UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES OF SMALL BUSINESS ISSUERS
Under Section 12(b) or (g) of the Securities Exchange Act of 1934
Cryogenic Solutions, Inc.
----------------------------------------------
(Name of Small Business Issuer in its charter)
Nevada 75-2801178
- -------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
6524 San Felipe PMB 388 Houston, Texas 77057
- ---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, (713) 780-1399
---------------
Securities to be registered under Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
NA NA
- ------------------- ------------------------------
Securities to be registered under Section 12(g) of the Act:
The registrant had 17,485,700 shares of Common Stock,
at $.001 par value, outstanding as of December 31,1998.
-------------------------------------------------------
(Title of class)
Explanation for ammended form.
Due to software complications the intial Form 10SB12G EDGAR filing was
incorrectly transmitted.
Item 1. Description of Business
Cryogenic Solutions, Inc. is a biotechnology company focusing on controlled
cellular dedifferentiation and transdifferentiation processes. The company has
acquired the exclusive rights for applications to a specialized expression
vector capable of producing single stranded DNA (ssDNA) in both eukaryotes and
prokaryotes.
The company was formed in 1995 under SEC regulation D as a biomedical research
and development operation. Equity funding has been the only source of
operational and research support from the outset. Capital resources have been
carefully husbanded with the bulk of the funding allocated directly to research
with administrative overhead held to a minimum.
The company has developed a "cassette" that can be inserted into a viral
delivery/expression vector of choice. The cassette enables the vector to
express any desired sequence-specific, single-stranded DNA (ssDNA)
oligonucleotide.
Most human diseases arise from the function or dysfunction of genes within the
body, either those of pathogens, such as viruses, or the body's own genes. New
technological advances in molecular biology have led to the identification of
genes associated with major human diseases and the determination of their
genetic basis.
Antisense oligonucleotide technology is providing a highly specific strategy
for targeting a wide range of diseases at the genetic level, by interfering
with mRNA to inhibit production of disease associated proteins.
In this rapidly expanding market, the race is on to develop oligonucleotide
drugs for the treatment of diseases such as cancer, HIV, Hepatitis B and a
range of inflammatory conditions such as arthritis and psoriasis.
Research scientists agree that antisense approaches coupled with available
genome and viral genetic information will ultimately lead to viable genetic
medical therapies. Currently, there are two major types of antisense molecules
used in antisense strategies. The first uses RNA to form duplexes with cellular
RNA. RNA expression vectors offer high transfection rates, cell targeting, and
in vivo transcription of the desired RNA. However, affecting messenger RNA-
antisense RNA duplex formation has often proved ineffective because of low
hybridization rates to target RNA and a brief antisense RNA half-life due to
host-cell mediated degradation.
The second antisense molecule types are oligonucleotides composed of DNA or DNA
analogs. DNA oligonucleotide mediated antisense formation with messenger RNA
has proved effective in cell culture. Advantages of using DNA oligos are that
DNA has a higher binding affinity for cellular RNA than does an RNA molecule
and DNA has a longer half-life than RNA. Most importantly, DNA-RNA hybrids
activate RNase H, an enzyme that digests the target RNA in the duplex. The
RNase H enzymatic activity permanently removes the RNA from the cell and frees
the oligo to bind to additional RNAs. This subsequently lowers the amount of
DNA oligos required for RNA hybridization and lessens problems caused by
toxicity. The list, of viral and chromosomal genes that have been successfully
turned off in cell culture, by this antisense mechanism, is fast growing and
the number of patents issued on specific genetic sequences for antisense use is
also expanding rapidly. There are approximately 600 such U.S. patents at this
writing.
Heretofore, DNA and DNA analog oligonucleotide mediated antisense strategies
have been ineffective as an antisense therapy in living organisms. In contrast
to RNA vectors, no effective ssDNA vector has previously been designed which
can bind, penetrate, and synthesize ssDNA in cells and tissues of living
animals. The DNA oligonucleotide antisense approach has worked well in vitro
but not in vivo because cells cultured in vitro, e.g., in cell cultures, can be
saturated with the oligonucleotide, a luxury that is not practical in the
living organism. In fact, even with liposome uptake enhancers and chemical
modifications to the DNA backbone, which increase half-life, the requisite
quantity of DNA oligos introduced into the organism is often toxic. Animal
studies have shown this approach to induce hypotension, renal failure, coma,
and death.
The CYGS proprietary technology merges the above antisense approaches. Our new
technology allows a delivery/expression vector to bind cells, enter the cell,
and replicate. Our cassette, when inserted into the desired targeting vector,
will express sequence-specific ssDNA rather than RNA. The ssDNA (1) can be
regulated to attempt expression of ssDNA at therapeutic but subtoxic levels,
(2) is sequence specific and possesses a relatively long half-life, (3) can be
targeted to multiple sites on a target RNA or be targeted to multiple target
RNAs, (4) provide binding sites for DNA-binding proteins, and (5) induce RNase
H activity freeing the ssDNA to hybridize with other RNAs.
Having developed an effective technology for the delivery of therapeutic
antisense molecules, the choice is how to most effectively get the products
resulting from the technology into the health care marketplace.
