<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 June 30, 1998
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.)
818 East South Temple Street, Salt Lake City, Utah 84102
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(801) 521-8000
(Registrant's telephone number, including area code)
(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 August 19, 1998 is 4,331,674 shares, all of one class of $.0001 par
value common stock.
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<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page No.
--------
<S> <C> <C>
PART I
Item 1. Financial Statements 3-9
Item 2. Management's Discussion and Analysis 10-13
PART II
Item 1. Legal Proceedings 14
Item 2. Changes in Securities 14
Item 3. Defaults Upon Senior Securities 14
Item 4. Submission of Matters to a
Vote of Security Holders 14
Item 5. Other Information 14
Item 6. Exhibits and Reports on Form 8-K 14
Signatures 15
</TABLE>
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<PAGE> 3
ABS GROUP, INC.
(A Development Stage Company)
Consolidated Balance Sheets
ASSETS
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
---------- ----------
(Unaudited)
<S> <C> <C>
CURRENT ASSETS
Cash $ 5,420 $ 1,906
Accounts receivable 2,659 5,782
Inventories 171,516 168,951
Prepaid expenses 3,133 4,080
Employee advances 3,619 1,227
---------- ----------
Total Current Assets 186,347 181,946
---------- ----------
FIXED ASSETS 158,980 174,921
---------- ----------
OTHER ASSETS
Investment in joint venture (Note 2) 769,243 841,204
Patents/intellectual property 663,610 683,851
Deposits 5,649 19,769
Goodwill 174,731 185,009
---------- ----------
Total Other Assets 1,613,233 1,729,833
---------- ----------
TOTAL ASSETS $1,958,560 $2,086,700
========== ==========
</TABLE>
The accompanying notes are an integral part of
these consolidated financial statements.
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<PAGE> 4
ABS GROUP INC.
(A Development Stage Company)
Consolidated Balance Sheets (Continued)
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
------------ ------------
(Unaudited)
<S> <C> <C>
CURRENT LIABILITIES
Accounts payable - trade $ 396,496 $ 339,487
Accrued expenses 96,076 46,368
Related party payable 17,251 22,322
Capital lease obligation, current portion 932 1,145
Notes payable, current portion 325,000 140,000
------------ ------------
Total Current Liabilities 835,755 549,322
------------ ------------
LONG-TERM LIABILITIES
Capital lease obligation 2,031 2,261
Notes payable 120,000 105,000
------------ ------------
Total Long-Term Liabilities 122,031 107,261
------------ ------------
Total Liabilities 957,786 656,583
------------ ------------
MINORITY INTEREST IN CONSOLIDATED
SUBSIDIARIES 64,881 93,637
------------ ------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Common stock, 10,000,000 shares authorized
at $0.0001 par value; 4,206,474 and 4,165,363
shares issued and outstanding, respectively 421 417
Capital in excess of par value 12,811,362 12,776,480
Foreign currency translation (312) (6,915)
Deficit accumulated during the development stage (11,875,578) (11,433,502)
------------ ------------
Total Stockholders' Equity 935,893 1,336,480
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,958,560 $ 2,086,700
============ ============
</TABLE>
The accompanying notes are an integral part of
these consolidated financial statements.
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<PAGE> 5
<TABLE>
<CAPTION>
ABS GROUP INC.
