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: March 31, 2000
[ ] 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, $0.001 par value, outstanding as March 31,
2000: 11,141,619 shares
Transitional Small Business Disclosure Format (check one): Yes ___ No X
--
<PAGE>
AGRI BIO-SCIENCES, INC.
PERIOD ENDED MARCH 31, 2000
INDEX
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION Page
Item 1. Financial Statements
Condensed financial statements of Agri Bio-Sciences, Inc.:
<S> <C>
Balance Sheet as of March 31, 2000 3
Expense Statements for the three months ended March 31, 2000
and March 31, 1999 and period from May 30, 1995 (Date
of Inception) to March 31, 2000 4
Statements of Cash Flows for the three months ended March 31,
2000 and March 31, 1999 and period from May 30,
1995 (Date of Inception) to March 31, 2000 5
Notes to financial statements 6
Item 2. Plan of Operations 7
PART II. OTHER INFORMATION
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
March 31, 2000
<TABLE>
ASSETS
<S> <C>
Cash $ 3,986
Fertilizer plant and equipment, net 161,886
--------
TOTAL ASSETS $165,872
========
LIABILITIES
Accounts payable $ 15,391
Accrued expenses 14,892
Due to current stockholders 148,000
Due to former stockholder 100,000
--------
TOTAL LIABILITIES 278,283
--------
STOCKHOLDERS' EQUITY
Preferred stock, $.001 par value,
5,000,000 shares authorized,
0 shares issued and outstanding
Common stock, $.001 par value,
20,000,000 shares authorized,
11,000,000 issued and outstanding 11,000
Paid in capital 612,150
Deficit Accumulated During the
Development Stage (735,561)
--------
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) (112,411)
--------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $165,872
========
</TABLE>
See notes to financial statements.
<PAGE>
AGRI BIO-SCIENCES, INC.
(A Development Stage Company)
Statements of Expenses
Three Months Ended March 31, 2000 and 1999,
and the Period from May 30, 1995 (Date of Inception)
to March 31, 2000
<TABLE>
<CAPTION>
May 30, 1995
(Inception) to
March 31,
2000 1999 2000
----------- ------------- --------
EXPENSES
<S> <C> <C> <C>
Fees paid for services
by stockholders $ 188,400
Other administrative expenses $ 12,938 $ 32,612 375,426
Inventory writedown 100,000
Interest 3,962 59,735
Depreciation 1,250 1,250 12,000
--------- --------- ---------
NET (DEFICIT) $( 18,150) $( 33,862) $(735,561)
========= ========= =========
(Loss) per common share $( .00) $( .00)
Weighted average
shares outstanding 11,000,000 10,900,000
</TABLE>
See notes to financial statements.
<PAGE>
AGRI BIO-SCIENCES, INC.
(A Development Stage Company)
Statements of Cash Flow
Three Months Ended March 31, 2000 and 1999, and
the Period from May 30, 1995 (Date of Inception)
to March 31, 2000
<TABLE>
<CAPTION>
May 30, 1995
(Inception) to
March 31,
2000 1999 2000
------------ ----------- ----------
CASH FLOW FROM OPERATING ACTIVITIES
<S> <C> <C> <C>
Net loss $( 18,150) $( 33,862) $(735,561)
Adjustments to reconcile net
income to net cash provided by
operating activities:
Depreciation 1,250 1,250 12,000
Writedown of inventory 100,000
Common stock issued for services 87,650
Contribution of imputed interest 2,500 42,500
Increase in accounts payable 92 21,059 15,392
Increase in accrued expenses 1,615 12,391
------------ ----------- ------------
NET CASH USED BY
OPERATING ACTIVITIES ( 12,693) ( 11,553) (465,628)
--------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Plant site construction and
equipment purchases ( 73,886)
CASH FLOWS FROM FINANCING ACTIVITIES
Sales of common stock for cash 895,500
Advances by a founding shareholder 72,000
Cash paid to repurchase shares
from a founding shareholder (500,000)
Advances by other shareholders 76,000
---------
NET CASH PROVIDED BY
FINANCING ACTIVITIES 543,500
---------
NET INCREASE (DECREASE) IN CASH $( 12,693) $( 11,553) $ 3,986
CASH AT BEGINNING OF PERIOD 16,679 11,989
--------- --------- ----------
CASH AT END OF PERIOD $ 3,986 $ 436 $ 3,986
========= ========= =========
SUPPLEMENTAL DISCLOSURES
Interest paid $ 0 $ 0 $ 0
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 notes to financial statements.