The company has spent approximately $1,000,000 per year for the past two years
on research and development activities.
To date there are limited ways to deliver single stranded DNA oligonucleotides
into cells, but they are not reliable and can only be used in limited
applications. The company's ssDNA expression vector can be used in very broad
applications and can be delivered safely into the cells of living animals. To
our knowledge there is no effective competition to the company's patented
technology.
The company has 5 full time employees.
Regulatory Issues
Ultimately, there will be compounds available by prescription from physicians
for use by patients for specific ailments. The road from lab to clinic is less
a thoroughfare than a mountain trail rife with obstacles and detours mostly
involving the FDA approval process. CYGS has mapped a set of pathways that
should optimize the process.
The FDA approves compounds that have been demonstrated both safe and effective
as individual parts and in combination. The safety of our vector by itself is
easily demonstrated since it has no efficacy by itself. The task is to prove
safety with a sufficient number of efficacious oligos to comfortably
extrapolate universal safety of the vector alone.
The FDA recognizes different categories of disease that deserve different
approval standards. The most lenient is accorded to those drugs that have been
designated "compassionate use" in that any dangers or side effects they may
exhibit are less harmful than those inherent in the disease itself when
compared with the potential benefits.
Certain diseases have been designated as "orphan" diseases in that there are so
few cases that the major drug companies cannot justify the expense of
investigational development and submitting to the full approval process. Many
of the orphan diseases, although rare, are nonetheless devastating to the
patients and their families from both a physical and financial point of view.
Accordingly, the FDA has afforded less rigorous requirements for their
approval.
Accordingly, application for approval of disease specific oligos for "orphan"
drugs with "compassionate use" status offer the easiest and fastest way to
demonstrate the safety of our vector and the efficacy of the specific oligos in
combination.
Although this approach does not represent enormous profit potential in the
early stages, it minimizes the expense and time involved in gaining the first
set of approvals. As anyone with any exposure to the regulatory process knows,
generating a history that involves strict adherence to the regulations and
consistency in approach builds trust and facilitates communication with the
regulatory agency. Therefore, an important component of the company's
regulatory strategy involves cycling through a number of applications to the
FDA beginning with the simplest and easiest to win approval.
Company Technology
The technology that became the ssDNA IEV was invented by an MD, Dr. Charles
Conrad, founder of InGene, Inc and a practicing neural oncologist. The
technology was exclusively licensed and developed under a sponsored research
agreement by CYGS. The United States Patent Office (USPTO) has allowed all the
claims and the first ssDNA IEV patent is scheduled to be issued in August of
1999. Patent filings including co-inventions by CYGS scientists and Dr.
Conrad are in process. The company has also initiated work on additional
technologies.
Item 2. Management's Discussion and Analysis or Plan of Operation
The first obvious market target for our delivery vector comprises those
companies who own the rights to patented oligos with therapeutic potential.
Their initial interest would be in testing the combined technologies with a
view to commercialization.
The next target would be the major pharmaceutical manufacturers who might
already have options on oligos and are looking for a way to bring value to that
property with delivery technology. These would necessarily be firms with a long
view as antisense gene therapy has the potential to severely impact the
revenues now generated by treating symptoms for conditions that can be
corrected or eliminated with the new biotechnology.
Strategic alliances are the rule rather than the exception in the biotech world
as mentioned before. Virtually every technology invented must be combined with
another technology to comprise a useable product. These combinations are
generally effected through M&A or strategic alliances.
Sometimes the alliances are more intended to match financing to innovation than
to match complimentary technologies. Each alliance has a valuable role in the
biotechnology arena.
Initial contact has been made by various firms that may result in a strategic
alliance.
Thus far the major role of management has been to obtain the funding for the
research, monitoring the progress, husbanding intellectual property, and
development of the technology.
1) The decision was made early on that equity funding would be the primary
source with an eye to grants whenever possible. Debt has not been an option.
2) The management team has successfully kept the G&A extremely low and
dedicated the lions share of available funds for research and development.
3) The Company has vigorously pursued prosecution of patents for both its
licensed technology and internally developed technology. The first of such has
been allowed and is scheduled for issue by August, 1999.
4) The combination of Beta Tests and RFP's assures a flow of corroborative data
while new approaches and technologies are tested.
The strategy from this point forward is simple:
1) Provide the ssDNA IEV (the Beta Test Kits to as many respected investigators
as possible at cost so that they can demonstrate the efficacy of their own
patented oligos delivered by our patented vector;
2) Complete animal studies to prove in vivo expression in pharmacologically
significant quantities;
3) Identify promising "compassionate use" therapies that qualify for fast-track
FDA approval to demonstrate safety and efficacy in human trials.
This strategy has been initiated and is progressing with deliberate speed. In
addition, the company is posting Requests for Proposals (RFP) from interested
and competent research facilities to conduct in vivo studies from a list
suggested by the CYGS Scientific Advisory Board.
The Company extended an offer to all shareholders to buy back shares of CYGS
Cryogenic Solutions, Inc. freely tradable common stock. The Company will issue
two shares of one year restricted common stock for each share of freely tradable
common stock transferred to the Company between May 16 and August 21, 1999 up
to a total of ten million shares.
