Table of Contents

 

 

** **

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**WASHINGTON****,****D.C.20549**

 

**FORM 10-Q**

 

**(Mark One)**

 
| **x**      | ** ** | **QUARTERLY REPORT PURSUANT TO  SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934** |
|------------|------------|--------------------------------------------------------------------------------------------------------|
| ** ** | ** ** | ** **                                                                                             |
| ** ** | ** ** | **For the quarterly****period****ended March 31, 2009**                                           |

 

**or**

 
| **o**  | ** ** | **TRANSITION REPORT PURSUANT TO  SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934**                                                                  |
|--------|------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |       |                                                                                                                                                                     |
|   |       | **For the transition period from                      to** |

 

**Commission File No. 001-31326**

 

**SENESCO TECHNOLOGIES, INC.**

(exact name of registrant as specified in itscharter)

 

| **Delaware**                                                   | **84-1368850**                    |
|----------------------------------------------------------------|-----------------------------------|
| (State or other jurisdiction of incorporation or organization) | (IRS Employer Identification No.) |

 

**303George Street, Suite 420New Brunswick, New Jersey 08901**(Address of principal executive offices)

 

**(732)296-8400**(Registrant’s telephone number, including area code)

 

Indicateby check mark whether the registrant: (1) has filed all reports requiredto be filed by Section 13 or 15(d) of the Securities Exchange Act of1934 during the past 12 months (or for such shorter period that the registrantwas required to file such reports), and (2) has been subject to suchfiling requirements for the past 90 days.

 
|   | Yes:x |   | No:o |
|--------|-------|--------|------|

 

Indicateby check mark whether the registrant has submitted electronically and posted onits corporate Web site, if any, every Interactive Data File required to besubmitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 ofthis chapter) during the preceding 12 months (or for such shorter period thatthe registrant was required to submit and post such files).

 
|   | Yes:o |   | No:o |
|--------|-------|--------|------|

 

Indicateby check mark whether the registrant is a large accelerated filer, anaccelerated filer, a non-accelerated filer or a smaller reporting company.  See definitions of “accelerated filer”, “largeaccelerated filer” and “smaller reporting company” in Rule 12b-2 of theExchange Act.

 
| Large  accelerated filer o    |   | Accelerated  filer o     |
|------------------------------------|--------|-------------------------------|
|                               |   |                          |
| Smaller  reporting company  x |   | Non-accelerated  filer o |

 

 

Indicateby check mark whether the registrant is a shell company (as defined in Rule 12b-2of the Exchange Act).

 
|   | Yes:o |   | No:x |
|--------|-------|--------|------|

 

Asof April 15, 2009, 19,511,199 shares of the issuer’s common stock, parvalue $0.01 per share, were outstanding.

 

 

 

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Table of Contents

 

SENESCOTECHNOLOGIES, INC. AND SUBSIDIARY

TABLE OFCONTENTS

 
| ** **    | ** **             | ** **                                                                                  | **Page** |
|---------------|------------------------|---------------------------------------------------------------------------------------------|----------|
| PART I.  | FINANCIAL INFORMATION. |                                                                                        |
|          |                   |                                                                                        |     |
|          | Item 1.                | Financial Statements (Unaudited)                                                            | 1        |
|          |                   |                                                                                        |     |
|          |                   | CONDENSED CONSOLIDATED BALANCE SHEETS                                                       |     |
|          |                   | as of March 31, 2009 and June 30,  2008                                           | 2        |
|          |                   |                                                                                        |     |
|          |                   | CONDENSED CONSOLIDATED STATEMENTS OF  OPERATIONS                                            |     |
|          |                   | For the Three Months Ended March 31,  2009 and 2008,                                   |     |
|          |                   | For the Nine Months Ended March 31,  2009 and 2008,                                    |     |
|          |                   | and From Inception on July 1, 1998  through March 31, 2009                        | 3        |
|          |                   |                                                                                        |     |
|          |                   | CONDENSED CONSOLIDATED STATEMENT OF  STOCKHOLDERS’ EQUITY                              |     |
|          |                   | From Inception on July 1, 1998 through  March 31, 2009                            | 4        |
|          |                   |                                                                                        |     |
|          |                   | CONDENSED CONSOLIDATED STATEMENTS OF CASH  FLOWS                                            |     |
|          |                   | For the Nine Months Ended March 31,  2009 and 2008,                                    |     |
|          |                   | and From Inception on July 1, 1998  through March 31, 2009                        | 8        |
|          |                   |                                                                                        |     |
|          |                   | NOTES TO  CONDENSED CONSOLIDATED FINANCIAL STATEMENTS                                       | 9        |
|          |                   |                                                                                        |     |
|          | Item 2.                | Management’s Discussion and Analysis of  Financial Condition and Results of Operations | 19       |
|          |                   |                                                                                        |     |
|          |                   | Overview                                                                                    | 19       |
|          |                   |                                                                                        |     |
|          |                   | Liquidity and  Capital Resources                                                            | 32       |
|          |                   |                                                                                        |     |
|          |                   | Changes to  Critical Accounting Policies and Estimates                                      | 34       |
|          |                   |                                                                                        |     |
|          |                   | Results of Operations                                                                       | 35       |
|          |                   |                                                                                        |     |
|          | Item 3.                | Quantitative and Qualitative Disclosures  about Market Risk                                 | 42       |
|          |                   |                                                                                        |     |
|          | Item 4T.               | Controls and Procedures                                                                     | 43       |
|          |                   |                                                                                        |     |
| PART II. | OTHER INFORMATION.     |                                                                                        |
|          |                   |                                                                                        |
|          | Item 1A.               | Risk Factors                                                                                | 44       |
|          |                   |                                                                                        |     |
|          | Item 6.                | Exhibits                                                                                    | 58       |
|          |                   |                                                                                        |     |
| SIGNATURES    | 59                     |
|               |                        |                                                                                             |          |  |  |  |

 

i

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**PART I. FINANCIAL INFORMATION.**

 

**Item 1.****                                                           Financial Statements.**

 

Certain information and footnote disclosures required under UnitedStates generally accepted accounting principles have been condensed or omittedfrom the following consolidated financial statements pursuant to the rules andregulations of the Securities and Exchange Commission.  However, Senesco Technologies, Inc., aDelaware corporation, and its wholly owned subsidiary, Senesco, Inc., aNew Jersey corporation (collectively, “Senesco” or the “Company”), believe thatthe disclosures are adequate to assure that the information presented is notmisleading in any material respect.

 

The results of operations for the interim periods presented herein arenot necessarily indicative of the results to be expected for the entire fiscalyear.

 

1

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Table ofContents

 

 

SENESCO TECHNOLOGIES, INC. AND SUBSIDIARY

(A DEVELOPMENT STAGE COMPANY)

CONDENSEDCONSOLIDATED BALANCE SHEETS

 
| ** **                                                                                                                     | ** ** | **March 31,** | ** ** | **June 30,** | ** ** |
|--------------------------------------------------------------------------------------------------------------------------------|------------|--------------------|------------|-------------------|------------|
| ** **                                                                                                                     | ** ** | **2009**           | ** ** | **2008**          | ** ** |
| ** **                                                                                                                     | ** ** | **(unaudited)**    | ** ** | ** **        | ** ** |
| ASSETS                                                                                                                         |       |               |       |              |       |
| CURRENT ASSETS:                                                                                                                |       |               |       |              |       |
| Cash and cash equivalents                                                                                                      |       | $                  | 378,193    |              | $          | 5,676,985 |   |
| Short-term investments                                                                                                         |       | 2,299,388          |       | 500,000           |       |
| Prepaid expenses and other current assets                                                                                      |       | 889,822            |       | 180,556           |       |
| Total Current Assets                                                                                                           |       | 3,567,403          |       | 6,357,541         |       |
|                                                                                                                           |       |               |       |              |       |
| Property and equipment, net                                                                                                    |       | 6,896              |       | 5,459             |       |
| Intangibles, net                                                                                                               |       | 3,625,476          |       | 3,213,543         |       |
| Deferred financing costs                                                                                                       |       | 741,462            |       | 1,059,230         |       |
| Security deposit                                                                                                               |       | 7,187              |       | 7,187             |       |
| TOTAL ASSETS                                                                                                                   |       | $                  | 7,948,424  |              | $          | 10,642,960 |   |
|                                                                                                                           |       |               |       |              |       |
| LIABILITIES  AND STOCKHOLDERS’ EQUITY                                                                                     |       |               |       |              |       |
|                                                                                                                           |       |               |       |              |       |
| CURRENT LIABILITIES:                                                                                                           |       |               |       |              |       |
| Accounts payable                                                                                                               |       | $                  | 472,375    |              | $          | 370,167 |   |
| Accrued expenses                                                                                                               |       | 500,772            |       | 314,267           |       |
| Total Current Liabilities                                                                                                      |       | 973,147            |       | 684,434           |       |
|                                                                                                                           |       |               |       |              |       |
| Convertible note, net of discount                                                                                              |       | 1,926              |       | 57                |       |
| Grant payable                                                                                                                  |       | 99,728             |       | 99,728            |       |
| Other liability                                                                                                                |       | 17,778             |       | 23,062            |       |
| TOTAL LIABILITIES                                                                                                              |       | 1,092,579          |       | 807,281           |       |
|                                                                                                                           |       |               |       |              |       |
| STOCKHOLDERS’ EQUITY:                                                                                                     |       |               |       |              |       |
|                                                                                                                           |       |               |       |              |       |
| Preferred stock, $0.01 par value; authorized  5,000,000 shares, no shares issued                                               |       | —             |       | —            |       |
| Common stock, $0.01 par value; authorized  100,000,000 shares, issued and outstanding 19,511,199 and 18,375,117,  respectively |       | 195,112            |       | 183,751           |       |
| Capital in excess of par                                                                                                       |       | 41,020,987         |       | 39,874,958        |       |
| Deficit accumulated during the development stage                                                                               |       | (34,360,254        | )          | (30,223,030       | )          |
| TOTAL STOCKHOLDERS’ EQUITY                                                                                                |       | 6,855,845          |       | 9,835,679         |       |
|                                                                                                                           |       |               |       |              |       |
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY                                                                                |       | $                  | 7,948,424  |              | $          | 10,642,960 |   |

 

See Notes to Condensed Consolidated FinancialStatements.

 

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SENESCOTECHNOLOGIES, INC. AND SUBSIDIARY

(A DEVELOPMENT STAGE COMPANY)

CONDENSEDCONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

 
| ** **                                                              | ** ** | **For the Three   Months Ended   March 31,** | ** ** | **For the Three   Months Ended   March 31,** | ** ** | **For the Nine   Months Ended  March 31,** | ** ** | **For the Nine   Months Ended  March 31,** | ** ** | **From Inception on   July 1, 1998   through   March 31,** | ** ** |
|-------------------------------------------------------------------------|------------|---------------------------------------------------|------------|---------------------------------------------------|------------|-------------------------------------------------|------------|-------------------------------------------------|------------|----------------------------------------------------------------------|------------|
| ** **                                                              | ** ** | **2009**                                          | ** ** | **2008**                                          | ** ** | **2009**                                        | ** ** | **2008**                                        | ** ** | **2009**                                                             | ** ** |
|                                                                    |       |                                              |       |                                              |       |                                            |       |                                            |       |                                                                 |       |
| Revenue                                                                 |       | $                                                 | 75,000     |                                              | $          | 79,167                                          |       | $                                               | 275,000    |                                                                 | $          | 456,667 |   | $ | 1,450,000 |   |
|                                                                    |       |                                              |       |                                              |       |                                            |       |                                            |       |                                                                 |       |
| Operating Expenses:                                                     |       |                                              |       |                                              |       |                                            |       |                                            |       |                                                                 |       |
| General and administrative                                              |       | 532,245                                           |       | 876,966                                           |       | 1,711,166                                       |       | 1,851,876                                       |       | 23,436,622                                                           |       |
| Research and development                                                |       | 540,494                                           |       | 474,176                                           |       | 1,624,166                                       |       | 1,219,325                                       |       | 11,581,761                                                           |       |
| Total Operating Expenses                                                |       | 1,072,739                                         |       | 1,351,142                                         |       | 3,335,332                                       |       | 3,071,201                                       |       | 35,018,383                                                           |       |
|                                                                    |       |                                              |       |                                              |       |                                            |       |                                            |       |                                                                 |       |
| Loss From Operations                                                    |       | (997,739                                          | )          | (1,271,975                                        | )          | (3,060,332                                      | )          | (2,614,534                                      | )          | (33,568,383                                                          | )          |
|                                                                    |       |                                              |       |                                              |       |                                            |       |                                            |       |                                                                 |       |
| Sale of state income tax loss, net                                      |       | —                                            |       | —                                            |       | —                                          |       | —                                          |       | 586,442                                                              |       |
| Other noncash income                                                    |       | —                                            |       | —                                            |       | —                                          |       | —                                          |       | 321,259                                                              |       |
| Interest income, net                                                    |       | 737                                               |       | 43,907                                            |       | 41,788                                          |       | 76,013                                          |       | 522,025                                                              |       |
| Amortization of debt discount and financing costs                       |       | (107,240                                          | )          | (66,676                                           | )          | (319,637                                        | )          | (120,271                                        | )          | (988,400                                                             | )          |
| Interest expense on convertible notes                                   |       | (227,235                                          | )          | (187,473                                          | )          | (799,043                                        | )          | (255,309                                        | )          | (1,233,197                                                           | )          |
| Net Loss                                                                |       | $                                                 | (1,331,477 | )                                                 | $          | (1,482,217                                      | )          | $                                               | (4,137,224 | )                                                                    | $          | (2,914,101 | ) | $ | (34,360,254 | ) |
|                                                                    |       |                                              |       |                                              |       |                                            |       |                                            |       |                                                                 |       |
| Basic and Diluted Net Loss Per Common Share                             |       | $                                                 | (0.07      | )                                                 | $          | (0.08                                           | )          | $                                               | (0.22      | )                                                                    | $          | (0.17 | ) |   |   |
|                                                                    |       |                                              |       |                                              |       |                                            |       |                                            |       |                                                                 |       |
| Basic and Diluted Weighted Average Number of Common  Shares Outstanding |       | 19,033,091                                        |       | 17,583,461                                        |       | 18,678,109                                      |       | 17,510,410                                      |       |                                                                 |       |

 

See Notesto Condensed Consolidated Financial Statements.

 

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SENESCOTECHNOLOGIES, INC. AND SUBSIDIARY

(A DEVELOPMENT STAGE COMPANY)

CONDENSEDCONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

FROM INCEPTION ON JULY 1, 1998 THROUGH MARCH 31,2009

(unaudited)

 
| ** **                                                                                        | ** ** | **Common Stock** | ** ** | **Capital in   Excess of** | ** ** | **Deficit   Accumulated  During the  Development** | ** ** | ** ** | ** ** |
|---------------------------------------------------------------------------------------------------|------------|------------------|------------|----------------------------|------------|----------------------------------------------------|------------|------------|------------|
| ** **                                                                                        | ** ** | **Shares**       | ** ** | **Amount**                 | ** ** | **Par Value**                                      | ** ** | **Stage**  | ** ** | **Total** | ** ** |
|                                                                                              |       |             |       |                       |       |                                               |       |       |       |   |   |
| 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                                               | )          | —     |       | — |   |
|                                                                                              |       |             |       |                       |       |                                               |       |       |       |   |   |
| 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 $2.934582 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 |   |
|                                                                                                   |            |                  |            |                            |            |                                                    |            |            |            |  |  |  |  |  |

 

(continued)

 

See Notes to Condensed Consolidated FinancialStatements.

 

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SENESCO TECHNOLOGIES, INC. AND SUBSIDIARY

(A DEVELOPMENT STAGE COMPANY)

CONDENSEDCONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

FROM INCEPTION ON JULY 1, 1998 THROUGH MARCH 31,2009

(unaudited)

 
| ** **                                                                                                                | ** ** | **Common Stock** | ** ** | **Capital in  Excess of** | ** ** | **Deficit Accumulated During the  Development** | ** ** | ** ** | ** ** |
|---------------------------------------------------------------------------------------------------------------------------|------------|------------------|------------|---------------------------|------------|-------------------------------------------------|------------|------------|------------|
| ** **                                                                                                                | ** ** | **Shares**       | ** ** | **Amount**                | ** ** | **Par Value**                                   | ** ** | **Stage**  | ** ** | **Total** | ** ** |
| Fair market value of options and warrants vesting  during the year ended June 30, 2001                               |       | —           |       | —                    |       | $                                               | 308,619    |       | —     |   | $ | 308,619 |   |
|                                                                                                                      |       |             |       |                      |       |                                            |       |       |       |   |   |
| 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 for 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 |   |
|                                                                                                                      |       |             |       |                      |       |                                            |       |       |       |   |   |
| Fair market value of options and warrants vested  during the year ended June 30, 2003                                |       | —           |       | —                    |       | 848,842                                         |       | —     |       | 848,842 |   |
|                                                                                                                      |       |             |       |                      |       |                                            |       |       |       |   |   |
| 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 | ) |
|                                                                                                                           |            |                  |            |                           |            |                                                 |            |            |            |  |  |  |  |  |

 

(continued)

 

See Notes to Condensed Consolidated FinancialStatements.