<PAGE>
AGRI BIO-SCIENCES, INC.
(A Development Stage Company)
Statements of Cash Flow
Three Months Ended March 31, 2000 and 1999,
and the Period from May 30, 1995 (Date of Inception)
to March 31, 2000
<TABLE>
<CAPTION>
May 30, 1995
(Inception) to
March 31,
2000 1999 2000
------------ ----------- -----------
<S> <C> <C> <C>
NET INCREASE (DECREASE) IN CASH
(from previous page) $( 12,693) $ (11,553) $ 3,986
CASH AT BEGINNING OF PERIOD 16,679 11,989
--------- --------- ------------
CASH AT END OF PERIOD $ 3,986 $ 436 $ 3,986
========= ========= =========
SUPPLEMENTAL DISCLOSURES
Interest paid $ 0 $ 2,710 $ 0
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 notes to financial statements.
<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 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. The Company
had begun very preliminary efforts to procure an initial market maker for the
Company's Common Stock, par value $.001 per share ("Common Stock"), so that
public trading in the Common Stock could commence in the United States. Because
of the Company's close connection to the country of Mexico, the Company has
suspended these efforts for the present. However, the Company is now seeking to
establish a trading market for the Common Stock in Mexico and has engage an
attorney located in Mexico for this purpose.
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 its 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. Global did not
purchase the required 2,000 metric tons of Micro Min in 1999. The Company is
currently forebearing from any action against Global on the belief that Global
will be able to remedy in the future its failure to purchase the required
amount.
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 foreseeable future.
While there had been discussions of a formal assignment to CIAGAM of Global's
rights and obligations under its exclusive product sales agreement with the
Company, such an assignment is not presently expected.
STATUS OF SALES EFFORTS:
For some time, Global had been holding discussions with various
governmental, quasi--governmental and industry parties, who would serve as the
primary distributor of Micro Min in Mexico. These parties have included
Fertilizantes Nacionales, S.A. de C.V., the Mexican federal and state Colleges
of Agricultural Engineers, and INTAGRO, a company based in Veracruz, Mexican.
These discussions failed to produce a definitive agreement. Because of the delay
in establishing a formal relationship with any large sales force, CIAGAM
(assuming the role previously undertaken by Global) has been making sales calls
on critical governmental and quasi-governmental agencies as well as private
businesses. CIAGAM has reached an agreement in principle with AGROFERMEX, a
Mexican fertilizer distributor having 250 offices, regarding AGROFERMEX's
serving as a non-exclusive distributor of Micro Min in Mexico. This agreement in
principle has not yet produced a definitive, legally binding agreement, and
whether or not a definitive, legally binding agreement will be executed can not
now be determined.
In addition to CIAGAM's agreement in principle with AGROFERMEX, 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. One hundred twenty (120) metric tons of Micro Min are already located
in warehouses in Mexico. Another 130 metric tons of Micro Min are located at the
Company's plant facility in Bay Springs, Mississippi, bagged and ready to be
shipped. The Company is currently delaying delivery of this order, pending the
installation of the first laboratory in Mexico discussed in "LABORATORY
OPERATION" below. Such installation and the delivery of part of this order is
expected within the next 60 days. As a result of the ASIA purchase order, the
Company expects to realize revenues in the near future. Management believes that
CIAGAM (or another primary distributor in Mexico) will receive additional
purchase orders from ASIA in the future, although there can be no assurance in
this regard.
