Attached files
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-Q
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|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2010
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______ to ______
Commission file number 000-53854
ENZYMEBIOSYSTEMS
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(Exact name of registrant as specified in its charter)
Nevada 27-0464302
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
16773 W Park Drive, Chagrin Falls, Ohio, 44023
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(Address of principal executive offices)(Zip Code)
Issuer's telephone number, including area code: (440) 708-0012
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to
such filing requirements for the past 90 days. Yes |X| No |_|
Indicate by check mark whether the Registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer or a smaller reporting company. See
definition of "accelerated filer and large accelerated filer" in Rule 12b-2 of
the Exchange Act (Check one).
Large accelerated filer |_| Accelerated filer |_|
Non-accelerated filer |_| Smaller Reporting Company |X|
(Do not check if a smaller reporting company)
Indicate by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Exchange Act). Yes |_| No |X|
As of May 17, 2010, the registrant's outstanding common stock consisted
of 31,500,000 shares, $0.001 par value. Authorized - 195,000,000 common
voting shares. No preferred issued, 5,000,000 preferred shares, par value
$0.001 authorized.
Table of Contents
EnzymeBioSystems
Index to Form 10-Q
For the Quarterly Period Ended March 31, 2010
Part I. Financial Information
Page
Item 1. Financial Statements
Balance Sheets as of March 31, 2010 and June 30, 2009 3
Statements of Operations for the three months and nine
ended March 31, 2010 4
Statements of Cash Flows for the nine months
ended March 31, 2010 5
Notes to Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 9
Item 3. Quantitative and Qualitative Disclosures About Market Risk 17
Item 4. Controls and Procedures 17
Part II Other Information
Item 1. Legal Proceedings 19
Item 1A. Risk Factors 19
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 19
Item 3. Defaults Upon Senior Securities 19
Item 4. Submission of Matters to a Vote of Security Holders 19
Item 5. Other Information 19
Item 6. Exhibits 20
Signatures 21
2
Part I. Financial Information
Item 1. Financial Statements
EnzymeBioSystems
(A Development Stage Company)
Condensed Balance Sheets
March 31,
2010 June 30,
(Unaudited) 2009
------------ ------------
ASSETS
Current Assets:
Cash and cash equivalents $ 9,849 $ 30,500
------------ ------------
Total current assets 9,849 30,500
Fixed Assets:
Furniture and equipment, net 6,613 -
------------ ------------
Total fixed assets 6,613 -
------------ ------------
TOTAL ASSETS $ 16,462 $ 30,500
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Credit card payable $ 610 $ -
Accrued expense 1,750 2,500
------------ ------------
Total current liabilities 2,360 2,500
------------ ------------
Stockholders' equity:
Preferred stock, $0.001 par value, 5,000,000
shares authorized, none issued and
outstanding as of 3/31/10 and 6/30/09 - -
Common stock, $0.001 par value, 195,000,000
shares authorized, 31,500,000, 30,500,000
shares issued and outstanding as of
3/31/10 and 6/30/09, respectively 31,500 30,500
Additional Paid-in Capital 19,000 500
(Deficit) accumulated during
development stage (36,398) (3,000)
------------ ------------
Total stockholders' equity 14,102 28,000
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 16,462 $ 30,500
============ ============
The accompanying notes are an integral part of these financial statements.
3
EnzymeBioSystems
(A Development Stage Company)
Condensed Statements of Operations
(Unaudited)
For the For the From
three months nine months June 26, 2009
ended ended (inception) to
March 31, March 31, March 31,
2010 2010 2010
-------------- -------------- --------------
REVENUE $ - $ - $ -
EXPENSES
Auditing fees 1,750 5,000 7,500
General & Administrative 8,552 20,355 20,355
Incorporating fees - - 500
Research & Development - 8,043 8,043
-------------- -------------- --------------
Total expenses 10,302 33,398 36,398
Net (loss) before income taxes (10,302) (33,398) (36,398)
Provision for income tax - - -
-------------- -------------- --------------
NET (LOSS) $ (10,302) $ (33,398) $ (36,398)
============== ============== ==============
NET (LOSS) PER SHARE -
BASIC AND FULLY DILUTED $ (0.00) $ (0.00)
============== ==============
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING -
BASIC AND FULLY DILUTED 30,600,000 30,600,000
============== ==============
The accompanying notes are an integral part of these financial statements.