 

5

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Table ofContents

 

SENESCOTECHNOLOGIES, INC. AND SUBSIDIARY

(A DEVELOPMENT STAGE COMPANY)

CONDENSEDCONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

FROM INCEPTION ON JULY 1, 1998 THROUGH MARCH 31,2009

(unaudited)

 
| ** **                                                                                                              | ** ** | **Common Stock** | ** ** | **Capital in  Excess of** | ** ** | **Deficit Accumulated During the  Development** | ** ** | ** ** | ** ** |
|-------------------------------------------------------------------------------------------------------------------------|------------|------------------|------------|---------------------------|------------|-------------------------------------------------|------------|------------|------------|
| ** **                                                                                                              | ** ** | **Shares**       | ** ** | **Amount**                | ** ** | **Par Value**                                   | ** ** | **Stage**  | ** ** | **Total** | ** ** |
| 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 - $3.25  |       | 370,283          |       | $                         | 3,704      |                                            | 692,945    |       | —     |   | 696,649 |   |
|                                                                                                                    |       |             |       |                      |       |                                            |       |       |       |   |   |
| 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  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 |   |
|                                                                                                                    |       |             |       |                      |       |                                            |       |       |       |   |   |
| Fair market value of options and Warrants granted and  vested During the year ended June 30,2006                   |       | —           |       | —                    |       | 677,000                                         |       | —     |       | 677,000 |   |
|                                                                                                                    |       |             |       |                      |       |                                            |       |       |       |   |   |
| Warrants exercised during the year ended  June 30, 2006 at an exercise price of $0.01                              |       | 10,000           |       | 100                       |       | —                                          |       | —     |       | 100 |   |
|                                                                                                                    |       |             |       |                      |       |                                            |       |       |       |   |   |
| Issuance of common stock and warrants for cash on  October 11, 2006 at $1.135 per unit                             |       | 1,986,306        |       | 19,863                    |       | 2,229,628                                       |       | —     |       | 2,249,491 |   |
|                                                                                                                    |       |             |       |                      |       |                                            |       |       |       |   |   |
| Commissions, legal and bank fees associated with  issuance on October 11, 2006                                     |       | —           |       | —                    |       | $                                               | (230,483   | )          | —     |   | $ | (230,483 | ) |
|                                                                                                                         |            |                  |            |                           |            |                                                 |            |            |            |  |  |  |  |  |

 

 (continued)

 

See Notesto Condensed Consolidated Financial Statements

 

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SENESCOTECHNOLOGIES, INC. AND SUBSIDIARY

(A DEVELOPMENT STAGE COMPANY)

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’EQUITY

FROM INCEPTION ON JULY 1, 1998 THROUGH MARCH 31,2009

(unaudited)

 
| ** **                                                                                                                                  | ** ** | **Common Stock** | ** ** | **Capital in  Excess of** | ** ** | **Deficit Accumulated During the  Development** | ** ** | ** ** | ** **  |
|---------------------------------------------------------------------------------------------------------------------------------------------|------------|------------------|------------|---------------------------|------------|-------------------------------------------------|------------|------------|-------------|
| ** **                                                                                                                                  | ** ** | **Shares**       | ** ** | **Amount**                | ** ** | **Par Value**                                   | ** ** | **Stage**  | ** **  | **Total** | ** ** |
| Fair market value of options and warrants vested  during the year ended June 30, 2007                                                  |       | —           |       | —                    |       | $                                               | 970,162    |       | —      |   | $ | 970,162 |   |
|                                                                                                                                        |       |             |       |                      |       |                                            |       |       |        |   |   |
| 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, 2008                                                  |       | —           |       | —                    |       | 1,536,968                                       |       | —     |        | 1,536,968 |   |
|                                                                                                                                        |       |             |       |                      |       |                                            |       |       |        |   |   |
| Allocation of proceeds from issuance of convertible  notes and warrants from September 21, 2007 through June 30, 2008             |       | —           |       | —                    |       | 9,340,000                                       |       | —     |        | 9,340,000 |   |
|                                                                                                                                        |       |             |       |                      |       |                                            |       |       |        |   |   |
| 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 |   |
|                                                                                                                                        |       |             |       |                      |       |                                            |       |       |        |   |   |
| Convertible notes converted into common stock  during the year ended June 30, 2008                                                     |       | 555,556          |       | 5,556                     |       | 430,952                                         |       | —     |        | 436,508 |   |
|                                                                                                                                        |       |             |       |                      |       |                                            |       |       |        |   |   |
| Fair market value of options and warrants vested  during the nine months ended March 31, 2009                                          |       | —           |       | —                    |       | 358,347                                         |       | —     |        | 358,347 |   |
|                                                                                                                                        |       |             |       |                      |       |                                            |       |       |        |   |   |
| Cashless exercise of warrants during the nine  months ended March 31, 2009 at an exercise price of $0.74                               |       | 2,395            |       | 24                        |       | (24                                             | )          | —     |        | — |   |
|                                                                                                                                        |       |             |       |                      |       |                                            |       |       |        |   |   |
| Issuance of common stock in lieu of cash payment  for interest during the nine months ended March 31,2009                              |       | 1,020,987        |       | 10,210                    |       | 788,833                                         |       | —     |        | 799,043 |   |
|                                                                                                                                        |       |             |       |                      |       |                                            |       |       |        |   |   |
| Issuance of common stock in connection with the  Company’s short term incentive plan during the nine months ended  March 31, 2009 |       | 112,700          |       | 1,127                     |       | (1,127                                          | )          | —     |        | — |   |
|                                                                                                                                        |       |             |       |                      |       |                                            |       |       |        |   |   |
| Net loss                                                                                                                                    |       | —           |       | —                    |       | —                                          |       | $          | (34,360,254 | ) | (34,360,254 | ) |
| Balance at March 31, 2009                                                                                                              |       | 19,511,199       |       | $                         | 195,112    |                                            | $          | 41,020,987 |        | $ | (34,360,254 | ) | $ | 6,855,845 |   |

 

See Notesto Condensed Consolidated Financial Statements.

 

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SENESCOTECHNOLOGIES, INC. AND SUBSIDIARY

(A DEVELOPMENT STAGE COMPANY)

CONDENSEDCONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

 
| ** **                                                                             | ** ** | **For the Nine Months Ended  March 31,** | ** ** | **From Inception on  July 1, 1998 through  March 31,** | ** ** |
|----------------------------------------------------------------------------------------|------------|-----------------------------------------------|------------|------------------------------------------------------------------|------------|
| ** **                                                                             | ** ** | **2009**                                      | ** ** | **2008**                                                         | ** ** | **2009** | ** ** |
| Cash flows from operating activities:                                                  | ** ** | ** **                                    | ** ** | ** **                                                       | ** ** | ** ** | ** ** |
| Net loss                                                                               |       | $                                             | (4,137,224 | )                                                                | $          | (2,914,101 | ) | $ | (34,360,254 | ) |
| 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                   |       | —                                        |       | —                                                           |       | (321,259 | ) |
| Issuance of common stock and warrants for interest                                     |       | 799,043                                       |       | 255,309                                                          |       | 1,242,512 |   |
| Share-based compensation expense                                                       |       | 358,347                                       |       | 708,537                                                          |       | 10,054,444 |   |
| Depreciation and amortization                                                          |       | 81,054                                        |       | 67,179                                                           |       | 541,742 |   |
| Amortization of convertible note discount and  deferred financing costs                |       | 319,637                                       |       | 120,271                                                          |       | 988,400 |   |
| (Increase) decrease in operating assets:                                               |       |                                          |       |                                                             |       |   |   |
| Accounts receivable                                                                    |       | —                                        |       | —                                                           |       | — |   |
| Prepaid expense and other current assets                                               |       | (709,266                                      | )          | 46,831                                                           |       | (889,822 | ) |
| Security deposit                                                                       |       | —                                        |       | —                                                           |       | (7,187 | ) |
| Increase (decrease) in operating liabilities:                                          |       |                                          |       |                                                             |       |   |   |
| Accounts payable                                                                       |       | 102,208                                       |       | 59,267                                                           |       | 472,375 |   |
| Accrued expenses                                                                       |       | 186,505                                       |       | 132,260                                                          |       | 500,772 |   |
| Deferred revenue                                                                       |       | —                                        |       | (16,667                                                          | )          | — |   |
| Other liability                                                                        |       | (5,284                                        | )          | (4,601                                                           | )          | 17,778 |   |
| Net cash used in operating activities                                                  |       | (3,004,980                                    | )          | (1,545,715                                                       | )          | (21,544,070 | ) |
|                                                                                   |       |                                          |       |                                                             |       |   |   |
| Cash flows from investing activities:                                                  |       |                                          |       |                                                             |       |   |   |
| Patent costs                                                                           |       | (490,251                                      | )          | (551,752                                                         | )          | (3,997,051 | ) |
| Purchase of investments, net                                                           |       | (1,799,388                                    | )          | (250,000                                                         | )          | (2,299,388 | ) |
| Purchase of property and equipment                                                     |       | (4,173                                        | )          | (2,783                                                           | )          | (177,063 | ) |
| Net cash used in investing activities                                                  |       | (2,293,812                                    | )          | (804,535                                                         | )          | (6,473,502 | ) |
|                                                                                   |       |                                          |       |                                                             |       |   |   |
| Cash flows from financing activities:                                                  |       |                                          |       |                                                             |       |   |   |
| Proceeds from grant                                                                    |       | —                                        |       | —                                                           |       | 99,728 |   |
| Proceeds from issuance of bridge notes                                                 |       | —                                        |       | —                                                           |       | 525,000 |   |
| Proceeds from issuance of common stock, net and  exercise of options and warrants      |       | —                                        |       | —                                                           |       | 19,082,818 |   |
| Proceeds from issuance of convertible note and  warrants, net                          |       | —                                        |       | 6,550,000                                                        |       | 9,340,000 |   |
| Deferred financing costs                                                               |       | —                                        |       | (558,578                                                         | )          | (651,781 | ) |
| Net cash provided by financing activities                                              |       | —                                        |       | 5,991,422                                                        |       | 28,395,765 |   |
|                                                                                   |       |                                          |       |                                                             |       |   |   |
| Net (decrease) increase in cash and cash  equivalents                                  |       | (5,298,792                                    | )          | 3,641,172                                                        |       | 378,193 |   |
|                                                                                   |       |                                          |       |                                                             |       |   |   |
| Cash and cash equivalents at beginning of period                                       |       | 5,676,985                                     |       | 408,061                                                          |       | — |   |
|                                                                                   |       |                                          |       |                                                             |       |   |   |
| Cash and cash equivalents at end of period                                             |       | $                                             | 378,193    |                                                             | $          | 4,049,233 |   | $ | 378,193 |   |
|                                                                                   |       |                                          |       |                                                             |       |   |   |
| Supplemental disclosure of cash flow information:                                      |       |                                          |       |                                                             |       |   |   |
| Cash paid during the period for interest                                               |       | $                                             | —     |                                                             | $          | — |   | $ | 22,317 |   |
| Supplemental schedule of noncash financing activity:                                   |       |                                          |       |                                                             |       |   |   |
| Conversion of convertible notes into common stock,  net                                |       | $                                             | —     |                                                             | $          | — |   | $ | 500,000 |   |
| Conversion of bridge notes into stock                                                  |       | $                                             | —     |                                                             | $          | — |   | $ | 534,316 |   |
| Allocation of convertible debt proceeds to warrants  and beneficial conversion feature |       | $                                             | —     |                                                             | $          | 6,550,000 |   | $ | 9,340,000 |   |
| Warrants issued for financing costs                                                    |       | $                                             | —     |                                                             | $          | 277,979 |   | $ | 639,645 |   |
| Issuance of common stock for interest on  convertible notes                            |       | $                                             | 799,043    |                                                             | $          | 255,309 |   | $ | 1,242,512 |   |

 

See Notes to Condensed Consolidated FinancialStatements.

 

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SENESCOTECHNOLOGIES, INC. AND SUBSIDIARY

(A DEVELOPMENT STAGE COMPANY)

NOTES TOCONDENSED CONSOLIDATED FINANCIAL STATEMENTS 

(unaudited)

 

**Note 1 - Basis of Presentation:**

 

Thefinancial statements included herein have been prepared by Senesco Technologies, Inc.(the “Company”), without audit, pursuant to the rules and regulations ofthe Securities and Exchange Commission. Certain information and footnote disclosures normally included infinancial statements prepared in accordance with United States generallyaccepted accounting principles have been condensed or omitted pursuant to such rules andregulations.  These unaudited condensed consolidatedfinancial statements should be read in conjunction with the auditedconsolidated financial statements and notes thereto included in the Company’sAnnual Report on Form 10-K for the fiscal year ended June 30, 2008.

 

In theopinion of the Company’s management, the accompanying unaudited condensedconsolidated financial statements contain all adjustments, consisting solely ofthose which are of a normal recurring nature, necessary to present fairly itsfinancial position as of March 31, 2009, the results of its operations forthe three-month and nine-month periods ended March 31, 2009 and 2008, cashflows for the nine-month periods ended March 31, 2009 and 2008, and theresults of its operations and cash flows for the period from inception on July 1,1998 through March 31, 2009.

 

Interimresults are not necessarily indicative of results for the full fiscal year.

 

**Note 2 — Liquidity:**

** **

There issubstantial doubt about the Company’s ability to continue as a going concerndue to its limited assets and capital and recurring losses as explained in thefollowing paragraph.

 

The Company has a limited operating history and limitedassets and capital and has incurred losses each year since inception with adeficit accumulated during the development stage from inception on July 1,1998 through March 31, 2009 of $34,360,254.  The Company has generated minimal revenues bylicensing its technology for certain crops to companies willing to share in itsdevelopment costs. In addition, the Company’s technology may not be ready forcommercialization for several years. The Company expects to continue to incurlosses for the next several years because it anticipates that its expenditureson research and development, and administrative activities will significantlyexceed its revenues during that period. The Company cannot predict when, ifever, it will become profitable.

 

The Company’s operations to date have required significantcash expenditures.  The Company’s futurecapital requirements will depend on the results of its research and developmentactivities, preclinical and clinical studies, and competitive and technologicaladvances.

 

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The Company plans to address thesematters by raising capital through the placement of debt instruments or equityor both.  However, the Company may not beable to obtain adequate funds for its operations when needed or on acceptableterms.  If the Company is unable to raiseadditional funds, it will need to do one or more of the following:

 

·                  delay, scale-back oreliminate some or all of its research and product development programs;

 

·                  provide a license to thirdparties to develop and commercialize products or technologies that the Companywould otherwise seek to develop and commercialize itself;

 

·                  seek strategic alliances orbusiness combinations;

 

·                  attempt to sell the Company;

 

·                  cease operations; or

 

·                  declare bankruptcy.

 

Asof March 31, 2009, the Company had cash and investments in the amount of$2,677,581, which consisted of money market funds and U.S. treasury bills.  The Company estimates that such amount willcover its expenses for approximately the next four months from March 31,2009.  The accompanying financialstatements do not include any adjustment from the outcome of this uncertainty.

 

**Note 3 — Intangible Assets:**

** **

The Company conducts research and development activities,the cost of which is expensed as incurred, in order to generate patents thatcan be licensed to third parties in exchange for license fees androyalties.  Because the patents are thebasis of the Company’s future revenue, the patent costs are capitalized.   The capitalized patent costs represent theoutside legal fees incurred by the Company to submit and undertake allnecessary efforts to have such patent applications issued as patents.

 

The length of time that it takes for an initial patentapplication to be approved is generally between four to six years.  However, due to the unique nature of eachpatent application, the actual length of time may vary.  If a patent application is denied, theassociated cost of that application would be written off.  However, the Company has not had any patentapplications denied as of March 31, 2009. Additionally, should a patent application become impaired during theapplication process, the Company would write down or write off the associatedcost of that patent application.

 

Issued patents and agricultural patent applications pendingare being amortized over a period of 17 years, the expected economic life ofthe patent.

 

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The Company assesses theimpairment in value of intangible assets whenever events or circumstancesindicate that their carrying value may not be recoverable.  Factors the Company considers important whichcould trigger an impairment review include the following:

 

·                  significant negativeindustry trends;

 

·                  significant underutilizationof the assets;

 

·                  significant changes in howthe Company uses the assets or its plans for their use; and

 

·                  changes in technology andthe appearance of competing technology.

 

If the Company’s review determines that the futurediscounted cash flows related to these assets will not be sufficient to recovertheir carrying value, the Company will reduce the carrying values of theseassets down to its estimate of fair value and continue amortizing them overtheir remaining useful lives.  To date,the Company has not recorded any impairment of intangible assets.

 

**Note 4 - Loss Per Share:**

** **

Net loss per common share is computed by dividing theloss by the weighted-average number of common shares outstanding during theperiod.  Shares to be issued upon theexercise of the outstanding options and warrants aggregating 23,151,963 and19,955,861 as of March 31, 2009 and 2008, respectively, are not includedin the computation of net loss per share, as their effect isanti-dilutive.  Additionally, as of March 31,2009, 10,555,556 shares to be issued upon the conversion of convertible notesat a fixed conversion price of $0.90 are not included in the computation ofdiluted net loss per share, as their effect is anti-dilutive.

 

**Note 5 — Share-BasedTransactions:**

** **

Theterms and vesting schedules for share-based awards vary by type of grant andthe employment status of the grantee. Generally, the awards vest based upon time-based conditions.

 

Thefair value of each stock option and warrant granted has been determined usingthe Black-Scholes model.  The materialfactors incorporated in the Black-Scholes model in estimating the value of theoptions and warrants include the following:

 
| ** **                  | ** ** | **Three Months Ended March 31,** | ** ** | **Nine Months Ended  March 31,** | ** ** |
|-----------------------------|------------|---------------------------------------|------------|---------------------------------------|------------|
| ** **                  | ** ** | **2009**                              | ** ** | **2008**                              | ** ** | **2009** | ** ** | **2008** | ** ** |
| Estimated life in years     |       | 3.5-5.5                               |       | 4-6                                   |       | 3.5-5.5 |   | 4-6 |   |
| Risk-free interest rate (1) |       | 1.3%—1.8%                        |       | 1.9% — 4.1%                      |       | 1.1%-2.1% |   | 1.9%-4.1% |   |
| Volatility                  |       | 100%                                  |       | 100%                                  |       | 100% |   | 100% |   |
| Dividend paid               |       | None                                  |       | None                                  |       | None |   | None |   |

 

----

(1)                                  Represents the interest rate on a U.S. Treasury security with a maturitydate corresponding to that of the option term.

