<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[xx] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
or
[ ] 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: 0-19814
ABS Group Inc.
(Exact name of registrant as specified in its charter)
Delaware 87-0462198
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2936 Sierra Point Place, Salt Lake City, Utah 84198
(Address of principal executive offices) (Zip Code)
(801) 521-8000
(Registrant's telephone number, including area code)
Advanced Biological Systems, Inc.
(Former name, former address and former fiscal year,
if changed since last report)
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. [x] Yes [ ] No
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's class of
common stock, as of the latest practicable date.
The number of shares outstanding of each of the registrant's classes of common
stock, as of October 30, 1996 is 2,643,935 shares, all of one class of $.0001
par value common stock.
1
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page No.
--------
PART I
<S> <C>
Item 1. Financial Statements 3-18
Item 2. Plan of Operation 19-20
PART II
Item 1. Legal Proceedings 21
Item 2. Changes in Securities 21
Item 3. Defaults Upon Senior Securities 21
Item 4. Submission of Matters to a
Vote of Security Holders 21
Item 5. Other Information 21
Item 6. Exhibits and Reports on Form 8-K 21
Signatures 22
</TABLE>
2
<PAGE> 3
[JONES, JENSEN & COMPANY LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
The Board of Directors
ABS Group Inc.
(Formerly Advanced Biological Systems, Inc.)
Salt Lake City, Utah
The accompanying balance sheet of ABS Group Inc. (formerly Advanced Biological
Systems, Inc.) (a development stage company) as of September 30, 1996 and the
related statements of operations stockholders' equity (deficit), and cash flows
for the three months and nine months ended September 30, 1996 and 1995 and from
inception on October 3, 1988 through September 30, 1996 were not audited by us
and, accordingly, we do not express an opinion on them. The accompanying balance
sheet as of December 31, 1995 was audited by us and we expressed an unqualified
opinion on it in our report dated April 4, 1996.
/s/ Jones, Jensen & Company
Jones, Jensen & Company
October 24, 1996
3
<PAGE> 4
ABS GROUP INC.
(Formerly Advanced Biological Systems, Inc.)
(A Development Stage Company)
BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS
September 30, December 31,
1996 1995
----------- -----------
(Unaudited)
<S> <C> <C>
CURRENT ASSETS
Cash $ 94 $ 45,598
----------- -----------
Total Current Assets $ 94 $ 45,598
----------- -----------
OTHER ASSETS
Investment in joint venture (Note 2) 1,000,000 --
----------- -----------
Total Other Assets 1,000,000 --
----------- -----------
TOTAL ASSETS $ 1,000,094 $ 45,598
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable - trade $ 56,064 $ 68,429
Accrued interest payable 662 --
Loan payable - related party (Note 3) 5,000 --
Notes payable (Note 4) 168,000 --
----------- -----------
Total Current Liabilities 229,726 68,429
----------- -----------
COMMITMENTS AND CONTINGENCIES (Note 5) -- --
----------- -----------
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock, $0.0001 par value, 10,000,000 shares
authorized, 2,355,374 and 890,374 shares
issued and outstanding, 236 89
Capital in excess of par value 9,339,029 8,321,926
Deficit accumulated during the development stage (8,568,897) (8,344,846)
----------- -----------
Total Stockholders' Equity (Deficit) 770,368 (22,831)
----------- -----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY (DEFICIT) $ 1,000,094 $ 45,598
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE> 5
ABS GROUP INC.
(Formerly Advanced Biological Systems, Inc.)
