ZENOSENSE, INC. - FORM 10-Q - November 10, 2014

Attached files

file	filename
EXCEL - IDEA: XBRL DOCUMENT - ZENOSENSE, INC.	Financial_Report.xls
EX-31.1 - CERTIFICATION - ZENOSENSE, INC.	ex311.htm
EX-32.1 - CERTIFICATION - ZENOSENSE, INC.	ex321.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

x QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2014

[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________________ to ______________________

000-54936

Commission file number

Zenosense, Inc.
(Exact name of small business issuer as specified in its charter)

Nevada				26-3257291
(State or other jurisdiction of incorporation or organization)				(IRS Employer Identification No.)
Avda Cortes Valencianas 58, Planta 5, 46015 Valencia, Spain
(Address of principal executive offices)

34 960454202
(Issuer’s telephone number)

Not Applicable
(Former name, former address and former fiscal year, if changed since last report)

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 has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes [X]

No [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a small reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act
Large accelerated filer	[ ]	Accelerated filer	[ ]

Non-accelerated filer	[ ]	Smaller reporting company	[ X ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act

Yes [ ]

No [X]

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. 49,615,297 common shares issued and outstanding as of November 6, 2014.

ZENOSENSE, INC.

TABLE OF CONTENTS

		Page
	PART I – FINANCIAL INFORMATION

Item 1.	Financial Statements	4

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	5

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	9

Item 4.	Controls and Procedures	9

	PART II – OTHER INFORMATION

Item 1.	Legal Proceedings	10

Item 1A.	Risk Factors	10

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	10

Item 3.	Defaults Upon Senior Securities	10

Item 4.	Mine Safety Disclosures	10

Item 5.	Other Information	10

Item 6.	Exhibits	11

	SIGNATURES	12

PART I – FINANCIAL INFORMATION

ITEM 1.

FINANCIAL STATEMENTS

Index
Balance Sheet (unaudited)	F-1

Statements of Operations (unaudited)	F-2

Statements of Cash Flows (unaudited)	F-3

Notes to Financial Statements (unaudited)	F-4 to F-8

ZENOSENSE, INC.

Balance Sheets

(unaudited)

	September 30, 2014			December 31, 2013
Assets
Current Assets
Cash and cash equivalents	$	108,240		$	26,778
Prepaid expense		-			76,699
Total assets	$	108,240		$	103,477

Liabilities and Stockholders’ Equity
Current Liabilities
Accounts payable and accrued expense	$	9,163		$	18,634
Accounts payable and accrued expense - related party		6,211			440
Advances		2,598			2,598
Notes payable to related party		1,675			1,675
Total liabilities		19,647			23,347


Stockholders’ Equity
Common stock, $0.001 par value, 500,000,000 common stock authorized, 49,615,297 and 48,038,212 shares issued and outstanding, respectively.		49,615			48,038
Additional paid-in capital		1,005,270			582,247
Accumulated deficit		(966,292	)		(550,155	)
Total stockholders’ equity		88,593			80,130
Total Liabilities and Stockholders’ equity	$	108,240		$	103,477

See accompanying notes to the financial statements

F-1

ZENOSENSE, INC.

Statements of Operations

For the Three and Nine Months Ended September 30, 2014 and 2013

(unaudited)

	Three Months ended September 30, 2014			Three Months ended September 30, 2013			Nine Months ended September 30, 2014			Nine Months ended September 30, 2013

Expense
Research and development	$	52,681		$	-		$	282,778		$	-
General and administrative		45,734			6,572			133,196			23,101
Total expenses		98,415			6,572			415,974			23,101

Loss from operations		(98,415	)		(6,572	)		(415,974	)		(23,101	)

Other income/(expense)
Interest expense		(73	)		(21	)		(163	)		(63	)
Total other expenses		(73	)		(21	)		(163	)		(63	)

Net loss	$	(98,488	)	$	(6,593	)	$	(416,137	)	$	(23,164	)

Net loss per common share:
Basic and diluted	$	(0.00	)	$	(0.00	)	$	(0.01	)	$	(0.00	)

Weighted average common shares outstanding:
Basic and diluted		48,814,474			30,000,000			48,544,011			30,000,000

See accompanying notes to the financial statements

F-2

ZENOSENSE, INC.

