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Effective Date 3/31/2012

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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549



FORM 10-Q



x

Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended March 31, 2012

o

Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from _____ to _____

Commission File Number: 000-52238

CELLCYTE GENETICS CORPORATION

(Exact name of registrant as specified in its charter)


Nevada

 

86-1127046

(State or other jurisdiction of incorporation or organization)

 

(I.R.S. Employer Identification No.)

 

 

 

 

 

 

14205 SE 36th Street, Suite 100
Bellevue, Washington

 


98006

(Address of principal executive offices)

 

(Zip Code)

 

 

 

 

 

 

(425) 519-3755

 

 

(Registrant’s telephone number, including are code)

 

 

Indicate by checkmark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes  x   No  o  

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes  x     No o

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

Large accelerated filer o

Accelerated filer o
Non-accelerated filer o (Do not check if a smaller reporting company)

Smaller reporting company x






Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes  o   No  x

Indicate the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date.   82,329,481 shares of common stock outstanding as of May 11, 2012.



- - 2 - -






CELLCYTE GENETICS CORPORATION


Quarterly Report On Form 10-Q

For The Quarterly Period Ended March 31, 2012

FORWARD-LOOKING STATEMENTS

This Form 10-Q for the quarterly period ended March 31, 2012 contains forward-looking statements that involve risks and uncertainties.  Forward-looking statements in this document include, among others, statements regarding our capital needs, business plans and expectations.  Such forward-looking statements involve assumptions, risks and uncertainties regarding, among others, the success of our business plan, availability of funds, government regulations, operating costs, our ability to achieve significant revenues, our business model and other factors.  Any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements.  In some cases, you can identify forward-looking statements by terminology such as “may”, “will”, “should”, “expect”, “plan”, “intend”, “anticipate”, “believe”, “estimate”, “predict”, “potential” or “continue”, the negative of such terms or other comparable terminology.  In evaluating these statements, you should consider various factors, including the assumptions, risks and uncertainties set forth in our Annual Report on Form 10-K for the year ended December 31, 2011 and other reports and documents we have filed with or furnished to the Securities and Exchange Commission.  These factors may cause our actual results to differ materially from any forward-looking statement made in this document.  While these forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding future events, our actual results will likely vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggested herein.  The forward-looking statements in this document are made as of the date of this document and we do not intend or undertake to update any of the forward-looking statements to conform these statements to actual results, except as required by applicable law, including the securities laws of the United States.

__________





2






PART I – FINANCIAL INFORMATION

Item 1.

Financial Statements

The following unaudited interim consolidated financial statements of CellCyte Genetics Corporation are included in this Quarterly Report on Form 10-Q:

Description

Page

Interim Consolidated Balance Sheets as of March 31, 2012 and December 31, 2011:

 3

Interim Consolidated Statements of Operations for the Three Months ended March 31, 2012 and 2011 and for the period from January 4, 2005 (Date of Inception) to March 31, 2012:

 4

Interim Consolidated Statements of Cash Flows for the Three Months ended March 31, 2012 and 2011 and for the period from January 4, 2005 (Date of Inception) to March 31, 2012:

 5

Condensed Notes to Interim Consolidated Financial Statements:

 6

__________



3









CELLCYTE GENETICS CORPORATION

(a Development Stage Company)

CONSOLIDATED BALANCE SHEETS

 

 

 

 

 

 

 

 

 

 

 

 

 

March 31,

 

December 31,

 

 

 

 

2012

 

2011

 

 

 

 

(unaudited)

 

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CURRENT ASSETS

 

 

 

 

 

 

Prepaid expenses and deposits

$

          76,300

 

$

           8,675

 

 

Total Current Assets

 

          76,300

 

 

           8,675

 

 

 

 

 

 

 

 

 

OTHER ASSETS

 

 

 

 

 

 

Furniture and equipment, net of depreciation

 

           4,964

 

 

           7,009

 

Intellectual property, net of amortization

 

          21,846

 

 

          23,722

 

 

Total Other Assets

 

          26,810

 

 

          30,731

 

 

 

 

 

 

 

 

 

TOTAL ASSETS

$

        103,110

 

$

          39,406

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' DEFICIT

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CURRENT LIABILITIES

 

 

 

 

 

 

Accounts payable

$

        606,580

 

$

        597,246

 

Accrued expenses

 

          97,275

 

 

          91,641

 

Due to related parties

 

        140,704

 

 

        140,704

 

Note payable - current portion

 

        254,570

 

 

        254,570

 

 

Total Current Liabilities

 

     1,099,129

 

 

     1,084,161

 

 

 

 

 

 

 

 

 

LONG TERM LIABILITIES

 

 

 

 

 

 

Convertible notes - related party

 

        281,274

 

 

        196,834

 

Note payable - long term portion

 

                -   

 

 

                -   

 

 

Total Long Term Liabilities

 

        281,274

 

 

        196,834

 

 

 

 

 

 

 

 

 

COMMITMENTS AND CONTINGENCIES

 

                -   

 

 

                -   

 

 

 

 

 

 

 

 

 

STOCKHOLDERS' DEFICIT

 

 

 

 

 

 

