**UNITEDSTATESSECURITIES AND EXCHANGE COMMISSION****Washington, D.C. 20549**

 

**Form 10-QSB**

 

** **
| **ý**                                                                                                                                                            | **QUARTERLY REPORT UNDER SECTION 13 OR 15(d)  OF THE SECURITIES EXCHANGE ACT OF 1934** |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------|
|                                                                                                                                                                  |                                                                                   |
| **For  the quarterly period ended June 30, 2002.**                                                                                                                    |
|                                                                                                                                                                  |
| **o**                                                                                                                                                                 | **TRANSITION REPORT UNDER SECTION 13 OR 15(d)  OF THE EXCHANGE ACT**                   |
|                                                                                                                                                                  |                                                                                   |
| **For  the transition period from             to          ** |
|                                                                                                                                                                  |
| **Commission  file number: 0-26807**                                                                                                                                  |

** **

** **

**CYTOGENIX,INC.**(Exact name of small business issuer as specified in its charter)

 

 

 

| **NEVADA**                                                      |   | **76-0484097**                     |
|-----------------------------------------------------------------|--------|------------------------------------|
| (State or other jurisdiction  of incorporation or organization) |   | (IRS Employer  Identification No.) |
|                                                            |   |                               |
| **9881  South Wilcrest, Houston, Texas**                        |   | **77099**                          |
| (Address of principal  executive offices)                       |   | (Zip Code)                         |

                                                                                                  

 

| **(281)  988-6118**                                    |
|--------------------------------------------------------|
| (Issuer’s telephone  number, including area code) |

 

 

 

 

The number of shares outstanding of each of theissuer’s classes of common equity, as of the latest practicable date:

 

As of June 30, 2002, 57,803,016 shares of the issuer’s common stock was outstanding.

 

Transitional Small Business Disclosure Format (checkone):    Yes o    No ý

 

 

## ****

## ** **

## **PART I**

 

## **Item1                     Financial Statements**

** **

**CYTOGENIX, INC .**

**(A Development Stage Company)**

**BALANCE SHEET**

** **

 

 

 
|                                                                                     |   | **JUNE 30, 2002** |      |
|------------------------------------------------------------------------------------------|--------|-------------------|-----------|
| **ASSETS**                                                                               |   |              |      |
|                                                                                     |   |              |      |
| **CURRENT  ASSETS**                                                                      |   |              |      |
| Cash                                                                                     |   | $                 | 37,169    |   |
| Deferred  consulting fees                                                                |   | 1,027,492         |      |
| Prepaid expenses  and other current assets                                               |   | 19,696            |      |
|                                                                                     |   |              |      |
| Total Current  Assets                                                                    |   | 1,084,357         |      |
|                                                                                     |   |              |      |
| **PROPERTY  AND EQUIPMENT, net**                                                         |   | 112,473           |      |
|                                                                                     |   |              |      |
| **PATENTS,**net of  accumulated amortization of $40,440                                  |   | 334,560           |      |
|                                                                                     |   |              |      |
| **TOTAL  ASSETS**                                                                        |   | $                 | 1,531,390 |   |
|                                                                                     |   |              |      |
|                                                                                     |   |              |      |
| **LIABILITIES AND STOCKHOLDERS’  EQUITY**                                           |   |              |      |
|                                                                                     |   |              |      |
| **CURRENT  LIABILITIES**                                                                 |   |              |      |
| Accounts payable  and accrued liabilities                                                |   | 475,918           |      |
|                                                                                     |   |              |      |
| **TOTAL  LIABILITIES**                                                                   |   | 475,918           |      |
|                                                                                     |   |              |      |
| **STOCKHOLDERS’  EQUITY**                                                           |   |              |      |
| Common stock,  $0.001 par value, 150,000,000 shares authorized, 57,803,016 shares issued |   | 57,803            |      |
| Additional  paid-in capital                                                              |   | 14,216,790        |      |
| Treasury stock,  547,250 shares; at cost                                                 |   | (629,972          | )         |
| Accumulated  development stage deficit                                                   |   | (12,589,149       | )         |
|                                                                                     |   |              |      |
| **TOTAL  STOCKHOLDERS EQUITY**                                                           |   | 1,055,472         |      |
|                                                                                     |   |              |      |
| **TOTAL  LIABILITIES AND STOCKHOLDERS’ EQUITY**                                     |   | $                 | 1,531,390 |   |

## ** **

 