Statements of Cash Flows

For the Nine Months Ended September 30, 2014 and 2013

(unaudited)

	September 30, 2014			September 30, 2013

Operating activities
Net loss	$	(416,137	)	$	(23,164	)
Adjustments to reconcile net losses to net cash used in operating activities:
Changes in operating assets and liabilities:
Prepaid expense		76,699			-
Accounts payable and accrued expense		(9,471	)		56
Accounts payable and accrued expense– related party		5,871
Cash used in operating activities		(343,038	)		(23,108	)

Financing activities
Proceeds from sale of common stock		411,500			-
Proceeds from note payable		13,000			-
Proceeds from advances from a third party		-			23,108
Cash provided by financing activities		424,500			23,108

Net increase (decrease) in cash		81,462			-

Cash and cash equivalent, beginning of period		26,778			-

Cash and cash equivalent, end of period	$	108,240		$	-

Supplemental disclosure of cash flow information
Cash paid for income taxes	$	-		$	-
Cash paid for interest	$	-		$	-

Non-cash investing and financing activities:
Conversion of note payable and accrued interest into common stock	$	13,100		$	-

See accompanying notes to the financial statements.

F-3

ZENOSENSE, INC.

Notes to the Financial Statements

(unaudited)

1. Nature of operations

Zenosense, Inc. (the “Company”) was incorporated under the laws of the State of Nevada on August 11, 2008, for the purpose of acquiring and developing mineral properties. The Company's mineral rights agreement was terminated on May 15, 2013, and as a result, the Company was no longer a pre-exploration stage company.

On October 1, 2013, because the Company had abandoned its mineral properties development business plan, it accordingly reclassified the mineral development component of operations as discontinued operations.

On November 22, 2013, the Company filed a certificate of amendment to with the State of Nevada and (1) changed its name from “Braeden Valley Mines, Inc.” to “Zenosense, Inc.” and (2) effected an increase in the Company’s authorized shares from 50,000,000 to 500,000,000, with par value of $0.001 per share.

Effective December 4, 2013, the Company entered into a development and exclusive license agreement, as amended (“License Agreement”) whereby the Company will provide a third party with capital for the development of sensory technology for a methicillin resistant Staphylococcus aureus / Staphylococcus aureus (“MRSA/SA”) detection device and a cancer detective device and other improvements and variations to the products (the “Sgenia Products”) to be used in hospital and health care environments, in exchange for a worldwide, exclusive license to manufacture, market and sell the resulting products, subject to certain limitations and a royalty arrangement on a revenue sharing basis. The License Agreement was modified in April 2014 and July 2014 to extend to additional cancer sensory products and to modify and extend the development schedule and change the research funding budget to accommodate the lung cancer product as well as MRSA/SA product, respectively.

2. Basis of presentation

The accompanying unaudited interim financial statements of Zenosense, Inc. have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission (“SEC”), and should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s latest Annual Report on Form 10-K filed with the SEC. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements which would substantially duplicate the disclosure contained in the audited financial statements for the most recent fiscal year ended December 31, 2013, as reported in Form 10-K, have been omitted.

3. Going Concern

The financial statements have been prepared in accordance with generally accepted accounting principles applicable to a going concern, which assumes that the Company will be able to meet its obligations and continue its operations for 12 months. Realization values may be substantially different from carrying values as shown and these financial statements do not give effect to adjustments that would be necessary to the carrying values and classification of assets and liabilities should the Company be unable to continue as a going concern. At September 30, 2014, the Company had not yet achieved profitable operations, had accumulated losses of $966,292 since its inception and expects to incur further losses in the development of its business, all of which raises substantial doubt about the Company’s ability to continue as a going concern. The Company’s ability to continue as a going concern is dependent upon its ability to generate future profitable operations and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due.

