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LATEST ENZYME BIOSYSTEMS PRESS RELEASE & NEWS

Form 10-Q for ENZYMEBIOSYSTEMS

Form 10-Q for ENZYMEBIOSYSTEMS


14-May-2014

Quarterly Report

MANAGEMENT’S DISCUSSION AND ANALYSIS OF  
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Item 2. – Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Information

This Quarterly Report on Form 10-Q contains forward-looking statements. When used in this Quarterly Report on Form 10-Q, the words “anticipate,” “believe,” “estimate,” “will,” “plan,” “seeks,” “intend,” and “expect” and similar expressions identify forward-looking statements. Although we believe that our plans, intentions, and expectations reflected in any forward-looking statements are reasonable, these plans, intentions, or expectations may not be achieved. Our actual results, performance, or achievements could differ materially from those contemplated, expressed, or implied, by the forward-looking statements contained in this Quarterly Report on Form 10-Q. Important factors that could cause actual results to differ materially from our forward-looking statements are set forth in this Quarterly Report on Form 10-Q All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements set forth in this Quarterly Report on Form 10-Q. Except as required by federal securities laws, we are under no obligation to update any forward-looking statement, whether as a result of new information, future events, or otherwise.

Critical Accounting Policies

There have been no material changes to our critical accounting policies and estimates from the information provided in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, included in our Annual Report on Form 10-K for the fiscal year ended June 30, 2013.

Results of Operations

Overview of Current Operations

History and Organization

The Company was organized June 26, 2009 (Date of Inception) under the laws of the State of Nevada, as EnzymeBioSystems.

Our Business

We utilize enzyme technologies to develop commercial solutions for a broad range of applications within the specialty chemical industry. These markets are largely served by a small number of large, well-established businesses and research centers. We plan to work collaboratively with those industrial companies to develop differentiated, high performance enzyme solutions for their target markets, and to leverage their well-developed distribution capabilities to better exploit commercial opportunities. Our enzyme technology will tie-in with development of new commercial biological active compounds. We hope we can develop specialty enzymes to eliminate the side effects and toxicity of the new commercial developed products. Our current emphasis has been directed to performing the necessary research work to submit an Investigational New Drug (“IND”) Application with the FDA for our synthetic Amooranin compound.

Our offices and laboratory are currently located at 16773 W Park Drive, Chagrin Falls, Ohio, 44023.

Enzyme Industry

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 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.

Business Strategy

We foresee our three areas of business opportunity, includes: 1) buying raw materials to produce specialty enzymes in our lab facility and offer these products for sale to research facilities and pharmaceutical companies; 2) become a specialty contract manufacture for research universities and pharmaceutical companies that utilize enzymes in their research programs; and, 3) Publish in research and medical journals theoretical and practical applications of enzyme research, for the direct purpose of selling our research applications to research facilities.

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.

We plan to use enzyme technologies to develop commercial solutions for a broad range of applications within the specialty chemical industry. These markets are largely served by a small number of large, well-established businesses and research university centers. We plan to work collaboratively with those industrial companies to develop differentiated, high performance enzyme solutions for their target markets, and to leverage their well-developed distribution capabilities to better exploit commercial opportunities.

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.

Marketing Strategy

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

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 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. All 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.

Our Current Business Strategy

Management is preparing 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.

Management is evaluating an enzyme compound which it believes has a specific therapeutic value in fighting tumors, specifically breast tumors. Management has undertaken research to study its synthetic Amooranin compound, which the Company has developed in-house. Studies of Amooranin have already been completed in rats. Further, research is required to study Amooranin in a different animal species.

Amooranin, a triterpene acid with a novel structure isolated from the stem bark of Amoora rohituka, a tropical tree growing wild in India. Recent studies showed that multiple breast cancer cell lines respond to Amooranin in growth suppression assays. Mechanistic studies suggest that Amooranin suppresses growth factor signaling, induces cell cycle arrest, and promotes apoptosis. Because the anti-neoplastic activity of the plant-derived compound of Amooranin is relatively weak.

Our CEO developed a new synthetic analogue of this molecule by chemical transformations in an attempt to identify a more potent agent. One of these analogues, Amooranin-Me, was found to inhibit proliferation of several breast cancer cells with greater potency than the parent compound of Amooranin. Preliminary screening of Amooranin-Me in in-vitro experiments revealed an some potenecy against breast cancer MCF-7 cells with concentrations down to the nanomolar range. All these studies indicate that Amooranin-Me is a promising drug with potential to be used for human breast cancer prevention.

Management wants to continue its research with Amooranin 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.