2

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**CYTOGENIX, INC.**

**(A Development Stage Company)**

** STATEMENT OF OPERATIONS**

 

 
|                                        |   |                                     |     |                                   |   |                    |   |       |       | **From February 10, 1995** |   |
|---------------------------------------------|--------|------------------------------------------|----------|----------------------------------------|--------|-------------------------|--------|------------|------------|----------------------------|--------|
|                                        |   | **For the Three Months Ended June  30,** |     | **For the Six Months Ended June  30,** |   | **(Date of Inception)** |   |
|                                        |   | **2002**                                 |     | **2001**                               |   | **2002**                |   | **2001**   |       | **To June 30, 2002**       |   |
| **REVENUES**                                |   |                                     |     |                                   |   |                    |   |       |       |                       |   |
| Research kit sales                          |   | $                                        | —   |                                   | $      | —                  |   | $          | 1,700      |                       | $      | — |   | $ | 2,575 |   |
| Gain on sale of security                    |   | —                                   |     | —                                 |   | —                  |   | —     |       | 881                        |   |
| Dividend income                             |   | —                                   |     | —                                 |   | —                  |   | —     |       | 1,633                      |   |
|                                        |   |                                     |     |                                   |   |                    |   |       |       |                       |   |
| **Total Revenues**                          |   | —                                   |     | —                                 |   | 1,700                   |   | —     |       | 5,089                      |   |
|                                        |   |                                     |     |                                   |   |                    |   |       |       |                       |   |
| **OPERATING EXPENSES**                      |   |                                     |     |                                   |   |                    |   |       |       |                       |   |
| Research and development                    |   | 268,621                                  |     | 181,832                                |   | 535,090                 |   | 451,413    |       | 4,198,791                  |   |
| General and administrative                  |   | 640,658                                  |     | 455,477                                |   | 917,709                 |   | 752,557    |       | 8,237,806                  |   |
| Depreciation and amortization               |   | 13,348                                   |     | 16,091                                 |   | 20,710                  |   | 23,610     |       | 147,641                    |   |
| Equity in losses of joint venture           |   | —                                   |     | —                                 |   | —                  |   | —     |       | 10,000                     |   |
|                                        |   |                                     |     |                                   |   |                    |   |       |       |                       |   |
| **Total Expenses**                          |   | 922,627                                  |     | 653,400                                |   | 1,473,509               |   | 1,227,580  |       | 12,594,238                 |   |
|                                        |   |                                     |     |                                   |   |                    |   |       |       |                       |   |
| **NET LOSS**                                |   | $                                        | (922,627 | )                                      | $      | (653,400                | )      | $          | (1,471,809 | )                          | $      | (1,227,580 | ) | $ | (12,589,149 | ) |
|                                        |   |                                     |     |                                   |   |                    |   |       |       |                       |   |
| **BASIC AND DILUTED LOSS PER COMMON SHARE** |   | $                                        | (0.02    | )                                      | $      | (0.02                   | )      | $          | (0.03      | )                          | $      | (0.04 | ) |   |   |
|                                        |   |                                     |     |                                   |   |                    |   |       |       |                       |   |
| **BASIC WEIGHTED AVERAGE SHARES**           |   | 55,014,619                               |     | 31,057,971                             |   | 50,471,373              |   | 30,245,076 |       |                       |   |

 

