ZENOSENSE, INC. - Quarter Report: 2016 June (Form 10-Q)

form10q.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

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

For the quarterly period ended June 30, 2016

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

For the transition period from __________________ to ______________________

000-54936
Commission file number
Zenosense, Inc.
(Exact name of small business issuer as specified in its charter)

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

001 (34) 960454202
(Issuer’s telephone number)

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [X] No [ ] Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a small reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act
Large accelerated filer	[ ]	Accelerated filer	[ ]
Non-accelerated filer	[ ]	Smaller reporting company	[ X ]
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. 16,677,431 common shares issued and outstanding as of August 4, 2016

ZENOSENSE, INC.

TABLE OF CONTENTS

		Page
	PART I – FINANCIAL INFORMATION

Item 1.	Financial Statements	3

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	4

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	10

Item 4.	Controls and Procedures	10

	PART II – OTHER INFORMATION

Item 1.	Legal Proceedings	11

Item 1A.	Risk Factors	11

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	11

Item 3.	Defaults Upon Senior Securities	11

Item 4.	Mine Safety Disclosures	11

Item 5.	Other Information	11

Item 6.	Exhibits	12

	SIGNATURES	13

PART I - FINANCIAL INFORMATION

ITEM 1 Financial Statements

ZENOSENSE, INC.

FINANCIAL STATEMENTS

As of June 30, 2016 and December 31, 2015 and

For the Three and Six Months Ended June 30, 2016 and 2015

TABLE OF CONTENTS

	Page
Balance Sheets (Unaudited)	F-1

Statements of Operations (Unaudited)	F-2

Statements of Cash Flows (Unaudited)	F-3

Notes to Financial Statements (Unaudited)	F-4 to F-7

ZENOSENSE, INC.

Balance Sheets

(Unaudited)

	June 30, 2016			December 31, 2015
Assets
Current Assets
Cash and cash equivalent	$	7,170		$	989
Investment in joint venture		130,000			-
Prepaid expense		-			4,167
Total assets	$	137,170		$	5,156

Liabilities and Stockholders’ Deficit
Current liabilities:
Accounts payable and accrued expense	$	23,160		$	33,850
Accounts payable and accrued expense – related party		70,572			49,951
Loan payable		-			110,000
Convertible notes, net of discount		156,831			-
Stock payable		67,500			67,500
Total current liabilities		318,063			261,301


Stockholders’ Deficit:
Common stock 500,000,000 shares authorized, $0.001 par value issued and outstanding 16,677,431 and 7,087,919 shares, respectively		16,677			7,088
Additional paid in capital		1,188,208			1,047,797
Accumulated Deficit		(1,385,778	)		(1,311,030	)
Total stockholders’ deficit		(180,893	)		(256,145	)
Total Liabilities and Stockholders’ deficit	$	137,170		$	5,156

See accompanying notes to these unaudited financial statements.

F-1

ZENOSENSE, INC.

Statements of Operations

For the Three and Six Months Ended June 30, 2016 and 2015

(Unaudited)

	Three Months ended June 30, 2016			Three Months ended June 30, 2015			Six Months ended June 30, 2016			Six Months ended June 30, 2015

Revenues	$	-		$	-		$	-		$	-

Expense
General and administrative expense		43,861			30,227			70,467			70,241
Total expenses		43,861			30,227			70,467			70,241

Loss from operations		(43,861	)		(30,227	)		(70,467	)		(70,241	)

Other income/(expense)
Interest expense		(2,872	)		(566	)		(4,281	)		(1,000	)
Total other expense		(2,872	)		(566	)		(4,281	)		(1,000	)

Net loss	$	(46,733	)	$	(30,793	)	$	( 74,748	)	$	(71,241	)

Net loss per common share:
Basic and diluted	$	(0.00	)	$	(0.02	)	$	(0.01	)	$	(0.04	)

Weighted average common shares outstanding:
Basic and diluted		9,406,253			7,087,828			8,253,495			7,087,828

See accompanying notes to these unaudited financial statements.

F-2

ZENOSENSE, INC.

Statements of Cash Flows

For the Six Months Ended June 30, 2016 and 2015

	June 30, 2016			June 30, 2015

Operating Activities
Net loss	$	(74,748	)	$	(71,241	)

Adjustments to reconcile net loss to net cash used in operating activities:
Amortization of debt discount		1,087			-
Changes in operating assets and liabilities:
Prepaid expense		4,167			(9,167	)
Accounts payable and accrued expense		(4,946	)		23,956
Accounts payable and accrued expense – related party		20,621			22,658
Cash used in operating activities		(53,819	)		(33,794	)

Investing activities
Investment in joint venture		(130,000	)		-
Cash used in investing activities		(130,000	)		-

Financing activities
Proceeds from third party loan		-			30,000
Proceeds from sales of common stock		150,000			-
Proceeds from convertible note payable		40,000			-
Cash provided by financing activities		190,000			30,000

Net increase (decrease) in cash		6,181			(3,794	)

Cash, beginning of period		989			4,423

Cash, end of period	$	7,170		$	629

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

Noncash investing and financing activities:
Beneficial conversion feature	$	155,744		$	-

See accompanying notes to these unaudited financial statements.

F-3

ZENOSENSE, INC.

