Company Overview

Zero Gravity Solutions, Inc. (“we”, “us”, “our”, the "Company", “ZGSI” or the "Registrant"), a Nevada corporation, is a biotechnology company focused on commercializing technology derived from, and designed for spaceflight with significant applications on Earth. These technologies are focused on improving world agriculture by providing valuable solutions to challenges facing humanity, including threats to world agriculture and the ability to feed the world’s rapidly growing population. The Company’s business model is currently focused on its two primary business segments: 1) BAM-FX™, which is a cost effective, ionic nutrient delivery system for plants that can deliver minerals and micronutrients systemically at the cellular level of a plant, and 2) Directed Selection™, which relates to the production and alteration of new varieties of novel stem cells with unique and beneficial characteristics in the prolonged zero/micro gravity environment of the International Space Station. These novel stem cells, if developed, could be patented for commercial sale to third parties in the agricultural and human regenerative medical markets. ZGSI is headquartered in Boca Raton, Florida.

Our business activities are separated between two primary wholly owned subsidiaries. BAM Agricultural Solutions, Inc., (“BAM Inc.”), oversees product introduction and business development through in-field trials and data validation with crop growers, manufacturing and sales of our BAM-FX™ product in house or through our domestic and international independent distributors. Zero Gravity Life Sciences Inc. (“ZGLS”) is responsible for any space research projects, life science applications of our technology and conducting research on future BAM Inc. product lines. We believe that the separation of these functions and the corresponding allocation of management by expertise will enable us to improve our performance and provide focus on our different business activities.

A separate wholly owned subsidiary, Zero Gravity Solutions, LTD (ZGS Ltd.), domiciled in England, was engaged in European market and business development. During the first quarter of 2015, the Company conducted a review of its operating expenses and use of resources and determined that certain administrative and support costs were outside the scope of the 2015 business plan. Accordingly, the Company made reductions in personnel and curtailed operations of ZGS Ltd. during April 2015. ZGS Ltd. was liquidated during the fourth quarter of 2015. The Company redirected those financial resources to BAM-FX™ trials and commercialization in North and South American markets during the fourth quarter 2015 continuing throughout 2016. The Company expects to address European markets for BAM-FX™ at a future time when adequate resources are available to pursue the European markets and all local regulatory and import requirements are satisfied for import of BAM-FX™.

The Company is focused on implementing a near-term revenue generation plan through the introduction of the Company’s first commercial product, BAM-FX™, to the world’s agricultural markets. BAM-FX™ is an ionic micro-nutrient delivery system for agriculture. The Company conducted field trials on a variety of crops in laboratory and academic settings as well as in field applications on grower/end-user crops during 2014 and expanded field applications with those and additional trial participants during 2015. During 2015, the Company initiated in excess of sixty (60) trials on a variety of field crops, vegetables and fruits with first year participants and additional trials commenced with initial participants. Many of our second season trials have completed or are near completion. The final tabulated results for these trials are expected to be available during the first or second quarter of 2016, however, initial observations show significant yield and biomass improvements for crops treated. The number of trials on grower/end-user crops expanded during 2015 in the Midwest United States, Rocky Mountain States, California, Florida, Pakistan, Chile, Mexico and Guatemala. To support its commercial and field trial efforts, the Company has hired or contracted with certified crop advisors and qualified personnel for sales and marketing support, in field test research and toxicology services.

During the fourth quarter of 2015, the Company expanded its commercial marketing and product introduction to a number of countries in the Asia Pacific region. The work has been undertaken by a distributor, pursuant to a non-exclusive distribution agreement executed in 2015. The business development effort focuses on farming operations managed by entities within the distributor’s existing business network in Taiwan, Indonesia, Vietnam, India, Thailand, Malaysia and Singapore. Based on the distributor’s meetings with growers in a number of those countries during the fourth quarter of 2015 and first quarter of 2016, test quantities of BAM-FX™ have been provided to validate trial results obtained during 2015. We expect, based on successful validation, growers in these countries will commence commercial application of BAM-FX™ during the end of the second quarter 2016.

The Company opened a manufacturing facility during the third quarter of 2014 to supply product for trial and expected future product demand and began the commercial roll out of BAM-FX™ into the world’s agricultural markets. The Company conducted a complete regulatory review of the manufacturing operations during the first quarter of 2015 and during 2015 made certain policy and procedural changes to ensure compliance with good manufacturing processes and regulatory requirements. During the third quarter of 2015, the Company engaged a chemical process engineer to analyze plant operations and audit adherence to regulatory requirements. The Company continues to make process improvements and modifications to existing equipment to enhance efficiencies resulting from the recommendations made which will enable it to provide stable and quality consistent product. The Company expects to add a second manufacturing facility during 2016, to meet anticipated demand.

During the second quarter of 2015, our chief scientist began developing new formulations of BAM-FX™ to address nutritional needs of plants that are additive to our product’s current zinc and copper formulation. The new formulations address known plant deficiencies of boron, manganese, magnesium and iron and can be manufactured to include all or numerous combinations of these elements. The new formulations have been tested by an independent laboratory, which verified the existence of and the ability to combine those elements in solution. We expect to commence stability testing and limited trials of new formulations during 2016. We also expect to obtain licenses to sell those products once all regulatory and labeling requirements are met.

The Company’s long term objectives include the commercialization of ZGSI’s space derived Directed Selection™ technology, which predicts that plant and animal stem cells exposed to prolonged microgravity in space can be endowed with new characteristics beneficial to society. In conjunction with our collaborators, National Aeronautics and Space Administration (“NASA”), the United States Department of Agriculture (“USDA”) and the University of Florida, over the past three years, we conducted scientific studies on six NASA sponsored flights to the International Space Station (“ISS”). These experiments demonstrated that the gene expression of plant cells in zero/microgravity changes substantially, and furthermore, provided us with strong evidence that these changes can be directed toward beneficial attributes.

