<PAGE>
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 29, 2000
------------------
__ 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.
- --------------------------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
Delaware 95-3937129
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1531 Monrovia Avenue, Newport Beach, California 92663
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number including area code: (949) 645-3703
- --------------------------------------------------------------------------------
(Not applicable)
- --------------------------------------------------------------------------------
(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 March 20, 2000.
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ALLERGY IMMUNO TECHNOLOGIES, INC.
INDEX
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements:
Statements of Operations (unaudited) - Nine Months and Three Months
Ended February 29, 2000 and February 28, 1999..........................2
Balance Sheet (unaudited) - February 29, 2000......................3 & 4
Statements of Cash Flows (unaudited)
Nine Months Ended February 29, 2000 and February 28, 1999..............5
Statement of Changes in Shareholders' Deficit (unaudited) -
Nine Months Ended February 29, 2000....................................6
Notes to Financial Statements........................................7-9
ITEM 2. Management's Discussion and Analysis of Financial Condition
and Selected Financial Data......................................10 & 11
PART II OTHER INFORMATION
Other Information.................................................... 12
Signatures............................................................12
i
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<TABLE>
PART I - FINANCIAL INFORMATION
SUMMARIZED FINANCIAL INFORMATION
ALLERGY IMMUNO TECHNOLOGIES, INC.
STATEMENTS OF OPERATIONS (UNAUDITED)
<CAPTION>
Nine Months Ended Three Months Ended
February 29 February 28 February 29 February 28
2000 1999 2000 1999
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Net sales .................................... $ 60,531 $ 52,198 $ 16,940 $ 14,003
Cost of sales ........................... (67,636) (64,465) (25,579) (21,675)
------------- ------------- ------------- -------------
Gross loss ................................... (7,105) (12,267) (8,639) (7,672)
Operating Expenses:
Selling, general and administrative ..... 133,062 47,183 36,051 15,252
Research and development ................ 0 300 0 0
------------- ------------- ------------- -------------
Total operating expenses ..................... 133,062 47,483 36,051 15,252
Operating Loss ............................... (140,167) (59,750) (44,690) (22,924)
Other income:
Other income, net ....................... 1,098 1,700 504 816
------------- ------------- ------------- -------------
Loss before taxes ............................ (139,069) (58,050) (44,186) (22,108)
Income Taxes ................................. 800 800 0 0
------------- ------------- ------------- -------------
NET LOSS ..................................... $ (139,869) $ (58,850) $ (44,186) $ (22,108)
============= ============= ============= =============
Per share data:
Net loss ................................ $ (.01) $ (.00) $ (.00) $ (.00)
============= ============= ============= =============
Weighted average number of common and
common equivalent shares (basic and
diluted) outstanding: ........................ 17,170,390 16,184,198 17,170,390 16,184,198
============= ============= ============= =============
</TABLE>
2
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ALLERGY IMMUNO TECHNOLOGIES, INC.
BALANCE SHEET (UNAUDITED)
February 29,
2000
------------
Assets
Current Assets
Cash ........................................................ $ 6,663
Accounts receivable, less allowance for doubtful accounts ... 12,889
Inventory ................................................... 5,931
Prepaid expenses and other current assets ................... 1,721
------------
Total Current Assets .................................. 27,204
Land held for investment ........................................ 46,000
Fixed assets, net of accumulated depreciation ................... 843
Patents, net of accumulated amortization ........................ 12,294
------------
Total assets .................................................... $ 86,341
============
The accompanying notes are an integral part of these statements
3
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ALLERGY IMMUNO TECHNOLOGIES, INC.
