Cellcyte 10Q 6-30-10


CELLCYTE GENETICS CORPORATION
(a Development Stage Company)
CONSOLIDATED BALANCE SHEETS

			June 30,		December 31,
			2010		2009
			(Unaudited)
ASSETS

CURRENT ASSETS
	Cash and cash equivalents		$	-	$	7,301
	Other receivables			-		25,900
	Prepaid expenses and deposits			26,250		6,875
		Total Current Assets		26,250		40,076

OTHER ASSETS
	Furniture and equipment, net of depreciation and impairment			75,414		137,787
	Intellectual property, net of amortization and impairment			34,980		38,732
		Total Other Assets		110,394		176,519

TOTAL ASSETS			$	136,644	$	216,595


LIABILITIES AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES
	Accounts payable		$	623,924	$	644,666
	Accrued expenses			13,418		19,277
	Due to related parties			149,139		140,704
	Note payable - current portion			46,107		29,848
		Total Current Liabilities		832,588		834,495

LONG TERM LIABILITIES
	Convertible notes - related party			33,274		22,000
	Note payable - long term portion			232,256		232,256
		Total Long Term Liabilities		265,530		254,256

COMMITMENTS AND CONTINGENCIES				-		-

STOCKHOLDERS' DEFICIT
	Common stock, $0.001 par value; 525,000,000 shares authorized,
		74,556,405 and 71,081,307 shares issued and outstanding, respectively		74,556		71,081
	Additional paid in capital			11,280,969		10,956,070
	Common stock purchase warrants			49,154		49,154
	Deficit accumulated during development stage			(12,366,153)		(11,948,461)
		Total Stockholders' Deficit		(961,474)		(872,156)

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT			$	136,644	$	216,595


See accompanying condensed notes to the interim consolidated financial statements


CELLCYTE GENETICS CORPORATION
(a Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)


											From Inception
			For the Three Months Ended				For the Six Months Ended				(January 4, 2005)
			June 30,				June 30,				to June 30,
			2010		2009		2010		2009		2010

REVENUES			$	-	$	-	$	-	$	-	$	-

OPERATING EXPENSES:
	Consulting			500		2,525		500		37,028		1,678,107
	General and administrative			30,869		121,712		65,073		334,023		2,347,998
	Professional fees			61,351		145,451		95,896		159,720		1,703,285
	Research, development and laboratory			-		-		-		506		1,296,619
	Salaries and benefits			-		-		-		-		1,457,524
	Stock-based compensation			45,500		154,667		229,500		154,667		2,652,786
		Total Operating Expenses		138,220		424,355		390,969		685,944	11,136,319
												-
LOSS FROM OPERATIONS				(138,220)		(424,355)		(390,969)		(685,944)	(11,136,319)

OTHER INCOME (EXPENSE)
	Interest income			-		-		-		-		32,512
	Interest and finance charges			(9,237)		(23,186)		(17,838)		(62,887)		(223,991)
	Impairment of intellectual property			-		-		-		-		(568,913)
	Impairment of tenant improvements			-		-		-		-		(383,535)
	Loss on disposal of furniture and equipment			(7,293)		-		(8,885)		-		(139,454)
		Total Other Income (Expense)		(16,530)		(23,186)		(26,723)		(62,887)	(1,283,381)

LOSS BEFORE TAXES				(154,750)		(447,541)		(417,692)		(748,831)	(12,419,700)

INCOME TAXES				-		-		-		-		-

NET LOSS			$	(154,750)	$	(447,541)	$	(417,692)	$	(748,831)	$(12,419,700)

BASIC AND DILUTED NET LOSS
	PER COMMON SHARE		$	(0.00)	$	(0.01)	$	(0.01)	$	(0.01)

WEIGHTED AVERAGE NUMBER OF
	SHARES OUTSTANDING FOR BASIC
	AND DILUTED CALCULATION		73,483,646		64,151,326		72,823,620		63,538,987


See accompanying condensed notes to the interim consolidated financial statements


CELLCYTE GENETICS CORPORATION
(a Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

									From Inception		From Inception
					For the Six Months Ended				(January 4, 2005)		(January 4, 2005)
					June 30,				to June 30,		to December 31,
					2010		2009		2010		2009


CASH FLOWS FROM OPERATING ACTIVITIES:
	Net loss				$	(417,692)	$	(748,831)	$	(12,366,153)	$	(11,948,461)
	Adjustments to reconcile net loss to net cash used by
		operating activities
			Amortization of intellectual property			3,752		3,752		111,635		107,883
			Depreciation of furniture and equipment			31,247		101,771		523,777		492,530
			Stock-based compensation			229,500		154,667		2,652,786		2,423,286
			Non-cash services			65,170		229,635		957,890		892,720
			Amortization of discount on note			300		-		300		-
			Warrant issued for legal services			-		-		46,154		46,154
			Accounts payable paid with common stock			33,704		69,755		103,459		69,755
			Non-cash beneficial conversion right			-		20,000		36,400		36,400
			Non-cash impairment of intellectual property			-		-		568,913		568,913
			Non-cash impairment of tenant improvements			-		-		383,535		383,535
			Expenses paid by stockholder			-		6,465		32,755		32,755
			Accounts payable reduced in lease settlement			-		-		520,788		520,788
			Gain on extinguishment of debt			-		-		(53,547)		(53,547)
			Loss on disposal of furniture and equipment			8,885		-		139,454		130,569
	Decrease (increase) in assets
			Other receivables			25,900		-		-		(25,900)
			Prepaid expenses and deposits			(19,375)		(62,689)		(26,250)		(6,875)
	Increase (decrease) in liabilities
			Accounts payable			(6,229)		179,087		528,896		535,125
			Deferred rent			-		(7,853)		-		-
			Accrued interest			-		-		82,088		82,088
			Accrued expenses			5,859		16,124		25,136		19,277
				Net cash used by operating activities		(38,979)		(38,117)		(5,731,984)		(5,693,005)