Our Directed Selection™ research aims to produce new varieties of proprietary, patentable stem cells for plants with desirable traits, such as the ability to better survive environmental challenges (i.e . temperature or climate change) or to resist disease. Adaptive changes in the plant will be accomplished without the need for additive or subtractive genetic engineering, thus eliminating public concerns about genetically modified organisms (“GMO”). The plant still uses the capabilities that are a natural part of its genetic potential, through altered gene expression that enables adaptation toward valuable traits. Another important aspect of our space derived IP capitalizes on space flight experiments showing the unique effects of zero/microgravity on mammalian cells. Space-based technology imparts the likely ability to reproduce undifferentiated multi-potent human stem cells in substantially larger quantities and more rapidly than is possible on Earth. Long-term goals include revolutionary advancements in stem cell differentiation, cellular macrostructure assembly, vascularization and wound healing. Because both humans and animals use very similar metabolic pathways, we also expect to produce patented stem cells that can provide beneficial treatments to commercial livestock. We believe that this area may lead to significant future business opportunities for the Company.

The Company continues to develop technical relationships to validate the science incorporated in BAM-FX™ and identify additional commercial markets. During January 2016, the Company executed a new five-year Reimbursable Space Act Agreement, (“RSAA”), with NASA Ames Research Center (“NASA ARC”) and an existing investor and contractor, Intrinsyx Technologies Corporation (“Intrinsyx”). The RSAA will give the Company access to NASA scientists and laboratories, which when engaged, may assist in identifying and documenting additional attributes of the Company’s science and potential applications in other segments of agricultural markets. Because the RSAA is reimbursable, in which the Company reimburses NASA for their technical services, ownership of intellectual property resulting from the research work performed, is retained by the Company.

The primary objectives of the RSAA are:

a. To establish the scientific basis for action of ZGSI products,

b. To quantify the impact of ZGSI products on plant growth and productivity,

c. To evaluate and test the impact of ZGSI products on yield physiology of selected crops important to commercial agriculture and NASA applications, and

d. To evaluate and test the potential utility of ZGSI products to NASA space biology and life support applications.

NASA ARC will utilize its unique, ground-based, controlled environment facilities and research personnel to address a series of science-based questions relevant to both ZGSI and NASA. The scientific data will be jointly evaluated by ZGSI and NASA ARC to determine utility of the ZGSI products to commercial agriculture and NASA applications. If jointly agreed and based on evaluation of the scientific data, space flight and other opportunities could be developed to test a potential role in achieving NASA goals in plant-based space biology and life support pursuits.

The RSAA lays out a four-phase plan of work (each a “Phase”). Phases Two through Four will depend both on the successful execution of the previous Phase and joint agreement between NASA ARC and ZGSI.

ZGSI, working with NASA ARC, expects to understand the mode of action and physiological effects leading to increased yields currently observed on earth in commercial agricultural systems. ZGSI will gain access to NASA ARC’s unique facilities designed specifically to conduct ecophysiological studies of the type necessary to address the science questions of interest to ZGSI. Additionally, ZGSI will discover if BAM-FX™ truly has applications for growing plants in the controlled conditions of spaceflight and for human colonization of other worlds. ZGSI expects to optimize BAM-FX™ application methods in controlled environment agriculture on earth and for use in space flight applications.

During October 2015, the Company entered into an agreement with Intrinsyx to undertake a plant growth experiment on broccoli aboard the ISS utilizing hardware developed by Intrinsyx to house the experiment and following protocols designed by the Company. The Company expects its experimental payload to be carried to the ISS aboard a Space-X flight to occur during the second quarter of 2016.

In 2016, the Company plans, in conjunction with NASA ARC, the University of Florida, Space Florida and the USDA, as well as other state and federal governmental agencies and agricultural co-ops and consortiums to apply and obtain research grants, which would, if obtained, increase the resources for and accelerate the advancement of the Company’s initiatives, previously noted.

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 associated regulatory needs to reach full profit potential, ZGSI’s strategy is to enter into partnership agreements and execute non-exclusive distribution agreements, domestically and internationally, with industry-leading companies to supplement necessary resources and expedite revenue generation.

Corporate History and Structure

The Company engaged in various business activities and enacted a series of name changes from 2003 to 2013 until we adopted our current name and business plan of Zero Gravity Solutions, Inc. on January 11, 2013.

The Company’s Prior History and Timeline

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.

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 Agricultural Solutions, Inc. (“BAM Inc.”) and Zero Gravity Life Sciences, Inc. (“ZGLS”). BAM Inc. is a Florida Corporation, which holds and controls the manufacturing, sales and revenue generation of the Company's agricultural product, BAM-FX™. ZGLS is a Florida Corporation, which holds and controls the Company’s Directed Selection™ business segment and the related research and development work. The Company had previously wholly owned Zero Gravity Solutions, LTD (ZGS 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 (EU). During the fourth quarter 2015, both UK companies were liquidated, and the financial resources redeployed and focused on markets in the United States and Chile.

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

Principal Product Lines

BAM-FX™

BAM-FX™ is an ionic micro-nutrient delivery system for food crops. BAM-FX™ was originally developed by John W. Kennedy, our Chief Science Officer and former 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 of zinc and copper in a precise ratio used to treat plant mineral deficiencies by providing a delivery system to move mineral ions to the mineral deficient areas in plants. The benefits of BAM-FX™ are accomplished without the use of genetic modification (“GMO”) or traditional fertilizers, soil amendments or supplements. Instead, the BAM-FX™ formula transports highly bio-available, balanced, ionic minerals systemically into the biological system of a plant using a mineral complex carrier in an ionic form, which penetrates and distributes nutrients throughout the plant's cellular structure. BAM-FX™ delivers a diversity of nutrients, in measurably larger quantities than can be achieved through standard and traditional methods, and it is capable of substantially cutting costs with its versatile application possibilities and its enhancement of multiple products.

BAM-FX™ can be applied either by soaking seeds or direct application at time of planting and foliar treatment of the plant at later stages of development. Further, the benefits to crops are accomplished without the use of additive or subtractive genetic modification techniques and therefore, crops treated with BAM-FX™ are not categorized as GMOs. As major agricultural markets throughout the world are concerned about the long-term effects of genetically modified plants and crops that are ingested by humans, we believe that the fact that crops treated with BAM-FX™ are not categorized as GMOs creates a competitive market advantage and provides a wider potential customer base in these areas.

Noted in the “BAM-FX™ Trials” section below, BAM-FX™ treated plants have shown higher yields, increased plant resistance to harmful environmental factors and higher quality fruit and vegetables in tests with commercial farmers. 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 agriculture a considerable amount of time and money while creating faster growing, healthier, 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.