(A Development Stage Company)
Consolidated Statements of Operations
(Unaudited)
From
Inception on
For the Three For the Six October 3,
Months Ended Months Ended 1988 Through
June 30, June 30, June 30,
1998 1997 1998 1997 1998
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
SALES $ 2,487 $ 60,360 $ 46,214 $ 165,297 $ 431,349
COST OF SALES 3,211 55,463 30,688 117,216 336,504
------------ ------------ ------------ ------------ ------------
GROSS MARGIN (724) 4,897 15,526 48,081 94,845
------------ ------------ ------------ ------------ ------------
EXPENSES
Depreciation and amortization 23,365 21,724 45,324 39,926 138,923
Rent 21,423 22,421 37,745 46,256 131,168
Research and development 2,460 16,648 2,460 16,648 31,413
General and administrative 141,938 759,149 306,143 946,626 3,098,966
------------ ------------ ------------ ------------ ------------
Total Expenses 189,186 819,942 391,672 1,049,456 3,400,470
------------ ------------ ------------ ------------ ------------
LOSS FROM OPERATIONS (189,910) (815,045) (376,146) (1,001,375) (3,305,625)
------------ ------------ ------------ ------------ ------------
LOSS INCOME (EXPENSE)
Interest income 132 487 207 487 4,969
Interest expense (10,598) (3,938) (19,326) (3,961) (50,636)
Loss on investment (32,036) (27,840) (71,961) (82,450) (205,757)
------------ ------------ ------------ ------------ ------------
Total Other Income
(Expense) (42,502) (31,291) (91,080) (85,924) (251,424)
------------ ------------ ------------ ------------ ------------
LOSS BEFORE DISCONTINUED
OPERATIONS AND MINORITY
INTEREST (232,412) (846,336) (467,226) (1,087,299) (3,557,049)
LOSS ON DISCONTINUED
OPERATIONS -- -- -- -- (8,425,042)
MINORITY INTEREST
IN LOSS 10,831 20,411 25,150 26,103 106,513
------------ ------------ ------------ ------------ ------------
NET LOSS $ (221,581) $ (825,925) $ (442,076) $ (1,061,196) $(11,875,578)
============ ============ ============ ============ ============
NET LOSS PER SHARE $ (0.05) $ (0.22) $ (0.11) $ (0.30)
============ ============ ============ ============
WEIGHTED AVERAGE
NUMBER OF SHARES
OUTSTANDING 4,206,474 3,795,376 4,206,474 3,564,707
============ ============ ============ ============
The accompanying notes are an integral part of these consolidated financial statements.
-5-
</TABLE>
<PAGE> 6
<TABLE>
<CAPTION>
ABS GROUP INC.
(A Development Stage Company)
Consolidated Statements of Cash Flows
(Unaudited)
From
Inception on
For the Three For the Six October 3,
Months Ended Months Ended 1988 Through
June 30, June 30, June 30,
1998 1997 1998 1997 1998
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM
OPERATING ACTIVITIES
Net loss from operations $ (221,581) $ (825,925) $ (442,076) $ (1,061,196) $(11,875,578)
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 23,365 21,724 45,324 39,926 143,442
Bad debt expense -- -- -- -- 7,729
Stock and options issued for
services rendered -- 472,933 3,386 472,933 1,431,419
Loss on investment in joint venture 32,036 27,840 71,961 82,460 205,757
Stock issued in settlement of debt -- -- -- -- 1,413,320
Loss on disposition of assets -- -- -- -- 3,206,791
Foreign currency translation -- 127 -- 127 (6,924)
Minority interest (10,831) (26,103) (25,150) (26,103) (108,102)
Changes in operating assets and liabilities:
(Increase) decrease in accounts
receivable 17,172 55,618 3,123 (23,105) 3,572
(Increase) decrease in inventory (7,063) (52,140) (2,565) (70,385) (124,199)
(Increase) decrease in prepaid
assets 82 31,799 (1,445) 2,060 4,692
(Increase) decrease in deposits 12,149 (18,230) 14,120 (19,600) 7,497
(Increase) decrease in related
party receivables -- -- -- (19,500) (19,500)
Increase (decreased) in accounts
payable 91,712 115,035 62,651 (79,831) 322,451
Increase (decrease) in accrued
expenses 30,827 3,938 44,637 3,938 168,255
------------ ------------ ------------ ------------ ------------
Net Cash Provided (Used)
by Operating Activities $ (32,132) $ (193,384) $ (226,034) $ (698,276) $ (5,219,378)
------------ ------------ ------------ ------------ ------------
The accompanying notes are an integral part of these consolidated financial statements.
-6-
</TABLE>
<PAGE> 7
<TABLE>
<CAPTION>
ABS GROUP INC.
