Bloomios (BLMS) 10QSB 2006 Q1 Quarterly report (small business)

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-QSB

(Mark One)
x  Quarterly Report Under Section 13 Or 15(d) Of The Securities Exchange Act Of 1934

For the quarterly period endedApril 30, 2005

¨ Transition Report Under Section 13 Or 15(d) Of The Securities Exchange Act Of 1934

For the transition period _____________ to _____________

COMMISSION FILE NUMBER000-50026

XLR MEDICAL CORP.
(Exact name of small business issuer as specified in its charter)

NEVADA	88-0488851
(State or other jurisdiction of incorporation or	(IRS Employer Identification No.)
organization)

Suite 204, 1480 Gulf Road
Point Roberts, Washington 98281
(Address of principal executive offices)

360-220-5219
(Issuer's telephone number)

Not Applicable
(Former name, former address and former fiscal year, if changed since last report)

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange
Act during the past 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 ¨ 

State the number of shares outstanding of each of the issuer's classes of common equity, as of
the latest practicable date:As of June 21, 2005, the Issuer had 26,099,880 Shares of Common
Stock outstanding.

Transitional Small Business Disclosure Format (check one): Yes ¨ No x 

PART I - FINANCIAL INFORMATION

ITEM 1.               FINANCIAL STATEMENTS.

2

XLR Medical Corp.
(formerly Relay Mines Limited)
(A Development Stage Company)

April 30, 2005

	Index
Consolidated Balance Sheets	F–1
Consolidated Statements of Operations	F–2
Consolidated Statements of Cash Flows	F–3
Notes to the Consolidated Financial Statements	F–4

XLR Medical Corp.
(formerly Relay Mines Limited)
(A Development Stage Company)
Consolidated Balance Sheets
(expressed in U.S. dollars)

	April 30,		January 31,
	2005		2005
	$		$
	(unaudited)		(audited)
ASSETS
Current Assets
Cash	18,440		24,923
Prepaid expenses	454		–
Total Assets	18,894		24,923
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current Liabilities
Accounts payable	45,950		45,102
Accrued liabilities	95,187		81,561
Due to related parties (Note 4 (a))	500,884		471,965
Loans payable (Note 5)	926,000		876,000
Total Liabilities	1,568,021		1,474,628
Contingencies and Commitments (Notes 1 and 3)
Stockholders’ Deficit
Common Stock (Note 6)
Authorized: 100,000,000 shares, par value of $0.00001
Issued and outstanding: 26,099,880 and 25,799,880 shares, respectively	261		258
Additional Paid-in Capital	1,809,613		1,689,616
Additional Common Stock Subscribed	6,000		6,000
Deficit Accumulated During the Development Stage	(3,365,001	)	(3,145,579	)
Total Stockholders’ Deficit	(1,549,127	)	(1,449,705	)
Total Liabilities and Stockholders’ Deficit	18,894		24,923

The Accompanying Notes are an Integral Part of the Consolidated Financial Statements
F-1

XLR Medical Corp.
(formerly Relay Mines Limited)
(A Development Stage Company)
Consolidated Statements of Operations
(expressed in U.S. dollars)
(unaudited)

	Accumulated from
	December 21, 2000		For the Three
	(Date of Inception)		Months Ended
	to April 30,		April 30,
	2005		2005		2004
	$		$		$
Revenue	–		–		–
Expenses
Consulting and management fees (Note 4)(1)	928,407		33,000		66,700
General and administrative	717,512		45,026		36,548
Total Expenses	1,645,919		78,026		103,248
Loss Before Other Items	(1,645,919	)	(78,026	)	(103,248	)
Impairment losses on investments (Note 6)	(1,528,568	)	(120,000	)	–
Interest expense (Note 5)	(190,514	)	(21,396	)	(16,038	)
Net Loss for the Period	(3,365,001	)	(219,422)	)	(119,286	)
Net Loss Per Share – Basic and Diluted			(0.01	)	(0.01	)
Weighted Average Shares Outstanding			26,000,000		9,493,000
(1)Stock-based compensation is included in the following:
Consulting and management fees	68,960		–		–

The Accompanying Notes are an Integral Part of the Consolidated Financial Statements
F-2

XLR Medical Corp.
(formerly Relay Mines Limited)
(A Development Stage Company)
Consolidated Statements of Cash Flows
(expressed in U.S. dollars)
(unaudited)

	Thee Months Ended
	April 30,
	2005		2004
	$		$
Cash Flows Used in Operating Activities
Net loss	(219,422	)	(119,286	)
Adjustment to reconcile net loss to net cash used in operating activities:
Impairment losses on investments	120,000		–
Changes in operating assets and liabilities:
Prepaid expenses	(454	)	–
Accounts payable and accrued liabilities	14,474		18,386
Due to related parties	28,919		74,048
Net Cash Used in Operating Activities	(56,483	)	(26,852	)
Cash Flows Used In Investing Activities
Investment in Exelar Medical Corp.	–		(325,000	)
Net Cash Used in Investing Activities	–		(325,000	)
Cash Flows From Financing Activities
Proceeds from loans payable	50,000		345,750
Net Cash Provided by Financing Activities	50,000		345,750
Increase in Cash	(6,483	)	(6,102	)
Cash – Beginning of Period	24,923		6,455
Cash – End of Period	18,440		353
Non-cash Investing and Financing Activities
Shares issued as a finder’s fee for the investment in EMC	120,000		–
Supplemental Disclosures
Interest paid	–		–
Income taxes paid	–		–

The Accompanying Notes are an Integral Part of the Consolidated Financial Statements
F-3

XLR Medical Corp.
(formerly Relay Mines Limited)
(A Development Stage Company)
Notes to the Consolidated Financial Statements
(expressed in U.S. dollars)
(unaudited)