 

The economic values of the options will depend on the futureprice of the Company’s common stock, par value $0.01 (the “Common Stock”),which cannot be forecast with reasonable accuracy.

 

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A summary of changes in the stockoption plan for the nine month period ended March 31, 2009 is as follows:

 
| ** **                         | ** ** | **Number of Options** | ** ** | **Weighted-Average   Exercise Price** | ** ** |
|------------------------------------|------------|-----------------------|------------|---------------------------------------|------------|
| Outstanding at July 1, 2008   |       | 3,715,600             |       | $                                     | 1.95       |   |
| Granted                            |       | 712,920               |       | $                                     | 0.58       |   |
| Exercised                          |       | —                |       | —                                |       |
| Canceled                           |       | —                |       | —                                |       |
| Outstanding at March 31, 2009 |       | 4,428,520             |       | $                                     | 1.73       |   |
| Exercisable at March 31, 2009 |       | 3,5,45,520            |       | $                                     | 1.95       |   |

 

A summary of changes to thenon-vested stock options for the nine month period ended March 31, 2009 isas follows:

 
| ** **                                      | ** ** | **Weighted-Average**  | ** ** |
|-------------------------------------------------|------------|-----------------------|------------|
| ** **                                      | ** ** | **Number of Options** | ** ** | **Grant-Date  Fair Value** | ** ** |
| Non-vested stock options at July 1, 2008   |       | 937,264               |       | $ | 0.77 |   |
| Granted                                         |       | 712,920               |       | $ | 0.45 |   |
| Vested                                          |       | (767,184              | )          | $ | (0.61 | ) |
| Forfeited                                       |       | —                |       | — |   |
| Non-vested stock options at March 31, 2009 |       | 883,000               |       | $ | 0.66 |   |

 

As of March 31, 2009, the aggregate intrinsic value ofstock options outstanding was $8,030, with a weighted-average remaining term of6.0 years.  The aggregate intrinsic valueof stock options exercisable at that same date was $77,550, with aweighted-average remaining term of 5.3 years. As of March 31, 2009, the Company has 6,009,364 shares availablefor future stock option grants.

 

As of March 31, 2009, total compensation expense notyet recognized related to stock option grants and restricted stock unitsamounted to approximately $123,000**,**which will be recognized over the next 21 months, and an additional $640,000which may be recognized as achievement of certain target goals under theCompany’s Long-Term Incentive Program become probable over the next 24 months.

 

***Short-Term Incentive Program***

** **

On November 19, 2008, upon recommendation of theCompany’s Compensation Committee, the Board adopted a Short-Term EquityIncentive Program for each of Bruce C. Galton, John E. Thompson, Ph.D., JoelBrooks, Richard Dondero and Sascha Fedyszyn. The Programs are intended to ensure the achievement of certain goals ofthe Company, continuity of the Company’s executive management, and to align theinterests of the executive management with those of the shareholders.

 

Pursuant to and as defined in the Short-Term EquityIncentive Program, each executive would be awarded shares of the Company’sCommon Stock, or options to acquire shares of the Company’s Common Stock, ifthe Company achieves certain target goals relating to research, 

 

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financing, licensing, investor relations and otheradministrative items during the fiscal year ending June 30, 2009.

 

The number of eligible shares andoptions to be awarded to the executive is based upon the following weightings:

 

1.               25% of eligible shares and options for contributions relating to theCompany’s Human Health Objectives;

 

2.               15% of eligible shares and options for contributions relating to theCompany’s Finance Objectives;

 

3.               20% of eligible shares and options for contributions relating to theCompany’s Agricultural Licensing Objectives;

 

4.               25% of eligible shares and options for contributions relating to theCompany’s Investor Relations, Intellectual Property and Website Administration;and

 

5.               15% of the eligible shares and options relating to the Company’sOrganizational Objectives.

 

If the target goals are achievedby the Company, the executive officers would be awarded the following number ofshares and options for the fiscal year ended June 30, 2009:

 
| ** **              | ** ** | **Number of Shares** | ** ** | **Number of Options (1)** | ** ** |
|-------------------------|------------|----------------------|------------|---------------------------|------------|
| Bruce C. Galton         |       | 66,000               |       | —                    |       |
| John E. Thompson, Ph.D. |       | —               |       | 48,000                    |       |
| Joel Brooks             |       | 28,000               |       | —                    |       |
| Richard Dondero         |       | —               |       | 80,000                    |       |
| Sascha P. Fedyszyn      |       | 42,000               |       | —                    |       |
| Total                   |       | 136,000              |       | 128,000                   |       |

 

----

(1)                                  Such options are exercisable at a strike price of $0.60, which representsthe closing price of the common stock on November 18, 2008.

 

As of March 31, 2009, the Company has determined thatthe achievement of the target goals is probable.  The total amount of  compensation expense in connection with theshort-term incentive program in the amount of $140,480 is being recordedratably over the seven and one-half month period from November 19, 2008through June 30, 2009.   For thenine months ended March 31, 2009, the Company recorded $84,288 of suchexpense.

 

***Long-Term Incentive Program***

** **

On December 13, 2007, upon recommendation of theCompany’s Compensation Committee, the Board adopted a Long-Term Equity IncentiveProgram for the members of the executive management team.  The Long-Term Equity Incentive Program isintended to ensure the achievement of certain goals of the Company, continuityof the Company’s executive management, and to align the interests of the executivemanagement with those of the shareholders.

 

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Pursuant to and as defined in the Long-Term Equity IncentiveProgram, each executive would be awarded shares of the Company’s Common Stockand options to acquire shares of the Company’s Common Stock if the Companyachieves certain target goals relating to its Multiple Myeloma research projectover the next three fiscal years.

 

The number of eligible shares andoptions to be awarded to the executives is based upon the following weightings:

 

1.               20% of the eligible shares upon the execution of a research agreement toconduct a phase I/II clinical trial at a research facility;

 

2.               20% of the eligible shares upon the filing and acceptance by the FDA of aninvestigational new drug application; and

 

3.               60% of the eligible shares upon the successful completion of a FDA approvedphase I/II clinical trial .

 

If the target goals are achievedby the Company, the executive officers would be awarded the following number ofshares and options :

 
| ** **              | ** ** | **Goal 1** | ** ** | **Goal 2** | ** ** | **Goal 3** | ** ** |
|-------------------------|------------|------------|------------|------------|------------|------------|------------|
| Number of Shares        |       |       |       |       |       |       |       |
| Bruce C. Galton         |       | 25,000     |       | 25,000     |       | 75,000     |       |
| Joel Brooks             |       | 10,000     |       | 10,000     |       | 30,000     |       |
| Sascha P. Fedyszyn      |       | 10,000     |       | 10,000     |       | 30,000     |       |
| Total number of shares  |       | 45,000     |       | 45,000     |       | 135,000    |       |
| Number of Options (1)   |       |       |       |       |       |       |       |
| John E. Thompson, Ph.D. |       | 50,000     |       | 50,000     |       | 150,000    |       |
| Richard Dondero         |       | 60,000     |       | 60,000     |       | 180,000    |       |
| Total number of options |       | 110,000    |       | 110,000    |       | 330,000    |       |

 

----

(1)                                  Such options are exercisable at a strike price of $0.99, which representsthe closing price of the common stock on December 12, 2007.

 

As of March 31, 2009, the Company is not able todetermine if the achievement of the target goals under the Long-Term EquityIncentive Program are probable and, therefore, has not yet begun to recognizeany of the $640,000 compensation expense that was computed on the date ofadoption of the Long-Term Equity Incentive Program.  The Company will begin recognizing suchcompensation expense ratably over the remaining term of the Long-Term EquityIncentive Program at such time that the Company is able to determine that theachievement of the target goals are probable.

 

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**Note 6** — **Revenue Recognition:**

 

The Company receives certain nonrefundable upfront fees inexchange for the transfer of its technology to licensees.  Upon delivery of the technology, the Companyhas no further obligations to the licensee with respect to the basic technologytransferred and, accordingly, recognizes revenue at that time.  The Company may, however, receive additionalpayments from its licensees in the event such licensees achieve certaindevelopment or commercialization milestones in their particular field ofuse.  Other nonrefundable upfront feesand milestone payments, where the milestone payments are a function of time asopposed to achievement of specific achievement-based milestones, are deferredand amortized ratably over the estimated research period of the license.

 

**Note 7 —Convertible Notes and StockholdersEquity:**

 

During the year ended June 30, 2008, the Company issued$5,000,000 of convertible notes and warrants to YA Global Investments L.P. (“YAGlobal”) and $5,000,000 of convertible notes and warrants to Stanford VentureCapital Holdings, Inc. (“Stanford”), for aggregate gross proceeds in theamount of $10,000,000.  The convertiblenotes convert into the Company’s Common Stock at a fixed price of $0.90 pershare, subject to certain adjustments (the “Fixed Conversion Price”), through August 1,2009 and December 20, 2009, respectively, at which time the convertiblenotes may convert into shares of the Company’s Common Stock at the lower of thefixed conversion price or 80% of the lowest daily volume-weighted average price(the “VWAP”) of the common stock during the five trading days prior to theconversion date. The maturity date of each of the convertible notes for YAGlobal and Stanford is December 30, 2010 and December 31, 2010,respectively.

 

The convertible notes accrue interest on their outstandingprincipal balances at an annual rate of 8%. The Company has the option to pay interest in cash or, upon certainconditions, common stock.  If the Companypays interest in Common Stock, the stock will be valued at a 10% discount tothe average daily VWAP for the five day trading period prior to the interest paymentdate (the “Interest Shares”).

 

At the Company’s option, it can redeem a portion of, or allof, the principal owed under the convertible notes by providing the investorswith at least 30 business days’ written notice, provided that, at the time ofreceipt of the notice, either: (A)(i) the VWAP of the Common Stock exceeds130% of the Fixed Conversion Price for at least 20 of 30 prior trading days,and (ii) there is an effective registration statement for the resale ofthe Common Stock that will be issued under the redemption or (B) it redeemsa portion, or all, of the principal owed at a 20% premium above the principalthen outstanding and any accrued interest thereupon.  If the Company redeems all or any of theprincipal outstanding under the convertible notes, it will pay an amount equalto the principal being redeemed plus accrued interest.

 

If there is an effective registration statement for theresale of the shares underlying the convertible notes or if such shares become Rule 144eligible, the Company will have the option to force the investors to convert50% and 100% of its then-outstanding convertible notes if its Common Stockprice exceeds 150% and 175% of the Fixed Conversion Price, respectively, forany 20 out of 30 trading days; provided that such forced conversion meetscertain conditions (the “Call Option”). If the Company exercises its Call Option prior to the third anniversaryof the signing date, it will issue additional warrants to the investor equal to50% of the number of 

 

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shares underlying the convertible note subject to the forcedconversion.  These warrants will beexercisable at the fixed conversion price and will have the same maturity asthe other warrants issued under the YA Global financing.

 

The Company’s obligations under the convertible notes aresecured by all of its and its subsidiary’s assets and intellectual property, asevidenced by certain security agreements and certain patent security agreementsby and between the Company and each of YA Global and Stanford.  Pursuant to a subordination agreement, YAGlobal is the senior secured creditor.

 

The conversion rate of each convertible note is subject toadjustment for certain events, including dividends, stock splits, combinationsand the sale of the Company’s Common Stock or securities convertible into orexercisable for the Company’s Common Stock at a price less than the thenapplicable conversion or exercise price.

 

The investors have a right of first refusal on any futurefunding that involves the issuance of the Company’s capital stock for so longas a portion of the convertible notes are outstanding.

 

Pursuant to the Registration Rights Agreement, the Companyfiled an initial registration statement on October 12, 2007 to register3,333,333 shares of common stock, underlying the convertible notes, issuable toYA Global, and such registration statement became effective on November 1,2007.

 

The convertible notes and warrants issued to YA Global aresubject to a maximum cap of 30,500,000 on the number of shares of common stockthat can be issued upon the conversion of the convertible notes, the exerciseof the warrants and the issuance of interest shares.

 

The convertible notes and warrants issued to Stanford aresubject to a maximum cap of 31,888,888 on the number of shares of common stockthat can be issued upon the conversion of the convertible notes, the exerciseof the warrants and the issuance of interest shares.

 

Currently, at the fixed conversion price, the number ofshares of common stock issuable upon conversion of the remaining $9,500,000 ofconvertible notes outstanding and shares of common stock to be issued uponexercise of the warrants outstanding at March 31, 2009 represents, in theaggregate, 24,438,888 shares, plus an estimated additional 2,830,000 shares(based upon the stock price at March 31, 2009) for the payment of interestin stock under the convertible notes.

 

As of March 31, 2009, the outstanding balance of theconvertible notes were $1,926, which is comprised of notes with an aggregateface amount of $9,500,000 less unamortized debt discount of $9,498,074.  Debt discount associated with the convertiblenotes is amortized to interest expense, using the effective yield method, overthe remaining life of the convertible notes. Upon conversion of the convertible notes into Common Stock, anyunamortized debt discount relating to the portion converted will be charged tointerest.  Total charges to interest foramortization of debt discount were $1,450 and $1,869 for the three month andnine month periods ended March 31, 2009.

 

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The costs associated with the issuances in the amount of$1,291,427 have been recorded as deferred financing costs and are beingamortized ratably over the term of the convertible notes.  The balance of deferred financing costs as ofMarch 31, 2009 amounted to $741,462.

 

**Note 8 — Income Taxes:**

 

No provision for income taxes hasbeen made in the three month and nine month periods ended March 31, 2009and 2008 given the Company’s losses in 2009 and 2008 and available netoperating loss carryforwards.  A benefithas not been recorded as the realization of the net operating losses is notassured and the timing in which the Company can utilize its net operating losscarryforwards in any year or in total may be limited by provisions of theInternal Revenue Code regarding changes in ownership of corporations.

 

**Note 9 — Effects of New AccountingPronouncements Applicable to the Company**

 

*EITF Issue No. 07-1 —Accounting for Collaborative Arrangements*

 

This pronouncement defines acollaborative arrangement as a contractual arrangement that involves a jointoperating activity that involves two or more parties who are both activeparticipants in the activity and exposed to significant risks and rewardsdependent on the commercial success of the activity.  The pronouncement also defines how the costsincurred and revenues generated from transactions with third parties should berecorded and presented in each entity’s income statement.  This pronouncement is effective for financialstatements issued for fiscal years beginning after December 15, 2008, andinterim periods within those fiscal years, and shall be applied retrospectivelyto all prior periods presented for all collaborative arrangements existing asof the effective date.  The Company doesnot believe that this pronouncement will have any material effect on itsfinancial statements.

 

*SFAS No. 157 — Fair Value Measurements*

 

InSeptember 2006 the Financial Accounting Standards Board (“FASB”) issuedStatement of Financial Accounting Standards No. 157, *Fair Value Measurements* (SFAS No. 157).  SFAS No. 157 defines fair value,establishes a framework for measuring fair value, and expands disclosures aboutfair value measurement.  SFAS No. 157also emphasizes that fair value is a market-based measurement, not anentity-specific measurement, and sets out a fair value hierarchy with thehighest priority being quoted prices in active markets.  Under SFAS No. 157, fair valuemeasurements are disclosed by level within that hierarchy.  In February 2008, the FASB issued FASBStaff Position No. 157-2, *EffectiveDate of FASB Statement No. 157*, which permits a one-yeardeferral for the implementation of SFAS No. 157 with regard tononfinancial assets and liabilities that are not recognized or disclosed atfair value in the financial statements on a recurring basis.  The Company adopted SFAS No. 157 for thefiscal year beginning July 1, 2008, except for nonfinancial assets andnonfinancial liabilities that are recognized or disclosed at fair value in thefinancial statements on a nonrecurring basis for which delayed application ispermitted until our fiscal year beginning July 1, 2009.  The adoption of the remaining provisions ofSFAS No. 157 is not expected to have a material impact on the Company’sfinancial position, results of operations or cash flows.

 

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*EITF Issue No. 07-5 —Determining Whether an Instrument (or Embedded Feature) is Indexed to an Entity’sOwn Stock.*

 

InJune 2008, the FASB ratified EITF Issue No. 07-5, “DeterminingWhether an Instrument (or Embedded Feature) is Indexed to an Entity’s Own Stock”(“EITF 07-5”). EITF 07-5 provides guidance on how to determine if certaininstruments or embedded features are considered indexed to our own stock,including instruments similar to our convertible notes and warrants to purchaseour stock. EITF 07-5 requires companies to use a two-step approach to evaluatean instrument’s contingent exercise provisions and settlement provisions indetermining whether the instrument is considered to be indexed to its own stockand exempt from the application of SFAS No. 133, “Accounting forDerivative Instruments and Hedging Activities”. Although EITF 07-5 is effectivefor fiscal years beginning after December 15, 2008, any outstandinginstrument at the date of adoption will require a retrospective application ofthe accounting through a cumulative effect adjustment to retained earnings uponadoption. The Company is currently evaluating the impact that adoption of EITF07-5 will have on its consolidated financial statements.

 

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

 

The following discussion and analysis should be read inconjunction with our condensed consolidated financial statements and the relatednotes thereto included in this Quarterly Report on Form 10-Q.  The discussion and analysis may containforward-looking statements that are based upon current expectations and entailvarious risks and uncertainties.  Ouractual results and the timing of events could differ materially from thoseanticipated in the forward-looking statements as a result of various factors,including those set forth under “Factors That May Affect Our Business,Future Operating Results and Financial Condition” and elsewhere in this report.

