sheet concentrations of credit risk such as foreign exchange contracts, options contracts or other foreign hedging arrangements. The Company maintains the majority of its cash balances with one financial institution in the form of demand deposits.

NOTE 4 – BUSINESS ACQUISITION

As of January 31, 2014, the Company had completed the purchase of Bio Blue Bird. Shares for both Austrianova Singapore and the Company originally held in escrow under the Austrianova APA have been released from escrow and returned to the respective original owners, with the 100,000,000 shares of Common Stock having been returned to the treasury of the Company. Bio Blue Bird is now a wholly owned subsidiary of the Company. Austrianova Singapore is now the manufacturing organization and research entity that the Company is working with to produce encapsulated products.

NOTE 5 – DEBT

On November, 2013, the Company settled its obligation to pay $400,000 in licensing fees, for a licensing agreement terminated in 2009, with the issuance of 2,000,000 shares of common stock. The shares were valued $226,000 using the closing share price of the Common Stock on the day of issuance resulting in a gain on settlement of debt of $174,000.

As of January 31, 2014, the Company owes $20,000 plus $6,000 of accrued interest to a note holder. The note accrues interest at 8% per annum and is past due. The debt has been settled in full subsequent to January 31, 2014.

NOTE 6 – COMMON STOCK TRANSACTIONS

During the nine months ended January 31, 2014, 12,570,000 shares of Common Stock were issued to officers and directors of the Company for compensation. These shares were valued using the closing share price of the Common Stock on the day of issuance for a total non-cash expense of $1,333,348.

During the nine months ended January 31, 2014, 9,864,999 shares of Common Stock were issued to consultants for services rendered to the Company. These shares were valued using the closing share price of the Common Stock price on the day of issuance for a total non-cash expense of $1,152,396. As of January 31, 2014, $647,958 of this expense has been deferred to prepaids and will be expensed to future periods as determined by the term of each agreement.

During the nine months ended January 31, 2014, the Company sold 16,200,000 shares of Common Stock for $1,828,000. $50,000 of this amount was received subsequent to January 31, 2014 and has, therefore, been recorded as a stock subscription receivable.

During the nine months ended January 31, 2014, the Company received $2,000,000 from the sale of 17,000,000 shares of Common Stock. As of January 31, 2014, these shares had not yet been issued and are disclosed as Common Stock to be issued.

In May 2013, the Company issued 26,000,000 shares of Common Stock in exchange for debt of $471,010 and accrued interest of $31,095. These shares were valued using the closing share price of the Common Stock on the day of issuance for a total of $4,475,000 resulting in a loss on settlement of debt of $3,973,795.

In May 2013, 75,000 shares of Common Stock were issued to settle debt of $32,392. The shares were valued using the closing share price of the Common Stock on the day of issuance resulting in a gain on settlement of debt of $21,142.

In November 2013, 2,000,000 shares of Common Stock were issued to settle debt of $400,000. The shares were valued using the closing share price of the Common Stock on the day of issuance resulting in a gain on settlement of debt of $174,000.

In December 2013, 141,667 shares of Common Stock were issued for service and to settle debt totaling $16,717. The shares were valued using the closing share price of the Common Stock on the day of.

During the nine months ended January 31, 2014, a shareholder converted 8,500 shares of the Company’s Series E Preferred Stock (defined below) into 54,000,000 shares of Common Stock. The shares were valued using the closing share price of the Common Stock on the day of issuance for a total of $6,475,000 resulting in a loss on conversion of $5,895,000.

All shares were issued without registration under the Securities Act of 1933, as amended (“Securities Act”), in reliance upon the exemption afforded by Section 4(2) of the Securities Act.

NOTE 7 – PREFERRED STOCK

The Company has one series of preferred stock designated as "Series E Preferred Stock." The Series E Preferred Stock has the following features:

During the nine months ended January 31, 2014, a shareholder converted 8,500 shares of the Company’s Series E Preferred Stock into 54,000,000 shares of Common Stock. These shares were valued using the closing share price of the Common Stock on the day of issuance for a total of $6,475,000 resulting in a loss on conversion of $5,895,000.

