ZENOSENSE, INC. - Quarter Report: 2017 March (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 March 31, 2017

[ ] 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, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer	[ ]		Accelerated filer	[ ]
Non-accelerated filer	[ ]	(Do not check if a smaller reporting company)	Smaller reporting company	[ X ]
Emerging growth company	[ ]
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ] 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: 20,083,493 common shares issued and outstanding as of May 17, 2017

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	8

Item 4.	Controls and Procedures	8

	PART II – OTHER INFORMATION

Item 1.	Legal Proceedings	9

Item 1A.	Risk Factors	9

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	9

Item 3.	Defaults Upon Senior Securities	9

Item 4.	Mine Safety Disclosures	9

Item 5.	Other Information	9

Item 6.	Exhibits	9

	SIGNATURES	10

PART 1 - FINANCIAL INFORMATION

ZENOSENSE, INC.

ITEM 1. FINANCIAL STATEMENTS

As of March 31, 2017 and December 31, 2016 and

For the Three Months Ended March 31, 2017 and 2016

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-11

ZENOSENSE, INC.

Balance Sheet

(Unaudited)

	March 31, 2017			December 31, 2016
Assets

Current assets
Cash	$	1,461		$	10,271
Prepaid expense		6,249			9,375
Investment in joint venture		345,677			249,336
Total current assets		353,387			268,982

Total assets		353,387			268,982



Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable and accrued liabilities		29,003			23,691
Accounts payable and accrued liabilities - related party		85,724			85,671
Convertible note, net of discount of $421,870 and $313,846		113,671			73,319
Stock payable		67,500			67,500

Total current liabilities		295,898			250,181


Stockholders’ equity:
Capital stock 500,000,000 common stock authorized, $0.001 par value 18,338,022 and 16,677,339 common shares issued and outstanding, respectively		18,338			16,677
Additional paid-in capital		1,732,479			1,562,516
Accumulated deficit		(1,693,328	)		(1,560,392	)
Total stockholders’ equity		57,489			18,801
Total liabilities and stockholders’ equity	$	353,387		$	268,982

See accompanying notes to the financial statements.

F-1

ZENOSENSE, INC.

Statements of Operations

For the Three Months Ended March 31, 2017 and 2016

(Unaudited)

	March 31, 2017			March 31, 2016

Revenues	$	-		$	-

Operating expenses
General and administrative expenses		36,949			26,606
Total operating expenses		36,949			26,606

Loss from operations		(36,949	)		(26,606	)

Other income/(expense)
Interest expense		(62,328	)		(1,409	)
Loss in equity method investment		(33,659	)		-
Total other expense		(95,987	)		(1,409	)

Net loss	$	(132,936	)	$	(28,015	)

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

Weighted average common shares outstanding:
Basic and diluted		17,673,872			7,087,900

See accompanying notes to the financial statements.

F-2

ZENOSENSE, INC.

Statements of Cash Flows

For the Three Months Ended March 31, 2017 and 2016

(Unaudited)

	March 31, 2017			March 31, 2016
Operating Activities
Net loss	$	(132,936	)	$	(28,015	)
Adjustment to reconcile to net loss to net cash used in operating activities:
Amortization of debt discount		51,976			-
Loss in equity method investment		33,659			-
Changes in operating assets and liabilities:
Prepaid expense		3,126			2,500
Accounts payable and accrued liabilities		5,312			10,160
Accounts payable and accrued liabilities - related party		53			14,916
Cash used in operating activities		(38,810	)		(439	)

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

Financing activities
Proceeds from convertible notes payable		160,000			-
Cash provided by financing activities		160,000			-

Net increase (decrease) in cash		(8,810	)		(439	)

Cash, beginning of period		10,271			989

Cash, end of period	$	1,461		$	550

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

Non-cash investing and financing activities:
Beneficial conversion feature		160,000			-
Conversion of convertible notes to common stock		11,624			-

See accompanying notes to the financial statements.

F-3

ZENOSENSE, INC.