F-4

ZENOSENSE, INC.

Notes to the Financial Statements

(unaudited)

3. Going Concern (continued)

The Company expects to continue to incur substantial losses as it executes its business plan and does not expect to attain profitability in the near future. Since its inception, the Company has funded operations through short-term borrowings, advances and equity investments in order to meet its strategic objectives. The Company's future operations are dependent upon external funding and its ability to execute its business plan, realize sales and control expenses. Management believes that sufficient funding will be available from additional borrowings and private placements to meet its business objectives including anticipated cash needs for working capital, for the next fiscal year. However, there can be no assurance that the Company will be able to obtain sufficient funds to continue the development of its business operations, or if obtained, upon terms favorable to the Company.

4. Summary of 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.

Reclassifications

Certain reclassifications have been made to the prior year financial statements to conform with the current year presentation.

Cash and cash equivalents

Cash and cash equivalents are defined as cash on hand, demand deposits and short-term, highly liquid investments with an original maturity of ninety days or less. The Company has not experienced any losses on its deposits of cash and cash equivalents.

Research and development

Research and development costs are expensed as incurred.

Income taxes

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between their financial statement carrying amounts and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

Loss per common share

Basic loss per common share is computed by dividing net loss available to common stockholders by the weighted average number of common shares outstanding. Diluted loss per share is computed by dividing net loss by the weighted average number of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during each period.

F-5

ZENOSENSE, INC.

Notes to the Financial Statements

(unaudited)

4. Summary of Significant Accounting Policies (continued)

Recently Adopted Accounting Standards

In June 2014, the FASB issued ASU 2014-10, Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements. ASU 2014-10 eliminates the distinction of a development stage entity and certain related disclosure requirements, including the elimination of inception-to-date information on the statements of operations, cash flows and stockholders’ equity. The amendments in ASU 2014-10 will be effective prospectively for annual reporting periods beginning after December 15, 2014, and interim periods within those annual periods, however early adoption is permitted. The Company evaluated and adopted ASU 2014-10 for the reporting period ended June 30, 2014.

5. Notes Payable

On September 30, 2008, Zenosense received $1,675 pursuant to a promissory note with the former President of the Company. The note is unsecured, bears interest at 5% per annum and is due on demand. At September 30, 2014 and December 31, 2013, the Company owed $1,675 and $1,675, respectively, to the former President of the Company for this promissory note. At September 30, 2014 and December 31, 2013, the Company owed interest of $503 and $440, respectively, in connection with this promissory note.

The Company also entered into a Demand Promissory Note with a principal amount of $13,000 on June 3, 2014. The note is unsecured and bears interest at 5% per annum and is due on demand. The principal and accrued interest of $13,100 was converted into 67,500 shares of common stock on July 28, 2014 and the note was extinguished.

6. Common Stock

In February 2014, the Company issued 423,529 shares of common stock to an investor for cash proceeds of $180,000.

On April 8, 2014, a third party purchased 55,556 shares of the Company’s common stock for cash proceeds of $25,000. The third party also committed to purchase an additional 900,000 shares of Company’s common stock in four tranches for an aggregate purchase price of $450,000, subject to certain conditions.

On July 28, 2014, the loan from a third party investor, in the principal amount of $13,000, and the accrued interest of $100 was converted into 67,500 shares of our common stock. The shares were issued as restricted stock, pursuant to an exemption from registration under the federal securities laws.

On July 28, 2014, the Company entered into a Securities Purchase Agreement under which the investor committed to purchase an aggregate of 1,370,000 shares of the Company’s common stock, par value $0.001 per share, for an aggregate purchase price of $274,000. The initial purchase of shares was made on July 28, 2014 for 357,000 shares for a purchase price of $71,500. Two additional purchase installments were made in August and September.. Each installment was for 337,500 shares at a purchase price of $67,500 per installment. The shares when issued are pursuant to an exemption from registration under the federal securities laws.