 

**Overview**

 

*Our Business*

 

Theprimary business of Senesco Technologies, Inc., a Delaware corporationincorporated in 1999, and its wholly-owned subsidiary, Senesco, Inc., aNew Jersey corporation incorporated in 1998, collectively referred to as “Senesco,”“we,” “us” or “our,” is to utilize our patented and patent-pending genes,primarily eucaryotic translation initiation Factor 5A, or Factor 5A, anddeoxyhypusine synthase, or DHS, and related technologies for their inhibitionin human health applications to develop novel approaches to treat inflammatorydiseases and cancer.

 

Inagricultural applications, we are developing and licensing Factor 5A, DHS andLipase to enhance the quality and productivity of fruits, flowers, andvegetables and agronomic crops through the control of cell death, referred toherein as senescence, and growth in plants.

 

*HumanHealth Applications*

 

Webelieve that our gene technology could have broad applicability in the humanhealth field, by either inhibiting or inducing apoptosis.  Inhibiting apoptosis may be useful inpreventing or treating a wide range of inflammatory and ischemic diseasesattributed to premature apoptosis. Inducing apoptosis may be useful in treatingcertain forms of cancer because the cancerous cells have failed to initiateapoptosis on their own due to damaged or inhibited apoptotic pathways.

 

Wehave commenced preclinical *in-vivo*and *in-vitro* research todetermine the ability of Factor 5A to regulate key execution genes,pro-inflammatory cytokines, receptors, and transcription factors, which areimplicated in numerous apoptotic diseases.

 

Certainpreclinical human health results to date include:

 

·                  Performing efficacy,toxicological and dose-finding studies in mice for our potential multiplemyeloma drug candidate, SNS-01.  SNS-01is a nano-encapsulated combination therapy of Factor 5A and an siRNA againstFactor 5A.  Our efficacy study in severecombined immune-deficient mice with subcutaneous human multiple myeloma testedSNS-01 dosages ranging from 0.15 mg/kg to 1.5 mg/kg.  In these studies, mice treated with a dose ofeither 0.75 mg/kg or 1.5 mg/kg both showed a 91% reduction in tumor volume anda decrease in tumor weight of 87% and 95%, respectively.  For mice that 

 

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received smaller doses of either 0.38 mg/kg or 0.15 mg/kg, there wasalso a reduction in tumor volume (73% and 61%, respectively) and weight (74%and 36%, respectively).  All of thetreated mice, regardless of dose, survived. This therapeutic dose range provided the basis for an 8-day maximumtolerated dose study in which normal mice received two intravenous doses ofincreasing amounts of SNS-01 (from 2.2 mg/kg). Body weight, organ weight and serum levels of liver enzymes were used asclinical indices to assess toxicity.  Adose between 2.2 mg/kg and 2.9 mg/kg was well tolerated with respect to theseclinical indices, and the survival rate at 2.9 mg/kg was 80%.  Those mice receiving above 2.9 mg/kg ofSNS-01 showed evidence of morbidity and up to 80% mortality.  The 2.9 mg/kg threshold, twice the upper endof the therapeutic dose range, was therefore determined to be the maximumtolerated dose in mice.

 

·                  demonstrated significanttumor regression and diminished rate of tumor growth of multiple myeloma tumorsin SCID mice treated with Factor 5A technology encapsulated in nanoparticles;

 

·                  increased median survival byapproximately 250% in a tumor model of mice injected with melanoma cancercells;

 

·                  induced apoptosis in bothhuman cancer cell lines derived from tumors and in lung tumors in mice;

 

·                  induced apoptosis of cancercells in a human multiple myeloma cell line;

 

·                  measured VEGF reduction inmouse lung tumors as a result of treatment with our genes;

 

·                  decreased ICAM andactivation of NFkB in cancer cells employing siRNA against Factor 5A;

 

·                  increased the survival,while maintaining functionality, of mouse pancreatic islet cells isolated fortransplantation, using intraperitaneal administration of our technology.  Initial animal studies have shown that ourtechnology administered prior to harvesting beta islet cells from a mouse, hasa significant impact not only on the survival of the beta islet cells, but alsoon the retention of the cells’ functionality when compared to the untreatedbeta islet cells.  Additional studieshave shown that the treated beta islet cells survive a pro-inflammatorycytokine challenge, while maintaining their functionality with respect toinsulin production.  These furtherstudies also revealed Factor-5A’s involvement in the modulation of induciblenitric oxide synthase (iNOS), an important indicator of inflammation; and

 

·                  increased the survival rateof mice in a lethal challenge sepsis model. Additionally, a broad spectrum of systemic pro-inflammatory cytokineswere down-regulated, while not effecting the anti-inflammatory cytokine IL-10.

 

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Accelerating Apoptosis

 

The data from our pre-clinical studies indicate that theup-regulation of Factor 5A induces cell death in cancer cells through both thep53 (intrinsic) and cell death receptor (extrinsic) apoptotic pathways. Tumorsarise when abnormal cells fail to undergo apoptosis due to an inability toactivate their apoptotic pathways. Just as the Factor 5A gene appears tofacilitate expression of the entire suite of genes required for programmed celldeath in plants, the Factor 5A gene appears to regulate expression of a suiteof genes required for programmed cell death in human cells. Because the Factor5A gene appears to function at the initiation point of the apoptotic pathways,both intrinsic and extrinsic, we believe that our gene technology has potentialapplication as a means of combating a broad range of cancers.  Based on the results obtained through our *in-vitro* studies, we have found that up-regulating Factor 5Aresults in: (i) the up-regulation of p53; (ii) increased inflammatorycytokine production; (iii) increased cell death receptor formation; and (iv) increasedcaspase activity.  These features,coupled with a simultaneous down-regulation Bcl-2, result in apoptosis ofcancer cells.  In addition, our *in-vitro* studies have shown that the up-regulation of Factor5A also down-regulates VEGF, a growth factor which allows tumors to developadditional vascularization needed for growth beyond a small mass of cells.

 

Inhibiting Apoptosis

 

Our preclinical studies indicate that down-regulation of ourproprietary Factor 5A gene may have potential application as a means forcontrolling the effects of a broad range of diseases that are attributable topremature cell death, ischemia, or inflammation. Such inflammatory diseasesinclude glaucoma, heart disease, and other certain inflammatory diseases suchas Crohn’s disease, sepsis and diabetic retinopathy.  We are engaged in preclinical research ofcertain inflammatory diseases. Using small inhibitory RNA’s, or siRNA’s,against Factor 5A to inhibit its expression, the results of our studies haveindicated a reduction in pro-inflammatory cytokine formation and the formationof receptors for LPS, interferon-gamma and TNF-alpha.  Our studies have also indicated that byinhibiting Factor 5A, iNOS, MAPK, NFkB, JAK1 and ICAM are downregulated, whichdecreases the inflammatory cytokines formed through these pathways.Additionally, a mouse study has indicated that our siRNA is comparable to asteroid and to a prescription anti-TNF drug in its ability to reduce cytokineresponse to LPS.  Other mouse studies have also indicated that the siRNA againstFactor 5A (i) protects thymocyte cells from apoptosis and decreasesformation of MPO, TNF-a, MIP-1alpha, and IL-1 in the lungs of mice challengedwith LPS and (ii) increases the survival rate in which sepsis was inducedby a lethal injection of LPS and (iii) reduces blood serum levels ofinflammatory proteins, such as IL-1, IL-2, IL-6, IL-12, TNF-a, IFNg andMIP-1alpha, while not effecting IL-10, an anti-inflammatory cytokine.  Other experiments utilizing siRNA to Factor5A include inhibition of or apoptosis during the processing of mouse pancreaticbeta islet cells for transplantation, the inhibition of early inflammatorychanges associated with type-1 diabetes in an in-vivo rat model.

 

Proteins required for cell deathinclude p53, interleukins, TNF-a and other cytokines and caspases.  Expression of these cell death proteins isrequired for the execution of apoptosis. Based on our studies, we believe that down-regulating Factor 5A bytreatment with siRNA inhibits the expression of p53, a major cell deathtranscription factor that in turn controls the formation of a suite of othercell death proteins.  In addition, webelieve that the down-regulation of Factor 5A up-regulates Bcl-2, a suppressorof apoptosis.

 

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*HumanHealth Target Markets*

 

Webelieve that our gene technology may have broad applicability in the humanhealth field, by either inhibiting or accelerating apoptosis.  Inhibiting apoptosis may be useful inpreventing or treating a wide range of inflammatory and ischemic diseasesattributed to premature apoptosis, including diabetes, diabetic retinopathy andlung inflammation, among others. Accelerating apoptosis may be useful in treating certain forms of cancerbecause the body’s immune system is not able to force cancerous cells toundergo apoptosis.

 

Ourpreclinical research has yielded data that we have presented to variousbiopharmaceutical companies that may be prospective licensees for thedevelopment and marketing of potential applications of our technology.  Additionally, we are using the proceeds ofour most recent financing to advance our research in multiple myeloma with thegoal of initiating a Phase I clinical trial, and may select additional humanhealth indications to bring into clinical trials. We believe that the successof our future operations will likely depend on our ability to transform ourresearch and development activities into a commercially feasible technology.

 

*HumanHealth Research Program*

 

Our human health research program, which has consisted ofpre-clinical *in-vitro* and *in-vivo*experiments designed to assess the role and method of action of the Factor 5Agenes in human diseases, is being performed by approximately twelve (12) thirdparty researchers, at our direction, at Mayo Clinic, the University of Virginia and the University of Waterloo.

 

Ourresearch and development expenses incurred on human health applications wereapproximately 72% of our total research and development expenses for the ninemonths ended March 31, 2009.  Ourresearch and development expenses incurred on human health applications wereapproximately 53% of our total research and development expenses for the ninemonths ended March 31, 2008.  Sinceinception, the proportion of our research and development expenses on humanhealth applications has increased, as compared to our research and developmentexpenses on agricultural applications. This change is primarily due to the fact that our research focus onhuman health has increased and some of our research costs for plantapplications have shifted to our license partners.

 

Ourplanned future pre-clinical research and development initiatives for humanhealth include:

 

·                  Multiple Myeloma.  Our objective is to advance our technologyfor the potential treatment of multiple myeloma with the goal of initiating aclinical trial.  In connection with thepotential clinical trial, we have engaged a clinical research organization, orCRO, to assist us through the process. We have also determined the delivery system for our technology,contracted for the supply of pharmaceutical grade materials to be used intoxicology and human studies, performed certain toxicity studies, and havecontracted with a third party laboratory to conduct additional toxicolystudies.  Together with the assistance ofour CRO, we will have additional toxicology studies performed with the goal offiling an investigational new drug application, or IND application, with theU.S. Food and Drug Administration, or FDA, for their review and considerationin order to 

 

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initiate a clinical trial. Assuming that we have adequate funding, we estimate that it will takeless than nine (9) months from March 31, 2009 to complete theseobjectives.

 

·                  Lung Inflammation.  The objective of our planned future lunginflammation experiments is to optimize the delivery and dose of the siRNA toFactor 5A to the lungs.  A mouse modelsystem is currently being conducted to illustrate the siRNA to Factor 5A’sability to reduce morbidity and mortality of lung inflammation caused by theup-regulation of pro-inflammatory cytokines induced by a pathogen.

 

·                  Other.  We may continue to look at other diseasestates in order to determine the role of Factor 5A.

 

Inorder to pursue the above research initiatives, as well as other researchinitiatives that may arise, we completed private placements of $10 million ofconvertible notes and warrants in fiscal 2008. It will be necessary for us to raise a significant amount of additionalworking capital in the near future to continue to pursue some of the aboveinitiatives as well as new initiatives. If we are unable to raise the necessary funds, we may be required tosignificantly curtail the future development of some of our researchinitiatives and we will be unable to pursue other possible researchinitiatives.

 

Wemay further expand our research and development program beyond the initiativeslisted above to include other research centers.

 

*HumanHealth Competition*

 

Ourcompetitors in human health that are presently attempting to distribute theirtechnology have generally utilized one of the following distribution channels:

 

·                  Entering into strategicalliances, including licensing technology to major marketing and distributionpartners; or

 

·                  developing in-houseproduction and marketing capabilities.

 

Inaddition, some competitors are established distribution companies, which alleviatesthe need for strategic alliances, while others are attempting to create theirown distribution and marketing channels.

 

Thereare many large companies and development stage companies working in the fieldof apoptosis research including: Amgen Inc., Centocor, Inc., GenzymeCorporation, OSI Pharmaceuticals, Inc., Novartis AG, Introgen Therapeutics, Inc.,Genta, Inc., and Vertex Pharmaceuticals, Inc., amongst others.

 

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*AgriculturalApplications*

 

Ouragricultural research focuses on the discovery and development of certain genetechnologies, which are designed to confer positive traits on fruits, flowers,vegetables, forestry species and agronomic crops.  To date, we have isolated and characterizedthe senescence-induced Lipase gene, DHS, and Factor 5A in certain species ofplants. Our goal is to modulate the expression of these genes in order toachieve such traits as extended shelf life, increased biomass, increased yieldand increased resistance to environmental stresses and disease, therebydemonstrating proof of concept in each category of crop.

 

Certainagricultural results to date include:

 

·                  longer shelf life ofperishable produce;

 

·                  increased biomass and seedyield;

 

·                  greater tolerance toenvironmental stresses, such as drought and soil salinity;

 

·                  greater tolerance to certainfungal and bacterial pathogens;

 

·                  more efficient use of fertilizer;and

 

·                  advancement to field trialsin banana and trees.

 

Thetechnology presently utilized by the industry for increasing the shelf life incertain flowers, fruits and vegetables relies primarily on reducing ethylenebiosynthesis, and therefore only has application to the crops that areethylene-sensitive.  Because Factor 5A,DHS and Lipase are already present in all plant cells, our technology may beincorporated into crops by using either conventional breeding methods(non-genetically modified) or biotechnology techniques.

 

Wehave licensed this technology to various strategic partners and have enteredinto a joint venture. We may continue to license this technology, as theopportunities present themselves, to additional strategic partners and/or enterinto additional joint ventures.  Ourcommercial partners have licensed our technology for use in turfgrass, canola,corn, soybean, cotton, banana, alfalfa, rice and certain species of trees andbedding plants, and we have obtained proof of concept for enhanced post harvestshelf life, seed yield, biomass, and resistance to disease in several of theseplant species.

 

Wehave ongoing field trials of certain trees and bananas with our respectivepartners.  The initial field trialsconducted with ArborGen over a three year period in certain species of treeshave concluded and the trees have been harvested for wood qualityassessment.  Preliminary data from ourjoint field trials show significantly enhanced growth rates in some of thetrees relative to controls.  Additionalfield trials for enhanced growth rates and other traits are currently beingperformed with ArborGen.

 

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Todate, banana field trials have indicated that our technology extends the shelflife of banana fruit by 100%.  Inaddition to the post-harvest shelf life benefits, an additional field trialgenerated encouraging disease tolerance data specific to Black Sigatoka (BlackLeaf Streak Disease) for banana plants. Additional field trials for bananaplants are ongoing for the combined traits of disease tolerance and shelf lifeextension.

 

Commercializationby our partners may require a combination of traits in a crop, such as bothpost harvest shelf life and disease resistance, or other traits.  Our near-term research and developmentinitiatives include modulating the expression of DHS and Factor 5A genes inthese plants and then propagation and phenotype testing of such plants.

 

Ourongoing research and development initiatives for agriculture include assistingour license and joint venture partners to:

 

·                  further develop andimplement the DHS and Factor 5A gene technology in banana, canola, cotton,turfgrass, bedding plants, rice, alfalfa, corn, soybean and trees; and

 

·                  test the resultant crops fornew beneficial traits such as increased yield, increased tolerance toenvironmental stress, disease resistance and more efficient use of fertilizer.

 

*AgriculturalTarget Markets*

* *

Inorder to address the complexities associated with marketing and distribution inthe worldwide market, we have adopted a multi-faceted commercializationstrategy in which we have entered into and plan to enter into, as theopportunities present themselves, additional licensing agreements or otherstrategic relationships with a variety of companies or other entities on acrop-by-crop basis.  We anticipate revenues from these relationships inthe form of licensing fees, royalties, usage fees, or the sharing of grossprofits.  In addition, we anticipatepayments from certain of our partners, which are described in the *Agricultural Development and License Agreements* section ofthis Form 10-Q,  upon ourachievement of certain research and development benchmarks.  This commercialization strategy allows us togenerate revenue at various stages of product development, while ensuring thatour technology is incorporated into a wide variety of crops.  Our optimal partners combine thetechnological expertise to incorporate our technology into their product linealong with the ability to successfully market the enhanced final product,thereby eliminating the need for us to develop and maintain a sales force.

 

Becausethe agricultural market is dominated by privately held companies orsubsidiaries of foreign-owned companies, market size and market share data forthe crops under our license and development agreements is not readilyavailable.  Additionally, because we haveentered into confidentiality agreements with our license and developmentpartners, we are unable to report the specific financial terms of the agreementsas well as any market size and market share data that our partners may havedisclosed to us regarding their companies.