Common stock, $0.001 par value; 525,000,000 shares authorized,

 

 

 

 

 

 

 

82,329,481 shares issued and outstanding, respectively

 

          82,329

 

 

          82,329

 

Additional paid in capital

 

    11,734,022

 

 

    11,734,022

 

Common stock purchase warrants

 

          49,154

 

 

          49,154

 

Deficit accumulated during the development stage

 

  (13,142,798)

 

 

  (13,107,094)

 

 

Total Stockholders' Deficit

 

    (1,277,293)

 

 

    (1,241,589)

 

 

 

 

 

 

 

 

 

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT

$

        103,110

 

$

          39,406

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See accompanying condensed notes to the interim consolidated financial statements




4







CELLCYTE GENETICS CORPORATION

(a Development Stage Company)

CONSOLIDATED STATEMENTS OF OPERATIONS  (unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

From Inception

 

 

 

 

For the Three Months Ended

 

(January 4, 2005)

 

 

 

 

March 31,

 

to March 31,

 

 

 

 

2012

 

2011

 

2012

 

 

 

 

 

 

 

 

 

 

 

 

REVENUES

 

$

              -   

 

$

              -   

 

$

                 -   

 

 

 

 

 

 

 

 

 

 

 

 

OPERATING EXPENSES:

 

 

 

 

 

 

 

 

 

 

Consulting

 

 

              -   

 

 

              -   

 

 

       1,678,107

 

General and administrative

 

 

        15,587

 

 

        16,449

 

 

       2,542,218

 

Professional fees

 

 

        14,140

 

 

        17,467

 

 

       1,837,598

 

Research, development and laboratory

 

 

              -   

 

 

              -   

 

 

       1,296,619

 

Salaries and benefits

 

 

              -   

 

 

              -   

 

 

       1,457,524

 

Stock-based compensation

 

 

              -   

 

 

              -   

 

 

       3,025,776

 

 

Total Operating Expenses

 

 

        29,727

 

 

        33,916

 

 

     11,837,842

 

 

 

 

 

 

 

 

 

 

 

 

LOSS FROM OPERATIONS

 

 

      (29,727)

 

 

      (33,916)

 

 

    (11,837,842)

 

 

 

 

 

 

 

 

 

 

 

   

OTHER INCOME (EXPENSE)

 

 

 

 

 

 

 

 

   

 

Interest income

 

 

              -   

 

 

              -   

 

 

           32,512

 

Interest and finance charges

 

 

        (5,976)

 

 

      (10,928)

 

 

        (303,179)

 

Impairment of intellectual property

 

 

              -   

 

 

              -   

 

 

        (568,913)

 

Impairment of tenant improvements

 

 

              -   

 

 

              -   

 

 

        (383,535)

 

Gain on extinguishment of debt

 

 

              -   

 

 

              -   

 

 

           53,547

 

Loss on disposal of furniture and equipment

 

              -   

 

 

              -   

 

 

        (135,388)

 

 

Total Other Income (Expense)

 

 

        (5,976)

 

 

      (10,928)

 

 

     (1,304,956)

 

 

 

 

 

 

 

 

 

 

 

   

LOSS BEFORE TAXES

 

 

      (35,703)

 

 

      (44,844)

 

 

    (13,142,798)

 

 

 

 

 

 

 

 

 

 

 

 

INCOME TAXES

 

 

              -   

 

 

              -   

 

 

                 -   

 

 

 

 

 

 

 

 

 

 

 

 

NET LOSS

 

$

      (35,703)

 

$

      (44,844)

 

$

    (13,142,798)

 

 

 

 

 

 

 

 

 

 

 

 

BASIC AND DILUTED NET LOSS

 

 

 

 

 

 

 

 

 

 

PER COMMON SHARE

 

$

          (0.00)

 

$

          (0.00)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

WEIGHTED AVERAGE NUMBER OF  

 

 

 

 

 

 

 

 

 

 

SHARES OUTSTANDING FOR BASIC

 

   

 

 

   

 

 

 

 

 AND DILUTED CALCULATION

 

 

  82,329,481

 

 

  74,556,405

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See accompanying condensed notes to the interim consolidated financial statements





- 5 -







CELLCYTE GENETICS CORPORATION

(a Development Stage Company)

CONSOLIDATED STATEMENTS OF CASH FLOWS  (unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

From Inception

 

 

 

 

 

 

For the Three Months Ended

 

(January 4, 2005)

 

 

 

 

 

 

March 31,

 

to March 31,

 

 

 

 

 

 

2012

 

2011

 

2012

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

          (35,703)

 

$

          (44,844)

 

$

    (13,142,798)

 

Adjustments to reconcile net loss to net cash used by

 

 

 

 

 

 

 

 

 

 

 

operating activities

 

 

 

 

 

 

 

 

   

 

 

 

Amortization of intellectual property

 

 

              1,876

 

 

              1,876

 

 

          124,769

 

 

 

Depreciation of furniture and equipment

 

 

              2,045

 

 

              2,045

 

 

          549,292

 

 

 

Stock-based compensation

 

 

                  -   

 

 

                  -   

 

 

        3,025,776

 

 

 

Non-cash services

 

 

                  -   

 

 

