SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2013
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-19041
BIOGENETIC SCIENCES, INC.
(Exact Name Of Registrant
As Specified In Its Charter)
|(State of Incorporation)
Wall Street, 28th Floor
|(Address of Principal
Telephone Number, Including Area Code: (212) 400-7198
Indicate by check mark
whether the registrant (1) has filed all reports required to be filed by Section 13 or
15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes x No ¨
the Registrant had 1,088,740 shares of common stock outstanding.
Indicate by check mark whether the registrant is a shell
company (as defined in Rule 12b-2 of the Exchange Act). Yes x No ¨
Indicate by check
mark whether the registrant is a large accelerated filer, an accelerated filer, a
non-accelerated filer or a smaller reporting company (as defined in Rule 12b-2 of the Exchange Act).
||Accelerated filer ¨
AMERICAN BIOGENETIC SCIENCES, INC.
Notes to Unaudited Interim
March 31, 2013
Back to Table of
Note 1. The Company
American Biogenetic Sciences, Inc. (the "Company", We or
the "Registrant") was incorporated in Delaware on September 1, 1983. Prior to ceasing its operations in 2002, the
Company was engaged in the research, development and production of bio-pharmaceutical
products. On September 19, 2002, the Registrant
filed for bankruptcy under the U.S. Bankruptcy Code in the U.S. Bankruptcy Court
Eastern District of New York. On November 4,
2005, the Company emerged from Bankruptcy Court.
On August 13, 2010, the Company's sole officer/director transferred and
assigned his control stock position to an unrelated third party but remained
as the Company's sole executive officer/director.
Note 2. Going Concern
The accompanying financial statements have been prepared assuming the Company will
continue as a going concern. The Company has incurred losses, has negative operational
cash flows and has no revenues. The future of the Company is dependent upon Management's
success in its efforts and limited resources to pursue and effect a business combination.
These conditions raise substantial doubt about the Company's ability to continue as a
going concern. These financial statements do not include any adjustments that might arise
from this uncertainty.
Note 3. Basis of Presentation
The Financial Statements of the Company have been prepared in accordance with generally
accepted accounting principles in the United States of America. In the opinion of
management, the accompanying unaudited financial statements include all adjustments,
consisting of only normal recurring accruals, necessary for a fair statement of financial
position, results of operations, and cash flows. The information included in this
Quarterly Report on Form 10-Q should be read in conjunction with the financial statements
and the accompanying notes included in our Annual Report on Form 10-K for the year ended
December 31, 2012. The accounting policies are described in the Notes to the
Financial Statements in the 2012 Annual Report on Form 10-K and updated, as
necessary, in this Form 10-Q. The year-end balance sheet data presented for comparative
purposes was derived from audited financial statements, but does not include all
disclosures required by accounting principles generally accepted in the United States. The
results of operations for the three months ended March 31, 2013 are not necessarily
indicative of the operating results for the full year or for any other subsequent interim
Use of Estimates: The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates and
assumptions that affect reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statement and the reported
amounts of revenues and expenses during the reporting period. Actual results could differ
from the estimates.
Cash and Cash Equivalents: For financial statement presentation purposes, the
Company considers those short-term, highly liquid investments with original maturities of
three months or less to be cash or cash equivalents.
Fair Value of Financial Instruments: ASC # 825, "Disclosures about Fair
Value of Financial Instruments," requires disclosure of fair value information
about financial instruments. Fair value estimates discussed herein are based upon certain
market assumptions and pertinent information available to management as of
March 31, 2013.
These financial instruments include accounts payable and accrued expenses. Fair values
were assumed to approximate carrying values for these financial instruments since they are
short-term in nature and their carrying amounts approximate fair values.
