UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: October 31, 2004
[ ] 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: 333-103083
XENOMICS, INC.
-----------------------------------------------------
(Exact name of Registrant as specified in its charter)
Florida 04-3721895
- ------------------------------- --------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
420 Lexington Avenue, Suite 1701, New York, New York 10170
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(Address of principal executive offices) (Zip Code)
(212) 297-0808
-------------------------------
(Registrant's telephone number)
---------------------------------------------------
(Former Name, Former Address and Former Fiscal Year,
if changed since last report)
Check whether the issuer: (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act 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 past 90 days.
[X] Yes [ ] No
APPLICABLE ONLY TO CORPORATE ISSUERS:
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date:
Class Outstanding at December 14, 2004
Common Stock, par value $0.0001 15,588,737 shares
Transitional Small Business Disclosure Format (check one): Yes [ ] No [X]
XENOMICS, INC.
FORM 10-QSB
CONTENTS
PART I -- FINANCIAL INFORMATION Page
Item 1. Consolidated Financial Statements
Unaudited Consolidated Balance Sheet as of
October 31, 2004 1
Unaudited Consolidated Statements of Operations
for the Three and Nine Months Ended October
31, 2004 and 2003 and the period April 26,
2002 (Inception) to October 31, 2004 2
Unaudited Consolidated Statements of Cash Flows
for the Nine Months Ended October 31, 2004
and 2003 and for the period April 26, 2002
(Inception) to October 31, 2004 3
Notes to Unaudited Consolidated Financial
Statements 4
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10
Item 3. Controls and Procedures 12
PART II -- OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 13
Signatures
i
INTRODUCTORY NOTE
This Report on Form 10-QSB for Xenomics, Inc. (the "Company") may contain
forward-looking statements. You can identify these statements by forward-looking
words such as "may," "will," "expect," "intend," "anticipate," believe,"
"estimate" and "continue" or similar words. Forward-looking statements include
information concerning possible or assumed future business success or financial
results. You should read statements that contain these words carefully because
they discuss future expectations and plans, which contain projections of future
results of operations or financial condition or state other forward-looking
information. We believe that it is important to communicate future expectations
to investors. However, there may be events in the future that we are not able to
accurately predict or control. Accordingly, we do not undertake any obligation
to update any forward-looking statements for any reason, even if new information
becomes available or other events occur in the future.
The forward-looking statements included herein are based on current expectations
that involve a number of risks and uncertainties set forth under "Risk Factors"
in our report on Form 8-K and other periodic reports filed with the SEC.
Accordingly, to the extent that this Report contains forward-looking statements
regarding the acquisitions, financial condition, operating results, business
prospects or any other aspect of the Company, please be advised that the
Company's actual financial condition, operating results and business performance
may differ materially from that projected or estimated by the Company in
forward-looking statements. Unless otherwise indicated in this Report all share
and per share information gives effect to a 111 for 1 stock split effected on
July 26, 2004.
ii
PART I - FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Xenomics Inc.
(A Development Stage Company)
Consolidated Balance Sheets
October 31, 2004
(Unaudited)
ASSETS
CURRENT ASSETS
Cash $ 1,157,183
Prepaid expenses 43,334
------------------
Total current assets 1,200,517
------------------
FIXED ASSETS 88,195
------------------
OTHER ASSETS
Patents 38,732
Security deposits 57,207
------------------
Total other assets 95,939
------------------
Total Assets $ 1,384,651
==================
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable and accruals $ 67,793
------------------
Total current liabilities 67,793
------------------
Total Liabilities 67,793
------------------
STOCKHOLDERS' EQUITY
Preferred stock, $.001 par value, 20,000,000 shares
authorized, none outstanding -
Common stock, $0.0001 par value, 100,000,000 shares
authorized; 15,938,737 issued and outstanding 1,594
Treasury Stock-350,000 shares (35)
Additional paid in capital 1,717,587
Accumulated (Deficit) during development stage (402,288)
------------------
Total Stockholders' Equity 1,316,858
------------------
Total Liabilities and Stockholders' Equity $ 1,384,651
==================
The accompanying notes are an integral part of the financial statements
1
Xenomics Inc.
