10-Q 1 g3655.txt QTRLY REPORT FOR THE QTR ENDED 9-30-09 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For quarterly period ended September 30, 2009 or [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____________ to _____________ Commission File Number 000-53486 ENOX BIOPHARMA, INC. (Exact name of registrant as specified in its charter) Nevada 26-0477124 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) 3849 West 13th Avenue, Vancouver BC V6R2S9 Canada (Address of principal executive offices)(Zip code) Tel: + (604) 637-9744 Fax: +1 (888) 224-7259 (Registrant's telephone number, including area code) 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 checkmark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definition of "large accelerated filer," "accelerated filer," and "smaller reporting company" in Rule 12b-2 of the Exchange Act. Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer [ ] Smaller reporting company [X] Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X] The issuer has 11,763,702 shares of common stock outstanding as of November 16, 2009. ENOX BIOPHARMA, INC. (A DEVELOPMENT STAGE COMPANY) INDEX TO FINANCIAL STATEMENTS SEPTEMBER 30, 2009 Financial Statements- Balance Sheets as of September 30, 2009 and December 31, 2008.............. 3 Statements of Operations for the Three Months and Nine Months Ended September 30, 2009 and 2008, and Cumulative from Inception.......... 4 Statements of Changes in Stockholders' Equity for the Period from Inception through September 30, 2009....................................... 5 Statements of Cash Flows for the Nine Months Ended September 30, 2009 and 2008, and Cumulative from Inception................ 6 Notes to Financial Statements September 30, 2009............................ 7 2 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS ENOX BIOPHARMA, INC. (A DEVELOPMENT STAGE COMPANY) BALANCE SHEETS AS OF SEPTEMBER 30, 2009, AND DECEMBER 31, 2008

The accompanying notes to financial statements are an integral part of these statements. 3 ENOX BIOPHARMA, INC. (A DEVELOPMENT STAGE COMPANY) STATEMENTS OF OPERATIONS FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEBMER 30, 2009 AND 2008, AND CUMULATIVE FROM INCEPTION (JUNE 28, 2007) THROUGH SEPTEMBER 30, 2009 (Unaudited)

The accompanying notes to financial statements are an integral part of these statements. 4 ENOX BIOPHARMA, INC. (A DEVELOPMENT STAGE COMPANY) STATEMENTS OF STOCKHOLDERS' EQUITY FOR THE PERIOD FORM INCEPTION (JUNE 28, 2007) THROUGH SEPTEMBER 30, 2009 (UNAUDITED)

The accompanying notes to financial statements are an integral part of these statements 5 ENOX BIOPHARMA, INC. (A DEVELOPMENT STAGE COMPANY) STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2009 AND 2008, AND CUMULATIVE FROM INCEPTION (JUNE 28, 2007) THROUGH SEPTEMBER 30, 2009 (UNAUDITED)

The accompanying notes to financial statements are an integral part of these statements. 6 ENOX BIOPHARMA, INC. (A DEVELOPMENT STAGE COMPANY) NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2009 (1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BASIS OF PRESENTATION AND ORGANIZATION Enox Biopharma, Inc. (the "Company" or "Enox") was organized and incorporated under the laws of the State of Nevada on June 28, 2007. The business plan of the Company is to develop a novel treatment for acute ear infections in children. The Company has identified a medical device with unique drug eluting technology suitable for the treatment of acute and antibiotic-resistant ear infections in children, and has filed a provisional patent application to protect the Company's technology. The accompanying financial statements of the Company were prepared from the accounts of the Company under the accrual basis of accounting. On October 27, 2008 the Company submitted a Registration Statement on Form S-1 to the Securities and Exchange Commission ("SEC") to register up to 4,306,560 of its outstanding shares of common stock on behalf of selling stockholders and 4,793,893 of common stock on behalf of selling stockholders upon exercise of warrants. The Company will not receive any of the proceeds of this registration activity once the shares of common stock are sold, although the Company may receive proceeds of up to $1,123,312 if all of the warrants are exercised. The Registration Statement on Form S-1 was declared effective on October 31, 2008. UNAUDITED INTERIM FINANCIAL STATEMENTS The interim financial statements of the Company as of September 30, 2009, and for the period then ended, and cumulative from inception, are unaudited. However, in the opinion of management, the interim financial statements include all adjustments, consisting of only normal recurring adjustments, necessary to present fairly the Company's financial position as of September 30, 2009, and the results of its operations and its cash flows for the periods ended September 30, 2009, and cumulative from inception. These results are not necessarily indicative of the results expected for the calendar year ending December 31, 2009. The accompanying financial statements and notes thereto do not reflect all disclosures required under accounting principles generally accepted in the United States. Refer to the Company's audited financial statements as of December 31, 2008, filed with the SEC, for additional information, including significant accounting policies. CASH AND CASH EQUIVALENTS For purposes of reporting within the statement of cash flows, the Company considers all cash on hand, cash accounts not subject to withdrawal restrictions or penalties, and all highly liquid debt instruments purchased with a maturity of three months or less to be cash and cash equivalents. REVENUE RECOGNITION The Company is in the development stage and has yet to realize revenues from planned operations. It plans to realize revenues from licensing, selling, research and development, and royalty activities. Revenues will be recognized by major categories under the following policies: For licensing activities, revenue from such agreements will be realized over the term and under the conditions of each specific license once all contract conditions have been met. Payments for licensing fees are generally received at the time the license agreements are executed, unless other terms for delayed payment are documented and agreed to between the parties. For research and development activities, revenues from such agreements will be realized as contracted services are performed or when milestones are achieved, in accordance with the terms of specific agreements. Advance payments for the use of technology in which further services are to be provided or fees received on the signing of research agreements are recognized over the period of performance of the related activities. Amounts received in advance of recognition will be considered as deferred revenues by the Company. 