SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark one)
[X] Quarterly Report Pursuant to Section 13 or 15 (d) of the Securities Exchange
Act of 1934
For the Quarter Period Ended February 28, 2001
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[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the transition period from _______ to _______.
Commission File No. 0-26189
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ALLERGY IMMUNO TECHNOLOGIES, INC.
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(Exact name of small business issuer as specified in its charter)
Delaware 95-3937129
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1531 Monrovia Avenue, Newport Beach, California 92663
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number including area code: (949) 645-3703
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(Not applicable)
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(Former name, former address and former fiscal year, if changed since last
report.)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [X] No [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: 17,170,390 shares of Common
Stock as of April 12, 2001.
ALLERGY IMMUNO TECHNOLOGIES, INC.
INDEX
PART I FINANCIAL INFORMATION
ITEM 1. Financial Statements:
Statements of Operations - Nine Months and Three Months
Ended February 28, 2001 and February 29, 2000..................................2
Balance Sheet - February 28, 2001..........................................3 & 4
Statements of Cash Flows
Nine Months Ended February 28, 2001 and February 29, 2000......................5
Statement of Changes in Shareholders' Deficit -
Nine Months Ended February 28, 2001............................................6
Notes to Financial Statements................................................7-9
Management's Discussion and Analysis of Financial Condition
and Selected Financial Data................................................10-11
PART II. Other Information....................................................12
Signatures....................................................................13
PART I - FINANCIAL INFORMATION
SUMMARIZED FINANCIAL INFORMATION
ALLERGY IMMUNO TECHNOLOGIES, INC.
STATEMENTS OF OPERATIONS (UNAUDITED)
Nine Months Ended Three Months Ended
February 28, February 29, February 28, February 29,
2001 2000 2001 2000
------------- ------------- ------------- -------------
Net sales $ 77,920 $ 60,531 $ 23,008 $ 16,940
Cost of sales 65,258 67,636 24,180 25,579
------------- ------------- ------------- -------------
Gross profit (loss) 12,662 (7,105) (1,172) (8,639)
Operating Expenses:
Selling, general and administrative 60,261 133,062 15,049 36,051
------------- ------------- ------------- -------------
Total operating expenses 60,261 133,062 15,049 36,051
Operating Loss (47,599) (140,167) (16,221) (44,690)
Other income:
Other income, net 83 1,098 83 504
------------- ------------- ------------- -------------
Loss before taxes (47,516) (139,069) (16,138) (44,186)
Income Taxes 800 800 800 0
------------- ------------- ------------- -------------
NET LOSS $ (48,316) $ (139,869) $ (16,938) $ (44,186)
============= ============= ============= =============
Per share data:
Net loss per share, basic and diluted $ (.00) $ (.01) $ (.00) $ (.00)
============= ============= ============= =============
Weighted average number of common and
Common equivalent shares outstanding 17,170,390 17,170,390 17,170,390 17,170,390
============= ============= ============= =============
The accompanying notes are an integral part of these statements.
2
ALLERGY IMMUNO TECHNOLOGIES, INC.
BALANCE SHEET (UNAUDITED)
February 28,
2001
--------------
Assets
Current Assets
Cash $ 345
Accounts receivable, less allowance for doubtful accounts 9,420
Inventory 4,351
Prepaid expenses and other current assets 3,333
--------
Total Current Assets 17,449
Land held for investment 46,000
Fixed assets, net of accumulated depreciation 391
Patents, net of accumulated amortization 11,934
--------
Total assets $ 75,774
========
The accompanying notes are an integral part of these statements
3
ALLERGY IMMUNO TECHNOLOGIES, INC.
BALANCE SHEET, CONTINUED (UNAUDITED)
February 28,
2001
------------
Liabilities and Shareholders' Deficit
Current Liabilities
Accounts payable and accrued expenses $ 21,650
Due to affiliate 311,902
------------
Total Current Liabilities 333,552
Shareholders' Equity
Common stock, $.001 par value authorized 50,000,000 shares,
Issued and outstanding 17,170,390 17,170
Additional paid-in-capital 1,777,388
Accumulated deficit (2,052,336)
------------
Total Shareholders' Deficit (257,778)
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Total Liabilities and Deficit $ 75,774
============
The accompanying notes are an integral part of these statements
4
ALLERGY IMMUNO TECHNOLOGIES, INC.
