10-Q 1 biomoda10q033112.htm biomoda10q033112.htm


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549 
 

 
FORM 10-Q
 

 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended March 31, 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 No. 333-90738

BIOMODA, INC.
(Exact name of registrant as specified in its charter)

New Mexico
85-0392345
(State of incorporation)
(IRS Employer Identification No.)

609 Broadway NE #215, Albuquerque, New Mexico 87102
(Address of principal executive offices including zip code)

Registrant's telephone number:  (505) 821-0875

Check 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 o
 
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 o
  
Indicate by check mark whether the registrant is a large accelerated filer, and accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
 
 Large accelerated filer   o
Accelerated filer  o
 Non-accelerated filer     o
Smaller reporting company  x
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes o No x

The number of issuer’s shares of Common Stock outstanding as of May 11 2012, was 176,363,963.
 
 
TABLE OF CONTENTS
 
 
 
PART I. FINANCIAL INFORMATION
 
Item 1. FINANCIAL STATEMENTS (UNAUDITED)
 
Forward-Looking Statements
 
This Form 10-Q contains forward-looking statements about the business, financial condition and prospects of the Company that reflect assumptions made by management and management's beliefs based on information currently available to it. We can give no assurance that the expectations indicated by such forward-looking statements will be realized. If any of management's assumptions should prove incorrect, or if any of the risks and uncertainties underlying such expectations should materialize, our actual results may differ materially from those indicated by the forward-looking statements.

The key factors that are not within our control and that may have a direct bearing on operating results include, but are not limited to, the acceptance by customers of our products, our ability to develop new products cost-effectively, our ability to raise capital, the development by competitors of products using improved or alternative technology, the retention of key employees and general economic conditions.

There may be other risks and circumstances that management is unable to predict. When used in this Form 10-Q, words such as "believes," "expects," "intends," "plans," "anticipates," "estimates" and similar expressions are intended to identify forward-looking statements, although there may be certain forward-looking statements not accompanied by such expressions. All forward-looking statements are intended to be covered by the safe harbor created by Section 21E of the Securities Exchange Act of 1934.
 
 
BIOMODA, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
 
   
March 31,
   
December 31,
 
   
2012
   
2011
 
ASSETS
           
CURRENT ASSETS
           
Cash
  $ 13,754     $ 1,073  
Prepaid expenses
    1,271       1,271  
TOTAL CURRENT ASSETS
    15,025       2,344  
                 
Fixed assets, net of accumulated depreciation of
    $19,627 and $19,228
    7,524       10,080  
Patents and trademarks, net of accumulated amortization
    of $362,468 and $356,870
    196,516       192,876  
TOTAL ASSETS
  $ 219,065     $ 205,300  
                 
LIABILITIES & STOCKHOLDERS' DEFICIT
               
CURRENT LIABILITIES
               
Accounts payable
  $ 509,627     $ 506,323  
Accrued liabilities
    506,207       404,744  
Advances from stockholders
    265,690       263,815  
Short-term debt
    180,965       180,373  
TOTAL CURRENT LIABILITIES
    1,462,489       1,355,255  
LONG-TERM LIABILITIES
               
Derivative liabilities - warrant instruments
    29,822       32,731  
TOTAL LIABILITIES
    1,492,311       1,387,986  
                 
COMMITMENTS AND CONTINGENCIES
    -       -  
                 
STOCKHOLDERS' DEFICIT
               
Redeemable preferred stock - Series A; no par value; 2,000,000 shares authorized; cumulative and
    covertible; liquidation and redemption values of $1.50 and $1.80 per share, respectively;
    no shares issued or outstanding
    -       -  
Redeemable preferred stock - Series B; no par value; 100 shares authorized;
         liquidation and redemption values of $6.00; 100 shares issued and outstanding
    60,000       60,000  
Undesignated preferred stock; 2,000,000 shares authorized;
         noshares issued and outstanding
    -       -  
Common stock, no par value, 700,000,000 share authorized;
    175,863,963 and 130,314,363 issued and 175,472,388 and
    129,922,786 outstanding, respectively
    8,659,336       8,080,960  
Treasury stock, at cost, 391,575 shares
    (1,233 )     (1,233 )
Deficit accumulated during development stage
    (9,991,349 )     (9,322,413 )
Total stockholders' deficit
    (1,273,246 )     (1,182,686 )
                 
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT
  $ 219,065     $ 205,300  
 
The accompanying notes are an integral part of these unaudited financial statements.
 
