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Scivanta Medical Posts Net Income Of $1.6 Million For Fiscal 2008

Scivanta Medical Corporation (Scivanta Medical), a cardiovascular devices company, has reported general and administrative expenses of $1.4 million for the fiscal 2008, compared with the general and administrative expenses of $1.7 million in the previous year-end. It has reported a net income of $1.6 million, or $0.06 per share, for the fiscal 2008, compared with the net income of $1.4 million, or $0.06 per share, in the previous year-end.

Results of Operations

Research and Development

For the fiscal year ended October 31, 2008, research and development expenses, on a net basis, were $718,183, which consisted of gross research and development expenses of $1,694,044 offset by $855,987 of research and development expenses reimbursed by the Foundation and $119,874 of research and development expenses reimbursed by Ethox. For the fiscal year ended October 31, 2007, research and development expenses, on a net basis, were $276,098, which consisted of gross research and development expenses of $329,581 offset by $53,483 of research and development expenses reimbursed by the Foundation. The $442,085, or 160%, increase in research and development expenses, on a net basis, for the fiscal year ended October 31, 2008 was primarily due to a $68,062 increase in license costs related to the HCMS, a $1,140,434 increase in software and hardware development costs for the HCMS and a $103,212 increase in consulting expenses related to the development of the HCMS, offset by a $922,378 increase in the reimbursement of software, hardware and clinical trial expenses by the Foundation and Ethox.

Other Income (Expenses)

During the fiscal year ended October 31, 2007, Scivanta Medical recorded $3,100,000 of other income related to the settlement of the litigation with Syntho Pharmaceuticals, Inc. and its principal owner, Muhammed Malik (collectively, the “Syntho Group”).

During the fiscal years ended October 31, 2008 and 2007, Scivanta Medical incurred interest expense of $30,700 and $44,016, respectively. The $13,316, or 30%, decrease in interest expense for the fiscal year ended October 31, 2008 was primarily due to a decrease in interest expense associated with convertible debentures that matured and were either repaid or converted in May 2007.

Interest income for the fiscal years ended October 31, 2008 and 2007 was $43,598 and $73,856, respectively. The $30,258, or 41%, decrease in interest income for the fiscal year ended October 31, 2008 was primarily due to a decrease in cash and cash equivalents and a decrease in interest rates.

Income Tax Benefit

During the fiscal years ended October 31, 2008 and 2007, we recorded an income tax benefit of $512,354 and $306,803, respectively, related to the sale of a portion of our unused net operating loss carryovers for the State of New Jersey to a third party through the NJEDA Technology Business Tax Certificate Transfer Program.

Net (Loss) Income

The change to a net loss during the fiscal year ended October 31, 2008 was primarily attributable to a $3,100,000 decrease in other income related to the settlement of the litigation with the Syntho Group and a $442,085 increase in research and development expenses, on a net basis, offset by a $205,551 increase in income tax benefit related to the sale of a portion of our unused net operating loss carryovers for the State of New Jersey and a $262,605 decrease in general and administrative expenses.

Liquidity and Capital Resources

As of October 31, 2008, Scivanta Medical had working capital of $968,793 and cash and cash equivalents on hand of $598,644. The $1,410,265 decrease in cash on hand from October 31, 2007 was primarily due to Scivanta Medical’s continuing operating expenses offset by the receipt of $306,803 of net proceeds related to the sale of a portion of its unused net operating loss carryovers for the State of New Jersey to a third party through the 2007 NJEDA Technology Business Tax Certificate Transfer Program.

During the past several years, Scivanta Medical has generally sustained recurring losses and negative cash flows from operations. We currently do not generate any revenue from operations.

On December 18, 2008, Scivanta Medical received $512,354 of net proceeds related to the sale of a portion of our unused net operating loss carryovers for the State of New Jersey to a third party through the 2008 NJEDA Technology Business Tax Certificate Transfer Program. The company will use these proceeds to continue the development of the HCMS and for working capital purposes.