UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________
FORM 10-Q
________________________________
ý QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2011
or
¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-19041
AMERICAN BIOGENETIC SCIENCES, INC.
(Exact Name Of Registrant As Specified In Its Charter)
| Delaware | 11-2655906 |
| (State of Incorporation) | (I.R.S. Employer Identification No.) |
| 40 Wall Street, 28th Floor | 10005 |
| (Address of Principal Executive Offices) | (ZIP Code) |
Registrant's 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 June 30, 2011, 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).
| Large accelerated filer ¨ | Accelerated filer ¨ | Non-Accelerated filer ¨ | Smaller reporting company x |
| Item | Description | Page | |||
|---|---|---|---|---|---|
PART I - FINANCIAL INFORMATION | |||||
ITEM 1. | 3 | ||||
ITEM 2. | 3 | ||||
| ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK | 6 | |||
ITEM 4. | 6 | ||||
PART II - OTHER INFORMATION | |||||
ITEM 1. | 6 | ||||
| ITEM 1A. | RISK FACTORS | 6 | |||
ITEM 2. | 6 | ||||
ITEM 3. | 6 | ||||
ITEM 4. | 6 | ||||
ITEM 5. | 6 | ||||
| ITEM 6. | EXHIBITS | 6 | |||
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS Back to Table of Contents
| American Biogenetic Sciences, Inc. | ||||
| Balance Sheets | ||||
| Back to Table of Contents | ||||
| December 31, 2010 | ||||
| June 30, 2011 | (Audited) | |||
ASSETS | ||||
| Current assets: | ||||
| Cash | $ | 0 | $ | 0 |
| Prepaid expenses | 0 | 0 | ||
| Total current assets | 0 | 0 | ||
| Total Assets | $ | 0 | $ | 0 |
LIABILITIES AND STOCKHOLDERS' DEFICIENCY | ||||
| Current Liabilities: | ||||
| Accounts payable - trade | $ | 6,568 | $ | 3,672 |
| Accrued interest expenses | 15,960 | 11,400 | ||
| Advances from and accruals due to related party | 101,113 | 65,113 | ||
| Total current liabilities | 123,641 | 80,185 | ||
| Convertible debt, related party | 76,000 | 76,000 | ||
| Total liabilities | 199,641 | 156,185 | ||
| Stockholders' Deficiency: | ||||
| Preferred stock, 10,000,000 shares authorized, $0.0001 par value; | ||||
| none issued and outstanding | - | - | ||
| Common stock, 900,000,000 shares authorized, $0.0001 par value; | ||||
| 1,088,740 shares issued and outstanding at June 30, 2011 and | ||||
| 1,088,740 shares issued and outstanding at December 31, 2010 | 109 | 109 | ||
| Additional paid-in capital | 46,191 | 46,191 | ||
| Accumulated deficit | (245,941) | (202,485) | ||
| Total Stockholders' Deficiency | (199,641) | (156,185) | ||
| Total Liabilities and Stockholders' Deficiency | $ | 0 | $ | 0 |
| See Summary of Significant Accounting Policies and Notes to Financial Statements. | ||||
| American Biogenetic Sciences, Inc. | ||||||||
| Statement of Operations | ||||||||
| Three Months | Three Months | Six Months | Six Months | |||||
| Ended | Ended | Ended | Ended | |||||
| June 30, 2011 | June 30, 2010 | June 30, 2011 | June 30, 2010 | |||||
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||
| Revenue | $ | 0 | $ | 0 | $ | 0 | $ | 0 |
| Costs and expenses: | ||||||||
| General and administrative | 15,794 | 9,500 | 38,896 | 21,000 | ||||
| Interest expenses | 2,280 | 2,280 | 4,560 | 4,560 | ||||
| Total costs and expenses | 18,074 | 11,780 | 43,456 | 25,560 | ||||
| Net loss | $ | (18,074) | $ | (11,780) | $ | (43,456) | $ | (25,560) |
| Basic and diluted per shares amounts: | ||||||||
| Basic and diluted net loss | $ | (0.02) | $ | (0.01) | $ | (0.04) | $ | (0.02) |
| Weighted average shares outstanding: | ||||||||
| Basic and diluted | 1,088,740 | 1,088,740 | 1,088,740 | 1,088,740 | ||||
| See notes to unaudited interim financial statements. | ||||||||
American Biogenetic Sciences, Inc. | ||||
