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U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB
[ ] Annual report under Section 13 or 15(d) of the Securities Exchange Act
of 1934
For the calendar year ended December 31, 1997
[ ] Transition report under Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the transition period from to
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Commission file number 0-19814
ABS GROUP INC
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(Name of Small Business Issuer in Its Charter)
Delaware 87-0462198
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(State or Other Jurisdiction of (IRS Employer
Incorporation or Organization) Identification No.)
818 East South Temple Street, Salt Lake City, Utah 84102
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(Address of Principal Executive Office) (Zip Code)
(801) - 521-8000
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(Issuer's Telephone Number, Including Area Code)
Securities registered under Section 12(b) of the Exchange Act: None
Securities registered under Section 12(g) of the Exchange Act:
Common Stock par value $ .0001 per share
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(Title of Class)
Check whether the issuer; (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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 past 90 days.
Yes [XX] No [ ]
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Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B is not contained in this form, and no disclosure will
be contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [ ]
State issuer's revenues for its most recent calendar year - $273,842
The aggregate market value for the 1,060,173 shares of voting stock
(all of one class of $.0001 par value Common Stock) held by non-affiliates * of
Registrant as of March 31, 1998 is $1,424,607 based upon an average of the bid
($1.21875) and asked ($1.46875) prices for such stock on the date heretofore
indicated. See Item 5 (a) which indicates the limited, if any, trading activity
in the Registrant's securities for the periods indicated. By virtue hereof, it
is difficult if not impossible to accurately arrive at a completely realistic
"aggregate market value" of Registrant shares held by non-affiliates as called
for herein especially in view of the fact that the existence of limited or
sporadic quotations should not of itself be deemed to constitute an "established
public trading market". The above statements regarding "aggregate market value"
and "established public trading market" should be taken into careful
consideration when considering the information contained herein regarding the
indicated "aggregate market value" of shares of voting stock held by
non-affiliates.
* Affiliates for the purpose of this item refers to the Registrant's
officers and directors (as well as officers and/or directors of each of
its subsidiaries) and/or any persons or firms (excluding those
brokerage firms and/or clearing houses and/or depository companies
holding Registrant's securities as record holders only for their
respective clienteles' beneficial interest) owning 5% or more of the
Registrant's Common Stock, both of record and beneficially or of record
only to the extent that Registrant was able to verify beneficial
ownership of certain securities held of record by CEDE for affiliates -
all as of March 31, 1998.
ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PAST FIVE YEARS
Check whether the issuer has 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 [ ]
Not Applicable
APPLICABLE ONLY TO CORPORATE REGISTRANTS
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date. 4,331,674 shares as of March 31,
1998.
Transitional Small Business Disclosure Format: Yes [ X ] No [ ]
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DOCUMENTS INCORPORATED BY REFERENCE
If the following documents are incorporated by reference, briefly
describe them and identify the part of the Form 10-KSB (e.g., Part I, Part II,
etc.) into which the document is incorporated: (1) any annual report to
security-holders; (2) any proxy or information statement; and (3) any prospectus
filed pursuant to Rule 424(b) or (c) of the Securities Act of 1933 ("Securities
Act").
None
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TABLE OF CONTENTS
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Number
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PART I
Item 1. Description of Business 5
Item 2. Description of Property 10
Item 3. Legal Proceedings 11
Item 4. Submission of Matters to a Vote of Security Holders 11
PART II
Item 5. Market For Common Equity and Related Stockholder Matters 11
Item 6. Management's Discussion and Analysis 12
Item 7. Financial Statements 15
F1 - F25
Item 8. Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure 16
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance With Section 16(a) of the Exchange Act 16
Item 10. Executive Compensation 18
Item 11. Security Ownership of Certain Beneficial Owners and Management 19
Item 12. Certain Relationships and Related Transactions 22
Item 13. Exhibits, List and Reports on Form 8-K 22
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ITEM 1. DESCRIPTION OF BUSINESS
ABS Group Inc. (hereinafter "ADBS" or the "Company"), formerly Advanced
Biological Systems, Inc., is a development stage company incorporated in the
State of Delaware in October, 1988 which discontinued operations in 1992 and was
basically inactive through March 31, 1996 (not having had any significant
revenues from operations from inception through such date).
In July, 1996, ADBS took the necessary steps so as to bring itself
current with the SEC with respect to its 1934 Act reporting requirements thereby
placing itself in a position so as to be able to pursue its current business
objectives, i.e. acquisition of existing business(es) and/or entry into joint
ventures in bio and medical technology opportunities where research and
development activities have been completed and products are ready for
manufacture and marketing or require final registrations and approvals for
market. Such activities resulted in the following:
A. JOINT VENTURE AND LIMITED LIABILITY COMPANY
In this respect and with the aforesaid stated business objective of
becoming a diversified bio-medical and bio-technical company seeking
opportunities in emerging medical technologies the Company, 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 thereafter formed a New York State
limited liability company known as DBD Company LLC ("DBD") and sublicensed the
aforesaid rights to DBD in order to commercialize the drug (a cytoxic
chemotherapy agent) for the treatment of cervical and brain cancer and other
forms of the disease. BIO is required to manage the venture while the Company
holds a 40% ownership interest in DBD (which interest may increase to 45% if
certain monetary goals are achieved). The Company has specifically defined
monetary commitments regarding this project (see Note 3 to consolidated
financial statements) and in this respect is obligated to provide financing
necessary in order to complete New Drug Application ("NDA") filings with the
Federal Drug Administration ("FDA"); Phase III clinical trials having been
successfully completed for such new drug. The Company's aforesaid monetary
obligation to DBD amounts to $1,000,000 of which $400,000 was contributed
through December 31, 1997 and the balance of $600,000 is to be paid during 1998
on an "as needed" basis. As indicated in aforesaid Note 3 to the consolidated
financial statements, a significant portion of the Company's further
consideration 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. In this manner the Company has been able 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
transaction(s) entered into. With respect to FDA filings, the Company's joint
venture utilizes the services of a firm founded by and presided over by a former
Deputy Director of the FDA in the Division of Cardio-Renal Drug Products (who,
while at the FDA, reviewed several Investigational New Drug applications (INDs)
and NDAs. Such individual, in his consultatory capacity, has been involved in
the filing of numerous INDs and NDAs.
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In February of 1998, DBD and its consultant and members of scientific
advisory committees organized to assist in the process met with FDA staff to
review the current status of a proposed NDA application. Based on the materials
prepared and as a result of discussions, DBD was advised to proceed with the NDA
application. The FDA requested that a Pharmacokinetic study be completed as part
of the application. DBD consultants believe that such filings can be prepared
and delivered to the FDA in the next 9 to 12 months. Under this timetable, and
subject to approval of the NDA, DBD can expect to have a product for the market
in 1999.
B. ACQUISITIONS OF SUBSIDIARIES
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 each of which
subsequently resulted in acquisitions of subsidiaries as hereinafter indicated.
One of such letters of intent was 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 was with a private
company then engaged in the development, manufacture and sale of microbiological
diagnostic and testing systems and equipment providing advanced culture
identification capability which was considered to be useful in the determination
of the presence of a variety of pathogenic organisms.
As a direct result of the entry into the aforesaid letters of intent
and the consummation of the intentions expressed therein, the Company concluded
such transactions, as follows:
(i) In November of 1996, Marine Research USA, Inc., ("MRUSA") an 80%
owned subsidiary of the Company formed under the laws of the State of Utah
principally for purposes of the transaction described herein acquired 100% of
the issued and outstanding securities of Marine Research Pty. Ltd. ("MRPL"), a
corporation organized under the laws of Australia and founded by Samuel J. Grant
("Grant") who owns the balance of 20% of MRUSA. MRPL is in the business of
manufacturing and marketing products produced from sea cucumbers harvested in
the territorial waters of Australia. In connection with this transaction, Grant,
the founder and a former principal shareholder of MRPL, entered into a four-year
employment agreement with the Australian corporation as its Managing Director
(and also serves as President and a Director of MRUSA). Grant has also signed a
non-disclosure agreement under which he must hold in confidence MRPL's
proprietary information.
In connection with this share acquisition, the Company has made
available to MRPL $200,000 of equity capital financing. As additional
consideration regarding this transaction, the Company issued 500,000
unregistered shares of its common stock to Grant and MRUSA issued to Grant 2,000
shares of its stock which represents 20% of the issued and outstanding
securities of MRUSA. Grant has executed restrictive covenants that limit the
transferability of MRUSA shares issued to him. MRUSA retained a right of first
refusal to acquire Grant's MRUSA shares. During 1997, the Company advanced an
additional $ 112,827 in working capital as a loan to MRUSA.
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Through MRPL and MRUSA, the Company is engaged in the formulation,
processing and marketing of several nutritional products which use as a
principal ingredient, the Sea Cucumber, harvested along the Great Barrier Reef
in Australia. MRPL holds certain rights, title and interest in four existing
products registered with the Australian Therapeutic Goods Administration ("TGA")
which is similar to the U.S. FDA.
In Australia and New Zealand these products are sold by MRPL for
therapeutic relief of arthritic and muscular pain and inflammations. In the
United States, these products are sold as food and nutritional supplements
through health food providers, and other companies which distribute such
products through catalog sales and are also offered for sale in specialty
nutrition and health food outlets. These products are packaged in the United
States in a TGA and FDA approved facility in Orem, Utah. The fourth product TBL
12 is used as a food supplement. Additional testing is now underway with
patients in Melbourne, Australia regarding use of TLB 12 in potentially treating
diseases of the immune system including HIV and Cancer - but such testing
remains in a very early stage and potential positive results, if any, can not be
predetermined.
MRPL has offices and a distribution center in Castletown, Queensland,
Australia while MRUSA maintains offices in Salt Lake City, Utah with its parent
ABS Group Inc.
In 1997, MRUSA completed the formulation and packaging of 23 products
to be sold under the Healthy Connection label. Ten of these products use the sea
cucumber product as an ingredient. The others are general nutriceutical
products. All of these products are featured in a catalog published by
HealthLink International which is a dba for MRUSA. Catalogs are made available
to patients of medical professionals who then order the products by phone, pay
for them with credit cards or checks and they receive the product by mail from
the Company. HealthLink International pays a professional fee to those medical
professionals who offer the product to their patients. HealthLink operates from
offices in Midvale, Utah.
(ii) Pursuant to Share Purchase and Sale Agreement dated December 31,
1996, the Company acquired (from a New Jersey corporation known as Medical
Technologies, Inc. ("MT") all of the issued and outstanding securities
(100,000,000 shares of common stock) of Future Medical Technologies, Inc.