Notes to the Financial Statements

(Unaudited)

1. Nature of operations

Zenosense, Inc. (the “Company”) was incorporated under the laws of the State of Nevada on August 11, 2008, for the purpose of acquiring and developing mineral properties. In May 2013, the Company terminated its mineral development business.

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

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

On June 20, 2016, the Company entered into a joint venture arrangement by way of a Subscription and Shareholders’ Agreement (“MML SSA”) with a third party medical detection device developer (“Partner”) utilizing a joint venture vehicle, MIDS Medical Ltd (“MML”), a UK Limited company of which the Company owns a 40% interest awarded on July 1, 2016, in exchange for its participation and funding to support MML during a Phase 1 and prospectively during a Phase 2 development of the Partner’s MIDS universal immunoassay detection technology platform (“MIDS”). MML will have the right, under license, to use the MIDS Intellectual Property (“MIDS IP”) during the development and the MIDS IP will be transferred to MML in the event MML concludes a commercial deal for MIDS with a third party.

The MIDS technology will incorporate what we believe to be a novel microfluidic strip design, magnetic nanoparticle manipulation and a unique double detection technique using bespoke ‘Hall Effect’ sensors and a bespoke optical sensor which, when combined, will increase significantly the sensitivity and accuracy of the result.

The MIDS technology platform has the potential to be adapted to a vast array of POC immunoassay tests, taking them to a whole new level of accuracy, cost, ease of use and speed of testing: A multi-capability POC device with laboratory gold standard accuracy for testing for conditions such as Chlamydia, prostate, colorectal and other cancers, stroke tests, sports anti-doping tests, Drugs of Abuse, insulin tests, H. Pylori, Inflammatory & Autoimmune disease, Influenza, Legionella, Osteoporosis, Endocrine tests, Respiratory Virus, pneumonia, Blood infections, Streptococcus, Meningitis, Rheumatism, Hepatitis, HIV, Viral tests, and many more.

2. Basis of presentation

The accompanying unaudited interim consolidated financial statements of Zenosense, Inc. have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission (“SEC”), and should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s latest Annual Report on Form 10-K for the year ended December 31, 2015 filed with the SEC on May 20, 2016. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements which would substantially duplicate the disclosure contained in the audited financial statements for the most recent fiscal year ended December 31, 2015, as reported on Form 10-K, have been omitted.

F-4

ZENOSENSE, INC.

Notes to the Financial Statements

(Unaudited)

3. Going Concern

The financial statements have been prepared in accordance with generally accepted accounting principles applicable to a going concern, which assumes that the Company will be able to meet its obligations and continue its operations for 12 months. Realization values may be substantially different from carrying values as shown and these financial statements do not give effect to adjustments that would be necessary to the carrying values and classification of assets and liabilities should the Company be unable to continue as a going concern. At June 30, 2016, the Company had not yet achieved profitable operations, had accumulated losses of $1,385,778 since its inception and expects to incur further losses in the development of its business, all of which raises substantial doubt about the Company’s ability to continue as a going concern. The Company’s ability to continue as a going concern is dependent upon its ability to generate future profitable operations and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due.

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

4. Summary of Significant Accounting Policies

Use of estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Reclassifications

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

Cash and cash equivalents

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

Research and development

Research and development costs are expensed as incurred.

Income taxes

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

Loss per common share

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

Subsequent events

The Company evaluated all events or transactions that occurred after June 30, 2016, up through the date these financial statements were issued and no subsequent events occurred that required disclosure in the accompanying financial statements.

Recently Adopted Accounting Standards

The Company does not expect the adoption of any recent accounting pronouncements to have a material impact on its financial statements.

F-5

ZENOSENSE, INC.

Notes to the Financial Statements

(Unaudited)

5. Loans Payable

On November 2, 2015, four promissory notes previously owed to several third parties (the “Prior Notes”) were assigned to a new party (the “Investor”) in one note for a total of $110,000 in principal plus accrued interest of $3,647. The new note bears interest of 5% and is due on demand. At May 16, 2016, the Company had accrued interest of $5,744 in connection with the promissory note.

On March 29, 2016, the Investor gave notice that it demanded repayment of all principal amounts and accrued interest outstanding, due within 90 days of the demand notice.

On May 16, 2016 the Investor exchanged the Prior Notes and accrued interest in the amount of $115,744 for new convertible notes.

6. Convertible Debt

On April 20, 2016 the Investor agreed to a further loan of $40,000 and the Company issued a convertible note in a principal amount of $40,000 (the “April 2016 Note”). The April 2016 Note bears a 5% interest per annum and is due on April 19, 2018. The April 2016 Note may be prepaid at any time within 90 days of the Issue Date. Starting from September 20, 2016, the April 2016 Note can be convertible into shares of common stock (the “Conversion”) of the Company, at the discretion of the holder, at a price of $0.007 per share subject to a blocker provision that limits the amount issued at any time to 4.99% of the outstanding shares of Common Stock. The Company has initially reserved 5,714,286 shares of Common Stock issuable upon the Conversion.

