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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES
OF SMALL BUSINESS ISSUERS
Under Section 12(b) or (g) of the Securities Exchange Act of 1934
AMENDMENT #4
ALLERGY IMMUNO TECHNOLOGIES, INC.
(Name of small business issuer in its charter)
DELAWARE 95-3937129
(State or jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1531 Monrovia Avenue
Newport Beach, California 92663
949-645-3703
(Address and telephone number of principal executive offices)
Securities to be registered under Section 12(b) of the Act:
Title of each class Name of each exchange on which
To be so registered each class is to be registered
None N/A
Securities to be registered under Section 12(g) of the Act:
Common Stock, par value $.001
(Title of class)
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BUSINESS
GENERAL
Allergy Immuno Technologies, Inc. ("AIT" or "the Company") provides
clinical testing services to doctors, clinics and pharmaceutical firms in
specialized areas of allergy and immunology determinations. Test samples are
sent to the Company's laboratory for evaluation and the results of the tests are
reported to the customer (doctors, clinics or other). All of the Company's
current revenues are derived from providing these testing services. AIT also is
engaged in the development and commercialization of novel bio-pharmaceutical
products for the treatment of allergies. The Company's research in the allergy
field has created opportunities for new therapeutic approaches and inventions
that include the possible development of oral and/or inhalant anti-allergy
treatments as an alternative to allergy shots. The Company is currently
searching for a potential partner for its patented allergy treatment
technologies (for which it holds four U.S. patents).
AIT's strategy is to use its patent protected technologies to create a
portfolio of unique and highly efficient allergy therapeutic treatment products.
The Company's planned allergy treatment products are expected to become the
treatment of choice for patients who wish to avoid the expensive, sometimes
unreliable and painful series of injections currently used by allergists
("current immunotherapy"). Patients undergoing the type of immunotherapy
treatment that is currently available usually must visit the physician once a
week for injections and continue these visits every week for four to five years.
As an alternative to repetitive injections and the lengthy regime now
used in current immunotherapy, the Company's new anti-allergy drugs are being
designed to expand the market for allergy treatment by increasing patient
acceptance and improving patient compliance. It could provide efficient allergy
control at decreased costs by dramatically reducing both the length of therapy
and the required number of visits to physicians. This would benefit both the
patient and the health care provider, increasing patient acceptance and
compliance and providing effective allergy treatment at lower costs.
The Company's predecessor was originally incorporated in Utah in 1981
under the name Investor's Wealth. In 1985 that company changed its name to
Advanced Allergy Research Center, Inc. In June of 1986 NMS Pharmaceuticals, Inc.
(now Biomerica, Inc.) invested $350,000 and certain assets pursuant to an
Agreement for Purchase of Stock and Transfer of Assets dated May 15, 1986 in
exchange for 6,559,064 shares of common stock. Biomerica, Inc. ("Biomerica") now
owns approximately 74.6% of the Company's common stock. Biomerica is a global
medical company devoted to developing, manufacturing and marketing advanced
medical diagnostic products for the early detection of diseases. Biomerica's
products are sold to physicians, hospitals, laboratories and drugstores.
Biomerica has recently entered into the e-commerce market through www.testathome
and has been developing an online pharmacy called The BigRX.com. Allergy Immuno
Technologies, Inc. was incorporated in Delaware in 1986. It was qualified as a
foreign corporation in California in January 1987. In January 1987 the
predecessor Utah corporation merged with and into the Delaware corporation
pursuant to an Agreement and Plan of Merger filed on January 20, 1987, with the
Secretary of State of Delaware and with the Secretary of State of Utah. The
Company's common stock was traded on NASDAQ's OTC Bulletin Board under the stock
symbol ALIM prior to August 1, 1999, and should again be qualified to trade on
the OTC Bulletin Board after this Form 10-SB Registration clears Securities and
Exchange Commission comments. During the year ended May 31, 1999, the Company
had two major customers which accounted for approximately 29% and 11% of net
sales, respectively. During the year ended May 31, 1998, the Company had two
major customers which accounted for approximately 33% and 20% of net sales,
respectively. There are currently no contracts with these customers.
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Currently the Company runs a clinical laboratory and does not
manufacture any products for sale. The Company purchases diagnostic products
from Biomerica and other manufacturers of diagnostic products. The products that
the Company proposes to develop from its patents are therapeutic products.
Therefore, Biomerica does not make competing products, but rather makes
diagnostic products which the Company may purchase at a discount for use in its
clinical laboratory. For many years Biomerica has invested in companies in
related fields. Biomerica plans for the Company to raise additional funds and
continue with the development of its patents into saleable products. One
director of the Company, Janet Moore, owns approximately 11% of Biomerica.
