10-Q 1 cyto10q033109.txt 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, 2009 []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 registrant as specified in its charter) NEVADA 76-0484097 ------ ---------- (State or other jurisdiction of (IRS Employer Identification No.) incorporation or organization) 3100 Wilcrest, Suite140, Houston, Texas 77042 --------------------------------------- ----- (Address of principal executive offices) (Zip Code) Issuer's telephone number, including area code: (713) 789-0070 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 is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of "accelerated filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated Accelerated Non-accelerated Smaller reporting filer [ ] filer [ ] filer [ ] company [X] Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes |_| No |X| The number of shares outstanding of the issuer's common stock, par value $.001 per share, as of May 14, 2009 was 169,404,590. TABLE OF CONTENTS PART I FINANCIAL INFORMATION ITEM 1. Financial Statements Balance Sheets as of March 31, 2009 (Unaudited) and December 31, 2008 3 Statements of Operations for the three months ended March 31, 2009 and 2008 (Unaudited) 4 Statements of Cash Flows for the three months ended March 31, 2009 and 2008(Unaudited) 5 Notes to Financial Statements (Unaudited) 6 ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 8 ITEM 3. Quantitative and Qualitative Disclosures About Market Risk 11 ITEM 4. Controls and Procedures 12 PART II OTHER INFORMATION ITEM 1. Legal Proceedings 12 ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds 13 ITEM 6. Exhibits 14 SIGNATURES 15 2

The accompanying notes are an integral part of these financial statements. 3 CYTOGENIX, INC. STATEMENTS OF OPERATIONS THREE MONTHS ENDING MARCH 31, 2009 AND 2008 (UNAUDITED) 2009 2008 ----------- ----------- REVENUES $ 0 $ 13,160 COSTS OF REVENUES 0 10,354 ----------- ----------- GROSS MARGIN 0 2,806 COSTS AND EXPENSES: Research and development 2,462 247,419 General and administrative 185,450 554,565 Consulting expense 277 52,009 Depreciation and amortization 15,004 15,860 ----------- ----------- TOTAL COST AND EXPENSES 203,193 869,853 ----------- ----------- LOSS FROM OPERATIONS (203,193) (867,047) OTHER INCOME (EXPENSE): Interest income 0 517 Interest expense 0 (16,725) ----------- ----------- TOTAL OTHER INCOME (EXPENSE) 0 (16,208) ----------- ----------- NET LOSS $(203,193) $(883,255) =========== =========== Net loss per share: Basic and diluted net loss $ (0.01) $ (0.01) per share ----------- ----------- Weighted average shares outstanding: Basic and diluted 161,515,701 146,594,885 =========== =========== The accompanying notes are an integral part of these financial statements. 4 CYTOGENIX, INC. STATEMENTS OF CASH FLOWS THREE MONTHS ENDING MARCH 31, 2009 AND 2008 (UNAUDITED) 2009 2008 --------- --------- Net Loss $(203,193) $(883,255) Adjustments to reconcile net loss to net cash used in operating activities: Deprecation and amortization 15,004 15,860 Stock-based compensation 0 200,547 Changes in assets and liabilities: Accounts receivable 0 16,000 Inventory 0 10,142 Prepaid expenses 2,448 9,338 Accounts payable 5,887 182,858 Accrued expenses 91,356 267,239 --------- --------- Net cash used in operating activities (88,498) (181,271) --------- --------- INVESTING ACTIVITIES: Proceeds from restricted long term investment 0 53,402 Deposit on building contract 0 (300,000) Purchase of property and equipment 0 0 --------- --------- Net cash provided by (used in) investing activities 0 (246,598) FINANCING ACTIVITIES: Payment on notes payable 0 (45,014) Proceeds from notes payable - related party 950 300,000 Proceeds from stock subscriptions 165,000 151,000 --------- --------- Net cash provided by financing activities 165,950 405,986 --------- --------- NET CHANGE IN CASH 77,452 (21,883) CASH, beginning of period 5,475 162,042 --------- --------- CASH, end of period $ 82,927 $ 140,159 --------- --------- SUPPLEMENTAL CASH FLOW INFORMATION: Interest paid $ 0 $ 1,339 --------- --------- Income taxes paid $ 0 $ 0 --------- --------- The accompanying notes are an integral part of these financial statements. 5 CYTOGENIX, INC. NOTES TO FINANCIAL STATEMENTS MARCH 31, 2009 (UNAUDITED) NOTE 1 - NATURE OF ACTIVITIES AND BASIS OF PRESENTATION Nature of Business CytoGenix, Inc. ("CytoGenix" or the "Company") was incorporated on February 10, 1995 in Nevada. CytoGenix is a biotechnology company focusing on controlled cellular processes. CytoGenix has acquired the rights for application to a specialized expression vector capable of producing single stranded DNA (ssDNA) in both eukaryotes and prokaryotes. Unaudited Interim Financial Statements: The accompanying unaudited interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States and applicable Securities and Exchange Commission ("SEC") regulations for interim financial information. These financial statements are unaudited and, in the opinion of management, include all adjustments (consisting of normal recurring accruals) necessary to present fairly the balance sheets, statements of operations and statements of cash flows for the periods presented in accordance with accounting principles generally accepted in the United States. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to SEC rules and regulations. It is presumed that users of this interim financial information have read or have access to the audited financial statements and footnote disclosure for the preceding fiscal year contained in the Company's Annual Report on Form 10-K. Operating results for the interim periods presented are not necessarily indicative of the results that may be expected for the year ending December 31, 2009. NOTE 3 - COMMITMENTS AND CONTINGENCIES Frank Vazquez and Lawrence Wunderlich v. CytoGenix, Inc. In November 2006, former Chief Financial Officer (CFO), Lawrence Wunderlich, and former Chief Operations Officer (COO), Frank Vazquez, resigned from the Company. The Company and former officers are pursuing arbitration to determine obligations consistent with the circumstances surrounding the former officers' resignations. On June 30, 2008, CytoGenix, Inc. (the "Company"), Lawrence Wunderlich and Frank Vazquez entered into a Settlement Agreement and Mutual Release (the "Settlement Agreement") regarding arbitration No. 70 144 08333 06, styled Frank Vazquez and Lawrence Wunderlich v. CytoGenix, Inc., before the American Arbitration Association in Houston, Texas, (the "Arbitration"). Pursuant to the Settlement Agreement, all claims of Messrs. Vazquez and Wunderlich against the Company, and all claims of the Company against each of Messrs. Vazquez and Wunderlich have been released, acquitted and forever discharged. The Settlement Agreement obligates the Company to issue to (i) Mr. Wunderlich warrants to acquire, on or before June 30, 2011, 1,066,666 shares, 1,066,667 shares and 1,066,667 shares of the Company's common stock at exercise prices of $0.05, $0.10 and $0.15, respectively, and (ii) Mr. Vazquez warrants to acquire, on or before June 30, 2011, 666,666 shares, 666,667 shares and 666,667 shares of the Company's common stock at exercise prices of $0.05, $0.10 and $0.15, respectively. Under the Settlement Agreement the Company is also obligated to pay $150,000 each to Messres. Vazquez and Wunderlich in equal monthly installments ($3,125 per month to each) over a four-year period commencing October 1, 2008. The Company has negotiated with Messres. Vazquez and Wunderlich to defer the commencement of the monthly payments set forth in the settlement agreement from October 1, 2008 to April 1, 2009. As of the date of this filing, the Company has not made any payments to Vazquez and Wunderlich and they have given the Company a default letter and requested the Judge to execute the Agreed Default Judgment in the Settlement Agreement. 6

(1) Weighted-average exercise price (2) Weighted-average contractual life remaining NOTE 6 - COMMON STOCK In the first quarter of 2009, the Company received $165,000 and for 11,000,000 shares at a price of $0.015per share as part of its February 14, 2009 private placement. NOTE 8 - SUBSEQUENT EVENTS Subsequent to March 31, 2009, the Company received $35,000 in proceeds from a private placement offering of 2,333,333 shares of restricted common stock. On April 24, 2009, the Company executed a Settlement Agreement, Indemnification and Mutual Release with Malcolm Skolnick, the Company's former Chairman of the Board, President and Chief Executive Officer for the sum of $10.00 and the intent to negotiate a consulting agreement. Under the terms of the Agreement all parties to the Agreement agreed to dismiss any and all actual and potential claims that have been raised or which could have been raised at the time of the execution of the Agreement. 7 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. IN ACCORDANCE WITH THE "SAFE HARBOR" PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995, THE COMPANY NOTES THAT CERTAIN STATEMENTS IN THIS FORM 10-Q WHICH ARE FORWARD-LOOKING AND WHICH PROVIDE OTHER THAN HISTORICAL INFORMATION, INVOLVE RISKS AND UNCERTAINTIES THAT MAY IMPACT THE COMPANY'S RESULTS OF OPERATIONS. THESE FORWARD-LOOKING STATEMENTS INCLUDE, AMONG OTHERS, STATEMENTS CONCERNING THE COMPANY'S GENERAL BUSINESS STRATEGIES, FINANCING DECISIONS, AND EXPECTATIONS FOR FUNDING CAPITAL EXPENDITURES AND OPERATIONS IN THE FUTURE. WHEN USED HEREIN, THE WORDS "BELIEVE," "PLAN," "CONTINUE," "HOPE," "ESTIMATE," "PROJECT," "INTEND," "EXPECT," AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY SUCH FORWARD-LOOKING STATEMENTS. ALTHOUGH THE COMPANY