(A Development Stage Company)
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
From Inception
For the Three Months Ended For the Nine Months Ended on October 3,
September 30, September 30, 1988 Through
-------------------------- ------------------------- September 30,
1996 1995 1996 1995 1996
--------- --------- --------- --------- -----------
<S> <C> <C> <C> <C> <C>
REVENUE $ -- $ -- $ -- $ -- $ --
--------- --------- --------- --------- -----------
OPERATING EXPENSES
Consulting 122,340 -- 122,340 -- 122,340
Rent 10,000 -- 10,000 -- 10,000
General and administrative 11,694 -- 11,694 -- 11,694
--------- --------- --------- --------- -----------
Total Expenses 144,034 -- 144,034 -- 144,034
--------- --------- --------- --------- -----------
OPERATING LOSS (144,034) -- (144,034) -- (144,034)
--------- --------- --------- --------- -----------
OTHER INCOME AND
(EXPENSES)
Interest expense (662) -- (662) -- (662)
Gain (loss) on discontinued
operations 837 (8,037) (79,355) (31,411) (8,424,201)
--------- --------- --------- --------- -----------
Total Other Income and
(Expenses) 175 (8,037) (80,017) (31,411) (8,424,823)
--------- --------- --------- --------- -----------
NET LOSS $(143,859) $ (8,037) $(224,051) $ (31,411) $(8,568,897)
========= ========= ========= ========= ===========
Loss Per Share $ (0.23) $ (0.03) $ (0.36) $ (0.10) $ (27.36)
========= ========= ========= ========= ===========
Weighted Average Number
of Shares Outstanding 638,549 310,374 616,007 310,374 313,180
========= ========= ========= ========= ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE> 6
ABS GROUP INC.
(Formerly Advanced Biological Systems, Inc.)
(A Development Stage Company)
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
(Unaudited)
<TABLE>
<CAPTION>
Deficit
Accumulated
Common Stock Capital in During the
------------------- Excess of Development
Shares Amount Par Value Stage
------- ------ ----------- ---------
<S> <C> <C> <C> <C>
Balance, October 3, 1988 -- $-- $ -- $ --
Shares issued to incorporators
for approximately $0.04 per share 110,222 11 3,989 --
Net loss for the year ended
December 31, 1988 -- -- -- (164)
------- --- ----------- ---------
Balance, December 31, 1988 110,222 11 3,989 (164)
Shares issued to the public for
approximately $1.13 per share on
August 22, 1989 57,778 6 64,994 --
Costs of public offering -- -- (29,265) --
Net loss for the year ended
December 31, 1989 -- -- -- (28,341)
------- --- ----------- ---------
Balance, December 31, 1989 168,000 17 39,718 (28,505)
Shares of restricted common
stock issued for $180.00 per share 13,889 1 2,499,999 --
Net loss for the year ended
December 31, 1990 -- -- -- (129,598)
------- --- ----------- ---------
Balance, December 31, 1990 181,889 $18 $ 2,539,717 $(158,103)
------- --- ----------- ---------
</TABLE>
The accompanying notes are an integral part of these financial statements.
6
<PAGE> 7
ABS GROUP INC.
(Formerly Advanced Biological Systems, Inc.)
(A Development Stage Company)
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) (Continued)
(Unaudited)
<TABLE>
<CAPTION>
Deficit
Accumulated
Capital in During the
Common Stock Excess of Development
--------------------
Shares Amount Par Value Stage
------- ------ ----------- --------------
<S> <C> <C> <C> <C>
Balance, December 31, 1990 181,889 $18 $ 2,539,717 $ (158,103)
Shares issued in private
transactions at an average price
of approximately $137.94 per share 3,797 1 523,749 --
Shares issued in private
placement at $90.00 per share 22,278 2 2,004,998 --
Shares issued in exchange for
product and marketing rights
at $90.00 per share 13,333 1 1,199,999 --
Costs of private placement -- -- (218,523) --
Contribution of assets by an
officer and director -- -- 1,350 --
Net loss for the year ended
December 31, 1991 -- -- -- (2,245,287)
------- --- ----------- -----------
Balance, December 31, 1991 221,297 22 6,051,290 (2,403,390)
Shares issued on March 31, 1992
in private placement at
$112.51 per share 2,222 -- 250,000 --
Shares issued on March 31, 1992
in settlement of debt at
approximately $30.07 per share 5,000 1 150,349 --
Shares issued on April 15, 1992 in
private placement at an average price
of approximately $134.62 per share 1,278 -- 172,050 --
------- --- ----------- -----------
Balance forward 229,797 $23 $ 6,623,689 $(2,403,390)
------- --- ----------- -----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
7
<PAGE> 8
ABS GROUP INC.
