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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported)
January 28, 2011
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EnzymeBioSystems
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(Exact Name of Registrant as Specified in Its Charter)
Nevada
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(State or Other Jurisdiction of Incorporation)
000-53854 27-0464302
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(Commission File Number) (IRS Employer Identification No.)
16773 W Park Drive, Chagrin Falls, Ohio 44023
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(Address of Principal Executive Offices) (Zip Code)
(440) 708-0012
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(Registrant's Telephone Number, Including Area Code)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of
the following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
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As used in this Current Report on Form 8-K, unless otherwise stated, all
references to the "Company", "we," "our" and "us" refer to EnzymeBioSystems.
Item 1.01 Entry Into a Material Definitive Agreement
On January 28, 2011, EnzymeBioSystems (the "Company") entered into an
an Exclusive Technology License and Patents Agreement with Berkeley
Clinic LC, an Arizona Limited Liability Company, whereby Berkeley
Clinic LC was granted:
1) an exclusive fifty (50) percent ownership in all EnymeBioSystems
proprietary enzyme products;
2) the assignment of all rights, title and interest in all future patents
(domestic and foreign) granted in all enzyme products developed by
EnzymeBioSystems; and,
3) and one million (1,000,000) unregistered restricted Series A Preferred
shares of EnzymeBioSystems,
in exchange for One Hundred Fifty Thousand ($150,000) Dollars. The Series A
Preferred Share carry a voting weight equal to ten (10) Common Shares. The
shares of Series A Preferred Stock are not redeemable and cannot be
converted into Common Shares, unless it is approved by the Board of
Directors and agreed upon by the Series A Preferred Shareholders. The
Company plans to use these funds to further capitalize the Company, and
develop proprietary enzyme products. See Exhibit 3.3 and 10.2.
Item 3.02 Unregistered Sales of Equity Securities
On January 28, 2011, EnzymeBioSystems agreed to issue one million (1,000,000)
shares of its unregistered restricted Series A Preferred Stock to Berkeley
Clinic. The shares will be issued pursuant to Regulation D, Rule 506 of the
Securities Exchange Act of 1934. All securities were issued in reliance upon
an exemption from registration under Section 4(2) of the Securities Act. We
believed that Section 4(2) was available because the offer and sale did not
involve a public offering and there was not general solicitation or general
advertising involved in the offer or sale. Berkeley Clinic LC is an
accredited investor. Before Berkeley Clinic LC received these unregistered
securities they were known to our management, through pre-existing business
relationships. Berkeley Clinic LC was provided access to all material
information, which they requested and all information necessary to verify
such information and was afforded access to our management in connection
with this transaction. Berkeley Clinic LC acquired these securities for
investment and not with a view toward distribution, acknowledging such
intent to us. They understood the ramifications of their actions. The
shares of common stock issued will contain a legend restricting
transferability absent registration or applicable exemption.
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Item 5.03. Amendments to Articles of Incorporation or Bylaws; Change in
Fiscal Year.
The Board of Directors approved Articles of Designation for the Company's
Series A Preferred Shares. The Series A Preferred Share carry a voting
weight equal to ten (10) Common Shares. The shares of Series A Preferred
Stock are not redeemable and cannot be converted into Common Shares, unless
it is approved by the Board of Directors and agreed upon by the Series A
Preferred Shareholders. The Articles of Designation were filed with the
Nevada Secretary of State on January 13, 2011.
The Company's Articles of Designation is attached hereto as Exhibit 3.3 and
is incorporated herein by reference.
Item 5.06 Change in Shell Company Status
EnzymeBioSystems ceased to be shell company on January 28, 2011. As a result
of obtaining $150,000 in outside funding from Berkeley Clinic LC to move our
business plan forward, and our agreement with Northeastern Ohio Universities
College of Medicine d/b/a Northeastern Ohio Universities Colleges of Medicine
and Pharmacy in Rootstown, Ohio, to perform research on a series of
semisynthetic penicillins and cephalosporins containing structural fragments
of the well-known antitumor antibiotic sarcomycin, we believe that we are
not a shell corporation as that term is defined in Rule 405 of the Securities
Act and Rule 12b-2 of the Exchange Act.
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FORM 10 INFORMATION
Business
Forward-Looking Statements
--------------------------
This Current Report on Form 8-K contains forward-looking statements. To the
extent that any statements made in this report contain information that is
not historical, these statements are essentially forward-looking. Forward-
looking statements can be identified by the use of words such as "expects",
"plans", "will", "may," "anticipates", "believes", "should", "intends",
"estimates", and other words of similar meaning. These statements are subject
to risks and uncertainties that cannot be predicted or quantified and,
consequently, actual results may differ materially from those expressed or
implied by such forward-looking statements. Such risks and uncertainties
include, without limitation, our ability to raise additional capital to
finance our activities; the effectiveness, profitability and marketability of
our products; legal and regulatory risks; the future trading of our common
stock; our ability to operate as a public company; our ability to protect our
proprietary information; general economic and business conditions; the
volatility of our operating results and financial condition; our ability to
attract or retain qualified senior management personnel and research and
development staff; and other risks detailed from time to time in our filings
with the Securities and Exchange Commission (the "SEC"), or otherwise.
Information regarding market and industry statistics contained in this report
is included based on information available to us that we believe is accurate.
It is generally based on industry and other publications that are not
produced for purposes of securities offerings or economic analysis. Forecasts
and other forward-looking information obtained from these sources are subject
to the same qualifications and the additional uncertainties accompanying any
estimates of future market size, revenue and market acceptance of products
and services
Overview of Current Operations
------------------------------
EnzymeBioSystems was formed on June 26, 2009 as a Nevada corporation.
We are a startup company that plans to manufacture specialty enzymes and
enzyme related products.
Enzymes
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Enzymes can be categorized as "enzyme inhibitors" and "enzyme activators."
Enzyme inhibitors are molecules that bind to enzymes and decrease their
activity. Since blocking an enzyme's activity can kill a pathogen or correct
a metabolic imbalance, many drugs are enzyme inhibitors. Enzyme activators
are molecules that bind to enzymes and increase their activity. These
molecules are often involved in the allosteric [defined as having to do with
a protein with a structure that is altered reversibly by a small molecule so
that its original function is modified] regulation of enzymes in the control
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of metabolism. Both enzyme inhibitors and enzyme activators are currently
used by many pharmaceutical and biotechnology companies in research and
development of new drug compounds.
Enzymes also can be used as pharmaceutical products. Enzymes as
pharmaceuticals have two important features that distinguish them from all
other types of pharmaceutical products. First, enzymes often bind and act on
their targets with great affinity and specificity. Second, enzymes are
catalytic and convert multiple target molecules to the desired products.
These two features make are considered specialized enzymes that can
accomplish therapeutic biochemistry in the body that small molecules cannot.
These characteristics have resulted in the development of many enzyme drugs
for a wide range of disorders, e.g. insulin and interferon.
We plan to deploy our enzyme technologies across diverse markets that
represent commercial opportunities in helping us build visibility for
EnzymeBioSystems. This includes building our reputation in the scientific
community through trade publications and protecting our intellectual property
and technology through the patent process.
Management is evaluating an enzyme compound which it believes has a specific
therapeutic value in fighting tumors. In an effort to evaluate this
compound, management, on or about July 9, 2010 entered into an agreement with
Northeastern Ohio Universities College of Medicine d/b/a Northeastern Ohio
Universities Colleges of Medicine and Pharmacy in Rootstown, Ohio, to perform
rat studies. The research will study a series of semisynthetic penicillins
and cephalosporins containing structural fragments of the well-known
antitumor antibiotic sarcomycin. Specifically, the two areas of this study
will include: 1) an examination of the in vitro cytotoxicity of penicillin
analogs against hepatocellular carcinoma cells; and 2) Investigate the
dose-responsive antitumor actions of penicillin analogs against
chemically-induced hepatic tumorigenesis in rats.
Management hopes this research with identify an enzyme compound developed by
the Company that will lead to the filing of an Investigational New Drug
Application ("IND") with the U. S. Food and Drug Administration. It is still
too early to determine if this project has any potential value for the
Company, and there are no assurances that the Company will ever obtain be
able to obtain an IND for this compound.
We currently have only limited resources and capability to develop,
manufacture, market, sell, or distribute specialty enzyme products on a
commercial scale. We will determine which specialty enzyme products to
pursue independently based on various criteria, including: investment
required, estimated time to market, regulatory hurdles, infrastructure
requirements, and industry-specific expertise necessary for successful
commercialization. At any time, we may modify our strategy and pursue
collaborations for the development and commercialization of some specialty
enzyme products that we had intended to pursue independently. In order for
us to commercialize more specialty enzyme products directly, we plan to
establish or obtain through outsourcing arrangements additional capability to
develop, manufacture, market, sell, and distribute such products.
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Marketing Strategy
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Through our future independent and collaborative research and development
programs, we plan to develop commercial enzyme products across multiple
markets. In addition, we plan to develop a pipeline of enzyme product
candidates that we expect to launch independently and/or in collaboration
with strategic partners. Once we develop our innovative enzyme products, we
plan to send samples of these products to potential customers. This will
give them an opportunity to evaluate our products as compared to the enzymes
they are purchasing from our competition.
Competition
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Our competitors have substantially greater financial, technical, and
marketing resources than we do and may succeed in developing products that
would render our products obsolete or noncompetitive. In addition, many of
these competitors have significantly greater experience than we do in their
respective fields. Our ability to compete successfully will depend on our
ability to develop proprietary products that reach the market in a timely
manner and are technologically superior to, and/or are less expensive than,
other products on the market. Current competitors or other companies may
develop technologies and products that are more effective than ours. Our
technologies and products may be rendered obsolete or uneconomical by
technological advances or entirely different approaches developed by one or
more of our competitors. The existing approaches of our competitors or new
approaches or technology developed by our competitors may be more effective
than those developed by us.
Any enzyme products that we develop will compete in multiple, highly
competitive markets. For example, Codexis, Maxygen, Inc., Evotec, and Xencor
have alternative evolution technologies. Integrated Genomics Inc., Myriad
Genetics, Inc., and ArQule, Inc. perform screening, sequencing, and/or
bioinformatics services. Novozymes A/S, Verenium Corporation, Genencor
International Inc. and MPBiomedicals are involved in development,
overexpression, fermentation, and purification of enzymes. Many of these
competitors have significantly greater financial and human resources than we
do. We believe that the principal competitive factors in our market are
access to genetic material, technological experience and expertise, and
proprietary position.
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Our Growth Strategy
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Management is preparing a number of trade articles to publish in research
and medical journals on the theoretical and practical applications of enzyme
research. Management hopes these articles will give the Company some
notoriety among enzyme researchers/users. The articles are being prepared
for the direct purpose of selling our research applications to research
facilities and end users. If enzyme researchers/users are intrigued by the
applications discussed in the research articles, management believes these
researches/users will become future customers and purchase specialty enzymes
from EnzymeBioSystems. Also, management hopes to position the Company,
whereby it receives royalties from the enzyme applications it develops and
markets.
Patent, Trademark, License and Franchise Restrictions and Contractual
Obligations and Concessions
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We do not have any trademarks, patents, or other intellectual property.