 

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*AgriculturalDevelopment and License Agreements*

* *

Through April 15, 2009, we have eight (8) activelicense agreements and one joint collaboration with established agriculturalbiotechnology companies or, in the case of Poet, as more fully described below,an established ethanol company, as follows:

 

·                  In June 2002, weentered into a three-year worldwide exclusive development and option agreementwith ArborGen, LLC to develop our technology in certain species of trees.  In June 2006, ArborGen exercised theiroption to license our technology and in December 2006, converted thedevelopment and option agreement into a license agreement, referred to hereinas the ArborGen Agreement.  To date, theresearch being conducted by ArborGen has proceeded according to schedule.  ArborGen has seen promising positive growthresponses in greenhouse-grown seedlings. These initial greenhouse data led to the initiation of field trials byArborGen in the second half of calendar year 2004.  At the end of the 2005 growing season,certain trees which were enhanced by our technology had approximately doublethe increase in volume relative to control trees.  Further field trials are ongoing to supportthese data and to analyze the growth rates of trees which incorporate ourtechnology. Under the ArborGen Agreement, we have received an upfront paymentand benchmark payments and we may receive additional benchmark payments uponachievement of certain development milestones and royalties uponcommercialization.

 

·                  In September 2002, weentered into an exclusive development and license agreement with Cal/WestSeeds, referred to herein as the Cal/West License, to commercialize ourtechnology in certain varieties of alfalfa. The Cal/West License will continue until the expiration of the patentsset forth in the agreement, unless terminated earlier by either party pursuantto the terms of the agreement.  TheCal/West License also grants Cal/West an exclusive option to develop ourtechnology in various other forage crops. The Cal/West Seeds development effort successfully incorporated ourtechnology into their alfalfa seed as of July 2004.  Seed transformation and greenhouse traitanalysis is ongoing.  Under the Cal/WestLicense, we have received an upfront payment and we may receive benchmarkpayments as certain development milestones are achieved and a royalty uponcommercialization based upon the volume of alfalfa seed sold that contains ourtechnology.

 

·                  In March 2004, weentered into an exclusive development and license agreement with The ScottsCompany, referred to herein as the Scotts Agreement, to commercialize ourtechnology in turfgrass and certain species of bedding plants.  Scotts is working on incorporating our technologyto enhance a variety of traits in these plants, including environmental stressresistance, disease resistance and enhanced bloom properties.  We are collaborating with Scotts in the areasof ornamental bedding plants and turfgrass. A large-scale greenhouse evaluation of bedding plants was beingconducted and additional greenhouse testing is planned.  Transformation and initial tissue culturescreening of events have been undertaken in turfgrass.  In tissue culture, turfgrass containing ourtechnology has grown more successfully than control turfgrass without ourtechnology.  Greenhouse testing of thegrass containing our technology is the next planned development step. Under theScotts Agreement, we have received an upfront payment 

 

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and benchmark payments.  In January 2006,the development and license agreement with Scotts was amended. Due to a changein the corporate financial policy at Scotts, Scotts requested that we defercertain milestone payments, which were to be made on a calendar yearbasis.  We agreed and these payments havenow been deferred and incorporated in the amount to be paid to us upon commercialization.  Additionally, the commercialization fee hasbeen increased.  All other aspects of theagreement remain unchanged, and the project continues to move forward withoutinterruption. We may also receive royalties upon commercialization from the netsales of turfgrass seed and bedding plants containing our technology.

 

·                  In October 2005, weentered into an agreement with Poet to license our proprietary gene technologyto Poet to improve aspects of Poet’s ethanol production capabilities.  We are currently revising our work plan toincorporate our technology into those aspects of Poet’s ethanolproduction.  We will receive an annualpayment for each Poet facility that incorporates our technology.  If Poet incorporates our technology into eachof its facilities, we would be entitled to receive an annual payment in excessof $1,000,000.

 

·                  On November 8, 2006, weentered into a license agreement with Bayer CropScience GmbH for thedevelopment and commercialization of canola. Under the terms of the agreement, we received an upfront payment, willreceive milestone payments upon the achievement of certain developmentmilestones and will receive commercialization fees based upon specifiedbenchmarks.  In August, 2008, BayerCropScience GmbH successfully completed the first development milestone relatedto this license.

 

·                  On July 17, 2007, we enteredinto a license agreement with Bayer CropScience AG for the development andcommercialization of cotton.  Under theterms of the agreement, we received an upfront payment, will receive milestonepayments upon the achievement of certain development milestones, andadditionally, upon commercialization, a royalty on net sales.

 

·                  On August 6, 2007, weentered into a license agreement with Monsanto for the development andcommercialization of corn and soy.  Underthe terms of the agreement, we received an upfront payment, will receivemilestone payments upon the achievement of certain development milestones, andadditionally, upon commercialization, a royalty on net sales.

 

·                  On September 11, 2007,we entered into a license agreement with Bayer CropScience AG for thedevelopment and commercialization of rice. Under the terms of the agreement, we received an upfront payment, willreceive milestone payments upon the achievement of certain developmentmilestones, and additionally, upon commercialization, a royalty on net sales.

 

InDecember 2008, the Development and License Agreement with the Harris MoranSeed Company, or Harris Moran, was terminated by mutual agreement due to HarrisMoran’s recently announced corporate restructuring.  Harris Moran has reported that its parentcompany, Limagrain, restructured its vegetable seed operations and that HarrisMoran will now be part of a new business unit with Clause (France) and MarcoPolo (Thailand).  This restructuring hasresulted in a consolidation of research and development efforts amongst HarrisMoran and its 

 

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sistercompanies that will not encompass our technology.  Harris Moran made us aware of this shift inresearch and development focus and presented us with a letter on December 1,2008 formally ending the relationship through the mutual agreement of theparties.  Pursuant to the terms of theDevelopment and License Agreement all rights to use our technology in lettuceand melon revert to us.

 

*JointVenture*

* *

OnMay 14, 1999, we entered into a agreement with Rahan Meristem Ltd., orRahan Meristem, an Israeli company engaged in the worldwide export marketing ofbanana germplasm, referred to herein as the Rahan Joint Venture**. **Ingeneral, bananas are grown either for local domestic consumption or grown forexport.  According to the Food andAgriculture Organization of the United Nations, there were approximately 16million metric tons of bananas exported in 2004.  The level of production equates to the fruitof approximately 480 million banana plants. A percentage of these plants are replaced each year with new bananaseedlings.** **Rahan Meristem accounts for approximately 10% of theworldwide export of enhanced banana seedlings.

 

Wehave contributed, by way of a limited, exclusive, worldwide license to theRahan Joint Venture, access to our technology, discoveries, inventions andknow-how, whether patentable or otherwise, pertaining to plant genes and theircognate expressed proteins that are induced during senescence for the purposeof developing, on a joint basis, genetically enhanced banana plants which willresult in a banana that has a longer shelf life.  Rahan Meristem has contributed itstechnology, inventions and know-how with respect to banana plants.  Rahan Meristem and Senesco have equallyshared the expense of field trials.

 

Allaspects of the Rahan Joint Venture’s research and development initiative areproceeding on time**. **Both the DHS and lipase genes havebeen identified and isolated in banana, and the Rahan Joint Venture iscurrently in the process of silencing these genes.  Two Israeli field trials indicated thatSenesco’s proprietary technology extends the shelf life of the banana fruit upto 100%, while allowing the banana fruit to ripen normally.  Later field trials have indicated what webelieve are increased disease tolerance results and we are currently performingadditional field trials to further assess disease tolerance.  However, as the banana modified with ourtechnology may be considered a genetically modified  organism, or GMO, shelf life extension mayhave to be combined with disease tolerance to gain acceptance by the growers.

 

*AgriculturalResearch Program*

* *

Ouragricultural research and development is performed by three (3) researchers,at our direction, at the University of Waterloo, where the technology wasdeveloped.  Additional agriculturalresearch and development is performed by our partners in connection with theScotts Agreement, the ArborGen License, the Cal/West License, the BayerLicenses, the Monsanto License and through the Rahan Joint Venture.

 

Thediscoverer of our technology, John E. Thompson, Ph.D., is the Associate VicePresident, Research and former Dean of Science at the University of Waterloo inOntario, Canada, and is our Executive Vice President and Chief ScientificOfficer.  Dr. Thompson is also oneof our directors and beneficially owns approximately4.3% of the outstanding shares of our 

 

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commonstock as of March 31, 2009.  On September 1,1998, we entered into, and haveextended through August 31, 2009, a research and developmentagreement with the University of Waterloo and Dr. Thompson as theprincipal inventor.  The Research andDevelopment Agreement provides that the University of Waterloo will performresearch and development under our direction, and we will pay for the cost ofthis work and make certain payments to the University of Waterloo.  In return for payments made under theResearch and Development Agreement, we have all rights to the intellectualproperty derived from the research.

 

*AgriculturalCompetition*

* *

Ourcompetitors in both human health and agriculture that are presently attemptingto distribute their technology have generally utilized one or more of thefollowing distribution channels:

 

·                  licensing technology tomajor marketing and distribution partners;

 

·                  entering into strategic alliances;or

 

·                  developing in-houseproduction and marketing capabilities.

 

Inaddition, some competitors are established distribution companies, whichalleviates the need for strategic alliances, while others are attempting tocreate their own distribution and marketing channels.

 

Ourcompetitors in the field of delaying plant senescence are companies thatdevelop and produce transformed plants with a variety of enhanced traits.  Such companies include: Mendel Biotechnology, Inc.;Renessen LLC; Exelixis Plant Sciences, Inc.; Syngenta International AG;and Eden Bioscience Corporation, among others.

 

*AgriculturalDevelopment Program*

* *

Generally,projects with our licensees and joint venture partner begin by transformingseed or germplasm to incorporate our technology.  Those seeds or germplasm are then grown inour partners’ greenhouses.  Aftersuccessful greenhouse trials, our partners will transfer the plants to thefield for field trials.  After completionof successful field trials, our partners may have to apply for and receiveregulatory approval prior to initiation of any commercialization activities.

 

Generally,the approximate time to complete each sequential development step is asfollows:

 
|   | Seed  Transformation | approximately  1 to 2 years |   |
|--------|----------------------|-----------------------------|--------|
|   | Greenhouse           | approximately  1 to 2 years |   |
|   | Field  Trials        | approximately  2 to 5 years |   |

 

Theactual amount of time spent on each development phase depends on the crop, itsgrowth cycle and the success of the transformation achieving the desiredresults.  As such, the amount of time foreach phase of development could vary, or the time frames may change.

 

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Thedevelopment of our technology with Poet is different than our other licenses inthat we are modifying certain production inputs for ethanol.  That process involves modifying the inputs,testing such inputs in Poet’s production process and if successful,implementing such inputs in Poet’s production process on a plant by plantbasis.

 

Thestatus 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            |       | Greenhouse                |
| Corn                                         |       | Monsanto            |       | Proof  of concept ongoing |
| Cotton                                       |       | Bayer               |       | Proof  of concept ongoing |
| Canola                                       |       | Bayer               |       | Seed  transformation      |
| Rice                                         |       | Bayer               |       | Proof  of concept ongoing |
| Soybean                                      |       | Monsanto            |       | Proof  of concept ongoing |
| Turfgrass                                    |       | The  Scotts Company |       | Greenhouse                |
| Bedding  Plants                              |       | The  Scotts Company |       | Greenhouse                |
| Ethanol                                      |       | Poet                |       | Modify  inputs            |

 

Commercializationby our partners may require a combination of traits in a crop, such as bothshelf life and disease resistance, or other traits.

 

Basedupon our commercialization strategy, we anticipate that there may be asignificant period of time before plants enhanced using our technology reachconsumers.  Thus, we have not begun toactively market our technology directly to consumers, rather, we have sought toestablish ourselves within the industry through presentations at industryconferences, our website and direct communication with prospective licensees.

 

Consistentwith our commercialization strategy, we intend to attract other companiesinterested in strategic partnerships or licensing our technology, which mayresult in additional license fees, revenues from contract research and otherrelated revenues.  Successful futureoperations will depend on our ability to transform our research and developmentactivities into a commercially feasible technology.

 

*IntellectualProperty*

* *

Wehave nineteen (19) issued patents from the United States Patent and TrademarkOffice, or PTO, and twenty-six (26) issued patents from foreign countries,thirty-three (33) of which are for the use of our technology in agriculturalapplications and twelve (12) of which relate to human health applications.

 

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Inaddition to our forty-five (45) patents, we have a wide variety of patentapplications, including divisional applications and continuations-in-part, inprocess with the PTO and internationally. We intend to continue our strategy of enhancing these new patentapplications through the addition of data as it is collected.

 

*GovernmentRegulation*

* *

Atpresent, the U.S. federal government regulation of biotechnology is dividedamong three agencies: (i) the U.S. Department of Agriculture regulates theimport, field-testing and interstate movement of specific types of geneticengineering that may be used in the creation of transformed plants; (ii) theEnvironmental Protection Agency regulates activity related to the invention ofplant pesticides and herbicides, which may include certain kinds of transformedplants; and (iii) the FDA regulates foods derived from new plantvarieties.  The FDA requires thattransformed plants meet the same standards for safety that are required for allother plants and foods in general. Except in the case of additives that significantly alter a food’sstructure, the FDA does not require any additional standards or specificapproval for genetically engineered foods but expects transformed plantdevelopers to consult the FDA before introducing a new food into the marketplace.

 

Inaddition, our ongoing preclinical research with cell lines and lab animalmodels of human disease is not currently subject to the FDA requirements thatgovern clinical trials.  However, use ofour technology, if developed for human health applications, will also besubject to FDA regulation.  Generally,the FDA must approve any drug or biologic product before it can be marketed inthe United States.  In addition, prior tobeing sold outside of the U.S., any products resulting from the application ofour human health technology must be approved by the regulatory agencies offoreign governments.  Prior to filing anew drug application or biologics license application with the FDA, we wouldhave to perform extensive clinical trials, and prior to beginning any clinicaltrial, we need to perform extensive preclinical testing which could takeseveral years and may require substantial expenditures.

 

Webelieve that our current activities, which to date have been confined toresearch and development efforts, do not require licensing or approval by anygovernmental regulatory agency. However, we, or our licensees, will be requiredto obtain such licensing or approval from governmental regulatory agenciesprior to the commercialization of our genetically transformed plants and theapplication of our human health technology.

 

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**Liquidity and Capital Resources**

** **

*Overview*

* *

Asof March 31, 2009, our cash balance and investments, which consisted ofmoney market funds and U.S. treasury bills, totaled $2,677,581, and we hadworking capital of $2,594,256.  As of March 31,2009, we had a federal tax loss carryforward of approximately $24,420,000 and astate tax loss carry-forward of approximately $17,057,000 to offset futuretaxable income. We cannot assure you that we will be able to take advantage ofany or all of such tax loss carryforwards, if at all, in future fiscal years.

 

*Contractual Obligations*

* *

Thefollowing table lists our cash contractual obligations as of March 31,2009:

 
| ** **                                                           | ** ** | **Payments Due by Period** | ** **    |
|----------------------------------------------------------------------|------------|----------------------------|---------------|
| **Contractual Obligations**                                          | ** ** | **Total**                  | ** **    | **Less than  1 year** | ** ** | **1 - 3 years** | ** ** | **4 - 5 years** | ** ** | **More than  5 years** | ** ** |
| Research and Development Agreements (1)                              |       | $                          | 1,896,813     |   | $ | 1,896,813 |   | $ | — |   | $ |  — |   | $ |  — |   |
| Facility, Rent and Operating Leases (2)                              |       | $                          | 172,672       |   | $ | 79,192 |   | $ | 93,480 |   | $ |  — |   | $ |  — |   |
| Employment, Consulting and Scientific Advisory  Board Agreements (3) |       | $                          |  651,442 |   | $ |  568,800 |   | $ | 82,642 |   | $ |  — |   | $ |  — |   |
| Total Contractual Cash Obligations                                   |       | $                          | 2,720,927     |   | $ | 2,544,805 |   | $ | 176,122 |   | $ |  — |   | $ |  — |   |

 

----

(1)       Certain of our research and development agreements disclosed herein providethat payment is to be made in Canadian dollars and, therefore, the contractualobligations are subject to fluctuations in the exchange rate.

(2)       The lease for our office space in New Brunswick, New Jersey is subject tocertain escalations for our proportionate share of increases in the building’soperating costs.

(3)       Certain of our employment andconsulting agreements provide for automatic renewal, which is not reflected inthe table, unless terminated earlier by the parties to the respectiveagreements.

 

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We expect our capital requirements to increase significantlyover the next several years as we commence new research and developmentefforts.  Our future liquidity andcapital funding requirements will depend on numerous factors, including, butnot limited to, the levels and costs of our research and developmentinitiatives and the cost and timing of the expansion of our businessdevelopment and administrative staff.

 

Effective September 1, 2008, we extended our Researchand Development Agreement with the University of Waterloo for an additionalone-year period through August 31, 2009, in the amount of CAD $735,000 orapproximately USD $700,000. Research and development expenses under thisagreement aggregated USD $139,740 and USD $180,000 for the three month periodsended March 31, 2009 and 2008 and USD $489,258 and $548,792 for the ninemonth periods ended March 31, 2009 and 2008 and USD $5,116,522 for thecumulative period from inception through March 31, 2009.

 

During the nine months ended March 31, 2009, we madesignificant payments for services to be performed and for the manufacture ofmaterials in connection with our toxicology studies and clinical trial totalingapproximately $850,000, of which $828,000 have been included as prepaidexpenses on our Balance Sheet as of March 31, 2009.

 

*Capital Resources*

 

Since inception, we have generated revenues of $1,450,000 inconnection with the initial fees and milestone payments received under ourlicense and development agreements.  Wehave not been profitable since inception, we will continue to incur additionaloperating losses in the future, and we will require additional financing tocontinue the development and subsequent commercialization of ourtechnology.  While we do not expect togenerate significant revenues from the licensing of our technology for the nextone to three years, or longer, we may enter into additional licensing or otheragreements with marketing and distribution partners that may result inadditional license fees, receive revenues from contract research, or otherrelated revenue.