(Formerly Advanced Biological Systems, Inc.)
(A Development Stage Company)
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) (Continued)
(Unaudited)
<TABLE>
<CAPTION>
Deficit
Accumulated
Capital in During the
Common Stock Excess of Development
------------------
Shares Amount Par Value Stage
------- ------ ----------- ------------
<S> <C> <C> <C> <C>
Balance forward 229,797 $23 $ 6,623,689 $(2,403,390)
Shares issued on July 23, 1992
upon exercise of options at
approximately $0.09 per share 2,777 -- 250 --
Shares issued on
October 23, 1992 in settlement
of debt at $30.00 per share 3,333 -- 100,000 --
Shares issued on
October 23, 1992 in settlement
of debt at $9.00 per share 11,667 1 104,999 --
Shares issued on
November 24, 1992 in private
placement at $60.02 per share 833 -- 50,000 --
Shares issued on November
25, 1992 in private placement
at approximately $11.32 per share 4,479 1 50,684 --
Shares issued during
December 1992 in settlement
of debt at $30.00 per share 27,903 3 837,092 --
Costs of private placements -- -- (9,250) --
Net loss for the year ended
December 31, 1992 -- -- -- (5,540,971)
------- --- ----------- -----------
Balance, December 31, 1992 280,789 $28 $ 7,757,464 $(7,944,361)
------- --- ----------- -----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
8
<PAGE> 9
ABS GROUP INC.
(Formerly Advanced Biological Systems, Inc.)
(A Development Stage Company)
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) (Continued)
(Unaudited)
<TABLE>
<CAPTION>
Deficit
Accumulated
Capital in During the
Common Stock Excess of Development
------------------
Shares Amount Par Value Stage
------- ------ ----------- ------------
<S> <C> <C> <C> <C>
Balance, December 31, 1992 280,789 $28 $7,757,464 $(7,944,361)
Shares issued on
January 6, 1993 in private
placement at approximately
$11.25 per share 1,778 -- 20,000 --
Shares issued on
January 6, 1993 upon exercise
of options at approximately
$0.09 per share 2,778 -- 250 --
Shares issued on May 26, 1993
in private placement at approximately
$6.00 per share 1,667 -- 10,000 --
Shares issued on May 26, 1993
in private placement at approximately
$6.00 per share 6,667 1 39,999 --
Shares issued on July 9, 1993
in private placement at approximately
$4.50 per share 3,333 -- 15,000 --
Shares issued on August 18,
1993 in private placement at
$3.00 per share 6,000 1 17,999 --
Shares issued during December
1993 in settlement of debt at
approximately $30.00 per share 7,363 1 220,874 --
Net loss for the year ended
December 31, 1993 -- -- -- (248,136)
------- --- ---------- -----------
Balance, December 31, 1993 310,375 $31 $8,081,586 $(8,192,497)
------- --- ---------- -----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
9
<PAGE> 10
ABS GROUP INC.
(Formerly Advanced Biological Systems, Inc.)
(A Development Stage Company)
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) (Continued)
(Unaudited)
<TABLE>
<CAPTION>
Deficit
Accumulated
Capital in During the
Common Stock Excess of Development
---------------------
Shares Amount Par Value Stage
------- ------ ----------- ------------
<S> <C> <C> <C> <C>
Balance, December 31, 1993 310,375 $ 31 $8,081,586 $(8,192,497)
Net loss for the year ended
December 31, 1994 -- -- -- (107,291)
--------- ---- ---------- -----------
Balance, December 31, 1994 310,375 31 8,081,586 (8,299,788)
Shares issued during December
1995 settlement of debt at
approximately $0.30 per share 466,667 47 140,351 --
Shares issued during December
1995 in private placement at
approximately $0.88 per share 113,333 11 99,989 --
Net loss for the year
ended December 31, 1995 -- -- -- (45,058)
--------- ---- ---------- -----------
Balance, December 31, 1995 890,375 89 8,321,926 (8,344,846)
Shares issued in private placement
at approximately $1.05 per share 33,333 4 34,996 --
Shares issued in private placement
at approximately $1.50 per share 3,333 -- 5,000 --
Shares issued in settlement of
dispute valued at approximately
$0.90 per share 2,333 -- 2,100 --
Shares issued September 25, 1996
for investment in joint venture
valued at $2.00 per share 425,000 43 849,957 --
Shares issued September 27, 1996
for services rendered, valued at
$0.15 per share 1,000 -- 150 --
--------- ---- ---------- -----------
Balance forward 1,355,374 $136 $9,214,129 $(8,344,846)
--------- ---- ---------- -----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
10
<PAGE> 11
ABS GROUP INC.