STATEMENTS OF CASH FLOWS (UNAUDITED)
NINE MONTHS ENDED
February 28, February 29,
2001 2000
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Cash flows from operating activities:
Net loss $ (48,316) $(139,869)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization 185 2,071
Changes in current assets and liabilities:
Accounts Receivable 2,584 661
Inventory 26 525
Prepaid expenses and other current assets 1,269 1,558
Accounts payable and other accrued expenses 12,105 1,754
Other receivable-consulting 0 100,000
---------- ----------
Net cash used in operating activities (32,147) (33,300)
---------- ----------
Cash flows from investing activities:
Purchases of property and equipment 0 (2,644)
---------- ----------
Net cash used in investing activities 0 (2,644)
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Cash flows provided by financing activities:
Advances from affiliate 29,889 40,405
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Net cash provided by financing activities 29,889 40,405
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Net change in cash (2,258) (4,461)
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Cash at beginning of year 2,603 2,202
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Cash at end of quarter $ 345 $ 6,663
========== ==========
The accompanying notes are an integral part of these statements.
5
ALLERGY IMMUNO TECHNOLOGIES, INC.
STATEMENT OF CHANGES IN SHAREHOLDERS' DEFICIT (UNAUDITED)
FOR THE NINE MONTHS ENDED FEBRUARY 28, 2001
Common Stock
-------------------------- Additional Accumu-
Number of Paid-In Lated
Shares Amount Capital Deficit Total
------------ ------------ ------------ ------------ ------------
Balances at
May 31, 2000 17,170,390 $ 17,170 $ 1,777,388 $(2,004,020) $ (209,462)
Net loss - - - (48,316) (48,316)
------------ ------------ ------------ ------------ ------------
Balances at
February 28, 2001 17,170,390 $ 17,170 $ 1,777,388 $(2,052,336) $ (257,778)
============ ============ ============ ============ ============
The accompanying notes are an integral part of these statements.
6
NOTES TO FINANCIAL STATEMENTS
February 28, 2001
(1) Reference is made to Note 1 of the Notes to Financial Statements
contained in the Company's Annual Report on Form 10-KSB for the fiscal
year ended May 31, 2000, for a summary of significant accounting
policies utilized by the Company.
(2) The information set forth in these statements is unaudited. The
information reflects all adjustments which, in the opinion of
management, are necessary to present a fair statement of results of
operations of Allergy Immuno Technologies, Inc., for the periods
indicated. It does not include all information and footnotes necessary
for a fair presentation of financial position, results of operations,
and cash flow in conformity with generally accepted accounting
principles.
(3) Results of operations for the interim periods covered by this Report
may not necessarily be indicative of results of operations for the full
fiscal year.
(4) Earnings Per Share
------------------
In February 1997, the Financial Accounting Standards Board ("FASB")
issued Statement of Financial Accounting Standards (SFAS) No. 128,
EARNINGS PER SHARE ("EPS"). SFAS No. 128 requires dual presentation of
basic EPS and diluted EPS on the face of all income statements issued
after December 15, 1997 for all entities with complex capital
structures. Basic EPS is computed as net income divided by the weighted
average number of common shares outstanding for the period. Diluted EPS
reflects the potential dilution that could occur from common shares
issuable through stock options, warrants and other convertible
securities.