F-6

ZENOSENSE, INC.

Notes to the Financial Statements

(unaudited)

7. Commitments

On December 4, 2013, the Company entered into the License Agreement with Sgenia Industrial S.L. and its subsidiaries, Sgenia Soluciones S.L and ZENON Biosystem S.L (collectively, “Sgenia”) for the development of an MRSA/SA detection device and cancer detective device and other improvements and variations to the devices (the “Sgenia Products”), to be based on the Sgenia sensory technology. Pursuant to the License Agreement, the Company will have a worldwide exclusive license to manufacture, market and sell the resulting products, subject to certain limitations and a royalty arrangement on a revenue sharing basis. The Company entered into amendments (the “Amendments”) to the License Agreement to modify and extend the Sgenia Products to include a lung cancer product and change the product development schedule and the research funding budget to accommodate the additional lung cancer product as well as the continuation of the development of the MRSA product. Additionally, the development stage objectives and milestones were modified to reflect the current state of development of each of the Sgenia Products.

Under the License Agreement, the Company is funding the development of the Sgenia Products pursuant to a research and development plan proposed by Sgenia and accepted by the Company. The funding will be provided on an advance basis, per month, based on agreed development stages. In return, the Company will have the exclusive right to manufacture, formulate, package, market and sell the Sgenia Products world-wide, for 40 years, subject to a limitation on the inclusion of Spain in the territory. All intellectual property developed by Sgenia at any time during the term related to manufacturing, formulating and/or packaging process shall be shared ownership and licensed to the Company on a royalty-free basis. Sgenia will also supply to the Company, at a negotiated price based on quantity, all of the requirements for the integrated circuits on microchips that are necessary for the operation of the Sgenia Products. Sgenia and the Company will also work together to research and develop the Sgenia Products and establish written plans and reviewing committees for the management of the overall development project and commercialization of the Sgenia Products.

The Company’s funding of the MRSA product development was limited to an initial approved budget of $1,256,438, of which $526,846 was advanced by the Company. As a result of the Amendment of July 2014, the current revised and approved aggregate budget for research and development of the Sgenia Products is approximately $1,411,000, of which $579,527 has been advanced (including the amounts advanced under the prior budget) as of September 30, 2014. For the remainder of 2014 and 2015, as of September 30, 2014, the Company is committed to advancing $1,358,319 in research and development funds under the revised and approved budget subject to Sgenia meeting certain milestones. The aggregate of the advances paid by the Company are recorded as research and development expenses. During the three month period ended September 30, 2014, no amounts were advanced under the terms of the License Agreement and the budget. The budget may be changed by mutual agreement from time to time.

In addition to providing the development funding, the Company will also pay royalties for completed sales of the Sgenia Products, payable 60 days after each fiscal quarter of the Company (the “Royalties”). The Royalties will be 20% of net sales, which is calculated based on gross sales of the device and the installation and training for the Sgenia Products, less various expenses, including manufacturing, components acquired from Sgenia, commissions, refunds and discounts and sales taxes. If the Sgenia Products are sold by Sgenia in Spain for original use in Spain, then the Royalties on those sales will be reduced. The Company also has the right to sublicense to other parties throughout the world, except in Spain if and when, if at all, Sgenia seeks to act as the distributor in that territory.

The Company has the option to fund the development of future proposed products based on the Sgenia intellectual property, and if funded the Company will obtain the right to manufacture, market and sell the resulting devices.

F-7

ZENOSENSE, INC.

Notes to the Financial Statements

(unaudited)

8. Related Party

On December 5, 2013, the Company entered into a one-year service agreement with Mr. Carlos Jose Gil, through his consulting firm, Ksego Engineering S.L., under which the Company will obtain his services as the Chief Executive Officer of the Company. Mr. Gil will receive a base salary and additional compensation equal to 10% of the net sales generated from the License Agreement. During the three and nine months ended September 30, 2014, the Company recorded $17,945 and $58,097, respectively, of general and administrative expenses related to amounts paid/owed to Ksego Engineering S.L. for services rendered by Mr. Gil. As of September 30, 2014, the Company owes Mr. Gil $5,708. No additional compensation based on net sales has been earned to date.

