UNITED STATES


SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549





FORM 10-K




(Mark One)


x
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934





For the fiscal year ended December 31, 2010





 ̈
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934





For the transition period from ___________to___________





Commission file number 000-28790





PHYTOMEDICAL TECHNOLOGIES, INC.


(Exact name of registrant as specified in its charter)





Nevada
87-0429962(State or other jurisdiction of
(I.R.S. Employerincorporation or organization)
Identification No.)100 Overlook Drive, 2nd FloorPrinceton, New Jersey
08540(Address of principal executive offices)
(Zip Code)





(800) 611-3388


(Registrant’s telephone number, including area code)





Securities registered pursuant to Section 12(b) of the Act: None




Securities registered pursuant to Section 12(g) of the Act:




Title of each class


Name of each exchange on which registeredCommon Stock, $0.00001 par value per share

OTC Bulletin Board





Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.


Yes  ̈No  x





Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act.


Yes  ̈No  x





Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.


Yes xNo   ̈





Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ̈





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





Large accelerated filer
 ̈

Accelerated filer
 ̈Non-accelerated filer (Do not check if a smaller

reporting company)
 ̈

Smaller reporting company
x




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


Yes x   No  ̈




The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant as of the last business day of the registrant’s most recently completed second fiscal quarter, based upon the closing sale price of the registrant’s common stock on June 30, 2010 as reported on the OTC Bulletin Board was $6,223,661.





As of March 21, 2011, there were 241,487,995 shares of the registrant’s common stock outstanding.





DOCUMENTS INCORPORATED BY REFERENCE


None.










TABLE OF CONTENTS





PHYTOMEDICAL TECHNOLOGIES, INC.


ANNUAL REPORT ON FORM 10-K


FOR THE FISCAL YEAR ENDED DECEMBER 31, 2010





PAGEPART IItem 1.
Business
3Item 2.
Properties
6Item 3.
Legal Proceedings
6PART IIItem 5.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
7Item 7.
Management's Discussion and Analysis of Financial Condition and Results of Operations
8Item 8.
Financial Statements
18Item 9.
Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
40Item 9A.
Controls and Procedures
40Item 9B.
Other Information
40PART IIIItem 10.
Directors, Executive Officers, and Corporate Governance
41Item 11.
Executive Compensation
46Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
52Item 13.
Certain Relationships and Related Transactions, and Director Independence
53Item 14.
Principal Accounting Fees and Services
53PART IVItem 15.
Exhibits, Financial Statement Schedules
55SIGNATURES
56EXHIBIT INDEX
57CERTIFICATIONS





2





PART I





Forward-Looking Statements





Except for the historical information presented in this document, the matters discussed in this Form 10-K for the fiscal year ended December 31, 2010 contain forward-looking statements which involve assumptions and our future plans, strategies, and expectations. These statements are generally identified by the use of words such as “may,” “will,” “should,” “expect,” “anticipate,” “estimate,” “believe,” “intend,” or “project” or the negative of these words or other variations on these words or comparable terminology. These statements are expressed in good faith and based upon a reasonable basis when made, but there can be no assurance that these expectations will be achieved or accomplished.





Such forward-looking statements include statements regarding, among other things, (a) the potential markets for our technologies, our potential profitability, and cash flows (b) our growth strategies (c) expectations from our ongoing research and development activities (d) anticipated trends in the technology industry (e) our future financing plans and (f) our anticipated needs for working capital. This information may involve known and unknown risks, uncertainties, and other factors that may cause our actual results, performance, or achievements to be materially different from the future results, performance, or achievements expressed or implied by any forward-looking statements. These statements may be found under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” as well as in this Form 10-K generally. Actual events or results may differ materially from those discussed in forward-looking statements as a result of various factors, including, without limitation, the matters described in this Form 10-K generally. In light of these risks and uncertainties, there can be no assurance that the forward-looking statements contained in this filing will in fact occur. In addition to the information expressly required to be included in this filing, we will provide such further material information, if any, as may be necessary to make the required statements, in light of the circumstances under which they are made, not misleading.





Although forward-looking statements in this report reflect the good faith judgment of our management, forward-looking statements are inherently subject to known and unknown risks, business, economic and other risks and uncertainties that may cause actual results to be materially different from those discussed in these forward-looking statements. Readers are urged not to place undue reliance on these forward-looking statements, which speak only as of the date of this report. We assume no obligation to update any forward-looking statements in order to reflect any event or circumstance that may arise after the date of this report, other than as may be required by applicable law or regulation. Readers are urged to carefully review and consider the various disclosures made by us in our reports filed with the Securities and Exchange Commission which attempt to advise interested parties of the risks and factors that may affect our business, financial condition, results of operation and cash flows. If one or more of these risks or uncertainties materialize, or if the underlying assumptions prove incorrect our actual results may vary materially from those expected or projected.





Except where the context otherwise requires and for purposes of this 10-K only, “we,” “us,” “our,” “Company,” “our Company,” and “PhytoMedical” refer to PhytoMedical Technologies, Inc., a Nevada corporation, and its consolidated subsidiaries.





ITEM 1.  BUSINESS





Description of Business





We were incorporated in the State of Nevada on July 25, 2001. The accompanying consolidated financial statements include the accounts of the Company and our wholly owned subsidiaries PhytoMedical Technologies Corporation (“PhytoMedical Corp.”), PolyPhenol Technologies Corporation (“PolyPhenol”) and PhytoMedical Technologies Ltd. (“PhytoMedical Ltd.”).





PhytoMedical Corp. was incorporated on March 10, 2004 in the State of Nevada and has no assets and liabilities.





PolyPhenol was incorporated on August 24, 2004, in the State of Nevada and has no assets and liabilities.




3





PhytoMedical Ltd. was incorporated on April 11, 2007 in the Province of British Columbia, Canada for providing administrative services to our Canada office.  We ceased to conduct business in Canada on August 31, 2008 and closed this office. As a result, we dissolved PhytoMedical Ltd. and eliminated all intercompany balances, effective January 1, 2009.





Since our incorporation we have focused our activities on the development of new technologies (in particular pharmaceutical technologies and products) and, where warranted, acquisition of rights to obtain licenses to technologies and products that are being developed by third parties, primarily universities and government agencies, through sponsored research and development agreements.





On May 31, 2010, our then President and Chief Executive Officer, James Lynch, resigned both as an officer and as a director, and Mr. Amit S. Dang was appointed in his place. On June 3, 2010, Mr. Jeet Sidhu was appointed to our Board of Directors.  In June 2010 Messrs. Gary Branning, Greg Wujek, and Raymond Krauss resigned as directors.  Mr. Krauss also resigned as our Chief Financial Officer, a position currently held by Mr. Dang.





Following the management changes which occurred in June 2010, our Board of Directors determined that it was in our shareholders best interest to refocus our business in activities in a manner which may more fully enhance shareholder value.   As a result, on August 25, 2010, we entered into a non-binding Memorandum of Intent (the “MOI”) with Standard Gold Corp., a Nevada corporation (“SGC”), relating to continuing discussions and the negotiation of a definitive agreement regarding our possible acquisition of all of the issued and outstanding shares of SGC.





SGC is a natural resource exploration company engaged in the exploration of precious metals in the western United States on properties that may contain economic concentrations of mineralization.  As of the date of this report, none of SGC’s properties are known to contain any reserves. SGC’s strategy is to acquire properties that are prospective for mineral exploration and may have undergone some degree of mineral exploration and exploitation.  To date, SGC has acquired interests in gross acres of State Leases and Federal lode claims in the State of Nevada.





Pursuant to the MOI, we loaned SGC $30,000 (the “SGC Loan”) so that it could maintain its mineral claims, in good standing, pending on-going negotiations.  The SGC Loan bore interest at an annual rate of 8.5%.  Both the principal and the accrued interest on the SGC Loan were repaid in January 2011.





On October 22, 2010 we entered into a Share Exchange Agreement (the “Share Exchange Agreement”) with SGC and its shareholders, pursuant to which we would acquire all of the issued and outstanding shares of SGC in exchange for 607,539,940 shares of our common stock (the “SGC Acquisition”).  Consummation of the transactions contemplated by the Share Exchange Agreement were subject to the satisfaction of a number of conditions, including, but not limited to, our receipt of subscriptions for an aggregate of 150,000,000 Units that were previously being offered by us at $0.01 per unit.  If the conditions to closing were not satisfied by December 31, 2010 the Share Exchange Agreement would automatically terminate.





Each of the parties to the Share Exchange Agreement, no longer believing that the conditions to closing of the transactions contemplated by the Share Exchange Agreement in fact could be satisfied, entered into the Termination Agreement and Mutual Release (the “Termination Agreement”), dated as of December 24, 2010.  The Termination Agreement provides for the earlier termination of the Share Exchange Agreement and a release (except as otherwise provided) by SGC and its shareholders on the one hand, and us on the other hand, of any claims arising from or related to the Share Exchange Agreement and any agreements delivered pursuant thereto.





In anticipation that we would consummate the SGC Acquisition and pursue the exploration and development of the mineral claims held by SGC, we did not pay the $20,000 license maintenance fee that was due on September 1, 2010 to the Trustees of Dartmouth College (the “Dartmouth Trustees”). We had an exclusive license, granted pursuant to a license agreement dated September 1, 2008 (the “Dartmouth License Agreement”), between us and the Dartmouth Trustees, to develop, market and distribute a novel class of synthesized compounds known as bis-intercalators. Pursuant to Section 5.01(e) of the Dartmouth License Agreement, a $20,000 license maintenance fee was due and payable to the Dartmouth Trustees on September 1, 2010. Pursuant to Section 9.02 of the Dartmouth License Agreement, the Dartmouth Trustees provided us notice that it has terminated the Dartmouth License Agreement for a breach under Section 5.01(e).




4





We had originally commenced our research and development activities relating to D11B, the anti-cancer compound licensed by us from Dartmouth College (“Dartmouth”), through a Sponsored Research Agreement (the “Sponsored Research Agreement”) with Dartmouth.  As of September 30, 2009, the termination date of the Sponsored Research Agreement, Dartmouth concluded its research and development activities, and provided us with, what it believes is, a key anti-cancer compound for glioblastoma, D11B. Based upon results of in vivo efficacy and toxicity tests, we had entered into a fee-for-services agreement with Latitude Pharmaceuticals, Inc. (“Latitude”) to assist us in our development of an IV formulation of D11B, in order to conduct additional tests. Further development of the IV formulation for D11B was ceased in anticipation of the SGC Acquisition.





Because the transactions contemplated by the Share Exchange Agreement were not consummated, we are undertaking efforts to identify new commercial opportunities. We do not expect to generate any revenues for the foreseeable future and expect to continue to incur losses. Our independent registered public accountant has issued an audit opinion which includes a statement expressing substantial doubt as to our ability to continue as a going concern.





Research and Development





Research and development costs represent costs incurred to develop our technologies and were incurred pursuant to our former sponsored research agreements with Dartmouth and other third party providers. These agreements include salaries and benefits for research and development personnel, allocated overhead and facility occupancy costs, contract services and other costs. Research and development costs are expensed when incurred, except for nonrefundable advance payments for future research and development activities which are capitalized and recognized as expense as the related services are performed.





Research and development expense for the years ended December 31, 2010 and 2009 were $8,764 and $113,826.





Employees





As of December 31, 2010, we did not have any employees.




5





ITEM 2.  PROPERTIES





Our corporate office is located at 100 Overlook Drive, 2nd Floor, Princeton, New Jersey, 08540.  Rent for this month-to-month operating lease is $119 per month plus tax and variable charges. Pursuant to the lease terms, we are provided with a bundle of services, including, but not limited to, reception, phone and mail service.





We also maintain an office at 2000 Town Center, Suite 1900, Southfield, Michigan, 48075. We have a three month lease, which began August 1, 2010 and automatically renews in three month intervals.  We may terminate this lease agreement by giving written notice to the landlord not less than two months prior to the expiration of the term of the lease. The rent for the office in Southfield, MI is $715 per month plus tax and variable charges. We share this office space with another company for whom Mr. Amit S. Dang, our Chief Executive Officer and Chief Financial Officer provides executive consulting services. As a result, we evenly share the total monthly rent cost with the aforementioned company.  Pursuant to the lease terms, we are provided with a bundle of services, including, but not limited to, reception, phone and mail service for one gross price.





ITEM 3.  LEGAL PROCEEDINGS





As of the date of this report, we are not a party to any material pending legal proceedings or government actions, including any bankruptcy, receivership, or similar proceedings. In addition, management is not aware of any known litigation or liabilities involving the operators of our properties that could affect our operations. Should any liabilities incur in the future, they will be accrued based on management’s best estimate of the potential loss. As such, there is no adverse effect on our financial position, results of operations or cash flow at this time. Furthermore, we do not believe that there are any proceedings to which any of our directors, officers, or affiliates, any owner of record of the beneficially or more than five percent of our common stock, or any associate of any such director, officer, affiliate, or security holder is a party adverse or has a material interest adverse to us.





6


PART II





ITEM 5.  MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES





Market Information





Our common stock is traded on the Over the Counter Bulletin Board (the “OTCBB”) under the symbol “PYTO.”





The following table sets forth the high and low bid quotations for our common stock for each quarter during the past two fiscal years as reported by the OTCBB.  The below quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions:





High


LowFiscal Year Ended December 31, 2010First Quarter 2010 (January 1 –  March 31, 2010)

$
0.05


$
0.02Second Quarter 2010 (April 1 –  June 30, 2010)

$
0.05


$
0.03Third Quarter 2010 (July 1 –  September 30, 2010)

$
0.05


$
0.01Fourth Quarter 2010 (October 1 –  December 31, 2010)

$
0.03


$
0.01Fiscal Year Ended December 31, 2009First Quarter 2009 (January 1  –  March 31, 2009)

$
0.14


$
0.03Second Quarter 2009 (April 1 –  June 30, 2009)

$
0.09


$
0.04Third Quarter 2009 (July 1 –  September 30, 2009)

$
0.08


$
0.05Fourth Quarter 2009 (October 1 –  December 31, 2009)

$
0.08


$
0.02





As of March 14, 2011, there were approximately 298 stockholders of record of our common stock.





Dividend Policy





We have not paid any dividends on our common stock and our board of directors presently intends to continue a policy of retaining earnings, if any, for use in our operations. The declaration and payment of dividends in the future, of which there can be no assurance, will be determined by the board of directors in light of conditions then existing, including earnings, financial condition, capital requirements and other factors. The Nevada Revised Statutes prohibit us from declaring dividends where, if after giving effect to the distribution of the dividend:





·
We would not be able to pay our debts as they become due in the usual course of business; or


·
Our total assets would be less than the sum of our total liabilities plus the amount that would be needed to satisfy the rights of stockholders who have preferential rights superior to those receiving the distribution.





Except as set forth above, there are no restrictions that currently materially limit our ability to pay dividends or which we reasonably believe are likely to limit materially the future payment of dividends on common stock.





Our Board of Directors has the right to authorize the issuance of preferred stock, without further stockholder approval, the holders of which may have preferences over the holders of the common stock as to payment of dividends.





Securities Authorized for Issuance Under Equity Compensation Plans





The following table sets forth certain information regarding the common stock that may be issued upon the exercise of options, warrants and other rights that have been or may be granted to employees, directors or consultants under all of our existing equity compensation plans, as of December 31, 2010.




7





Plan Category

Number of

securities to be

issued upon

exercise of

outstanding

options,

warrants and

rights


Weighted-

average exercise

price of

outstanding

options,

warrants and

rights


Number of

securities

remaining

available for

future issuance

under equity

compensation

plans (excluding

securities reflected

in column (a))(a)


(b)


(c)Equity compensation plans approved by security holders


-



-



22,250,000
(1)Equity compensation plans not approved by security holders


-



-



-Total


-



-



22,250,000





(1)
As of December 31, 2010, there are no stock options outstanding.  This represents the number of stock options available for grant under our 2005 Stock Plan.





ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS





Overview





The following Management’s Discussion and Analysis (“MD&A”) is intended to help the reader understand our consolidated results of operations and financial condition. The MD&A is provided as a supplement to, and should be read in conjunction with, our consolidated financial statements and the accompanying notes to the consolidated financial statements included in this Form 10-K.





The MD&A is based on our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities and expenses and related disclosure of contingent assets and liabilities. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.





Background





We were incorporated in the State of Nevada on July 25, 2001.  The accompanying consolidated financial statements include the accounts of the Company and our wholly owned subsidiaries PhytoMedical Technologies Corporation (“PhytoMedical Corp.”), PolyPhenol Technologies Corporation (“PolyPhenol”) and PhytoMedical Technologies Ltd. (“PhytoMedical Ltd.”).





PhytoMedical Corp. was incorporated on March 10, 2004 in the State of Nevada and has no assets and liabilities.





PolyPhenol was incorporated on August 24, 2004, in the State of Nevada and has no assets and liabilities.




8





PhytoMedical Ltd. was incorporated on April 11, 2007, in the Province of British Columbia, Canada for providing administrative services to our Canada office.  We ceased to conduct business in Canada on August 31, 2008 and closed this office. As a result, we dissolved PhytoMedical Ltd. and eliminated all intercompany balances, effective January 1, 2009.





Since our incorporation we have focused our activities on the development of new technologies (in particular pharmaceutical technologies and products) and, where warranted, acquisition of rights to obtain licenses to technologies and products that are being developed by third parties, primarily universities and government agencies, through sponsored research and development agreements.





On May 31, 2010, our then President and Chief Executive Officer, James Lynch, resigned both as an officer and as a director, and Mr. Amit S. Dang was appointed in his place. On June 3, 2010, Mr. Jeet Sidhu was appointed to our Board of Directors.  In June 2010 Messrs. Gary Branning, Greg Wujek, and Raymond Krauss resigned as directors.  Mr. Krauss also resigned as our Chief Financial Officer, a position currently held by Mr. Dang.





Following the management changes which occurred in June 2010, our Board of Directors determined that it was in our shareholders best interest to refocus our business in activities in a manner which may more fully enhance shareholder value.   As a result, on August 25, 2010, we entered into a non-binding Memorandum of Intent (the “MOI”) with Standard Gold Corp., a Nevada corporation (“SGC”), relating to continuing discussions and the negotiation of a definitive agreement regarding our possible acquisition of all of the issued and outstanding shares of SGC.





