UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] Quarterly report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 For the quarterly period
ended: September 30, 1999
[ ] Transition report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 For the transition period
from _______ to _________
Commission file number: 000-25557
AGRI BIO-SCIENCES, INC.
(Exact name of small business issuer as specified in its charter)
Delaware 76-0481583
(State or other jurisdiction of I.R.S. Employer
incorporation or organization Identification No.)
5211 Court of York, Houston, Texas 77069
(Address of principal executive officer) (Zip Code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No ___
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE
PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court Yes ___ No ___
APPLICABLE ONLY TO CORPORATE ISSUERS
The number of shares of common stock, $0.01 par value, outstanding
as September 30, 1999: 11,050,000
shares
Transitional Small Business Disclosure Format (check one): Yes ___ No X
<PAGE>
AGRI BIO-SCIENCES, INC.
PERIOD ENDED SEPTEMBER 30, 1999
INDEX
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PART I. FINANCIAL INFORMATION Page
Item 1. Financial Statements
Condensed financial statements of Agri Bio-Sciences, Inc.:
<S> <C>
Balance sheet as of September 30, 1999 3
Income statements for the three and nine months ended
September 30, 1999, three months and nine months
ended September 30, 1998 and period from May 30, 1995 (Date
of Inception) to September 30, 1999 4
Statements of cash flows for the nine months ended September
30, 1999, the nine months ended September 30, 1998 and
period from May 30, 1995 (Date of Inception) to September
30, 1999 5
Notes to financial statements 6
Item 2. Plan of Operations 7
PART II. OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds 10
Item 6. Exhibits and Reports on Form 8-K 10
(a) Exhibits
SIGNATURE 11
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2
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
AGRI BIO-SCIENCES, INC.
(A Development Stage Company)
Balance Sheet
September 30, 1999
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ASSETS
<S> <C>
Cash$ 2,694
Fertilizer plant and equipment, net 164,386
-------
TOTAL ASSETS $167,080
LIABILITIES
Accounts payable $ 26,926
Accrued expenses 9,311
Due to current stockholders 118,000
Due to former stockholder 100,000
--------
TOTAL LIABILITIES 254,237
STOCKHOLDERS' EQUITY
Common stock, $.001 par value, 20,000,000
shares authorized, 10,900,000 issued
and outstanding 10,900
Paid in capital 582,250
Deficit accumulated during the development stage (680,307)
--------
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) ( 87,157)
--------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $167,080
========
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3
<PAGE>
AGRI BIO-SCIENCES, INC.
(A Development Stage Company)
Statements of Expenses
9 Months Ended September 30, 1999 and 1998
and the period from May 30, 1995 (Inception)
Through September 30, 1999
<TABLE>
<CAPTION>
- - 1999 - - 1999 - - 1998 - - 1998 May 30,1995
3 Months 9 months 3 Months 9 Months (Inception)
Ended Ended Ended Ended to Sep. 30,
Sep. 30 Sep. 30 Sep. 30 Sep 30 1999
EXPENSES
<S> <C> <C> <C> <C> <C>
Fees paid for services
by stockholders $ 168,400
Other administrative $ 32,142 $ 75,809 $ 13,251 $ 73,574 364,317
Inventory writedown 100,000 100,000 100,000
Interest 2,710 38,090
Depreciation 1,250 3,750 1,250 3,750 9,500
-------- -------- --------- --------- ---------
Net (loss) $(33,392) $(79,559) $(114,501) $(180,034) $(680,307)
======== ======== ========= ========= =========
(Loss) per common share $(.003) $(.007) $(.010) $(.020)
Weighted average
shares outstanding 10,900,000 10,900,000 10,900,000 10,777,778
</TABLE>
4
<PAGE>
AGRI BIO-SCIENCES, INC.