4
EnzymeBioSystems
(A Development Stage Company)
Condensed Statements of Cash Flows
(Unaudited)
From
For the nine June 26, 2009
months ended (Inception) to
March 31, March 31,
2010 2010
-------------- --------------
OPERATING ACTIVITIES
Net (loss) $ (33,398) $ (36,398)
Adjustments to reconcile net loss to
net cash used by operating activities:
Increase (decrease) in:
Credit card payable 610 610
Accrued expenses (750) 1,750
Depreciation 604 604
-------------- --------------
Cash (used) by operating activities (33,934) (33,434)
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 40,500
Contributed capital 9,500 10,000
-------------- --------------
Cash provided by financing activities 19,500 50,500
-------------- --------------
NET CHANGE IN CASH (20,651) 9,849
CASH AND EQUIVALENTS - BEGINNING OF PERIOD 30,500 -
-------------- --------------
CASH AND EQUIVALENTS - END OF PERIOD $ 9,849 $ 9,849
============== ==============
SUPPLEMENTAL DISCLOSURES:
Interest paid $ - $ -
Income taxes paid $ - $ -
Non-cash transactions $ - $ -
The accompanying notes are an integral part of these financial statements.
5
EnzymeBioSystems
(A development stage company)
Notes to the Condensed Financial Statements
(Unaudited)
NOTE 1 - CONDENSED FINANCIAL STATEMENTS
The accompanying condensed 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 March 31,
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
accepted 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, 2009 audited financial statements filed with its registration
statement on Form S-1/A. The results of operations for the period ended
March 31, 2010 is not necessarily indicative of the operating results
for the full year.
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
March 31, 2010, the Company has not recognized any revenues and has
accumulated operating losses of approximately $36,398 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.
6
EnzymeBioSystems
(A development stage company)
Notes to the Condensed Financial Statements
(Unaudited)
NOTE 3 - 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.
NOTE 4 - SIGNIFICANT ACCOUNTING POLICIES
Use of Estimates
----------------
The preparation of financial statements in conformity with generally accepted
accounting principles 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 revenues and expenses
during the reporting period. Actual results could differ from those estimates.
Recent Accounting Pronouncements
--------------------------------
Management has evaluated recently issued accounting pronouncements through
May 12, 2010 and concluded that they will not have a material effect on the
financial statements as of March 31, 2010.
7
EnzymeBioSystems
(A development stage company)
Notes to the Condensed Financial Statements
(Unaudited)
NOTE 5 - 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 6 - CONTRIBUTED CAPITAL
During the quarters ending December 31, 2009 and March 31, 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.
NOTE 7 - FIXED ASSET DEPRECIATION
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.
NOTE 8 - SUBSEQUENT EVENTS
None. The Company has evaluated subsequent events through May 12, 2010,
the date which the financial statements were available to be issued.
8
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
The Company may from time to time make written or oral "forward-looking
statements" including statements contained in this report and in other
communications by the Company, which are made in good faith by the Company
pursuant to the "safe harbor" provisions of the Private Securities Litigation
Reform Act of 1995.
These forward-looking statements include statements of the Company's plans,
objectives, expectations, estimates and intentions, which are subject to
change based on various important factors (some of which are beyond the
Company's control). The following factors, in addition to others not listed,
could cause the Company's actual results to differ materially from those
expressed in forward looking statements: the strength of the domestic and
local economies in which the Company conducts operations, the impact of
current uncertainties in global economic conditions and the ongoing financial
crisis affecting the domestic and foreign banking system and financial
markets, including the impact on the Company's suppliers and customers,
changes in client needs and consumer spending habits, the impact of
competition and technological change on the Company, the Company's ability to
manage its growth effectively, including its ability to successfully integrate
any business which it might acquire, and currency fluctuations. All forward-
looking statements in this report are based upon information available to the
Company on the date of this report. The Company undertakes no obligation to
publicly update or revise any forward-looking statement, whether as a result
of new information, future events, or otherwise, except as required by law.
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 Registration Statement on Form S-1 for the fiscal year ended June 30, 2009.
9
Results of Operations
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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. Activities to date have been limited primarily to
organization, initial capitalization, establishing administrative offices in
Chargrin, Falls, Ohio, and commencing our initial operational plans. As of
the date of this offering circular, the Company has developed a business
plan, established administrative offices and started obtaining laboratory
equipment to build its laboratory.