(A Development Stage Company)
Consolidated Statements of Operations
For the Nine Months and Three Months Ending October 31, 2004 and for the Period
Commencing April 26, 2002 (Date of inception) to October 31, 2004 (Unaudited)
Cumulative
From
April 26, 2002 For Nine For Nine For Three For Three
(inception) Months Months Months Months
Through Ended Ended Ended Ended
October 31, October 31, October 31, October 31, October 31,
2004 2004 2003 2004 2003
------------ ------------ ------------ ------------ ------------
Revenues $ 0 $ 0 $ 0 $ 0 $ 0
Operating expenses 406,259 401,065 485 305,292 61
------------ --------------------------- --------------------------
Net (loss) before other income (406,259) (401,065) (485) (305,292) (61)
Other Income -Interest Income 3,971 3,971 0 3,971 0
------------ --------------------------- --------------------------
Net (loss) before provision for (402,288) (397,094) (485) (301,321) (61)
income taxes
Provision for income taxes 0 0 0 0 0
------------ --------------------------- --------------------------
Net (loss) $ (402,288) $ (397,094) $ (485) $ (301,321) $ $(61)
============ =========================== ==========================
Weighted average shares outstanding 190,646,316 229,548,000 15,588,737 229,548,000
==========================================================
Net (Loss) - per share, Basic and diluted $ (0.00) $ (0.00) $ (0.02) $ (0.00)
===========================================================
The accompanying notes are an integral part of the financial statements
2
Xenomics Inc.
(A Development Stage Company)
Consolidated Statements of Cash Flows
For the Nine Months Ending October 31, 2004 and for the Period Commencing April
26, 2002 (Date of inception) to October 31, 2004 (Unaudited)
Cumulative
From For the For the
April 26, 2002 Nine Months Nine Months
(inception) Ended Ended
Through October 31, October 31,
October 31, 2004 2004 2003
---------------- ------------- ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) $ (402,288) $ (397,094) $ (485)
Adjustments to reconcile net income (loss) to net cash
used for operations:
Change in operating assets and liabilities:
(Increase) in prepaid expenses (43,334) (43,334) 0
Increase in accounts payable & accruals 67,793 25,696 365
------------- ------------- ------------
Net cash used by operating activities (377,829) (414,732) (120)
------------- ------------- ------------
CASH FLOW FROM INVESTING ACTIVITIES:
(Increase) in security deposits (57,207) (57,207) 0
Purchase fixed assets (88,195) (88,195) 0
Patent costs (38,732) (1,732) 0
------------- ------------- ------------
Net cash (used) by investing activities (184,134) (147,134) 0
------------- ------------- ------------
CASH FLOW FROM FINANCING ACTIVITIES:
Net proceeds from private placement 2,368,510 2,368,510 0
Payment of acquisition costs (149,800) (149,800) 0
Purchase of common stock (500,000) (500,000) 0
------------- ------------- ------------
Net cash provided by financing activities 1,718,710 1,718,710 0
------------- ------------- ------------
Net Increase (Decrease) in cash 1,556,747 1,156,844 (120)
CASH, beginning of period, 436 339 495
------------- ------------- ------------
CASH, end of period $ 1,157,183 $ 1,157,183 $ 375
============= ============= ============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for Interest Expenses $ 0 $ 0 $ 0
Cash paid for Income Taxes $ 0 $ 0 $ 0
The accompanying notes are an integral part of the financial statements
3
Xenomics Inc.
(A Development Stage Company)
Notes to Consolidated Financial Statements
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
- ------------
The Company was organized under the laws of the State of Florida on April 26,
2002 as Used Kar Parts Inc. Upon a reverse merger on July 2, 2004 with its
subsidiary Xenomics (a California corporation), the Company changed its name to
Xenomics, Inc. The Company is in the development stage and plans to generate
revenue from developing its medical patents. Currently it has no operations.