Notes to the Financial Statements

(Unaudited)

1.	Nature of operations

Zenosense, Inc. was incorporated under the laws of the State of Nevada on August 11, 2008 for the purpose of acquiring and developing mineral properties. The Company's mineral rights agreement was terminated on May 15, 2013, and as a result, the Company was no longer a pre-exploration stage company.

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 sensory technology for a methicillin resistant Staphylococcus aureus / Staphylococcus aureus (“MRSA/SA”) detection device and a cancer detective 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 2015 and July 2015 to extend to additional cancer sensory products and to modify and extend the development schedule and change the research funding budget to accommodate the lung cancer product as well as 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 SSA was modified in September 2016 and January 2017 to amend the amount and timings of certain payments, to reflect the cash requirements of MML.

2.	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 March 31, 2017, the Company had not yet achieved profitable operations, had accumulated losses of $1,693,328 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.

F-4

ZENOSENSE, INC.

Notes to the Financial Statements

3.	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.

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.

Equity method accounting for joint venture

As of March 31, 2017, the Company has a 40% interest in a joint venture with Bio-AMD UK Holdings Limited by way of subscription and shareholders agreement in a third party medical detection device developer, MIDS Medical Limited (“MML”). The investment in MML is accounted for using the equity method.

Subsequent events

The Company evaluated all events or transactions that occurred after March 31, 2017, 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 believe that there are any new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.

F-5

ZENOSENSE, INC.

Notes to the Financial Statements

4.	Equity Method Investment

On June 20, 2016, the Company entered into the MML SSA with thePartner utilizing a joint venture vehicle, MML 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. MML will have the right, under license, to use the 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 was modified in September 2016 and January 2017 to amend the amount and timings of certain payments, to reflect the cash requirements of MML.

During the three months ended March 31, 2017, the Company’s equity share of the net losses in MML was $33,659. The Company’s investment in MML during the three months ended was $130,000. As of March 31, 2017 the Company had a net investment of $345,677 in MML. The summarized balance sheet of MML as of March 31, 2017 is as follows:

Current Assets
Cash	$	206,047
Prepaid expenses		12,855
		218,901
Property and equipment		25,022
Intellectual property		975,000
Total Assets	$	1,218,923

Current Liabilities
Accounts payable - trade	$	22,286
Accrued liabilities		4,503
Total Current Liabilities		26,789

Equity
Share capital		1,625,000
Subscription receivable		(227,500	)
Other comprehensive income		(3,178	)
Accumulated deficit		(202,188	)
Total equity		1,192,134
Total Equity and Liabilities	$	1,218,923

The summarized statement of operations for MML for the three months ended March 31, 2017 is as follows:

Revenue	$	–
General and administrative expenses		84,148
Net loss	$	(84,148	)

F-6

ZENOSENSE, INC.

Notes to the Financial Statements

5.	Convertible Debt

On April 20, 2016 the Company issued a convertible note to the Noteholder in a principal amount of $40,000 (the “April Senior Note”). It is due on April 19, 2018, cannot be prepaid and bears interest at 5% per annum. On September 20, 2016, at the Noteholder’s discretion, it became convertible into shares of common stock of the Company at a price of $0.007 per share, subject to a blocker provision that limits the amount of common stock that may be issued at any time to 4.99% of the then outstanding shares of common stock. The Company has initially reserved 5,714,286 shares of Common Stock issuable upon the conversion feature.

On May 17, 2016, the Noteholders of four unsecured promissory notes in the aggregate of $110,000 (the “Prior Notes”) agreed to exchange these notes for two new convertible notes, (together the “May Senior Notes”) under two separate Securities Exchange Agreements. One note for the principal amount of $53,197 (the “$53,197 May Senior Note”), and the other for the principal amount of $62,547 (the “$62,547 May Senior Note”), for a combined aggregate principal amount of $115,744. The May Senior Notes bear interest at 5% per annum and are due on May 16, 2018 and may not be prepaid by the Company. The May Senior Notes can be converted 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 of common stock that may be issued at any time to 4.99% of the outstanding shares of common stock. The Company has initially reserved 16,534,857 shares of Common Stock issuable upon the conversion feature.