BELIEVES THAT THE EXPECTATIONS REFLECTED IN SUCH FORWARD-LOOKING STATEMENTS ARE BASED ON REASONABLE ASSUMPTIONS, NO STATEMENTS CONTAINED IN THIS FORM 10-Q SHOULD BE RELIED UPON AS PREDICTIONS OF FUTURE EVENTS. SUCH STATEMENTS ARE NECESSARILY DEPENDENT ON ASSUMPTIONS, DATA OR METHODS THAT MAY BE INCORRECT OR IMPRECISE AND MAY BE INCAPABLE OF BEING REALIZED. THE RISKS AND UNCERTAINTIES INHERENT IN THESE FORWARD-LOOKING STATEMENTS COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE EXPRESSED IN OR IMPLIED BY THESE STATEMENTS. READERS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON THE FORWARD-LOOKING STATEMENTS CONTAINED HEREIN, WHICH SPEAK ONLY AS OF THE DATE HEREOF. THE INFORMATION CONTAINED IN THIS FORM 10-Q IS BELIEVED BY THE COMPANY TO BE ACCURATE AS OF THE DATE HEREOF. CHANGES MAY OCCUR AFTER THAT DATE, AND THE COMPANY WILL NOT UPDATE THAT INFORMATION EXCEPT AS REQUIRED BY LAW IN THE NORMAL COURSE OF ITS PUBLIC DISCLOSURE PRACTICES. IMPORTANT RISK FACTORS THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THE EXPECTATIONS REFLECTED IN ANY FORWARD-LOOKING STATEMENT HEREIN INCLUDE AMONG OTHER THINGS: (1) THE ABILITY OF THE COMPANY TO PENETRATE THE MARKET WITH ITS CURRENT THERAPEUTIC PRODUCTS AGAINST LARGER, WELL-FINANCED COMPETITORS WITHIN THE MARKETPLACE; (2) THE ABILITY OF THE COMPANY TO GENERATE REVENUES IS SUBSTANTIALLY DEPENDENT UPON CONTINUED RESEARCH AND DEVELOPMENT FOR, AND FDA APPROVAL OF, THERAPEUTIC PRODUCTS; (3) THE ABILITY OF THE COMPANY TO ATTRACT AND RETAIN KEY OFFICERS, KNOWLEDGEABLE SALES AND MARKETING PERSONNEL AND HIGHLY TRAINED TECHNICAL PERSONNEL; (4) THE ABILITY OF THE COMPANY TO OBTAIN ADDITIONAL FINANCING FROM PUBLIC AND PRIVATE EQUITY MARKETS TO FUND OPERATIONS AND FUTURE GROWTH; AND (5) THE ABILITY OF THE COMPANY TO GENERATE REVENUES TO COVER OPERATING LOSSES AND POSITION THE COMPANY TO ACHIEVE POSITIVE CASH FLOW. 8 Company Overview CytoGenix has developed down regulation and gene silencing technologies comprising a set of techniques which can either prevent a gene from expressing the protein for which it is encoded or interact with the target protein to change or inhibit its function. These techniques are based on the use of single stranded DNA (ssDNA) expression vectors for production of specifically designed strings of single stranded DNA (oligos) inside a cell which can be useful in triplex, antisense, DNA enzyme and aptameric applications. Triplex applications are those where a designed sequence of ssDNA binds to a specific location in the duplex DNA of the genome which can inhibit a promoter or expression of a target gene and prevent gene expression. In some antisense applications, the expression vector makes a specific ssDNA sequences that binds to a complementary target mRNA's and prevents the production of the encoded protein. When this antisense sequence binds to the targeted mRNA it prevents mRNA from being "read" by a ribosome. This antisense approach can be modified so that internally produced ssDNA sequence contains an additional DNA enzyme sequence in the central region of the ssDNA sequence which can degrade the target mRNA after the sequence binds to the targeted mRNA and prevents further translation. Aptamers are ssDNA sequences that directly bind to the target proteins to inhibit their function. The Company has coordinated and performed experiments utilizing all these applications. The results appear in scientific publications in peer reviewed journals as well as in patent applications, some of which have been granted or allowed. The Company's early research and development on ssDNA expression vectors was dependent upon the use of DNA plasmids produced using bacterial fermentation techniques. The Company looked for alternatives and developed a process for producing enzymatically biosynthesized DNA (synDNA(TM)) without using bacterial fermentation. The bacteria-free process for making and purifying therapeutic quality DNA is proprietary to the Company. The Company believes the combination of, rapid manufacture, and regulatory advantages associated with endotoxin-free and bacteria-free production may make our production process more desirable than that of plasmid DNA. The Company is currently generating minimal revenues from synDNA(TM) sales. The Company has used it's enzymatically biosynthesized DNA process to develop DNA vaccines. Tests comparing the efficacy of various DNA vaccines made with synDNA(TM) to conventional, bacteria-grown plasmids have demonstrated synDNA(TM) products are equivalent to or more effective than these conventional plasmids in some cases. These tests have included targets such as HIV, Hepatitis B virus, Smallpox, as well as seasonal and avian flu. The Company has entered a Cooperative Research and Development Agreement with the United States Department of Agriculture (USDA) to