On May 17, 2016, the Investor agreed to exchange the Prior Notes (see note 5) for two new convertible notes (the “May 2016 Notes”) under two separate Securities Exchange Agreements which closed on May 17, 2016. One note for the principal amount of $53,197 and the other for the principal amount of $62,547 for a combined aggregate principal amount of $115,744. The May 2016 Notes bear a 5% interest per annum and are due on May 16, 2018. The May 2016 Notes may be prepaid at any time within 90 days of issuance. The May 2016 Notes can be convertible into shares of common stock of the Company at the discretion of the holder, at a price of $0.007 per share subject to a blocker provision that limits the amount issued at any time to 4.99% percent of the outstanding shares of Common Stock. The Company has initially reserved 16,534,857 shares of Common Stock issuable upon the Conversion.

At June 30, 2016, the Company had accrued interest of $1,087 in connection with the new notes.

The convertible notes contained a beneficial conversion feature with a combined intrinsic value of $155,744 for the three notes. The intrinsic value is based upon the difference between the market price of Zenosense’s common stock on the date of issuance and the conversion price of $0.007. The discount is being amortized through interest expense using the straight line method over the term of the notes. For the three and six months ended June 30, 2016, the Company recorded amortization of $1,087 on debt discount.

7. Common Stock

On June 6, 2016, the Company entered into a Securities Purchase Agreement (the “SPA”) with an accredited investor (the “ Investor ”). The transaction closed on June 8, 2016 (the “Closing”).

Under the terms of the SPA; the Investor purchased 9,589,512 shares of the Company’s common stock, par value $0.001 per share (the “Common Stock ”), for a purchase price of $150,000 and a commitment by the Investor to provide unsecured convertible loans (the “ Commitment Loans ”) in an aggregate amount of $640,000. The Commitment Loans will be made in four individual amounts (individually the “Conversion Amount ” and collectively the “ Conversion Amounts ”). On or before September 20, 2016, the Investor will lend the Company a Conversion Amount of $180,000. On or before November 20, 2016, the Investor will lend the Company a Conversion Amount of $170,000. On or before January 20, 2016, the Investor will lend the Company a Conversion Amount of $170,000. On or before March 20, 2017, the Investor will lend the Company a Conversion Amount of $120,000. The Commitment Loans shall bear an interest rate of 10% per annum based on a 360 day year and are due 4 years from each respective issuance date (the “Maturity Date”). The Company may, at any time prior to the Maturity Date, prepay any unconverted amount of each respective Commitment Loan in full or in part. The Investor may, at any time prior to the Maturity Date of each respective Commitment Loan, convert any or all of the Conversion Amounts into Common Stock at the lower of either (a) $0.07 per share (subject to adjustment), or (b) a 15% discount to the 10 day VWAP provided that any such conversion is not at a price of less than $0.035 per share (subject to adjustment). In either scenario the total number of shares of Common Stock issued on conversion may not cause the total beneficial ownership by the Investor and its affiliates to exceed 4.99% of the outstanding shares of Common Stock. On the Maturity Date of each respective Commitment Loan any outstanding amount shall automatically and mandatorily convert into Common Stock at a price of $0.07 per share (subject to adjustment).

F-6

ZENOSENSE, INC.

Notes to the Financial Statements

(Unaudited)

8. Commitments

In December 4, 2013, the Company entered into the License Agreement with Sgenia Industrial S.L. and its subsidiaries, Sgenia Soluciones S.L and ZENON Biosystem S.L (collectively, “Sgenia”) for the development of the Sgenia Products, to be based on the Sgenia sensory technology. Pursuant to the License Agreement, the Company will have a worldwide exclusive license to manufacture, market and sell the resulting products, subject to certain limitations and a royalty arrangement on a revenue sharing basis. The Company entered into three amendments (the “Amendments”) to the License Agreement to modify and extend the Sgenia Products to include a lung cancer product and change the product development schedule and the research funding budget to accommodate the additional lung cancer product as well as the continuation of the development of the MRSA product.

Additionally, the development stage objectives and milestones were modified to reflect the current state of development of each of the Sgenia Products. Under the License Agreement, the Company is funding the development of the Sgenia Products pursuant to a research and development plan proposed by Sgenia and accepted by the Company. The funding will be provided on an advance basis, per month, based on agreed development stages. In return, the Company will have the exclusive right to manufacture, formulate, package, market and sell the Sgenia Products world-wide, for 40 years, subject to a limitation on the inclusion of Spain in the territory. All intellectual property developed by Sgenia at any time during the term related to manufacturing, formulating and/or packaging process shall be shared ownership and licensed to the Company on a royalty-free basis.

Sgenia will also supply to the Company, at a negotiated price based on quantity, all of the requirements for the integrated circuits on microchips that are necessary for the operation of the Sgenia Products. Sgenia and the Company will also work together to research and develop the Sgenia Products and establish written plans and reviewing committees for the management of the overall development project and commercialization of the Sgenia Products.

The Company’s funding of the MRSA product development was limited to an initial approved budget of $1,256,438, of which $526,846 was advanced by the Company. As a result of the Amendment of July 2014, at the date of this report, the revised and approved budget is approximately $1,142,143, of which $769,787 has been advanced (including the amount advanced under the prior budget) as of June 30, 2016. The Company is currently committed to advancing approximately EUR656,000 (approximately $727,000), for research and development under the revised and approved budget, and subject to Sgenia meeting certain milestones. Some of the milestones have not been met as of June 30, 2016. The aggregate of the advances paid by the Company are recorded as research and development expenses. The budget may be changed by mutual agreement from time to time.