1.	Nature of Operations, Recapitalization and Continuance of Business
	Relay Mines Limited (“Relay”) was incorporated in the State of Nevada on February 2, 2001. Pursuant to an Agreement and Plan of Merger dated August 12, 2004 and an Agreement and Plan of Merger dated September 13, 2004 (the “Merger”), Relay acquired and merged with, by way of reverse merger, TSI Medical Corp., a Nevada corporation (“TSI”). The Merger of TSI by Relay is considered a recapitalization of TSI whereby TSI is considered the acquirer for accounting and financial reporting purposes. The consolidated financial statements include the accounts of Relay since the reverse merger (September 13, 2004) and the historical accounts of TSI since the date of its inception, December 21, 2000. All significant intercompany balances and transactions have been eliminated on consolidation. Relay changed its name to XLR Medical Corp. (the “Company” or “TSI” for transactions entered into prior to the Merger) and changed its trading symbol to XLRC.
	TSI is involved in a joint venture with Exelar Corporation (“Exelar”) for the purpose of developing a patented technology that utilizes small superconducting magnets to focus and control dosages of therapeutic radiation for the treatment of cancerous tumours (the “Technology”). Under a Technology Acquisition and Funding Agreement dated March 22, 2004 with Exelar Corporation (the “Exelar Agreement”), Exelar transferred the Technology to its wholly-owned subsidiary, Exelar Medical Corporation (“EMC”), and TSI agreed to provide funding to EMC in exchange for rights to acquire up to a 60% interest in EMC.
	Upon completion of the Merger on September 13, 2004 with TSI, the Company:
	a)	caused 60,000,000 common shares, previously issued to two directors of the Company, to be returned to treasury and cancelled for no consideration;
	b)	issued 9,492,667 common shares to the shareholders of TSI to acquire 100% of the issued and outstanding shares of TSI on a one-for-one basis;
	c)	agreed to adopt a stock option plan providing for the grant of options to purchase up to 1,450,000 common shares at $0.50 per share expiring May 31, 2009 to the holders of outstanding TSI options;
	d)	issued warrants to acquire 54,367 common shares at $0.75 per share expiring October 1, 2006 to the holders of outstanding TSI warrants;
	e)	assumed an obligation of TSI to issue units at $0.35 per unit. A total of 440,005 units were subscribed for and $154,002 was received. These units have been issued. Each unit consists of one common share and one warrant. The warrant allows the holder to acquire one additional common share at $0.35 per share; and
	f)	assumed an obligation of TSI to issue 300,000 common shares as a finder’s fee in connection with TSI’s acquisition of its interest in EMC. The shares were issued during the quarter, refer to Note 6.
	The Company is a development stage company as defined by Statement of Financial Accountings Standards (“SFAS”) No. 7 “Accounting and Reporting by Development Stage Enterprises”. In a development stage company, management devotes most of its activities in developing a market for its products and/or services. The Company is presently in its developmental stage and currently has no sources of revenue to provide incoming cash flows to sustain future operations. The ability of the Company to emerge from the development stage with respect to any planned principal business activity is dependent upon its successful efforts to raise additional equity financing and then generate significant revenue. Management has plans to seek additional capital through equity and/or debt offerings. There is no guarantee that the Company will be able to complete any of the above objectives. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern.
	At April 30, 2005, the Company had a working capital deficit of $1,549,127 and has incurred losses of $3,365,001 since inception. The Company will not be able to complete its funding obligations under the Exelar Agreement without acquiring substantial additional financing in the near future. If financing is not available or attainable, the Company’s ability to retain or increase its interest in EMC will be substantially limited. The Company currently does not have sufficient financing arrangements in place to meet its funding obligations to EMC and there is no assurance that the Company will be able to acquire the required financing on acceptable terms or at all. The Company expects to fund itself by the sale of shares or the issuance of debt.

F-4

XLR Medical Corp.
(formerly Relay Mines Limited)
(A Development Stage Company)
Notes to the Consolidated Financial Statements
(expressed in U.S. dollars)
(unaudited)

2.	Summary of Significant Accounting Principles
	a)	Basis of Accounting and Fiscal Year End
		These consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States and are presented in U.S. dollars. The Company has changed its fiscal year end of June 30 to that of TSI, which is January 31 because of the reverse merger. The historical financial statements presented are those of TSI.
	b)	Use of Estimates
		The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
	c)	Cash and Cash Equivalents
		The Company considers all highly liquid instruments with a maturity of three months or less at the time of issuance to be cash equivalents.
	d)	Long-Lived Assets
		In accordance with Financial Accounting Standards Board (“FASB”) Statement of Financial Accounting Standards (“SFAS”) No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets”, the carrying value of intangible assets and other long-lived assets is reviewed on a regular basis for the existence of facts or circumstances that may suggest impairment. The Company recognizes impairment when the sum of the expected undiscounted future cash flows is less than the carrying amount of the asset. Impairment losses, if any, are measured as the excess of the carrying amount of the asset over its estimated fair value.
	e)	Foreign Currency Translation
		The Company’s functional and reporting currency is the United States dollar. Foreign currency transactions are primarily undertaken in Canadian dollars and are translated into United States dollars using exchange rates at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are remeasured at each balance sheet date at the exchange rate prevailing at the balance sheet date. Foreign currency exchange gains and losses are charged to operations. The Company has not, to the date of these financials statements, entered into derivative instruments to offset the impact of foreign currency fluctuations.
	f)	Basic and Diluted Net Income (Loss) Per Share
		The Company computes net income (loss) per share in accordance with SFAS No. 128, "Earnings per Share". SFAS No. 128 requires presentation of both basic and diluted earnings per share (EPS) on the face of the income statement. Basic EPS is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti dilutive.
	g)	Financial Instruments
		The carrying value of cash, accounts payable, accrued liabilities, due to related parties, and loans payable approximate fair value due to the relatively short maturity of these instruments.
	h)	Comprehensive Loss
		SFAS No. 130, “Reporting Comprehensive Income”, establishes standards for the reporting and display of comprehensive loss and its components in the financial statements. As at April 30, 2005 and 2004, the Company has no items that represent a comprehensive loss and, therefore, has not included a schedule of comprehensive loss in the financial statements.

F-5

XLR Medical Corp.
(formerly Relay Mines Limited)
(A Development Stage Company)
Notes to the Consolidated Financial Statements
(expressed in U.S. dollars)
(unaudited)

2.	Summary of Significant Accounting Principles (continued)
	i)	Stock-Based Compensation
		The Company has adopted a stock option plan to fulfill an obligation under the Merger with TSI. The Company accounts for stock-based awards using the intrinsic value method of accounting in accordance with Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” (APB 25). Under the intrinsic value method of accounting, compensation expense is recognized if the exercise price of the Company’s employee stock options is less than the market price of the underlying common stock on the date of grant.
		Statement of Financial Accounting Standards No. 123, “Accounting for Stock-Based Compensation”, (SFAS 123), established a fair value based method of accounting for stock-based awards. Under the provisions of SFAS 123, companies that elect to account for stock-based awards in accordance with the provisions of APB 25 are required to disclose the pro forma net income (loss) that would have resulted from the use of the fair value based method under SFAS 123.
		The Company issues stock to non-employees for services. The Company accounts for stock issued for services to non-employees in accordance with SFAS No. 123 “Accounting for Stock-Based Compensation”. Compensation expense is based on the fair market value of the stock award or fair market value of the goods and services received whichever is more reliably measurable.
		The Company has also adopted the disclosure requirements of Statement of Financial Accounting Standards No. 148, “Accounting for Stock-Based Compensation — Transition and Disclosure an Amendment of FASB Statement No. 123” (SFAS 148), to require more prominent disclosures in both annual and interim financial statements regarding the method of accounting for stock-based employee compensation and the effect of the method used on reported results.
		2004 Stock Option Plan
		The Company adopted a Stock Option Plan (“2004 Plan”) dated September 13, 2004, under which the Company was authorized to grant options to acquire up to a total of 1,450,000 common shares. The maximum aggregate number of shares that may be optioned under the 2004 Plan will be increased effective the first day of each fiscal quarter up to a maximum of 15% of the outstanding shares on the first day of the applicable quarter.
		The Company did not recognize stock-based compensation expense during the three months ended April 30, 2005 or 2004. During the three months ended April 30, 2005, the Company granted stock options to a director under the 2004 Plan, to acquire up to 700,000 shares of common stock exercisable at a price of $0.70 per share up to April 6, 2009.
		The following table illustrates the effect on net loss per share as if the fair value method had been applied to all outstanding and vested awards in each quarter.

	Three Months Ended
	April 30,
	2005		2004
	$		$
	(unaudited)		(unaudited)
Net loss — as reported	(219,422	)	(119,286	)
Add: Stock-based compensation expense included in
net loss — as reported	–		–
Deduct: Stock-based compensation expense
determined under fair value method	(402,534	)	–
Net loss — pro forma	(621,956	)	(119,286	)
Net loss per share (basic and diluted) — as reported	(0.01	)	(0.01	)
Net loss per share (basic and diluted) — pro forma	(0.02	)	(0.01	)

The fair value of the options granted during the period was estimated at the date of grant using the Black-Scholes option pricing model using the following weighted average assumptions: risk free interest rate of 3.81%, expected volatility of 152%, an expected option life of 3 years and no expected dividends. The weighted average fair value of options granted was $0.58 per share. Had the Company determined compensation cost based on the fair value at the date of grant for its employee stock options, the net loss would have increased by $402,534 for the three months ended April 30, 2005.