9. Subsequent Events

The Company has reviewed events subsequent to this report and has no items to report.

F-8

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

Forward-Looking Statements

This section of this quarterly report includes a number of forward-looking statements that reflect our current views with respect to future events and financial performance. Forward-looking statements are often identified by words like: believe, expect, estimate, anticipate, intend, project and similar expressions, or words which, by their nature, refer to future events. You should not place undue certainty on these forward-looking statements, which apply only as of the date of this report. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or our predictions.

As used in this quarterly report, the terms “we,” “us,” “our” “our company” and “Zenosense” mean Zenosense, Inc., unless otherwise indicated. We have no subsidiaries.

General Overview

Zenosense, Inc. was incorporated on August 11, 2008 in the State of Nevada. Our authorized common stock currently consists of 500,000,000 authorized shares of common stock, with par value of $0.001.

The original purpose of the Company was to acquire and to develop mineral properties and to engage in the exploration for gold and other mineral properties. On May 15, 2013, our mining lease expired and we lost our right to explore the mining property. We then became a shell company, as defined under the Securities and Exchange Act of 1934, as amended, until December 4, 2013, when we commenced the transaction with Sgenia described below.

In the summer of 2013, we started to look for other business opportunities. We became interested in a sensory technology for a methicillin resistant Staphylococcus aureus/Staphylococcus aureus (“MRSA/SA”) detection device to be used in hospital and health care environments and began to negotiate a license agreement with the developers of such technology (the “Sgenia Technology”). In late 2013, we entered into a Development and Exclusive License Agreement (the “License Agreement”) with Sgenia Industrial, S.L. and its subsidiaries Sgenia Soluciones, S.L. and ZENON Biosystem, S.L. (“Zenon”) (collectively “Sgenia”), all of which are formed under the laws of Spain. Under the terms of the License Agreement, we will provide Zenon with capital for the research and development of devices that utilizes the Sgenia technology (the “Sgenia Products”), in exchange for a worldwide, exclusive license to manufacture, market and sell the resulting products, subject to certain limitations and a royalty arrangement on a revenue sharing basis. The License Agreement gives us additional rights to improvements and developments and future products.

Sgenia and the Company entered into amendments in April 2014 and July 2014 to extend the License Agreement to cancer sensory devices based on the intellectual property of Sgenia and to amend the budget and development objectives and development stages due to the expansion of development work.

In December 2013, we filed an amendment to our charter to change our name from “Braeden Valley Mines, Inc.” to “Zenosense, Inc.” and to increase the number of our authorized shares of Common Stock from 50,000,000 shares to 500,000,000 shares. The amendments were approved by our stockholders on November 23, 2013 at the annual meeting of the stockholders. We also entered into capital contribution agreements to reduce the number of outstanding shares held by our prior management, converted some outstanding debt and raised initial working capital, in part to be able to finalize the License Agreement and make the initial development payment.

To fund our obligations under the License Agreement, we have sold shares of common stock from time to time on a private placement basis and converted funds advanced to the company into common shares of the company. Since the end of the previous fiscal year, we have received an aggregate of $437,500 from the sale of common stock and debt securities, which has been used to pay our financial obligations and for working capital.

Plan of Operation

Our business plan is to develop devices that can detect MRSA/SA and cancer to be used in hospitals and other medical care centers. Our principal activity since December 2013 and for the next 18 months and thereafter will be funding the research and development of the Sgenia Products. At September 30, 2014, we had working capital of $88,593. Our current cash assets are not sufficient to cover our current and expected expenses, including the funding obligation under the License Agreement, and therefore, we will need to obtain further financing, without which we will not be able to execute our business plan.