 

We anticipate that, based upon our current cash andinvestments, as of March 31, 2009 we will be able to fund our operationsfor the next four (4) months. Over the next twelve months, we plan to fundour research and development and commercialization activities by:

 

·                  utilizing our current cashbalance and investments;

 

·                  achieving some of themilestones set forth in our current licensing agreements;

 

·                  through the possibleexecution of additional licensing agreements for our technology; and

 

·                  through the placement ofequity or debt instruments.

 

We cannot assure you that we will be able to raise moneythrough any of the foregoing transactions, or on favorable terms, if at all.

 

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**Changes to Critical Accounting Policies and Estimates**

** **

Weadopted Financial Accounting Standards Board (“FASB”) Statement of FinancialAccounting Standards No. 157, *FairValue Measurements* (SFAS No. 157) for the fiscal year beginningJuly 1, 2008, except for nonfinancial assets and nonfinancial liabilitiesthat are recognized or disclosed at fair value in the financial statements on anonrecurring basis for which delayed application is permitted until our fiscalyear beginning July 1, 2009.  Theadoption of the remaining provisions of SFAS No. 157 did not have amaterial impact on the Company’s financial position, results of operations orcash flows.

 

Except for the adoption of SFAS No. 157,there have been no changes to our critical accountingpolicies and estimates as set forth in our Annual Report on Form 10-K forthe fiscal year ended June 30, 2008.

 

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**Results of Operations**

** **

ThreeMonths Ended March 31, 2009 andThree Months Ended March 31, 2008

 

The net loss for the three month period ended March 31,2009 was $1,331,477.   The net loss forthe three month period ended March 31, 2008 was $1,482,217.  Such a change represents a decrease in netloss of $150,740**,**or 10.2%.  This decrease in net loss was primarily theresult of a decrease in operating expenses, which was partially offset by anincrease in non-cash expenses associated with the outstanding convertible notesthat were issued during the year ended June 30, 2008.

** **

*Revenue*

* *

Total revenues of $75,000 for the three month period ended March 31,2009 consisted of a milestone payment on an agricultural licenseagreement.  Total revenues of $79,167 forthe three month period ended March 31, 2008 consisted of a milestonepayment and the amortized portion of previous milestone payments received inconnection with certain agricultural license agreements.

 

Weanticipate that we will continue to receive milestone payments in connectionwith our current agricultural development and license agreements while wecontinue to pursue our goal of attracting other companies to license ourtechnologies in various other crops. Additionally, we anticipate that we will receive royalty payments fromour license agreements when our partners commercialize their crops containingour technology.  However, it is difficultfor us to determine our future revenue expectations because we are adevelopment stage biotechnology company. As such, the timing and outcome of our experiments, the timing ofsigning new partners and the timing of our partners moving through thedevelopment process into commercialization is difficult to accurately predict.

 

*Operating Expenses*

 
| ** **                 | ** ** | **Three Months Ended  March 31,** | ** **  |
|----------------------------|------------|----------------------------------------|-------------|
| ** **                 | ** ** | **2009**                               | ** **  | **2008** | ** ** | **Change** | ** ** | **%** | ** ** |
| ** **                 | ** ** | **(in thousands, except % values)**    | ** **  |
| General and administrative |       | $                                      |  532   |   | $ |  877 |   | $ |  (345 | ) | (39.3 | )% |
| Research and development   |       | 541                                    |        | 474 |   | 67 |   | 14.1 | % |
| Total operating expenses   |       | $                                      |  1,073 |   | $ |  1,351 |   | $ |  (278 | ) | (20.6 | )% |

 

We expect operating expenses to increase over the nexttwelve months as we anticipate that research and development expenses willincrease as we continue to expand our research and development activities.

 

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*General and Administrative Expenses*

 
| ** **                       | ** ** | **Three Months Ended  March 31,** | ** ** |
|----------------------------------|------------|----------------------------------------|------------|
| ** **                       | ** ** | **2009**                               | ** ** | **2008** | ** ** | **Change** | ** ** | **%** | ** ** |
| ** **                       | ** ** | **(in thousands, except % values)**    | ** ** |
| Share-based compensation         |       | $                                      |  120  |   | $ |  505 |   | $ |  (385 | ) | (76.2 | )% |
| Payroll and benefits             |       | 177                                    |       | 176 |   | 1 |   | 0.6 | % |
| Investor relations               |       | 45                                     |       | 46 |   | (1 | ) | (2.2 | )% |
| Professional fees                |       | 74                                     |       | 76 |   | (2 | ) | (2.6 | )% |
| Depreciation and amortization    |       | 27                                     |       | 23 |   | 4 |   | 17.4 | % |
| Director fees                    |       | 14                                     |       | — |   | 14 |   | — |   |
| Other general and administrative |       | 75                                     |       | 51 |   | 24 |   | 47.1 | % |
| Total general and administrative |       | $                                      |  532  |   | $ |  877 |   | $ |  (345 | ) | (39.3 | )% |

 

·                  Share-based compensation forthe three months ended March 31, 2009 and 2008 consisted of the amortizedportion of the compensation charge in connection with our short-term stockincentive plan and the amortized portion of the Black-Scholes value of optionsand warrants granted to directors, employees and consultants.  Share-based compensation for the three monthsended March 31, 2008 also consisted of the Black-Scholes value of $384,000for warrants extended and repriced in connection with an amendment to afinancial advisory agreement entered into on February 14, 2008.  During the three month periods ended March 31,2009 and 2008, there were 127,836 and 0 options granted to our directors inlieu of cash compensation under our non-employee director compensation plan.

 

·                  Depreciation andamortization increased primarily as a result of additional agricultural andhuman health patent costs being amortized.

 

·                  Director fees increased dueto the Company implementing a cash compensation plan for non-employee directorsbeginning July 1, 2008.  During thethree month period ended March 31, 2008, the non-employee directors didnot receive any cash compensation.

 

We expect general and administrative expenses to modestlyincrease over the next twelve months primarily due to an increase in payrolland benefits and legal and accounting fees related to the increased regulatoryenvironment surrounding our business.

 

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*Research and Development Expenses*

 
| ** **                     | ** ** | **Three Months Ended  March 31,** | ** ** |
|--------------------------------|------------|----------------------------------------|------------|
| ** **                     | ** ** | **2009**                               | ** ** | **2008** | ** ** | **Change** | ** ** | **%** | ** ** |
| ** **                     | ** ** | **(in thousands, except % values)**    | ** ** |
| Share-based compensation       |       | $                                      | 23         |   | $ | 57 |   | $ | (34 | ) | (59.7 | )% |
| Other research and development |       | 518                                    |       | 417 |   | 101 |   | 24.2 | % |
| Total research and development |       | $                                      | 541        |   | $ | 474 |   | $ | 67 |   | 14.1 | % |

 

·                  Share-based compensationconsists primarily of the amortized portion of Black-Scholes value of options,restricted stock units and warrants granted to research and developmentconsultants and employees.

 

·                  Other research anddevelopment costs increased primarily as a result of an expansion of our humanhealth programs, specifically our multiple myeloma research program.

 

The breakdown of our research and development expensesbetween our agricultural and human health research programs is as follows:

 
| ** **                     | ** ** | **Three Months Ended March 31,** | ** ** |
|--------------------------------|------------|---------------------------------------|------------|
| ** **                     | ** ** | **2009**                              | ** ** | **%** | ** ** | **2008** | ** ** | **%** | ** ** |
| ** **                     | ** ** | **(in thousands, except % values)**   | ** ** |
| Agricultural                   |       | $                                     | 146        |   |   | 27 | % | $ | 181 |   | 38 | % |
| Human health                   |       | 395                                   |       | 73 | % | 293 |   | 62 | % |
| Total research and development |       | $                                     | 541        |   |   | 100 | % | $ | 474 |   | 100 | % |

 

·                  Agricultural researchexpenses decreased during the three month period ended March 31, 2009primarily as a result of a decrease in the allocation of resources fromagriculture to human health at the University of Waterloo .

 

·                  Human health research expensesincreased during the three month period ended March 31, 2009 primarily asa result of the multiple myeloma project.

 

We expect the percentage of human health research programsto continue to increase as a percentage of the total research and developmentexpenses as we continue our current research projects and begin new humanhealth initiatives.

 

*Amortization of debt discount, financing costs andinterest expense*

* *

Duringthe year ended June 30, 2008, we issued $10,000,000 in convertible notesand warrants.  The net proceeds of thoseconvertible notes and warrants were recorded as equity.  The discount on the convertible notes isbeing amortized, using the effective yield method, over the term of theconvertible notes.  The related costs ofissuance were recorded as deferred financing costs and are being amortized on astraight line basis over the term of the convertible notes.  At March 31, 2009, there were $9,500,000of convertible notes outstanding.  At March 31,2008, there were $7,000,000 of convertible notes outstanding.

 

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*** ***

*InterestIncome, net*

*** ***

Interestincome was lower during the three month period ended March 31, 2009 as aresult of lower interest rates compared to the three-month period ended March 31,2008.

** **

NineMonths Ended March 31, 2009 andNine Months Ended March 31, 2008

 

The net loss for the nine month period ended March 31,2009 was $4,137,224.   The net loss forthe nine month period ended March 31, 2008 was $2,914,101.  Such a change represents an increase in netloss of $1,223,123**,**or 42.0%.  This increase in net loss was primarily theresult of an increase in non-cash expenses associated with the outstandingconvertible notes that were issued during the year ended June 30, 2008, anincrease in operating expenses and a decrease in revenue and interest income.

** **

*Revenue*

* *

Total revenues of $275,000 for the nine month period ended March 31,2009 consisted of milestone payments in connection with certain agriculturallicense agreements.  Total revenues of$456,667 for the nine month period ended March 31, 2008 consisted of theinitial payments and the amortized portion of previous milestone paymentsreceived in connection with certain agricultural license agreements.

 

Weanticipate that we will continue to receive milestone payments in connectionwith our current agricultural development and license agreements while wecontinue to pursue our goal of attracting other companies to license ourtechnologies in various other crops. Additionally, we anticipate that we will receive royalty payments fromour license agreements when our partners commercialize their crops containingour technology.  However, it is difficultfor us to determine our future revenue expectations because we are adevelopment stage biotechnology company. As such, the timing and outcome of our experiments, the timing ofsigning new partners and the timing of our partners moving through thedevelopment process into commercialization is difficult to accurately predict.

 

*Operating Expenses*

 
| ** **                 | ** ** | **Nine Months Ended March 31,** | ** ** |
|----------------------------|------------|--------------------------------------|------------|
| ** **                 | ** ** | **2009**                             | ** ** | **2008** | ** ** | **Change** | ** ** | **%** | ** ** |
| ** **                 | ** ** | **(in thousands, except % values)**  | ** ** |
| General and administrative |       | $                                    | 1,711      |   | $ | 1,852 |   | $ | (141 | ) | (7.6 | )% |
| Research and development   |       | 1,624                                |       | 1,219 |   | 405 |   | 33.2 | % |
| Total operating expenses   |       | $                                    | 3,335      |   | $ | 3,071 |   | $ | 264 |   | 8.6 | % |

 

We expect operating expenses to increase over the nexttwelve months as we anticipate that research and development expenses willincrease as we continue to expand our research and development activities.

 

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*General and Administrative Expenses*

 
| ** **                       | ** ** | **Nine Months Ended March 31,**     | ** ** |
|----------------------------------|------------|---------------------------------------------------------|------------|
| ** **                       | ** ** | **2009**                                                | ** ** | **2008** | ** ** | **Change** | ** ** | **%** | ** ** |
| ** **                       | ** ** | **(in thousands, except % values)** | ** ** |
| Share-based compensation         |       | $                                                       | 323        |   | $ | 620 |   | $ | (297 | ) | (47.9 | )% |
| Payroll and benefits             |       | 522                                                     |       | 508 |   | 14 |   | 2.8 | % |
| Investor relations               |       | 200                                                     |       | 257 |   | (57 | ) | (22.2 | )% |
| Professional fees                |       | 349                                                     |       | 248 |   | 101 |   | 40.7 | % |
| Depreciation and amortization    |       | 81                                                      |       | 67 |   | 14 |   | 20.9 | % |
| Director fees                    |       | 58                                                      |       | — |   | 58 |   | — |   |
| Other general and administrative |       | 178                                                     |       | 152 |   | 26 |   | 17.1 | % |
| Total general and administrative |       | $                                                       | 1,711      |   | $ | 1,852 |   | $ | (141 | ) | (7.6 | )% |

 

·                  Share-based compensation forthe nine months ended March 31, 2009 and, 2008 consisted of the amortizedportion of the Black-Scholes value of options, restricted stock units andwarrants granted to directors, employees and consultants.  Share-based compensation for the nine monthsended March 31, 2008 also consisted of the Black-Scholes value of $384,000of warrants extended and repriced in connection with an amendment to afinancial advisory agreement entered into on February 14, 2008.  During the nine month periods ended March 31,2009 and 2008, there were 849,420 and 1,317,300 options, restricted stock unitsand warrants granted to such directors, employees and consultants.

 

·                  Payroll and benefitsincreased primarily as a result of salary increases.

 

·                  Investor relations decreasedprimarily as a result of a decrease in the cost of our annual report andinvestor relations consulting costs.

 

·                  Professional fees increasedprimarily as a result of an increase in legal fees and accounting feesprimarily due to an increase in legal fees related to our multiple myelomaproject and accounting and legal fees related to the review and filing of oursecurities filings.

 

·                  Depreciation andamortization increased primarily as a result of additional agricultural andhuman health patent costs being amortized.

 

·                  Director fees increased dueto the Company implementing a cash compensation plan for non-employee directorsbeginning July 1, 2008.  During thenine month period ended March 31, 2008, the non-employee directors did notreceive any cash compensation.

 

We expect general and administrative expenses to modestlyincrease over the next twelve months primarily due to an increase in payrolland benefits and legal and accounting fees related to the increased regulatoryenvironment surrounding our business.

 

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*Research and Development Expenses*

 
| ** **                     | ** ** | **Nine Months Ended March 31,**     | ** ** |
|--------------------------------|------------|---------------------------------------------------------|------------|
| ** **                     | ** ** | **2009**                                                | ** ** | **2008** | ** ** | **Change** | ** ** | **%** | ** ** |
| ** **                     | ** ** | **(in thousands, except % values)** | ** ** |
| Share-based compensation       |       | $                                                       | 35         |   | $ | 88 |   | $ | (53 | ) | (60.2 | )% |
| Other research and development |       | 1,589                                                   |       | 1,131 |   | 458 |   | 40.5 | % |
| Total research and development |       | $                                                       | 1,624      |   | $ | 1,219 |   | $ | 405 |   | 33.2 | % |

 

·                  Share-based compensationconsists primarily of the amortized portion of Black-Scholes value of options,restricted stock units and warrants granted to research and developmentconsultants and employees.

 

·                  Other research anddevelopment costs increased primarily as a result of an expansion of our humanhealth programs, specifically our multiple myeloma research program, which waspartially offset by a decrease in the cost of our research agreement with theUniversity of Waterloo due to the strengthening of the U.S. dollar against theCanadian dollar.

 

The breakdown of our research and development expensesbetween our agricultural and human health research programs is as follows:

 
| ** **                      | ** ** | **Nine Months Ended March 31,**     | ** ** |
|---------------------------------|------------|-------------------------------------|------------|
| ** **                      | ** ** | **2009**                            | ** ** | **%** | ** ** | **2008** | ** ** | **%** | ** ** |
| ** **                      | ** ** | **(in thousands, except % values)** | ** ** |
| Agricultural                    |       | $                                   | 457        |   | $ | 28 | % | $ | 572 |   | 47 | % |
| Human  health                   |       | 1,167                               |       | 72 | % | 647 |   | 53 | % |
| Total  research and development |       | $                                   | 1,624      |   | $ | 100 | % | $ | 1,219 |   | 100 | % |

 

·                  Agricultural researchexpenses decreased during the nine month period ended March 31, 2009 primarilyas a result of a decrease in the allocation of resources from agriculture tohuman health at the University of Waterloo. Human health research expenses increased during the nine month periodended March 31, 2009 primarily as a result of the multiple myelomaproject.

 

We expect the percentage of human health research programsto continue to increase as a percentage of the total research and developmentexpenses as we continue our current research projects and begin new humanhealth initiatives.

 

*Amortization of debt discount, financing costs and interestexpense*

 

Duringthe year ended June 30, 2008, we issued $10,000,000 in convertible notesand warrants.  The net proceeds of thosenotes and warrants were recorded as equity. The discount on the convertible notes is being amortized, using theeffective yield method, over the term of the convertible notes.  The related costs of issuance were recordedas deferred financing costs and are being amortized on a straight line basisover the term of the convertible notes. At March 31, 2009 there were $9,500,000 of convertible notesoutstanding.  At March 31, 2008,there were $7,000,000 of convertible notes outstanding.

 

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*Interest Income,net*

 

Interestincome was lower during the nine month period ended March 31, 2009 as aresult of lower interest rates during the nine month period ended March 31,2009.

 

Period From Inception on July 1, 1998 through March 31,2009

 

From inception of operations on July 1, 1998 through March 31,2009, we have had revenues of $1,450,000, which consisted of the initiallicense fees and milestone payments in connection with our various developmentand license agreements.  We do not expectto generate significant revenues for approximately the next one to three years,during which time we will continue to engage in significant research anddevelopment efforts.

 

We have incurred losses each year since inception and havean accumulated deficit of $34,360,254 at March 31, 2009.  We expect to continue to incur losses as aresult of expenditures on research and development and administrativeactivities.