SGC is a natural resource exploration company engaged in the exploration of precious metals in the western United States on properties that may contain economic concentrations of mineralization.  As of the date of this report, none of SGC’s properties are known to contain any reserves. SGC’s strategy is to acquire properties that are prospective for mineral exploration and may have undergone some degree of mineral exploration and exploitation.  To date, SGC has acquired interests in gross acres of State Leases and Federal lode claims in the State of Nevada.





Pursuant to the MOI, we loaned SGC $30,000 (the “SGC Loan”) so that it could maintain its mineral claims, in good standing, pending on-going negotiations.  The SGC Loan bore interest at an annual rate of 8.5%.  Both the principal and the accrued interest on the SGC Loan were repaid in January 2011.





On October 22, 2010 we entered into a Share Exchange Agreement (the “Share Exchange Agreement”) with SGC and its shareholders, pursuant to which we would acquire all of the issued and outstanding shares of SGC in exchange for 607,539,940 shares of our common stock (the “SGC Acquisition”).  Consummation of the transactions contemplated by the Share Exchange Agreement were subject to the satisfaction of a number of conditions, including, but not limited to, our receipt of subscriptions for an aggregate of 150,000,000 Units being offered by us as at $0.01 per unit.  If the conditions to closing were not satisfied by December 31, 2010 the Share Exchange Agreement would automatically terminate.





Each of the parties to the Share Exchange Agreement, no longer believing that the conditions to closing of the transactions contemplated by the Share Exchange Agreement in fact could be satisfied, entered into a Termination Agreement and Mutual Release (the “Termination Agreement”), dated as of December 24, 2010.  The Termination Agreement provides for the earlier termination of the Share Exchange Agreement and a release (except as otherwise provided) by SGC and its shareholders on the one hand, and us on the other hand, of any claims arising from or related to the Share Exchange Agreement and any agreements delivered pursuant thereto.





In anticipation that we would consummate the SGC Acquisition and pursue the exploration and development of the mineral claims held by SGC, we did not pay the $20,000 license maintenance fee that was due on September 1, 2010 to the Trustees of Dartmouth College (the “Dartmouth Trustees”). We had an exclusive license, granted pursuant to a license agreement dated September 1, 2008 (the “Dartmouth License Agreement”), between us and the Dartmouth Trustees, to develop, market and distribute a novel class of synthesized compounds known as bis-intercalators. Pursuant to Section 5.01(e) of the Dartmouth License Agreement, a $20,000 license maintenance fee was due and payable to the Dartmouth Trustees on September 1, 2010.  Pursuant to Section 9.02 of the Dartmouth License Agreement, the Dartmouth Trustees provided us notice that it has terminated the Dartmouth License Agreement for a breach under Section 5.01(e).




9





We had originally commenced our research and development activities relating to D11B, the anti-cancer compound licensed by us from Dartmouth College (“Dartmouth”), through a Sponsored Research Agreement (the “Sponsored Research Agreement”) with Dartmouth.  As of September 30, 2009, the termination date of the Sponsored Research Agreement, Dartmouth concluded its research and development activities, and provided us with, what it believes is, a key anti-cancer compound for glioblastoma, D11B. Based upon results of in vivo efficacy and toxicity tests, we had entered into a fee-for-services agreement with Latitude Pharmaceuticals, Inc. (“Latitude”) to assist us in our development of an IV formulation of D11B, in order to conduct additional tests. Further development of the IV formulation for D11B was ceased in anticipation of the SGC Acquisition.





As of December 31, 2010, we have paid $220,260 pursuant to the Sponsored Research Agreement with Dartmouth and $10,017 for reimbursement of expenses.  Of the total $230,277 paid to Dartmouth, $8,764 is included in research and development expense for the year ended December 31, 2010 and $60,463 is included in research and development expense for the year ended December 31, 2009.





As a result of the termination of the Dartmouth License Agreement, we recorded an impairment charge of $15,000 during the year ended December 31, 2010 to write-off the previously paid license fee.





As of December 31, 2010, we have paid $45,377 pursuant to the terms of the fee-for-services agreement with Latitude, all of which is included in research and development expense for the year ended December 31, 2009.





Because the transactions contemplated by the Share Exchange Agreement were not consummated, we are undertaking efforts to identify new commercial opportunities. We do not expect to generate any revenues for the foreseeable future and expect to continue to incur losses. Our independent registered public accountant has issued an audit opinion which includes a statement expressing substantial doubt as to our ability to continue as a going concern.





Results of Operations





A summary of our operating expense (income) for the years ended December 31, 2010 and 2009 was as follows:





Year EndedDecember 31,


Increase /


Percentage2010


2009


(Decrease)


ChangeOperating expense (income)Director and management fees - related party

$
50,200


$
6,800


$
43,400



638
%Investor relations and marketing


17,664



3,658



14,006



383Wages and benefits


(2,566,016
)


263,052



(2,829,068
)


*Research and development


8,764



113,826



(105,062
)


(92
)Professional fees


284,158



136,423



147,735



108Impairment of license fee


15,000



-



15,000



*Other operating expenses


67,422



64,480



2,942



5Total operating expense (income)

$
(2,122,808
)

$
588,239


$
(2,711,047
)


(461
)%





* Not meaningful





Director and Management Fees – Related Party





On June 3, 2010, in order to fill vacancies created by the resignations of Mr. Lynch and Mr. Branning, the Board of Directors appointed Mr. Amit S. Dang and Mr. Jeet S. Sidhu to our Board of Directors.  The Board of Directors also approved the terms of an Interim Executive Services Agreement between us and Mr. Dang (the “Executive Services Agreement”) pursuant to which Mr. Dang was appointed our President and Chief Executive Officer.  On June 22, 2010, in order to fill the vacancy created by the resignation of Mr. Krauss, the Board of Directors also appointed Mr. Dang to serve as our Chief Financial Officer, Treasurer, and Secretary.  Mr. Dang receives compensation of $5,000 per month during the term of the Executive Services Agreement.  We may terminate the Executive Services Agreement at any time with or without cause. During the year ended December 31, 2010, we incurred $35,000 pursuant to the Executive Services Agreement.




10





Until May 31, 2010, non-employee Board members received $250 per month for services rendered in the capacity of a Board member plus $100 per Board meeting attended.  The Board approved an increase, effective June 1, 2010, in non-employee Board fees to $750 per month.





During the years ended December 31, 2010 and 2009, we incurred $9,200 and $6,800, respectively, in non-employee director fees.  Additionally, during the year ended December 31, 2010, we recorded stock compensation of $6,000 (net of the reversal of stock compensation discussed in “Note 14. Stock Options” to the consolidated financial statements contained in this Form 10-K) for stock options previously granted to directors and vesting over time.





The increase in director fees of $2,400 for the year ended December 31, 2010 compared to 2009 is primarily due to the increase in the monthly fee paid to non-employee directors.





Investor Relations and Marketing





Marketing and investor relations costs represent fees paid to publicize our technology within the industry and investor community with the purpose of increasing company recognition.





We utilize various third parties to manage our investor relations and facilitate our marketing programs, to increase company recognition and branding, and to provide shareholder communications.





The increase in investor relations and marketing during the year ended December 31, 2010 compared to the prior year is substantially due to $5,500 paid for the publication of our financial statements and other corporate information in various financial periodicals and $7,150 incurred for the press releaseannouncing that we were continuing negotiations for the acquisition of Standard Gold Corp. and the announcement of the appointment of Dr. James Lynch as our President and Chief Executive Officer, effective March 15, 2010.





Wages and Benefits





During the year ended December 31, 2010, we incurred $50,135 in wages and benefits expense for services rendered by Dr. Lynch and $50,997 in wages and benefits expense for services rendered by Mr. Wujek, both of whom served as our former President, Chief Executive Officer, and each as one of our Directors.   Mr. Wujek resigned as our President and Chief Executive Officer, effective March 15, 2010 and as one of our directors, effective June 17, 2010. Simultaneously with his resignation as our President and Chief Executive Officer, the employment agreement between us and Mr. Wujek was terminated and all of the 2,000,000 stock options previously granted to Mr. Wujek, none of which had vested, were forfeited upon his resignation and termination of employment.  Accordingly, during the year ended December 31, 2010, we recorded a reversal of stock compensation expense previously recorded for the fair value of Mr. Wujek’s stock options of $2,667,500.  The year ended December 31, 2010 also includes stock compensation of $6,310 for the amortization of the fair value of a stock option granted to Dr. Lynch to purchase up to 4,000,000 shares of our common stock at an exercise price of $0.04 per share. The stock option granted to Dr. Lynch was forfeited upon him tendering his resignation, effective May 31, 2010, and therefore we recorded a reversal of stock compensation of $6,310 during the same twelve month period ending December 31, 2010 for a net $0 impact to the consolidated financial statements during the year ended December 31, 2010.





Wages and benefits incurred during the year ended December 31, 2009 represents amounts incurred for services rendered by Mr. Wujek.




11





Research and Development





Research and development costs represent costs incurred to develop our technologies and are incurred pursuant to our sponsored research agreement with Dartmouth and other third party contract research organizations. The sponsored research agreement includes salaries and benefits for research and development personnel, allocated overhead and facility occupancy costs, contract services and other costs. Research and development costs are expensed when incurred, except for nonrefundable advance payments for future research and development activities which are capitalized and recognized as expense as the related services are performed.





Research and development expense for the year ended December 31, 2010 consists of payments made pursuant to the Sponsored Research Agreement with Dartmouth and a third party for furthering the development of the D11B compound.





Research and development expense for the year ended December 31, 2009, consists of payments made pursuant to the Sponsored Research Agreement with Dartmouth, the fee-for-services agreement with Latitude, reimbursement of related expenses, and payments to other third party contractors.





Professional Fees





Professional fees substantially consist of accounting fees, audit and tax fees, legal fees, and SEC related filing costs.





During the year ended December 31, 2010, we incurred professional fees of $284,158, an increase of $147,735, from $136,423 during the prior year.  The increase is substantially due to increases in legal fees of approximately $105,500, accounting related fees of approximately $25,500, and SEC filing costs of approximately $17,200.  The increase in legal fees is due to the preparation and filing of our Form S-1, execution of stock option agreements for stock options granted on March 15, 2010 to Dr. Lynch and non-employee directors, fees incurred as a result of changes in the composition of our executive team and Board of Directors, services performed in connection with the receipt of $400,000 in May 2010 pursuant to a private placement offering, and the MOI between us and Standard Gold Corp. The increase in accounting related fees is substantially due to the filing of our Form S-1 and the increase in corporate activity previously described. The increase in SEC filing costs is due to the filing of our Form S-1 and related correspondence in addition to various Form 8-Ks.





Impairment of License Fee





On September 1, 2008, we entered into the Dartmouth License Agreement pursuant to which we obtained the exclusive rights to develop, market, and distribute a novel class of synthesized compounds known as bis-intercalators.





Under the terms of the Dartmouth License Agreement, we were obligated to pay annual license maintenance fees to the Dartmouth Trustees, in addition to an upfront payment of $15,000 within 30 days of execution of the agreement, with such payment already having been made.





In anticipation that we would consummate the SGC Acquisition and pursue the exploration and development of the mineral claims held by SGC, we did not pay the $20,000 license maintenance fee that was due on September 1, 2010 pursuant to Section 5.01(e) of the Dartmouth License Agreement. As a result of the intended termination of the Dartmouth License Agreement, we recorded an impairment charge of $15,000 during the year ended December 31, 2010 to write-off the previously paid license fee. Pursuant to Section 9.02 of the Dartmouth License Agreement, the Dartmouth Trustees provided us notice that it has terminated the Dartmouth License Agreement for a breach under Section 5.01(e).





Other Operating Expenses





Other operating expenses include patent application fees, license related fees, travel and entertainment, rent, office supplies, printing and mailing, information technology related fees and other administrative costs.





12


During the year ended December 31, 2010, we incurred other operating expenses of $67,422, an increase of $2,942, from $64,480 during the prior year.  The increase is partially due to increases in travel related expenses of approximately $6,900, rent of approximately $4,300, and printing and mailing costs of approximately $5,300 for the distribution of our Information Statement pursuant to Section 14(c) of the Securities Exchange Act of 1934, whereby in January 2010, we informed our investors that certain of our stockholders, representing a majority of our issued and outstanding shares of common stock, voted to increase the number of authorized shares of common stock issuable from 300,000,000 to 2,000,000,000. Offsetting these increases in other operating expenses are decreases in patent filing fees of approximately $14,900 and a $10,000 license maintenance fee paid to Dartmouth in the prior year.





Other Income (Expense)





A summary of our other income (expense) for the years ended December 31, 2010 and 2009 was as follows:





December 31,


Increase /


Percentage2010


2009


(Decrease)


ChangeOther income (expense)Interest expense

$
(95,877
)

$
(63,750
)

$
(32,127
)


50
%Interest income


780



-



780



*Change in fair value of warrant liability


-



(93,910
)


93,910



*Gain on extinguishment of warrant liability


-



52,631



(52,631
)


*Loss on dissolution of foreign subsidiary


-



(523
)


523



*Total other income (expense)

$
(95,097
)

$
(105,552
)

$
10,455



(10
)%





* Not meaningful





Interest Expense





Interest expense for the year ended December 31, 2010 substantially represents interest accrued of $86,129 on the $750,000 note payable (from January 1 through February 28, 2010) and $1,067,527 convertible note payable (from March 1 through December 31, 2010) to Mr. Harmel S. Rayat, interest accrued of $2,832 on the $40,000 convertible note payable to a non-affiliated third party, and $6,885 for the accretion of the discount on the convertible notes payable.





Interest expense for the year ended December 31, 2009 represents interest accrued on the $750,000 note payable to Mr. Rayat, at an annual rate of 8.5%.





Please refer to “Convertible Note Payable – Current” and “Notes Payable and Convertible Note Payable – Long Term” below.





Interest Income





Interest income for the year ended December 31, 2010 represents interest earned on the SGC Loan. Please refer to “Background” above for the terms of the SGC Loan.





Change in Fair Value of Warrant Liability and Gain on Extinguishment of Warrant Liability





On January 1, 2009, we adopted guidance which is now part of ASC 815-40, Contracts in Entity’s Own Equity(ASC 815-40).We determined that our Class A Warrants contained a Dilutive Issuance provision.  As a result, we reclassified 10,897,081 of our Class A Warrants to warrant liability, resulting in a cumulative adjustment to accumulated deficit as of January 1, 2009 of $1,174,576.





Our Class A Warrants were considered derivative liabilities and were therefore required to be adjusted to fair value each quarter.  We valued our warrant liability using the Black-Scholes model.  Our stock price, remaining term of the Class A Warrants and the volatility of our stock all impact the fair value of our Class A Warrants.




13




On September 29, 2009, we consummated a securities exchange agreement (“Securities Exchange Agreement”) with the holders of our Class A Warrants whereby the holders and us agreed to exchange the holders’ remaining Class A Warrants, on the basis of one share for every ten (10) Class A Warrants for an aggregate of 1,089,705 shares of our common stock, $0.00001 par value per share. The exchange of the Class A Warrants for common stock pursuant to the Securities Exchange Agreement resulted in an extinguishment of the warrant liability.




The fair value of our warrant liability at September 29, 2009, the effective date of the Securities Exchange Agreement, using the Black-Scholes model was $118,013, using the following assumptions:  dividend yield of 0%, expected volatility of 156.43%, risk-free interest rate of 0.41%, and expected term of 1.0 year.  We recorded a non-cash loss of $93,910 for the year ended December 31, 2009.





The fair value of the 1,089,705 shares of common stock issued to settle the warrant liability was $65,382, based on the closing price of our common stock of $0.06 per share on September 29, 2009 as quoted on the Over the Counter Bulletin Board.  We recorded a gain on extinguishment of warrant liability of $52,631 on September 29, 2009 as a result of the excess of the Class A Warrant Liability over the fair value of the consideration provided the warrant holders, in the form of common stock.





As of December 31, 2010 no Class A Warrants were outstanding.





Loss on Dissolution of Foreign Subsidiary





PhytoMedical Ltd. provided administrative services to our Canadian office. We ceased to conduct business in Canada, effective August 31, 2008 and closed this office. As a result, we dissolved PhytoMedical Ltd. and eliminated all intercompany balances, effective January 1, 2009.  We recorded a loss on our investment in PhytoMedical Ltd. equal to the accumulated other comprehensive income at the time of the dissolution.





Liquidity and Capital Resources





The accompanying consolidated financial statements have been prepared assuming we will continue as a going concern.  We have incurred cumulative losses of $24,112,661 through December 31, 2010 and do not have positive cash flows from operating activities.  Additionally, we have expended a significant amount of cash in developing our technology.  We face all the risks common to companies that are relatively new, including under capitalization and uncertainty of funding sources, high initial expenditure levels, uncertain revenue streams, and difficulties in managing growth. These conditions raise substantial doubt about our ability to continue as a going concern.  Management recognizes that in order to meet our capital requirements, and continue to operate, additional financing will be necessary.  We expect to raise additional funds through private or public equity investments in order to expand the range and scope of our business operations. We will seek access to private or public equity but there is no assurance that such additional funds will be available for us to finance our operations on acceptable terms, if at all. If we are unable to raise additional capital or generate positive cash flow, it is unlikely that we will be able to continue as a going concern.  The financial statements do not include any adjustments that might result from the outcome of this uncertainty.





Our principal source of liquidity is cash in the bank.  At December 31, 2010, we had cash and cash equivalents of $44,551. We have financed our operations primarily from $400,000 received pursuant to the 2010 Offering (see “2010 Offering” below) and a private placement completed in September 2007, raising net proceeds of $3,109,500.





Net cash used in operating activities was $440,740 for the year ended December 31, 2010 compared to $590,542 for the prior year.  The decrease of $149,802 in cash used in operating activities is substantially due to decreases in payments made for research and development of approximately $121,000 (see “Research and Development” above), wages and benefits of approximately $162,000 (see “Wages and Benefits” above), patent filing fees of approximately $14,900 and a $10,000 license maintenance fee paid to Dartmouth in the prior year (see “Other Operating Expenses” above). Offsetting these decreases are increases in the amounts paid for professional fees of approximately $105,000 (see “Professional Fees” above), director and management fees – related party of approximately $46,800 (see “Director and Management Fees – Related Party” above), investor relations and marketing of approximately $14,000 (see “Investor Relations and Marketing” above), and rent of approximately $4,300 (see “Other Operating Expenses” above).