On October 18, 2016, the Noteholder entered into a Debt Purchase and Assignment Agreement (the “Assignment Agreement”) with an accredited investor as defined in Rule 501(a) of the 1933 Securities Act (the “Junior holder”) to purchase $42,000 (the “Junior Note”) of the principal amount of the $62,547 May Senior Note. The Assignment Agreement stipulated that the Junior Note is (a) subordinate to the Noteholder’s balance of the $62,547 May Senior Note; and (b) unconvertible unless the trading price of the Company’s securities is equal to or greater than $0.15 per share based on the volume weighted average (”VWAP”) price of the preceding five trading days.

On November 1, 2016, after notice from the Noteholder, the Company reissued the $62,547 May Senior Note in two notes: (a) the Junior Note in an amount of $42,000 and (b) the balance of the $62,547 May Senior Note, this being $21,968 to include interest due through November 1, 2016 (the “November Senior Note”). The Junior Note contains terms reflecting the Assignment Agreement stipulations of subordination and VWAP conversion otherwise the two notes carry forward the same terms of the May Senior Note.

On September 29, 2016, the Company issued an unsecured convertible note in the principal amount of $60,000 to the Noteholder (the “September 2016 Note”) which also granted an option to the Noteholder to provide four unsecured convertible loans (the “Option Loans”): (a) by October 31, 2016, $140,000; (b) by November 30, 2016, $170,000 (c) by January 31, 2017, $180,000; and (d) by March 31, 2017, $100,000.

On October 27, 2016, the Noteholder exercised the first Option Loan and Company issued an unsecured note (the “October 2016 Note”) in the principal amount of $140,000, to the Noteholder.

On December 6, 2016, the September 2016 Note was amended (the “Note Amendment”) to revise the Option Loans amounts and timing to (a) on December 6, 2016, a loan of $30,000; (b) by January 31, 2017, a loan of $180,000; (c) by February 28, 2017, a loan of $140,000; and (d) by March 31, 2017, a loan of $100,000. All other terms and conditions remained the same. Simultaneously with the Note Amendment, the Company issued a note to the Noteholder in the principal amount of $30,000 (the “December 2016 Note”).

On February 1, 2017, the September 2016 Note was further amended (the “Second Note Amendment”) to revise the Option Loans amounts and timing to allow the Noteholder to provide three unsecured convertible loans to the Company (the “New Option Loans”): (a) by March 15, 2017, $160,000; (b) by April 15, 2017, $170,000; and (c) by May 15, 2017, $90,000. All other terms and conditions remained the same.

On March 3, 2017, the Company issued an unsecured note (the “March 2017 Note”) in the principal amount of $160,000 to the Noteholder which retained the option to provide the balance of the New Option Loans. On receipt of these funds, a payment of $130,000 was made to MML.

F-7

ZENOSENSE, INC.

Notes to the Financial Statements

The terms and conditions of certain commitment loans, the Option Loans, the New Option Loans, (collectively the “New Loans”) are the same (conversion and floor prices having been adjusted in line with the terms of the commitment loans at the time of the reverse stock split completed on August 4, 2016), and bear an interest rate of 10% per annum, based on a 360-day year, and are due four years from the issuance date. The Company may, at any time prior to the maturity date, prepay any unconverted amount of the New Loans in full or in part. The Noteholder may, at any time prior to the maturity date convert any or all of the New Loans into shares of common stock of the Company (the “Common Stock”) at either (a) $0.07 per share (subject to adjustment), or (b) a 15% discount to the 10-day Volume Weighted Average Price per share, 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 held by the Investor and its affiliates, or the Noteholder and its affiliates to exceed 4.99% of the outstanding shares of common stock. On the maturity date of each of the New Loans, any outstanding amount shall automatically and mandatorily convert into common stock at a price of $0.07 per share (subject to adjustment). The New Loans also contain standard anti-dilution provisions.

The Company evaluated the notes to have beneficial conversion features with an intrinsic value exceeding the principal balances. 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 and $0.07. The total discount is being amortized through interest expense using the interest method over the term of the notes. For the three months ended March 31, 2017, the Company recorded amortization of debt discount in the amount of $51,976. In addition, the Company recorded additional beneficial conversion feature related to the March 2017 Note, mentioned above, in the amount of $160,000. The summary of convertible notes payable for the three months ended March 31, 2017 is as follows:

Principal balances of the convertible notes	$	535,541
Less discount related to beneficial conversion features		(534,308	)
Add amortization of debt discount		51,976
Balance at March 31, 2017	$	113,671

6.	Common stock

Zenosense’s authorized capital consists of 500,000,000 shares of common stock, with par value of $0.001.

