UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

x  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended September 30, 2012

¨  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: 000-28347

ONCOVISTA INNOVATIVE THERAPIES, INC.

(Exact name of registrant as specified in its charter)

14785 Omicron Drive

Suite 104

San Antonio, Texas 78245

(Address of principal executive offices)

(210) 677-6000

(Registrant’s telephone number, including area code)

Indicate by check mark whether the issuer: (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

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

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

State the number of shares outstanding of each of the registrant’s classes of common equity, as of the latest practicable date: 21,627,868 shares of common stock with a par value of $.001 outstanding as of November 7, 2012.

ONCOVISTA INNOVATIVE THERAPIES, INC.

FORM 10-Q

FOR THE QUARTER ENDED SEPTEMBER 30, 2012

TABLE OF CONTENTS

PART I – FINANCIAL INFORMATION

ITEM 1 – CONDENSED FINANCIAL STATEMENTS

ONCOVISTA INNOVATIVE THERAPIES, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

See accompanying notes to the condensed consolidated financial statements

ONCOVISTA INNOVATIVE THERAPIES, INC. AND SUBSIDIARIES

Consolidated Statements of Operations

(Unaudited)

See accompanying notes to the condensed consolidated financial statements

ONCOVISTA INNOVATIVE THERAPIES, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(Unaudited)

See accompanying notes to the condensed consolidated financial statements

OncoVista Innovative Therapies, Inc. (“OVIT”) is a biopharmaceutical company developing targeted anticancer therapies by utilizing tumor-associated biomarkers. OVIT’s product pipeline is comprised of early (Phase I/II) clinical-stage compounds, late preclinical drug candidates and early preclinical leads. OVIT is not committed to any single treatment modality or class of compound, but believes that successful treatment of cancer requires a tailored approach based upon individual patient disease characteristics.

Through its former subsidiary, AdnaGen AG (“AdnaGen”), OVIT previously developed diagnostic kits for several cancer indications, and marketed diagnostic kits in Europe for the detection of circulating tumor cells (“CTCs”) in patients with cancer.

On October 28, 2010, OVIT entered into a Stock Purchase Agreement with Alere Holdings Bermuda Limited Canon’s Court (“Alere Holdings”), whereby OVIT sold all of its shares, representing approximately 78% of the total issued and outstanding shares of AdnaGen to Alere Holdings. Under the terms of the agreement, OVIT and the other AdnaGen shareholders agreed to sell their respective shares of AdnaGen, and all AdnaGen related business assets, to Alere Holdings for: (i) a $10 million up-front payment; (ii) $10 million in potential milestone payments contingent upon the achievement of various balance sheet objectives within 24 months; and (iii) up to $63 million in potential milestone payments contingent upon the achievement of various clinical, regulatory and sales objectives within the next 36 months. OVIT is entitled to receive its pro rata portion of the up-front and potential milestone payments. In November 2010, OVIT received $6.0 million, net of expenses and certain fees, as its share of the $10 million up-front payment. In August 2011, certain expenses related to legal fees were paid to OncoVista, Inc., OVIT’s subsidiary, of approximately $204,000.

OVIT is using the proceeds from the sale of its shares in AdnaGen to fund on-going development activities for its drug candidate portfolio. Additionally, OVIT is evaluating several opportunities to license or acquire other compounds or diagnostic technologies that it believes will provide for treatments that are highly targeted with low or no toxicity.

At September 30, 2012, OVIT had three full time employees. OncoVista, Inc. (“OncoVista”), OVIT’s operating subsidiary, had one full-time employee.

Basis of Presentation

The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and the rules and regulations of the United States Securities and Exchange Commission (the “Commission”) for interim financial information. Accordingly, they do not include all the information and footnotes necessary for a comprehensive presentation of financial position, results of operations, and changes in deficit or cash flows. It is management’s opinion, however, that all material adjustments (consisting of normal recurring adjustments) have been made which are necessary for a fair financial statement presentation. The interim results for the period ended September 30, 2012 are not necessarily indicative of results for the full fiscal year.

The unaudited interim consolidated financial statements should be read in conjunction with the required financial information included as part of OVIT’s Form 10-K for the year ended December 31, 2011.

Principles of Consolidation

The consolidated financial statements include the accounts of OVIT and OncoVista, Inc. (collectively, the “Company”). All intercompany balances have been eliminated in consolidation.

Use of Estimates

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

Significant estimates include the valuation of warrants and stock options granted for services or compensation, estimates relating to the fair value of derivative liabilities and the valuation allowance for deferred tax assets.