                  -   

 

 

        1,005,082

 

 

 

Amortization of discount on note

 

 

                150

 

 

                150

 

 

              1,350

 

 

 

Warrant issued for legal services

 

 

                  -   

 

 

                  -   

 

 

            46,154

 

 

 

Accounts payable paid with common stock

 

 

                  -   

 

 

                  -   

 

 

          144,103

 

 

 

Non-cash beneficial conversion right

 

 

                  -   

 

 

                  -   

 

 

            36,400

 

 

 

Non-cash impairment of tenant improvements

 

 

                  -   

 

 

                  -   

 

 

          383,535

 

 

 

Non-cash impairment of intellectual property

 

 

                  -   

 

 

                  -   

 

 

          568,913

 

 

 

Expenses paid by stockholder

 

 

                  -   

 

 

                  -   

 

 

            32,755

 

 

 

Accounts payable reduced in lease settlement

 

 

                  -   

 

 

                  -   

 

 

          520,788

 

 

 

Gain on extinguishment of debt

 

 

                  -   

 

 

                  -   

 

 

          (53,547)

 

 

 

Loss on disposal of furniture and equipment

 

 

                  -   

 

 

                  -   

 

 

          135,388

 

Decrease (increase) in assets

 

 

 

 

 

 

 

 

 

 

 

 

Prepaid expenses and deposits

 

 

          (67,625)

 

 

              7,450

 

 

          (76,300)

 

Increase (decrease) in liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Accounts payable

 

 

              9,332

 

 

          (14,121)

 

 

          517,150

 

 

 

Accrued interest

 

 

                  -   

 

 

                  -   

 

 

            82,088

 

 

 

Accrued expenses

 

 

              5,634

 

 

              5,534

 

 

            97,275

 

 

 

 

Net cash used by operating activities

 

 

          (84,291)

 

 

          (41,910)

 

 

      (6,001,827)

 

 

 

 

 

 

 

 

 

 

 

 

 

   

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

 

 

 

   

 

 

 

Intellectual property acquisition

 

 

                  -   

 

 

                  -   

 

 

         (715,528)

 

 

 

Cash from sales of equipment

 

 

                  -   

 

 

                  -   

 

 

          107,465

 

 

 

Furniture and equipment acquisition, net

 

 

                  -   

 

 

                  -   

 

 

      (1,327,070)

 

 

 

Cash acquired on reverse acquisition

 

 

                  -   

 

 

                  -   

 

 

              1,429

 

 

 

 

Net cash provided (used) by investing activities

 

 

                  -   

 

 

                  -   

 

 

      (1,933,704)

 

 

 

 

 

 

 

 

 

 

 

 

 

   

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

 

 

   

 

 

 

Proceeds from issuance of convertible notes

 

 

            84,291

 

 

            41,910

 

 

        1,231,323

 

 

 

Proceeds from convertible note allocated to warrant

 

                  -   

 

 

                  -   

 

 

              3,000

 

 

 

Advances from related party

 

 

                  -   

 

 

                  -   

 

 

          112,625

 

 

 

Payments on note payable

 

 

                  -   

 

 

                  -   

 

 

          (67,306)

 

 

 

Proceeds from sale of common stock

 

 

                  -   

 

 

 

 

 

        6,655,889

 

 

 

 

Net cash provided by financing activities

 

 

            84,291

 

 

            41,910

 

 

        7,935,531

 

 

 

 

 

 

 

 

 

 

 

 

 

   

 

Net increase in cash and cash equivalents

 

 

                  -   

 

 

                  -   

 

 

                  -   

 

 

 

 

 

 

 

 

 

 

 

 

 

   

 

Cash and cash equivalents, beginning of period

 

 

                  -   

 

 

                  -   

 

 

                  -   

 

 

 

 

 

 

 

 

 

 

 

 

 

   

 

Cash and cash equivalents, end of period

 

 $

                  -   

 

$

                  -   

 

$

                  -   

 

 

 

 

 

 

 

 

 

 

 

 

 

   

SUPPLEMENTAL CASH FLOW DISCLOSURES:

 

 

 

 

 

 

 

 

   

 

Income taxes paid

 

$

                  -   

 

$

                  -   

 

$

                  -   

 

Interest paid

 

$

              3,614

 

$

              3,614

 

$

            80,307

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NON CASH INVESTING AND FINANCING ACTIVITES

 

 

 

 

 

 

 

 

Note payable to related party converted to common stock

$

                  -   

 

 $

                  -   

 

 $

            36,400

 

Issuance of note for insurance

 

 $

                  -   

 

 $

                  -   

 

 $

            69,000

 

Issuance of note in exchange for accounts payable

 

 $

                  -   

 

 $

                  -   

 

 $

          275,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See accompanying condensed notes to the interim consolidated financial statements




- 6 -




CELLCYTE GENETICS CORPORATION

(A DEVELOPMENT STAGE COMPANY)

CONDENSED NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2012

(unaudited)



NOTE 1 – DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

CellCyte Genetics Corporation (the “Company”) is in the development stage, as defined by Financial Accounting Standards Board (“FASB”) ASC 915, “Development Stage Entities” and its efforts have been principally devoted to the commercialization of its cell expansion technology since it previously discontinued the discovery and development of stem cell therapeutic products in 2008. To date, the Company has not generated any sales revenues, has incurred ongoing operating expenses and has sustained losses.  Consequently, its operations are subject to all the risks inherent in the establishment of a new business enterprise. 

