FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15 (D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended August 31, 1999 Commission File No. 0-26189
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ALLERGY IMMUNO TECHNOLOGIES, INC.
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(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
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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 October 1, 1999.
<PAGE>
ALLERGY IMMUNO TECHNOLOGIES, INC.
INDEX
PART I Financial Statements:
Statement of Operations - Three Months
Ended August 31, 1999 and 1998.....................................2
Balance Sheet - August 31, 1999................................3 & 4
Statement of Cash Flows
Three Months Ended August 31, 1999 and 1998........................5
Statement of Changes in Shareholders' Deficit -
Three Months Ended August 31, 1999.................................6
Notes to Financial Statements..................................7 & 8
Management's Discussion and Analysis of Financial Condition
and Selected Financial Data........................................9
PART II Other Information.................................................10
Signatures........................................................10
i
<PAGE>
PART I - FINANCIAL INFORMATION
SUMMARIZED FINANCIAL INFORMATION
ALLERGY IMMUNO TECHNOLOGIES, INC.
STATEMENT OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
August 31,
1999 1998
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<S> <C> <C>
Net sales......................................... $ 24,899 $ 23,147
Cost of sales.................................. 23,173 19,795
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Gross profit................................... 1,726 3,352
Operating Expenses:
Selling, general and administrative............ 59,704 14,380
Research and development....................... 0 150
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Total operating expenses.......................... 59,704 14,530
Operating Loss.................................... (57,978) (11,178)
Other income:
Other income, net.............................. 264 44
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Loss before taxes................................. (57,714) (11,134)
Income Taxes...................................... 800 800
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NET LOSS.......................................... $ (58,514) $ (11,934)
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Per share data:
Basic and diluted.............................. $ (.00) $ (.00)
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Weighted average number of common and common
equivalent shares outstanding..................... 17,170,390 15,253,961
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</TABLE>
2
<PAGE>
ALLERGY IMMUNO TECHNOLOGIES, INC.
BALANCE SHEET (UNAUDITED)
<TABLE>
<CAPTION>
August 31,
1999
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<S> <C>
Assets
Current Assets
Cash ...................................................................... $ 3,753
Accounts receivable, net allowance for doubtful accounts of $11,185........ 10,485
Inventory.................................................................. 6,456
Prepaid expenses and other current assets.................................. 1,261
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Total Current Assets .............................................. 21,955
Land held for investment..................................................... 46,000
Fixed assets, net of accumulated depreciation................................ 925
Patents, net of accumulated amortization of $4,796........................... 12,473
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$ 81,353
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<FN>
The accompanying notes are an integral part of these statements
</TABLE>
3
<PAGE>
ALLERGY IMMUNO TECHNOLOGIES, INC.
BALANCE SHEET (UNAUDITED)
<TABLE>
<CAPTION>
August 31,
1999
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<S> <C>
Liabilities and Shareholders' Deficit
Current Liabilities
Accounts payable and accrued expenses................................ $ 10,346
Due to affiliate..................................................... 161,197
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Total Current Liabilities........................................ 171,543
Shareholders' Deficit
Common stock, $.001 par value authorized 50,000,000 shares,
issued and outstanding 17,170,390 in 1999.......................... 17,170
Additional paid-in-capital........................................... 1,777,388
Accumulated deficit.................................................. (1,884,748)
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Total Shareholders' Deficit............................................. (90,190)
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Total Liabilities and Deficit........................................... $ 81,353
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<FN>
The accompanying notes are an integral part of these statements.
</TABLE>
4
<PAGE>
ALLERGY IMMUNO TECHNOLOGIES, INC.
STATEMENT OF CASH FLOWS (UNAUDITED)
THREE MONTHS ENDED AUGUST 31, 1999 AND 1998
<TABLE>
<CAPTION>
1999 1998
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<S> <C> <C>
Cash flows from operating activities:
Net loss ........................................... $ (58,514) $ (11,934)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Depreciation and amortization.................... 866 717
Changes in current assets and liabilities:
Accounts Receivable............................ 3,065 4,590
Inventory...................................... 0 (620)
Prepaid expenses and other current assets...... 2,018 1,386
Accounts payable and other accrued liabilities. 2,627 4,942
Other receivable-consulting.................... 100,000 0
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Net cash provided by (used in) operating activities. 50,062 (919)
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Cash flows from investing activities:
Purchases of property and equipment............... (1,700) 0
Net cash used in investing activities............... (1,700) 0
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Cash flows provided by financing activities:
Net advances from affiliate....................... (46,811) 4,848
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Net cash (used in) provided by financing activities. (46,811) 4,848
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Net change in cash ................................. 1,551 3,949
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Cash at beginning of period......................... 2,202 3,562
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Cash at end of period............................... $ 3,753 $ 7,511
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<FN>
The accompanying notes are an integral part of these statements.
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
ALLERGY IMMUNO TECHNOLOGIES, INC.
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (UNAUDITED)
FOR THE THREE MONTHS ENDED AUGUST 31, 1999
Common Stock Additional Accumu-
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Number of Paid-In Lated
Shares Amount Capital Deficit Total
------------ ------------- --------------- --------------- --------------
<S> <C> <C> <C> <C> <C>
Balance at
May 31, 1999 17,170,390 $ 17,170 $ 1,777,388 $ (1,826,234) $ (31,676)
Net loss (58,514) (58,514)
------------ ------------- --------------- --------------- --------------
Balance at
August 31, 1999 17,170,390 $ 17,170 $ 1,777,388 $ (1,884,748) $ (90,190)
------------ ------------- --------------- --------------- --------------
------------ ------------- --------------- --------------- --------------
<FN>
The accompanying notes are an integral part of these statements.