We reviewed with Sgenia the development schedule and funding requirements for the initial products and requirements to develop the cancer sensory devices, and in July, 2014 we agreed upon a new budget and developmental schedule for these products. Currently, the budget and development schedule extends to July 2015. The company agreed to the changes based on the generally positive results of Sgenia in its work to date.

We anticipate that we will incur the following expenses over the next 12 month period in connection with the development of the Sgenia Products: (1) we will have to fund the future development expenses of Sgenia up to a current budgeted amount of $1,358,319, (2) payment of compensation to our officers, employees, and consultants of approximately $130,000, (3) legal, audit and reporting expenses of approximately $70,000, and (4) general working capital. Additional expenses may arise from time to time, which we cannot currently identify or determine a possible expense. We will need additional funding to cover our anticipated expenses mentioned above, and for future development.

Liquidity and Capital Resources

As of September 30, 2014 and December 31, 2013, our total assets were $108,240 and $103,477, respectively, and our total current liabilities were $19,647 and $23,347, respectively. As of September 30, 2014, we had working capital of $88,593. Our financial statements report a net loss of $416,137 for the nine months ended September 30, 2014.

We have had recurring losses from operations. The continuation of our company is dependent upon our company attaining and maintaining profitable operations and raising additional capital as needed. Our financial statements reflect that there is a going concern qualification.

Results of Operations

Overview

The following discussion of the results of operations, cash flows and changes in our financial position should be read in conjunction with our audited financial statements and notes for the year ended December 31, 2013, which are included in our Form 10-K, filed on March 26, 2014.

Three Months Ended September30, 2014 and 2013

Our operating results for the three months ended September 30, 2014 and for the three months ended September30, 2013 are summarized as follows:

	Three Months Ended September 30
	2014			2013
Revenue	-			-
Operating Expenses		98,415		$	6,572
Net (Loss)		(98,488	)	$	(6,593	)

Operating Expenses

Our operating expenses for the three months ended September 30, 2014 and September 30, 2013 are outlined in the table below:

	Three Months Ended
	September 30
	2014		2013
Research and development expenses	$	52,681	$	-
General and administrative expenses	$	45,734	$	6,572

The increase in research and development expenses is due to the Company’s License Agreement with Sgenia signed in December 2013, which requires the company to make monthly payments to Sgenia in return for research and development services.

General and administrative expenses have increased as a result of the Company hiring a Chief Executive Officer and incurring additional legal and accounting fees in connection with the new operations of the company.

The Company has suffered recurring losses from operations. The continuation of our Company is dependent upon our Company attaining and maintaining profitable operations and raising additional capital as needed.

Revenues

We have earned no revenues since our inception.

We have suffered recurring losses from operations. The continuation of our company is dependent upon our company attaining and maintaining profitable operations and raising additional capital as needed.

Nine Months Ended September 30, 2014 and 2013

Our operating results for the nine months ended September 30, 2014 and for the nine months ended September30, 2013 are summarized as follows:

	Nine Months Ended September 30
	2014		2013
Revenue	-		-
Operating Expenses		415,974	$	23,101
Net (Loss)		(416,137)	$	(23,164	)

Operating Expenses

Our operating expenses for the nine months ended September 30, 2014 and 2013 are outlined in the table below:

	Nine Months Ended
	September 30
	2014		2013
Research and development expenses	$	282,778	$	-
General and administrative expenses	$	133,916	$	23,101

The increase in research and development expenses is due to the Company’s License Agreement with Sgenia signed in December 2013, which requires the Company to make monthly payments to Sgenia in return for research and development services.

General and administrative expenses have increased as a result of the company hiring a Chief Executive Officer and incurring additional legal and accounting fees in connection with the new operations of the Company.

	Nine Months Ended September 30
	Nine Months Ended September 30
	2014		2013
Cash Flows
Net Cash Used in Operating Activities	$	(343,038)	$	(23,108)
Net Cash Provided by (Used In) Investing Activities	$	-	$	-
Net Cash Provided by Financing Activities	$	424,500	$	23,108
Cash increase (decrease) during the period	$	81,462	$	-

We had cash of $108,240 and $26,778 as of September 30, 2014 and December 31, 2013, respectively. We had a working capital of $88,593 as of September 30, 2014 compared to working capital of $80,130 as of December 31, 2013.