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.
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.
10
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.
11
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.
Our Growth Strategy
-------------------
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.
Recent Event
------------
Management is evaluating an enzyme compound which it believes has a specific
therapeutic value. In an effort to evaluate this compound, management has
begun to move forward to contract animal research studies with this compound
with the eventual intent of filing 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.
Results of Operations for the quarter ended March 31, 2010
----------------------------------------------------------
During the three and nine month period ended March 31, 2010, the Company did
not generate any revenues. In addition, the Company does not expect to
generate any profit for the next year.
12
In its most recent three month operating period ended March 31, 2010, the
Company generated no revenues. During the three months ended March 31, 2010,
the Company had auditing fee expenses of $1,750, general and administrative
expenses of $8,552. The general and administrative expenses represented
costs associated in business start-up costs. In its most recent nine month
operating period ended March 31, 2010, the Company generated no revenues.
During the nine months ended March 31, 2010, the Company had auditing fee
expenses of $5,000 general and administrative expenses of $20,355 and research
and development expenses of $8,043. Since the Company's inception, on
June 26, 2009, the Company experienced a net loss of $(36,398).
Revenues
--------
The Company has generated no revenues since its inception. As of March 31,
2010, the Company had an accumulated deficit of $(36,398) 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. On March 26, 2010, the Company closed its
registered offering, whereby it sold 1,000,000 common shares pursuant to a
self-underwritten offering an aggregate of $10,000.00 in cash. The funds will
be used to advance the Company's enzyme business.
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.
13
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.
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. 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 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 plan to open a laboratory where when can produce enzymes on a small scale,
we are in the process of acquiring laboratory equipment.
Significant changes in the number of employees.
-----------------------------------------------
As of March 31, 2010, 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.
14
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 May 17, 2010, the Company has 31,500,000 shares of common stock
issued and outstanding. As of March 31, 2010, the Company had current assets
of $9,849 and current liabilities of $2,360.
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.
As a result of our the Company's current limited available cash, no officer
or director received compensation through the six months ended March 31,
2010. No officer or director received stock options or other non-cash
compensation since the Company's inception through March 31, 2010. The
Company has no employment agreements in place with its officers. Nor does
the Company owe its officers any accrued compensation, as the Officers agreed
to work for company at no cost, until the company can become profitable on a
consistent Quarter-to-Quarter basis.
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.
15
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
------------------------
Management has evaluated recently issued accounting pronouncements through
May 12, 2010 and concluded that they will not have a material effect on the
financial statements as of March 31, 2010.
16
Item 3. Quantitative and Qualitative Disclosures about Market Risk.
Not applicable.
Item 4T. Controls and Procedures
(a) Evaluation of Internal Controls and Procedures
Management is committed to maintaining disclosure controls and procedures
that are designed to ensure that information required to be disclosed in its
Exchange Act reports is recorded, processed, summarized, and reported within
the time periods specified in the U.S. Securities and Exchange Commission's
rules and forms, and that such information is accumulated and communicated to
its management, including its Chief Executive Officer and Chief Financial
Officer, as appropriate to allow timely decisions regarding required
disclosure.
As required by Rule 13a-15(b) of the Exchange Act, we must carry out an
evaluation of the effectiveness of our disclosure controls and procedures as
of the end of each fiscal quarter, under the supervision and with the
participation of its management, including its Chief Executive Officer and
the Chief Financial Officer, who is also the sole member of our Board of
Directors, to provide reasonable assurance regarding the reliability of
financial reporting and the reparation of the financial statements in
accordance with U. S. generally accepted accounting principles.
Management, including the chief executive officer and chief financial
officer, does not expect that the Company's disclosure controls and internal
controls will prevent all error and all fraud. Because of its inherent
limitations, a system of internal control over financial reporting can
provide only reasonable, not absolute, assurance that the objectives of the
control system are met and may not prevent or detect misstatements. Further,
over time, control may become inadequate because of changes in conditions or
the degree of compliance with the policies or procedures may deteriorate.