The following table illustrates the required disclosure of the
reconciliation of the numerators and denominators of the basic and
diluted EPS computations:
7
For the Nine Months Ended February 28, 2001
--------------------------------------------------
Income Shares Per Share
(Numerator) (Denominator) Amount
-------------- -------------- --------------
Basic EPS -
Loss available to common
Shareholders $ (48,316) 17,170,390 $ (.00)
==============
Effect of dilutive securities - Options - -
-------------- --------------
Diluted EPS -
Loss available to common share-
Holders plus assumed conversions $ (48,316) 17,170,390 $ (.00)
============== ============== ==============
For the Nine Months Ended February 29, 2000
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Income Shares Per Share
(Numerator) (Denominator) Amount
-------------- -------------- --------------
Basic EPS -
Loss available to common
Shareholders $ (139,869) 17,170,390 $ (.01)
==============
Effect of dilutive securities - Options - -
-------------- --------------
Diluted EPS -
Loss available to common share-
Holders plus assumed conversions $ (139,869) 17,170,390 $ (.00)
============== ============== ==============
For the Three Months Ended February 28, 2001
--------------------------------------------------
Income Shares Per Share
(Numerator) (Denominator) Amount
-------------- -------------- --------------
Basic EPS -
Loss available to common
Shareholders $ (16,938) 17,170,390 $ (.00)
==============
Effect of dilutive securities - Options - -
-------------- --------------
Diluted EPS -
Loss available to common share-
Holders plus assumed conversions $ (16,938) 17,170,390 $ (.00)
============== ============== ==============
8
For the Three Months Ended February 29, 2000
--------------------------------------------------
Income Shares Per Share
(Numerator) (Denominator) Amount
-------------- -------------- --------------
Basic EPS -
Loss available to common
Shareholders $ (44,186) 17,170,390 $ (.00)
==============
Effect of dilutive securities - Options - -
-------------- --------------
Diluted EPS -
Loss available to common share-
Holders plus assumed conversions $ (44,186) 17,170,390 $ (.00)
============== ============== ==============
(5) The accompanying financial statements have been prepared assuming the
Company will continue as a going concern. During the year ended May 31, 2000
("Fiscal 2000"), the Company experienced a net loss of $177,786 and during the
nine months ended February 28, 2001, a loss of $48,316 (unaudited) and had
negative cash flows from operations of $10,961 and $32,147 for the fiscal year
and nine months, respectively. In addition, the Company had substantial working
capital and shareholders' deficits at February 28, 2001. These factors, among
others, raise substantial doubt about the Company's ability to continue as a
going concern. The financial statements do not include any adjustments that
might result from the outcome of this uncertainty.
There can be no assurances that the Company will be able to successfully
implement its plans, including generating profitable operations, generating
positive cash flows from operations and obtaining additional debt and equity
capital to meet present and future working capital demands.
(6) In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative
Instruments and Hedging Activities". The statement will require recognition of
all derivatives as either assets or liabilities on the balance sheet at fair
value. The statement is effective for the company's fiscal year 2002, as
deferred by SFAS No. 137, but early adoption is permitted. Management has
completed an evaluation of the effects of this statement and does not believe
that it will have a material effect on the company's financial statements.
In December 1999, the Securities and Exchange Commission issued Staff Accounting
Bulletin ("SAB") No. 101, "Revenue Recognition in Financial Statements." The
effective date of the bulletin was delayed according to SAB No. 101A and SAB No.
101B and will be effective for the company's fourth quarter of fiscal year 2001.
Management has completed an evaluation of the effects of this bulletin and does
not believe that it will have a materials effect on the Company's financial
statements.
9
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND SELECTED FINANCIAL DATA
THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 PROVIDES A "SAFE HARBOR"
FOR FORWARD-LOOKING STATEMENTS. CERTAIN INFORMATION CONTAINED HEREIN (AS WELL AS
INFORMATION INCLUDED IN ORAL STATEMENTS OR OTHER WRITTEN STATEMENTS MADE OR TO
BE MADE BY ALLERGY IMMUNO TECHNOLOGIES) CONTAINS STATEMENTS THAT ARE
FORWARD-LOOKING, SUCH AS STATEMENTS RELATING TO ANTICIPATED FUTURE REVENUES OF
THE COMPANY AND SUCCESS OR CURRENT PRODUCT OFFERINGS. SUCH FORWARD-LOOKING
INFORMATION INVOLVES IMPORTANT RISKS AND UNCERTAINTIES THAT COULD SIGNIFICANTLY
AFFECT ANTICIPATED RESULTS IN THE FUTURE, AND ACCORDINGLY, SUCH RESULTS MAY
DIFFER MATERIALLY FROM THOSE EXPRESSED IN ANY FORWARD-LOOKING STATEMENTS MADE BY
OR ON BEHALF OF ALLERGY IMMUNO TECHNOLOGIES. THE POTENTIAL RISKS AND
UNCERTAINTIES INCLUDE, AMONG OTHERS, THE CONTINUED DEMAND FOR THE COMPANY'S
SERVICES, COMPETITIVE AND ECONOMIC FACTORS OF THE MARKETPLACE, HEALTH CARE
REGULATIONS AND THE STATE OF THE ECONOMY. READERS ARE CAUTIONED NOT TO PLACE
UNDUE RELIANCE ON THESE FORWARD-LOOKING STATEMENTS, WHICH SPEAK ONLY AS OF THE
DATE HEREOF, AND THE COMPANY UNDERTAKES NO OBLIGATION TO UPDATE THESE
FORWARD-LOOKING STATEMENTS.
