10QSB 1 discover10qsb093007.txt 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 ------------------------------------------------------- (Address of principal executive offices including zip code) (303) 499-6000 -------------- (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 ----- Page Number ------ 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