We plan to rely on trade secrets, technical know-how, and continuing
invention to develop and maintain our competitive position. We will take
security measures to protect our trade secrets, proprietary know-how and
technologies, and confidential data and continue to explore further methods
of protection. Our policy is to execute confidentiality agreements with our
employees and consultants upon the commencement of an employment or
consulting arrangement with us. These agreements generally require that all
confidential information developed or made known to the individual by us
during the course of the individual's relationship with us be kept
confidential and not disclosed to third parties. These agreements also
generally provide that inventions conceived by the individual in the course
of rendering services to us shall be our exclusive property.
Research and Development Activities and Costs
---------------------------------------------
Research and development expenses related to our specialty enzyme business
include costs related to ongoing bioprocess development and manufacturing
process yield improvements. For the fiscal year ending June 30, 2010, the
Company spent $15,032 in product research and development. The research
included the development of a specialty enzyme compound that management
believes will have a therapeutic value. The compound in being tested in rats
at Northeastern Ohio Universities College of Medicine. (See Exhibit 10.1)
Effect of Government Regulation on Business
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We are subject to various federal, state and local environmental laws and
regulations, including those relating to the discharge of materials into the
air, water and ground, the generation, storage, handling, use, transportation
and disposal of hazardous materials, and the health and safety of our
employees.
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Non-drug biologically derived products, such as the specialty enzymes we
plan to produce are regulated in the United States based on their
application, by either the United States Food and Drug Administration,
("FDA"), the Environmental Protection Agency, ("EPA") in the case of plants
and animals, the United States Department of Agriculture ("USDA"). In
addition to regulating drugs, the FDA also regulates food and food additives,
feed and feed additives, and Generally Recognized As Safe substances used in
the processing of food. The EPA regulates biologically derived chemicals not
within the FDA's jurisdiction. Although the food and industrial regulatory
process can vary significantly in time and expense from application to
application, the timelines generally are shorter in duration than the drug
regulatory process.
In the United States, transgenic agricultural products may be reviewed by
the FDA, EPA, and USDA, depending on the plant and the trait engineered into
it. The regulatory process for these agricultural products can take up to
five years of field testing under USDA oversight, and up to another two years
for applicable agencies to complete their reviews. At this time, we do not
anticipate producing any enzymes that would require FDA approval. Our
processes would include combining enzymes that have already been approved the
FDA.
Even after investing significant time and expenditures, we may not obtain
regulatory approval for our enzyme products that incorporate technologies
that have not been approved for commercialization in the United States or
elsewhere. For example, the EPA regulates biologically derived chemical
substances not within the FDA's jurisdiction. An unfavorable EPA ruling
could delay commercialization or require modification of the production
process resulting in higher manufacturing costs, thereby making the product
uneconomical. In addition, the USDA may prohibit genetically engineered
plants from being grown and transported except under an exemption, or under
controls so burdensome that commercialization becomes impracticable. Our
future products may not be exempted by the USDA. In addition, new laws, new
interpretations of existing laws, increased governmental enforcement of
environmental laws, or other developments could require us to make additional
significant expenditures.
We will be subject to various federal, state and local environmental laws
and regulations, including those relating to the discharge of materials into
the air, water and ground, the generation, storage, handling, use,
transportation and disposal of hazardous materials, and health and safety
issues.
Outside of the United States, scientifically-based standards, guidelines
and recommendations pertinent to transgenic and other products intended for
the international marketplace are being developed by, among others, the
representatives of national governments within the jurisdiction of the
standard-setting bodies, including Codex Alimentarius, the International
Plant Protection Convention, and the Office des International Epizooties. The
use of the existing standard-setting bodies to address concerns about
products of biotechnology is intended to harmonize risk-assessment
methodologies and evaluation of specific products or classes of products.
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In the future we may be subject to additional laws, regulations, policies,
approvals and the like of federal, state, local, municipal, foreign and other
bodies.
Compliance With Environmental Laws
----------------------------------
We seek to comply with all applicable statutory and administrative
requirements concerning environmental quality. We have made, and will
continue to make, expenditures for environmental compliance and protection.
Expenditures for compliance with environmental laws have not had, and are not
expected to have, a material effect on our capital expenditures, results of
operation or competitive position.
Employees
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The Company currently has: two Officers, who are also Directors of the
Company. These two individuals perform all of the job functions for the
Company. Ashot Martirosyan, our President, devotes 40 hours per week
of his time to our business, and Anushavan Yeranosyan, our
Secretary/Treasurer, devotes approximately 20 hours per week of his time to
our business. The Company has no intention at this time to add employees
until it can become a profitable entity. The Company from time to time may
retain independent consultants in connection with its operations.
(i) The Company's performance is dependent on the performance of its
officers. In particular, the Company's success depends on their
ability to develop a business strategy which will be successful for
the Company.
(ii) The Company does not carry key person life insurance on any of its
personnel. The loss of the services of any of its executive officers
or other key employees could have a material adverse effect on the
business, results of operations and financial condition of the
Company. The Company's future success also depends on its ability to
retain and attract highly qualified technical and managerial
personnel.
(iii) There can be no assurance that the Company will be able to retain its
key managerial and technical personnel or that it will be able to
attract and retain additional highly qualified technical and
managerial personnel in the future. The inability to attract and
retain the technical and managerial personnel necessary to support the
growth of the Company's business, due to, among other things, a large
increase in the wages demanded by such personnel, could have a
material adverse effect upon the Company's business, results of
operations and financial condition.
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Item 1A. Risk Factors.
Risk Factors Relating to Our Company
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RISK FACTORS RELATING TO OUR FINANCIAL CONDITION
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1. WE HAVE A LIMITED HISTORICAL FINANCIAL INFORMATION UPON WHICH YOU MAY
EVALUATE OUR PERFORMANCE.
We have a limited history and we are subject to all risks inherent in
a developing business enterprise. Our likelihood of success must be
considered in light of the problems, expenses, difficulties, complications,
and delays frequently encountered in connection with manufacturing specialty
enzymes and the competitive and regulatory environment in which we operate.
You should consider, among other factors, our prospects for success in light
of the risks and uncertainties encountered by companies that, like us, are in
their early stages of research. We may not successfully address these risks
and uncertainties or successfully implement our operating and acquisition
strategies. If we fail to do so, it could materially harm our business to
the point of having to cease operations and could impair the value of our
common stock to the point investors may lose their entire investment. Even
if we accomplish these objectives, we may not generate positive cash flows or
profits we anticipate in the future.
2. AS WE HAVE NEVER MINIMAL REVENUES SINCE OUR INCEPTION, THERE IS NO
ASSURANCE THAT WE WILL BE ABLE TO CONTINUE AS A GOING CONCERN.
Our financial statements included with this Form 8-K for the year ended
June 30, 2009 and the interim period through September 30, 2010, have been
prepared assuming that we will continue as a going concern. Our auditors
have made reference to the substantial doubt as to our ability to continue as
a going concern in their audit report on our audited financial statements for
the year ended June 30, 2009. Because the Company has been issued an opinion
by its auditors that substantial doubt exists as to whether the company can
continue as a going concern, it may be more difficult for the company to
attract investors. Since our auditor's have raised a substantial doubt about
our ability to continue as a going concern, this typically results greater
difficulty to obtain loans than businesses that do not have a qualified
auditors opinion. Additionally, any loans we might obtain may be on less
advantageous terms. Our future is dependent upon our ability to obtain
financing and upon future profitable operations from the sale of our future
enzyme products. We plan to seek additional funds through private placements
of our common stock. You may be investing in a company that will not have
the funds necessary to continue to deploy its business strategies. If we are
not able to achieve revenues or find financing, then we likely will be forced
to cease operations and investors will likely lose their entire investment,
investors may lose their entire investment.
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3. WE MAY NOT BE ABLE TO ATTAIN PROFITABILITY WITHOUT ADDITIONAL FUNDING,
WHICH MAY BE UNAVAILABLE.
We have prepared audited financial statements for the year end for
June 30, 2009, which show we have cash and cash equivalents of $5,913. Our
unaudited financials as of September 30, 2010 show we have cash and cash
equivalents of $32,124. Our ability to continue to operate as a going
concern is fully dependent upon the Company obtaining sufficient financing to
continue its development and operational activities. The ability to achieve
profitable operations is in direct correlation to our ability to generate
revenues or raise sufficient financing. It is important to note that even if
the appropriate financing is received, there is no guarantee that we will
ever be able to operate profitably or derive any significant revenues from
its operation. Management believes, for the next twelve months, it has
sufficient funds available to implement its business, on a limited basis.
4. IF WE ARE NOT ABLE TO COMPETE EFFECTIVELY AGAINST LARGER BIOMEDICAL
MANUFACTURERS WITH GREATER RESOURCES, OUR PROSPECTS FOR FUTURE SUCCESS
WILL BE JEOPARDIZED.
We will face intense competition from larger and better-established
biomedical manufacturers that may prevent us from ever becoming a significant
company. Management expects the competition to intensify in the future.
Pressures created by our future competitors could negatively impact our
business, results of operations and financial condition.
Many of our potential competitors have longer operating histories, larger
customer bases, greater brand recognition and significantly greater
financial, marketing, technical and other resources. In addition, our
competitors may acquire or be acquired by, receive investments from or enter
into other commercial relationships with larger, well-established and well-
financed competitors. Therefore, some of our competitors with other revenue
sources may be able to devote greater resources to marketing and promotional
campaigns, adopt more aggressive pricing policies and devote substantially
more resources to product development. There can be no assurance that we
will be able to compete successfully against current and
future competitors.
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COMPANY RISK FACTORS
--------------------
5. IF WE ARE UNABLE TO RESPOND EFFECTIVELY AS TECHNOLOGIES AND MARKET TRENDS
EMERGE, OUR COMPETITIVE POSITION AND OUR ABILITY TO GENERATE REVENUES AND
PROFITS MAY BE HARMED.
To be successful, we must keep pace with rapid changes in enzyme research
and technology, changing customer requirements, new innovations by
competitors and evolving industry standards, any of which could render our
existing products obsolete if we fail to respond in a timely manner. For
example, if new enzyme applications are introduced by our competitors not
part by our technology, or if effective new sources of enzymes are
discovered, our future products and technology could become less competitive
or obsolete. If competitors develop innovative applications and technology
that is superior to ours or if we fail to accurately anticipate market trends
and respond on a timely basis with our own innovations, our potential
competitive position may be harmed and we may not achieve sufficient growth
in our revenues to attain, or sustain, profitability.
6. THERE MAY BE A POSSIBLE INABILITY TO FIND SUITABLE EMPLOYEES.
In order to implement our business plan, management recognizes that
additional staff will be required. No assurances can be given that we will
be able to find suitable employees that can support our needs or that these
employees can be hired on favorable terms. We do not plan to hire any
additional employees until our cash flows can justify the expense. When we
are ready to hire new employees, we will most likely look for people who have
some type of chemistry experience or a working knowledge of chemical
engineering, which may be difficult to find.
7. WE MAY BE LIABLE FOR THE PRODUCTS WE PLAN TO PRODUCE.
There is no guarantee that the level of insurance coverage we secure will
be adequate to protect us from risks associated with claims that exceed the
level of coverage maintained. As a result of our limited operations to date,
no threatened or actual claims have been made upon us for product liability.