 
BIOMODA, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
 
   
For the Three Months Ended
 March 31,
   
January 3, 1990
(Inception) to
 
   
2012
   
2011
   
March 31, 2012
 
                   
Revenue
  $ -     $ -     $ 23  
                         
Operating expenses
                       
  Professional fees
    8,607       79,538       1,624,145  
  General and administrative
    652,785       217,527       7,653,524  
  Research and development, net of grants received
    -       154,129       3,386,701  
  Depreciation and amortization
    5,855       8,816       390,544  
                         
          Total operating expenses
    667,247       460,010       13,054,914  
                         
          Loss from operations
    (667,247 )     (460,010 )     (13,054,891 )
                         
Other income (expense)
                       
  Gain on extinguishment of debt
    -       -       1,326,028  
  Gain of sale of assets
    -       -       39,225  
  Unrealized gain (loss) on derivative liabilities- warrant instruments
    2,278       (93,745 )     2,708,596  
  Unrealized gain (loss) on derivative liabilities- option instruments
    -       (441 )     24,568  
  Unrealized loss on derivative liability-note conversion feature
    -       (190,732 )     569,150  
  Other income
    -       -       244,479  
  Interest income
    -       84       4,501  
  Interest expense
    (3,967 )     (157,965 )     (1,853,005 )
                         
          Total other income (expense)
    (1,689 )     (442,799 )     3,063,542  
                         
Gain (Loss) before provision for income taxes
    (668,936 )     (902,809 )     (9,991,349 )
                         
Provision for income taxes
    -       -       -  
                         
Net loss
  $ (668,936 )   $ (902,809 )   $ (9,991,349 )
                         
Basic and diluted earnings per common share
  $ (0.00 )   $ (0.01 )        
                         
Basic and diluted weighted average number of common shares outstanding
    137,326,941       92,954,664          
 
The accompanying notes are an integral part of these unaudited financial statements.
 
 
BIOMODA, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' (DEFICIT) EQUITY
FOR THE PERIOD FROM JANUARY 3, 1990 (INCEPTION) TO March 31, 2012
(UNAUDITED)
 
                                 
Accumulated
   
Total
 
                                 
Deficit During
   
Stockholders'
 
   
Common Stock
   
Preferred Stock
   
Treasury
   
Development
   
Equity
 
   
Shares
   
Amount
   
Shares
   
Amount
   
Stock
   
Stage
   
(Deficit)
 
Inception
    -     $ -       -     $ -     $ -     $ -     $ -  
Issuance of Common Stock, June 26, 1991
    2,997,000       18,433                                       18,433  
Cumulative Net Loss for the period from January 3, 1990
 (date of inception) to December 31,1996
      (60,010 )     (60,010 )
Balance, December 31, 1996
    2,997,000       18,433       -       -               (60,010 )     (41,577 )
Issuance of Common Stock Warrants on December 31, 1997
       (100,952 warrants at exercise price of $.20)
    -       -                                       -  
Net loss
                                            (32,914 )     (32,914 )
Balance, December 31, 1997
    2,997,000       18,433       -       -               (92,924 )     (74,491 )
Issuance of Common Stock, January 20, 1998
    59,940       10,000                                       10,000  
Exercise of Common Stock Warrants on March 17, 1998
    100,952       20,190                                       20,190  
Issuance of Common Stock, April 15, 1998, net of stock
issuance costs
    631,578       276,350                                       276,350  
Issuance of Common Stock Options, April 15, 1998
      23,650                                       23,650  
Exercise of Common Stock Options, November 2, 1998
    62,237       23,670                                       23,670  
Net loss
                                            (295,948 )     (295,948 )
Balance, December 31, 1998
    3,851,707       372,293       -       -               (388,872 )     (16,579 )
Issuance of Common Stock, January 30, 1999
    180,000       87,300                                       87,300  
Issuance of Common Stock, for the month of March, 1999
    310,000       150,300                                       150,300  
Issuance of Common Stock, May 29, 1999
    51,546       25,000                                       25,000  
Issuance of Common Stock, June 2, 1999
    95,092       50,000                                       50,000  
Issuance of Common Stock, September 30, 1999
    51,546       25,000                                       25,000  
Issuance of Common Stock, December 29, 1999
    92,005       50,143                                       50,143  
Net loss
                                            (303,956 )     (303,956 )
Balance, December 31, 1999
    4,631,896       760,036       -       -               (692,828 )     67,208  
Exercise of Common Stock Options, February 24, 2000
    166,535       80,770                                       80,770  
Issuance of Common Stock, May 12, 2000
    253,609       56,000                                       56,000  
Exercise of Common Stock Options, June 8, 2000
    62,497       30,312                                       30,312  
Issuance of Common Stock, for the month of September, 2000
    96,745       21,086                                       21,086  
Exercise of Common Stock Options, November 3, 2000
    66,000       7,491                                       7,491  
Issuance of Common Stock for Services, December 8, 2000
    40,000       19,400                                       19,400  
Net loss
                                            (257,139 )     (257,139 )
Balance, December 31, 2000
    5,317,282       975,095       -       -               (949,967 )     25,128  
 
