ZGSI Zero Gravity Solutions Inc (CE)

Company Overview

Organizational structure

Zero Gravity Solutions, Inc. a Nevada corporation (including its predecessors, “we”, “us”, “our”, the “ Company”, “ZGSI” or the “ Registrant”), is an agricultural based biotechnology company focused on commercializing technology derived from, and designed for long term spaceflight and planetary colonization with significant applications to agriculture on earth. These technologies are focused on improving world agriculture by providing valuable solutions to challenges facing humanity, including climate change stress and soil degradation threats to agricultural production and the increasing inability to feed the world’s rapidly growing population. The Company’s business model is focused on its primary technology application, BAM-FX^® which is a cost effective, ionic nutrient delivery platform and stimulant for plants that promotes the delivery of minerals and micronutrients systemically. ZGSI is headquartered in Boca Raton, Florida.

Our business activities are conducted in our wholly owned subsidiary, BAM Agricultural Solutions, Inc. (“BAM.”) and our 98% owned subsidiary, Specialty Agricultural Solutions, Inc. (“SASI”). BAM oversees BAM-FX^®’s commercial introduction and business development through product trials and validation with crop growers and distributors that have established business networks in agricultural markets, manufacturing, sales and agronomy support. In addition, BAM manages the introduction of Gardener’s Choice^®, a ready to use product for the home and garden retail markets. SASI, which was incorporated in 2018, is introducing a commercial product for sale by hydroponic legal cannabis and hemp grow operations. Zero Gravity Life Sciences Inc. (“ZGLS”) was originally formed for space research projects, life science applications of our technology and conducting research on future BAM product lines. ZGLS is currently inactive.

Operating Activity Overview

The Company is focused on near-term revenue generation through:

BAM-FX^® is an enabling technology platform, registered as a fertilizer application in fifty (50) domestic states and approved for commercial import and sale in Chile, Colombia, China, Paraguay, India and Brazil.  Gardener’s Choice^® is a product derived from the core BAM-FX^® technology registered as a fertilizer application and approved for sale in all fifty (50) domestic states.

During 2018, the Company prudently devoted resources to domestic and international trials with growers and independent third parties for both commercial and retail, ready to use, products.

Commercial agricultural markets generally adopt new products after multiple years of successful trials showing consistent results. The Company believes that BAM-FX^® will gain market recognition and acceptance as it continues technical product development and support for application timing and dosage rates, validation of the technology attributes and proper product pricing providing growers an appropriate return on their investment. The Company conducted commercial trials on high value crops domestically and internationally during 2018.

The Company, through its affiliation with Nurture Earth, a technology development and outsource research and development company headquartered in Aurangabad, India, conducted extensive product development trials on claims and efficacy of Gardener’s Choice^® in 2018. In addition, research and trial work performed on pigeon pea and pomegranate showed BAM-FX^® applications activated natural latent plant defenses to limit or eliminate the impact of biotic pathogens. The pathogens include aspergillus or collar rot on newly germinated pigeon pea and Telya disease or bacterial blight in pomegranate.

The Company also conducted significant domestic trials on avocado and wine grape during 2018. The avocado trials are conducted in cooperation with the California Avocado Commission and with our distribution partner in Mexico. Early trial results have shown improvement in micronutrient and chlorophyll levels. Yield and quality results from these trials are expected in 2019. Wine grape trials in California commenced in May 2018 treating 40 acres of Pinot Noir grapes against 40 acres of control and concluded during the fourth quarter of 2018. Yield and quality results in treated vines, which were under pressure from a viral disease, red blotch, matched the quality and yield of the untreated control without pressure from red blotch. The wine grape trial reinforced the Company’s claim that BAM-FX^® causes a latent plant defense response to enable a plant to withstand biotic stresses.

Business development in China, India and the Philippines continued through the efforts of consultants and distributors during 2018. The efforts included, but were not limited to, trials on wine grape, vegetables, cotton and flowers. The Company has distribution partners in China and Philippines and has identified potential distribution partners in China. We expect to generate orders and product sale revenue through the distributors’ networks in each of these countries during 2019.

We engaged with a potential distributor in Brazil, DallGree Comercio de Productos Agricola, EIRELI, (“Dallgree”) beginning in 2017 and continued developing the business relationship through 2018. Dallgree ordered 250 gallons of product during 2018 for sale and market development trials with growers on soybean, corn, vegetable and sugar cane crops, the majority of which showed crop benefits during the year. We expect to execute a business development and distribution agreement with Dallgree during the second half of 2019.

BAM, entered into a License and Distribution Agreement during 2018 with a group of Mexican businessmen having longstanding relationships within the Mexican agricultural markets and a successful history in building companies in Mexico and in the U.S. The initial crop introduced to growers under this agreement for trial and registration for import and sale was avocado.

Throughout 2018, the Company continued product and market development of Gardener’s Choice^® and received initial purchase orders from certain big box home and garden retailers during the fourth quarter of 2018 which were fulfilled in 2019. In order to produce and deliver upon expected demand, the Company engaged Assemblies Unlimited, a national full turnkey contract packaging, contract filing and fulfillment services provider for the Gardener’s Choice^® product line.

The Company expects international distributors to purchase commercial quantities of BAM-FX^® and domestic retail entities to order or purchase the Company’s home and garden, ready to use product, Gardener’s Choice^® during 2019.

Domestic commercial activity:

The Company began conducting domestic product trials on a variety of crops in laboratory and academic settings as well as in-field applications on grower/end-user crops during 2014. Trials continued in subsequent years on a variety of field crops, vegetables and fruits, a number of which were validated by independent accredited third-party laboratories or academic institutions, showed significant yield, nutrient and biomass improvements for crops treated.

In excess of one hundred and fifty trials were conducted during 2017. The trials included grower experience, universities and independent third-party laboratories on crops including, but not limited to, tomato, grape, berry, onion, soybean, wheat, cotton, melon, stone fruit, corn, tobacco and cannabis. For commercial markets to develop, multi-year third-party validation trials are necessary. A number of third-party validation trials planned for 2017 were not funded due to lack of financial resources. As a result, our agronomists and certified crop advisors confined their 2017 efforts to identifying appropriate product application timing in crop growth cycles and dosage rates to maximize yield, quality and plant health.

In 2018, the Company targeted a limited number of crops that have high market value for the grower and have shown significant yield and quality improvement from prior tests. We believe BAM-FX^® can produce a significant return on investment for growers of high value crops, which will then provide the Company an opportunity to penetrate agricultural input markets with a shorter market acceptance period.

The Company targeted grape, avocado, berries, soybean, tobacco and certain vegetable crops during 2018. Based on significant improvements in yield and quality on medicinal cannabis from testing with growers in Mendocino and Humboldt Counties in California, the Company added legal cannabis to its list of target crops for 2018. Revenue focused trials which continue in progress, are conducted in cooperation with the California Avocado Commission. Early trial results have shown improvement in micronutrient and chlorophyll levels and appear to have increased the tree canopy, which allowed the tree to shield most of its emerging fruits from a frost in early 2019. The control did not express an increase in canopy and showed significant loss. A positive revenue focused trial on wine grape concluded in December 2018 showing BAM-FX^®’s ability to control the spread of virus in the plant. We believe, based on the results of our work in avocado and wine grape, both participants and grower observers will begin incorporating BAM-FX^® into their nutrition programs in 2019.