8. THE ENZYME COMPOUND INDUSTRY IS SUBJECT TO PRICING PRESSURES THAT MAY
CAUSE US TO REDUCE THE FUTURE GROSS MARGINS FOR OUR PRODUCTS.
Management believes to be competitive, we might be required to adjust our
prices in response to industry-wide pricing pressures. Our competitors may
possibly source from regions with lower costs than those of our sourcing
partners and those competitors may apply such additional cost savings to
further reduce prices.
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Management believes increased customer demands for markdown allowances,
incentives and other forms of economic support might reduce our gross margins
and affect our profitability. Our financial performance may be negatively
affected by these pricing pressures if we are forced to reduce our prices
without being able to correspondingly reduce our costs for finished goods or
if our costs for finished goods increase and we cannot increase our prices.
Management wants investors to know that there are no assurances that we may
ever achieve acceptable operating margins, we may never obtain any share of
the market, or be able to establish any value for our enzyme products.
9. THE LOSS OF ONE OR MORE OF OUR FUTURE SUPPLIERS OF RAW MATERIALS MAY
INTERRUPT OUR SUPPLIES.
We plan to purchase our raw materials from a limited number of third-party
suppliers. We do not have any material or long-term contracts in place with
any suppliers at this time. Furthermore, our future suppliers also purchase
the components of our products from a limited number of suppliers. The loss
of one or more of these vendors could interrupt our supply chain and impact
our ability to deliver products to our customers, which would have a material
adverse effect on our future net sales and profitability.
10. INCREASES IN THE PRICE OF RAW MATERIALS USED TO MANUFACTURE OUR ENZYME
PRODUCTS COULD MATERIALLY INCREASE OUR COSTS AND DECREASE OUR
PROFITABILITY.
The prices for enzyme components are dependent on the market price for the
raw materials used to produce them. There can be no assurance that prices
for these and other raw materials will not increase in the near future.
These raw materials are subject to price volatility caused by supply
conditions, power outages, government regulations, economic climate and other
unpredictable factors. Any raw material price increase would increase our
cost of sales and decrease our future profitability unless we are able to
pass higher prices on to our customers. In addition, if one or more of our
competitors is able to reduce its production costs by taking advantage of any
reductions in raw material prices or favorable sourcing agreements, we may
face pricing pressures from those competitors and may be forced to reduce our
prices or face a decline in net sales, either of which could have a material
and adverse effect on our business, results of operations and financial
condition.
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11. WE DO NOT OWN EQUIPMENT WITH THE CAPACITY TO MANUFACTURE PRODUCTS ON A
COMMERCIAL SCALE. IF WE ARE UNABLE TO ACCESS THE CAPACITY TO MANUFACTURE
PRODUCTS IN SUFFICIENT QUANTITY, WE MAY NOT BE ABLE TO COMMERCIALIZE OUR
PRODUCTS OR GENERATE SIGNIFICANT SALES.
We have only limited experience in enzyme manufacturing, and we do not
have our own internal capacity to manufacture specialty enzyme products on a
commercial scale. We expect to be dependent to a significant extent on third
parties for commercial scale manufacturing of our specialty enzyme products.
We do not have any arrangements with third parties that have the required
manufacturing equipment and available capacity to manufacture our commercial
enzymes. While we plan to build our own pilot development facility, we will
continue to depend on third parties for large-scale commercial manufacturing.
Any difficulties or interruptions of service with our third party
manufacturers or our own pilot manufacturing facility could disrupt our
research and development efforts, delay our commercialization of specialty
enzyme products, and harm our relationships with our specialty enzyme
strategic partners, collaborators, or customers.
12. WE MAY PURSUE SPECIALTY ENZYME PRODUCTS THAT ULTIMATELY REQUIRE MORE
RESOURCES THAN WE ANTICIPATE OR WHICH MAY BE TECHNICALLY UNSUCCESSFUL.
We currently have only limited resources and capability to develop,
manufacture, market, sell, or distribute specialty enzyme products on a
commercial scale. We will determine which specialty enzyme products to
pursue independently based on various criteria, including: investment
required, estimated time to market, regulatory hurdles, infrastructure
requirements, and industry-specific expertise necessary for successful
commercialization. At any time, we may modify our strategy and pursue
collaborations for the development and commercialization of some specialty
enzyme products that we had intended to pursue independently. We may pursue
specialty enzyme products that ultimately require more resources than we
anticipate or which may be technically unsuccessful. In order for us to
commercialize more specialty enzyme products directly, we would need to
establish or obtain through outsourcing arrangements additional capability to
develop, manufacture, market, sell, and distribute such products. If we are
unable to successfully commercialize specialty enzyme products resulting from
our internal product development efforts, we will continue to incur losses in
our specialty enzymes business, as well as in our business as a whole. Even
if we successfully develop a commercial specialty enzyme product, we may not
generate significant sales and achieve profitability in our specialty enzymes
business, or in our business as a whole.
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13. WE MAY NOT BE ABLE TO DEVELOP MANUFACTURING CAPACITY SUFFICIENT TO MEET
DEMAND IN AN ECONOMICAL MANNER OR AT ALL.
If demand for enzyme products increases beyond the scope of our future
production facilities, we may incur significant expenses in the expansion
and/or construction of production facilities and increases in personnel in
order to increase production capacity. Any unanticipated expansion
requirements may cause complications for delays in production, which could
result in a loss of business and customers. To finance the expansion of a
commercial-scale production facility is complex and expensive. We cannot
assure you that we will have the necessary funds to finance the development
of production facilities, or that we will be able to develop this
infrastructure in a timely or economical manner, or at all.
14. OUR OFFICERS HAVE NO EXPERIENCE IN OPERATING AN OPERATIONAL SPECIALTY
ENZYME COMPANY, AND HAVE NO EXPERIENCE IN EVALUATING THE SUCCESS OF
FUTURE PRODUCTS.
Our executive officers, who have chemical engineering education, have no
experience in operating a specialty enzyme Company. Their work history
includes working for an antibiotic laboratory, managing a medical supply
company and working as a production engineer. They have no experience
in independently developing, manufacturing, marketing, selling, and
distributing commercial specialty enzyme products. Due to their lack of
experience, our executive officers may make wrong decisions and choices
regarding selection of products to pursue on behalf of the Company.
Consequently, our Company may suffer irreparable harm due to management's
lack of experience in this industry. As a result we may have to suspend or
cease operations, which will result in the loss of your investment.
15. WE EXPECT THAT CERTAIN ENZYME DEVELOPMENT WILL REQUIRE US TO USE
HAZARDOUS MATERIALS IN OUR BUSINESS. ANY CLAIMS RELATING TO IMPROPER
HANDLING, STORAGE, OR DISPOSAL OF THESE MATERIALS COULD BE TIME
CONSUMING AND COSTLY AND COULD ADVERSELY AFFECT OUR BUSINESS AND RESULTS
OF OPERATIONS.
Our research and development processes may involve the controlled use of
hazardous materials, including chemical, and biological materials. We cannot
eliminate entirely the risk of accidental contamination or discharge and any
resultant injury from these materials. Federal, state, and local laws and
regulations govern the use, manufacture, storage, handling, and disposal of
these materials. We may be sued for any injury or contamination that results
from our use or the use by third parties of these materials, and our
liability may exceed our total assets. In addition, compliance with
applicable environmental laws and regulations may be expensive, and current
or future environmental regulations may impair our research, development, or
production efforts. We plan to purchase insurance to protect us from
potential losses; however, at this time, we do not have any insurance
coverage for accidental contamination, discharge or any resultant injury from
these hazardous materials.
15
16. WE ARE SUBJECT TO ALL GOVERNMENTAL RULES, LAWS AND REGULATIONS RELATING
TO THE BIOMEDICALS INDUSTRY IN THE U.S.
We are subject to all governmental rules, laws and regulations relating to
the biomedical industry in the U.S., and we fully intend to comply therewith.
Biologically derived enzyme products are regulated in the United States
based on their application, by either the United States Food and Drug
Administration ("FDA"), or the Environmental Protection Agency ("EPA"), or,
in the case of plants and animals, the United States Department of
Agriculture ("USDA"). In addition to regulating drugs, the FDA also
regulates food and food additives, feed and feed additives, and GRAS
(Generally Recognized As Safe) substances used in the processing of food.
The EPA regulates biologically derived chemicals not within the FDA's
jurisdiction.
Under current FDA policy, our future products will most likely come within
the FDA's jurisdiction, may be subject to lengthy FDA reviews and unfavorable
FDA determinations if they raise safety questions which cannot be
satisfactorily answered, if results do not meet regulatory requirements or if
they are deemed to be food additives whose safety cannot be demonstrated. An
unfavorable FDA ruling could be difficult to resolve and could prevent a
product from being commercialized. Even after investing significant time and
expenditures, we may not obtain regulatory approval for any drug products
that incorporate our technologies or inventions.
The EPA regulates biologically derived chemical substances not within the
FDA's jurisdiction. An unfavorable EPA ruling could delay commercialization
or require modification of the production process resulting in higher
manufacturing costs, thereby making the product uneconomical. In addition,
the USDA may prohibit genetically engineered plants from being grown and
transported except under an exemption, or under controls so burdensome that
commercialization becomes impracticable. Our future products may not be
exempted by the USDA.
Further, there is no assurance the governmental agencies having
jurisdiction over us, our operations and properties, will not enact laws,
rules and/or regulations in the future which may have an adverse impact on us
and our operations.
17. OUR RESULTS OF OPERATIONS MAY BE ADVERSELY AFFECTED BY ENVIRONMENTAL,
HEALTH AND SAFETY LAWS, REGULATIONS AND LIABILITIES.
We are subject to various federal, state and local environmental laws and
regulations, including those relating to the discharge of materials into the
air, water and ground, the generation, storage, handling, use, transportation
and disposal of hazardous materials, and the health and safety of our
employees. We will need to meet a significant number of environmental and
other regulations and standards established by various federal, state and
local regulatory agencies.
16
In addition, some of these laws and regulations require our contemplated
facilities to operate under permits that are subject to renewal or
modification. These laws, regulations and permits can often require
expensive pollution control equipment or operational changes to limit actual
or potential impacts to the environment. As these regulations and standards
evolve, and if new regulations or standards are implemented, we may be
required to modify our proposed facilities and processes or develop and
support new facilities or processes and this will increase our costs. Any
failure to comply, or delays in compliance, with the various existing and
evolving industry regulations and standards could prevent or delay our
production of specialty enzyme products. Any inability to address these
requirements and any regulatory changes could have a material adverse effect
on our specialty enzyme business, financial condition and operating results.
A violation of these laws and regulations or permit conditions can result
in substantial fines, natural resource damages, criminal sanctions, permit
revocations and/or facility shutdowns.
18. OUR MANAGEMENT CONTROLS A LARGE BLOCK OF OUR COMMON STOCK THAT WILL
ALLOW THEM TO CONTROL THE COMPANY.
As of December 31, 2010, our officers and directors owned approximately
63% of our outstanding common stock. As a result, our two officers will have
the ability to control substantially all matters submitted to our stockholders
for approval including:
a) election of our board of directors;
b) removal of any of our directors;
c) amendment of our Articles of Incorporation or bylaws; and
d) adoption of measures that could delay or prevent a change in control or
impede a merger, takeover or other business combination involving us.
