Xpention Genetics - Recent Material Event
<![CDATA[Aggregate market value of the 39,775,458 shares of common voting stock held
by non-affiliates of the registrant as of September 9, 2008 was $198,877 based
on the bid price at September 9, 2008 of $.005 as reported by OTCBB.
Number of authorized outstanding shares of the registrant's $.001 par value
common stock, as of September 9, 2008: 96,561,790.
2
TABLE OF CONTENTS
PART I
Item 1. Description of Business 4
Item 2. Description of Property 9
Item 3. Legal Proceedings 9
Item 4. Submission of Matters to a Vote of Security Holders 9
PART II
Item 5. Market for Common Equity and Related Stockholder Matters 9
Item 6. Management's Discussion and Analysis or Plan of Operation 10
Item 7. Financial Statements 12
Item 8. Changes in and Disagreements With Accountants on Accounting
and Financial Disclosure 12
Item 8A. Controls and Procedures 12
Item 8B. Subsequent Events 13
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act 13
Item 10. Executive Compensation 15
Item 11. Security Ownership of Certain Beneficial Owners and Management 17
Item 12. Certain Relationships and Related Transactions 17
PART IV
Item 13. Exhibits and Reports on Form 8-K 17
Item 14. Principal Accountant Fees and Services 17
SIGNATURES 19
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PART I
ITEM 1. DESCRIPTION OF BUSINESS.
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COMPANY HISTORY
The Company was incorporated in the State of Nevada, U.S.A., on September
5, 2002.
The Company has been in the exploration or development stage since its
formation and has not yet realized any revenues from its planned operations. It
is primarily engaged in the development of technology acquired under license for
detection of cancer tumors. The prior business plan of mineral exploration has
been abandoned.
The Company owns Xpention, Inc., a wholly owned subsidiary, which has
entered into the Patent and Technology License Agreement with The University of
Texas M.D. Anderson Cancer Center which granted Xpention the exclusive rights to
patented technology for the detection of cancer based on a tumor marker known as
p65 which has been demonstrated to show elevated levels in the blood of canine
and human cancer patients.
BACKGROUND
Cancers
Cancer is a group of diseases characterized by uncontrolled growth and
spread of abnormal cells. If the spread is not controlled, it can result in
death. Cancer is caused by both external factors (tobacco, chemicals, radiation,
and infectious organisms) and internal factors (inherited mutations, hormones,
immune conditions, and mutation that occur from metabolism). Causal factors may
act together or in sequence to initiate or promote cancer development.
About 1,300,000 new cases of cancer were diagnosed in 2003. This year about
550,000 Americans are expected to die of cancer, more than 1,500 people a day.
Cancer is now the number one leading cause of death in the U.S. exceeding even
heart disease in 2004. In the U.S., one out of every four deaths is attributable
to cancer.
The National Institutes of Health estimates overall costs for cancer in the
year 2002 at $171.6 billion. $60.9 billion for direct medical costs (total of
all health expenditures) and $15.5 billion for indirect morbidity costs (cost of
lost productivity due to premature death). An estimated 250,000 new cases of
breast cancer in women and 220,000 new cases of prostate cancer in men occurred
in 2003.
Companion Animal Cancers
There are 65 million pet dogs and nearly 78 million pet cats in the
United States, most of whom are considered part of the family. U.S. expenditure
on veterinary care for pets in 2004 has grown over previous years and is esti-
mated at $8.3 billion with an additional $7.9 billion in supplies and medicine
(APPMA 2003/2004 National Pet Owner's Survey). Companion animals are living
longer and healthier lives but are also experiencing a higher frequency of
disease. Diagnosis of disease occurs more commonly in the late stages of life.
Cancer is the number one cause of natural death in senior dogs and cats and
accounts for nearly 50% of deaths each year. One of the most common forms of
canine cancer, lymphosarcoma, has an annual incidence of approximately 100,000
new cases. Dogs, in fact, experience approximately the same rate of cancer as
humans do, although the prevalence is slightly lower with cats. It is notable
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however, that of the other common geriatric veterinary diseases (e.g. congestive
heart failure, renal failure and diabetes mellitus), cancer is the most
treatable. Treatments include surgery, radiation and chemotherapy. Treatment
success is often a function of how progressed the cancer is at time of
diagnosis.
Given the frequency of these diseases and the lengths to which pet owners
will go to keep their animals healthy and happy into their senior years, the
availability of a simple screening tool and monitoring method that would detect
cancers would be extremely helpful for the future of veterinary medicine. This
test could be used as part of a senior wellness evaluation, or as part of
routine follow-up after detecting symptoms.
INITIAL STUDY OF P65
P65 is a promising marker for the early detection of malignant tumor
formation and a useful tool for monitoring therapy and remission. Levels of p65
also appear to have a direct correlation to tumor mass.
In an initial study performed, at The University of Texas, 67 dogs with
lymphosarcoma and 14 normal dogs were evaluated for p65 levels with the
following findings:
Sensitivity: 0.94
Specificity: 0.70
Predictive Value: 0.83
(elevated p65 & presence of cancer)
Diagnosis Methods
Current methods for diagnosis include costly imaging techniques and
invasive procedures. Evaluation of the success of therapy is accomplished by
using routine biochemistry and hematology testing, imaging and analysis of
symptoms. Early detection and treatment would provide the best odds of attaining
remission.
PLAN OF OPERATION
Through its subsidiary, the Company has the rights to a genetic marker in
the blood called, P65. P65 is a promising marker for the early detection of
malignant tumor formation and a useful tool for monitoring therapy and
remission. Levels of p65 also appear to have a direct correlation to tumor mass/
size. Initially, the Company intended to utilize its licensed technology to
develop an immunological test for the detection of cancer in canines. This
development stage of the test was anticipated to last approximately six to eight
months but has been substantially delayed. If development of the immunological
test is successful, the Company hopes to commercialize the test through
licensing the test to third parties for sale and distribution.
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P65 THERAPEUTIC VACCINE
If tests warrant, the company intends to pursue development of therapeutic
vaccines utilizing RNAi (interference RNA) technology. Any changes in the
genetic dynamic of P65 appear to steer cells toward abnormal growth resulting in
tumor development. The hallmark of P65 alter -ation is a pronounced increase in
the level of gene expression. Other oncogenes such as ERB2 are found to be
elevated primarily in breast cancer. It has been shown that once the level of
ERB2 goes back to normal, cancer growth slows down or disappears.
LICENSE TERMS
The license of Patent #5310653, #5411868, and 5,773,215 obtained by the
company from The University of Texas contains the following material terms:
The Board of Regents of The University of Texas System, an agency of the
State of Texas, through the University of Texas M.D. Anderson Cancer Center, a
component institution of The University of Texas System, hereby grants to
Xpention a royalty-bearing, exclusive license under inventions and discoveries
by patent rights or technology rights within the licensed field, to manufacture,
have manufactured, use, import, offer to sell and/or sell licensed products
within licensed territory for use within licensed field. It is subject to the
payment by Xpention to the University of Texas M.D. Anderson Cancer Center of
$50,000, the timely payment of all amounts due under any related sponsored
research agreement between University of Texas M.D. Anderson Cancer Center and
Xpention in effect during the agreement, and is further subject to the following
rights retained by Board of Regents and University of Texas M.D. Anderson Cancer
Center to:
(a) Publish the general scientific findings from research related to
the inventions and discoveries; and
(b) Use the inventions and discoveries for research, teaching,
patient care, and other educationally-related purposes.
EMPLOYEES
The Company is a development stage company and as of May 31, 2008 had one
salaried employee. Upon the completion of its reorganization the Company's
former officers resigned and President and Chief Executive Officer of Xpention
Inc., David Kittrell, became the President and CEO of Xpention Genetics in
February 2005. The Company expects to continue to use consultants, subcontract
labor, attorneys and accountants as necessary and may find a need to engage
additional full-time employees as necessary.
RISK FACTORS
Need For Additional Financing. The Company has very limited funds, and such
funds may not be adequate to develop the Company's current business plan. The
ultimate success of the Company may depend upon its ability to raise additional
capital. If additional capital is needed, there is no assurance that funds will
be available from any source or, if available, that they can be obtained on
terms acceptable to the Company. If not available, the Company's operations will
be limited to those that can be financed with its modest capital.
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Regulation of Penny Stocks. The Company's securities will be subject to a
Securities and Exchange Commission rule that imposes special sales practice
requirements upon broker-dealers who sell such securities to persons other than
established customers or accredited investors. For purposes of the rule, the
phrase "accredited investors" means, in general terms, institutions with assets
in excess of $5,000,000, or individuals having a net worth in excess of
$1,000,000 or having an annual income that exceeds $200,000 (or that, when
combined with a spouse's income, exceeds $300,000). For transactions covered by
the rule, the broker-dealer must make a special suitability determination for
the purchaser and receive the purchaser's written agreement to the transaction
prior to the sale. Consequently, the rule may affect the ability of broker-deal-
ers to sell the Company's securities and also may affect the ability of
purchasers in this offering to sell their securities in any market that might
develop therefore.