Net Loss per Share

Basic earnings (loss) per share are computed by dividing net income (loss) by the weighted average number of common shares outstanding. Diluted earnings per share is computed by dividing net income by the weighted average number of common shares outstanding including the effect of share equivalents. Common stock equivalents consist of shares issuable upon the exercise of certain common stock purchase warrants and stock options.

As the Company has had losses from operations for the nine month periods ended September 30, 2012 and 2011, all unvested restricted stock, stock options and warrants are considered to be anti-dilutive. At September 30, 2012 and 2011, the following shares have been excluded since their inclusion in the computation of diluted EPS would be anti-dilutive:

Share-Based Compensation

All share-based payments to employees are recorded and expensed in the statements of operations under Accounting Standards Codification (“ASC”) 718 “Compensation – Stock Compensation.” ASC 718 requires the measurement and recognition of compensation expense for all share-based payment awards made to employees and directors, including grants of employee stock options, based on estimated fair values. The Company has used the Black-Scholes option-pricing model to estimate grant date fair value for all option grants.

Share-based compensation expense is based on the value of the portion of share-based payment awards that is ultimately expected to vest during the year, less expected forfeitures. ASC 718 requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.

Recent Accounting Pronouncements

The Company has evaluated all recently issued accounting pronouncements and believe such pronouncements do not have a material effect on the Company’s financial statements.

As reflected in the accompanying consolidated financial statements, the Company reported a net loss of approximately $1.3 million, and net cash used in operations of approximately $1.3 million for the nine months ended September 30, 2012, an accumulated deficit of approximately $21.6 million and total deficit of approximately $1.3 million at September 30, 2012. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management believes that the Company has sufficient capital to meet its anticipated operating cash requirements for the next 5 to 6 months.

The accompanying condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. These financial statements do not include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary should the Company be unable to continue as a going concern. The ability of the Company to continue as a going concern is dependent on management’s ability to further implement its strategic plan, obtain additional capital, principally by obtaining additional debt and/or equity financing, and generate revenues from collaborative agreements or sale of pharmaceutical products.

There can be no assurance that these plans will be sufficient or that additional financing will be available in amounts or terms acceptable to the Company.

As a result of the proceeds received pursuant to the Stock Purchase Agreement with Alere Holdings, the Company has eliminated all of its outstanding debt. The Company is using the balance of the proceeds from the sale of its shares in AdnaGen to fund on-going development activities for its drug candidate portfolio. Additionally, the Company is evaluating several opportunities to license or acquire other compounds or diagnostic technologies that it believes will provide for treatments that are highly targeted, efficacious and with low or no toxicity.

Equipment balances at September 30, 2012 and December 31, 2011 are summarized below:

Accrued expenses at September 30, 2012 and December 31, 2011 are summarized below:

As of December 31, 2011, the Company had one outstanding unsecured note in the principal amount of $100,000 and $67,711 in accrued interest. Interest accrued at a rate of 8%, payable to a third party, and was due on demand. In July 2012, the Company entered into a settlement agreement to satisfy the obligation in full with a one-time payment of $60,000, resulting in a gain on extinguishment of $114,495.

The Company determined that warrants issued in connection with the bridge round of debt financing entered into by the Company in January 2009 required liability classification due to certain provisions (which were amended in 2010) that may result in an adjustment to the number shares issued upon settlement (see Note 10).

The estimated fair value of the derivative liability was $183,126 and $322,834 at September 30, 2012.

The Company uses the Black-Scholes pricing model to calculate the fair value of its warrant liabilities. Key assumptions used to apply these models are as follows:

Fair value measurements

Assets and liabilities measured at fair value as of September 30, 2012 are as follows:

The fair value framework requires a categorization of assets and liabilities into three levels based upon the assumptions (inputs) used to price the assets and liabilities. Level 1 provides the most reliable measure of fair value, whereas Level 3 generally requires significant management judgment. The three levels are defined as follows:

Level 1: Unadjusted quoted prices in active markets for identical assets and liabilities.

Level 2: Observable inputs other than those included in Level 1. For example, quoted prices for similar assets or liabilities in active markets or quoted prices for identical assets or liabilities in inactive markets.

Level 3: Unobservable inputs reflecting management’s own assumptions about the inputs used in pricing the asset or liability.

There were no financial assets or liabilities measured at fair value, with the exception of cash and cash equivalents and the above mentioned derivative liability as of September 30, 2012 and December 31, 2011, respectively. The fair values of accounts receivable, accounts payable and third-party debt approximate the carrying amounts due to the short term nature of these instruments. The fair value of the related party accounts payable and accruals are not practicable to estimate due to the related party nature of the underlying transaction.