F-6

XLR Medical Corp.
(formerly Relay Mines Limited)
(A Development Stage Company)
Notes to the Consolidated Financial Statements
(expressed in U.S. dollars)
(unaudited)

2.	Summary of Significant Accounting Principles (continued)
	j)	Reclassifications
		Certain reclassifications have been made to the prior period’s financial statements to conform to the current period’s presentation.
	k)	Income Taxes
		Potential benefits of income tax losses are not recognized in the accounts until realization is more likely than not. The Company has adopted SFAS No. 109 “Accounting for Income Taxes” as of the Company’s inception. Pursuant to SFAS No. 109, the Company is required to compute tax asset benefits for net operating losses carried forward. The potential benefit of net operating losses has not been recognized in these financial statements because the Company cannot be assured that it is more likely than not that it will be able to utilize the net operating losses carried forward in future periods.
	l)	Recent Accounting Pronouncements
		In December 2004, FASB issued SFAS No. 153, “Exchanges of Nonmonetary Assets - An Amendment of APB Opinion No. 29”. The guidance in APB Opinion No. 29, “Accounting for Nonmonetary Transactions”, is based on the principle that exchanges of nonmonetary assets should be measured based on the fair value of the assets exchanged. The guidance in that Opinion, however, included certain exceptions to that principle. SFAS No. 153 amends Opinion No. 29 to eliminate the exception for nonmonetary exchanges of similar productive assets and replaces it with a general exception for exchanges of nonmonetary assets that do not have commercial substance. A nonmonetary exchange has commercial substance if the future cash flows of the entity are expected to change significantly as a result of the exchange. The provisions of SFAS No. 153 are effective for nonmonetary asset exchanges occurring in fiscal periods beginning after June 15, 2005. Early application is permitted and companies must apply the standard prospectively. The adoption of this standard is not expected to have a material effect on the Company’s results of operations or financial position.
		In December 2004, the Financial Accounting Standards Board (FASB) issued SFAS No. 123R, “Share Based Payment”. SFAS 123R establishes standards for the accounting for transactions in which an entity exchanges its equity instruments for goods or services. It also addresses transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entity’s equity instruments or that may be settled by the issuance of those equity instruments. SFAS 123R focuses primarily on accounting for transactions in which an entity obtains employee services in share-based payment transactions. SFAS 123R requires that the compensation cost relating to share-based payment transactions be recognized in financial statements. That cost will be measured based on the fair value of the equity or liability instruments issued. Public entities that file as small business issuers will be required to apply SFAS 123R in the first interim or annual reporting period that begins after December 15, 2005. Management is currently evaluating the impact of adoption of this standard on the Company’s results of operations and financial position.
		In March 2005, the SEC staff issued Staff Accounting Bulletin No. 107 (“SAB 107”) to give guidance on the implementation of SFAS 123R. The Company will consider SAB 107 during implementation of SFAS 123R.
	m)	Interim Financial Statements
		These interim unaudited financial statements have been prepared on the same basis as the annual financial statements and in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the Company’s financial position, results of operations and cash flows for the periods shown. The results of operations for such periods are not necessarily indicative of the results expected for a full year or for any future period

F-7

XLR Medical Corp.
(formerly Relay Mines Limited)
(A Development Stage Company)
Notes to the Consolidated Financial Statements
(expressed in U.S. dollars)
(unaudited)

3.	Investment in Exelar Medical Corp.
	On March 22, 2004, TSI entered into a Technology Acquisition and Funding Agreement (the “Exelar Agreement”) with Exelar and EMC to acquire and develop a technology utilizing super-conducting magnets to control therapeutic radiation doses delivered by photon linear accelerators (the “Technology”). TSI will participate in the development and commercialization of the Technology by funding the acquisition and development of the Technology. Under the Exelar Agreement, Exelar transferred the Technology to its wholly owned subsidiary, EMC, and TSI agreed to provide funding to EMC in exchange for rights to acquire up to a 60% interest in EMC. Under the Exelar Agreement, to complete the acquisition of the first 51% of EMC, TSI must:
		i)	fund EMC $900,000 by June 23, 2004 (funded) to earn a 16.5% interest (earned);
		ii)	fund EMC a further $1,550,000 by September 21, 2004 to earn an additional 18.5% interest (extended but not in default);
		iii)	fund EMC a further $1,000,000 by December 20, 2004 to earn an additional 8.1% interest (extended but not in default); and
		iv)	fund EMC a further $1,300,000 by March 20, 2005 to earn an additional 7.9% interest (extended but not in default).
	Under the Exelar Agreement the Company will receive one share of EMC for every $2 of funding. If the Company defaults on any of its funding obligations, Exelar may, at its option, convert the Company’s shares of EMC into non-voting shares, remove the Company’s nominees from the Board of EMC and reduce the Company’s interest in EMC by 1/3 if the default occurs on or before the September 21, 2004 funding deadline and by 1/5 if the default occurs after the September 21, 2004 funding deadline.
	If EMC requires additional funding, the Company has the option to acquire an additional 9% interest, for a total of 60%, by funding EMC a further $1,500,000. Exelar has an option to convert up to 100% of its shares of EMC into such number of common shares as shall, after their issuance, represent 49% of the outstanding and issued shares of the Company, on a fully diluted basis. Exelar’s option to convert cannot be exercised until the earliest of the following events has occurred:
		i)	Completion of the Company’s funding obligations to EMC;
		ii)	Default by the Company of any of its funding obligations to EMC;
		iii)	March 1, 2005; or
		iv)	An initial public offering of the Company’s shares.
4.	Related Party Transactions
	a)	Various officers, directors and the former President of the Company are due a total of $500,884 (January 31, 2005 - $471,965) for expenses paid on behalf of the Company or for services performed for the Company. These amounts are non-interest bearing, unsecured and due on demand.
	b)	The Company incurred management fees of $15,000 (2004 - $Nil) to the President and CEO of the Company during the three months ended April 30, 2005.
	c)	The Company incurred management fees of $3,000 (2004 - $700) to the Vice-President of the Company during the three months ended April 30, 2005.
	d)	The Company incurred management fees of $15,000 (2004 - $18,000) to the CFO of the Company during the three months ended April 30, 2005.