7 For royalty activities, revenues will be realized once performance requirements of the Company have been completed, and collection is reasonably assured. IMPAIRMENT OF LONG-LIVED ASSETS The Company evaluates the recoverability of long-lived assets and the related estimated remaining lives at each balance sheet date. The Company records an impairment or change in useful life whenever events or changes in circumstances indicate that the carrying amount may not be recoverable or the useful life has changed. For the period ended September 30, 2009, no events or circumstances occurred for which an evaluation of the recoverability of long-lived assets was required. LOSS PER COMMON SHARE Basic loss per share is computed by dividing the net loss attributable to the common stockholders by the weighted average number of shares of common stock outstanding during the period. Diluted loss per share is computed similar to basic loss per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. There were no dilutive financial instruments issued or outstanding for the period ended September 30, 2009. INCOME TAXES The Company accounts for income taxes pursuant to SFAS No. 109, "ACCOUNTING FOR INCOME TAXES" ("SFAS No. 109"). Under SFAS No. 109, deferred tax assets and liabilities are determined based on temporary differences between the basis of certain assets and liabilities for income tax and financial reporting purposes. The deferred tax assets and liabilities are classified according to the financial statement classification of the assets and liabilities generating the differences. The Company maintains a valuation allowance with respect to deferred tax assets. The Company establishes a valuation allowance based upon the potential likelihood of realizing the deferred tax asset and taking into consideration the Company's financial position and results of operations for the current period. Future realization of the deferred tax benefit depends on the existence of sufficient taxable income within the carryforward period under the federal tax laws. Changes in circumstances, such as the Company generating taxable income, could cause a change in judgment about the realizability of the related deferred tax asset. Any change in the valuation allowance will be included in income in the year of the change in estimate. PATENT AND INTELLECTUAL PROPERTY The Company capitalizes the costs associated with obtaining a patent or other intellectual property associated with its intended business plan. Such costs are amortized over the estimated useful lives of the related assets. FAIR VALUE OF FINANCIAL INSTRUMENTS The Company estimates the fair value of financial instruments using the available market information and valuation methods. Considerable judgment is required in estimating fair value. Accordingly, the estimates of fair value may not be indicative of the amounts the Company could realize in a current market exchange. As of September 30, 2009, the carrying value of the Company's financial instruments approximated fair value due to their short-term nature and maturity. ESTIMATES The financial statements are prepared on the basis of accounting principles generally accepted in the United States of America. 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 as of September 30, 2009, and revenues and expenses for the periods ended September 30, 2009, and 2008, and cumulative from inception. Actual results could differ from those estimates made by management. RECENT ACCOUNTING PRONOUNCEMENTS June 2009, the FASB issued SFAS No. 166, "Accounting for Transfers of Financial Assets--an amendment of FASB Statement No. 140" ("SFAS 166"). The provisions of 8 SFAS 166, in part, amend the derecognition guidance in FASB Statement No. 140, eliminate the exemption from consolidation for qualifying special-purpose entities and require additional disclosures. SFAS 166 is effective for financial asset transfers occurring after the beginning of an entity's first fiscal year that begins after November 15, 2009. The Company does not expect the provisions of SFAS 166 to have a material effect on the financial position, results of operations or cash flows of the Company. In June 2009, the FASB issued SFAS No. 167, "Amendments to FASB Interpretation No. 46(R) ("SFAS 167"). SFAS 167 amends the consolidation guidance applicable to variable interest entities. The rovisions of SFAS 167 significantly affect the overall consolidation analysis under FASB Interpretation No. 46(R). SFAS 167 is effective as of the beginning of the first fiscal year that begins after November 15, 2009. SFAS 167 will be effective for the Company beginning in 2010. The Company does not expect the provisions of SFAS 167 to have a material effect on the financial position, results of operations or cash flows of the Company. In June 2009, the FASB issued SFAS No. 168, "The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles - a replacement of FASB Statement No. 162" ("SFAS No. 168"). Under SFAS No. 168 the "FASB Accounting Standards Codification" ("Codification") will become the source of authoritative U. S. GAAP to be applied by nongovernmental entities. Rules and interpretive releases of the Securities and Exchange Commission ("SEC") under authority of federal securities laws are also sources of authoritative GAAP for SEC registrants. SFAS No. 168 is effective for financial statements issued for interim and annual periods ending after September 15, 2009. On the effective date, the Codification will supersede all then-existing non-SEC accounting and reporting standards. All other non-grandfathered non-SEC accounting literature not included in the Codification will become non-authoritative. SFAS No. 168 is effective for the Company's interim quarterly period beginning July 1, 2009. The Company does not expect the adoption of SFAS No. 168 to have an impact on the financial statements. In June 2009, the Securities and Exchange Commission's Office of the Chief Accountant and Division of Corporation Finance announced the release of Staff Accounting Bulletin (SAB) No. 112. This staff accounting bulletin amends or rescinds portions of the interpretive guidance included in the Staff Accounting Bulletin Series in order to make the relevant interpretive guidance consistent with current authoritative accounting and auditing guidance and Securities and Exchange Commission rules and regulations. Specifically, the staff is updating the Series in order to bring existing guidance into conformity with recent pronouncements by the Financial Accounting Standards