SOURCE: GeNOsys, Inc.

October 16, 2008 06:00 ET

GeNOsys, Inc. Reports Recent Developments and Third Quarter 2008 Financial Results

PROVO, UT--(Marketwire - October 16, 2008) - GeNOsys, Inc. (OTCBB: GNYS), a medical research and development company specializing in pharmaceutical, biotechnical and medical gas generating systems, today announced recent key achievements and financial results for the third quarter and first nine months ended August 31, 2008.

Recent Business Development Milestones

--  Completed the research and development, engineering and construction
    of the GeNOx-B and portable GeNOx-P Nitric Oxide Gas Generators. The
    Company has been issued a patent on the GeNOx-B and has applied for a
    patent on the GeNOx-P.
    
--  Completed preliminary research and development on the proprietary
    tablet medium GeNOx-Tablet. Additionally, a formula for the bulk
    manufacture of the tablet medium has been formulated. This formula will be
    essential to carry out the business model of the Company as a commercially
    viable reoccurring revenue producer of Nitric Oxide Gas Generators.
    

"The third quarter of fiscal 2008 was another active and productive period for GeNOsys, highlighted by the completion of the GeNOx-B and portable GeNOx-P Nitric Oxide Gas Generators," said Mr. Clark Mower, Chairman of the Board of Directors of GeNOsys. "Independent research has shown that Nitric Oxide gas, an FDA approved drug for use in the treatment of pulmonary hypertension in new-borns, may be an effective agent for the treatment of tuberculosis. Through our technology we are able to generate high purity Nitric Oxide for a significantly reduced cost. Now that we have completed this process, our plan includes a multi-track process of FDA and ISO 13485:2003 approvals in order to monetize our products.

Mr. Mower continued, "GeNOsys has a very large opportunity through the commercialization of our generators. Despite infecting nearly two billion people with the bacteria, which is one-third of the world's population, tuberculosis is "The Forgotten Plague," according to a recent article in Time magazine. The World Health Organization states that no new class of drug has been developed for its treatment in over thirty years. By 2010, the market for anti-tuberculosis drugs is projected to be between $612 and $670 million. The potential market for a new anti-tuberculosis drug is estimated to be between $316 and $345 million according to The Global Alliance for Tuberculosis Drug Development. Additionally, our research has shown that there are several other markets in which our generators have the potential to be used."

Financial results for the three months ended August 31, 2008

During the three-month period ended August 31, 2008, GeNOsys had a net loss of $332,349. This compares to a net loss of $239,738 for the comparable period ended August 31, 2007. Net loss per common share for each of the three month periods was $(.01).

Research and development ("R&D") expenses were $185,129 and $120,163, respectively, for the three-month periods ended August 31, 2008, and 2007, an increase of $64,966. The increase results from non-cash stock-based compensation charges, which were $15,488 higher in the 2008 period, from consulting and advisory board fees, and for additional work on both the nitric oxide generator and the tablet formulation to bring them to finalization. As the work on document preparation and regulatory work for FDA approval intensifies, R&D expenses are expected to increase.

General and administrative expenses were $147,152 and $122,907, respectively, for the three-month periods ended August 31, 2008 and 2007, an increase of $24,245. The increase results from the non-cash stock-based compensation charge, which was $22,287 higher in 2008 than in the comparable 2007 period. Excluding that charge, general and administrative expenses would have remained flat in 2008 as compared to 2007. General and administrative expenses are expected to continue to increase in the remaining periods of this fiscal year as expenses were incurred in raising the additional capital needed to fund our operations and bring our products to market.

Financial results for the nine months ended August 31, 2008

During the nine-month period ended August 31, 2008, GeNOsys had a net loss of $970,224. This compares to a net loss of $657,293 for the comparable period ended August 31, 2007. Net loss per common share for these periods was $(.02) and $(.01), respectively.