Holders of Series E Preferred Stock have specific rights to be paid in cash out of the assets of the Company prior to any junior class of Common Stock. As a result of the obligations for Series E Preferred Stock, the Company has determined these redemption features have the potential to be outside the control of the Company and, therefore, the Company has classified the Series E Preferred Stock outside of shareholder’s equity in accordance with ASC 480 regarding instruments with debt and equity features.  Thus, the full value for the convertible Series E Preferred Stock was recorded outside of stockholders’ equity in the accompanying unaudited consolidated balance sheet.

NOTE 8 – WARRANTS

A summary of the status of the Company's outstanding warrants for Common Stock as of January 31, 2014 and April 30, 2013 and changes during the periods is presented below:

On January 21, 2014, the Company began the implementation of its “Warrant Conversion Program”. The program consists of having every PPM investor convert his or her Class A warrants (with a conversion price of $0.075 per share) into shares of common stock and an equal number of new Class D warrants (with a conversion price of $0.25 per share). As of January 31, 2014, 400,000 Class A warrants were converted for total cash proceeds of $30,000.

NOTE 9 – LEGAL PROCEEDINGS

The Company is not currently a party to any material pending legal proceedings. There are no material legal proceedings to which any property of the Company is subject.

The prior material legal proceeding that has now been concluded is the Settlement Agreement with Cornerstone Bank, entered into on or about May 7, 2012. The settlement with Cornerstone Bank was fully satisfied by the Company’s payment of $702,061 to Cornerstone Bank. Collateral held by Cornerstone in the form of 8,230,637 shares of Common Stock was returned to the Company. All obligations to Cornerstone have been satisfied. As a result of writing off the liability due to Cornerstone totaling $2,341,106 and the building asset and the accumulated depreciation totaling $1,028,778, the Company has recognized a gain on settlement of debt of $1,312,328.

During the period January 1, 2012 through March 31, 2013, Pauline M. Muggli (“Muggli”), doing business as Internet Pro Designs, and Ron Simper (“Simper”) provided information technology consulting services (“IT Services”) to the Company. Muggli submitted invoices to the Company for IT Services allegedly performed at the request of the Company in excess of $60,000 (“IT Invoices”). The Company disputed the IT Services and the amount of the IT Invoices. Effective October 23, 2013, the Company, Muggli and Simper entered into a settlement agreement pursuant to which the Company paid Muggli $3,000 in cash and 141,667 shares of Common Stock in exchange for a release of all claim that either Muggli or Simper have against the Company. The Company provided a similar release of all claims against Muggli and Simper. The cash has been paid and the shares have been issued to Muggli. General releases between the parties are in effect.

Freedom-2, Inc. and The General Hospital Corporation (“General Hospital”) are parties to a Master Agreement dated October 1, 1999 and associated License Agreement (collectively, “MGH Agreements”). Since entering into the MGH Agreements, Freedon-2 became a wholly owned subsidiary of the Company. Freedom-2 allegedly owed General Hospital $69,095 under the MGH Agreements (“Debt”). The Company and Freedom-2, Inc. denied liability for the Debt, but elected to resolve the dispute without becoming involved in time consuming and costly litigation. Effective November 1, 2013, a settlement agreement was entered into between General Hospital, the Company and Freedom-2, Inc. pursuant to which all of the Company’s rights to five patents related to permanent, removable tissue markings were transferred to General Hospital. In exchange, General Hospital provided a general release of all claims, including the Debt. The Company provided General Hospital a general release of all claims. The settlement has been consummated and the general releases are in effect.

The Company’s wholly owned subsidiary Freedom-2, Inc. and Brown University are parties to an Intellectual Property License Agreement dated May 16, 2009. Brown University asserted a claim against the Company and Freedom-2, Inc. for $400,000 under the Property License Agreement. Although the Company and Freedom-2, Inc. denied liability, they nevertheless wanted to resolve the dispute without becoming embroiled in time consuming and costly litigation. Effective December 9, 2013 a settlement agreement was entered into between Brown University, the Company and Freedom-2, Inc. pursuant to which the parties released each other for all claims relating to the Property License Agreement. In addition, the Company agreed to issue 2,000,000 shares of Common Stock to Brown University to consummate the settlement. The shares of Common Stock have been issued and the general releases are in effect.