Board, namely, Statement of Financial Accounting Standards No. 141 (revised 2007), Business Combinations, and Statement of Financial Accounting Standards No. 160, Non-controlling Interests in Consolidated Financial Statements. The statements in staff accounting bulletins are not rules or interpretations of the Commission, nor are they published as bearing the Commission's official approval. They represent interpretations and practices followed by the Division of Corporation Finance and the Office of the Chief Accountant in administering the disclosure requirements of the Federal securities laws. In April 2009, the FASB issued FSP No. FAS 107-1 and APB 28-1, Interim Disclosures about Fair Value of Financial Instruments. This FSP amends FASB Statement No. 107, Disclosures about Fair Value of Financial Instruments, to require disclosures about fair value of financial instruments for interim reporting periods of publicly traded companies as well as in annual financial statements. This FSP also amends APB Opinion No. 28, Interim Financial Reporting, to require those disclosures in summarized financial information at interim reporting periods. This FSP shall be effective for interim reporting periods ending after June 15, 2009. The Company does not have any fair value of financial instruments to disclose. In April 2009, the FASB issued FSP No. FAS 115-2 and FAS 124-2, Recognition and Presentation of Other-Than-Temporary Impairments. This FSP amends the other-than-temporary impairment guidance in U.S. GAAP for debt securities to make the guidance more operational and to improve the presentation and disclosure of other-than-temporary impairments on debt and equity securities in the financial statements. The FSP does not amend existing recognition and measurement guidance related to other-than-temporary impairments of equity securities. The FSP shall be effective for interim and annual reporting periods ending after June 15, 2009. The Company currently does not have any financial assets that are other-than-temporarily impaired. In April 2009, the FASB issued FSP No. FAS 141(R)-1, Accounting for Assets Acquired and Liabilities Assumed in a Business Combination That Arise from Contingencies, to address some of the application issues under SFAS 141(R). The 9 FSP deals with the initial recognition and measurement of an asset acquired or a liability assumed in a business combination that arises from a contingency provided the asset or liability's fair value on the date of acquisition can be determined. When the fair value can-not be determined, the FSP requires using the guidance under SFAS No. 5, Accounting for Contingencies, and FASB Interpretation (FIN) No. 14, Reasonable Estimation of the Amount of a Loss. This FSP was effective for assets or liabilities arising from contingencies in business combinations for which the acquisition date is on or after January 1, 2009. The adoption of this FSP has not had a material impact on our financial position, results of operations, or cash flows. In April 2009, the FASB issued FSP No. FAS 157-4, "Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly" ("FSP FAS 157-4"). FSP FAS 157-4 provides guidance on estimating fair value when market activity has decreased and on identifying transactions that are not orderly. Additionally, entities are required to disclose in interim and annual periods the inputs and valuation techniques used to measure fair value. This FSP is effective for interim and annual periods ending after June 15, 2009. The Company does not expect the adoption of FSP FAS 157-4 will have a material impact on its financial condition or results of operation. In October 2008, the FASB issued FSP No. FAS 157-3, "Determining the Fair Value of a Financial Asset When the Market for That Asset is Not Active," ("FSP FAS 157-3"), which clarifies application of SFAS 157 in a market that is not active. FSP FAS 157-3 was effective upon issuance, including prior periods for which financial statements have not been issued. The adoption of FSP FAS 157-3 had no impact on the Company's results of operations, financial condition or cash flows. In December 2008, the FASB issued FSP No. FAS 140-4 and FIN 46(R)-8, "Disclosures by Public Entities (Enterprises) about Transfers of Financial Assets and Interests in Variable Interest Entities." This disclosure-only FSP improves the transparency of transfers of financial assets and an enterprise's involvement with variable interest entities, including qualifying special-purpose entities. This FSP is effective for the first reporting period (interim or annual) ending after December 15, 2008, with earlier application encouraged. The Company adopted this FSP effective January 1, 2009. The adoption of the FSP had no impact on the Company's results of operations, financial condition or cash flows. In December 2008, the FASB issued FSP No. FAS 132(R)-1, "Employers' Disclosures about Postretirement Benefit Plan Assets" ("FSP FAS 132(R)-1"). FSP FAS 132(R)-1 requires additional fair value disclosures about employers' pension and postretirement benefit plan assets consistent with guidance contained in SFAS 157. Specifically, employers will be required to disclose information about how investment allocation decisions are made, the fair value of each major category of plan assets and information about the inputs and valuation techniques used to develop the fair value measurements of plan assets. This FSP is effective for fiscal years ending after December 15, 2009. The Company does not expect the adoption of FSP FAS 132(R)-1 will have a material impact on its financial condition or results of operation. In September 2008, the FASB issued exposure drafts that eliminate qualifying special purpose entities from the guidance of SFAS No. 140, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities," and FASB Interpretation 46 (revised December 2003), "Consolidation of Variable Interest Entities - an interpretation of ARB No. 51," as well as other modifications. While the proposed revised pronouncements have not been finalized and the proposals are subject to further public comment, the Company anticipates the changes will not have a significant impact on the Company's financial statements. The changes would be effective March 1, 2010, on a prospective basis. In June 2008, the FASB issued FASB Staff Position EITF 03-6-1, Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities, ("FSP EITF 03-6-1"). FSP EITF 03-6-1 addresses whether instruments granted in share-based payment transactions are participating securities prior to vesting, and therefore need to be included in the computation of earnings per share under the two-class method as described in FASB Statement of Financial Accounting