Legal Matters

On August 11, 2011, an action was filed against the Company in the United States District Court for the Southern District of New York, entitled New Millennium PR Communications, Inc., against OncoVista Innovative Therapies, Inc., The action seeks damages for the alleged breach of a public relations agreement and seeks an order directing a cash payment of $75,750 and the issuance of warrants to purchase 25,000 shares of the Company’s common stock. On October 5, 2011, the Company sent a notice of motion to the United States District Court for the Southern District of New York seeking to dismiss the case due to lack of subject matter jurisdiction. New Millennium PR Communications, Inc. filed an opposition to the Company’s request for dismissal. On January 20, 2012 the court denied the motion to dismiss the case due to lack of subject matter jurisdiction. On July 10, 2012 the Company filed a motion for summary judgment. On September 11, 2012 New Millennium PR Communications, Inc. filed an opposition to the Company’s request for summary judgment. The court has not yet ruled on the matter.

On August 26, 2011, an action was filed against the Company in the Supreme Court of the State of New York, New York County, entitled CAMOFI Master LDC and CAMHZN LDC against OncoVista Innovative Therapies, Inc. and OncoVista, Inc. The action seeks damages for the alleged breach of a Subscription Agreement, a Warrant Agreement and an Anti-Dilution Agreement and seeks an order directing the issuance of (i) an aggregate of 1,980,712,767 shares of the Company’s common stock, and (ii) warrants to purchase an aggregate of 702,857,767 shares of the Company’s common stock at an exercise price of $0.001. On October 20, 2011, the Company filed an answer to the complaint. On November 1, 2011, the plaintiffs made an extensive document request to the Company for all documents related to the matter. The Company’s counsel has started taking depositions and has requested access to CAMOFI Master LDC and CAMHZN Master LDC principals for further depositions. On June 29, 2012 CAMOFI Master LDC and CAMHZN Master LDC filed for summary judgment. On August 9, 2012 the parties filed a stipulation with the court extending the return date of motion for summary judgment until September 10, 2012. The court has not yet ruled on the motion to dismiss.

On February 16, 2012, an action was filed by the Company in the 225 Judicial District Court of the State of Texas, Bexar County, entitled OncoVista Innovative Therapies, Inc. against J. Michael Edwards. The action seeks damages relating to the executive employment agreement of our former Chief Financial Officer, J. Michael Edwards. Specifically the Company is seeking to have the Stock Option Agreement granted to Mr. Edwards on January 6, 2009 be declared void ab initio. The Company is also seeking damages and attorney fees. On March 30, 2012, the Company received a copy of a counterclaim that may be filed in the same court and is seeking approximately $197,000 in alleged compensation due.

Alexander L. Weis, Ph.D., Chairman of the Company’s Board of Directors and its Chief Executive Officer, President, Chief Financial Officer and Secretary, and a significant shareholder, is a beneficial owner of Lipitek International, Inc. and Lipitek Research, LLC. The Company leases its laboratory space from Lipitek, Inc. under a three-year lease agreement for $12,000 per month. Management believes that rent is based on reasonable and customary rates as if the space were rented to a third party.

On November 17, 2005, the Company entered into a purchase agreement with Lipitek and Dr. Weis, under which Lipitek granted the Company an option to purchase all membership interests in Lipitek Research, LLC (Lipitek Research) for a purchase price of $5.0 million, which is payable quarterly based upon revenues of Lipitek Research up to $50,000 per quarter. Through September 30, 2012, the Company had paid a total of $550,000 toward this agreement and has accrued $600,000 and $450,000, which is included in accounts payable in the condensed consolidated balance sheets as of September 30, 2012, and December 31, 2011, respectively and recorded as research and development expense. During the nine month periods ended September 30, 2012 and 2011, the Company made no payments toward the agreement.

Prior to the full payment of the purchase price, the Company has the option, upon 30 days written notice, to abandon the purchase of Lipitek Research and would forfeit the amounts already paid. All intellectual property developments by Lipitek Research through the term of the agreement or 2012, whichever is later, shall remain the Company’s property, irrespective of whether the option is exercised. In addition, the Company will receive 80% of the research and development revenue earned by Lipitek while the agreement is in place. In the nine month periods ended September 30, 2012 and 2011, the Company did not recognize any revenue from its share of Lipitek revenues.

Common Stock

The Company is authorized to issue up to 147,397,390 shares of common stock. At September 30, 2012, shares of common stock reserved for future issuance are as follows:

Restricted Stock

On June 13, 2012, the Company entered into an agreement to grant an aggregate of 300,000 shares of common stock to Landmark Financial Corporation which shares vest at the rate of 50,000 shares per month for six months, the term of the agreement. These shares will be granted for services to be provided by Landmark Financial Corporation related to identifying and evaluating alternative strategies for expanding the Company’s business. As of September 30, 2012 the shares have not been issued to Landmark Financial Corporation. The Company recorded $33,000 and $39,492 in consulting expense for the restricted stock grant for the three and nine months ended September 30, 2012, respectively and $66,000 in accrued expenses for the shares that were not issued as of September 30, 2012.