F-8

XLR Medical Corp.
(formerly Relay Mines Limited)
(A Development Stage Company)
Notes to the Consolidated Financial Statements
(expressed in U.S. dollars)
(unaudited)

5.	Loans Payable
	a)	By a Loan Agreement dated March 8, 2004, TSI’s subsidiary, 689158 B.C. Ltd., borrowed $500,000 from Charles F. White Corp. (“CFW”). The loan was guaranteed by TSI and was repayable on July 2, 2004 with interest at 12% per annum and a bonus of $80,000 payable at maturity. As security for the guarantee, TSI pledged its shares in the common stock of TechniScan (Note 3). The bonus has been included in interest expense. In the event of default, additional interest was to accrue on the unpaid amount at 2% per month, compounded monthly. TSI received notice that the loan was in default.
		On February 28, 2005, the Company entered into a Forbearance and Amendment Agreement with CFW, in which CFW agreed to refrain from enforcing its rights and remedies against the Company until March 31, 2005. Under the terms of the Agreement, the Company agreed to pay to CFW the proceeds of any transaction not in the ordinary course of its business, provided that the Company has a working capital surplus in excess of $100,000. The payment of any such proceeds will be credited against the amounts owing to CFW under the Loan Agreement. The terms of the Loan Agreement were amended as follows:
		(i)	Interest on the $500,000 principal amount will accrue at 12% per annum from the date of advancement of the funds, without any additional interest thereon; and
		(ii)	Interest on the $80,000 bonus payable will accrue at 24% per annum, beginning on the date of default under the Loan Agreement, being July 2, 2004.
		As at April 30, 2005, interest expense of $71,690 on the loan and $16,231 on the bonus has been accrued and is included in accrued liabilities. Although default has occurred under the Forbearance and Amendment Agreement, CFW has not enforced its right and remedies against the Company.
	b)	A person related to CFW loaned the Company $25,000. This amount is non-interest bearing, unsecured and due on demand.
	c)	On July 27, 2004, Relay received a loan from Aton Select Fund Ltd. in the amount of $100,000, which is non- interest bearing, unsecured and due on demand. These funds were advanced to TSI to assist TSI in funding the obligations due pursuant to the Exelar Agreement as discussed in Note 4.
	d)	On October 19, 2004, the Company received a loan from Carnavon Trust Reg. in the amount of $71,000 which is interest bearing at 5% per annum, unsecured and due on demand. The former President of the Company is a director of Carnavon Trust Reg.
	e)	On December 20, 2004, the Company received a loan from Clarion Finanz AG in the amount of $100,000, which is interest bearing at 5% per annum, unsecured and due on demand. The former President of the Company is a director of Clarion Finanz AG.
	f)	On April 21, 2005, Relay received a loan from Aton Select Fund Ltd. in the amount of $50,000, which is non-interest bearing, unsecured and due on demand.
6.	Common Stock On March 1, 2005, the Company issued 300,000 shares of common stock in consideration for a finder’s fee relating to TSI’s acquisition of its interest in EMC. The shares were valued at $0.40 per share, for a total consideration of $120,000. Since the Company’s investment in EMC was previously written off as impaired, the $120,000 was charged to operations during the quarter.
7.	Subsequent Events
	a)	The Company entered into a non-binding Letter of Intent on March 17, 2005, subject to the completion of a formal private placement agreement, to issue a $4,700,000 convertible note to an investor. On June 6, 2005, the Company received notice from the investor that he has withdrawn from the Letter of Intent and will not be entering into any financing agreement with the Company.
	b)	On May 26, 2005, the Board of Directors resolved to record cash advances of $209,210 and $12,500 made to a former director and the former Secretary and director of the Company, respectively, during the year ended January 31, 2005 as management fees.

F-9

ITEM 2.               MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Certain information disclosed in this Quarterly Report includes “forward looking statements”, which may be identified by words such as “plan”, “anticipate”, “believe”, “estimate”, should”, “expect” and other similar expressions. These statements include our expectations and objectives regarding our future financial position, operating results and business strategy. These statements reflect the current views of management with respect to future events and are subject to risk, uncertainties and other factors that may cause our actual results, performance or achievements, or industry results, to be materially different from those forward looking statements set forth under the caption “Management’s Discussion and Analysis or Plan of Operation” and elsewhere in this Quarterly Report. We do not intend to update the forward looking information to reflect actual results or changes in the factors affecting such forward-looking information. We advise you to carefully review the reports and documents we file from time to time with the Securities and Exchange Commission (the “SEC”), particularly our Annual Reports on Form 10-KSB, our Quarterly Reports on Form 10-QSB and our Current Reports on Form 8-K.

As used in this Quarterly Report, the terms "we", "us", "our", “Company” and “XLR” mean XLR Medical Corp. unless otherwise indicated. All dollar amounts in this Quarterly Report are in U.S. dollars unless otherwise stated.

INTRODUCTION

We were incorporated on February 2, 2001 under the laws of the State of Nevada. Until September 13, 2004, our business was focused on the acquisition, exploration and development of mineral properties. Following a review of our business, our Board of Directors determined that it was in the Company’s best interests to discontinue our mineral exploration business and to change the focus of our operations to the pursuit of opportunities in the biotechnology field.

Effective on September 13, 2004, we abandoned our mineral exploration business to focus on the business opportunities presented by our acquisition of TSI Medical Corp. (“TSI”) and by the unique cancer treatment technology currently being developed by Exelar Medical Corporation (“EMC”). EMC is a joint venture company established by TSI and the Exelar Corporation (“Exelar”), the original developers of the technology.

Our acquisition of and merger with TSI has been accounted for as a reverse acquisition. As such, TSI has been treated as the acquiring entity for accounting and financial reporting purposes. As such, the fiscal year end of TSI, being January 31, 2004, has been adopted for purposes of our reporting obligations under the Securities Act of 1933, as amended (the “Securities Act”) and the Securities Exchange Act of 1934, as amended (the “Exchange Act”), commencing on September 15, 2004.

The EMC Technology

EMC is currently developing a unique technology to be used in the treatment of cancerous tumors (the “EMC Technology”). The EMC Technology utilizes small super-conducting magnets to control therapeutic radiation doses delivered by photon linear accelerators. Accelerators generate therapeutic beams of X-rays (technically called high energy photon beams). Photons are packets of energy that travel though space at the speed of light. An accelerator is to a radiation therapy beam what a flashlight is to a beam of visible light. However, each photon in a flashlight beam carries only about 1/10,000,000th of the energy of a single photon in an accelerator beam. It is this huge scale-up in photon energy that allows an accelerator beam to penetrate into the body to destroy cancer cells within it. The photons from an accelerator are so energetic that when one collides with an electron in a DNA molecule (or any other chemical) in the body, the electron is ejected with great speed and the molecule is disrupted. The recoiling electron travels onward, predominantly in the same direction as the incoming

3

photon. The recoiling electron can penetrate through downstream tissue for some centimeters and on its way destroy many additional molecules. If the molecules are part of the cancer, this contributes to curative effects. If, however, the recoiling electrons travel into healthy tissue belonging to important organs, this can lead to immediately deleterious side-effects and/or significant long-term consequences to the patient.

The EMC Technology is based upon a unique realization that, by applying a locally intense magnetic field to the exterior of the patient's body in the near vicinity of where the photon beam passes through the cancer, one can locally trap significant numbers of the recoiling electrons. The magnetic field causes the recoiling electrons to spiral within the tumor region rather than traveling more or less straight ahead beyond the tumor and into healthy tissue. This patented concept can therefore potentially increase the dosage to a tumor while reducing the exposure of nearby healthy tissue. The magnetic field can also be utilized to simplify alignment of the beam with the tumor and enhance the targeting of moving tumors like those in the lung that shift during respiration.

A prototype device incorporating the EMC Technology (the “Device”) has been developed by Exelar. The Device employs a single, super-conducting magnet slightly larger than the size of a hockey puck. It operates at near absolute 0° (Kelvin). It is cooled by a commercial low temperature refrigerator (cryo-cooler) and is insulated by an evacuated metal case (thermos bottle). Physically, the Device is the size of a beer keg, with the magnet enclosure the size of a stein. Two pizza box sized units hold the evacuation pump and power source. The unit is attached to a gantry, is easily maneuverable and operates as an add-on device in conjunction with a photon accelerator.