3

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**CYTOGENIX, INC.**

**(A Development Stage Company)**

**STATEMENT OF CASH FLOWS**

 
|                                                                               |   |                                  |       |     |   | **From February 10, 1995 (Date of  Inception) To** |   |
|------------------------------------------------------------------------------------|--------|---------------------------------------|------------|----------|--------|----------------------------------------------------|--------|
|                                                                               |   |                                  |       |     |   |                                               |
|                                                                               |   | **For the Six Months Ended June 30,** |       |     |
|                                                                               |   | **2002**                              |       | **2001** |   | **June 30, 2002**                                  |   |
|                                                                               |   |                                  |       |     |   |                                               |   |
| **CASH  FLOWS FROM OPERATIONS**                                                    |   |                                  |       |     |   |                                               |   |
| Net loss                                                                           |   | $                                     | (1,471,809 | )        | $      | (1,227,580                                         | )      | $ | (12,589,149 | ) |
| **Adjustments  to reconcile net (Loss) to net cash used by operating activities:** |   |                                  |       |     |   |                                               |   |
| Depreciation and  amortization                                                     |   | 31,334                                |       | 23,610   |   | 158,265                                            |   |
| Common stock  issued for services                                                  |   | 68,448                                |       | 145,988  |   | 6,161,500                                          |   |
| Equity in losses  of joint venture                                                 |   | —                                |       | —   |   | 10,000                                             |   |
| Additional  penalty in treasury shares                                             |   | —                                |       | —   |   | 125,765                                            |   |
| Deferred  consulting fees                                                          |   | 688,360                               |       | —   |   | 688,360                                            |   |
|                                                                               |   |                                  |       |     |   |                                               |   |
| **Changes  in operating assets and liabilities:**                                  |   |                                  |       |     |   |                                               |   |
| Prepaid expenses  and other assets                                                 |   | (8,500                                | )          | (34,577  | )      | (19,696                                            | )      |
| Notes receivable                                                                   |   | —                                |       | —   |   | (25,100                                            | )      |
| Accounts payable  and accrued liabilities                                          |   | (420,328                              | )          | 528,129  |   | 538,856                                            |   |
| Stockholders’  loans                                                          |   | —                                |       | —   |   | 135,990                                            |   |
|                                                                               |   |                                  |       |     |   |                                               |   |
| **Net  cash used by operating activities**                                         |   | (1,112,495                            | )          | (564,430 | )      | (4,815,209                                         | )      |
|                                                                               |   |                                  |       |     |   |                                               |   |
| **CASH  FLOW FROM INVESTING**                                                      |   |                                  |       |     |   |                                               |   |
| Payments for  additions to propery and equipment                                   |   | (7,500                                | )          | —   |   | (225,000                                           | )      |
| Investment in  joint venture                                                       |   | —                                |       | —   |   | (10,000                                            | )      |
|                                                                               |   |                                  |       |     |   |                                               |   |
| **Net  cash used in investing activities**                                         |   | (7,500                                | )          | —   |   | (235,000                                           | )      |
|                                                                               |   |                                  |       |     |   |                                               |   |
| **CASH  FLOW FROM FINANCING**                                                      |   |                                  |       |     |   |                                               |   |
| Proceeds from  note payable                                                        |   | —                                |       | 250,000  |   | 250,000                                            |   |
| Payment on note  payable                                                           |   | —                                |       | (150,000 | )      | (250,000                                           | )      |
| Treasury shares  sold subject to mandatory repurchase                              |   | —                                |       | —   |   | 1,104,803                                          |   |
| Proceeds from  issuance of common stock and exercise of common stock warrants      |   | 1,141,476                             |       | 574,730  |   | 3,957,575                                          |   |
| Proceeds from  issuance of common stock warrants                                   |   | —                                |       | —   |   | 25,000                                             |   |
| Bank overdraft                                                                     |   | —                                |       | (44,496  | )      | —                                             |   |
|                                                                               |   |                                  |       |     |   |                                               |   |
| **Net  cash provided by financing activities**                                     |   | 1,141,476                             |       | 630,234  |   | 5,087,378                                          |   |
|                                                                               |   |                                  |       |     |   |                                               |   |
| **Increase  in cash and cash equivalents**                                         |   | 21,481                                |       | 65,804   |   | 37,169                                             |   |
|                                                                               |   |                                  |       |     |   |                                               |   |
| **Balance  at beginning of year**                                                  |   | 15,688                                |       | —   |   | —                                             |   |
|                                                                               |   |                                  |       |     |   |                                               |   |
| **Balance  at end of year**                                                        |   | $                                     | 37,169     |     | $      | 65,804                                             |   | $ | 37,169 |   |

 

4

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**1.     NATURE OF OPERATIONS AND ORGANIZATION**

 

CytoGenix, Inc.(the “Company”) is a development stage company that was incorporated in Nevadaon February 10, 1995.  It is abiotechnology company focusing on controlled cellular dedifferentatiation andtransdifferentiation processes.  TheCompany has acquired the exclusive rights for applications to a specializedexpression vector capable of producing single stranded DNA (ssDNA) in botheukaryotes and prokaryotes.

 

**2.     BASIS OF PRESENTATION**

 

The accompanyingunaudited financial statements have been prepared by Cytogenix, Inc. (the“Company”) and include all adjustments that are, in the opinion of management,necessary for a  fair presentation offinancial results for the six months ended June 30, 2002, pursuant to the rulesand regulations of the Securities and Exchange Commission.  All adjustments and provisions included inthese statements are of normal recurring nature.

 

The informationcontained herein is condensed from that which would appear in the annualfinancial statements; accordingly, the financial statements included hereinshould be reviewed in conjunction with the financial statements and relatednotes thereto contained in the Annual Report on Form 10-KSB filed by theCompany with the Securities and Exchange Commission for the fiscal year endedDecember 31, 2001.  Accountingmeasurements at interim dates inherently involve greater reliance on estimatesthan at year end.  The results ofoperations for the interim period presented are not necessarily indicative ofthe results that can be expected for the entire year. 