Item 3. Description of Property.
The Company's corporate executive offices are located at 1501 Winrock, #9909,
Houston, Texas 77057. The Company has occupied this approximate 1100 square
foot unit since August 1998. The facility is in excellent condition and is
adequate for corporate use. Rent on the facility is $775,00 per month.
Item 4. Security Ownership of Certain Beneficial Owners and Management.
Principal Shareholders
The following table sets forth the name and address, as of December 31,1998,
and the approximate number of Shares of Common Stock of the Company owned of
record or beneficially by each person who owned of record, or was known by the
Company to own beneficially, more than 5% of the Company's Common Stock, and
the name and shareholdings of each Officer and Director, and all Officers and
Directors as a group.
<TABLE>
<S> <C> <C>
Name of Number of Percent of
Beneficial Owner Shares Owned Shares Owned
Skillern Family Partnership 2,000,000 12.5% D,O
2900 South Gessner #504 Common
Houston, Texas 77063
Dell T. Gibson 872,000 5.4% D,O
6524 San Felipe #388 Common
Houston, Texas 77057
Gibson Family Partnership 569,399 3.6%
6524 San Felipe #388 Common
Houston, Texas, 77057
Laurence Mealey 1,000,000 6.2% D,O
6524 San Felipe #388 Common
Houston. TX 77057
Mike Walters, L.P.T. 1,500,000 9.3% D
1220 Blalock #220 Common
Houston, Texas 77055
Malcolm Skolnick, Ph.D. 500,000 3.1%
6524 San Felipe #388 Common
Houston, Texas 77057
Allan Richardson 1,273,303 7.9%
4615 Post Oak Place #298 Common
Houston, Texas 77027
D A Director of Company
O An Officer of Company
Officers and Directors as a group: 5,041,399 37%
Common
</TABLE>
Item 5. Directors, Executive Officers, Promoters and Control Persons.
The following table sets forth certain information with respect to each of the
Directors, executive Officers, key employees and control persons of the
Company.
<TABLE>
<S> <C>
NAME TITLE
Michael Skillern 31 President, Director
Dell Gibson 60 Executive Vice President, Director
Laurence Mealey 65 Vice President, Commercial Development,Director
Lawrence Wunderlich 40 Vice President, Finance
Michael Walters 64 Director
</TABLE>
None of the members of Management is related to the other.
The Company has entered into temporary agreements with the officers of the
Company where they are paid salary of $60,000 each per year. Such payment can
be made in form of cash or restricted common stock at the prevailing ask price
of the stock. The officers are given the option of accruing cash payments until
such time as the Company can afford to make such payments, in the opinion of
the Board of Directors. The payment of stock is based on the closing asked
price of the Company's common stock on the 1st and 15th of each month for the
preceding pay period.
Mr. Skillern attended Texas Tech University before working for the State of
Texas Senate. In 1986 Mr. Skillern worked as Vice President of Finance for
Doctors' Insurance Exchange in Houston, Texas where he arranged credit lines
and partnership financing exceeding $1,000,000. Mr. Skillern is the founder and
currently serves as a Director and President for Cryogenic Solutions, Inc. Mr.
Skillern serves as one of three general partners for Skillern Family
Partnership, LTD which owns 2,000,000 common shares of the Company.
Mr. Gibson graduated from the University of Texas in Austin and has done post
graduate work there. After U.S. Army service in Europe, Mr. Gibson has worked
in a wide variety of Sales, Marketing and Management positions with companies
such as Searle Cardio Pulmonary Instruments and AMSCO Rehab. Mr. Gibson
currently serves as Vice President and Director for Cryogenic Solutions, Inc.
Mr. Gibson owns 872,000 common shares of The Company. Mr. Gibson serves as one
of three general partners for the Gibson family Partnership which owns 569,399
shares of the Company
Mr. Mealey was born in England where he earned his MBE and MBA degrees. He has
over three decades experience as CEO, CFO, or COO with such international
companies as Gulf+Western, The Laird Group in London, and INCO of Canada.
Using "hands on" experience, Mr. Mealey has enabled fledgling companies to
realize their full market as well as increasing efficiency and profitability of
existing companies. His international successes have included activities in
nearly every European country as well as Brazil, Mexico, Canada, and of course,
the USA.
Mr. Wunderlich, 40, worked as a financial consultant at the investment banking
firm of Josephthal and Company. Prior to his employment with Josephthal, Mr.
Wunderlich co-owned The Language Loop a translation and interpreting service
provider to international companies. Mr. Wunderlich is fluent in German and
Russian. Mr. Wunderlich attended the University of Vienna and Manhattan College
in Riverdale, New York.
Michael Walters, L.P.T. is a Licensed Physical Therapist and has been in
private practice for over thirty six years. During this time he has been
associated with the Brook Army Hospital Burn Center in San Antonio, Texas and
trained in that facility. He has also served and trained in the trauma ward in
this same facility. Michael Walters owns 1,500,000 shares of Cryogenic
Solutions, Inc. common stock.
An equity interest in The Company will be made available, on an incentive
basis, to all employees, through an incentive and non-qualified stock option
plan.