14





Net cash used in investing activities was $30,000 for the year ended December 31, 2010 compared to $0 for the prior year.  On August 25, 2010, pursuant to the MOI with SGC, we loaned SGC $30,000 so that it could maintain its mineral claims, in good standing, pending on-going negotiations.  The SGC Loan bore interest at an annual rate of 8.5%.  Both the principal and the accrued interest on the SGC Loan were repaid in January 2011.





Net cash provided by financing activities was $440,000 for the year ended December 31, 2010 compared to $0 for the prior year.  On May 19, 2010, we sold 40,000,000 Units pursuant to the 2010 Offering (see “2010 Offering” below) for gross receipts of $400,000. Additionally, on March 2, 2010 we issued a one year convertible promissory note in the amount of $40,000 to a non-affiliated third party.  The convertible note bears interest at the rate of 8.5% per annum, which interest is accrued and payable on the maturity date of the convertible promissory note (see “Convertible Note Payable – Current” below.





2010 Offering





On May 4, 2010, our registration statement on Form S-1 (the “Registration Statement”) was declared effective by the United States Securities and Exchange Commission, and we commenced our self directed public offering (the “2010 Offering”) in accordance with the Prospectus dated May 4, 2010 and included in the Registration Statement, of up to a maximum of 200,000,000 units (the "Units") of our securities at a price of $0.01 per Unit.  Each Unit consists of:


·
one (1) share of our common stock, $0.00001 par value per share; and,
 ·
one-half of one Series B Warrant (collectively, the “Series B Warrants”).


Each full Series B Warrant entitles the holder to purchase one additional share of our common stock at an exercise price of $0.03 per share, expiring two (2) years from the date of issuance of the Series B Warrants.





The 2010 Offering was a direct public offering by us, without any involvement of underwriters or broker-dealers.  The 2010 Offering terminated on October 31, 2010





As of the termination date of the 2010 Offering, we sold 40,000,000 Units (all on May 19, 2010) for gross receipts of $400,000 pursuant to the terms of the 2010 Offering.  Accordingly, we issued 40,000,000 shares of our common stock and Series B Warrants to purchase up to 20,000,000 shares of common stock at an exercise price of $0.03 per share to the investors having subscribed for the 40,000,000 Units.





At the time of grant, the fair value of the Series B Warrants as calculated using the Black-Scholes model was $607,995 using the following assumptions:  dividend yield of 0%, expected volatility of 152.5%, risk-free interest rate of 0.8%, and expected term of two years.  The portion of the proceeds from the 2010 Offering allocated to the Series B Warrants was $110,144.





Convertible Note Payable – Current





On March 2, 2010 we issued a one year convertible promissory note in the amount of $40,000 to a non-affiliated third party.  The convertible note bears interest at the rate of 8.5% per annum, which interest is accrued and payable on the maturity date of the convertible promissory note.  As long as the convertible promissory note remains outstanding and not fully paid, the holder has the right, but not the obligation, to convert all or any portion of the aggregate outstanding principal amount of the convertible promissory note, together with all or any portion of the accrued and unpaid interest into that number of shares, subject to certain terms and conditions, of our common stock equal to the amount of the converted indebtedness divided by $0.01 per share. In the event of default, as defined in the Convertible Promissory Note agreement, the annual interest rate increases to 10% and is due on demand. We may, in our discretion, redeem the convertible promissory note at any time prior to the maturity date of the convertible promissory note.  Certain events of default will result in all sums of principal and interest then remaining unpaid immediately due and payable, upon demand of the holder.





15


Since the book value of the convertible promissory note ($40,000) divided by the number of shares to which the debt can be converted (4,000,000 shares of common stock) is $0.01 per share, which was less than the fair value of the stock at the time the debt was issued ($0.03 per share), there was a beneficial conversion feature.  The beneficial conversion feature was recorded as a discount against the convertible promissory note, which reduced the book value of the convertible promissory note to not less than zero.  We amortize the discount using the effective interest method over the one-year life of the convertible promissory note.





During the year ended December 31, 2010, we recorded interest expense of $2,832 payable to the holder of the convertible promissory note.  During the year ended December 31, 2010, we recorded interest expense related to the accretion of the discount on the convertible promissory note of $6,839.  At December 31, 2010, the carrying value of the convertible promissory note was $6,839, net of unamortized discount of $33,161. At December 31, 2010, accrued interest related to the convertible promissory note was $2,832. Due to the unique nature of the terms of the convertible promissory note, it is not practicable to determine its fair value at December 31, 2010.





Notes Payable and Convertible Note Payable – Long Term





We had arranged with Mr. Harmel S. Rayat, our former Chief Financial Officer, Director, and majority shareholder, a loan amount up to $2,500,000 that may be drawn down on an “as needed basis” at a rate of prime plus 3%.  Effective September 15, 2008, we terminated this loan agreement with Mr. Rayat.  At December 31, 2009, we had an unsecured promissory note pursuant to this loan agreement in the amount of $750,000 payable to Mr. Rayat, which was due on March 8, 2006 and bore interest at an annual rate of 8.5%.  At December 31, 2009, accrued interest on the $750,000 remaining promissory note was $307,223 and was included in interest payable.  The entire principal and accrued interest was due and payable on demand.





On March 1, 2010, Mr. Rayat agreed to convert the then outstanding balance of the note payable ($750,000) and accrued and unpaid interest ($317,527) thereon to a fixed three (3) year term convertible note, totaling $1,067,527 (the “Rayat Convertible Note”).  The Rayat Convertible Note bears interest at the rate of 8.5% per annum, which interest is accrued and payable on the maturity date of the Rayat Convertible Note.  As long as the Rayat Convertible Note remains outstanding and not fully paid, Mr. Rayat has the right, but not the obligation, to convert all or any portion of the aggregate outstanding principal amount of the Rayat Convertible Note, together with all or any portion of the accrued and unpaid interest into that number of shares, subject to certain terms and conditions, of the Company’s common stock equal to the amount of the converted indebtedness divided by $0.01 per share. In the event of default, as defined in the Convertible Promissory Note agreement, the annual interest rate increases to 10% and is due on demand. We may, in our discretion, redeem the Rayat Convertible Note at any time prior to the maturity date of the Rayat Convertible Note.  Certain events of default will result in all sums of principal and interest then remaining unpaid immediately due and payable, upon demand of Mr. Rayat.





Since the book value of the Rayat Convertible Note ($1,067,527) divided by the number of shares of common stock to which the debt can be converted (106,752,700) is $0.01 per share, which was less than the fair value of the stock at the time the debt was issued ($0.03 per share), there was a beneficial conversion feature.  The beneficial conversion feature was recorded as a discount against the Rayat Convertible Note, which reduced the book value of the Rayat Convertible Note to not less than zero.  We amortize the discount using the effective interest method over the three-year life of the Rayat Convertible Note.





During the years ended December 31, 2010 and 2009, we recorded interest expense of $86,129 and $63,750, respectively, payable to Mr. Rayat related to the original $750,000 note payable and the Rayat Convertible Note.  During the year ended December 31, 2010, we recorded interest expense related to the accretion of the discount on the Rayat Convertible Note of $46.  At December 31, 2010, the carrying value of the Rayat Convertible Note was $46, net of unamortized discount of $1,067,481. At December 31, 2010, accrued interest related to the Rayat Convertible Note was $75,824.  Due to the unique nature of the terms of the Rayat Convertible Note, it is not practicable to determine its fair value at December 31, 2010.





Accrued Payroll Liabilities





On March 15, 2010, Mr. Greg Wujek tendered his resignation as our President and Chief Executive Officer (“CEO”).  On June 17, 2010, Mr. Wujek tendered his resignation as one of our directors. As of his resignation date as our President and CEO, we owed Mr. Wujek $30,277 for salary and related payroll taxes earned, but not paid.  We intend to repay Mr. Wujek in full when we have the capital resources to do so. Mr. Wujek has not made any demands for payment.




16





Other Contractual Obligations





As of December 31, 2010, we have the following contractual obligations: the Rayat Convertible Note of $1,067,527, the short term convertible note in the principal amount of $40,000, accrued interest of $78,656, $30,277 for accrued payroll owed to Mr. Wujek, $1,313 owed to a third party for investor and shareholder relations services, and $358 related to the three month operating lease agreement we have for our office space in Southfield, Michigan.





Off-Balance Sheet Arrangements





We have no off-balance sheet arrangements.





Recently Issued Accounting Pronouncements





See “Note 3.  Summary of Significant Accounting Policies” to the Consolidated Financial Statements in this Form 10-K.





17


ITEM 8.  FINANCIAL STATEMENTS





INDEX TO FINANCIAL STATEMENTS





PageReport of Independent Registered Public Accounting Firm

19Consolidated Balance Sheets as of December 31, 2010 and 2009

20Consolidated Statements of Operations for the Years Ended December 31, 2010 and 2009

21Consolidated Statements of Stockholders’ Equity (Deficit) for the Years Ended December 31, 2010 and 2009

22Consolidated Statements of Cash Flows for the Years Ended December 31, 2010 and 2009

23Notes to Consolidated Financial Statements

24





18








REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM





To the Board of Directors


PhytoMedical Technologies, Inc.


Princeton, New Jersey





We have audited the accompanying consolidated balance sheets of PhytoMedical Technologies, Inc. and Subsidiaries ("the Company") as of December 31, 2010 and 2009, and the related consolidated statements of operations, stockholders' equity (deficit), and cash flows for the years then ended.  These financial statements are the responsibility of the Company's management.  Our responsibility is to express an opinion on these financial statements based on our audits.





We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  The Company has determined that it is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.  Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting.  Accordingly, we express no such opinion.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.  An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audits provide a reasonable basis for our opinion.





In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of PhytoMedical Technologies, Inc. and Subsidiaries as of December 31, 2010 and 2009, and the results of their operations and their cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States.





The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern.  As discussed in Note 2 to the financial statements, the Company has not generated any revenues, has an accumulated deficit of $24,112,661 as of December 31, 2010, and does not have positive cash flows from operating activities.  These conditions raise substantial doubt about the Company's ability to continue as a going concern.  Management's plans regarding these matters are also described in Note 2.  The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.





/S/ PETERSON SULLIVAN LLP





Seattle, Washington


March 28, 2011





19





PHYTOMEDICAL TECHNOLOGIES, INC.





CONSOLIDATED BALANCE SHEETS


DECEMBER 31, 2010 AND 2009


(Expressed in U.S. Dollars)





December 31,


Decenber 31,2010


2009ASSETSCurrent assetsCash and cash equivalents

$
44,551


$
75,291Note receivable


30,000



-Prepaid expenses and other current assets


6,377



278Total current assets


80,928



75,569Intangible assets - license fees


-



15,000Total assets

$
80,928


$
90,569LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)Current liabilitiesAccounts payable

$
77,138


$
19,112Interest payable


2,832



307,223Notes payable


-



750,000Convertible note payable, net of unamortized discount of $33,161 and $0


6,839



-Accrued payroll liabilities


30,277



-Total current liabilities


117,086



1,076,335Long term liabilitiesConvertible note payable, net of unamortized discount of $1,067,481 and $0


46



-Interest payable


75,824



-Total long term liabilities


75,870



-Total liabilities


192,956



1,076,335Commitments and ContingenciesStockholders' equity (deficit)Preferred stock: $0.25 par value; 1,000,000 authorized, no shares issued and outstanding at December 31, 2010 and 2009


-



-Common stock: $0.00001 par value; 2,000,000,000 authorized, 241,487,995 and 201,487,995 shares issued and outstanding at December 31, 2010 and 2009, respectively


2,415



2,015Additional paid-in capital


23,998,218



25,152,591Accumulated deficit


(24,112,661
)


(26,140,372
)Total stockholders' equity (deficit)


(112,028
)


(985,766
)Total liabilities and stockholders' equity (deficit)

$
80,928


$
90,569





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





20





PHYTOMEDICAL TECHNOLOGIES, INC.





CONSOLIDATED STATEMENTS OF OPERATIONS


FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009


(Expressed in U.S. Dollars)





Years EndedDecember 31,2010


2009Revenue

$
-


$
-Operating expense (income)Director and management fees - related party


50,200



6,800Investor relations and marketing


17,664



3,658Wages and benefits, net of reversal of stock-based compensation of $2,674,268 in 2010


(2,566,016
)


263,052Research and development


8,764



113,826Professional fees


284,158



136,423Impairment of license fee


15,000



-Other operating expenses


67,422



64,480Total operating expense (income)


(2,122,808
)


588,239Income (loss) from operations


2,122,808



(588,239
)Other income (expense)Interest expense


(95,877
)


(63,750
)Interest income


780



-Change in fair value of warrant liability


-



(93,910
)Gain on extinguishment of warrant liability


-



52,631Loss on dissolution of foreign subsidiary


-



(523
)Total other income (expense)


(95,097
)


(105,552
)Net income (loss)

$
2,027,711


$
(693,791
)Net income (loss) per share - basic

$
0.01


$
(0.00
)Net income (loss) per share - diluted

$
0.01


$
(0.00
)Weighted average number of common shares outstandingBasic


226,255,118



200,675,941Dilutive


340,308,031



200,675,941





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





21





PHYTOMEDICAL TECHNOLOGIES, INC.





CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)


FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009


(Expressed in U.S. Dollars)





Accumulated Other








TotalCommon Stock


Additional


Comprehensive


Accumulated


Comprehensive


Stockholders'Shares


Amount


Paid-in Capital


Income (Loss)


Deficit


Income (Loss)


Equity (Deficit)Balance, December 31, 2008


200,398,290


$
2,004


$
26,285,899


$
(523
)

$
(26,621,157
)

$
-


$
(333,777
)Cumulative adjustment upon adoption of ASC 815-40


-



-



(1,198,679
)


-



1,174,576



-



(24,103
)Extinguishment of warrant liability


1,089,705



11



65,371



-



-



-



65,382Comprehensive income (loss)Loss on dissolution of foreign subsidiary


-



-



-



523



-



523



523Net loss, year ended December 31, 2009


-



-



-



-



(693,791
)


(693,791
)


(693,791
)Total comprehensive loss






















(693,268
)Balance, December 31, 2009


201,487,995



2,015



25,152,591



-



(26,140,372
)






(985,766
)Stock based compensation expense


-



-



12,768



-



-



-



12,768Reversal of stock based compensation due to forfeiture of stock options


-



-



(2,674,268
)


-



-



-



(2,674,268
)Beneficial conversion feature on convertible notes payable


-



-



1,107,527



-



-



-



1,107,527Issuance of common stock related to the 2010 Offering


40,000,000



400



399,600



-



-



-



400,000Net income, year ended December 31, 2010


-



-



-



-



2,027,711



2,027,711



2,027,711Total comprehensive income





















$
2,027,711Balance, December 31, 2010


241,487,995


$
2,415


$
23,998,218


$
-


$
(24,112,661
)





$
(112,028
)





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





22





PHYTOMEDICAL TECHNOLOGIES, INC.





CONSOLIDATED STATEMENTS OF CASH FLOWS


FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009


(Expressed in U.S. Dollars)





Years EndedDecember 31,2010


2009Cash flows from operating activitiesNet income (loss)

$
2,027,711


$
(693,791
)Adjustments to reconcile net income (loss) to net cash used in operating activitiesAccreted discount on convertible debt


6,885



-Change in fair value of warrant liability


-



93,910Gain on extinguishment of warrant liability


-



(52,631
)Impairment of license fee


15,000



-Stock based compensation


12,768



-Reversal of stock based compensation due to forfeiture of stock options


(2,674,268
)


-Loss on dissolution of foreign subsidiary


-



523Changes in operating assets and liabilities:(Increase) decrease in prepaid expenses and other current assets


(6,099
)


1,982Increase (decrease) in accounts payable


58,026



(4,285
)Increase in interest payable


88,960



63,750Increase in accrued payroll liabilities


30,277



-Net cash used in operating activities


(440,740
)


(590,542
)Cash flows from investing activityPayment pursuant to the issuance of note receivable


(30,000
)


-Net cash used in investing activity


(30,000
)


-Cash flows from financing activitiesProceeds from convertible note payable to stockholder


40,000



-Allocated proceeds from issuance of common stock


289,856



-Allocated proceeds from issuance of warrants attached to issuance of common stock


110,144



-Net cash provided by financing activities


440,000



-Decrease in cash and cash equivalents


(30,740
)


(590,542
)Cash and cash equivalents at beginning of period


75,291



665,833Cash and cash equivalents at end of period

$
44,551


$
75,291Supplemental disclosure of cash flow information:Interest paid in cash

$
-


$
-Income tax paid in cash

$
-


$
-Notes payable and accrued interest converted to convertible note payable

$
1,067,527


$
-Debt discount recorded for beneficial conversion feature

$
1,107,527


$
-Issuance of 1,089,705 shares of common stock to extinguish warrant liability of $118,013during the year ended December 31, 2009

$
-


$
118,013





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





23





PHYTOMEDICAL TECHNOLOGIES, INC.





NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


December 31, 2010 and 2009


(Expressed in U.S. Dollars)





Note 1.  Organization and Description of Business





PhytoMedical Technologies, Inc. (the “Company”) was incorporated in the State of Nevada on July 25, 2001. The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries PhytoMedical Technologies Corporation (“PhytoMedical Corp.”), PolyPhenol Technologies Corporation (“PolyPhenol”) and PhytoMedical Technologies Ltd. (“PhytoMedical Ltd.”).





PhytoMedical Corp. was incorporated on March 10, 2004 in the State of Nevada and has no assets and liabilities.





PolyPhenol was incorporated on August 24, 2004 in the State of Nevada and has no assets and liabilities.





PhytoMedical Ltd. was incorporated on April 11, 2007 in the Province of British Columbia, Canada for providing administrative services to the Company’s Canada office.  The Company ceased to conduct business in Canada on August 31, 2008 and closed this office. As a result, the Company dissolved PhytoMedical Ltd. and eliminated all intercompany balances, effective January 1, 2009.