 

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**3.     GOING CONCERN**

 

Since inception,the Company has been considered a development stage company and has notgenerated any operating revenue.  Tofund its development stage activities to date, the Company has relied on thesale of its common stock.  There issubstantial doubt that the Company will generate sufficient revenues during2002 to meet its operating cash requirements. Accordingly, the Company’s ability to continue operations through 2002depends on its success in obtaining equity or debt financing in an amountsufficient to support its operations. This raises substantial doubt about its ability to continue as a goingconcern.  The financial statements donot include any adjustments that might result from this uncertainty.

 

 

**4.     STOCK BASED COMPENSATION**

 

During September1999, the Company established an Employee Stock Purchase Plan (the “PurchasePlan”), under which employees may purchase common shares at par value quarterlyup to 25% of their gross salary with the number of shares computed at theclosing price on the last day of each pay period.  The purchase plan was made retroactive to January 1, 1999 and iscompensatory since only a maximum discount of 15% is allowed for the purchaseplan to be non-compensatory.

 

For the periodended June 30, 2002, the Company issued 2,514,940 shares of its common stock inreturn for services; 191,279 shares were issued to employees of the Company and2,323,661 shares were issued for consulting services provided by non-employees.  Compensation cost and the aggregate fairvalue of consulting services for the six period ended June 30, 2002 was $70,253and $798,885 respectively.  Theaggregate fair value consulting services includes $554,295 of deferredconsulting fees as described in Note 5.

 

**5.     CONSULTING AGREEMENT**

 

For the six monthperiod ended June 30, 2002, the Board of Directors approved a consultingagreement with a company (“the Consultant”) that commenced March 19, 2002 andcontinues for a one year period.  Theservices to be rendered include consultations with management of the Companywith respect to financial relations, business promotion, business growth anddevelopment including merger and acquisitions, and general businessconsultation.

 

The agreementcalls for 2,200,000 shares of restricted common stock of the Company to beissued and delivered to an escrow agent and which shall be payable in thefollowing manner:  1,000,000 shares willbe due and payable to the Consultant and/or assigns immediately upon signing ofthe agreement, 200,000 shares will be due and payable to the Consultant and/orassigns on March 31, 2002, and the remaining 1,000,000 shares will be due andpayable to the Consultant and/or assigns in equal installments of 100,000shares beginning on April 30, 2002 and ending on January 31, 2003.  In accordance with SFAS 123 and EITF 96-18,the Company has accounted for the consulting agreement based on the fair marketvalue of the Company’s stock at the commencement

 

6

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date of theagreement.  The Company expensed$215,705 associated with this agreement and recorded deferred consulting feesof $554,295 as of June 30, 2002.

 

 

**6.     PRIVATE PLACEMENTS**

 

For the six monthperiod ended June 30, 2002, the Company has received  total proceeds of $1,141,476 for 10,397,411 shares issued inprivate placements.

 

**7.     SUPPLEMENTAL CASH FLOW INFORMATION**

 

For the six-monthperiod ended June 30, 2002, there were issuances of common stock for deferredconsulting fees of $770,000.

 

 

 

**Item2     Management’s Discussion and Analysisor Plan of Operation.**

** **

        IN ACCORDANCE WITH THE “SAFE HARBOR”PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995, THE COMPANYNOTES THAT CERTAIN STATEMENTS IN THIS FORM 10-QSB WHICH ARE FORWARD-LOOKING ANDWHICH PROVIDE OTHER THAN HISTORICAL INFORMATION, INVOLVE RISKS ANDUNCERTAINTIES THAT MAY IMPACT THE COMPANY’S RESULTS OF OPERATIONS. THESEFORWARD-LOOKING STATEMENTS INCLUDE, AMONG OTHERS, STATEMENTS CONCERNING THECOMPANY’S GENERAL BUSINESS STRATEGIES, FINANCING DECISIONS, AND EXPECTATIONSFOR FUNDING CAPITAL EXPENDITURES AND OPERATIONS IN THE FUTURE. WHEN USEDHEREIN, THE WORDS “BELIEVE,” “PLAN,” “CONTINUE,” “HOPE,” “ESTIMATE,” “PROJECT,”“INTEND,” “EXPECT,” AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY SUCHFORWARD-LOOKING STATEMENTS. ALTHOUGH THE COMPANY BELIEVES THAT THE EXPECTATIONSREFLECTED IN SUCH FORWARD-LOOKING STATEMENTS ARE BASED ON REASONABLEASSUMPTIONS, NO STATEMENTS CONTAINED IN THIS FORM 10-QSB SHOULD BE RELIED UPONAS PREDICTIONS OF FUTURE EVENTS. SUCH STATEMENTS ARE NECESSARILY DEPENDENT ONASSUMPTIONS, DATA OR METHODS THAT MAY BE INCORRECT OR IMPRECISE AND MAY BEINCAPABLE OF BEING REALIZED. THE RISKS AND UNCERTAINTIES INHERENT IN THESEFORWARD-LOOKING 

 

7

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STATEMENTS COULDCAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE EXPRESSED IN OR IMPLIED BYTHESE STATEMENTS.