Item 6. Executive Compensation
The Company has entered into temporary agreements with the officers of the
Company where they are paid salary of $60,000 each per year. Such payment can
be made in form of cash or restricted common stock at the prevailing ask price
of the stock. The officers are given the option of accruing cash payments until
such time as the Company can afford to make such payments, in the opinion of
the Board of Directors. The payment of stock is based on the closing asked
price of the Company's common stock on the 1st and 15th of each month for the
preceding pay period.
Item 7. Certain Relationships and Related Transactions
Some of the directors of the Company may hold other positions outside of the
employment of the Company. Management is unaware of any other interests of its
officers and directors that may create a potential conflict of interest with
the Company.
Item 8. Legal Proceedings.
The Company has no pending litigation.
Item 9. Market for Common Equity and Related Stockholder Matters.
Principal Market
The Company's securities are traded on the NASD electronic bulletin board,
quotations for which are under the symbol "CYGS." The market makers are:
Herzog, Heine, Geduld, Inc
USCC Trading/A Division of Fleet Securities
WM.V. Frankel & Co. Inc.
Hill Thompson Magid & Co., Inc.
Wein Securities Corp.
Sharpe Capital, Inc.
Knight Securities, Inc.
Waterhouse Securities, Inc.
Advanced Clearing, Inc.
Continental Broker-Dealer Corp.
Brown & Company Securities Corporation
GVR Company
Bid Information
The high and low bid price for the Company's common stock for each quarter
within the last two fiscal years, as received from OTC Bulletin Board follows.
The quotations reflect inter-dealer prices, without retail mark-up, mark-down
or commission and may not represent actual transactions.
<TABLE>
<CAPTION>
High Low
<S> <C> <C>
Fiscal Year Ending December 31, 1998
Fourth Quarter Ending 12/31/98 .54 .51
Third Quarter Ending 09/30/98 .59 .56
Second Quarter Ending 06/30/98 .75 .63
First Quarter Ending 03/31/98 .35 .34
Fiscal Year Ending December 31, 1997
Fourth Quarter Ending 12/31/97 .48 .43
Third Quarter Ending 09/30/97 .20 .20
Second Quarter Ending 06/30/97 .30 .30
First Quarter Ending 03/31/97 .18 .18
</TABLE>
Stockholders
There are approximately 850 shareholders of record for the Company as of the
date of this submission. Dividends To date, the Company has not paid any
dividends on its Common Stock. The payment of dividends, if any, in the future,
rests within the discretion of its Board of Directors and will depend, among
other things, upon the Company's earnings, its capital requirements and its
financial condition, as well as other relevant factors. The Board does not
intend to declare any dividends in the foreseeable future, but instead intends
to retain all earnings, if any, for use in the Company's business operations.
Under Nevada corporate law, dividends may be paid out of surplus or, in case
there is no surplus, out of net profits for the fiscal year in which the
dividend is declared and/or the preceding fiscal year.
Item 10. Recent Sales of Unregistered Securities.
The following tables outlines all securities the Company sold or issued within
the past three years without registering the securities under the Securities
Act.
<TABLE>
<CAPTION>
Date Type of Number of Number of Consideration
Security Securities Issued Investors
<S> <C> <C> <C> <C>
03/25/97 Common 3,687,425 5 Paid par value $.001 for
a total of $3,687.00
to Skillern Family
Partnership, Dell
Gibson, Malcolm
Skolnick, Susan
Kerr, Alex Bernal.
03/11/98 Common 1,283,960 9 Paid par value $.001 for
a total of $1,283.00
to Craig Tomlinson,
Gibson Family Family
Partnership, Malcolm
Skolnick, Mark Wisner,
Charles Conrad, Charles
Boyd, Harry Morgenthal,
William Waldroff,Skillern
Family Partnership.
03/26/98 Common 30,000 1 Paid par value $.001 for
a total of $30.00 to
Allan Richardson.
07/16/98 Common 980,000 7 Paid par value $.001 for
a total of $980.00
to InGene Inc., Ellis
Gibson, Charles Bardwell,
Dell Gibson, Laurence
Mealey, Craig Tomlinson,
Steven Sloat.
</TABLE>
Item 11. Description of Securities
General
The holders of Common Stock are entitled to one vote for each share held of
record on all matters to be voted on by stockholders. There is no cumulative
voting with respect to the election of Directors, with the result that the
holders of more than 50% of the Shares voted for the election of Directors can
elect all of the Directors. The holders of Common Stock are entitled to receive
dividends when, as and if declared by the Board of Directors out of funds
legally available therefor. In the event of liquidation, dissolution or winding
up of the Company, the holders of Common Stock are entitled to share ratably in
all assets remaining available for distribution to them after payment of
liabilities and after provision has been made for each class of stock, if any,
having preference over the Common Stock. Holders of Shares of Common Stock as
such, have no conversion, preemptive or other subscription rights, and there
are no redemption provisions applicable to the Common Stock. The Company has
not issued any Preferred Stock. However, the Preferred Stock, if issued, may
contain special preferences as determined by the Board of Directors of the
Company, including, but not limited to, the bearing of interest and
convertibility into Shares of Common Stock of the Company.
Item 12. Indemnification of Directors and Officers.
