Form 10QSB GenoMed, Inc.
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 2003
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
Commission File Number: 000-49720
GenoMed, Inc.
(Exact name of Small Business Issuer as specified in its Charter)
Florida
(State or other jurisdiction of incorporation or organization)
43-1916702
(I.R.S. Employer Identification No.)
909 South Taylor Avenue, St. Louis, Missouri 63110
(Address of principal executive offices) (Zip Code)
(314) 977-0115
(877) 436-6603
(Issuer's telephone number)
All Correspondence to:
Brenda Lee Hamilton, Esquire
Hamilton, Lehrer and Dargan, P.A.
2 East Camino Real, Suite 202
Boca Raton, Florida 33432
561-416-8956
Check mark whether the Issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 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 [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
As of June 30, 2003, we had 122,862,565 shares of our Common Stock outstanding.
INDEX
PART 1. CONSOLIDATED FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements............................... 3-8
Item 2. Management's Discussion and Analysis and Plan of operation...... 9-18
Item 3. Controls and Procedures......................................... 18
PART II. OTHER INFORMATION
Item 1. Legal Proceedings............................................... 18
Item 2. Changes in Securities and Use of Proceeds....................... 18
Item 3. Default Upon Senior Securities.................................. 18
Item 4. Submission of Matters to a Vote of Securities................... 18
Item 5. Other Information............................................... 18
Item 6. Exhibits and Reports on Form 8-K................................ 19
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PART 1.
Item 1. Consolidated Financial Information
GenoMed, Inc.
(A Development Stage Company)
Consolidated Balance Sheet
June 30, 2003
(Unaudited)
Assets
Current assets:
Cash $ 20,948
-----------
Property and equipment, net 158,171
-----------
$ 179,119
===========
Liabilities and stockholders' (deficit)
Current liabilities:
Accounts payable $ 56,111
Due to shareholders 312,438
-----------
Total current liabilities 368,549
-----------
Note payable - affiliate 1,077,581
-----------
Stockholders' (deficit):
Common stock, $.001 par value,
1,000,000,000 shares authorized,
122,862,565 shares issued and outstanding 122,862
Additional paid in capital 1,475,691
Subscribed common shares 9,000
(Deficit) accumulated during the development stage (2,874,564)
-----------
(1,267,011)
-----------
$ 179,119
===========
See the accompanying notes to the consolidated financial statements.
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GenoMed, Inc.
(A Development Stage Company)
Consolidated Statements of Operations
Three Months Ended June 30, 2003 and 2002,
Six Months Ended June 30, 2003 and 2002 and
the Period From Inception (January 3, 2001) to June 30, 2003
(Unaudited)
Three Months Ended Six Months Ended Inception to
June 30, June 30, June 30, June 30, June 30,
2003 2002 2003 2002 2003
------------ ------------ ------------ ------------ ------------
Restated Restated
Revenue $ 950 $ - $ 1,950 $ - $ 1,950
------------ ------------ ------------ ------------ ------------
Operating expenses:
Research and development - - - - 333,264
Selling, general and
administrative expenses 668,510 794,590 738,431 1,266,390 2,429,184
------------ ------------ ------------ ------------ ------------
668,510 794,590 738,431 1,266,390 2,762,448
------------ ------------ ------------ ------------ ------------
(Loss) from operations (667,560) (794,590) (736,481) (1,266,390) (2,760,498)
------------ ------------ ------------ ------------ ------------
Other expense:
Impairment of website - - - - 6,939
Interest 20,000 14,000 40,000 25,000 107,127
------------ ------------ ------------ ------------ ------------
20,000 14,000 40,000 25,000 114,066
------------ ------------ ------------ ------------ ------------
Net (loss) $ (687,560) $ (808,590) $ (776,481) $ (1,291,390) $ (2,874,564)
============ ============ ============ ============ ============
Per share information - basic
and fully diluted:
Weighted average shares
outstanding 122,268,120 120,310,000 121,680,244 120,310,000 274,901,355
============ ============ ============ ============ ============
Net (loss) per share $ (0.01) $ (0.01) $ (0.01) $ (0.01) $ (0.01)
============ ============ ============ ============ ============
See the accompanying notes to the consolidated financial statements.
-4-
GenoMed, Inc.