As shown in the accompanying financial statements, the Company has incurred significant losses since inception and has not generated any revenues to date.  The future of the Company is dependent upon its ability to obtain sufficient financing, demonstration that its bioreactor device can satisfy the cell expansion requirements of research organizations which it has, or will have, collaboration agreements with research organizations, the continued willingness of CCYG stock option holders to exercise their vested options and, ultimately, upon achieving future profitable operations.  These factors, among others, raise substantial doubt about the Company's ability to continue as a going concern.  The accompanying interim consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

The Company follows the accounting guidance outlined in the Financial Accounting Standards Board Codification guidelines. The accompanying unaudited interim consolidated financial statements have been prepared in accordance with generally accepted principles for interim financial information and with the instructions to Form 10-Q of Regulation S-K.  They may not include all information and footnotes required by United States generally accepted accounting principles for complete financial statements.  However, except as disclosed herein, there have been no material changes in the information disclosed in the notes to the financial statements for the year ended December 31, 2011 included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on April 16, 2012.  The interim unaudited financial statements should be read in conjunction with those financial statements included in the Form 10-K.  In the opinion of Management, all adjustments considered necessary for a fair presentation, which unless otherwise disclosed herein, consisting primarily of normal recurring adjustments, have been made. Operating results for the three months ended March 31, 2012 are not necessarily indicative of the results that may be expected for the year ending December 31, 2012.

The Company’s financial statements include certain estimates and assumptions which affect the reported amounts of assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period.  Accordingly, actual results may differ from those estimates.




7






NOTE 2 – INTELLECTUAL PROPERTY

As of December 31, 2011, the Company had $70,002 of capitalized patents. Through March 31, 2012, the Company did not incur any additional costs for its intellectual property. The Company amortizes patents over the remaining life of the patents, which ranges from 6 to 16 years.

Intellectual property at March 31, 2012 and December 31, 2011 is as follows:

 

 

March 31,

 

December 31,

 

 

2012

 

2011

Patents

 

$

70,002 

 

$

70,002 

Accumulated amortization

 

 

(48,156)

 

 

(46,280)

Patents, net

 

$

21,846

 

$

23,722 

NOTE 3 – PROPERTY AND EQUIPMENT

As of March 31, 2012 and December 31, 2011, the Company had a remaining cost basis of $120,745 in laboratory, computer and office equipment. During the three months ended March 31, 2012, the Company did not sell or otherwise dispose of any of its property and equipment.

Property and equipment as of March 31, 2012 and December 31, 2011 are as follows:

 

 

March 31,

 

December 31,

 

 

2012

 

2011

Laboratory equipment

 

$

40,935 

 

$

40,935 

Computer and office equipment

 

 

79,810 

 

 

79,810 

Accumulated depreciation

 

 

(115,781)

 

 

(113,736)

Property and equipment, net

 

$

4,964 

 

$

7,009 


NOTE 4 – COMMITMENTS AND CONTINGENCIES

Promissory Note

During 2009, the Company was in default on its facility lease and had an outstanding lease liability, including operating costs, penalties and interest in the amount of $520,788. Effective August 14, 2009, the Company finalized a lease termination agreement with its landlord whereby the Company executed a promissory note in the amount of $275,000 and agreed to vacate the facility and leave certain of its furniture behind in full settlement of all amounts owing.

On August 25, 2010, the Company entered into a forbearance agreement with its previous landlord whereby the landlord would forbear enforcement of its claims and causes of actions upon the following terms:

1.

A payment of $25,000 on or before December 21, 2010, and



- 8 -






2.

Commencing July 1, 2011 and on the first day of each month thereafter, for a total of six months ending December 1, 2011, a payment of $5,000.

Following the completion of the scheduled payments in 2011, the Company entered into further negotiations with its previous landlord whereby the Company settled the entire amount of principal and interest outstanding on the Note for a final payment of $75,000. This payment was transferred to the Company’s attorney on March 21, 2012 and is reflected as a deposit on the balance sheet at March 31, 2012. A Stipulation and Order of Dismissal was submitted to the Superior Court of Washington on April 7, 2012 and the funds were released to the landlord. Approval of the Court will occur in May 2012. Accordingly, the entire outstanding balance on the Note has been reclassified as a current liability at March 31, 2012 and December 31, 2011.

NOTE 5 – CAPITAL STOCK

Common Stock

The Company has authorized 525,000,000 shares of its common stock, $0.001 par value. The Company had issued and outstanding 82,329,481 shares of its common stock at March 31, 2012 and December 31, 2011, respectively.

During the three month period ended March 31, 2012, the Company did not issue any shares of its common stock for services.