Testing of the Device has been done on “phantom” synthetic tissue. Precision dose data is collected in three dimensions inside the phantom. The results of the testing show these effects:

1.	The creation of a “hot spot” of radiation inside the body along the beam with the magnetic field as compared to the beam without the magnetic field.
2.	A significant reduction in the radiation dose “downstream” beyond the hotspot.
3.	An indication that the recoiling elections congregate in higher density tissue (such as tumors).

The data from phantom testing indicates 25% to 40% dose enhancement.

The prototype is currently running in a clinical environment on a Varion 2100 C accelerator at Rush-Presbyterian-St. Luke’s Medical Centre in Chicago.

Technology Acquisition and Funding Agreement

Pursuant to our Technology Acquisition and Funding Agreement with Exelar and EMC (the “Funding Agreement”), we have the right to acquire up to a 51% interest in EMC by providing funding to EMC as follows:

Funding Date	Amount to be Paid	Number of Shares of  EMC to be Acquired	Cumulative % Ownership of EMC
March 25, 2004	$325,000  (already paid)	162,500	6.7%
June 23, 2004	$575,000  (already paid)	287,500	16.5%
September 21, 2004	$1,550,000	775,000	35.0%

4

Funding Date	Amount to be Paid	Number of Shares of  EMC to be Acquired	Cumulative % Ownership of EMC
December 20, 2004	$1,000,000	500,000	43.1%
March 20, 2005	$1,300,000	650,000	51.0%
Total	$4,750,000	2,375,000	51.0%

As of the date of filing this Quarterly Report, we have not provided EMC with the September 21, 2004 financing payment of $1,550,000, the December 20, 2004 financing payment of $1,000,000 or the March 20, 2005 payment of $1,300,000. Exelar had previously agreed not to exercise its default rights with respect to the September 21, 2004 payment in exchange for our agreement to shorten the period during which we may cure a default under the Funding Agreement from 20 days after receipt of notice of default to 3 days after receipt of such notice. We are currently in discussions with Exelar to amend the terms of the Funding Agreement; however, there is no assurance that we will be able to reach an agreement. As of the date of filing this Quarterly Report, Exelar has not exercised its default rights with respect to the remaining payments under the Funding Agreement; however, there is no assurance that it will continue to refrain from exercising those default rights. In March, 2005, we announced that we had reached a non-binding agreement in principle with an investor based in New York (the “Investor”) for a $4,700,000 convertible note financing, an amount that would have been sufficient to allow us to meet our financing obligations under the Funding Agreement. However, we have received notice from the Investor that, due to circumstances outside of our control, he will not be completing the convertible note financing. As a result, we will not receive any of the expected funds from the Investor. We are currently exploring our options and are seeking alternative sources of financing.

Under the terms of the Funding Agreement, we will receive one share of EMC for each $2.00 of funding provided until a total of $4,750,000 in funding is provided. If we default on any of our funding obligations, Exelar may, at its option, convert our shares of EMC into non-voting shares, remove all of our nominees to EMC’s board of directors and reduce our percentage interest in EMC such that the effective price of the EMC shares will be increased to:

(a)	$3.00 per share if we default on any of the financing payments to be made on or before September 21, 2004; and
(b)	$2.50 per share if we default on any of the financing payments to be made after September 21, 2004.

If we complete our funding obligations and the board of the directors of EMC determines that additional funding is required to complete the development and commercialization of the EMC Technology, we will have the option of increasing our percentage ownership in EMC to 60% by providing an additional $1,500,000 in financing.

Also under the Funding Agreement, Exelar will have the option to convert its shares of EMC into Company Shares. The number of Company Shares that Exelar will be entitled to upon conversion will be equal to 49% of the Company Shares outstanding at the time of conversion. Exelar’s option to convert can be exercised upon the earliest of the following events:

(a)	completion of our funding obligations to EMC;
(b)	default by us of any of our funding obligations to EMC;
(c)	March 1, 2005; or
(d)	an initial public offering of our stock.

5

As we are now past March 1, 2005, Exelar may exercise its conversion rights at any time.

Currently we have provided $900,000 in financing under the Funding Agreement. As a result we currently own approximately 16.5% of EMC, with Exelar owning the remaining 83.5% .

PLAN OF OPERATION

Subject to our receiving the necessary financing, our plan of operation for the next twelve months is to meet our funding obligations to EMC under the Funding Agreement. Under the Funding Agreement, we are required to provide EMC with aggregate financing in the amount of $3,850,000 and are currently in default of our obligations (see “Technology Acquisition and Funding Agreement” above). As of the date of filing this Quarterly Report, Exelar has not exercised its default rights under the Funding Agreement; however, there is no assurance that it will continue to refrain from exercising these rights. The amounts payable to EMC under the Funding Agreement are in excess of our current financial resources and we will not be able to proceed with our plan of operation unless we acquire significant additional financing.

We had reached a non-binding agreement in principle for a $4,700,000 convertible note financing, an amount that would have been sufficient to allow us to meet our obligations under the Funding Agreement. Completion of the convertible note financing was subject to the finalization of formal agreements. However, we have received notice from the proposed investor that he will not be completing the convertible note financing. As a result, we will not receive any of the expected funds from the convertible note financing.

We plan to pursue equity financing through the sale of Company Shares on a private placement basis. Our Board of Directors has approved the offering of up to 8,000,000 units to be issued at a price of $0.40 per unit for total potential proceeds net of commissions of $2,880,000. However, there is no assurance that the Offering will be completed or that all of the units offered will be sold.

Currently, we do not have any other financing arrangements in place and there is no assurance that we will be able to acquire sufficient financing in order to allow us to meet our funding obligations to EMC. If we are not able to obtain the necessary financing, Exelar may, at its option, reduce our percentage interest in EMC, convert our EMC shares into non-voting shares and/or remove any of our nominees from EMC’s board of directors as provided under the Funding Agreement.

RESULTS OF OPERATIONS

The financial statements accompanying this Quarterly Report contemplate our continuation as a going concern. However, we have sustained substantial losses and are still in the development stage. Additional funding will be necessary to meet our funding obligations to EMC and to allow EMC to continue development and marketing of the EMC Technology. We intend to arrange for the sale of additional Company Shares to obtain additional operating capital for at least the next twelve months. There can be no assurance that we will be able to raise the capital necessary to continue our operations.

In accordance with generally accepted accounting principles, TSI has been treated as the acquiring entity for accounting purposes. As such, the results of operations presented in this Quarterly Report reflect the financial results of TSI for the period from inception on December 21, 2000 to October 31, 2004 and the financial results of Relay Mines Limited from the date of the Second Merger on September 15, 2004 onwards.

6

First Quarter Summary
	Three Months Ended April 30
			Percentage
	2005	2004	Increase / (Decrease)
Revenue	$Nil	$Nil	--
Expenses	(78,026)	(103,248)	(24.4)%
Impairment Loss on Investments	(120,000)	Nil	100%
Interest Expense	(21,396)	(16,038)	33.4%
Net Income (Loss)	$(219,422)	$(119,286)	83.9%

Revenues

We have not earned any revenues to date and we do not anticipate earning revenues until such time as testing and development of the EMC Technology has been completed. We are presently in the development stage of our business and we can provide no assurance that EMC will be able to complete commercial development or successfully sell or license products incorporating the EMC Technology once development is complete.