(A Development Stage Company)
Consolidated Statements of Cash Flows (Continued)
(Unaudited)
From
Inception on
For the Three For the Six October 3,
Months Ended Months Ended 1988 Through
June 30, June 30, June 30,
1998 1997 1998 1997 1998
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM
INVESTING ACTIVITIES
Investments in joint venture $ -- $ -- $ -- $ (250,000) $ (550,000)
Cash acquired through invest-
ment in subsidiary -- -- -- -- 2,022
Purchase of subsidiaries -- -- -- -- (108,731)
Purchase of product marketing
rights -- -- -- -- (1,250)
Purchase of fixed assets (1,509) (48,341) (1,509) (99,264) (99,700)
Purchase of promotional video -- -- -- -- (50,000)
Capitalized patent costs -- (14,367) -- (14,367) (1,727)
----------- ----------- ----------- ----------- -----------
Net Cash Provided (Used)
by Investing Activities (1,509) (62,708) (1,509) (363,631) (809,386)
----------- ----------- ----------- ----------- -----------
CASH FLOWS FROM
FINANCING ACTIVITIES
Capital contributed by
shareholder -- -- -- -- 25,000
Proceeds from loans 20,000 -- 210,000 -- 875,462
Repayment of loans (225) -- (443) (76,169) (76,394)
Proceeds from sale of
common stock -- 156,813 21,500 1,123,094 5,210,116
----------- ----------- ----------- ----------- -----------
Net Cash Provided (Used)
by Financing Activities 19,775 156,813 231,057 1,046,925 6,034,184
----------- ----------- ----------- ----------- -----------
NET INCREASE (DECREASE)
IN CASH AND CASH
EQUIVALENTS (13,866) (99,279) 3,514 (14,982) 5,420
CASH AND CASH
EQUIVALENTS AT
BEGINNING OF PERIOD 19,286 150,274 1,906 65,977 --
----------- ----------- ----------- ----------- -----------
CASH AND CASH
EQUIVALENTS AT END
OF PERIOD $ 5,420 $ 50,995 $ 5,420 $ 50,995 $ 5,420
=========== =========== =========== =========== ===========
The accompanying notes are an integral part of these consolidated financial statements.
-7-
</TABLE>
<PAGE> 8
<TABLE>
<CAPTION>
ABS GROUP INC.
(A Development Stage Company)
Consolidated Statements of Cash Flows (Continued)
(Unaudited)
From
Inception on
For the Three For the Six October 3,
Months Ended Months Ended 1988 Through
June 30, June 30, June 30,
1998 1997 1998 1997 1998
----------- -------- -------- -------- ----------
<S> <C> <C> <C> <C> <C>
SUPPLEMENTAL
DISCLOSURES OF CASH
FLOW INFORMATION
Interest paid $ -- $ -- $ -- $ -- $ 711
Income taxes paid $ -- $ -- $ -- $ -- $ --
NON-CASH FINANCING
ACTIVITIES
Stock issued for note $ -- $ -- $ -- $ -- $2,733,750
Purchase of Bioreactors through
assignment of note $ -- $ -- $ -- $ -- $2,150,000
Acquisition of product marketing rights
through issuance of notes and stock $ -- $ -- $ -- $ -- $2,200,000
Stock issued in settlement of debt $ -- $ -- $ -- $ -- $1,560,818
Stock and options issued for services
rendered $ -- $ 472,933 $ -- $ 472,933 $1,431,416
Stock issued for acquisition of
subsidiary $ -- $ -- $ -- $ -- $ 500,138
Stock issued for investment in joint
venture $ -- $ -- $ -- $ -- $ 425,000
Stock issued for accrued interest $ -- $ -- $ 26,000 $ -- $ 26,000
Accrued salaries contributed by a
shareholder of the Company $ -- $ -- $ -- $ -- $ 41,250
The accompanying notes are an integral part of these consolidated financial statements.
-8-
</TABLE>
<PAGE> 9
ABS GROUP INC.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
June 30, 1998 and December 31, 1997
(Unaudited)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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, 1997
Annual Report on Form 10-KSB. The results of operations for
the periods ended June 30, 1998 and 1997 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 covered by
this report.