NOTE 10 – RELATED PARTY TRANSACTIONS

As of April 30, 2013 the Company owed a shareholder $393,158. During May 2013, the Company received additional loans of $77,853 from that shareholder. In May 2013, the Company issued 26,000,000 shares of Common Stock in exchange for debt of $471,010 and accrued interest of $31,095. The shares were valued using the closing price of the Common Stock on the day of issuance for a total of $4,475,000 resulting in a loss on settlement of debt of $3,973,795.

As of January 31, 2014 and April 30, 2013, the Company owed $204,989 and $227,569, respectively, to two officers and a director. The loans accrue interest at 8% and are due on demand. As of January 31, 2014 total accrued interest on these loans is $34,834.

NOTE 11 – SUBSEQUENT EVENTS

The Company has performed an evaluation of subsequent events in accordance with ASC Topic 855, noting no additional subsequent events other than those noted below.

Subsequent to January 31, 2014, the Company issued 400,000 shares of Common Stock to consultants for services rendered to the Company.

Subsequent to January 31, 2014, fifteen investors converted a total of 15,550,200 Class A warrants for total cash proceeds of $1,140,345 and conversion of $25,920 of debt to an officer.

Subsequent to January 31, 2014, the Company received $1,100,000 from the sale of 11,000,000 shares of Common Stock.

On February 14, 2014, the Company entered into a $27,000,000 stock purchase agreement (“Stock Purchase Agreement”) and a registration rights agreement (“Registration Rights Agreement”) with Lincoln Park Capital pursuant to which the Company has the right to sell to Lincoln Park Capital up to $27,000,000 in shares of its Common Stock, subject to certain limitations.

Under the terms and subject to the conditions of the Purchase Agreement, Lincoln Park purchased 8,000,000 shares of Common Stock for $2,000,000 on the date of the Stock Purchase Agreement and is obligated to purchase up to $25,000,000 in additional shares of Common Stock (subject to certain limitations) the Company may sell from time to time over the 30-month period commencing on the date that a registration statement, which the Company must file with the Securities and Exchange Commission (“SEC”) pursuant to the Registration Rights Agreement, is declared effective by the SEC and a final and complete prospectus in connection therewith is filed. The Company may direct Lincoln Park Capital to purchase up to 1,000,000 shares of Common Stock (subject to increase in the event the trading price of the Common Stock exceeds certain established thresholds) and may require additional purchases in accordance with the Stock Purchase Agreement. The purchase price of shares of Common Stock related to the future funding will be based on the prevailing market prices of such shares at the time of sales, subject to a discount in certain circumstances. The Company controls the timing and amount of any sales of Common Stock to Lincoln Park Capital. As consideration for its commitment to purchase shares of Common Stock pursuant to the Stock Purchase Agreement, the Company agreed to issue to Lincoln Park 5,062,500 shares of Common Stock upon execution of the Stock Purchase Agreement and 5,062,500 shares of Common Stock which will only be issued to Lincoln Park pro rata to the extent it makes additional purchases against the $25,000,000 total, or in the event the registration statement filed pursuant to the Registration Rights Agreement is not declared effective within 270 days from the date of the Purchase Agreement. 

The Stock Purchase Agreement and the Registration Rights Agreement contain customary representations, warranties and agreements of the Company and Lincoln Park Capital and customary conditions to completing future sale transactions, indemnification rights and obligations of the parties. There is no upper limit on the price per share that Lincoln Park Capital could be obligated to pay for Common Stock under the Stock Purchase Agreement. The Company has the right to terminate the Stock Purchase Agreement at any time, at no monetary cost or penalty. Actual sales of shares of Common Stock to Lincoln Park Capital under the Stock Purchase Agreement will depend on a variety of factors to be determined by the Company from time to time, including (among others) market conditions, the trading price of the Common Stock and determinations by the Company as to the appropriate sources of funding for the Company and its operations.

As of March 17, 2014, the Company had a balance of approximately $4.0 million in its bank account as a result of numerous sales of Common Stock.