The Company’s market strategy is to develop relationships with potential channel partners. In general, a channel partner is an established agricultural input distributor and/or service provider with which the Company has executed a distribution agreement. Three domestic distribution agreements were signed during 2016 and two domestic distribution agreements were signed in 2017. No domestic distribution agreements were signed in 2018. Although we expected our domestic channel partner strategy would begin generating product revenue during the 2018 growing season, the Company did not have sufficient financial resources to provide sustained technical support for the product introduction process with the distributors’ customers.

During 2018 while continuing to pursue a channel partner strategy and our technical product development fieldwork, the Company expanded its approach and began discussions with three large prospective domestic agricultural industry leaders and a number of regional agricultural input distributors. The objective was to explore technological synergies and product integration strategies incorporating BAM-FX^® into existing product lines to enhance the effectiveness of these products. We believe the Company’s technology is a delivery platform or product enhancement that, when incorporated into other agricultural products, such as fertilizer, the resulting product's effectiveness and grower return on investment is improved. The Company plans to continue its 2018 product integration discussions and technology development with these agricultural industry leaders recognizing that the benefit of these efforts will not result in near term revenues, instead are a part of a longer term product integration and licensing strategy.

         During 2018, we were introduced to a potential strategic partner with an interest to incorporate BAM-FX^® into an existing commercial product. The potential strategic partner is a company owning a large portfolio of agricultural and outdoor product brands and has annual net revenue in excess of two billion dollars. We participated in a competitive trial conducted by a third party laboratory.  The trial compared BAM-FX^® performance results with the results of another name brand plant food supplement product on tomato, vinca and turf. Overall, BAM-FX^® results showed favorably. We are continuing product development integration by testing the dry formulation in conjunction with the potential strategic partner’s brand fertilizer.

International commercial activity:

International business development efforts begun in 2015 continued throughout 2018. The Company’s international business strategy, in general, is to engage existing agricultural entities, which have strong distribution channels within a country, that are financially able to introduce new products into local agricultural markets. We have initiated business development activities through existing management relationships or trusted referrals. The Company undertakes the cost of developing the relationship, provides technical product support including research, trial data and product application protocols. The local entity contracts directly with the Company and incurs the cost of business development efforts within the country. By the end of 2018, we completed three years of product efficacy and business development work in India, and two years of product efficacy and business development work in China, Philippines and Brazil. We have found that the product acceptance cycle internationally, although subject to replication of results, is shorter than the domestic acceptance cycle. BAM-FX^® is approved for commercial import and sale in Chile, Colombia, China, Paraguay, India and Brazil.  We expect to obtain government approval for import and sale in Philippines and Mexico during 2019.

           We employ the technical talents of certified crop advisors and agronomists, both domestically and internationally, to support our commercialization and revenue generation efforts. During the second half of 2017, the Company began to focus on crops with high market value for growers enabling the grower to realize a return on the cost of purchasing and applying BAM-FX^® As a result of the change in focus, the Company began and continued through 2018 to reduce the number of technical consultants and advisors employed domestically. In India and China, the Company has maintained or increased the use of contracted technical and business development talent to introduce BAM-FX^® into those markets.

           During the third quarter of 2016, the Company formed an agronomy and science team to integrate agronomy and crop advisor personnel and centralize technical product know-how in Asia and North and South America. The domestic agronomy and science team provided technical support to growers and channel partners in domestic and international markets during 2018.The team maintains the Company’s relationships with science advisors at the NASA-Ames Research Center (“ NASA ARC”), which were developed pursuant to a Reimbursable Space Act Agreement (“ RSAA”) executed in January 2016. Due to lack of adequate resources, we were unable to continue our research work pursuant to the RSAA during 2018.

           The Company expects to increase its agronomy support to international markets in 2019 as those changes are necessitated by business development efforts with expectation of product revenue.

Paraguay

The Company executed an exclusive distribution agreement with a distributor in Paraguay during 2016. In collaboration with that distributor, the Company completed Paraguay’s government product testing requirements for commercial import and obtained import approval from Servicio Nacional de Calidad y Sanidad Vegetal y de Semillas (“SENAVE”), the government agency overseeing agricultural imports. BAM-FX^® tests were successfully completed by the Paraguay Agricultural and Technological Center in January 2017 and submitted to SENAVE. BAM-FX^® was registered and approved for commercial sale in Paraguay during the second quarter of 2017.

The distributor in Paraguay completed commercial soybean trials and compiled results from trials begun in 2017 during the first quarter of 2018, which showed grower benefits resulting in an increased return on their investment. Due to the distributor’s complete shift of resources to other endeavors, we are currently evaluating and exploring other distributors to exploit this market. Although we recognize the significant market potential in Paraguay, the Company expects to cautiously approach business development efforts when sufficient resources permit.

Brazil

BAM-FX^® was introduced to Brazil during 2016. The Company contracted with Fundacao de Apoio A Pesquisa Agricola, a private nonprofit entity established under the laws and registered with the Brazilian government, which provided positive product test results for the Brazilian government’s product registration and import approval process. A Brazilian channel partner, DallGree, was identified during 2017 and introduced to the Company by one of the Company’s agronomy and science consultants affiliated with the University of Florida, familiar with agricultural markets and distributors in Brazil. During the first and second quarters of 2019, one of our agronomy team provided technical support and business development assistance to DallGree, in meetings with multiple Brazilian growers applying BAM-FX^®. We expect to finalize a distribution agreement with DallGree during the second half of 2019.

Colombia

           BAM-FX^® was introduced into Colombia during 2016.  The Company contracted with an independent Colombian laboratory during 2016 to test and provide evidence of effectiveness of BAM-FX^® for the Colombian government’s registration and approval to commercially import product, which we received during 2017. The Company engaged an import-export company in Colombia during 2016 to introduce BAM-FX^® to commercial agricultural markets in Colombia, pursuant to a foreign business development consulting agreement. The Company terminated the agreement in 2018 and we are working with a business development consultant to identify a Colombian distributor to sell, market and distribute BAM-FX^® within Colombia.

India

Pursuant to a non-exclusive distribution agreement executed in 2015 for certain countries in the Asia-Pacific markets, a distributor engaged a potential sub-distributor in India during 2016, Nurture Earth. During 2018 the Company terminated the non-exclusive distribution agreement and continued business development efforts in India directly through Nurture Earth.

Nurture Earth, in addition to providing technical support for product development of BAM-FX^® and Gardener’s Choice^® during 2017 and 2018, conducted trials with a number of target customers, both large agricultural users and distributors. Foliar applications and seed treat trial work showed yield improvements on vegetables of approximately fifty percent (50%), cotton approximately twenty-eight percent (28%) and tomato approximately forty eight percent (48%) of harvested fruit weight and approximately eighty three percent (83%) in seeds. Seed treat results on pigeon pea showed positive germination and in excess of a ninety percent (90%) survival rate when exposed to a fungus, aspergillus, against a control survival rate of less than ten percent (10%).

During the first quarter of 2019, Nurture Earth began treating fifteen (15) plants infected with bacterial blight, Telya disease, out of a total population of five hundred and fifty (550) pomegranate plants. Telya has no known cure, reduces fruit yield by up to 90% and is widely spread in India. Although subject to additional observation and testing, it appears that the BAM-FX^® treatment arrested the spread of the bacterial blight and promoted plant regeneration.

The Company, with the assistance of Nurture Earth, obtained approval from the Indian government to import BAM-FX^® for commercial sale during the first quarter of 2019. We believe growers and sub-distributors in India identified by Nurture Earth will begin purchasing and applying our product in 2019. We received a product purchase order from Nurture Earth and expect to fulfill that order in the fourth quarter of 2019.