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

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

On June 20, 2016 the Company entered into a joint venture arrangement by way of the MML SSA with the Partner utilizing a joint venture vehicle, MML, a UK Limited company under which the Company will own a 40% interest. MML is developing the Partner’s MIDS universal immunoassay detection technology with an initial focus on a novel POC Cardiac Device with the aim of developing a hand held device to support high sensitivity tests of various cardiac biomarkers to definitively identify or discount AMI, with accuracy equal or better than gold standard laboratory tests, within minutes.

The Company’s funding of MML is limited to an initial aggregate payment of £450,500 (approximately $580,000) for Phase 1 of which £92,857.14 ($130,000) has already been paid. In addition, The Company may be required to provide the Contingency to be available after March 31, 2017 in an aggregate amount of up to £45,000 (approximately $58,000) to be paid by the Company within 20 days of receiving a written notice from MML.

9. Related Party Transactions

On December 5, 2013, the Company entered into a one-year service agreement with Mr. Carlos Jose Gil, through his consulting firm, Ksego Engineering S.L., under which the Company obtains his services as the Chief Executive Officer of the Company. The agreement is now on a month-to-month basis. Mr. Gil receives a base salary and additional compensation equal to 10% of the net sales generated from the License Agreement. During the six months ended June 30, 2016, the Company recorded $30,553 of general and administrative expenses related to amounts paid/owed to Ksego Engineering S.L. for services rendered by Mr. Gil. As of June 30, 2016, the Company owes Mr. Gil $70,572. No additional compensation based on net sales has been earned to date.

10. Subsequent Events

After the close of the stock market on August 3, 2016, the Company effected a 1-for-7 reverse split of its common stock. The reverse stock split was approved by the Company’s board of directors. As a result, all common stock share amounts included in this filing have been retroactively adjusted by a factor of seven, and all common stock per share amounts have been increased by a factor of seven, with the exception of our common stock par value.

On August12, 2016, the Company amended Mr. Carlos Jose Gil’s service agreement to include additional compensation equal to 10% of the revenue received by Zenosense, Inc. from MML as a result of any future commercialization of the MIDS project.

F-7

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

Forward-Looking Statements

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

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

General Overview

Zenosense, Inc. was incorporated on August 11, 2008 in the State of Nevada. In December 2013, we filed an amendment to our charter to change our name from “Braeden Valley Mines, Inc.” to “Zenosense, Inc.” and to increase the number of our authorized shares of Common Stock from 50,000,000 shares to 500,000,000 shares par value of $0.001.

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

In the summer of 2013, we started to look for other business opportunities. We became interested in sensory technology devices for use in hospitals and health care environments. During the latter part of the year, we began to negotiate a license agreement with the developers of such technology (the “Sgenia Technology”), and in December 2013, we entered into a Development and Exclusive License Agreement (the “License Agreement”) with Sgenia Industrial, S.L. (“Sgenia”) and its subsidiaries Sgenia Soluciones, S.L. (“Sgenia Subsidiary”) and ZENON Biosystem, S.L. (“Zenon”), all of which were formed under the laws of Spain. The products currently being developed under the License Agreement include one to be used in the detection of methicillin resistant Staphylococcus aureus/Staphylococcus aureus (“MRSA/SA”) in the healthcare environment and another to be used to detect lung cancer in patients. Under the terms of the License Agreement, we will provide Zenon with capital for the development of the devices that utilizes the Sgenia Technology (the “Sgenia Products”), in exchange for a worldwide, exclusive license to manufacture, formulate, market and sell the resulting products, subject to certain limitations and a royalty arrangement on a revenue sharing basis. The License Agreement gives us additional rights to improvements and developments to the Sgenia Products and future products using the Sgenia Technology. In June 2016, we were presented the opportunity of involvement in a joint venture complementary to our current medical device development business plan and we entered into the MML SSA as a joint venture to develop the MIDS technology.

On June 20, 2016, we entered into a joint venture by way of a Subscription and Shareholders’ Agreement (“MML SSA”) with a third party medical detection device developer (“Partner”) utilizing a joint venture vehicle, MIDS Medical Ltd (“MML”), a UK Limited company of which we own a 40% interest awarded on July 1, 2016, in exchange for its participation and funding to support MML during a Phase 1 and prospectively during a Phase 2 development of the Partner’s MIDS universal immunoassay detection technology platform (“MIDS”). MML will have the right, under license, to use the MIDS Intellectual Property (“MIDS IP”) during the development and the MIDS IP will be transferred to MML in the event MML concludes a commercial deal for MIDS with a third party.

The MML SSA provides for a series of payments (“Phase 1 Payments”) in an aggregate amount of £450,500 (approximately $580,000 based on the current rate of exchange). The Partner made a Phase 1 Payment to MML, of $130,000 (the “First Payment”), which was converted to £92,857, Subsequent Phase 1 Payments are expected to be received as follows; (a) on or before September 20, 2016, a payment £106,093, (b) on or before November 20, 2016, a payment of £100,640; (c) on or before January 20, 2017 a payment of £100,640; and (d) on or before March 20, 2017 a payment of £50,320.