Common Stock Warrants

The Company did not issue any common stock purchase warrants during the three month period ended March 31, 2012. Warrants outstanding are as follows:


 

Warrants
Outstanding

 

Weighted Average
Exercise Price

 

Weighted Average
Remaining Life

 

 

 

 

 

 

Balance, December 31, 2010

919,230

$

0.06 

 

3.62 years 

Warrants issued

-

 

 

 

Warrants exercised

 

-

 

 

Warrants expired

-

 

-

 

 

Balance, December 31, 2011

919,230 

 

0.06 

 

2.62 years

Warrants issued

-

 

-

 

 

Warrants exercised

-

 

 

 

Warrants expired

-

 

                      - 

 

 

Balance,  March 31, 2012

919,230 

$

0.06 

 

2.37 years



- 9 -









Common Stock Options

The Company did not grant any stock options for shares of its common stock during the three months ended March 31, 2012.

The Company’s stock option activity for the three month period ended March 31, 2012 is as follows:

 

Options
Outstanding

 

Weighted Average
Exercise Price

 

Weighted Average
Remaining Life

 

 

 

 

 

 

Balance, December 31, 2010

34,445,000 

$

0.109 

 

3.95 years 

Options granted

19,500,000 

 

0.0113

 

 

Options exercised

 

 

 

Options cancelled and expired

-

 

 

 

Balance, December 31, 2011

53,945,000 

 

0.069 

 

3.63 years

Options granted

-

 

 

 

Options exercised

 

 

 

Options cancelled and expired

 

 

 

Balance, March 31, 2012

53,945,000 

$

0.069 

 

3.38 years


NOTE 6 – BASIC AND DILUTED NET LOSS PER SHARE

The Company computes net income (loss) per common share in accordance with FASB ASC 260, “Earnings Per Share”.   Net income (loss) per share is based upon the weighted average number of outstanding common shares and the dilutive effect of common share equivalents, such as options and warrants to purchase common stock, convertible preferred stock and convertible notes, if applicable, that are outstanding each year.  Basic and diluted earnings per share were the same at the reporting dates of the accompanying financial statements, as including common stock equivalents in the calculation of diluted earnings per share would have been anti-dilutive.  

Common stock equivalents that were not included in diluted earnings per share at March 31, 2012 and 2011 are as follows:

  



- 10 -








 

 

2012

 

2011

Stock options

 

 

53,945,000

 

 

34,445,000 

Warrants

 

 

919,230 

 

 

919,230 

Convertible promissory notes

 

 

12,397,984

 

 

4,377,290

Common stock equivalents

 

 

67,262,214

 

 

39,741,520 

NOTE 7 – RELATED PARTY TRANSACTIONS

During the year ended December 31, 2008, two former officers, Gary Reys and Dr. Ronald Berninger, who were also members of the Company’s board of directors, advanced funds in the amount of $26,290 for their defense of certain legal matters. During 2009, Dr. Berninger advanced an additional $6,465 for his defense. Under the Company’s Bylaws, the Company is required to provide for the legal defense of its officers and directors. These advances are included in due to related parties.

Convertible Promissory Notes

On December 23, 2009, an officer of the Company loaned $25,000 to the Company in exchange for a convertible promissory note and a warrant to purchase 150,000 shares of common stock. The promissory note bears interest at the annual rate of eight percent and all interest and principal is due on December 22, 2014. The promissory note and accrued interest can be converted into common stock at any time, at the option of the holder, at the exchange rate of $0.035 per share. The fair market value of the warrants of $3,000 was recorded as a discount on the promissory note and is being amortized over five years.

During the three months ended March 31, 2012, a stockholder of the Company advanced a total of $83,900 under a convertible promissory note to help pay for certain operating and debt costs. The total outstanding on the promissory note at March 31, 2012 is $240,794 and bears interest at the annual rate of eight percent. All interest and principal is due on January 24, 2015. The promissory note and accrued interest can be converted into common stock at any time, at the option of the holder, at the exchange rate of $0.024 per share.

During the three months ended March 31, 2012, a second stockholder of the Company advanced a total of $391 under a convertible promissory note to help pay for certain operating costs.  The total outstanding on the promissory note at March 31, 2011 was $17,131 and bears interest at the annual rate of eight percent. All interest and principal is due on August 17, 2015. The promissory note and accrued interest can be converted into common stock at any time, at the option of the holder, at the exchange rate of $0.02 per share.

The total of these convertible promissory notes have been reclassified from short term liabilities to long term liabilities in the December 31, 2011 balance sheet to better reflect the nature of these promissory notes and to conform to the presentation as of March 31, 2012.





- 11 -






Stockholder Advances

During the year ended December 31, 2007 a stockholder of the Company paid various outstanding payables on behalf of the Company. As of March 31, 2012 the Company owed this stockholder $107,949.  These advances are unsecured, non-interest bearing with no set terms of repayment.

NOTE 8 – SUBSEQUENT EVENTS

Management has evaluated subsequent events through May 11, 2012. Other than as disclosed in Note 4, there was no event of which management was aware that occurred after the balance sheet date that would require any adjustment to, or disclosure in, the accompanying consolidated financial statements.


- 12 -






Item 2.

Management’s Discussion and Analysis

As used in this Quarterly Report: (i) the terms the “Company”, “our company”, “we”, “us” and “our” refer to CellCyte Genetics Corporation, a Nevada corporation, and its subsidiary, unless the context requires otherwise; (ii) references to “CellCyte” mean CellCyte Genetics Corporation, a Washington corporation; and (iii) all dollar amounts refer to United States dollars unless otherwise indicated.