China

The Company contracted a business development entity with offices in the U.S. and China, Asia 21 Communications, LLC (“Asia 21”), as its project manager for marketing and product testing in China during 2017. The results of the trials during 2017 in China were positive in certain crops and have encouraged growers to replicate the trials in 2018, the second year of tests in grapes, rice and tobacco. Trials in wheat, soybean, berries, tomato and stone fruit showed either marginally improved crop yield or yield less than ten percent (10%), which growers consider statistically insignificant. We believe these marginal results are due to application protocols, which were not optimized. Trials with wine grape, conducted successfully in 2017, were replicated in 2018, showing marginal improvement primarily due to growers’ limited use of nutrient programs in one out of five years of which 2018 was a permitted year. Although trial results were positive, we have been asked to conduct one additional trial in 2019, a year, in which, nutrient programs are not permitted.

On February 12, 2018, the Company was notified that BAM-FX^® was approved for import and commercial sale within China.

A number of potential distributors have been identified in China, however, the Company has no formal distribution agreements with distributors in China, at this time. Although we hope to generate nominal revenue from sales to growers through Asia 21 during 2019, we do not expect to generate significant revenue through distributors in China during 2019. 

Chile

After a review of ongoing costs associated with the Company’s operations in Chile and potential for near term commercial sales and collection of accounts receivable, the Company determined during the fourth quarter of 2017 that the cost associated with penetrating and maintaining the Chilean market would require significant additional resource commitments during 2018, which we determined would be better utilized in markets with shorter term sales prospects. The Company began supporting the Chilean operations financially during 2015. Initially the Company expected the Chilean operation would obtain and provide its own financing to support operating as a distributor in the country. Despite successful trials conducted in Chile, the expected funding was not secured by the potential Chilean distributor. We believe it is necessary to engage an established and financially stable distributor to continue developing the market for BAM-FX^® in Chile. The Company expects to resume business development efforts when financial resources are available to identify, engage and support a distributor.

Mexico

On February 20, 2018, BAM and a group of Mexican businessmen (the “Lichtinger Group”) entered into a License and Business Development Agreement Mexico, effective as of February 13, 2018 (the “Business Development Agreement”). Following consummation of the Agreement, the Lichtinger Group formed Agro Space Tech SA de CV de RV (“Agro Space”), a Mexican company, to which BAM received a twenty percent (20%) equity ownership interest. This interest was recorded with the formation of the Company, but we did not receive certificates. The Business Development Agreement provides Agro Space with the exclusive right to import, package, sell and distribute BAM’s product lines and promote its brand, as well as other “white label” brands as they are introduced, in the Mexican markets, and a limited manufacturing right to modify the presentation of BAM’s products and dilute such products, all during the term of the Business Development Agreement. Trials with avocado growers began in the fourth quarter of 2018 with final results during the fourth quarter of 2019.  During the second quarter of 2019, Agro Space began trials on berry crops. We expect our agronomy team will continue to work with Agro Space’s agronomy expert in Mexico during 2019 to develop protocols through numerous tests of BAM-FX® in diverse geographies and soils. We believe Agro Space will obtain approval for import and sale of product in Mexico during 2019. Assuming the success of the trials and receipt of import approval, we anticipate commercial product introduction efforts could begin in 2019.

 Haiti

             During the fourth quarter of 2017, the Company entered into a distribution agreement with a group for product sale and distribution to the government of Haiti. Although we expected an initial order of 50,000 gallons of BAM-FX^® during 2018, due in part to political problems within the country, we do not expect orders will be forthcoming in 2019, if at all.

Domestic Retail Market Activity 

During 2016, the Company investigated entering the home and garden retail market with a specially formulated ready to use offering of BAM-FX^®. During 2017, the Company applied for the trademark, Gardener’s Choice^®, the name of the retail product and on January 10, 2018 received notice of allowance from the USPTO.

Although we expected to test market acceptance using pilot programs in certain big box stores during 2017, the Company determined that additional product development work was needed. During 2017, product efficacy, stability and safety validation work, including corrosivity, was expanded with the assistance of Nurture Earth and completed during the third quarter of 2018. Product formulation was refined for the ready to use markets during 2018. Efficacy testing was successfully performed on a wide range of home and garden flowers and vegetables. Product configuration and artwork were finalized during the fourth quarter of 2018. The Gardener’s Choice^® label was registered with and the product approved for sale by all state regulatory agencies during the first quarter of 2019. Product artwork was finalized for production during the first quarter of 2019.

As part of Gardener’s Choice^® product introduction strategy, the Company displayed product at and staffed a booth at the GIE Expo 2017 and 2018 and the Ace Hardware 2018 Spring and Fall Conventions to showcase the product. During the fourth quarter of 2018, our representatives also attended the Great Lakes Expo and PLMA, Private Label Trade Show. We delivered orders for Gardener’s Choice^® counter displays and aisle displays in the first and second quarter of 2019. Our response from attending industry trade shows, including the Ace Hardware 2018 Fall Convention and the GIE Expo 2018 during October 2018, and initial marketing efforts to several co-op and big box buyers at both regional and national levels has been positive and generated interest in 2019 product placement.

             We have developed an overall marketing strategy for introduction and promotion of Gardener’s Choice^® including print and social media. One component of our strategy incorporates educational programming on certain internet platforms. Sales and presentation materials for retail consumers and buyers and retail point-of-sale displays are being developed to deploy during 2019.

The Company engaged two senior level retail sales and marketing consultants during 2018 with existing sales representative networks to introduce and place product in regional and national big box retail outlets, including Ace Hardware. We also engaged a senior level retail marketing professional to introduce and place product in national lower cost retail and health care retail stores to broaden product exposure and customer experience.

We have engaged a product contract packaging company, Assemblies Unlimited, for product bottling, packaging and logistics assistance. Assemblies Unlimited has production capacity to handle our requirements, based on expected product orders, in the foreseeable future.

Specialty Crop Activity

In 2016, a licensed grower in Mendocino Country provided the Company anecdotal information on significant yield improvement the grower realized by applying BAM-FX^® to cannabis plants. The grower conducted the work without the Company’s participation. As a result of yield improvement reported, the Company participated in two independent trials during 2017 on medical cannabis in California with growers licensed with the State of California. A trial in Mendocino County resulted in an increase in cannabinoid levels from 15% in the control crop to approximately 23% for the crop treated with BAM-FX^®. Complete yield results were not available for this trial as wildfires caused partial crop damage. A second trial in Humboldt County, California, with a licensed grower, showed an approximate forty four percent (44%) yield increase using BAM-FX^® over the control group.

With the positive trial results obtained and the number of inquiries the Company received about the use of BAM-FX^® on cannabis crops during the fourth quarter of 2017, the Company added cannabis and hemp as target crops for 2018. The Company restricted its business activities to sale and distribution of product to stores catering to cannabis growers, providing the picks and shovels to growers.

During the second quarter of 2018, the Company engaged a master cannabis grower as a subject matter expert consultant to assist with understanding the market and developing retail markets in Michigan, Colorado, California and Oklahoma. Product was introduced to Michigan grow stores using one ounce samples for counter display and product advertising in the Michigan Medical Marijuana Report. Due to positive response from growers’ tests of the one-ounce samples, during the fourth quarter of 2018 we began selling product to grow stores. Customers began purchasing product resulting in store reorders in the first quarter of 2019. We began product marketing in Oklahoma during the first quarter of 2019.

