U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2007
Commission File Number: 000-18606
Discovery Technologies, Inc.
(Exact name of small business issuer as specified in its charter)
Nevada 36-3526027
- ---------------------------- ---------------------------------
(State of other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
5353 Manhattan Circle Suite 101 Boulder, Colorado 80303
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(Address of principal executive offices including zip code)
(303) 499-6000
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(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act 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 ___
Indicate by checkmark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act)
Yes X No ___
As of October 24, 2007, the Registrant had 2,083,339 shares of common stock,
$.001 par value per share, outstanding.
Transitional Small Business Disclosure Format (check one): Yes__ No X
INDEX
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Page
Number
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Part I. Financial Information
Item I. Financial Statements
Balance Sheets as of September 30, 2007
(unaudited) and June 30, 2007 2
Statements of Operations, Three Months
ended September 30, 2007 and 2006 (unaudited) 3
Statements of Cash Flows, Three Months
ended September 30, 2007 and 2006 (unaudited) 4
Notes to Financial Statements 5
Item 2. Management's Discussion and Analysis of
Financial Conditions and Results of
Operations 6
Item 3. Controls and Procedures 6
Part II. Other Information 7
PART I FINANCIAL INFORMATION
Item 1. Financial Statements.
DISCOVERY TECHNOLOGIES, INC.
(A Development Stage Company)
BALANCE SHEETS
ASSETS
September 30, June 30,
2007 2007
(Unaudited) (See Note 1)
------------ ------------
Current Assets 423 5,207
------------ ------------
Total Assets $ 423 $ 5,207
============ ============
LIABILITIES AND STOCKHOLDERS' (DEFICIT)
Current Liabilities:
Accounts Payable $ 23,273 $ 14,723
Accounts Payable-related party 16,172 2,797
------------ ------------
Total Current Liabilities 39,445 17,520
------------ ------------
Total Liabilities 39,445 17,520
------------ ------------
Stockholders' (Deficit):
Preferred Stock, $.001 par value
20,000,000 shares authorized
Zero shares issued and
Outstanding -- --
Common Stock, $.001 par value,
780,000,000 shares authorized
2,083,339 shares issued and
outstanding 2,083 2,083
Additional paid-in capital 1,060,387 1,060,387
Accumulated (deficit) (1,052,470) (1,052,470)
Accumulated (deficit) during
Development stage (49,022) (22,313)
------------ ------------
Total Stockholders' (Deficit) (39,022) (12,313)
------------ ------------
Total Liabilities and Stockholders' (Deficit) $ 423 $ 5,207
============ ============
The accompanying notes are an integral part of the financial statements.
2
DISCOVERY TECHNOLOGIES, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
(Unaudited)
For the
Period from
December 4,
2006 (date of
Commencement
of development
Three Months Ended stage) through
September 30, September 30, September 30,
2007 2006 2007
------------- ------------- --------------
Revenues $ -- $ -- $ --
------------- ------------- --------------
Expenses:
Attorney fees 11,394 -- 14,110
Audit fees 7,500 -- 17,500
Bank fees 42 -- 45
Contract Services fees -- -- 376
Edgar filing fees 1,070 -- 1,530
General corporate fees -- -- 815
Mail & postage fees 5,491 -- 5,491
Transfer agent fees 1,212 -- 9,109
Office Supplies -- -- 46
------------- ------------- --------------
Net (Loss) $ (26,709) -- 49,022
------------- ------------- --------------
Per Share $ (.01) $ nil (.03)
============= ============= ==============
Weighted Average Number
of Shares Outstanding 2,083,339 416,244 1,493,530
============= ============= ==============
The accompanying notes are an integral part of the financial statements.