Basis of Accounting
- -------------------
The Company's policy is to prepare its financial statements using the accrual
basis of accounting in accordance with generally accepted accounting principles.
The Company has elected to use January 31 as its annual year end.
Use of Estimates
- ----------------
The preparation of financial statements in conformity with generally accepted
accounting principles 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.
Cash Equivalents
- ----------------
For purposes of the statement of cash flows, the Company treats all short-term
investments with maturities of six months or less at acquisition to be cash
equivalents.
Development Stage Company
- -------------------------
The Company has been in the development stage since inception (April 26, 2002).
There have been no revenues to date. The Company has incurred an accumulated
deficit of $402,288 since inception.
Concentration of Risk
- ---------------------
The Company places its cash in high credit quality financial institutions. For
the period ending October 31, 2004 the Company had on deposit funds in excess of
the $100,000 FDIC insured limits. Management does not believe that there is any
concentration risk.
4
Xenomics Inc.
(A Development Stage Company)
Notes to Consolidated Financial Statements
Income Taxes
- ------------
The Company accounts for income taxes under the accrual method established by
Statement of Financial Accounting Standards (SFAS) No. 109, which requires
recognition of deferred tax assets and liabilities for the expected future tax
consequences and events that have been included in the financial statements or
tax returns. Under this method, deferred tax assets and liabilities are
determined based on assets and liabilities using enacted rates for the year in
which the differences are expected to reverse.
Principles of Consolidation
- ---------------------------
The consolidated financial statements include the accounts of Xenomics, Inc. and
its wholly-owned subsidiary Xenomics. All inter company transactions have been
eliminated.
Net Loss Per Share, basic
- -------------------------
Net income (loss) per share is computed by dividing the net income (loss) by the
weighted average number of shares outstanding during the period. Net income
(loss) per share, diluted, is not presented due to the anti dilutive nature of
the securities outstanding.
Fair value of financial instruments
- -----------------------------------
The following methods and assumptions were used to estimate the fair value of
each class of financial instruments: cash, and accounts payable. The carrying
amounts approximated fair value because of the demand nature of these
instruments.
Interim Statements
- ------------------
The financial statements for the nine and three months ending October 31, 2004
and 2003 are unaudited and include all adjustments which in the opinion of
management are necessary for a fair presentation, and such adjustments are of a
normal and recurring nature. The results of operations for the nine and three
months are not indicative of a full year results.
5
Xenomics Inc.
(A Development Stage Company)
Notes to Consolidated Financial Statements
NOTE 2 CAPITAL STOCK TRANSACTIONS
On July 2, 2004, the Company sold 2,645,210 shares of common stock for
$2,512,859 in a private placement. Simultaneously, the Company purchased
218,862,474 shares of common stock from a shareholder for $500,000 and acquired
all of the shares of common stock of Xenomics (a California corporation) for
2,258,001 shares of common stock
As part of the Xenomics acquisition, 350,000 shares of common stock are being
held in escrow to cover potential indemnification liabilities. Such shares are
being treated on the balance sheet as treasury stock.
Effective July 26, 2004, the Company had a 111 to 1 forward stock split. All
financial and per share data has been adjusted accordingly.
As of October 31, 2004, the Company had issued 20,000 stock warrants at an
exercise price of $1.25, immediately vesting, and expiring July 23, 2009.
NOTE 3 INCOME TAXES
In February 1992, the Financial Standards Board issued Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes". Under SFAS No. 109,
deferred assets and liabilities are recognized for the estimated future tax
consequences between the financial statement carrying amounts of the existing
assets and their respective basis.
Deferred assets and liabilities are measured using enacted tax rates in effect
for the year in which temporary differences are expected to be recovered or
settled. Under SFAS No. 109 the effect on deferred assets and liabilities of a
change in tax rates is recognized in the period that includes the enactment
date.