 

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**Item 3.****                                  ****Quantitative and Qualitative Disclosures about MarketRisk.**

 

*Foreign Currency Risk*

 

Ourfinancial statements are denominated in United States dollars and, except forour agreement with the University of Waterloo, which is denominated in Canadiandollars, all of our contracts are denominated in United States dollars.  Therefore, we believe that fluctuations inforeign currency exchange rates will not result in any material adverse effecton our financial condition or results of operations.  In the event we derive a greater portion ofour revenues from international operations or in the event a greater portion ofour expenses are incurred internationally and denominated in a foreigncurrency, then changes in foreign currency exchange rates could effect ourresults of operations and financial condition.

 

*Interest Rate Risk*

 

Weinvest in high-quality financial instruments, primarily money market funds andUnited States treasury notes, with an effective duration of the portfolio ofless than one year, and no security with an effective duration in excess of oneyear, which we believe are subject to limited credit risk.  We currently do not hedge our interest rateexposure.  Due to the short-term natureof our investments, which we plan to hold until maturity, we do not believethat we have any material exposure to interest rate risk arising from ourinvestments.

 

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**Item 4T.****                          ****Controls and Procedures.**

 

(a)           Evaluation of disclosure controls and procedures.

 

The principal executive officerand principal financial officer have evaluated ourdisclosure controls and procedures (as defined in Rules 13a-15(e) and15d-15(e) under the Exchange Act) as of March 31, 2009.  Based on this evaluation, they have concludedthat our disclosure controls and procedures were effective to ensure that theinformation required to be disclosed by us in reports that we file or submitunder the Securities Exchange Act of 1934 is recorded, processed, summarizedand reported within the time periods specified in the Commission’s rules andforms, and to ensure that information required to be disclosed by us in thereports that we file or submit under the Securities Exchange Act of 1934 isaccumulated and communicated to our management, including our principalexecutive and principal financial officers, to allow timely decisions regardingrequired disclosure.

 

(b)           Changesin internal controls.

 

No change in our internal controls over financial reporting(as defined in Rules 13a-15(f) and 15d-15(f) under the ExchangeAct) occurred during the three month and nine month periods ended March 31,2009 that has materially affected, or is reasonably likely to materiallyaffect, our internal controls over financial reporting.

 

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**PART II. OTHER INFORMATION****.**

 

**Item 1A.  Risk Factors.**

 

The more prominent risks and uncertainties inherent in ourbusiness are described below. However, additional risks and uncertainties mayalso impair our business operations.  Ifany of the following risks actually occur, our business, financial condition orresults of operations may suffer.

 

**RisksRelated to Our Business**

 

***We have a limitedoperating history and have incurred substantial losses and expect to incurfuture losses****.*

 

We are a development stage biotechnology company with alimited operating history and limited assets and capital.  We have incurred losses each year sinceinception and had an accumulated deficit of $34,360,254 at March 31, 2009.We have generated minimal revenues by licensing our technology for certaincrops to companies willing to share in our development costs. In addition, ourtechnology may not be ready for commercialization for several years. We expectto continue to incur losses for the next several years because we anticipatethat our expenditures on research and development, and administrativeactivities will significantly exceed our revenues during that period. We cannotpredict when, if ever, we will become profitable.

 

***We may need additional capital to fund ouroperations until we are able to generate a profit.***

 

Our operations to date have required significant cashexpenditures.  Our future capitalrequirements will depend on the results of our research and development activities,preclinical and clinical studies, and competitive and technological advances.

 

In addition, the most recent financings with YA GlobalInvestments, L.P., referred to herein as YA Global, and Stanford VentureCapital Holdings, Inc., referred to herein as Stanford, are secured by allof our assets.  If we default under theconvertible notes, the investors may foreclose on our assets and ourbusiness.  As a result, we will need toobtain more funding in the future through collaborations or other arrangementswith research institutions and corporate partners, or public and privateofferings of our securities, including debt or equity financing.  We may not be able to obtain adequate fundsfor our operations from these sources when needed or on acceptable terms.Future collaborations or similar arrangements may require us to licensevaluable intellectual property to, or to share substantial economic benefitswith, our collaborators.  If we raiseadditional capital by issuing additional equity or securities convertible intoequity, our stockholders may experience dilution and our share price maydecline.  Any debt financing may resultin restrictions on our spending.

 

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If we are unable to raise additional funds, we will need todo one or more of the following:

 

·                  delay, scale-back oreliminate some or all of our research and product development programs;

 

·                  license third parties todevelop and commercialize products or technologies that we would otherwise seekto develop and commercialize ourselves;

 

·                  seek strategic alliances orbusiness combinations;

 

·                  attempt to sell our company;

 

·                  cease operations; or

 

·                  declare bankruptcy.

 

We believe that at the projected rate of spending we shouldhave sufficient cash and investments to maintain our present operations for thenext 4 months as of March 31, 2009.

 

***We may be adverselyaffected by the current economic environment.***

 

Ourability to obtain financing, invest in and grow our business, and meet ourfinancial obligations depends on our operating and financial performance, whichin turn is subject to numerous factors. In addition to factors specific to our business, prevailing economicconditions and financial, business and other factors beyond our control canalso affect our business and ability to raise capital.  We cannot anticipate all of the ways in whichthe current economic climate and financial market conditions could adverselyimpact our business.

 

***We depend on a singleprincipal technology and, if our technology is not commercially successful, wewill have no alternative source of revenue****.*

 

Our primary business is the development and licensing oftechnology to identify, isolate, characterize and promote or silence geneswhich control the death of cells in humans and plants. Our future revenue andprofitability critically depend upon our ability to successfully developapoptosis and senescence gene technology and later license or market suchtechnology.  We have conductedexperiments on certain crops with favorable results and have conducted certainpreliminary cell-line and animal experiments, which have provided us with dataupon which we have designed additional research programs. However, we cannotgive any assurance that our technology will be commercially successful oreconomically viable for any crops or human health applications.

 

In addition, no assurance can be given that adverseconsequences might not result from the use of our technology such as thedevelopment of negative effects on humans or plants or reduced benefits interms of crop yield or protection.  Ourfailure to obtain market acceptance of our technology or of our current orpotential licensees to successfully commercialize such technology would have amaterial adverse effect on our business.

 

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***We outsource all of ourresearch and development activities and, if we are unsuccessful in maintainingour alliances with these third parties, our research and development effortsmay be delayed or curtailed.***

 

We rely on third parties to perform all of our research anddevelopment activities.  Our research anddevelopment efforts take place at the University of Waterloo in Ontario,Canada, where our technology was discovered, Mayo Clinic, the University ofVirginia and with our commercial partners. At this time, we do not have the internal capabilities to perform ourresearch and development activities. Accordingly, the failure of third-partyresearch partners to perform under agreements entered into with us, or ourfailure to renew important research agreements with these third parties, maydelay or curtail our research and development efforts.

 

***We have significantfuture capital needs and may be unable to raise capital when needed, whichcould force us to delay or reduce our research and development efforts.***

 

As of March 31, 2009, we had cash and highly-liquidinvestments of $2,677,581 and working capital of $2,594,256. Using ouravailable reserves as of March 31, 2009, we believe that we can operateaccording to our current business plan for the next 4 months from March 31,2009.  To date, we have generated minimalrevenues and anticipate that our operating costs will exceed any revenuesgenerated over the next several years. Therefore, we will be required to raiseadditional capital in the future in order to operate in accordance with ourcurrent business plan, and this funding may not be available on favorableterms, if at all.  If we are unable toraise additional funds, we will need to do one or more of the following:

 

·                  delay, scale back oreliminate some or all of our research and development programs;

 

·                  provide a license to thirdparties to develop and commercialize our technology that we would otherwiseseek to develop and commercialize ourselves;

 

·                  seek strategic alliances orbusiness combinations;

 

·                  attempt to sell our company;

 

·                  cease operations; or

 

·                  declare bankruptcy.

 

In addition, in connection with any funding, if we need toissue more equity securities than our certificate of incorporation currentlyauthorizes, or more than 20% of the shares of our common stock outstanding, wemay need stockholder approval.  Ifstockholder approval is not obtained or if adequate funds are not available, wemay be required to curtail operations significantly or to obtain funds througharrangements with collaborative partners or others that may require us torelinquish rights to certain of our technologies, product candidates, productsor potential markets.  Investors mayexperience dilution in their investment from future offerings of our commonstock.  For example, if we raiseadditional capital by issuing equity securities, such an issuance would reducethe percentage ownership of existing stockholders.  In addition, 

 

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assuming the exercise of all options and warrantsoutstanding and the conversion of the notes into common stock, as of March 31,2009, we had 4,383,328 shares of common stock authorized but unissued andunreserved, which may be issued from time to time by our board of directorswithout stockholder approval.  The totalnumber of shares that may be issued under the financing is subject to certaincaps as more fully described in this Form 10-Q.  Furthermore, we may need to issue securitiesthat have rights, preferences and privileges senior to our common stock.  Failure to obtain financing on acceptableterms would have a material adverse effect on our liquidity.

 

Since our inception, we have financed all of our operationsthrough private equity and debt financings. Our future capital requirementsdepend on numerous factors, including:

 

·                  the scope of our researchand development;

 

·                  our ability to attractbusiness partners willing to share in our development costs;

 

·                  our ability to successfullycommercialize our technology;

 

·                  competing technological andmarket developments;

 

·                  our ability to enter intocollaborative arrangements for the development, regulatory approval andcommercialization of other products; and

 

·                  the cost of filing,prosecuting, defending and enforcing patent claims and other intellectualproperty rights.

 

***Our business depends uponour patents and proprietary rights and the enforcement of these rights.  Our failure to obtain and maintain patentprotection may increase competition and reduce demand for our technology.***

 

As a result of the substantial length of time and expenseassociated with developing products and bringing them to the marketplace in thebiotechnology and agricultural industries, obtaining and maintaining patent andtrade secret protection for technologies, products and processes is of vitalimportance.  Our success will depend inpart on several factors, including, without limitation:

 

·                  our ability to obtain patentprotection for our technologies and processes;

 

·                  our ability to preserve ourtrade secrets; and

 

·                  our ability to operatewithout infringing the proprietary rights of other parties both in the UnitedStates and in foreign countries.

 

As of March 31, 2009, we have been issued nineteen (19)patents by the PTO and twenty-six (26) patents from foreign countries.  We have also filed numerous patentapplications for our technology in the United States and in several foreigncountries, which technology is vital to our 

 

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primary business, as well as several Continuations in Part onthese patent applications.  Our successdepends in part upon the grant of patents from our pending patent applications.

 

Although we believe that our technology is unique and thatit 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 besuccessfully defended against.  If we donot obtain and maintain patent protection, we may face increased competition inthe United States and internationally, which would have a material adverseeffect on our business.

 

Since patent applications in the United States aremaintained in secrecy until patents are issued, and since publication ofdiscoveries in the scientific and patent literature tend to lag behind actualdiscoveries by several months, we cannot be certain that we were the firstcreator of the inventions covered by our pending patent applications or that wewere the first to file patent applications for these inventions.

 

In addition, among other things, we cannot assure you that:

 

·                  our patent applications willresult in the issuance of patents;

 

·                  any patents issued orlicensed to us will be free from challenge and if challenged, would be held tobe valid;

 

·                  any patents issued orlicensed to us will provide commercially significant protection for ourtechnology, products and processes;

 

·                  other companies will notindependently develop substantially equivalent proprietary information which isnot covered by our patent rights;

 

·                  other companies will notobtain access to our know-how;

 

·                  other companies will not begranted patents that may prevent the commercialization of our technology; or

 

·                  we will not incur licensingfees and the payment of significant other fees or royalties to third partiesfor the use of their intellectual property in order to enable us to conduct ourbusiness.

 

***Our competitors mayallege that we are infringing upon their intellectual property rights, forcingus to incur substantial costs and expenses in resulting litigation, the outcomeof which would be uncertain.***

 

Patent law is still evolving relative to the scope andenforceability of claims in the fields in which we operate.  We are like most biotechnology companies inthat our patent protection is highly uncertain and involves complex legal andtechnical questions for which legal principles are not yet firmlyestablished.  In addition, if issued, ourpatents may not contain claims sufficiently broad to protect us against thirdparties with similar technologies or products, or provide us with any competitiveadvantage.

 

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The PTO and the courts have not established a consistentpolicy regarding the breadth of claims allowed in biotechnology patents.  The allowance of broader claims may increasethe incidence and cost of patent interference proceedings and the risk ofinfringement litigation.  On the otherhand, the allowance of narrower claims may limit the scope and value of ourproprietary rights.

 

The laws of some foreign countries do not protectproprietary rights to the same extent as the laws of the United States, andmany companies have encountered significant problems and costs in protectingtheir proprietary rights in these foreign countries.

 

We could become involved in infringement actions to enforceand/or protect our patents.  Regardlessof the outcome, patent litigation is expensive and time consuming and woulddistract our management from other activities. Some of our competitors may be able to sustain the costs of complexpatent litigation more effectively than we could because they havesubstantially greater resources. Uncertainties resulting from the initiation and continuation of anypatent litigation could limit our ability to continue our operations.

 

***If our technologyinfringes the intellectual property of our competitors or other third parties,we may be required to pay license fees or damages.***

 

If any relevant claims of third-party patents that areadverse to us are upheld as valid and enforceable, we could be prevented fromcommercializing our technology or could be required to obtain licenses from theowners of such patents.  We cannot assureyou that such licenses would be available or, if available, would be on acceptableterms.  Some licenses may be non-exclusiveand, therefore, our competitors may have access to the same technology licensedto us.  In addition, if any partiessuccessfully claim that the creation or use of our technology infringes upontheir intellectual property rights, we may be forced to pay damages, includingtreble damages.

 

***Our security measures maynot adequately protect our unpatented technology and, if we are unable toprotect the confidentiality of our proprietary information and know-how, thevalue of our technology may be adversely affected.***

 

Our success depends upon know-how, unpatentable tradesecrets, and the skills, knowledge and experience of our scientific andtechnical personnel.  As a result, werequire all employees to agree to a confidentiality provision in their employmentagreement that prohibits the disclosure of confidential information to anyoneoutside of our company, during the term of employment and thereafter.  We also require all employees to disclose andassign to us the rights to their ideas, developments, discoveries andinventions.  We also attempt to enterinto similar agreements with our consultants, advisors and researchcollaborators.  We cannot assure you thatadequate protection for our trade secrets, know-how or other proprietaryinformation against unauthorized use or disclosure will be available.

 

We occasionally provide information to researchcollaborators in academic institutions and request that the collaboratorsconduct certain tests.  We cannot assureyou that the academic institutions will not assert intellectual property rightsin the results of the tests conducted by the research collaborators, or thatthe academic institutions will grant licenses under such intellectual propertyrights to us on acceptable terms, if at all. If the assertion of intellectual property rights 

 

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by an academic institution is substantiated, and theacademic institution does not grant intellectual property rights to us, theseevents could limit our ability to commercialize our technology.

 

***As we evolve from acompany primarily involved in the research and development of our technologyinto one that is also involved in the commercialization of our technology, wemay have difficulty managing our growth and expanding our operations.***

 

As our business grows, we may need to add employees andenhance our management, systems and procedures. We may need to successfully integrate our internal operations with theoperations of our marketing partners, manufacturers, distributors and suppliersto produce and market commercially viable products.  We may also need to manage additionalrelationships with various collaborative partners, suppliers and otherorganizations.  Although we do notpresently conduct research and development activities in-house, we mayundertake those activities in the future. Expanding our business may place a significant burden on our managementand operations.  We may not be able toimplement improvements to our management information and control systems in anefficient and timely manner and we may discover deficiencies in our existingsystems and controls.  Our failure to effectivelyrespond to such changes may make it difficult for us to manage our growth andexpand our operations.

 

***We have no marketing orsales history and depend on third-party marketing partners.  Any failure of these parties to perform woulddelay or limit our commercialization efforts.***

 

We have no history of marketing, distributing or sellingbiotechnology products and we are relying on our ability to successfullyestablish marketing partners or other arrangements with third parties tomarket, distribute and sell a commercially viable product both here andabroad.  Our business plan envisionscreating strategic alliances to access needed commercialization and marketingexpertise.  We may not be able to attractqualified sub-licensees, distributors or marketing partners, and even ifqualified, these marketing partners may not be able to successfully marketagricultural products or human health applications developed with ourtechnology.  If our current or potentialfuture marketing partners fail to provide adequate levels of sales, ourcommercialization efforts will be delayed or limited and we may not be able togenerate revenue.

 

***We will depend on jointventures and strategic alliances to develop and market our technology and, ifthese arrangements are not successful, our technology may not be developed andthe expenses to commercialize our technology will increase.***

 

In its current state of development, our technology is notready to be marketed to consumers.  Weintend to follow a multi-faceted commercialization strategy that involves thelicensing of our technology to business partners for the purpose of furthertechnological development, marketing and distribution.  We have and are seeking business partners whowill share the burden of our development costs while our technology is stillbeing developed, and who will pay us royalties when they market and distributeproducts incorporating our technology upon commercialization.  The establishment of joint ventures andstrategic alliances may create future competitors, especially in certainregions abroad where we do not pursue patent protection.  If we fail to establish beneficial businesspartners and strategic alliances, our growth will suffer and the continueddevelopment of our technology may be harmed.