Earnings per Common Share: Basic net loss per share is computed using the weighted
average number of common shares outstanding during the period. Diluted net loss per common
share is computed using the weighted average number of common and dilutive equivalent
shares outstanding during the period. Dilutive common equivalent shares consist of options
to purchase common stock (only if those options are exercisable and at prices below the
average share price for the period) and shares issuable upon the conversion of issued and
outstanding preferred stock. Due to the net losses reported, dilutive common equivalent
shares were excluded from the computation of diluted loss per share, as inclusion would be
anti-dilutive for the periods presented. There were no common equivalent shares required
to be added to the basic weighted average shares outstanding to arrive at diluted weighted
average shares outstanding as of March 31, 2013 or 2012.
Income Taxes: The Company accounts for income taxes in accordance with ASC # 740, "Accounting
for Income Taxes," which requires recognition of estimated income taxes payable
or refundable on income tax returns for the current year and for the estimated future tax
effect attributable to temporary differences and carry-forwards. Measurement of deferred
income tax is based on enacted tax laws including tax rates, with the measurement of
deferred income tax assets being reduced by available tax benefits not expected to be
ASC 740 also clarifies the
accounting for uncertainty in tax positions. This guidance prescribes a
two-step process to determine the amount of tax benefit to be recognized.
First, the tax position must be evaluated to determine the likelihood that
it will be sustained upon external examination. If the tax position is
deemed "more-likely-than-not" to be sustained, the tax position is then
assessed to determine the amount of benefit to recognize in the financial
statements. The amount of the benefit that may be recognized is the largest
amount that has a greater than 50% likelihood of being realized upon
ultimate settlement. There are no uncertain tax positions taken by the
Company on its tax returns. Tax years subsequent to 2005 remain open to
examination by U.S. federal and state tax jurisdictions.
Management of the Company is
not aware of any additional needed liability for unrecognized tax benefits
at March 31, 2013 and 2012. The Company has net operating losses of
about $367,901, which begin to expire in 2024.
Impact of recently issued accounting standards
There were no new accounting pronouncements that had a significant impact on the
Companys operating results or financial position.
Note 4. Convertible Notes to Related Party
In October 2009, we issued a convertible promissory note in the amount of
$76,000 to our sole officer/director. The note bears interest at the rate of 12%
per annum until paid or the note and accrued interest is converted into shares
of the Company's common stock at a conversion price of $0.001 per share. The
note was issued in consideration of cash advances made and for services provided
to the Company by the sole officer/director, who was also the Company's
controlling shareholder. On August 13, 2010, the Company's sole officer/director
transferred and assigned his control stock position to an unrelated third party
but remained as the Company's sole executive officer/director. In connection
with the August 2010 change in control, the convertible note payable to sole
officer/director together with accrued interest was also verbally assigned to
the new controlling shareholder.
In accordance Accounting Standard Codification ("ASC # 815"), "Accounting
for Derivative Instruments and Hedging Activities", we evaluated the holder's
non-detachable conversion right provision and liquidated damages clause,
contained in the terms governing the note to determine whether the features
qualify as an embedded derivative instruments at issuance. Such
non-detachable conversion right provision and liquidated damages clause did
not need to be accounted as derivative financial instruments.
Note 5. Related Party Transactions
Fair value of services: Our sole officer/director provides
services to the Company, which services are accrued and are valued at $2,000
per month. The total of these accrued expenses for the three-month period ended
March 31, 2013 was $6,000 and is reflected in the statement of
operations as general and administrative expenses.
An entity controlled by the Company's sole officer/director provided
office space to the Company valued at $1,000 per month. The total of $3,000
during the three-month period ended March 31, 2013 was recorded as accrued
expenses and is reflected in the statement of operations as general and
An entity controlled by the Company's sole officer/director provided
corporate securities compliance services to the Company valued at $5,000
during the three-month period ended March 31, 2013, which was recorded as
accrued expenses and is reflected in the statement of operations as general
and administrative expenses.
Due Related Parties: Amounts due to related parties consist of
fair value of services provided by our sole officer/director, accrued office
space expenses, corporate regulatory compliance expenses and cash advances
received from our controlling shareholder. Such items due totaled $201,613 at
March 31, 2013 and $187,613 at December 31, 2012.