In addition, the Securities and Exchange Commission has adopted a number of
rules to regulate "penny stocks." Such rules include Rules 3a51-1, 15g-1, 15g-2,
15g-3, 15g-4, 15g-5, 15g-6, 15g-7, and 15g-9 under the Securities Exchange Act
of 1934, as amended. Because the securities of the Company may constitute "penny
stocks" within the meaning of the rules, the rules would apply to the Company
and to its securities. The rules may further affect the ability of owners of
Shares to sell the securities of the Company in any market that might develop
for them.
Shareholders should be aware that, according to Securities and Exchange
Commission, the market for penny stocks has suffered in recent years from
patterns of fraud and abuse. Such patterns include (i) control of the market for
the security by one or a few broker-dealers that are often related to the
promoter or issuer; (ii) manipulation of prices through prearranged matching of
purchases and sales and false and misleading press releases; (iii) "boiler room"
practices involving high-pressure sales tactics and unrealistic price
projections by inexperienced sales persons; (iv) excessive and undisclosed
bid-ask differentials and markups by selling broker-dealers; and (v) the
wholesale dumping of the same securities by promoters and broker-dealers after
prices have been manipulated to a desired level, along with the resulting
inevitable collapse of those prices and with consequent investor losses. The
Company's management is aware of the abuses that have occurred historically in
the penny stock market. Although the Company does not expect to be in a position
to dictate the behavior of the market or of broker-dealers who participate in
the market, management will strive within the confines of practical limitations
to prevent the described patterns from being established with respect to the
Company's securities.
Lack of Operating History. The Company was formed in 2002 and has had a
limited operating history. The acquisition of a subsidiary holding a license has
provided the Company with a new opportunity for business development which
carries continued special risks inherent in a new business opportunity. The
Company must be regarded as a new or start-up venture with all of the unforeseen
costs, expenses, problems, and difficulties to which such ventures are subject.
No Assurance of Success or Profitability. There is no assurance that the
Company will successfully commercialize its proprietary patented technology.
Even if the Company should successfully commercialize its proprietary patented
technology, there is no assurance that it will generate revenues or profits, or
that the market price of the Company's common stock will be increased thereby.
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Lack of Diversification. Because of the limited financial resources that
the Company has, it is unlikely that the Company will be able to diversify its
operations. The Company's probable inability to diversify its activities into
more than one area will subject the Company to economic fluctuations within a
particular business or industry and therefore increase the risks associated with
the Company's operations.
Dependence upon Management. The Company currently has only one individual
who is serving as its officer and director. The Company will be heavily
dependent upon his skills, talents, and abilities to implement its business
plan.
Indemnification of Officers and Directors. The Nevada Business Corporation
Act provides for the indemnification of its directors, officers, employees, and
agents, under certain circumstances, against attorney's fees and other expenses
incurred by them in any litigation to which they become a party arising from
their association with or activities on behalf of the Company. The Company will
also bear the expenses of such litigation for any of its directors, officers,
employees, or agents, upon such person's promise to repay the Company therefore
if it is ultimately determined that any such person shall not have been entitled
to indemnification. This indemnification policy could result in substantial
expenditures by the Company which it will be unable to recoup.
Director's Liability Limited. The Nevada Business Corporation Act excludes
personal liability of its directors to the Company and its stockholders for
monetary damages for breach of fiduciary duty except in certain specified
circumstances. Accordingly, the Company will have a much more limited right of
action against its directors than otherwise would be the case. This provision
does not affect the liability of any director under federal or applicable state
securities laws.
Dependence upon Outside Advisors. To supplement the business experience of
its officers and directors, the Company employ's accountants, technical experts,
appraisers, attorneys, or other consultants or advisors. The selection of any
such advisors will be made by the Company's President without any input from
stockholders. Furthermore, it is anticipated that such persons may be engaged on
an "as needed" basis without a continuing fiduciary or other obligation to the
Company. In the event the President of the Company considers it necessary to
hire outside advisors, he may elect to hire persons who are affiliates, if they
are able to provide the required services.
Competition. The Company expects to be at a disadvantage when competing
with many firms that have substantially greater financial and management
resources and capabilities than the Company.
No Foreseeable Dividends. The Company has not paid dividends on its common
stock and does not anticipate paying such dividends in the foreseeable future.
Limited Public Market. There is only a limited public market for the
Company's common stock, and no assurance can be given that a market will
continue or that a shareholder ever will be able to liquidate his investment
without considerable delay, if at all. If a market should continue, the price
may be highly volatile. Factors such as those discussed in this "Risk Factors"
section may have a significant impact upon the market price of the securities
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offered hereby. Due to the low price of the securities, many brokerage firms may
not be willing to effect transactions in the securities. Even if a purchaser
finds a broker willing to effect a transaction in these securities, the
combination of brokerage commissions, state transfer taxes, if any, and any
other selling costs may exceed the selling price. Further, many lending
institutions will not permit the use of such securities as collateral for any
loans.
ITEM 2. DESCRIPTION OF PROPERTY
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Since February 2005 the Company has used office space provided by the
Company's officer. The Company does not pay rent for the use of this space. The
Company owns no real property.
ITEM 3. LEGAL PROCEEDINGS
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The Company is not currently a party to any pending legal proceedings, nor
is its property subject to such proceedings as of September 9, 2008.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
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None in fiscal year.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
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The Company's common stock trades on the OTC:BB under the symbol "XPNG.OB"
The range of high, low and close trade quotations for the Company's common stock
by fiscal quarter within the last two fiscal years, as reported by the National
Quotation Bureau Incorporated, was as follows:
HIGH LOW
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Year Ended May 31, 2008
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First Quarter $0.055 $0.024
Second Quarter $0.030 $0.011
Third Quarter $0.015 $0.004
Fourth Quarter $0.005 $0.003
Year Ended May 31, 2007
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First Quarter $0.06 $0.05
Second Quarter $0.03 $0.02
Third Quarter $0.03 $0.03
Fourth Quarter $0.04 $0.04
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The above quotations reflect inter-dealer prices, without retail mark-up,
mark-down, or commission and may not necessarily represent actual transactions.
NUMBER OF HOLDERS
As of May 31, 2008, there were 110 record holders of the Company's common
stock, not counting shares held in "street name" in brokerage accounts which is
unknown. As of May 31, 2008, there were 59,975,833 shares of common stock
outstanding on record with the Company's stock transfer agent, Holladay Stock
Transfer, Inc.
DIVIDENDS
The Company has not declared or paid any cash dividends on its common stock
and does not anticipate paying dividends for the foreseeable future.
SALES OF UNREGISTERED SECURITIES
Subsequent to the periods covered by this report, we issued shares of our
common stock without registering those securities under the Securities Act of
1933, as amended ("Securities Act"). Effective June 30, 2008, we issued
36,585,957 shares of common stock to The Regency Group LLC pursuant to the
conversion of outstanding principal and interest aggregating $128,051.
In each case, we relied on exemptions provided under the Securities Act. We
took steps to see that the investors had available the same type of information
that would be included in a registration statement. Finally, each certificate
representing shares issued pursuant to those exemptions has been inscribed by
the restricted legend required by Rule 144.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
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Forward-Looking Statements
This report contains forward-looking statements that involve risks and
uncertainties. We use words such as anticipate, believe, plan, expect, future,
intend and similar expressions to identify such forward-looking statements. You
should not place too much reliance on these forward-looking statements. Our
actual results are likely to differ materially from those anticipated in these
forward-looking statements for many reasons, including the risks faced by us
described in the Risk Factors section included in this Annual Report on Form
10-KSB.
Plan of Operation
The Company, through its wholly-owned subsidiary, holds the exclusive worldwide
license to a patented technology for the detection of cancer based on a tumor
marker known as "p65" which has been demonstrated to have elevated levels in the
blood of canine and human cancer conditions. The tumor marker "p65" is believed
to be a protein required in the early development of numerous cancers and
appears from early research to provide a strong indication of tumor growth in
both canines and humans. It also appears to have a direct correlation to tumor
size/mass making it a promising marker for both early detection of malignant
tumor formation as well as a useful tool for monitoring therapy and remission.
We plan to develop an immunological test as well as a molecular assay for
detection of cancer in canines. We also plan to develop both immunological and
molecular tests for detection of human cancers as well as therapeutic treatments
and vaccines.
We contract with third party research organizations to conduct our research
activities. During June 2007, we entered into an Assay Revalidation /
Redevelopment Proposal with Future Focus, an independent testing organization.
The project calls for third party validation of the research results presented
in the final report from the University of Texas Health Science Center at San
Antonio ("UTHSCSA") and technology transfer of the current assay plus assay
reformatting and sample analysis. On August 15, 2007, we announced that the
researchers had been unable to replicate the results obtained at UTHSCSA.
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As a result of the revalidation results, we are reviewing our planned research
activities for the development of an immunological canine cancer detection test.
