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 June 30, 2012
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 ¨
On September 27,
2012, 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.Back to Table of
Notes to Unaudited Interim
June 30, 2012
Note 1. The Company
American Biogenetic Sciences, Inc. (the "Company", We or
"ABS") 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.
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
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, 2011. The accounting policies are described in the Notes to the
Financial Statements in the 2011 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 and six months ended June 30, 2012 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 June 30, 2012.
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 June 30, 2012 or 2011.
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 requires that the Company recognize in its financial statements the impact of a
tax position, if that position is more likely than not of being sustained on audit, based
on the technical merits of the position. Management of the Company is not aware of any
additional needed liability for unrecognized tax benefits at June 30, 2012 and 2011.
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. The
note bears interests of 12% per annum until paid or converted. Interest is payable
upon the maturity date. The conversion rate is $0.001 per share. The note was issued in
consideration of cash advances made and for services provided to the Company by our
In accordance Accounting Standard Codification ( ASC # 815), Accounting
for Derivative Instruments and Hedging Activities, we evaluated the holders
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
Note 5. Related Party Transactions
Fair value of services: Our President 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 period ended June 30, 2012 was $12,000 and is reflected in the statement
of operations as general and administrative expenses.
An entity controlled by the Companys President provided office space to the
Company valued at $1,000 per month. The total of $6,000 during the six months ended June
30, 2012 was recorded as accrued expenses and is reflected in the statement of operations
as general and administrative expenses.
An entity controlled by the Companys President provided corporate securities
compliance services to the Company valued at $10,000 during the six-month period ended
June 30, 2012, 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 President, accrued office space expenses, corporate regulatory
compliance expenses and cash advances received from our President and control shareholder.
Such items due totaled $157,113 at June 30, 2012 and $129,113 at December 31, 2011.
Note 6. Commitments and Contingencies
There are no pending or threatened legal proceedings as of June 30, 2012. 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.
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 June 30, 2012, we had no assets and
had total liabilities of $268,761 consisting of $157,113 in advances from and accruals due to related parties, a
short-term note in the amount of $76,000, accrued interest expenses of $25,080 and
accounts payable of $10,568.
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.
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
procedures. As of June 30, 2012, 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 effective as of the date of filing this
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, 2011, 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
SAFTY 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: September 27, 2012