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: June 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
June 30, 1999: 11,050,000 shares
Transitional Small Business Disclosure Format (check one): Yes ___ No X
<PAGE>
AGRI BIO-SCIENCES, INC.
PERIOD ENDED JUNE 30, 1999
INDEX
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION Page
<S> <C>
Item 1. Financial Statements
Condensed financial statements of Agri Bio-Sciences, Inc.:
Balance sheet as of June 30, 1999 3
Statements of Expenses for the three and six months ended June
30, 1999, three months and six months ended June 30, 1998
and
period from May 30, 1995 (Date of Inception) to June 30, 1999 4
Statements of cash flows for the six months ended June 30,
1999, the six months ended June 30, 1998 and period
from May 30, 1995 (Date of Inception) to June 30, 1999 5
Notes to financial statements 6
Item 2. Management's Discussion and Analysis of Financial Condition
And Results 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
</TABLE>
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
AGRI BIO-SCIENCES, INC.
(A Development Stage Company)
Balance Sheet
June 30, 1999
<TABLE>
<S> <C>
ASSETS
Cash $ 866
Fertilizer plant and equipment, net 165,636
TOTAL ASSETS $166,472
LIABILITIES
Accounts payable $ 26,926
Accrued expenses 9,311
Due to current stockholders 84,000
Due to former stockholder 100,000
-------
TOTAL LIABILITIES 220,237
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 (646,915)
--------
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) ( 53,765)
--------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $166,472
</TABLE>
See summary of accounting policies and
notes to financial statements.
<PAGE>
AGRI BIO-SCIENCES, INC.
(A Development Stage Company)
Statements of Expenses
<TABLE>
<CAPTION>
- - 1999 - - 1999 - - 1998 - - 1998 May 30, 1995
3 Months 6 Months 3 Months 6 Months (Inception)
Ended Ended Ended Ended to June 30,
June 30 June 30 June 30 June 30 1999
<S> <C> <C> <C> <C> <C>
EXPENSES
Fees paid for services
by stockholders
168,400
Other administrative $ 11,055 $ 43,667 $ 31,540 $47,023 332,175
Inventory writedown 100,000
Interest 2,710 38,090
Depreciation 1,250 2,500 0 0 8,250
--------- --------- ---------- --------- ----------
Net (Loss) $(12,305) $(46,167) $( 31,540) $(49,733) $(646,915)
======== ======== ========== ========= =========
(Loss) per common share $(.001) $(.004) $(.003) $(.005)
Weighted Average
Shares Outstanding 10,900,000 10,900,000 10,900,000 10,716,667
</TABLE>
See summary of accounting policies and
notes to financial statements.
<PAGE>
AGRI BIO-SCIENCES, INC.
(A Development Stage Company)
Statements of Cash Flows
6 Months Ended June 30, 1999 and 1998 and
the period from May 30, 1995 (Inception)
Through June 30, 1999
<TABLE>
<CAPTION>
Inception
Through
1999 1998 1999
--------- --------- ----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) $(46,167) $(49,733) $(646,915)
Adjustments to reconcile net income
to net cash provided by
operating activities
Depreciation 2,500 8,250
Writedown of inventory 100,000
Common stock issued for services 12,000 67,650
Contribution of imputed interest 30,000
Changes in:
Accounts payable 19,014 4,927 26,926
Accrued expenses 1,500 ( 1,200) 9,310
-------- -------- ---------
NET CASH USED BY OPERATING ACTIVITIES (23,153) ( 34,006) (404,778)
------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Plant site construction and equipment
purchases (73,886)
CASH FLOWS FROM FINANCING ACTIVITIES
Sales of common stock for cash 125,500 895,500
Advances by shareholders 12,000 42,000 84,000
Payments on bank credit line (128,210)
Cash paid to repurchase shares from
a founding shareholder (500,000)
NET CASH PROVIDED BY FINANCING ACTIVITIES 12,000 39,290 479,500
-------- -------- ---------
NET INCREASE (DECREASE) IN CASH (11,153) 5,284 836
CASH - Beginning of period 11,989 7,597
- End of period $ 836 $ 12,881 $ 836
======== ======== =========
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>
See summary of accounting policies and notes to financial
statements.
<PAGE>
AGRI BIO-SCIENCES, INC.
(A Development Stage Company)
Notes to Financial Statements
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 the rules of the Securities and Exchange Commission ("SEC"), 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 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 Form 10-KSB, have been omitted.