The MML SSA also provides for a contingency funding (the “Contingency”) to be available after March 31, 2017 in an aggregate amount of up to £45,000 (approximately $58,000) to be paid by us within 20 days of receiving a written notice from MML.

The MML SSA contains various provisions to govern the funding obligations of ours: if any Phase 1 Payment is not made within 14 days of it falling due (“Default”), our shareholding in MML may be reduced to zero unless otherwise agreed with the Partner; if no Contingency is drawn during Phase 1 the Partner will be awarded an enduring 2.5% profit after tax right in MML (“Override”) which will increase to a 15% Override if we decline to fund Stage 2; if we decline to fund Phase 2 and any Contingency has been drawn, the Partner will be awarded a 15% Override decreased by 0.5% for each £7,500 tranche of Contingency drawn down during Phase 1. Any Override will convert on a ratio of 1% Override to 1% of ordinary shares in the event of a sale of MML.

To fund our obligations under the License Agreement and MML SSA, to date we have sold shares of common stock on a private placement basis and converted funds advanced to the Company into common shares of the Company.

Plan of Operation

Our business plan is to develop devices to be used at the POC in hospitals and other medical care centers to detect AMI, MRSA/SA and the signs of lung cancer, and where necessary, to fund the medical trials of those medical devices. Up to June 20, 2016 our principal activity since December 2013 has been funding the development of the Sgenia Products. Since then, our primary focus is the funding and co development of the MIDS technology platform to develop a hand held device to be used at the POC for the early detection of low levels of certain cardiac biomarkers using high sensitivity cardiac assays for the diagnosis of AMI. To date we have not been successful in securing funding for continued development of the Sgenia license and research. At June 30, 2016, we had a working capital deficit of $284,160.Our current cash assets are not sufficient to cover our current and expected expenses, including the funding obligation under the License Agreement and the SSA, and therefore, we will need to obtain further financing, without which we will not be able to execute our business plan.

In light of our current inability to fund our operations and fund the Sgenia license and the fact that the Sgenia research is delayed, we reviewed with Sgenia the development schedule and funding requirements for the initial products and requirements to develop the cancer sensory devices, and have agreed in principle to an alternative development schedule which would result in the lengthening of the developmental schedule for these products and an increase of the budget requirements. The schedule and funding will be finalized once we have obtained sufficient funding, for which we cannot give any assurance that we will be able to obtain. We have been attempting to secure the necessary funding to continue either the existing development schedule and corresponding budget or the alternative development schedule.

Assuming that we are able to obtain operational funding, in addition to any funding necessary to maintain our status as a public company, subject to regular review and additional assessment of requirements, currently we anticipate that we will incur the following expenses over the twelve (12) month period following funding in connection with the development of the Sgenia Products and the MIDS technology: (1) we will have to fund our obligations under the terms of the MML SSA in an amount of up to £402,643,(2) we will have to fund the future development expenses of Sgenia in the approximate amount of 656,000 euros, (3) payment of compensation to our officers, employees, and consultants of approximately $100,000, (4) legal, audit and reporting expenses of approximately $50,000, and (5) general working capital. Additional unknown expenses may arise from time to time, which we cannot currently identify or determine a possible expense. We will need additional funding to cover our anticipated expenses mentioned above, and for future development and implementation of our business plan.

On June 20, 2016, the Company entered into a joint venture arrangement by way of a Subscription and Shareholders’ Agreement (“SSA”) with a third party medical detection device developer (“Partner”) utilizing a joint venture vehicle, MIDS Medical Ltd (“MML”), a UK Limited company of which the Company owns a 40% interest awarded on July 1, 2016, in exchange for its participation and funding to support MML during a Phase 1 and prospectively during a Phase 2 development of the Partner’s MIDS universal immunoassay detection technology platform (“MIDS”). MML will have the right, under license, to use the MIDS Intellectual Property (“MIDS IP”) during the development and the MIDS IP will be transferred to MML in the event MML concludes a commercial deal for MIDS with a third party.

The SSA provides for a series of payments (“Phase 1 Payments”) in an aggregate amount of £450,500 (approximately $650,000 based on the current rate of exchange). The Partner made a Phase 1 Payment to MML, of $130,000 (the “First Payment”), which was converted to £92,857, Subsequent Phase 1 Payments are expected to be received as follows; (a) on or before September 20, 2016, a payment £106,093, (b) on or before November 20, 2016, a payment of £100,640; (c) on or before January 20, 2017 a payment of £100,640; and (d) on or before March 20, 2017 a payment of £50,320.

The SSA also provides for a contingency funding (the “Contingency”) to be available after March 31, 2017 in an aggregate amount of up to £45,000 (approximately $64,000) to be paid by the Company within 20 days of receiving a written notice from MML.

The parties to the SSA envisage a second phase of development (“Phase 2”) to follow Phase 1. This is expected to be over a similar timeframe and at a similar cost. MML may independently obtain funding for Phase 2 at MML’s option, or invite the Company to fund.