("FMT"), which was a wholly owned subsidiary of MT. FMT is in the business of
developing, manufacturing and marketing of diagnostic products for medical and
industrial applications including a variety of plastic disposable micro
biological diagnostic and testing systems, equipment and devices which enable
microbiologists to test for bacteria in food and water and other liquids and
which provide advanced culture-identification capability useful in the
determination of presence of a variety of pathogenic organisms in a short time
frame. FMT has a patent pending for one device and owns rights to certain other
products. In connection with this transaction, Steven Gelman, consultant to FMT
since October 1996, served as president of FMT through March 31, 1998 when the
Company accepted his resignation.
As consideration regarding this transaction, the Company issued two
ninety-day, 6% interest, promissory notes in the sums of $44,000 and $31,563.80
and also assumed the remaining payments of a four-year, 7% interest, $250,000
promissory note with a balance of $225,000 at December 31, 1996. Subsequent to
closing the Company paid in full (to MT) the above referenced
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$44,000 and the $31,563.80 promissory notes. During 1997, the Company issued
300,000 of its shares to the holder of the $225,000 note in complete settlement
of the Note and its accrued interest.
Until March 31,1998 FMT maintained offices in Boulder, Colorado, and
was managed by its then President, Steven I. Gelman and through December of 1997
maintained a research laboratory in Atlanta, Georgia, in conjunction with
Georgia State University
During the first quarter of 1998, the Company determined that FMT's
narrow market segment and margins limited its ability to be profitable in its
current marketing mode. Also, outsourcing all manufacture and distribution
functions resulted in higher costs and further limited operating profits.
Effective April 1, 1998, the Company closed its offices in Boulder and
relocated all FMT sales and administrative functions to Salt Lake City into
space already under lease by ABS Group.
FMT intends to seek a joint venture with others for the manufacture and
marketing of its products and seeks broader industrial applications for its
proprietary technologies. It will also seek to retain a new general manager for
the FMT operations.
The Company together with its subsidiaries MRUSA, MRPL and FMT are
collectively referred to as the "Company" unless otherwise specifically
indicated.
The following organizational chart is intended and designed as an
overview (summary only) of the Company's structure and its division of corporate
responsibilities and operations between certain designated business areas and
persons. This information is qualified in its entirety by the more detailed
information appearing herein and in the consolidated Notes to the Company's
consolidated financial statements.
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ABS GROUP INC ORGANIZATION & OPERATIONS O1998
ABS GROUP INC.
(Delaware Corporation)
Board of Directors/Officers
Emanuel A. Floor - President, CEO, Treasurer & Director
Oleg Batratchenko - Secretary & Director
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INVESTMENTS OPERATIONS
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DEVELOPMENT OF THERAPEUTIC DRUGS NATURAL PRODUCTS FOR WELLNESS AND INNOVATIONS IN MICROBIOLOGY AND
AND MEDICINES FITNESS LABORATORY MONITORS
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DBD COMPANY LLC MARINE RESEARCH FUTURE MEDICAL TECHNOLOGIES, INC.
(DBD) USA, INC. (MARINE USA) (FMT)
40% Interest 80.0% Subsidiary Wholly Owned Subsidiary
(New York Limited Company) (Utah Corporation) (New Jersey Corporation)
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HEALTHLINK INTERNATIONAL
(d.b.a. for Marine Research
MARINE RESEARCH PTYLTD
(Australia Limited Company)
Wholly Owned by MARINE USA
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VENTURE MANAGER OFFICERS & DIRECTORS OFFICERS & DIRECTORS
Biopharmaceutics, Inc. MARINE RESEARCH USA, INC. Emanuel A. Floor,
Ed Fine, President Samuel J. Grant President, Treasurer & Director
President & Director Oleg Batratchenko,
OFFICES Emanuel A. Floor, Vice President, Secretary & Director
BELLPORT, NEW YORK Treasurer & Director
HEALTHLINK INTERNATIONAL OFFICES
CONSULTANTS Tim Apgood, Managing Director Salt Lake City, Utah
Ehrreich Consulting Group MARINE RESEARCH PTY LTD
FDA Liaison & Filings & Samuel J. Grant, Managing Director. Company is conducting a search
Scientific Advisory Boards OFFICES for a new general manager and
Salt Lake City, Utah effective April 1 has relocated
Castletown, Queensland Australia from Boulder Co. to Salt Lake
City, Utah
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Venture with Biopharmaceutics, Inc. Manufacturing and Marketing of Manufacture and Marketing of
(New York) for the development, products using Sea Cucumber or monitors and related equipment
manufacturing, regulatory "Beche-de-Mer" which are marketed and media for membrane filtration
processing and rights to in capsule form as therapeutic and other microbiological liquid
commercially exploit drugs in Australia and as filtration and culturing and
Dibromodulcitol (DBD) as a drug for nutritional supplements in the development and sale of advanced
treatment of brain and cervical United States for relief from line of disposables useful in
cancer. Phase III Clinical Trials arthritis and muscular pain and in Quantitation and Presumptive
complete. As a result of informal gel form as a nutritional Identification of most bacterial
review with NDA and DBD scientists supplement useful in boosting pathogens. Products sold to food
in February, an NDA application is immune system. HealthLink markets industries and others to validate
being prepared for filing in 1998. products through a catalog in that products are bacteria free.
A Pharmacokenetic Study to be offices of medical professionals. Company seeking additional uses
completed prior to filing. Drug Research continues on use of gel for equipment in general
expected to be marketed in 1999. for AIDS and Cancer Patients and industrial application.
other groups.
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C. EMPLOYEES
At the present time ADBS' staff consists of its two officers and
directors. FMT has two employees while MRUSA and MRPL employ an aggregate of
five persons (each inclusive of their officers and directors).
ITEM 2. DESCRIPTION OF PROPERTY
Through March 31, 1997 the Company maintained its executive offices at
the home of its President (Emanuel A. Floor) at 2936 Sierra Point Place, Salt
Lake City, Utah 84109 (on a rent free basis through December 31, 1995) and its
telephone number was and remains 801-521-8000. During 1997, the Company paid
Emanuel A. Floor and Associates (an affiliate of Mr. Floor) approximately $3,000
for use of the office space, phones, mail and postage and other office
facilities and/or expenses.
Effective April 1, 1997, the Company established its Corporate
headquarters as well as its United States office for both MRUSA and MRPL in
space leased from unrelated third parties at 818 East South Temple Street, Salt
Lake City, Utah 84102. Its telephone number continues to be 801-521-8000. Its
fax number is 801-532-2160.
Under terms of the three-year lease, the Company is obligated to pay
$21,600 for the first year, $22,800 for the second year and $23,400 for the
third year. The company has paid a security deposit of $11,000; the equivalent
of approximately six months rent. A portion of this sum, $5,500, will be
credited against the monthly rent at the rate of $157.77 per month for the term
and the balance will be credited to the Company on return of the premises in
good order.
Effective April 1, 1998, the Company relocated the offices and
operations of FMT to its Corporate offices in Salt Lake City. FMT's telephone
number is 801-521-5515 and its fax number is 801-532-2160.
In December of 1996, FMT, a wholly owned subsidiary of the Company,
entered into a two-year lease with an unrelated third party for office space in
Boulder, Colorado. Occupancy of the space was effective February 1, 1997. Rental
charges for the space is $49,200 to be paid at the rate of $2,000 per month for
the first year and $2,100 per month for the second year. FMT deposited $12,000
with the landlord as a security deposit and to prepay three specific months of
the lease. As of March 31, 1998, FMT and ABS Group were released from the lease
with no penalty. There remains approximately $10,000 in the security deposit
and, subject to possible offsets for move out cleanup cost, the Company should
receive the bulk of the remaining deposit as a refund in June of 1998.
For further information regarding Company obligations with respect to
leasing of office space under various operating lease agreements, reference is
made to Note 8 to the Company's consolidated financial statements.
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ITEM 3. LEGAL PROCEEDINGS
The Company is not presently a party to any material litigation nor, to
the knowledge of management, is any material litigation threatened.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company has not held an annual meeting of stockholders throughout
calendar years 1992 - 1997 inclusive. While the Company does currently intend to
hold an annual meeting of stockholders for its calendar year ended December 31,
1997 it has not, as yet, formalized any specific plans as to any proposed date
or site for such meeting.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
(a) Marketing Information. The following table sets forth, for the
periods indicated, the range of high and low bid prices on the dates indicated
for the Company's securities indicated below for each full quarterly period
within the two most recent calendar years (if applicable) and any subsequent
interim period for which financial statements are included and/or required to be
included.
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Calendar Year Ended December 31, 1996 Quarterly Common Stock Price
By Quarter Ranges (1) (2)
Quarter Date High Low
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1st March 31, 1996 $ .015 $ .015
2nd June 30, 1996 $ .22 $ .015
3rd September 30, 1996 $ 3.25 $ .50
4th December 31, 1996 $ 4.50 $ 3.00
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Calendar Year Ended December 31, 1997 Quarterly Common Stock Price
By Quarter Ranges (1)
Quarter Date High Low
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1st March 31, 1997 $ 5.00 $ 3.00
2nd June 30, 1997 $ 4.00 $ 3.125
3rd September 30, 1997 $ 3.50 $ 2.75
4th December 31, 1997 $ 2.625 $ 1.625
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Calendar Year Ended December 31, 1998 Quarterly Common Stock Price
By Quarter Ranges (1)(2)(3)
Quarter Date High Low
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1st March 31, 1998 $ 1.625 $ .875
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(1) The existence of limited or sporadic quotations should not of itself be
deemed to constitute an "established public trading market". To the
extent that limited trading in the Company's Common Stock has taken
place, such transactions have been limited to the over-the-counter
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market (except as otherwise may be indicated hereinafter). All prices
indicated herein are as reported to the Company by broker-dealer(s)
making a market in its securities in the National Quotation Data
Service ("pink sheets") and/or in the Electronic Over-the-Counter
Bulletin Board (the latter under the symbol ADBS). The aforesaid
securities were not traded or quoted on any automated quotation system
(other than as may be indicated herein). The over-the-counter market
quotes indicated above reflect inter-dealer prices, without retail
mark-up, mark-down or commission, and may not necessarily represent
actual transactions.
(2) On or about August 16, 1996 the Company effectuated a 1 for 30 reverse
split of its then outstanding shares of common stock. Prices indicated
commencing with the quarter ended September 30, 1996 reflect such
reverse split.