BAM-FX™ Trials

In 2014, BAM-FX™ product development and commercialization activities spanned a wide range of studies, in terms of crop plants, test parameters, geographic region, and potential customer base. Early product testing used controlled conditions of indoor facilities to study BAM-FX™’s impact on seed germination, early seedling growth, and impact to young plants. Later testing progressed to small-scale outdoor test plots, conducted both internally and in the hands of commercial field application specialists, farm managers and candidate early adopter customers. In total, BAM-FX™ product testing to date has found that the product provides significant benefits to plant growth and yield, such as rooting activity, plant biomass, maturation time, BRIX (sugar content), and – most importantly – overall crop yield and improved nutrient access by the plant, as demonstrated by the ability to reduce fertilizer application.

In 2015, we conducted second season tests with a number of growers from 2014. These trial applications were primarily foliar applications during the growth cycle of the crops. These tests included but were not limited to wine grapes, table grapes, avocado, beans, tomatoes, rice, berries, stone fruit, grape, corn, onions, barley, wheat, and leafy greens. We also initiated a number of trials with new growers, their first season of testing, independent agricultural laboratories and consultants and undertook a collaborative research effort utilizing BAM-FX™ to increase sugar or Brix content of tobacco for use as a biofuel.

A sample of our 2015 trials and results, including a detail discussion of our wine grape trial to provide an understanding of trial methodology and specificity and two trial summaries, are as follows:

High Value Crop: Detail of Wine Grape Trial

The field trial, analyses and harvest was conducted jointly by Intrinsyx and Guglielmo Winery staff.

For the 2014 first season trial, a total of 300 mature Carignan vines were selected with 150 vines in three separate adjacent rows marked for BAM-FX™ treatment and 150 marked in three separate adjacent rows as untreated controls. Additionally, 150 mature Zinfandel vines were selected with 75 marked for the BAM-FX™ treatment and 75 marked as control untreated vines. The vines were chosen because all vines were of similar age, health, size and spacing.

These wine grapes are normally dry farmed but due to the local drought conditions, one quarter of an acre foot of water was applied by sprinkler sets during July 2014. This was the only water manually applied all year. Additionally, micronized wettable sulfur was applied as a fungicide, following manufacturer recommendations for wine grapes.

The first foliar spray was applied to both test plots during June 2014 when grape bunches or clusters were just starting to form at a rate of 50 oz. of BAM-FX™ stock per acre at a concentration of 0.33 oz. BAM-FX™ stock per gallon of water. The second application was applied seven days later during July at a rate of 50 oz. of BAM-FX™ stock per acre at a concentration of 0.50 oz. BAM-FX™ stock per gallon of water. At this time the green grapes on the BAM-FX™ treated appeared slightly larger than the control and new growth was noticed with young leaves and tendrils being more pronounced on the BAM-FX™ treated vines.

The third and final foliar spray of BAM-FX™ was applied during late July when the grapes start to ripen and turn purple. The application rate was 50 oz. BAM-FX™ stock per acre at a concentration of 1 oz. BAM-FX™ stock per gallon of water.

During September 2014, bunches of grapes were randomly harvested from ten vines from both BAM-FX™ treated vines, and control vines, and taken to an onsite analytical lab for direct comparisons. Guglielmo personnel crushed and juiced the bunches to analyze the juice for sugar content or degrees Brix (one degree Brix is 1 gram of sucrose in 100 grams of solution and represents the strength of the solution as percentage by mass). Each gram of sucrose will turn into about a one half gram of alcohol when fermented. Both the Carignan and Zinfandel grapes tested from vines treated with BAM-FX™ had increased sugar content.

The juice was also measured for titratable acidity or “total acidity.” Acids in wine are an important component in both winemaking and the finished product, having a direct influence on the color, balance and taste of the wine as well as the growth and vitality of yeast during fermentation and protecting the wine from bacteria. The measure of the amount of acidity in wine is the total of all acids present, while strength of acidity is measured according to pH. Most wines have a pH between 2.9 and 3.9. Generally, the lower the pH, the higher the acidity in the wine.

There are three primary acids found in wine grapes: tartaric, malic and citric acids. Acids play significant roles in winemaking and finished wines. In wine tasting, the term “acidity” refers to the fresh, tart and sour attributes of the wine which are evaluated in relation to how well the acidity balances out the sweetness and bitter components of the wine. The BAM-FX™ treated Carignan vines yielded grapes that had a slightly lower acid content, and the Zinfandel grapes had a slightly higher acid content. Conversely, the Carignan grapes treated with BAM-FX™ had a slightly higher pH and the Zinfandel grapes treated with BAM-FX™ had a slightly lower pH.

During harvest it was visually obvious that the BAM-FX™ treated vines had larger bunch, berry sizes and greater yields. The quantitative results obtained from the 2014 fall harvest showed that BAM-FX™ treated vines had an approximate two-fold increase in both bunch and berry weights for Carignan and Zinfandel vines.

The trial results demonstrated that in addition to increasing overall wine grape production, BAM-FX™ increased the sugar content and overall quality of wine grapes.

For the 2015 second season field trial, a different area of the Guglielmo vineyard was chosen with new vines. The focus shifted to applications made only on Zinfandel wine grapes. After making many other field trial observations in orchard crops, and based on the 2014 season trial results, a different application rate and timing protocol was chosen for the 2015 field trial.

A total of 300 mature Zinfandel vines were surveyed and marked off in a block having 150 vines in three separate adjacent rows for BAM-FX™ treatment, and 150 vines in three separate adjacent rows as untreated controls. These vines were chosen because all vines were of similar age, health, size and spacing with a total of 907 vines per acre. These wine grapes are normally dry farmed in the Santa Clara Valley of California, but due to the drought conditions, one quarter of an acre foot of water, was applied by sprinkler sets during July 2015. This was the only water manually applied during the growing season. A micronized wettable sulfur was applied as a fungicide starting in early April with an additional application during each of the three following months (May-July), following manufacturer recommendations for wine grapes.

At first sign of early bud break in March 2015, 50 oz. of BAM-FX™ stock per acre was applied in a spray, at a concentration of 0.75 oz. BAM-FX™ per gallon of water in the early morning, targeting the top woody area, new small leaves and emerging swollen buds around vine knobs and the branch starts. Secondarily, BAM-FX™ was also soil applied by slightly wetting the surrounding soil directly underneath vines above roots through an intentional overspray on the same pass.

A second evening fine mist spray was then applied as a foliar to leaves only at a concentration of 0.5 oz. BAM-FX™ per gallon of water at a rate of 50 oz. BAM-FX™ stock per acre onto leaves. This was applied strategically in May 2015, during the early to mid-vegetative phase.