The accompanying notes are an integral part of these financial statements.
 
 
BIOMODA, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' (DEFICIT) EQUITY
FOR THE PERIOD FROM JANUARY 3, 1990, (INCEPTION) TO March 31, 2012
(Continued)
 
                                   
Accumulated
   
Total
 
                                   
Deficit During
   
Stockholders'
 
   
Common Stock
   
Preferred Stock
     
 Treasury
   
Development
   
Equity
 
   
Shares
   
Amount
   
Shares
   
Amount
     
 Stock
   
Stage
   
(Deficit)
 
Issuance of Common Stock for Services, January 25, 2001
    5,000       2,425                                 2,425  
Issuance of Common Stock, January 31, 2001
    160,000       24,000                                 24,000  
Issuance of Common Stock for Services, April 6, 2001
    15,000       7,276                                 7,276  
Issuance of Common Stock, for the month of April, 2001
    120,000       58,200                                 58,200  
Issuance of Common Stock, June 28, 2001
    20,000       9,700                                 9,700  
Issuance of Common Stock, for the month of August, 2001
    110,000       53,500                                 53,500  
Issuance of Common Stock, November 7, 2001
    10,000       5,000                                 5,000  
Net loss
                                        (372,655 )     (372,655 )
Balance, December 31, 2001
    5,757,282       1,135,196       -       -               (1,322,622 )     (187,426 )
Net loss
                                            (83,689 )     (83,689 )
Balance, December 31, 2002
    5,757,282       1,135,196       -       -               (1,406,311 )     (271,115 )
Exercise of stock options, July 11, 2003
    980,000       147,000                                       147,000  
Net loss
                                            (311,233 )     (311,233 )
Balance, December 31, 2003
    6,737,282       1,282,196       -       -               (1,717,544 )     (435,348 )
Issuance of Common Stock for Services, February 9, 2004
    35,000       5,250                                       5,250  
Exercise of Common stock Options, February 9, 2004
    60,000       30,000                                       30,000  
Issuance of Common Stock for Services, August 5, 2004
    85,000       12,750                                       12,750  
Exercise of Common stock Options, September 27, 2004
    200,000       30,000                                       30,000  
Net loss, December 31, 2004
                                            (758,945 )     (758,945 )
Balance, December 31, 2004
    7,117,282       1,360,196       -       -               (2,476,489 )     (1,116,293 )
Issuance of Common Stock for Services, May 27, 2005
    30,000       4,500                                       4,500  
Issuance of Common Stock for Services, October 12, 2005
    40,000       6,000                                       6,000  
Net loss, December 31, 2005
                                            (624,756 )     (624,756 )
Balance, December 31, 2005
    7,187,282       1,370,696       -       -               (3,101,245 )     (1,730,549 )
Issuance of Common Stock for Services, October 23, 2006
    690,000       544,500                                       544,500  
Issuance of Common Stock in exchange for Debt, October 23, 2006
    1,176,471       1,000,000                                       1,000,000  
Issuance of Common Stock for Services, November 30, 2006
    7,500       28,125                                       28,125  
Issuance of Common Stock for Services, December 15, 2006
    10,000       29,000                                       29,000  
Issuance of Common Stock for Services, December 26, 2006
    15,000       44,850                                       44,850  
Acquisition of Treasury Stock, June 30, 2006
                                   
        (9,000
            (9,000 )
Stock-Based Compensation
            35,042                                       35,042  
Net loss, December 31, 2006
                                            (1,807,312 )     (1,807,312 )
Balance, December 31, 2006
    9,086,253       3,052,213       -       -      
        (9,000
    (4,908,557 )     (1,865,344 )
 
The accompanying notes are an integral part of these financial statements.
 