NOTE 2 - INVESTMENT IN JOINT VENTURE
During the 3 months ended June 30, 1998, the Company advanced
no additional funds to DBD Company, Inc. (DBD). The Company is
committed to advancing an additional $600,000 to DBD during
1998, on an as needed basis. The financial statements reflect
the Company's share of DBD's loss which is $32,036.
NOTE 3 - NOTES PAYABLE
As of December 31, 1997, the Company had an obligation to pay
$130,000 in notes due in January 1998 together with accrued
interest at ten percent per annum to two otherwise
unaffiliated lenders. During January 1998, the Company
restructured its debt with both of such parties and issued new
notes bearing interest at ten percent per annum and due May 1,
1998. In addition, one of such parties advanced an additional
$120,000 to the Company during January 1998. Both parties
waived accrued interest on the original notes and as partial
consideration for the restructuring, the Company issued two
year unregistered warrants to the lenders to acquire 225,000
shares of the Company's common stock at an exercise price of
$.375 per share. An additional 216,000 two year unregistered
warrants exercisable at $.375 per share were issued as partial
consideration for the aforesaid $120,000 loan made in January
1998. As of August 18, 1998, the notes had not yet been paid
in whole or in part.
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<PAGE> 10
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS
The Company's intentions as heretofore expressed in its Form
10-KSB for year ended December 31, 1997 is to become a diversified public
company through the acquisition or financing of opportunities with emerging
bio-medical technology firms where (a) research and development stages have been
basically completed, (b) intellectual property is protected by patents,
licenses, registration and/or proprietary formulas or processes, (c) products
and/or services are deemed unique and/or desirable and (d) Company's management
and marketing skills and financial resources are envisioned to be a valuable
asset to the overall operation(s) (present and/or proposed) of the acquired
firm(s) - all with the ultimate objective of benefitting the Company's
stockholders. Reference is herewith made to Item 1 to aforesaid Form 10-KSB as
well as to the consolidated financial statements and notes thereto as contained
therein which summarizes relevant information with respect to the Company's
initial joint venture with Biopharmaceutics, Inc. (entered into in September
1996) and its subsequent acquisitions in November and December 1996 (of the
subsidiaries hereinafter referred to) as well as the various monetary and other
obligations assumed as a result thereof.
The consolidated financial statements include those of ABS
Group Inc. and its subsidiaries, Future Medical Technologies, Inc. ("FMT";
currently inactive), Marine Research USA, Inc. ("MRUSA") and Marine Research
Pty. Ltd. ("MRPL").
This discussion summarizes the significant factors affecting
the consolidated operating results, financial condition and liquidity/cash flows
of the Company as at quarter ended June 30, 1998 and the year ended December 31,
1997 with respect to the Company's consolidated balance sheets and the
comparative (a) three month periods ended June 30, 1998 and June 30, 1997 and
(b) six month periods ended June 30, 1998 and June 30, 1997 based upon
information appearing in the Company's consolidated statements of operations and
related financial statements and should be read in conjunction with such
unaudited consolidated financial statements.
CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS
ENDED JUNE 30, 1998 AND JUNE 30, 1997:
Sales for the three month period ended June 30, 1998 were
$2,487 as compared to sales of $60,360 for the comparative three month period
ended June 30, 1997, while cost of sales decreased from the comparative three
month period ended June 30, 1997 from $55,433 to $3,211 resulting in a gross
margin for the three month period ended June 30, 1997 of $4,897 as compared to
$(724) for the comparative three month period ended June 30, 1998. Accordingly,
gross margin for the comparative periods decreased by $5,621.