Since its incorporation, the Company focused its efforts on the development of new technologies (in particular pharmaceutical technologies and products) and, where warranted, the acquisition of rights to obtain licenses to technologies and products that are being developed by third parties, primarily universities and government agencies, through sponsored research and development agreements.





On May 31, 2010, the Company’s then President and Chief Executive Officer, James Lynch, resigned both as an officer and as a director, and Mr. Amit S. Dang was appointed in his place. On June 3, 2010, Mr. Jeet Sidhu was appointed to the Company’s Board of Directors.  In June 2010 Messrs. Gary Branning, Greg Wujek, and Raymond Krauss resigned as directors.  Mr. Krauss also resigned as the Company’s Chief Financial Officer, a position currently held by Mr. Dang.





Following the management changes which occurred in June 2010, the Company’s Board of Directors determined that it was in its shareholders best interest to refocus its business in activities in a manner which may more fully enhance shareholder value.   As a result, on August 25, 2010, the Company entered into a non-binding Memorandum of Intent (the “MOI”) with Standard Gold Corp., a Nevada corporation (“SGC”), relating to continuing discussions and the negotiation of a definitive agreement regarding its possible acquisition of all of the issued and outstanding shares of SGC.





SGC is a natural resource exploration company engaged in the exploration of precious metals in the western United States on properties that may contain economic concentrations of mineralization.  As of the date of this report, none of SGC’s properties are known to contain any reserves. SGC’s strategy is to acquire properties that are prospective for mineral exploration and may have undergone some degree of mineral exploration and exploitation.  To date, SGC has acquired interests in gross acres of State Leases and Federal lode claims in the State of Nevada.





Pursuant to the MOI, the Company loaned SGC $30,000 (the “SGC Loan”) so that it could maintain its mineral claims, in good standing, pending on-going negotiations.  The SGC Loan bore interest at an annual rate of 8.5%.  Both the principal and the accrued interest on the SGC Loan were repaid in January 2011.





24





On October 22, 2010 the Company entered into a Share Exchange Agreement (the “Share Exchange Agreement”) with SGC and its shareholders, pursuant to which the Company would acquire all of the issued and outstanding shares of SGC in exchange for 607,539,940 shares of its common stock (the “SGC Acquisition”).  Consummation of the transactions contemplated by the Share Exchange Agreement were subject to the satisfaction of a number of conditions, including, but not limited to, the Company’s receipt of subscriptions for an aggregate of 150,000,000 Units that it was previously offering at $0.01 per unit.  If the conditions to closing were not satisfied by December 31, 2010 the Share Exchange Agreement would automatically terminate.





Each of the parties to the Share Exchange Agreement, no longer believing that the conditions to closing of the transactions contemplated by the Share Exchange Agreement in fact could be satisfied, entered into the Termination Agreement and Mutual Release (the “Termination Agreement”), dated as of December 24, 2010.  The Termination Agreement provides for the earlier termination of the Share Exchange Agreement and a release (except as otherwise provided) by SGC and its shareholders on the one hand, and the Company on the other hand, of any claims arising from or related to the Share Exchange Agreement and any agreements delivered pursuant thereto.





In anticipation that the Company would consummate the SGC Acquisition and pursue the exploration and development of the mineral claims held by SGC, it did not pay the $20,000 license maintenance fee that was due on September 1, 2010 to the Trustees of Dartmouth College (the “Dartmouth Trustees”). The Company had an exclusive license, granted pursuant to a license agreement dated September 1, 2008 (the “Dartmouth License Agreement”), between the Company and the Dartmouth Trustees, to develop, market and distribute a novel class of synthesized compounds known as bis-intercalators. Pursuant to Section 5.01(e) of the Dartmouth License Agreement, a $20,000 license maintenance fee was due and payable to the Dartmouth Trustees on September 1, 2010. Pursuant to Section 9.02 of the Dartmouth License Agreement, the Dartmouth Trustees provided the Company notice that it has terminated the Dartmouth License Agreement for a breach under Section 5.01(e).





The Company had originally commenced its research and development activities relating to D11B, the anti-cancer compound licensed from Dartmouth College (“Dartmouth”), through a Sponsored Research Agreement (the “Sponsored Research Agreement”) with Dartmouth.  As of September 30, 2009, the termination date of the Sponsored Research Agreement, Dartmouth concluded its research and development activities, and provided the Company with, it believes, a key anti-cancer compound for glioblastoma, D11B. Based upon results of in vivo efficacy and toxicity tests, the Company had entered into a fee-for-services agreement with Latitude Pharmaceuticals, Inc. (“Latitude”) to assist it with its development of an IV formulation of D11B, in order to conduct additional tests. Further development of the IV formulation for D11B was ceased in anticipation of the SGC Acquisition.





Because the transactions contemplated by the Share Exchange Agreement were not consummated, the Company is undertaking efforts to identify new commercial opportunities. The Company does not expect to generate any revenues for the foreseeable future and expects to continue to incur losses. Our independent registered public accountant has issued an audit opinion which includes a statement expressing substantial doubt as to the Company’s ability to continue as a going concern.





Note 2.  Going Concern Uncertainties





The Company has not generated any revenues, has an accumulated deficit of $24,112,661 as of December 31, 2010 and does not have positive cash flows from operating activities.  The accompanying consolidated financial statements have been prepared in conformity with generally accepted accounting principles in the United States of America, which contemplates continuation of the Company as a going concern, which is dependent upon the Company’s ability to establish itself as a profitable business.





The Company has expended a significant amount of cash in developing its technology and expects to incur additional losses as it continues to develop its technologies.  To date, the Company’s cash flow requirements have primarily been met by proceeds of $400,000 received pursuant to the 2010 Offering (as that term is defined in “Note 13. 2010 Offering” below) and net proceeds of $3,109,500 received pursuant to the 2007 Private Placement (as that term is defined in “Note 15. Warrants” below) which was completed by the Company in September 2007. Management recognizes that in order to meet the Company’s capital requirements, and continue to operate, additional financing will be necessary.  The Company expects to raise additional funds through private or public equity investments in order to support existing operations and expand the range and scope of its business operations. The Company will seek access to private or public equity but there is no assurance that such additional funds will be available for the Company to finance its operations on acceptable terms, if at all.  Furthermore, there is no assurance that the net proceeds received from any successful financing arrangement will be sufficient to cover cash requirements during the initial stages of the Company’s operations.  If the Company is unable to raise additional capital or generate positive cash flow, it is unlikely that the Company will be able to continue as a going concern.





25





In view of these conditions, the ability of the Company to continue as a going concern is in substantial doubt and dependent upon achieving a profitable level of operations and on the ability of the Company to obtain necessary financing to fund ongoing operations. These consolidated financial statements do not give effect to any adjustments which will be necessary should the Company be unable to continue as a going concern and therefore be required to realize its assets and discharge its liabilities in other than the normal course of business and at amounts different from those reflected in the accompanying consolidated financial statements.





Note 3.  Summary of Significant Accounting Policies





Basis of Presentation





The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”).





Principles of Consolidation





These consolidated financial statements presented are those of the Company and its wholly-owned subsidiaries, PhytoMedical Corp., PolyPhenol, and PhytoMedical Ltd.  All significant intercompany transactions and accounts have been eliminated in consolidation.





Accounting Estimates





The preparation of the Company’s consolidated financial statements requires management to make estimates and use assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses.  These estimates and assumptions are affected by management’s application of accounting policies.   Critical accounting policies for the Company include accounting for research and development costs, accounting for stock-based compensation, and valuation of equity instruments. On an on-going basis, the Company evaluates its estimates.  Actual results and outcomes may differ materially from these estimates and assumptions.




Reclassifications





Certain reclassifications have been made to prior fiscal year amounts or balances to conform to the presentation adopted in the current fiscal year.





Foreign Operations and Foreign Currency Translation





The functional currencies of the Company’s international subsidiaries are the local currency of the country in which the subsidiary is located. Assets and liabilities recorded in foreign currencies are translated at the exchange rate on the balance sheet date.  Translation adjustments resulting from this process are charged or credited to accumulated other comprehensive income.  Revenues and expenses of the Company’s consolidated foreign operations are translated at the average rates of exchange prevailing during the year. Gains and losses on foreign currency transactions are included in foreign exchange gain or loss.





Cash and Cash Equivalents





Cash and cash equivalents includes highly liquid investments with original maturities of three months or less.  On occasion, the Company has amounts deposited with financial institutions in excess of federally insured limits.





26




Research and Development




Research and development costs represent costs incurred to develop the Company’s technology, including salaries and benefits for research and development personnel, allocated overhead and facility occupancy costs, supplies, equipment purchase and repair and other costs.  Research and development costs are expensed when incurred, except for nonrefundable advance payments for future research and development activities which are capitalized and recognized as expense as the related services are performed.





During the years ended December 31, 2010 and 2009, the Company incurred $8,794 and $113,826 on research and development activities.





Fair Value





The Company measures fair value as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the reporting date. The Company utilizes a three-tier hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value:





Level 1. Valuations based on quoted prices in active markets for identical assets or liabilities that an entity has the ability to access.  The Company has no assets or liabilities valued with Level 1 inputs.





Level 2. Valuations based on quoted prices for similar assets or liabilities, quoted prices for identical assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable data for substantially the full term of the assets or liabilities.  The Company has no assets or liabilities valued with Level 2 inputs.





Level 3. Valuations based on inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Liabilities valued with Level 3 inputs are described below in “Note 12.  Notes Payable and Convertible Notes Payable” and “Note 15. Warrants.”





Fair Value of Financial Instruments





Due to the unique nature of the terms of the Convertible Note Payable and Rayat Convertible Note, it is not practicable to determine their fair value at December 31, 2010. Please refer to “Note 12.  Notes Payable and Convertible Notes Payable” below.




The carrying value of note receivable, interest payable, and accrued payroll liabilities approximate fair value because of the short-term nature of those instruments.




Stock-Based Compensation




The Company measures all employee stock-based compensation awards using a fair value method on the date of grant and recognizes such expense in its consolidated financial statements over the requisite service period.  The Company uses the Black-Scholes pricing model to determine the fair value of stock-based compensation awards on the date of grant.  The Black-Scholes pricing model requires management to make assumptions regarding the warrant and option lives, expected volatility, and risk free interest rates. See “Note 14. Stock Options” and “Note 15. Warrants” for additional information on the Company’s stock-based compensation plans.





Impairment of Long-Lived Assets





Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate the carrying value of an asset may not be recoverable.  Recoverability of assets to be held and used is measured by comparison of the carrying value of an asset to future net cash flows expected to be generated by the asset.  If impairment exists, an adjustment is made to write the asset down to its fair value, and a loss is recorded as the difference between the carrying value and fair value. Fair values are determined based on discounted cash flows or internal and external appraisals, as applicable.  Assets to be disposed of are carried at the lower of carrying value or estimated net realizable value.





27





In anticipation that the Company would consummate the SGC Acquisition and pursue the exploration and development of the mineral claims held by SGC, it did not pay the $20,000 license maintenance fee that was due on September 1, 2010 pursuant to Section 5.01(e) of the Dartmouth License Agreement. Pursuant to Section 9.02 of the Dartmouth License Agreement, the Dartmouth Trustees provided the Company notice that it has terminated the Dartmouth License Agreement for a breach under Section 5.01(e).  As a result of the Company’s intention to terminate the Dartmouth License Agreement, it recorded an impairment charge of $15,000 at September 30, 2010 to write-off the previously paid license fee.





Income Taxes




The Company accounts for income taxes using the asset and liability method. Under the asset and liability method, deferred tax assets and liabilities are recognized for the future tax consequences attributed to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and tax credits and loss carry-forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences and carry-forwards are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is established when necessary to reduce deferred tax assets to amounts expected to be realized. The Company reports a liability for unrecognized tax benefits resulting from uncertain income tax positions taken or expected to be taken in an income tax return.  Estimated interest and penalties are recorded as a component of interest expense or other expense, respectively.  See “Note 17. Income Taxes” for further discussion.





Segment Reporting




The Company’s business is considered as operating in one segment based upon the Company’s organizational structure, the way in which the operations are managed and evaluated, the availability of separate financial results and materiality considerations.





Net Income (Loss) Per Share





The computation of basic net income (loss) per share is based on the weighted average number of shares that were outstanding during the year. The computation of diluted net income (loss) per share is based on the weighted average number of shares used in the basic net income (loss) per share calculation plus the number of common shares that would be issued assuming the exercise of all potentially dilutive common shares outstanding using the treasury stock method for shares subject to stock options and warrants.  See “Note 4. Net Income (Loss) Per Share” for further discussion.





Related Party Transactions





A related party is generally defined as (i) any person that holds 10% or more of the Company’s securities and their immediate families, (ii) the Company’s management, (iii) someone that directly or indirectly controls, is controlled by or is under common control with the Company, or (iv) anyone who can significantly influence the financial and operating decisions of the Company. A transaction is considered to be a related party transaction when there is a transfer of resources or obligations between related parties.





Recently Adopted Accounting Pronouncements




The Company reviews new accounting standards as issued.  Although some of these accounting standards issued or effective after the end of the Company’s previous fiscal year may be applicable to the Company, it has not identified any standards that it believes merit further discussion.  The Company believes that none of the new standards will have a significant impact on its consolidated financial statements.





28





Note 4.  Net Income (Loss) Per Share





Basic net income (loss) per share is computed by dividing the net income (loss) by the weighted average number of common shares outstanding during the period.  Diluted net income (loss) per share is computed by dividing the net income (loss) by the weighted average number of common and dilutive common equivalent shares outstanding during the period.





There are no securities outstanding at December 31, 2010 that are excluded from the computation of diluted net income per share for the year ended December 31, 2010.





During the year ended December 31, 2009, the Company recorded a net loss.  Excluded from the computation of diluted net loss per share for the year ended December 31, 2009, because their effect would be anti-dilutive are stock options and warrants to acquire 2,000,000 shares of common stock with a weighted-average exercise price of $0.52 per share.





For purposes of earnings per share computations, shares of common stock that are issuable at the end of a reporting period are included as outstanding.





Following is the computation of basic and diluted net income (loss) per share for the years ended December 31, 2010 and 2009:





Years EndedDecember 31,2010


2009Basic Net Income (Loss) Per Share ComputationNumerator: net income (loss)

$
2,027,711


$
(693,791
)Denominator:Weighted average number of common shares outstanding


226,255,118



200,675,941Basic net income (loss) per share

$
0.01


$
(0.00
)Dilutive Net Income (Loss) Per Share ComputationNumerator: net income (loss)

$
2,027,711


$
(693,791
)Add: convertible notes payable interest expense and accreted discount


85,541



-Adjusted net income (loss)


2,113,252



(693,791
)Denominator:Weighted average number of common shares outstanding


226,255,118



200,675,941Effect of dilutive securities:Warrants


953,824



-Assumed conversion of convertible notes payable


113,099,089



-Total shares


340,308,031



200,675,941Diluted net income (loss) per share

$
0.01


$
(0.00
)





Note 5.  Iowa State University Sponsored Research Agreement





On February 1, 2007, the Company, through its wholly owned subsidiary, PolyPhenol, entered into a Sponsored Research Agreement with Iowa State University (“ISU”). Under terms of the agreement, the Company continued to undertake its research at ISU for development of the Company’s novel, synthesized type A-1 ‘polyphenolic’ compounds.  On January 6, 2009, the Company provided written notice to ISU terminating the Sponsored Research Agreement between the Company and ISU. The termination was effective March 6, 2009.





29





Upon written notice of termination of the Sponsored Research Agreement to ISU on January 6, 2009, the Company was current with respect to all contractual obligations owed to ISU pursuant to the Sponsored Research Agreement.





As of December 31, 2010, the Company had paid a total of $114,972 pursuant to the terms of the ISU Sponsored Research Agreement and have reimbursed ISU $673 for other out-of-pocket costs, none of which is included in research and development expense for the years ended December 31, 2010 and 2009.





Note 6.  Iowa State University Research Foundation License Agreement





On June 12, 2006, the Company, through its wholly owned subsidiary, PolyPhenol, entered into an exclusive license agreement with Iowa State University Research Foundation Inc. (“ISURF”) to develop, market and distribute novel synthesized compounds derived from type A-1 polyphenols, which have been linked to insulin sensitivity by the USDA's Agricultural Research Service.  On January 6, 2009, the Company gave written notice to ISURF, terminating the License Agreement between the Company and ISURF, effective April 6, 2009.





Upon written notice of termination of the license agreement to ISURF on January 6, 2009, the Company was current with respect to all contractual obligations owed to ISURF pursuant to the license agreement.





As of December 31, 2010, the Company had paid a total of $20,000 to ISURF for the license fee and $31,223 for reimbursement of patent costs and research expenses as per agreement with ISURF, none of which is included in research and development expense for the years ended December 31, 2010 and 2009.





Note 7.  Dartmouth Sponsored Research Agreement





On May 25, 2007, the Company entered into a Sponsored Research Agreement with Dartmouth College (“Dartmouth”), in the area of cancer research, specifically furthering research and development of anti-tumor bis-acridines. The Sponsored Research Agreement with Dartmouth was amended on October 1, 2008 extending it to September 30, 2009.  As of September 30, 2009, Dartmouth had concluded their research and development and provided the Company with a key anti-cancer compound for glioblastoma.  The Company entered into a fee-for-services agreement with Latitude Pharmaceuticals, Inc. (“Latitude”) to develop an intravenous (“IV”) formulation for its lead anti-cancer compound for glioblastoma (see “Note 9. Latitude Agreement”).  Further development of the IV formulation for D11B was ceased in anticipation of the SGC Acquisition.





As of December 31, 2010, the Company has paid $220,260 pursuant to the Sponsored Research Agreement with Dartmouth and $10,017 for reimbursement of expenses. Of the total $230,277 paid to Dartmouth, $8,764 and $60,463 is included in research and development expense for the years ended December 31, 2010 and 2009.