Manufacturing Operations

We operate a manufacturing facility in Okeechobee, Florida, managed by an experienced biochemical engineer. Manufacturing is conducted on an as needed batch process. The Company continues to make process improvements and modifications to existing equipment and facilities to enhance efficiency, comply with regulatory requirements, control the quality of raw materials used in production and consistently provide customers a quality product. The Company has two product mixing lines, which increase production capability for expected product demand. A reverse osmosis water treatment system provides consistent water quality. Manufacturing operations during the second half of 2017 concentrated on process and procedure documentation, quality control and production precision. During 2018, we completed documentation of our standard operating procedures. During the third and fourth quarter of 2018, we integrated inventory control and product delivery systems to coordinate product deliveries to TF Fulfillment, our Gardener’s Choice^® fulfillment vendor. We believe our plant capacity will be adequate for expected future product requirements. 

Research and Development Activity

          We believe the Company’s proprietary technologies enable the development of a diverse product line with unique solutions to big problems, representing significant potential revenue and profit opportunities. Due to the market scope and the associated regulatory requirements to reach full profit potential, ZGSI’s strategy is to enter into business affiliations by executing distribution agreements, domestically and internationally, with industry-leading agriculture product distributors which could leverage our collective resources and expedite revenue generation. In addition, we believe our proprietary technologies represent a delivery platform or enabling system that could enhance the performance of agricultural inputs for other agricultural companies’ products. We believe product integration and associated research will be a component of our business activity in 2019.

The Company developed scientific relationships with NASA ARC, Ohio State University. UC Davis, Utah State, University of Iowa and Penn State University during 2016 to understand and validate the science incorporated in BAM-FX^® and identify additional commercial attributes. The Company did not have the financial resources to fully exploit these relationships during 2018 due to financial constraints. We engaged Texas A&M on cotton trials during 2018, which although successful, were not conclusive due to widespread adverse weather conditions on Texas cotton fields during the year. We expect to collaborate with Iowa State University during 2019 to show the efficacy of certain new products including a dry formulation.

Pursuant to the RSAA with NASA ARC, the Company has access to NASA scientists and laboratories. Because the RSAA is reimbursable agreement, whereby the Company reimburses NASA for technical services, the Company retains ownership of intellectual property resulting from the research work performed.

NASA ARC used its unique, ground-based, controlled environment facilities and research personnel to address a series of questions relevant to both ZGSI and NASA during 2016 through the first half of 2017. The scientific data is jointly evaluated by ZGSI and NASA ARC to determine utility of the ZGSI products to commercial agriculture and NASA applications. First year research pursuant to the RSAA was completed during the first half of 2017. The studies were conducted in both soil pots and hydroponic systems with near optimal nutrient supply. The results, which showed a significant improvement in plant productivity, suggest that the effects of BAM-FX^® include improvement in nutrient use efficiency and enhancement of photosynthetic efficiency which causes an increase in the amount of biomass produced per unit of light energy absorbed by the plant.

As jointly agreed and based on evaluation of the scientific data, space flight opportunities have been identified to test our potential role in achieving NASA goals in plant-based space biology and life support pursuits. On February 21, 2017, the Company’s research experiment using BAM-FX^® was successfully delivered to the ISS, launched from the Kennedy Space Center on February 18, 2017. In collaboration with NASA and Inrinsyx Technologies Corporation (“Intrinsyx”), the experiments studied the growth and nutritional effects of BAM-FX^® in broccoli seedlings in microgravity, advancing scientific knowledge to promote the growth of fresh, nutrient-dense food for astronauts on long duration space missions. In a report issued by Intrinsyx, the space flight experiment test was successful as the results obtained during space flight supported the initial hypothesis that using BAM-FX^® in plant growth media enhanced broccoli growth for both roots and shoots over untreated controls with an approximate doubling of growth size and fivefold greater dry weights obtained on orbit. The Company additionally participated in launched research experiments on June 3, 2017 and April 3, 2018 in collaboration with Intrinsyx.

From the scientific work of NASA ARC, ZGSI expects to understand BAM-FX^®’s mode of action and physiological effects leading to increased yields currently observed on earth in commercial agricultural systems and address the science questions of interest to ZGSI and queries from channel partners. Additionally, ZGSI expects to discover how to utilize BAM-FX^® for applications for growing plants in the controlled conditions of spaceflight and for human colonization of other worlds. ZGSI plans to optimize BAM-FX^® application methods in both controlled environment agricultures on earth and in space flight applications.

We have maintained our relationship with and provided trial data and product development information to NASA ARC personnel with the hope of continuing our relationship under the RSAA. Pending adequate financial resources, we hope to fund additional research and continue working with NASA ARC in 2019 to finalize: the preliminary results of our 2016 and 2017 studies and, identify the scientific evidence of the action of BAM-FX^® within the plant structure. 

In collaboration with Nurture Earth and based on research performed on our behalf, certain proteins found to express after application of BAM-FX^®, were identified in 2018. These findings provide the basis for additional research to understand how and if BAM-FX^® acts as a primer. A primer evokes a plant’s defense responses against biological and environmental stress. We expect to utilize the date from this research to file certain patent applications during 2019.

Corporate History and Structure

Zero Gravity Solutions, Inc. was initially incorporated in the State of Idaho as Hazelwood-Gable, Inc. on August 19, 1983 to engage in the business of developing mineral resources. The Company engaged in limited operations until 2003. On June 19, 2002, the Company changed its corporate domicile to the State of Nevada and, on November 25, 2003, changed its name to American Thorium, Inc. On December 10, 2003, the Company entered into an agreement to acquire certain mining claims and changed its name to Thorium Nuclear Energy, Inc. on March 5, 2004. On March 8, 2006, the Company changed its name to Hazelwood Ventures, Inc. and began looking for new business ventures. On June 14, 2006, the Company changed its name to Monarch Molybdenum & Resources, Inc. and on November 27, 2007 entered into a merger agreement, whereby it was to acquire certain mining claims from Thorium Energy, Inc. and changed the Company's name to Thorium Energy, Inc. The merger agreement was rescinded on March 19, 2008 and the Company changed its name to Monolith Ventures Inc. on April 2, 2008 and with the intent to acquire or merge with one or more businesses. On December 30, 2011, the Company acquired ElectroHealing Holdings, Inc., which held certain patents, patent applications and other technologies and/or licenses pertaining to medical device technology and changed its name to ElectroHealing Technologies, Inc. on January 12, 2012. Subsequent to the transaction, management re-evaluated the merits and benefits of the ElectroHealing Holdings, Inc. acquisition and began to explore possible alternatives. Accordingly, we executed a rescission agreement on December 20, 2012 that returned the previously acquired patents and technologies in exchange for the cancellation of the shares of our common stock previously issued in the acquisition.

Formation of ZGSI and the Company’s Current Structure

On December 3, 2012, we entered into a Patent Acquisition Agreement with John W. Kennedy whereby we acquired certain patents applications and technologies related to the Company’s current Directed Selection™ business segment. In connection with the acquisition of this technology, we changed our name to Zero Gravity Solutions, Inc. on January 11, 2013 to better reflect our new business endeavors, and issued 11,500,000 shares of our authorized, but previously unissued common stock. In connection with this acquisition, we moved our corporate headquarters from Salt Lake City, Utah to its current location at 190 NW Spanish River Boulevard, Suite 101, Boca Raton, FL 33431. Our website address is www.zerogsi.com.