Operating Expenses

The major components of our operating expenses for the year are outlined in the table below:

	Three Months Ended April 30
			Percentage
	2005	2004	Increase / (Decrease)
Consulting and Management Fees	$33,000	$66,700	(50.5)%
General and Administrative	45,026	36,548	23.2%
Total Operating Expenses	(78,026)	(103,248)	(24.4)%

The decrease in our operating expenses is a result of a 50.5% decrease in incurred consulting and management fees. The additional management fees paid in 2004 were paid to two former directors and officers who are no longer with the Company.

Impairment Loss on Investments

Effective on March 1, 2005 we issued 300,000 shares of our common stock in payment of a commitment made by the former management of TSI to ITV for introducing TSI to the business opportunities presented by the EMC Technology. These shares were issued at a deemed issue price of $0.40 per share, the closing price for our common stock as of the date of issuance. The amount of the deemed issue price was added to the cost of the Company’s investment in EMC, however an impairment charge of $120,000 was recorded in order to reflect the uncertain value of our investment in EMC.

7

LIQUIDITY AND CAPITAL RESOURCES

Cash Flows	Three Months Ended April 30
	2005	2004
Net Cash from (used in) Operating Activities	$(56,483)	$(26,852)
Net Cash from (used in) Investing Activities	Nil	(325,000)
Net Cash from (used in) Financing Activities	50,000	345,750
Net Increase (decrease) in Cash During Period	$(6,483)	$(6,102)

 

Working Capital
			Percentage
	At April 30, 2005	At January 31, 2005	Increase / (Decrease)
Current Assets	$18,894	$24,923	(24.2)%
Current Liabilities	(1,568,021)	(1,474,628)	6.3%
Working Capital Deficit	$(1,549,127)	$(1,449,705)	6.9%

As at April 30, 2005, we had cash on hand of $18,440. The increase in our current liabilities is largely a result of increases in our accrued liabilities, amounts due to related parties and loans payable. Accrued liabilities increased by $13,626 from January 31, 2005, largely as a result of our operating activities since that time and as a result of the fact that we had no sources of revenue or significant sources of financing during that time. At April 30, 2005 we owed $500,884 to certain of our current and former officers and directors for expenses incurred on behalf of the Company, an increase of $28,919 from January 31, 2005. In addition, we had loans payable in the amount of $926,000, an increase of $50,000 from January 31, 2005. The increase in loans payable is a result of a $50,000 unsecured, non-interest bearing demand loan obtained by the Company in April, 2005.

We currently have insufficient capital reserves to meet our obligations under the Funding Agreement. As such, we are technically in default of the provisions of the Funding Agreement; however, we have not yet received a notice of default from Exelar. In March, 2005, we announced that we had reached a non-binding agreement in principle with an investor based in New York (the “Investor”) for a $4,700,000 convertible note financing, an amount that would have been sufficient to allow us to meet our financing obligations under the Funding Agreement. However, we have received notice from the Investor that, due to circumstances outside of our control, he will not be completing the convertible note financing. As a result, we will not receive any of the expected funds from the Investor. We are currently exploring our options and are seeking alternative sources of financing.

Our Board of Directors has also approved a private placement offering of 8,000,000 units at a price of $0.40 per unit for total potential proceeds of $2,880,000 net of conversions. However, there is no assurance that the private placement offering will be completed or that we will be able to sell all units offered under the private placement. Even if all units are sold under the private placement, the funds received will be insufficient to allow us to meet all of our obligations under the Funding Agreement without additional financing.

We are a development stage company and we currently have no sources of revenue to provide incoming cash flows with which to sustain future operations. Our ability to emerge from the development stage is dependent on our ability to raise additional financing and to generate future revenues, of which there is no assurance. As such, our auditors have expressed the opinion that there is a substantial doubt as to our ability to continue as a going concern.

8

OFF-BALANCE SHEET ARRANGEMENTS

We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

CRITICAL ACCOUNTING POLICIES

We have identified certain accounting policies, described below, that are most important to the portrayal of our current financial condition and results of operations. Our significant accounting policies are more thoroughly described in Note 2 to the interim consolidated financial statements included in this Quarterly Report.

Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Long-Lived Assets

In accordance with Financial Accounting Standards Board (“FASB”) Statement of Financial Accounting Standards (“SFAS”) No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets”, the carrying value of intangible assets and other long-lived assets is reviewed on a regular basis for the existence of facts or circumstances that may suggest impairment. The Company recognizes an impairment when the sum of the expected undiscounted future cash flows is less than the carrying amount of the asset. Impairment losses, if any, are measured as the excess of the carrying amount of the asset over its estimated fair value.

Stock-Based Compensation

The Company has adopted a stock option plan to fulfill an obligation under the Merger with TSI. The Company accounts for stock-based awards using the intrinsic value method of accounting in accordance with Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” (APB 25). Under the intrinsic value method of accounting, compensation expense is recognized if the exercise price of the Company’s employee stock options is less than the market price of the underlying common stock on the date of grant.

Statement of Financial Accounting Standards No. 123, “Accounting for Stock-Based Compensation,” (SFAS 123), established a fair value based method of accounting for stock-based awards. Under the provisions of SFAS 123, companies that elect to account for stock-based awards in accordance with the provisions of APB 25 are required to disclose the pro forma net income (loss) that would have resulted from the use of the fair value based method under SFAS 123.

The Company issues stock to non-employees for services. The Company accounts for stock issued for services to non-employees in accordance with SFAS No. 123 “Accounting for Stock-Based Compensation”. Compensation expense is based on the fair market value of the stock award or fair market value of the good and services received whichever is more reliably measurable.

The Company will also adopt the disclosure requirements of Statement of Financial Accounting Standards No. 148, “Accounting for Stock-Based Compensation — Transition and Disclosure an Amendment of FASB Statement No. 123” (SFAS 148), to require more prominent disclosures in both annual and interim financial statements regarding the method of accounting for stock-based employee compensation and the effect of the method used on reported results.

9

RISK FACTORS

Need For Financing

We will not be able to meet our funding obligations to EMC without acquiring substantial additional financing in the near future.

As of the date of filing of this Quarterly Report, we had not provided EMC with the $1,550,000 financing payment due by September 21, 2004, the $1,000,000 payment due by December 20, 2004 or the $1,300,000 payment due by March 20, 2005. Although Exelar has not exercised its default rights at this time, there is no assurance that we will be able to acquire sufficient financing to meet our obligations under the Funding Agreement. If sufficient financing is not available or obtainable, our ability to acquire or retain our interest in EMC may be substantially limited and investors may lose a substantial portion or all of their investment. We currently do not have sufficient financing arrangements in place to meet our funding obligations to EMC and there is no assurance that we will be able to acquire the required financing on acceptable terms or at all.

Liabilities of TSI

As a result of our acquisition of and merger with TSI, we have assumed all of TSI’s liabilities.

We are currently in default of the CFW Loan as amended by the Forbearance Agreement. This loan is secured by 826,240 shares of TechniScan, Inc. (“TechniScan”). TechniScan is a medical technology company engaged in the business of developing and marketing a proprietary imaging system for detecting breast cancer. CFW has not yet exercised its default rights; however, there is no assurance that it will continue to refrain from exercising those rights. If CFW exercises its default rights before we are able to obtain sufficient financing to repay the CFW Loan, we may lose our rights to the TechniScan shares and CFW may seek to take legal action to enforce their rights. If CFW is successful in any legal proceedings it may bring, our ability to meet our plan of operation and to continue as a going concern may be substantially limited.