At present the Company's objective, in addition to running a clinical
laboratory, is to develop orally administered therapeutics based solely on the
technology covered by the four patents discussed in "Technology and Patents",
the Liposome Encapsulated Allergens (LEA) technology. The Company intends to
raise funds by way of merger or other method in order to conduct clinical trials
and mass produce the product for market distribution.
LABORATORY SERVICES
AIT currently operates a clinical reference laboratory in Newport
Beach, California, for allergy and other esoteric diagnostic testing services.
Being a credited clinical laboratory, AIT provides specialized testing services
to large organizations such as Laboratory Corporation of America, American Homes
Products, as well as other clinics and physicians. The laboratory accepts
samples from the physicians, laboratories, clinics or pharmaceutical companies,
performs the requested test and sends a written report of the test results to
the customer. Most of the tests performed relate to allergy or immunology.
Examples of some of the commonly performed tests are those for:
CANDIDA RELATED CONDITIONS
An elevation of certain antibodies specific to CANDIDA ALBICANS
(pathogenic fungus) antigens is an indication of either an infection (systemic
or topical) by C. ALBICANS, or the overgrowth of the fungus in the intestine.
The overgrowth in the intestine can cause C. ALBICANS antigens to enter the
circulation causing systemic Candidiasis. The use of antibiotics,
immunosuppressive agents, or birth control pills creates favorable conditions
for Candidiasis. Systemic Candidiasis is a serious condition in immunosuppressed
patients.
FOOD ALLERGIES
Incompletely digested food antigens may gain access to the systemic
circulation either through the microvilli by endocytosis or through the
intercellular spaces of the gut mucosa in conditions such as the inflammatory
bowel disease, coeliac disease, gastroenteritis or the immature mucosa of the
infant. Certain antibodies may be produced against these food antigens and may
form complexes with newly absorbed antigens and can lead to tissue damage when
deposited in various organs. AIT has various panels that can test for as many as
ninety different food allergies.
BASOPHIL HISTAMINE RELEASE (BHR)
The BHR test can be used to assess the allergic response using human
blood in a test tube rather than on humans directly. Since most allergic
reactions end up with histamine release, the measurement of histamine is
essential in evaluating the effects of allergy.
OTHER ALLERGIES
AIT also performs other tests for various allergies such as inhalants,
molds, weeds, insects, and animals, among others.
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TECHNOLOGY AND PATENTS
AIT has succeeded in obtaining four patents pertaining to its
discoveries for allergy treatment. These are:
(1) Immunotherapy agents for treatment of IgE mediated allergies:
U.S. Patent #5,116,612 (issued May 6, 1992).
(2) Liposome containing immunotherapy agents for treatment of IgE
mediated allergies: U.S. Patent #5,049,390 (issued September
17, 1991).
(3) Immunotherapy agents for treatment of IgE mediated allergies:
U.S. Patent #4,946,945 (issued August 7, 1990).
(4) Allergen-thymic hormone conjugates for treatment of IgE
mediated allergies: U.S. Patent #5,275,814 (issued January 4,
1994).
There can be no assurance or guarantee that the Company can adequately
protect its patents or proprietary technology.
AIT is focused on the discovery and commercialization of novel
bio-pharmaceutical drugs for the treatment of allergies. The Company's research
has led to new therapeutic approaches and inventions which are covered by the
above patents. AIT's strategy is to utilize its proprietary technologies to
create unique drugs for the treatment of allergies, especially those that can be
taken orally avoiding the present injection therapy which is tedious, expensive
and unpredictable. With financial assistance from Biomerica, AIT has begun
preclinical animal studies utilizing the technology covered in some of these
patents. In connection with these efforts, the Company has also received certain
technical expertise and assistance from Biomerica.
As discussed in "Business-General," the Company intends to use its
proprietary technology to bring the LEA products into the mass market. The
Company will not need additional patents or licensed technology to complete the
research and development portion of the project. However, it may require
additional equipment and manpower for manufacturing purposes as the Company is a
small company and does not have the financial resources to mass produce the
products. The Company will require additional capital and manufacturing
expertise from an established pharmaceutical manufacturer to accomplish its
goals. This project is discussed in detail under "Business-Research and
Development" and "Business-Manufacturing".
The objective of AIT is to tap the estimated $6 billion allergy market
in the U.S. by developing drugs for allergy treatment based on
Liposome-Encapsulated Allergens (LEA). The Company plans to find a strategic
partner to finance the cost of these efforts.