On July 30, 2013, John W. Kennedy assigned to the Company the entire right, title and interest in, to and under the invention and provisional patent application for Bioavailable Minerals for Plant Health which became the basis for the Company’s BAM-FX^® business segment.

The Company currently has two wholly owned subsidiaries: BAM and ZGLS.  BAM is a Florida corporation that holds and controls the manufacturing, sales and revenue generation of the Company's agricultural product, BAM-FX^®.  ZGSL is a Florida corporation that is currently inactive. The Company had previously wholly owned Zero Gravity Solutions, LTD, and BAM Agricultural Solutions, LTD. (both private United Kingdom limited companies based in the United Kingdom) which had been created to service the Company's expected operations and interests in the European Union. During the fourth quarter 2015, both UK companies were liquidated.

On September 25, 2018, the Company incorporated SASI. As of December 31, 2018, the Company owns 98% of SASI. The remaining 2% is owned by outside investors.  The Company’s cannabis and hemp business initiatives will be conducted through SASI. Activity for SASI began in 2019.

The Company currently has 17 employees, of which all are full-time employees. The Company has selected December 31st as its fiscal year end.

          On April 29, 2019, we entered into a Settlement Agreement with John W. Kennedy, the Company’s former Chief Science Officer and a former member of the Board of Directors, pursuant to which, among other things, the Company assigned USPN 9,816,071, Patent Application No. 15/729,038, Patent Application No. 14/244,084 and International Patent Serial No. PCT/US 15/24045 (collectively, the “Intellectual Property”) to Mr. Kennedy, and Mr. Kennedy agreed to effectuate the transfer of two million shares of common stock of the Company back to the Company (the “Settlement Agreement”). The Intellectual Property relates to technologies that the Company does not intend to pursue. The Settlement Agreement was entered into in order to resolve certain disputes between the Company and Mr. Kennedy concerning various licensing and royalty agreements entered into between the parties covering the Intellectual Property.

Principal Product Lines

BAM-FX^®

BAM-FX^® is an ionic micronutrient delivery system for plants. BAM-FX^® was originally developed by John W. Kennedy, our former Chief Science Officer and director, to grow food crops in space vehicles designed for deep space human missions, but has been found to have potentially far reaching applications for agriculture on earth. BAM-FX^® is a proprietary formulation, currently including micronutrients zinc and copper, used to improve plant performance by providing a delivery system that allows plants to more efficiently uptake nutrients. BAM-FX^® is not classified as a genetically modified organism.  The BAM-FX^® formula, works as an enhancement of or bio-stimulant for other agricultural plant treatment regiments. BAM-FX^® enhances the uptake of nutrients and it is capable of improving crop yields and potentially reducing input costs.

BAM-FX^® can be applied by seed treat or soak, soil application using drip irrigation systems or as a foliar treatment of the plant at certain stages of the plant’s development. Our product development work during 2018 indicates that seed and foliar treatments result in optimal plant response.

Academic and grower product trials, validated by independent laboratories and academic institutions, showed BAM-FX^® treated plants exhibit faster germination, higher yields, increased plant resistance to harmful environmental factors and higher quality fruit and vegetables. Trials have shown that applications of BAM-FX^® on various crops reduces the need for multiple applications of other products, which we believe will save growers time and money while creating faster growing, healthier, and more robust plants. Additionally, we believe BAM-FX^® may provide significant value for farmers, growers, and world agriculture through: 

Food crops offer the best source of nutrition for humans since many supporting nutrients require organic carriers and are not normally absorbed by using vitamin and mineral supplements alone. As BAM-FX^® can be applied to any plant, we anticipate a substantial demand for BAM-FX^® to support improved crop health and nutrition.

The Company completed trials on the effects of BAM-FX^® on medicinal cannabis with certified licensed growers on outdoor crops as well as crops in a highly controlled internal environment during 2017 and 2018. The same positive results we have seen with commercial agriculture crops were also evidenced with cannabis. During the fourth quarter of 2018, the Company introduced a sixteen (16) ounce liquid concentrated product into hydroponic retail stores in Michigan with 2019 introductions planned for Colorado and Oklahoma.

Gardener’s Choice^®

Gardener’s Choice^® is a ready to use, home and garden product developed for consumer retail markets. Gardener’s Choice^® is a derivative of BAM-FX^®, a liquid product packaged in a six ounce and a thirty-two (32) ounce hand held trigger spray bottle. During 2018, the Company completed product development of and registered Gardener’s Choice^® for sale in all domestic states. The product is intended for use on household and garden flowers, herbs and vegetables.

Revenue Cycle

The commercialization cycle for new agricultural products is minimally two to three growing seasons. Our 2015 trials included a mix of independent laboratory tests, first year small-scale trials with growers and second season multiple acre trials with growers. Demonstrating consistent product performance is one key to obtain product orders from growers in the United States. During 2016, in connection with NASA ARC, we began developing product application dose rates and response curves scientifically to enable us to predict outcomes and support consistent performance. We have undertaken trials with growers of grape, avocado, tobacco, berries, cotton, soybean and stone fruit during 2017 and 2018 with positive result. Many of these trials are in the second and third year with the same growers. Although we will continue our trial efforts in 2019, we hope growers will begin to incorporate BAM-FX^® into their standard operating procedures during 2019.

Although United States growers have not historically been innovators and have required multiple growing season trials before adopting new products and technologies, our domestic trial results were instrumental in opening commercial markets in Asia, Mexico and South American countries.

During the fourth quarter of 2016, the Company entered into an agreement with Global Biotech, S.A.S. a Colombian agricultural testing and analytic laboratory, to evaluate BAM-FX^® through a series of product application tests to obtain approval for commercial import. We received registration approval through the Colombia Institute of Agriculture during 2017 for commercial import. The Company terminated the agreement in 2018. We are working with a business development consultant to identify a Colombian distributor to sell, market and distribute BAM-FX^® within Colombia.

Having been approved for import and sale in Brazil, we provided on-site technical assistance and business development support with growers for our prospective distributor, DallGree during the first and second quarter of 2019. Based on successful trials conducted on a number of crops, growers have begun purchasing our product through DallGree. We expect DallGree will place additional purchase orders with us during the second half of 2019 to replenish their inventory.

The Company conducted initial market analysis in China with the assistance of a contractor, Asia 21, focusing on the sale and distribution of products and solutions into China and providing local operational support, management and services. Asia 21 has offices in the United States and China. Registration with the China Ministry of Agriculture for approval to import and sell BAM-FX^®, which began during the fourth quarter of 2016, was received in February 2018. We plan to continue our business development efforts in China during 2019 and hope to generate initial orders from purchasers during the second half of 2019.

The Company began introducing BAM-FX^® to Asia-Pacific markets in 2016, targeting potential distributors through existing business relationships. High-value crop and row crop product evaluation is currently in process in a number of Asia-Pacific countries including India and Philippines. In India, Nurture Earth has completed three years of trial work with growers and seed companies. We received a product order from Nurture Earth and expect to fulfill that order in the fourth quarter of 2019.

Retail markets are driven by innovation, performance and brand recognition. During the fourth quarter of 2017, we introduced the Gardener’s Choice^® brand by attending and manning a booth at the Ace and GIE trade shows and attended both again during 2018. The product generated interest at Ace and GIE trade shows and purchase orders at the Ace Hardware 2018 Fall Convention. During the fourth quarter of 2018, our representatives also attended and manned a booth at the Great Lakes Expo. We hope, once Gardener’s Choice^® is on retail store shelves, our product packaging, benefits and promotional material, will encourage consumer purchases and repeat orders. During November 2018, we attended and explored private label opportunities at the PLMA, Private Label Trade Show. Revenue is expected to follow the home lawn and garden spring, summer and fall planting season cycles.