Research and development ("R&D") expenses were $515,832 and $319,086, respectively, for the nine-month periods ended August 31, 2008 and 2007. A significant portion of the $196,746 increase in research and development expenditures resulted from higher non-cash stock-based compensation charges in 2008, which exceeded the 2007 charge by $92,326. Increases were also seen in consulting fees and advisory board fees for additional work on both the nitric oxide generator and the tablet formulation. As the documentation preparation and regulatory work for FDA approval intensifies, R&D expenses are expected to increase.

General and administrative expenses were $456,656 and $355,396, respectively, for the nine-month periods ended August 31, 2008 and 2007. The increase results from non-cash stock-based compensation charges, which were $132,859 higher in 2008 than 2007. Excluding that charge, general and administrative expenses would have decreased by $31,599 in 2008 as compared to 2007. General and administrative expenses are expected to continue to increase in the remaining periods of this fiscal year as expenses are incurred in raising the additional capital needed to fund operations and bring the products to market.

About GeNOsys, Inc.

GeNOsys, Inc. (generated nitric oxide systems) is a medical research and development company specializing in pharmaceutical, biotechnical and medical gas generating systems. Nitric oxide gas is one of the medical gases that will be generated along with various combinations of beneficial medical gases suitable for the control of human disease. Distribution will be accelerated through the use of already existing distribution networks that currently sell related respiratory products. For further information, see the Company's Website at: www.genosysusa.com.

This press release may contain forward-looking statements including the Company's beliefs about its business prospects and future results of operations. These statements involve risks and uncertainties. Among the important additional factors that could cause actual results to differ materially from those forward-looking statements are risks associated with the overall economic environment, changes in anticipated earnings of the company and other factors detailed in the company's filings with the SEC. In addition, the factors underlying Company forecasts are dynamic and subject to change and therefore those forecasts speak only as of the date they are given. The Company does not undertake to update them; however, it may choose from time to time to update them and if it should do so, it will disseminate the updates to the investing public.


                    GENOSYS, INC. AND SUBSIDIARIES
                     (A Development Stage Company)
             CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                               (Unaudited)

                                                                  From
                                                                Beginning
                                                                   of
                                                               Development
                                                                  Stage
                                                                (June 30,
                                                                  2005)
                 For the Three Months    For the Nine Months    To August
                   Ended August 31,        Ended August 31,        31,
                  2008         2007       2008        2007        2008
               ----------- ----------- ----------- ----------- -----------
Revenues       $         - $         - $         - $         - $         -

Cost of sales            -           -           -           -           -
               ----------- ----------- ----------- ----------- -----------

Gross margin             -           -           -           -           -

Operating
 expenses:
  Research and
   development     185,129     120,163     515,832     319,086   1,735,288
  General and
   administra-
   tive            147,152     122,907     456,656     355,396   1,733,279
               ----------- ----------- ----------- ----------- -----------

    Total
     operating
     expenses      332,281     243,070     972,488     674,482   3,468,567
               ----------- ----------- ----------- ----------- -----------

Net income
 (loss) from
 operations       (332,281)   (243,070)   (972,488)   (674,482) (3,468,567)
               ----------- ----------- ----------- ----------- -----------

Other income
 (expense):
  Interest
   income               47       3,332       2,379      17,503      82,198
  Gain (loss)
   on disposal
   of asset              -           -           -        (414)       (414)
  Other income
   (expense)             -           -           -         100         100
               ----------- ----------- ----------- ----------- -----------

    Total other
     income
     (expense),
     net                47       3,332       2,379      17,189      81,884
               ----------- ----------- ----------- ----------- -----------

Net income
 (loss) before
 income Taxes     (332,234)   (239,738)   (970,109)   (657,293) (3,386,683)
               ----------- ----------- ----------- ----------- -----------

Provision
 (benefit) for
 income Tax            115           -         115           -         415
               ----------- ----------- ----------- ----------- -----------

Income (loss)
 from continuing
 operations       (332,349)   (239,738)   (970,224)   (657,293) (3,387,098)