(A Development Stage Company)
Consolidated Statements of Cash Flows
Six Months Ended June 30, 2003 and 2002
the Period From Inception (January 3, 2001) to June 30, 2003
(Unaudited)
Six Months Six Months
Ended Ended Inception to
June 30, June 30, June 30,
2003 2002 2003
---------- ----------- ------------
Restated
Cash flows from operating activities:
Net cash (used in) operating activities $ (18,583) $ (511,209) $ (826,798)
---------- ----------- ------------
Cash flows from investing activities:
Net cash (used in) investing activities - (201,042) (210,254)
---------- ----------- ------------
Cash flows from financing activities:
Net cash provided by financing activities 26,500 455,000 1,058,000
---------- ----------- ------------
Net increase (decrease) in cash 7,917 (257,251) 20,948
Beginning - cash balance 13,031 269,892 -
---------- ----------- ------------
Ending - cash balance $ 20,948 $ 12,641 $ 20,948
========== =========== ============
Supplemental cash flow information:
Cash paid for income taxes $ - $ - $ -
========== =========== ============
Cash paid for interest $ - $ - $ -
========== =========== ============
See the accompanying notes to the consolidated financial statements.
-5-
GenoMed, Inc.
(A Development Stage Company)
Notes to Consolidated Financial Statements
June 30, 2003
(Unaudited
(1) Basis Of Presentation
The accompanying unaudited consolidated financial statements have been prepared
in accordance with accounting principles generally accepted in the United States
of America ("GAAP") for interim financial information. They do not include all
of the information and footnotes required by GAAP for complete financial
statements. In the opinion of management, all adjustments (consisting only of
normal recurring adjustments) considered necessary for a fair presentation have
been included. The results of operations for the periods presented are not
necessarily indicative of the results to be expected for the full year. For
further information, refer to the financial statements of the Company as of
December 31, 2002 and the period from inception (January 3, 2001) to December
31, 2002 including notes thereto included in Form 10-KSB.
(2) Earnings Per Share
The Company calculates net income (loss) per share as required by SFAS No. 128,
"Earnings per Share." Basic earnings (loss) per share is calculated by dividing
net income (loss) by the weighted average number of common shares outstanding
for the period. Diluted earnings (loss) per share is calculated by dividing net
income (loss) by the weighted average number of common shares and dilutive
common stock equivalents outstanding. During the periods presented common stock
equivalents were not considered as their effect would be anti-dilutive.
(3) Stockholders' (Deficit)
During January 2003 the Company issued 769,231 shares of common stock pursuant
to a subscription agreement entered into in December 2002 for cash aggregating
$10,000.
During February 2003 the Company accepted a subscription for 187,500 shares of
common stock in exchange for cash aggregating $1,500. As of June 30, 2003 these
shares had not yet been issued.
During May 2003 the Company issued 1,666,667 shares of common stock in exchange
for cash aggregating $25,000. In conjunction with this issuance the Company
issued 116,667 shares of common stock as a commission.
-6-
During the period ended June 30, 2003 the Company charged $4,500 to operations
pursuant to its agreement to issue 300,000 shares of common stock on December
31, 2003 in accordance with the terms of advisory board contracts. As of June
30, 2003, 150,000 shares had been earned and had not been issued. The shares
have been valued at the trading price of $.03 of the Company's common stock on
June 30, 2003, the measurement date. The above amount has been included as
subscribed common shares.
During the period ended June 30, 2003 the Company charged $12,000 to operations
related to the vesting of stock options granted in 2002.
During March 2002 the Company granted an officer options to purchase 37,500,000
shares of common stock at an exercise price of 20% of the fair market value of
the common stock on the exercise date. The options may be exercised after May 6,
2002 for a period of 10 years as to 12,500,000 options and after November 6,
2002 for a period of 10 years as to 25,000,000 options. The change in the
discount from the fair market value of the common stock related to the options
will be charged to operations as general and administrative expenses during the
period from the grant date to the exercise date. During the period ended June
30, 2003 $600,000 was charged to operations related to the increase in the
discount from $.008 at December 31, 2002 to $.024 at June 30, 2003.
During the period ended June 30, 2003 the Company granted options to purchase
956,731 shares of common stock to purchasers of 956,731 shares of its common
stock in December 2002 and February 2003 for an aggregate of $11,500. The
options are exercisable at $.05 per share and expire when the trading price of
the Company's common stock is at least $.07 for a period of ten days.
The effect of applying SFAS No. 123 pro-forma net (loss) is not necessarily
representative of the effects on reported net income (loss) for future years due
to, among other things, the vesting period of the stock options and the fair
value of additional stock options in future years. There is no material
difference between the reported net loss and the pro-forma net loss had the fair
values of the options granted during 2003 been included in operations.
(4) Going Concern
The Company's financial statements are presented on a going concern basis, which
contemplates the realization of assets and satisfaction of liabilities in the
normal course of business.