Finally, at the onset of grape berry ripening, a third foliar fine mist evening spray was applied at a concentration of 0.5 oz. BAM-FX™ stock per gallon of water at a rate of 50 oz. per acre onto leaves and grape bunches during July 2015. Due to warm temperatures and an early spring, the 2015 growing season started and ended early with an August 2015 harvest date for the Zinfandel grapes.

At harvest time it was visibly apparent that the BAM-FX™ treated vines had a significantly greater yield. Guglielmo personnel harvested each row in this trial directly into forklift bins and then weighed the subsequent harvest from each of the six rows of 50 vines, three rows treated with BAM-FX™ and three un-treated control rows. The yield results from the 2015 trial showed an approximate doubling of yields obtained from the BAM-FX™ treated vines. Generally, the treated vines appeared greener and had visibly more leaves and vine biomass.

In addition to collecting weights at harvest, due to the visibly apparent shoot growth differences and leaf biomass, immediately prior to harvest the vines in each row were measured for a variety of growth parameters. The summarized results showed that the BAM-FX™ treated vines compared to the control had: greater average number of grape bunches per each vine (28 BAM-FX™ vs. 23 control); larger average bunch area per each vine (10 in ² BAM-FX™ vs. 8.5 in ² control); greater total bunch area per vine (296 in ² BAM-FX™ vs. 212 in ² control); ten inch longer average branch length (38 in BAM-FX™ vs. 28 in control); a longer total vine branch length (610 inches BAM-FX™ vs. 448 inches control); and the same average number of branches per each vine.

At the time of the 2015 harvest, crush-juice quality parameters were again measured, showing only a slight average increase for sugar content (Brix) without any statistical differences, and with little or no difference in titratable acidity or pH.

A Juice Quality panel including zinc and copper analyses, and a Berry Phenolic profile was completed on samples that had been shipped overnight after the day of harvest to Enartis Vinquiry Laboratories in California. The Juice Quality panel revealed results consistent with the findings from Guglielmo Winery laboratory, that in BAM-FX™ treated berries there was no difference in the sugar content (“ ^o Brix”) or the pH. There was however an apparent 15% average decrease in the titratable acidity compared to results received at harvest at Guglielmo which showed little or no difference in titratable acidity. The Enartis analysis showed an 8% average decrease in the malic acid content of BAM-FX™ treated vines. It appears that BAM-FX™ advanced the maturity of these vines compared to controls because malic acid is known to decline in grape berries starting at veraison, the onset of ripening.

The Juice Quality panel also demonstrated no difference in ammonia content of juice from BAM-FX™ treated vines compared with the control but did find a 7% average increase in assimilable amino nitrogen in juice from BAM-FX™ treated vines. This is important because specific forms of nitrogen in grape juice (ammonia and nitrogen containing amino acids) are necessary for the successful fermentation of grape juice into wine . Results suggest that BAM-FX™ can potentially decrease the nitrogen fertilizer requirements for crops by increasing the nitrogen use efficiency of plants. A 7% average increase in amino nitrogen may be an indicator of this resulting from enhanced nitrogen uptake and amino acid assimilation processes stimulated perhaps by vines having adequate zinc and copper content.

Analyses also showed a 45% average higher zinc and 14% average higher copper content in the juice from the BAM-FX™ treated vines. This demonstrates that BAM-FX™ bioavailable ionic forms of zinc and copper enter vines through the shoots and at least in part are transported into berries and the resulting juice. The copper values in grape juice from BAM-FX™ treated vines are well below the mark where negative impacts on wine quality have been reported. These results help confirm suggested protocols are valid and use of the product as tested does not result in any entry barriers to the wine grape production market.

Lastly the grape Berry Phenolic profile results are of major importance because the suite of phenolic compounds in grapes include several hundred molecules and the ratios are responsible for the taste, color, mouthfeel and overall quality of wine. These phenolic compounds include anthocyanins, proanthocyanidins, tannins, or catechins, phenolic acids, stilbenoids, flavonols, and dihydroflavonols. The results from these tests demonstrated that berries harvested from BAM-FX™ treated vines had no average difference in their tannin content when compared to untreated controls. However, the results in BAM-FX™ treated grape berries compared to controls do show an important 19% average increase in total anthocyanins and also a 5% average increase in the total phenolic content. The results are very positive because an increase in total anthocyanins and total phenolics demonstrates a clear positive effect of BAM-FX™ treatments on the quality of these Zinfandel wine grape berries.

Our first season results demonstrated the ability to increase both the yields and quality sugar content/Brix in both Zinfandel and Carignan varieties, and total acids in Zinfandel. The second season results demonstrated in Zinfandel grapes the ability to increase yields, zinc content and quality in the multiple parameters measured.

Based on these findings, we expect BAM-FX™ will be used in larger scale applications in early spring 2016 and within the next few years, that BAM-FX™ will become a standard micronutrient ionic zinc and copper application in the wine grape industry.

Row Crop: Corn Trials Summary

Corn is the largest crop in total acreage in the United States, with an estimated 88.9 million acres planted in 2015 reported by the United States Department of Agriculture in their release dated June 30, 2015. We believe the size of this market provides a significant opportunity for future revenue streams in addition to soybeans and wheat, which are the second and third largest row crops in the United States, by acreage.

During 2015, in a second year corn trial, BAM-FX™ was evaluated on two farms in Iowa, one on twenty acres and the second on fifteen acres. The protocols in both trials applied thirty-two ounces of BAM-FX™ per acre with a reduction of nitrogen based fertilizer: a 25% reduction of nitrogen, phosphorous and potassium on the twenty acre trial and a 25% reduction of nitrogen with no reduction in phosphorus and potassium on the fifteen acre trial. The control acreage followed normal grower fertilizer application.

The trial results showed a 4% improvement in bushels per acre on the twenty-acre trial and a 1% improvement on the fifteen-acre trial. In both trails, the root ball on BAM-FX™ treated corn showed increased size, improved nutrient uptake and strengthening of the plant’s anchor structure to withstand damage from wind, thereby reducing the grower’s crop loss.