(3) Trading has been on a sporadic basis with limited, if any, trading
volume (on certain dates). Reported volume during the most recent
quarter ended March 31, 1998 exceeded 5,000 shares on only six
occasions, with such volume exceeding 10,000 shares on only four
occasions.
(b) Holders. As of March 31, 1998, the approximate number of
stockholders of the Company's Common Stock (as indicated on its transfer agent's
March 31, 1998 certified list of stockholders) amounted to 171 persons and/or
firms (inclusive of those brokerage firms and/or clearing houses and/or
depository companies holding the Company's securities for their respective
clientele - each such brokerage house, clearing house and/or depository firm
being considered as one record holder). The exact number of beneficial owners of
the Company's securities is not known but would necessarily exceed the number of
record owners indicated above in that brokerage firms and/or clearing house
and/or depository companies are normally record owners for presumably any number
of unidentified beneficial owners.
(c) Dividends. The payment by the Company of dividends, if any, in the
future rests within the discretion of its Board of Directors and will depend,
among other things, upon the Company's earnings, its capital requirements and
its financial condition, as well as other relevant factors. The Company has not
paid or declared any dividends upon its Common Stock since its inception and, by
reason of its present financial status and its contemplated financial
requirements , does not contemplate or anticipate paying any dividends upon its
Common Stock in the foreseeable future.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS
The Company's intentions as expressed herein 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 ultimate objective of benefiting the Company's
stockholders. Its initial joint venture with BIO (entered into in September
1996) and its subsequent acquisitions in November and December 1996 as well as
the various monetary and
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other obligations assumed thereunder are summarized in Item 1 hereto with
further details appearing in the applicable Notes to the consolidated financial
statements. Such consolidated financial statements include those of ABS Group
Inc. and its subsidiaries, Future Medical Technologies, Inc. ("FMT"), 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/or liquidity/cash flows
of the Company during the calendar years ended December 31, 1996 (if applicable)
and 1997 and should be read in conjunction with the consolidated financial
statements and notes thereto included in such report.
The discussion appearing hereinafter with respect to the consolidated
statements of operations does not contain comparable information and no analysis
of same is being given herein since it is not properly susceptible to narrative
comparison by virtue of the facts that (a) as indicated in Item 1 of this Form
10-KSB, the Company was basically inactive from the time that it discontinued
operations in 1992 until the time that it was reactivated during late 1996 and
(b) from inception through December 31, 1996 it had insignificant revenues from
operations aggregating $17,812 all of which was during 1996. For reasons
comparable to those heretofore stated directly above, no comparable information
is provided herein with respect to the Company's consolidated balance sheet.
CONSOLIDATED STATEMENTS OF OPERATIONS
For the calendar year ended December 31, 1997
Sales for the calendar year ended December 31, 1997 were $ 273,842
while cost of sales amounted to $ 207,126 resulting in a gross margin for
calendar year 1997 of $ 66,716. Expenses amounted to $ 1,721,681 of which
general and administrative expenses accounted for approximately 88%. Primarily
as a result of the above, the net loss for calendar year ended December 31, 1997
was $(1,708,905) thereby increasing the Company's deficit accumulated during
development stage to $(11,433,502) at December 31, 1997.
CONSOLIDATED BALANCE SHEET AS AT DECEMBER 31, 1997
Total assets of the Company at calendar year ended December 31, 1997
were $ 2,086,700 of which a $ 841,204 investment in joint venture and $ 683,851
patents/intellectual property accounted for approximately 40% and 33% thereof.
Total current assets amounted to $181,946 while total current liabilities
amounted to $549,322 thereby creating a working capital deficit of $(367,376).
The aforesaid current liabilities of $ 549,322 consisted principally of
accounts payable of $339,487 and the current portion of notes payable of
$ 162,322. The long-term portion of such notes payable - to wit: $ 105,000 is
the only long-term liability of the Company (excepting for a capital lease
obligation of $2,261) and total liabilities as at December 31, 1997 amounted to
$656,583. See also Note 5 to consolidated financial statements.
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As at December 31, 1997 the Company's accumulated deficit amounted to
$(11,433,502) while total stockholders' equity amounted to $ 1,336,480.
CASH REQUIREMENTS AND LIQUIDITY
As indicated in the consolidated statements of stockholders' equity and
most particularly in that portion thereof which refers to transactions during
the 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 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 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 that 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 in accordance with the new
rules governing transactions of this nature.
See Note 5 to audited financial statements regarding notes payable
aggregating $267,322, which notes payable primarily represent loans made and/or
debt financing.
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 8, 1998 accompanying such consolidated
financial statements and the loss most recently incurred during the calendar
year ended December 31, 1997 of $1,708,905. Company management nevertheless
continues to believe 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) the belief 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.
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
-14-
<PAGE> 15
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.
ITEM 7. FINANCIAL STATEMENTS
The following consolidated financial statements have been prepared in
accordance with the requirements of Regulation S-X and supplementary financial
information included herein, if any, has been prepared in accordance with Item
302 of Regulation S-K, such information appears on pages F-1 through F-25
inclusive of this Form 10-KSB, which pages follow this page.
ABS GROUP INC
December 31, 1997 AND 1996
CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Independent Auditor's Report F-1
Consolidated Balance Sheets F-2
Consolidated Statements of Operations F-4
Consolidated Statements of Stockholder's Equity (Deficit) F-5
Consolidated Statements of Cash Flows F-13
Notes to the Consolidated Financial Statements F-16 - F-25
</TABLE>
-15-
<PAGE> 16
INDEPENDENT AUDITORS' REPORT
The Board of Directors
ABS Group Inc.
(Formerly Advanced Biological Systems, Inc.)
Salt Lake City, Utah
We have audited the accompanying consolidated balance sheets of ABS Group Inc.
(formerly Advanced Biological Systems, Inc.) (a development stage company) and
subsidiaries as of December 31, 1997 and 1996 and the related consolidated
statements of operations, stockholders' equity and cash flows for the years
ended December 31, 1997, 1996 and 1995 and from the date of inception on October
3, 1988 through December 31, 1997. These consolidated financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
consolidated financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of ABS
Group Inc. (formerly Advanced Biological Systems, Inc.) (a development stage
company) and subsidiaries as of December 31, 1997 and 1996 and the results of
their operations and their cash flows for the years ended December 31, 1997,
1996 and 1995, and from the date of inception on October 3, 1988 through
December 31, 1997 in conformity with generally accepted accounting principles.
The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 9 to the
consolidated financial statements, the Company is a development stage company
with no significant operating revenues to date. These conditions raise
substantial doubt about its ability to continue as a going concern. Management's
plans concerning these matters are also described in Note 9. The consolidated
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
/s/ Jones, Jensen & Company
Jones, Jensen & Company
Salt Lake City, Utah
April 9, 1998
F-1
<PAGE> 17
ABS GROUP INC.
(Formerly Advanced Biological Systems, Inc.)
(A Development Stage Company)
Consolidated Balance Sheets
ASSETS
<TABLE>
<CAPTION>
December 31,
------------------------------
1997 1996
---------- ----------
<S> <C> <C>
CURRENT ASSETS
Cash $ 1,906 $ 65,977
Accounts receivable (Note 1) 5,782 30,293
Inventories (Note 1) 168,951 87,992
Prepaid expenses 4,080 2,060
Advances to employees 1,227 --
---------- ----------
Total Current Assets 181,946 186,322
---------- ----------
PROPERTY AND EQUIPMENT (Note 2) 174,921 107,593
---------- ----------
OTHER ASSETS
Investment in joint venture (Note 3) 841,204 698,953
Patents/intellectual property (Note 4) 683,851 724,334
Deposits 19,769 12,997
Goodwill (Note 1) 185,009 205,566
---------- ----------
Total Other Assets 1,729,833 1,641,850
---------- ----------
TOTAL ASSETS $2,086,700 $1,935,765
========== ==========
</TABLE>
The accompanying notes are an integral part of
these consolidated financial statements.
F-2
<PAGE> 18
ABS GROUP INC.
(Formerly Advanced Biological Systems, Inc.)
(A Development Stage Company)
Consolidated Balance Sheets
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
December 31,
-----------------------------------
1997 1996
------------ ------------
<S> <C> <C>
CURRENT LIABILITIES
Accounts payable $ 339,487 $ 335,395
Accrued expenses 46,368 --
Related party payable (Note 7) 22,322 --
Capital lease obligation, current (Note 11) 1,145 --
Notes payable, current (Note 5) 140,000 100,564
------------ ------------
Total Current Liabilities 549,322 435,959
------------ ------------
LONG-TERM LIABILITIES
Capital lease obligation (Note 11) 2,261 --
Notes payable (Note 5) 105,000 200,000
------------ ------------
Total Long-Term Liabilities 107,261 200,000
------------ ------------
Total Liabilities 656,583 635,959
------------ ------------
MINORITY INTEREST IN CONSOLIDATED
SUBSIDIARIES 93,637 132,141
------------ ------------
COMMITMENTS AND CONTINGENCIES (Notes 3 and 8)
STOCKHOLDERS' EQUITY
Common stock, 10,000,000 shares
authorized at $0.0001 par value;
4,165,363 and 3,293,935 shares
issued and outstanding, respectively 417 329
Capital in excess of par value 12,776,480 10,891,924
Foreign currency translation (6,915) 9
Deficit accumulated during the development stage (11,433,502) (9,724,597)
------------ ------------
Total Stockholders' Equity 1,336,480 1,167,665
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $ 2,086,700 $ 1,935,765
============ ============
</TABLE>
The accompanying notes are an integral part of
these consolidated financial statements.
F-3
<PAGE> 19
<TABLE>
<CAPTION>
ABS GROUP INC.
(Formerly Advanced Biological Systems, Inc.)