With the participation of the chief executive officer and chief financial
officer, our management evaluated the effectiveness of the Company's internal
control over financial reporting as of March 31, 2010 based upon the framework
in Internal Control-Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO). Based on the assessment
performed using the criteria established by COSO, management has concluded
that the Company maintained ineffective internal control over financial
reporting in the following areas:
17
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;
2) inadequate segregation of duties consistent with control objectives; and
3) ineffective controls over period end financial disclosure and reporting
processes.
The aforementioned material weaknesses were identified by our Chief Executive
Officer in connection with the review of our financial statements as of
March 31, 2010.
Management believes that the material weaknesses set forth in items (2), and
(3) above did not have an effect on our financial results. However,
management believes that the lack of a functioning audit committee and the
lack of a majority of outside directors on our board of directors results in
ineffective oversight in the establishment and monitoring of required internal
controls and procedures, which could result in a material misstatement in our
financial statements in future periods.
This amended quarterly report does not include an attestation report of the
Corporation's registered public accounting firm regarding internal control
over financial reporting. Management's report was not subject to attestation
by the Corporation's registered public accounting firm pursuant to temporary
rules of the SEC that permit the Corporation to provide only the management's
report in this quarterly report.
(b) Management's Remediation Initiatives
-----------------------------------------
In an effort to remediate the identified material weaknesses and other
deficiencies and enhance our internal controls, we have initiated, or plan to
initiate, the following series of measures:
We will create a position to segregate duties consistent with control
objectives and will increase our personnel resources and technical accounting
expertise within the accounting function when funds are available to us.
We plan to appoint one or more outside directors to our board of directors who
shall be appointed to an audit committee resulting in a fully functioning audit
committee who will undertake the oversight in the establishment and monitoring
of required internal controls and procedures such as reviewing and approving
estimates and assumptions made by management when funds are available to us.
(c) Changes in internal controls over financial reporting
----------------------------------------------------------
There was no change in our internal controls over financial reporting that
occurred during the period covered by this report, that has materially
affected, or is reasonably likely to materially affect, our internal controls
over financial reporting.
18
PART II. OTHER INFORMATION
Item 1 -- 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.
Item 1A - Risk Factors
See Risk Factors set forth in Part I, Item 1A of the Company's Registration
Statement on Form S-1 for the fiscal year ended June 30, 2009 and the
discussion in Item 1, above, under " Liquidity and Capital Resources."
Item 2 -- Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3 -- Defaults Upon Senior Securities
None.
Item 4 -- Submission of Matters to a Vote of Security Holders
None.
Item 5 -- Other Information
On March 26, 2010, the Company closed its registered offering, whereby it
sold 1,000,000 common shares of the Company's 0.001 par value to twenty-eight
(28) investors at a price of $0.01 per share pursuant to a self-underwritten
offering to known friends and acquaintances of the Officers of the Company
for an aggregate of $10,000.00 in cash.
19
Item 6 -- Exhibits
Filed Period Filing
Exhibit Exhibit Description herewith Form ending Exhibit date
-------------------------------------------------------------------------------
3.1 Articles of Incorporation, S-1 6/30/09 3.1 09/28/2009
as currently in effect
-------------------------------------------------------------------------------
3.2 Bylaws S-1 6/30/09 3.2 09/28/2009
as currently in effect
-------------------------------------------------------------------------------
99.1 Subscription Agreement S-1 6/30/09 99.1 09/28/2009
-------------------------------------------------------------------------------
31.1 Certification of its X
Principal Executive Officer,
pursuant to Section 302
of the Sarbanes-Oxley Act
-------------------------------------------------------------------------------
31.2 Certification of its X
Principal Financial Officer,
pursuant to Section 302
of the Sarbanes-Oxley Act
-------------------------------------------------------------------------------
32.1 Certification of its X
Principal Executive Officer
pursuant to Section 906
of the Sarbanes-Oxley Act
-------------------------------------------------------------------------------
32.2 Certification of its X
Principal Financial Officer,
pursuant to Section 906
of the Sarbanes-Oxley Act
-------------------------------------------------------------------------------
20
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
EnzymeBioSystems
--------------------------
Registrant
Date: May 17, 2010 By: /s/ Ashot Martirosyan
------------ ------------------------------------------
By: Ashot Martirosyan
Its: Principal Executive Officer
Date: May 17, 2010 By: /s/ Anushavan Yeranosyan
------------ --------------------------------------
By: Anushavan Yeranosyan
Its: Principal Accounting Officer
21