The following discussion of our plan of operations, results of operations and financial condition as of and for the three months ended March 31, 2012 should be read in conjunction with (i) our unaudited interim consolidated financial statements and related notes for the three months ended March 31, 2012 included in this Quarterly Report, and (ii) our Annual Report on Form 10-K for the year ended December 31, 2011, including our annual audited financial statements set forth therein.

Overview

We are a biotechnology company involved in research and development of medical devices for cell expansion and maintenance.

We intend to focus our efforts over the next twelve months primarily on the development of our cell expansion technology. These efforts will consist of entering into collaborative research agreements with well-known, established research organizations to utilize our patented CCG-E45 Culture Chamber product to enhance their cell production efforts. In conjunction with these research activities, our engineers will be developing alternative culture chamber configurations to optimize specific cell categories. Under these collaborative agreements, we will provide our CCG-E45 Incubators and Culture Chambers, and onsite training and oversight. Our collaboration partners will provide staffing, space and the cell types being tested.

Our initial collaborative research agreement was signed on September 9, 2010 with the Fred Hutchison Cancer Research Center in Seattle, Washington. Joint research activities under this agreement are expected to continue through-out 2012.

Plan of Operations

Our operations over the next 12 months will be limited by the amount of resources we are able to raise, and the willingness of our contractors and consultants to work for stock and stock option compensation. Accordingly, we have developed an Interim Operating Plan that may allow us to complete certain limited research and development activities while we attempt to raise adequate funding to restart our business.

Our plan of operations under our Interim Operating Plan for the next 12 months is to:

(a)

perform the work specified by out Interim Operating Plan under recently executed contracts with our scientists and manufacturing consultants.

(b)

apply for State and Federal research grants to develop specific configurations and applications of the bioreactor device.



13






 (c)

support the beta testing of our bioreactor product as specified in our agreements with independent research laboratories to maximize the possibility that such labs will adopt our bioreactor technology to satisfy their cell expansion needs.

(d)

continue small scale manufacturing of our cell expansion culture chambers, as needed, to maintain an adequate supply of bioreactors for the academic and institutional research organizations with which we have beta testing collaboration agreements.

(e)

locate and occupy new office, lab and manufacturing space if required to execute our Interim Operating Plan.

Over the next 12 months we anticipate that we will require an aggregate of $600,000 in cash and stock-based compensation to cover expenses and debt service, including certain accounts payable, as follows:

(a)

$30,000 for facility and equipment related expenses;

(b)

$25,000 for debt service;

(c)

$115,000 for pre-clinical work, quality assurance, manufacturing of biologic material, academic collaborations and further research collaborations;

(d)

$80,000 for design and device manufacturing;

(e)

$125,000 for legal expenses related to general corporate matters, and accounting expenses related to quarterly reviews and annual audits;

(f)

$75,000 for salaries and consulting;

(g)

$115,000 for general and administrative, travel, conferences and public relations; and

(h)

$75,000 to fund the settlement agreement with our prior landlord.

During the next 12 months we anticipate that we will generate minimal non-recurring engineering (NRE) service revenue and revenue from the sale and licensing of our incubator and bioreactor device technology.  We have no cash and cash equivalents and a working capital deficit of $1,022,829 at March 31, 2012. We presently do not have sufficient cash to fund our operations, and have curtailed substantially all activities, other than those called for by the execution of our Interim Operating Plan.  

During the period covered by our Interim Operating Plan, we expect to fund our operations through a combination of the sale of excess laboratory equipment, issuances of stock, including issuances of stock and stock options registered pursuant to an S-8 registration statement, as payment in-kind to our independent contractors, consultants and other service providers, and the issuance of convertible loans from current stockholders and other investors. However, there is no certainty that we will be able to obtain these loans on commercially reasonable terms or when



- 14 -






needed, or that they will be sufficient to meet our cash requirements. Accordingly, we anticipate that we will require additional financing to enable us to pay our planned expenses and debt service for the next 12 months and pursue our plan of operations.

At this time, we cannot accurately estimate a date of transition from operating under our Interim Operating Plan to a state in which our operations will be funded by a combination of equity funding and cash provided from bioreactor and incubator sales. Further, there is no assurance that our research, product and device demonstration program will result in significant revenues, or that we will obtain the cash necessary to fund the Interim Operating Plan.

Subsequent to the 12 month period following the date of our Annual Report for the year ended December 31, 2011, we will be required to obtain additional financing in order to continue to pursue our business plan.  We cannot accurately predict the amount of additional capital that will be required, nor the extent to which this will consist of equity or debt financing.

We cannot provide investors with any assurance that we will be able to raise sufficient funding from the issuance of promissory notes or the sale of our common stock to fund our business plan going forward.  In the absence of such financing, our business plan will fail.

Results of Operations

Three Months Ended March 31, 2012, Compared to three Months Ended March 31, 2011.