RESULTS OF OPERATIONS
Net sales for Allergy Immuno Technologies were $77,920 or the nine months ended
February 28, 2001, as compared to $60,531 for the same period in the previous
year. This represents an increase of $17,389, or 29%. For the three months then
ended sales were $23,000 as compared to $16,940 in fiscal 2000. This represents
an increase of $6,068 or 36%. Cost of sales for the nine months decreased from
$67,636 to $65,258 or $2,378 (4%). Cost of sales for the quarter ended February
28, 2001 decreased from $25,579 to $24,180, or $1,399 (5%). Sales increased for
the first nine months due to testing services provided by the Company for a
large company with respect to a research project they were conducting. Cost of
sales as a percentage of sales decreased from 111.7% to 83.8% for the nine
months and from 151% to 105% for the quarter ended February 28, 2001 due to
higher sales in relation to fixed costs.
Selling, general and administrative costs for the nine months ended February 28,
2001 decreased from $133,062 in fiscal 2000 to $60,261 in fiscal 2001. This
represents a decrease of $72,801 (55%). For the quarter then ended selling,
general and administrative costs decreased from $36,051 to $15,050, or $21,001
(58%), all of which was due to decreased legal and accounting costs associated
with the filing of the Company's Form 10-SB in the prior fiscal year.
During the first quarter of the prior fiscal year the Company received a payment
of $100,000 (which was recorded as income in the prior fiscal year) for
consulting services and an option to purchase 10,000 Class A Units of
Hollister-Stier LLC at a purchase price of $10 per unit.
10
LIQUIDITY AND CAPITAL RESOURCES
As of February 28, 2001, the Company had a cash balance of $345 as compared to a
$2,603 cash balance as of May 31, 2000. Its current working capital deficit is
$316,103 as compared to a deficit of $207,972 as of May 31, 2000.
The Company has been experiencing losses and has had to rely on borrowings from
Biomerica, Inc., which owns approximately 74.6% of the outstanding stock of AIT.
Management believes that losses will continue during this fiscal year. As of
February 28, 2001 the Company owed Biomerica $311,902. Biomerica is not charging
the Company interest on the advances and has not determined any date of
repayment. In the past Biomerica has taken the Company's stock as repayment for
cash advanced.
GOING CONCERN
The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. During the year ended May 31, 2000 ("Fiscal
2000"), the Company experienced a net loss of $177,786 and during the nine
months ended February 28, 2001, a loss of $48,316 (unaudited) and had negative
cash flows from operations of $70,961 and $32,147 for Fiscal 2000 and the nine
months ended February 28, 2001, respectively. In addition, the Company had
substantial working capital and shareholders' deficits at February 28, 2001.
These factors, among others, raise substantial doubt about the Company's ability
to continue as a going concern. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
There can be no assurances that the Company will be able to successfully
implement its plans, including generating profitable operations, generating
positive cash flows from operations and obtaining additional debt and equity
capital to meet present and future working capital demands.
11
PART II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS. Inapplicable.
Item 2. CHANGES IN SECURITIES. Inapplicable.
Item 3. DEFAULTS UPON SENIOR SECURITIES. Inapplicable.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. Inapplicable
Item 5. OTHER INFORMATION. Inapplicable.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K. None.
12
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has fully caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: April 12, 2001
ALLERGY IMMUNO TECHNOLOGIES, INC.
By: /S/ Zackary S. Irani
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Zackary Irani,
President, Chief Executive Officer
13