The Company and its affiliates may not be liable to its shareholders for errors
in judgment or other acts or omissions not amounting to intentional misconduct,
fraud or a knowing violation of the law, since provisions have been made in the
Articles of Incorporation and By-laws limiting such liability. The Articles of
Incorporation and By-laws also provide for indemnification of the Officers and
Directors of the Company in most cases for any liability suffered by them or
arising out of their activities as Officers and Directors of the Company if
they were not engaged in intentional misconduct, fraud or a knowing violation
of the law.
Item 13. Financial Statements.
<TABLE>
<CAPTION>
BALANCE SHEET
As of June 30, 1999
(UNAUDITED)
<S> <C>
June 30, 1999
ASSETS -------------
Current Assets
Checking/Savings
Coastal $ 10,896.20
Donaldson, Lufkin & Jennette $ 26.56
-------------
Total Checking/Savings $ 10,922.76
Other Current Assets
Petty cash $ 600.00
Federal Income Tax Withheld $ 18.65
Stock Subscriptions $ 21,950.15
-------------
Total Other Current Assets $ 22,568.80
-------------
Total Current Assets $ 33,491.56
Fixed Assets
Research and Development Asset
Computer Equipment $ 2,079.24
Cyrostorage 1,457.91
Freezer 3,000.00
Liquid Nitrogen Container 600.00
Phoenix-Centrifuge/Microscope 2,500.00
Phoenix-Microscope 1,259.91
Phoenix -1/2 Centrifuge 1,982.34
Phoenix Equipment-Incubator 4,319.08
Refrigerator 400.00
Shaker Bath 1,800.00
Shelves for Lab 291.36
Straligene-PCR Machine 8,177.74
VWR-Incubator 2,208.21
VWR-Water Bath/Platform 3,742.23
Acc. Depreciation -15,094.34
-------------
Total Research and Development Asset $ 18,723.68
-------------
Total Fixed Assets $ 18,723.68
Other Assets
Development Stage Expenses
Accounting Fees $ 17,846.27
Advertising 18,288.64
Auto Allowance 2,400.00
Auto Insurance 2,986.58
Auto Mileage Reimbursement 227.50
Auto Repairs 681.12
Auto-Lease 4,773.30
Auto-Miscellaneous Expense 120.17
Auto-Parking/Tolls 435.71
Bank Service Charges 626.23
Cellular Phone Exp 1,266.98
Computer-Related Expenses 3,016.90
Domain Registration 70.00
Fixed Asset
Computer Equipment $ 12,668.73
Office Equipment $ 1,210.54
Telephones, etc. 966.39
-------------
Total Fixed Asset $ 14,845.66
Freight/Delivery 2,765.71
Investigatory Expenses 60.83
Legal Fees 84,329.84
Meals and Entertainment 4,035.77
Medical Insurance 27,528.53
Miscellaneous Exp. 13,765.76
Office Supplies/Expenses 14,688.04
Payroll Expenses 337,666.60
Professional Fees 164,258.04
Registered Agent's Fee 570.00
Rental of Office Space 17,625.00
Telephone 22,462.61
Telephone Message Service 1,084.17
Travel Expenses 8,081.59
Utilities 773.42
-------------
Total Development Stage Expenses $ 767,280.97
Deposits
Office Deposit $ 250.00
Telephone Service 260.00
-------------
Total Deposits $ 510.00
Investments
Quatum Bit Technology $ 10,100.00
Organizational Expenses
Accounting Fees $ 2,595.00
Freight/Delivery 249.00
Legal Fees 3,275.00
Office Supplies/Expenses 185.29
Professional Fees 1,250.00
State Incorporation Fees 340.00
-------------
Total Organizational Expenses $ 7,894.29
-------------
Total Other Assets $ 785,785.26
-------------
TOTAL ASSETS $ 838,000.50
=============
LIABILITIES & EQUITY
Liabilities
Current Liabilities
Accounts Payable $ 35,414.36
Payroll Expense $ 3,339.50
-------------
Total Current Liabilities $ 38,753.86
-------------
Total Liabilities $ 38,753.86
Equity
Corp. Stockholders' Equity:
Common Stock $ 38,162.92
Paid-In Capital 1,251,777.55
Stock Exp.-Issuance/Sales -59,014.13
Stock Warrants 25,000.00
Treasury Stock -60,000.00
Deficit Accumulated During the Development Stage -396,679.70
-------------
Total Equity $ 799,246.64
-------------
TOTAL LIABILITIES & EQUITY $ 838,000.50
=============
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
Six Months Ended June 30, 1999 and
the Period From February 10, 1995
(Date of Inception) to
June 30, 1999
(UNAUDITED)
<S> <C> <C>
Feb. 10, 1995
(Inception) to
June 30, 1999 June 30, '99
Income
Dividend Income $ 1,383.44 $ 1,641.47
------------- -------------
Total Income $ 1,383.44 $ 1,641.47
Expense
Interest Paid $ $ 734.98
Miscellaneous
Other Spring Valley Exp. 10,013.83
Spring Valley Litigation Exp. 7,398.00
Rent 450.00
-------------
Total Miscellaneous $ $ 18,595.81
Research and Development Expense
Bio Research Fees $ 515.12 $ 17,787.62
Biotechnology 100,700.00 235,842.13