Nine Months Ending
October 31, 2004
----------------
Statutory federal income tax rate 34%
State income tax rate 6
Effective tax rate 40%
==
The amount recorded as a deferred tax asset as of October 31, 2004 is
approximately $158,000. The Company has established a 100% valuation allowance
against this deferred tax asset, as the Company has no history of profitable
operations.
The Company has a net operating loss carry forward as of December 31, 2003 of
approximately $5,000 which is offset by a 100% valuation allowance due to the
uncertainty surrounding the ultimate realization of these assets. The loss
carry-forward expires in 15 years.
6
Xenomics Inc.
(A Development Stage Company)
Notes to Consolidated Financial Statements
NOTE 4 PATENT EXPENSES
As of October 31, 2004, the Company has capitalized costs related to patent
development of $38,732. Patents generally have a life of seventeen years.
Additional patent development is continuing, and as of yet no revenues have been
generated under these patents.
NOTE 5 CONTRACTS AND COMMITTMENTS
Pursuant to a royalty agreement dated December 21, 1999, the Company is
obligated to pay $5,000 annually commencing May 17, 2000 as consideration for
the assignment of intellectual property to the Company. On July 2, 2004 all
royalties incurred as of that date ($25,000) were paid.
Commencing in July 2004, the Company entered into a three year consulting
agreement with its Chairman and three year employment agreements with two key
executives for a combined annual compensation of $375,000 (increasing to
$485,000 upon the occurrence of certain events). Additionally, the individuals
were granted stock options of an aggregate 3,037,500 shares of common stock at
$1.25 per share vesting progressively after 1 year of employment.
In September 2004, the Company entered into a 3 year letter agreement with its
Chief Executive Officer with an annual base salary of $215,000, other benefits,
and 1,050,000 common stock options at an exercise price of $2.25 per share
vesting progressively over three years.
NOTE 6 FIXED ASSETS
The cost of property and equipment will be depreciated using the straight-line
methods over their estimated useful lives (5-7 years). As of October 31, 2004,
the Company had $88,195 in fixed assets. No depreciation had been provided
since the assets will be depreciated when put into use.
7
Xenomics Inc.
(A Development Stage Company)
Notes to Consolidated Financial Statements
NOTE 7 LEASE COMMITTMENTS
Office Facilities
- -----------------
The Company executed a lease agreement commencing September 15, 2004 and
expiring September 30, 2011. Annual base rent for the year ending September 2005
is $71,649 increasing to an annual base rent ending in September 2011 of
$80,689.
Laboratory Facilities
- ---------------------
The Company executed a lease agreement commencing September 1, 2004 and expiring
in August 2006. The total monthly rent (inclusive of common area and maintenance
charges) is $10,028. For the years ending January 31, 2004, 2005 and 2006, the
lease liability is $50,140, $120,336 and $70,196, respectively.
Rent expense for the three and nine months ended October 31, 2004 was $32,979.
There was no rent expense for the three and nine months ended October 31, 2003
NOTE 8 STOCK OPTION PLAN
The Company has reserved 5,000,000 shares of common stock for issuance upon
exercise of option grants under the 2004 Stock Option Plan, instituted in June
2004. As of September 30, 2004, 3,825,000 of options have been granted at an
exercise price of $1.25 per share. Of the options granted, 75,000 are
immediately vested and the remainder vest over three years. The options expire
after ten years in 2014.
In September 2004, the Company also authorized the issuance of 1,050,000 options
to the Chief Executive Officer, at a exercise price of $2.25 per share vesting
over three years. The Company also authorized the issuance of 375,000 options at
an exercise price of $2.25 per share which vest in the event there is a sale of
the Company for consideration equal to or exceeding $15.00 per share. These
options are subject to shareholder approval of an increase in the number of
shares in the option plan.
The Company has not recognized an expense for these options due to the limited
market and trading volume for the Company's common stock.