(A Development Stage Company)
Consolidated Statements of Operations
From Inception
on October 3,
For the Years Ended December 31, 1988 Through
------------------------------------------------------ December 31,
1997 1996 1995 1997
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
SALES $ 273,842 $ 17,812 $ -- $ 385,135
COST OF SALES 207,126 5,209 -- 305,816
------------ ------------ ------------ ------------
GROSS MARGIN 66,716 12,603 -- 79,319
------------ ------------ ------------ ------------
EXPENSES
Depreciation and amortization 86,754 6,845 -- 93,599
Bad debt expense 7,729 -- -- 7,729
Rent 81,423 12,000 -- 93,423
Research and development 28,373 580 -- 28,953
General and administrative 1,517,402 1,267,692 -- 2,785,094
------------ ------------ ------------ ------------
Total Expenses 1,721,681 1,287,117 -- 3,008,798
------------ ------------ ------------ ------------
LOSS FROM OPERATIONS (1,654,965) (1,274,514) -- (2,929,479)
------------ ------------ ------------ ------------
OTHER INCOME (EXPENSE)
Interest income 4,654 108 -- 4,762
Interest expense (30,599) (711) -- (31,310)
Loss on investment (Note 3) (107,749) (26,047) -- (133,796)
------------ ------------ ------------ ------------
Total Other Income (Expense) (133,694) (26,650) -- (160,344)
------------ ------------ ------------ ------------
LOSS BEFORE DISCONTINUED
OPERATIONS AND MINORITY
INTEREST (1,788,659) (1,301,164) -- (3,089,823)
LOSS ON DISCONTINUED
OPERATIONS -- (80,196) (45,058) (8,425,042)
MINORITY INTEREST IN LOSS 79,754 1,609 -- 81,363
------------ ------------ ------------ ------------
NET LOSS $ (1,708,905) $ (1,379,751) $ (45,058) $(11,433,502)
------------ ============ ============ ============
NET LOSS PER SHARE $(0.46) $ (0.98) $(0.11)
============ ============ ============
WEIGHTED AVERAGE SHARES
OUTSTANDING 3,754,703 1,401,599 428,621
============ ============ ============
The accompanying notes are an integral part of these consolidated financial statements.
F-4
</TABLE>
<PAGE> 20
<TABLE>
<CAPTION>
ABS GROUP INC.
(Formerly Advanced Biological Systems, Inc.)
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity
Deficit
Accumulated
Common Stock Capital in Foreign During the
-------------------------- Excess of Currency Development
Shares Amount Par Value Translation Stage
----------- ----------- ----------- ------------ -----------
<S> <C> <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)
----------- ----------- ----------- ------------ -----------
The accompanying notes are an integral part of these consolidated financial statements.
F-5
</TABLE>
<PAGE> 21
<TABLE>
<CAPTION>
ABS GROUP INC.
(Formerly Advanced Biological Systems, Inc.)
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity (Continued)
Deficit
Accumulated
Common Stock Capital in Foreign During the
-------------------------- Excess of Currency Development
Shares Amount Par Value Translation Stage
----------- ----------- ----------- ------------ -----------
<S> <C> <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)
----------- ----------- ----------- ------------ -----------
The accompanying notes are an integral part of these consolidated financial statements.
F-6
</TABLE>
<PAGE> 22
<TABLE>
<CAPTION>
ABS GROUP INC.
(Formerly Advanced Biological Systems, Inc.)
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity (Continued)
Deficit
Accumulated
Common Stock Capital in Foreign During the
-------------------------- Excess of Currency Development
Shares Amount Par Value Translation Stage
----------- ----------- ----------- ------------ -----------
<S> <C> <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)
----------- ----------- ----------- ------------ -----------
The accompanying notes are an integral part of these consolidated financial statements.
F-7
</TABLE>
<PAGE> 23
<TABLE>
<CAPTION>
ABS GROUP INC.
(Formerly Advanced Biological Systems, Inc.)
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity (Continued)
Deficit
Accumulated
Common Stock Capital in Foreign During the
-------------------------- Excess of Currency Development
Shares Amount Par Value Translation Stage
----------- ----------- ----------- ------------- -----------
<S> <C> <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)
----------- ----------- ----------- ------------- -----------
The accompanying notes are an integral part of these consolidated financial statements.
F-8
</TABLE>
<PAGE> 24
<TABLE>
<CAPTION>
ABS GROUP INC.
(Formerly Advanced Biological Systems, Inc.)
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity (Continued)
Deficit
Accumulated
Common Stock Capital in Foreign During the
-------------------------- Excess of Currency Development
Shares Amount Par Value Translation Stage
----------- ----------- ----------- ------------- -----------
<S> <C> <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 April 10, 1996
in private placement at
approximately $1.50 per share 33,333 4 34,996 -- --
Shares issued May 17, 1996
in private placement at
approximately $1.50 per share 3,333 -- 5,000 -- --
Shares issued May 17, 1996
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 $1.00 per share (Note 3) 425,000 43 424,957 -- --
Shares issued September 27, 1996
for options exercised valued at
$0.15 per share 1,000 -- -- -- --
----------- ----------- ----------- ------------- -----------
Balance forward 1,355,374 $ 136 $ 8,788,979 $ -- $(8,344,846)
----------- ----------- ----------- ------------- -----------
The accompanying notes are an integral part of these consolidated financial statements.
F-9
</TABLE>
<PAGE> 25
<TABLE>
<CAPTION>
ABS GROUP INC.
(Formerly Advanced Biological Systems, Inc.)
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity (Continued)
Deficit
Accumulated
Common Stock Capital in Foreign During the
-------------------------- Excess of Currency Development
Shares Amount Par Value Translation Stage
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Balance forward 1,355,374 $ 136 $ 8,788,979 $ -- $(8,344,846)
Shares issued September 30, 1996
for services rendered valued at
$0.79 per share 1,000,000 100 789,900 -- --
Capital contributed by a
stockholder -- -- 25,000 -- --
Shares issued October 1996 for
cash at an average price of
approximately $1.38 per share 333,333 33 459,967 -- --
Shares issued October 10, 1996
to settle shareholder payable
at $1.00 per share 5,000 -- 5,000 -- --
Shares issued to acquire
subsidiary (Note 1) 500,000 50 500,088 -- --
Shares issued December 30, 1996
for cash at $2.50 per share 100,000 10 249,990 -- --
Stock offering costs (Note 1) -- -- (90,000) -- --
Fractional shares resulting from
reverse stock split 228 -- -- -- --
Options granted with an exercise
price below current market price
of common stock (Note 6) -- -- 163,000 -- --
Change in foreign currency
translation -- -- -- (6,915) --
Net loss for the year ended
December 31, 1996 -- -- -- -- (1,379,751)
----------- ----------- ----------- ----------- -----------
Balance, December 31, 1996 3,293,935 $ 329 $10,891,924 $ (6,915) $(9,724,597)
----------- ----------- ----------- ----------- -----------
The accompanying notes are an integral part of these consolidated financial statements.
F-10
</TABLE>
<PAGE> 26
<TABLE>
<CAPTION>
ABS GROUP INC.
(Formerly Advanced Biological Systems, Inc.)
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity (Continued)
Deficit
Accumulated
Common Stock Capital in Foreign During the
-------------------------- Excess of Currency Development
Shares Amount Par Value Translation Stage
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1996 3,293,935 $ 329 $10,891,924 $ (6,915) $(9,724,597)
Shares issued on January 16, 1997
in private placement at
$2.00 per share 12,500 1 24,999 -- --
Shares issued on February 5, 1997
in private placement of
$2.00 per share 7,150 1 14,299 -- --
Shares issued on February 6, 1997
in private placement of
$2.00 per share 7,150 1 14,299 -- --
Shares issued on February 13, 1997
in private placement at
$2.50 per share 400,000 40 999,960 -- --
Shares issued on March 3, 1997
in private placement at
approximately $2.50 per share 6,295 1 15,738 -- --
Shares issued on March 10, 1997
in private placement at
$2.50 per share 20,000 2 49,998 -- --
Shares issued on March 25, 1997
in private placement at
$2.00 per share 8,129 1 16,257 -- --
Shares issued March 31, 1997
for options exercised at
$0.15 per share 5,000 -- 750 -- --
Shares issued on April 10, 1997
in private placement at
$2.50 per share 5,204 1 13,009 -- --
----------- ----------- ----------- ----------- -----------
Balance forward 3,765,363 $ 377 $12,041,233 $ (6,915) $(9,724,597)
----------- ----------- ----------- ----------- -----------
The accompanying notes are an integral part of these consolidated financial statements.
F-11
</TABLE>
<PAGE> 27
<TABLE>
<CAPTION>
ABS GROUP INC.
(Formerly Advanced Biological Systems, Inc.)
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity (Continued)
Deficit
Accumulated
Common Stock Capital in Foreign During the
---------------------------- Excess of Currency Development
Shares Amount Par Value Translation Stage
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Balance forward 3,765,363 $ 377 $ 12,041,233 $ (6,915) $ (9,724,597)
Shares issued on June 6, 1997
in private placement at
$2.00 per share 25,000 2 49,998 -- --
Shares issued on June 13, 1997
in private placement at
$2.00 per share 50,000 5 99,995 -- --
Shares issued on August 11, 1997
in private placement at
$2.00 per share 10,000 1 19,999 -- --
Shares issued on August 20, 1997
in private placement at
$2.00 per share 5,000 1 9,999 -- --
Shares issued September 30, 1997
for options exercised at
$0.15 per share 10,000 1 1,499 -- --
Shares issued December 30, 1997
in settlement of a note payable and
accrued interest at approximately
$0.84 per share 300,000 30 250,970 -- --
Stock offering costs (Note 1) -- -- (170,146) -- --
Options granted with an exercise
price below current market price
of common stock (Note 6) -- -- 472,933 -- --
Change in foreign currency
translation -- -- -- 6,924 --
Net loss for the year ended
December 31, 1997 -- -- -- -- (1,708,905)
------------ ------------ ------------ ------------ ------------
Balance, December 31, 1997 4,165,363 $ 417 $ 12,776,480 $ 9 $(11,433,502)
============ ============ ============ ============ ============
The accompanying notes are an integral part of these consolidated financial statements.
F-12
</TABLE>
<PAGE> 28
<TABLE>
<CAPTION>
ABS GROUP INC.
(Formerly Advanced Biological Systems, Inc.)
(A Development Stage Company)
Consolidated Statements of Cash Flows
From Inception
On October 3,
For the Years Ended December 31, 1988 Through
--------------------------------------------- December 31,
1997 1996 1995 1997
------------ ------------ ---------- --------------
<S> <C> <C> <C> <C>
CASH FLOWS FROM
OPERATING ACTIVITIES
Net loss from operations $ (1,708,905) $ (1,379,751) $ (45,058) $(11,433,502)
Adjustments to reconcile net loss to net
cash used by operating activities:
Depreciation and amortization 86,754 6,845 -- 96,642
Bad debt expense 7,729 -- -- 7,729
Stock and options issued for services rendered 472,933 955,100 -- 1,428,033
Loss on investment in joint venture 107,749 26,047 -- 133,796
Stock issued in settlement of debt -- -- -- 1,413,320
Loss on disposition of assets -- -- -- 3,206,791
Foreign currency translation (6,924) -- -- (6,924)
Minority interest (79,754) -- -- (79,754)
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable 16,783 (16,334) -- 449
(Increase) decrease in prepaids and advances (3,247) -- -- (3,247)
(Increase) decrease in deposits (6,772) -- -- (6,772)
(Increase) decrease in inventory (80,959) (40,675) -- (121,634)
Increase (decrease) in accrued expenses 113,618 -- -- 113,618
Increase (decrease) in accounts payable 4,092 185,706 (40,881) 258,227
------------ ------------ --------- ------------
Net Cash (Used) by
Operating Activities $ (1,076,903) $ (263,062) $ (85,939) $ (4,993,228)
------------ ------------ --------- ------------
The accompanying notes are an integral part of these consolidated financial statements.