(A Development Stage Company)
Statements of Cash Flows
9 Months Ended September 30, 1999 and 1998
and the period from May 30, 1995 (Inception)
Through September 30, 1999
<TABLE>
<CAPTION>
Inception
Through
1999 1998 1999
--------- ---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C> <C>
Net (loss) $(79,559) $(180,034) $(680,307)
Adjustments to reconcile net income
to net cash provided by
operating activities
Depreciation 3,750 3,750 9,500
Common stock issued for services 67,650
Writedown of inventory value 100,000 100,000
Contribution of imputed interest 30,000
Changes in:
Other current assets 7,500
Accounts payable 19,014 4,927 26,926
Accrued expenses 1,500 ( 1,200) 9,310
-------- --------- ---------
NET CASH USED BY
OPERATING ACTIVITIES (55,295) ( 65,057) (436,920)
-------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Plant site construction and equipment
purchases ( 73,886)
---------
NET CASH USED FOR
INVESTING ACTIVITIES ( 73,866)
------------- ------------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Sales of common stock for cash 137,500 895,500
Purchase of stock from a former
shareholder (500,000)
Advances by shareholders 46,000 52,000 118,000
------- --------- ---------
NET CASH PROVIDED BY
FINANCING ACTIVITIES 46,000 61,290 513,500
-------- --------- ---------
NET INCREASE (DECREASE) IN CASH ( 9,295) ( 3,737) 2,694
CASH - Beginning of period 11,989 7,597
- End of period $ 2,694 $ 3,830 $ 2,694
======== ========= =========
SUPPLEMENTAL DISCLOSURES
Non-cash investing and financing activities:
Contribution of plant site at inception $100,000
Purchase of bagged fertilizer for
note payable 100,000
</TABLE>
5
<PAGE>
NOTES TO FINANCIAL STATEMENTS
AGRI BIO-SCIENCES, INC.
(A Development Stage Company)
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited interim financial statements of Agri Bio-Sciences,
Inc. have been prepared in accordance with generally accepted accounting
principles and should be read in conjunction with the audited financial
statements and notes thereto contained in the Company's latest Annual Report
filed with the SEC on Form 10-KSB. In the opinion of management, all
adjustments, consisting of normal recurring
adjustments, necessary for a fair presentation of financial position and the
results of operations for the interim periods presented have been reflected
herein. The results of operations for interim periods are not necessarily
indicative of the results to be expected for the full year. Notes to the
financial statements which would substantially duplicate the disclosure
contained in the audited financial statements for the most recent fiscal year,
1998, as reported in the 10-KSB, have been omitted.
6
<PAGE>
Item 2. PLAN OF OPERATION
Agri Bio-Sciences, Inc., a Delaware corporation (the "Company"), is a
developmental stage company formed for the production of a fertilizer known as
"Micro Min." It has not yet commenced full-scale production activities and has
not generated any revenues from operations. While there can be no assurance that
the Company will be able to generate meaningful revenues or achieve profitable
operations, the Company has received its first purchase order for Micro Min and
expects to receive additional purchase orders in the near future.
On November 3, 1999, 100,000 registered shares of the Company's Common
Stock, par value $.001 per share ("Common Stock"), were distributed to the
stockholders of GS Financial Services, Inc., a Delaware corporation ("GS
Financial"), thus establishing a public float for the Common Stock. The Company
is currently seeking to procure an initial market maker for the Common Stock so
that public trading in the Common Stock may commence in the near future.
EXCLUSIVE SALE AND PURCHASE ARRANGEMENT:
The Company was formed solely for the purpose of manufacturing Micro
Min and does not intend to engage in the sale and marketing of Micro Min.
Instead, Global Farm Sciences, Inc., a Texas corporation ("Global"), was formed
in December 1997 by Lester Stephens, M. Manny Kalish and Patrick N. Morgan
(founders and board members of the Company) for the purpose of selling Micro Min
to foreign entities. On August 27, 1998, the Company signed a five-year
exclusive product sales agreement with Global. This Agreement requires Global to
purchase 2,000 metric tons of Micro Min during the year 1999 and 2000 and
thereafter purchase 3,000 metric tons of Micro Min during each succeeding year.
Global must pay $620.00 per metric ton in United States dollars, FOB the
Company's plant facility in Bay Springs, Mississippi. Global must remit 50% of
the purchase price with each purchase order for Micro Min forwarded to the
Company. (This initial amount provides the Company with adequate funds to
produce one metric ton of product and thereby provides the Company with the
necessary funds to keep the plant in operation). Thereafter, Global must remit
the remaining 50% payment of its purchase order to the Company within ninety 90
days of their receipt of the product FOB the plant. The Global agreement may be
terminated prior to its five-year term upon the occurrence of certain customary
termination events, such as breach of contract or bankruptcy.