The Company has experienced a significant loss from operations as a result of
its investment necessary to achieve its operating plan, which is long-range in
nature. For the period ended June 30, 2003 the Company incurred a net loss of
$776,481 and has a working capital deficit of $347,601 and a stockholders'
deficit of $1,267,011 at June 30, 2003. In addition, the Company has no
significant revenue generating operations.
The Company's ability to continue as a going concern is contingent upon its
ability to attain profitable operations and secure financing. In addition, the
Company's ability to continue as a going concern must be considered in light of
the problems, expenses and complications frequently encountered by entrance into
established markets and the competitive environment in which the Company
operates.
The Company is pursuing equity financing for its operations. Failure to secure
such financing or to raise additional capital or borrow additional funds may
result in the Company depleting its available funds and not being able pay its
obligations.
-7-
The financial statements do not include any adjustments to reflect the possible
future effects on the recoverability and classification of assets or the amounts
and classification of liabilities that may result from the possible inability of
the Company to continue as a going concern.
(5) Note Payable - Affiliate
On April 9, 2003 the Company converted $1,010,500 in advances and $67,081 of
accrued interest into a convertible promissory note in the amount of $1,077,581.
The note bears interest at 8% per annum and is due on January 1, 2005. The note
may be converted into common shares of the Company as follows:
a. The unpaid principal in whole or in part together with accrued interest
shall at the option of the holder be converted into the class of the
Company's shares on the same terms and conditions applicable to any
investors in a financing agreement. The holder may elect to negotiate
separate terms and conditions however the unpaid balance will not be
payable in cash, but convertible only into shares of the Company. For the
purposes of this calculation the aggregate value of the Company's shares
received by the holder in conversion shall be determined by subtracting
$1,000,000 from the unpaid original principal balance of the note, which
remains unpaid at the time of conversion. A financing agreement is defined
as the receipt by the Company of a least $1,500,000 of net cash proceeds
from the sale of capital stock.
b. The unpaid principal in whole or in part together with accrued interest
shall be converted into shares if the Company realizes revenue of
$1,500,000 during the period commencing April 9, 2003 and ending on
December 31, 2004. The price per share shall be determined as provided in c
below. The unpaid balance will not be payable in cash but convertible only
into shares of the Company. For the purposes of this calculation the
aggregate value of the Company's shares received by the holder in
conversion shall be determined by subtracting $1,000,000 from the unpaid
original principal balance of the note, which remains unpaid at the time of
conversion.
c. If no financing agreement has occurred by December 31, 2004 and/or the
Company has not realized the requirements of a and b above the holder may
elect to convert the unpaid principal balance and accrued interest into the
number of common shares of the Company determined by dividing the unpaid
balance by the average bid price of the Company's common stock for the
previous 30 trading days. The unpaid balance will not be payable in cash
but convertible only into shares of the Company.
(6) Correction of An Error
During August 2002 the Company determined that the value assigned to 37,500,000
options issued to an officer should have been recorded at the discount from the
fair market value of the common shares for the options vested on the measurement
date of an aggregate of $567,811 through June 30, 2002. Through June 30, 2002
the Company had previously charged $670,000 to operations related to these
options. In addition, the Company has recorded an adjustment to previously
issued financial statements for the period ended March 31, 2002 related to these
options and to correct the valuation of certain common shares to be issued
pursuant to advisory board and employment contracts aggregating $69,000. The
Company also had recorded $830,000 as deferred compensation at June 30, 2002.
The accompanying financial statements have been restated to reflect the above
corrections. The adjustments decreased the net loss for the six months and three
months ended June 30, 2002 as previously reported from $(1,393,579) and
$(979,779) to $(1,291,390) and $(808,590) or $(.00) and $(.00) per share and
reduced deferred compensation and additional paid in capital on the June 30,
2002 balance sheet by $830,000.
-8-
Item 2. Management's Discussion and Analysis of Financial Condition and Plan of
Operations
Forward-Looking Statements.
The following discussion and analysis contains forward looking statements and
should be read in conjunction with our financial statements and related notes.