F-13
</TABLE>
<PAGE> 29
<TABLE>
<CAPTION>
ABS GROUP INC.
(Formerly Advanced Biological Systems, Inc.)
(A Development Stage Company)
Consolidated Statements of Cash Flows (Continued)
From Inception
On October 3,
For the Years Ended December 31, 1988 Through
------------------------------------------------- December 31,
1997 1996 1995 1997
----------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
CASH FLOWS FROM
INVESTING ACTIVITIES
Investment in joint venture $ (250,000) $ (300,000) $ -- $ (550,000)
Cash acquired through investment in subsidiary -- 2,022 -- 2,022
Purchase of subsidiaries -- (108,731) -- (108,731)
Purchase of product marketing rights -- -- -- (1,250)
Purchase of fixed assets (88,916) -- -- (99,700)
Purchase of promotional video -- -- -- (50,000)
----------- ----------- ----------- -----------
Net Cash (Used) by Investing Activities (338,916) (406,709) -- (807,659)
----------- ----------- ----------- -----------
CASH FLOWS FROM FINANCING
ACTIVITIES
Capital contributed by shareholder -- 25,000 -- 25,000
Payments on capital leases (721) -- -- (721)
Payments on loans (75,564) -- -- (75,564)
Proceeds from loans 267,322 5,000 31,500 665,462
Proceeds from sale of common stock 1,160,711 660,150 100,000 5,188,616
----------- ----------- ----------- -----------
Net Cash Provided by Financing Activities 1,351,748 690,150 131,500 5,802,793
----------- ----------- ----------- -----------
NET INCREASE (DECREASE) IN
CASH AND CASH EQUIVALENTS (64,071) 20,379 45,561 1,906
CASH AND CASH EQUIVALENTS
AT BEGINNING OF PERIOD 65,977 45,598 37 --
----------- ----------- ----------- -----------
CASH AND CASH EQUIVALENTS
AT END OF PERIOD $ 1,906 $ 65,977 $ 45,598 $ 1,906
=========== =========== =========== ===========
The accompanying notes are an integral part of these consolidated financial statements.
F-14
</TABLE>
<PAGE> 30
<TABLE>
<CAPTION>
ABS GROUP INC.
(Formerly Advanced Biological Systems, Inc.)
(A Development Stage Company)
Consolidated Statements of Cash Flows (Continued)
From Inception
On October 3,
For the Years Ended December 31, 1988 Through
---------------------------------------------- December 31,
1997 1996 1995 1997
---------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
SUPPLEMENTAL DISCLOSURES
OF CASH FLOW INFORMATION
Interest paid $ 30,599 $ 711 $ -- $ 31,310
Income taxes paid $ -- $ -- $ -- $ --
NON-CASH FINANCING
ACTIVITIES
Stock issued for note payable $ 225,000 $ -- $ -- $2,723,750
Stock issued for accrued interest $ 26,000 $ -- $ -- $ 26,000
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 $ -- $ 7,100 $140,398 $1,560,818
Stock and options issued for
services rendered $ 472,933 $ 955,100 $ -- $1,428,033
Stock issued for acquisition
of subsidiary $ -- $ 500,138 $ -- $ 500,138
Stock issued for investment
in joint venture $ -- $ 425,000 $ -- $ 425,000
Accrued salaries contributed
by a shareholder to the
Company $ 41,250 $ -- $ -- $ 41,250
The accompanying notes are an integral part of these consolidated financial statements.
F-15
</TABLE>
<PAGE> 31
ABS GROUP INC.
(Formerly Advanced Biological Systems, Inc.)
(A Development Stage Company)
Notes to the Consolidated Financial Statements
December 31, 1997 and 1996
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Organization
The consolidated financial statements include those of ABS
Group Inc. (formerly Advanced Biological Systems, Inc.)
(Formerly Advanced Biological Systems, Inc.) and its
subsidiaries Future Medical Technologies, Inc. (FMT), Marine
Research USA, Inc. (MRUSA) and Marine Research Pty Ltd.
(MRPL). Collectively, they are referred to herein as "the
Company." All intercompany accounts and transactions have
been eliminated.
ABS Group Inc. (formerly Advanced Biological Systems, Inc.)
was incorporated under the laws of the State of Delaware on
October 3, 1988, discontinued operations during 1992, and was
inactive until 1996. During 1996, the Company acquired FMT,
MRUSA and MRPL. The Company is currently engaged in the
production and sale of nutritional supplements and
microbiological testing kits.
On December 31, 1996, the Company purchased FMT by assuming
debt in the amount of $300,564 and by paying $73,731 in cash.
The acquisition resulted in fixed assets being revalued to
their fair market value of $55,200. The purchase of FMT
resulted in the creation of goodwill of $205,566.
Future Medical Technologies, Inc. was incorporated under the
laws of the State of New Jersey on September 28, 1989 for the
purpose of developing technology relating to microbiological
testing of water, beverages and food.
On November 7, 1996, the Company entered into an Asset
Acquisition and Financing Agreement with Marine Research USA,
Inc., Marine Research Pty. Ltd. and Samuel J. Grant, whereby
the Company issued 500,000 shares of its restricted common
stock to Mr. Grant as an inducement for him to transfer
certain intellectual property and operating equipment to
MRPL. As a result of the transaction, MRUSA became owner of
100% of the issued and outstanding shares of MRPL. The
Company became 80% owner of MRUSA and Mr. Grant became 20%
owner of MRUSA. The consolidated results of operations of
MRUSA from November 7, 1996 through December 31, 1996 are
included in the consolidated statements of operations of the
Company.
Marine Research USA (MRUSA) was incorporated in the State of
Utah on November 6, 1996 for the purpose of facilitating the
purchase of Marine Research Pty. Ltd. by ABS Group Inc.
(formerly Advanced Biological Systems, Inc.) MRUSA owns 100%
of the issued and outstanding stock of Marine Research Pty.
Ltd.
Marine Research Pty Ltd. (MRPL) was incorporated under the
laws of the State of Queensland Australia on February 22,
1991 under the name of Myalldeen Pty. Ltd. MRPL was inactive
until November of 1996 when it was purchased by MRUSA. Since
that time, MRPL has been engaged in the production and sale
of registered therapeutic products in Australia and a
nutritional supplement outside of Australia, the primary
ingredient of which is Sea Cucumber.
b. Accounting Method
The Company's financial statements are prepared using the
accrual method of accounting. The Company has elected a
calendar year end.
F-16
<PAGE> 32
ABS GROUP INC.
(Formerly Advanced Biological Systems, Inc.)
(A Development Stage Company)
Notes to the Consolidated Financial Statements
December 31, 1997 and 1996
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
c. Loss Per Share
The computation of loss per share of common stock is based on
the weighted average number of shares outstanding during the
period.
d. Deferred Offering Costs
In connection with the public offering of the Company's
common stock, all costs were accumulated as deferred charges.
The deferred charges were offset against capital in excess of
par value upon successful completion of the offering.
e. Cash Equivalents
The Company considers all highly liquid investments with a
maturity of three months or less when purchased to be cash
equivalents.
f. Income Taxes
No provision for income taxes has been accrued because the
Company has net operating losses from inception. Net
operating loss carryforwards of approximately $11,400,000 at
December 31, 1997, expire in 2012. No tax benefit has been
reported in the financial statements because the Company is
uncertain if the carryforwards will expire unused.
Accordingly, the potential tax benefits are offset by a
valuation account of the same amount.
g. Stock Split
On November 15, 1989, the Company effected a forward split of
its common shares outstanding on a 4-for-1 basis in the form
of a stock dividend. On June 29, 1992, the Company effected a
reverse stock split of its common shares outstanding on a
1-for-3 basis. On August 14, 1996, the Company effected an
additional reverse stock split of its common shares
outstanding on a 1-for-30 basis. The financial statements
have been restated retroactively to reflect the effects to
these stock splits.
h. Inventories
Inventories consist of finished goods held for sale which are
stated at the lower of cost or market, with cost determined
on a first-in, first-out basis and market based on the lower
of replacement cost or realizable value.
i. Accounts Receivable
The Company provides an allowance for losses on trade
receivables based on a review of the current status of
existing receivables and management's evaluation of periodic
aging of accounts. Accounts receivable are shown net of a
$17,448 and $9,719 allowance for doubtful accounts at
December 31, 1997 and 1996, respectively.
F-17
<PAGE> 33
ABS GROUP INC.
(Formerly Advanced Biological Systems, Inc.)
(A Development Stage Company)
Notes to the Consolidated Financial Statements
December 31, 1997 and 1996
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
j. Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could
differ from those estimates.
k. Depreciation
Property and equipment are depreciated using the
straight-line method over their estimated useful lives of
five to ten years. (Note 2)
l. Amortization
Goodwill and other intangibles are amortized over their
estimated lives of 10 years. Amortization expense for the
years ended December 31, 1997 and 1996 was $61,039 and
$5,038, respectively.
NOTE 2 - PROPERTY AND EQUIPMENT
Major classifications of property and equipment are as
follows:
<TABLE>
<CAPTION>
December 31,
------------------------------
1997 1996
--------- ---------
<S> <C> <C>
Production equipment $ 79,384 $ 47,760
Office equipment 62,553 11,640
Leasehold improvements 10,506 --
Product molds 50,000 50,000
--------- ---------
202,443 109,400
Less accumulated depreciation (27,522) (1,807)
--------- ---------
$ 174,921 $ 107,593
========= =========
</TABLE>
Depreciation expense for the years ended December 31, 1997
and 1996 was $25,715 and $1,807, respectively.
NOTE 3 - 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 for which BIO holds
the rights to manufacture and market. The two companies
formed DBD Company LLC (DBD) to accomplish this. BIO
sublicensed its rights to the drug and is responsible for the
management of the day-to-day operations of DBD. The Company
is obliged to contribute cash to DBD totaling $1,000,000. As
of December 31, 1997 the Company had contributed $400,000 to
DBD. The balance of $600,000 is to be paid during 1998 on an
as needed basis.