 
BIOMODA, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' (DEFICIT) EQUITY
FOR THE PERIOD FROM JANUARY 3, 1990, (INCEPTION) TO March 31, 2012
(Continued)
 
                                 
Accumulated
   
Total
 
                                 
Deficit During
   
Stockholders'
 
   
Common Stock
   
Preferred Stock
   
Treasury
   
Development
   
Equity
 
   
Shares
   
Amount
   
Shares
   
Amount
   
Stock
   
Stage
   
(Deficit)
 
Issuance of Common Stock for Services, January 2007
    131,000       259,500                               259,500  
Issuance of Common Stock, January 2007
    30,000       30,000                               30,000  
Issuance of Common Stock for Services, February 2007
    150,000       157,500                               157,500  
Issuance of Common Stock for Services, March 2007
    445,000       375,500                               375,500  
Issuance of Common Stock in exchange for Debt, March 2007
    86,786       73,768                               73,768  
Exercise of Options, March 2007
    2,000       1,000                               1,000  
Issuance of Common Stock for Services, April 2007
    724,062       455,559                               455,559  
Issuance of Common Stock in exchange for Debt, April 2007
    500,000       315,000                               315,000  
Issuance of Common Stock for Services, June 2007
    920,000       154,600                               154,600  
Issuance of Common Stock, June 2007
    343,000       41,667                               41,667  
Issuance of Common Stock for Services, July 2007
    141,000       15,700                               15,700  
Issuance of Common Stock, July 2007
    1,466,635       84,985                               84,985  
Issuance of Common Stock, August 2007
    1,636,166       53,943                               53,943  
Issuance of Common Stock for Services, September 2007
    160,000       12,800                               12,800  
Issuance of Common Stock, September 2007
    2,416,248       54,819                               54,819  
Issuance of Common Stock, October 2007
    1,557,730       36,457                               36,457  
Issuance of Common Stock in exchange for Debt, October 2007
    165,000       16,500                               16,500  
Issuance of Common Stock for Services, November 2007
    770,000       100,100                               100,100  
Issuance of Common Stock, November 2007
    16,190,967       445,674                               445,674  
Issuance of Common Stock for Services, December 2007
    90,140       21,634                               21,634  
Issuance of Common Stock, December 2007
    11,303,996       385,250                               385,250  
Stock-Based Compensation
            55,416                               55,416  
Net loss, December 31, 2007
                                      (2,307,051 )     (2,307,051 )
Balance, December 31, 2007
    48,315,983       6,199,585       -       -       (9,000 )     (7,215,608 )     (1,025,023 )
Issuance of Common Stock, January 2008
    3,887,100       155,077                                       155,077  
Issuance of Common Stock for Services, February 2008
    11,128,967       312,244                                       312,244  
Issuance of Common Stock for Services, February 2008
    1,500,000       180,000                                       180,000  
Issuance of Common Stock for Services, March 2008
    1,725,860       86,293                                       86,293  
Issuance of Common Stock, March 2008
    8,410,112       209,897                                       209,897  
Issuance of Common Stock, April 2008
    1,328,142       33,268                                       33,268  
Issuance of Common Stock for Services, April 2008
    25,000       1,250                                       1,250  
Issuance of Common Stock for Services, June 2008
    237,237       17,779                                       17,779  
Issuance of Common Stock for Services, July 2008
    244,000       12,200                                       12,200  
Issuance of Common Stock for Services, September 2008
    125,000       5,000                                       5,000  
Issuance of Common Stock for Services, October 2008
    47,188       1,888                                       1,888  
Issuance of Common Stock for Services, December 2008
    30,000       900                                       900  
Net loss, December 31, 2008
                                            (315,263 )     (315,263 )
Balance, December 31, 2008
    77,004,589       7,215,381       -       -       (9,000 )     (7,530,871 )     (324,490 )
 
The accompanying notes are an integral part of these financial statements.
 