Note 8.  Dartmouth License Agreement





On September 1, 2008, the Company entered into the Dartmouth License Agreement pursuant to which the Company obtained the rights to develop, market and distribute a novel class of synthesized compounds known as bis-intercalators.  These anti-cancer agents, which have a ‘cytotoxic’ or poisonous affinity for cancer cells, are designed to bind tightly to cancer cell DNA (deoxyribonucleic acid), the blueprint of life for the cancer cell.





Under the terms of the Dartmouth License Agreement, the Company was obligated to pay annual license maintenance fees to the Dartmouth Trustees, in addition to an upfront payment of $15,000 within 30 days of execution of the agreement, with such payment already having been made.  Additionally, the Company is required to make milestone payments to the Dartmouth Trustees if, and only when, specific clinical and regulatory approval milestones are achieved.





Throughout the duration of the Dartmouth License Agreement, the Company was obligated to make royalty payments to the Dartmouth Trustees based on the net sales of products derived from the Dartmouth License Agreement, if any.  The Company was also obligated to reimburse the Dartmouth Trustees all costs incurred for filing, prosecuting and maintaining any licensed patents related to the Dartmouth License Agreement, throughout the duration of the agreement. The Company was required to undertake the development, regulatory approval, and commercialization, of products derived from the Dartmouth License Agreement, if any, and pursue collaborative commercial partnerships, if viable.




30




Pursuant to Rule 24b-2, the Company submitted a request for confidential treatment of certain portions of the Dartmouth License Agreement, relating to the payment terms and certain provisions under the Dartmouth License Agreement.  The Company’s request was granted on March 9, 2009.  Accordingly, certain terms of the Dartmouth License Agreement do not need to be released to the public until August 5, 2013.





In anticipation that the Company would consummate the SGC Acquisition and pursue the exploration and development of the mineral claims held by SGC, it did not pay the $20,000 license maintenance fee that was due on September 1, 2010 pursuant to Section 5.01(e) of the Dartmouth License Agreement. Pursuant to Section 9.02 of the Dartmouth License Agreement, the Dartmouth Trustees provided the Company notice that it has terminated the Dartmouth License Agreement for a breach under Section 5.01(e).  As a result of the Company’s intention to terminate the Dartmouth License Agreement, it recorded an impairment charge of $15,000 at September 30, 2010 to write-off the previously paid license fee.





Note 9. Latitude Agreement





On July 6, 2009, the Company entered into a fee-for-services agreement with Latitude, which was amended on October 23, 2009  (the “Latitude Agreement”), to develop an IV formulation of the Company’s anti-cancer compound for glioblastoma, D11B, for use in ongoing and future testing to determine the compound’s efficacy and toxicology, and if warranted, future early stage human clinical trials. As of December 31, 2010, the Company has paid $45,377 pursuant to the terms of the Latitude Agreement, all of which is included in research and development expense for the year ended December 31, 2009.





Note 10. Note Receivable





On August 25, 2010, the Company entered into the non-binding MOI with SGC, relating to the continuing discussions and the negotiation of a definitive agreement regarding its possible acquisition of all of the issued and outstanding shares of SGC.  Pursuant to the MOI, the Company funded the SGC Loan in the amount of $30,000 so that SGC could maintain its mineral claims, in good standing, pending on-going negotiations.  The SGC Loan bore interest at an annual rate of 8.5%.  During the year ended December 31, 2010, the Company recorded interest income of $780 related to the SGC Loan. Both the principal and the accrued interest on the SGC Loan were repaid in January 2011.





Note 11.  Accrued Payroll Liabilities





On March 15, 2010, Mr. Greg Wujek tendered his resignation as the Company’s President and Chief Executive Officer (“CEO”).  On June 17, 2010, Mr. Wujek tendered his resignation as one of our directors. As of his resignation date as our President and CEO, the Company owed Mr. Wujek $30,277 for salary and related payroll taxes earned, but not paid.  We intend to repay Mr. Wujek in full when we have the capital resources to do so. Mr. Wujek has not made any demand for payment.





Note 12.  Notes Payable and Convertible Notes Payable





Convertible Note Payable – Current





On March 2, 2010 the Company issued a one year convertible promissory note in the amount of $40,000 to a non-affiliated third party.  The convertible note bears interest at the rate of 8.5% per annum, which interest is accrued and payable on the maturity date of the convertible promissory note.  As long as the convertible promissory note remains outstanding and not fully paid, the holder has the right, but not the obligation, to convert all or any portion of the aggregate outstanding principal amount of the convertible promissory note, together with all or any portion of the accrued and unpaid interest into that number of shares, subject to certain terms and conditions, of the Company’s common stock equal to the amount of the converted indebtedness divided by $0.01 per share. In the event of default, as defined in the Convertible Promissory Note agreement, the annual interest rate increases to 10% and is due on demand. The Company may, in its discretion, redeem the convertible promissory note at any time prior to the maturity date of the convertible promissory note.  Certain events of default will result in all sums of principal and interest then remaining unpaid immediately due and payable, upon demand of the holder.





31





Since the book value of the convertible promissory note ($40,000) divided by the number of shares to which the debt can be converted (4,000,000 shares of common stock) is $0.01 per share, which was less than the fair value of the stock at the time the debt was issued ($0.03 per share), there was a beneficial conversion feature.  The beneficial conversion feature was recorded as a discount against the convertible promissory note, which reduced the book value of the convertible promissory note to not less than zero.  The Company amortizes the discount using the effective interest method over the one-year life of the convertible promissory note.





During the year ended December 31, 2010, the Company recorded interest expense of $2,832 payable to the holder of the convertible promissory note.  During the year ended December 31, 2010, the Company recorded interest expense related to the accretion of the discount on the convertible promissory note of $6,839.  At December 31, 2010, the carrying value of the convertible promissory note was $6,839, net of unamortized discount of $33,161. At December 31, 2010, accrued interest related to the convertible promissory note was $2,832.





Notes Payable and Convertible Note Payable – Long Term





The Company had arranged with Mr. Harmel S. Rayat, former Chief Financial Officer, Director, and majority shareholder of the Company, a loan amount up to $2,500,000 that may be drawn down on an “as needed basis” at a rate of prime plus 3%.  Effective September 15, 2008, Mr. Rayat and the Company terminated this loan agreement.  At December 31, 2009, the Company had an unsecured promissory note pursuant to this loan agreement in the amount of $750,000 payable to Mr. Rayat, which was due on March 8, 2006 and bore interest at an annual rate of 8.5%.  At December 31, 2009, accrued interest on the $750,000 remaining promissory note was $307,223 and was included in interest payable.  The entire principal and accrued interest was due and payable on demand.





On March 1, 2010, Mr. Rayat agreed to convert the then outstanding balance of the note payable ($750,000) and accrued and unpaid interest ($317,527) thereon to a fixed three (3) year term convertible note, totaling $1,067,527 (the “Rayat Convertible Note”).  The Rayat Convertible Note bears interest at the rate of 8.5% per annum, which interest is accrued and payable on the maturity date of the Rayat Convertible Note.  As long as the Rayat Convertible Note remains outstanding and not fully paid, Mr. Rayat has the right, but not the obligation, to convert all or any portion of the aggregate outstanding principal amount of the Rayat Convertible Note, together with all or any portion of the accrued and unpaid interest into that number of shares, subject to certain terms and conditions, of the Company’s common stock equal to the amount of the converted indebtedness divided by $0.01 per share. In the event of default, as defined in the Convertible Promissory Note agreement, the annual interest rate increases to 10% and is due on demand. The Company may, in its discretion, redeem the Rayat Convertible Note at any time prior to the maturity date of the Rayat Convertible Note.  Certain events of default will result in all sums of principal and interest then remaining unpaid immediately due and payable, upon demand of Mr. Rayat.





Since the book value of the Rayat Convertible Note ($1,067,527) divided by the number of shares of common stock to which the debt can be converted (106,752,700) is $0.01 per share, which was less than the fair value of the stock at the time the debt was issued ($0.03 per share), there was a beneficial conversion feature.  The beneficial conversion feature was recorded as a discount against the Rayat Convertible Note, which reduced the book value of the Rayat Convertible Note to not less than zero.  The Company amortizes the discount using the effective interest method over the three-year life of the Rayat Convertible Note.





During the years ended December 31, 2010 and 2009, the Company recorded interest expense of $86,129 and $63,750, respectively, payable to Mr. Rayat related to the original $750,000 note payable and the Rayat Convertible Note.  During the year ended December 31, 2010, the Company recorded interest expense related to the accretion of the discount on the Rayat Convertible Note of $46.  At December 31, 2010, the carrying value of the Rayat Convertible Note was $46, net of unamortized discount of $1,067,481. At December 31, 2010, accrued interest related to the Rayat Convertible Note was $75,824.


32
 
 Note 13.  2010 Offering
 
 On May 4, 2010, the Company’s registration statement on Form S-1 (the “Registration Statement”) was declared effective by the United States Securities and Exchange Commission, and the Company commenced its self directed public offering (the “2010 Offering”) in accordance with the Prospectus dated May 4, 2010 and included in the Registration Statement, of up to a maximum of 200,000,000 units (the "Units") of its securities at a price of $0.01 per Unit.  Each Unit consists of:


·
one (1) share of the Company’s common stock, $0.00001 par value per share; and,
 ·
one-half of one Series B Warrant (collectively, the “Series B Warrants”).


Each full Series B Warrant entitles the holder to purchase one additional share of the Company’s common stock at an exercise price of $0.03 per share, expiring two (2) years from the date of issuance of the Series B Warrants.


The 2010 Offering was a direct public offering by the Company, without any involvement of underwriters or broker-dealers.  The 2010 Offering terminated on October 31, 2010





As of the termination date of the 2010 Offering, the Company sold 40,000,000 Units (all on May 19, 2010) for gross receipts of $400,000 pursuant to the terms of the 2010 Offering.  Accordingly, the Company issued 40,000,000 shares of its common stock and Series B Warrants to purchase up to 20,000,000 shares of common stock at an exercise price of $0.03 per share to the investors having subscribed for the 40,000,000 Units.





At the time of grant, the fair value of the Series B Warrants as calculated using the Black-Scholes model was $607,995 using the following assumptions:  dividend yield of 0%, expected volatility of 152.5%, risk-free interest rate of 0.8%, and expected term of two years.  The portion of the proceeds from the 2010 Offering allocated to the Series B Warrants was $110,144.





Note 14.  Stock Options





On July 12, 2001, the Company approved its 2001 Stock Option Plan (the “2001 Plan”), which has 10,000,000 shares reserved for issuance thereunder, all of which were registered under Form S-8 on October 2, 2003. On July 25, 2005, the Company approved its 2005 Stock Option Plan (the “2005 Plan”), which has 15,000,000 shares reserved for issuance thereunder. The 2001 Plan and 2005 Plan provide shares available for options granted to employees, directors and others. The options granted to employees under the Company’s option plans generally vest over two to five years or as otherwise determined by the plan administrator. Options to purchase shares expire no later than ten years after the date of grant.





The Company measures all stock-based compensation awards using a fair value method on the date of grant and recognizes such expense in its consolidated financial statements over the requisite service period.  The grant date fair value of stock options is based on the price of a share of the Company’s common stock on the date of grant.  In determining grant date fair value of stock options, the Company uses the Black-Scholes option pricing model which requires management to make assumptions regarding the option lives, expected volatility, and risk free interest rates all of which impact the fair value of the option and, ultimately, the expense that will be recognized over the life of the option.





The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for a bond with a similar term.  The Company does not anticipate declaring dividends in the foreseeable future.  Volatility is calculated based on the historical weekly closing stock prices for the same period as the expected life of the option.  The Company uses the “simplified” method for determining the expected term of its “plain vanilla” stock options.  The Company recognizes compensation expense for only the portion of stock options that are expected to vest.  Therefore, the Company applies an estimated forfeiture rate that is derived from historical employee termination data and adjusted for expected future employee turnover rates.





A summary of the Company’s stock option activity for the years ended December 31, 2010 and 2009 and related information follows:





33




Remaining


AggregateWeighted Average


Contractual


IntrinsicNumber of Options


Exercise Price


Term


ValueOutstanding at December 31, 2009


2,000,000


$
0.52Grants


4,800,000



0.04Forfeitures


(6,600,000
)


0.19Expirations


(200,000
)


0.04Outstanding at December 31, 2010


-


$
-



-


$
-Exercisable at December 31, 2010


-


$
-



-


$
-Available for grant at December 31, 2010


22,250,000





The aggregate intrinsic value in the table above represents the total pretax intrinsic value for all “in-the-money” options (i.e. the difference between the Company’s closing stock price on the last trading day of its fourth quarter of its fiscal year 2010 and the exercise price, multiplied by the number of shares) that would have been received by the option holders had all option holders exercised their options on December 31, 2010. The intrinsic value of the options changes based on the fair market value of the Company’s common stock.





Stock Option Grants, Forfeitures, and Expirations





On May 31, 2010, Dr. James Lynch tendered his resignation as a Director and as the President and Chief Executive Officer of the Company, effective May 31, 2010. The resignation constituted a termination of the employment agreement between Dr. Lynch and the Company dated March 15, 2010 (the “Lynch Employment Agreement”).  None of the 4,000,000 stock options previously granted to Dr. Lynch on March 15, 2010, pursuant to the Lynch Employment Agreement had vested and the options have been forfeited.  Accordingly, during the year ended December 31, 2010, the Company recorded stock compensation of $6,310 for the amortization of the fair value of the stock option granted to Dr. Lynch and a reversal of stock compensation expense of $6,310 for the same stock option for a net $0 impact to the consolidated financial statements during the year ended December 31, 2010.





On June 1, 2010, Mr. Gary Branning tendered his resignation as a Director of the Company effective as of that date. None of the 200,000 stock options previously granted to Mr. Branning on March 15, 2010 had vested and the options have been forfeited.  Accordingly, during the year ended December 31, 2010, the Company recorded stock compensation of $153 for the amortization of the fair value of the stock option granted to Mr. Branning and a reversal of stock compensation expense of $153 for the same stock option for a net $0 impact to the consolidated financial statements during the year ended December 31, 2010.





On June 17, 2010, Mr. Raymond Krauss tendered his resignation as a Director and as the Chief Financial Officer, Secretary and Treasurer of the Company effective as of that date. None of the 200,000 stock options previously granted to Mr. Krauss on March 15, 2010 had vested and the options have been forfeited.  Accordingly, during the year ended December 31, 2010, the Company recorded stock compensation of $153 for the amortization of the fair value of the stock option granted to Mr. Krauss and a reversal of stock compensation expense of $153 for the same stock option for a net $0 impact to the consolidated financial statements during the year ended December 31, 2010.





On March 15, 2010, Mr. Greg Wujek tendered his resignation as the Company’s President and Chief Executive Officer effective as of that date. Simultaneously with his resignation as the Company’s President and Chief Executive Officer the employment agreement between the Company and Mr. Wujek was terminated and all of the 2,000,000 stock options previously granted to Mr. Wujek, none of which had vested, were forfeited.  Accordingly, during the year ended December 31, 2010, the Company recorded a reversal of stock compensation expense previously recorded for the fair value of Mr. Wujek’s stock options of $2,667,500, which is included in wages and benefits.





34





On June 17, 2010, Mr. Greg Wujek tendered his resignation as a Director of the Company effective as of that date. Of the 400,000 stock options previously granted to Mr. Wujek on March 15, 2010, 200,000 had vested and were exercisable through September 19, 2010. All 400,000 stock options granted to Mr. Wujek on March 15, 2010 expired unexercised.  During the year ended December 31, 2010, the Company recorded stock compensation of $6,152 for the amortization of the 400,000 stock options granted to Mr. Wujek and a reversal of stock compensation expense of $152 for the same stock option for a net $6,000 recorded as stock compensation expense during the year ended December 31, 2010.





The weighted average grant date fair value of the 4,800,000 stock options granted during the fiscal year ended December 31, 2010 was estimated at $0.04 each, for a total of $184,000, using the Black-Scholes option pricing model with the following weighted average assumptions: dividend yield of 0%, expected volatility of 114.74%, risk-free interest rate of 3.15%, and expected life of 7.4 years.





During the year ended December 31, 2010, stock-based compensation expense of $12,768 was recorded for stock options previously granted and vesting over time, offset by the reversal of stock-based compensation of $2,674,268 recorded for unvested stock options that were forfeited during the same time.  Of the net stock-based compensation income of $2,661,500 recorded during the year ended December 31, 2010, stock-based compensation expense of $6,000 is included in director and management fees – related party and stock-based compensation income of $2,667,500 is included in wages and benefits.  As of December 31, 2010, the Company did not have any unrecognized compensation cost related to unvested stock options and there were no stock options issued and outstanding.





The Company did not recognize any stock-based compensation expense during the year ended December 31, 2009.





The Company does not repurchase shares to fulfill the requirements of stock options that are exercised. Further, the Company issues new shares when stock options are exercised.





Note 15.  Warrants





Series B Warrants





On May 4, 2010, the Company commenced its 2010 Offering of up to a maximum of 200,000,000 Units of its securities at a price of $0.01 per Unit.  Please refer to “Note 13. 2010 Offering.”  Each Unit consists of:


·
one (1) share of the Company’s common stock, $0.00001 par value per share; and,
 ·
one-half of one Series B Warrant.


Each full Series B Warrant entitles the holder to purchase one additional share of the Company’s common stock at an exercise price of $0.03 per share, expiring two (2) years from the date of issuance of the Series B Warrants.


The 2010 Offering was a direct public offering by the Company, without any involvement of underwriters or broker-dealers.  The 2010 Offering terminated on October 31, 2010.





As of the termination date of the 2010 Offering, the Company sold 40,000,000 Units (all on May 19, 2010) for gross receipts of $400,000 pursuant to the terms of the 2010 Offering.  Accordingly, the Company issued 40,000,000 shares of its common stock and Series B Warrants to purchase up to 20,000,000 shares of common stock at an exercise price of $0.03 per share to the investors having subscribed for the 40,000,000 Units.





At the time of grant, the fair value of the Series B Warrants as calculated using the Black-Scholes model was $607,995 using the following assumptions:  dividend yield of 0%, expected volatility of 152.5%, risk-free interest rate of 0.8%, and expected term of two years. The portion of the proceeds from the 2010 Offering allocated to the Series B Warrants was $110,144.