For purposes of this plan of operations, GenoMed, Inc. is referred to herein as
"we," "us," or "our." This discussion and analysis contains forward-looking
statements based on our current expectations, assumptions, estimates and
projections overview. The words or phrases "believe," "expect," "may," "should,"
"anticipates" or similar expressions are intended to identify "forward-looking
statements". Actual results could differ materially from those projected in the
forward-looking statements as a result of the following risks and uncertainties,
many of which are more fully discussed in our Form 10-KSB for the period ending
December 31, 2002, which is available for review at www.sec.gov: (a) our
independent accountants, Stark Winter Schenkein & Co., LLP, have issued an
opinion in conjunction with their audit of our consolidated balance sheet as of
December 31, 2002, raising substantial doubt about our ability to continue as a
going concern based on the losses that we have suffered from our operations, our
working capital and stockholders' deficiencies, and the developmental stage
nature of our business and that our ability to continue as a going concern is
contingent upon our ability to attain profitable operations by securing
financing and implementing our business plan; (b) because we are a development
stage company with a limited operating history and a poor financial condition,
you will be unable to determine whether we will ever become profitable; (c) our
plan of operations has been substantially delayed due to lack of financing, and
if we are unable to obtain financing to pursue our plan of operations we will no
longer be able to conduct business and you will lose your entire investment; (d)
if we are not awarded patents or licenses, we will never market potential
products and our potential revenues will be negatively affected; (e) our
business may be adversely affected by regulatory costs which would negatively
affect our potential profitabiliy; (f) because our genomics method of gene
identification is a relatively new gene identification method, the public or
prospective strategic partners may not accept it as an acceptable gene
identification method, which would negatively affect our operations and
potential revenues; (g) our competitors may develop and respond to gene
procedures and products before us due to their superior financial and technical
resources and superior technologies; (h) we may be subject to medical or product
liability claims that will negatively affect our potential profitability and may
lead to losses; (i) because we will lack control over the outsourcing of sample
collection, genotyping and data analysis, our quality control and brand name
reputation may be negatively affected; (j) if we fail to recruit test patients
for our clinical trials, our development of potential products will be delayed
which would negatively affect our potential revenues; (k) if our strategic
partners fail to obtain Federal Drug Administration approval, our costs may
increase and our revenues may decrease; (l) our entire business plan is
dependent upon forming strategic alliances or acquisitions or partnership
alliances with others for which there are no assurances, and if we fail to do so
we will never generate any revenues; (m) if we fail to abide by the terms of our
acquisition agreement in which we acquired Genomic Medicine, LLC, the
acquisition could be rescinded and we would have no business or ability to
generate revenues; (n) if we fail to conduct adequate due diligence regarding
our strategic alliances or acquisitions and partnership alliances, we will be
subject to increased costs and operational difficulties; (o) our management
decisions are made by our President/Chief Executive Officer/Chairman of the
Board/ Chief Medical Officer, Dr. David Moskowitz and if we lose his services,
our operations will be negatively impacted; and (p) we plan to issue our common
stock as compensation to our officers/directors which will substantially dilute
the value of your shares.
-9-
PLAN OF OPERATIONS:
Original Operations
Our Plan of Operations was scheduled to occur from March 2002 to March 2003;
however, we have not had sufficient funds to conduct our original Plan of
Operations. Because we have insufficient funds to conduct our operations as
originally planned, we have ceased conducting our operations, as follows:
o Dismissed two of our three employees, our Administrative Assistant and
Director of Research and Development; therefore, we have only one
employee, our President/Chairman of the Board/Chief Medical Officer,
David Moskowitz;
o We have not paid the $135,000 salary due to our President/Chairman of
the Board/Chief Medical Officer;
o We have no financial resources by which to pay for genotypes and for
the collection of blood from Hispanic patients with documented
disease;
o We have no financial resources to begin the collection of Caucasian,
African American, Asian and Hispanic samples for 52 diseases;
o We have no financial resources to conduct genotyping of Type 2 NIDDM
samples from patients with Type 2 Diabetes;
o We have no financial resources to lease laboratory space; and
o We have no financial resources by which to hire a research assistant.
Accordingly, our Plan of Operations will be delayed until such time that we
obtain sufficient funding, as follows:
Annual
Type Expenditures Estimated Amount
------------------- ------------------
Salaries $ 500,000
------------------- ------------------
Operating Expenses* $ 200,000
------------------- ------------------
Genotyping $ 2,000,000
------------------- ------------------
Data Analysis $ 100,000
------------------- ------------------
Marketing $ 150,000
------------------- ------------------
Patents $ 30,000
------------------- ------------------
Total $ 2,980,000
==================
* Operating Expenses include office rent, utilities, and legal and accounting
expenses.
-10-
We intend to satisfy these estimated total expenditures of $2,980,000 for our
Plan of Operations through revenues or a private placement of our equity
Securities. If we are unable to obtain sufficient financing, then we will be
unable to conduct our plan of operations, which may negatively impact
development of our brand name and reputation. Our alternative plan of operations
is to collect revenues only as a Next Generation Disease Management company. In
the event that we do not obtain adequate financing we may have to liquidate our
business and undertake any or all of the following actions:
o Sell or dispose of our assets, if any;
o Pay our liabilities in order of priority, if we have available cash to
pay such liabilities;
o If any cash remains after we satisfy amounts due to our creditors,
distribute any remaining cash to our shareholders in an amount equal
to the net market value of our net assets;
o File a Certificate of Dissolution with the State of Florida to
dissolve our corporation and close our business;
o Make the appropriate filings with the Securities and Exchange
Commission so that we will no longer be required to file periodic and
other required reports with the Securities and Exchange Commission,
if, in fact, we are a reporting company at that time; and
o Make the appropriate filings with the National Association of Security
Dealers to affect a delisting of our common stock, if, in fact, our
common stock is trading on the OTC Bulletin Board at that time.