Stock Option Plans

All grants are expensed in the appropriate period based upon each award’s vesting terms, in each case with an offsetting credit to additional paid-in capital. Under the authoritative guidance for share based compensation, in the event of termination, the Company will cease to recognize compensation expense. There is no deferred compensation recorded upon initial grant date, instead, the fair value of the share-based payment is recognized ratably over the stated vesting period.

The Company granted stock options to employees, consultants and directors to acquire 658,600 shares of common stock for future services having a fair market value of $135,354 during the nine months ended September 30, 2011. Vesting periods for these options included the following: monthly over two years and monthly over four years. No options were granted for the same period in 2012.

The stock-based compensation expense recorded by the Company with respect to awards under the Company’s stock plans is as follows:

In addition to options granted to employees, the Company historically granted options to consultants and for the nine months ended September 30, 2011, and recognized $6,077 as consulting expense. Such amounts are included in general and administrative expense in the consolidated statements of operations for the nine months ended September 30, 2011.

The following is a summary of the Company’s stock option activity:

The following summarizes the activity of the Company’s stock options that have not vested for the nine months ended September 30, 2012:

The total fair value of the stock options that vested during the nine months ended September 30, 2012 and 2011 was $56,385 and $99,272 respectively. At September 30, 2012 there was $23,800 of additional unrecognized compensation cost related to stock options that will be recorded over a weighted average future period of less than 1 year.

Warrants

On June 27, 2012 CAMOFI Master LDC and CAMHZN Master LDC exercised warrants for 216,000 and 41,143 shares respectively of the Company’s common stock with an exercise price of $0.001 per share generating cash proceeds of $257.

ITEM 2 – MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Our Management’s Discussion and Analysis contains not only statements that are historical facts, but also statements that are forward-looking (within the meaning of Section 27A of the Securities Act of 1933 (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934 (the “Exchange Act”)).  Forward-looking statements are, by their very nature, uncertain and risky.  These risks and uncertainties include international, national and local general economic and market conditions; demographic changes; our ability to sustain, manage, or forecast growth; our ability to successfully make and integrate acquisitions; raw material costs and availability; new product development and introduction; existing government regulations and changes in, or the failure to comply with, government regulations; adverse publicity; competition; the loss of significant customers or suppliers; fluctuations and difficulty in forecasting operating results; changes in business strategy or development plans; business disruptions; the ability to attract and retain qualified personnel; the ability to protect technology; and other risks that might be detailed from time to time in our filings with the Commission.

Although the forward-looking statements in this report reflect the good faith judgment of our management, such statements can only be based on facts and factors currently known by them.  Consequently, and because forward-looking statements are inherently subject to risks and uncertainties, the actual results and outcomes may differ materially from the results and outcomes discussed in the forward-looking statements.  You are urged to carefully review and consider the various disclosures made by us in this report and in our other reports as we attempt to advise interested parties of the risks and factors that may affect our business, financial condition, and results of operations and prospects.

As used in this Quarterly Report, the terms “we,” “us,” and “our,” mean OncoVista Innovative Therapies, Inc., our current subsidiary, OncoVista, Inc. (“OncoVista”) and our former subsidiary, AdnaGen A.G. (“AdnaGen”), collectively, unless otherwise indicated.

Overview

We are a biopharmaceutical company developing targeted anticancer therapies by utilizing tumor-associated biomarkers. Our therapeutic strategy is based on targeting the patient’s tumor(s) with treatments that will deliver drugs selectively based upon specific biochemical characteristics of the cancer cells comprising the tumor. Through a combination of licensing agreements, as well as mergers and acquisitions, we have acquired the rights to several technologies with the potential to more effectively treat cancers and significantly improve quality-of-life for patients. We believe that the development of targeted approaches to the administration of anticancer agents should lead to improved outcomes and reduced toxicity.

We previously developed diagnostic kits through our former majority-owned German operating subsidiary, AdnaGen, for several cancer indications, and marketed diagnostic kits in Europe for the detection of circulating tumor cells (“CTCs”) in patients with cancer. On October 28, 2010, we entered into a Stock Purchase Agreement with Alere Holdings Bermuda Limited Canon’s Court (“Alere Holdings”), whereby we, and the other AdnaGen shareholders, agreed to sell our respective shares of AdnaGen, and all AdnaGen related business assets, to Alere Holdings for: (i) a $10 million up-front payment; (ii) $10 million in potential milestone payments contingent upon the achievement of various balance sheet objectives within 24 months; and (iii) up to $63 million in potential milestone payments contingent upon the achievement of various clinical, regulatory and sales objectives within next 36 months. We are entitled to receive our pro rata portion of approximately 78% of the up-front and potential milestone payments. In November 2010, we received $6.0 million, net of expenses and certain fees, as our share of the $10 million up-front payment.