We believe the use of BAM-FX™ provides growers a strong return on investment, in addition to improvement in crop yields, by reducing fertilizer which saves growers both fertilizer cost and reduction of fertilizer run off into waterways, thereby reducing the grower’s exposure to fines and penalties currently being imposed by numerous municipalities on growers for nitrogen and phosphorus intrusion into water sources that feed drinking water processing facilities. We expect that our focus on Mid-Western and Rocky Mountain region states, marketing these benefits to corn growers, distributors and grower co-operatives in 2016, will result in sustainable revenue streams as growers incorporate BAM-FX™ into their fertilizer operating practices during second quarter of 2016.

Specialty Crops: Kishu Mandarin Trial Summary

Kishu Mandarin, originated in China, has been gaining interest from growers in the United States. The Kishu is very profitable for growers due to its small size, superb flavor and ease to peel. The Company conducted a ten-month trial on forty Kishu trees for a grower in California during 2015. The trees selected for trial with BAM-FX™ had been producing poorly compared with other trees on the grower’s property. The objective of the trial was to determine if use of BAM-FX™ would improve the tree’s health, boost new leaf growth, fruit production and increase the quantity and size of the fruit.

All trees selected were three years old and in the same area of the grower’s property. The control consisted of ten trees and the trial consisted of forty trees. The grower’s watering protocols for both control and trial were followed. The forty trial trees were treated with three applications of BAM-FX™, as a root drench and a foliar spray application, with two applications prior to budding and flowering and a subsequent foliar application seven weeks later.

The results were significant. The BAM-FX™ treated trees produced an average fruit count approximately double compared with the control and average fruit size was approximately one third larger than the control. The fruit analysis results conducted and provided by an independent laboratory were as significant as the yield results. The BAM-FX™ treated trees produced fruit showing significant improvement in the nutritional quality of the fruit. Calcium content increased by 37%, copper by 62% and zinc by 15%.

The sodium or salt content of the fruit decreased by 24%, an important finding not only from a human nutritional standpoint but for the health of the Kishu tree. Given that the trees selected were producing poorly, it can be inferred from the results that the soil in which they were planted contained high levels of sodium and BAM-FX™ assisted in reducing the sodium uptake by the tree, improving its overall health.

We believe the results show multiple benefits to growers including an improvement in crop yield and quality and quantifiable increase in operating profit, which we expect will extend to citrus growers in Florida. We are currently marketing BAM-FX™ to citrus growers in both states and expect to begin generating revenue from product sales during the latter part of the second quarter of 2016.

Our trials have provided us the data to establish product application parameters crucial to engage early adopter customers and to provide sales representatives, distributors, and key industry opinion leaders the tools for on-site product evaluation. For a variety of economically important crops, these tools include: acceptable BAM-FX™ concentration ranges and delivery rates, treatment methods, successful integration with a variety of commercial farming practices (e.g. soil application in furrow, drip irrigation, foliar spray, helicopter spray), and a series of evaluation criteria for demonstration of product success. Our 2015 testing was conducted on multiple crop acres for most crops tested which showed results similar to those in 2014: faster plant establishment (increased root growth, stronger plant crowns and greater leaf growth), faster crop maturation, tolerance to stress, improvement in nutritional value and overall increased yields. BAM-FX™ also showed the potential to support a reduction in fertilizer application rates.

The commercialization cycle for new agricultural products is generally 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 a key to obtaining product orders from growers in the United States. We believe our trial results support consistent performance, growing season over growing season, and expect to realize significant future orders from our second season growers and industry thought leaders who have seen improvements in yield, quality, stress relief and decrease in fertilizer application rates.

Although the United States agricultural market is cautious, requiring multiple growing season trials before adopting new products and technologies, our domestic trial results have been instrumental in opening commercial markets in Chile and other South American countries. Having completed a number of first year trials in Chile coupled with successful domestic trial data, we have seen a significant interest from Chilean growers, now placing orders for BAM-FX™ for commercial application in the first quarter of 2016. We believe there are numerous growers open to early adoption of BAM-FX™ in Chile and South America. Although the current number of those growers we have identified and contacted is small, we expect that number to increase significantly by word of mouth from the combination of sales and technical agricultural service conducted in Chile during the first quarter of 2016. Growers from Brazil, Bolivia, Guatemala and Peru have expressed interest in BAM-FX™ as a result of these efforts.

The Company initially engaged a distributor in Chile to develop the Chilean commercial market. During 2015 and the first quarter of 2016, the Company provided our distributor credit terms and financial resources to assure the ability to carry, repackage and distribute BAM-FX™ in Chile, pursuant to a non-exclusive marketing and distribution agreement. Based on the size of the markets in Chile and South America, successful initial sales results and the Company’s belief that those markets will require additional investment to penetrate and service, the Company expects to form a wholly owned subsidiary in Chile, which will, in cooperation with our current distributor warehouse, market and distribute BAM-FX™ during the second quarter of 2016.

DIRECTED SELECTION™

Directed Selection™ is a proprietary technological method designed to use the unique conditions of near-zero gravity in low earth orbit to create plants and animal cells that have beneficial traits that we believe would have value to society. This technology predicts that plant and animal stem cells exposed to prolonged microgravity in space can be endowed with new characteristics.

Life on Earth has always developed within the confines of gravity. About 50% of the energy expended by terrestrial-bound plants is dedicated to structural support in order to overcome gravity. By removing gravity from the equation, plant cells in a weightless environment have an excess of energy. This relatively benign environmental change causes the plant to engage its survival mechanisms, thereby enabling differential gene expression. The plant is able to adapt quickly to changing environments or disease causing organisms, stressors that we introduce artificially while the plant is in microgravity, thereby directing gene expression. This indicates that we can produce new varieties of plants, with required new attributes, faster than traditional methods.

All aspects of our Directed Selection™ technology must be conducted in a long-term microgravity environment, currently only available in space. We partnered with the University of Florida to conduct the initial experiments in order to validate the efficacy of this technology in space. Preliminary results showed that the Directed Selection™ technology was able to identify frost resistance capabilities in the Jatropha Curcas plant. This capability could allow cultivation in areas previously impossible.

The Company is using the Directed Selection™ platform technology to create more robust plant varieties adapted toward desirable characteristics. Our Directed Selection™ research aims to produce new varieties of proprietary, patentable stem cells for plants with desirable traits like the ability to better survive environmental challenges (i.e . temperature or climate change) or to resist disease. Adaptive changes in the plant will be accomplished without the need for additive or subtractive genetic engineering, thus eliminating public concerns about GMOs. The plant still uses the capabilities that are a natural part of its genetic potential, through altered gene expression that enables adaptation toward valuable traits.

