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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 November 30, 1999
__ 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 January 5, 2000.
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ALLERGY IMMUNO TECHNOLOGIES, INC.
INDEX
PART I FINANCIAL INFORMATION
ITEM 1. Financial Statements:
Statements of Operations (unaudited) - Six Months and Three Months
Ended November 30, 1999 and 1998.....................................2
Balance Sheet (unaudited) - November 30, 1999....................3 & 4
Statements of Cash Flows (unaudited)
Six Months Ended November 30, 1999 and 1998..........................5
Statement of Changes in Shareholders' Deficit (unaudited) -
Six Months Ended November 30, 1999...................................6
Notes to Financial Statements......................................7-9
ITEM 2. Management's Discussion and Analysis of Financial Condition
and Selected Financial Data.........................................10
PART II OTHER INFORMATION
Signatures..........................................................11
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<TABLE>
PART I - FINANCIAL INFORMATION
SUMMARIZED FINANCIAL INFORMATION
ALLERGY IMMUNO TECHNOLOGIES, INC.
STATEMENTS OF OPERATIONS (UNAUDITED)
<CAPTION>
Six Months Ended Three Months Ended
November 30, November 30,
1999 1998 1999 1998
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net sales................................................... $ 43,591 $ 38,195 $ 18,692 $ 15,048
Cost of sales.......................................... 42,057 42,790 18,884 22,995
---------- ---------- ---------- ----------
Gross profit (loss).................................... 1,534 (4,595) (192) (7,947)
Operating
Selling, general and administrative.................... 97,011 31,931 37,307 17,551
Research and development............................... 0 300 0 150
---------- ---------- ---------- ----------
Total operating expenses.................................... 97,011 32,231 37,307 17,701
Operating................................................... (95,477) (36,826) (37,499) (25,648)
Other
Other income, net...................................... (594) (883) (330) (839)
---------- ---------- ---------- ----------
(Loss) income before taxes.................................. (94,883) (35,943) (37,169) (24,809)
Income Taxes................................................ 800 800 0 0
---------- ---------- ---------- ----------
NET (LOSS) INCOME........................................... $ (95,683) $ (36,743) $ (37,169) $ (24,809)
========== ========== ========== ==========
Per share data:
Net loss............................................... $ (.01) $ (.00) $ (.00) $ (.00)
========== ========== ========== ==========
Common equivalent shares outstanding: 17,170,390 15,693,797 17,170,390 16,138,467
========== ========== ========== ==========
</TABLE>
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<TABLE>
ALLERGY IMMUNO TECHNOLOGIES, INC.
BALANCE SHEET (UNAUDITED)
<CAPTION>
November 30,
1999
------------
<S> <C>
Assets
Current Assets
Cash ............................................................. $ 0
Accounts receivable, less allowance for doubtful accounts......... 9,765
Inventory......................................................... 6,456
Prepaid expenses and other current assets......................... 2,072
----------
Total Current Assets ....................................... 18,293
Land held for investment.............................................. 46,000
Fixed assets, net of accumulated depreciation......................... 1,496
Patents, net of accumulated amortization.............................. 12,384
----------
Total assets.......................................................... $ 78,173
==========
</TABLE>
The accompanying notes are an integral part of these statements
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<TABLE>
ALLERGY IMMUNO TECHNOLOGIES, INC.
BALANCE SHEET (UNAUDITED)
<CAPTION>
November 30,
1999
-------------
<S> <C>
Liabilities and Shareholders' Deficit
Current Liabilities
Accounts payable and accrued expenses...................................... $ 7,146
Due to affiliate........................................................... 198,386
-------------
Total Current Liabilities............................................. 205,532
Shareholders' Deficit
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........................................................ (1,921,917)
-------------
Total Shareholders' Deficit..................................................... (127,359)
-------------
Total Liabilities and Deficit................................................... $ 78,173
=============
</TABLE>
The accompanying notes are an integral part of these statements.
4
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<TABLE>
ALLERGY IMMUNO TECHNOLOGIES, INC.
STATEMENTS OF CASH FLOWS (UNAUDITED)
<CAPTION>
SIX MONTHS ENDED NOVEMBER 30
1999 1998
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net loss ................................................................. $ (95,683) $ (36,743)
Adjustments to reconcile net loss to net cash provided by
(used in) operating activities:
Depreciation and amortization........................................ 1,326 1,429
Changes in current assets and liabilities:
Accounts Receivable................................................ 3,785 13,144
Inventory.......................................................... 0 (1,012)
Prepaid expenses and other current assets.......................... 1,207 498
Accounts payable and other accrued liabilities..................... (573) 8,445
Other receivable-consulting........................................ 100,000 0
------------ ------------
Net cash provided by (used in) operating activities....................... 10,062 (14,239)
------------ ------------
Cash flows provided by (used in) investing activities:
Purchases of property and equipment.................................. (2,642) 0
Net cash provided by (used in) investing activities....................... (2,642) 0
------------ ------------
Advances from affiliate............................................... (9,622) 14,001
------------ ------------
Net cash (used in) provided by financing activities....................... (9,622) 14,001
------------ ------------
Net change in cash ....................................................... (2,202) (238)
------------ ------------
Cash at beginning of year................................................. 2,202 3,562
------------ ------------
Cash at end of quarter.................................................... $ 0 $ 3,324
============ ============
</TABLE>
The accompanying notes are an integral part of these statements.