The following table sets out our consolidated loss for the periods indicated:

 

Three Months Ended
March 31, 2012

Three Months
Ended
March 31, 2011

 

(Unaudited)

(Unaudited)

Revenues

$

 $ —

Operating Expenses

 

 

General and administrative

15,587

16,449

Professional fees

14,140

17,467

Stock-based compensation

-

-

Other Expense, net

(5,976)

 (10,928)

Net Loss

$

(35,703)

$ (44,844)

Revenues

We have had no operating revenues since our inception on January 4, 2005 to March 31, 2012.  We anticipate that we will not generate any revenues for so long as we are a development stage company.



- 15 -






General and Administrative Expenses

Our general and administrative expenses in the three months ended March 31, 2012, decreased to $15,587 from $16,449 for the same period of 2011, primarily as a result of a reduction in depreciation and rent expense.

Professional Fees

In the three months ended March 31, 2012, we incurred professional fees of $14,140, compared to $17,467 for the same period of 2011. The decrease is primarily related to a reduction in the activities of the contract accountants providing general operating support and a reduction in general legal services.

Stock-Based Compensation

In the three months ended March 31, 2012 and 2011, we incurred no stock-based compensation expense. Stock-based compensation is related to stock options provided to our directors and consultants that vested during each period.

Other Income (Expense)

In the three months ended March 31, 2012, other expense was $5,976, compared to $10,928 for the same period in 2011. Other expense consisted primarily of interest expense for both periods.

Net Loss

As a result of the above, our net loss for the three months ended March 31, 2012 was $35,703, compared to $44,844 for the same period of 2011.

Liquidity and Capital Resources

As of March 31, 2012, we had no cash and a working capital deficit of $1,022,829.  Our planned expenditures over the next 12 months are expected to amount to approximately $600,000 and will exceed our cash reserves and working capital.  We presently do not have sufficient cash to fund our operations and have curtailed significantly all activities.  

During the period covered by our Interim Operating Plan, we expect to fund our operations through a combination of issuances of stock, including issuances of stock and stock options registered pursuant to an S-8 registration statement, as payment in-kind to our independent contractors, consultants and other service providers, and the issuance of convertible loans from current stockholders and other investors. We anticipate that we will not require additional financing beyond the results of actions described above in order to pursue our operations under the Interim Operating Plan. Our business activities and plan of operations beyond the next 12 months will depend on the extent to which our bioreactor product is found to be a superior way for clinical research laboratories, with which we establish collaborative research agreements, to satisfy their cell expansion needs.



- 16 -






In the event that the testing under our collaborative research agreements is successful, our goal is to convert each of our collaboration partners into a paying customer. With each collaborating laboratory, there exists the potential for our bioreactor to become a component of some diagnostic or therapeutic procedure that could be licensed to a biopharmaceutical manufacturer. At this time, we do not have any definitive information from any of our collaboration partners as to the effectiveness of our bioreactor, so there is a risk that the tests will not be successful and that our Interim Operating Plan will fail.

We cannot provide investors with any assurance that we will be able to raise sufficient funding from the activities discussed above to fund our plan of operations going forward.  In the absence of such financing, our business plan will fail.  Even if we are successful in obtaining short-term financing, there is no assurance that we will obtain the funding necessary to pursue our business plan.  If we do not continue to obtain additional financing going forward, we will be forced to abandon our plan of operations.

Cash Used in Operating Activities

Cash used in operating activities in the three months ended March 31, 2012 was $84,291, compared to $41,910 for the same period of 2011.  In 2012, $75,000 of our cash was transferred to our law firm pending payment for a settlement with our previous landlord. Otherwise, in 2012 and 2011, operating activities used cash primarily for insurance, storage of our equipment, and payment to our outside auditors. We anticipate that cash used in operating activities will be limited over the balance of 2012 as we move forward with limited operations.  We have funded our operations primarily from the sale of excess laboratory equipment and from the issuance of our common stock, and expect to continue efforts to raise additional capital through the sale equipment and stock.

Cash Provided by Investing Activities

There was no cash generated from investing activities for the three months ended March 31, 2012 and 2011.

Cash Provided By Financing Activities

We have funded our business to date primarily from sales of our common stock and issuance of convertible promissory notes.  In the three months ended March 31, 2012, we had net proceeds of $84,291 related to advances under convertible promissory notes, compared to net proceeds of $41,910 for the same period of 2011 from the proceeds of convertible promissory notes.

Going Concern

As shown in the accompanying financial statements and more fully detailed in our 2011 Annual Report on Form 10-K, we have incurred significant losses since inception and have not generated any revenues to date.  The future of our company is dependent upon our ability to obtain sufficient financing and upon achieving future profitable operations.  These factors, among others, raise substantial doubt about our company’s ability to continue as a going concern.  The accompanying interim consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.



- 17 -






Future Financings

We anticipate continuing to rely on equity sales of our common stock and the issuance of convertible debt in order to continue to fund our business operations.  Issuances of additional shares will result in dilution to our existing stockholders.  There is no assurance that we will achieve any additional sales of our equity securities or arrange for debt or other financing to fund our business plan.

Off-Balance Sheet Arrangements

We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.

