ZENOSENSE, INC. company history: the story so far

History

A former Nevada mining shell became a Spanish-linked breath-test developer, funded itself with ever cheaper convertible loans, and by 2018 held a 40% stake in a UK medical joint venture.

2013-2014: From mining shell to breath sensors

Zenosense began as Braeden Valley Mines, a shell company that lost its Nevada mining lease on May 15, 2013. In December 2013 it took its new name and signed a 40-year exclusive license with Sgenia Industrial and its affiliates in Spain to develop a device that detects MRSA, a drug-resistant infection, from the breath. Zenosense agreed to fund development, with a budget of about $1.26 million, and to pay a 20% royalty on net sales.

The same deal reshaped the company. It did a 2-for-1 stock dividend, turned $318,749 and $146,536 of debt into shares at $0.40, and swapped its chief executive, with Carlos Jose Gil replacing Vasquez as 43,500,000 shares were surrendered to capital. Shares on issue rose from 30,000,000 in 2013 to 49,615,297 by the end of 2014.

In April 2014 an investor agreed to buy shares for $25,000 and committed a further $450,000 in tranches, depending on a working prototype and keeping the company's over-the-counter listing. In July 2014 the license was amended to add a lung cancer product, with about $527,000 spent so far and an estimated $1,411,000 still needed. Early MRSA tests showed 75% sensitivity and 66% specificity.

2016-2018: Cheap convertibles and a UK venture

The record then goes quiet until April 2016, when Zenosense issued a $40,000 convertible note at just $0.001 a share. In June an investor bought 67,126,578 shares for $150,000 and promised $640,000 of convertible loans. A reverse split was completed on August 4, 2016, which is why shares on issue fell to 16,677,451 by year end.

On June 20, 2016 the company formed a UK joint venture, MIDS Medical Ltd, taking 40% in return for funding Phase 1 development of a partner's immunoassay (blood-test) technology. Payments were later rescheduled and totalled $650,000. When the June investor failed to make a $180,000 loan due in September 2016, the company turned to its senior-note holder, issuing convertible notes of $60,000, $140,000 and $30,000 that year. Shares rose to 31,068,136 by 2018, though the record does not break that down.

On August 31, 2018 MIDS Medical agreed that an outside investor could put in up to US$1,200,000 for up to 10.31% of the venture. Zenosense's stake could not fall below 30% before a sale. As of September 4, 2018, the auditor had flagged going-concern doubt, and the MRSA and lung cancer sensors had not yet reached their milestones.

Written from the 8 story beats below (2013 to 4 Sept 2018), which come from the company's own announcements and filings.

Beat by beat

The events that changed the company's story, in plain English, each written against everything known about the company at the time. The dot shows whether it was good, bad or neutral for shareholders.

shares on issue market cap (log scale)

201827.0m shares · US$9.2m market cap

4 Sept
On Aug 31, 2018 Zenosense and MIDS Medical (MML), the UK venture where it holds 40%, agreed that an outside investor will fund up to US$1,200,000 in tranches for up to 10.31% of MML; Zenosense's stake will not fall below 30% before a sale of MML. The first tranche is US$300,000 (US$47,000 at signing, US$103,000 by Sept 30 and US$150,000 by Oct 30, 2018) for 2.91%, and later tranches of $300,000, $375,000 and $225,000 are the investor's option through May 31, 2019. The money goes to MML, not Zenosense. Zenosense keeps its control rights, but its percentage in MML will be diluted if the investor takes up the tranches (inference).
material agreement
27.0m shUS$9.2m