As a result of the proceeds received pursuant to the Stock Purchase Agreement with Alere Holdings, we have eliminated substantially all of our outstanding debt. We are using the balance of the proceeds from the sale of our shares in AdnaGen to fund on-going development activities for our drug candidate portfolio. Additionally, we are evaluating several opportunities to license or acquire other compounds or diagnostic technologies that we believe will provide for treatments that are highly targeted, efficacious and with low or no toxicity.

Development Programs

Our most advanced product candidate is Cordycepin (OVI-123) which is in Phase I/II clinical trials for refractory leukemia patients who express the enzyme terminal deoxynucleotidyl transferase (TdT). We have received orphan drug designation from the FDA for Cordycepin which affords us seven years of market exclusivity once the drug is approved for marketing. We initiated a Phase I/II trial based on the “original” ADA-sensitive compound in the second quarter of 2008. The trial was initiated at two U.S. centers, The Dana Farber Cancer Institute in Boston, Massachusetts and the Cancer Therapy Research Center at the University of Texas Health Sciences Center at San Antonio, Texas, and is designed to enroll up to 24 patients in the first stage and up to 20 patients in the second stage. In October 2009, after enrolling five patients in this clinical trial, we placed the clinical trial on administrative hold due to our limited capital resources. We have engaged a clinical research organization (“CRO”) in France to do additional pre-clinical in-vitro evaluations of Cordycepin and the ADA inhibitor Pentostatin with the intent of gaining a better understanding of the inhibition effects of Pentostatin on Cordycepin. We are in the process of reinitiating the Phase I/II clinical trial to determine the maximum tolerated dose, and expect to start enrolling patients later this year.

We have completed Good Laboratory Practice (“GLP”) animal drug safety studies in two species for our lead drug candidate from the L-nucleoside conjugate program (OVI-117). We have accumulated in vitro and in vivo data indicating that several of the L-nucleoside conjugates are effective against various types of cancer. To date, OVI-117 has undergone two proof-of-concept studies of human cancers in animal models, as both a single agent and as a multi-agent combination therapy with oxaliplatin. The Investigational New Drug application (IND) was submitted to the FDA on June 2, 2012 and approved by the FDA on July 5, 2012. We engaged a contract manufacturer and a clinical batch of OVI-117 is available for use in our proposed Phase 1 trial. The clinical protocol has been written and a principal investigator engaged. We believe that OVI-117 should be ready to enter Phase I clinical trials later in 2012.

Other Research and Development Plans

In addition to conducting Phase I and Phase II clinical trials, we plan to conduct pre-clinical research to accomplish the following:

Other Strategic Plans

In addition to developing our existing anti-cancer drug portfolio, we plan to obtain rights to additional drug candidates or diagnostic technologies through licensing, partnerships, and mergers/acquisitions. Our efforts in this area will be guided by business considerations (cost of the opportunity, fit with existing portfolio, etc.) as well as input from our clinical advisory board regarding likelihood of successful clinical development and marketing approval. Our goal is to create a well-balanced product portfolio including lead molecules in different stages of development and addressing different medical needs.

Results of Operations

Three Months Ended September 30, 2012 and 2011

Research and development. Research and development expenses decreased by approximately $209,000, or 46%, to approximately $249,000 for the three months ended September 30, 2012, as compared to approximately $457,000 for the three months ended September 30, 2011. The decrease in 2012 is primarily due to the fact that we have not incurred any expenses as of yet as a result of our clinical trials.

General and administrative. General and administrative expenses remained consistent for the three months ended September 30, 2012 as compared to September 30, 2011, with an increase of approximately $1,000, or < 1%, to approximately $228,000.

Other Income (Expense). Other income (expense) decreased $297,000, or 73%, to income of approximately $109,000 for the three months ended September 30, 2012 compared to income of approximately $406,000 for the three months ended September 30, 2011. The decrease is as a result of the loss of approximately $7,000 on the derivative liability in 2012, compared to a gain of approximately $198,000 in 2011, a decrease of approximately$204,000 in the gain on sale of subsidiary in the three month period ended September 30, 2011, offset by a gain on debt settlement of approximately $114,000.