As a result of their ownership and positions, these two individuals have
the ability to influence all matters requiring shareholder approval,
including the election of directors and approval of significant corporate
transactions. In addition, the future prospect of sales of significant
amounts of shares held by our director and executive officer could affect the
market price of our common stock if the marketplace does not orderly adjust
to the increase in shares in the market and the value of your investment in
the company may decrease. Management's stock ownership may discourage a
potential acquirer from making a tender offer or otherwise attempting to
obtain control of us, which in turn could reduce our stock price or prevent
our stockholders from realizing a premium over our stock price.
17
Investors will own a minority percentage of the Company's common stock and
will have minority voting rights. Investors will not have the ability to
control either a vote of the Company's Shareholders or Board of Directors.
19. SOME OF OUR OFFICERS AND DIRECTORS HAVE OTHER BUSINESS VENTURES.
As disclosed in their biographies contained herein, some of our officers
and directors work with other companies in addition to their work for us.
Anushavan Yeranosyan is a part-time financial advisor of A & A Medical
Supply, LLC. A & A Medical Supply distributes medical supplies to the health
care industry. Although none of our officers and directors are currently
working for any other companies in the biomedical industry, they are not
prohibited from doing so.
Ashot Martirosyan, our President, plans to devote 40 hours per week of his
time to our business, and Anushavan Yeranosyan, our Secretary/Treasurer plans
to devote 20 hours per week of his time to our business. Anushavan
Yeranosyan's other activities may prevent him from devoting full-time to our
operations which could slow our operations and may reduce our financial
results because of the slow down in operations. Therefore, it is possible
that a conflict of interest with regard to his time may arise based on his
involvement in other activities.
If one or more of our officers or directors began working for another
biomedical company it could take away from the time they currently spend
working on our business affairs and could create a potential conflict of
interest. We do not have any employment agreements with any of your
officers, which means they are not obligated to continue to work for the
Company and can resign their positions whenever they are inclined to do so.
18
RISK FACTORS RELATING TO OUR COMMON STOCK
-----------------------------------------
20. ALTHOUGH OUR STOCK IS QUOTED ON THE OTC-BULLETIN BOARD NO TRADING MARKET
HAS DEVELOPED FOR OUR STOCK AND PURCHASERS OF OUR SECURITIES MAY HAVE
DIFFICULTY SELLING THEIR SHARES.
Although our stock is quoted on the OTC-Bulletin Board, no trades in our
stock have taken place, to-date, and an active trading market in our
securities may not develop, or if developed, may not be sustained. If no
active market is ever developed for our common stock, it will be difficult
for you to sell any shares you purchase in our Company. In such a case, you
may find that you are unable to achieve any benefit from your investment or
liquidate your shares without considerable delay, if at all. In addition, if
no trading develops, your common stock will not have a quantifiable value and
it may be difficult, if not impossible, to ever resell your shares, resulting
in an inability to realize any value from your investment.
21. FUTURE SALES OF SHARES BY EXISTING CONTROLLING STOCKHOLDERS COULD CAUSE
OUR STOCK PRICE TO DECLINE, FURTHER, CERTAIN SHARES OF OUR COMMON STOCK
ARE RESTRICTED FROM IMMEDIATE RESALE.
If our existing controlling stockholders sell, or indicate an intention to
sell, substantial amounts of our common stock in the public market, the
trading price of our common stock could decline. As of January 28, 2011, we
have 31,500,000 common shares issued and outstanding. There are 10,500,000
registered shares freely tradable, without restriction. Our officers own
20,000,000 common shares. If in the future, if they decide to sell their
shares or if it is perceived that they will be sold, to the extent
permitted by the Rules 144 and 701 under the Securities Act, the trading
price of our common stock could decline.
The 20,000,000 shares of common stock, owned by our two officers are
restricted from immediate resale in the public market. The restricted shares
are restricted in accordance with Rule 144, which states that if
unregistered, restricted securities are to be sold, a minimum of one year
must elapse between the later of the date of acquisition of the securities
from the issuer or from an affiliate of the issuer, and any resale of those
securities in reliance on Rule 144. The Rule 144 restrictive legend remains
on the stock until the holder of the stock holds the stock for longer than
six months (unless an affiliate) and meets the other requirements of Rule 144
to have the restriction removed. The sale or resale of those shares in the
public market, or the market's expectation of such sales, may result in an
immediate and substantial decline in the market price of our shares. Such a
decline will adversely affect our investors, and make it more difficult for
us to raise additional funds through equity offerings in the future.
19
22. WE HAVE NEVER DECLARED DIVIDENDS ON OUR COMMON STOCK AND DO NOT PLAN TO
DO SO IN THE FORESEEABLE FUTURE.
We intend to retain any future earnings to finance the operation and
expansion of its business and do not anticipate paying any cash dividends in
the foreseeable future. As a result, stockholders will need to sell shares
of common stock in order to realize a return on their investment, if any.
You should not rely on an investment in our company if you require dividend
income. The only possibility of any income to investors would come from any
rise in the market price of your stock, which is uncertain and unpredictable.
A holder of common stock will be entitled to receive dividends only when,
as, and if declared by the Board of Directors out of funds legally available
therefore. We have never issued dividends on our common stock. Our Board of
Directors will determine future dividend policy based upon our results of
operations, financial condition, capital requirements, and other
circumstances.
23. HOLDERS OF OUR COMMON STOCK HAVE A RISK OF POTENTIAL DILUTION IF WE
ISSUE ADDITIONAL SHARES OF COMMON STOCK IN THE FUTURE.
Although our Board of Directors intends to utilize its reasonable business
judgment to fulfill its fiduciary obligations to our then existing
stockholders in connection with any future issuance of our common stock, the
future issuance of additional shares of our common stock would cause
immediate, and potentially substantial, dilution to the net tangible book
value of those shares of common stock that are issued and outstanding
immediately prior to such transaction. Any future decrease in the net
tangible book value of our issued and outstanding shares could have a
material effect on the market value of the shares.
24. WE DO NOT HAVE INSURANCE AND, THEREFORE, LIABILITY WE INCUR COULD HAVE
SUBSTANTIAL IMPACT ON OUR ABILITY TO CONTINUE AS A GOING CONCERN.
We have limited capital and, therefore, we do not currently have a policy
of insurance against liabilities arising out of the negligence of our
officers and directors and/or arising from deficiencies in any of our
business operations. Even assuming we obtained insurance, there is no
assurance that such insurance coverage would be adequate to satisfy any
potential claims made against us, our officers and directors, or our business
operations or assets. Any such liability which might arise could be
substantial and would likely exceed our total assets. However, our Articles
of Incorporation and Bylaws provide for indemnification of officers and
directors to the fullest extent permitted under Nevada law. Insofar as
indemnification for liabilities arising under the Securities Act of 1933 may
be permitted to directors, officer and controlling persons, it is the opinion
of the U. S. Securities and Exchange Commission that such indemnification is
against public policy, as expressed in the Act, and is therefore,
unenforceable.
20
25. IF WE FAIL TO MAINTAIN AN EFFECTIVE SYSTEM OF INTERNAL CONTROLS, WE MAY
NOT BE ABLE TO ACCURATELY REPORT OUR FINANCIAL RESULTS OR PREVENT FRAUD
AND AS A RESULT, INVESTORS MAY BE MISLED AND LOSE CONFIDENCE IN OUR
FINANCIAL REPORTING AND DISCLOSURES, AND THE PRICE OF OUR COMMON STOCK
MAY BE NEGATIVELY AFFECTED.
The Sarbanes-Oxley Act of 2002 requires that we report annually on the
effectiveness of our internal control over financial reporting. A
"significant deficiency" means a deficiency or a combination of deficiencies,
in internal control over financial reporting that is less severe than a
material weakness yet important enough to merit attention by those
responsible for oversight of the Company's financial reporting. A "material
weakness" is a deficiency or a combination of deficiencies in internal
control over financial reporting, such that there is a reasonable possibility
that a material misstatement of the annual or interim financial statements
will not be prevented or detected on a timely basis.
As of June 30, 2009 management assessed the effectiveness of our internal
control over financial reporting based on the criteria for effective internal
control over financial reporting. The matters involving internal controls
and procedures that our management considered to be material weaknesses under
the standards of the Public Company Accounting Oversight Board were: (1) lack
of a functioning audit committee due to a lack of a majority of independent
members and a lack of a majority of outside directors on our board of
directors, resulting in ineffective oversight in the establishment and
monitoring of required internal controls and procedures; and (2) inadequate
segregation of duties consistent with control objectives.
In addition, in connection with our on-going assessment of the
effectiveness of our internal control over financial reporting, we may
discover "material weaknesses" in our internal controls as defined in
standards established by the Public Company Accounting Oversight Board, or
the PCAOB. A material weakness is a significant deficiency, or combination of
significant deficiencies, that results in more than a remote likelihood that
a material misstatement of the annual or interim financial statements will
not be prevented or detected.
Failure to provide effective internal controls may cause investors to lose
confidence in our financial reporting and may negatively affect the price of
our common stock. Moreover, effective internal controls are necessary to
produce accurate, reliable financial reports and to prevent fraud. If we
have deficiencies in our internal controls over financial reporting, these
deficiencies may negatively impact our business and operations.
21
26. LOW-PRICED STOCKS MAY AFFECT THE RESELL OF OUR SHARES.
Penny Stock Regulation Broker-dealer practices in connection with
transactions in "Penny Stocks" are regulated by certain penny stock rules
adopted by the Securities and Exchange Commission. Penny stocks generally are
equity securities with a price of less than $5.00 (other than securities
registered on certain national securities exchanges or quoted on the NASDAQ
system). The penny stock rules require a broker-dealer, prior to a
transaction in a penny stock not otherwise exempt from the rules, to deliver
a standardized risk disclosure document that provides information about penny
stocks and the risk associated with the penny stock market. The broker-dealer
must also provide the customer with current bid and offer quotations for the
penny stock, the compensation of the broker-dealer and its salesperson in the
transaction, and monthly account statements showing the market value of each
penny stock held in the customer's account. In addition, the penny stock
rules generally require that prior to a transaction in a penny stock; the
broker-dealer must make a written determination that the penny stock is a
suitable investment for the purchaser and receive the purchaser's written
agreement to the transaction. These disclosure requirements may have the
effect of reducing the level of trading activity in the secondary market for
a stock that becomes subject to the penny stock rules. The Company's stock
is currently quoted on the OTC-Bulletin Board with no trading activity to
date; therefore, the stock will has a trading price of less than $5.00 per
share and is subject to the penny stock rules and investors may find it more
difficult to sell their securities, should they desire to do so.
Properties.
Our offices are currently located at 16773 W. Park Drive, Chagrin Falls,
Ohio 44023. The Company has constructed a laboratory and administrative
offices at this address. Management believes that its current facilities
are adequate for its needs through the next twelve months, and that, should
it be needed, suitable additional space will be available to accommodate
expansion of the Company's operations on commercially reasonable terms,
although there can be no assurance in this regard.
22
Legal Proceedings.
From time to time, we may become involved in various lawsuits and legal
proceedings, which arise in the ordinary course of business. However,
litigation is subject to inherent uncertainties, and an adverse result in
these or other matters may arise from time to time that may harm our
business.
We are not presently a party to any material litigation, nor to the knowledge
of management is any litigation threatened against us, which may materially
affect us.