Standards No. 128, "Earnings per Share." FSP EITF 03-6-1 is effective for financial statements issued for fiscal years beginning on or after December 15, 2008 and earlier adoption is prohibited. We are not required to adopt FSP EITF 03-6-1; neither do we believe that FSP EITF 03-6-1 would have material effect on our consolidated financial position and results of operations if adopted. In May 2008, the Financial Accounting Standards Board ("FASB") issued SFAS No. 163, "Accounting for Financial Guarantee Insurance Contracts-and interpretation of FASB Statement No. 60". SFAS No. 163 clarifies how Statement 60 applies to financial guarantee insurance contracts, including the recognition and measurement of premium revenue and claims liabilities. This statement also requires expanded disclosures about financial guarantee insurance contracts. SFAS No. 163 is effective for fiscal years beginning on or after December 15, 2008, and interim periods within those years. SFAS No. 163 has no effect on the Company's financial position, statements of operations, or cash flows at this time. 10 In May 2008, the Financial Accounting Standards Board ("FASB") issued SFAS No. 162, "The Hierarchy of Generally Accepted Accounting Principles". SFAS No. 162 sets forth the level of authority to a given accounting pronouncement or document by category. Where there might be conflicting guidance between two categories, the more authoritative category will prevail. SFAS No. 162 will become effective 60 days after the SEC approves the PCAOB's amendments to AU Section 411 of the AICPA Professional Standards. SFAS No. 162 has no effect on the Company's financial position, statements of operations, or cash flows at this time. In March 2008, the Financial Accounting Standards Board, or FASB, issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities--an amendment of FASB Statement No. 133. This standard requires companies to provide enhanced disclosures about (a) how and why an entity uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for under Statement 133 and its related interpretations, and (c) how derivative instruments and related hedged items affect an entity's financial position, financial performance, and cash flows. This Statement is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged. SFAS No. 161, has no effect on the Company's financial position, statements of operations, or cash flows at this time. (2) GOING CONCERN The Company is currently in the development stage. While management of the Company believes that the Company will be successful in its planned operating activities, there can be no assurance that the Company will be successful in the development of a product and sale of its planned product, technology, or services to generate sufficient revenues to sustain the operations of the Company. The Company also intends to conduct additional capital formation activities through the issuance of its common stock and to commence operations. The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate continuation of the Company as a going concern. The Company has incurred an operating loss since inception and the cash resources of the Company were insufficient to meet its planned business objectives. These and other factors raise substantial doubt about the Company's ability to continue as a going concern. The accompanying financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the possible inability of the Company to continue as a going concern. (3) PATENT PENDING On April 9, 2008, the Company filed a provisional patent application with the U.S. Patent Office. The cost of filing for the provisional patent has been capitalized by the Company, and amounted to $7,800. The provisional patent automatically expires twelve months after the day of filing. If the Company files a non-provisional patent and the patent is granted to the Company, the historical cost of the patent will be amortized over its useful life, which is estimated to be 20 years. As of September 30, 2009, the Company has capitalized legal fees of $27,221 for preparing a PCT application. (4) PROPERTY AND EQUIPMENT Cost: Office and computer equipment $3,250 Less: Accumulated depreciation and amortization 2,424 ------ Property and Equipment, net $ 826 ====== The company depreciates all of its property and equipment on a straight line basis over 3 years. (5) COMMON STOCK On June 28, 2007 (inception), the Company issued 6,750,000 shares of its common stock for cash of $683, of which 6,350,000 of these shares were issued to Directors of the Company. 11 On December 28, 2007, 3,819,227 units were issued pursuant to a private placement subscription agreement for cash consideration of $234,883 at a subscription price of $0.0615 per unit. Each unit consists of one common stock of the Company and one non-transferable Series A warrant. Each Series A warrant is exercisable into one common share at an exercise price of $0.20 for a two-year period expiring December 28, 2009. On July 15, 2008, the Company sold 304,000 units for a total of $76,000. Each Unit consisted of one share of common stock and two warrants. One warrant entitles the holder thereof to purchase one share of common stock at an exercise price of $0.30 per share, expiring one year from the date of purchase. The second warrant entitles the holder thereof to purchase one share of common stock at an exercise price of $0.40 per share, expiring two years from the date of purchase. The consideration was allocated to the shares and warrants issued based upon the relative fair value. On July 20, 2008, the Company sold 183,333 units for a total of $55,000. Each Unit consisted of one share of common stock and two warrants. One warrant entitles the holder thereof to purchase one share of common stock at an exercise price of $0.35 per share, expiring one year from the date of purchase. The second warrant entitles the holder thereof to purchase one share of common stock at an exercise price of $0.45 per share, expiring two years from the date of purchase. The consideration was allocated to the shares and warrants issued based upon the relative fair value. On October 27, 2008 the Company submitted a Registration Statement on Form S-1 to the Securities and Exchange Commission ("SEC") to register up to 4,306,560 of its outstanding shares of common stock on behalf of selling stockholders and 4,793,893 of common stock on behalf of selling stockholders upon exercise of warrants. The Company will not receive any of the proceeds of this registration activity once the shares of common stock are sold, although the Company may receive proceeds of up to $1,123,312 if all of the warrants are exercised. The Registration Statement on Form S-1 was declared