Discontinued
 operations:
  Loss from
   discontinued
   operations,
   net of tax             -           -          -           -     (2,131)
  Gain on
   disposal of
   discontinued
   operations,
   net of tax            -           -           -           -      71,253
               ----------- ----------- ----------- ----------- -----------

Net income
 (loss)        $  (332,349)$ (239,738) $  (970,224)$  (657,293)$(3,317,976)
               =========== =========== =========== =========== ===========
Basic and
 diluted loss
 per share from
 continuing
 operations    $      (.01)$      (.01)$      (.02)$      (.01)$      (.07)
               =========== =========== =========== =========== ===========
Basic and
 diluted loss
 per share from
 discontinued
 operations    $         - $         - $         - $         - $         -
               =========== =========== =========== =========== ===========
Basic and
 diluted loss
 per share     $      (.01)$      (.01)$      (.02)$      (.01)$      (.07)
               =========== =========== =========== =========== ===========

Basic and
 diluted
 weighted
 average
 number of
 common shares
 outstanding    46,148,787  45,668,031  46,002,850  45,668,031  45,252,720
               =========== =========== =========== =========== ===========



                      GENOSYS, INC. AND SUBSIDIARIES
                       (A Development Stage Company)
              CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (Unaudited)
                                                                  From
                                                                Beginning
                                                                   of
                                                              Development
                                  For the Nine  For the Nine  Stage (June
                                  Months Ended  Months Ended    30, 2005)
                                     August        August      to August
                                    31, 2008      31,  2007     31, 2008
                                  ------------  ------------  ------------
Cash flows from operating
 activities:
  Net loss                        $   (970,224) $   (657,293) $ (3,317,976)
  Adjustments to reconcile net
   loss to net cash used in
   operating activities:
    Depreciation and amortization       38,954        34,200        97,135
    Gain on the disposal of
     discontinued Operations                 -             -       (71,253)
    Loss on disposal of equipment            -           414           414
    Stock-based compensation           281,616        56,431       420,355
    Decrease in cash from
     discontinued operations                 -             -        (6,020)
    Stock issued for services            8,536             -       278,536
    Changes in operating assets
     and liabilities:
      (Increase) Decrease in
       prepaid expenses                (37,197)       64,956       (40,943)
      Increase (Decrease) in
       accounts payable                 55,048        14,030        68,197
      Increase (Decrease) in
       related party liabilities        (9,340)            -         4,000
      Increase (Decrease) in
       accrued liabilities             195,522       (38,358)      209,729
      Increase (Decrease) in tax
       payable                               -             -           200
                                  ------------  ------------  ------------
        Net cash used in
         operating activities         (437,085)     (525,620)   (2,357,626)
                                  ------------  ------------  ------------

Cash flows from investing
 activities:
  Purchase of intangible assets        (27,543)      (33,634)      (69,672)
  Purchase of equipment                 (1,021)      (18,200)     (207,501)
                                  ------------  ------------  ------------
        Net cash provided by
         (used in) investing
         Activities                    (28,564)      (51,834)     (277,173)
                                  ------------  ------------  ------------

Cash flows from financing
 activities:
  Issuance of common stock for
   cash                                153,500             -     2,574,604
  Proceeds from related party
   loans                                36,000             -        36,000
  Cash from discontinued
   operations                                -             -       (19,777)
                                  ------------  ------------  ------------
        Net cash provided by
         financing activities          189,500             -     2,590,827
                                  ------------  ------------  ------------

Net increase (decrease) in cash       (276,149)     (577,454)      (43,972)

Cash at beginning of the period        280,105       904,715        47,928
                                  ------------  ------------  ------------

Cash at end of the period         $      3,956  $    327,261  $      3,956
                                  ============  ============  ============

Supplemental Disclosure
 Information
  Cash paid during the year for:
    Interest                      $          -  $          -  $        750
    Income/franchise  taxes                  -             -           200
    Stock issued for services            8,536             -       278,536
                                  ============  ============  ============

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