We also continue to evaluate various options for commercialization of products;
however, it is not anticipated that we will generate any revenues from
commercialization of our technology during the next twelve months.
Liquidity and Capital Resources
At of May 31, 2008, our working capital deficit of $669,558 was comprised of
total current assets of $50 consisting of cash and cash equivalents and total
current liabilities of $669,608. This represents a decline in working capital of
$198,383 compared to the deficit of $471,175 at fiscal year end May 31, 2007.
During the year ended May 31, 2008, we consumed working capital while we pursued
our business plan.
Management does not believe that the Company's current capital resources will be
sufficient to fund its operating activity and other capital resource demands
during fiscal year 2009. Our ability to continue as a going concern is
contingent upon our ability to obtain capital through the sale of equity or
issuance of debt, joint venture or sale of assets, and ultimately attaining
profitable operations. There is no assurance that we will be able to
successfully complete any one of these activities.
The report of our registered independent public accountants on our financial
statements at May 31, 2008 contains a qualification about our ability to
continue as a going concern. This qualification is based on our lack of
operating revenue and limited working capital, among other things.
We are presently seeking additional debt and equity financing to provide
sufficient funds for payment of amounts due under research contracts as well as
accrued but unpaid professional fees and administrative expenses and to fund
ongoing research and operations.
We have never received revenue from our operations. We have historically relied
on equity and debt financings to fund our capital resource requirements. We have
experienced net losses since inception. We do not believe that we are a
candidate for conventional debt financing and we have not made arrangements to
borrow funds under a working capital line of credit. We will be dependent on
additional financing to continue our research and development efforts.
All of our investment in research and development activities has been expensed,
and does not appear as an asset on our balance sheet. From inception to May 31,
2008, we have spent $937,601 on our research and development efforts to
commercialize the "p65" technology.
All of our capital resources to date have been provided through the sale of our
equity securities, proceeds from notes payable and convertible debentures, and
advances from related parties. From inception to May 31, 2008, we received
$475,100 in cash through issuance of our common stock. Since we have not
generated any cash from operations, we have relied on sale of equity and
borrowings to fund all of our capital needs.
Our ability to pay accounts payable and accrued expenses and repay borrowings is
dependent upon receipt of new funding from related parties, private placements
or debt financing. Certain related parties have periodically advanced funds to
us to meet our working capital needs. The related parties are under no
obligation to continue these advances. During the year ended May 31, 2008, the
related parties advanced $15,000 to us. These funds are due on demand and do not
accrue interest.
Net cash used in operating activities was $45,257 during the year ended May 31,
2008, compared to $107,522 during 2007. During the year ended May 31, 2008, we
incurred a net loss of $311,983, which included $126,200 in amortization expense
as a result of the debt discount. During the year ended May 31, 2008, accounts
payable and accrued expenses increased by $140,526. During the year ended May
31, 2007, we incurred a net loss of $205,721, which included $2,400 in stock
compensation expense and $8,400 in amortization expense as a result of debt
discount. During the year ended May 31, 2007, accounts payable and accrued
expenses increased by $87,399. Historically, we have reported significant
fluctuations in cash usage, as the timing of our cash payments is typically
dependent upon cash provided by financing activities.
During the years ended May 31, 2008 and 2007, the Company did not receive or use
funds in its investing activities.
Net cash provided by financing activities during the year ended May 31, 2008,
was $20,600, compared to $113,000 during 2007. We received proceeds of $5,600
from a convertible bridge loan from The Regency Group LLC (Regency Group) during
the year ended May 31, 2008. We also received advances from related parties of
$15,000 during fiscal year 2008. During the year ended May 31, 2007 we received
loan proceeds of $8,000 from Regency Group and we also received proceeds of
$30,000 from the sale of convertible debt, Also during 2007 we received cash
proceeds of $75,000 from the issuance of 2,250,000 shares of common stock.
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During the year ended May 31, 2008, we modified the terms and conditions of
previous borrowings from Regency Group. As we were unable to retire the debt as
of the maturity dates, we negotiated an extension of the due dates. As
additional consideration for the extensions, all of the Regency Group notes
payable were amended to include conversion terms that allow all or part of the
borrowings to be converted into common stock of the Company at a rate of $0.0035
per share. Effective June 30, 2008, Regency Group converted the outstanding
balances into 36,585,957 shares of common stock.
Results of Operations - Year Ended May 31, 2008 Compared to the Year Ended May
31, 2007
We are considered a development stage company for accounting purposes, since we
have not received any revenues from operations. We are unable to predict with
any degree of accuracy when that situation will change. We expect to incur
losses until such time, if ever, as we begin generating revenue from operations.
For the year ended May 31, 2008, we recorded a net loss of $(311,983) or $(0.01)
per share, compared to a 2007 net loss of $(205,721) or $(0.00) per share, an
increased loss of $106,262. During the year ended May 31, 2008, we restructured
our debt such that we recognized additional interest expense, as discussed
below.
Research and development costs decreased by $8,600 to $28,065 during the year
ended May 31, 2008, compared to $36,665 incurred during the year ended May 31,
2007. The costs incurred during 2008 represent third party testing costs
incurred to revalidate the results of the research report from UTHSCSA. Our use
of third party research and testing partners can result in variations in the
expenses reported in each period.
General and administrative expenses decreased by $4,699 to $149,741 for the year
ended May 31, 2008, compared to $154,440 during 2007. The primary components of
general and administrative expense are costs accrued for compensation,
professional fees associated with our status as a public company, and the
premium costs of directors and officers insurance. There were no significant
changes in the nature of these activities in 2008 compared to 2007.
Interest expense, including the amortization of debt discount, increased to
$134,177 for the year ended May 31, 2008 compared to $14,616 for 2007. The
increase of $119,561 includes the amortization of debt discount related to the
beneficial conversion feature included in the restructuring of the borrowings
from Regency Group. In the debt restructuring, we granted conversion rights at
$0.0035 per share. For accounting purposes, the value of the rights was
calculated and additional interest expense was recorded to recognize that value.
The additional interest expense is a non-cash item and does not affect our
liquidity.
ITEM 7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
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Please refer to pages F-1 through F-15.
ITEM 8. CHANGES IN AND DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
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None
ITEM 8A. CONTROLS AND PROCEEDURES
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The Company carried out an evaluation, under the supervision and with the
participation of the Company's President and Chief Financial Officer, of the
effectiveness of the design and operation of the Company's disclosure controls
and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under
the Securities Exchange Act of 1934, as amended (the "Exchange Act") as of the
period included in this report. Based upon such evaluation, such officers have
concluded that the Company's disclosure controls and procedures are effective in
alerting them, on a timely basis, to material information relating to the
Company require to be included in this Form 10-KSB.
There have been no significant changes to the Company's internal controls
over financial reporting that have materially affected, or are reasonably likely
to materially effect, the Company's internal controls over financial reporting
during the most recent quarterly period.
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ITEM 8B. SUBSEQUENT EVENTS
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Subsequent to May 31, 2008, the Company received cash advances totaling
$22,500 from a stockholder to cover operating expenses. The advances are
non-interest bearing and are due upon demand.
Subsequent to May 31, 2008, the Company received a cash advance totaling
$6,250 from a related party to cover operating expenses. The advance is
non-interest bearing and is due upon demand.
Effective June 30, 2008, Regency Group converted principal of $113,600 and
accrued interest of $14,451 into 36,585,957 shares of common stock.
On July 25, 2008, stockholders holding a majority of shares entitled to
vote authorized a reverse stock split of our outstanding common stock in the
range of from 1:10 to 1:20 (or more plainly stated, the range would be as low as
from one new share to be exchanged for ten existing shares to as high as one new
share to be exchanged for twenty existing shares), as determined in the sole
discretion of the Board of Directors. Our Board will have the discretion to
elect, as it determines to be in the best interests of our Company and our
stockholders, to affect the reverse split at any exchange ratio within the range
at any time before our 2008 annual stockholder meeting.
Similarly, stockholders holding a majority of shares authorized the Board
to change the Company's name to Cancer Detection Corporation.
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
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WITH SECTION 16(a)
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The following table lists the executive offices and directors of the
Company as of May 31, 2008:
NAME Age POSITION HELD TENURE
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David Kittrell 56 President, CEO, CFO, Director Since February 2005
The director named above will serve until the next annual meeting of the
Company's stockholders. Thereafter, directors will be elected for one-year terms
at the annual stockholders' meeting. Officers will hold their positions at the
pleasure of the board of directors, absent any employment agreement, except that
David Kittrell has a five year employment agreement (from November 1, 2004) at
$8,000 per month. There is a bonus of $96,000 due if and when the Company earns
$1 million net profit. The contract provides for a severance payment of two
times annual salary for termination other than cause. There is no arrangement or
understanding between the directors and officers of the Company and any other
person pursuant to which any director or officer was or is to be selected as a
director or officer.
The directors of the Company will devote such time to the Company's affairs
on an "as needed" basis, but less than 20 hours per month. As a result, the
actual amount of time which they will devote to the Company's affairs is unknown
and is likely to vary substantially from month to month.