<PAGE>
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 sales, marketing, or production
activities, has not generated any revenue from operations and will not generate
revenue from operations until it commences its sales operation in Mexico. While
there can be no assurance that the Company will be able to generate meaningful
revenue or achieve profitable operations, it is expected to start selling Micro
Min in Mexico during the early part of September, 1999.
The Company expects to become a publicly traded company through the
distribution of 100,000 shares of its Common Stock, par value $.001 per share
("Common Stock") to the stockholders of GS Financial Services, Inc., a Delaware
corporation ("GS Financial"). Such distribution is referred to hereinafter as
the "Distribution." The Distribution has been registered with the U.S.
Securities and Exchange Commission, but has not yet been completed due to
several unforeseeable and unexpected delays not within the control of the
Company. The Company is working diligently to complete the Distribution and
reasonably expects the Distribution to be completed near or around the end of
August 1999, although there can be no assurance in this regard. The Company is
currently seeking to procure an initial market maker for the Common Stock so
that trading in the Common Stock may commence in the near future.
EXCLUSIVE SALE AND PURCHASE ARRANGEMENT:
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 the
Company's product 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. For the
foreseeable future, Global intends to rely on its relationship with
FERTILIZANTES NACIONALES, S.A. de C.V. and The National College of Agricultural
Engineers for purposes of generating sales of Micro Min.
BANK FINANCING SALES:
Global Farm Sciences, Inc., has recently established a relationship
with the Banco de Mexico, the national bank of Mexico. Banco de Mexico has
indicated a desire to furnish the Mexican farmer with a credit line sufficient
for the farmer to purchase certain items of agriculture necessary for the farmer
to grow crops. This credit line will be established by the Mexican sales
organization in Mexico designated by Global. In this case, it will be
FERTILIZANTES NACIONALES, S.A. de C.V. ("FERTINAL"), an established fertilizer
sales organization in Mexico which reports that it has a 35% market share of
fertilizer sales in Mexico.
SALES PROCEDURE:
In essence, Global Farm Sciences, Inc. will purchase Micro Min from
the Company FOB the Company's plant facility in Bay Springs, Mississippi, for
the sum of $620.00 per metric ton of Micro Min. Global will then ship the
product to a Mexican port (Veracruz), where trucks owned by FERTINAL will
transport it to one or more of their 26O warehouses located throughout Mexico.
Once at one of those warehouses, the product will be sold to client/farmers of
FERTINAL by salesmen using the Banco de Mexico's line of credit financing
package. We understand that Banco de Mexico's plan includes the farmer placing
his land in trust as collateral against the line of credit. The Banco de Mexico
reports that this is a normal operating procedure used throughout Mexico for
years. Management believes that the reason the Banco de Mexico has indicated an
interest in the current plan because it will allow it to have thousands of
salesmen (FERTINAL and others) acting as loan application managers. These
salesmen will initially apply the Banco de Mexico loan package to their
farmer/client and at the same time take a representative soil sample from the
farmer's land. The farmer/client's application with proper loan papers will be
presented to the local branch of the Banco de Mexico, and the soil sample
forwarded by national bus transportation to Intertek Testing Service (I.T.S.)
laboratory located in Mexico City.
LABORATORY OPERATION:
Intertek Testing Service, is an ISO 9002 Certified company with offices
in 102 countries of the world. It has eleven laboratories in Mexico. I.T.S. 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
FERTINAL. Assisting them in this service is Global's vice president of
laboratory technology, Robert A. Kalish. The I.T.S. 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
I.T.S. offices in Mexico City.
ADDED SALES FORCE:
The College of Agricultural Engineers (the "College") is an association
of graduates of various agricultural colleges in Mexico and is mandated by
Article 3 of the Constitution of Mexico. Each of Mexico's 32 states has a
College of Agricultural Engineers organization and each state has about 10
branch offices servicing the state's College. The College estimates that it has
about 15,000 agricultural engineer members nationwide. By law the College is
authorized to pursue commercial avenues to provide the various Colleges with
funds with which to operate successfully. The purpose of the Colleges is to
assist the farmers in their state to grow the best possible crops at the least
possible costs. The presidents of the state Colleges in Morelos, Veracruz,
Tlaxcala, Puebla, Michuacan, Tabasco, and the states of the Yucatan Peninsula,
have stated that they were going to organize a commercial branch of their state
College so that they could also be certified by I.T.S. to take soil samples and
sell fertilizers. The Colleges would then be able to buy whatever FERTINAL has
in their warehouses for eventual sale to the College's farmer/clients. Each
FERTINAL and College salesperson is expected to contact approximately 45 farmers
per week with regard to the services of I.T.S. and the products FERTINAL has
warehoused for use by farmers for their crops. As micronutrients are some of the
most important fertilizers to be recommended by any analytical soil testing
service, it is expected that Micro Min will be chosen by the farmer as it is the
only blended micronutrient fertilizer licensed in Mexico.