Liposomes are small spherical particles of lipid (fat) substance
suspended in an aqueous medium within a tissue. A small allergen can be attached
(conjugated) or encapsulated to a liposome via a chemical reaction and
introduced into the host tissue orally or intravenously. Once the allergen bound
or encapsulated liposome is introduced it starts an immune reaction in the host
body to produce antibodies to the introduced allergen. This is the same
principal as used in vaccination to prevent diseases. The host's antibodies (IgG
class) work as a defense mechanism against any exposure to the allergen after
the host has been desensitized using allergen bound liposomes. LEA therapy may
work better than the currently used desensitization therapy. The results of
pre-clinical studies conducted on laboratory rodents administered with liposome
encapsulated dust mite by mouth and by injection, showed a dramatic increase in
the desensitization process. If successful, this new type of therapy may
revolutionize allergy treatment for reasons indicated below:
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FEATURES BENEFIT
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Oral delivery possible Increased patient compliance, no injections
necessary
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Complete treatment blockers Treats the disease and not the symptoms as in
histamine blockers
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Reduced patient visits Convenient to patient and less costly to
managed care
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AIT is currently looking for a partner to continue this effort to
develop and test this technology.
As mentioned above, the Company has developed a Histamine Basophil
Release (BHR) test that is a surrogate to human testing wherein sensitivities to
allergens may be determined in a test tube. Food sensitivity studies for large
pharmaceutical and nutritional firms such as Mead Johnson and Carnation were
conducted utilizing the BHR test. AIT intends to use the same BHR test in the
development of the new encapsulated liposome allergen therapy.
RESEARCH AND DEVELOPMENT
The life of a product goes through phases: the formulation of an idea;
proving that idea through scientific challenge; making it into a feasible
reality; educating others so they may accept that reality; and finally
distributing the product for others to benefit from it. Thus far the Company has
worked to prove the feasibility and effectiveness of its idea of encapsulating
specific allergens with liposomes to act as antagonist to an allergic reaction
to that allergen in an individual. The idea has been proven to work in IN VITRO
testing in the Company's laboratories. The idea has also been successfully
tested in animal models. The above constitutes almost 40% of the work needed to
be done in the life of a product. The remaining 60% is the regulatory approval,
mass production and marketing of that idea in the shape of a viable product.
During fiscal 1999 the Company spent $300 on research and development
as compared to $39 in fiscal 1998. The research that lead to the Company's
patent positions occurred in prior years. The Company does not expect to engage
in further research and development until the Company obtains additional
financing or until the Company enters into a strategic alliance with a partner
that would conduct the research needed to bring the products to market.
Biomerica has continually advanced the Company operating funds over recent
years. Biomerica determined that it could not continue to advance the Company
such large funds to cover the costs of continued research. The Company and
Biomerica understood from the very beginning that the funding provided by
Biomerica would only be temporary. The Company has not found a strategic partner
but would benefit from such partner which could supply capital and manufacturing
abilities in the allergy therapeutics field. In fiscal 1998 Biomerica invested
funds to cover the cost of hiring a president who tried to raise additional
capital in order to continue the research. The Company was negotiating a
potential alliance with Hollister-Stier, LLC (formerly Bayer Allergy Group).
However, it was agreed that the best way to proceed was for the largest
shareholder of Hollister-Stier to pay the Company a consulting fee and grant it
options. Therefore, the Company earned $100,000 from the largest shareholder of
Hollister-Stier, LLC, as compensation in return for consulting services. The
Company also received an option to purchase 10,000 shares of Hollister- Stier,
LLC, a private company, which is a manufacturer, distributor and marketer of
Medical allergens in the United States.
The Company is exploring strategic alliances, acquisition and/or
partnerships with companies whose technologies will have potential synergistic
benefits for AIT's products and technologies. Such alliances are expected to
include companies in the liposome manufacturing field, and distribution and
marketing firms.
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Further, AIT will actively seek partners to help commercialize its
products. AIT supported both the research and the initial pre-clinical work but
it anticipates that any developed products would be jointly commercialized
through a marketing partner. The Company believes its partnering strategy will
enable it to reduce its cash requirements while developing a portfolio of
potential products marketed through existing/proven distribution channels. (See
"Government Regulation and Licenses".)