Consultants 2,260.75
Depreciation Expense 5,123.60 15,094.34
Freight/Delivery 56.98 71.63
Patent Attorneys' Fees/Exp 51,420.72 66,764.26
Payroll Expenses 0.00 37,615.92
Quantum Optics
Supplies 300.00
Supplies
lab 25.00 3688.71
Travel 0.00 300.00
------------- -------------
Total Research and Development Expense $ 157,841.42 $ 379,725.36
------------- -------------
Total Expense $ 157,841.42 $ 398,321.17
------------- -------------
Net Deficit From Operations $ (156,457.98) $ (396,679.70)
Deficit Accumulated During the Development
Stage at the Beginning of the Period (240,221.72) 0
------------- -------------
Deficit Accumulated During the Development
Stage at the End of the Period $ (396,679.70) $ (396,679.70)
============= =============
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF CASH FLOWS
Six Months Ended June 30, 1999 and
the Period From February 10, 1995
(Date of Inception) to
June 30, 1999
(UNAUDITED)
<S> <C> <C>
Feb. 10, 1995
(Inception) to
June 30, '99 June 30, '99
OPERATING ACTIVITIES
Deficit from Operations $ (156,457.98) $ (396,679.70) Adjustments:
Depreciation Expense 5,123.60 15,094.34
Petty Cash 0.00 -600.00
Stock Subscriptions -19,735.00 (21,950.15)
Accounts Payable 31,666.78 35,414.36
Payroll Expense -2,528.06 3,339.50
Federal Income Tax Withheld -18.65 (18.65)
------------- -------------
Net cash provided by Operating Activities $ (141,949.31) (365,400.30)
INVESTING ACTIVITIES
Research and Development
Asset Acquisition $ (4,800.00) $ (33,818.02)
Development Stage Expenses -268,847.97 (767,280.97)
Deposits: Office Deposit 0.00 -510.00
Investment-Quantum Bit Induction Technolog -10,100.00 (10,100.00)
Organizational Expenses 0.00 -7,894.29
------------ ------------
Net cash provided by Investing Activities $(283,747.97) $ (819,603.28)
FINANCING ACTIVITIES ------------ -------------
Stockholders' Equity: Common Stock $ 20,677.22 $ 38,162.92
Stockholders' Equity: Paid-In Capital 308,292.78 1,251,777.55
Stockholders' Equity: Stock Warrants 25,000.00 25,000.00
Stockholders' Equity: Stock Expenses/Issua -30,581.80 -59,014.13
Stockholders' Equity: Treasury Stock -60,000.00 -60,000.00
------------ -------------
Net cash provided by Financing Activities $ 263,388.20 $1,195,926.34
------------ -------------
Net cash increase for period $(162,309.08) $ 10,922.76
Cash at Beginning of Period 173,231.84 -0-
------------ -------------
Cash at End of Period $ 10,922.76 $ 10,922.76
============ =============
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF STOCKHOLDERS' EQUITY
Six Months Ended June 30, 1999 and
the Period From February 10, 1995
(Date of Inception) to
June 30, 1999
(UNAUDITED)
<S> <C> <C>
Feb. 10, 1995
(Inception) to
June 30, l999 June 30, '99
------------- ------------
Stockholders' Equity: Common Stock $ 20,677.22 $ 38,162.92
Stockholders' Equity: Paid-In Capital 308,292.78 1,251,777.55
Stockholders' Equity: Stock Warrants 25,000.00 25,000.00
Stockholders' Equity: Stock Expense/
Issuance/ sale -30,581.80 -59,014.13
Stockholders' Equity: Treasury Stock -60,000.00 -60,000.00
------------- -------------
Total $ 263,388.20 $1,195,926.34
Deficit from Operations $ (156,457.98) -396,679.70
------------- -------------
Total Stockholders' Equity $ 106,930.22 $ 799,246.64
============= =============
To the Board of Directors and Stockholders of Cryogenic Solutions, Inc.
6524 San Felipe, Suite 388
Houston, Texas 77057
I have audited the accompanying balance sheet of Cryogenic Solutions, Inc. (a
Nevada corporation in the development stage) as of December 31, 1998, and the
related statement of operations, stockholders' equity, and cash flows for the
year then ended and for the period from February 10, 1995 (inception), to
December 31, 1998. These financial statements are the responsibility of the
Company's management. My responsibility is to express an opinion on these
financial statements based on my audit.
I conducted my audit in accordance with generally accepted auditing standards.
Those standards require that I plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. I believe that my audit provides a reasonable basis for my
opinion.
In my opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Cryogenic Solutions, Inc. as
of December 31, 1998, and the results of its operations and its cash flows for
the year then ended, in conformity with generally accepted accounting
principles.