 
BIOMODA, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' (DEFICIT) EQUITY
FOR THE PERIOD FROM JANUARY 3, 1990, (INCEPTION) TO March 31, 2012
(Continued)
 
                                 
Accumulated
   
Total
 
                                 
Deficit During
   
Stockholders'
 
   
Common Stock
   
Preferred Stock
   
Treasury
   
Development
   
Equity
 
   
Shares
   
Amount
   
Shares
   
Amount
   
Stock
   
Stage
   
(Deficit)
 
Issuance of Common Stock for Services, January 2009
    30,000       1,200                               1,200  
Issuance of Common Stock for Services, June 2009
    30,000       1,200                               1,200  
Adjustment to Treasury Shares on June 30, 2009
            (9,000 )                 9,000             -  
Addition to Treasury Shares September 30, 2009
                                (4,617 )           (4,617 )
Issuance of Common Stock for Services, July 2009
    250,000       12,500                                 12,500  
Issuance of Common Stock for Cash, August 2009
    100,000       5,000                                 5,000  
Issuance of Common Stock for Services, August 2009
    100,000       7,000                                 7,000  
Issuance of Treasury Shares for Services August 2009
      220,000                                 220,000  
Issuance of Common Stock for Cash, December 2009
    2,000,000       100,000                                 100,000  
Issuance of Treasury Shares for Services October 2009
      72,885                   2,115             75,000  
Net loss, December 31, 2009
                                        (905,289 )     (905,289 )
Balance, December 31, 2009
    79,514,589       7,626,166       -       -       (2,502 )     (8,436,160 )     (812,496 )
Issuance of Common Stock for cash January 2010
    400,000       20,000                                       20,000  
Issuance of Common Stock for cash February 2010
    800,000       40,000                                       40,000  
Issuance of Common Stock for services February 2010
    480,000       105,600                                       105,600  
Issuance of Treasury Shares for Services February 2010
      58,731                       1,269               60,000  
Issuance of Common Stock and Warrants for Cash March 2010
    6,250,001       820,000                                       820,000  
Derivative liabilities on debt, warrants and non-employee options
      (2,312,922 )                                     (2,312,922 )
Issuance of Common Stock for cash June 2010
    335,000       53,600                                       53,600  
Issuance of Common Stock for services June 2010
    625,000       100,000                                       100,000  
Issuance of Common Stock for services to Directors June 2010
    200,000       50,000                                       50,000  
Issuance of Common Stock for cash July 2010
    471,184       66,956                                       66,956  
Issuance of Common Stock for Series II Warrants July 2010
    589,712       -                                       -  
Issuance of Common Stock for services  July 2010
    2,005,000       384,700                                       384,700  
Issuance of Common Stock for cash August 2010
    666,400       94,696                                       94,696  
Issuance of Common Stock for services  to Directors August 2010
    100,000       17,000                                       17,000  
Issuance of Common Stock for services October 2010
    500,000       65,000                                       65,000  
Net loss December 31, 2010
                                            (655,781 )     (655,781 )
Balance, December 31, 2010
    92,936,886       7,189,527       -       -       (1,233 )     (9,091,941 )     (1,903,647 )
Issuance of Common Stock for Services March 2011
    100,000       25,000                                       25,000  
Issuance of Common Stock for Conversion of Debt April, 2011
    4,681,128       226,997                                       226,997  
Issuance of Common Stock for Series I Warrants April 2011
    1,560,000       79,872                                       79,872  
Issuance of Common Stock for Conversion of Debt May, 2011
    4,202,961       112,037                                       112,037  
Issuance of Common Stock for Conversion of Debt June, 2011
    12,876,443       204,332                                       204,332  
Issuance of Common Stock for Conversion of Debt July, 2011
    5,415,278       54,153                                       54,153  
Issuance of Common Stock for Series I Warrants July 2011
    4,000,000       40,000                                       40,000  
Issuance of Common Stock for Cash August 2011
    2,500,000       25,000                                       25,000  
Issuance of Common Stock for Series I cashless Warrants August 2011
    2,041,667       -                                       -  
Issuance of Preferred Stock for Conversion of Accrued Liabilities
    -       100       60,000                       60,000  
Derivative liabilities on debt, warrants and non-employees options
      124,042                                       124,042  
Net loss, December 31, 2011
                                            (230,472 )     (230,472 )
Balance, December 31, 2011
    130,314,363     $ 8,080,960       100     $ 60,000     $ (1,233 )   $ (9,322,413 )   $ (1,182,686 )
Issuance of Common Stock for exercise of Series I Warrants February 2012      2,000,000       20,000                                      
20,000
 
Issuance of Common Stock for Services February 2012        40,749,600        529,745                                      
529,745
 
Derivative liabilities on debt, warrants and non-employees options              631                                      
631
 
Issuance of Common Stock for Cash March 2012        2,800,000       28,000                                      
28,000
 
Net Income, March 31, 2012                                            
(668,936
)     (668,936
Balance, March 31, 2012     175,863,963     8,659,336           100     60,000     (1,233   (9,991,349 )    (1,273,246
 
The accompanying notes are an integral part of these consolidated financial statements.
 