Net Loss. As a result of the foregoing, our net loss increased by approximately $90,000, or 32%, to a net loss of approximately $368,000 for the three months ended September 30, 2012, compared to a net loss of approximately $278,000 for the three months ended September 30, 2011.

Nine Months Ended September 30, 2012 and 2011

Research and development. Research and development expenses increased by approximately $90,000, or 11%, to approximately $889,000 for the nine months ended September 30, 2012, as compared to approximately $799,000 for the nine months ended September 30, 2011. The increase in 2012 is primarily due to the continued development of our existing anti-cancer drug portfolio including reinitiating our patient enrollment in our Phase I/II clinical trials for Cordycepin (OVI-123), as well as finalizing our preclinical studies, developing our clinical protocol, manufacturing the drug product and the preparation and submission of an IND to the FDA for OVI-117 to enter into Phase I trials.

General and administrative. General and administrative expenses decreased by approximately $255,000, or 28%, to approximately $641,000 for the nine months ended September 30, 2012, as compared to approximately $897,000 for the nine months ended September 30, 2011. The decrease was due primarily to a decrease in stock-based compensation from the prior year, as well as a decrease in consulting expense for professional services.

Other Income (Expense). Other income (expense) increased approximately $151,000, or 151%, to income of approximately $251,000 for the nine months ended September 30, 2012 compared to income of approximately $100,000 for the nine months ended September 30, 2011. The increase is due to a gain on derivative liability of approximately $139,000 in 2012, as compared to a loss of approximately $99,000 in 2011, a decrease of approximately $204,000 in the gain on sale of subsidiary in the nine month period ended September 30, 2012, offset by an increase in gain on debt settlement of approximately $114,000.

Net Loss. As a result of the foregoing, our net loss decreased by approximately $317,000, or 20%, to a net loss of approximately $1.3 million for the nine months ended September 30, 2012, compared to a net loss of approximately $1.6 million for the nine months ended September 30, 2011.

Going Concern and Recent Events

Our consolidated financial statements for the nine months ended September 30, 2012 have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. We reported a net loss of approximately $1.3 million, and net cash used in operations of approximately $1.3 million for the nine months ended September 30, 2012, an accumulated deficit of approximately $21.6 million and total deficit of approximately $1.3 million at September 30, 2012. The Report of the Independent Registered Public Accounting Firm on the Company’s financial statements as of and for the year ended December 31, 2011 includes a “going concern” explanatory paragraph expressing substantial doubt about our ability to continue as a going concern.

In November 2010, we received approximately $6.0 million as our pro rata portion of the up-front payment from the sale of our shares of AdnaGen as described above. As a result of the stock purchase agreement with Alere Holdings, we now have sufficient capital to meet our anticipated operating cash requirements for the next 5 to 6 months.

Our ability to continue as a going concern depends on the success of management’s plans to achieve the following:

Liquidity and Capital Resources

At September 30, 2012, we had cash and cash equivalents of approximately $787,000 compared to $2.1 million at December 31, 2011. In order to preserve principal and maintain liquidity, our funds are primarily invested in checking and interest bearing saving accounts with the primary objective of capital preservation. Based on our current projections, we believe that our available resources and cash flow are sufficient to meet our anticipated operating cash needs for the next 5 to 6 months. Our ability to continue as a going concern is dependent our ability to further implement our strategic plan, continue to obtain additional debt and/or equity financing, and generate additional revenues from collaborative agreements.

To date, we have financed our operations principally through proceeds of offerings of securities exempt from the registration requirements of the Securities Act, the proceeds from the sale of AdnaGen and debt financing provided by related parties. We can provide no assurance that additional funding will be available on terms acceptable to us, or at all. Accordingly, we may not be able to secure the funding which is required to expand research and development programs beyond their current levels or at levels that may be required in the future. If we cannot secure adequate financing, we may be required to delay, scale back or eliminate one or more of our research and development programs or to enter into license or other arrangements with third parties to commercialize products or technologies that we would otherwise seek to develop and commercialize ourselves. Our future capital requirements will depend upon many factors, including:

Accordingly, we may be required to issue equity or debt securities or enter into other financial arrangements, including relationships with corporate and other partners, in order to raise additional capital. Depending upon market conditions, we may not be successful in raising sufficient additional capital for our short or long-term requirements. In such event, our business, prospects, financial condition, and results of operations would be materially adversely affected.

Operating Activities. For the nine months ended September 30, 2012, net cash used in operations increased approximately $6,000, or less than 1%. The increase was primarily due to cash used in legal and research and development activities.