We used cash in operations of $282,778 during the nine months ended September 30, 2014, principally due to payments to Sgenia to conduct research and development activities on behalf of the Company.

We received $411,500 of cash proceeds from the sale of the Company’s common stock during the nine months ended September 30, 2014.

Contractual Obligations

As a “smaller reporting company”, we are not required to provide tabular disclosure obligations.

Limited Operating History: Need for Additional Capital

There is limited historical financial information about us upon which to base an evaluation of our performance. We have no assets other the License Agreement which correlates with its funding obligations, and a limited operating, business plan. We have not generated any revenues from operations. We are pursuing new business opportunities and there is no assurance we will be able to implement the cooperation with Sgenia.

We have no assurance that future financing will be available to us on acceptable terms. If financing is not available on satisfactory terms, we may be unable to continue, develop or expand our operations. Equity financing will result in additional dilution to existing shareholders.

Off-Balance Sheet Arrangements

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

ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not Applicable.

ITEM 4.	CONTROLS AND PROCEDURES.

Disclosure Controls and Procedures

Under the supervision and the participation of our management, including our principal executive officer (who is also our principal financial officer), we conducted an evaluation as of September 30, 2014 of the effectiveness of the design and operation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended. Based on this evaluation, our principal executive officer and our principal financial officer concluded that our disclosure controls and procedures were not effective as of September 30, 2014, and was not effective during the entire quarter ended September 30, 2014 because (1) the Company lacks a functioning audit committee and there is a lack of independent directors on the board of directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures; (2) the Company has inadequate segregation of duties consistent with control objectives; and (3) the Company has ineffective controls over its period end financial disclosure and reporting processes.

Changes in internal controls over financial reporting

There has been no change in our internal control over financial reporting that occurred during the fiscal quarter ended September 30, 2014 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II OTHER INFORMATION

ITEM 1 LEGAL PROCEEDINGS

As of November 10, 2014, there are no material pending legal proceedings, to which we are a party or of which any of our properties is the subject. Also, our management is not aware of any legal proceedings contemplated by any governmental authority against us.

ITEM 1A RISK FACTORS

There have been no material changes to the risk factors previously disclosed in the Company’s annual report on Form 10-K, which was filed with the Securities and Exchange Commission on March 26, 2014. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

ITEM 2 UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3 DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4 MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5 OTHER INFORMATION

None.

ITEM 6 EXHIBITS.

The following documents are included herein:

Exhibit No.	Document Description
31.1	Certification of Principal Executive Officer and Principal Financial Officer pursuant Section 302 of the Sarbanes-Oxley Act of 2002.	Filed herewith
32.1	Certification of Chief Executive Officer and Chief Financial Officer pursuant Section 906 of the Sarbanes-Oxley Act of 2002.	Filed herewith
101.INS*	XBRL Instance Document	Filed herewith.
101.SCH*	XBRL Taxonomy Extension Schema Document	Filed herewith.
101.CAL*	XBRL Taxonomy Extension Calculation Linkbase Document	Filed herewith.
101.LAB*	XBRL Taxonomy Extension Labels Linkbase Document	Filed herewith.
101.PRE*	XBRL Taxonomy Extension Presentation Linkbase Document	Filed herewith.
101.DEF*	XBRL Taxonomy Extension Definition Linkbase Document	Filed herewith.

* Pursuant to Regulation S-T, this interactive data file is deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, and otherwise is not subject to liability under these sections.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on our behalf by the undersigned thereunto duly authorized.

		ZENOSENSE, INC.

Date: November 10, 2014	By:	/c/ Carolos Jose Gil
	Name:	Carlos Jose Gil
	Title:	President, Chief Executive Officer, Principal Financial Officer and Director (Authorized Officer for Registrant)

Attached files

ZENOSENSE, INC. Reports

Also read