effective on October 31, 2008. On December 25, 2008, 142,857 units were issued pursuant to a private placement subscription agreement for cash consideration of $50,000 at a subscription price of $0.35 per unit. Each unit consists of one share of common stock of the Company and one warrant. Each warrant is exercisable into one common share at an exercise price of $0.20 for a three-year period expiring December 25, 2011. On July 2, 2009, 14,285 units were issued pursuant to a private placement subscription agreement for cash consideration of $5,000 at a subscription price of $0.35 per unit. Each unit consists of one share of common stock of the Company and one warrant. Each warrant is exercisable into one common share at an exercise price of $0.50 for a three-year period expiring July 2, 2012. On July 10, 2009, a shareholder exercised warrants for 50,000 shares of common stock at an exercise price of $0.20 per share. On July 22, 2009, the Company issued 57,143 shares of the Company's common stock pursuant to a private placement subscription agreement, at a purchase price of $0.35 per share, for an aggregate purchase price of $20,000. On July 28, 2009, 250,000 units were issued pursuant to a private placement subscription agreement for cash consideration of $75,000 at a subscription price of $0.30 per unit. Each Unit is comprised of one share of the Company's common stock and one warrant to purchase one share of common stock at an exercise price of $0.40 per share for a period of two years from the issuance date. On September 25, 2009, 192,857 shares were issued to a consultant, pursuant to the cashless exercise feature in their consulting agreement. The shares were valued at $0.35 per share, for an aggregate amount of $67,500. (6) STOCK PURCHASE WARRANTS On December 28, 2007, 3,819,227 units were issued pursuant to a private placement subscription agreement for cash consideration of $234,883 at a subscription price of $0.0615 per unit. Each unit consists of one common stock of the Company and one non-transferable Series A warrant. Each Series A warrant is exercisable into one common share at an exercise price of $0.20 for a two-year period expiring December 28, 2009. The value allocated to the warrants was estimated using the Black-Scholes option pricing model with the following assumptions: dividend yield of 0%, expected volatility of 916%, and risk-free interest rate of 3.94%. On July 15, 2008, the Company sold 304,000 units for a total of $76,000. Each Unit consisted of one share of common stock and two warrants. One warrant entitles the holder thereof to purchase one share of common stock at an exercise 12 price of $0.30 per share, expiring one year from the date of purchase. The second warrant entitles the holder thereof to purchase one share of common stock at an exercise price of $0.40 per share, expiring two years from the date of purchase. The value allocated to the warrants was estimated using the Black-Scholes option pricing model with the following assumptions: dividend yield of 0%, expected volatility of 648%, and risk-free interest rate of 3.94%. On July 20, 2008, the Company sold 183,333 units for a total of $55,000. Each Unit consisted of one share of common stock and two warrants. One warrant entitles the holder thereof to purchase one share of common stock at an exercise price of $0.35 per share, expiring one year from the date of purchase. The second warrant entitles the holder thereof to purchase one share of common stock at an exercise price of $0.45 per share, expiring two years from the date of purchase. The value allocated to the warrants was estimated using the Black-Scholes option pricing model with the following assumptions: dividend yield of 0%, expected volatility of 648%, and risk-free interest rate of 3.94%. On December 25, 2008, 142,857 units were issued pursuant to a private placement subscription agreement for cash consideration of $50,000 at a subscription price of $0.35 per unit. Each unit consists of one share of common stock of the Company and one warrant. Each warrant is exercisable into one common share at an exercise price of $0.20 for a three-year period expiring December 25, 2011. The value allocated to the warrants was estimated using the Black-Scholes option pricing model with the following assumptions: dividend yield of 0%, expected volatility of 100%, and risk-free interest rate of 3%. On July 2, 2009, 14,285 units were issued pursuant to a private placement subscription agreement for cash consideration of $5,000 at a subscription price of $0.35 per unit. Each unit consists of one share of common stock of the Company and one warrant. Each warrant is exercisable into one common share at an exercise price of $0.50 for a three-year period expiring July 2, 2012. On July 10, 2009, a shareholder exercised warrants for 50,000 shares of common stock at an exercise price of $0.20 per share. On September 25, 2009, 250,000 units were issued pursuant to a private placement subscription agreement for cash consideration of $75,000 at a subscription price of $0.30 per Unit. Each Unit is comprised of one share of the Company's common stock and one warrant to purchase one share of common stock at an exercise price of $0.40 per share for a period of two years from the issuance date. A summary of the Company's outstanding stock purchase warrants as of September 30, 2009 is presented below: Exercise price Remaining Warrants per share contractual life -------- --------- ---------------- 3,769,227 $0.20 3 months 304,000 $0.40 9 months 183,333 $0.45 9 months 14,285 $0.50 2.75 years 250,000 $0.40 2 years 142,857 $0.20 2.25 years --------- 4,663,702 (7) INCOME TAXES The provisions (benefit) for income taxes for the period ended September 30, 2009 and 2008 were as follows (using a 23% effective federal and state income tax rate): 13 2009 2008 --------- --------- Current Tax Provision: Federal- Taxable income $ -- $ -- --------- --------- Total current tax provision $ -- $ -- ========= ========= Deferred Tax Provision: Federal- Loss carryforwards $ 50,580 $ 36,312 Change in valuation allowance (50,580) (36,312) --------- --------- Total deferred tax provision $ -- $ -- ========= ========= The Company had deferred income tax assets as of September 30, 2009 and December 31, 2008, as follows: 2009 2008 --------- --------- Loss carryforwards $ 117,706 $ 67,126 Less - Valuation allowance (117,706) (67,126) --------- --------- Total net deferred tax assets $ -- $ -- ========= ========= As of September 30, 2009, the Company had net operating loss carryforwards for income tax reporting purposes of approximately $511,765 that may be offset against future taxable income. The net operating loss carryforwards expire in the