In February 2014, the Company issued 423,529 shares of common stock to an investor for cash proceeds of $180,000.

On April 8, 2014, a third party purchased 55,556 shares of the Company’s common stock for cash proceeds of $25,000. The third party also committed to purchase an additional 900,000 shares of Company’s common stock in four tranches for an aggregate purchase price of $450,000, subject to certain conditions.

On July 28, 2014, the loan from a third party investor, in the principal amount of $13,000, and the accrued interest of $100 was converted into 65,500 shares of our common stock. The shares were issued as restricted stock, pursuant to an exemption from registration under the federal securities laws

On July 28, 2014, the Company entered into a Securities Purchase Agreement under which the investor committed to purchase an aggregate of 1,370,000 shares of the Company’s common stock, par value $0.001 per share, for an aggregate purchase price of $274,000. The initial purchase of shares was made on July 28, 2014 for 357,000 shares for a purchase price of $71,500. Two additional purchase instalments were made in August and September. Each instalment was for 337,500 shares at a purchase price of $67,500 per instalment. The shares when issued are pursuant to an exemption from registration under the federal securities laws. On November 11, 2014, the Company received $67,500 for 337,500 shares of common stock. As of December 31, 2016 and 2015 the shares in connection with the final investment have not been issued.

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.

F-8

ZENOSENSE, INC.

Notes to the Financial Statements

On August 3, 2016, the Company implemented a 1-for-7 reverse split of its common stock. All share and per share data in these financial statements and footnotes have been retrospectively adjusted to account for this reverse stock split.

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, for a purchase price of $150,000 and a commitment by the Investor to provide a series of unsecured convertible loans (the “Commitment Loans”) in an aggregate loan amount of $640,000, payable in four individual amounts, the first payment due by September 20, 2016, the Noteholder retaining the right of first refusal on the Commitment Loans. The first Commitment Loan was not entered into due to the capital requirements of the Company being less than anticipated, primarily due to lower than expected MML development costs during the quarter, which allowed for an amendment to the MML funding obligations of the Company. Consequently, the Company issued the October 2016 Note in the amount of $60,000 rather than draw upon the Commitment Loans which was provided by the Noteholder. Subsequently the Noteholder has exercised its right to provide a number of additional loans.

On September 29, 2016, the Investor, the Company and the Noteholder entered into an amendment to the SPA pursuant to which the Investor, the Noteholder and the Company agreed that should the Noteholder elect to provide the Option Loans, as amended, the Investor will not be required to, or will it be permitted to, provide the Commitment Loans. In the event the Noteholder does not provide the Option Loans, the Investor will be required to provide the Commitment Loans in an amended aggregate amount of $580,000, on dates and in amounts to be agreed between the Investor and the Company.

On February 16, 2017, the Company issued 828,571 shares of common stock in exchange for the conversion of $5,800 of the principal amount due under the Junior Note. Consequently, the principal amount owing on the Junior Note reduced to $36,200 plus accrued interest.

On February 16, the Company issued 832,000 shares of common stock in exchange for the conversion of $5,824 of the principal amount due under the May $53,197 Senior Note. Consequently, the principal amount owing on the Senior Note reduced to $47,373 plus accrued interest.

7.	Commitments

MML Funding Arrangement

The Company’s funding of MML was limited to an initial committed aggregate payment of £450,500 (approximately $650,000 at exchange rates prevailing at the time of the MML SSA) for Phase 1. In addition, the Company may be required to provide an additional £45,000 (approximately $56,040 at March 31, 2017 exchange rates) to be available after March 31, 2017, payable within 20 days after the Company receives written notice from MML.