 

        READERS ARE CAUTIONED NOT TO PLACE UNDUERELIANCE ON THE FORWARD-LOOKING STATEMENTS CONTAINED HEREIN, WHICH SPEAK ONLYAS OF THE DATE HEREOF. THE INFORMATION CONTAINED IN THIS FORM 10-QSB ISBELIEVED BY THE COMPANY TO BE ACCURATE AS OF THE DATE HEREOF. CHANGES MAY OCCURAFTER THAT DATE, AND THE COMPANY WILL NOT UPDATE THAT INFORMATION EXCEPT ASREQUIRED BY LAW IN THE NORMAL COURSE OF ITS PUBLIC DISCLOSURE PRACTICES.

 

        IMPORTANT RISK FACTORS THAT COULD CAUSEACTUAL RESULTS TO DIFFER MATERIALLY FROM THE EXPECTATIONS REFLECTED IN ANYFORWARD-LOOKING STATEMENT HEREIN INCLUDE AMONG OTHER THINGS: (1) THE ABILITY OFTHE COMPANY TO QUICKLY PENETRATE THE MARKET WITH ITS CURRENT THERAPEUTICPRODUCTS AGAINST LARGER, WELL-FINANCED COMPETITORS WITHIN THE MARKETPLACE; (2)THE ABILITY OF THE COMPANY TO GENERATE REVENUES IS SUBSTANTIALLY DEPENDENT UPONCONTINUED RESEARCH AND DEVELOPMENT FOR, AND FDA APPROVAL OF, THERAPEUTICPRODUCTS; (3) THE ABILITY OF THE COMPANY TO ATTRACT AND RETAIN KEY OFFICERS,KNOWLEDGEABLE SALES AND MARKETING PERSONNEL AND HIGHLY TRAINED TECHNICALPERSONNEL; (4) THE ABILITY OF THE COMPANY TO OBTAIN ADDITIONAL FINANCING FROMPUBLIC AND PRIVATE EQUITY MARKETS TO FUND OPERATIONS AND FUTURE GROWTH; AND (5)THE ABILITY OF THE COMPANY TO GENERATE REVENUES TO COVER OPERATING LOSSES ANDPOSITION THE COMPANY TO ACHIEVE POSITIVE CASH FLOW.

 

8

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        The Company has budgeted $3,200,000 foroperations in fiscal year 2002, of which $1,700,000 has been allocated forgeneral and administrative costs and $1,437,420 has been allocated for researchand development, including five live animal studies that are estimated to cost$50,000 per study. Dr. Yin Chen, Vice President of Research and Development,has determined the scientific protocols for three of these studies. The Companywill rely on equity financing to satisfy its working capital requirements, andas of June 30 , 2002 the Company had $37,169 in cash on hand. Of the $1,437,420 budgeted for research anddevelopment expenses, the Company anticipates $498,650 will be paid pursuant tothe terms of the Company’s sponsored research agreements with Columbia University,Yale University, The Children’s Research Center and Baylor College of Medicine,$235,000 will be paid as patent attorneys fees and expenses, $162,000 will bepaid as salary to the Company’s employees and researchers and $46,000 will bepaid for supplies. The remaining $495,770 will be used for miscellaneousresearch expenses and for initiating future research projects.

 

        There are currently over 600 U.S.patents for antisense molecules with therapeutic potential, each of which is aprospective licensee for CytoGenix’s technology. The Company anticipatesentering into licenses for a $100,000 initiation fee and either a minimumroyalty fee of $50,000 per year or a royalty fee equal to 15% of the licensee’snet sales, whichever is greater.

 

        The Company’s ability to continueoperations through December 31, 2002 and beyond depends on its success inobtaining equity financing in an amount sufficient to support its operationsthrough that date. There is substantial doubt that the Company will be able togenerate sufficient revenues or be able to raise adequate capital to remain agoing concern through December 31, 2002. Based on historical yearly financialrequirements, operating capital of approximately $3.2 million will be neededfor each of the calendar years 2002 and 2003.

 

        The Company expects its sources ofrevenue for the next several years to consist primarily of payments underfuture product development joint ventures and of licensing agreements as wellas possible royalties. The process of developing the Company’s products willrequire significant additional research and development, preclinical testingand clinical trials, as well as regulatory approvals. These activities,together with the Company’s general and administrative expenses, are expected toresult in operating losses for at least two more years. The Company will notreceive product revenue from therapeutic products unless it completes clinicaltrials and successfully commercializes or arranges for the commercialization ofone or more products, the accomplishment of which no assurance can be given.