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BIOGRAPHICAL INFORMATION
DAVID KITTRELL, President
Mr. Kittrell received his B.A. in Economics from Davidson College in North
Carolina in 1974. He received his Master of Arts in Economics from the
University of Miami in 1978. Mr. Kittrell held various positions with SunTrust
Bank in Florida, including, Management Associate, Credit Department; Vice
President, International Division; Vice President and Manager, Real Estate
Administration Department; Vice President, Commercial Real Estate Finance
Department; Senior Vice President, Special Assets Group; Senior Vice President
and Manager, Real Estate Finance; and Executive Vice President and Chief Credit
Officer, Credit Administration Division (1978-1997). From 1999 to 2001, he was a
Broker Associate with Coldwell Banker Residential Brokerage in Colorado. Since
2001, Mr. Kittrell has been a Managing Broker with Coldwell Banker Residential
Brokerage in Colorado.
COMPLIANCE WITH SECTION 16(A) OF EXCHANGE ACT
Section 16(a) of the Exchange Act requires the Company's officers and
directors, and certain persons who own more than 10% of a registered class of
the Company's equity securities (collectively, "Reporting Persons"), to file
reports of ownership and changes in ownership ("Section 16 Reports") with the
Securities and Exchange Commission (the "SEC"). Reporting Persons are required
by the SEC to furnish the Company with copies of all Section 16 Reports they
file. The Company is reviewing Section 16a to determine if any reporting
compliance was missed.
Based solely on its review of the copies of such Section 16 Reports
received by it, or written representations received from certain Reporting
Persons, no persons were required to file forms pursuant to Section 16(a):
failed to file although there appears to have been no late filing.
14
ITEM 10. EXECUTIVE COMPENSATION
-------------------------------
DIRECTOR COMPENSATION
Directors received no cash compensation for their service to the Company as
directors, but can be reimbursed for expenses actually incurred in connection
with attending meetings of the Board of Directors.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE OF DIRECTORS
------------------------------------ -------------- -------------- ----------------- ---------------- -------------------
<S> <C> <C> <C> <C> <C>
Name Annual Meeting Fees Consulting Number of Number of
Retainer ($) Fees/Other Fees Shares (#) Securities
Fees ($) ($) Underlying
Options SARS (#)
------------------------------------ -------------- -------------- ----------------- ---------------- -------------------
Director, David Kittrell $0 $0 $0 0 0
------------------------------------ -------------- -------------- ----------------- ---------------- -------------------
</TABLE>
EXECUTIVE OFFICER COMPENSATION
David Kittrell, director, will serve until the next annual meeting of the
Company's stockholders. Thereafter, directors will be elected for one-year terms
at the annual stockholders' meeting. Officers will hold their positions at the
pleasure of the board of directors, absent any employment agreement, except that
David Kittrell has a five year employment agreement (from November 1, 2004) at
$8,000 per month. There is a bonus of $96,000 due if and when the Company earns
$1 million net profit. The contract provides for a severance payment of two
times annual salary for termination other than cause. There is no arrangement or
understanding between the directors and officers of the Company and any other
person pursuant to which any director or officer was or is to be selected as a
director or officer.
The following table and notes set forth the annual cash compensation paid
to officers of the Company.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE OF EXECUTIVES
--------------------------- --------- ------------ --------------- -------------------- ---------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Name & Principal Position Fiscal Annual Annual Bonus Awards Other Restricted Securities
Year Salary ($) ($) Annual Stock Award(s) Underlying
Compensation ($) ($) Options/ SARS
(#)
--------------------------- --------- ------------ --------------- -------------------- ---------------- ----------------
David Kittrell, President 2006 $96,000(1) 0 0 0 0
2007 $96,000(1) 0 0 0 0
2008 $96,000(1) 0 0 0 0
--------------------------- --------- ------------ --------------- -------------------- ---------------- ----------------
</TABLE>
(1) Amounts accrued pursuant to employment agreement. No amounts were paid to
Mr. Kittrell in any year.
Option/SAR Grants Table (None)
15
Aggregated Option/SAR Exercises in Last Fiscal Year an FY-End Option/SAR value
(None)
Long Term Incentive Plans - Awards in Last Fiscal Year
(None)
WARRANTS
The following table sets forth information with respect to options to
purchase common stock of the Company granted during fiscal year ended May 31,
2008.
<TABLE>
<CAPTION>
Non-Qualified Options
--------------------- ---------------------- ----------------- -------------- --------------------- ---------------------
<S> <C> <C> <C> <C> <C>
Name Date Issued Number Issued Exercise Expiration Date Consideration
Price
--------------------- ---------------------- ----------------- -------------- --------------------- ---------------------
None
</TABLE>
<TABLE>
<CAPTION>
Aggregated Option/SAR Exercises in Last Fiscal Year
and FY-End Option/SAR value
<S> <C> <C> <C> <C>
Name Shares Acquired Value Realized Number of Securities Value of Unexercised
on Exercise (#) ($) Underlying Unexercised In the Money
Option/SARs at FY-End (#) Options/SARs at
Exercisable / Unexercisable FY-End ($)
Exercisable /
Unexercisable
--------------------------------------------------------------------------------------------------------
None
</TABLE>
No other compensation not described above was paid or distributed during
the last fiscal year to the executive officers of the Company. There are no
compensatory plans or arrangements, with respect to any executive office of the
Company, which result or will result from the resignation, retirement or any
other termination of such individual's employment with the Company or from a
change in control of the Company or a change in the individual's
responsibilities following a change in control.
16
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
-----------------------------------------------------------------------
The following table sets forth, as of the date of this Report, the number
of shares of common stock owned of record and beneficially by executive
officers, directors and persons who hold 5.0% or more of the outstanding common
stock of the Company as of September 9, 2008. Also included are the shares held
by all executive officers and directors as a group.
SHAREHOLDERS/ NUMBER OF SHARES OWNERSHIP
BENEFICIAL OWNERS PERCENTAGE
---------------------------------------------------------------------------
David Kittrell 14,300,000 14.8%
10965 Elizabeth Drive
Conifer, CO 80433
The Regency Group, LLC. 36,585,957 37.89%
James Coutris 5,900,375 6.11%
1210 Bassett Road
Westlake, OH 44145
All directors and executive
officers as a group (1 person) 14,300,000 14.8%
Each principal shareholder has sole investment power and sole voting power
over the shares.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
-------------------------------------------------------------
None
PART IV
ITEM 13. EXHIBITS
-----------------
Exhibits:
31 Sarbanes-Oxley Certification
32 Sarbanes-Oxley Certification
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
-----------------------------------------------
The Company's Board acts as the audit committee and had no "pre-approval
policies and procedures" in effect for the auditors' engagement for the audit
year 2008 and 2007. All services of the independent registered auditing firm
reflected below were approved by the Board.
Stark Winter Schenkein & Co., LLP ("Stark") is the Company's principal
auditing accountant firm. The Company's Board of Directors has considered
whether the provision of the audit services is compatible with maintaining
Stark's independence. All audit work was performed by the auditors' full time
employees.
17
The following table sets forth fees paid to (or accrued to) Stark Winter
Schenkein & Co., LLP for the years ended May 31, 2008 and 2007.
2008 2007
---------- ----------
Audit Fees $21,738 $16,950
Audit Related Fees 0 2,250
Tax Fees 0 0
All Other Fees 0 0
---------- -----------
Total Fees $21,738 $19,200
========== ===========
INDEX
Form 10-KSB
Regulation Consecutive
S-K Number Exhibit Page Number
---------- ------------------------- -------------------------
3.1 Articles of Incorporation Incorporated by reference
to Registration Statement
Form 10SB12G #333-107179
3.2 Bylaws Incorporated by Reference
to Registration Statement
Form 10SB12G #333-107179
18
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Shareholders and Board of Directors
Xpention Genetics, Inc.
We have audited the accompanying balance sheets of Xpention Genetics, Inc. (a
development stage company) as of May 31, 2008 and 2007, and the related
statements of operations, stockholders' (deficit), and cash flows for the years
then ended, and for the period from October 13, 2004 (inception) to May 31,
2008. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audits 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. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Xpention Genetics, Inc. (a
development stage company) as of May 31, 2008 and 2007, and the results of its
operations, and its cash flows for the years then ended, and for the period from
October 13, 2004 (inception) to May 31, 2008, in conformity with accounting
principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company has suffered recurring losses from operations
and has working capital and stockholders' deficits. These factors raise
substantial doubt about the Company's ability to continue as a going concern.
The financial statements do not include any adjustments that might result from
the outcome of this uncertainty.
/s/ Stark Winter Schenkein & Co., LLP
-------------------------------------
Denver, Colorado
September 4, 2008
F-1
<TABLE>
<CAPTION>
XPENTION GENETICS, INC.