35
 
 Class A Warrants
 
 On September 25, 2007, PhytoMedical completed a $3,205,000 private placement (the “2007 Private Placement”), for which Palladium Capital, LLC (“Palladium"), acted as the exclusive placement agent. The 2007 Private Placement consisted of the sale of 10,683,331 units (the "Units") at a price of $0.30 per Unit (the "Unit Issue Price") or $3,205,000 in the aggregate. The Units were offered and sold to 13 accredited investors (the “Investors”) as defined in Regulation D as promulgated under the Securities Act of 1933, as amended.   Each Unit consisted of one share of common stock and one Class A warrant (“Class A Warrant”) at an exercise price of $0.40 per share, expiring September 25, 2010.  The Company issued 10,683,331 Class A Warrants pursuant to the terms of the 2007 Private Placement and 213,750 to the agent as commission (under the same terms), for a total of 10,897,081 Class A Warrants.





The terms of the Class A Warrants that were issued pursuant to the 2007 Private Placement contained a provision such that upon subsequent equity sales of common stock or common stock equivalents at an effective price per share (the “Base Share Price”) less than the $0.40 exercise price per share of the Class A Warrants then the exercise price of the Class A Warrants would have been reduced to the Base Share Price and the number of Class A Warrants would have been increased such that the aggregate exercise price payable, after taking into account the decrease in the exercise price would have been equal to the aggregate exercise price prior to such adjustment (“Dilutive Issuance”). The potential adjustment to the Class A Warrant exercise price and number of underlying shares of common stock resulted in a settlement amount that did not equal the difference between the fair value of a fixed number of the Company’s common stock and a fixed exercise price.  Accordingly, the Class A Warrants were not considered indexed to the Company’s own stock and therefore needed to be accounted for as a derivative.





At the time of grant, the fair value of the Class A Warrants as calculated using the Black-Scholes model was $2,724,270.  The proceeds from the 2007 Private Placement allocated to the Class A Warrants were $1,198,679.





Class A Warrant Liability and Securities Exchange Agreement





On January 1, 2009, the Company adopted guidance which is now part of ASC 815-40, Contracts in Entity’s Own Equity (ASC 815-40).The Company determined that its Class A Warrants contained a Dilutive Issuance provision.  As a result, the Company reclassified 10,897,081 of its Class A Warrants to warrant liability, under long-term liabilities, resulting in a cumulative adjustment to accumulated deficit as of January 1, 2009 of $1,174,576.





The Company’s Class A Warrants were considered derivative financial instruments and were therefore required to be adjusted to fair value each quarter.  Fair value measurement should be determined based on the assumptions that market participants would use in pricing the asset or liability. As a basis for considering market participant assumptions in fair value measurements, the Company used a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels 1 and 2 of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy).




On September 29, 2009, the Company consummated a securities exchange agreement (“Securities Exchange Agreement”) with the holders of the Company’s Class A Warrants whereby the holders and the Company agreed to exchange the holders’ remaining Class A Warrants, on the basis of one share for every ten (10) Class A Warrants for an aggregate of 1,089,705 shares of the Company’s common stock $0.00001 par value per share. The exchange of the Class A Warrants for common stock pursuant to the Securities Exchange Agreement resulted in an extinguishment of the warrant liability.




The fair value of the Company’s warrant liability at September 29, 2009, the effective date of the Securities Exchange Agreement, using a Black-Scholes model (Level 3 inputs) was $118,013, using the following assumptions:  dividend yield of 0%, expected volatility of 156.43%, risk-free interest rate of 0.41%, and expected term of 1.0 year.





The fair value of the 1,089,705 shares of common stock issued to settle the warrant liability was $65,382, based on the closing price of the Company’s common stock of $0.06 per share on September 29, 2009 as quoted on the Over the Counter Bulletin Board.  The Company recorded a gain on extinguishment of warrant liability of $52,631 on September 29, 2009 as a result of the excess of the Class A Warrant Liability over the fair value of the consideration provided the warrant holders, in the form of common stock.





36





Prior to the consummation of the Securities Exchange Agreement, the Company adjusted the Class A Warrants to fair value each quarter.  As a result the Company recorded a non-cash loss related to the Class A Warrants of $93,910 for the year ended December 31, 2009.





As of December 31, 2010, there are no Class A Warrants outstanding.





Note 16.  Related Party Transactions





Wages and benefits





During the year ended December 31, 2010, the Company incurred $101,484, net of the reversal of stock compensation of $2,667,500, as compensation for services that executive officers provided to the Company. During the year ended December 31, 2009, the Company incurred $263,052, as compensation for services that executive officers provided to the Company





Director and Management fees- related party





On June 3, 2010, in order to fill vacancies created by the resignations of Dr. Lynch and Mr. Branning, the Board of Directors appointed Mr. Amit S. Dang and Mr. Jeet S. Sidhu to the Company’s Board of Directors.  The Board of Directors also approved the terms of an Interim Executive Services Agreement between the Company and Mr. Dang (the “Executive Services Agreement”) pursuant to which Mr. Dang was appointed the Company’s President and Chief Executive Officer.  On June 22, 2010, in order to fill the vacancy created by the resignation of Mr. Krauss, the Board of Directors also appointed Mr. Dang to serve as the Company’s Interim Chief Financial Officer, Treasurer, and Secretary.  Mr. Dang receives compensation of $5,000 per month during the term of the Executive Services Agreement.  The Executive Services Agreement may be terminated at any time with or without cause by the Company. During the year ended December 31, 2010, the Company incurred $35,000 pursuant to the Executive Services Agreement which is included in director and management fees – related party.





Until May 31, 2010, non-employee Board members received $250 per month for services rendered in the capacity of a Board member plus $100 per Board meeting attended.  The Board approved an increase, effective June 1, 2010, in non-employee Board fees to $750 per month.





During the years ended December 31, 2010 and 2009, the Company incurred $9,200 and $6,800 in non-employee director fees.  Additionally, during the year ended December 31, 2010, the Company recorded stock compensation of $6,000 (net of the reversal of stock compensation discussed in “Note 14. Stock Options”) for stock options previously granted to directors and vesting over time.





Notes payable and convertible note payable





The Company had arranged with Mr. Harmel S. Rayat, former Chief Financial Officer, Director, and majority shareholder of the Company, a loan amount up to $2,500,000 that may be drawn down on an “as needed basis” at a rate of prime plus 3%.  Effective September 15, 2008, Mr. Rayat and the Company terminated this loan agreement.  At December 31, 2009, the Company had an unsecured promissory note pursuant to this loan agreement in the amount of $750,000 payable to Mr. Rayat, which was due on March 8, 2006 and bore interest at an annual rate of 8.5%.




37




On March 1, 2010, Mr. Rayat agreed to convert the then outstanding balance of the note payable ($750,000) and accrued and unpaid interest ($317,527) thereon to the Rayat Convertible Note.  The Rayat Convertible Note bears interest at the rate of 8.5% per annum, which interest is accrued and payable on the maturity date of the Rayat Convertible Note.  As long as the Rayat Convertible Note remains outstanding and not fully paid, Mr. Rayat has the right, but not the obligation, to convert all or any portion of the aggregate outstanding principal amount of the Rayat Convertible Note, together with all or any portion of the accrued and unpaid interest into that number of shares, subject to certain terms and conditions, of the Company’s common stock equal to the amount of the converted indebtedness divided by $0.01 per share. In the event of default, as defined in the Convertible Promissory Note agreement, the annual interest rate increases to 10% and is due on demand. The Company may, in its discretion, redeem the Rayat Convertible Note at any time prior to the maturity date of the Rayat Convertible Note.  Certain events of default will result in all sums of principal and interest then remaining unpaid immediately due and payable, upon demand of Mr. Rayat.





During the year ended December 31, 2010, the Company recorded interest expense of $86,129 and $63,750, respectively, payable to Mr. Rayat related to the original $750,000 note payable and the Rayat Convertible Note.  Please refer to “Note 12.  Notes Payable and Convertible Notes Payable”. At December 31, 2010, accrued interest on the Rayat Convertible Note was $75,824 and is included in interest payable.





All related party transactions are recorded at the exchange amount established and agreed to between related parties and are in the normal course of business.





Note 17.  Income Taxes





Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.  Significant components of the Company’s deferred tax assets at December 31, 2010 and 2009 are as follows:




Year EndedDecember 31,2010


2009Deferred tax assets:Net operating loss carryforwards

$
7,067,537


$
6,869,861Capitalized research and development


315,654



364,705Stock based compensation


—



1,221,110Accrued interest


136,091



104,456Research and development credit carry forward


63,738



63,368Other


85



85Total deferred tax assets


7,583,105



8,623,585Less: valuation allowance


(7,583,105
)


(8,623,585
)Net deferred tax asset

$
—


$
—





The net decrease in the valuation allowance for deferred tax assets was $1,040,480 for the year ended December 31, 2010.  The net increase in the valuation allowance for deferred tax assets was $226,663 for the year ended December 31, 2009.  The Company evaluates its valuation allowance requirements on an annual basis based on projected future operations. When circumstances change and this causes a change in management’s judgment about the realizability of deferred tax assets, the impact of the change on the valuation allowance is reflected in current operations.





For federal income tax purposes, the Company has net U.S. operating loss carry forwards at December 31, 2010 available to offset future federal taxable income, if any, of $20,786,873, which will fully expire by the fiscal year ended December 31, 2030.  Accordingly, there is no current tax expense for the years ended December 31, 2010 and 2009.  In addition, the Company has research and development tax credit carry forwards of $63,738 at December 31, 2010, which are available to offset federal income taxes and begin to expire during the year ended December 31, 2026.





38





The utilization of the tax net operating loss carry forwards may be limited due to ownership changes that have occurred as a result of sales of common stock.





The effects of state income taxes were insignificant for the years ended December 31, 2010 and 2009.





The following is a reconciliation between expected income tax benefit and actual, using the applicable statutory income tax rate of 34% for the years ended December 31, 2010 and 2009:





Year EndedDecember 31,2010


2009Income tax (expense) benefit at statutory rate

$
(689,422
)

$
235,889Non-deductible fund raising costs


(10,634
)


-Non-deductible meals and entertainment


(163
)


-Liquidation of Canadian subsidiary - permanent difference


(26,471
)


-Expiration of vested stock options


(314,160
)


-Change in fair value of warrant liability


-



(31,929
)Gain on extinguishment of warrant liability


-



17,894Research and development credit


370



4,809Change in valuation allowance


1,040,480



(226,663
)$
-


$
-





The fiscal years 2007 through 2010 remain open to examination by federal authorities and other jurisdictions of which the Company operates.




39





ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE





None.




ITEM 9A. CONTROLS AND PROCEDURES




(a) Evaluation of Disclosure Controls and Procedures





Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”), as of the end of the period covered by this annual report. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that as of December 31, 2010, our disclosure controls and procedures were effective such that the information required to be disclosed in our reports filed under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.





(b) Management’s Report on Internal Control over Financial Reporting





Our management is responsible for establishing and maintaining effective internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.  Based on this evaluation, management concluded that our internal control over financial reporting was effective as of December 31, 2010.





This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by our registered public accounting firm pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act, which permanently exempts non-accelerated filers (generally issuers with a public float under $75 million) from complying with Section 404(b) of the Sarbanes-Oxley Act of 2002.





(c) Changes in Internal Control over Financial Reporting





There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.





ITEM 9B. OTHER INFORMATION





None.





40





PART III





ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE





DIRECTORS AND EXECUTIVE OFFICERS





The following table sets forth the names and ages of all of our directors and executive officers. We have a board of directors comprised of two members. Each director holds office until a successor is duly elected or appointed.  Executive officers serve at the discretion of the Board of Directors and are appointed by the Board of Directors.  Also provided herein are brief descriptions of the business experience of each of the directors and officers during the past five years, and an indication of directorships held by each director in other companies subject to the reporting requirements under the Federal securities law.





Name

Age

Position With Company

Director SinceAmit S. Dang (1)

30

President, Chief Executive Officer, Chief Financial Officer, Treasurer, Secretary, and Director

June 3, 2010Jeet S. Sidhu

38

Director

June 3, 2010





(1)  Mr. Dang was appointed President and Chief Executive Officer on June 3, 2010 and assumed his position as our Chief Financial Officer, Treasurer and Secretary on June 22, 2010.





Former Directors and Officers





Set forth below are the names of all of our former directors and executive officers, all positions and offices held by each person, the period during which each has served as such, and the principal occupations and employment of such persons during at least the last five years.





Name

Age

Former Positions With Company

Date Assumed

Position(s)

Date Resigned

Position(s)Dr. James F. Lynch (1)

49

Former President, Chief Executive Officer, and Director

March 15, 2010

May 31, 2010Greg Wujek (2)

48

Former President, Chief Executive Officer, and Director

April 3, 2006

June 17, 2010Gary Branning (3)

56

Former Chief Financial Officer and Director

September 13, 2006

June 1, 2010Raymond Krauss (4)

47

Chief Financial Officer, Secretary, Treasurer, Director

October 11, 2007

June 17, 2010





(1)      Dr. Lynch was appointed a Director and to the position of President and Chief Executive Officer on March 15, 2010. He resigned from all of his positions with us on May 31, 2010.




41





(2) Mr. Wujek was appointed a director and to the positions of President and Chief Executive Officer on April 3, 2006.  Mr. Wujek resigned his position as President and Chief Executive Officer effective as of March 15, 2010. He resigned as a Director on June 17, 2010.





(3)Mr. Branning was appointed a director on September 13, 2006 and to the position of Chief Financial Officer on September 5, 2008.  Mr. Branning resigned as our Chief Financial Officer, effective December 11, 2008 and as one of our directors on June 1, 2010.





(4)Mr. Krauss was appointed a Director on October 11, 2007.  He was appointed to the positions of Chief Financial Officer, Secretary and Treasurer on December 11, 2008 to fill the vacancy created by the resignation of Mr. Branning from these positions. He resigned as from all of his positions with us on June 17, 2010.





Biographical Information





Set forth below are the names of all of our directors and executive officers, all positions and offices held by each person, the period during which each has served as such, and the principal occupations and employment of such persons during at least the last five years, and other director positions held currently or during the last five years:





Amit Singh Dang.Mr. Dang holds a Bachelors degree (B.B.A.) in Finance from Wayne State University (2003), with advanced academic studies in contract, criminal, civil, and policy law; management, finance, logistics, and strategy; and audit theory; from Michigan State University (2003-2004), The University of Michigan (2004-2006), and the Institute of Internal Auditors (2006-2008), respectively.  From February 2006 to June 2006, Mr. Dang was employed as a Business Process and Development Consultant for Sterling Solutions and Systems.  From June 2006 to May 2008, Mr. Dang worked as a Risk and Performance Services Consultant at Crowe Horwath, where he specialized in identifying high-risk areas for public and private companies and helped develop and re-engineer core business processes for greater efficiency and control.  From October 13, 2009 through May 11, 2010, Mr. Dang served as the President and Chief Executive Officer and Chief Financial Officer of HepaLife Technologies, Inc. Since May 2008, Mr. Dang has served as the Managing Director for Infinitus Ventures, facilitating the early incubation, capital funding, and development of client companies.  In addition, Mr. Dang provides consulting services to companies in the process of transitioning into alternative business ventures.  In light of our current circumstances, Mr. Dang’s financial and accounting background and his experience with companies transitioning to other business ventures make him particularly qualified to serve on our board of directors during this important transitional period in our corporate history.





Jeet S. Sidhu. Mr. Sidhu graduated from the British Columbia Institute of Technology with a Diploma in Corporate Finance in 1995. From 2002-2009, Mr. Sidhu was Vice-President of Montgomery Asset Management Corporation, a privately held firm providing financial and management consulting services to emerging growth corporations.  Mr. Sidhu served as a member of the board of directors for U.S. Petroleum Corporation from August 2003 until August 2006.  Mr. Sidhu served as a director of Entheos Technologies, Inc. from September 8, 2008 to August 26, 2010.  Mr. Sidhu currently serves as a member of the Board of Directors of MicroChannel Technologies, Inc.  Mr. Sidhu was invited to join the Board of Directors due to his experience with public companies in the matters relating to business development, financial reporting and legal compliance.





Family Relationships and Other Matters





There are no family relationships among or between any of our officers and directors.





Legal Proceedings





During the past ten years none of our directors, executive officers, or promoters have been involved in any of the following legal proceedings:




1.
A petition under the Federal bankruptcy laws or any state insolvency law was filed by or against, or a receiver, fiscal agent or similar officer was appointed by a court for the business or property of such person, or any partnership in which he was a general partner at or within two years before the time of such filing, or any corporation or business association of which he was an executive officer at or within two years before the time of such filing;




42




2.
Such person was convicted in a criminal proceeding or is a named subject of a pending criminal proceeding (excluding traffic violations and other minor offenses);




3.
Such person was the subject of any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him from, or otherwise limiting, the following activities:




a.
Acting as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage transaction merchant, any other person regulated by the Commodity Futures Trading Commission, or an associated person of any of the foregoing, or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person, director or employee of any investment company, bank, savings and loan association or insurance company, or engaging in or continuing any conduct or practice in connection with such activity;




b.
Engaging in any type of business practice; or




c.
Engaging in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of Federal or State securities laws or Federal commodities laws;




4.
Such person was the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any Federal or State authority barring, suspending or otherwise limiting for more than 60 days the right of such person to engage in any activity described in paragraph 3(a) or to be associated with persons engaged in any such activity;




5.
Such person was found by a court of competent jurisdiction in a civil action or by the Commission to have violated any Federal or State securities law, and the judgment in such civil action or finding by the Commission has not been subsequently reversed, suspended, or vacated;




6.
Such person was found by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any Federal commodities law, and the judgment in such civil action or finding by the Commodity Futures Trading Commission has not been subsequently reversed, suspended or vacated;




7.
Such person was the subject of, or a party to, any Federal or State judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of:




a.
Any Federal or State securities or commodities law or regulation; or




b.
Any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order; or




c.
Any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or




8.
Such person was the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26))), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29))), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.