CASH FLOWS FROM INVESTING ACTIVITIES:
			Intellectual property acquisition			-		-		(715,528)		(715,528)
			Cash from sales of equipment			22,240		600		58,465		36,225
			Furniture and equipment acquisition, net			-		-		(1,327,070)		(1,327,070)
			Cash acquired on reverse acquisition			-		-		1,429		1,429
				Net cash provided (used) by investing activities		22,240		600		(1,982,704)		(2,004,944)

CASH FLOWS FROM FINANCING ACTIVITIES:
			Proceeds from issuance of convertible notes			10,974		24,703		984,374		973,400
			Proceeds from convertible note allocated to warrant			-		-		3,000		3,000
			Advances from related party			8,435		7,433		114,918		106,483
			Payments on note payable			(9,971)		-		(43,493)		(33,522)
			Proceeds from sale of common stock			-		-		6,655,889		6,655,889
				Net cash provided by financing activities		9,438		32,136		7,714,688		7,705,250

	Net increase in cash and cash equivalents					(7,301)		(5,381)		-		7,301

	Cash and cash equivalents, beginning of period					7,301		6,304		-		-

	Cash and cash equivalents, end of period				$	-	$	923	$	-	$	7,301

SUPPLEMENTAL CASH FLOW DISCLOSURES:
	Income taxes paid				$	-	$	-	$	-
	Interest paid				$	-	$	-	$	8,381

NON CASH INVESTING AND FINANCING ACTIVITES
	Expenses paid by stockholders				$	-	$	6,465	$	6,465		6465
	Issuance of common stock for accounts payable				$	33,704	$	69,755	$	103,459		69755
	Note payable to related party converted to common stock				$	-	$	36,400	$	36,400		36400
	Issuance of note for insurance				$	26,250	$	20,625	$	46,875		20625
	Issuance of note in exchange for accounts payable				$	-	$	-	$	275,000		275000

See accompanying condensed notes to the interim consolidated financial statements

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CELLCYTE GENETICS CORPORATION

(A DEVELOPMENT STAGE COMPANY)

CONDENSED NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2010

(unaudited)

NOTE 1 – DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

CellCyte Genetics Corporation (the “Company”) is in the development stage, as defined by Financial Accounting Standards Board (“FASB”) ASC 915, “Development Stage Entities” and its efforts have been principally devoted to discovery and development of stem cell therapeutic products and the development of its cell expansion technology. To date, the Company has not generated any sales revenues, has incurred ongoing operating expenses and has sustained losses. Consequently, its operations are subject to all the risks inherent in the establishment of a new business enterprise.

As shown in the accompanying financial statements, the Company has incurred significant losses since inception, has not generated any revenues to date, and was involved in certain legal matters as more fully discussed in Note 8. In addition, effective July 1, 2008, the Company suspended significantly all of its stem cell therapeutic operations and switched its focus to its cell expansion technology. The future of the Company is dependent upon its ability to obtain sufficient financing and upon achieving future profitable operations. These factors, among others, raise substantial doubt about the Company's ability to continue as a going concern. The accompanying interim consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

The Company follows the accounting guidance outlined in the Financial Accounting Standards Board Codification guidelines. The accompanying unaudited interim consolidated financial statements have been prepared in accordance with generally accepted principles for interim financial information and with the instruction to Form 10-Q of Regulation S-K. They may not include all information and footnotes required by United States generally accepted accounting principles for complete financial statements. However, except as disclosed herein, there have been no material changes in the information disclosed in the notes to the financial statements for the year ended December 31, 2009 included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on April 15, 2010. The interim unaudited financial statements should be read in conjunction with those financial statements included in the Form 10-K. In the opinion of Management, all adjustments considered necessary for a fair presentation, which unless otherwise disclosed herein, consisting primarily of normal recurring adjustments, have been made. Operating results for the six months ended June 30, 2010 are not necessarily indicative of the results that may be expected for the year ending December 31, 2010.

The Company’s financial statements include certain estimates and assumptions which affect the reported amounts of assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Accordingly, actual results may differ from those estimates.

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NOTE 2 – INTELLECTUAL PROPERTY

As of December 31, 2009, the Company had $70,002 of capitalized patents. Through June 30, 2010, the Company did not incur any additional costs for its intellectual property. The Company amortizes patents over the remaining life of the patents, which ranges from 7 to 17 years.