Harrie Marie Pollok Operhall,
A Professional Corporation
Houston, Texas
July 6, 1999
</TABLE>
<TABLE>
<CAPTION>
BALANCE SHEET
As of December31,1998
<S> <C>
ASSETS
Current Assets
Checking/Savings
Coastal $ 173,231.84
-------------
Total Checking/Savings $ 173,231.84
Other Current Assets
Petty cash $ 600.00
Stock Subscriptions $ 2,215.15
-------------
Total Other Current Assets $ 2,815.15
-------------
Total Current Assets $ 176,046.99
Fixed Assets
Research and Development Asset
Computer Equipment $ 79.24
Cyrostorage 1,457.91
Freezer 3,000.00
Phoenix-Centrifuge/Microscope 2,500.00
Phoenix-Microscope 1,259.91
Phoenix -1/2 Centrifuge 1,982.34
Phoenix Equipment-Incubator 4,319.08
Shelves for Lab 291.36
Straligene-PCR Machine 8,177.74
VWR-Incubator 2,208.21
VWR-Water Bath/Platform 3,742.23
Acc. Depreciation -9,970.74
-------------
Total Research and Development Asset $ 19,047.28
-------------
Total Fixed Assets $ 19,047.28
Other Assets
Development Stage Expenses
Accounting Fees $ 8,395.00
Advertising 16,813.87
Auto Allowance 600.00
Auto Insurance 2,986.58
Auto Mileage Reimbursement 227.50
Auto Repairs 681.12
Auto-Lease 1,414.52
Auto-Miscellaneous Expense 120.17
Auto-Parking/Tolls 422.71
Bank Service Charges 516.23
Cellular Phone Exp. 1,266.98
Computer-Related Expenses 1,120.28
Fixed Asset
Computer Equipment $ 12,668.73
Office Equipment $ 1,210.54
Telephones, etc. 966.39
-------------
Total Fixed Asset $ 14,845.66
Freight/Delivery 2,527.21
Investigatory Expenses 60.83
Legal Fees 48,620.90
Meals and Entertainment 3,784.22
Medical Insurance 7,861.53
Miscellaneous Exp. 12,965.93
Office Supplies/Expenses 12,019.22
Payroll Expenses 191,747.34
Professional Fees 134,011.54
Registered Agent's Fee 570.00
Rental of Office Space 12,925.00
Telephone 13,936.19
Telephone Message Service 1,084.17
Travel Expenses 6,620.07
Utilities 288.23
-------------
Total Development Stage Expenses $ 498,433.00
Deposits
Office Deposit $ 250.00
Telephone Service 260.00
-------------
Total Deposits $ 510.00
Organizational Expenses
Accounting Fees $ 2,595.00
Freight/Delivery 249.00
Legal Fees 3,275.00
Office Supplies/Expenses 185.29
Professional Fees 1,250.00
State Incorporation Fees 340.00
-------------
Total Organizational Expenses $ 7,894.29
-------------
Total Other Assets $ 506,837.29
-------------
TOTAL ASSETS $ 701,931.56
=============
LIABILITIES & EQUITY
Liabilities
Current Liabilities
Accounts Payable $ 3,747.58
Payroll Expense $ 5,867.56
-------------
Total Current Liabilities $ 9,615.14
-------------
Total Liabilities $ 9,615.14
Equity
Corp. Shareholder's Equity
Common Stock $ 17,485.70
Paid-In Capital 943,484.77
Stock Exp.-Issuance/Sales -28,432.33
Deficit Accumulated During
the Development Stage -240,221.72
-------------
Total Equity $ 692,316.42
TOTAL LIABILITIES & EQUITY $ 701,931.56
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
Year Ended December 31, 1998 and
the Period from February 10, 1995
(Date of Inception) to December 31, 1998
<S> <C> <C>
Feb. 10,1995
(Inception)to
Dec.31,1998 Dec. 31,1998
Income ------------- -------------
Dividend Income $ 61.08 $ 258.03
------------- -------------
Total Income $ 61.08 $ 258.03
Expense
Interest Paid $ 0.90 $ 734.98
Miscellaneous
Other Spring Valley Exp. 2,374.32 10,013.83
Spring Valley Litigation Exp. 9,475.00 7,398.00
Rent 0.00 450.00
------------- -------------
Total Miscellaneous $ 11,850.22 $ 18,595.81
Research and Development Expense
Bio Research Fees $ 1,500.00 $ 17,272.50
Biotechnology 78,880.79 135,142.13
Consultants 2,260.75
Depreciation Expense 5,535.92 9,970.74
Freight/Delivery 14.64 14.65
Patent Attorneys' Fees/Expenses 12,343.54 15,343.54
Payroll Expenses 33,958.34 37,615.92
Quantum Optics
Supplies 300.00
Supplies
Lab 298.00 3663.71
Travel 0.00 300.00
------------- ------------
Total Research and
Development Expense $ 132,531.23 $ 221,883.94
------------- -------------
Total Expense $ 144,381.45 $ 240,030.75
------------- -------------
Net Deficit From Operations $ (144,320.37) $ (240,221.72)
Deficit Accumulated During the Development
Stage at the Beginning of the Period -95,901.35 0
------------- -------------
Deficit Accumulated During the
Development Stage at the End
of the Period $ (240,221.72) $ (240,221.72)
============= =============
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF CASH FLOWS
Year Ended December 31, 1998 and
the Period from February 10, 1995
(Date of Inception) to December 31, 1998
<S> <C> <C>
Feb. 10,1995
(Inception)to
Dec. 31,1998 Dec. 31,1998
OPERATING ACTIVITIES ------------- -------------
Deficit from Operations $ (144,320.37) $ (240,221.72)
Adjustments:
Depreciation Expense 5,535.92 9970.74
Petty Cash -600.00 -600.00
Stock Subscriptions -2,215.15 -2215.15
Accounts Payable 2,822.58 3747.58
Payroll Expense 5,867.56 5867.56
Other Current Liability:
Loan From Shareholder -56,040.00 -
Net cash provided by Operating ------------- -------------
Activities $ (188,949.46) (223,450.99)
INVESTING ACTIVITIES