Investing and Financing Activities. There was no cash provided by investing activities for the nine months ended September 30, 2012, and approximately $202,000 in the nine month period ended September 30, 2011, primarily on the gain on sale of subsidiary of approximately $204,000. There was cash used in financing activities for the nine month period ended September 30, 2012 of approximately $60,000 for the repayment of debt and approximately $8,000 provided by financing activities for the nine month period ended September 30, 2011, related to the exercise of stock options.

Recent Accounting Pronouncements

We have evaluated all recently issued accounting pronouncements and we believe such pronouncements do not have a material effect on our financial statements.

Critical Accounting Policies

We have identified the policies below as critical to our business operations and the understanding of our results of operations. The impact and any associated risks related to these policies on our business operations are disclosed throughout this section where such policies affect our reported and expected financial results. The preparation of our financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of our financial statements, and the reported amounts of revenues and expenses during the reporting period. There can be no assurance that actual results will not differ from those estimates.

Revenue Recognition. While we have not recognized revenues from continuing operations, we anticipate that future revenues will be generated from product sales. We expect to recognize revenue from product sales in accordance with SEC, Staff Accounting Bulletin (“SAB”) No. 104, “Revenue Recognition” that requires we recognize revenue when each of the following four criteria is met: 1) a contract or sales arrangement exists; 2) products have been shipped or services have been rendered; 3) the price of the products or services is fixed or determinable; and 4) collectability is reasonably assured. We anticipate that customers will have no right of return for products sold. Revenues are considered to be earned upon shipment.

Share-Based Compensation. We follow Accounting Standards Codification (“ASC”) 718 “Compensation – Stock Compensation” which requires the measurement and recognition of compensation expense for all share-based payment awards made to employees and directors including grants of employee stock options based on estimated fair values. We have used the Black-Scholes option pricing model to estimate grant date fair value for all option grants. The assumptions we use in calculating the fair value of share-based payment awards represent management’s best estimates, but these estimates involve inherent uncertainties and the application of management judgment. As such, as we use different assumptions based on a change in factors, our stock-based compensation expense could be materially different in the future.

Preclinical Study and Clinical Trial Accruals. Substantially all of our preclinical studies and clinical trials are being performed by third-party CROs and other outside vendors. For preclinical studies, we use the percentage of work completed to date and contract milestones achieved to determine the accruals recorded. For clinical trial accruals, we use the number of patients enrolled, period of patient enrollment and percentage of work completed to date to estimate the accruals. We monitor patient enrollment levels and related activities to the extent possible through internal reviews, correspondence and status meetings with CROs and review of contractual terms. Our estimates are dependent on the timeliness and accuracy of data provided by our CROs and other vendors. If we have incomplete or inaccurate data, we may under-or overestimate activity levels associated with various studies or clinical trials at a given point in time. In this event, we could record adjustments to research and development expenses in future periods when the actual activity levels become known. No material adjustments to preclinical study and clinical trial expenses have been recognized to date.

ITEM 3 – Quantitative and Qualitative Disclosures About Market Risk

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information under this item.

ITEM 4 – CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

As of September 30, 2012, under the supervision and with the participation of our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), management has evaluated the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rule 13a-15 under the Exchange Act. Based on that evaluation, the CEO and CFO concluded that, as of September 30, 2012, our disclosure controls and procedures were ineffective at the reasonable assurance level in timely alerting him to material information required to be included in our periodic SEC reports as a result of the material weakness in internal control over financial reporting discussed below. Management’s assessment of the effectiveness of internal control over financial reporting is expressed at the level of reasonable assurance because a control system, no matter how well designed and operated, can provide only reasonable, but not absolute, assurance that the control system’s objectives will be met.

Management’s Quarterly Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Exchange Act Rule 13a-15(f). Our internal control system is a process designed by, or under the supervision of, our principal executive and principal financial officer, or persons performing similar functions, and effected by our Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”).

Our internal control over financial reporting includes policies and procedures that pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect transactions and dispositions of assets; provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. GAAP, and that receipts and expenditures are being made only in accordance with the authorization of our management and directors; and provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our consolidated financial statements.

Because of our inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management assessed the effectiveness of our internal control over financial reporting as of September 30, 2012. As a result of its assessment, management identified a material weakness in our internal control over financial reporting. Based on the weakness described below, management concluded that our internal control over financial reporting was not effective as of September 30, 2012.