(Formerly Advanced Biological Systems, Inc.)
(A Development Stage Company)
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) (Continued)
(Unaudited)
<TABLE>
<CAPTION>
Deficit
Accumulated
Common Stock Capital in During the
--------------------- Excess of Development
Shares Amount Par Value Stage
-------- ------ ------------ ------------
<S> <C> <C> <C> <C>
Balance forward 1,355,374 $136 $9,214,129 $(8,344,846)
Shares issued September 30, 1996
for services rendered valued at
$0.10 per share 1,000,000 100 99,900 --
Capital contributed by a stockholder -- -- 25,000 --
Net loss for the nine months
ended September 30, 1996 -- -- -- (224,051)
--------- ---- ---------- -----------
Balance, September 30, 1996 2,355,374 $236 $9,339,029 $(8,568,897)
========= ==== ========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
11
<PAGE> 12
ABS GROUP INC.
(Formerly Advanced Biological Systems, Inc.)
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
From Inception
For the Three Months Ended For the Three Months Ended on October 3,
September 30, Sepember 30, 1988 Through
------------------------------ ---------------------------- September 30,
1996 1995 1996 1995 1996
-------------- -------------- --------------- -------------- -------------
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM
OPERATING ACTIVITIES
Net loss from operations $(143,859) $(8,037) $(224,051) $(31,411) $(8,568,897)
Adjustments to reconcile net loss
to net cash used by operating
activities
Depreciation and amortization -- -- -- -- 3,043
Stock issued for services rendered 100,150 -- 100,150 -- 100,150
Stock issued in settlement of
debt -- -- 20,100 -- 1,433,420
Loss on disposition of assets -- -- -- -- 3,206,791
Increase (decrease) in cash
overdraft -- (837) -- -- --
Increase (decrease)
in accounts payable
and accrued expenses 13,722 -- (11,703) -- 56,726
--------- ------- --------- -------- -----------
Net Cash (Used) by
Operating Activities (29,987) (8,874) (115,504) (31,411) (3,768,767)
--------- ------- --------- -------- -----------
CASH FLOWS FROM
INVESTING ACTIVITIES
Purchase of fixed assets -- -- -- -- (10,784)
Purchase of product marketing
rights -- -- -- -- (1,250)
Purchase of promotional video -- -- -- -- (50,000)
--------- ------- --------- -------- -----------
Net Cash Provided (Used)
by Investing Activities $ -- $ -- $ -- $ -- $ (62,034)
--------- ------- --------- -------- -----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
12
<PAGE> 13
ABS GROUP INC.
(Formerly Advanced Biological Systems, Inc.)
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
From Inception
For the Three Months Ended For the Nine Months Ended on October 3,
September 30, September 30, 1988 Through
-------------------------- --------------------------- September 30,
1996 1995 1996 1995 1996
----------- ---------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM
FINANCING ACTIVITIES
Proceeds from loans $ 5,000 $9,000 $ 5,000 $31,500 $ 398,140
Proceeds from sale of common
stock -- -- 40,000 -- 3,407,755
Contribution of capital by
shareholder 25,000 -- 25,000 -- 25,000
------- ------ -------- ------- ----------
Net Cash Provided by
Financing Activities 30,000 9,000 70,000 31,500 3,830,895
------- ------ -------- ------- ----------
NET INCREASE (DECREASE) IN
CASH AND CASH
EQUIVALENTS 13 126 (45,504) 89 94
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 81 -- 45,598 37 --
------- ------ -------- ------- ----------
CASH AND CASH EQUIVALENTS,
END OF PERIOD $ 94 $ 126 $ 94 $ 126 $ 94
======= ====== ======== ======= ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
13
<PAGE> 14
ABS GROUP INC.