year 2029. Current tax laws limit the amount of loss available to be offset against future taxable income when a substantial change in ownership or a change in the nature of the business occurs. Therefore, the amount available to offset future taxable income may be limited. No tax benefit has been reported in the financial statements for the realization of loss carryforwards, as the Company believes there is a high probability that the carryforwards will not be utilized in the foreseeable future. Accordingly, the potential tax benefits of the loss carryforwards are offset by a valuation allowance of the same amount. (8) RELATED PARTY TRANSACTIONS The Company neither owns nor leases any real or personal property. The Company's Directors provide office space free of charge. The officers and directors of the Company are involved in other business activities and may, in the future, become involved in other business opportunities. If a specific business opportunity becomes available, such persons may face a conflict in selecting between the Company and their other business interests. The Company has not formulated a policy for the resolution of such conflicts. On June 28, 2007 (inception), the Company issued 6,350,000 shares of its common stock to Directors of the Company for a cash payment of $635. From June 28, 2007 (inception) through September 30, 2009, the company paid $90,303 to its President and Director, Prof. Yossef Av-Gay for services as an independent contractor pursuant to the terms of the Consulting Agreement dated September 1, 2007. From June 28, 2007 (inception) through September 30, 2009, the company paid $26,000 to its Director, Dr. David Greenberg for services as an independent contractor pursuant to the terms of the Consulting Agreement dated August 1, 2007. (9) COMMITMENTS On August 1, 2008, the Company extended a consulting agreement with Dr. David Greenberg, its Director, for a term of twelve months, pursuant to which the consultant agreed to provide the Company with management consulting services, in exchange for payment of consulting fees in the amount of $1,000 per month. The specific services to be provided by the consultant include speaking on the Company's behalf to potential investors, collaborators, and partners. 14 On August 1, 2008, the Company extended a consulting agreement with 0794658 B.C Ltd., a company owned by Prof. Av-Gay, its President and Director, pursuant to which the consultant agreed to provide the Company with management consulting services, in exchange for payment by the Company of consulting fees in the amount of $3,000 per month. Pursuant to an amendment the consulting fees increased to $4,000 per month beginning in July 2009. The specific services to be provided by the consultant include: managing the Company's activities and operations, providing microbiology and biochemistry expertise, speaking on the Company's behalf to potential investors, collaborators, and partners, and filing patents with the U.S. Patent and Trademark Office. Upon expiration of the initial term, the consulting agreement is automatically renewable for terms of 90 days. On September 1, 2008, the Company extended a service agreement and amendment with the University of British Columbia for a term of one year, pursuant to which the University of British Columbia agreed to provide the Company with research services in connection with the Company's product development. Under the Agreement, the Company agreed to pay to University of British Columbia $50,000 for the term of the agreement. On September 1, 2008, the Company extended a consulting agreement with NRD Solutions for twelve months for a fee of $12,000, pursuant to which the consultant agreed to provide the Company with an evaluation of the Company's tympanostomy tube device, provide an expert opinion on the Company devices and technologies, and speak on the Company's behalf to potential investors, collaborators and partners. On January 7, 2008, the Company entered into a Transfer Agent Agreement with Holladay Stock Transfer ("Holladay Stock Transfer"). Holladay Stock Transfer will act as the Company's transfer agent and registrar. Under the Agreement, the Company agreed to pay to Holladay Stock Transfer an initial setup fee of $450 and a minimum annual fee amounting to $400 plus transaction fees. On December 15, 2008, the Company entered into a Consultancy Agreement pursuant to which the consultant served as a non-exclusive business development and company planning consultant for a period of one year. In consideration for its services, the Company issued options to the consultant to purchase 450,000 shares of its common stock, at an exercise price of $0.20 per share for a period of 4 years, of which 100,000 options vested immediately and the remaining 350,000 options vest upon the achievement of certain milestones. The options also contain a cashless exercise feature. Additionally, the Company agreed to pay the consultant a monthly consulting fee of $5,000 commencing after the Company has secured additional financing of an aggregate of $750,000. The agreement was terminated and the consultant elected the cashless exercise feature pursuant to which the Company issued 192,857 shares valued at $67,500. On February 9, 2009, the Company entered into an agreement with a venture capital firm to raise approximately $3,000,000 through the sale of convertible preferred stock. As of September 30, 2009 the Company paid an expense deposit of $15,000 to the firm. On February 4, 2009, the Company entered into a Consultancy Agreement pursuant to which the consultant will provide regulatory consulting and clinical trial design and management services. In consideration for these services, the Company agreed to compensate the consultant on an hourly basis. Additionally, following the establishment of the product development plan should the Company decide to proceed with further services the consultant will receive a monthly retainer of $5,000. (10) RECLASSIFICATIONS Certain items have been reclassified to conform to the current period presentation. (11) EVENTS SUBSEQUENT TO THE BALANCE SHEET DATE The Company evaluated events occurring between the balance sheet date and November 16, 2009, the date the financial statements were issued. 