Intellectual property at June 30, 2010 and December 31, 2009 is as follows:


	June 30,		December 31,
	2010		2009
Patents	$	70,002	$	70,002
Accumulated amortization		(35,022)		(31,270)
Patents, net	$	34,980	$	38,732

NOTE 3 – PROPERTY AND EQUIPMENT

As of December 31, 2009, the Company had capitalized a total of $293,404 in laboratory, computer and office equipment. During the six months ended June 30, 2010, the Company sold lab equipment with a cost basis of $58,525 and a net book value of $31,125, for $22,240, resulting in a loss of $8,885.

Property and equipment as of June 30, 2010 and December 31, 2009 are as follows:


	June 30,		December 31,
	2010		2009
Laboratory equipment	$	144,119	$	202,644
Computer and office equipment		90,760		90,760
Accumulated depreciation		(159,465)		(155,617)
Property and equipment, net	$	75,414	$	137,787

NOTE 4 – COMMITMENTS AND CONTINGENCIES

Promissory Note

Effective August 14, 2009, the Company finalized a lease termination agreement with its landlord whereby the Company executed a promissory note in the amount of $275,000 and agreed to vacate the facility and leave certain of its furniture behind in full settlement of all amounts owing. The promissory note bears interest at the annual rate of 12%, required an initial payment of $25,000 on or before December 1, 2009, and has monthly payments of $5,000 commencing January 1, 2010. The initial payment of $25,000 was paid on December 1, 2009.

As of August 20, 2010, the Company was delinquent in its payments by $27,000 and was negotiating with the Note holder for further payment concessions and forbearance of legal action.

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Failure to successfully negotiate with the Note holder may result in further legal action and adversely affect the future business activities of the Company.

Principal payments under the promissory note are as follows:


Year		Principal Payments
2010	$	27,509
2011		33,973
2012		38,211
2013		43,128
2014		48,598
Thereafter		68,346
Total	$	259,764

NOTE 5 – CAPITAL STOCK

Common Stock

The Company has authorized 525,000,000 shares of its common stock, $0.001 par value. The Company had issued and outstanding 74,556,405 and 71,081,307 shares of its common stock at June 30, 2010 and December 31, 2009, respectively.

During the six month period ended June 30, 2010, the Company issued 3,475,098 shares of its common stock for services and settlement of trade accounts payable, with an estimated value of $98,874.

Common Stock Warrants

The Company did not issue any common stock purchase warrants during the six month period ended June 30, 2010. Warrants outstanding are as follows:


	Warrants Outstanding		Weighted Average Exercise Price	Weighted Average Remaining Life

Balance, December 31, 2008	1,529,365	$	0.75	0.84 years
Warrants issued	919,230		0.06
Warrants exercised	-		-
Warrants expired	(1,529,365)		0.75
Balance, December 31, 2009	919,230		0.06	4.62 years
Warrants issued	-		-
Warrants exercised	-		-

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Warrants expired	-		-
Balance, June 30, 2010	919,230	$	0.06	4.12 years

Common Stock Options

The Company granted stock options for 8,400,000 shares of its common stock to its directors during the six months ended June 30, 2010.

The weighted-average fair value of the stock options granted during the period was estimated to be $0.02 per share for a total fair value of $168,000, and was determined using the Black-Scholes option pricing model using the following weighted-average assumptions: expected option life of 5 years; risk-free interest rate of 2.58%; dividend yield of 0%; and expected volatility of 100%. Certain of these options are subject to vesting conditions and, as of June 30, 2010, the Company had recorded stock-based compensation of $84,000 in connection with the vesting of these options leaving $84,000 to be expensed on future vesting. The Company also recognized $145,500 in stock-based compensation based on the vesting of previously granted options, leaving $90,000 to be recognized on future vesting.

The Company’s stock option activity for the six month period ended June 30, 2010 is as follows:


	Options Outstanding		Weighted Average Exercise Price	Weighted Average Remaining Life

Balance, December 31, 2008	1,735,000	$	1.34	5.47 years
Options granted	15,810,000		0.066
Options exercised	-		-
Options cancelled and expired	-		-
Balance, December 31, 2009	17,545,000		0.19	3.81 years
Options granted	8,400,000		0.035
Options exercised	-		-
Options cancelled and expired	-		-
Balance, June 30, 2010	25,945,000	$	0.14	3.70 years

NOTE 6 – BASIC AND DILUTED NET LOSS PER SHARE

The Company computes net income (loss) per common share in accordance with FASB ASC 260, “Earnings Per Share”. Net income (loss) per share is based upon the weighted average number of outstanding common shares and the dilutive effect of common share equivalents, such as options and warrants to purchase common stock, convertible preferred stock and convertible notes, if applicable, that are outstanding each year. Basic and diluted earnings per share were the

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same at the reporting dates of the accompanying financial statements, as including common stock equivalents in the calculation of diluted earnings per share would have been anti-dilutive.

Common stock equivalents that were not included in diluted earnings per share at June 30, 2010 and 2009 are as follows:


	2010		2009
Stock options		25,945,000		1,660,000
Warrants		919,230		1,529,365
Convertible promissory notes		1,209,013		1,000,000
Common stock equivalents		28,073,243		4,189,365

NOTE 7 – RELATED PARTY TRANSACTIONS

During the year ended December 31, 2008, two former officers, Gary Reys and Dr. Ronald Berninger, who were also members of the Company’s board of directors, advanced funds in the amount of $26,290 for their legal defense related to the matters discussed in Note 8. During 2009, Dr. Berninger advanced an additional $6,465 for his defense. Under the Company’s Bylaws, the Company is required to provide for the legal defense of its officers and directors. As of June 30, 2010, these amounts remain unpaid.