 
BIOMODA, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
 
         
January 3, 1990
 
   
For the Three Months Ended
   
(inception) to
 
    March 31,     March 31,  
   
2012
   
2011
   
2012
 
CASH FLOWS FROM OPERATING ACTIVITIES
                 
  Net loss
  $ (668,936 )   $ (902,809 )   $ (9,991,349 )
Adjustments to reconcile net earnings to net
cash used in operating activities
                       
    Stock based compensation
    529,745       25,000       4,527,821  
    Depreciation and amortization
    5,855       3,815       384,711  
    Unrealized gain on derivative liabilities - warrant instruments
    (2,278 )     93,745       (2,708,596 )
    Unrealized gain on derivative liabilities - options
    -       441       (24,567 )
    Unrealized gain on derivative liabilities - note conversion feature
    -       190,732       (569,150 )
    Amortization of debt discount
    -       140,000       1,203,886  
    Amortization of deferred financing costs
    -       5,000       29,573  
    Write-off of license fee
    -       -       1,250  
    Write-off of accounts payable
    (32,654 )     -       (32,654 )
    Gain/loss on sale of assets
    -       -       (4,830 )
    Foreign currency translation adjustments
    -       -       3,247  
    Gain on extinguishment of debt
    -       -       (1,283,964 )
Changes in operating assets and liabilities
                       
    Accounts receivable
    -       -       174,222  
    Prepaid expenses and other current assets
    -       3,710       39,101  
    Advances on research grants
    -       -       -  
    Accounts payable and accrued liabilities
    143,545       198,165       1,748,069  
                         
        Net cash used in operating activities
    (24,723 )     (242,201 )     (6,503,230 )
                         
CASH FLOWS FROM INVESTING ACTIVITIES
                       
     Proceeds from sale of equipment
    -       -       6,327  
     Purchase of equipment
    -       -       (37,443 )
     Organizational costs
    -       -       (560 )
     Purchases of patents, trademarks and licenses
    (9,096 )     (4,166 )     (575,232 )
                         
        Net cash used in investing activities
    (9,096 )     (4,166 )     (606,908 )
                         
CASH FLOWS FROM FINANCING ACTIVITIES
                       
    Issuance of common stock for cash
    48,000       -       4,291,008  
    Proceeds from/ repayments of stockholders' advances
    (1,500 )     3,375       222,906  
    Repayment of line of credit from affiliated entity
    -       -       (341,107 )
    Proceeds/repayments of short-term debt
    -       592       (104,954 )
    Proceeds/repayments of convertible short-term debt, net
    -       -       480,000  
    Proceeds from line of credit from affiliated company
    -       -       2,680,882  
    Proceeds/repayments of long-term debt, net
    -       (3,627 )     (91,226 )
    Acquisition of treasury stock
    -       -       (13,617 )
                         
        Net cash provided by financing activities
    46,500       340       7,123,892  
                         
NET INCREASE IN CASH
    12,681       (246,027 )     13,754  
                         
Cash at beginning of period
    1,073       248,770       -  
                         
Cash at end of period
  $ 13,754     $ 2,743     $ 13,754  
                         
Supplemental cash flow information:
                       
    Interest expense paid in cash
  $ -     $ -     $ -  
    Income taxes paid in cash
  $ -     $ -     $ -  
                         
Non-cash investing and financing activities:
                       
    Accrued salaries converted to notes payable
  $ -     $ -     $ 479,484  
    Accrued salaries converted to preferred stock
  $ -     $ -     $ 65,504  
    Derivative liability incurred through issuance of warrants
  $ -     $ -     $ 3,370,622  
    Settlement of derivative liabilities
  $ 631     $ -     $ 1,182,372  
    Interest converted to note payable
  $ -     $ -     $ 159,462  
    Common stock issued to extinguish related party debt
  $ -     $ -     $ 1,418,768  
    Common stock issued to extinguish related party debt
  $ -     $ -     $ 50,000  
 Discount on note payable related to deferred financing costs
  $ -     $ -     $ 60,000  
 Discount on note payable related to derivative conversion feature
  $ -     $ -     $ 500,000  
 Conversion of notes payable and accrued interest to common stock
  $ -     $ -     $ 597,519  
 Fixed assets used to settle accounts payable
  $ 2,157     $ -     $ 2,157  
 
The accompanying notes are an integral part of these unaudited financial statements.
 
 
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