Critical Accounting Policies

Our financial statements are impacted by the accounting policies used and the estimates and assumptions made by management during their preparation.  A complete summary of these policies is included in Note 2 of the notes to our historical financial statements.  We have identified below the accounting policies that are of particular importance in the presentation of our financial position, results of operations and cash flows and which require the application of significant judgment by management.

Use of Estimates

Our financial statements are prepared in conformity with accounting principles generally accepted in the United States of America and include certain estimates and assumptions which affect the reported amounts of assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period.  Accordingly, actual results may differ from those estimates.

Income Taxes

We follow the provisions of FASB ASC 740, “Income Taxes”, under which deferred tax assets and liabilities are determined based on differences between financial reporting and tax basis of assets and liabilities. Deferred tax assets and liabilities are measured using the enacted tax rates and laws that are expected to be in effect when the differences are expected to reverse.  The provisions of ASC 740 also require the recognition of future tax benefits such as net operating loss carry-forwards, to the extent that the realization of such benefits is more likely than not.  To the extent that it is more likely than not that such benefits will not be received, we record a valuation allowance against the related deferred tax asset.

Intangible Assets

Our intangible assets primarily consist of patents and intellectual property, which are carried at the purchase price and/or the legal cost to obtain them less accumulated amortization.  Patents and licenses are being amortized over their estimated useful lives, which range from seven to



- 18 -






seventeen years. Annually these assets are reviewed for recoverability to determine if the carrying amount on the balance sheet is appropriate.

Research and Development Costs

Research and development costs are expensed as incurred. The cost of intellectual property purchased from others that is immediately marketable or that has an alternative future use is capitalized and amortized as intangible assets. Capitalized costs are amortized using the straight-line method over the estimated economic life of the related asset. We periodically review our capitalized intangible assets to assess recoverability based on the projected undiscounted cash flows from operations, and impairments are recognized in operating results when a permanent diminution in value occurs.

Stock-Based Compensation

We account for our stock option plan primarily under the recognition and measurement principles of FASB ASC 718, “Compensation – Stock Compensation”. Accordingly, compensation cost has been recognized using the fair value method and expected term accrual requirements as prescribed in ASC 718. We recorded no stock-based compensation expense during the three months ended March 31, 2012 as none of the outstanding options vested during the period.


Item 3.

Quantitative and Qualitative Disclosures About Market Risk.

Not Applicable.


Item 4.

Controls And Procedures

Evaluation of Disclosure Controls and Procedures

In connection with the preparation of this Quarterly Report on Form 10-Q, an evaluation was carried out by our management, with the participation of the Principal Executive Officer and Principal Accounting Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (“Exchange Act”)) as of March 31, 2012.  Disclosure controls and procedures are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC rules and forms and that such information is accumulated and communicated to management, including the Principal Executive Officer and the Principal Accounting Officer, to allow timely decisions regarding required disclosures. Based on its evaluation, our management concluded, as of the end of the period covered by this report, that our disclosure controls and procedures were not effective.



- 19 -






Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during the quarter ended March 31, 2012 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.  The Company has not begun remediation efforts to correct the previously disclosed material weakness (as defined in Rule 13a-15(d) under the Exchange Act) reported on the Company’s Form 10-K filed for the period ended December 31, 2011.


__________



- 20 -






PART II – OTHER INFORMATION

Item 1.

Legal Proceedings

We are not currently a party to any legal proceedings.

Item 1A.

Risk Factors

Not Applicable.

Item 2.

Unregistered Sales of Equity Securities

We did not issue any shares of our common stock during the three month period ended March 31, 2012.

Item 3.

Defaults Upon Senior Securities

None.

Item 4.

Mine Safety Disclosure

Not Applicable.

Item 5.

Other Information

None.

Item 6.

Exhibits

The following exhibits are included with this Quarterly Report on Form 10-Q:

Exhibit
Number

Description of Exhibit

3.1

Articles of Incorporation, as amended.  Incorporated by reference to our Registration Statement on Form SB-2 filed on May 4, 2005.

3.2

Bylaws.  Incorporated by reference to our Current Report on Form 8-K filed May 14, 2004.

31.1

Rule 13a-14(a)/15(d)-14(a) Certification of Principal Executive Officer.

31.2

Rule 13a-14(a)/15(d)-14(a) Certification of Principal Accounting Officer.

32.1

18 U.S.C. Section 1350 Certification of Principal Executive Officer.

32.2

18 U.S.C. Section 1350 Certification of Principal Accounting Officer.



- 21 -








101.INS*

XBRL Instance

101.SCH*

XBRL Taxonomy Extension Schema

101.CAL*

XBRL Taxonomy Extension Calculation

101.DEF*

XBRL Taxonomy Extension Definition

101.LAB*

XBRL Taxonomy Extension Label

101.PRE*

XBRL Taxonomy Extension Presentation

* XBRL information is furnished and not filed or a part of a registration statement or prospectus for purposes of sections 11 or of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, ad amended, and otherwise is not subject to liability under these sections.

__________



- 22 -






SIGNATURES


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


CELLCYTE GENETICS CORPORATION

Dated:  May 11, 2012

Per:


/s/ “John M. Fluke, Jr.

John M. Fluke, Jr.

Interim Principal Executive Officer

__________



1



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