Convertible Promissory Notes

On December 23, 2009, a consultant of the Company loaned $25,000 to the Company in exchange for a convertible promissory note and a warrant to purchase 150,000 shares of common stock. The promissory note bears interest at the annual rate of eight percent and all interest and principal is due on December 22, 2014. The promissory note and accrued interest can be converted into common stock at any time, at the option of the holder, at the exchange rate of $0.035 per share. The fair market value of the warrants of $3,000 was recorded as a discount on the promissory note and is being amortized over five years. As of June 30, 2010, $300 of this discount has been amortized to interest expense.

During the six months ended June 30, 2010, a stockholder of the Company advanced a total of $10,974 to help pay for certain operating costs. On March 18, 2010 these advances were converted into a convertible promissory note. The promissory note bears interest at the annual rate of eight percent and all interest and principal is due on January 24, 2015. The promissory note and accrued interest can be converted into common stock at any time, at the option of the holder, at the exchange rate of $0.024 per share.

Stockholder Advances

During the year ended December 31, 2007 a stockholder of the Company paid various outstanding payables on behalf of the Company. As of March 31, 2009 the Company owed this stockholder $107,949. These advances are unsecured, non-interest bearing with no set terms of repayment.

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During the six months ended June 30, 2010, a stockholder of the Company paid various operating expenses on behalf of the Company. As of June 30, 2010 the Company owed this stockholder $8,435. These advances are unsecured, non-interest bearing with no set terms of repayment. Effective August 18, 2010, these advances were converted into a convertible promissory note. The promissory note bears interest at the annual rate of eight percent and all interest and principal is due on August 17, 2015. The promissory note and accrued interest can be converted into common stock at any time, at the option of the holder, at the exchange rate of $0.02 per share.

NOTE 8 – LEGAL DISPUTES

In January 2008, three stockholder lawsuits were filed against the Company in the United States federal court for the Western District of Washington: Armbruster v. Cellcyte Genetics Corporation, et. al, No. C08-0047, Tolerico v. Cellcyte Genetics Corporation, et. al., No. C08-0163 and Pruitt v. Cellcyte Genetics Corporation, et. al., No. C08-0178. An amended complaint consolidating the 3 lawsuits was filed and the amended consolidated complaint alleged, inter alia, that the Company and its former officers and directors filed misleading statements with the Securities and Exchange Commission regarding the Company’s products, and that it posted misleading information regarding a former officer on the Company’s website. The lawsuits claimed that investors purchased the Company’s stock based on the alleged misleading statements and seek monetary relief.

On March 22, 2010 all claims against the Company and its former officers and directors related to the stockholder lawsuits were dismissed, without prejudice, and without an award of costs to any party.

The Company was also engaged in a dispute with a former employee, who voluntarily resigned in 2007. The former employee had signed an employment agreement with the Company which contained certain restrictions on their conduct after termination of employment. The former employee was claiming to have been misled into signing the agreement and was seeking monetary damages for constructive discharge and relief from the terms of the employment contract, which the Company disputed.

On February 3, 2010, the Company entered into a Mutual Release Agreement with this former employee which settled all of its outstanding litigation involving this former employee. Both the arbitration and the underlying lawsuit were dismissed with prejudice, with none of the parties admitting any liability for damages. The Mutual Release Agreement became effective on March 3, 2010 following the completion of all activities contemplated under the Agreement.

NOTE 9 – RECENT ACCOUNTING PRONOUNCEMENTS

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activity in Level 3 fair value measurements. Those disclosures are effective for fiscal years beginning after December 15, 2010, and for interim periods within those years. The Company will comply with the additional disclosures required by this guidance upon its adoption in January 2011.

In December 2009, the FASB issued ASU 2009-16, “Transfers and Servicing” (ASC 860 “Accounting for Transfers of Financial Assets”). ASU 2009-16 amends the accounting for transfers of financials assets and will require more information about transfers of financial assets, including securitizations, and where entities have continuing exposure to the risks related to transferred financial assets. ASU 2009-16 is effective at the start of a reporting entity's first fiscal year beginning after November 15, 2009, with early adoption not permitted. The adoption of this guidance on January 1, 2010 did not have any impact on the Company’s financial statements.

In October 2009, the FASB issued ASU 2009-15, “Accounting for Own-Share Lending Arrangements in Contemplation of Convertible Debt Issuance or Other Financing”. ASU 2009-15 amends the accounting and reporting guidance for debt (and certain preferred stock) with specific conversion features or other options. ASU 2009-15 is effective for fiscal years beginning on or after December 15, 2009. The adoption of this guidance on January 1, 2010 did not have any impact on the Company’s s consolidated financial position, results of operations and cash flows.

NOTE 10 – SUBSEQUENT EVENTS

On July 23, 2010, the Company approved the issuance of 2.5 million stock options to its new president with an exercise price of $0.02 per share and a term of five years.