BALANCE SHEET (UNAUDITED)
February 29,
2000
------------
Liabilities and Shareholders' Deficit
Current Liabilities
Accounts payable and accrued expenses ...................... $ 9,473
Due to affiliate ........................................... 248,413
------------
Total Current Liabilities ............................. 257,886
Shareholders' Deficit
Preferred stock, par value $1.00 per share; 100,000 shares
authorized; no shares issued and outstanding
Common stock, $.001 par value authorized 50,000,000 shares,
issued and outstanding 17,170,390 shares ................. 17,170
Additional paid-in-capital ................................. 1,777,388
Accumulated deficit ........................................ (1,966,103)
------------
Total Shareholders' Deficit ..................................... (171,545)
------------
Total Liabilities and Shareholders' Deficit ..................... $ 86,341
============
The accompanying notes are an integral part of these statements.
4
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ALLERGY IMMUNO TECHNOLOGIES, INC.
STATEMENTS OF CASH FLOWS (UNAUDITED)
NINE MONTHS ENDED
FEBRUARY 29 FEBRUARY 28
2000 1999
----------- -----------
Cash flows from operating activities:
Net loss .............................................$ (139,869) $ (58,850)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization ................... 2,071 2,136
Changes in current assets and liabilities:
Accounts Receivable ........................... 661 11,132
Inventory ..................................... 525 (18)
Prepaid expenses and other current assets ..... 1,558 1,564
Accounts payable and other accrued liabilities 1,754 713
Other receivable-consulting ................... 100,000 -
----------- -----------
Net cash used in operating activities ................ (33,300) (43,323)
----------- -----------
Cash flows used in investing activities:
Purchases of property and equipment ............. (2,644) -
----------- -----------
Net cash used in investing activities ................ (2,644) -
----------- -----------
Cash flows provided by financing activities:
Advances from affiliate .......................... 40,405 39,761
----------- -----------
Net cash provided by financing activities ............ 40,405 39,761
----------- -----------
Net change in cash ................................... 4,461 (3,562)
----------- -----------
Cash at beginning of year ............................ 2,202 3,562
----------- -----------
Cash at end of quarter ...............................$ 6,663 $ -
=========== ===========
The accompanying notes are an integral part of these statements.
5
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<TABLE>
ALLERGY IMMUNO TECHNOLOGIES, INC.
STATEMENT OF CHANGES IN SHAREHOLDERS' DEFICIT (UNAUDITED)
FOR THE NINE MONTHS ENDED FEBRUARY 29, 2000
<CAPTION>
Common Stock
-------------------------------------- Additional Accumu-
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 (139,869) (139,869)
----------------- ----------------- ----------------- ----------------- -----------------
Balance at
February 29, 2000 17,170,390 $ 17,170 $ 1,777,388 $ (1,966,103) $ (171,545)
================= ================= ================= ================= =================
</TABLE>
The accompanying notes are an integral part of these statements.
6
<PAGE>
NOTES TO FINANCIAL STATEMENTS
February 29, 2000
(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. 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
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<TABLE>
<CAPTION>
For the Nine Months Ended February 29, 2000
---------------------------------------------------------------------
Income Shares Per Share
(Numerator) (Denominator) Amount
---------------------- ------------------- --------------------
<S> <C> <C> <C>
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 $ (.01)
====================== =================== ====================
For the Nine Months Ended February 28, 1999
---------------------------------------------------------------------
Income Shares Per Share
(Numerator) (Denominator) Amount
---------------------- ------------------- --------------------
Basic EPS -
Loss available to common
Shareholders.................................. $ (58,850) 16,184,198 $ (.00)
====================
Effect of dilutive securities - Options............. - -
---------------------- -------------------
Diluted EPS -
Loss available to common share-
Holders plus assumed conversions.............. $ (58,850) 16,184,198 $ (.00)
====================== =================== ====================
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)
====================== =================== ====================
8
<PAGE>
For the Three Months Ended February 28, 1999
---------------------------------------------------------------------
Income Shares Per Share
(Numerator) (Denominator) Amount
---------------------- ------------------- --------------------
Basic EPS -
Loss available to common
Shareholders.................................. $ (22,108) 16,184,198 $ (.00)
====================
Effect of dilutive securities - Options............. - -
---------------------- -------------------
Diluted EPS -
Loss available to common share-
Holders plus assumed conversions.............. $ (22,108) 16,184,198 $ (.00)
====================== =================== ====================
</TABLE>
5. The Company currently operates a Novell-based LAN system put in place in
November 1994. The Company's computers have been upgraded to year 2000
compliant equipment. The Company shares accounting software with Biomerica
and the software was upgraded in March of 1999. The cost of these upgrades
was not material. 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.