NOTE 9 INVESTMENT IN SUBSIDIARY
The Company entered into a shareholder's agreement on April 7, 2004 for Spaxen
Italia SRL (an Italian corporation). The Company's contribution for its 50%
interest in Spaxen Italia SRL consists of rights in a certain technology and
related patent application that applies Xenomic's, Inc. proprietary technology
in the field of infectious diseases. The other 50% partner will contribute to
the subsidiary 100,000 Euros as working capital. The subsidiary had minimal
activity. Spaxen Italia SRL has incurred approximately $100,000 for startup and
administrative expenditures since inception. The Company has no obligation to
fund the joint venture other than contribution of the use if its intellectual
property.
8
Xenomics Inc.
(A Development Stage Company)
Notes to Consolidated Financial Statements
NOTE 10 NEW ACCOUNTING PRONOUNCEMENTS
In December 2002, the FASB issued Statement of Financial Accounting Standards
No. 148, "Accounting for Stock-Based Compensation" Transition and Disclosure an
Amendment of FASB Statement No. 123 (SFAS 148). SFAS 148 amends SFAS 123
"Accounting for Stock-Based Compensation," providing for an alternative method
of transition for a voluntary change to the fair value based method of
accounting for stock-based employee compensation. Additionally, it amends the
disclosure requirements of SFAS 123 to require prominent disclosures in both
annual and interim financial statements about the method of accounting for
stock-based employee compensation and the effect of the method used on reported
results. SFAS 148 is effective for fiscal years beginning after December 15,
2002. The interim disclosure provisions are effective for financial reports
containing financial statements for interim periods beginning after December 15,
2002. The Company's adoption of the interim disclosure provisions of SFAS 148
did not affect its financial position.
In May 2003, the FASB issued Statement of Financial Accounting Standards No.
150, "Accounting for Certain Financial Instruments with Characteristics of both
Liabilities and Equity" (SFAS 150). SFAS sets standards for an issuer as to how
to classify and measure financial instruments with characteristics of both
liabilities and equity. SFAS 150 is effective for financial instruments entered
into after May 31, 2003, and is effective after June 15, 2003. Adoption of SFAS
150 is not expected to have a material effect on the Company.
NOTE 11 SUBSEQUENT EVENT
The Company is in the process of raising additional capital through a private
placement.
9
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The following discussion should be read in conjunction with our condensed
consolidated financial statements and notes to those statements. In addition to
historical information, the following discussion and other parts of this
quarterly report contain forward-looking information that involves risks and
uncertainties.
Overview
- --------
We are a development stage medical diagnostic company that focuses on the
development of diagnostic tests utilizing transrenal nucleic acids (Tr-NA) for a
broad range of diagnostic tests. Tr-NA's are components of DNA derived from the
blood stream that have been shown to cross the kidney barrier and can be
detected in urine. In March 2004, we organized a joint venture with the
Spallanzani National Institute for Infectious Diseases (Instituto Nazionale per
le Malattie Infettive, "INMI") in Rome, Italy, in the form of a new R&D company
called SpaXen Italia, S.R.L ("SpaXen") which will conduct research and
development on non-invasive diagnostic tests for infectious disease using Tr-NA
methodology.
Since inception on April 26, 2002 through October 31, 2004, we have sustained
cumulative net losses of $402,288. Our losses have resulted primarily from
research and development expenses, patent costs and legal and accounting
expenses. From inception through October 31, 2004, we have not generated any
revenue from operations. We expect to incur additional losses to perform further
research and development activities. We do not currently have any commercial
products and we do not expect to have any for the foreseeable future. Our
product development efforts are in their early stages and we cannot make
estimates of the costs or the time it will take to complete. The risk of
completion of any program is high because of the long duration of clinical
testing, regulatory approval and review cycles and uncertainty of the costs. Net
cash inflows from any products developed may take several years to achieve.