(Formerly Advanced Biological Systems, Inc.)
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
From Inception
on October 3,
For the Three Months Ended For the Nine Months Ended 1988 Through
September 30, September 30, September 30,
1996 1995 1996 1995 1996
---------- ----------- ------------ ----------- ---------
<S> <C> <C> <C> <C> <C>
SUPPLEMENTAL CASH FLOW
DISCLOSURES
Interest paid $ -- $ -- $ -- $ -- $ --
Income taxes paid $ -- $ -- $ -- $ -- $ --
NON-CASH FINANCING
ACTIVITIES
Stock issued for note $ -- $ -- $ -- $ -- $2,498,750
Stock issued in settlement of
debt $ -- $ -- $ -- $ -- $1,433,420
Purchase of Bioreactor through
assignment of note $ -- $ -- $ -- $ -- $2,150,000
Acquisition of product marketing
rights through issuance of
notes and stock $ -- $ -- $ -- $ -- $2,200,000
Stock issued for services rendered $ -- $100,150 $ -- $100,150 $ 100,150
</TABLE>
The accompanying notes are an integral part of these financial statements.
14
<PAGE> 15
ABS GROUP INC.
(formerly Advanced Biological Systems, Inc.)
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
September 30, 1996 and December 31, 1995
(Unaudited)
NOTE 1 - MANAGEMENT ADJUSTMENTS
Certain information and footnote disclosures normally included
in the financial statements prepared in accordance with
generally accepted accounting principles have been condensed or
omitted. It is suggested that these financial statements be read
in conjunction with the Registrant's December 31, 1995 Annual
Report on Form 10-KSB. The results of operations for the periods
ended September 30, 1996 and 1995 are not necessarily indicative
of operating results for the full years.
The consolidated financial statements and other information
furnished herein reflect all adjustments which are, in the
opinion of management of the Registrant, necessary for a fair
presentation of the results of the interim periods converted by
this report.
NOTE 2 - INVESTMENT IN JOINT VENTURE
On September 25, 1996, the Company entered into a Joint Venture
Agreement with Biopharmaceutics, Inc. (BIO) for the purpose of
commercially exploiting a drug which BIO has the rights to. The
two companies will form a limited liability company (LLC) to
accomplish this. BIO will sublicense its rights to the drug and
will also be responsible to manage the day-to-day operations of
the LLC. The Company will contribute cash to the LLC totaling
$1,000,000. The schedule of the contributions to the LLC is as
follows:
a) $400,000 by October 31, 1996.
b) $300,000 by February 28, 1997.
c) $300,000 by August 31, 1997.
As additional consideration, the Company will pay BIO a total of
$2.75 million in cash and securities as follows:
a) 425,000 shares of the Company's restricted
common stock valued at $2.00 per share and
$150,000 in cash represented by a promissory
note payable to BIO, due October 31, 1996.
b) $350,000 of the Company's restricted common
stock, calculated at the closing bid price
per share of the stock on the day preceding
the filing of the Treatment Investigational
New Drug (IND) for the drug with the FDA and
$150,000 cash on the date of filing.
c) $500,000 of the Company's restricted common
stock, calculated as described in b) above
on the day preceding the approval of the
Treatment IND by the FDA or $250,000 cash on
the day of approval.
15
<PAGE> 16
ABS GROUP INC.
(formerly Advanced Biological Systems, Inc.)