During the quarter ended September 30, 1999, the Company and Global
realized that the success of Global's business activities in Mexico was limited
due to Global's status as a foreign corporation in that country. Accordingly,
with the knowledge and consent of the Company, Global has been employing Ciences
Agro Ambientales, S.A. de C.V. ("CIAGAM") to undertake the sales-related
activities that Global was originally to undertake. CIAGAM is indirectly owned
by certain members of the Company's Board of Directors, and is a registered
Mexican corporation fully authorized under Mexican corporate law. Global's use
of CIAGAM for sales-related activities is expected for the
7
<PAGE>
foreseeable future. While there has been no formal assignment of Global's
rights and obligations under its exclusive product sales agreement with the
Company, such an assignment has been discussed and may occur in the future.
STATUS OF SALES EFFORTS:
For some time, Global has been holding discussions with FERTILIZANTES
NACIONALES, S.A. de C.V. ("FERTINAL") regarding a possible agreement whereby
FERTINAL would be the exclusive reseller of Micro Min in Mexico. FERTINAL is an
established fertilizer sales organization in Mexico which reports that it has a
35% market share of fertilizer sales in Mexico and it operates approximately 260
warehouses located throughout Mexico capable of holding fertilizer inventory.
While discussions with FERTINAL continue, no definitive agreement with FERTINAL
has been reached.
In addition, for some time, Global has been holding discussions with
The College of Agricultural Engineers (the "College") regarding a possible
arrangement whereby members of the College would attempt to sell Micro Min to
farmers in Mexico. The College is an association of graduates of various
agricultural colleges in Mexico and estimates that it has about 15,000
agricultural engineer members nationwide. While discussions with the Colleges
continue, no definitive agreement with the College has been reached.
Because of the delay in establishing a formal relationship with
FERTINAL, the College or another large sales force, CIAGAM itself is making
sales calls on critical governmental and quasi-governmental agencies as well as
private businesses. In this connection, CIAGAM received an initial purchase
order for 290 metric tons of Micro Min from Asesoria Integral Agrupecuaria, S.A.
de C.V. ("ASIA"), a fertilizer distributor in Mexico. The Micro Min ordered is
to be delivered as soon as practical. One hundred twenty (120) metric tons of
Micro Min is already located in warehouses in Mexico. Another 120 metric tons of
Micro Min is located at the Company's plant facility in Bay Springs,
Mississippi, bagged and ready to be shipped. The Company is now in the process
of filling ASIA's order, and the Company expects to reactivate its plant
facility in Bay Springs, Mississippi shortly after the 1999 holiday season in
order to produce the remaining Micro Min needed to fill the order. As a result
of the ASIA purchase order, the Company expects to realize revenues in January
2000. Management believes that CIAGAM will receive additional purchase orders
from ASIA in the future, although there can be no assurance in this regard.
BANK FINANCING SALES:
CIAGAM has recently established a relationship with the Banco de
Mexico, the national bank of Mexico. The Banco de Mexico has indicated a desire
to establish a credit line sufficient for Mexican farmers to purchase certain
items of agriculture necessary for growing crops. Although CIAGAM and the Banco
de Mexico have not agreed upon definitive terms nor entered into definitive
agreements regarding the line of credit,
8
current discussions are revolving around certain terms. First, the line of
credit is expected to have a total amount ranging from $425,000 to $1.2 million.
This amount of funding is expected to service adequately an eight-state targeted
area in Mexico. In addition, amounts advanced on the line of credit to farmers
will be due and payable approximately 90 days after the advance. Moreover, as is
customary, the line of credit would require the farmers to place their land in
trust as collateral against the amounts advanced. Finally, CIAGAM is expected to
be required to guarantee a comparatively small portion of each advance on the
line of credit. Despite the current status of the negotiations regarding the
line of credit, there can be no assurance that CIAGAM will successfully conclude
such negotiations and establish a line of credit with the Banco de Mexico or any
other lender.
LABORATORY OPERATION:
Intertek Testing Service ("ITS") is an ISO 9002 Certified company with
offices in 102 countries of the world. It has eleven laboratories in Mexico. ITS
will be using the Company's laboratory computer copyrighted software and testing
protocols to do the soil, water and plant testing for all farmer/clients of
CIAGAM. Assisting them in this service is Global's vice president of laboratory
technology, Robert A. Kalish. The ITS laboratory in Mexico City will receive the
sample and process it using the Company's computer copyrighted software to
complete an analytical report for the farmer which depicts the present condition
of the farmer's soil. This report also recommends the exact fertilizers to be
used both in kind and amounts on a per acre basis. Management believes that a
service like this has never before available to the farmers of Mexico. The soil
analytical report will be reduced to computer language and forwarded by MODEM to
a computer in the sales office servicing the farmer/client. Global reports that
it has sufficient funds in its budget to install computers in each of the sales
offices in those initial areas being targeted for Micro Min sales. A computer
server is presently installed in the ITS offices in Mexico City.