On September 29, 2016, the MML SSA was amended (the “First Amendment”) to provide for a committed aggregate payment of $650,000, payable in USD under an amended timetable; all other provisions of the MML SSA remained in force. Under the First Amendment, the Company had made payments to MML of $130,000 on August 2, 2016 and $30,000 on October 1, 2016. Subsequent payments were amended to: (a) by October 31, 2016, $110,000, (b) by November 30, 2016, $152,500; (c) by January 31, 2017, $152,500; and (d) by March 31, 2017, $75,000.

On December 6, 2016, the MML SSA was further amended (the “Second Amendment”) to provide for an amended payment timetable. The Company had made payments to MML of $130,000 on August 2, 2016, $30,000 on October 1, 2016 and $110,000 on October 30, 2016. Subsequent payments were amended to; (a) within 10 days of December 6, 2016, $22,500; (b) by January 31, 2017, $152,500; (c) by February 31, 2017, $130,000; and (d) by March 31, 2017, $75,000. All other provisions remained in force.

On January 31, 2017, the Company entered into an additional amendment (the “Third Amendment”) to the MML SSA to provide for payments to be made: (a) by March 15, 2017, $130,000; (b) by April 15, 2017, $152,500; and (d) by May 15, 2017, $75,000. MML also obtained the right to draw down all or part of the earliest of any undrawn Phase 1 Payments in advance of the payment due date, with 14 days advance notice to the Company (the “Accelerated Payment”). All other provisions and terms of the MIDS Agreement and the aggregate amount of the Phase 1 Payments, as amended, remain in force.

As of May 12, 2017, the Company has made payments in an aggregate amount of $650,000 to MML.

F-9

ZENOSENSE, INC.

Notes to the Financial Statements

Sgenia License Agreement

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 an MRSA/SA detection device and cancer detective device and other improvements and variations to the devices (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 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 2015, 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 March 31, 2017. The Company is currently committed to advancing approximately EUR 656,000 (approximately $704,262 USD), 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 March 31, 2017. 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.

F-10

ZENOSENSE, INC.

Notes to the Financial Statements

8.	Income taxes

Our deferred tax assets consist of the benefit from net operating loss (“NOL”) carry-forwards. For the three month ended March 31, 2017, the related deferred tax assets of approximately $377,051, has been fully offset by a valuation allowance.

The NOL carry-forwards begin to expire in 2029.

As of March 31, 2017, the Company had net operating loss carry-forwards of $1,693,328.

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 will obtain his services as the Chief Executive Officer of the Company. Mr. Gil will receive a base salary and additional compensation equal to 10% of the net sales generated from the License Agreement. On August 12, 2016, the Company amended Mr. Carlos Jose Gil’service agreement to include additional compensation, if any, to be equal to 10% of the revenue received by Zenosense, Inc. from MML as a result of any future commercialization of the MIDS project.

During the three months ended March 31, 2017, the Company recorded $14,796 of general and administrative expenses related to amounts paid/owed to Ksego Engineering S.L. for services rendered by Mr. Gil. As of March 31, 2017, the Company owes Mr. Gil $85,724. No additional compensation based on net sales has been earned to date.

10.	Subsequent events

On April 2, 2017, the Company issued an unsecured convertible note (the “April 2017 Note”) in the principal amount of $170,000, to the Noteholder in exchange for a loan of $170,000. The Noteholder retained the option to provide the final amount of $90,000 of the New Option Loans. On receipt of these funds, a payment of $152,500 was made to MML in line with the terms of the Third Amendment.

On April 4, 2017, the Company issued 916,900 shares of common stock in exchange for the conversion of $6,418 of the principal amount due under the May $53,197 Senior Note. Consequently, the principal amount owing on the May $53,197 Senior Note reduced to $40,955 plus accrued interest.

On April 4, 2017, the holder of the Junior Note (the "Original Junior Note Holder") notified the Company that it has sold and assigned an aggregate amount of $22,300 of the $42,000 Junior Note to a new investor (the "Additional Junior Note Holder"). The Company therefore cancelled the Junior Note, and issued a new note in the principal amount of $22,300 to the Additional Junior Note Holder (the "Additional Junior Note") and a new note in the principal amount of $14,712 to the Original Junior Note Holder.