Limited Operating History And Risks Of A New Business Venture

TSI was incorporated on December 21, 2000 and, until its entry into the Funding Agreement on March 22, 2004, had been involved in organizational and development activities and seeking business opportunities. TSI had not earned any revenues prior to its merger with Acquisition Sub and has not earned any revenues since that time.

Potential investors should be aware of the difficulties normally encountered by a new enterprise and the high rate of failure of such enterprises. The likelihood of success must be considered in light of the problems, expenses, difficulties complications and delays encountered in connection with the development of a business in the area in which we and EMC intend to operate and in connection with the formation and commencement of operations of a new business in general. These include, but are not limited to, unanticipated problems relating to research and development programs, marketing, approvals by the FDA, competition and additional costs and expenses that may exceed current estimates. There is no history upon which to base any assumption as to the likelihood that we or EMC will prove successful, and there can be no assurance that we or EMC will generate any operating revenues or ever achieve profitable operations.

EMC’s Operations Are Subject To Extensive Government Regulations

EMC’s operations will be subject to extensive government regulations in the United States. In order to sell its devices, EMC must satisfy numerous mandatory procedures, regulations, and safety standards established by the federal and state regulatory agencies. There can be no assurance that EMC can successfully comply with all present or future government regulations.

The Health Care Industry Is Subject To Continuing Reform Measures By Governments And Third PartyPayors, Which Contribute To The Uncertainty Of Pricing And Reimbursements To Us

The levels of revenue and profitability of medical devices may be affected by government and third party payors for medical services and their continuing efforts to contain or reduce the costs of health care and by initiatives of third party payors with respect to the availability of reimbursements for medical services.

10

In the United States, there have been, and we expect that there will continue to be, a number of federal and state proposals to implement similar governmental control. Although we cannot predict what legislative reforms may be proposed or adopted or what actions federal, state or private payors for health care services may take in response to any health care reform proposals or legislation, the existence and pendency of such proposals could have a material adverse effect on us and EMC.

Whether a medical procedure is subject to reimbursement from third party payors impacts upon the likelihood that a service will be purchased. Third party payors are increasingly challenging the prices charged for medical procedures. There can be no assurance that any procedures using EMC’s medical devices will be reimbursable. To the extent that any or all medical procedures using EMC’s medical devices are not reimbursable by third party payors, EMC’s ability to sell products on a competitive basis will be adversely affected, which could have a material adverse effect on us and EMC.

Rapid Technological Changes In Our Industry Could Make Our Products Obsolete

The medical devices industry is characterized by rapid technological change and intense competition. New technologies, products and industry standards will develop at a rapid pace which could make EMC’s planned product obsolete. The advent of new devices and procedures and advances in new drugs and genetic engineering are especially threatening. EMC’s and our future success will depend upon EMC’s ability to develop and introduce product enhancements to address the needs of its customers. Material delays in introducing product enhancements may cause customers to forego purchases of EMC’s product and purchase those of competitors.

EMC Must Receive And Maintain Government Clearances Or Approvals In Order To Market ItsProducts

EMC’s products and future manufacturing activities are subject to extensive, rigorous and changing federal and state regulation in the United States and to similar regulatory requirements in other major international markets, including the European Union and Japan. These regulations and regulatory requirements are broad in scope and govern, among other things:

(a)	product design and development;
(b)	product testing;
(c)	product labeling;
(d)	product storage;
(e)	pre-market clearance and approval;
(f)	advertising and promotion; and
(g)	product sales and distribution.

Furthermore, regulatory authorities subject a marketed product, its manufacturer and the manufacturing facilities to continual review and periodic inspections. EMC will be subject to ongoing FDA requirements, including required submissions of safety and other post-market information and reports, registration requirements, quality systems regulations, and recordkeeping requirements. The quality systems regulations include requirements relating to quality control and quality assurance, as well as the corresponding maintenance of records and documentation. EMC’s prospective distributors, depending on their activities, will also be subject to certain requirements under federal and state laws and registration requirements covering the distribution of products. Regulatory agencies may change existing requirements or adopt new requirements or policies that could affect EMC’s regulatory responsibilities or the regulatory responsibilities of a prospective distributor. EMC may be slow to adapt or may not be able to adapt to these changes or new requirements.

Later discovery of previously unknown problems with EMC’s products, manufacturing processes, or failure to comply with applicable regulatory requirements may result in enforcement actions by the FDA and other international regulatory authorities, including, but not limited to:

11

(a)	warning letters;
(b)	patient or physician notification;
(c)	restrictions on our products or manufacturing processes;
(d)	voluntary or mandatory recalls;
(e)	product seizures;
(f)	refusal to approve pending applications or supplements to approved applications that EMC submits;
(g)	refusal to permit the import or export of EMC’s products;
(h)	fines;
(i)	injunctions;
(j)	suspension or withdrawal of marketing approvals or clearances; and
(k)	civil and criminal penalties.

Should any of these enforcement actions occur, EMC’s and our business, financial condition and results of operations could be materially and adversely affected.

Asserting And Defending Intellectual Property Rights May Impact Results Of Operations

In the medical devices industry, competitors often assert intellectual property infringement claims against one another. The success of EMC’s business depends on its ability to successfully defend its intellectual property rights. Future litigation may have a material impact on EMC’s and our financial condition even if EMC is successful in developing and marketing products. EMC may not be successful in defending or asserting its intellectual property rights.

An adverse outcome in any litigation or interference proceeding could subject EMC to significant liabilities to third parties and require it to cease using the technology that is at issue or to license the technology from third parties. In addition, a finding that any of its intellectual property rights are invalid could allow its competitors to more easily and cost-effectively compete. Thus, an unfavorable outcome in any patent litigation or interference proceeding could have a material adverse effect on EMC’s and our business, financial condition or results of operations.

The cost to EMC of any patent litigation or interference proceeding could be substantial. Uncertainties resulting from the initiation and continuation of patent litigation or interference proceedings could have a material adverse effect on its ability to compete in the marketplace. Patent litigation and interference proceedings could also absorb significant management time.

EMC May Be Subject To Product Liability Lawsuits

EMC may be subject to product liability claims. The United States Supreme Court has stated that compliance with FDA regulations will not shield a company from common law negligent design claims or manufacturing and labeling claims based on state rules. Such claims may absorb significant management time and could degrade EMC’s reputation and the marketability of its products. If product liability claims are made with respect to EMC’s products, they may need to recall the implicated product which could have a material adverse effect on EMC’s and our business, financial condition and results of operations. In addition, although EMC may maintain product liability insurance, it cannot be sure that such insurance will be adequate to cover potential product liability lawsuits. Insurance is expensive and in the future may not be available on acceptable terms, if at all. If a successful product liability claim or series of claims exceeds insurance coverage, it could have a material adverse effect on EMC’s and our business, financial condition and results of operations.

Competition

The business environment in which EMC intends to operate is highly competitive. EMC expects to experience competition from companies involved in the medical technology industry. Certain of EMC’s potential competitors will have greater technical, financial, marketing, sales and other resources than EMC.

12

Dependence On Key Personnel

Our success will largely depend on the performance of our directors and officers and those of EMC. Our success will also depend on EMC’s ability to attract and retain highly skilled technical, research, management, regulatory compliance, sales and marketing personnel. Competition for such personnel is intense. The loss of the services of such personnel or the inability to attract and retain other key personnel could impair the development of EMC’s and consequently our business, operating results and financial condition.