develop a DNA vaccine against Brucellosis and with the United States Army Medical Research Institute for Infectious Diseases (USAMRIID) to develop DNA vaccines against ebola and equine encephalitis. If the Company is able to raise sufficient operating capital, it plans to pursue cooperative agreements with the federal government especially in the bio-terror and pandemic threat areas. The Company is subject to risks common to biopharmaceutical companies, including risks inherent in its research and development efforts and clinical trials, reliance on collaborative partners, enforcement of patent and proprietary rights, the need for future capital, potential competition and uncertainty in obtaining required regulatory approval. In order for a product to be commercialized, it will be necessary for the Company and its collaborators to conduct pre-clinical tests and clinical trials, demonstrate efficacy and safety of the Company's product candidates, obtain regulatory clearances and enter into distribution and marketing arrangements either directly or through sublicenses. From the Company's inception through the date of this document, the major role of management has been to obtain sufficient funding for required research, monitoring research progress and to develop and license intellectual property. Results of Operations Three Months Ended March 31, 2009 Compared to Three Months Ended March 31, 2008. For the three months ended March 31, 2009, we reported a net loss of $ 203,193, or less than one cent per share, and revenue of $0 as compared with a net loss of $883,255, or less than one cent per share, and revenues of $13,160 the three months ended March 31, 2008. Revenue for the three months ended March 31, 2008 resulted from the sale of synDNA. 9 Research and Development Expenses. Research and development expenses decreased to $2,462 for the first quarter of 2009 as compared to $247,419 during the same period in 2008 due to the Company not having any scientist working or carrying on any significant R&D during the three months ended March 31, 2009. General and Administrative Expenses. General and administrative expenses decreased to $185,450 for the first quarter of 2009 compared to $554,565 for the same period in 2008 primarily due to the decrease of $193,581 in management staff, a decrease of $87,883 in legal fees for patents and the lawsuit by former employees to a minimal amount for the three months ended March 31, 2009, a decrease of $41,310 in accounting fees and a decrease of $30,000 in marketing expense. Consulting Expenses. Consulting expenses decreased to $277 for the first quarter of 2009 compared to $52,009 for the same period in 2008. This decrease was due to the Company not contracting with any consultants during the three months ended March 31, 2009. Depreciation and Amortization Expenses. Depreciation and amortization expenses decreased to $15,004 for the first quarter of 2009 compared to $15,860 for the same period in 2008 due primarily to certain items of equipment reaching their full depreciation cycle. Interest Expense. Interest expense decreased to $0 for the first quarter of 2009 compared to $16,725 for the same period in 2008, which was related to a loan from a related party existing in 2008. Liquidity and Capital Resources Our working capital deficit increased by $23,189 to ($3,207,128) at March 31, 2009 compared to ($3,183,939) at December 31, 2008. This deficit is primarily due to lack of revenues while we are continuing to incur ordinary general and administrative and research and development and operating expenses. Our cash flows from operations were negative during the three months ended March 31, 2009 and 2008, respectively, due to our lack of revenues and the continuation of general and administrative and research and development and operating costs. Our primary funding source during the three months ended March 31, 2009 came from $165,000 in stock subscriptions as financing activities. We consumed $88,498 in cash from operating activities for the three months ended March 31, 2009 compared with $181,271 for the three months ended March 31, 2008. The decrease is attributable to the Company's reduced operating level during the three months ended March 31, 2009. We had a net loss of $203,193 and $883,255 $0.01 and $0.01 per share for the three months ended March 31, 2009 and 2008, respectively. Our financial statements are prepared using principles applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. However, we do not have significant cash or other material liquid assets, nor do we have an established source of revenue sufficient to cover our operating costs and to allow us to continue as a going concern. We may, in the future, experience significant fluctuations in our results of operations. If we are required to obtain additional debt and equity financing or our illiquidity could suppress the value and price of our shares if and when trading in those shares develops. However, our future offerings of securities may not be undertaken, and if undertaken, may not be successful or the proceeds derived from these offerings may be less than anticipated and/or may be insufficient to fund operations and meet the needs of our business plan. Our current working capital is not sufficient to cover expected cash requirements for 2009 or to bring us to a positive cash flow position. If we do not raise sufficient capital to execute our business plan, it is possible that we will not be able to continue as a going concern. 