F-18
<PAGE> 34
ABS GROUP INC.
(Formerly Advanced Biological Systems, Inc.)
(A Development Stage Company)
Notes to the Consolidated Financial Statements
December 31, 1997 and 1996
NOTE 3 - INVESTMENT IN JOINT VENTURE (Continued)
As additional consideration, the Company has agreed to 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, which
was paid in full 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.
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.
In exchange for the consideration, the Company received a 40% ownership
interest in DBD. This ownership interest will increase to 45% at such
time as BIO has received $2,000,000 in profits from DBD. The investment
is accounted for by the equity method. The investment in the joint
venture is carried at cost of $975,000 less the Company's share of the
loss for the years ended December 31, 1997 and 1996 which was $107,749
and $26,047, respectively, for a net amount of $841,204. This differs
from the Company's underlying equity in the net assets of DBD by
$575,000, which is the amount paid to BIO by the Company. BIO's
sublicence of the product rights did not result in the recording of an
asset on the books of DBD because BIO's basis in the product rights was
$0. The amount paid to BIO represents the estimated net present value
of future income to be derived from the sale of the drug. Financial
information for DBD is as follows:
F-19
<PAGE> 35
ABS GROUP INC.
(Formerly Advanced Biological Systems, Inc.)
(A Development Stage Company)
Notes to the Consolidated Financial Statements
December 31, 1997 and 1996
NOTE 3 - INVESTMENT IN JOINT VENTURE (Continued)
<TABLE>
<CAPTION>
December 31,
----------------------------------
1997 1996
--------- ---------
<S> <C> <C>
Assets:
Cash $ 19,053 $ 25,052
Prepaid expense 46,651 75,000
--------- ---------
Total Assets $ 65,704 $ 100,052
========= =========
Liabilities and Equity:
Liabilities:
Accounts payable and accrued expenses $ 1,000 $ 15,069
--------- ---------
Equity:
The Company 266,204 123,953
Other (201,500) (38,970)
--------- ---------
Total Equity 64,704 84,983
--------- ---------
Total Liabilities and Equity $ 65,704 $ 100,052
========= =========
</TABLE>
<TABLE>
<CAPTION>
For the Years Ended
December 31,
----------------------------------
1997 1996
--------- ---------
<S> <C> <C>
Gross revenue $ -- $ --
Cost of sales and operational expenses 269,373 65,117
--------- ---------
Net loss $(269,373) $ (65,117)
========= =========
Company interest in net loss $(107,749) $(26,047)
========= =========
</TABLE>
NOTE 4 - PATENTS/INTELLECTUAL PROPERTY
During 1996, the Company acquired certain intellectual property as a
result of the purchase of its subsidiaries. Intellectual property
consists of the following:
<TABLE>
<CAPTION>
December 31,
-----------------------------------
1997 1996
--------- ---------
<S> <C> <C>
Patent Pending Qualture $ 22,243 $ 22,243
Product Rights Qualture 102,519 102,519
Product Registrations Sea Care 604,610 604,610
--------- ---------
729,372 729,372
Less accumulated amortization (45,521) (5,038)
--------- ---------
Total Patents/Intellectual Property $ 683,851 $ 724,334
========= =========
</TABLE>
F-20
<PAGE> 36
ABS GROUP INC.
(Formerly Advanced Biological Systems, Inc.)
(A Development Stage Company)
Notes to the Consolidated Financial Statements
December 31, 1997 and 1996
NOTE 4 - PATENTS/INTELLECTUAL PROPERTY (Continued)
The Patent Pending Qualture has been capitalized and will not be
amortized until the patent is granted. The Product Rights Qualture will
be amortized over their estimated useful lives of 10 years. The Product
Registrations for SeaCare will be amortized over their estimated useful
lives of 20 years. Amortization of intellectual property was $38,312
and $5,038 for the years ending December 31, 1997 and 1996,
respectively.
NOTE 5 - NOTES PAYABLE
Notes payable at December 31, 1997 and 1996 consisted of the following:
<TABLE>
<CAPTION>
1997 1996
--------- ---------
<S> <C> <C>
Note payable to corporation, 7% interest, maturing October 1,
2000, quarterly payments of various amounts, unsecured $ -- $ 225,000
Note payable to corporation, 6% interest, principal
and interest, due March 31, 1997, unsecured -- 31,564
Note payable to corporation, 6% interest principal
and interest due March 31, 1997, unsecured -- 44,000
Note payable to a company, 8% interest, principal
and interest due March 11, 1999, unsecured 50,000 --
Note payable to a company, 10% interest, principal
and interest due December 20, 1997, unsecured (Note 10) 100,000 --
Note payable to a company, 10% interest, principal
and interest due January 11, 1998, unsecured 30,000 --
Note payable to a company, 10% interest, principal
and interest due on demand, unsecured (Note 12) 10,000 --
Note payable to a company, 8% interest, principal
and interest due June 14, 1999, unsecured 30,000 --
Note payable to a company, 10% interest, principal
and interest due January 18, 1999, unsecured 25,000 --
--------- ---------
Total 245,000 300,564
Less Current Maturities (140,000) (100,564)
--------- ---------
Long-Term Debt $ 105,000 $ 200,000
========= =========
</TABLE>
F-21
<PAGE> 37
ABS GROUP INC.
(Formerly Advanced Biological Systems, Inc.)
(A Development Stage Company)
Notes to the Consolidated Financial Statements
December 31, 1997 and 1996
NOTE 5 - NOTES PAYABLE (Continued)
Aggregate maturities required on long-term debt at December 31, 1997
are as follows:
<TABLE>
<CAPTION>
Year Amount
------ --------
<S> <C>
1998 $140,000
1999 105,000
2000 --
2001 --
2002 + --
--------
Total $245,000
========
</TABLE>
NOTE 6 - 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 (3) or (5) years from the grant date. The options
are issuable in such amounts and a 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
December 31, 1997:
<TABLE>
<CAPTION>
Exercise Fair
Date Term of Price Per Value on Options Options Options
Granted Option Share Grant Date Granted Exercised Outstanding
- ------- ------ ----- ---------- ------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
August 21, 1996 5 Yrs. $ 0.15 $ 0.79 200,000 16,000 184,000
November 20, 1996 5 Yrs. $ 0.90 $ 1.00 350,000 -- 350,000
January 1, 1997 5 Yrs. $ 0.75 $ 3.75 25,000 -- 25,000
January 1, 1997 5 Yrs. $ 3.75 $ 3.75 40,000 -- 40,000
February 28, 1997 3 Yrs. $ 0.35 $ 3.50 28,500 -- 28,500
April 18, 1997 5 Yrs. $ 1.00 $ 3.50 100,000 -- 100,000
June 30, 1997 5 Yrs. $ 0.675 $ 3.38 21,500 -- 21,500
------- ------- -------
765,000 16,000 749,000
======= ======= =======
Weighted average value of options granted $ 0.83
Total compensation cost recognized from issuance of options $ 635,933
</TABLE>
The Fair Value of the options is based on the average offering price of
the Company's common stock in the four months prior to the grant date
of the options less a discount due to the restricted nature of the
employee stock options.
F-22
<PAGE> 38
ABS GROUP INC.
(Formerly Advanced Biological Systems, Inc.)
(A Development Stage Company)
Notes to the Consolidated Financial Statements
December 31, 1997 and 1996
NOTE 6 - STOCK OPTIONS (Continued)
Of the 765,000 options granted to date, 749,000 options remain
unexercised and expire from three to five years from the date of the
grant. Outstanding options are not considered in the loss per share
calculation as they are antidilutive. The grant of options resulted in
the recognition of $472,933 and $163,000 of compensation as a result of
the difference between the exercise price and fair market price of the
Company's common stock at December 31, 1997 and 1996, respectively.
NOTE 7 - RELATED PARTY TRANSACTIONS
During 1997 and 1996, the Company received advances from shareholders
of $41,250 and $5,000, respectively. The advances were converted to
minority interest in 1997 and equity during 1996.
During 1997, the Company received advances from an officer of $25,000.
At December 31, 1997, the balance due to the officer was $ 22,322.
NOTE 8 - COMMITMENTS AND CONTINGENCIES
The Company leases office space under various operating lease
agreements which expire through 2000. Future commitments under
non-cancelable operating leases are as follows:
<TABLE>
<CAPTION>
Year Amount
------ -------
<S> <C>
1998 $22,650
1999 23,250
2000 5,850
-------
Total $51,750
=======
</TABLE>
The Company has committed to contribute $1,000,000 to a joint venture
of which it is a partner. As of December 31, 1997, the Company had
contributed $400,000. The remaining $600,000 is to be contributed
during 1998. (Note 3)
NOTE 9 - GOING CONCERN
The Company's financial statements are prepared using generally
accepted accounting principles applicable to a going concern. However,
the Company has experienced significant operating losses and does not
have a proven source of revenues. Management plans to obtain equity
financing sufficient to cover its operating costs during the
development stage until operations generate sufficient revenues to
cover operating expenses. During the year ended December 31, 1997, the
Company raised approximately $1,150,000 in equity financing.
NOTE 10 - WARRANTS
On October 21, 1997, the Company issued warrants to purchase up to
50,000 shares of the Company's common stock exercisable at a price of
$1.00 per share. The warrants were issued to another company as
additional consideration for lending the Company $100,000 (Note 5). The
warrants expire on October 20, 1999.
F-23
<PAGE> 39
ABS GROUP INC.
(Formerly Advanced Biological Systems, Inc.)
(A Development Stage Company)
Notes to the Consolidated Financial Statements
December 31, 1997 and 1996
NOTE 11 - LEASES
The Company leases certain equipment with a lease term through April of
2001. Obligations under this capital lease have been recorded in the
accompanying consolidated financial statements at the present value of
future minimum lease payments. The capitalized cost of $4,127 less
accumulated depreciation at $295 is included in property and equipment
in the accompanying consolidated financial statements at December 31,
1997. Depreciation expense for this equipment for the years ended
December 31, 1997 and 1996 was $295 and $0, respectively.