3
DISCOVERY TECHNOLOGIES, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
(Unaudited)
For the
Period from
December 4,
2006 (date of
Commencement
of development
Three Months Ended stage) through
September 30, September 30, September 30,
2007 2006 2007
------------- ------------- --------------
Cash Flows from Operating Activities:
Net (loss) $ (26,709) $ -- (49,022)
Adjustments to reconcile net loss
To net cash used in operating
activities:
Accounts Payable 8,550 -- 23,273
Advance from affiliate 13,375 -- 16,172
------------- ------------- --------------
Net Cash (Used in) Operating
Activities (4,784) -- (9,577)
------------- ------------- --------------
Cash Flows from Investing Activities -- -- --
------------- ------------- --------------
Cash Flows from Financing Activities
Issuance of common stock for cash -- -- 10,000
------------- ------------- --------------
Net Cash Provided by Financing
Activities -- -- 10,000
Increase (decrease) in Cash (4,784) -- 423
Cash, Beginning of Period 5,207 -- --
------------- ------------- --------------
Cash, End of Period $ 423 $ -- 423
============= ============= ==============
Interest Paid $ -- $ -- --
============= ============= ==============
Income Taxes Paid $ -- $ -- --
============= ============= ==============
The accompanying notes are an integral part of the financial statements.
4
DISCOVERY TECHNOLOGIES, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
September 30, 2007 (Unaudited)
(1) Unaudited Financial Statements
The balance sheet as of September 30, 2007, the statements of operations and the
statements of cash flows for the three month periods ended September 30, 2007
and 2006, have been prepared by Discovery Technologies, Inc. (Company) without
audit, pursuant to the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosures, normally included in
the financial statements prepared in accordance with accounting principles
generally accepted in the United States of America, have been condensed or
omitted as allowed by such rules and regulations, and the Company believes that
the disclosures are adequate to make the information presented not misleading.
In the opinion of management, all adjustments (which include only normal
recurring adjustments) necessary to present fairly the financial position,
results of operations and changes in financial position at September 30, 2007
and for all periods presented, have been made.
It is suggested that these statements be read in conjunction with the June 30,
2007 audited financial statements and the accompanying notes included in the
Company's Annual Report on Form 10-KSB, filed with the Securities and Exchange
Commission.
(2) Basis of Presentation
The accompanying financial statements have been prepared in conformity with
generally accepted accounting principles in the United States of America, which
contemplates continuation of the Company as a going concern. However, the
Company has limited working capital and no active business operations, which
raises substantial doubt about its ability to continue as a going concern.
In view of these matters, realization of certain of the assets in the
accompanying balance sheet is dependent upon continued operations of the
Company, which in turn is dependent upon the Company's ability to meet its
financial requirements, raise additional capital, and the success of its future
operations. However, the Company has sustained losses from operations and has
net capital and working capital deficits, which raises substantial doubt about
its ability to continue as a going concern.
Management has opted to resume the filing of Securities and Exchange Commission
(SEC) reporting documentation and then to seek a business combination.
Management believes that this plan provides an opportunity for the Company to
continue as a going concern.
(3) Migratory Merger and Common Stock Conversion
On August 27, 2007 the Board of Directors unanimously adopted resolutions
announcing a special meeting of shareholders to consider and act upon a proposed
Agreement and Plan of Merger, to reincorporate Discovery Technologies in the
State of Nevada by merger with and into a Nevada corporation with the same name
("Discovery Technologies Nevada") which Discovery Technologies formed for such
purpose (the "Migratory Merger"). Effective September 24, 2007, shareholders
approved the Agreement and Plan of Merger as described in the definitive proxy
materials filed with the Securities and Exchange Commission.
In accordance with the Agreement and Plan of Merger, Discovery Technologies
adopted the capital structure of Discovery Technologies Nevada, which includes
total authorized capital stock of 800,000,000 shares, of which 780,000,000 are
common stock, with a par value of $.001 per share (the "Discovery Technologies
Nevada Common Stock") and 20,000,000 shares are blank check preferred stock,
with a par value of $.001 per share (the "Preferred Stock"). In addition, on the
Effective Date described below, the issued and outstanding shares of our Common
Stock automatically converted into shares of Discovery Technologies Nevada
Common Stock at a ratio of nine (9) shares of our currently outstanding Common
Stock for one (1) share of Discovery Technologies Nevada Common Stock.