43





SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE





Section 16(a) of the Securities Exchange Act of 1934 (the “Exchange Act”), as amended, requires the directors, executive officers, and any beneficial owner of more than 10% of any class of equity securities to file periodic reports of their ownership, and changes in that ownership, with the Securities and Exchange Commission (the “SEC”).  These persons are required by regulations of the SEC to furnish us with copies of all Section 16(a) forms they file.





Based solely on a review of copies of these forms received, we believe that during the fiscal year ended December 31 2010, our current and former directors and executive officers have complied with applicable filing requirements under Section 16(a), except that our current officer and directors, Mr. Amit S. Dang and Mr. Jeet Sidhu each did not file one Form 3, within the reporting time frame required by the SEC.  Additionally, former President, CEO, and Director, Greg Wujek did not file a final Form 3 or Form 5 upon his resignation as our President and CEO on March 15, 2010 and as on of our directors on June 17, 2010, whereby he forfeited all stock options previously granted to him.  Additionally, former President, CEO and Director, Mr. James Lynch did not file one Form 3 and one Form 5 within the reporting time frame required by the SEC.  In addition, two of our former directors, Mr. Gary Branning and Mr. Raymond Krauss, each did not file a final Form 3 or Form 5 upon their resignations and forfeiture of all options previously granted to them.





CODE OF ETHICS





We have adopted a Code of Ethics that applies to all of our officers, directors and employees, including our Chief Financial Officer and Chief Executive Officer.  The Code of Ethics is designed to deter wrongdoing, and to promote, among other things, honest and ethical conduct, full, fair, accurate, timely, and understandable disclosure in reports and documents that we file with, or submit to the SEC, compliance with applicable governmental laws, rules and regulations, the prompt internal reporting of violations of the Code of Ethics, and accountability for adherence to the Code of Ethics. Our Code of Ethics is available on our website at http://www.phytomedical.com. To access our Code of Ethics, click on “Investors”, and then click on “Code of Ethics” located under “Corporate Governance.”





A copy of our Code of Ethics may be obtained at no charge by sending a written request to our Chief Executive Officer, Amit S. Dang, 100 Overlook Drive, 2nd Floor, Princeton, NJ  08540.





CORPORATE GOVERNANCE





We have adopted Corporate Governance Guidelines applicable to our Board of Directors. Our Corporate Governance Guidelines are available on our website at http://www.phytomedical.com. To access our Corporate Governance Guidelines, click on “Investors”, and then click on “Corporate Governance” located under “Corporate Governance.”





Director Independence





We are not listed on a U.S. securities exchange and, therefore, are not subject to the corporate governance requirements of any such exchange, including those related to the independence of directors. However, at this time, after considering all of the relevant facts and circumstances, our Board of Directors has determined that Mr. Jeet S. Sidhu is independent from our management and qualifies as an “independent director” under the standards of independence of the FINRA listing standards.  We do not currently have a majority of independent directors as required by the FINRA listing standards. Upon our listing on any national securities exchange or any inter-dealer quotation system, we will elect such independent directors as is necessary under the rules of any such securities exchange.





Board Leadership Structure and Role in Risk Oversight





Our Chief Executive Officer serves as Chairman of our Board of Directors. We feel that in this combined role, he can provide unique insight into the company’s business, industry, and strategic opportunities, consistent and reliable communication between our board and management, clear accountability for the execution of our strategy, effective decision-making, and alignment on corporate strategy.  We do not have a lead independent director.




44





The Board believes full and open communication between it and management is essential for effective risk management and oversight. Members of our board meet regularly with our Chief Executive Officer to discuss strategy and risks facing the company. Our Chief Executive Officer attends the quarterly board meetings and is available to address any questions or concerns raised by the board on risk management-related and any other matters. Our Chief Executive Officer is also asked to contribute to the agenda for these meetings, so that each functional division of the company can identify topics that may require board attention. Each quarter our Chief Executive Officer presents to the board on strategic matters involving our operations and strategic initiatives and discusses with the board key strategies, challenges, risks, and opportunities for the company.





Management is responsible for the day-to-day management of risks the company faces, while the board, as a whole and through its committees, is responsible for the oversight of risk management. In its risk oversight role, the Board of Directors monitors whether the risk management processes that management has designed and implemented are effective both as designed and as executed.





Board of Directors Meetings, Committees of the Board of Directors, and Annual Meeting Attendance





During the fiscal year ended December 31, 2010, each director attended at least 75% of all meetings of the Board of Directors.  We do not maintain a policy regarding director attendance at annual meetings.  All directors attended the 2010 Annual Meeting of Shareholders.





We do not currently have any standing committees of the Board of Directors.  The full Board is responsible for performing the functions of:  (i) the Audit Committee, (ii) the Compensation Committee and (iii) the Nominating Committee.




Audit Committee





The Board does not currently have a standing Audit Committee.  The full Board performs the principal functions of the Audit Committee.  The full Board monitors our financial reporting process and internal control system and reviews and appraises the audit efforts of our independent accountants.





Compensation Committee





The Boarddoes not currently have a standing Compensation Committee.  The full Board establishes our overall compensation policies and reviews recommendations submitted by our management.





Nominating Committee





The Board does not currently have a standing Nominating Committee.  We do not maintain a policy for considering nominees.  Our Bylaws provides that the number of Directors shall be fixed from time to time by the Board, but in no event shall be less than the minimum required by law.  The Board shall be large enough to maintain our required expertise but not too large to function efficiently.  Director nominees are recommended, reviewed and approved by the entire Board.  The Board believes that this process is appropriate due to the relatively small number of directors on the Board and the opportunity to benefit from a variety of opinions and perspectives in determining director nominees by involving the full Board.





While the Board is solely responsible for the selection and nomination of directors, the Board may consider nominees recommended by stockholders as it deems appropriate. The Board evaluates each potential nominee in the same manner regardless of the source of the potential nominee’s recommendation.  Although we do not have a policy regarding diversity, the Board does take into consideration the value of diversity among Board members in background, experience, education and perspective in considering potential nominees for recommendation to the Board for selection. Stockholders who wish to recommend a nominee should send nominations to our Chief Executive Officer, Amit S. Dang, 100 Overlook Drive, 2nd Floor, Princeton, NJ  08540, that include all information relating to such person that is required to be disclosed in solicitations of proxies for the election of directors. The recommendation must be accompanied by a written consent of the individual to stand for election if nominated by the Board and to serve if elected.




45




Compensation Consultants




We have not historically relied upon the advice of compensation consultants in determining Named Executive Officer compensation. Instead, the full Board reviews compensation levels and makes adjustments based on their personal knowledge of competition in the market place, publicly available information and informal surveys of human resource professionals.





Stockholder Communications





Stockholders who wish to communicate with the Board of Directors may do so by addressing their correspondence to the Board of Directors at PhytoMedical Technologies, Inc., Attention: Amit S. Dang, Chief Executive Officer, 100 Overlook Drive, 2nd Floor, Princeton, NJ 08540.   The Board of Directors shall review and respond to all correspondence received, as appropriate.





ITEM 11.  EXECUTIVE COMPENSATION





Summary Compensation





The following table and descriptive materials set forth information concerning compensation earned for services rendered to us by: the Chief Executive Officer (the “CEO”); the Chief Financial Officer (the “CFO”); and the two other most highly-compensated executive officers other than the CEO and CFO who were serving as executive officers during the fiscal year ended August 31, 2010 (the “Named Executive Officers”).





SUMMARY COMPENSATION TABLE





The following table summarizes the compensation earned by the Named Executive Officers during the fiscal years ended December 31, 2010 and 2009.





Name and Principal Position

Year Ended

December 31,

Salary ($)(5)


Option

Awards ($)(6)


All Other

Compensation($)(7)


Total ($)Amit S. Dang  (1)

2010

$
35,000


$
-


$
-


$
35,000President, Chief Executive Officer,Chief Financial Officer, Director

2009

$
-


$
-


$
-


$
-Dr. James F. Lynch (2)

2010

$
47,217


$
160,000


$
2,918


$
210,135Former President, Chief ExecutiveOfficer, Former Director

2009

$
-


$
-


$
-


$
-Greg Wujek (3)

2010

$
50,997


$
-


$
-


$
50,997Former President, Chief ExecutiveOfficer, Former Director

2009

$
237,557


$
-


$
25,495


$
263,052Raymond Krauss (4)

2010

$
-


$
-


$
-


$
-Former Chief Financial Officer,Secretary, Treasurer, FormerDirector

2009

$
-


$
-


$
-


$
-





(1)
Mr. Dang was appointed President and Chief Executive Officer on June 3, 2010 and assumed his position as our Chief Financial Officer, Treasurer and Secretary on June 22, 2010. The Board of Directors approved the terms of an Interim Executive Services Agreement between us and Mr. Dang (the “Executive Services Agreement”) pursuant to which Mr. Dang receives compensation of $5,000 per month during the term of the Executive Services Agreement.  The Executive Services Agreement may be terminated at any time with or without cause by the Company.




46





(2)
Dr. Lynch was appointed a director and to the position of President and Chief Executive Officer on March 15, 2010. He resigned from all of his positions with us on May 31, 2010. Simultaneously with his appointment we entered into an employment agreement with Dr. Lynch (the “Lynch Employment Agreement”).





In consideration of his employment we paid Dr. Lynch an annual salary of $248,000 and reimbursement of his health insurance premiums in the amount of $1,350 per month.  The Board of Directors also granted Dr. Lynch an option to acquire up to 4,000,000 shares of our common stock at an exercise price of $0.04 per share, vesting as follows:





a)           as to 600,000 shares when, to the Board’s sole determination and satisfaction, as a result of Dr. Lynch’s efforts, our proprietary pharmacological compound, ‘D11B’ achieves IV formulation and stability milestones, enabling further development;





b)           as to 600,000 when, to the Board’s sole determination and satisfaction, as a result of Dr. Lynch’s efforts, our proprietary pharmacological compound, ‘D11B’, achieves toxicity and pharmacokinetic milestones, enabling further development;





c)           as to 300,000 shares when, to the Board’s sole determination and satisfaction, as a result of Dr. Lynch’s efforts, we successfully prepare an Investigator’s Brochure (IB) in accordance with ICH guidelines, for a product or products related to our proprietary pharmacological compound, ‘D11B’;





d)           as to 450,000 shares when, to the Board’s sole determination and satisfaction, as a result of Dr. Lynch’s efforts, we successfully file an Investigational New Drug Application (IND) with the US Food & Drug Administration for a product or products related to our proprietary pharmacological compound, ‘D11B’;





e)           as to 300,000 shares when, to the Board’s sole determination and satisfaction, as a result of Dr. Lynch’s efforts, we successfully administer ‘first patient-first dose’ for a product or products related to our proprietary pharmacological compound, ‘D11B’;





f)           as to 1,000,000 shares when, in the Board’s sole determination and satisfaction, as a result of Dr. Lynch’s efforts, we successfully add a new compound (or product(s) derived therefrom) to our pipeline other than compounds (or products derived from any compounds contemplated) by our license agreement with the Trustees of Dartmouth College;





g)           as to 250,000 shares (500,000 shares in the aggregate), on each of, March 15, 2012  and March 15, 2013;





h)           as to 62,500 (250,000 shares in aggregate) on each of June 15, 2010, September 15, 2010, December 15, 2010 and March 15, 2011.




The grant date fair value of the 4,000,000 stock options granted to Dr. Lynch was $160,000 using the Black-Scholes option pricing model with the following weighted average assumptions: expected volatility of 114.7%, risk-free interest rate of 3.2%, expected life of 7.7 years, and a 0% dividend yield.  The $160,000 was amortized over the requisite service period for each tranche of options as outlined in a) through h) above.





Dr. Lynch’s resignation on May 31, 2010 constituted a termination of the Lynch Employment Agreement. None of the 4,000,000 stock options previously granted to Dr. Lynch on March 15, 2010, pursuant to the Lynch Employment Agreement had vested and the options have been forfeited.  Accordingly, during the year ended December 31, 2010, we recorded stock compensation of $6,310 for the amortization of the fair value of the stock option granted to Dr. Lynch and a reversal of stock compensation expense of $6,310 for the same stock option for a net $0 impact to the consolidated financial statements during the year ended December 31, 2010.




47





(3)
On April 3, 2006, we appointed Mr. Greg Wujek to the positions of President and Chief Executive Officer and as a Director.  Pursuant to an employment agreement with Mr. Wujek, the Board approved an annual salary of $225,000, a one-time payment of $16,437 for reimbursement of certain expenses incurred in connection with the acceptance of employment, and a stock option to purchase up to 2,250,000 shares of our common stock, subject to certain vesting requirements, at an exercise price of $1.22.





On August 1, 2006, we cancelled the stock option granted to Mr. Wujek in April 2006 for 2,250,000 stock options and simultaneously entered into a stock option agreement with Mr. Wujek for the purchase of up to 2,000,000 shares of common stock, subject to certain vesting requirements, at an exercise price of $0.52 per share, expiring July 31, 2016.





The stock option to purchase up to 2,000,000 shares of common stock vested as follows:





(a) 250,000 options shall vest if and when an Investigational New Drug (IND) application is filed for any current or future compounds;





(b) 250,000 options shall vest if and when a phase I clinical trial is commenced for any current or future compounds; and





(c) 1,500,000 options shall vest if and when we or a wholly owned subsidiary or any one current or future compound is acquired, in whole or in part, or when either through us or a subsidiary, enter into a strategic collaborative agreement for any one current or future compound, provided that our Board of Directors has approved, by written resolution, any such acquisition, sale or agreement.





We accounted for the cancellation and re-issuance of the stock option as a modification of terms, resulting in additional stock-based compensation expense for the excess of the fair value of the replacement award over the fair value of the cancelled award at the cancellation date.  The fair value of the stock option as a result of the cancellation and re-issuance was $2,667,500.  The fair value of each batch of stock options was amortized over their expected service periods, which we reassessed on a periodic basis.  Mr. Wujek resigned his position as President and Chief Executive Officer effective as of March 15, 2010.  Simultaneously with his resignation, the employment agreement between us and Mr. Wujek was terminated and all of the 2,000,000 stock options previously granted to Mr. Wujek, none of which had vested, were forfeited.  Accordingly, during the year ended December 31, 2010, we recorded a reversal of stock compensation expense previously recorded for the fair value of Mr. Wujek’s stock options of $2,667,500. During the year ended December 31, 2009, we did not recognize any stock-based compensation expense related to the 2,000,000 stock options granted to Mr. Wujek.





On March 15, 2010, as compensation for providing services as a non-employee director, we granted Mr. Wujek a stock option to purchase up to 400,000 shares of our common stock at an exercise price of $0.04 per share. Mr. Wujeks’s option grant of 400,000 shares vested as follows: 200,000 on the date of grant; 66,667 on March 15, 2011; 66,667 on March 15, 2012 and 66,666 on March 15, 2013.





Pursuant to the terms of the option agreement between us and Mr. Wujek, the option to purchase up to 400,000 shares of our common stock terminated at such time as Mr. Wujek ceased to serve as one of our directors. Mr. Wujek then would have 90 days to exercise the option to the extent vested.





The grant date fair value of the 400,000 stock options granted to Mr. Wujek on March 15, 2010, was $12,000 using the Black-Scholes option pricing model with the following weighted average assumptions: expected volatility of 114.7%, risk-free interest rate of 3.2%, expected life of six years, and a 0% dividend yield.  The $12,000 was amortized over the requisite service period for each tranche of options as outlined above. Please refer to “COMPENSTION OF DIRECTORS” below.




48





On June 17, 2010, Mr. Greg Wujek tendered his resignation as one of our Directors, effective as of that date. Of the 400,000 stock options previously granted to Mr. Wujek on March 15, 2010, 200,000 had vested and were exercisable through September 19, 2010. All 400,000 stock options granted to Mr. Wujek on March 15, 2010 expired unexercised.  During the year ended December 31, 2010, the Company recorded stock compensation of $6,152 for the amortization of the 400,000 stock options granted to Mr. Wujek and a reversal of stock compensation expense of $152 for the same stock option for a net $6,000 recorded as stock compensation expense during the year ended December 31, 2010.





(4)
Mr. Krauss was appointed to the Board of Directors on October 11, 2007.  He was appointed to the positions of Chief Financial Officer, Secretary and Treasurer on December 11, 2008.  M. Krauss resigned from all positions with us on June 17, 2010.  Mr. Krauss received compensation as a non-employee director.  He did not receive additional compensation for the period of time when he served as our Chief Financial Officer. See “COMPENSATION OF DIRECTORS” below.





(5)
This column includes both employee and employer related payroll taxes paid on behalf of the employee.





(6)
This column reflects the grant date fair value of option awards as determined in accordance with FASB ASC Topic 718.   For information regarding significant factors, assumptions and methodologies used in determining the fair value of stock options, see “Note 14. Stock Options” to the PhytoMedical Technologies, Inc. Consolidated Financial Statements contained in this Form 10-K.





(7)
Represents amounts paid for health care insurance.





OUTSTANDING EQUITY AWARDS AT FISCAL-YEAR END




We have no equity awards outstanding at December 31, 2010.





COMPENSATION OF DIRECTORS





We do not pay director compensation to directors who are also our employees.  Our Board of Directors determines the non-employee directors’ compensation for serving on the Board and its committees. In establishing director compensation, the Board is guided by the following goals:





·
Compensation should consist of a combination of cash and equity awards that are designed to fairly pay the directors for work required for a company of PhytoMedical Technologies, Inc.’s size and scope;





·
Compensation should align the directors’ interests with the long-term interests of stockholders; and





·
Compensation should assist with attracting and retaining qualified directors.





Until May 31, 2010, non-employee Board members received $250 per month for services rendered in the capacity of a Board member plus $100 per Board meeting attended.  The Board approved an increase, effective June 1, 2010, in non-employee Board fees to $750 per month.  Directors are entitled to participate in, and have been issued options under, our 2005 Stock Plan.  We also reimburse directors for any actual expenses incurred to attend meetings of the Board.





The following table provides information regarding all compensation paid to our non-employee directors during the fiscal year ended December 31, 2010.




49





Director CompensationFees Earned orPaid in


StockName

Cash ($)(1)


Awards ($)(2)


Total ($)Gary Branning (3)

$
1,600


$
6,000


$
7,600Raymond Krauss (4)


1,600



6,000



7,600Greg Wujek (5)


750



12,000



12,750Jeet S. Sidhu (6)


5,250



—



5,250Total director compensation

$
9,200


$
24,000


$
33,200





(1)
The amounts in this column represent the monthly cash meeting fee earned by or paid to our non-employee directors for service during the fiscal year ended December 31, 2010.