On July 28, 2010, the Company approved the issuance of 2.0 million stock options to its new vice president of manufacturing with an exercise price of $0.02 per share and a term of five years. This option has not been issued as of August 20, 2010, and is awaiting final execution of the agreement with the new vice president.

Other subsequent event disclosures have been disclosed elsewhere in these condensed notes to the consolidated financial statements.

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Item 2.

Management’s Discussion and Analysis

As used in this Quarterly Report: (i) the terms the “Company”, “our company”, “we”, “us” and “our” refer to CellCyte Genetics Corporation, a Nevada corporation, and its subsidiary, unless the context requires otherwise; (ii) references to “CellCyte” mean CellCyte Genetics Corporation, a Washington corporation; and (iii) all dollar amounts refer to United States dollars unless otherwise indicated.

The following discussion of our plan of operations, results of operations and financial condition as of and for the six months ended June 30, 2010 should be read in conjunction with (i) our unaudited interim consolidated financial statements and related notes for the six months ended June 30, 2010 included in this Quarterly Report, and (ii) our Annual Report on Form 10-K for the year ended December 31, 2009, including our annual audited financial statements set forth therein.

Overview

We are a biotechnology company involved in research and development of medical devices for cell expansion and maintenance.

We intend to focus our efforts over the next twelve months within the device segment.

Plan of Operations

Our operations over the next 12 months will be limited by the amount of resources we are able to raise, and the willingness of our contractors and consultants to work for stock and stock option compensation. Accordingly, we have developed an Interim Operating Plan that may allow us to complete certain limited research and development activities while we attempt to raise adequate funding to restart our business.

Our plan of operations under our Interim Operating Plan for the next 12 months is to:

(a)

finalize our Interim Operating Plan and formalize contracts with our scientists and manufacturing consultants.

(b)

apply for State and federal research grants to develop specific configurations and applications of the bioreactor device.

(c)

conduct pre-clinical lab research to identify key cell lines for expansion and optimum configurations of the bioreactor device.

(d)

complete the design and sourcing of components to begin small scale manufacturing of our cell expansion device technology for use in collaborative research with academic and institutional research organizations.

(e)

initiate collaborative demonstrations of our bioreactor product with independent research laboratories that require the expansion of cord blood stem cells, maintenance of islet cells and production of other cell lines and proteins.

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(f)

locate and occupy new office, lab and manufacturing space if required to execute our Interim Operating Plan.

We anticipate that we will incur an aggregate of $1,000,000 in expenses and debt service, including certain accounts payable, for the next 12 months as follows:

(a)

$121,000 for facility and equipment related expenses;

(b)

$80,000 for debt service;

(c)

$135,000 for pre-clinical work, quality assurance, manufacturing of biologic material, academic collaborations and further research collaborations;

(d)

$128,000 for design and device manufacturing;

(e)

$210,000 for legal expenses related to intellectual property prosecution, general corporate matters and facility lease negotiation, and accounting expenses and payables related to quarterly reviews and annual audits;

(f)

$205,000 for salaries and consulting; and

(g)

$121,000 for general and administrative, including Director and Officer insurance.

During the next 12 months we anticipate that we will generate minimal non-recoverable engineering (NRE) service revenue and revenue from the sale and licensing of our incubator and bioreactor device technology. We presently do not have sufficient cash to fund our operations, and have curtailed substantially all activities, other than those called for by the execution of our Interim Operating Plan.

During the period covered by our Interim Operating Plan, we expect to fund our operations through a combination of the sale of excess laboratory equipment, issuances of stock, including issuances of stock and stock options registered pursuant to an S-8 registration statement, as payment in-kind to our independent contractors, consultants and other service providers, and the issuance of convertible loans from current stockholders and other investors. However, there is no certainty that we will be able to obtain these loans on commercially reasonable terms or when needed, or that they will be sufficient to meet our cash requirements. Accordingly, we anticipate that we will require additional financing to enable us to pay our planned expenses and debt service for the next 12 months and pursue our plan of operations.

At this time, we cannot accurately estimate a date of transition from operating under our Interim Operating Plan to a state in which our operations will be funded by a combination of equity funding and cash provided from bioreactor and incubator sales. Further, there is no assurance that our research, product and device demonstration program will result in significant revenues, or that we will obtain the cash necessary to fund the Interim Operating Plan.

Subsequent to the 12 month period following the date of this Quarterly Report, we will be required to obtain additional financing in order to continue to pursue our business plan. We

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believe that conventional debt financing will not be an alternative for funding as we do not have tangible assets to secure any debt financing. We anticipate that additional funding will be in the form of convertible promissory notes and equity financing from the sale of our common stock.

We cannot provide investors with any assurance that we will be able to raise sufficient funding from the issuance of promissory notes or the sale of our common stock to fund our business plan going forward. In the absence of such financing, our business plan will fail.

Results of Operations

Three Months Ended June 30, 2010 Compared to Three Months Ended June 30, 2009.

The following table sets out our consolidated loss for the periods indicated:


	Three Months Ended June 30, 2010	Three Months Ended June 30, 2009
	(Unaudited)	(Unaudited)
Revenues	$ —	$ —
Operating Expenses
Consulting	500	2,525
General and administrative	30,869	121,712
Professional fees	61,351	145,451
Stock-based compensation	45,500	154,667
Other Income (Expense)	(16,530)	(23,186)
Net Loss	(154,750)	(447,541)

Revenues

We have had no operating revenues since our inception on January 4, 2005 to June 30, 2010. We anticipate that we will not generate any revenues for so long as we are a development stage company.