10 The Company is currently operating at a loss and will continue to require equity and/or debt financing until it develops revenue from product sales or licensing. The process of developing the Company's future products will require hiring of additional personnel, significant expenses associated with additional research and development, preclinical testing and clinical trials, as well as processes directly related to attaining regulatory approvals. These activities, together with the Company's general and administrative expenses, are expected to result in operating losses for at three to five more years. The Company will not receive product revenue from therapeutic and vaccine products unless it completes clinical trials and successfully commercializes or arranges for the commercialization of one or more products, the accomplishment of which no assurance can be given. We are attempting to raise additional capital through bridge loans and sales of common stock either through private placements or public offerings, as well as seeking other sources of funding. There are no assurances that the Company will be able to achieve a level of revenues adequate to generate sufficient cash flow from operations or obtain the additional financing through private placements or public offerings to support the investment in the Company's technologies. It is possible that additional equity financing will be highly dilutive to existing shareholders. If these funds are not available the Company may not continue its operations or execute its business plan. Intellectual Property Matters: As of March 31, 2009, CytoGenix holds approximately 15 granted patents (2 US; 13 foreign) covering our original ssDNA expression vector and anti-herpes platforms, with 27 additional pending patent applications covering these as well as our synDNA and avian flu vaccine platforms. With sufficient funding the Company's budget would be expected to be in the $4,600,000 range for operations in fiscal year 2009, of which approximately $1,500,000 would be allocated for general and administrative costs and $3,100,000 for research and development. We will require equity financing to satisfy our working capital requirements, and have, as of March 31, 2009, $82,927 of cash on hand for fiscal year 2009. Of the $3,100,000 budgeted for research and development expenses, the Company would anticipate utilizing $2,300,000 for pre-clinical development. The Company's ability to continue operations through December 31, 2009 depends on its success in obtaining equity financing in an amount sufficient to support at least its basic operations through that date. There is substantial doubt that the Company will be able to generate sufficient revenues or be able to raise adequate capital to remain a going concern through December 31, 2009. It is possible that additional equity financing will be highly dilutive to existing shareholders. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. Item 3 is not required for a smaller reporting company. 11 ITEM 4. CONTROLS AND PROCEDURES Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation 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, or the Exchange Act, as of March 31, 2009. The Company concluded that material weaknesses over internal control of financial reporting, as previously disclosed, are still in existence. Based on this evaluation our principal executive officer and principal financial officer concluded that our disclosure controls and procedures as of March 31, 2009 are not effective to ensure that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported accurately and within the time periods specified in Securities and Exchange Commission rules and forms. Changes in Internal Controls The Company is attempting to remediate its control deficiencies. Remediation of the identified material weakness in internal controls over financial reporting will be addressed and modified as needed until all necessary internal controls are implemented and operate for a period of time, are tested, and the Company and its auditors are able to conclude that such internal controls are operating