Research and Development Asset
Acquisitions $ (5,742.25) $ (29,018.02)
Development Stage Expenses -303,616.41 (498,433.00)
Deposits: Office Deposit -250.00 -510.00
Organizational Expenses -3,000.00 -7,894.29
Net cash provided by Investing ------------- -------------
Activities $ (312,608.66) $ (535,855.31)
FINANCING ACTIVITIES
Long Term Liability: Bill Waldroff $ (15,000.00) $ -
Shareholder's Equity: Common Stock 6,777.81 17,485.70
Shareholder's Equity: Paid-In Capital 664,040.98 943,484.77
Shareholder's Equity:
Stock Expense-Issuance/Sales -14,243.70 -28,432.33
Net cash provided by Financing ------------- -------------
Activities $ 641,575.09 $ 932,538.14
------------- -------------
Net cash increase for period $ 140,016.97 $ 173,231.84
Cash at Beginning of Period 33,214.87 0.00
------------- -------------
Cash at End of Period $ 173,231.84 $ 173,231.84
============= =============
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF STOCKHOLDERS' EQUITY
Year Ended December 31, 1998 and
the Period from February 10, 1995
(Date of Inception) to December 31, 1998
<S> <C> <C>
Feb.10,1995
(Inception)to
Dec.31,1998 Dec.31,1998
----------- -----------
Stockholders' Equity: Common Stock $ 6,777.81 $ 17,485.70
Stockholders' Equity: Paid-In Capital 664,040.98 943,484.77
Stockholders' Equity: Stock Expense/
Issuance/Sale -14,243.70 -28,432.33
------------- -------------
Total $ 656,575.09 $ 932,538.14
Deficit from Operations $ (144,320.37) -240,221.72
------------- -------------
Total Stockholders' Equity $ (512,254.72) $ (692,316.42)
============= =============
</TABLE>
Item 14. Changes In and Disagreements With Accountants on Accounting and
Financial Disclosure.
Item 15. Financial Statements and Exhibits.
CRYOGENIC SOLUTIONS, INC.
(A Development Stage Corporation)
NOTE A-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations
Cryogenic Solutions, Inc. was incorporated in Nevada on February 10, 1995. It
is a biotechnology company focusing on controlled cellular dedifferentiation
and transdifferentiation processes. The Company has acquired the exclusive
rights for applications to a specialized expression vector capable of producing
single stranded DNA (ssDNA) in both eukaryotes and prokaryotes.
Equity funding has been the only source of operational and research support
from the outset. Capital resources have been carefully husbanded with the bulk
of the funding allocated directly to research with administrative overhead held
to a minimum.
Depreciation
Currently, depreciation on the research and development equipment is computed
using the straight-line method over the assets' expected useful lives.
Amortization
The development stage expenses and the organization expenses are being
capitalized for future amortization purposes, once the corporation begins
marketing the results of its research.
Income Tax
The financial statements do not include a provision for income taxes because
the Corporation has incurred net operating losses for all periods to date. The
"Deficit Accumulated During the Development Stage at December 31, 1998" for $
240,221.72 reflects the net operating loss to date.
NOTE B-DEVELOPMENT STAGE OPERATIONS
The Corporation's operations, as explained in Note A, is still devoted to
raising capital, obtaining financing, and providing the funding for the
research described in Notes A and D.
NOTE C-PROPERTY AND EQUIPMENT
Property and equipment are individually identified on the Balance Sheet and are
stated at cost.
Research and Development equipment is being depreciated using the straight-line
method over the estimated useful lives of the respective assets ranging from
three to five years.
The General and Administrative equipment has been set up under the Development
Stage Expenses and no depreciation has been calculated at this time.
NOTE D-RESEARCH AND DEVELOPMENT EXPENSES
The research and the development of the technology that became known as the
ssDNA IEV was invented by an MD, Dr. Charles Conrad, founder of InGene, Inc.
and a practicing neural oncologist. The technology was exclusively licensed and
developed under a sponsored research agreement by the Corporation. The
financial arrangements of the contract are monitored by the Corporation's
management.
The research and development expense categories also reflect the expenses of
the patent attorneys hired to assist the Corporation in the patent filings of
the first ssDNA IEV patent, which is scheduled to be issued in August of l999.
Other patent filings include co-inventions by a Corporation scientist and Dr.
Conrad.
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of l934, the
registrant caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized.
Dell Gibson, Executive Vice President
---------------------------------------
(Registrant)
Date August 30, 1999 By
- ------------------------------------------------------------------------------
(Signature)*
* Print the name and title of each signing officer under his or her signature.