Submission of Matters to a Vote of Security Holders.
We did not submit any matters to a vote of our security holders during the
past fiscal year.
23
Market for Registrant's Common Equity, Related Stockholder Matters
and Issuer Purchases of Equity Securities.
(a) Market Information
EnzymeBioSystems Common Stock, $0.001 par value, is quoted on the
OTC-Bulletin Board under the stock symbol: ENZB. Since the Company's
listing no trades have taken place in the stock.
(b) Holders of Common Stock
As of January 28, 2011, there were approximately thirty-seven (37) holders of
record of our Common Stock and 31,500,000 shares issued and outstanding.
(c) Dividends
In the future we intend to follow a policy of retaining earnings, if any, to
finance the growth of the business and do not anticipate paying any cash
dividends in the foreseeable future. The declaration and payment of future
dividends on the Common Stock will be the sole discretion of board of
directors and will depend on our profitability and financial condition,
capital requirements, statutory and contractual restrictions, future
prospects and other factors deemed relevant.
(d) Securities Authorized for Issuance under Equity Compensation Plans
There are no outstanding grants or rights or any equity compensation plan in
place.
(e) Recent Sales of Unregistered Securities
On June 26, 2009 (inception), the Company issued 20,000,000, par value
$0.001 common shares of stock for cash to its two directors, and 10,500,000
common shares for cash to seven (7) founding shareholders. Of the original
30,500,000 common shares sold, a total of 10,500,000 common shares owned by
the seven founders, who are not directors, were subsequently registered with
the U.S. Securities and Exchange Commission on Form S-1 originally filed on
September 28, 2009.
On March 26, 2010, the Company sold 1,000,000 common shares at par value of
$0.001 per share for $10,000 cash, pursuant its Prospectus (424B3) statement
filed with the SEC on December 21, 2009.
On January 28, 2011, the Company sold 1,000,000 of its Series A Preferred
Shares for $150,000 cash, pursuant to an Exclusive Technology License and
Patents Agreement. See Exhibit 10.2.
As of January 28, 2011, the Company has a total 31,500,000 common shares
issued and outstanding to approximately thirty-seven (37) shareholders.
(f) Issuer Purchases of Equity Securities
We did not repurchase any of our equity securities during the years ended
June 30, 2010.
24
Financial Information
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Results of Operations for the quarter ended September 30, 2010
--------------------------------------------------------------
During the three month period ended September 30, 2010, the Company did
not generate any revenues. In addition, the Company does not expect to
generate any profit for the next twelve months.
In its most recent three month operating period ended September 30, 2010, the
Company generated no revenues. During the three months ended September 30,
2010, the Company had auditing fee expenses of $1,770, general and
administrative expenses of $5,558. For the three months ending September 30,
2010, the Company's research and development expenses were $10,690 as
compared to $4,541 for the same period last year. Research and development
expenses increased based on preparing additional enzymes for IND research
development. During the three months ended September 30, 2010, the Company
experienced total operating expenses of $24,018 as compared to $6,294 for the
same period last year. The increase in expenses in due to the increased
activities of the Company as compared to last year, when the Company was just
beginning its operations. Since the Company's inception, on June 26, 2009
through September 30, 2010, the Company experienced a net loss of $(79,811).
Revenues
--------
The Company has generated no revenues since its inception. As of September
30, 2010, the Company had an accumulated deficit of $(79,811) dollars. There
can be no assurances that the Company can achieve or sustain profitability or
that the Company's operating losses will not increase in the future.
Plan of Operation
-----------------
Management does not believe that the Company will be able to generate any
significant profit during the coming year. Management believes developmental
and marketing costs will most likely exceed any anticipated revenues for the
coming year. Management is evaluating an enzyme compound which it believes
has a specific therapeutic value in fighting tumors. On or about July 9,
2010 management entered into agreement an with Northeastern Ohio Universities
College of Medicine d/b/a Northeastern Ohio Universities Colleges of Medicine
and Pharmacy in Rootstown, Ohio, to perform rat studies. The research will
study a series of semisynthetic penicillins and cephalosporins containing
structural fragments of the well-known antitumor antibiotic sarcomycin.
Specifically, the two areas of this study will include: 1) an examination
of the in vitro cytotoxicity of penicillin analogs against hepatocellular
carcinoma cells; and 2) Investigate the dose-responsive antitumor actions
of penicillin analogs against chemically-induced hepatic tumorigenesis in
rats.
25
Management hopes this research with identify an enzyme compound developed by
the Company that will lead to the filing of an Investigational New Drug
Application ("IND") with the U. S. Food and Drug Administration. It is still
too early to determine if this project has any potential value for the
Company, and there are no assurances that the Company will ever obtain be
able to obtain an IND for this compound.
Management intends to personally finance EnzymeBioSystems, without
seeking reimbursement, to ensure that the Company has enough funds to operate
for the next twelve (12) months without the need to raise additional capital
to meet its fully reporting obligations in its normal course of business.
Future funding could result in potentially dilutive issuances of equity
securities, the incurrence of debt, contingent liabilities and/or
amortization expenses related to goodwill and other intangible assets, which
could materially adversely affect the Company's business, results of
operations and financial condition. Any future acquisitions of other
businesses, technologies, services or product(s) might require the Company to
obtain additional equity or debt financing, which might not be available on
terms favorable to the Company, or at all, and such financing, if available,
might be dilutive.
Going Concern
-------------
Our independent auditors included an explanatory paragraph in their report on
the accompanying financial statements regarding concerns about our ability to
continue as a going concern. Our financial statements contain additional
note disclosures describing the circumstances that lead to this disclosure by
our independent auditors.
Liquidity and Capital Resources
-------------------------------
The Company is authorized to issue 195,000,000 shares of its $0.001 par value
common stock and 5,000,000 shares of its $0.001 par value preferred stock.
As of January 28, 2011, the Company has 31,500,000 shares of common stock
issued and outstanding. As of September 30, 2010, the Company had current
assets of $32,124 and current liabilities of $54,435.
The Company has limited financial resources available, which has had an
adverse impact on the Company's liquidity, activities and operations.
In order for the Company to remain a Going Concern it will need to find
additional capital or generate revenues. Additional working capital may be
sought through additional debt or equity private placements, additional notes
payable to banks or related parties (officers, directors or stockholders),
or from other available funding sources at market rates of interest, or a
combination of these. The ability to raise necessary financing will depend
on many factors, including the nature and prospects of any business to be
acquired and the economic and market conditions prevailing at the time
financing is sought. No assurances can be given that any necessary financing
can be obtained on terms favorable to the Company, or at all.
26
Our officers have agreed to donate funds to the operations of the Company, in
order to keep it fully reporting for the next twelve (12) months, without
seeking reimbursement for funds donated.
Director, Executive Officer and Corporate Governance.
The following table sets forth certain information regarding our current
director and executive officer. Our executive officers serve one-year terms.
Set forth below are the names, ages and present principal occupations or
employment, and material occupations, positions, offices or employments for
the past five years of our current director and executive officer.
Name Age Positions and Offices Held
--------------- --- --------------------------
Ashot Martirosyan 58 President and Director
Anushavan Yeranosyan 47 Secretary, Treasurer and Director
---------------------------------------------------------------------
Set forth below is a brief description of the background and business
experience of our sole officer and director.
27
Ashot Martirosyan, President and Director
-----------------------------------------
Mr. Martirosyan was the head of the "Anti-Biotics and Enzyme Inhibitors
Laboratory" of "Institute of Organic Chemistry" in Yerevan, Armenia until
November 2008. He moved to USA November 2008 and started preparing his
research results and scientific materials for publications.
Mar. 2009 -
Present Developing business plan, to incorporate and begin operations
Of EnzymeBioSystems.
1992 - 2008 Institute of Fine Organic Chemistry,
National Academy of Sciences, Republic of Armenia
Head of Antibiotics Laboratory
1984 - 1992 Institute of Fine Organic Chemistry,
National Academy of Sciences, Republic of Armenia
Senior Researcher
1976 - 1984 Institute of Fine Organic Chemistry,
National Academy of Sciences, Republic of Armenia
Antibiotics Laboratory Researcher
1974 - 1976 Optical-Mechanical Corporation - "Astro"
Head of Chemical Laboratory
Republic of Armenia
Education:
1980 - 1984 Yerevan State University
Ph.D. degree, Candidate of Chemical Sciences: Organic
Chemistry
1969 - 1974 Moscow Chemical and Technological Institute of D.I. Mendeleev
Department of Organic Chemistry
Chemical Technology
28
Anushavan Yeranosyan, Secretary, Treasurer and Director
-------------------------------------------------------
2002 - 2009 Cutting Systems, Inc.
Cleveland, Ohio
United States
Director of Engineering
2005 - 2009 A & A Medical Supply
A distributor of health care supplies
Euclid, Ohio
Financial advisor
1998 - 2002 Cutting Systems, Inc.
Cleveland, Ohio
United States
Production Manager
1996 - 1998 Cutting Systems, Inc.
Cleveland, Ohio
United States
Engineer
1992 - 1996 Armenian Services LLC
Yerevan, Armenia
Founder/Owner
1990 - 1992 Laser Institute
Yerevan, Armenia
Project Manager
1988 - 1990 Laser Institute
Yerevan, Armenia
Engineer
1984 - 1988 Aviocomplex
Yerevan, Armenia
Engineer
Education:
1987 - 1988 Moscow
Moscow Humanitarian University
Master's Degree - International Relations
1979 - 1984 State Engineering University of Armenia (Polytechnic)
Master's Degree
Electronics
29
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires our executive officer and director, and persons who
beneficially own more than ten percent of our common stock, to file initial
reports of ownership and reports of changes in ownership with the SEC.
Executive officers, directors and greater than ten percent beneficial owners
are required by SEC regulations to furnish us with copies of all Section
16(a) forms they file. Based upon a review of the copies of such forms
furnished to us and written representations from our executive officer and
director, we believe that as of the date of this report they were not current
in his 16(a) reports.
Board of Directors
------------------
Our board of directors currently consists of two members, Ashot Martirosyan
and Anushavan Yeranosyan. Our directors serve one-year terms.
Audit Committee
---------------
The company does not presently have an Audit Committee. The sole member of
the Board sits as the Audit Committee. No qualified financial expert has
been hired because the company is too small to afford such expense.
30
Committees and Procedures
-------------------------
(1) The registrant has no standing audit, nominating and compensation
committees of the Board of Directors, or committees performing
similar functions. The Board acts itself in lieu of committees due
to its small size.
(2) The view of the board of directors is that it is appropriate for the
registrant not to have such a committee because its directors
participate in the consideration of director nominees and the
board and the company are so small.
(3) The members of the Board who act as nominating committee is
not independent, pursuant to the definition of independence of a
national securities exchange registered pursuant to section 6(a)
of the Act (15 U.S.C. 78f(a).
(4) The nominating committee has no policy with regard to the
consideration of any director candidates recommended by security
holders, but the committee will consider director candidates
recommended by security holders.
(5) The basis for the view of the board of directors that it is
appropriate for the registrant not to have such a policy is that
there is no need to adopt a policy for a small company.
(6) The nominating committee will consider candidates recommended by
security holders, and by security holders in submitting such
recommendations.