Based upon our current assets, however, we will not have the ability to
distribute any cash to our shareholders. If we have any liabilities that we are
unable to satisfy and we qualify for protection under the U.S. Bankruptcy Code,
we may voluntarily file for reorganization under Chapter 11 or liquidation under
Chapter 7. Our creditors may also file a Chapter 7 or Chapter 11 bankruptcy
action against us. If our creditors or we file for Chapter 7 or Chapter 11
bankruptcy, our creditors will take priority over our shareholders. If we fail
to file for bankruptcy under Chapter 7 or Chapter 11 and we have creditors, such
creditors may institute proceedings against us seeking forfeiture of our assets,
if any.
We do not know and cannot determine which, if any, of these actions we will be
forced to take.
If any of these foregoing events occur, you could lose your entire investment in
our shares.
-11-
OUR PLAN OF OPERATIONS TO DATE
To date, we have accomplished the following in our Plan of Operations:
November 2001
Dr. David Moskowitz became our Chairman of the Board and Chief Medical Officer.
Jerry E. White became our President, Chief Executive Officer, and a Director.
Jerry White resigned on October 21, 2002, and our Board of Directors appointed
Dr. David Moskowitz as our President and Chief Executive Officer as of October
22, 2002 to fill the vacancies created by Jerry White's resignation.
Dr. Scott Williams became the first member of our Scientific Advisory Board.
Filed Provisional Patent Application: "Modifications of Serum Potassium
Concentration in Patients for Whom ACE Inhibition is Indicated." Patent
application number pending. This patent concerns patients with chronic kidney
disease that cannot tolerate ACE inhibitors because their serum potassium
concentration is already high. ACE inhibitors make this problem worse. ACE
inhibitors block the action of the ACE enzyme, and as a class have been used as
anti-hypertensive drugs since the late 1970s. This provisional patent
application describes the use of a second medication to control serum potassium,
allowing the use of ACE inhibitors in such patients.
Filed Provisional Patent Application: "Clinical Trials Illustrating New Uses for
an Existing ACE Inhibitor." Patent application number 60/347,013. This
provisional patent application describes how to test ACE inhibitors for new
disease indications.
Re-filed Provisional Patent Application: "Promoter SNPs." Patent application
number pending. This provisional patent application specifies nearly 12,000 SNPs
culled from the regulatory region of some 5,000 genes. The specific region of
the gene involved is the promoter, which sits upstream of the coding portion of
the gene.
December 2001
Dr. Tony Frudakis joins our Scientific Advisory Board. Filed Provisional Patent
Application: "New Formulation of an Existing ACE Inhibitor." Patent Application
Number 60/350,563. This provisional patent application outlines the
reformulation of a particular ACE inhibitor at the higher doses required for
minimal clinical effectiveness.
Letter of Intent with DNAPrint Genomics, Inc. and Orchid BioSciences, Inc. to
perform 400,000 SNP-genotypes at $0.40 per genotype.
-12-
Approval obtained from American Diabetes Association to utilize its bank of DNA
samples from patients with Type 2 Diabetes.
Disease Management Consultants Vince Kuraitis and Alan Kaul engaged to develop a
marketing plan to form relationships with disease management firms and health
care plans to commercialize our clinical research findings.
Second contract for Regulatory SNPs signed with Sequence Sciences, LLC to find
more regulatory SNPs.
Filed tenth Provisional Patent Application involving a method to delay or
prevent altogether most common serious diseases. Patent application number
pending.
Added Peter C. Brooks and Richard A. Kranitz as members of our Board of
Directors.
January 2002
Dr. Jason Moore joins our Scientific Advisory Board.
HealthChip trademark filed with United States Patent and Trademark Office.