</TABLE>
6
<PAGE>
NOTES TO FINANCIAL STATEMENTS
August 31, 1999
(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, 1999, for a summary of significant accounting policies utilized by the
Company.
(2) The information set forth in these statements is unaudited and may be
subject to normal year-end adjustments. 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
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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. All periods presented have been
restated to adopt the provisions of SFAS No. 128.
The following table illustrates the required disclosure of the
reconciliation of the numerators and denominators of the basic and diluted
EPS computations:
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<PAGE>
<TABLE>
<CAPTION>
For the Three Months Ended August 31, 1999
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Income Shares Per Share
(Numerator) (Denominator) Amount
------------------ ------------------ ---------------
<S> <C> <C> <C>
Basic EPS -
Loss available to common
Shareholders........................... $ (58,514) 17,170,390 ($.00)
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Effect of dilutive securities - Options.... - -
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Diluted EPS -
Loss available to common share-
Holders plus assumed conversions....... $ (58,514) 17,170,390 ($.00)
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<CAPTION>
For the Three Months Ended August 31, 1998
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Income Shares Per Share
(Numerator) (Denominator) Amount
------------------ ------------------ ---------------
<S> <C> <C> <C>
Basic EPS -
Loss available to common
Shareholders........................... $ (11,934) 15,253,961 ($.00)
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Effect of dilutive securities - Options.... - -
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Diluted EPS -
Loss available to common share-
Holders plus assumed conversions....... $ (11,934) 15,253,961 ($.00)
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------------------ ------------------ ---------------
</TABLE>
5. The Company currently operates a Novell-based LAN system put in place in
November 1994. Most of the Company's computers have been upgraded to year
2000 compliant equipment. The Company upgraded its software and most
hardware in March of 1999. The cost of these upgrades was not materials.
The accounting and record-keeping software that is employed at AIT is in
wide use.
The Company does not place orders electronically nor does it make
disbursements to vendors or employees in that medium. The Company has a
broad base of available suppliers and therefore is not heavily reliant on
any one supplier outside of the Company. The Company has a limited number
of customers and the impact, if any, of Year 2000 related problems on the
Company's customers could have an adverse affect on the Company.
8
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND SELECTED FINANCIAL DATA
The statements in this Report on Form 10-QSB and other statements made by
Allergy Immuno Technologies, Inc. that relate to future plans, events or
performance are forward-looking statements which involve risks and
uncertainties. Actual results, events or performance may differ materially from
those anticipated in any forward-looking statements as a result of a variety of
factors, including, but not limited to, competition, which has and will continue
to put price pressure on the Company's third party collection receivables, and
overall macro-economic conditions.
RESULTS OF OPERATIONS
Net sales for Allergy Immuno Technologies were $24,899 for the first quarter
of fiscal 1999 as compared to $23,147 for the same period in the previous year.
This represents an increase of $1,752, or 7.6%. Cost of sales increased from
$19,795 to $23,173, or $3,378 (17.1%). The increase in cost of sales was
primarily due to an increase in materials and wages.
Selling, general and administrative costs increased from $14,380 in fiscal
1999 to $59,704 in the current quarter. This represents an increase of $45,324,
all of which was due to an increase in legal and accounting costs associated
with the filing of the Company's Form 10-SB and Form 10-KSB. In the prior
fiscal year these forms were not required to be filed by the Company and
therefore it did not incur such costs. The Company will be continuing to incur
legal and accounting costs on an on-going basis but not to the extent of this
quarter's charges. The initial filing, Form 10-SB, is a non-recurring filing
requirement, however, other reports will be required, such as Form 10-QSB and
the annual Form 10-KSB.
During this quarter 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.
LIQUIDITY AND CAPITAL RESOURCES
As of August 31, 1999, the Company had cash of $3,753 as compared to $7,511
in the previous year. Its current working capital deficit was $149,588 as
compared to a deficit of $121,354 for the previous year.
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.
Biomerica has agreed to provide continued financial and management support, if
necessary, at least through the end of this fiscal year. As of August 31, 1999
the Company owed Biomerica $161,197. 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.
9
<PAGE>
During the three months ended August 31, 1999, Biomerica repaid $46,811 of these
advances.
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.
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: October 9, 1999
BIOMERICA, INC.
By: /S/ Zackary S. Irani
-----------------------------
Zackary Irani
President, Chief Executive Officer
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<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAY-31-1999
<PERIOD-END> AUG-31-1999
<CASH> 3,753
<SECURITIES> 0
<RECEIVABLES> 21,670
<ALLOWANCES> 11,185
<INVENTORY> 6,456
<CURRENT-ASSETS> 21,955
<PP&E> 45,639
<DEPRECIATION> 44,714
<TOTAL-ASSETS> 81,353
<CURRENT-LIABILITIES> 171,543
<BONDS> 0
0
0
<COMMON> 17,170
<OTHER-SE> (107,360)
<TOTAL-LIABILITY-AND-EQUITY> 81,353
<SALES> 24,899
<TOTAL-REVENUES> 24,899
<CGS> 23,173
<TOTAL-COSTS> 23,173
<OTHER-EXPENSES> 59,704
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (57,714)
<INCOME-TAX> 800
<INCOME-CONTINUING> (58,514)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (58,514)
<EPS-BASIC> (.00)
<EPS-DILUTED> (.00)
</TABLE>