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
(Continued) September 30, 1996 and
December 31, 1995
(Unaudited)
NOTE 2 - INVESTMENT IN JOINT VENTURE (Continued)
d) $500,000 of the Company's restricted common
stock, calculated as described in b) above
on the day preceding the filing of the new
drug application (NDA) if the company
elected to pay cash in c) above or $250,000
cash on the day of filing of the NDA if
stock was issued in c) above on the day of
approval.
e) $500,000 of the Company's restricted common
stock, calculated as described in b) above
on the day preceding the approval of the NDA
by the FDA.
NOTE 3 - RELATED PARTY TRANSACTIONS
During the three months ended September 30, 1996, the Company
received an advance of $5,000 from a shareholder. The amount is
non-interest bearing and is due upon demand.
The Company also received a capital contribution of $25,000 from
a shareholder. The amount has been recorded as additional
paid-in capital.
NOTE 4 - NOTES PAYABLE
During the three months ended September 30, 1996, the Company
made no principle payments on notes payable totaling $18,000. An
additional note payable to Biopharmaceutics for $150,000 was
issued in connection with the investment in joint venture (Note
2). The note is due with interest accrued at 7% on October 31,
1996.
NOTE 5 - COMMITMENTS AND CONTINGENCIES
As disclosed in the December 31, 1995 financial statements, the
Company has written off certain accounts payable. The Company's
management believes that the risk that the Company will be
required to pay any of the amounts is remote.
NOTE 6 - STOCK ISSUANCES
During the three months ended September 30, 1996, the Company
entered into a consulting agreement whereby the consultant will
perform consulting services regarding finding merger and
acquisition opportunities for the Company. As consideration for
the services performed, the Company issued 1,000,000 shares of
its restricted common stock valued at $0.10 per share to the
consultant.
16
<PAGE> 17
ABS GROUP INC.
(formerly Advanced Biological Systems, Inc.)
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
(Continued) September 30, 1996 and
December 31, 1995
(Unaudited)
NOTE 7 - REVERSE STOCK SPLIT
In July of 1996 the Company obtained the written consent of its
majority stockholders in lieu of a Meeting of Stockholders,
whereby such stockholders authorized, amongst other matters, a
reverse stock split of all then outstanding shares on a 1 for 30
basis. Such stock split was effectuated on August 14, 1996 at
which time the Company's trading symbol on the Electronic
Over-the-Counter Bulletin Board was changed from AVBS to ADBS.
The financial statements have been retroactively restated to
reflect the effects of this reverse stock split.
NOTE 8 - STOCK OPTIONS
The Board of Directors has adopted a 1996 Non-Statutory Stock
Option Plan and reserved 1,000,000 shares for issuance to
eligible full and part-time employees, officers, directors and
consultants. Options are non-transferrable and those issued to
date are exercisable during a term of not more than (5) years
from the grant date. The options are issuable in such amounts
and at such prices as determined by the Board of Directors,
except that each option price of each grant will not be less
than twenty percent (20%) of the market value of such shares on
the date the options are granted.
The following table summarizes common stock options outstanding
as of June 30, 1996.
<TABLE>
<CAPTION>
Exercise
Price Per Options Options Options
Date Granted Share Granted Exercised Outstanding
------------ ----- ------- --------- -----------
<S> <C> <C> <C> <C>
August 21, 1996 $0.15 200,000 1,000 199,000
</TABLE>
Of the 200,000 options granted to date 199,000 options remain
unexercised and expire five years from date of grant.
NOTE 9 - SUBSEQUENT EVENTS
a. Payments on note payable.
During October 1996, the Company made payments totaling $100,000
on its note payable to Biopharmaceutics.
b. Contributions to Joint Venture
During October 1996, the Company advanced $100,000 to the LLC as
part of the joint venture agreement (Note 2).
17
<PAGE> 18
ABS GROUP INC.
(formerly Advanced Biological Systems, Inc.)