Note 6. Commitments and Contingencies
There are no pending or threatened legal proceedings as of March 31, 2013. The
Company has no non-cancellable operating leases.
MANAGEMENT'S DISCUSSION AND ANALYSIS AND PLAN OF OPERATIONS Back to Table of
Some of the statements contained in this quarterly
report of American Biogenetic Sciences, Inc., a Delaware corporation discuss future
expectations, contain projections of our plan of operation or financial condition or state
other forward-looking information. Forward-looking statements give our current
expectations or forecasts of future events. You can identify these statements by the fact
that they do not relate strictly to historical or current facts. In some cases, you can
identify forward-looking statements by terminology such as "may,"
"will," "should," "could," "would,"
"expect," "plan," "anticipate," "believe,"
"estimate," "continue," or the negative of such terms or other similar
Biogenetic Sciences, Inc., a Delaware corporation, is sometimes referred to herein as
"we", "us", "our", "Company" and the
"Registrant". The Registrant was formed in 1983 for the purpose of
researching, developing and marketing cardiovascular and neurobiology products for
commercial development and distributing vaccines. The Registrant's products were designed
for in vitro and in vivo diagnostic procedures and therapeutic drugs, and its products had
been identified for use in the treatment of epilepsy, migraine and mania,
neurodegenerative diseases, coronary artery diseases and cancer. The Registrant
commenced selling its products during the last quarter of 1997 but did not generate any
sufficient revenues from operations to fund its operating expenses.
On September 19, 2002, the Registrant filed a petition
under the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Eastern District of
New York. On November 4, 2005, the Bankruptcy Court approved an order authorizing a change
in control and provided that the Company, subsequent to the bankruptcy proceeding, is free
and clear of all liens, claims and other obligations.
On August 13, 2010, the Registrant's sole
officer/director, who was also the principal shareholder, transferred and
assigned his control stock position to an unrelated third party but remained
as the Registrant's sole officer and director. In connection with the August
2010 change in control, the convertible note payable to sole
officer/director together with accrued interest was also verbally assigned
to the new control shareholder. See Note 4 to the Notes to Unaudited Interim
Plan of Operation
We have no present operations or
revenues and our current activities are related to seeking new business opportunities,
including seeking an acquisition or merger with an operating company. If our management
seeks to acquire another business or pursue a new business opportunity, it would have
substantial flexibility in identifying and selecting a prospective business. Registrant
would not be obligated nor does management intend to seek pre-approval from our
shareholders. Under the laws of the State of Delaware, the consent of holders of a
majority of the issued and outstanding shares, acting without a shareholders' meeting, can
approve an acquisition.
The Registrant is entirely dependent on
the judgment of its executive officer/director in connection with pursuing a new business
opportunity or a selection process for a target operating company. In evaluating a
prospective new business opportunity or an operating company, he would consider, among
other factors, the following: (i) costs associated with effecting a transaction; (ii)
equity interest in and opportunity to control the prospective candidate; (iii) growth
potential of the target business; (iv) experience and skill of management and availability
of additional personnel; (v) necessary capital requirements; (vi) the prospective
candidate's competitive position; (vii) stage of development of the business opportunity;
(viii) the market acceptance of the business, its products or services; (ix) the
availability of audited financial statements of the potential business opportunity; and
(x) the regulatory environment that may be applicable to any prospective business
The foregoing criteria are not intended
to be exhaustive and there may be other criteria that management may deem relevant. In
connection with an evaluation of a prospective or potential business opportunity,
management may be expected to conduct a due diligence review.
Liquidity and Capital Resources
We will use our limited personnel and
financial resources in connection with seeking new business opportunities,
including seeking an acquisition or merger with an operating company. It may
be expected that entering into a new business opportunity or business
combination will involve the issuance of a substantial number of restricted
shares of common stock. If such additional restricted shares of common stock
are issued, our shareholders will experience a dilution in their ownership
interest in the Registrant. If a substantial number of restricted shares are
issued in connection with a business combination, a change in control may be
expected to occur.