A key part of our ongoing operations is the expansion of these patents to cover additional crops, animals and humans, and the specific methods and tools that are developed from our research and development. The Company possesses patent applications that contain claims covering biological processes in microgravity, including the growth of cellular plant and animal tissues in orbit, stem cell replication and related processes.

The second part of the Directed Selection™ technology pertains to the mass replication or propagation of stem cells in space, something that can be done on Earth but at much slower rates. Although stem cells can be produced on Earth, current methods are inadequate to create large quantities of healthy cells in short periods of time. Our technology would allow for the increased production of healthy stem cells. Tests, which occurred over six space missions, have provided initial proof-of-concept that the Directed Selection™ technology allows stem cells to replicate in masse. We believe it may eventually allow us to produce large quantities of undifferentiated pluripotent stem cells in the same environment for commercial sale to third parties.

Directed Selection™ Research

A series of space microgravity experiments were executed by means of six Shuttle flights to the ISS spanning from 2007 through 2011, linked to and supported by the NASA Space Act Agreement entered into by ZGSI’s founder, Mr. John W. Kennedy. A new five year RSAA, signed during January 2016, with NASA ARC, provides us access to NASA scientists and laboratories to continue research on earth. In addition, we expect that there are opportunities through a collaboration with Space Florida to continue research on the ISS. In prior years, tests of chemical compounds, plant cells, and mammalian stem cells in microgravity were conducted in conjunction with the USDA, Agricultural Research Service Labs (Beltsville, MD) and the Tropical Research and Education Center (TREC), a division of the University of Florida.

Proof Of Concept Plant Research To Develop Jatropha Biofuel Strains.

The ZGSI space research program in-part focused on Directed Selection™ of traits in plants, using microgravity. Initial research focused on in vitro cell culture methods for plants of interest for biofuels or valuable ornamentals. The tropical and sub-tropical plant, Jatropha curcas (physic nut), produces an easily purified biodiesel or jet fuel, but Jatropha is intolerant of frost and subject to diseases like root rot, leaf spot, and rust. A Jatropha cultivar with a broader climate range, improved frost tolerance, and greater disease resistance, would be a valuable improvement to biofuel production. A parallel study of ornamentals tested an endangered orchid species, two types of tropical flowering tree, and a common plant model organism. Research encompassed a series of six flights, from 2007 through 2011, and was completed by Dr. Wagner Vendrame at TREC. Research support was provided by NASA, BioServe Space Technologies, The Vecellio Group, and Vecenergy Corporation.

Plant cells from test species were grown in microgravity aboard the ISS and returned to ground for follow-up testing. The series of experiments produced several important results. First, the research team discovered the means to produce and propagate plant stem cells using microgravity. Second, methods were developed to out-grow plants from microgravity stem cells. Plant cells in microgravity were able to form pro-embryonic masses, which would enable quick regeneration of clonal plant material, in order to grow new, whole plants. Plant cells also had increased growth, and cell cultures acquired a high stress tolerance in microgravity, based upon the ability to recover viable cells after long-term (290 days) culture under very limited nutrient conditions. As predicted, plant cells grown in microgravity acquired different growth characteristics and differential gene expression, compared to growth in normal gravity conditions. Currently, proprietary Jatropha strains are in keeping at TREC.

Mammalian Stem Cell Research in Space

Mammalian stem cell research offers an immeasurable promise for human health, through potential means of disease treatment or cure and for tissue or organ regeneration or repair. ZGSI scientists and collaborators recognized this valuable application of space research early on, in 2008, and used the STS-126 flight mission to attempt to grow porcine liver stem cells (PICM-19) in microgravity. The experiment verified that mammalian stem cells would propagate, differentiate, and even form biliary liver structures in microgravity. Cell viability was maintained and cell activity assays indicated that cells maintained hepatocyte detoxification function over the test period. An early stem cell experiment, the PICM-19 work was an essential first step toward using microgravity to mass-propagate human differentiated or undifferentiated stem cells, to accomplish a myriad of research goals.

Timeline and Plan of Operations

While we believe we can reach our goals, 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 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 provides general and financial administration, marketing support and strategic planning to BAM Inc. and ZGLS. In February 2015, the Company hired a chief financial officer to assist the Company with financial management and reporting, strategic planning and internal control improvement. The Company has developed the sales and marketing tools as well as developing methods for marketing on our website and through social media.

In the second quarter 2016, the Company expects to conclude a private placement offering of its securities, having raising approximately $6,000,000 in equity capital since the commencement of the Offering in the fourth quarter of 2015. The offering consisted of a unit comprised of one share of the Company’s common stock and a five year warrant to purchase one share of the Company’s common stock at $2.00 for $1.25 per unit.

BAM Agricultural Solutions, Inc.

BAM Inc.’s focus for 2016 is to commercialize BAM-FX™ in both domestic and international markets. BAM Inc. expects to, develop its precision agricultural approach in the market, expand domestic sales in states not currently addressed, and prove its value proposition with grower return on investment statistics and replication of sales. BAM Inc. is hiring and training experienced agricultural personnel required to introduce and sell BAM-FX™ to growers, end-users and distributors in their respective markets, which currently consist primarily of independent commission based contractors.

The Company’s plan of operations for fiscal 2016 includes adding field agricultural technical support personnel and additional field sales and marketing management. The Company also expects to expand its brand recognition and market penetration by developing a non-exclusive distributor network including independent sales representatives.

The primary domestic markets for sale of product are those in which trials have been performed, including California, Florida, Idaho, Iowa, North and South Dakota and Texas. We expect that research and new formulations of BAM-FX™ and product research and development conducted through ZGLS will allow us to expand the sale of product in our target agricultural markets.

BAM Inc. also expects to commence commercial sales during the second quarter of 2016 in a number of South American countries, certain countries in the Asia Pacific region and Pakistan.

BAM Inc. has finalized the scale up of its principal manufacturing facility, which is expected to have the capacity to fulfill anticipated demand in fiscal 2016. 

Zero Gravity Life Sciences, Inc.

We expect ZGLS will execute a multi-track research and development program related to BAM-FX™, both for our space program and developing and testing new BAM-FX™-based formulations for specific crops and varying geographic soils and weather conditions. In addition, ZGLS will manage our intellectual property portfolio and assist BAM Inc. with patent strategies related to commercialization of new products. The Company expects ZGLS to assume managing and provide focus on the Company’s research and intellectual property initiatives with NASA ARC, TREC, Space Florida to commence when a new CEO is hired, planned to be during the second quarter of 2016. These initiatives include new product formulation research and development in addition to developing a center for agricultural innovation in cooperation with Space Florida.