History
- -------
We were incorporated in the State of Florida on April 26, 2002. On July 2, 2004,
we acquired Xenomics, an unaffiliated California corporation by issuing
2,258,001 shares of our common stock to Xenomics' five shareholders in exchange
for all outstanding shares of Xenomics stock (the "Exchange"). The Exchange was
made according to the terms of a Securities Exchange Agreement dated May 18,
2004. As part of the Exchange, we:
o redeemed 1,971,734 pre-split shares (the equivalent of
218,862,474 post-split shares) from Panetta Partners Ltd., a
principal shareholder, for $500,000 or $0.0023 per share.
o amended our articles of incorporation to change our corporate
name to "Xenomics, Inc." and to split our stock outstanding
prior to the redemption 111 for 1 (effective July 26, 2004).
o entered into employment agreements with two of the former
Xenomics shareholders and a consulting agreement with one of
the former Xenomics shareholders.
10
o entered into a Voting Agreement with certain investors, the
former Xenomics shareholders and certain principal
shareholders.
o entered into a Technology Acquisition Agreement with the
former Xenomics shareholders under which we granted an option
to the former Xenomics holders to acquire Xenomics technology
if we fail to apply at least 50% of the net proceeds of
financing we raise to the development of Xenomics technology
during the period ending July 1, 2006 in exchange for all of
our shares and share equivalents held by the former Xenomics
holders at the time such option is exercised.
Results of Operations
- ---------------------
Three Months Ended October 31, 2004 and October 31, 2003.
- ---------------------------------------------------------
We had no revenues during the three months ended October 31, 2004 and October
31, 2003 because we do not have any commercial products and we do not expect to
have any for the foreseeable future.
Operating expenses increased to $305,292 during the three months ended October
31, 2004 from $61 for the same period in 2003. This increase was primarily the
result of the acquisition of Xenomics discussed elsewhere in this report. During
the three months ended October 31, 2004, we incurred directors and officers
insurance expense, higher payroll and consulting expenses, increased rent
expenses as we entered into leases for our corporate headquarters in New York
and laboratory space in New Jersey and increased legal, travel and office
expenses.
Other income consisted of interest income and increased to $3,971 during the
three months ended October 31, 2004 from 0 for the same period in 2003.
Net loss for the three months ended October 31, 2004 was $301,321 compared to
$61 for the same period in 2003. The increase in the net loss in 2004 is the
result of higher operating expenses as described above.
Nine Months Ended October 31, 2004 and October 31, 2003.
- --------------------------------------------------------
We had no revenues during the nine months ended October 31, 2004 and 2003
because we do not have any commercial products and we do not expect to have any
for the foreseeable future.
Operating expenses increased to $401,065 during the nine months ended October
31, 2004 from $485 for the same period in 2003. This increase was primarily the
result of the acquisition of Xenomics discussed elsewhere in this report. During
the nine months ended October 31, 2004, we incurred directors and officers
insurance expense, higher payroll and consulting expenses, increased rent
expenses as we entered into leases for our corporate headquarters in New York
and laboratory space in New Jersey and increased legal, travel and office
expenses.
Other income consisted of interest income and increased to $3,971 during the
nine months ended October 31, 2004 from 0 for the same period in 2003.
11
Net loss for the three months ended October 31, 2004 was $397,094 compared to
$485 for the same period in 2003. The increase in the net loss in 2004 is the
result of higher operating expenses as described above.
Liquidity and Capital Resources.
- --------------------------------
As of October 31, 2004 we had $1,157,183 in cash and cash equivalents. On June
24, 2004, we sold and issued in a private placement to accredited investors an
aggregate 2,645,210 shares of common stock at an issue price of $0.95 per share
for aggregate gross proceeds of $2,512,949.
On September 15, 2004 we entered into a seven year lease for our corporate
headquarters in New York City comprising 1,963 square feet with an approximate
fixed rent of $75,000 per year through 2011. On July 7, 2004, we entered into a
two year lease for our laboratory in New Jersey comprising 3,698 square feet
with an approximate fixed rent of $7,400 per month through 2006.