Purchased one SNP Stream UHT (Ultrahigh Throughput) SNP Genotyping system from
Orchid BioSciences, Inc. that will enable us to perform as many as 100,000
genotypes a day. Purchased one SNP stream UHT system and the software from
Orchid BioSciences, Inc. of Princeton, New Jersey, that will further enable us
to perform as many as 100,000 genotypes a day. Beta Test Agreement with Orchid
BioSciences, Inc. completed for the SNP stream UHT system, which will permit us
to operate this equipment through a joint venture with DNA Print, Inc. in
Sarasota, Florida. The Beta Test Agreement involves the following: In return for
providing Orchid BioSciences with information regarding their systems genotyping
accuracy, the agreement allows GenoMed to perform the first 50,000 genotypes at
no charge.
February 2002
Orchid BioSciences, Inc. installed our UHT SNP-stream genotyping system at
DNAPrint Genomics, Inc, a company with one year's experience using the Orchid
genotyping platform. We are outsourcing our high-throughput genotyping needs to
DNAPrint Genomics, Inc.
Personnel with DNAPrint Genomics began training on SNP stream-UHT system
equipment. DNAPrint Genomics personnel have been trained by Orchid BioSciences
to operate the new system. In return for hosting the machine, we are allowing
DNAPrint Genomics to use our UHT SNP-stream machine for DNAPrint's genotyping
needs driving times when the machine would otherwise be idle.
Our first board meeting was held in Sarasota, Florida. Board members also
visited DNAPrint Genomics to see the UHT SNP-stream technology in operation.
-13-
March 2002 - August 2002
Data analysis and manuscript preparation
We conducted data analysis in conjunction with our preparation of the following
publications:
From Pharmacogenomics to Improved Patient Outcomes: Angiotensin
I-Converting Enzyme as an Example
Is Angiotensin I-Converting Enzyme a "Master" Disease Gene?
Is "Somatic" Angiotensin I-Converting Enzyme a Mechanosensor?
September 2002
In September 2002, we published an article in Diabetes Technology; Therapeutics,
demonstrating our efforts to prevent end-stage kidney disease in diabetes and
hypertension. We also published case reports showing better outcomes than with
conventional treatment with emphysema and peripheral vascular disease or poor
circulation.
October 2002
We published an article in Diabetes Technology and Therapeutics describing how
our patent-pending treatment regarding Inhibition of Angiotensin II Production
and/or Activity might benefit a total of some 160 common diseases associated
with aging, such as all cardiovascular diseases, all common cancers, except
prostate, several psychiatric diseases, autoimmune diseases, and viral diseases,
including infection with HIV and progression to AIDS.
December 2002
We published an article in Diabetes Technology and Therapeutics describing the
molecular mechanism for aging.
January 2003
We began to seek elderly volunteers in nursing homes to test ACE inhibitors, in
addition to their current medications, for the purpose of delaying progression
of age-related diseases.
We began to seek collaborators in a trial to treat acute kidney failure with an
intravenous drug, rather than with the kidney machine. The trial would be for
patients with new, sudden loss of kidney function, not for chronic dialysis
patients.
We began to seek collaborators in Neonatal Intensive Care Units to test a new
treatment for lung immaturity in newborns. Lung immaturity is common in babies
more than a month premature.
We began to seek volunteers with glaucoma to test a new medication in addition
to their current medications.
-14-
February 2003
We signed a Letter of Intent to collaborate with Dr. Huseyin Abali of Turkey to
use ACE inhibitors to help treat cancer. We plan to collaborate with Dr. Abali
using our ACE inhibitor treatment in lung cancer, colorectal cancer, mesenchymal
tumors, and lymphomas.
March 2003
Alopecia areata, an autoimmune disease, responded dramatically in a patient with
active disease to our patent pending treatment approach of inhibiting
angiotensin II.
April 2003
We announced a novel anti-viral therapy that may decrease mortality in the SARS
epidemic and that we were seeking patient and physician collaborators to
collaborate in a world-wide trial of the efficacy of this therapy. On April 25,
2003, we filed a patent application for the use of "sartans" for SARS. A
"sartan" is a drug that specifically inhibits the angiotensin II type 1
receptor. It appears that angiotensin II operates through the AT1 receptor to
activate lymphocytes and macrophages, but that type 2 angiotensin II receptor
promotes death of these cells and thus, an AT1 receptor blocker might be ideal
for selectively turning off an overly exuberant host immune response.
On April 30, 2003, our Chief Executive Officer, Dr. David Moskowitz, presented
our patient outcomes data to help stop the epidemic of end-stage kidney disease
to Blue Cross/Blue Shield of Tennessee.
May 2003
We announced the granting of a license of our aminophylline treatment to Dr.
Mehmet Sukru Sever. Aminophylline is an existing, generic drug that we have used
to restore kidney function and avoid dialysis in the setting of acute kidney
failure. Dr. Sever coordinated kidney dialysis for survivors of the earthquake
in Bingol in Eastern Turkey.