Patent, Trademark, License and Franchise Restrictions and Contractual Obligations and Concessions

In 2012, the two officers of the Company, along with an outside third party, as inventors, filed International Patent Application PCT/US2012/071182 entitled “Amooranin Compounds and Analogs Thereof and Related Methods of Use.” The Geneva Patent Office informed the investors that they published the aforementioned international application of 04 July 2013 under No. WO 2013/101719. At this time, no patent has been issued.

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.

Results of Operations for the three months ended March 31, 2014

During the three month period ended March 31, 2014, the Company did not generate any revenues. In addition, the Company does not expect to generate any profit for the next twelve months.

For the three months ending March 31, 2014, we experienced a net loss of $(8,412) as compared to a net gain of $(18,650) for the same period last year. The net loss for the three months ending March 31, 2014 was attributed to $8,084 in general and administrative expenses and $328 in interest expense. This compares to general and administrative costs of $10,710, research and development costs of $(35,360) and salaries $6,000 for the same period last year, with no interest expense. We have suspended salaries this year, due to unavailability of any cash flows.

For the nine months ending March 31, 2014, we experienced a net loss of $(30,121) as compared to a net loss of $(64,234) for the same period last year. The net loss for the nine months ending March 31, 2014 was attributed to administrative fees of $29,137 and interest of $984 for total expenses of $31,121. This compares to administrative fees of $30,900, research and development of $15,334 and salaries of $18,000 and no interest expense for total expenses of $64,234 for the same period last year.

The Company used net cash in operations of $17,762 and $243,855 during the nine month period ended March 31, 2014 and the period from inception to March 31, 2014, respectively, net cash in investing activities to purchase furniture and equipment of $7,217 during the period from inception to December 31, 2013; and generated cash of $450,000 and $708,890 from financing activities during the nine month period ended March 31, 2014 and the period from inception to March 31, 2014, respectively.

Revenues

The Company has generated no revenues since its inception. As of March 31, 2014, the Company had an accumulated deficit of $(349,993) 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.

Going Concern

Our independent auditors included an explanatory paragraph in their report on the June 30, 2013 audited 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. Our ability to continue as a going concern is contingent upon the successful completion of additional financing arrangements and our ability to achieve and maintain profitable operations.

Therefore, management plans to raise equity capital to finance the operating and capital requirements of the Company. While the Company is devoting 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.

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 costs will most likely exceed its cash reserves for the coming year. Management is evaluating an enzyme compound, specifically a synthetic Amooranin which it believes has a specific therapeutic value in fighting tumors. Therefore, management will be required to seek outside funding, of at least $500,000.

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.

Management hopes its research will identify an enzyme compound developed by the Company that will lead to the filing of an Investigational New Drug Application 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.

Summary of any product research and development that we will perform for the term of our plan of operation.

We plan to deploy our enzyme technologies across diverse markets that represent commercial opportunities in helping us build visibility for EnzymeBioSystems. We plan to use enzyme technologies to develop commercial solutions for a broad range of applications within the specialty chemical industry. We plan to work collaboratively with those industrial companies to develop differentiated, high performance enzyme solutions for their target markets, and to leverage their well-developed distribution capabilities to better exploit commercial opportunities.

We believe that this market approach might give us the ability to broadly apply our enzyme development and manufacturing capabilities while minimizing commercial risk in that research or pharmaceutical companies might change their needs during our development processes. We view our enzyme development and manufacturing capabilities as: 1) Computer-based methods of predicting the affinity of an inhibitor or activator for an enzyme, such as molecular docking. Docking is used to predict the binding orientation of small molecule drug candidates to their protein targets in order to in turn predict the affinity and activity of the small molecule. This plays an important role in the rational design of drugs; and, 2) Deployment of new catalytic systems immobilized on inorganic nano-particles in our technologies.

Expected purchase or sale of plant and significant equipment.

We opened a laboratory where are producing enzymes on a small scale, we are in the process of developing additional enzymes products.

Significant changes in the number of employees.

As of March 31, 2014, we did not have any employees. We are dependent upon our two officers for our future business development. As our operations expand we anticipate the need to hire additional employees, consultants and professionals; however, the exact number is not quantifiable at this time.

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 March 31, 2014, the Company has 31,500,000 shares of common stock issued and outstanding and 1,000,000 of its Series A Preferred Shares issued and outstanding. As of March 31, 2014, the Company had current assets of $457,818 (cash and cash equivalents) and current liabilities of $75,311.

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.

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.

EnzymeBioSystems’s Funding Requirements

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.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results or operations, liquidity, capital expenditures or capital resources that is material to investors.

Critical Accounting Policies and Estimates

Revenue Recognition: We recognize revenue from product sales once all of the following criteria for revenue recognition have been met: pervasive evidence that an agreement exists; the services have been rendered; the fee is fixed and determinable and not subject to refund or adjustment; and collection of the amount due is reasonable assured.

New Accounting Standards

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.