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that, there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. As a result of our assessment, management identified the following material weaknesses in internal control over financial reporting as of September 30, 2012:

Changes in Internal Control Over Financial Reporting

There were no significant changes in our internal control over financial reporting that occurred during the nine months ended September 30, 2012 that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

PART II – OTHER INFORMATION

ITEM 1 – LEGAL PROCEEDINGS

On August 11, 2011, an action was filed against the Company in the United States District Court for the Southern District of New York, entitled New Millennium PR Communications, Inc., against OncoVista Innovative Therapies, Inc., The action seeks damages for the alleged breach of a public relations agreement and seeks an order directing a cash payment of $75,750 and the issuance of warrants to purchase 25,000 shares of the Company’s common stock. On October 5, 2011, the Company sent a notice of motion to the United States District Court for the Southern District of New York seeking to dismiss the case due to lack of subject matter jurisdiction. New Millennium PR Communications, Inc. filed an opposition to the Company’s request for dismissal. On January 20, 2012 the court denied the motion to dismiss the case due to lack of subject matter jurisdiction. On July 10, 2012 the Company filed a motion for summary judgment. On September 11, 2012 New Millennium PR Communications, Inc. filed an opposition to the Company’s request for summary judgment. The court has not yet ruled on the matter.

On August 26, 2011, an action was filed against the Company in the Supreme Court of the State of New York, New York County, entitled CAMOFI Master LDC and CAMHZN LDC against OncoVista Innovative Therapies, Inc. and OncoVista, Inc. The action seeks damages for the alleged breach of a Subscription Agreement, a Warrant Agreement and an Anti-Dilution Agreement and seeks an order directing the issuance of (i) an aggregate of 1,980,712,767 shares of the Company’s common stock, and (ii) warrants to purchase an aggregate of 702,857,767 shares of the Company’s common stock at an exercise price of $0.001. On October 20, 2011, the Company filed an answer to the complaint. On November 1, 2011, the plaintiffs made an extensive document request to the Company for all documents related to the matter. The Company’s counsel has started taking depositions and has requested access to CAMOFI Master LDC and CAMHZN Master LDC principals for further depositions. On June 29, 2012 CAMOFI Master LDC and CAMHZN Master LDC filed for summary judgment. On August 9, 2012 the parties filed a stipulation with the court extending the return date of motion for summary judgment until September 10, 2012. The court has not yet ruled on the motion to dismiss.

On February 16, 2012, we filed an action in the 225 Judicial District Court of the State of Texas, Bexar County, entitled OncoVista Innovative Therapies, Inc. against J. Michael Edwards. The action seeks damages relating to the executive employment agreement of our former Chief Financial Officer, J. Michael Edwards. Specifically we are seeking to have the Stock Option Agreement granted to Mr. Edwards on January 6, 2009 be declared void ab initio. We are also seeking damages and attorney fees. On March 30, 2012, the Company received a copy of a counterclaim that may be filed in the same court and is seeking approximately $197,000 in alleged compensation due.

ITEM 1A – RISK FACTORS

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 (the “Exchange Act”) and are not required to provide the information under this item.

ITEM 2 – UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

On June 27, 2012 CAMOFI Master LDC and CAMHZN Master LDC exercised warrants for 216,000 and 41,143 shares respectively of our common stock with an exercise price of $0.001 per share.

ITEM 3 – DEFAULTS UPON SENIOR SECURITIES

There have been no events which are required to be reported under this item.

ITEM 4 – MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5 – OTHER INFORMATION

On January 11, 2012, we entered into an Agreement (the “Agreement”) with KP Pharmaceutical Technology, Inc., an Indiana corporation (“KPPT”). The Agreement provides that, in exchange for KPPT providing manufacturing and analytical testing of our lead drug candidate from the L-nucleoside conjugate program, OVI-117, we shall pay KPPT a total fee of $158,000. There is no material relationship between us and KPPT, other than with respect to the Agreement.

On June 13, 2012, we entered into an Agreement (the “Agreement”) with Landmark Financial Corporation (“Landmark”). The Agreement provides that, in exchange for Landmark identifying and evaluating alternative strategies for expanding our business, we shall pay Landmark (a) a retainer fee consisting of 300,000 shares of the our common stock which vest at the rate of 50,000 shares per month for six months (the term of the Agreement), and (b) a “success fee” for the consummation of each and any transaction closing during the term of the Agreement and for 12 months thereafter, between the us and any party first introduced to us by Landmark. There is no material relationship between us and Landmark, other than with respect to the Agreement.

On July 12, 2012 we consummated a settlement with a debt holder of one outstanding unsecured note in the aggregate amount of $174,495 (as of June 30, 2012). We and the debt holder agreed to a one time payment of $60,000 for complete and full payment of the debt.

ITEM 6 – EXHIBITS

Exhibits:

SIGNATURES

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

ONCOVISTA INNOVATIVE THERAPIES, INC.
Alexander L. Weis, Ph.D.
Chief Executive Officer and Chief Financial Officer
(Principal Executive Officer, Principal Financial
Officer and Principal Accounting Officer)

Date: November 7, 2012