201616.7m shares · US$2.7m market cap

6 Oct
On Sept 29, 2016 Zenosense pushed back its remaining MIDS Medical (UK joint venture) Phase 1 payments, with the total now $650,000: $30,000 on Sept 30, $110,000 by Oct 30, $152,500 by Nov 30, 2016, $152,500 by Jan 30 and $75,000 by Mar 31, 2017. The investor from the June 2016 deal had not made the $180,000 first Commitment Loan due by Sept 20, so the company took a $60,000 10% convertible note from its senior-note holder instead, with an option for that holder to lend $140,000, $170,000, $180,000 and $100,000 more through Mar 31, 2017. If the holder lends, the June investor is not required (or allowed) to make its Commitment Loans; if not, that investor must lend $580,000 (down from $640,000) on dates to be agreed. Conversion is at $0.07 or a 15% discount to the 10-day average price, floor $0.035 (adjusted for the Aug 4, 2016 reverse split, which the filing says was completed), so existing shareholders face dilution if converted (inference).
capital raising announcement
16.7m shUS$2.7m
23 June
On June 20, 2016 Zenosense entered a joint venture, MIDS Medical Ltd (UK), taking a 40% stake from July 1, 2016 in return for funding Phase 1 development of a partner's MIDS immunoassay technology: £450,500 (about $666,000) in payments, $130,000 already paid, plus up to £45,000 contingency. Missing a payment by more than 14 days could cut its stake to zero, and a second phase of similar cost is envisaged. This is a new business line beside the Sgenia MRSA and lung cancer work, and likely the cardiac project foreshadowed in the June 9 filing (inference).
material agreement
49.6m shUS$1.1m
9 June
On June 8, 2016 an investor bought 67,126,578 shares for $150,000 and committed to $640,000 of 10% unsecured convertible loans in four installments through March 2017, convertible at the lower of $0.01 or a 15% discount to the 10-day VWAP (floor $0.005). The company agreed to pursue a reverse split of up to 1-for-10, and plans to use the money to take part in a third-party cardiac diagnostic device project (terms drafted, not guaranteed) alongside its lung cancer and MRSA work. The holder of the existing Senior Notes approved the deal but kept a right of first refusal on the loans.
capital raising announcement
49.6m shUS$1.1m
3 May
After a gap in the filings reviewed here, Zenosense issued a $40,000 convertible note (5% interest, due April 19, 2018) to an investor in April 2016. It becomes convertible from September 20, 2016 at $0.001 per share, with 40,000,000 shares reserved, and the investor gets a right of first refusal on future equity financing. The conversion price is far below the earlier $0.40 and $0.40-range share prices, which is dilutive for existing holders (inference).
capital raising announcement
49.6m shUS$992k

201448.5m shares · US$8.2m market cap

24 July
A third amendment to the Sgenia license extended the development schedule and widened the budget to cover a lung cancer product alongside the MRSA product. About $527,000 has been spent on development so far, and the revised budget needs an estimated further $1,411,000; the company cites early MRSA test sensitivity of 75% and specificity of 66%.
material agreement
48.5m shUS$8.2m
10 Apr
Zenosense signed a stock purchase agreement with an accredited investor: $25,000 for 55,556 shares now, plus a commitment of $450,000 for 900,000 more shares in four tranches, conditional on the stage-one MRSA/SA prototype goal and keeping its OTC listing. About 85% of the later payments are to go to stage-two development; the company says it has provided over $520,000 of development funding to its partner since December 2013.
capital raising announcement
48.5m sh

201330.0m shares · US$30.0m market cap

6 Dec
The former mining shell (Braeden Valley Mines, which said it was a shell company and lost its Nevada mining lease on May 15, 2013) became Zenosense and signed a 40-year exclusive license with Sgenia Industrial and its affiliates (Spain) to develop and sell an MRSA/SA detection device. The company funds development (about $1.26 million budget, $296,749 provided by Dec 4, 2013) and pays a 20% net-sales royalty; it also did a 2-for-1 stock dividend, converted $318,749 and $146,536 of debt into shares at $0.40, sold 375,000 shares for $150,000 with a further $180,000 of purchases planned, and changed its CEO (Vasquez out, Carlos Jose Gil in) with 43,500,000 shares surrendered to capital. The filing text was truncated, so later details (e.g. resulting share count) are not captured.
business combination
30.0m shUS$30.0m