(7) There are no specific, minimum qualifications that the nominating
committee believes must be met by a nominee recommended by security
holders except to find anyone willing to serve with a clean
background.
(8) The nominating committee's process for identifying and evaluation
of nominees for director, including nominees recommended by security
holders, is to find qualified persons willing to serve with a clean
backgrounds. There are no differences in the manner in which the
nominating committee evaluates nominees for director based on
whether the nominee is recommended by a security holder, or found
by the board.
Code of Ethics
--------------
We have not adopted a Code of Ethics for the Board and any salaried
employees.
31
Limitation of Liability of Directors
------------------------------------
Pursuant to the Nevada General Corporation Law, our Articles of Incorporation
exclude personal liability for our Directors for monetary damages based upon
any violation of their fiduciary duties as Directors, except as to liability
for any breach of the duty of loyalty, acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, or any
transaction from which a Director receives an improper personal benefit. This
exclusion of liability does not limit any right which a Director may have to
be indemnified and does not affect any Director's liability under federal or
applicable state securities laws. We have agreed to indemnify our directors
against expenses, judgments, and amounts paid in settlement in connection
with any claim against a Director if he acted in good faith and in a manner
he believed to be in our best interests.
Executive Compensation
The following table sets forth summary compensation information for the
fiscal year ended June 30, 2010 for our two officers.
Summary Compensation Table
--------------------------
All
Fiscal Other
Year Compen-
ending Salary Bonus Awards sation Total
Name and Principal Position Jun. 30 ($) ($) ($) ($) ($)
-----------------------------------------------------------------------------
Ashot Martirosyan President 2010 9,000 -0- -0- -0- 9,000
Anushavan Yeranosyan Sec/Tres 2010 -0- -0- -0- -0- -0-
-----------------------------------------------------------------------------
We do not maintain key-man life insurance for our executive officer/
director. We do not have any long-term compensation plans or stock option
plans.
32
Stock Option Grants
-------------------
We did not grant any stock options to the executive officer or director from
inception through fiscal year end June 30, 2010.
Outstanding Equity Awards at 2010 Fiscal Year-End
-------------------------------------------------
We did not have any outstanding equity awards as of June 30, 2010.
Option Exercises for Fiscal 2010
--------------------------------
There were no options exercised by our named executive officer in fiscal
2009.
Potential Payments Upon Termination or Change in Control
--------------------------------------------------------
We have not entered into any compensatory plans or arrangements with respect
to our named executive officer, which would in any way result in payments to
such officer because of her resignation, retirement, or other termination of
employment with us or our subsidiaries, or any change in control of, or a
change in his responsibilities following a change in control.
Director Compensation
---------------------
The following table sets forth summary compensation information for the
fiscal year ended June 30, 2010 for our two directors.
Summary Compensation Table
--------------------------
All
Fiscal Other
Year Compen-
ending Salary Bonus Awards sation Total
Name and Principal Position Jun. 30 ($) ($) ($) ($) ($)
-----------------------------------------------------------------------------
Ashot Martirosyan President 2010 9,000 -0- -0- -0- 9,000
Anushavan Yeranosyan Sec/Tres 2010 -0- -0- -0- -0- -0-
-----------------------------------------------------------------------------
33
Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters.
The following table presents information, to the best of our knowledge, about
the ownership of our common stock on January 28, 2011 relating to those
persons known to beneficially own more than 5% of our capital stock and by
our named executive officer and sole director.
Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and does not necessarily indicate
beneficial ownership for any other purpose. Under these rules, beneficial
ownership includes those shares of common stock over which the stockholder
has sole or shared voting or investment power. It also includes shares of
common stock that the stockholder has a right to acquire within 60 days after
January 28, 2011 pursuant to options, warrants, conversion privileges or
other right.
The percentage ownership of the outstanding common stock, however, is based
on the assumption, expressly required by the rules of the Securities and
Exchange Commission, that only the person or entity whose ownership is being
reported has converted options or warrants into shares of EnzymeBioSystems's
common stock.
We do not have any outstanding options, warrants or other securities
exercisable for or convertible into shares of our common stock.
AMOUNT AND
NATURE OF
TITLE OF NAME OF BENEFICIAL BENEFICIAL PERCENT OF
CLASS OWNER AND POSITION OWNERSHIP CLASS(1)
-----------------------------------------------------------------------
Common Ashot Martirosyan(2) 10,000,000 31.7%
President/Director
Common Anushavan Yeranosyan(3) 10,000,000 31.7%
Secretary/Treasurer
------------------------------
DIRECTORS AND OFFICERS
AS A GROUP (2 persons) 20,000,000 63.4%
(1) Percent of Class is based on 31,500,000 shares issued and outstanding.
(2) Ashot Martirosyan, 16773 W Park Drive, Chagrin Falls, Ohio, 44023.
(3) Anushavan Yeranosyan, 16773 W Park Drive, Chagrin Falls, Ohio, 44023
We are not aware of any arrangements that may result in "changes in control"
as that term is defined by the provisions of Item 403(c) of Regulation S-B.
34
We believe that all persons named have full voting and investment power with
respect to the shares indicated, unless otherwise noted in the table. Under
the rules of the Securities and Exchange Commission, a person (or group of
persons) is deemed to be a "beneficial owner" of a security if he or she,
directly or indirectly, has or shares the power to vote or to direct the
voting of such security, or the power to dispose of or to direct the
disposition of such security. Accordingly, more than one person may be deemed
to be a beneficial owner of the same security. A person is also deemed to be
a beneficial owner of any security, which that person has the right to
acquire within 60 days, such as options or warrants to purchase our common
stock.
Certain Relationships and Related Transactions, and Director Independence.
Our officers and directors are also our primary shareholders. Together,
our officers and directors control 20,000,000 shares of our common stock, or
63.4% of our outstanding common stock.
Through a Board Resolution, the Company hired the professional services of
Seale and Beers, Certified Public Accountants, to perform audited financials
for the Company. Seale and Beers, CPAs own no stock in the Company. The
company has no formal contracts with its accountants, as they are paid on a
fee for service basis.
35
Financial Statement
-------------------
Fiscal Year ending June 30, 2009 (audited)
------------------------------------------
PAGE
----
Independent Auditors' Report 36
Balance Sheet 37
Statements of Operations 38
Statements of Changes in Stockholders' Equity 39
Statements of Cash Flows 40
Notes to Financials 41
For Quarter ending September 30, 2010 (unaudited)
-------------------------------------------------
Balance Sheet 48
Statements of Operations 49
Statements of Changes in Stockholders' Equity 50
Statements of Cash Flows 51
Notes to Financials 52
36
SEALE AND BEERS, CPAs
PCAOB & CPAB REGISTERED AUDITORS
--------------------------------
www.sealebeers.com
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
-------------------------------------------------------
To the Board of Directors
EnzymeBioSystems
(A Development Stage Company)
We have audited the accompanying balance sheets of EnzymeBioSystems
(A Development Stage Company) as of June 30, 2010 and 2009, and the related
statements of operations, stockholders' equity (deficit) and cash flows for
the year ended June 30, 2010, for the period from inception on June 26, 2009
through June 30, 2010, and for the period from inception on June 26, 2009
through June 30, 2010. These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we
plan and perform the audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management,
as well as evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of EnzymeBioSystems (A
Development Stage Company) as of June 30, 2010 and 2009, and the related
statements of operations, stockholders' equity (deficit) and cash flows
for the year ended June 30, 2010, for the period from inception on June 26,
2009 through June 30, 2010, and for the period from inception on June 26,
2009 through June 30, 2010, in conformity with accounting principles
generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 3 to the
financial statements, the Company has an accumulated deficit of $55,793
and has not yet established an ongoing source of revenues, which raises
substantial doubt about its ability to continue as a going concern.
Management's plans concerning these matters are also described in Note 3.
The financial statements do not include any adjustments that might result
from the outcome of this uncertainty.
/s/ Seale and Beers, CPAs
-------------------------
Seale and Beers, CPAs
Las Vegas, Nevada
October 12, 2010
50 S. Jones Blvd. Suite 202 Las Vegas, NV 89107
Phone: (888)727-8251 Fax: (888)782-2351
37
EnzymeBioSystems
(A Development Stage Company)
Balance Sheet
June 30, June 30,
2010 2009
------------ ------------
ASSETS
Current Assets:
Cash and cash equivalents $ 5,913 $ 30,500
------------ ------------
Total current assets 5,913 30,500
------------ ------------
TOTAL ASSETS $ 5,913 $ 30,500
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,723 $ -
Accrued expenses 5,500 2,500
Credit card payable 1,483 -
------------ ------------
Total current liabilities 8,706 2,500
------------ ------------
Stockholders' equity:
Preferred stock, $0.001 par value, 5,000,000
shares authorized, none issued and
outstanding as of 6/30/10 and 6/30/09,
respectively - -
Common stock, $0.001 par value, 195,000,000
shares authorized, 31,500,000 and 30,500,000
shares issued and outstanding as of 6/30/10
and 6/30/09, respectively 31,500 30,500
Additional Paid-in Capital 21,500 500
(Deficit) accumulated during
development stage (55,793) (3,000)
------------ ------------
Total stockholders' equity (2,793) 28,000
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 5,913 $ 30,500
============ ============
The accompanying notes are an integral part of these financial statements.
38
EnzymeBioSystems
(A Development Stage Company)
Statements of Operations
For the From From
year June 26, 2009 June 26, 2009
ended (inception) to (inception) to
June 30, June 30, June 30,
2010 2009 2010
-------------- -------------- --------------
REVENUE $ - $ - $ -
OPERATING EXPENSES:
Auditing fees 9,625 2,500 12,125
General & administrative 22,738 - 22,738
Incorporating fees - 500 500
Research & development 16,095 - 16,095
Research & development
reimbursement (See note 11) (10,976) - (10,976)
Salaries 9,000 - 9,000
-------------- -------------- --------------
Total operating expenses 46,482 3,000 49,482
-------------- -------------- --------------
Loss from operations (46,482) (3,000) (49,482)
OTHER EXPENSES:
Loss on impairment of
furniture and equipment (6,311) - (6,311)
-------------- -------------- --------------
Total other expense (6,311) - (6,311)
-------------- -------------- --------------
Net (loss) before income taxes (52,793) (3,000) (55,793)
Provision for income tax - - -
-------------- -------------- --------------
NET (LOSS) $ (52,793) $ (3,000) $ (55,793)
============== ============== ==============
BASIC LOSS PER SHARE $ (0.00) $ (0.00)
============== ==============
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING -
BASIC AND FULLY DILUTED 30,765,753 12,200,000
============== ==============
The accompanying notes are an integral part of these financial statements.