| Back to Table of Contents | ||||
| Six Months | Six Months | |||
| Ended | Ended | |||
| June 30, 2011 | June 30, 2010 | |||
| (Unaudited) | (Unaudited) | |||
| Cash flows from operating activities: | ||||
| Net income (loss) | $ | (43,456) | (25,560) | |
| Adjustment required to reconcile net income (loss) to cash used in operating activities: | ||||
| Fair value of expenses provided from related parties | 33,000 | 18,000 | ||
| Increase (decrease) in accounts payable and accrued expenses | 10,456 | 7,560 | ||
| Cash flows used by operating activities | $ | 0 | 0 | |
| Cash flows from investing activities: | ||||
| Cash used in investing activities | 0 | 0 | ||
| Cash flows from financing activities: | ||||
| Proceeds from the issuance of common stock | 0 | 0 | ||
| Advances from related parties | 0 | 36 | ||
| Cash provided by financing activities | 0 | 36 | ||
| Change in cash | 0 | 0 | ||
| Cash - beginning of period | 0 | 0 | ||
| Cash - end of period | $ | 0 | $ | 0 |
| See notes to unaudited interim financial statements. | ||||
AMERICAN BIOGENETIC SCIENCES, INC.
Notes to Unaudited Interim Financial Statements
June 30, 2011
Back to Table of Contents
1. Basis of Presentation
American Biogenetic Sciences, Inc. (the "Company", "We" or "ABS") was incorporated in Delaware on September 1, 1983.
The Financial Statements presented herein have been prepared by us in accordance with the accounting policies described in our December 31, 2010 Annual Report on Form 10-K and should be read in conjunction with the Notes to Consolidated Financial Statements which appear in that report.
The preparation of these financial statements in conformity with accounting principles generally accepted in the United States requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on going basis, we evaluate our estimates, including those related intangible assets, income taxes, insurance obligations and contingencies and litigation. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other resources. Actual results may differ from these estimates under different assumptions or conditions.
In the opinion of management, the information furnished in this Form 10-Q reflects all adjustments necessary for a fair statement of the financial position and results of operations and cash flows as of and for the three-and six month periods ended June 30, 2011 and 2010. All such adjustments are of a normal recurring nature. The Financial Statements have been prepared in accordance with the instructions to Form 10-Q and therefore do not include some information and notes necessary to conform with annual reporting requirements.
“Fresh Start” Accounting: We adopted "fresh-start" accounting as of September 20, 2002 in accordance with procedures specified by AICPA Statement of Position ("SOP") No. 90-7, "Financial Reporting by Entities in Reorganization under the Bankruptcy Code.
In accordance with SOP No. 90-7, the reorganized value of the Company was allocated to the Company's assets based on procedures specified by SFAS No. 141, "Business Combinations". Each liability existing at the plan sale date, other than deferred taxes, was stated at the present value of the amounts to be paid at appropriate market rates. It was determined that the Company's reorganization value computed immediately before September 20, 2002 was $0. We adopted "fresh-start" accounting because holders of existing voting shares immediately before filing and confirmation of the sale received less than 50% of the voting shares of the emerging entity and its reorganization value is less than its post-petition liabilities and allowed claims.
The accounts of the former subsidiaries were not included in the sale and have not been carried forward.