During 2016, ZGLS expects to identify and compete for significant grants available for agriculture as well as specific crops and food sustainability, both at the federal and state level. Further ZGLS intends to continue to strengthen its relationships with various space agencies and space grant related opportunities, for example, Space Florida. We executed the new RSAA with NASA during the first quarter of 2016 and intend to utilize the association with NASA ARC research scientists to assist in both research and grant related activity in 2016.

Strategy for Growth

BAM Agricultural Solutions, Inc.

The Company’s subsidiary, BAM Inc., has been executing the commercial roll out of BAM-FX™ into the world’s agricultural markets. Following two years of initial product testing with several universities, end product users and laboratory work, BAM-FX™ has now been licensed and approved for sale in sixteen states in the United States: Utah, Idaho, Iowa, Maryland, Delaware, Nevada, Arizona, Alabama, Californian, Texas, New Mexico, North Carolina, Oregon, South Dakota, Virginia and Florida. The Company has focused on building a solid foundation, addressing regulatory and compliance issues while developing sales and technical teams in targeted geographic areas. The Company has received initial and second season commercial orders from end users (growers) and distributors, which have been manufactured, invoiced and shipped.

The Company is currently increasing its internal sales and technical team and establishing non-exclusive distribution relationships with national and regional agricultural product distributors to promote brand awareness and increase domestic and international sales. The Company’s strategic growth plan includes organic growth through product sales, strategic alliances and distributors. In development are sales and marketing tools highlighting the benefits of applying BAM-FX™ which include: improved plant health, increased nutritional value, reduction of fertilizer applications, stress relief and positive electronic charge which infuses zinc and copper into plant leaf cells. Tools to enable field sales personnel to compute the product’s value proposition or return on a grower’s investment are also in development and expect to be deployed during the end of the first quarter of 2016.

In addition, we have identified several crops of high market value that, based upon our testing, have shown BAM-FX™ significantly increases crop yield, quality and nutritional value. Such crops include grapes, avocados, strawberries, raspberries, alfalfa, spinach (leafy vegetables) and tomatoes, among others. We track the amount of acreage dedicated to a specific crop and the market value of the crop in order to prioritize our marketing and sales efforts.

Our distributor in Chile commenced commercial product sales to growers in Chile during the first quarter of 2016. Crops include wine and table grapes, avocado, blueberries, walnuts, cherries and pears. Our distributor is also in the process of establishing warehouse operations and obtaining regulatory approvals to break down BAM-FX™ bulk receipts into container sizes acceptable to growers and then repackage and re-label the containers for sale within Chile and to export to other South American countries. Based upon the initial product launch in Chile and the commercial acceptance of BAM-FX™ in the Chilean market, we expect the second quarter 2016 revenue from sales to contribute significantly to our 2016 results. As part of our expansion plan in South America, product validation has been initiated on fruit trees in Peru and Paraguay.

Zero Gravity Life Sciences, Inc.

ZGLS’s short to mid-term plans includes the utilization of NASA and European space agencies relationships to focus research on BAM-FX™ as it relates to our space program applications, as well as to engage in research based upon the Company’s zero/micro gravity intellectual property leading toward the development and patenting of unique stem cells developed on the ISS. These patentable plant stem cell lines could lead to new global food cash crops such as rice that may be resistant to climate change and other adverse factors. ZGLS will also be engaged in the human regenerative medical field developing cell growth types and capabilities not possible on the ground. We believe this may lead to positive commercial outcomes.

ZGLS is also continuing ground-based research on a pipeline of additional derivative BAM-FX™ products utilizing other minerals and micronutrients other than our original Zinc-Copper compound. The Company intends to build a family of “BAM” related products for different crops, soil conditions and nutritional outcomes.

Sales and Distribution Strategy

The Company is implementing sales, marketing and distribution strategies in the United States and in selected global markets to provide effective market penetration, sales and customer support through an internal sales and marketing organization and a network of selected, well qualified and highly respected strategic partners and distributors.

During 2014 the Company began building its internal sales and marketing organization by adding employees, sales representatives, commissioned agents and contractors with experience in sales and marketing management, in field research and toxicology. Further, the Company has developed appropriate sales and marketing materials and policies and procedure to administer a rapidly growing sales force. During 2015 we contracted with a certified crop advisor for sales and technical support in California and a regional sales manager for the southeastern United States. We also began commercial sales in Chile through a local non-exclusive distributor. Sales efforts through the third quarter of 2015 were focused primarily on proving the agricultural benefits to growers and distributors, conducting in excess of sixty trials in numerous crops. During most of 2015, the Company trained its sales and marketing personnel on the unique benefits of applying BAM-FX™ to crops, refined protocols to optimize product performance and educated and proved BAM-FX™ benefits and claims to growers and distributors with in field testing supported by third party results analysis.

During the fourth quarter of 2015, the Company began leveraging its experience, directing its efforts to agricultural distributors and thought leaders. Our sales representatives and managers were now armed with independent third party laboratory results, which proved technically, BAM-FX™ benefit claims and could approach agricultural thought leaders with scientific data. Our sales efforts focused on those growers with whom we developed working relationships during 2014 and 2015 with emphasis on making inroads with growers and crops on which we had proven scientific data. The targets included row crop growers (corn) and specialty growers (wine grapes, avocados, citrus and stone fruit). We believe our market reach will expand rapidly as industry thought leaders purchase and adopt BAM-FX™ in their crop protocols.

We expect to continue to add independent sales representatives to our sales team in 2016 while converting key independent sales representatives to employees. Our 2016 strategic plan includes building a network of domestic and international distributors that have existing sales teams. We plan that each of BAM’s distributors will have an existing customer base and the capabilities and infrastructure to provide BAM-FX™ packaging, distribution and customer support. We believe this approach will be successful in California with wine grape growers and avocado growers and corn growers in the Midwest through agricultural co-operatives that service growers, since our trials have shown that BAM-FX™ reduces plant stress brought about by poor climate, soil or water conditions and increases crop yield.

We believe that the revenue opportunities in Chile and South America require our direct involvement to develop the BAM-FX™ brand name recognition, warehousing, packaging and distribution to properly service the potential market.