Total expenses decreased by $630,757 (from $819,942 at June
30, 1997 to $189,186 at June 30, 1998) while the single largest item of
operating expenses continued to be represented by "general and administrative"
expenses, which represented approximately 75% of all operating expenses for the
three month period ended June 30, 1998 and represented approximately 93% of all
operating expenses for the three month period ended June 30, 1997. Depreciation
and amortization
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<PAGE> 11
expenses for the three month period ended June 30, 1998 represented
approximately 12% of total operating expenses as compared to approximately 3% of
total operating expenses for the comparative three month period ended June 30,
1997. Rental expenses for the three month period ended June 30, 1998 represented
approximately 11% of total operating expenses as compared to approximately 3%
for the comparative three month period ended June 30,1997. Primarily as a result
of the above, net losses decreased from $(825,925) for the three month period
ended June 30, 1997 to $(221,581) for the three month period ended June 30,
1998; a decrease in losses of $604,344.
CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE SIX MONTHS ENDED
JUNE 30, 1998 AND JUNE 30, 1997:
Sales for the six month period ended June 30, 1998 were
$41,214 as compared to sales of $165,297 for the comparative six month period
ended June 30, 1997, while cost of sales decreased from the comparative six
month period ended June 30, 1997 from $117,216 to $30,688 resulting in a gross
margin for the six month period ended June 30, 1997 of $48,081 as compared to
$15,526 for the comparative six month period ended June 30, 1998. Accordingly,
gross margin for the comparative periods decreased by $32,555.
Total expenses decreased by $657,784 (from $1,049,456 at June
30, 1997 to $391,672 at June 30, 1998) while the single largest item of
operating expenses continued to be represented by "general and administrative"
expenses, which represented approximately 78% of all operating expenses for the
six month period ended June 30, 1998 and represented approximately 90% of all
operating expenses for the six month period ended June 30, 1997. Depreciation
and amortization expenses for the six month period ended June 30, 1998
represented approximately 12% of total operating expenses as compared to
approximately 4% of total operating expenses for the comparative six month
period ended June 30, 1997. Rental expenses for the six month period ended June
30, 1998 represented approximately 10% of total operating expenses as compared
to approximately 4% for the comparative six month period ended June 30,1997.
Primarily as a result of the above, net losses decreased from $(1,061,196) for
the six month period ended June 30, 1997 to $(442,076) for the six month period
ended June 30, 1998; a decrease in losses of $619,120.
Additionally, net loss from inception in October of 1988
through June 30, 1998 amounted to $(11,875,578).
CONSOLIDATED BALANCE SHEETS:
Total assets of the Company at June 30, 1998 and calendar year
ended December 31, 1997 were $1,958,560 and $2,086,700 respectively, a decrease
of $128,140, with total current assets increasing from $181,946 at December 31,
1997 to $186,347 at June 30, 1998 - an increase of $4,401. The principal reason
for the decrease in total assets (referred to above) resulted from a $71,961
decrease in "investment in joint venture". Investment in joint venture and
patents/intellectual property accounted for 39% and 34% respectively of total
assets as at June 30, 1998 as compared to approximately 40% and 33% as at
December 31, 1997.
-11-
<PAGE> 12
Total current liabilities of the Company at June 30, 1998 and
calendar year ended December 31, 1997 were $835,755 and $549,322 respectively,
an increase of $286,433, principally due to an increase of $185,000 in notes
payable, current portion. Total liabilities as at June 30, 1998 amounted to
$957,786 as compared to $656,583 at December 31, 1997.
The Company's working capital deficit as at June 30, 1998 was
$(649,408) as compared to a working capital deficit of $(367,376) at December
31, 1997.
As at June 30, 1998 the Company's deficit accumulated during
development stage increased to $(11,875,578) as compared to $(11,433,502) as at
December 31, 1997 (reflecting the aforesaid net loss of $442,076 incurred during
the six month period ended June 30,1998). Total stockholders' equity at June 30,
1998 decreased by $400,587 from $1,336,480 at December 31, 1997 to $935,893 at
June 30, 1998.