As a result of the reverse stock split of registrant's common stock,
registrant's outstanding shares of common stock was reduced from 18,746,196
shares to 2,083,339 shares. All references in the accompanying financial
statements to the number of common shares and per share amounts have been
retroactively restated to reflect the stock split.
The Migratory Merger and reverse split became effective on October 16, 2007,
(the "Effective Date") . The new trading symbol for Discovery Technologies, Inc.
on the Over the Counter Bulletin Board is DCVT.
5
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
Discovery Technologies, Inc. was incorporated under the laws of the state of
Kansas in February, 1987. Management's plan of operations is to seek a business
combination with an operating company.
The Company generated no revenues during the quarter ended September 30, 2007,
and management does not anticipate any revenues until following the conclusion
of a merger or acquisition, if any, as contemplated by the Company's business
plan.
The Company has little capital. The Company anticipates operational costs will
be limited until such time as significant evaluation work is undertaken
regarding prospective mergers or acquisitions.
At September 30, 2007, the Company had no material commitments for capital
expenditures.
ITEM 3 CONTROLS AND PROCEDURES
(a) Evaluation of disclosure controls and procedures.
Our Chief Executive Officer and Chief Financial Officer (collectively the
"Certifying Officers") maintain a system of disclosure controls and procedures
that is designed to provide reasonable assurance that information, which is
required to be disclosed, is accumulated and communicated to management timely.
Under the supervision and with the participation of management, the Certifying
Officers evaluated the effectiveness of the design and operation of our
disclosure controls and procedures (as defined in Rule [13a-14(c)/15d-14(c)]
under the Exchange Act) within 90 days prior to the filing date of this report.
Based upon that evaluation, the Certifying Officers concluded that our
disclosure controls and procedures are effective in timely alerting them to
material information relative to our company required to be disclosed in our
periodic filings with the SEC.
(b) Changes in internal controls.
Our Certifying Officer has indicated that there were no significant changes in
our internal controls or other factors that could significantly affect such
controls subsequent to the date of his evaluation, and there were no such
control actions with regard to significant deficiencies and material weaknesses.
6
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 2. Changes in Securities
None.
Item 3. Defaults upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
On September 24, 2007, the shareholders of Discovery Technologies, Inc., a
Kansas corporation ("Discovery Technologies Kansas) approved the merger of
Discovery Technologies Kansas into Discovery Technologies, Inc., a Nevada
corporation ("Discovery Technologies Nevada"), by a vote of :1,696,328 shares
for; 0 shares against; and 0 shares abstained. The merger, scheduled to be
effective on October 16, 2007, will be as provided in the Agreement and Plan of
Merger included as an exhibit to the definitive proxy statement filed with the
Commission on August 31, 2007.
Item 6. Exhibits
Exhibit 3.1 Articles of Incorporation
Exhibit 3.2 Bylaws of the Company
Exhibit 31.1 Chief Executive Officer Certification pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002
Exhibit 31.2 Chief Financial Officer certification pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002
Exhibit 32.1 Chief Executive Officer certification pursuant to 18 U.S.C.
Section 1350
Exhibit 32.2 Chief Financial Officer certification pursuant to 18 U.S.C.
Section 1350
7
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this quarterly report to be signed
on its behalf by the undersigned, thereunto duly authorized.
REGISTRANT Discovery Technologies, Inc.
BY(Signature) /s/ Michael Friess
(Name and Title) Michael Friess, President, Chief
Executive Officer
(Date) November 9, 2007
BY(Signature) /s/ John Venette
(Name and Title) John Venette, Treasurer,
Secretary and Chief Financial Officer
(Date) November 9, 2007
8