 

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***Competition in the humanhealth and agricultural biotechnology industries is intense and technology ischanging rapidly.  If our competitorsmarket their technology faster than we do, we may not be able to generaterevenues from the commercialization of our technology.***

 

Many human health and agricultural biotechnology companiesare engaged in research and development activities relating to apoptosis and senescence.  The market for plant protection and yieldenhancement products is intensely competitive, rapidly changing and undergoingconsolidation.  We may be unable tocompete successfully against our current and future competitors, which mayresult in price reductions, reduced margins and the inability to achieve marketacceptance for products containing our technology.  Our competitors in the field of plantsenescence gene technology are companies that develop and produce transgenicplants and include major international agricultural companies, specializedbiotechnology companies, research and academic institutions and, potentially,our joint venture and strategic alliance partners.  These companies include: Mendel Biotechnology, Inc.,Renessen LLC, Exelixis Plant Sciences, Inc., Syngenta International AG,and Eden Bioscience Corporation, among others. Some of our competitors that are involved in apoptosis researchinclude:  Amgen Inc.; Centocor, Inc.;Genzyme Corporation; OSI Pharmaceuticals, Inc.; Novartis AG; IntrogenTherapeutics, Inc.; Genta, Inc.; and Vertex Pharmaceuticals, Inc.  Many of these competitors have substantiallygreater financial, marketing, sales, distribution and technical resources thanus and have more experience in research and development, clinical trials,regulatory matters, manufacturing and marketing.  We anticipate increased competition in thefuture as new companies enter the market and new technologies become available.  Our technology may be rendered obsolete oruneconomical by technological advances or entirely different approachesdeveloped by one or more of our competitors, which will prevent or limit ourability to generate revenues from the commercialization of our technology.

 

***Our business is subjectto various government regulations and, if we or our licensees are unable toobtain regulatory approval, we may not be able to continue our operations.***

 

At present, the U.S. federal government regulation ofbiotechnology is divided among three agencies:

 

·                  the USDA regulates theimport, field testing and interstate movement of specific types of geneticengineering that may be used in the creation of transgenic plants;

 

·                  the EPA regulates activityrelated to the invention of plant pesticides and herbicides, which may includecertain kinds of transgenic plants; and

 

·                  the FDA regulates foodsderived from new plant varieties.

 

The FDA requires that transgenic plants meet the samestandards for safety that are required for all other plants and foods ingeneral.  Except in the case of additivesthat significantly alter a food’s structure, the FDA does not require anyadditional standards or specific approval for genetically engineered foods, butexpects transgenic plant developers to consult the FDA before introducing a newfood into the marketplace.

 

Use of our technology, if developed for human healthapplications, will also be subject to FDA regulation.  The FDA must approve any drug or biologicproduct before it can be marketed 

 

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in the United States. In addition, prior to being sold outside of the U.S., any productsresulting from the application of our human health technology must be approvedby the regulatory agencies of foreign governments.  Prior to filing a new drug application orbiologics license application with the FDA, we would have to perform extensiveclinical trials, and prior to beginning any clinical trial, we would need toperform extensive preclinical testing which could take several years and mayrequire substantial expenditures.

 

We believe that our current activities, which to date havebeen confined to research and development efforts, do not require licensing orapproval by any governmental regulatory agency. However, we are planning onperforming clinical trials, which would be subject to FDA approval.  Additionally, federal, state and foreignregulations relating to crop protection products and human health applicationsdeveloped through biotechnology are subject to public concerns and politicalcircumstances, and, as a result, regulations have changed and may changesubstantially in the future. Accordingly, we may become subject to governmental regulations or approvalsor become subject to licensing requirements in connection with our research anddevelopment efforts. We may also be required to obtain such licensing orapproval from the governmental regulatory agencies described above, or fromstate agencies, prior to the commercialization of our genetically transformedplants and human health technology.  Inaddition, our marketing partners who utilize our technology or sell productsgrown with our technology may be subject to government regulations.  If unfavorable governmental regulations areimposed on our technology or if we fail to obtain licenses or approvals in atimely manner, we may not be able to continue our operations.

 

***Preclinical studies andclinical trials of our human health applications may be unsuccessful, whichcould delay or prevent regulatory approval.***

 

Preclinical studies may reveal that our human healthtechnology is ineffective or harmful, and/or clinical trials may beunsuccessful in demonstrating efficacy and safety of our human health technology,which would significantly limit the possibility of obtaining regulatoryapproval for any drug or biologic product manufactured with ourtechnology.  The FDA requires submissionof extensive preclinical, clinical and manufacturing data to assess the efficacyand safety of potential products. Furthermore, the success of preliminarystudies does not ensure commercial success, and later-stage clinical trials mayfail to confirm the results of the preliminary studies.

 

***Any inability to license from third parties theirproprietary technologies or processes which we use in connection with thedevelopment of our technology may impair our business.***

 

Other companies, universities and research institutions haveor may obtain patents that could limit our ability to use our technology in aproduct candidate or impair our competitive position.  As a result, we would have to obtain licensesfrom other parties before we could continue using our technology in a productcandidate.  Any necessary licenses maynot be available on commercially acceptable terms, if at all.  If we do not obtain required licenses, we maynot be able to develop our technology into a product candidate or we mayencounter significant delays in development while we redesign methods that arefound to infringe on the patents held by others.

 

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***Clinical trials for our human health technologywill be lengthy and expensive and their outcome is uncertain***

 

Beforeobtaining regulatory approval for the commercial sales of any productcontaining our technology, we must demonstrate through clinical testing thatour technology and product containing our technology is safe and effective foruse in humans.  Conducting clinicaltrials is a time-consuming, expensive and uncertain process and typicallyrequires years to complete.  In ourindustry, the results from preclinical studies and early clinical trials oftenare not predictive of results obtained in later-stage clinical trials.  Some products and technologies that haveshown promising results in preclinical studies or early clinical trialssubsequently fail to establish sufficient safety and efficacy data necessary toobtain regulatory approval.  At any timeduring clinical trials we or the FDA might delay or halt any clinical trial forvarious reasons, including:

 

·                  occurrence of unacceptabletoxicities or side effects;

 

·                  ineffectiveness of theproduct candidate;

 

·                  negative or inconclusiveresults from the clinical trials, or results that necessitate additionalstudies or clinical trials;

 

·                  delays in obtaining ormaintaining required approvals from institutions, review boards or otherreviewing entities at clinical sites;

 

·                  delays in patientenrollment; or

 

·                  insufficient funding or areprioritization of financial or other resources.

 

Anyfailure or substantial delay in successfully completing clinical trials andobtaining regulatory approval for our product candidates could severely harmour business.

 

***Even if we receiveregulatory approval, consumers may not accept products containing ourtechnology, which will prevent us from being profitable since we have no othersource of revenue.***

 

We cannot guarantee that consumers will accept productscontaining our technology.  Recently,there has been consumer concern and consumer advocate activism with respect togenetically-engineered agricultural consumer products.  The adverse consequences from heightenedconsumer concern in this regard could affect the markets for agriculturalproducts developed with our technology and could also result in increasedgovernment regulation in response to that concern. If the public or potentialcustomers perceive our technology to be genetic modification or geneticengineering, agricultural products grown with our technology may not gainmarket acceptance.

 

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***We depend on our keypersonnel and, if we are not able to attract and retain qualified scientificand business personnel, we may not be able to grow our business or develop andcommercialize 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 keyemployees and our ability to identify, hire and retain additional qualifiedpersonnel in an intensely competitive market. Although we have employment agreements with all of our key employees anda research agreement with Dr. John Thompson, these agreements may beterminated upon short or no notice.  Wedo not maintain key person life insurance on any member of management.  The failure to attract and retain keypersonnel could limit our growth and hinder our research and developmentefforts.

 

***Certain provisions of ourcharter, by-laws and Delaware law could make a takeover difficult.***

 

Certain provisions of our certificate of incorporation andby-laws could make it more difficult for a third party to acquire control ofus, even if the change in control would be beneficial to stockholders.  Our certificate of incorporation authorizesour board of directors to issue, without stockholder approval, except as may berequired by the rules of the NYSE Amex Exchange, 5,000,000 shares ofpreferred stock with voting, conversion and other rights and preferences thatcould adversely affect the voting power or other rights of the holders of our commonstock.  Similarly, our by-laws do notrestrict our board of directors from issuing preferred stock withoutstockholder approval.

 

In addition, we are subject to the Business Combination Actof the Delaware General Corporation Law which, subject to certain exceptions,restricts certain transactions and business combinations between a corporationand a stockholder owning 15% or more of the corporation’s outstanding votingstock for a period of three years from the date such stockholder becomes a 15%owner.  These provisions may have theeffect of delaying or preventing a change of control of us without action byour stockholders and, therefore, could adversely affect the value of our commonstock.

 

Furthermore, in the event of our merger or consolidationwith or into another corporation, or the sale of all or substantially all ofour assets in which the successor corporation does not assume our outstandingequity awards or issue equivalent equity awards, our current equity plansrequire the accelerated vesting of such outstanding equity awards.

 

***Increasing political andsocial turmoil, such as terrorist and military actions, increase the difficultyfor us and our strategic partners to forecast accurately and plan futurebusiness activities.***

 

Recent political and social turmoil, can be expected to putfurther pressure on economic conditions in the United States andworldwide.  These political, social andeconomic conditions may make it difficult for us to plan future businessactivities.

 

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**Risks Related to Our Common Stock**

 

***Our management and otheraffiliates have significant control of our common stock and could significantlyinfluence our actions in a manner that conflicts with our interests and theinterests of other stockholders.***

 

As of March 31, 2009, our executive officers, directorsand affiliated entities together beneficially own approximately 59.7% of theoutstanding shares of our common stock, assuming the exercise of options andwarrants which are currently exercisable or will become exercisable within 60days of March 31, 2009, held by these stockholders. As a result, thesestockholders, acting together, will be able to exercise significant influenceover matters requiring approval by our stockholders, including the election ofdirectors, and may not always act in the best interests of otherstockholders.  Such a concentration ofownership may have the effect of delaying or preventing a change in control ofus, including transactions in which our stockholders might otherwise receive apremium for their shares over then current market prices.  Stanfordis one such major stockholder of the Company. In February 2009, the SECfiled a civil lawsuit accusing certain executives of Stanford of fraud and thecompany’s assets were subsequently placed in receivership.  It is unclearat this point, what impact, if any, the ongoing investigation of Stanford mayhave on the Company.

 

***A significant portion ofour total outstanding shares of common stock may be sold in the market in thenear future, which could cause the market price of our common stock to dropsignificantly.***

 

As of March 31, 2009, we had 19,511,199 shares of ourcommon stock issued and outstanding, of which approximately 5,319,639 sharesare registered pursuant to  registrationstatements on Form S-3 and the remainder of which are either eligible tobe sold under SEC Rule 144 or are in the public float.  In addition, we have registered 2,632,194shares of our common stock underlying warrants previously issued on the Form S-3registration statement and we registered 6,137,200 shares of our common stockunderlying options granted or to be granted under our stock option plan.  Consequently, sales of substantial amounts ofour common stock in the public market, or the perception that such sales couldoccur, may have a material adverse effect on our stock price.

 

***Our common stock has alimited trading market, which could limit your ability to resell your shares ofcommon stock at or above your purchase price.***

 

Our common stock is quoted on the NYSE Amex Exchange andcurrently has a limited trading market. The NYSE Amex Exchange requires us to meet minimum financialrequirements in order to maintain our listing. We currently believe that we meet the continued listing requirements ofthe NYSE Amex Exchange.  However, wecannot assure you that we will continue to meet such standards.  If we do not meet the continued listingstandards, we could be delisted.  Wecannot assure you that an active trading market will develop or, if developed,will be maintained.  As a result, ourstockholders may find it difficult to dispose of shares of our common stockand, as a result, may suffer a loss of all or a substantial portion of theirinvestment.

 

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***If our common stock isdelisted from the NYSE Amex Exchange, we may not be able to list on any otherstock exchange, and our common stock may be subject to the “penny stock”regulations, which may affect the ability of our stockholders to sell theirshares.***

 

The NYSE Amex Exchange requires us to meet minimum financialrequirements in order to maintain our listing. As of March 31, 2009, we believe that we continue to be incompliance with the NYSE Amex Exchange’s continued listing requirements.  However, if we are unable to continue to bein compliance with the continued listing requirements, it is possible that wewill be delisted.  If we are delistedfrom the NYSE Amex Exchange, our common stock likely will become a “penny stock”.  In general, regulations of the SEC define a “pennystock” to be an equity security that is not listed on a national securitiesexchange or the NASDAQ Stock Market and that has a market price of less than$5.00 per share or with an exercise price of less than $5.00 per share, subjectto certain exceptions.  If our commonstock becomes a penny stock, additional sales practice requirements would beimposed on broker-dealers that sell such securities to persons other thancertain qualified investors.  Fortransactions involving a penny stock, unless exempt, a broker-dealer must makea special suitability determination for the purchaser and receive the purchaser’swritten consent to the transaction prior to the sale.  In addition, the rules on penny stocksrequire delivery, prior to and after any penny stock transaction, ofdisclosures required by the SEC.

 

If our stock is not accepted for listing on the NYSE AmexExchange, we will make every possible effort to have it listed on the Over theCounter Bulletin Board, or the OTC Bulletin Board.  If our common stock were to be traded on theOTC Bulletin Board, the Securities Exchange Act of 1934, as amended, andrelated SEC rules would impose additional sales practice requirements onbroker-dealers that sell our securities. These rules may adversely affect the ability of stockholders tosell our common stock and otherwise negatively affect the liquidity, tradingmarket and price of our common stock.

 

We believe that the listing of our common stock on arecognized national trading market, such as the NYSE Amex Exchange, is animportant part of our business and strategy. Such a listing helps our stockholders by providing a readily availabletrading market with current quotations. Without that, stockholders may have a difficult time getting a quote forthe sale or purchase of our stock, the sale or purchase of our stock wouldlikely be made more difficult and the trading volume and liquidity of our stockwould likely decline.  The absence ofsuch a listing may adversely affect the acceptance of our common stock ascurrency or the value accorded it by other parties.  In that regard, the absence of a listing on arecognized national trading market will also affect our ability to benefit fromthe use of our operations and expansion plans, including for use in licensingagreements, joint ventures, the development of strategic relationships andacquisitions, which are critical to our business and strategy and none of whichis currently the subject of any agreement, arrangement or understanding, withrespect to any future financing or strategic relationship it may undertake.  A delisting from the NYSE Amex Exchange couldresult in negative publicity and could negatively impact our ability to raisecapital in the future.

 

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***The market price of ourcommon stock may fluctuate and may drop below the price you paid.***

 

We cannot assure you that you will be able to resell theshares of our common stock at or above your purchase price.  The market price of our common stock mayfluctuate significantly in response to a number of factors, some of which arebeyond our control.  These factorsinclude:

 

·                  quarterly variations inoperating results;

 

·                  the progress or perceivedprogress of our research and development efforts;

 

·                  changes in accountingtreatments or principles;

 

·                  announcements by us or ourcompetitors of new technology, product and service offerings, significantcontracts, acquisitions or strategic relationships;

 

·                  additions or departures ofkey personnel;

 

·                  future offerings or resalesof our common stock or other securities;

 

·                  stock market price andvolume fluctuations of publicly-traded companies in general and developmentcompanies in particular; and

 

·                  general political, economicand market conditions.

 

***Because we do not intendto 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 unlessthe value of our common stock appreciates and they sell their shares.***

 

We have never paid or declared any cash dividends on ourcommon stock and we intend to retain any future earnings to finance thedevelopment and expansion of our business. We do not anticipate paying any cash dividends on our common stock inthe foreseeable future.  Therefore, ourstockholders will not be able to receive a return on their investment unlessthe value of our common stock appreciates and they sell their shares.

 

***Our stockholders may experience substantialdilution as a result of the conversion of outstanding convertible debentures,or the exercise of options and warrants to purchase our common stock.***

 

Asof March 31, 2009, we have granted options outside of our stock optionplan to purchase 10,000 shares of our common stock and outstanding warrants topurchase 18,713,443 shares of our common stock.  In addition, as of March 31,2009, we have reserved 10,437,884 shares of our common stock for issuance uponthe exercise of options granted pursuant to our stock option plan, all of whichmay be granted in the future.  The exercise of these options and warrantswill result in dilution to our existing stockholders and could have a materialadverse effect on our stock price. In addition, any shares issued in connectionwith the YA Global financing or Stanford financing, as further discussedelsewhere in this Form 10-Q, can also have a dilutive effect and apossible material adverse effect on our stock price.  The conversion price of the warrants are alsosubject to certain anti-dilution adjustments. The agreements with YA Global and Stanford provide for the potentialissuance of up to a total of 61,833,332 shares of our common stock, of which13,883,332 shares are included in outstanding warrants noted above.

 

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**Item 6.****                                  ****Exhibits.**

 

Exhibits.

 
| **Exhibit No.** | ** ** | **Description**                                                                                                                                                    |
|----------------------|------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 31.1                 |       | Certification of principal executive officer pursuant to  Section 302 of the Sarbanes-Oxley Act of 2002. (filed herewith)                                     |
| 31.2                 |       | Certification of principal financial and accounting  officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.  (filed herewith)                     |
| 32.1                 |       | Certification of principal executive officer pursuant to  Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. 1350.  (furnished herewith)                |
| 32.2                 |       | Certification of principal financial and accounting  officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18  U.S.C. 1350. (furnished herewith) |

 

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**SIGNATURES**

 

In accordance with the requirements of the SecuritiesExchange Act of 1934, the registrant caused this report to be signed on itsbehalf by the undersigned, thereunto duly authorized.

 
|              | SENESCO TECHNOLOGIES, INC. |
|-------------------|----------------------------|
|              |                       |
|              |                       |
| DATE: May 1, 2009 | By:                        | /s/ Bruce C. Galton |
|              |                       | Bruce C. Galton, President and Chief Executive Officer |
|              |                       | (Principal Executive  Officer) |
|              |                       |
|              |                       |
| DATE: May 1, 2009 | By:                        | /s/ Joel Brooks |
|              |                       | Joel Brooks, Chief Financial Officer and Treasurer |
|              |                       | (Principal Financial and Accounting Officer) |

 

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