CASH REQUIREMENTS AND LIQUIDITY
As heretofore indicated in the consolidated statements of
stockholders' equity in the Company's 10-KSB for calendar year ended December
31, 1997, the Company has been able to satisfy its cash requirements and raise
the necessary capital in order to finance its proposed growth and acquisition
program through the sale and issuance of 556,428 shares of its common stock for
an aggregate gross cash consideration of $1,278,605.50 during 1997. During the
first quarter of 1998 the Company sold an additional 41,111 shares for gross
cash consideration of $31,638.71 (of which $10,000 was originally advanced to
the Company in December 1997 and thereafter such indebtedness (plus accrued
interest) was canceled in exchange for issuance of 8,111 shares in January 1998)
and 13,000 shares were issued to a non related party who exercised his option to
acquire 13,000 shares at $.50 per share. Other than the 13,000 shares issued
pursuant to the option, the remaining shares of Company common stock referred to
above were sold in accordance with certain terms and conditions contained in
Off-Shore Securities Subscription Agreements and, accordingly, were sold outside
the U.S., not as a registered public offering but rather in reliance upon
Regulation S of the General Rules and Regulations under the Securities Act of
1933. All sales of securities pursuant to Regulation S made during 1997 and
January 1998 as referred to directly above have been reported in Forms 8-K with
dates of reports of January 16, 1997, February 5, 1997, March 10, 1997, April
14, 1997, June 13, 1997, August 6, 1997, August 20, 1997 and January 20, 1998 -
each of which Forms 8-K were filed in a timely manner.
Reference is also made to Note 3 to March 31, 1998 financial
statements regarding notes payable aggregating $250,000 which notes payable
primarily represent loans made and/or debt financing.
During the second quarter of 1998 the Company did not engage
in any form of equity and/or debt financing and, accordingly, found it to be
quite difficult to meet ongoing cash requirements.
-12-
<PAGE> 13
The consolidated financial statements to the Company's Form
10-KSB for calendar year ended December 31, 1997 indicate (in Note 9 thereto)
certain factors which create an uncertainty about the Company's ability to
continue as a going concern; such factors primarily relating to the Company
having sustained significant operating losses while not having had a proven
source of revenues. Notwithstanding the concerns expressed by the Company's
auditors in such Note 9 as well as in their report dated April 9, 1998
accompanying such consolidated financial statements and the loss most recently
incurred during the calendar year December 31, 1997 of $1,708,905 (and the
further loss of $442,076 during the first two quarters of 1998), Company
management nevertheless maintains the hope that the Company will be able to
continue its operations through (a) the raising of additional capital through
debt and/or equity financing if necessary and/or (b) that its operations
(through activities of its joint venture and/or operating subsidiaries) will
improve sufficiently so as to eventually generate sufficient revenues so as to
justify anticipated and on-going expenditures. No assurance can, however, be
given that such will be the case especially in view of the fact, as aforesaid,
that the Company was unable to raise additional capital during the second
quarter of 1998.
Other than as indicated herein or in its aforesaid Form 10-KSB
for calendar year ended December 31, 1997, 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
operations of its subsidiaries heretofore referred to as having been acquired in
late 1996.
-13-
<PAGE> 14
PART II
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
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<PAGE> 15
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.
/Emanuel A. Floor/
By ___________________________
Emanuel A. Floor, President
Dated: August 19, 1998
-15-
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 5,420
<SECURITIES> 0
<RECEIVABLES> 19,387
<ALLOWANCES> 16,728
<INVENTORY> 171,516
<CURRENT-ASSETS> 186,347
<PP&E> 203,952
<DEPRECIATION> 44,972
<TOTAL-ASSETS> 1,958,560
<CURRENT-LIABILITIES> 835,755
<BONDS> 0
0
0
<COMMON> 421
<OTHER-SE> 935,472
<TOTAL-LIABILITY-AND-EQUITY> 1,958,560
<SALES> 46,214
<TOTAL-REVENUES> 46,214
<CGS> 30,688
<TOTAL-COSTS> 391,672
<OTHER-EXPENSES> 71,754
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 19,326
<INCOME-PRETAX> (25,150)
<INCOME-TAX> 0
<INCOME-CONTINUING> (25,150)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (25,150)
<EPS-PRIMARY> (0.11)
<EPS-DILUTED> (0.11)
</TABLE>