39
EnzymeBioSystems
(A Development Stage Company)
Statements of Stockholders' Equity
Deficit
Preferred Accumulated
Stock Common Stock Additional During
------------- ------------------- Paid-in Development
Shares Amt Shares Amt Capital Stage Total
------- ----- ---------- ------- --------- ----------- ----------
June 26,
2009
Contributed
Capital - $ - - $ - $ 500 $ - $ 500
June 29,
2009
Founders
shares
issued for
cash at
$0.001 per
share 30,500,000 30,500 - - 30,500
Net (loss)
for the
period
ending
June 30,
2009 (3,000) (3,000)
------- ----- ---------- ------- --------- ----------- ----------
Balance,
June 30,
2009 - - 30,500,000 30,500 500 (3,000) 28,000
July 2009
Contributed
capital
(cash) 2,500 2,500
December
2009
Contributed
capital
(services) 2,500 2,500
March 26,
2010
Shares
issued for
cash at
$0.01 per
share 1,000,000 1,000 9,000 10,000
March 2010
Contributed
capital
(cash) 2,000 2,000
March 2010
Contributed
capital
(services) 2,500 2,500
June 2010
Contributed
capital
(services) 2,500 2,500
Net (loss)
for the
year (52,793) (52,793)
------- ----- ---------- ------- --------- ----------- ----------
Balance,
June 30,
2010 - $ - 31,500,000 $31,500 $ 21,500 $ (55,793) $ (2,793)
======= ===== ========== ======= ========= =========== ==========
The accompanying notes are an integral part of these financial statements.
40
EnzymeBioSystems
(A Development Stage Company)
Statements of Cash Flows
For the From From
year June 26, 2009 June 26, 2009
ended (inception) to (inception) to
June 30, June 30, June 30,
2010 2009 2010
-------------- -------------- --------------
OPERATING ACTIVITIES
Net (loss) $ (52,793) $ (3,000) $ (55,793)
Adjustments to reconcile
net loss to net cash
used by operating
activities:
Increase (decrease) in:
Accounts payable 1,723 - 1,723
Accrued expense 3,000 2,500 5,500
Credit card payable 1,483 - 1,483
Depreciation 906 - 906
Impairment of asset 6,311 - 6,311
Donated services 7,500 - 7,500
-------------- -------------- --------------
Cash (used) by
operating activities (31,870) (500) (32,370)
INVESTING ACTIVITIES
Purchase of furniture and
equipment (7,317) - (7,317)
Sale of furniture and
equipment 100 - 100
-------------- -------------- --------------
Cash (used) by
investing activities (7,217) - (7,217)
FINANCING ACTIVITIES
Sale of common stock 10,000 30,500 40,500
Contributed capital 4,500 500 5,000
-------------- -------------- --------------
Cash provided by
financing activities 14,500 31,000 45,500
-------------- -------------- --------------
NET INCREASE IN CASH (24,587) 30,500 5,913
CASH AND EQUIVALENTS -
BEGINNING OF PERIOD 30,500 - -
-------------- -------------- --------------
CASH AND EQUIVALENTS -
END OF PERIOD $ 5,913 $ 30,500 $ 5,913
============== ============== ==============
SUPPLEMENTAL DISCLOSURES:
Interest paid $ - $ - $ -
Income taxes paid $ - $ - $ -
Non-cash transactions $ 13,811 $ - $ 13,811
The accompanying notes are an integral part of these financial statements.
41
EnzymeBioSystems
(A Development Stage Company)
Notes to Financial Statements
June 30, 2010
NOTE 1 - GENERAL ORGANIZATION AND BUSINESS
EnzymeBioSystems (the "Company") was incorporated under the laws of the state
of Nevada on June 26, 2009. The Company has two officers/directors and
was organized to conduct any lawful business. The Company manufactures
specialty enzymes and enzyme related products.
The Company has minimal operations and in accordance with the provisions
of the Financial Accounting Standards Board ("FASB") ASC 915, the Company
is considered a development stage company.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING PRACTICES
Basis of Accounting
-------------------
The basis is United States generally accepted accounting principles.
Earnings per Share
------------------
The basic earnings (loss) per share is calculated by dividing the Company's
net income (loss) available to common shareholders by the weighted average
number of common shares during the year. The diluted earnings (loss) per
share is calculated by dividing the Company's net income (loss) available to
common shareholders by the diluted weighted average number of shares
outstanding during the year. The diluted weighted average number of shares
outstanding is the basic weighted number of shares adjusted as of the first
of the year for any potentially dilutive debt or equity.
The Company has not issued any options or warrants or similar securities
since inception.
Dividends
---------
The Company has not yet adopted any policy regarding payment of dividends.
No Dividends have been paid during the periods shown.
Research and development costs
------------------------------
Research and development costs are expensed as incurred. The amounts of
costs expensed for the years ended June 30, 2010 and 2009, were $16,095
and $0, respectively.
42
EnzymeBioSystems
(A Development Stage Company)
Notes to Financial Statements
June 30, 2010
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING PRACTICES (Continued)
Income Taxes
------------
The provision for income taxes is the total of the current taxes payable and
the net of the change in the deferred income taxes. Provision is made for
the deferred income taxes where differences exist between the period in which
transactions affect current taxable income and the period in which they enter
into the determination of net income in the financial statements.
Year-end
--------
The Company has selected June 30 as its year-end.
Advertising
-----------
Advertising is expensed when incurred. There has been no advertising
during the periods presented herein.
Use of Estimates
----------------
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America 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 revenue and expenses during the reporting period. Actual results could
differ from those estimates.
Revenue recognition
-------------------
The Company applies the provision of ASC 605, Revenue Recognition. ASC 605,
Revenue Recognition in Financial Statements, provides guidance on the
recognition, presentation and disclosure of revenue in financial statements.
ASC 605 outlines the basic criteria that must be met to recognize revenue
and provides guidance for the disclosure of revenue recognition policies.
The Company recognizes revenue related to product sales when (i) persuasive
evidence of the arrangement exists, (ii) shipment has occurred, (iii) the
fee is fixed or determinable, and (iv) collectability is reasonably assured.
For the period from August 14, 2006 (inception) to June 30, 2010, the
Company has not recognized any revenues.
43
EnzymeBioSystems
(A Development Stage Company)
Notes to Financial Statements
June 30, 2010
NOTE 3. GOING CONCERN
The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. As shown in the accompanying financial
statements, the Company has incurred net losses of $(55,793) for the period
from June 26, 2009 (inception) to June 30, 2010. The future of the
Company is dependent upon its ability to obtain financing and upon future
profitable operations from the development of its new business opportunities.
Management has plans to seek additional capital through private placements
and public offerings of its common stock. The financial statements do not
include any adjustments relating to the recoverability and classification of
recorded assets, or the amounts of and classification of liabilities that
might be necessary in the event the Company cannot continue in existence.
These conditions raise substantial doubt about the Company's ability to
continue as a going concern. These financial statements do not include any
adjustments that might arise from this uncertainty.
NOTE 4. STOCKHOLDERS'EQUITY
The Company is authorized to issue up to 5,000,000 of its $0.001 par value
preferred stock and up to 195,000,000 of its $0.001 par value common stock.
Preferred Stock
---------------
No shares of preferred stock have been issued.
Common Stock
------------
On June 29, 2009, the Company issued 30,500,000 shares of its $0.001 par
value common stock to its nine founders for $30,500 in cash.
On March 26, 2010, the Company issued 1,000,000 shares of its $0.001 par
value common stock to approximately 28 qualified investors for $10,000
in cash.
No other issuances of preferred or common stock have been made.
44
EnzymeBioSystems
(A Development Stage Company)
Notes to Financial Statements
June 30, 2010
NOTE 5 - CONTRIBUTED CAPITAL
In July 2009, a director of the Company contributed capital of $2,500 for
audit fees.
During the quarters ending December 31, 2009, March 31, 2010 and June 30,
2010, the Company's corporate counsel agreed to prepare, write, EDGARize
and provide legal opinion for the Company's interim reports and Form 10-K
filing, which the law firm valued at $2,500 for each quarter.
The law firm decided to contribute this capital based on its recommendation
that the Company engage the services of an auditor, who had his licensed
revoked and was not able to complete the Company's audit for the past fiscal
year. Based on this decision, the Company needed to engage a new auditor.
The Company's corporate counsel believes this action will help build goodwill
for its law firm.
In March 2010, a director of the company contributed capital of $2,000 for
audit fees.
NOTE 6 - RELATED PARTY TRANSACTIONS
Office services are provided without charge by a director. Such costs are
immaterial to the financial statements and, accordingly, have not been
reflected therein. The officers and directors of the Company are involved in
other business activities and may, in the future, become involved in other
business opportunities. If a specific business opportunity becomes
available, such persons may face a conflict in selecting between the Company
and their other business interests. The Company has not formulated a policy
for the resolution of such conflicts.
NOTE 7 - PROVISION FOR INCOME TAXES
The Company accounts for income taxes under ASC 740, "Accounting for Income
Taxes", which requires use of the liability method. ASC 740 provides that
deferred tax assets and liabilities are recorded based on the differences
between the tax bases of assets and liabilities and their carrying amounts
for financial reporting purposes, referred to as temporary differences.
Deferred tax assets and liabilities at the end of each period are determined
using the currently enacted tax rates applied to taxable income in the
periods in which the deferred tax assets and liabilities are expected to be
settled or realized.
45
EnzymeBioSystems
(A Development Stage Company)
Notes to Financial Statements
June 30, 2010
NOTE 7 - PROVISION FOR INCOME TAXES (Continued)
The provision for income taxes differs from the amount computed by applying
the statutory federal income tax rate to income before provision for income
taxes. The sources and tax effects of the differences are as follows:
U.S federal statutory rate (35.0%)
Valuation reserve 35.0%
------
Total -%
Income tax benefits as of June 30, 2010 and June 30, 2009, are calculated
as follows:
Year Ended
June 30,
2010 2009
-------- --------
Book loss $52,793 $ 3,000
Less: Book - -
depreciation
Add: Tax - -
depreciation
-------- --------
Net loss $52,793 $ 3,000
Effective 35% 35%
tax rate
-------- --------
Tax benefit $18,478 $ 1,050
Valuation $(18,478) $(1,050)
allowance
-------- --------
$ - $ -
-------- --------
During the year ended June 30, 2010, the Company recorded a valuation
allowance of $(18,478), as compared to $(1,050) for the previous year,
on the deferred tax assets to reduce the total to an amount that management
believes will ultimately be realized. Realization of deferred tax assets is
dependent upon sufficient future taxable income during the period that
deductible temporary differences and carryforwards are expected to be
available to reduce taxable income. There was no other activity in the
valuation allowance account during the year ended June 30, 2010.
46
EnzymeBioSystems
(A Development Stage Company)
Notes to Financial Statements
June 30, 2010
NOTE 8 - RECENT PRONOUNCEMENTS
The Company's management has evaluated all the recently issued accounting
pronouncements through the filing date of these financial statements and
does not believe that any of these pronouncements will have a material
impact on the Company's financial position and results of operations.
NOTE 9 - COMMITMENTS AND CONTINGENCIES
The Company rents its office and laboratory space in an unaffiliated,
commercially owned property for use as offices, storage and parking.
The Company entered into a lease agreement beginning September 1, 2009
at a monthly rent of $500 per month. This lease expired on August 31,
2010 and was renewed at a monthly rent of $600 per month beginning
September 1, 2010. The Company's current lease expires on August 31,
2015.
Minimum lease payments due under the terms of the lease are as follows:
Fiscal Year Ending
June 30, Rent
------------------ -------
2010 $ 5,000
2011 7,000
2012 7,200
2013 7,200
2014 7,200
2015 7,200
2016 1,200
-------
Total $42,000
47
EnzymeBioSystems
(A Development Stage Company)
Notes to Financial Statements
June 30, 2010
NOTE 10 - LONG-LIVED ASSET DEPRECIATION AND IMPAIRMENT
In October 2009, the Company placed equipment it purchased into service.