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<TABLE>
ALLERGY IMMUNO TECHNOLOGIES, INC.
STATEMENT OF CHANGES IN SHAREHOLDERS' DEFICIT (UNAUDITED)
FOR THE SIX MONTHS ENDED NOVEMBER 30, 1999
<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 (95,683) (95,683)
---------- ------- ---------- ------------ ----------
Balance at
November 30, 1999 17,170,390 $17,170 $1,777,388 $(1,921,917) $(127,359)
========== ======= ========== ============ ==========
</TABLE>
The accompanying notes are an integral part of these statements.
6
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NOTES TO FINANCIAL STATEMENTS
November 30, 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. 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:
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<TABLE>
For the Six Months Ended November 30, 1999
------------------------------------------
Income Shares Per Share
(Numerator) (Denominator) Amount
------------- ------------- -------------
<S> <C> <C> <C>
Basic EPS -
Loss available to common
Shareholders.................................. $ (95,683) 17,170,390 ($.00)
=============
Effect of dilutive securities - Options............. - -
------------- -------------
Diluted EPS -
Loss available to common share-
Holders plus assumed conversions.............. $ (95,683) 17,170,390 ($.00)
============= ============= =============
<CAPTION>
For the Six Months Ended November 30, 1998
------------------------------------------
Income Shares Per Share
(Numerator) (Denominator) Amount
------------- ------------- -------------
<S> <C> <C> <C>
Basic EPS -
Loss available to common
Shareholders.................................. $ (36,743) 15,693,797 ($.00)
=============
Effect of dilutive securities - Options............. -
------------- -------------
Diluted EPS -
Loss available to common share-
Holders plus assumed conversions.............. $ (36,743) 15,693,797 ($.00)
============= ============= =============
For the Three Months Ended November 30, 1999
--------------------------------------------
Income Shares Per Share
(Numerator) (Denominator) Amount
------------- ------------- -------------
<S> <C> <C> <C>
Basic EPS -
Loss available to common
Shareholders.................................. $ (37,169) 17,170,390 ($.00)
=============
Effect of dilutive securities - Options............. - -
------------- -------------
Diluted EPS -
Loss available to common share-
Holders plus assumed conversions.............. $ (37,169) 17,170,390 ($.00)
============= ============= =============
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For the Three Months Ended November 30, 1998
---------------------------------------------
Income Shares Per Share
(Numerator) (Denominator) Amount
------------- ------------- -------------
<S> <C> <C> <C>
Basic EPS -
Loss available to common
Shareholders.................................. $ (24,809) 16,138,467 ($.00)
=============
Effect of dilutive securities - Options............. -
------------- -------------
Diluted EPS -
Loss available to common share-
Holders plus assumed conversions.............. $ (24,809) 16,138,467 ($.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 January 11, 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.
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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, 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 $43,591 for the six months
ended November 30, 1999 as compared to $38,195 for the same period in the
previous year. This represents an increase of $5,396, or 14%. For the three
months then ended sales were $18,692 as compared to $15,048 in fiscal 1999. This
represents an increase of $3,644, or 24%. The six and three-month sales
increases were due to sales to several new accounts, which the Company did not
have in the previous fiscal year. Cost of sales for the six months decreased
from $42,790 to $42,057, or $733, or 2%. The Company had a gross profit of 3.5%
of sales as compared to a gross loss of 12.0% of sales for the six month period
in fiscal 2000 compared to fiscal 1999. The improvement in gross margin was due
to lower material costs as a percentage of sales, higher sales and fixed costs
remaining close to the previous year's. Cost of sales for the quarter ended
November 30, 1999 decreased from $22,995 to $18,884, or $4,111 (18%). The
decrease in cost of sales was primarily due to lower material and wage costs in
fiscal 2000. For the three- month period, the gross loss decreased from 52.8% of
sales to 1% of sales. This decrease was primarily due to higher sales in
addition to lower material and wage costs.
Selling, general and administrative costs for the six months ended November
30, increased from $31,931 in fiscal 1999 to $97,011 in fiscal 2000. This
represents an increase of $65,080 (204%). For the quarter then ended selling,
general and administrative costs increased from $17,551 to $37,307, or $19,756
(113%). 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, such
as this Form 10-QSB. 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 November 30, 1999, the Company had a zero cash balance as compared to
$3,324 in the previous year. Its current working capital deficit is $187,239 as
compared to a deficit of $145,287 for the previous year.
10
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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 November 30, 1999
the Company owed Biomerica $198,386. 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
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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: January 5, 2000
ALLERGY IMMUNO TECHNOLOGIES, INC.
By: /S/ Zackary S. Irani
------------------------------
Zackary Irani,
President, Chief Executive Officer
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