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

This following information specifies certain forward-looking statements of our management.  Forward-looking statements are statements that estimate the happening of future events and are not based on historical fact.  Forward-looking statements may be identified by the use of forward-looking terminology, such as “may”, “shall”, “could”, “expect”, “estimate”, “anticipate”, “predict”, “probable”, “possible”, “should”, “continue”, or similar terms, variations of those terms or the negative of those terms.   Forward-looking statements should not be read as a guarantee of future performance or results and may not be accurate indications of when such performance or results will be achieved. Forward-looking statements are based on information we have when those statements are made or management’s good faith belief as of that time with respect to future events and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. The forward-looking statements specified in the following information have been compiled by our management on the basis of assumptions made by management and considered by management to be reasonable. Our future operating results, however, are impossible to predict, and no representation, guaranty, or warranty is to be inferred from those forward-looking statements. You are cautioned not to place undue reliance on these forward-looking statements.

Forward-looking statements include, but are not limited to, the following:

Results of Operations for the Three Months Ended January 31, 2014 and 2013

Selling, General and Administrative Expenses

For the three months ended January 31, 2014, sales and marketing expense increased by $309,600 from $0 for the same period in the prior year. The increase is a result of the company’s efforts to promote its new focus on becoming a world-class biotechnology company.

For the three months ended January 31, 2014, compensation expense decreased by $21,730 to $92,799, as compared to $114,529 for the same period in the prior year. The decrease is a result of fewer shares of Common Stock being issued during the period.

For the three months ended January 31, 2014, legal and professional fees decreased by $72,185 to $33,216 from $105,401 for the same period in the prior year. The decrease is attributed to the Company no longer using certain service providers that it had used in the prior year, thus eliminating these expenses.

General and administrative expenses during the three months ended January 31, 2014 compared to the three months ended January 31, 2013, increased by $124,555 to $245,465 as compared to $120,910 in the prior period. The increase can be contributed to an overall increase in spending on marketing, investor relations and other consulting services.

During the three months ended January 31, 2014, net loss increased by $81,899 to $458,772, as compared to $376,873 in the prior period. The increase in net loss over the prior period is attributed to increased operating expenses.

Results of Operations for the Nine Months Ended January 31, 2014 and 2013

There was no revenue generated during the nine months ended January 31, 2014 compared to $12,160 for the same period in the prior year as a result of multiple factors. In 2013, we made a decision to discontinue the sale of Cinnergen because the cost of manufacturing and marketing Cinnergen was in excess of the revenues generated. The prior year's revenue was derived solely from the sale of Cinnergen, which sales occurred even in the absence of substantial marketing efforts. We instead utilized available funds to acquire the necessary components and personnel for our biotechnology operations to move forward in accordance with our strategy and plans discussed in Note 2 above.

Selling, General and Administrative Expenses

For the nine months ended January 31, 2014, sales and marketing expense increased by $229,437 to $324,600 from $95,163 for the same period in the prior year. The increase is a result of the company’s efforts to promote its new focus on becoming a world-class biotechnology company.

For the nine months ended January 31, 2014, compensation expense increased by $494,654 to $955,060 as compared to $460,406 for the same period in the prior year. The increase is a result of a combination of an overall increase in the share price of our Common Stock as well as additional shares being issued for compensation earlier in the fiscal year. In addition, during the nine months ended January 31, 2014, the Company issued Common Stock to directors of the Company valued at $480,000.

For the nine months ended January 31, 2014, legal and professional fees decreased by $16,867 to $240,731 from $257,598 for the same period in the prior year. The decrease is attributed to the Company no longer using certain service providers that it had used in the prior year, thus eliminating these expenses.

General and administrative expenses during the nine months ended January 31, 2014, compared to the nine months ended January 31, 2013, increased by $111,402 to $529,950 as compared to $418,548 in the prior period. The increase can be contributed to more spending on investor relations and other consulting services in the current fiscal year.

During the nine months ended January 31, 2014, net loss increased by $9,512,280 to $10,783,209 as compared to $1,270,929 in the prior period. The increase in net loss over the prior period is attributed to the increase in the loss from operations of $1,301,166 combined with a loss on settlement of debt of $3,973,795 and a loss on the conversion of 8,500 shares of Series E Preferred Stock to 54,000,000 shares of Common Stock in the amount of $5,895,000.