The SSA contains various provisions to govern the funding obligations of the Company: if any Phase 1 Payment is not made within 14 days of it falling due (“Default”), the Company’s shareholding in MML may be reduced to zero unless otherwise agreed with the Partner; if no Contingency is drawn during Phase 1 the Partner will be awarded an enduring 2.5% profit after tax right in MML (“Override”) which will increase to a 15% Override if the Company declines to fund Stage 2; if the Company declines to fund Phase 2 and any Contingency has been drawn, the Partner will be awarded a 15% Override decreased by 0.5% for each £7,500 tranche of Contingency drawn down during Phase 1. Any Override will convert on a ratio of 1% Override to 1% of ordinary shares in the event of a sale of MML.

At no time prior to a sale will the Company’s ownership interest in MML’s shares be less than 30% unless the Company is in Default. Provided that each Phase 1 Payment is made within 14 days of falling due the Company also has additional control rights over MML including representation on the board of directors, rights over the appointment and employment of senior management persons, indebtedness, major transactions, budget approval rights, accounting practices and general operational management supervisory rights.

As a condition of the SSA, MML has entered into Supply of Services Agreements under which it receives the services of key personnel related to the MIDS development.

Demand is increasing for Point of Care (“POC”) tests that can detect very low concentrations of a target analyte and to quantify the result. Current lateral flow based immunoassays can detect analyte at high levels of concentration. However, at low concentration levels, the assay system requires amplification either of the signal or the target, which will typically increase the complexity and the costs of the testing device. Consequently, current POC tests remain largely unreliable for targets that require quantification.

We believe there to be an opportunity to develop a universal immunoassay based POC testing system which:

●		Is capable of detecting biomarkers at a nanoparticle level, providing fully quantitative measurement of results i.e. giving a numerical value for each biomarker detected and not just an indication on whether a specified biomarker is actually present,
●		Is capable of multiplexing i.e. performing multiple types of test from the same sample,
●		Provides full connectivity and networking for collection, storage and transfer of data and results,
●		Displays test results in minutes (less than 8 minutes for a panel of up to 3 tests),
●		Requires a finger prick sample size for a single test,
●		Utilizes a handheld reader and single disposable cartridge designed to be operated by a minimally trained person, requiring modest manual operation, other than for sample collection,
●		Contains all necessary reagents and where all steps are automated into an integrated encompassing pre-treatment, analyte specific reaction, signal production, signal reaction and final result: from sample to result in one step,
●		Can be adapted to perform different immunoassays for testing in areas such as infectious diseases, drugs of abuse or oncology, especially where rapid diagnosis is critical, and
●		Has a simple system design, requiring minimal direct input costs and inline manufacturing processes to keep unit costs as low as possible.

The MML plan is to develop the MIDS platform initially for the cardiac marker POC testing market, these markers being measured to evaluate heart function. Cardiac markers are used in the diagnosis and risk stratification of patients with chest pain and suspected acute coronary syndrome. The detection of these markers is used to diagnose acute myocardial infarction (“AMI”) and its severity, typically troponin (cTnI or cTnT), myoglobin and Creatine kinase MB isoenzyme (CK-MB).

Standard procedure for chest pain patients is an immediate ECG, complemented by blood tests for the cardiac markers Troponin I or T, to diagnose AMI. However, the sensitivity of an ECG is recognized as only around 55%-75% accurate. And these standard Troponin tests provide only guidance; as troponin levels rise over time and are difficult to detect during the early stages. The solution is the detection of very low levels of cardiac markers (Troponin I and T) using high sensitivity cardiac Troponin assays (biomarker detection/measurement process). Gold standard laboratory analyzers currently required to run these tests can give up to a 99.6% Negative Predictive Value (the probability of no AMI): two thirds of suspect patients might be “ruled out” and safely discharged early. However, laboratory analyzers are located centrally, extremely expensive and slow to turnaround results (typically 60 minutes).

MML intends to develop its unique technology platform into a hand-held device for use anywhere, designed to equal or exceed gold standard laboratory levels of accuracy. MML believes it can develop a cardiac device (“MIDS Cardiac”) with a number of key features; a) deliver definitive results at the POC within minutes with a single Troponin I or T test within 3 minutes and three panel test (additional cardiac biomarkers) within 8 minutes, b) accuracy equal or superior to gold standard laboratory high sensitivity assays, c) patient friendly requiring a market leading 5 microliter finger prick blood sample per tested analyte, d) automated operation suitable for use by minimally trained personnel and, e) at a fraction of the cost of laboratory analyzers and results not requiring interpretation from specialized medical personnel.

The global market for cardiac biomarker diagnostic tests is projected to reach $7.2 billion by 2018, of which $1.16 billion is expected to be served by POC devices. The POC market is in its infancy; existing POC hand held devices not accurate or reliable enough to definitively exclude AMI. MML’s ultimate goal is to match or exceed current gold standard” high-sensitivity cardiac assays, currently carried out on relatively slow, hugely expensive laboratory analyzers. One multinational diagnostic company claiming the highest levels of accuracy on the market for a POC cardiac marker device, in reality achieves a mere 65% sensitivity. This poor sensitivity comes nowhere near what MML believes the MIDS Cardiac can achieve. Despite the shortcomings of POC cardiac devices currently on the market, 100’s of millions of dollars per year are generated from device and strip sales which only aid the diagnosis of AMI in conjunction with ECG and clinical symptoms. Should the development of MIDS Cardiac be successful we believe the device will deliver unparalleled levels of accuracy, reliability, ease of use and cost savings.