15 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FORWARD LOOKING STATEMENTS This quarterly report on Form 10-Q contains certain forward-looking statements. Forward-looking statements may include our statements regarding our goals, beliefs, strategies, objectives, plans, including product and service developments, future financial conditions, results or projections or current expectations. In some cases, you can identify forward-looking statements by terminology such as "may," "will," "should," "expect," "plan," "anticipate," "believe," "estimate," "predict," "potential" or "continue," the negative of such terms, or other comparable terminology. Such forward-looking statements appear in this Item 2 - "Management's Discussion and Analysis of Financial Condition and Results of Operations," and include statements regarding our expectations regarding our short - and long-term capital requirements and our business plan and estimated expenses for the coming 12 months. These statements are subject to known and unknown risks, uncertainties, assumptions and other factors that may cause actual results to be materially different from those contemplated by the forward-looking statements. The business and operations of Enox Biopharma, Inc. are subject to substantial risks, which increase the uncertainty inherent in the forward-looking statements contained in this report. We undertake no obligation to release publicly the result of any revision to these forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. Further information on potential factors that could affect our business is described under the heading "Risks Related To Our Business, Strategy, And Industry" in Part I, Item 1, "Risk Factors" in our registration statement on Form S-1 no 333-154763, which was declared effective on October 31, 2008. Readers are also urged to carefully review and consider the various disclosures we have made in this report. OVERVIEW Enox Biopharma, Inc. (referred to in this Quarterly Report as "Enox", "us", "we" and "our") was incorporated on June 28, 2007 in the State of Nevada. We are a development stage medical device company, and to date have not earned any revenue and currently do not have any significant assets. Our corporate offices are located at 3849 West 13th Avenue, Vancouver BC, Canada. Our telephone number is +1 (604) 637-9744 and our fax number is (888) 224-7259. We do not have any subsidiaries. We have a website at www.enoxbiopharma.com, however, the information contained on our website does not form part of this quarterly report. We are developing a unique drug eluting technology for preventing microbial infections associated with certain medical devices. We utilize non-antibiotic compounds that kill a wide range of pathogens. In light of the increasing difficulties associated with treating multi-drug resistant infections, our patented technology offers innovative solutions that avoid antibiotic resistance concerns while preventing hospital and community-acquired infections. A wide range of indwelling medical devices is being used on a daily basis to provide critical care to millions of patients. These devices include various catheters, tubes and blood lines that provide access to deliver life-saving drugs, fluids and gases, as well as remove unwanted substances from the body. While the use of such devices is vital for patients' care, the actual insertion creates a point of entry for microbes and is often associated with high rates of infection. We are developing antimicrobial coatings for urinary catheters, endotracheal tubes and ear tubes. We believe these products address well-defined market needs, including increasing resistance to antibiotics, escalating medical costs and changing medical reimbursement policies. We have secured our technology and intellectual property by filing two US provisional applications and two US utility patent application with the US Patent and Trademark Office on September 21, 2007 (US provisional applications serial # 60/974,228 (2007)), April 9, 2008 ((US provisional applications serial #61/043,639 (2008)), September 19, 2008 (US utility patent filed with respect to provisional patent # 60/974,228 (2007)), and March 23, 2009 (US utility patent filed with respect to provisional patent #61/043,639 (2008)). During the period ended September 30, 2009 we continued the research associated with the development of our urinary catheters. Our studies strengthened the company technology by demonstrating adequate slow releases and prevention of bacterial colonization associated with catheter-associated urinary infection which is the most common hospital acquired infection, affecting over one million people annually in the U.S. alone. An independent panel of scientists is now reviewing the data from these experiments in consideration for publication. 16 RESULTS OF OPERATIONS - THREE MONTHS ENDED SEPTEMBER 30, 2009 COMPARED TO THE THREE MONTHS ENDED SEPTEMBER 30, 2008, AND NINE MONTHS ENDED SEPTEMBER 30, 2009 COMPARED TO THE SIX MONTH ENDED SEPTEMBER 30, 2008 During the three months ended September 30, 2009, we incurred operating expenses of $125,504, an increase of $66,088 or approximately 111% from the three month ended September 30, 2008. Operating expenses increased during the three month ended September 30, 2009 from the comparative period due to exercised option of the consultant. Significant elements include: * research and development costs of $30,500, which decreased from $31,500 during the same period in the prior year, a decrease of approximately 3%, due to prepaid expenses for research and development; * professional fees of $7,500 related to accounting and legal services, which decreased from $15,500 during the same period in the prior year, an increase of 52%, as a result of decreased legal services; * consulting fees of $71,024, which increased from $0 during the same period in the prior year, an increase of 100%, as a result of exercised option by the consultant. * general and administrative fees of $16,208, which is an increase from $12,190 during the same period in the prior year, an increase of approximately 33%, due to more travel and other related expenses; and During the nine months ended September 30, 2009, we incurred operating expenses of $219,912, an increase of $62,034 or approximately 39% from the nine months ended September 30, 2008. Operating expenses increased during the nine month ended September 30, 2009 from the comparative period due to higher incurred expenses. Significant elements include: * research and development costs of $78,537, which decreased from $111,455 during the same period in the prior year, a decrease of approximately 30%, due to an end of Boston University service agreement; * professional fees of $17,156 related to accounting and legal services, which decreased from $20,638 during the same period in the prior year, a decrease of 17%, as a result of decrease accounting cost; * consulting fees of $93,073, which increase from $0 during the same period in the prior year, an increase of 100%, as a result of expensing prepaid option and exercise of options by the consultant. * general and administrative fees of $30,330, which is an increase from $25,108 during the same period in the prior year, a increase of approximately 21%, due to more travel and other related expenses; and NET LOSS We incurred a net loss of $125,504 for the three months ended September 30, 2009, compared to a net loss of $59,416 for the three months ended September 30, 2008. LIQUIDITY AND CAPITAL RESOURCES To date, we have had negative cash flows from operations and we have been dependent on sales of our equity securities to meet our cash requirements. We expect this situation to continue for the foreseeable future. We anticipate that we will have negative cash flows from operations in the next twelve month period. As of September 30, 2009, we had cash of $53,862, representing a net decrease in cash of $49,868 since December 31, 2008. Cash generated by financing activities during the nine months ended September 30, 2009 was $110,000. Cash used in operating activities amounted to $142,064 represented by a loss of $219,912 plus an increase in prepaid expenses from the previous balance sheet of $16,351, common stock issued of $67,500 , depreciation and amortizing of $816 and offset by accounts payable and accrued liabilities $6,819. Because we have not generated any revenue from our business, we will need to raise additional funds for the future development of our business and to respond to unanticipated requirements or expenses. We believe our current cash balances will be extinguished by the fourth quarter of 2009, provided we do not have any unanticipated expenses. We do not currently have any arrangements for financing and we can provide no assurance to investors we will be able to find such financing. There can be no assurance that additional financing will be available to us, or on terms that are acceptable. Consequently, we may not be able to proceed with our intended business plans or complete the development and commercialization of our product. 17 If we fail to generate sufficient net revenues, we will need to raise additional capital to continue our operations thereafter. We cannot guarantee that additional funding will be available on favorable terms, if at all. Any shortfall will effect our ability to expand or even continue our operations. We cannot guarantee that additional funding will be available on favorable terms, if at all. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK We believe our business is not currently subject to market risk. All of our business is currently conducted in US dollars, which is our functional currency. We have no debt and are not subject to any interest rate risk. ITEM 4/4T. CONTROLS AND PROCEDURES As required by Rule 13a-15 under the Securities and Exchange Act of 1934, as of September 30, 2009, we have carried out an evaluation of the effectiveness of the design and operation of our company's disclosure controls and procedures. This evaluation was carried out under the supervision and with the participation of our company's management, being our company's President (Principal Executive Officer) and Treasurer (Principal Accounting Officer). Based upon the results of that evaluation, our company's President (Principal Executive Officer) and Treasurer (Principal Accounting Officer) have concluded that, as of September 30, 2009, our company's disclosure controls and procedures were effective and provide reasonable assurance that material information related to our company is recorded, processed and reported in a timely manner. Our company's management, with the participation of our President (Principal Executive Officer) and Treasurer (Principal Accounting Officer), is responsible for the design of internal controls over financial reporting. The fundamental issue is to ensure all transactions are properly authorized, identified and entered into a well-designed, robust and clearly understood system on a timely basis to minimize risk of inaccuracy, failure to fairly reflect transactions, failure to fairly record transactions necessary to present financial statements in accordance with generally accepted account principles, unauthorized receipts and expenditures or the inability to provide assurance that unauthorized acquisitions or dispositions of assets can be detected. The small size of our company makes the identification and authorization process relatively simple and efficient and a process for reviewing internal controls over financial reporting has been developed. To the extent possible given our company's small size, the internal control procedures provide for separation of duties for handling, approving and coding invoices, entering transactions into the accounts, writing cheques and requests for wire transfers. As of September 30, 2009, our company's President (Principal Executive Officer) and Treasurer (Principal Accounting Officer) conclude that our company's system of internal controls is adequate and comparable to those of issuers of a similar size and nature. This quarterly report does not include an attestation report of our company's registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by the company's registered public accounting firm pursuant to temporary rules of the SEC that permit our company to provide only management's report in this quarterly report. There were no significant changes to our company's internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation, including any significant deficiencies or material weaknesses of internal controls that would require corrective action. PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS None. ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS None. ITEM 3. DEFAULTS UPON SENIOR SECURITIES None. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None. 18 ITEM 5. OTHER INFORMATION None. ITEM 6. EXHIBITS (a) Pursuant to Rule 601 of Regulation SK, the following exhibits are included herein or incorporated by reference. Exhibit Number Description -------------- ----------- 3.1 Articles of Incorporation* 3.2 By-laws* 31.1 Certification of CEO Pursuant to 18 U.S.C. ss. 1350, Section 302 31.2 Certification of CFO Pursuant to 18 U.S.C. ss. 1350, Section 302 32.1 Certification Pursuant to 18 U.S.C. ss.1350, Section 906 32.2 Certification Pursuant to 18 U.S.C. ss. 1350, Section 906 ---------- * Incorporated by reference to our S-1 Registration Statement, File Number 333-154763 19 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Date: November 16, 2009 By: /s/ Prof. Yossef Av-Gay ---------------------------------- Name: Prof. Yossef Av-Gay Title: President (Principal Executive Officer) Date: November 16, 2009 By: /s/ Itamar David ---------------------------------- Name: Itamar David Title: Principal Financial Officer 20

Enox Biopharma Inc 10-Q