2. Earnings/Loss Per Share
Basic earnings per share is computed by dividing income available to common shareholders (the numerator) by the weighted-average number of common shares outstanding (the denominator) for the period. Diluted earnings per share assume that any dilutive convertible securities outstanding were converted, with related preferred stock dividend requirements and outstanding common shares adjusted accordingly. It also assumes that outstanding common shares were increased by shares issuable upon exercise of those stock options for which market price exceeds the exercise price, less shares which could have been purchased by us with the related proceeds. In periods of losses, diluted loss per share is computed on the same basis as basic loss per share as the inclusion of any other potential shares outstanding would be anti-dilutive.
3. New Accounting Standards
In December 2007, the Financial Accounting Standards Board issued FASB Statement No. 141 (Revised 2007), Business Combinations (“SFAS 141R”). SFAS 141R provides additional guidance on improving the relevance, representational faithfulness, and comparability of the financial information that a reporting entity provides in its financial reports about a business combination and its effects. This Statement applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. There was no change in the Company’s financial statements as a result of this standard.
In December 2007, the Financial Accounting Standards Board issued FASB Statement No. 160, Noncontrolling Interests in Consolidated Financial Statements—an amendment of ARB No. 51 (“SFAS 160”). SFAS 160 amends ARB No. 51 to establish accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. This Statement is effective for fiscal years and interim periods within those fiscal years, beginning on or after December 15, 2008. No change resulted from this change.
In May 2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted Accounting Principles.” SFAS 162 identifies the sources of accounting principles and the framework for selecting the principles used in the preparation of financial statements of nongovernmental entities that are presented in conformity with generally accepted accounting principles (GAAP) in the United States. SFAS 162 is effective 60 days following the SEC’s approval of the Public Company Accounting Oversight Board amendments to AU Section 411, The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles. Yhe Company is currently evaluating the impact of SFAS 162 on its financial statements, but does not expect it to have a material effect.
Management does not anticipate that the adoption of these standards will have a material impact on the financial statements.
4. Related Party Transactions not Disclosed Elsewhere
Due Related Parties: Amounts due related parties consist of corporate expenses paid by the principal shareholder, cash advances made to the company as well as the fair value of services provided by the Company's officer and director and the use of office space provided. Such items totaled $101,113 at June 30, 2011. We expensed the fair value of services of $11,000 provided by the Company's officer for the three-month period ended June 30, 2011.
5. Going Concern
The Company's financial statements have been prepared on a going concern basis, which contemplates the realization of assets and settlement of liabilities and commitments in the normal course of business for the foreseeable future. Since adopting "fresh-start" accounting as of September 20, 2002, the Company has accumulated losses aggregating to $245,941 and has insufficient working capital to meet operating needs for the next twelve months as of June 30 31, 2011, all of which raise substantial doubt about the Company's ability to continue as a going concern.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS AND PLAN OF OPERATION Back to Table of Contents
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. They use of words such as "anticipate," "estimate," "expect," "project," "intend," "plan," "believe," and other words and terms of similar meaning in connection with any discussion of future operating or financial performance. From time to time, we also may provide forward-looking statements in other materials we release to the public.
General Background
American 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 opportunity.
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.
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.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Back to Table of Contents
We have not entered into, and do not expect to enter into, financial instruments for trading or hedging purposes.
ITEM 4. CONTROLS AND PROCEDURES Back to Table of Contents
Evaluation of disclosure controls and procedures. As of June 30, 2011, 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 quarterly report.
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
None.
ITEM 1A. 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, 2010, 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.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS Back to Table of Contents
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES Back to Table of Contents
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS Back to Table of Contents
None.
ITEM 5. OTHER INFORMATION Back to Table of Contents
None.
ITEM 6. EXHIBITS Back to Table of Contents
(a) The following documents are filed as exhibits to this report on Form 10-QSB or incorporated by reference herein. Any document incorporated by reference is identified by a parenthetical reference to the SEC filing that included such document.
Exhibit No. | Description |
|---|---|
| 31 | 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. |
| 32 | 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. |
SIGNATURES
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 indicated.
/s/ Richard Rubin
Richard Rubin
CEO, CFO and Chairman
Dated: August 24, 2011