 

        The Company is subject to risks commonto biopharmaceutical companies, including risks inherent in its research anddevelopment efforts and clinical trials, reliance on collaborative partners, enforcementof patent and proprietary rights, the need for future capital, potentialcompetition and uncertainty in obtaining required regulatory approval. In orderfor a product to be commercialized, it will be necessary for the Company andits collaborators to conduct pre-clinical tests and clinical trials,demonstrate efficacy and safety of the Company’s product candidates, obtainregulatory clearances and enter into distribution and marketing arrangementseither directly or through sublicenses. From the Company’s inception throughthe date of this document, the major role of management has been to obtainsufficient funding for required research, monitoring research progress anddeveloping and licensing intellectual property.

 

        The Company expects to incur losses forthe foreseeable future due to the ongoing activities of the Company to developnew products through research and development and to develop joint ventures andlicensing agreements with third parties. The Company expects its existing operations to continue to result innegative cash flow and working capital deficiencies that will require theCompany to continue to obtain additional capital. There can be no assurancethat the necessary financing will be available to the Company or, if available,that the same will be on terms satisfactory or favorable to it. It is possiblethat additional equity financing will be highly dilutive to existingshareholders.

 

        The Company is currently operating at aloss and expects to continue to depend on cash generated from the sale of debtand equity securities to fund its operating deficit. There can be no assurancethat the Company will be able to generate sufficient revenues to meet itsoperating cash and growth needs or that 

 

9

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any equity or debtfunding will be available or at terms acceptable to the Company in the futureto enable it to continue operating in its current form.

 

PART II

 

**ITEM1**.          LEGAL PROCEEDINGS. 

 

     Charles S. Boyd and Charles M. Bardwell,each of whom is a former director of the Company (the "Plaintiffs"),filed a petition on March 19, 2002 in the 6lst Judicial District Court ofHarris County, Texas, which names the Company and the three other board membersas defendants (collectively, the "Defendants"). The petition seeks,among other things, an ex-parte temporary restraining order based uponPlaintiff's allegations, temporarily enjoining and rcstraining the Defendantsfrom committing the Company to any future obligations or the negotiation of anyagreements until the holding of a shareholders' meeting for the purpose of theelection of directors, from hindering the Plaintiffs in the performance oftheir duties as directors, from attempting to remove the Plaintiffs asdirectors, and from issuing any of the Company's stock to employees who areboth officers and directors. The petition also seeks acknowledgement of certainresolutions purportedly approved at a board meeting held on January 17, 2002.

 

 A Temporary Restraining Order was issued by thecourt ex-parte, without notice to Defendants and without any opportunity toappear, respond and deny the allegations of Plaintiffs upon which the order wasissued. The Company vigorously denies the allegations of Plaintiffs' petition.On March 27, 2002, a hearing was held before the presiding judge of the 61stJudicial District Court to consider the application of the Plaintiffs forissuance of a temporary injunction. The presiding judge, after hearing thearguments of counsel for both parties, announced in open court, prior to theintroduction of any evidence, that Plaintiffs' request for relief was, in hisopinion, "moot". Thereafter, the parties agreed to stipulationsconcerning, among other things, the holding of a shareholder's meeting to electdirectors, the acknowledgement of the directors to be bound by the January 17,2002 board resolutions governing conduct of the board and management until thenext election by the shareholders of directors, and not to remove Plaintiffs  as directors pending that election. Thestipulations further provided that the Plaintiffs' petition would be dismissedfollowing the 2002 annual meeting of shareholders. By stipulation, noinjunctive relief was granted by the Court and the ex-parte temporaryrestraining orders were dissolved.

 

The Plaintiffs' filed a supplemental petition on May 30, 2002alleging various violations of the March 27, 2002 agreed stipulations,including the issuance of shares of common stock of the Company without, thePlaintiffs' allege, appropriate approval of those issuances by the Company'sboard of directors. The Company held its annual meeting of shareholders on May31, 2002. Subsequent to that meeting, the Company filed counterclaims againstMr. Bardwell to remove him as counsel for the Plaintiffs and for breach offiduciary duties.