June 2003
We announced that we were launching a clinical trial against age-related macular
degeneration using drugs to inhibit angiotensin II, as well as other causes of
blindness, such as retinitis pigmentosa.
We reported that over 300 patients had expressed interest in our clinical
trials, but that less than a dozen patients with diabetes or high blood pressure
had signed up to use our treatment to prevent kidney dialysis and other
complications of diabetes and high blood pressure.
We announced that a clinical trial using inhibitors of angiotensin II against
all neurodegenerative diseases, including common ones such as Alzheimer's
disease, Parkinson's disease, and rare ones like amyotrophic lateral sclerosis,
which is known as "Lou Gehrig's disease", and spinal muscular atrophy.
-15-
July 2003
Our Chief Executive Officer, Dr. David Moskowitz, was invited to speak at the
Nucleic Acid World Summit to be held in Boston, Massachusetts from September
15-17, 2003. The conference's subject is "Transforming Cutting-Edge Science into
Business" and will focus on uses of RNA and DNA to understand and treat
diseases, including viral scourges such as SARS, HIV, and West Nile virus. Dr.
Moskowitz's speech is entitled "Improving the Odds of Therapeutic Efficacy:
Blocking Angiotensin II." The conference is hosted by the Strategic Research
Institute.
We announced that we were still seeking volunteers for our treatment to avoid
complications of West Nile virus based on our belief that inhibiting angiotensin
II would decrease signaling by T cells and macrophage/monocyte/microglial cells,
which should in turn decrease the number of encephalitis cases due to West Nile
virus.
August 2003
We acquired 10,000 more promoter SNPs for our Disease Gene-Net from Sequence
Sciences. This brought the number of promoter SNPs to 23,000 that we have to
interrogate each disease.
We proposed our patent-pending approach, namely inhibiting angiotensin II, as a
possible treatment to halt any further troop deaths due to pneumonia cases which
appear to be an unusually intense allergic reaction to the anthrax vaccine.
Our Chief Executive Officer, Dr. David Moskowitz was invited to speak at an
anti-aging conference sponsored by the American Academy of Anti-Aging Medicine
to be held December 11-14, 2003. It is anticipated that over 4,000 scientists
and physicians interested in anti-aging medicine will attend the conference. Dr.
Moskowitz will discuss our clinical findings that ACE inhibitors and angiotensin
II receptor blockers may be effective against almost all age-related diseases.
Our Chief Executive Officer, Dr. David Moskowitz, was asked to serve as the
Chairperson and speak at the Cancer Drug Research and Development Conference in
San Diego, California on November 20-21, 2003. Dr. Moskowitz will speak on the
topic, "Is Angiotensin II Behind Most Cancers (Except Prostrate)?"
OUR PLAN OF OPERATIONS PENDING SUFFICIENT FINANCIAL RESOURCES
We intend to accomplish the following regarding our plan of operations over a
period of twelve months, when we have sufficient resources to do so, if ever.
Collections
Begin collections of Caucasian, African American, Asian and Hispanic samples for
52 diseases in accordance with our agreement with Bio Collections, Inc. The
blood samples will be obtained from clinics and hospitals in Florida. The blood
will be shipped to GenoMed in St. Louis, Missouri for conversion to DNA. The
total approximate cost will be $125 per sample.
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Establish Laboratory for Purpose of Collecting DNA from Blood
We plan to we lease space for a laboratory to conduct our testing and research
and development.
Hire Research Assistant
We will hire a research assistant for $30,000 per year who will prepare DNA
from the white blood cells present in blood samples.
Genotyping Type 2 NIDDM Samples
DNA samples from patients with Type 2 Diabetes and controls have already been
obtained from the American Diabetes Association and the Coriell Cell Repository.
Each DNA sample will be genotyped at a reasonably large number of potentially
functional SNPs (single nucleotide polymorphism) using the Orchid UHT SNP-stream
machine housed at DNAPrint Genomics, Inc. We will start with several hundred
SNPs and scale-up to 10,000 SNPs or more over the next eight months.
The frequency of each SNP will be determined for patients ("cases") and
controls. Where the SNP differs significantly in frequency between the "cases"
and "control" groups, the SNP is said to be associated with the disease under
consideration, in this case Type 2 Diabetes.
Personnel at DNAPrint Genomics, under the direction of its Chief Executive
Officer, Tony Frudakis, and its Project Manager, Matt Thomas, will be
responsible for executing the genotyping. The project will be overseen by David
Moskowitz, our Chairman of the Board/Chief Medical Officer.
Market to Health Care Plans
We have begun contacting health care plans for the purpose of establishing
agreements with these companies to provide our patent-pending cost-saving
medical treatments. We do not yet have such an agreement in place.