As of March 20, 2000 the Company has not experienced any Year 2000 related
problems internally and is not aware of any Year 2000 problems with
vendors, customers, other business associates or with Internet functions.
However, the Company has no way of knowing whether there will be any future
problems related to the Year 2000 issue and cannot guarantee that these
would not have an adverse affect on the Company.
9
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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, AND OVERALL ECONOMIC
CONDITIONS.
RESULTS OF OPERATIONS
Net sales for Allergy Immuno Technologies were $60,531 for the nine
months ended February 29, 2000 as compared to $52,198 for the same period in the
previous year. This represents an increase of $8,333, or 16%. For the three
months then ended sales were $16,940 as compared to $14,003 in fiscal 1999. This
represents an increase of $2,937, or 21%. Cost of sales for the nine months
increased from $64,465 to $67,636, or $3,171, or 5%. Cost of sales for the
quarter ended February 29, 2000 increased from $21,675 to $25,579, or $3,904
(18%). The increase in cost of sales was primarily due to higher insurance and
wage costs in the third quarter of fiscal 2000.
Selling, general and administrative costs for the nine months ended
February 29, increased from $47,183 in fiscal 1999 to $133,062 in fiscal 2000.
This represents an increase of $85,879 (182%). For the quarter then ended
selling, general and administrative costs increased from $15,252 to $36,051, or
$20,799 (136%). Much of the increase 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
incurring more legal and accounting costs on an on-going basis than previously
due to government filing requirements. The initial filing, Form 10-SB, is a
non-recurring filing requirement, however, other reports will be required to be
filed on a periodic basis. In addition, the Company had higher payroll and
related costs associated with business development.
During the first 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 February 29, 2000, the Company had $6,663 in cash as compared to
$0 at May 31, 1999. Its current working capital deficit is $230,682 as compared
to a deficit of $90,240 at May 31, 1999.
10
<PAGE>
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 February 29, 2000, the Company owed Biomerica $248,413. 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.
11
<PAGE>
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.
The Annual Meeting of the Company's stockholders was held on
January 7, 2000. The only matter voted on was the election of directors. The
following summarizes the voting on that matter:
Name Number of Votes For
- ---- -------------------
Dr. Robert Orlando 13,881,458
Zackary S. Irani 13,881,458
Janet Moore 13,881,458
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: April 10, 2000
ALLERGY IMMUNO TECHNOLOGIES, INC.
By: /S/ Zackary S. Irani
-----------------------------
Zackary Irani,
President, Chief Executive Officer
12
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAY-31-2000
<PERIOD-START> JUN-01-1999
<PERIOD-END> FEB-29-2000
<CASH> 6,663
<SECURITIES> 0
<RECEIVABLES> 22,226
<ALLOWANCES> (9,337)
<INVENTORY> 5,931
<CURRENT-ASSETS> 27,204
<PP&E> 46,582
<DEPRECIATION> (45,739)
<TOTAL-ASSETS> 86,341
<CURRENT-LIABILITIES> 257,886
<BONDS> 0
0
0
<COMMON> 17,170
<OTHER-SE> (188,715)
<TOTAL-LIABILITY-AND-EQUITY> 86,341
<SALES> 60,531
<TOTAL-REVENUES> 60,531
<CGS> 67,636
<TOTAL-COSTS> 200,698
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (139,069)
<INCOME-TAX> 800
<INCOME-CONTINUING> (139,869)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (139,869)
<EPS-BASIC> (.01)
<EPS-DILUTED> (.01)
</TABLE>