 

 

**ITEM2**.          CHANGES IN SECURITIES

 

        On April 26, 2002, the Company issued8,133,050 shares of common stock. These shares were sold for an aggregate cashprice of  $975,466 (or $0.12 per share)in a private placement to accredited investors (Carol Watral-41,667 shares,Brian Baker-62,500 shares, Paul Nelkin-62,500 shares, John Gattineri-42,000shares, Gary Templeton-10,000 shares, Kelly McCullough-10,000 shares, WarrenHammer-20,000 shares , Mark MacKain-416,667 shares, Series Unltd, Inc.-138,000shares, Alan Baisch-50,000 shares, Loretta De Domenico-60,000 shares, IreneGuarino-60,000 shares, Gary McGuire-30,000 shares, Peter Imbert-100,000 shares,Marc White-200,000 shares, Don Dow-50,000 shares, Robert Petraglia-42,000shares, Paul Goldman-100,000 shares, Robert Helfman-4,050 shares, InezSpain-16,667 shares, Harold Farrison-83,333 shares, Joanne Masso-10,000 shares, Peter Corbett-20,833 shares, Maria Haslam-10,000 shares, LaurenceAncker-20,000 shares, Linda Lawlor-20,000 shares, John Sullivan-200,000 shares, R. Dino Landino-12,500 shares, Robert Pietrantonio-100,000 shares, RichardCecil-300,000 shares, Stephen Howard-41,667 shares, Brian Sullivan-20,000shares, Vincent Farricielli-5,000 shares, Charles Farricielli-5,000 shares,Kirk Huntsman-100,000 shares, Barney Jeffcoats-200,000 shares, AndrewYasinoff-41,167 shares, John Ehlert-62,500 shares, Brad Houston-50,000 shares,Robert Houston-150,000 shares, Kent LaGasse-41,667 shares, Hydeman FamilyPartners-258,333 shares, Robert B. Hydeman Jr.-100,000 shares, Alicia DHydeman-50,000 shares, Blake B. Hydeman-50,000 shares, Wendy Blessing-100,000shares, Benjamin Blessing-50,000 shares, Nicholas Blessing-50,000 shares,Jennifer Blessing-50,000 shares, Doug Nelkin-16,667 shares, Joel Ray-100,000shares, R & D Kozak-20,000 shares, Mathew Calavan-50,000 shares,Jett-1,700,000 shares, Donald Lawlor-41,667 shares, William Merlo-100,000shares, Lawrence Cohen-50,000 shares, Robert Patrella-16,667 shares, Roland Violette-1,200,000shares, John Skubinski-70,000 shares, Frederick-Decker-41,667 shares, Chou MingTu-200,000 shares, Ruan Mei Lan-300,000 shares and Wisteria Trading Co.-100,000shares) pursuant to the exemption from registration provided by Section 3(b) ofthe Securities Act of 1933 and Rule 504 thereunder. The consideration of$926,466 for 7,724,719 of these shares were received during the first quarter,but certificates were not issued until April 26, 2002, and were applied tofirst quarter financials.

 

        On May 14, 2002, the Company issued837,069 shares of common stock as commission for services rendered inconnection to the private placement. These shares were issued (Hydeman FamilyPartners LTD -420,162 shares , Rick Barry-58,917 shares , Doug C. Nelkin-201,834shares, Marc S. Nelkin-20,334 shares , Brad Houston-48,250, ElizabethMcGiboney- 10,000 shares, Peter T. Imbert- 54,200 shares, Donald J. Lawlor-12,872 shares, John Gattineri- 10,000 and Andrew Yosinoff-500 shares)aggregating $217,638 (or $0.26 per shre).

 

        On May 20, 2002 the Company issued76,300 shares of common stock.  Of theseshares, 25,834 were issued to Richard A. Cecil for services rendered inconnection to the private placement aggregating $6,719 (or $0.26 per share).The remaining 50,466 shares were issued to Mark R Wisner for past servicesrendered aggregating $3,875 (or an average of $0.08 per share). 

 

        On June 11, 2002 the Company issued56,084 shares of common stock for services rendered. Of these shares, 22,200were issued to Marc S. Nelkin- 12,200 and Doug C. Nelkin- 10,000 shares forservices rendered in connection to the private placement aggregating $4,662 (or$0.21 per share). The remaining 33,884 shares were issued to Frank 

 

 

10

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Vazquez for pastservices rendered aggregating $3,769 (or $0.11 per share). Also, the Companysold 100,000 shares of common stock for an aggregate cash price of  $12,000 (or $0.12 per share) in a privateplacement to accredited investor Roland L. Violette pursuant to the exemptionfrom registration provided by Section 3(b) of the Securities Act of 1933 andRule 504 thereunder.

 

 

 
| **ITEM 3.** | **DEFAULTS  UPON SENIOR SECURITIES.** |
|-------------|---------------------------------------|
|        |                                  |   |   |   |
|        |                                  | None |   |   |

** **

**ITEM4.         **SUBMISSION OF MATTERS TO A VOTE OFSECURITY HOLDERS.

 

 OnMay 31, 2002, the Company held the annual meeting of the shareholders forpurposes of the following:

 

(1) ELECTION OF DIRECTORS. To elect fivedirectors to hold office until the 2003 Annual Meeting of Shareholders or untiltheir successors are elected and qualified;

 

(2) RATIFICATION AND APPROVAL OF THEAPPOINTMENT OF INDEPENDENT AUDITORS. To ratify and approve the appointment ofThomas Leger & Co. L.L.P. as the independent auditors for the Company forthe fiscal year ending December 31, 2002.