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
(Continued) September 30, 1996 and
December 31, 1995
(Unaudited)
NOTE 9 - SUBSEQUENT EVENTS (Continued)
c. Stock issuances
During October 1996, the Company sold 288,333 shares of its
restricted common stock in three private placements. Net
proceeds from the placements totalled $303,250.
d. Letter of Intent with Marine Research
On October 18, 1996, the Company entered into a Letter of Intent
with Marine Research Pty Ltd (Marine), (an Australian company)
whereby, the Company agreed to enter into negotiation to acquire
80% of the issued and outstanding shares of Marine. The Company
has proposed to acquire the shares of Marine for the following
consideration:
a) $35,000 cash to be advanced to Marine upon
execution of the Letter of Intent.
b) 500,000 shares of its restricted common
stock.
c) $165,000 cash upon closing of the
transaction.
e. Letter of intent with Future Medical Technologies, Inc.
On October 23, 1996, the Company entered into a Letter of Intent
with Future Medical Technologies, Inc. (FMTI) whereby, the
Company agreed to enter into negotiation to acquire 100% of the
issued and outstanding shares of FMTI. The Company has proposed
to acquire the shares of FMTI by issuing shares of its
restricted common stock to the shareholders of FMTI. The number
of shares to be issued has not yet been determined.
f. On October 1, 1996, the Company amended its articles to
change its name from Advanced Biological Systems, Inc. to ABS
Group Inc.
18
<PAGE> 19
PLAN OF OPERATION
The Company is subject to the reporting requirements under the
Securities Exchange Act of 1934 and during the first six months of 1996 embarked
upon an effort to bring itself "current" with respect to its reporting
requirements.
In that regard the Company prepared and filed, on July 12, 1996, the
following reports with the Securities and Exchange Commission ("SEC"):
Form 10-KSB for calendar year ended December 31, 1992
Forms 10-QSB for quarters ended March 31, 1993, June 30, 1993 and September
30,1993
Form 10-KSB for calendar year ended December 31, 1993
Forms 10-QSB for quarters ended March 31, 1994, June 30, 1994 and September 30,
1994
Form 10-KSB for calendar year ended December 31, 1994
Forms 10-QSB for quarters ended March 31, 1995, June 30, 1995 and September 30,
1995
Form 10-KSB for calendar year ended December 31, 1995 and
Form 10-QSB for quarter ended March 31, 1996
The above referenced reports clearly indicated that the Company had not
had any revenues from operations since its inception in 1988, had been inactive
for a considerable period of time and remained inactive through March 31, 1996.
The Company subsequently filed its Form 10-QSB for quarter ended June
30, 1996, is current with respect to its reporting requirements and has placed
itself in a position so as to pursue its current business objectives, i.e.,
acquisition of existing business(s) and/or entry into joint ventures (in medical
technology and related areas). The fact that the Company is a "public" company
trading on the electronic over-the-counter bulletin board, thereby creating a
"value" for the Company and its securities which might not otherwise exist if it
were not a public company is considered by management to be a valuable asset to
the Company (enabling it to enter into, negotiate and finalize certain
agreements utilizing as partial consideration therefore, issuance of restrictive
shares of Company common stock; as hereinafter indicated).
In this respect and with a stated business objective of becoming a
diversified bio-medical and bio-technical company seeking opportunities in
emerging medical technologies the Company has recently (in late September 1996)
entered into a Joint Venture Agreement with Biopharmaceutics, Inc. ("BIO") for
the purpose of the development and commercialization of a drug Dibromodulcitol
(also known as Mitolactol) to which BIO has the exclusive sublicense rights. BIO
and the Company formed a limited liability company known as DBD Company LLC in
order to develop the aforesaid drug (a cytoxic chemotherapy agent) for the
treatment of cervical and brain cancer and other forms of the disease, with the
Company holding a 45% interest in DBD Company LLC. The Company has certain
specifically defined monetary commitments regarding this project (see Note 2 to
financial statements) and in this respect is obligated to provide certain
financing necessary in order to complete Investigational New Drug Application
("IND") and New Drug Application ("NDA") filings with the Federal Drug
Administration ("FDA"); Phase III clinical trials having been successfully
completed for such
19
<PAGE> 20
new drug. As indicated in aforesaid Note 2, a significant portion of the
Company's monetary commitment towards the joint venture referred to is intended
to be met by the parties thereto through the issuance of shares of restrictive
common stock of the Company based upon certain valuations assigned and certain
calculations based upon trading price of the Company's common stock on certain
defined dates preceding certain FDA filings and subsequent, if received,
approvals. With respect to FDA filings, the Company's joint venture has entered
into agreement with and intends to utilize the services of a former Deputy
Director of the FDA in the Division of Cardio-Renal Drug Products (who, while at
the FDA, reviewed several INDs and NDAs. Such individual, in his consultatory
capacity, has been involved in the filing of numerous INDs and NDAs. In this
manner the Company has been able (as heretofore contemplated) to take advantage
of the fact that it is a "public" company with defined valuations to its trading
securities and with the ability to issue securities as partial consideration for
transactions entered into.