On April 6, 2017, the Company issued 828,571 shares of common stock in exchange for the conversion of $5,800 of the principal amount due under the Additional Junior Note. Consequently, the principal amount owing on the Additional Junior Note was reduced to $16,500 plus accrued interest.

On May 8, 2017, the Company issued an unsecured convertible note (the “May 2017 Note”) in the principal amount of $90,000, to the Noteholder in exchange for a loan of $90,000. On receipt of these funds, a payment of $75,000 was made to MML in line with the terms of the Third Amendment.

On May 14, 2017, the Company issued an unsecured convertible note (the “ May 14, 2017 Note”) in the principal amount of $50,000, to the Noteholder in exchange for a loan of $50,000. The terms and conditions of the May 14, 2017 Note are the same as the New Loans with the exception of a conversion price of $0.40. The proceeds of the loan will be used for general working capital.

F-11

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. Respective statements concerning the development of both MIDS Cardiac™ and other devices under development have been made based on information obtained from MIDS Medical Ltd. and Zenon Biosystem, which the Company believes to be accurate, but have not been independently verified.

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 aside from our 40% interest in MIDS Medical Ltd (“MML”).

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 new 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 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, MML, a UK Limited company of which we own a 40% interest as of July 1, 2016. Our interest in MML was obtained in exchange for a funding commitment 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 during the development and the MIDS intellectual property will be transferred to MML in the event MML concludes a commercial deal for MIDS with a third party.

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, issued convertible debt and converted funds advanced to the Company into common shares of the Company.

Plan of Operations

Our business plan is to develop devices to be used at the point-of-care (“POC”) in hospitals and other medical care centers to detect Acute Myocardial Infarction 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 was funding the development of the Sgenia Products. Because the development activities of the Sgenia Products has slowed, and certain milestones have not been achieved, one of which is the start of hospital testing, we have not been providing additional funding for the development of the Sgenia Products as provided in the License Agreement. Additionally, because of the development status, we have not been successful in obtaining our funding for further development of the Sgenia Products.

As a result of the our participation in MML, our primary focus since June 2016 has shifted to the funding and co-development of the MIDS technology platform to develop a hand held device, MIDS Cardiac™, 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. Utilizing a magnetic nanoparticle detection technology (“MIDS”), the intention is to deliver a test platform that can produce laboratory accuracy standard results or better in a handheld device in less than eight minutes. The technology platform is already protected by one patent grant and several patent applications now in the national phase in key geographic areas. The initial cardiac device, if successful, would target a global market for cardiac biomarker testing predicted to reach $7.2 billion by 20181. The test platform is also expected be applicable to a multiplicity of immunoassay tests representing a potential overall market opportunity estimated to be worth $23.7 billion per annum worldwide by 20192.

The MML SSA, as amended on September 28, 2016, December 6, 2017 and January 31, 2017 (the “Amendments”) provides for a series of payments (“Phase 1 Payments”) in an aggregate amount of $650,000 and 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 Amendments primarily reflected changes in the timings of funds required under the development budget which included a change to the original plan to allow MML to explore a potential enhancement to the MIDS nanoparticle detection method and the exploration of the potential development of a “Magnetic Bridge” detection technique based on the MIDS technology. As of May 12, 2017, all of the $650,000 commitment has been provided to MML and as of the date of this report the Company has not received a request for the Contingency.

1 http://www.bccresearch.com/pressroom/bio/global-market-for-vitro-cardiac-biomarkers-reach-$7.2-billion-2018

2 http://www.marketsandmarkets.com/PressReleases/immunoassay.asp

The MML SSA contains various provisions to govern our funding obligations: 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.

The parties to the MML 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.

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 the due date, the Company also has additional investor control rights over MML, including representation on the board of directors, rights over the appointment and employment of senior management persons, incurring indebtedness, entry into major transactions, budget approval rights, accounting practices and general operational management supervisory rights. Our Chief Executive Officer, Carlos Gil, is a director of MML.