(A Development Stage Company)
CONSOLIDATED BALANCE SHEETS
as of May 31, 2008 and 2007
2008 2007
----------------- -----------------
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $ 50 $ 24,707
----------------- -----------------
Total assets $ 50 $ 24,707
================= =================
LIABILITIES AND STOCKHOLDERS' (DEFICIT)
Current liabilities
Accounts payable and accrued expenses $ 149,664 $ 113,115
Accrued compensation 344,000 248,000
Accrued interest 17,344 9,367
Advances from related parties 15,000 -
Notes payable, related party 113,600 108,000
Convertible debt, net of discount 30,000 17,400
----------------- -----------------
Total current liabilities 669,608 495,882
----------------- -----------------
Stockholders' (deficit)
Preferred stock, $0.001 par value, 10,000,000 shares authorized,
none issued or outstanding - -
Common stock, $0.001 par value, 100,000,000 shares authorized,
59,975,833 shares issued and outstanding 59,976 59,976
Additional paid-in capital 921,124 807,524
(Deficit) accumulated during the development stage (1,650,658) (1,338,675)
----------------- -----------------
Total stockholders' (deficit) (669,558) (471,175)
----------------- -----------------
Total liabilities and stockholders' (deficit) $ 50 $ 24,707
================= =================
The accompanying notes are an integral part of these consolidated financial statements.
F-2
</TABLE>
<TABLE>
<CAPTION>
XPENTION GENETICS, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS
for the years ended May 31, 2008 and 2007,
and for the period from Inception (October 13, 2004) to May 31, 2008
October 13, 2004
(Inception) to
2008 2007 May 31, 2008
--------------------- ---------------------- ----------------------
<S> <C> <C> <C>
Revenues $ - $ - $ -
--------------------- ---------------------- ----------------------
Expenses
Research and development 28,065 36,665 937,601
General and administrative 149,741 154,440 556,113
--------------------- ---------------------- ----------------------
Total expenses 177,806 191,105 1,493,714
--------------------- ---------------------- ----------------------
Operating (loss) (177,806) (191,105) (1,493,714)
--------------------- ---------------------- ----------------------
Other (expense)
Interest expense (7,977) (6,216) (22,344)
Amortization of debt discount (126,200) (8,400) (134,600)
--------------------- ---------------------- ----------------------
Total other (expense) (134,177) (14,616) (156,944)
--------------------- ---------------------- ----------------------
Net (loss) $ (311,983) $ (205,721) $ (1,650,658)
===================== ====================== ======================
Basic and diluted:
(Loss) per share $ (0.01) $ (0.00) $ (0.03)
===================== ====================== ======================
Weighted average shares outstanding 59,975,833 57,852,408 53,182,698
===================== ====================== ======================
The accompanying notes are an integral part of these consolidated financial statements.
F-3
</TABLE>
<TABLE>
<CAPTION>
XPENTION GENETICS, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' (DEFICIT)
for the period from Inception (October 13, 2004) to May 31, 2008
(Deficit)
Accumulated
Number of Par Value of Additional During the
Common Common Paid in Development
Shares Shares Capital Stage Total
-------------- -------------- -------------- -------------- ---------------
<S> <C> <C> <C> <C> <C>
October 13, 2004 (Inception) - $ - $ - $ - $ -
Stock issued for cash at inception 14,300,000 14,300 (14,200) - 100
Recapitalization, Bayview merger 42,542,500 42,543 (42,543) - -
Net (loss) - - - (156,750) (156,750)
------------------------------------------------------------------------------------
Balance, May 31, 2005 56,842,500 56,843 (56,743) (156,750) (156,650)
Common stock issued for cash 333,333 333 399,667 - 400,000
Common stock issued for services 450,000 450 368,550 - 369,000
Net (loss) - - - (976,204) (976,204)
------------------------------------------------------------------------------------
Balance, May 31, 2006 57,625,833 57,626 711,474 (1,132,954) (363,854)
Common stock issued for services 100,000 100 2,300 - 2,400
Beneficial conversion on debt - - 21,000 - 21,000
Common stock issued for cash 2,250,000 2,250 72,750 - 75,000
Net (loss) - - - (205,721) (205,721)
------------------------------------------------------------------------------------
Balance, May 31, 2007 59,975,833 59,976 807,524 (1,338,675) (471,175)
Beneficial conversion on debt - - 113,600 - 113,600
Net (loss) - - - (311,983) (311,983)
------------------------------------------------------------------------------------
Balance, May 31, 2008 59,975,833 $ 59,976 $ 921,124 $(1,650,658) $ (669,558)
====================================================================================
The accompanying notes are an integral part of these consolidated financial statements.
F-4
</TABLE>
<TABLE>
<CAPTION>
XPENTION GENETICS, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
for the years ended May 31, 2008 and 2007,
and for the period from inception (October 13, 2004) to May 31, 2008
October 13, 2004
(Inception) to
2008 2007 May 31, 2008
----------------- ----------------- -------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net (loss) $ (311,983) $ (205,721) $ (1,650,658)
----------------- ----------------- -------------------
Adjustments to reconcile net (loss) to
net cash (used in) operating
activities:
Stock based compensation - 2,400 371,400
Amortization of debt discount 126,200 8,400 134,600
Changes in operating assets and liabilities:
Accounts payable and accrued expenses 140,526 87,399 511,008
----------------- ----------------- -------------------
Total adjustments 266,726 98,199 1,017,008
----------------- ----------------- -------------------
Cash flows (used in) operating activities (45,257) (107,522) (633,650)
----------------- ----------------- -------------------
Cash flows from investing activities:
----------------- ----------------- -------------------
Cash flows (used in) investing activities - - -
----------------- ----------------- -------------------
Cash flows from financing activities:
Proceeds from note payable 5,600 8,000 113,600
Proceeds from convertible debt - 30,000 30,000
Advances from related parties, net 15,000 - 15,000
Proceeds from issuance of common stock - 75,000 475,100
-------------------------------------------------------------
Cash flows provided by financing activities 20,600 113,000 633,700
-------------------------------------------------------------
Net (decrease) increase in cash and equivalents (24,657) 5,478 50
Cash and cash equivalents, beginning of period 24,707 19,229 -
-------------------------------------------------------------
Cash and cash equivalents, end of period $ 50 $ 24,707 $ 50
=============================================================
Supplemental cash flow information:
Income taxes paid $ - $ - $ -
=============================================================
Interest paid (returned) $ - $ (1,493) $ 5,000
=============================================================
The accompanying notes are an integral part of these consolidated financial statements.
F-5
</TABLE>
XPENTION GENETICS, INC. AND SUBSIDIARY
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
May 31, 2008 and 2007
NOTE 1. ORGANIZATION, BASIS OF PRESENTATION, AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
Organization
Xpention Genetics, Inc. (the "Company") is a Nevada corporation that resulted
from the business combination between Xpention, Inc. and Bayview Corporation
that occurred in March, 2005. For accounting purposes, the date of inception for
the Company is October 13, 2004, the date that Xpention, Inc. was incorporated.
The Company has been in the development stage since its formation and has not
yet realized any revenues from its planned operations. It is engaged in the
biotechnology industry to develop both immunological and molecular tests for
cancer detection in animals and humans as well as therapeutic vaccines and other
treatment methods for both canine and human cancers. The Company's fiscal year
ends on May 31st.
Basis of Presentation
Xpention Genetics, Inc. represents the result of a merger between Bayview
Corporation ("Bayview"), a public company, and Xpention, Inc., a private
company. During March 2005, Bayview issued 14,300,000 shares of its common stock
to the sole shareholder of Xpention, Inc. in exchange for all of the issued and
outstanding common shares of Xpention, Inc. pursuant to an Agreement and Plan of
Reorganization (the "Merger"). In addition, concurrent with the exchange of
shares, Bayview changed its name to Xpention Genetics, Inc.
For accounting purposes, this acquisition of Xpention, Inc. by Bayview, a
non-operating entity, represents a reverse acquisition under which Xpention,
Inc. is recognized as the accounting acquirer. In substance, the Merger was
recorded as a capital transaction by the issuance of 42,542,500 shares of common
stock by the Company for all of the issued and outstanding common shares of
Bayview. No goodwill or other intangible assets were recorded and the historical
financial statements as of and prior to the acquisition date represent the
operations of Xpention, Inc.
Xpention, Inc. (a wholly-owned subsidiary of the Company) was incorporated in
the State of Colorado on October 13, 2004. Since its inception, Xpention, Inc.
has participated in the biotechnology industry to develop both immunological and
molecular tests for cancer detection in animals and humans as well as
therapeutic vaccines and other treatment methods for both canine and human
cancers.
Bayview was incorporated in the State of Nevada, on September 5, 2002. From
inception until February 28, 2005, Bayview was primarily engaged in the
acquisition and exploration of mining properties, but had ceased operations by
February 28, 2005. As of the date of the Merger, Bayview had no assets and no
operations and has been treated as the acquired company for accounting purposes.