effectively. The Company cannot provide assurance that these procedures will be successful in identifying material errors that may exist in the financial statements. The Company cannot make assurances that it will not identify additional material weaknesses in its internal controls over financial reporting in the future. PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS BREACH OF CONTRACT ACTION Employment Actions Four former employees of the Company filed compliant with the Texas Workforce Commission in 2008 for a total of approximately $175,000 for wages claimed as unpaid by the Company. In November 2006, former Chief Financial Officer (CFO), Lawrence Wunderlich, and former Chief Operations Officer (COO), Frank Vazquez, resigned from the Company. The Company and former officers are pursuing arbitration to determine obligations consistent with the circumstances surrounding the former officers' resignations. On June 30, 2008, CytoGenix, Inc. (the "Company"), Lawrence Wunderlich and Frank Vazquez entered into a Settlement Agreement and Mutual Release (the "Settlement Agreement") regarding arbitration No. 70 144 08333 06, styled Frank Vazquez and Lawrence Wunderlich v. CytoGenix, Inc., before the American Arbitration Association in Houston, Texas, (the "Arbitration"). Pursuant to the Settlement Agreement, all claims of Messrs. Vazquez and Wunderlich against the Company, and all claims of the Company against each of Messrs. Vazquez and Wunderlich have been released, acquitted and forever discharged. The Settlement Agreement obligates the Company to issue to (i) Mr. Wunderlich warrants to acquire, on or before June 30, 2011, 1,066,666 shares, 1,066,667 shares and 1,066,667 shares of the Company's common stock at exercise prices of $0.05, $0.10 and $0.15, respectively, and (ii) Mr. Vazquez warrants to acquire, on or before June 30, 2011, 666,666 shares, 666,667 shares and 666,667 shares of the Company's common 12 stock at exercise prices of $0.05, $0.10 and $0.15, respectively. Under the Settlement Agreement the Company is also obligated to pay $150,000 each to Messres. Vazquez and Wunderlich in equal monthly installments ($3,125 per month to each) over a four-year period commencing October 1, 2008. The Company has negotiated with Messres. Vazquez and Wunderlich to defer the commencement of the monthly payments set forth in the settlement agreement from October 1, 2008 to April 1, 2009. As of the date of this filing, the Company has not made any payments to Vazquez and Wunderlich and they have given the Company a default letter and requested the Judge to execute the Agreed Default Judgment in the Settlement Agreement. ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS In February and March 2009, the Company received $165,000 for 11,000,000 shares of restricted common stock from a private placement offering begun in February 2009 at a share price of $0.015 per share. The proceeds will be used for general corporate purposes. The issuance of these shares was exempt from the registration requirements of the Securities Act of 1933 under Section 4(2) thereof. 13 ITEM 6. 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* Certificate of Amendment dated January 13, 2000 of Articles of Incorporation of CytoGenix, Inc. 3.4* Certificate of Amendment dated April 6, 2004 of Articles of Incorporation of CytoGenix, Inc. (incorporated by reference to Exhibit 3.5 to the Company's annual report of Form 10-KSB for the year ended December 31, 2004) 3.5* Certificate of Amendment dated March 7, 2001 of Articles of Incorporation of CytoGenix, Inc. (incorporated by reference to Annex II of the definitive proxy statement on Schedule 14A filed with the Securities and Exchange Commission on December 23, 2003) 3.6* Bylaws of Cryogenic Solutions, Inc. 3.7* Amendments to Bylaws of CytoGenix, Inc. (incorporated by reference to Annex I of the definitive proxy statement on Schedule 14A filed with the Securities and Exchange Commission on December 23, 2003) 10.1* Loan Agreement dated January 7, 2008 between CytoGenix, Inc., and KV Mechanical Construction and Restoration Co., Inc. 10.2* Supply Agreement Amendment No. 2 dated April 28, 2008 between CytoGenix, Inc. and GE Healthcare Bio-Sciences Corp. 31.1 Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer 31.2 Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer 32.1 Certification by Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 32.2 Certification by Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. -------------------------------------------------------------------------------- * Included in previous filings. 14 SIGNATURES In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. CYTOGENIX, INC. Date: May 20, 2009 By: /s/ Lex Cowsert ---------------- Lex Cowsert, PH.D. President and Chief Executive Officer 15

CYTOGENIX INC 10-Q