CORPORATE FUTURE GOALS:
The Company (through CAIGAM) intends to continue to pursue sales of
Micro Min in Mexico and possibly complete broad product sales agreements with
FERTINAL, the College or some other firm or organization having a large sales
force. In addition, the Company would like to begin exploring (through Global)
the possibility of establishing a sales program in Columbia. The Company already
has a product license for Micro Min in that country as well as associates and
relationships with important agricultural institutions and organizations. Global
is currently planning on a possible visit to Columbia in the first quarter of
year 2000 to explore more closely the possibility of establishing a sales
program in Columbia.
CAPITAL REQUIREMENTS, RESEARCH AND DEVELOPMENT AND EQUIPMENT EXPENDITURES:
The Company does not believe that it will need any financing over the
next 12
9
<PAGE>
months. Management believes that the Company will be able to finance its
operations through its receipt of down payments in the amount of 50% of the
purchase price of each purchase order issued by Global. Such down payments are
expected to cover all direct costs of producing the related product. The Company
has only minimal overhead, which has thus far been financed through amounts
advanced by M. Manny Kalish, a director of the Company. Mr. Kalish has indicated
that he intends to continue to provide limited financing of overhead, but he is
under no legal obligation to do so and may cease at any time.
Moreover, the Company does not intend to conduct any further research
and development over the next 12 months. However, if CIAGAM meets its sales
expectations, the Company expects to add (during the next 12 months) a
California Pellet Mill pelletizer and sufficient additional employees to meet
the demand for additional production.
PART II. OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
During the quarter ended September 30, 1999, the Company did not effect
any sale of any equity securities not registered under the Securities Act of
1933.
On April 22, 1999, the Company's Registration Statement on Form SB-2
(Commission File No. 333-51977) was declared effective by the U.S Securities and
Exchange Commission. This Registration Statement registered 100,000 shares of
the Common Stock held by GS Financial. Pursuant to a written agreement between
the Company and GS Financial, these 100,000 shares of Common Stock were to be
distributed to the stockholders of GS Financial. The distribution and offering
of these shares were completed on November 3, 1999. The Company received no
proceeds from the distribution. There was no change in the approximate actual
expenses incurred by the Company in connection with the distribution registered
under the Registration Statement from those reflected in the Company's Quarterly
Report on Form 10-QSB for the quarter ended June 30, 1999.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The following exhibits are filed with this Quarterly
Report or are incorporated herein by reference:
Exhibit
Number Description
27 Financial Data Schedule
10
<PAGE>
(b) Reports on Form 8-K
None
SIGNATURE
In accordance with the requirements of the Exchange Act, the Registrant
has duly caused this Report to be signed on its behalf by the undersigned,
thereunto duly authorized.
AGRI BIO-SCIENCES, INC.
(Registrant)
By: /s/Lester H. Stephens
Lester H. Stephens,
President
(Principal Executive
Officer, Principal
Financial Officer and
Principal Accounting Officer)
Dated: November 15, 1999
11
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE FINANCIAL DATA SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM ITEM 1
OF FORM 10-QSB FOR THE QUARTER ENDED SEPTEMBER 30, 1999 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0001060212
<NAME> Agri Bio-Sciences, Inc.
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C> <C>
<PERIOD-TYPE> 9-MOS 3-MOS
<FISCAL-YEAR-END> DEC-31-1999 DEC-31-1999
<PERIOD-START> JAN-1-1999 JUL-1-1999
<PERIOD-END> SEP-30-1999 SEP-30-1999
<EXCHANGE-RATE> 1 1
<CASH> 2694 2694
<SECURITIES> 0 0
<RECEIVABLES> 0 0
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 2694 2694
<PP&E> 164386 164386
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<TOTAL-ASSETS> 167080 167080
<CURRENT-LIABILITIES> 254237 254237
<BONDS> 0 0
0 0
0 0
<COMMON> 10900 10900
<OTHER-SE> (98057) (98057)
<TOTAL-LIABILITY-AND-EQUITY> 167090 167090
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<OTHER-EXPENSES> 79559 33392
<LOSS-PROVISION> 0 0
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<INCOME-PRETAX> (79559) (33392)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (79559) (33392)
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<EXTRAORDINARY> 0 0
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<NET-INCOME> (79559) (33392)
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<EPS-DILUTED> (0.01) (0.00)
</TABLE>