F-6
XPENTION GENETICS, INC. AND SUBSIDIARY
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
May 31, 2008 and 2007
Development Stage Company
The Company presents its financial statements in conformity with the accounting
principles generally accepted in the United States of America that apply to
enterprises that are establishing their operations. As a development stage
enterprise, the Company must utilize accounting principles consistent with those
required of an established enterprise, and, in addition, must disclose the
deficit accumulated during the development stage and the cumulative statements
of operations and cash flows from commencement of development stage to the
current balance sheet date.
Basis of Consolidation
The consolidated financial statements include the accounts of the Company and
its wholly-owned subsidiary, Xpention, Inc. All significant intercompany
accounts and transactions have been eliminated in consolidation.
Use of Estimates
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from those
estimates. On a periodic basis, management reviews those estimates, including
those related to allowances for doubtful accounts, loss contingencies for
litigation, income taxes, and projection of future cash flows used to assess the
recoverability of long-lived assets.
Cash and Cash Equivalents
For purposes of balance sheet classification and the statements of cash flows,
the Company considers cash in banks, deposits in transit, and all highly liquid
investments purchased with an original maturity of three months or less to be
cash equivalents.
Per Share Amounts
The Company follows SFAS 128, "Earnings Per Share". Basic earnings (loss) per
common share calculations are determined by dividing net income (loss) by the
weighted average number of shares of common stock outstanding during the year.
Diluted earnings (loss) per common share calculations are determined by dividing
net income (loss) by the weighted average number of common shares and dilutive
common share equivalents outstanding. During the periods when they are
anti-dilutive, common stock equivalents, if any, are not considered in the
computation.
Income Taxes
The Company accounts for income taxes under SFAS 109, "Accounting for Income
Taxes". Temporary differences are differences between the tax basis of assets
and liabilities and their reported amounts in the financial statements that will
result in taxable or deductible amounts in future years.
F-7
XPENTION GENETICS, INC. AND SUBSIDIARY
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
May 31, 2008 and 2007
In accordance with FIN 48 (effective June 1, 2007) which clarifies SFAS 109, the
Company recognizes in its financial statements the impact of any tax position
that more than likely will be sustained in an examination, based on the
technical merits of the position.
Research and Development
Research and development costs are charged to operations when incurred and are
included in operating expenses. The expenses for the years ended May 31, 2008
and 2007 were $28,065 and $36,665, respectively.
Beneficial Conversion Feature of Debt
In accordance with Emerging Issues Task Force ("EITF") No. 98-5 "Accounting for
Convertible Securities with Beneficial Conversion Features or Contingently
Adjustable Conversion Ratios" ("EITF 98-5"), and EITF No. 00-27 "Application of
Issue No. 98-5 to Certain Convertible Instruments" ("EITF 00-27"), the Company
recognizes the value of conversion rights attached to convertible debt
instruments. These rights give the holders the ability to convert the debt
instruments into shares of common stock at a price per share that was less than
the trading price to the public on the day the loan was made to the Company. The
beneficial value is calculated based on the market price of the stock at the
commitment date in excess of the conversion rate of the debt and is recorded as
a discount to the related debt and an addition to additional paid in capital.
The discount is amortized and recorded as interest expense over the life of the
related debt. The aggregate amounts recognized as amortization of debt discount
for the years ended May 31, 2008 and 2007 were $126,200 and $8,400,
respectively.
Revenue Recognition
Revenue from product sales will be recognized when delivery has occurred,
persuasive evidence of an agreement exists, the vendor fee is fixed or
determinable, and no further obligation exists and collectability is probable.
Generally, this will be when title passes on the date of shipment. Cost of
products sold will consist of the cost of raw materials and labor related to the
corresponding sales transaction. When a right of return exists, the Company will
defer revenues until the right of return expires. Revenue from services will be
recognized when service is completed.
Fair Value of Financial Instruments
SFAS 107, "Disclosures About Fair Value of Financial Instruments," requires
disclosure of fair value information about financial instruments. SFAS No. 157,
"Fair Value Measurements" (SFAS 157) defines fair value, establishes a framework
for measuring fair value in generally accepted accounting principles, and
expands disclosures about fair value measurements. Fair value estimates
discussed herein are based upon certain market assumptions and pertinent
information available to management as of May 31, 2008.
The respective carrying value of certain on-balance-sheet financial instruments
approximate their fair values. These financial instruments include cash,
accounts payable and accrued expenses, advances from related parties, notes
F-8
XPENTION GENETICS, INC. AND SUBSIDIARY
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
May 31, 2008 and 2007
payable, and convertible debt. Fair values were assumed to approximate carrying
values for these financial instruments since they are short term in nature and
their carrying amounts approximate fair value, or they are receivable or payable
on demand.
Impairment of Long Lived Assets
The company periodically reviews the carrying amount of long lived assets to
determine whether current events or circumstances warrant adjustments to such
carrying amounts. If an impairment adjustment is deemed necessary, such loss is
measured by the amount that the carrying value of such assets exceeds their fair
value. Considerable management judgment is necessary to estimate the fair value
of assets; accordingly, actual results could vary significantly from such
estimates. Assets to be disposed of are carried at the lower of their financial
statement carrying amount or fair value less costs to sell.
Segment Information
The Company follows SFAS 131, "Disclosure about Segments of an Enterprise and
Related Information". Certain information is disclosed, per SFAS 131, based on
the way management organizes financial information for making operating
decisions and assessing performance. The Company currently operates in one
business segment and will evaluate additional segment disclosure requirements if
it expands operations.
Stock Based Compensation
The Company accounts for equity instruments issued to employees for services
based on the fair value of the equity instruments issued and accounts for equity
instruments issued to other than employees based on the fair value of the
consideration received or the fair value of the equity instruments, whichever is
more reliably measurable.
Effective March 1, 2006, the Company implemented the provisions of SFAS 123(R),
"Share Based Payment," requiring the Company to provide compensation costs for
the Company's stock option plans determined in accordance with the fair value
based method prescribed in SFAS 123, as revised. The Company estimates the fair
value of each stock option at the grant date by using the Black-Scholes
option-pricing model and provides for expense recognition over the service
period, if any, of the stock option.
Prior to March 1, 2006, the Company applied the provisions of SFAS 123,
"Accounting for Stock-Based Compensation," which allowed companies to continue
to follow the intrinsic value method set forth in Accounting Principles Board
Opinion 25, "Accounting for Stock Issued to Employees" ("APB 25") but disclose
the pro forma effects on net income (loss) had the fair value of the options
been expensed.
Recent Accounting Pronouncements
In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for
Financial Assets and Financial Liabilities ("SFAS 159"). Under this standard, an
entity is required to provide additional information that will assist investors
and other users of financial information to more easily understand the effect of
F-9
XPENTION GENETICS, INC. AND SUBSIDIARY
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
May 31, 2008 and 2007
the company's choice to use fair value on its earnings. Further, the entity is
required to display the fair value of those assets and liabilities for which the
company has chosen to use fair value on the face of the balance sheet. This
standard does not eliminate the disclosure requirements about fair value
measurements included in SFAS 157 and SFAS No. 107, Disclosures about Fair Value
of Financial Instruments. SFAS 159 is effective for our fiscal year beginning
June 1, 2008. SFAS 159 is not expected to have a significant impact on our
financial statements.
In December 2007 the FASB issued SFAS No. 141 (revised 2007), Business
Combinations ("SFAS 141R"). This statement replaces SFAS 141, Business
Combinations. The statement provides guidance for how the acquirer recognizes
and measures the identifiable assets acquired, liabilities assumed and any
non-controlling interest in the acquiree. SFAS 141R provides for how the
acquirer recognizes and measures the goodwill acquired in the business
combination or a gain from a bargain purchase. The statement determines what
information to disclose to enable users to be able to evaluate the nature and
financial effects of the business combination. The provisions of SFAS 141R will
be effective for our fiscal year beginning June 1, 2009 and do not allow early
adoption. Management is currently evaluating the impact of adopting this
statement.
In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in
Consolidated Financial Statements (SFAS 160), which will be effective for our
fiscal year beginning June 1, 2009. This standard establishes accounting and
reporting standards for ownership interests in subsidiaries held by parties
other than the parent, the amount of consolidated net income attributable to the
parent and to the noncontrolling interest, changes in a parent's ownership
interest and the valuation of retained non-controlling equity investments when a
subsidiary is deconsolidated. The Statement also establishes reporting
requirements that provide sufficient disclosures that clearly identify and
distinguish between the interests of the parent and the interests of the
non-controlling owners. Management is currently evaluating the impact of
adopting this statement.