Consulting Fees

In the three months ended June 30, 2010, we had $500 in consulting fees, compared to $2,525 for the same period of 2009, primarily due to the curtailment of nearly all activities and limited resources.

General and Administrative Expenses

Our general and administrative expenses in the three months ended June 30, 2010 decreased to $30,869 from $121,712 for the same period of 2009, primarily as a result of the curtailment of

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nearly all activities. In 2010, general and administrative costs consisted primarily of insurance expense, while 2009 general and administrative expenses consist primarily of lease costs.

Professional Fees

In the three months ended June 30, 2010, we incurred professional fees of $61,351, compared to $145,451 for the same period of 2009. The decrease is primarily related to a reduction in the activities of the contract accountants providing general operating support, and that audit fees and legal services have declined due to limited activities.

Stock-Based Compensation

In the three months ended June 30, 2010, we incurred stock-based compensation expense of $45,500, compared to stock-based compensation expense of $154,667 for the same period in 2009. Stock-based compensation was related to stock options provided to our directors and consultants. The cost of our stock-based compensation has been declining due to the decline in the market price of our stock, and that certain performance criteria within the stock-option awards have not yet been met.

Net Loss

As a result of the above, our net loss for the three months ended June 30, 2010 was $154,750, compared to $447,541 for the same period of 2009.

Six Months Ended June 30, 2010 Compared to Six Months Ended June 30, 2009.

The following table sets out our consolidated loss for the periods indicated:


	Six Months Ended June 30, 2010	Six Months Ended June 30, 2009
	(Unaudited)	(Unaudited)
Revenues	$ —	$ —
Operating Expenses
Consulting	500	37,028
General and administrative	65,073	334,023
Professional fees	95,896	159,720
Research, development and laboratory	-	506
Stock-based compensation	229,500	154,667
Other Income (Expense)	(26,723)	(62,887)
Net Loss	(417,692)	(748,831)

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Revenues

We have had no operating revenues since our inception on January 4, 2005 to June 30, 2010. We anticipate that we will not generate any revenues for so long as we are a development stage company.

Consulting Fees

In the six months ended June 30, 2010, we had $500 in consulting fees, compared to $37,028 for the same period of 2009, primarily due to the curtailment of nearly all activities and limited resources.

General and Administrative Expenses

Our general and administrative expenses in the six months ended June 30, 2010 decreased to $65,073 from $334,023 for the same period of 2009, primarily as a result of the curtailment of nearly all activities. In 2010, general and administrative costs consisted primarily of insurance expense, while 2009 general and administrative expenses consist primarily of lease costs.

Professional Fees

In the six months ended June 30, 2010, we incurred professional fees of $95,896, compared to $159,720 for the same period of 2009. The decrease is primarily related to a reduction in the activities of the contract accountants providing general operating support, and that audit fees and legal services have declined due to limited activities.

Research, Development and Laboratory Expenses

In the six months ended June 30, 2010, we incurred no research, development and laboratory expenses, compared to $506 during the same period of 2009.

Stock-Based Compensation

In the six months ended June 30, 2010, we incurred stock-based compensation expense of $229,500, compared to stock-based compensation expense of $154,667 for the same period in 2009. Stock-based compensation was related to stock options provided to our directors and consultants.

Net Loss

As a result of the above, our net loss for the six months ended June 30, 2010 was $417,692, compared to $748,831 for the same period of 2009.

Liquidity and Capital Resources

As of June 30, 2010, we had no cash and a working capital deficit of $806,338. Our planned expenditures over the next 12 months are expected to amount to approximately $1,000,000 and

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will exceed our cash reserves and working capital. We presently do not have sufficient cash to fund our operations and have curtailed significantly all activities.

During the period covered by our Interim Operating Plan, we expect to fund our operations through a combination of issuances of stock, including issuances of stock and stock options registered pursuant to an S-8 registration statement, as payment in-kind to our independent contractors, consultants and other service providers, and the issuance of convertible loans from current stockholders and other investors. However, there is no certainty that we will be able to obtain these loans on commercially reasonable terms or when needed, or that they will be sufficient to meet our cash requirements. Accordingly, we anticipate that we will require additional financing in order to pursue our plan of operations for the next 12 months. If we are unable to obtain additional financing, we may have to abandon our business activities and plan of operations.

We believe that traditional debt financing will not be an alternative for funding as we do not have tangible assets to secure any debt financing. We anticipate that additional funding will come from the sale of our excess furniture and equipment, and may be in the form of convertible debt and equity financing from the sale of our common stock. However, we cannot provide investors with any assurance that we will be able to raise sufficient funding from the sale of equipment or our common stock to fund our plan of operations going forward. In the absence of such financing, our business plan will fail. Even if we are successful in obtaining short-term financing, there is no assurance that we will obtain the funding necessary to pursue our business plan. If we do not continue to obtain additional financing going forward, we will be forced to abandon our plan of operations.