Moreover, the Company is also working with approximately 800 farmers in
the state of Guanajuato, Mexico who have indicated a desire to form a
co-operative and have the Company install a laboratory on their behalf. On the
average, each of these farmers has approximately 700 hectares, for a total of
approximately 560,000 hectares or approximately 1,400,000 acres. At a bag of
Micro Min per acre, approximately 14,000 metric tons of Micro Min would be
required to serve the co-operative. At a profit of $305 per metric ton, the
Company would realize an aggregate profit of approximately $4,270,000. The
Company expects that an affiliated entity will establish, own and operate a
laboratory for the benefit of the co-operative. This project is in a very
preliminary stage, and there can be no assurance that this project will ever be
completed in the scope currently being contemplated, if at all.
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, 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:
At one point, the Company intended to forego the actual establishment,
ownership and operations of laboratories and instead license the Company's
software to Intertek Testing Services, a prominent international laboratory
testing company ("ITS"), for use in ITS's existing and future laboratories. The
Company and ITS never reached a definitive agreement in this regard. Now the
Company plans to license its software to CIAGAM, which will be responsible for
the actual establishment, ownership and operations of the laboratories. CIAGAM
expects to install its first laboratory within the next 60 days. It has
available funds in the amount of $150,000 for this purpose and expects to raise
an additional $250,000. While management of CIAGAM is confident that it will
raise the $250,000 additional amount in the immediate future, there can be no
assurance in this regard. CIAGAM originally expected to locate the first
laboratory in a double-wide, pre-fabricated building on the outskirts of Mexico
City to service farmers in the state of Morelos. However, two farmers' unions
located in the state of Sinaloa have approached CIAGAM with a view of having
CIAGAM locate the first laboratory in Sinaloa to service farmers in Sinaloa.
These farmers' unions have offered to provide a building for housing the first
laboratory. CIAGAM expects to make a decision on the location of its first
laboratory in the immediate future. Regardless of where the first laboratory is
located and whom it services, this laboratory will receive soil samples and
process them using the Company's computer copyrighted software to complete
analytical reports that depict the present condition of the farmers' soil. The
reports will also recommend 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. Once the first laboratory
achieves acceptable performance levels, CIAGAM expects to establish additional
laboratories, eventually to service all of Mexico.
CORPORATE FUTURE GOALS:
The Company (through CIAGAM) intends to continue to pursue sales of
Micro Min in Mexico and possibly complete broad product sales agreements with
AGROFERMEX or some other firm or organization having a large sales force. The
Company had contemplated establishing a sales program in Columbia. However,
certain instabilities in that country have caused the Company to postpone any
such effort. Although the Company will be involved in the establishment of
CIAGAM's first laboratory only to the extent of the licensing of the Company's
software, the Company expects that the installation of this laboratory will
greatly further the Company's business.
CAPITAL REQUIREMENTS, RESEARCH AND DEVELOPMENT AND EQUIPMENT EXPENDITURES:
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 certain directors of the Company. These directors have indicated
that they intend to continue to provide limited financing of overhead, but they
are 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 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: May 18, 2000
<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 MARCH 31, 2000 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>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-1-2000
<PERIOD-END> MAR-31-2000
<EXCHANGE-RATE> 1
<CASH> 3986
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3986
<PP&E> 161886
<DEPRECIATION> 0
<TOTAL-ASSETS> 165872
<CURRENT-LIABILITIES> 278283
<BONDS> 0
0
0
<COMMON> 11000
<OTHER-SE> (123411)
<TOTAL-LIABILITY-AND-EQUITY> 165872
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<OTHER-EXPENSES> 14188
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<INTEREST-EXPENSE> 3962
<INCOME-PRETAX> (18150)
<INCOME-TAX> 0
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</TABLE>