Cannabis growers tend to be innovators and rapid adopters of new products. Grower opinion on products travels quickly via social media. Sale of product to outdoor growers follows a cycle similar to home and garden retail sales. Indoor growers purchase products throughout the year, having multiple grow cycles and crops. Our product introduction and its short-term success will depend on those early adopters and the results they realize which, we believe, will spread quickly by word of mouth and social media exchanges. We have seen positive product response.  The Company is currently focused on developing relationships with national distributors.

Timeline and Plan of Operations

While we believe we can realize sustainable revenue executing our plan to leverage our technology and resources by developing strong business relationships with our channel partners in domestic and international commercial markets; integrating our technology into other agricultural companies’ products; introducing our ready to use lawn and garden retail product, Gardener’s Choice^®; and developing markets through sales to hydroponic grow stores and national distributors. However, we cannot guarantee we will be successful. Our business is subject to risks inherent in the establishment of a new business enterprise including the financial risks associated with the limited capital resources currently available to us for the implementation of our business strategies. There can be no guarantee that we will be able to obtain the necessary levels of profitability or fundraising needed to remain operational on a long-term basis. Adequate additional financing may not be available to us on acceptable terms, or at all. If we are unable to raise capital when needed or on attractive terms, we would be forced to delay, reduce or eliminate our research and product development programs or any future commercialization efforts. We will need to generate significant revenues to achieve profitability, and we may never do so.

Zero Gravity Solutions, Inc.

The Company is subject to the reporting requirements of the Securities Exchange Act of 1934, as amended and provides general and financial administration, marketing support and strategic planning to BAM and SASI. The Company also develops product marketing material, investor oriented materials and provides systems support and market reach on our websites and through social media programs.

            During August 2016, the Company identified a need to raise additional funds to execute its business plan for the remainder of 2016 and future periods. In October 2016, the Company began addressing those requirements through a private placement of common stock of up to $10,000,000 at $3.00 per share of common stock issued (the “ 2016 Private Placement”).  For the fiscal year ended December 31, 2018, the Company issued approximately 304,000 shares of common stock and received gross proceeds of $911,154 pursuant to the 2016 Private Placement. 

 During the first quarter of 2019, the Company redirected its corporate finance strategy by withdrawing a private placement and restructuring its debt with the cooperation of certain of its noteholders, more fully detailed in the Company’s Current Report on Form 8-K, filed with the SEC on June 13, 2019. The restructuring consolidates the Company’s existing notes and provides more favorable payment terms. In addition, the Company raised an additional $3,400,000 as a result of this restructuring.

               The Company expects to continue providing strategic directives, management and financial support to BAM, including working with NASA and Intrinsyx on future BAM-FX^® related research missions to the ISS and the roll out of Gardener’s Choice^® to big box and other retail outlets during 2019. The Company also expects to provide business development and financial support to SASI in 2019. 

BAM Agricultural Solutions, Inc.

BAM’s ability to execute its 2019 business strategy depends on the Company obtaining sufficient operating capital. BAM. expects to build commercial agricultural product demand and brand recognition for BAM-FX^® by generating sales and revenue in domestic and international markets through distributors and direct sales, pursuing technology integration or licensing opportunities with large agricultural companies, and launching its lawn and garden retail product, Gardener’s Choice^® and hydroponic grow store retail product during 2019. For the 2019 business strategy to be successful, we will need to directly provide business development and technical agronomy support.

The Company’s core product, BAM-FX^®, is an aqueous solution containing ionic zinc and copper micronutrients, in addition to sulfur. Currently, the product is sold in a concentrated form with pre-application dilution in rates ranging from 1:100 to 1:2,000. BAM-FX^® can be used in irrigation or hydroponic, seed treat and foliar applications. Zinc and sulfur promote plant growth and yield. Copper promotes enzyme activities in plants and is essential for chlorophyll and seed production. We believe the combination of micronutrients with other product attributes enables the product to improve crop yields, promote growth and withstand environmental stress by improving the plant’s ability to more efficiently uptake nutrients either available or latent in soils. The composition of micronutrient contained in BAM-FX^® is a contributor to its performance as a growth stimulator. We plan to focus our 2019 sales, agronomy and research efforts on - foliar and seed treat applications, introduce a granular product and refine application protocols on our targeted crops. 

Domestic target crops for 2019 commercial markets are primarily those crops with high farm value to growers including grape, berry, soybean, cotton, tobacco, vegetable, hemp, cannabis and avocado.

Business development efforts, including additional product performance trials, are expected to continue in India and China. The Company received approval to import and sell BAM-FX^® in China during February 2018 and in India during the first quarter of 2019. We plan to continue our business development engagement with Asia 21 to place product with local distributors in China. Our target crops for China 2019 commercial sales include grape, rice and flowers.

We are negotiating the terms of a distribution agreement with Nurture Earth for commercial sales in India. Nurture Earth has introduced and successfully trialed our product with a major seed company over the past three years who has expressed interest in purchasing product in 2019. In addition, Nurture Earth has introduced our product to hundreds of local distributors, also expressing interest in purchasing for resale. We received approval for import and sale in India during the first quarter of 2019. We received and expect to fulfill an initial order from Nurture Earth for approximately 2,500 gallons of BAM-FX^® during the fourth quarter of 2019.

The Company expects to begin initial product sales within Brazil during 2019. We worked with an agricultural product distributor during 2017 and 2018, Dallgree. Dallgree purchased product to trial in a number of crops including corn, bean and sugar cane. During the first and second quarters of 2019, we provided onsite technical support for meetings with growers trialing BAM-FX^® and believe these efforts will result in an additional order in 2019 from Dallgree. We expect to finalize a distribution agreement with Dallgree during the second half of 2019.

On February 13, 2018, the Company signed an exclusive business development and distribution agreement with Agro Space to introduce BAM-FX^® into agricultural markets in Mexico. The initial collaboration in the business development process is in avocado with secondary attention to berries. Trials with avocado growers began in the fourth quarter of 2018 with final results expected during the fourth quarter of 2019. During the second quarter 2019, Agro Space began trials on berry crops. We expect our agronomy team will continue to work with Agro Space’s agronomy expert in Mexico during 2019 to develop protocols through numerous tests of BAM-FX^® in diverse geographies and soils.  We believe Agro Space will obtain approval for import and sale of product in Mexico during 2019. Assuming the success of the trials and receipt of import approval, we believe commercial product introduction efforts could begin in 2019.

BAM investigated the retail markets for ready-to-use home and garden applications in 2016 and developed a ready to use product, Gardener’s Choice^®, during 2017 and 2018. BAM attended a number of trade shows in 2017 and 2018, showcasing the product at a Company booth, and received both wholesaler interest and initial orders for delivery in the first and second quarter of 2019. During the first quarter of 2019, BAM was approved as a vendor with Ace Hardware and Mid-States Distributing LLC, a distributor in the farm store channel with thirty nine (39) members having over seven hundred (700) store locations in thirty three (33) states and five (5) in Canada. The Company engages three independent retail experts who have access to an independent sales rep group of over thirty professionals. This team introduced product to major big box and regional retail companies during 2018, which we expect will continue and expand throughout 2019. The Company identified and works with a third-party vendor for product packaging, labeling and fulfillment services. During 2019 the Company hopes to build its sales representative network to generate sales of Gardener’s Choice^®.