Cash Used in Operating Activities

Cash used in operating activities in the six months ended June 30, 2010 was $38,979, compared to $38,117 for the same period of 2009. In 2010 and 2009, operating activities used cash primarily for insurance, storage of our equipment, and payment to our outside auditors. We anticipate that cash used in operating activities will be limited over the balance of 2010 as we move forward with limited operations. We have funded our operations primarily from the sale of excess laboratory equipment and from the issuance of our common stock, and expect to continue efforts to raise additional capital through the sale equipment and stock.

Cash Provided by Investing Activities

In the six months ended June 30, 2010, investing activities generated cash of $22,240 from the sale of excess equipment, compared to $600 in the same period of 2009.

Cash Provided By Financing Activities

We have funded our business to date primarily from sales of our common stock, issuance of convertible promissory notes, and advances from our stockholders. In the six months ended June 30, 2010, we had net cash provided by financing activities of $9,438 related to advances under convertible promissory notes of $10,974, advances from our stockholders of $8,435, offset by payments on promissory notes of $9,971. Net cash provided by financing activities of $32,136

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for the same period of 2009 was from the proceeds of a convertible promissory note and advances from our stockholders.

Going Concern

As shown in the accompanying financial statements and more fully detailed in our 2009 Annual Report on Form 10-K, we have incurred significant losses since inception and have not generated any revenues to date. The future of our company is dependent upon our ability to obtain sufficient financing and upon achieving future profitable operations. These factors, among others, raise substantial doubt about our company’s ability to continue as a going concern. The accompanying interim consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Future Financings

We anticipate continuing to rely on equity sales of our common stock and the issuance of convertible debt in order to continue to fund our business operations. Issuances of additional shares will result in dilution to our existing stockholders. There is no assurance that we will achieve any additional sales of our equity securities or arrange for debt or other financing to fund our business plan.

Off-Balance Sheet Arrangements

We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.

Critical Accounting Policies

Our financial statements are impacted by the accounting policies used and the estimates and assumptions made by management during their preparation. A complete summary of these policies is included in Note 2 of the notes to our historical financial statements. We have identified below the accounting policies that are of particular importance in the presentation of our financial position, results of operations and cash flows and which require the application of significant judgment by management.

Use of Estimates

Our financial statements are prepared in conformity with accounting principles generally accepted in the United States of America and include certain estimates and assumptions which affect the reported amounts of assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Accordingly, actual results may differ from those estimates.

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Income Taxes

We follow the provisions of FASB ASC 740, “Income Taxes”, under which deferred tax assets and liabilities are determined based on differences between financial reporting and tax basis of assets and liabilities. Deferred tax assets and liabilities are measured using the enacted tax rates and laws that are expected to be in effect when the differences are expected to reverse. The provisions of ASC 740 also require the recognition of future tax benefits such as net operating loss carry-forwards, to the extent that the realization of such benefits is more likely than not. To the extent that it is more likely than not that such benefits will not be received, we record a valuation allowance against the related deferred tax asset.

Intangible Assets

Our intangible assets primarily consist of patents and intellectual property, which are carried at the purchase price and/or the legal cost to obtain them less accumulated amortization. Patents and licenses are being amortized over their estimated useful lives, which range from seven to seventeen years. Annually these assets are reviewed for recoverability to determine if the carrying amount on the balance sheet is appropriate.

Research and Development Costs

Research and development costs are expensed as incurred. The cost of intellectual property purchased from others that is immediately marketable or that has an alternative future use is capitalized and amortized as intangible assets. Capitalized costs are amortized using the straight-line method over the estimated economic life of the related asset. We periodically review our capitalized intangible assets to assess recoverability based on the projected undiscounted cash flows from operations, and impairments are recognized in operating results when a permanent diminution in value occurs.

Stock-Based Compensation

We account for our stock option plan primarily under the recognition and measurement principles of FASB ASC 718, “Compensation – Stock Compensation”. Accordingly, compensation cost has been recognized using the fair value method and expected term accrual requirements as prescribed in ASC 718. We recorded stock-based compensation expense in the amount of $229,500 during the six months ended June 30, 2010.

Recent Accounting Pronouncements

In January 2010, the FASB issued ASU No. 2010-06, “Improving Disclosures about Fair Value Measurements” (“ASU 2010-06”) (codified within ASC 820 “Fair Value Measurements and Disclosures”). ASU 2010-06 improves disclosures originally required under SFAS No. 157. ASU 2010-16 is effective for interim and annual periods beginning after December 15, 2009, except for the disclosures about purchases, sales, issuances and settlements in the roll forward of activity in Level 3 fair value measurements. Those disclosures are effective for fiscal years beginning after December 15, 2010, and for interim periods within those years. We will comply with the additional disclosures required by this guidance upon its adoption in January 2011.

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In December 2009, the FASB issued ASU 2009-16, “Transfers and Servicing” (ASC 860 “Accounting for Transfers of Financial Assets”). ASU 2009-16 amends the accounting for transfers of financials assets and will require more information about transfers of financial assets, including securitizations, and where entities have continuing exposure to the risks related to transferred financial assets. ASU 2009-16 is effective at the start of a reporting entity's first fiscal year beginning after November 15, 2009, with early adoption not permitted. The adoption of this guidance on January 1, 2010 had no impact on our financial statements or disclosure.