MIDS IP (under license to MML)

The MIDS technology platform is protected by numerous patent applications now in the national phase in key geographic areas and already granted in China (grants in other territories almost certain to follow shortly).

• PCT application number PCT/GB2011/050749

• EP application number 11724436.8

• USA application number 13809367

• China application number 201180025701.5 (Granted)

• India application number 9624/CHENP/2012

The MML technical team has world class expertise and technical know-how of the application of magnetism to medical testing. This knowledge, alongside their commercial experience of the POC market, puts MML in an excellent situation to develop and commercialise MIDS Cardiac. MMLis well positioned to become a leading innovator in this field. The MML development team has:

●		Unparalleled expertise in the field of quantitative micro-magnetic and luminescence measurement techniques and applying that specialism to measure density and behaviour of particulate markers within body fluids.
●		Thirty years of experience in magnetic measurement and magnetic sensor (Hall Effect and Bio-Sensors) design and specifically in magnetic nano-particle applications within the medical and bio-engineering POC field.
●		High level experience of dealing with the measurement of changes within body fluids and tissues in micro and nano environments.
●		Extensive experience in the design and development of small, low cost POC measurement devices that read changes occurring on input strips, both from an engineering, physics (optics and magnetic), reader software and end user perspective.
●		Clear understanding of quality standards, timescales, processes and testing rigours required in the POC healthcare area.
●		Established relationships with commercial partners capable of creating licence revenue for enhancements of existing market products and to develop multiple new revenue streams from new applications.
●		A broad skills base across its management team covering scientific, technical and financial expertise. Team members have experience of closing deals related to products in this sector.

Liquidity and Capital Resources

As of June 30, 2016 and December 31, 2015, our total assets were $137,170 and $5,156, respectively, and our total current liabilities were $318,063 and $261,301 respectively. As of June 30, 2016, we had a working capital deficit of $179,806. Our financial statements report a net loss of $46,733 and $74,748 for the three and six months ended June 30, 2016, respectively.

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

Currently, we have only limited cash and similar assets, which do not allow us to continue with the funding obligations of the license with Sgenia or our obligations under the MML SSA. The License Agreement has not been declared in default. Further funding of the development project is not yet due as Sgenia has not completed the current stage of development terms.

As noted in our financial statements, in March 2016, we received notice of default on the Prior Notes. On May 17, 2016, we exchanged the Prior Notes for the May 2016 Notes (as defined in the financial statements).

Additionally, we received $40,000 as a further cash investment from the Investor on April 26, 2016, which was subscribed for after the Investor declared the default.The Company issued the April 2016 Note (as defined in the financial statements) in a principal amount of $40,000.00 to the Investor. The April 2016 Note and the May 2016 Notes contain standard anti-dilution provisions and other customary representations, warranties and covenants by, among and for the benefit of the parties. Additionally, the Investor has the right of first refusal in any future equity financing and impose restrictions on the Company’s ability to make distributions to its shareholder, repurchase shares of Common Stock, incur certain liabilities or sell assets. Notwithstanding the foregoing, the Company is permitted to raise additional capital relating to the Development and Exclusive License Agreement, effective December 4, 2013, as amended. The April 2016 Note and the May 2016 Notes also include customary event of default provisions and impose penalties on the Company in certain default events.

On June 6, 2016, we received a cash investment of $150,000 from an accredited investor in exchange for the issuance of 9,589,512 of common stock. The use of proceeds required the funds to be applied to participating in the MML project and for general working capital. The investor is required to provide additional loans in an aggregate amount of $640,000 to be applied to the Company’s ongoing obligations under the SSA and for general working capital.

Results of Operations

Overview

The following discussion of the results of operations, cash flows and changes in our financial position should be read in conjunction with our audited financial statements and notes for the year ended December 31, 2015, which are included in our Form 10-K, filed on May 20,2016.

Three Months Ended June 30, 2016 and 2015

Operating Expenses

Our operating expenses for the three months ended June 30, 2016 and 2015 are outlined in the table below:

	Three Months Ended
	June 30
	2016		2015
General and administrative expenses	$	43,859	$	30,227

General and administrative expenses have increased as a result of increased consulting services and an increase in our legal and accounting fees.

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

Cash Flows	Three Months Ended June 30, 2016		Three MonthsEnded June 30,2015
Net Cash Used in Operating Activities	$	(53,380)	$	(14,709)
Net Cash Used in Investing Activities	$	(130,000)	$	-
Net Cash Provided by Financing Activities	$	190,000	$	10,000
Cash increase (decrease) during the period	$	6,620	$	(4,709)

We had cash of $7,170 and $989 as of June 30, 2016 and December 31, 2015, respectively. We had a working capital deficit of $180,893 as of June 30, 2016, compared to working capital deficit of $256,145 as of December 31, 2015.

We used cash in operations of $53,380during the three months ended June 30, 2016, for funding the advance due under the MML SSA and certain expenses. We have not funded the Sgenia license during this period due to a lack of available funds and the fact that Sgenia and Zenon have not completed the preconditions for the next phase of funding.