In February 2008, FASB Staff Position (FSP) FSP No. 157-2, "Effective Date of
FASB Statement No. 157" (FSP No. 157-2) was issued. FSP No. 157-2 defers the
effective date of SFAS No. 157 to fiscal years beginning after December 15,
2008, and interim periods within those fiscal years, for all nonfinancial assets
and liabilities, except those that are recognized or disclosed at fair value in
the financial statements on a recurring basis (at least annually). Examples of
items within the scope of FSP No. 157-2 are nonfinancial assets and nonfinancial
liabilities initially measured at fair value in a business combination (but not
measured at fair value in subsequent periods), and long-lived assets, such as
property, plant and equipment and intangible assets measured at fair value for
an impairment assessment under SFAS No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets." The partial adoption of SFAS No. 157 on January
1, 2008 with respect to financial assets and financial liabilities recognized or
disclosed at fair value in the financial statements on a recurring basis did not
have a material effect on the Company's consolidated financial statements. The
Company is currently assessing the impact, if any, of SFAS No. 157 relating to
its planned June 1, 2009 adoption of the remainder of the standard.
F-10
XPENTION GENETICS, INC. AND SUBSIDIARY
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
May 31, 2008 and 2007
In March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative
Instruments and Hedging Activities - an Amendment of FASB Statement No. 133
(SFAS 161), which becomes effective on November 15, 2008. This standard changes
the disclosure requirements for derivative instruments and hedging activities.
Entities are required to provide enhanced disclosures about (a) how and why an
entity uses derivative instruments, (b) how derivative instruments and related
hedged items are accounted for under SFAS 133 and its related interpretations,
and (c) how derivative instruments and related hedged items affect an entity's
financial position, financial performance, and cash flows. Management is
currently evaluating the impact of adopting this statement.
In April 2008, the FASB issued FASB Staff Position (FSP) FSP 142-3,
"Determination of the Useful Life of Intangible Assets." This FSP amends the
factors that should be considered in developing renewal or extension assumptions
used to determine the useful life of a recognized intangible asset under FASB
Statement No. 142, "Goodwill and Other Intangible Assets." The intent of this
FSP is to improve the consistency between the useful life of a recognized
intangible asset under Statement 142 and the period of expected cash flows used
to measure the fair value of the asset under FASB Statement No. 141 (Revised
2007), "Business Combinations," and other U.S. generally accepted accounting
principles (GAAP). This FSP is effective for financial statements issued for
fiscal years beginning after December 15, 2008, and interim periods within those
fiscal years. Early adoption is prohibited. The Company does not expect the
adoption of FAS 142-3 to have a material effect on its results of operations and
financial condition.
In May 2008, the FASB issued FASB Staff Position (FSP) No. APB 14-1 "Accounting
for Convertible Debt Instruments That May Be Settled in Cash upon Conversion
(Including Partial Cash Settlement)" (FSP APB 14-1). FSP APB 14-1 requires the
issuer of certain convertible debt instruments that may be settled in cash (or
other assets) on conversion to separately account for the liability (debt) and
equity (conversion option) components of the instrument in a manner that
reflects the issuer's non-convertible debt borrowing rate. FSP APB 14-1 is
effective for fiscal years beginning after December 15, 2008 on a retroactive
basis and will be adopted by the Company in the first quarter of fiscal 2009.
The Company does not expect the adoption of FSP APB 14-1 to have a material
effect on its results of operations and financial condition.
In May 2008, the FASB issued SFAS No. 162, The Hierarchy of Generally Accepted
Accounting Principles (SFAS 162), which becomes effective upon approval by the
SEC. This standard sets forth the sources of accounting principles and provides
entities with a framework for selecting the principles used in the preparation
of financial statements that are presented in conformity with GAAP. It is not
expected to change any of our current accounting principles or practices and
therefore, is not expected to have a material impact on our financial
statements.
There were various other accounting standards and interpretations issued during
2008 and 2007, none of which are expected to a have a material impact on the
Company's financial position, operations or cash flows.
F-11
XPENTION GENETICS, INC. AND SUBSIDIARY
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
May 31, 2008 and 2007
NOTE 2. GOING CONCERN
The accompanying consolidated financial statements have been prepared in
conformity with accounting principles generally accepted in the United States of
America, which contemplates continuation of the Company as a going concern.
The Company is in its development stage and has not yet generated revenues from
operations. It has experienced losses from operations as a result of its
investment necessary to achieve its operating plan, which is long-range in
nature. For the year ended May 31, 2008, the Company incurred a net loss of
$311,983, and has incurred a cumulative net loss since inception of $1,650,658.
At May 31, 2008, the Company had a working capital deficit and stockholders'
deficit of $669,558. These conditions raise substantial doubt about the ability
of the Company to continue as a going concern.
Management does not believe that the Company's current capital resources will be
sufficient to fund its operating activity and other capital resource demands
during fiscal year 2009 and is currently seeking additional resources. The
Company's ability to continue as a going concern is contingent upon its ability
to obtain capital through the sale of equity or issuance of debt, joint venture
or sale of its assets, and ultimately attaining profitable operations.
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.
NOTE 3. NOTES PAYABLE, RELATED PARTY
In November 2004, an unrelated third party lent the Company $100,000 to pay
operating expenses pursuant to a note. This note was originally due on the
earlier of (i) the Company successfully receiving financing in excess of
$1,000,000; or (ii) November 12, 2005. The due date was subsequently extended to
December 31, 2006.
During 2006, the note was acquired by The Regency Group, LLC ("Regency Group")
and additional funds totaling $8,000 were advanced under the terms of a bridge
loan payable on October 9, 2007 or an earlier date if financing of $500,000 was
obtained.
In October 2007, additional funds totaling $5,600 were advanced to the Company
by Regency Group under the terms of a convertible bridge loan. As additional
consideration, the terms of the two earlier borrowings were modified to coincide
with the terms and conditions of the new borrowing. The loan was originally
payable on December 1, 2007 or an earlier date if financing of $1,000,000 was
obtained. The due dates of all the notes payable to Regency Group were
subsequently extended to January 31, 2008, and then again to April 30, 2008. In
connection with the extension of due dates, all of the loans were amended to
include conversion terms that allow all or part of the borrowings to be
converted into common stock of the Company at a rate of $0.0035 per share.
Effective June 30, 2008, Regency Group converted principal of $113,600 and
accrued interest of $14,451 into 36,585,957 shares of common stock.
F-12
XPENTION GENETICS, INC. AND SUBSIDIARY
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
May 31, 2008 and 2007
The Company is required to recognize the value of conversion rights attached to
the notes payable. These rights give the holders the ability to convert the
notes payable into shares of common stock at a price less than the quoted market
value of the common stock. For accounting purposes, the Company allocated
$113,600 to the value of the beneficial conversion feature based on its
intrinsic value and recorded that amount as a debt discount and an addition to
paid in capital. The debt discount was recorded as interest expense at the date
the conversion feature became effective. Accordingly, the Company recorded
$113,600 of interest expense related to the beneficial conversion feature during
the year ended May 31, 2008.
Interest on all these notes accrues at the rate of 5% per annum and aggregated
$5,577 during the year ended May 31, 2008 and $5,256 during the year ended May
31, 2007.
NOTE 4. CONVERTIBLE DEBT
Effective January 5, 2007, the Company issued convertible debentures in the
aggregate principal amount of $30,000. The debentures bear interest at 8% per
annum and were originally due on January 5, 2008. The due date was subsequently
extended, as discussed below. The debenture holders may convert the principal
and accrued interest into the Company's common stock at a rate of $0.01 per
share. Regency Group holds $15,000 of the convertible debt.
In accordance with EITFs No. 98-5 and No. 00-27, the Company is required to
recognize the value of conversion rights attached to the convertible debentures.
These rights give the holders the ability to convert the convertible debentures
into shares of common stock at a price of $0.01 per share, which was less than
the quoted market value of the common stock on January 5, 2007 of $0.017 per
share. When the debt was issued, the Company allocated $21,000 to the value of
the beneficial conversion feature based on its intrinsic value and recorded that
amount as a debt discount and an addition to paid-in capital. The debt discount
has been amortized as interest expense over the one year life of the debentures.
During the years ended May 31, 2008 and 2007, respectively, the Company recorded
$12,600 and $8,400 of amortization expense related to the debentures.
At May 31, 2008 and 2007 respectively, the balance of these convertible
debentures is as follows:
2008 2007
---------- ----------
Convertible debt, principal amount $ 30,000 $ 30,000
Less debt discount (21,000) (21,000)
---------- ----------
Subtotal 9,000 9,000
Accumulated amortization 21,000 8,400
---------- ----------
Total $ 30,000 $ 17,400
========== ==========
The due date of the convertible debentures was extended to April 30, 2008.
Subsequent to May 31, 2008, the Company repaid outstanding principal of $7,500
and extended the due date of $7,500 to September 30, 2008. The due date of the
other $15,000 of convertible debt was extended to December 31, 2008.
F-13
XPENTION GENETICS, INC. AND SUBSIDIARY
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
May 31, 2008 and 2007
NOTE 5. STOCKHOLDERS' (DEFICIT)
Preferred Stock The Company has authorized 10,000,000 shares of preferred stock
with a par value of $0.001. These shares may be issued in series with such
rights and preferences as may be determined by the Board of Directors. Since
inception, the Company has not issued any preferred shares.
Common Stock The Company has authorized 100,000,000 shares of $0.001 par value
common stock. In May 2005 the Board of Directors approved a 13 for 1 forward
stock split. All share and per share amounts presented in these financial
statements have been adjusted to retroactively include the effect of the stock
split.