Potential Legal, Regulatory, And/Or Compliance Risk

EMC will be required to comply with certain regulations, rules, and/or directives, including FDA approval. If EMC is not able to obtain FDA approval of its device under section 510(k) of the United States Food, Drug and Cosmetic Act as anticipated, it will be required to enter into an expensive and lengthy process to obtain FDA approval for the use of its device. Potential regulatory conditions and/or compliance therewith and the effects of such to EMC, may have a materially adverse affect upon EMC’s and our business operations, prospects and/or financial condition.

ITEM 3.               CONTROLS AND PROCEDURES.

(A)	Evaluation Of Disclosure Controls And Procedures
	As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our principal executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Our disclosure controls and procedures are designed to provide a reasonable level of assurance that our disclosure control objectives are achieved. Our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures are, in fact, effective at providing this reasonable level of assurance as of the period covered.
(B)	Changes In Internal Controls Over Financial Reporting
	In connection with the evaluation of our internal controls during our last fiscal quarter, our principal executive officer and principal financial officer have determined that there are no changes to our internal controls over financial reporting that has materially affected, or is reasonably likely to materially effect, our internal controls over financial reporting.

13

PART II - OTHER INFORMATION

ITEM 1.               LEGAL PROCEEDINGS.

None.

ITEM 2.               UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

Except as described below, all unregistered sales of our equity securities made during the three months ended April 30, 2005 have been reported by us in Current Reports on Form 8-K or in our Annual Report on Form 10-KSB filed with the SEC on June 6, 2005.

In satisfaction of the finder’s fee payable to ITV, we have issued 300,000 Company Shares to ITV. These shares were issued to ITV in satisfaction of a commitment provided by TSI to ITV at the time that TSI entered into the Funding Agreement with EMC and Exelar. At that time, TSI promised to issue 300,000 shares of its common stock to ITV as a finder’s fee for introducing TSI to Exelar and the business opportunities presented by the EMC Technology. ITV is a private company controlled by Douglas P. Boyd, Ph.D., our Chairman of the Board and one of our directors. These shares were issued to ITV pursuant to the exemption to registration contained in Section 4(2) of the Securities Act on the basis that the sale of these shares to ITV did not involve a public offering of our securities.

Proposed Private Placement

On September 20, 2004, our Board of Directors approved a private placement offering of up to 8,000,000 units at a price of $0.40 per unit (the “Offering”). Total proceeds of the Offering, assuming all units offered are sold, net of commissions, will be $2,880,000. Each unit issued under the Offering will consist of one Company Share and one-half of one share purchase warrant. Each one full share purchase warrant issued under the Offering will entitle the holder to purchase one additional Company Share at a price of $0.50 per share, expiring one year from the date of closing of the Offering. The net proceeds of the Offering are intended to be used by us to meet our financing obligations under the Funding Agreement and as general working capital. Although the Offering has been approved by our Board of Directors, there is no assurance that the Offering will be completed or that we will be able to sell all of the units offered.

If the Offering is completed, it is expected that any issuances of our securities will be made pursuant to the exemptions to registration contained in Regulation S promulgated under the Exchange Act on the basis that the Offering will be made only to people who are not “U.S. Persons”, as defined under Regulation S.

ITEM 3.               DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4.               SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

None.

14

ITEM 5.               OTHER INFORMATION.

All information required to be disclosed in a Current Report on Form 8-K during the period covered by this Quarterly Report has been previously disclosed by the filing of such reports on Form 8-K.

ITEM 6.               EXHIBITS AND REPORTS ON FORM 8-K.

The following exhibits are either provided with this Quarterly Report or are incorporated herein by reference:

Exhibit Number	Description of Exhibit
2.1	Agreement and Plan of Merger between Relay Mines Limited and TSI Med Acquisition Corp., dated as of September 13, 2004.(4)
3.1	Articles of Merger for Relay Mines Limited and TSI Med Acquisition Corp.(4)
3.2	Articles of Incorporation for Relay Mines Limited.(1)
3.3	Bylaws, As Amended, for Relay Mines Limited.(4)
10.1	Technology Acquisition and Funding Agreement between TSI Medical Corp., Exelar Corporation and Exelar Medical Corporation dated for reference March 22, 2004.(4)
10.2	Agreement and Plan of Merger between Carlo Civelli, Bruno Mosimann, TSI Medical Corp., Relay Mines Limited and TSI Med Acquisition Corp., dated effective as of August 12, 2004.(3)
10.3	Letter Agreement, dated October 13, 2004, between XLR Medical Corp., Exelar Corporation and Exelar Medical Corporation amending the terms of the Technology Acquisition and Funding Agreement dated March 22, 2004.(5)
10.4	Loan Agreement dated as of the 8thday of March, 2004 between 689158 B.C. Ltd. and The Charles F. White Corporation.(6)
10.5	Guarantee dated as of March 8, 2004 made by TSI Medical Corp. to and in favor of The Charles F. White Corporation.(6)
10.6	Forbearance and Amendment Agreement dated as of February 28, 2005 between 689158 B.C. Ltd., The Charles F. White Corporation and XLR Medical Corp.(6)
10.7	Non-Binding Letter of Intent dated March 16, 2005 from Avi Faliks.(7)
14.1	Code of Ethics(2)
31.1	Certification of Chief Executive Officer as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Financial Officer as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Chief Executive Officer as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of Chief Financial Officer as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

15

(1)	Previously filed with the SEC as an exhibit to our registration statement on Form SB-2 originally filed on May 1, 2001, as amended.
(2)	Previously filed with the SEC on September 12, 2003 as an exhibit to our Annual Report on Form 10-KSB for the year ended June 30, 2003.
(3)	Previously filed with the SEC on August 20, 2004 as an exhibit to our current report on Form 8-K.
(4)	Previously filed with the SEC on September 17, 2004 as an exhibit to our current report on Form 8-K.
(5)	Previously filed with the SEC on October 29, 2004 as an exhibit to our Annual Report on Form 10-KSB for the year ended June 30, 2004.
(6)	Previously filed with the SEC on March 3, 2005 as an exhibit to our current report on Form 8-K.
(7)	Previously filed with the SEC on March 22, 2005 as an exhibit to our current report on Form 8-K.

REPORTS ON FORM 8-K

The following Current Reports on Form 8-K have been filed by us since the end of our fiscal year ended January 31, 2005, as previously disclosed on our Annual Report on Form 10-KSB filed with the SEC on June 6, 2005:

Date of Form 8-K	Date of Filing  with the SEC	Description of the Form 8-K
February 28, 2005	March 3, 2005	Disclosure of entry into Forbearance and Amendment Agreement with CFW.
March 16, 2005	March 22, 2005	Disclosure of convertible note financing.
April 5, 2005	April 20, 2005	Disclosure of appointment of new director and officer.

16

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.

			XLR MEDICAL CORP.
		By:	/s/ Peter A. Hogendoorn
Date:	June 21, 2005		PETER A. HOGENDOORN
			President and Chief Executive Officer
			Director
			(Principal Executive Officer)
		By:	/s/ Logan B. Anderson
Date:	June 21, 2005		LOGAN B. ANDERSON
			Secretary, Treasurer and Chief Financial Officer
			Director
			(Principal Accounting Officer)