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

At March 31, 2017, we had a working capital of $57,489. Our current cash assets are not sufficient to cover our current and expected expenses, including the contractual funding obligation under the License Agreement and the MML 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 but there can be no assurances that we will be able to secure any additional financing on acceptable terms and conditions, or at all. If cash resources become insufficient to satisfy our ongoing cash requirements and our funding obligations under the license agreement, we would be in default under the License Agreement and could potentially lose all the funds previously invested in development.

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 as amended in a minimum total additional amount of £45,000 if the Contingency is requested (as of April 14, 2017),(2) we will have to fund the future development expenses of Sgenia in the approximate amount of €683,000, (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.

Liquidity and Capital Resources

As of March 31, 2017 and December 31, 2016, our total assets were $353,387 and $268,982, respectively, and our total current liabilities were $295,898 and $250,181, respectively. As of March 31, 2017, we had a working capital of $57,489. Our financial statements report a net loss of $132,936 for the three months ended March 31, 2017.

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.

Based on our current operating plan, we do not expect to generate any revenue for at least the next twelve months. We do not have sufficient cash and cash equivalents to fund our operations for at least the next twelve months. We will need to obtain additional financing to operate our business for the next twelve months. We hope to obtain the capital necessary to fund our business through private placements and public offerings 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.

In March 2016, we received notice of default on four unsecured promissory notes in the aggregate of $110,000 (the “Prior Notes”), with a due date in June 2016. We entered into discussions with the Noteholder and in the absence of any alternative, and the unlikelihood of completing on a main funding by the due date (which required the flexibility to repay all amounts due under the notes), agreed on May 17, 2016, exchanged them for two new convertible notes totalling $115,744 (the “May Senior Notes), one for the principal amount of $53,197 and the other for the principal amount of $62,547, both with a maturity date of May 16, 2018. The May Senior Notes bear 5% interest per annum, are due on May 16, 2018 and cannot be prepaid. The May Senior Notes are 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% of the outstanding shares of Common Stock. The May Senior Notes also 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 the May Senior Notes 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 Segnia License Agreement, effective December 4, 2013, as amended. The May Senior Notes also include customary event of default provisions and impose penalties on the Company in certain default events.

Additionally, we received $40,000 as a further cash investment from the Noteholder holding the Prior Notes on April 26, 2016 (the “Investment”), which was subscribed for after the investor declared the default. In consideration of the Investment and upon the Closing, the Company issued the April Senior Note in a principal amount of $40,000 to the Noteholder. The decision to accept the Investment was based on an urgent need to clear immediate liabilities, become current in our filing obligations and provide certain working capital while we continued to seek a main funding, which, if obtained, would allow us to repay all the outstanding notes and commence the lung cancer and MRSA device development.

On June 6, 2016, we received a cash investment of $150,000 from an accredited investor, (the “Investor”) in exchange for the issuance of 9,589,512 shares of common stock under a Securities Purchase Agreement (the “SPA”). The use of proceeds required the funds to be applied to participating in the MML project and for general working capital. The Investor was required to provide Commitment Loans, subject to a right of first refusal from the Noteholder, in an aggregate amount of $640,000 to be applied to the Company’s ongoing obligations under the MML SSA and for general working capital.

On September 29, 2016 the Noteholder took up the right of first refusal and, the Company issued the September Note in the principal amount of $60,000 to the Noteholder. Under the September 2016 Note, the Company also granted an option to the Noteholder to provide the Option Loans to the Company: (a) by October 31, 2016, $140,000; (b) by November 30, 2016, $170,000 (c) by January 31, 2017, $180,000; and (d) by March 31, 2017, $100,000. Simultaneously the Investor, the Company and the Noteholder entered into an amendment to the SPA pursuant to which the Investor, the Noteholder and the Company agreed that should the Noteholder elect to provide the Option Loans, the Investor will not be required to, nor will it be permitted to, provide the Commitment Loans. In the event the Noteholder does not provide the Option Loans, the Investor will be required to provide the Commitment Loans in an amended aggregate amount of $580,000, on dates and in amounts to be agreed between the Investor and the Company.

On October 27, 2016, the Company issued the October 2016 Note in the principal amount of $140,000, to the Noteholder in exchange of a loan of $140,000. The October 2016 Note was the first out of the four Option Loans and the Noteholder retained the option to provide the balance of the Option Loans.