Obligations under capital leases at December 31, 1997 and 1996
consisted of the following:
<TABLE>
<CAPTION>
1997 1996
------- ------
<S> <C> <C>
Total $ 3,406 $ --
Less: current portion (1,145) --
------- ------
Long-term portion $ 2,261 $ --
======= ======
</TABLE>
The future minimum lease payments under these capital leases and the
net present value of the future minimum lease payments are as follows:
<TABLE>
<CAPTION>
Year Ending
December 31, Amount
------------ ------
<S> <C>
1998 $ 1,145
1999 1,145
2000 1,145
2001 381
2002 and thereafter --
-------
Total future minimum lease payments 3,816
Less, amount representing interest (410)
-------
Present value of future minimum lease payments $ 3,406
=======
</TABLE>
NOTE 12 - SUBSEQUENT EVENTS
In January, 1998, the Company issued 8,111 shares of common stock in
full payment of a $10,000 note payable (Note 5). The common stock was
valued at $1.25 per share.
An officer of the Company resigned effective March 31, 1998 and at the
same time resigned from his position as President and director of
Future Medical Technologies, Inc., a wholly-owned subsidiary of the
Company.
As of March 31, 1998, the offices of Future Medical Technologies in
Boulder, Colorado were closed and consolidated with the Company's
offices in Salt Lake City, Utah.
F-24
<PAGE> 40
ABS GROUP INC.
(Formerly Advanced Biological Systems, Inc.)
(A Development Stage Company)
Notes to the Consolidated Financial Statements
December 31, 1997 and 1996
NOTE 13 - PROFORMA COMBINED STATEMENTS OF OPERATIONS
The historical information contained herein has been combined on a
proforma basis. The purchase of MRUSA was effective November 7, 1996
and the purchase of FMT was effective December 31, 1996. The purchases
have been presented as though they were effective January 1, 1996 and
1995. All significant accounting policies for MRUSA and FMT are the
same as the Company's defined in Note 1.
<TABLE>
<CAPTION>
For the Year Ended December 31, 1996
----------------------------------------------------------------------------------------
ABS Proforma Proforma
Group Inc. FMT MRUSA Adjustments Combined
-------------- ------------ ----------- ------------ -------------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C>
NET SALES $ -- $ 229,596 $ 17,812 $ -- $ 247,408
COST OF SALES -- 240,719 5,210 -- 245,929
-------------- ----------- ----------- ---------- ------------
GROSS MARGIN -- (11,123) 12,602 -- 1,479
EXPENSES 1,251,944 490,298 35,172 68,787 1,846,201
-------------- ----------- ----------- ------------ -------------
LOSS FROM OPERATIONS (1,251,944) (501,421) (22,570) (68,787) (1,844,722)
OTHER INCOM
(EXPENSE) (106,951) (180,206) 105 -- (287,052)
-------------- ----------- ----------- ------------ -------------
NET LOSS $ (1,358,895) $ (681,627) $ (22,465) $ (68,787) $ (2,131,774)
============== =========== =========== ============ =============
NET LOSS PER SHARE $ (1.13)
=============
</TABLE>
<TABLE>
<CAPTION>
For the Year Ended December 31, 1995
----------------------------------------------------------------------------------------
ABS Proforma Proforma
Group Inc. FMT MRUSA Adjustments Combined
-------------- ------------ ----------- ------------ -------------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C>
NET SALES $ -- $ 467,152 $ -- $ -- $ 467,152
COST OF SALES -- 145,784 -- -- 145,784
-------------- ----------- ----------- ------------ -------------
GROSS MARGIN -- 321,368 -- -- 321,368
EXPENSES -- 515,133 -- 68,787 583,920
-------------- ----------- ----------- ------------ -------------
LOSS FROM OPERATIONS -- (193,765) (68,787) (262,552)
OTHER INCOME
(EXPENSE) (45,058) -- -- -- (45,058)
-------------- ----------- ----------- ------------ -------------
NET LOSS $ (45,058) $ (193,765) $ -- $ (68,787) $ (307,610)
============== =========== =========== ============ =============
NET LOSS PER SHARE $ (0.38)
=============
</TABLE>
The proforma adjustments represent goodwill amortization of $20,557,
product rights amortization of $10,252, and product registrations
amortization of $37,978.
F-25
<PAGE> 41
ITEM 8 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE.
No disagreements with accountants on accounting and financial
disclosure matters existed during the Company's calendar year ended December 31,
1997.
PART III
ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
The Directors and Executive Officers of ABS Group Inc. (and its
subsidiaries as indicated hereunder) as of April 1, 1998 (1) are as follows:
<TABLE>
<CAPTION>
Name and Address *Position(s) Held Age
- ---------------- ----------------- ---
<S> <C> <C>
Emanuel A. Floor President, Treasurer and 62
2936 Sierra Point Place Chairman of the Board of
Salt Lake City, Utah 84109 Directors
Oleg Batratchenko Secretary and a Director 32
575 Ridgeland Terrace
Englewood, New Jersey 07631
Samuel J. Grant -- 45
12 Berrigan Avenue
Annadale, Townsville
Queensland, Australia
</TABLE>
(1) A former officer of ABS Group Inc., Steve I. Gelman, resigned effective
March 31, 1998 and at the same time resigned from his position as President and
a director of Future Medical Technologies, Inc., a wholly owned subsidiary of
ABS Group Inc. For further information with respect to Mr., Gelman reference is
herewith made to the Registrant's Form 10KSB for calendar year ended December
31, 1996.
* See narrative information below regarding additional positions held by each of
these persons in ABS Group Inc.'s subsidiaries.
Directors are elected to serve until the next annual meeting of
stockholders and until their successors have been elected and have qualified.
Officers are appointed to serve until the meeting of the Board of Directors
following the next annual meeting of stockholders and until their successors
have been elected and have qualified.
EMANUEL A. FLOOR has served as President and Chairman of the Board of Directors
of ABS Group Inc. since July 10, 1990, has served as Treasurer since October,
1992 and served as
-16-
<PAGE> 42
Secretary from March, 1993 to August 1996. Mr. Floor also serves as Vice
President, Treasurer and a Director of Marine Research USA, Inc. ("MRUSA") and
as President, Treasurer and a Director of Future Medical Technologies, Inc.
("FMT") and serves as a director in Marine Research Pty. Ltd. ("MRPL"). Mr.
Floor assumed his current positions in MRUSA, MRPL and FMT (director) in late
1996 upon consummation of ABS Group Inc.'s acquisition of such firms except for
the fact that on March 31, 1998, he became President of FMT as well, having
previously served as Vice President. See Item 1 hereto. Since 1970, Mr. Floor
has also served as the President of Emanuel A. Floor and Associates, Inc., and
since 1989 he has served as President of the Park Group, Inc.
Both of these private corporations provide consulting services to business
companies in the areas of public relations, marketing, management, development
and finance. From 1975 to 1986, Mr. Floor was president, chief executive officer
and director of Triad Properties, Inc., a real estate development and marketing
company, which, through various subsidiaries owned, managed and developed, among
other properties, the Salt Lake International Center, a 900-acre business park
adjacent to the Salt Lake City International Airport in Utah; Triad Center, a 21
acre parcel of undeveloped property at the Gallleria in Houston, Texas and the
Cone Ranch, a 12,000 acre parcel of undeveloped property near Tampa Florida. In
February of 1987, several months following Mr. Floor's resignation, Triad
Properties, Inc. and several related entities filed for protection in
consolidation proceedings under the Bankruptcy Code. Between 1986 and 1987, as a
result of a down-turn in the real estate market, Kimball Associates, Inc.,
Bertagnole Investments Co., Bertagnole Properties and East Canyon Resort Trust,
all of which were recreational real estate development firms for which Mr. Floor
was an officer and/or director and less than a 5% shareholder, filed for relief
under the Bankruptcy Code. As a result of his personal guarantee of substantial
amounts of indebtedness of these entities, Mr. Floor filed for personal
bankruptcy in 1988 and was discharged from bankruptcy on December 11, 1989.
Additionally, Mr. Floor filed for Chapter 13 proceedings in April 1993 and
received a discharge in June 1995. Mr. Floor holds a degree in Economics
(University of Utah - 1957) and has been active in public and civic affairs and
served for eight years as a Trustee to the University of Utah (which includes
the University Hospital and Research Center). He also served on the Board of
Trustees for LDS Hospital and Holy Cross Hospital (now Salt Lake Regional
Medical Center) in Salt Lake City, Utah.
OLEG BATRATCHENKO has been Secretary and a Director of ABS Group Inc. since
August 1996 and has also served as a Director of FMT since on or about January
1997. Mr. Batratchenko has a solid international background with over eight
years of financial research and investment banking experience. Since April 1995
he has been Vice President of Research at Berkshire International Finance, Inc.
("BIF"), a New York based business and consulting firm which provides a variety
of services and advise to the business, investment and financial community. At
BIF, Mr. Batratchenko currently manages the activities of the equity research
department and provides analytical support for the process of banking clients
selection, monitoring and deals structuring. He is also a Senior Vice President
of Fifth Avenue Research and Advisory Group, Inc., managing an array of public
relations services rendered to a number of growth oriented companies listed on
NASDAQ'S SmallCap Market. From 1993 to 1995 Safian Investment Research, Inc., a
White Plains, financial research and money management firm employed Mr.
Batratchenko in the capacity of Research Analyst. Prior thereto he worked as a
Performance Analyst with Neuberger and Berman, a New York money management firm.
Between 1987 and 1990 Mr. Batratchenko was a
-17-
<PAGE> 43
Research Associate at the Moscow Institute of World Economy and International
Relations, where he completed a Master's program in Economics. Mr. Batratchenko
also has a Master Degree in International Political Economy from New York
University and is an Associate member of the Financial Analysts - Money Managers
Society (New York).
SAMUEL J. GRANT has served as President, CEO and a Director of MRUSA, a Utah
corporation and 80% owned subsidiary of ABS Group Inc. since November 1996 and
owns the balance of 20% of MRUSA's outstanding securities. He also serves as
Managing Director (since November 1996) of MRUSA's wholly owned subsidiary
- -MRPL, an Australian limited company. Since 1982 Mr. Grant has been engaged in
the development of the special processes required to harvest the sea cucumber
and convert it and other sea based products into therapeutic products and became
Managing Director of Pacific Grant Corporation which initially manufactured,
marketed and distributed such products. For further information regarding MRPL
(and its products) reference is herewith made to Item 1, Description of
Business. Mr. Grant (a) previously served as Managing Director for a number of
Australian based companies and (b) has extensive experience in export marketing
having provided marketing related consulting services to various firms engaged
in such diverse areas as leather, textiles, minerals and industrial and
pharmaceutical chemicals. Mr. Grant received his education in Australia having
attended St. Benedict's College and Geralton Business College, both located in
Western Australia. Mr. Grant has been a member of the New York Academy of
Science since January of 1991.