Our working capital requirements will depend upon numerous factors including but
not limited to the nature, cost and timing of: product development; pre-clinical
and clinical testing; obtaining regulatory approvals; technological advances and
our ability to establish collaborative arrangements with research organizations
and individuals needed to commercialize our products. Our capital resources will
be focused primarily on the clinical development and regulatory approval of
Tr-NA technology. We expect that our existing capital resources will be
sufficient to fund our operations for at least the next 12 months. We will be
required to raise additional capital to complete the development and
commercialization of our current product candidates.
We are in the process of raising additional capital through a private placement
of common stock which began in late September 2004. There can be no assurance we
will be successful in these fund raising efforts.
Item 3. Controls and Procedures
Our Chief Executive Officer and Principal Financial Officer, based on the
evaluation of our disclosure controls and procedures (as defined in Rules
13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended)
required by paragraph (b) of Rule 13a-15 or Rule 15d-15, as of the end of the
period covered by this report, have concluded that our disclosure controls and
procedures were effective to ensure the timely collection, evaluation and
disclosure of information relating to our company that would potentially be
subject to disclosure under the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder.
During the three months ended October 31, 2004, there were no changes in our
internal control over financial reporting identified in connection with the
evaluation required by paragraph (d) of Rule 13a-15 or Rule 15d-15 that has
materially affected, or is reasonably likely to materially affect, our internal
control over financial reporting.
12
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
31.1 Certification of Chief Executive Officer required
under Rule 13a-14(a)/15d-14(a) under the Exchange
Act.
31.2 Certification of Principal Financial Officer required
under Rule 13a-14(a)/15d-14(a) under the Exchange
Act.
32.1 Certification of Chief Executive Officer pursuant to
18 U.S.C Section 1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002.
32.2 Certification of Principal Financial Officer pursuant
to 18 U.S.C Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
(b) Reports on Form 8-K.
On September 9, 2004, we filed a Form 8-K announcing that we had
entered into a letter agreement with V. Randy White defining the terms of his
employment agreement with us.
On September 15, 2004, we filed a Form 8-K/A which amended our Form 8-K
filed on July 19, 2004 by including financial statements of Xenomics and pro
forma financial information for Xenomics, Inc.
On September 23, 2004, we filed a Form 8-K announcing that our Chief
Executive Officer, Dr. V. Randy White gave a presentation in Germany in which he
stated that the Company had a peer-reviewed clinical database on more than 300
patients.
On October 26, 2004, we filed a Form 8-K announcing that Gary Jacob had
resigned as a director and V. Randy White and Tom Adams had been elected as
directors.
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.
XENOMICS, INC.
(Registrant)
Date: December 15, 2004 By: /s/ V. Randy White
--------------------------
V. Randy White
Chief Executive Officer
Date: December 15, 2004 By: /s/ Christoph Bruening
--------------------------
Christoph Bruening
Treasurer
13
Exhibit 31.1
CERTIFICATIONS
I, V. Randy White, certify that:
1) I have reviewed this quarterly report on Form 10-QSB of Xenomics,
Inc.
2) Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this
quarterly report;
3) Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4) The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) Designed such disclosure controls and procedures, or caused
such disclosure controls and procedures to be designed under
our supervision, to ensure that material information relating
to the registrant, including its consolidated subsidiaries, is
made known to us by others within those entities, particularly
during the period in which this quarterly report is being
prepared;
b) Designed such internal control over financial reporting, or
caused such internal control over financial reporting to be
designed under our supervision, to provide reasonable
assurance regarding the reliability of financial reporting and
the preparation of financial statements for external purposes
in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant's disclosure
controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls
and procedures, as of the end of the period covered by this
report based on such evaluation; and
d) Disclosed in this report any change in the registrant's
internal control over financial reporting that occurred during
the registrant's most recent fiscal quarter (the registrant's
fourth fiscal quarter in the case of an annual report) that
has materially affected, or is reasonably likely to materially
affect, the registrant's internal control over financial
reporting; and
5) The registrant's other certifying officers and I have disclosed,
based on our most recent evaluation of internal control over financial
reporting, to the registrant's auditors and the audit committee of the
registrant's board of directors (or persons performing the equivalent
functions);
a) All significant deficiencies and material weaknesses in the
design or operation of internal control over financial
reporting which are reasonably likely to adversely affect the
registrant's ability to record, process, summarize and report
financial information; and
b) Any fraud, whether or not material, that involves management
or other employees who have a significant role in the
registrant's internal control over financial reporting.