In October 2009, the FASB issued ASU 2009-15, “Accounting for Own-Share Lending Arrangements in Contemplation of Convertible Debt Issuance or Other Financing”. ASU 2009-15 amends the accounting and reporting guidance for debt (and certain preferred stock) with specific conversion features or other options. ASU 2009-15 is effective for fiscal years beginning on or after December 15, 2009. The adoption of this guidance on January 1, 2010 had no impact on our financial statements or disclosure.

Item 3.

Quantitative and Qualitative Disclosures About Market Risk.

Not Applicable.

Item 4.

Controls And Procedures

Evaluation of Disclosure Controls and Procedures

In connection with the preparation of this Quarterly Report on Form 10-Q, an evaluation was carried out by our management, with the participation of the Principal Executive Officer and Principal Accounting Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (“Exchange Act”)) as of June 30, 2010. Disclosure controls and procedures are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC rules and forms and that such information is accumulated and communicated to management, including the Principal Executive Officer and the Principal Accounting Officer, to allow timely decisions regarding required disclosures. Based on its evaluation, our management concluded, as of the end of the period covered by this report, that our disclosure controls and procedures were not effective.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during the quarter ended June 30, 2010 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. The Company has not begun remediation efforts to correct the previously disclosed material weakness (as defined in Rule 13a-15(d) under the Exchange Act) reported on the Company’s Form 10-K filed for the period ended December 31, 2009.

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PART II – OTHER INFORMATION

Item 1.

Legal Proceedings

In January 2008, three stockholder lawsuits were filed against us in the United States federal court for the Western District of Washington: Armbruster v. Cellcyte Genetics Corporation, et. al, No. C08-0047, Tolerico v. Cellcyte Genetics Corporation, et. al., No. C08-0163 and Pruitt v. Cellcyte Genetics Corporation, et. al., No. C08-0178. An amended complaint consolidating the 3 lawsuits was filed and the amended consolidated complaint alleged, inter alia, that the Company and its former officers and directors filed misleading statements with the Securities and Exchange Commission regarding our products, and that we posted misleading information regarding a former officer on our website. The lawsuits claimed that investors purchased our stock based on the alleged misleading statements and seek monetary relief.

On March 22, 2010 all claims against the Company and our former officers and directors related to the stockholder lawsuits were dismissed, without prejudice, and without an award of costs to any party.

We were also engaged in a dispute with a former employee, who voluntarily resigned in 2007. The former employee had signed an employment agreement with the Company which contained certain restrictions on their conduct after termination of employment. The former employee was claiming to have been misled into signing the agreement and was seeking monetary damages for constructive discharge and relief from the terms of the employment contract, which we disputed.

On February 3, 2010, we entered into a Mutual Release Agreement with this former employee which settled all of our outstanding litigation involving this former employee. Both the arbitration and the underlying lawsuit were dismissed with prejudice, with none of the parties admitting any liability for damages. The Mutual Release Agreement became effective on March 3, 2010 following the completion of all activities contemplated under the Agreement.

Item 1A.

Risk Factors

Not Applicable.

Item 2.

Unregistered Sales of Equity Securities

During the six month period ended June 30, 2010, we issued 3,475,098 shares of our common stock to our consultants, contractors and legal advisors for services, with an estimated fair value of $98,874.

Item 3.

Defaults Upon Senior Securities

None.

Item 4.

Submission of Matters to a Vote of Security Holders

None.

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Item 5.

Other Information

None.

Item 6.

Exhibits

The following exhibits are included with this Quarterly Report on Form 10-Q:


Exhibit Number	Description of Exhibit
3.1	Articles of Incorporation, as amended. Incorporated by reference to our Registration Statement on Form SB-2 filed on May 4, 2005.
3.2	Bylaws. Incorporated by reference to our Current Report on Form 8-K filed May 14, 2004.
31.1	Rule 13a-14(a)/15(d)-14(a) Certification of Principal Executive Officer.
31.2	Rule 13a-14(a)/15(d)-14(a) Certification of Principal Accounting Officer.
32.1	18 U.S.C. Section 1350 Certification of Principal Executive Officer.
32.2	18 U.S.C. Section 1350 Certification of Principal Accounting Officer.

__________

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SIGNATURES

Pursuant to the requirements 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.

CELLCYTE GENETICS CORPORATION

Dated: August 20, 2010.

Per:

/s/ “John M. Fluke, Jr.”

John M. Fluke, Jr.

Interim Principal Executive Officer

__________


Nevada		86-1127046
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)


14205 SE 36^th Street, Suite 100 Bellevue, Washington		98006
(Address of principal executive offices)		(Zip Code)


(425) 519-3755
(Registrant’s telephone number, including are code)


Description	Page
Interim Consolidated Balance Sheets as of June 30, 2010 and December 31, 2009:	3
Interim Consolidated Statements of Operations for the Three Months and Six Months ended June 30, 2010 and 2009 and for the period from January 4, 2005 (Date of Inception) to June 30, 2010:	4
Interim Consolidated Statements of Cash Flows for the Six Months ended June 30, 2010 and 2009 and for the period from January 4, 2005 (Date of Inception) to June 30, 2010:	5
Condensed Notes to Interim Consolidated Financial Statements:	6