Currently, we are validating BAM-FX™ product benefits with a number of large growers in the Asia Pacific region. Product validation will be managed by a distributor, contracted with us under a nonexclusive distribution contract. Upon successful completion of the validation process, we believe we will receive product orders from growers in the region in the second or third quarter of 2016. We also expect to begin commercial distribution of BAM-FX™ in Pakistan under a joint venture agreement to be finalized during the second quarter of 2016.

Intellectual Property

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

Patent Applications

We are the owners of several 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 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 enhances a plant’s immune system, may fortify against disease and promotes growth. The basis of which is the ability of the ionized ligand system to deliver selected minerals into a plant or other complex organism systemically at the cellular level. Our first field trials have utilized the primary ligand formulation of zinc and copper to deliver those molecules into several crops in both the laboratory and at large in the field. These crops have included strawberries, raspberries, corn, potatoes, tomatoes and others crops in a variety of locations. 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. 

We are also the licensee of a patent application that pertains to the use of an artificial Superoxide Dismutase (“SOD”) compositions for the treatment of several plant and animal diseases, including amyotrophic lateral sclerosis (also known as ALS disease). Superoxide is naturally produced by plants and animals, including humans, and its production is accelerated in times of trauma or stress. SOD is produced by the cells to counteract the effects of an over-production of superoxide. Adequate amounts of SOD may increase life-span in humans and may be capable of remediating (and saving) severely stressed plants. This patent application discusses an artificial SOD that can be easily applied and used for treating over-production of superoxide, particularly ALS and other neural disorders. The artificial SOD at issue here is less expensive to manufacture than other artificial SODs and has a significantly lighter molecular weight. Animal and human studies of the SOD are being discussed on an ongoing basis with NASA and academic entities. The plant and space radiation applications of the patent applications are being licensed to ZGSI exclusively from Mr. John W. Kennedy for specialized testing and research.

ZGSI is the exclusive assignee of a patent application directed to the replication of stems cells in a weightless environment. This patent application contains claims covering biological processes in microgravity, including the growth of cellular plant and animal tissues on-orbit, stem cell replication and related processes. The technology accelerates the evolution of organisms, particularly plants, to adapt the organism to thrive in a hostile environment including cold and/or arid climates. Plants adapted using the technology show increased tolerance for the selected hostile environment relative to traditional plants. Specific applications include the development of food crops that are tolerant of cold climates (e.g. frost resistant crops) and arid environments (drought resistant crops). A key part of our ongoing operations is the expansion of this technology to cover additional crops, animals and eventually humans, and the specific methodologies and tools that are developed from our R&D. It is therefore a part of our technology that holds much promise and, from a commercial standpoint, falls into the medium to longer term plans of the Company.

Trade Secrets

Parts of our stable of intellectual property resides in trade secrets pertaining to the manufacturing of several of the materials previously mentioned. In particular, BAM-FX™ and its 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™ without the correct purpose-built equipment requisite to the task may result in a damaging 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

In 2014, we filed trademark applications to protect “BAM-FX™” which are currently pending. Our patent for “Unlocking Nutrition for the World” was registered on September 8, 2015 We also hold a number of other common law trademarks that we may register in the future.

Strategic Relationships

Government Regulations

Although the BAM-FX™ product is different than most fertilizers available, we believe that most state regulatory agencies will require us to register it as a fertilizer. The BAM-FX™ product has been registered and issued a license as a liquid fertilizer by the State of California. California is considered one of the most difficult states to gain such registration, and may establish strong precedent for other states to allow such registration of the BAM-FX™ product. The Company does not make any claims that BAM-FX™ is a fungicide, bactericide or pesticide, including the related patent applications, thus alleviating most regulatory oversight. All ingredients in the formulation are categorized as Generally Regarded as Safe (“GRAS”) by the United States Food and Drug Administration (“USFDA”).

With our Directed Selection™ technology utilized in the creation of new varieties of an existing plant’s stem cell with unique characteristics, the resulting plant is developed exclusively through differential gene expression by exposure of the indigenous genome of the original plant to microgravity. No foreign DNA or genetic material is added or introduced to the genome, thus it is not considered to be a GMO and the Company believes that it would likely not fall under regulations that GMOs face. We believe that plants developed with Directed Selection™ technology would be regulated by the USFDA as are other non-genetically modified plants and we do not expect regulation to significantly impact our business plan.

Application of the Directed Selection™ technology to develop human stem cells represents a long term goal of the Company and therefore we have not fully investigated the level of regulation the resulting products may face. The Company will complete a full review of the applicable regulations before beginning any product development efforts.

We expect that any products utilizing our Superoxide Dismutase (SOD) patent license will be subject to regulatory control. At this time we have not completed research or development efforts in this area determine how a product may be regulated, if developed, as it relates to our Directed Selection technology.

Competition

There are more than 700 major fertilizer manufactures worldwide. Of those, approximately 80% manufacture a fertilizer including nitrogen. As a standalone product, BAM-FX™ will compete with these fertilizers or become a supplemental treatment with an additional application. We believe that our product can create improved end product value exceeding the cost of BAM-FX™. BAM-FX™ is engaged in laboratory and agricultural field testing. Preliminary data suggest that the positive effects of BAM-FX™ applications to all plants tested has made them healthier and more robust and productive.

The BAM-FX™ formula can be integrated into existing formulated, liquid fertilizers as an additional ingredient. Lab and field research indicates that, by blending BAM-FX™ with existing, widely distributed, “branded” products, we could become a major supplier to nitrogen based fertilizer producers making their way into the marketplace. BAM-FX™ works synergistically with and greatly improves other fertilizer products and therefore we could become a significant ingredient supplier to major companies with existing wide distribution. We are not aware of a direct competitor utilizing this business strategy.

Internal formulation research is ongoing as customization will be important to accommodate variations in soil and environmental conditions. New discoveries through earth and space research may result in products capable of growing plants in more formidable climatic conditions, which could give BAM-FX™ an additional future competitive advantage.

Competitive Advantage/Barriers to Entry:

The Company believes that ZGSI has adequately protected its intellectual property and has developed a strong, professional team and developed excellent relationships with industry leaders that provide it a positive competitive position.

Reports to Security Holders

We are required to file reports and other information with the U.S. Securities and Exchange Commission (“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 are an electronic filer with the SEC and, as such, 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.