Subsequent to September 30, 1996 and in a further effort to broaden its
above referenced business base and objectives within the medical technology
field, the Company during, October 1996, entered into two separate and distinct
letters of intent. One of such letters of intent is with an Australian limited
company and its founder, which parties hold interests in certain products found
in the waters along the Great Barrier Reef, which products are registered with
the Australian equivalent of the FDA. The second of such letters of intent is
with a private company currently engaged in the development, manufacture and
sale of microbiological diagnostic and testing systems and equipment providing
advanced culture identification capability which is considered to be useful in
the determination of the presence of a variety of pathogenic organisms.
Assuming consummation of the contemplated and expressed intentions of
the parties to such letters of intent and the conclusion of the Company's due
diligence to its satisfaction (of which no assurance can be given), the Company
will acquire eighty percent (80%) of the issued and outstanding shares of the
aforesaid Australian company and one hundred percent (100%) of the issued and
outstanding shares of the domestic company referred to above thereby having both
a majority owned subsidiary and a wholly owned subsidiary - engaged within the
biomedical and/or biotechnical industry.
Based upon all of the above management is currently unable to
realistically and specifically determine whether or not the Company can satisfy
such future cash requirements as may occur over the next 12 months or whether it
will be necessary to attempt to raise additional funds therefore through either
equity and/or debt financing (dependent upon whether or not (a) additional and
possible unforeseen financing is needed for the joint venture referred to
herein, (b) one or both of the letters of intent entered into result in
acquisition of subsidiaries and (c) additional companies are located which may
become "target" companies that the Company may seek to acquire and which may
require financing.
Other than as indicated herein, the Company is not engaged (on its own)
in any product research and development nor does management currently
contemplate the purchase or sale of any plant or significant equipment. Any
significant change in the number of Company employees will be dependent, to a
significant degree, upon the status of its on-going joint venture and the
proposed acquisitions referred to above.
20
<PAGE> 21
PART II
<TABLE>
<CAPTION>
<S> <C>
Item 1. Legal Proceedings - None
Item 2. Changes in Securities - None *
Item 3. Defaults Upon Senior Securities - None
Item 4. Submission of Matters to a
Vote of Security Holders - None **
Item 5. Other Information - None
Item 6. (a) Exhibits - None
(b) Reports on Form 8-K None
</TABLE>
* Except that on August 5, 1996 the Company amended its Certificate of
Incorporation so as to reduce its authorized shares from 30,000,000 to
10,000,000 and changed its par value from $.001 to $.0001. At the same
time the Company eliminated its prior authorization to issue a class of
Preferred Stock.
** Except that the Company obtained the written consent of its majority
stockholders in lieu of a meeting of stockholders whereby such
stockholders authorized the following (a) in July 1996 - the amendment
to the Company's Certificate of Incorporation and reverse stock split
(hereinabove referred to in Part II, Item 2 hereof) and (b) in late
September 1996 - the change of the Company's name to ABS Group Inc.
21
<PAGE> 22
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ABS GROUP INC.
By /s/ /Emanuel A. Floor/
-------------------------
Emanuel A. Floor, President
Dated: November 1, 1996
22
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