Specialty Agricultural Solutions, Inc.

During the fourth quarter of 2018, BAM delivered and sold introductory quantities of product to grow stores in Michigan, utilizing sample counter displays and targeted magazine advertising. SASI, the entity formed to address cannabis markets and began operations on January 1, 2019, introduced product to grow stores in Oklahoma and Colorado during the first quarter of 2019, generating consumer interest and initial sales to grow stores in Oklahoma. The Company plans to generate sufficient interest in retail outlets to attract the attention of regional and national wholesale distributors in cannabis channel markets with the hope that they will incorporate our product into their distribution channels.

In addition, SASI hopes to work with commercial indoor grow operations and develop product application protocols that fit within their standard operating processes. We are developing the expertise and operational understanding of indoor grow operations, which we hope, will benefit our business development efforts during 2019. In addition to improved yield and quality, we have identified early sexing of plants as a return on investment for growers. Early sexing is of particular importance to a grower as only female plants are used for extraction and production of cannabis products. The earlier a plant’s sex is determined in a growing cycle, the less resource is used to nurture plants that will eventually be discarded. We expect to continue trial work to validate our product claims during 2019.

SASI believes domestic hemp markets represent a significant revenue opportunity for 2019. By integrating BAM-FX^® into hemp agricultural input programs we believe we can establish a foothold in this anticipated rapid growth market. Inclusion of hemp in the 2018 US Farm Bill legalizes hemp and makes hemp a viable crop for domestic growers, most of which have no prior experience with this crop. We plan to conduct trials with our product to develop an application protocol to maximize either fiber production or quality of oils extracted. Based on our prior trials in the cannabis grow markets, we believe improved return on investment could be realized by hemp growers and plan to introduce BAM-FX^®, based upon successful trials, to hemp growers in 2019.

We believe the Company’s manufacturing facility in Okeechobee, Florida, has sufficient capacity to fulfill domestic and international orders for product demand in 2019. We continually improve our manufacturing process to simplify production and become more efficient while consistently producing a high quality product.

Zero Gravity Life Sciences, Inc.

We expect ZGLS will remain inactive during 2019.

Strategy for Growth

The Company expects to build upon its existing relationships with large-scale growers, co-operative groups and agricultural input distributors and generate revenue through direct product sales and product integration opportunities. We plan to conduct limited commercial grower experience trials in targeted high value domestic crops utilizing a small but talented technical and sales group including two agronomist employees, sales management and subject matter expert consultants in avocado and specialty crops including cannabis and hemp. Our plan includes adding sales management and agronomists, which will be dependent upon our performance and financial resources. Given our current staffing, we believe our commercial product sales efforts will be limited to Texas, California and the Mid-west. We expect to continue to develop data for crop sheets and product line extensions with a few independent third parties including Iowa State University and Nurture Earth.

The Company’s international sales efforts and revenue production will depend on the relationships it has built in prior years with distributors in India, Brazil, China, Mexico and Philippines. We expect that we will generate product sales in these countries by providing technical as well as marketing support to distributors who have committed their time and resources to develop their local commercial markets through a number of years of studies with end users. Although our product has been approved for import and sale in a number of other countries and we have identified potential distributors in those countries, we plan to enter those markets when definitive customer purchases are clear and our financial resources are sufficient to provide proper support for our local partner.

The second phase of the Company’s 2019 commercial sales and marketing strategy is to pursue alliances with large agricultural and chemical manufacturers to incorporate our core technology within their product lines to improve the performance and profitability of existing product lines. We have discussed opportunities with three large-scale integrated agricultural input distributors. We expect each opportunity will involve significant technical analysis including product efficacy testing, which if successful, could represent potentially sizable product sales or licensing revenue.

Our strategic plan will focus on sales of Gardener’s Choice^®, our ready to use home and garden product, which was introduced at the Ace Hardware 2018 Spring and Fall Conventions and GIE Expo 2017 and 2018. We received stocking orders from purchasers during the third and fourth quarters of 2018 and expect additional orders during the first and second quarters of 2019. Gardener’s Choice^® was approved as a qualified product and BAM as a qualified vendor of Ace Hardware and Mid-States Distributing during the first quarter of 2019. The Company hopes to expand its independent sales representative organization during 2019 with the assistance of retail subject matter expert consultants, currently engaged, to place Gardener’s Choice^® in regional and national retail outlets. The Company plans social media, digital media and television campaigns to support marketing and generate awareness and product sale through for our retail customers.

The Company, through SASI, plans to continue expanding upon its favorable product reception from placement in grow stores in Michigan and Oklahoma catering to legal cannabis growers and move into larger distributor channels to expand product reach. Recent changes in laws now make the possession of cannabis for medicinal or recreational uses legal in many countries throughout the world. The global legal market for such products in 2016 was $14.3 billion and is expected to reach $140 billion by 2027. These numbers anticipate approval of pending legislation in many countries that would once again allow for the large-scale farming of hemp, a variety of cannabis, which contains very low levels of the psychoactive agent known as THC. Twenty-five of the largest producers of cannabis in North America are reported to have under operation and construction more than seven million square feet of indoor capacity. Preliminary data has shown that BAM-FX^®, added to a grower's protocol, has produced up to a 44.79% increase in vegetative growth, in weight of processed buds per plant, as well as a significant improvement in quality, as measured by THC, terpene and cannabinoid levels. Through SASI, we will continue to pursue additional field studies to demonstrate the value of BAM-FX^® to the cannabis industry while expanding product development and sales efforts in the emerging domestic, hemp industry.

We are currently in discussions with groups that are pursuing fully integrated hemp growing operations in the United States. We intend to collaborate with one or more of these groups during 2019. Our objective will be to integrate BAM-FX^® as, a preferred input in the growing process to improve yield and provide growers a higher return on investment.

Currently, our sales and agronomy personnel are sufficient to support our domestic commercial and retail business strategies. As sale and distribution expands domestically and internationally, additional technical personnel will be required and added, on an as needed basis.

Intellectual Property

           We have made protection of our intellectual property a strategic priority. We rely on a combination of patent applications, trademarks, trade secrets and other intellectual property laws to protect our proprietary rights.

Patent Applications

           We are the owners of a U.S. patent and foreign pending patent applications that form an important part of our immediate and future business plans. We have been assigned or licensed the rights to these patent applications through agreements with our former Chief Science Officer and former director, John W. Kennedy.

           We are the assignee of a portfolio of patent applications that pertain to the second-generation bioavailable mineral compositions BAM-FX^®. The BAM-FX^® composition is highly useful as a nutrient additive that may fortify against disease or environmental stresses and promotes growth. The basis of which is the ability of the ionized micro nutrient platform to deliver selected minerals into a plant or other complex organism systemically at the cellular level. The U.S. Patent and Trademark Office issued U.S. Patent No. 9,266,785, titled Bioavailable Minerals for Plant Health, on February 23, 2016. The patent will expire on December 27, 2026. Related applications are pending in Chile, Thailand, and Malaysia as well as a child U.S. application. 

         On April 29, 2019, we entered into the Settlement Agreement with John W. Kennedy, the Company’s former Chief Science Officer and a former member of the Board, pursuant to which, among other things, Company assigned certain Intellectual Property to Mr. Kennedy, and Mr. Kennedy agreed to effectuate the transfer of two million shares of common stock of the Company back to the Company. The Intellectual Property relates to technologies that the Company does not intend to pursue. The Settlement Agreement was entered into in order to resolve certain disputes between the Company and Mr. Kennedy concerning various licensing and royalty agreements entered into between the parties covering the Intellectual Property. 

