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, 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.)
9230 Keogh Road, Houston, Texas 77040
(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, $0.001 par value, outstanding as
June 30, 2000: 11,141,619 shares
Transitional Small Business Disclosure Format (check one): Yes ___ No X
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AGRI BIO-SCIENCES, INC.
PERIOD ENDED JUNE 30, 2000
INDEX
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PART I. FINANCIAL INFORMATION Page
Item 1. Financial Statements
Condensed financial statements of Agri Bio-Sciences, Inc.:
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Balance sheet as of June 30, 2000 3
Income statements for the three and six months ended June 30,
2000, three months and six months ended June 30, 1999 and
period from May 30, 1995 (Date of Inception) to June 30, 2000 4
Statements of cash flows for the six months ended June 30,
2000, the six months ended June 30, 1999 and period
from May 30, 1995 (Date of Inception) to June 30, 2000 5
Notes to financial statements 6
Item 2. Plan of Operations 7
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 10
(a) Exhibits
SIGNATURE 11
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
AGRI BIO-SCIENCES, INC ............
(A Development Stage Company)
Balance Sheet
June 30, 2000
ASSETS
Cash$ ..................................................... $ 9,059
Fertilizer plant and equipment, net ....................... 160,636
---------
TOTAL ASSETS .......................................... $ 169,695
=========
LIABILITIES
Accounts payable .......................................... $ 1,562
Accrued expenses .......................................... 20,225
Due to current stockholders ............................... 168,000
Due to former stockholder ................................. 100,000
---------
TOTAL LIABILITIES ..................................... 289,787
---------
STOCKHOLDERS' EQUITY
Common stock, $.001 par value, 20,000,000
shares authorized, 11,000,000 issued
and outstanding ....................................... 11,000
Paid in capital ........................................... 617,150
Deficit accumulated during the development stage .......... (748,242)
---------
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) ...................... (120,092)
---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ................ $ 169,695
=========
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AGRI BIO-SCIENCES, INC ..........
(A Development Stage Company)
Statements of Expenses
6 Months Ended June 30, 2000 and 1999
and the period from May 30, 1995 (Inception)
Through June 30, 2000
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2000 - - 2000 - - 1999 - - 1999 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 2000
------------ ------------ ------------ ------------ ------------
EXPENSES
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Fees paid for services
by stockholders .............................. $ 188,400
Other administrative ........................... $ 1,448 $ 17,159 $ 11,055 $ 43,667 379,647
Inventory writedown ............................ 100,000
Interest ....................................... 7,210 11,172 66,945
Depreciation ................................... 1,250 2,500 1,250 2,500 13,250
------------ ------------ ------------ ------------ ------------
Net (loss) ................................. $ (9,908) $ (30,831) $ (12,305) $ (46,167) $ (748,242)
============ ============ ============ ============ ==========
(Loss) per common share ............................. $ (.001) $ (.003) $ (.001) $ (.004)
Weighted average
shares outstanding ............................. 11,000,000 11,000,000 10,900,000 10,900,000
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AGRI BIO-SCIENCES, INC
(A Development Stage Company)
Statements of Cash Flows
6 Months Ended June 30, 2000 and 1999
and the period from May 30, 1995 (Inception)
Through June 30, 2000
Inception
Through
2000 1999 2000
--------- --------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES
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Net (loss) ............................................................................ $ (30,831) $ (46,167) $(748,242)
Adjustments to reconcile net income
to net cash provided by operating activities
Depreciation ........................................................................ 2,500 2,500 13,250
Common stock issued for services .................................................... 87,650
Writedown of inventory value ........................................................ 100,000
Contribution of imputed interest .................................................... 5,000 42,500
Common stock issued for equipment ................................................... 2,500
Changes in:
Accounts payable .................................................................... (13,738) 19,014 1,562
Accrued expenses .................................................................... 9,449 1,500 20,225
--------- --------- ---------
NET CASH USED BY
OPERATING ACTIVITIES ..................................................... (27,620) (23,153) (480,555)
--------- --------- ---------
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
Purchase of stock from a former shareholder ........................................... (500,000)
Advances by shareholders .............................................................. 20,000 12,000 168,000
--------- --------- ---------
NET CASH PROVIDED BY
FINANCING ACTIVITIES ..................................................... 20,000 12,000 563,500
--------- --------- ---------
NET INCREASE (DECREASE) IN CASH ............................................................ (7,620) (11,153) 9,059
CASH - Beginning .......................................................................... 16,679 11,989
--------- --------- --------
- End of period ...................................................................... $ 9,059 $ 836 $ 9,059
========= ========= =========
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
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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 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, 1999, as reported in the 10-KSB, have been omitted.
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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. 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. In this connection, the Company has engage an
attorney and is in discussions with a stockbroker (both located in Mexico) to
assist in this effort.
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.
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 by the end of September 2000.
Originally, CIAGAM had expected to have installed its first laboratory by now.
However, deliberations regarding the best location for the first laboratory have
delayed installation. CIAGAM 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.
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.
ADDITIONAL INFORMATION:
On June 12, 2000, Lester H. Stephens resigned as President of the
Company to focus his business attentions on Tex-Mex Capital, Inc., a company
controlled by certain directors of the Company. The Board of Directors of the
Company has elected Robert Lane as President to succeed Mr. Stephens. For the
past five years, Mr. Lane has owned Bob Lane & Associates, a Houston-based
manufacturers representative company. Since July 1998, he has also served as
managing partner of Creative Communications, a Houston-based distributor of
packaging, printing and promotions.
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
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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/Robert Lane
Robert Lane,
President
(Principal Executive Officer, Principal
Financial Officer and Principal Accounting
Officer)
Dated: August 17, 2000