At inception (October 13, 2004), the Company issued 13,000 shares to its founder
for cash of $100. In conjunction with the business combination between Xpention,
Inc. and Bayview Corporation in March, 2005, Bayview issued 14,300,000 shares of
its common stock in exchange for the 13,000 previously outstanding shares of
Xpention. For accounting purposes, this business combination is treated as a
reverse acquisition of Bayview, and the consolidated company's statement of
stockholders' equity was restated to reflect the issuance of 14,300,000 shares
at inception. Furthermore, the previously outstanding shares of Bayview
(42,542,500) are treated as issued on March 18, 2005 as part of the
recapitalization of the Company. Immediately after the business combination,
there were 56,842,500 shares of common stock outstanding.
On June 15, 2005, the Company entered into a Subscription Agreement with a
private investor for the sale of 333,333 shares of restricted common stock for
cash proceeds of $400,000, or $1.20 per share.
On June 28, 2005, the Company entered into a Consulting Agreement with Dr.
Thomas Slaga for general scientific research assistance. The agreement continued
through May 31, 2006. The Company granted Dr. Slaga 450,000 shares of restricted
common stock as compensation for such services. The shares were valued at
$369,000, their fair market value on the date it was agreed they would be
issued.
On November 15, 2006, the Company authorized and issued an award of 100,000
shares of common stock to its then chief scientific officer as stock
compensation for his service as an officer and director. The services were
valued at $2,400, the fair market value of the stock issued.
On May 3, 2007, the Company entered into a Subscription Agreement with a private
investor for the sale of 2,250,000 shares of restricted common stock for cash
proceeds of $75,000, or $0.0333 per share.
NOTE 6. INCOME TAXES
A reconciliation of the tax provision for 2008 and 2007 at statutory rates is
comprised of the following components:
F-14
XPENTION GENETICS, INC. AND SUBSIDIARY
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
May 31, 2008 and 2007
2008 2007
---------------- ----------------
Tax expense (benefit) at statutory rates $ (106,000) $ (70,000)
Book to tax adjustments:
Amortization of debt discount 43,000 3,000
Net operating loss carry-forward 63,000 67,000
---------------- ----------------
Tax provision $ --- $ ---
================ ================
Deferred tax assets and liabilities represent the estimated future impact of
temporary differences between the financial statement and tax bases of assets
and liabilities. Those items consist of the following as of May 31, 2008 and
2007:
Deferred tax assets: 2008 2007
--------------- ---------------
Net operating loss carry-forwards $ 272,000 $ 242,000
Book to tax adjustments:
Stock for services 126,000 126,000
Accrued compensation 117,000 84,000
--------------- ---------------
Total deferred tax assets 515,000 452,000
Less valuation allowance (515,000) (452,000)
--------------- ---------------
Net deferred tax asset $ ---- $ ----
=============== ===============
Total deferred tax assets and the valuation allowance increased by approximately
$63,000 during 2008.
At May 31, 2008, the Company has tax loss carry-forwards approximating $800,000
that expire at various dates through 2028. At this time, the Company is unable
to determine if it will be able to benefit from its deferred tax asset. There
are limitations on the utilization of net operating loss carry-forwards,
including a requirement that losses be offset against future taxable income, if
any. In addition, there are limitations imposed by certain transactions which
are deemed to be ownership changes. Accordingly, a valuation allowance has been
established for the entire deferred tax asset.
NOTE 7. COMMITMENTS
Effective November 1, 2004, the Company entered into a five year employment
agreement with its President that provides for compensation of $8,000 per month
plus a bonus of $96,000 if and when the Company earns $1,000,000 net profit. The
Company has been unable to make cash payments to the President and, accordingly,
has accrued a liability for the amounts due. As of May 31, 2008, the accrued and
unpaid compensation due to the President was $344,000.
On February 17, 2005, the Company's wholly-owned subsidiary, Xpention, Inc.,
entered into a License and Technology Licensing Agreement with the University of
Texas M.D. Anderson Cancer Center (UTMDACC) to commercialize technology
F-15
XPENTION GENETICS, INC. AND SUBSIDIARY
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
May 31, 2008 and 2007
developed for cancer detection in animals and humans. The Company paid $50,000
for the license which was expensed during the year ended May 31, 2005. The
Agreement calls for a 5.5% royalty to be paid to UTMDACC on the sale of products
utilizing the licensed technology. In addition, payments of $50,000 each are due
upon the first sales to both the veterinary market and human market. The
Agreement expires in February 2020.
On May 28, 2005, the Company entered into a Research Agreement with Genethera
Inc. for research activities for the development of the p65 molecular assay for
humans. The agreement became effective on July 28, 2005, and expired on July 28,
2006, and required payments to Genethera Inc. of $10,000 per month. As of May
31, 2008, the balance due to Genethera Inc. was $110,000, all of which is
included in accounts payable on the accompanying balance sheet.
On July 21, 2005, the Company entered into a Research Agreement with Colorado
State University for research activities in connection with the development of
the p65 immunological test for canines in which CSU will provide canine blood
and tissue specimens for use in clinical trials. The agreement terminated on
July 1, 2006, and required payments to CSU totaling $17,520.
On November 2, 2005, the Company amended its Research Agreement with Colorado
State University. The amendment calls for CSU to collect additional blood
samples for use by the Company in development of a canine cancer detection test
and extends the agreement to November 1, 2006. The Company paid Colorado State
University an additional $15,330 for the work performed pursuant to the
amendment.
On December 1, 2005, the Company entered into a Research Agreement with The
University of Texas Health Science Center at San Antonio ("UTHSCSA") whereby
UTHSCSA agreed to perform research activities for development of an
immunological test for canines. This agreement replaced the Research Agreement
the Company entered into with AMC Cancer Research Center in May 2005 which has
been relinquished by AMC. The agreement with UTHSCSA permitted the Company to
continue its collaboration with Dr. Margaret Hanausek who accepted a faculty
position at UTHSCSA. The Company paid $89,306 to UTHSCSA for work performed
pursuant to the Agreement and the final report was received in May 2007.
During June 2007, the Company entered into an Assay Revalidation / Redevelopment
Proposal with Future Focus, an independent testing organization. The project
calls for third party validation of the research results presented in the final
report from UTHSCSA and technology transfer of the current assay plus assay
reformatting and sample analysis. Total cost of the project was $28,065,
including reimbursement of travel expenses, all of which was recorded during the
year ended May 31, 2008. As of May 31, 2008, the remaining balance due to Future
Focus was $23,765, and was included in accounts payable and accrued expense in
the accompanying balance sheet.
On October 11, 2006, the Company entered into a Corporate Development Consulting
Services Agreement with Innovision Ltd. Innovision shall assist the company
primarily in raising capital as well as other corporate services including
targeting possible acquisitions, identifying potential marketing alliances and
F-16
XPENTION GENETICS, INC. AND SUBSIDIARY
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
May 31, 2008 and 2007
strategic planning and operational support as requested by the Company.
Compensation to Innovision is performance based and consists of commissions paid
on capital funding either in cash or in the form of the Company's stock. As of
May 31, 2008, the Company has not entered into any agreements for debt or equity
financing with sources introduced by Innovision and is not obligated to make any
payments under the Agreement.
NOTE 8. RELATED PARTY TRANSACTION
During the year ended May 31, 2008, the Company received cash advances of
$15,000 from related parties, consisting of one stockholder and one entity
affiliated through common ownership interests, to cover operating expenses. The
advances do not bear interest and are due upon demand.
NOTE 9. SUBSEQUENT EVENTS
Subsequent to May 31, 2008, the Company received cash advances totaling $22,500
from a stockholder to cover operating expenses. The advances are non-interest
bearing and are due upon demand.
Subsequent to May 31, 2008, the Company received a cash advance totaling $6,250
from a related party to cover operating expenses. The advance is non-interest
bearing and is due upon demand.
Effective June 30, 2008, Regency Group converted principal of $113,600 and
accrued interest of $14,451 into 36,585,957 shares of common stock.
On July 25, 2008, stockholders holding a majority of shares entitled to vote
authorized a reverse stock split of our outstanding common stock in the range of
from 1:10 to 1:20 (or more plainly stated, the range would be as low as from one
new share to be exchanged for ten existing shares, to as high as one new share
to be exchanged for twenty existing shares), as determined in the sole
discretion of the Board of Directors. Our Board will have the discretion to
elect, as it determines to be in the best interests of our Company and our
stockholders, to affect the reverse split at any exchange ratio within the range
at any time before our 2008 annual stockholder meeting.
Similarly, stockholders holding a majority of shares authorized the Board to
change the Company's name to Cancer Detection Corporation.
F-17
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
Dated: September 9, 2008
XPENTION GENETICS, INC.
By: /s/ David Kittrell
---------------------------------
David Kittrell
President
DIRECTORS:
By: /s/ David Kittrell
--------------------------------
19
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