On December 6, 2016, the Company and the Noteholder entered into the Note Amendment reflecting the change in the Phase 1 Payments schedule. Simultaneously with the execution of the amendment, the Company issued the December 2016 Note in the principal amount of $30,000 in exchange of a loan of $30,000.

On February 1, 2017, the Company and the Noteholder entered into the Second Note Amendment reflecting the change in the Company’s cash requirements brought about by the change in the Phase 1 Payments schedule detailed above. This revised the Option Loans amounts and timing to allow the Noteholder to provide three New Option Loans: (a) by March 15, 2017, $160,000; (b) by April 15, 2017, $170,000; and (c) by May 15, 2017, $90,000. All other terms and conditions remained the same.

All other terms and conditions of the New Option Loans are the same as the Option Loans and are listed in Note 5 of the Financial Statements. In the event the Company receives a notice of Accelerated Payment, the Company will immediately inform the Investor which agrees to either provide or decline to provide the funds required within 3 calendar days of such request being received.

On March 3, 2017, the Company issued the March 2017 Note in the principal amount of $160,000, to the Noteholder which retained the option to provide the balance of the New Option Loans. On receipts of these funds, a payment of $130,000 was made to MML in line with the terms of the Third Amendment.

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, 2016, which are included in our Form 10-K filed on April 17, 2017.

Three Months Ended March 31, 2017 and 2016

Our operating results for the three months ended March 31, 2017 and for the three months ended March 31, 2016 are summarized as follows:

	Three Months Ended March 31
	2017		2016
Revenue	-		-
Operating Expenses	$	36,949	$	26,606
Other Expenses		95,987		1,409
Net Loss	$	132,936		28,015

Revenues

We have earned no revenues since our inception.

Operating expenses

Our operating expenses for the three months ended March 31, 2017 and 2016 consist of general and administration expenses. General and administrative expenses have increased as a result of increased consulting services and an increase in our legal expense.

Other expenses

Our other expenses consist of interest expense and the loss in equity method investment in MML. The amounts increased as a result of increased debt in late 2016 and the investment in MML in June 2016.

Net loss

We have 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 March 31, 2017			Three Months Ended March 31, 2016
Net cash used in operating activities	$	(38,810	)	$	(439	)
Net cash used in investing activities	$	(130,000	)	$	-
Net cash provided by financing activities	$	160,000		$	-
Cash increase (decrease) during the period	$	(8,810	)	$	(439	)

We had cash of $1,461 and $10,271 as of March 31, 2017 and December 31, 2016, respectively. We had a working capital of $57,489 as of March 31, 2017, compared to working capital of $18,801 as of December 31, 2016.

We used cash in operations of $38,810 during the three months ended March 31, 2017, principally for funding our corporate obligations and SEC reporting. We have not funded the Sgenia license during this three month 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.

We used cash in investing activities of $130,000 during the three months ended March 31, 2017, due under the MML SSA.

We received $160,000 of cash proceeds from loans during the three months ended March 31, 2017.

Limited Operating History: Need for Additional Capital

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 March 31, 2017, 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 March 31, 2017, 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 March 31, 2017, 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 April 17, 2017. 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

ITEM 6 EXHIBITS

The following documents are included herein:

Exhibit No.	Document Description
31.1	Certification of Principal Executive Officer who is also the Principal Financial Officer pursuant Section 302 of the Sarbanes-Oxley Act of 2002.	Filed herewith
32.1	Certification of Chief Executive Officer who is also the Chief Financial Officer pursuant Section 906 of the Sarbanes-Oxley Act of 2002.	Filed herewith
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document	Filed herewith.
101.LAB	XBRL Taxonomy Extension Labels Linkbase Document	Filed herewith.
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document	Filed herewith.
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document	Filed herewith.
101.INS	XBRL Taxonomy Extension Instance Linkbase Document	Filed herewith.
101.SCH	XBRL Taxonomy Extension Schema 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: May 18, 2017	By:	/s/ Carlos Jose Gil
	Name:	Carlos Jose Gil
	Title:	Chief Executive Officer (Principal Executive Officer and Principal Financial Officer)