Security ownership of management - See Item 11 hereof with respect to
security ownership, if any, of management and Item 10 footnote (c) with respect
to options granted to certain members of management in accordance with 1996 and
1997 Non-Statutory Stock Option Plans.
ITEM 10. EXECUTIVE COMPENSATION
Remuneration paid (and/or accrued, if applicable and so specifically
indicated) to officers and/or directors of the Company during calendar year
ended December 31, 1997 is indicated in the chart appearing directly
hereinafter.
<TABLE>
<CAPTION>
Securities or
Salaries, Fees Property, Insurance
Directors' Fees Benefits or Aggregate of
Name of Principal Capacities Commissions Reimbursement, Contingent Forms of
Individual In Which Served And Bonuses Personal Benefits Remuneration
---------- --------------- ----------- ----------------- ------------
<S> <C> <C> <C> <C>
Emanuel A. Floor President, Treasurer and $118,500 $ 20,664 (a) $ -0- (d)
Chairman of the Board of
Directors (i)
Oleg Batratchenko Secretary and a Director $ -0- $ -0- $ -0- (d)
(ii)
Samuel J. Grant Managing Director of $ 96,000 (b) $ -0- $ -0-
Marine Research Pty Ltd,
President and a Director
of Marine Research USA
Inc.
</TABLE>
-18-
<PAGE> 44
<TABLE>
<CAPTION>
Securities or
Salaries, Fees Property, Insurance
Directors' Fees Benefits or Aggregate of
Name of Principal Capacities Commissions Reimbursement, Contingent Forms of
Individual In Which Served And Bonuses Personal Benefits Remuneration
---------- --------------- ----------- ----------------- ------------
<S> <C> <C> <C> <C>
Steven I. Gelman Former President and a $ 106,780 $ 34,663 (c) $ -0-
Director of Future
Medical Technologies,
Inc.(iii)
</TABLE>
There are no current written employment agreements between ABS Group
Inc. and any of its officers and directors.
No compensation of any nature was paid to any director for services
rendered to the Company in such capacity excepting for repayment made, if any,
for accountable expenses incurred on the Company's behalf.
(i) Mr. Floor also serves as a Director in MRUSA, MRPL and FMT and is Vice
President and Treasurer of MRUSA and President and Treasurer of FMT.
(ii) Mr. Batratchenko also serves as Secretary and a Director of FMT.
(iii) Mr. Gelman served as President and Director of FMT and as Vice
President - Marketing of ABS Group Inc., until his resignation from all
positions held effective March 31, 1998.
(a) Consists of (i) office rent and expenses - $7,500, (ii) medical
insurance premiums - $5,664, (iii) auto allowance - $6,000 (iv)
reimbursement for business expenses $11,663 and (v) application of
$1,500 in wages applied to option exercise for purchase of 10,000
shares of Company common stock.
(b) The amount of $41,750 (USD) was accrued but not paid in 1997.
(c) Consists of health benefits, $2,441, educational benefits, $3,690 and
reimbursed business expenses of $28,531.
(d) In accordance with the terms and conditions of a 1996 Non Statutory
Stock Option Plan, Messrs. Floor and Batratchenko were each granted, in
August 1996, options to purchase up to 50,000 shares of Company common
stock exercisable at $ .15 per share while Mr. Floor was granted in
November 1996, additional options to purchase up to 350,000 shares of
Company Common stock exercisable at $ .90 per share. Through calendar
year ended December 31, 1996 none of such options were exercised.
During 1997, Mr. Floor exercised an aggregate of 15,000 of those
options exercisable at $ .15 per share thereby acquiring 15,000 shares
of Common Stock. See also footnote (a) (v) above.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(a) Security Ownership of Certain Beneficial Owners - The following
persons and/or firms are known to the Company to be the beneficial owners of
more than 5% of the 4,331,674 shares of the Company's outstanding $.0001 par
value Common Stock as of March 31, 1998. To the best of the Company's knowledge
each individual and/or firm has beneficial ownership of the shares and each
individual and/or firm has sole voting power and sole investment power with
respect to the number of shares beneficially owned.
-19-
<PAGE> 45
<TABLE>
<CAPTION>
Name and Address of Amount and Nature of Percent
Beneficial Owner Beneficial Ownership of Class
- ---------------- -------------------- --------
<S> <C> <C>
Arista Capital (1) 333,000 7.69%
@ Mees Pierson
Doctor Roy's Drive
George Town
Grand Cayman, BWI
Attina Holdings (1) 250,000 5.77%
P. O. Box
Nassau, Bahamas
Brookfield Associates, Ltd. 300,000 6.93%
c/o Akar Verwaltungs AG
Seestrasse 17 P.O. Box 53
CH-8702 Zollikon 2 Switzerland
Biopharmaceutics, Inc. 425,000 9.81%
900 Station Road
Bellport, New York 11713
Covalent Research Alliance Corp 300,000 6.93%
1275 Drummers Lane
Wayne, PA 19087
Sierra Growth & Opportunity Inc. 700,000 16.16%
500 Fifth Avenue Suite 3620
New York, New York 10010
Trianon Opus One, Inc. (1) 450,000 10.39%
West Bay Road
P O Box 31106 SMB
Grand Cayman, Cayman Islands, BWI
Samuel J. Grant 500,000 11.54%
12 Berrigan Avenue
Annadale, Townsville
Australia
- ----------------------------------------------------------------------------------------------
</TABLE>
(1) The shares indicated as being owned by these persons and/or firms (with
the exception of 50,000 shares owned of record and beneficially by
Trianon Opus One, Inc.) are not indicated as being owned of record and
beneficially on the Company's certified list of stockholders as of
March 31, 1998. Management of the Company, however, has been able to
identify through its records, the fact that such shares were "original
issuance" to those firms and subsequently transferred to CEDE.
(b) Security Ownership of Management - The number and percentage of shares of
$.0001 par value Common Stock of the Company owned of record and beneficially,
by each current officer and director of the Company (or officer and/or director
in any of the Company affiliates if so specifically indicated) and by all
current officers and directors of the Company as a group, is as follows - as of
March 31, 1998. To the best of the Company's knowledge each individual has
beneficial ownership of the shares and each individual has sole voting power and
sole investment power with respect to the number of shares beneficially owned.
-20-
<PAGE> 46
<TABLE>
<CAPTION>
Name and Address of Amount and Nature of Percent
Beneficial Owner Beneficial Ownership of Class
- ---------------- -------------------- --------
<S> <C> <C>
Emanuel A. Floor 13,168 (1)(2) .30%
2936 Sierra Point Place
Salt Lake City, Utah 84109
Oleg Batratchenko -0- (2) -0-%
575 Ridgeland Terrace
Englewood, New Jersey 07631
Samuel J. Grant (3) 500,000 11.54%
12 Berrigan Avenue
Annadale, Townsville
Australia
All officers and directors
as a group (3 person(s)) (4) 513,168 11.84%
</TABLE>
(1) Mr. Floor owns 10,000 shares of record and beneficially. Additionally,
Mr. Floor may be deemed to be the beneficial owner of 3,168 shares held
of record by The Five Floors, Inc., a Utah corporation, as a result of
his status as an officer and principal shareholder of such corporation
and the fact that such corporation's shares are owned, in their
entirety, by Mr. Floor and his family.
(2) Does not include options granted to Messrs. Floor and Batratchenko in
accordance with ADBS' 1996 Non-Statutory Stock Option Plan. See
footnote (c) to Item 10 hereof.
(3) Mr. Grant serves as President and a Director of MRUSA and Managing
Director of MRPL. Does not include 25,000 options (exercisable at $ .75
per share) granted to Mr. Grant in January 1997 in accordance with
above referenced 1996 Stock Option Plan. Additionally, Mr. Grant is to
receive an additional 25,000 options per year for each of the next
three years so long as he continues to be employed in the capacities
indicated and/or relatively similar capacities.
(4) Includes Mr. Grant who is not an officer or director of ADBS but serves
as President of certain subsidiaries as indicated in footnote 3 hereto.
The Company does not know of any arrangement or pledge of its
securities by persons now considered in control of the Company that might result
in a change of control.
-21-
<PAGE> 47
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
For the calendar year ended December 31, 1997 there have not been any
material transactions between the Company and any director, executive officer,
security holder or any member of the immediate family of any of the
aforementioned which exceeded $60,000 other than as may be indicated in this
Form 10-KSB and the consolidated financial statements and footnotes thereto
which are a part hereof.
ITEM 13. EXHIBITS, LIST AND REPORTS ON FORM 8-K
Reference is herewith made to page F-1 through F-25 inclusive of this
10-KSB with respect to the consolidated financial statements and Notes thereto
included therein.
No exhibits are being filed with this Form 10-KSB.
During the last quarter of the Company's calendar year ended December
31, 1997, no Forms 8-K were filed, However, a Form 8K was filed on January 30,
1998 with date of report of January 20, 1998, which indicated at Item designated
9 II A that the Registrant had issued certain of its securities (in January
1998) in consideration of extinquishment of indebtedness created as a result of
a loan in December 1997.
-22-
<PAGE> 48
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant 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
Date: April 10, 1998
In accordance with the Exchange Act, this report has been signed below
by the following persons on behalf of the registrant and in the capacities and
on the dates indicated.
<TABLE>
<S> <C> <C>
/s/ Emanuel A. Floor President, Treasurer, Dated: Apr. 10, 1998
- ------------------------------------ and Chairman of the
Emanuel A. Floor Board of Directors
/s/ Oleg Batratchenko Secretary and a Director Dated: Apr. 10, 1998
- ------------------------------------
Oleg Batratchenko
</TABLE>
-23-
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 1,906
<SECURITIES> 0
<RECEIVABLES> 23,230
<ALLOWANCES> 17,448
<INVENTORY> 168,951
<CURRENT-ASSETS> 181,946
<PP&E> 202,443
<DEPRECIATION> 27,552
<TOTAL-ASSETS> 2,086,700
<CURRENT-LIABILITIES> 549,322
<BONDS> 0
0
0
<COMMON> 417
<OTHER-SE> 1,336,063
<TOTAL-LIABILITY-AND-EQUITY> 2,086,700
<SALES> 273,842
<TOTAL-REVENUES> 273,842
<CGS> 207,126
<TOTAL-COSTS> 1,721,681
<OTHER-EXPENSES> 103,095
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 30,599
<INCOME-PRETAX> (1,708,905)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,708,905)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,708,905)
<EPS-PRIMARY> (0.46)
<EPS-DILUTED> (0.46)
</TABLE>