CORPORATE FUTURE GOALS:
One of the Company's primary goals in the immediate future is to
complete a written product sales agreement between Global and I.T.S., FERTINAL
and the various state Colleges of Agricultural Engineers. While there can be no
assurance that definitive agreements will be entered into or that the
relationships between Global and FERTINAL, the College, and I.T.S., will
continue, it appears that it would be in everyone's best interest to complete
these agreements as the total plan of operation appears extremely workable and
certainly profitable to all concerned including the country's farmers. The
Company expects these agreements to be completed by the early part of September
1999. If these relationships fail to continue, the Company intends to resume its
original sales and marketing plan described in its Registration Statement on
Form SB-2 (Commission File No.
333-51977).
THE COMPANY PROVIDES PRODUCT ONLY:
The Company will not participate in any of Global's sales operations
regardless of the area of sales. Such operations are maintained and funded by
Global alone. The Company is only expected to produce Micro Min product as
needed by Global in any of its sales areas. Because of the Company's affiliation
with Global, the Company expects that Global will allow the Company sufficient
time to order new bags, obtain raw material and produce product as expected or
projected by Global.
The Company does not believe that it will need any financing over the
next 12 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 Global 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.
<PAGE>
PART II. OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
During the quarter ended June 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 by GS Financial. Pursuant to a written agreement between the
Company and GS Financial, these 100,000 shares of Common Stock are to be
distributed to the stockholders of GS Financial in the Distribution. The Company
will receive no proceeds from the Distribution. Consequently, the Company has
received no proceeds from the offering registered pursuant to the Registration
Statement. The Distribution has been delayed from its expected completion date
for several reasons beyond the control of the Company. The Company is working
diligently to complete the Distribution and reasonably expects the Distribution
to be completed near or around the end of August 1999, although there can be no
assurance in this regard.
The following is the approximate actual expenses incurred by the Company
in connection with the Distribution registered under the Registration Statement.
All of these expenses were paid to persons other than directors or officers of
the Company or persons owning 10% or more of any class of equity securities of
the Company.
<TABLE>
<CAPTION>
Item Amount
<S> <C>
Legal Fees and Expense........................................................................... 17,850
Accounting Fees and Expenses .................................................................... 14,290
Prospectus Duplication ......................................................................... 800
Transfer Agent.................................................................................. 3,000
-----
Total ........................................................................................... 35,940
------
</TABLE>
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
(b) Reports on Form 8-K
None
<PAGE>
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: August 16, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE FINANCIAL DATA SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM
ITEM 1 OF FORM 10Q-SB FOR THE SIX MONTHS ENDED JUNE 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> 6-MOS 3-MOS
<FISCAL-YEAR-END> DEC-31-1999 DEC-31-1999
<PERIOD-START> JAN-1-1999 APR-1-1999
<PERIOD-END> JUN-30-1999 JUN-30-1999
<EXCHANGE-RATE> 1 1
<CASH> 866 866
<SECURITIES> 0 0
<RECEIVABLES> 0 0
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 866 866
<PP&E> 165636 165636
<DEPRECIATION> 0 0
<TOTAL-ASSETS> 166472 166472
<CURRENT-LIABILITIES> 220237 220237
<BONDS> 0 0
0 0
0 0
<COMMON> 10900 10900
<OTHER-SE> (64665) (64665)
<TOTAL-LIABILITY-AND-EQUITY> 166472 166472
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<OTHER-EXPENSES> 46167 12305
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<INCOME-PRETAX> (46167) (12305)
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<INCOME-CONTINUING> (46167) (12305)
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<NET-INCOME> (46167) (12305)
<EPS-BASIC> (0.004) (0.001)
<EPS-DILUTED> (0.004) (0.001)
</TABLE>