This equipment has a service life of 5 years and an estimated salvage value
of 10%. Depreciation has been calculated using the straight-line group
depreciation method, whereby the cost of the fixed asset, minus the residual
salvage value, is divided by the useful life of the fixed asset.
In accordance with ASC-360-10, Accounting for the Impairment or Disposal
of Long-lived Assets, we review long-lived assets for impairment at least
annually or whenever events or changes in circumstances indicate the
carrying amounts of such assets may not be recoverable. The Company's
policy is to record an impairment loss at each balance sheet date when it
is determined that the carrying amount may not be recoverable.
Recoverability of these assets is based on undiscounted future cash flows
of the related asset. For the year ended June 30, 2010, the Company
determined that based on estimated future cash flows, the carrying amount
of our furniture and equipment exceeded its fair value by $6,311, and
accordingly, recognized an impairment loss.
NOTE 11 - RESEARCH AND DEVELOPMENT REIMBURSEMENT EXPENSES
Our research and development reimbursement expenses consist primarily of fees
paid by third-parties to cover our costs to develop and manufacturer enzyme
products. During the quarter ended June 30, 2010, the Company was
reimbursed for research and development expenses of $10,976 by the
Northeastern Ohio Universities College of Medicine. The Company has an oral
agreement with the University where the Company develops and produces enzyme
product(s) for the University and is reimbursed for its actual research and
development expenses related to the development of these enzyme product(s).
NOTE 12 - SUBSEQUENT EVENTS
The Company has evaluated subsequent events through the filing date of
these financial statements, with no subsequent events to be reported.
48
EnzymeBioSystems
(A Development Stage Company)
Condensed Balance Sheet
(Unaudited)
September 30, June 30,
2010 2010
------------ ------------
ASSETS
Current Assets:
Cash and cash equivalents $ 32,124 $ 5,913
------------ ------------
Total current assets 32,124 5,913
------------ ------------
TOTAL ASSETS $ 32,124 $ 5,913
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 2,210 $ 1,723
Accrued expenses 1,750 5,500
Credit card payable 475 1,483
Deposits (See Note 6) 50,000 -
------------ ------------
Total current liabilities 54,435 8,706
------------ ------------
Stockholders' equity:
Preferred stock, $0.001 par value, 5,000,000
shares authorized, none issued and
outstanding as of 9/30/10 and 6/30/10,
respectively - -
Common stock, $0.001 par value, 195,000,000
shares authorized, 31,500,000 and 31,500,000
shares issued and outstanding as of 9/30/10
and 6/30/10, respectively 31,500 31,500
Additional Paid-in Capital 26,000 21,500
(Deficit) accumulated during
development stage (79,811) (55,793)
------------ ------------
Total stockholders' equity (deficit) (22,311) (2,793)
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 32,124 $ 5,913
============ ============
The accompanying notes are an integral part of these interim
financial statements.
49
EnzymeBioSystems
(A Development Stage Company)
Condensed Statements of Operations
(Unaudited)
From
June 26, 2009
For the three months ended (inception) to
September 30, September 30, September 30,
2010 2009 2010
-------------- -------------- --------------
REVENUE $ - $ - $ -
OPERATING EXPENSES:
Auditing fees 1,770 - 13,895
General & administrative 5,558 1,753 28,296
Incorporating fees - - 500
Research & development 10,690 4,541 26,786
Research & development
reimbursement (See note 11) - - (10,976)
Salaries 6,000 - 15,000
-------------- -------------- --------------
Total operating expenses 24,018 6,294 73,501
-------------- -------------- --------------
Loss from operations (24,018) (6,294) (73,501)
OTHER EXPENSES:
Loss on impairment of
furniture and equipment - - (6,311)
-------------- -------------- --------------
Total other expense - - (6,311)
-------------- -------------- --------------
Net (loss) before income taxes (24,018) (6,294) (79,811)
Provision for income tax - - -
-------------- -------------- --------------
NET (LOSS) $ (24,018) $ (6,294) $ (79,811)
============== ============== ==============
BASIC LOSS PER SHARE $ (0.00) $ (0.00)
============== ==============
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING -
BASIC AND FULLY DILUTED 31,500,000 30,500,000
============== ==============
The accompanying notes are an integral part of these interim
financial statements.
50
EnzymeBioSystems
(A Development Stage Company)
Condensed Statements of Cash Flows
(Unaudited)
From
June 26, 2009
For the three months ended (inception) to
September 30, September 30, September 30,
2010 2009 2010
-------------- -------------- --------------
OPERATING ACTIVITIES
Net (loss) $ (24,018) $ (6,294) $ (79,811)
Adjustments to reconcile
net loss to net cash
used by operating
activities:
Increase (decrease) in:
Accounts payable (1,263) - 2,210
Accrued expense (2,000) (2,500) 1,750
Credit card payable (1,008) 4,740 475
Depreciation - - 906
Impairment of asset - - 6,311
Contributed services 2,500 - 10,000
Customer deposits 50,000 - 50,000
-------------- -------------- --------------
Cash provided by (used in)
operating activities 24,211 (4,054) (8,159)
INVESTING ACTIVITIES
Purchase of furniture and
equipment - (2,073) (7,317)
Sale of furniture and
equipment - (2,073) 100
-------------- -------------- --------------
Cash (used in)
investing activities - - (7,217)
FINANCING ACTIVITIES
Sale of common stock - - 40,500
Contributed capital 2,000 2,500 7,000
-------------- -------------- --------------
Cash provided by
financing activities 2,000 2,500 47,500
-------------- -------------- --------------
NET INCREASE IN CASH 26,211 (3,627) 32,124
CASH AND EQUIVALENTS -
BEGINNING OF PERIOD 5,913 30,500 -
-------------- -------------- --------------
CASH AND EQUIVALENTS -
END OF PERIOD $ 32,124 $ 26,873 $ 32,124
============== ============== ==============
SUPPLEMENTAL DISCLOSURES:
Interest paid $ - $ - $ -
Income taxes paid $ - $ - $ -
Non-cash transactions $ 2,500 $ - $ 16,311
The accompanying notes are an integral part of these interim
financial statements.
51
EnzymeBioSystems
(A Development Stage Company)
Notes to the Condensed Interim Financial Statements
September 30, 2010
(Unaudited)
NOTE 1 - CONDENSED INTERIM FINANCIAL STATEMENTS
The accompanying financial statements have been prepared by the Company
without audit. In the opinion of management, all adjustments (which include
only normal recurring adjustments) necessary to present fairly the financial
position, results of operations and cash flows at September 30, 2010 and for
all periods presented have been made.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with accounting principles generally
***ccepted in the United States of America have been condensed or omitted. It
is suggested that these condensed financial statements be read in conjunction
with the financial statements and notes thereto included in the Company's
June 30, 2010 audited financial statements. The results of operations for
the period ended September 30, 2010 are not necessarily indicative of
the operating results for the full year.
Basis of Presentation
---------------------
In the opinion of management, the accompanying balance sheets and related
interim statements of income, cash flows, and stockholders' equity include
all adjustments, consisting only of normal recurring items, necessary for
their fair presentation in conformity with accounting principles generally
accepted in the United States of America ("U.S. GAAP"). Preparing financial
statements requires management to make estimates and assumptions the affect
the reported amounts of assets, liabilities, revenue and expenses. Actual
results and outcomes may differ from management's estimates and assumptions.
Interim results are not necessarily indicative of results for a full year.
The information included in this Form 10-Q should be read in conjunction
with information included in the Form 10-K.
52
EnzymeBioSystems
(A Development Stage Company)
Notes to the Condensed Interim Financial Statements
September 30, 2010
(Unaudited)
NOTE 2 - GOING CONCERN
These condensed financial statements have been prepared in accordance with
generally accepted accounting principles applicable to a going concern
which contemplates the realization of assets and the satisfaction of
liabilities and commitments in the normal course of business. As of
September 30, 2010, the Company has not recognized any revenues and has
accumulated operating losses of approximately $79,811 since inception.
The Company's ability to continue as a going concern is contingent upon
the successful completion of additional financing arrangements and its
ability to achieve and maintain profitable operations. Management plans
to raise equity capital to finance the operating and capital requirements
of the Company. Amounts raised will be used to further development of the
Company's products, to provide financing for marketing and promotion, to
secure additional property and equipment, and for other working capital
purposes. While the Company is putting forth its best efforts to achieve
the above plans, there is no assurance that any such activity will generate
funds that will be available for operations.
These conditions raise substantial doubt about the Company's ability to
continue as a going concern. These financial statements do not include
any adjustments that might arise from this uncertainty.
NOTE 3 - SIGNIFICANT ACCOUNTING POLICIES
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.
Recent Accounting Pronouncements
--------------------------------
The Company's management has evaluated all the recently issued accounting
pronouncements through the filing date of these financial statements and does
not believe that any of these pronouncements will have a material impact on
the Company's financial position and results of operations.
53
EnzymeBioSystems
(A Development Stage Company)
Notes to the Condensed Interim Financial Statements
September 30, 2010
(Unaudited)
NOTE 4 - RELATED PARTY TRANSACTIONS
The officers and directors of the Company are involved in other business
activities and may, in the future, become involved in other business
opportunities. If a specific business opportunity becomes available, such
persons may face a conflict in selecting between the Company and their other
business interests. The Company has not formulated a policy for the
resolution of such conflicts.
NOTE 5 - CONTRIBUTED CAPITAL
During the quarter ending September 30, 2010, an officer and director of
the Company contributed $2,000 for working capital.
During the quarter ending September 30, 2010, the Company's corporate counsel
agreed to prepare, write, EDGARize and provide legal opinion for the
Company's interim reports and Form 10 filing, which the law firm valued at
$2,500. The law firm decided to contribute this capital to help build
goodwill for its law firm.
NOTE 6 - FUNDING
During the Quarter ending September 30, 2010, the company entered into
negotiations with an accredited investor to help fund the operations of the
Company, and cover its IND project expenses with Northeastern Ohio
Universities College of Medicine d/b/a Northeastern Ohio Universities
Colleges of Medicine and Pharmacy in Rootstown, Ohio. As the negotiations
progressed, the accredited investor advanced the company $50,000 towards
finalizing the purchase of an equity position in the Company. No final
agreement has been negotiated, no shares have been issued for these funds,
and no debt instrument has been executed. Management expects to raise a
total of $150,000 from this accredited investor, with the negotiations
concluding before the end of December, 2010.
NOTE 7 - SUBSEQUENT EVENTS
The Company has evaluated subsequent events through the date of this
report, with no subsequent events to be reported.
54
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
The exhibits listed in the following Exhibit Index are filed as part of this
Current Report on Form 8-K:
Exhibit No. Exhibits
3.3 Articles of Designation, dated January 13, 2011.
10.2 Exclusive Technology License and Patents Agreement between
EnzymeBioSystems and Berkeley Clinic LC, dated January 28, 2011
23.1 Consent Letter from Seale and Beers, CPAs
55
SIGNATURE
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 hereunto duly authorized.
EnzymeBioSystems
---------------------------
Registrant
Dated: January 31, 2011 By: /s/ Ashot Martirosyan
-------------------------------------
By: Ashot Martirosyan
Its: Principal Executive Officer
56