Hispanic Collection of Blood Samples
We will arrange for the collection of blood from Hispanic patients with
documented disease. We will hire a firm to provide samples and to conduct
DNA preparation. The total anticipated estimated cost is $36,000.
Data Analysis
Once genotype results are known for 384 samples, there will be too much data to
keep track of, so it will take a computer or network of computers to process the
results. The computational demands expand when you consider that some of the
many SNPs we genotype for may work together to produce the disease. Sorting
through all the combinations of 10,000 SNPs, that is, one SNP at a time, then
any two SNPs out of 10,000, then any three SNPs out of the same 10,000, then any
four SNPs out of 10,000, and so on, will take advanced software and considerable
computing power. Therefore, we will lease a computer or network of computers
which will cost approximately $100,000.
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Patent Writing
As in every aspect of this project, high throughput patent application is
required. A template patent application has been prepared by our Chairman of the
Board and Chief Medical Officer, Dr. David Moskowitz. As data becomes available,
such as SNPs and genes associated with our first disease target, Type 2
Diabetes, it will be incorporated into the existing template patent application.
We have retained the law firms of Holland and Knight located in Boston,
Massachusetts, and Polster Lieder located in St. Louis, Missouri to help with
writing specific claims.
Marketing IP
We will attempt to recruit personnel with research pharmaceutical and healthcare
industry experience to market our disease-gene associations to the research
pharmaceutical industry and our cost-saving treatments to the healthcare
industry.
Item 3. Controls and Procedures
The Company's Chief Executive Officer and Chief Financial Officer evaluated the
Company's disclosure controls and procedures within the 90 days preceding the
filing date of this quarterly report. Based upon this evaluation, the Chief
Executive Officer and Chief Financial Officer concluded that the Company's
disclosure controls and procedures are effective in ensuring that material
information required to be disclosed is included in the reports that it files
with the Securities and Exchange Commission.
There were no significant changes in the Company's internal controls or, to the
knowledge of the management of the Company, in other factors that could
significantly affect these controls subsequent to the evaluation date.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Not applicable.
Item 2. Changes in Securities and Use of Proceeds
Not applicable
Item 3. Default Upon Senior Securities
Not applicable
Item 4. Submission of Matters to a Vote of Securities
Not applicable
Item 5. Other Information
Not Applicable.
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Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits required by Item 601 of Regulation S-B
EXHIBIT DESCRIPTION
NUMBER
2 In re: e-Miracle Network, Inc. - Amended Plan of reorganization*
3.1 Articles of Incorporation - E-Kids Network, Inc.*
3.2 Articles of Amendment of the Articles of Incorporation of E-Kids
Network, Inc.*
3.3 Amended and Restated By Laws of GenoMed, Inc.*
10.1 Agreement and Plan of Exchange by and Between GenoMed, Inc. and
Genomic Medicine, LLC and its sole owner*
10.2 Amendment to the Agreement and Plan of Exchange*
10.3 Agreement with Research Capital, LLC*
10.4 Amendment to Agreement with Research Capital, LLC*
10.5 Agreement with DNAPrint Genomics, Inc.*
10.6 Agreement with Muna, Inc.*
10.7 Agreement with Sequence Sciences, LLC*
10.8 Agreement with Better Health Technologies, Inc.*
10.9 Employment Agreement with Jerry E. White*
10.10 Employment Agreement with David Moskowitz*
10.11 Option Agreement with David Moskowitz*
10.12 Scientific Advisory Board Agreement with Jason Moore*
10.13 Scientific Advisory Board Agreement with Scott Williams*
10.14 Scientific Advisory Board Agreement with Tony Frudakis*
10.15 Resignation of Jerry E. White***
10.16 Settlement Agreement with Jerry E. White***
21 List of subsidiaries*
23 Consent of Stark Winter Schenkein ; Co., LLP, Certified Public
Accountants**
31 Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002
*Previously filed on April 4, 2002, as exhibit to Form 10-SB Registration
Statement, hereby incorporated by reference.
**Previously filed on July 19, 2001, as exhibit to Form 10-SB Registration
Statement, hereby incorporated by reference.
***Previously filed on October 31, 2002, as exhibit to Form 10-SB Registration
Statement, hereby incorporated by reference.
(b) Reports on Form 8-K
None
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned as duly authorized officers of the Registrant.
GenoMed, Inc.
By:/s/ Dr. David Moskowitz
Dr. David Moskowitz
President/Chief Executive Officer/Chairman of the Board/Chief
Financial Officer/Chief Accounting Officer
DATED: August 15, 2003
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