During the three months ended June 30, 2015, cash used in operations of $14,709, mainly due to our corporate obligations and SEC reporting.

Six Months Ended June 30, 2016 and 2015

Operating Expenses

Our operating expenses for the six months ended June 30, 2016, and June 30, 2015, are outlined in the table below:

	Six Months Ended
	June 30
	2016		2015
Research and development expenses	$	-	$
General and administrative expenses	$	70,467	$	70,241


Cash Flows	Six Months Ended June 30, 2016		Six Months Ended June 30, 2015
Net Cash Used in Operating Activities	$	(53,819)	$	(33,794)
Net Cash Used in Investing Activities	$	(130,000)	$	-
Net Cash Provided by Financing Activities	$	190,000	$	30,000
Cash increase (decrease) during the period	$	6,181	$	(3,794)

We used cash in operations of $53,819 during the six months ended June 30, 2016, principally for funding the advance due under the MML SSA and our corporate obligations and SEC reporting. We have not funded the Sgenia licence during this period due to the fact that Sgenia and Zenon have not completed the preconditions for the next phase of funding. During the six months ended June 30, 2015, cash used in operations of $33,794, mainly due to our corporate obligations and SEC reporting.

We used cash in investing activities of $130,000 during the six months ended June 30, 2016, due to the joint venture agreement with MIDS Medical Ltd.

We received $40,000 of cash proceeds from a loan during the three months ended June 30, 2016. During the six months ended June 30, 2015, we received $30,000 of cash proceeds from two loans.

Based on our current operating plan, we will not generate revenue that is sufficient to cover our expenses for at least the next twelve (12) months. In addition, we do not have sufficient cash and cash equivalents to execute our operations for at least the next twelve (12) months. We will need to obtain additional financing to operate our business for the next twelve (12) months. We expect to raise the capital necessary to fund our company through advances or a private placement and public offering of our common stock. Additional financing, whether through public or private equity or debt financing, arrangements with stockholders or other sources to fund operations, may not be available, or if available, may be on terms unacceptable to us.

Our ability to maintain sufficient liquidity is dependent on our ability to raise additional capital. If we issue additional equity securities to raise funds, the ownership percentage of our existing stockholders would be reduced. New investors may demand rights, preferences or privileges senior to those of existing holders of our common stock. Debt incurred by us would be senior to equity in the ability of debt holders to make claims on our assets. The terms of any debt issued could impose restrictions on our operations. If adequate funds are not available to satisfy either short or long-term capital requirements, our operations and liquidity could be materially adversely affected and we could be forced to cease operations.

Off-Balance Sheet Arrangements

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

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not Applicable.

ITEM 4 CONTROLS AND PROCEDURES.

Disclosure Controls and Procedures

Under the supervision and the participation of our management, consists of our principal executive officer (who is also our principal financial officer), we conducted an evaluation as of June 30, 2016, of the effectiveness of the design and operation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended. Based on this evaluation, our principal executive officer, who is also our principal financial officer, concluded that our disclosure controls and procedures were not effective as of June 30, 2016, because (1) the Company lacks a functioning audit committee and there is a lack of independent directors on the board of directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures;

(2) the Company has inadequate segregation of duties consistent with control objectives; and (3) the Company has ineffective controls over its period end financial disclosure and reporting processes. The Company operations are also ineffective due to the lack of operating funding.

Changes in internal controls over financial reporting

There has been no change in our internal control over financial reporting that occurred during the fiscal quarter ended June 30, 2016 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II OTHER INFORMATION

ITEM 1 LEGAL PROCEEDINGS

None.

ITEM 1A RISK FACTORS

There have been no material changes to the risk factors previously disclosed in the Company’s annual report on Form 10-K, which was filed with the Securities and Exchange Commission on May 23,2016. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

ITEM 2 UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3 DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4 MINE SAFETY DISCLOSURES

N/A.

ITEM 5 OTHER INFORMATION

None.

ITEM 6 EXHIBITS

Exhibit Document Description

No.

10.1*	Form of Share Exchange Agreement, dated May 17, 2016, between the Company and certain Note Holder.
10.2*	Form Convertible Promissory Note, dated May 17, 2016, issued by the Company
10.3*	Form of Securities Purchase Agreement, dated June 6, 2016, between the Company and an accredited investor.
10.4	Subscription and Shareholders' Agreement (incorporated by reference to Exhibit 10.2 of the Form 10-Q of Bio-AMD, Inc., filed with the Securities and Exchanage Commission on August 15, 2016.)
31.1*	Certification of Principal Executive Officer who is also the Principal Financial Officer pursuant Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*	Certification of Chief Executive Officer who is also the Chief Financial Officer pursuant Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS*	XBRL Instance Document
101.SCH*	XBRL Taxonomy Extension Schema Document
101.CAL*	XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB*	XBRL Taxonomy Extension Labels Linkbase Document
101.PRE*	XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF*	XBRL Taxonomy Extension Definition Linkbase Document

*Filed herewith

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following person on behalf of the Registrant.

		ZENOSENSE, INC.

Date: August 22, 2016	By:	/s/Carlos Jose Gil
	Name:	Carlos Jose Gil
	Title:	Chief Executive Officer (Principal Executive Officer and Principal Financial Officer)