On March 31, 2013, we had no assets
and had total liabilities of $321,601 consisting of $201,613 in advances
from and accruals due to related parties, a short-term note in the amount of
$76,000, accrued interest expenses of $31,920 and accounts payable of
The Company's general and administrative
expenses for the three months ended March 31, 2013 were $16,500, the same as
during the same period of the prior year. During the three-month
period ended March 31, 2013 and 2012, we incurred interest expenses of
In connection with our plan to seek new
business opportunities and/or effecting a business combination, we may
determine to seek to raise funds from the sale of restricted stock or debt
securities. We have no agreements to issue any debt or equity securities and
cannot predict whether equity or debt financing will become available at
terms acceptable to us, if at all.
There are no limitations in our articles
of incorporation on our ability to borrow funds or raise funds through the
issuance of restricted common stock to effect a business combination. Our
limited resources and lack of operating history may make it difficult to do
borrow funds or raise capital. Our inability to borrow funds or raise funds
through the issuance of restricted common stock required to effect or
facilitate a business combination may have a material adverse effect on our
financial condition and future prospects, including the ability to complete
a business combination. To the extent that debt financing ultimately proves
to be available, any borrowing will subject us to various risks
traditionally associated with indebtedness, including the risks of interest
rate fluctuations and insufficiency of cash flow to pay principal and
interest, including debt of an acquired business.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Back to Table of
We have not entered
into, and do not expect to enter into, financial instruments for trading or hedging
CONTROLS AND PROCEDURES Back to Table of
Evaluation of disclosure controls and
March 31, 2013, the Company's chief
executive officer/chief financial officer conducted an evaluation regarding the
effectiveness of the Company's disclosure controls and procedures (as defined in
Rules 13a-15(e) or 15d-15(e) under the Exchange Act. Based upon the evaluation
of these controls and procedures, our chief executive officer/chief financial
officer concluded that our disclosure controls and procedures were not effective
as of the date of filing this quarterly report due to lack of an oversighteeing
committee and a lack of segregation of duties. Management will considered the
need to add personnel and implement improved review procedures.
Changes in internal controls. During the quarterly period covered by this report, no changes
occurred in our internal control over financial reporting that materially affected, or is
reasonably likely to materially affect, our internal control over financial reporting.
PART II - OTHER INFORMATION
ITEM 1. LEGAL
PROCEEDINGS Back to Table of Contents
RISK FACTORS Back to Table of Contents
In addition to the other
information set forth in this report, you should carefully consider the factors discussed
in Part I, Item 1. Description of Business, subheading Risk Factors in
our Annual Report on Form 10-K for the year ended December 31, 2012, which could
materially affect our business, financial condition or future results. The risks described
in our Annual Report on Form 10-K are not the only risks facing our company.
Additional risks and uncertainties not currently known to us or that we currently deem to
be immaterial also may materially adversely affect our business, financial condition
and/or operating results.
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS Back to Table of
3. DEFAULTS UPON SENIOR SECURITIES Back to Table of
ITEM 4. MINE
SAFETY DISCLOSURE Back to Table of Contents
5. OTHER INFORMATION Back to Table of
6. EXHIBITS Back to Table of Contents
(a) The following documents are filed as exhibits to
this report on Form 10-Q or incorporated by reference herein. Any document incorporated by
reference is identified by a parenthetical reference to the SEC filing that included such
||Certification of CEO/CFO
pursuant to Rule 13a-14(a) or 15d-14(a) of the Exchange Act pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
||Certification of CEO/CFO
pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
Pursuant to the
requirements of the Securities Exchange Act of 1934, this report has been signed below by
the following persons on behalf of the registrant and in the capacities and on the date
CEO, CFO and Chairman
Dated: April 14, 2014