        Pursuant to the Settlement Agreement, the Company and Mr. Kennedy also entered into a Royalty Agreement, providing for, among other things, certain royalty payments to be made to the Company from the gross revenue generated by the Intellectual Property.

Trade Secrets

Parts of our portfolio of intellectual property includes trade secrets pertaining to the manufacturing of several of the materials previously mentioned. In particular, BAM-FX^® compositions and their derivatives are made in a complex and very specific process utilizing purpose-built equipment. These manufacturing processes are a separate technology, distinct from the patent applications, and remain highly secure and confidential. Reverse engineering of a product is always possible with sufficient resources. However, attempting to manufacture BAM-FX^® compositions without the correct purpose-built equipment requisite to the task may result in a runaway exothermic reaction. We believe that the experience we have honed over several years of manufacturing these products gives us a substantial competitive edge over any potential newcomers.

Trademarks

Our product names, logos and taglines are recognized by consumers and are valuable assets we are committed to protecting.  In an effort to secure these brands for our exclusive use, we have filed applications and obtained registrations in the US and EU Trademark Offices.  As of July 1, 2019, the Company has the following trademark inventory:

Strategic Relationships 

Government Regulations

Although BAM-FX^® is different than common fertilizers available, state regulatory agencies require us to register the product as a fertilizer. The BAM-FX^® product has been registered and issued a license as a liquid fertilizer in all fifty states. The Company does not claim that BAM-FX^® is a fungicide, bactericide or pesticide, therefore alleviating regulatory oversight associated with those claims. Gardener’s Choice^®, our ready to use home and garden product is also subject to state regulatory agency requirements and has been registered and issued a license as a liquid fertilizer in all fifty states. All ingredients in the formulation are categorized as Generally Regarded as Safe by the United States Food and Drug Administration (“USFDA”).

For all other countries, BAM-FX^® is required to register and obtain approval from the appropriate government agency regulating the import of agricultural products. We have completed governmental requirements of and have received approval for import and commercial sale of BAM-FX^® into China, Brazil, Colombia, Chile, Paraguay, and India.

The 2018 Farm Bill, enacted December 20, 2018, sets forth a definition of a plant biostimulant. The USFDA can modify that definition in a report to the President and Congress due December 19, 2019 identifying any regulatory, non-regulatory and legislative recommendations, including the appropriateness of any definitions for plant biostimulant. We plan to actively monitor the USFDA’s actions and the effect of their report recommendations, if any, on our product classification.

Competition

During 2017, the Company increased its understanding of mode of action of the core technology in BAM-FX^®. Initial research supports our theory that our core technology acts as a bio-stimulant. A plant bio-stimulant is any substance or microorganism applied to plants to enhance nutrition efficiency, abiotic stress tolerance (drought, extreme temperature, mineral toxicity) and/or crop quality traits, without regard of the bio-stimulant’s nutrients content. Plant bio-stimulants are also contained in numerous commercial agricultural products.

Global Market Insights, Inc. estimates the market size for bio-stimulants will exceed $4.0 billion by 2024. It stated that “The necessity for sustainable farming practices coupled with a scarcity of resources including water supply and land availability will propel the bio-stimulants market growth”.

“Acid-based ingredients dominate the industry accounting for over 50% share by 2024. Bio-stimulant sales are attributed to foliar spray segment since foliar feeding serves as a timely measure to prepare the crops for expected abiotic and biotic stress, such as heat stresses, drought or chill. Increased yield, better flavor, extended shelf life, higher test weight on grains and improved animal performance are some of the key factors augmenting the bio-stimulants market growth. Row crops segment is expected to register the highest growth during the forecast timeframe. This growth can be attributed to factors such as high production of oil seeds and food grains coupled with sustainable farming practices prompting the segment growth. High water absorption capacity and increased root length for efficient nutrient uptake along with healthy and strong crop appearance will positively impact the product penetration. Dry form accounted for over 70% industry share in 2017. They are water soluble and contain humic acid, beneficial bacteria, chelated iron, amino acids, soluble sea kelp, vitamins, minerals, and dextrose. The key factors stimulating the product demand include improved plant respiration, increased cell division & photosynthesis, lateral bud development, and delay in aging process of plant tissues.”

The bio-stimulants industry is in an evolving stage and has attracted participants including BASF SE, Bayer, Valagro and Arysta LifeScience. We believe that the proper classification of our product is more aligned as a bio-stimulant. Because this is an evolving industry, we believe we have an opportunity to become a first mover in the industry. Although this is a potential advantage, it also poses significant risk as the competition is well funded with resources available that are significantly greater than resources we have available.

Presently, our product is liquid. We are developing a dry formulation, which is currently undergoing efficacy trials and may not be available for commercial production until later in 2019 if at all. Considering approximately 70% of the share of bio-stimulant industry is attributable to dry formulation, at the present time we compete in a potential 2024 market of approximately $1.2 billion according to Global Market Insights, Inc.

A subset of manufacturers and suppliers market zinc and copper foliar products perceived to be similar to BAM-FX^®. The products make beneficial use claims similar to those we make, which in most cases are not substantiated, and are generally sold for less than our BAM-FX^® wholesale price. Buyers often have a difficult task distinguishing BAM-FX^® efficacy from other suppliers of zinc and copper foliar micronutrients. We believe our marketing approach focused on third party field test results and scientific proof of our product claims, allows us to differentiate BAM-FX^® from other competitive products. We believe that our product improves a grower’s return on investment through improved yield and reduction in agricultural inputs when properly applied to crops under appropriate agricultural conditions.

Government agencies and various organizations across the globe have encouraged farmers to adopt bio-stimulants according to Global Market Insights, Inc. In June 2011, the European Bio-stimulants Industry Consortium was formed to foster bio-stimulants to improve yield with less resources with major goals of sustainable agricultural production, economic growth and green innovation. Although the bio-stimulant market is at a development stage most notable players outside the United States, have established markets and have adequate financial and technical resources, with which, we may not be able to compete. 

 We began product introduction and business development in our specialty crop markets during the fourth quarter of 2018 at the grow store level and expect, based on realized favorable customer experience, we will gain strong market acceptance and ongoing revenue. The market potential to provide agricultural inputs for legal growing operations has driven a wide range of competitive product introductions. Scott’s Miracle-Gro Company, for example, has acquired and integrated distribution networks and agricultural input providers offering complete product lines to legal growers. In addition to ongoing new product introductions, we compete against established products already available to growers. Our ability to build and retain revenue in the legal cannabis agricultural market will depend significantly on our product’s performance.

Our core technology can be combined with existing fertilizer and herbicide formulations and conform to existing application protocols. Lab and field research indicates that, by blending BAM-FX^® with existing, widely distributed, “branded” products, we could enhance the performance of those products sold by other agricultural input companies, which we consider as industry collaborators, not competitors.

Competitive Advantage/Barriers to Entry:

The Company believes that it has adequately protected its intellectual property and has developed a strong professional technical team to enter the markets for its products and maintain those market positions. We believe our competitive advantages include:

Reports to Security Holders

We are required to file reports and other information with the SEC. You may read and copy any document that we file at the SEC's public reference facilities at 100 F. Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-732-0330 for more information about its public reference facilities. Our SEC filings are available to you free of charge at the SEC's web site at www.sec.gov. We file electronically with the SEC and, as a result, our information is available through the Internet site maintained by the SEC that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC. This information may be found at www.sec.gov.