Liquidity and Capital Resources

By adjusting the Company’s operations and by utilizing the $1,136,000 in proceeds from the sale of 39,622,400 shares of Common Stock to various investors through the Company’s Private Placement Memorandum and an additional $3,060,000 from the sale of 23,000,000 shares of Common Stock to other accredited investors, we have been able to maintain sufficient capital resources to meet projected cash flow needs of the Company. Failure by the Company to generate sufficient liquidity from operations or in raising sufficient capital resources on acceptable terms may have a materially adverse effect on our businesses, results of operations, liquidity and financial condition. We have no off-balance sheet arrangements, special purpose entities, financing partnerships or guarantees.

Item 3.  Quantitative and Qualitative Disclosures about Market Risk.

Not required for smaller reporting companies.

Item 4.  Controls and Procedures.

We carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in the Securities Exchange Act of 1934, as amended (“Exchange Act”) Rules 13a-15(e) and 15d-15(e)). Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered in this Report, our disclosure controls and procedures were effective to ensure that information required to be disclosed in reports filed under the Exchange Act is recorded, processed, summarized and reported within the required time periods and is accumulated and communicated to our management, including our Chief Executive Officer and our Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

There have been no changes to our internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) that occurred during the fiscal quarter ended January 31, 2014 which have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1.  Legal Proceedings.

The Company is not currently a party to any material pending legal proceedings. There are no material legal proceedings to which any property of the Company is subject.

Item 1A.  Risk Factors.

In addition to the other information set forth in this Report, you should carefully consider the factors discussed in Part I, Item 1A., “Risk Factors” in our Annual Report on Form 10-K, as amended by our Annual Report on Form 10-K/A, for the fiscal year ended April 30, 2013. The information set forth in these Reports could materially affect the Company’s business, financial position and results of operations. There are no material changes from the risk factors set forth in Part I, Item 1A, “Risk Factors,” of our Annual Report on Forms 10-K and 10-K/A for the fiscal year ended April 30, 2013.

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

On November 1, 2013, the Company issued 7,500,000 shares of Common Stock for services for a total non-cash expense of $927,500.

On November 1, 2013, the Company issued 100,000 shares of Common Stock to an officer for a total non-cash compensation expense of $12,290.

On November 1, 2013, the Company issued 2,000,000 shares of Common Stock to settle a $400,000 debt.

On November 25, 2013, the Company issued 1,000,000 shares of Common Stock to an accredited investor for total cash proceeds of $100,000. The proceeds were used to fund general operating expenses.

On December 4, 2013, the Company issued 1,200,000 shares of Common Stock to an accredited investor for total cash proceeds of $78,000. The proceeds were used to fund general operating expenses.

On December 1, 2013, the Company issued 100,000 shares of Common Stock to an officer for a total non-cash compensation expense of $13,240.

On December 6, 2013, the Company issued 141,667 shares of Common Stock to settle a $16,717 debt.

On January 1, 2014, the Company issued 100,000 shares of Common Stock to an officer for a total non-cash compensation expense of $11,440.

On January 2, 2014, the Company issued 60,000 shares of Common Stock for services for a total non-cash expense of $6,900.

On January 15, 2014, the Company issued 800,000 shares of Common Stock for services for a total non-cash expense of $106,400.

On January 15, 2014, the Company issued 100,000 shares of Common Stock to an accredited investor for total cash proceeds of $10,000. The proceeds were used to fund general operating expenses.

On January 29, 2014, the Company issued 400,000 shares of Common Stock to an accredited investor for total cash proceeds of $30,000. The proceeds were used to fund general operating expenses.

The issuance and sale of the restricted shares of Common Stock to the aforementioned entities and individuals in each of the transactions described above was made in reliance on exemptions from registration provided for in Sections 4(2) and 4(5) of the Securities Act of 1933, as amended (“Securities Act”), including Regulation D promulgated thereunder.

Item 3.  Defaults upon Senior Securities.

None.

Item 4.  Mine Safety Disclosure.

Not applicable.

Item 5.  Other Information.

(a)    None.

(b)   Not applicable.

Item 6.  Exhibits.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Company has duly caused this Report to be signed by the following persons on behalf of the Company and in the capacities and on the dates indicated.

Nuvilex, Inc.