 

A majority of the shares entitled to vote,present in person or represented by proxy, constituted a quorum at the AnnualMeeting. For the approval of Proposal No.1 (the election of directors), thefive candidates receiving the greatest number of affirmative votes would be elected,provided a quorum is present and voting. The affirmative vote of a majority ofthe shares present in person or represented by proxy at the Annual Meeting wasrequired to ratify and approve Proposal No. 2 (appointment of independentauditors).

 

On April 30, 2002, the record date for theannual Shareholder meeting held on May 31, 2002, there were 56,733,563 sharesof the Company's common stock issued and outstanding. All outstanding shareswere entitled to vote on the two proposals. On May 31, 2002, a quorum wasreached totaling 38,976,784 shares voted.

 

The results of the voting on the abovematters presented to the Shareholders were as follows:

 

(1) ELECTION OF DIRECTORS. The fivedirectors submitted to the shareholders for approval were elected as follows: 

 

 MalcolmH. Skolnick, Ph.D., JD: 37,896,563 shares voting for, 1,009,638 shares votingagainst and 70,583 shares abstaining.

 

 MichaelWalters: 37,896,563 shares voting for, 1,009,638 shares voting against and70,583 shares abstaining.

 

 LawrenceWunderlich: 37,896,563 shares voting for, 1,009,638 shares voting against and70,583 shares abstaining.

 

 FrankVazquez: 37,896,563 shares voting for, 1,009,638 shares voting against and70,583 shares abstaining.

 

 ScottE. Parazynski, M.D.: 37,896,563 shares voting for, 1,009,638 shares votingagainst and 70,583 shares abstaining.

 

(2) RATIFICATION AND APPROVAL OF THEAPPOINTMENT OF INDEPENDENT AUDITORS. The appointment of Thomas Leger & Co.L.L.P. as the independent auditors for the Company for the fiscal year endingDecember 31, 2002 was approved by the shareholders, with 38,694,489 sharesvoting for, 22,000 shares voting against and with 11,733 shares abstaining.

 

**ITEM5.**                OTHER INFORMATION.

 

  None

 
| **ITEM 6** | EXHIBITS AND REPORTS ON FORM 8-K |
|------------|----------------------------------|
|       |                             |   |   |   |
|       | (a)                              | Exhibits. |
|       |                             |   |   |   |
|       |                             | Exhibit Number | Description |
|       |                             | 3.1* |   | Articles of Incorporation of Cryogenic Solutions,  Inc. |
|       |                             |   |   |   |
|       |                             | 3.2* |   | Certificate of Amendment dated November 1, 1995 of  Articles of Incorporation of Cryogenic Solutions, Inc. |
|       |                             |   |   |   |
|       |                             | 3.3* |   | Bylaws of Cryogenic Solutions, Inc. |
|       |                             |   |   |   |
|       |                             | 99.1. |   | Certification pursuant to 18 U.S.C. Section 1350, as adopted  pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 - Chief Exeuctive  Officer |
|       |                             |   |   |   |
|       |                             | 99.2. |   | Certification pursuant to 18 U.S.C. Section 1350, as adopted  pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 - Chief Financial  Officer |
|            |                                  |  |  |  |  |  |

----

| *   Incorporated by reference to such Exhibit to the 10-SB of the Company  filed on January 31, 2001.                                                     |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                           |   |   |   |   |
|                                                                                                                                                           | (b) | Financial Statement Schedules. |
|                                                                                                                                                           |   |   |   |   |
|                                                                                                                                                           |   |
| All schedules are  omitted because they are not applicable or because the required information  is contained in the Financial Statements or the Notes thereto. |

 

11

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|   |   |                 |   |   |
|--------|--------|----------------------|--------|--------|
|   | (c)    | Reports on Form 8-K. |   |   |
|   |   |                 |   |   |
|   |   | None.                |   |   |

 

 

SIGNATURES

 

 In accordancewith the requirements of the Exchange Act, the registrant caused this report tobe signed on its behalf by the undersigned, thereunto duly authorized.  

 
|                  |   | CYTOGENIX, INC. |
|-----------------------|--------|-----------------|
|                  |   |            |   |
| Date: August 14, 2002 |   | By:             | /s/  Malcolm  Skolnick |
|                  |   |            | Malcolm Skolnick |
|                  |   |            | President and Chief Executive Officer |

 

 

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