Date: December 15, 2004
/s/ V. Randy White
- --------------------------
V. Randy White
Chief Executive Officer
Exhibit 31.2
CERTIFICATIONS
I, Christoph Bruening, certify that:
1) I have reviewed this quarterly report on Form 10-QSB of Xenomics,
Inc.
2) Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this
quarterly report;
3) Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4) The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) Designed such disclosure controls and procedures, or caused
such disclosure controls and procedures to be designed under
our supervision, to ensure that material information relating
to the registrant, including its consolidated subsidiaries, is
made known to us by others within those entities, particularly
during the period in which this quarterly report is being
prepared;
b) Designed such internal control over financial reporting, or
caused such internal control over financial reporting to be
designed under our supervision, to provide reasonable
assurance regarding the reliability of financial reporting and
the preparation of financial statements for external purposes
in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant's disclosure
controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls
and procedures, as of the end of the period covered by this
report based on such evaluation; and
d) Disclosed in this report any change in the registrant's
internal control over financial reporting that occurred during
the registrant's most recent fiscal quarter (the registrant's
fourth fiscal quarter in the case of an annual report) that
has materially affected, or is reasonably likely to materially
affect, the registrant's internal control over financial
reporting; and
5) The registrant's other certifying officers and I have disclosed,
based on our most recent evaluation of internal control over financial
reporting, to the registrant's auditors and the audit committee of the
registrant's board of directors (or persons performing the equivalent
functions);
a) All significant deficiencies and material weaknesses in the
design or operation of internal control over financial
reporting which are reasonably likely to adversely affect the
registrant's ability to record, process, summarize and report
financial information; and
b) Any fraud, whether or not material, that involves management
or other employees who have a significant role in the
registrant's internal control over financial reporting.
Date: December 15, 2004
/s/ Christoph Bruening
- --------------------------
Christoph Bruening
Treasurer
Exhibit 32.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
XENOMICS, INC.
FORM 10-QSB FOR THE QUARTER ENDED OCTOBER 31, 2004
PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
I am the Chief Executive Officer of Xenomics, Inc., a Florida corporation (the
"Company"). I am delivering this certificate in connection with the Form 10-QSB
of the Company for the quarter ended October 31, 2004 and filed with the
Securities and Exchange Commission ("Form 10-QSB").
Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, I hereby certify that, to the best of my knowledge,
the Form 10-QSB fully complies with the requirements of Section 13(a) or Section
15(d) of the Securities Exchange Act of 1934 and that the information contained
in the Form 10-QSB fairly presents, in all material respects, the financial
condition and results of operations of the Company.
Date: December 15, 2004
/s/ V. Randy White
- --------------------------
V. Randy White
Chief Executive Officer
Exhibit 32.2
CERTIFICATION OF PRINCIPAL ACCOUNTING OFFICER
XENOMICS, INC.
FORM 10-QSB FOR THE QUARTER ENDED OCTOBER 31, 2004
PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
I am the Treasurer (Principal Accounting Officer) of Xenomics, Inc., a Florida
corporation (the "Company"). I am delivering this certificate in connection with
the Form 10-QSB of the Company for the quarter ended October 31, 2004 and filed
with the Securities and Exchange Commission ("Form 10-QSB").
Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, I hereby certify that, to the best of my knowledge,
the Form 10-QSB fully complies with the requirements of Section 13(a) or Section
15(d) of the Securities Exchange Act of 1934 and that the information contained
in the Form 10-QSB fairly presents, in all material respects, the financial
condition and results of operations of the Company.
Date: December 15, 2004
/s/ Christoph Bruening
- --------------------------------
Christoph Bruening
Principal Accounting Officer