(2)
This column reflects the aggregate grant date fair value computed in accordance with FASB ASC Topic 718. For information regarding significant factors, assumptions and methodologies used in determining the fair value of our stock options, see “Note. 14 Stock Options” in the consolidated notes to the financial statements included in this Form 10-K.





(3)
Mr. Branning was appointed to the Board of Directors on September 13, 2006 and to the positions of Chief Financial Officer on September 5, 2008. Mr. Branning resigned as our Chief Financial Officer, effective December 11, 2008 and as one of our Directors on June 1, 2010.  Mr. Branning received compensation as a non-employee director. He did not receive compensation for the period of time when he served as our Chief Financial Officer.





On March 15, 2010, we granted Mr. Branning a stock option to purchase up to 200,000 shares of our common stock at an exercise price of $0.04 per share. The grant date fair value of the 200,000 stock options granted to Mr. Branning on March 15, 2010, was $6,000 using the Black-Scholes option pricing model with the following weighted average assumptions: expected volatility of 114.7%, risk-free interest rate of 3.2%, expected life of six years, and a 0% dividend yield.





As of his resignation date as one of our Directors, none of the 200,000 stock options previously granted to Mr. Branning on March 15, 2010 had vested and the options have been forfeited.





(4)
Mr. Krauss was appointed to the positions of Chief Financial Officer, Secretary and Treasurer on December 11, 2008.  M. Krauss resigned from all positions with us on June 17, 2010.  Mr. Krauss received compensation as a non-employee director.  He did not receive additional compensation for the period of time when he served as our Chief Financial Officer.





On March 15, 2010, we granted Mr. Krauss a stock option to purchase up to 200,000 shares of our common stock at an exercise price of $0.04 per share. The grant date fair value of the 200,000 stock options granted to Mr. Krauss on March 15, 2010, was $6,000 using the Black-Scholes option pricing model with the following weighted average assumptions: expected volatility of 114.7%, risk-free interest rate of 3.2%, expected life of six years, and a 0% dividend yield.





As of his resignation date as one of our Directors, none of the 200,000 stock options previously granted to Mr. Krauss on March 15, 2010 had vested and the options have been forfeited.





(5)
On April 3, 2006, we appointed Mr. Wujek to the positions of President and Chief Executive Officer and as a Director.  Mr. Wujek resigned his position as President and Chief Executive Officer effective as of March 15, 2010.  On March 15, 2010, as compensation for providing services as a non-employee director, we granted Mr. Wujek a stock option to purchase up to 400,000 shares of our common stock at an exercise price of $0.04 per share. Mr. Wujeks’s option grant of 400,000 shares vested as follows: 200,000 on the date of grant; 66,667 on March 15, 2011; 66,667 on March 15, 2012 and 66,666 on March 15, 2013.




50





Pursuant to the terms of the option agreement between us and Mr. Wujek, the option to purchase up to 400,000 shares of our common stock terminated at such time as Mr. Wujek ceased to serve as one of our directors. Mr. Wujek then would have 90 days to exercise the option to the extent vested.





The grant date fair value of the 400,000 stock options granted to Mr. Wujek on March 15, 2010, was $12,000 using the Black-Scholes option pricing model with the following weighted average assumptions: expected volatility of 114.7%, risk-free interest rate of 3.2%, expected life of six years, and a 0% dividend yield.  The $12,000 was amortized over the requisite service period for each tranche of options as outlined above.





On June 17, 2010, Mr. Greg Wujek tendered his resignation as one of our Directors, effective as of that date. Of the 400,000 stock options previously granted to Mr. Wujek on March 15, 2010, 200,000 had vested and were exercisable through September 19, 2010. All 400,000 stock options granted to Mr. Wujek on March 15, 2010 expired unexercised.





(6)
Mr. Sidhu was appointed one of our Directors on June 3, 2010.





SCIENTIFIC ADVISORY BOARD





We maintain a Scientific Advisory Board (“Advisory Board”), the members of which provide, from time to time, at our request, advice regarding specific facets of our ongoing scientific research and development and general corporate activities.   We believe that each member of the Advisory Board brings distinct scientific, clinical, and business development experience which can be called-upon as needed during various phases of our active research, development and commercial development.





The members of the Advisory Board are compensated for their services at the rate of $250 per hour, not to exceed $1,250 per day.  We also reimburse members of the Advisory Board for out-of-pocket expenses related to their services performed on our behalf.





Currently, our Advisory Board members are:





Name

Held Position SinceReza Fathi

April 2008Charles Lee, PhD

August 2006Jatinder S. Bhogal

September 2008Li-Xi Yang, MD, PhD

January 2009





Reza Fathi





Dr. Reza Fathi is an expert in pharmaceutical research and development with 20 years of experience in medicinal chemistry, designing experimental protocols and managing research teams. Dr. Fathi is first author of numerous patents and more than a dozen scientific publications in subjects including small molecule drug discovery, lead compound identification and synthesis of natural product based molecular libraries. Dr. Fathi’s expertise is widely respected, garnering him an array of appointments to prestigious medicinal chemistry positions including Chemistry Core Manager at Harvard Medical School’s Harvard Institute of Chemistry and Cell Biology, Director of Research Operations for XTL biopharmaceuticals, Director of Research Operations for vivoquest, and Member of the Scientific Advisory Committee for Proseed Capital Holding CVA in addition to his appointment at PhytoMedical Technologies, Inc.





Charles Lee





Dr. Charles Lee’s professional career encompassed academia (1977-1987), pharmaceutical industry (1987-1993) and contract research organization (1993-2004). He is currently a professor of pharmaceutical Sciences at the Gregory School of Pharmacy, Palm Beach Atlantic University.




51





Jatinder S. Bhogal





Since December 1993, Mr. Bhogal has worked as a business consultant to emerging growth companies. For over 15 years, Mr. Bhogal has provided early business development guidance and consulting, on a contract basis, to companies developing healthcare services, medical devices, pharmaceuticals and vaccines, solar-photovoltaics, biofuels, and information technology solutions.





Li-Xi Yang





Dr. Li-Xi Yang has more than 25 years of experience in the fields of cancer research, credited with many patents on anticancer compounds and publications in peer-reviewed journals.  Dr. Yang completed his Postdoctoral Fellowship at Dartmouth Medical School, where he received his PhD in Pharmacology and Toxicology.  He currently serves as Director of Radiation Oncology Residency Education and Senior Scientist at California Pacific Medical Center Research Institute.  Dr. Yang also serves as Director of Academic Research at St. Mary’s Medical Center, San Francisco, CA.  Dr. Yang is an active member of several professional committees, including: Graduate Medical Education Committee, Institutional Review Board, and Institutional Animal Care and Use Committee.




ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS





The following table sets forth certain information as of March 21, 2011 by (i) all persons who are known by us to beneficially own more than 5% of our outstanding shares of common stock, and (ii) by each director, director nominee, and Named Executive Officer and (iii) by all executive officers and directors as a group:





Name and Address of Beneficial Owner

Positions and Offices

Held

Number of

Shares

Beneficially

Owned(1)


Percent

of Class(1)Amit S. Dang

100 Overlook Drive, 2nd Floor, Princeton, NJ 08540

President, Chief Executive Officer, Chief Financial Officer, Treasurer, Secretary, and Director


1,500



*
%Jeet S. Sidhu

100 Overlook Drive, 2nd Floor

Princeton, NJ 08540

Director


164,800



*
%1420525 Alberta Ltd.(2)

1628 West 1st Avenue, Suite 216

Vancouver, British Columbia, V6J 1G1

Stockholder


85,730,171



35.5
%All Directors and Officers as a Group (2 persons)




166,300



*
%





* less than 1%





(1)
Calculated pursuant to rule 13d-3(d) of the Exchange Act.  Beneficial ownership is calculated based on 241,487,995 shares of common stock issued and outstanding on a fully diluted basis as of March 21, 2011.  Unless otherwise stated below, each such person has sole voting and investment power with respect to all such shares.  Under Rule 13d-3(d) of the Exchange Act, shares not outstanding which are subject to options, warrants, rights or conversion privileges exercisable within 60 days are deemed outstanding for the purpose of calculating the number and percentage owned by such person, but are not deemed outstanding for the purpose of calculating the percentage owned by each other person listed.




52





(2)
1420525 Alberta Ltd, is a private Alberta corporation wholly owned by Mr. Harmel Rayat, a former officer, former director, and former majority stockholder.  In such capacity, Mr. Rayat may be deemed to have beneficial ownership of these shares.





CHANGES IN CONTROL





There are no understandings or agreements known by management at this time which would result in a change in control of the Company.





We do not have any change-of-control or severance agreements with any of our executive officers or directors.





ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE





We do not have a formal written policy for the review and approval of transactions with related parties. However, our Code of Ethics and Corporate Governance Principles require actual or potential conflict of interest to be reported to the Board of Directors. Our employees are expected to disclose personal interests that may conflict with ours and they may not engage in personal activities that conflict with their responsibilities and obligations to us. Periodically, we inquire as to whether or not any of our Directors have entered into any transactions, arrangements or relationships that constitute related party transactions.  If any actual or potential conflict of interest is reported, our entire Board of Directors and outside legal counsel review the transaction and relationship disclosed and the Board makes a formal determination regarding each Director's independence. If the transaction is deemed to present a conflict of interest, the Board of Directors will determine the appropriate action to be taken.





Transactions with Related Persons





Since the beginning of the fiscal year ended December 31, 2010, there have been no transactions in which we were or are a participant in which the amount involved exceeded $120,000 and in which any related person (as that term is defined for purposes of Section 404 (a) of Regulation S-K) had or will have a direct or indirect material interest and there are currently no such proposed transactions. For related party transactions that do not exceed $120,000 please see “Note 16.  Related Party Transactions” in the consolidated notes to the financial statements included in this Form 10-K.





Review, Approval or Ratification of Transactions with Related Persons





Our policy with regard to transactions with related persons is that all material transactions are to be reviewed by the entire Board of Directors for any possible conflicts of interest.  In the event of a potential conflict of interest, the Board will generally evaluate the transaction in terms of the following standards: (i) the benefits to us; (ii) the impact on a director’s independence in the event the related person is a director, an immediate family member of a director or an entity in which a director is a partner, shareholder or executive officer; (iii) the availability of other sources for comparable products or services; (iv) the terms and conditions of the transaction; and (v) the terms available to unrelated parties or the employees generally.  The Board will then document its findings and conclusion in written minutes.





Director Independence





Please refer to “Director Independence” under the section titled “CORPORATE GOVERNANCE” in “ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE”.





ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES





INDEPENDENT PUBLIC ACCOUNTANTS





Peterson Sullivan, LLP (“Peterson Sullivan”) currently serves as our independent registered public accounting firm to audit our financial statements for the fiscal year ended December 31, 2010.  To the knowledge of management, neither such firm nor any of its members has any direct or material indirect financial interest in us or any connection with us in any capacity otherwise than as independent accountants.




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Our Board of Directors, in its discretion, may direct the appointment of different public accountants at any time during the year, if the Board believes that a change would be in the best interests of the stockholders.  The Board of Directors has considered the audit fees, audit-related fees, tax fees and other fees paid to Peterson Sullivan, as disclosed below, and has determined that the payment of such fees is compatible with maintaining the independence of the accountants.





We do not currently have an audit committee.





PRINCIPAL ACCOUNTING FEES AND SERVICES


The following table presents aggregate fees for professional services rendered by Peterson Sullivan during the years ended December 31, 2010 and 2009.





December 31,2010


2009Audit fees

$
30,186


$
27,858Audit-related fees


9,614



—Tax fees


6,506



4,840Total fees

$
46,306


$
32,698





Audit Fees





Audit Fees for the years ended December 31, 2010 and 2009 totaled $58,044 and consist of the aggregate fees billed by Peterson Sullivan for the audit of the consolidated financial statements included in our Annual Report on Form 10-K and review of interim consolidated financial statements included in the quarterly reports on Form 10-Q for the years ended December 31, 2010 and 2009.





Audit-Related Fees





Audit-related fees for the years ended December 31, 2010 and 2009 totaled $9,614 and consist of the aggregate fees billed by Peterson Sullivan for the review and providing of consents for our Form S-1 and amendments thereto that were filed with the Securities and Exchange Commission.
 
 Tax Fees





Tax Fees for the years ended December 31, 2010 and 2009 totaled $11,346 and consist of the aggregate fees billed by Peterson Sullivan for professional services rendered for tax compliance, tax advice and tax planning.
 
 All Other Fees
 
 There were no other fees billed by Peterson Sullivan for the years ended December 31, 2010 and 2009.


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PART IV





ITEM 15.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES





(a) The following documents are filed as a part of this Form 10-K:




1.   Financial Statements





The following financial statements are included in Part II, Item 8 of this Form 10-K:





·
Report of Independent Registered Public Accounting Firm


·
Consolidated Balance Sheets as of December 31, 2010 and 2009


·
Consolidated Statements of Operations for the Years Ended December 31, 2010 and 2009


·
Consolidated Statements of Stockholders’ Equity (Deficit) for the Years Ended December 31, 2010 and 2009


·
Consolidated Statements of Cash Flows for the Years Ended December 31, 2010 and 2009


·
Notes to Consolidated Financial Statements





2.  Exhibits





The exhibits listed in the Exhibit Index, which appears immediately following the signature page, are incorporated herein by reference, and are filed as part of this Form 10-K.





3.  Financial Statement Schedules





Financial statement schedules are omitted because they are not required or are not applicable, or the required information is provided in the consolidated financial statements or notes described in Item 15(a)(1) above.




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SIGNATURES





Pursuant to the requirements of Sections 13 or 15 (d) of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned,  thereunto duly  authorized.





PhytoMedical Technologies, Inc.(Registrant)March 28, 2011
By:
/s/ Amit S. DangAmit S. DangChief Executive Officer and Chief Financial Officer(Principal Executive Officer, Principal Financial Officer, and Principal Accounting Officer)





Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons  on  behalf of the registrant and in capacities and on the dates indicated.





Signature

Title

Date/s/ Amit S. Dang

Chief Executive Officer and Chief

March 28, 2011Amit S. Dang

Financial Officer(Principal Executive Officer,Principal Financial Officer, andPrincipal Accounting Officer)/s/ Jeet S. Sidhu

Director

March 28, 2011Jeet S. Sidhu




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Exhibit Index





Exhibit No.

Description of Exhibit3.1

Amended and Restated Articles of Incorporation(1)3.2

By Laws(1)4.1

Form of Subscription Agreement(1)4.2

Form of Series B Warrant(1)10.1

Sponsored Research Agreement with Iowa State University dated February 1, 2007(1)10.2

Exclusive license agreement with Iowa State University Research Foundation Inc. dated June 12, 2006(1)10.3

Agreement with Latitude Pharmaceuticals, Inc. dated July 6, 2009(1)10.4

Amendment dated October 23, 2009 to the Latitude Agreement(1)10.5

Redacted License Agreement dated September 1, 2008 with the Trustees of Dartmouth College(1)10.6

Sponsored Research Agreement dated May 25, 2007 with Dartmouth College(1)10.7

Technologies Research Agreement with Dartmouth College as amended(1)10.8

Employment Agreement with Greg Wujek dated April 6, 2006(1)10.9

Stock Option Agreement with Greg Wujek dated August 1, 2006(1)10.10

Employment Agreement with James F. Lynch dated March 15, 2010(1)10.11

Stock Option Agreement with James F. Lynch dated March 15, 2010(1)10.12

Convertible Promissory Note dated March 1, 2010 in the original principal amount of $1,067,527.40(1)10.13

Convertible Promissory Note dated March 2, 2010 in the original principal amount of $40,000(1)10.14

Amendment No. 1 dated April 12, 2010 to the March 1, 2010 Promissory Note in the original principal amount of $1,067,527.40(1)10.15

Amendment No. 1 dated April 12, 2010 to the March 2, 2010 Promissory Note in the original principal amount of $40,000(1)10.16

Stock Option Agreement between PhytoMedical Technologies and Raymond Krauss(1)10.17

Stock Option Agreement between PhytoMedical Technologies and Gary Branning(1)10.18

Stock Option Agreement between PhytoMedical Technologies and Greg Wujek(1)10.19

Employment Resignation Agreement between PhytoMedical Technologies, Inc. and Greg Wujek(1)





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10.20

Contract Interim Executive-Services Agreement dated June 3, 2010 between the Company and Amit S. Dang.(2)10.21

Memorandum of Intent dated August 25, 2010, between the Company and Standard Gold Corp. (3)10.22

Bridge Loan Agreement and Promissory Note dated August 25, 2010, between the Company and Standard Gold Corp. (3)10.23

Share Exchange Agreement dated October 22, 2010 by and among PhytoMedical Technologies, Inc., Standard Gold Corp. and the shareholders of Standard Gold Corp. *10.24

Termination Agreement and Mutual Release, dated as of December 24, 2010 by and among PhytoMedical Technologies, Inc., Standard Gold Corp. the shareholders of Standard Gold Corp, and Sierchio & Company, LLP. *10.25

Letter from Dartmouth College dated January 20, 2011, terminating the Exclusive License Agreement dated September 1, 2008 between Dartmouth College and PhytoMedical Technologies, Inc. *10.26

Code of Ethics. *23.1

Consent of Peterson Sullivan LLP. *31.1

Certification of Principal Executive Officer and Principal Financial Officer Pursuant to Rule 13(a)-14 of the Securities Exchange Act of 1934, As Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. *32.1

Certification of Principal Executive Officer and Principal Financial Officer Pursuant to 18 USC. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. *





*Filed herewith.





(1) Incorporated by reference to the Company’s Form S-1/A as filed with the Commission on April 26, 2010.





(2) Incorporated by reference to the Company’s Form 10-Q for the quarter ended June 30, 2010 as filed with the Commission on August 13, 2010.





(3) Incorporated by reference to the Company’s Form 10-Q for the quarter ended September 30, 2010 as filed with the Commission on October 21, 2010.




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