Thus far the Company has demonstrated the utility of the technology
incorporated in its patents through pre-clinicals in animal models. The future
assistance that the Company will need can be gained from one partner or many
depending on the partner and the partnership. However, the goal in any case will
be the fulfillment of the following objectives:
a. Testing the technology in laboratory trials for establishment of parameters
including: form of the product; whether it will be solid or liquid; and
method of delivery. Pharmaceutical manufacturers and contract clinical
trials laboratories possess the requisite capabilities for testing of this
kind.
b. Clinical trials in human models. The product will have to be tested on
human volunteers. Allergy treatment clinics will be the suitable
partnership for this kind of work.
c. Establishment of quality control and efficacy parameters like shelf-life,
stability, storage and mode of transportation. Contract laboratories will
be of suitable assistance in that they regularly perform this type of
service for the pharmaceutical industry.
d. Presentation of the products to FDA for marketing clearance. The products
have to go through regulatory compliance prior to mass marketing.
Pharmaceutical manufacturers have the personnel to deal with regulatory
affairs. This work can also be contracted out to specialized personnel in
this field.
e. Mass production of the products. An FDA licensed facility like an
established pharmaceutical manufacturer will be used to accomplish this
goal. Manufacturers of this kind have the manufacturing facility, the
equipment and the personnel trained for this kind of work.
f. Formulation of marketing strategies. Strategic alliances will be needed to
bring the product into the market via targeted advertising. An established
pharmaceutical company will know how to best market such products.
g. Sales and distribution of the products will be done via methods approved by
the regulatory agencies. A pharmaceutical manufacturer and distributor will
establish the distribution channels which can include any or all of
doctor's offices, hospitals, pharmacies and the internet.
MANUFACTURING
After the procedures for manufacturing the encapsulated liposome
allergens and related technologies are established, AIT's strategy is to
collaborate with national and international pharmaceutical companies to produce
and market its products.
For certain procedures of its production process AIT shall enter into
manufacturing agreements with FDA approved companies capable of manufacturing
commercial scale quantities of products to meet AIT's forecasted requirements.
Such manufacturing contracts shall provide for creating and maintaining
regulatory approvals, suitable shelf-life, stability and ease of use.
Additional considerations of scaling up production methods, developing
quality control systems, establishing batch to batch reproducibility, testing
sterilization methods, establishing reliable sources of raw materials will be
instituted and complied with. Generally, the equipment used in the Company's
process technologies is commercially available in industrial sizes and is
currently used in pharmaceutical industry operations.
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THE MARKET
Allergies affect 41 million people in the U.S. (20% of the population).
It is also estimated that in the U.S. alone there are 3.5 million lost workdays
every year due to allergic episodes. The incidence of allergies is at least the
same in other industrialized countries with some estimates reaching 35-50% of
the population. The total U.S. allergy market, at present, exceeds $5 billion
dollars annually.
The immunotherapeutic process involves weekly injections of allergenic
extract. Each dose gradually increases until the allergic response diminishes
significantly, usually between six months to a year after the shots were
started. Treatment is usually recommended to last for three to five years.
Immunotherapy can be very effective, but the risk of inducing
potentially life-threatening response is high. For this reason, the National
Institutes of Health (NIH) recommends immunotherapy be used only when other
therapies are not successful.
Despite potential complications, immunotherapy continues to be commonly
used in the prevention of allergies. Of the more than 40 million people in the
United States who suffer from allergies, approximately 1.5 million to 2.5
million are administered immunotherapy shots by their allergists as often as
twice weekly. The allergies for some patients are nearly completely eliminated
by this therapy. However, for others the therapy is not effective enough and
must be augmented with other allergy therapeutics.
Allergy shots prove time-consuming, costly, and risky for patients
because the allergen is injected into the body. Because such injections are
potentially harmful, patients must be monitored for at least twenty minutes
after receiving a shot. The yearly cost to patients includes the cost of the
extracts, weekly (or semiweekly) physician visits and injections that require
patient monitoring following administration.
In the U.S. there are currently approximately thirteen competitors in
the immunotherapy market, with four holding substantial market shares. These
four are led by Bayer Allergy Products, which gained strength in the market
after it merged with Miles Laboratories. Other top competitors include Center
Laboratories, ALK and Greer Laboratories.
In Europe there are more companies which deal in the immunotherapy
market, but they primarily sell within the borders of their own countries.
SEASONALITY OF BUSINESS
The business of the Company has not been subject to significant
seasonal fluctuations.
EMPLOYEES
The Company currently employs two employees who work in the laboratory
performing clinical testing. It contracts with Biomerica for a variety of
services including the advancement of certain technology. Although the Company
has no formal contract with Biomerica, Biomerica has been helping the Company
with in vitro testing in Biomerica's laboratories, where accepted methodologies
like radio-immuno-assay, enzyme-immuno-assay, enzyme-labeled immunosorbant assay
and Chromatography are used. Also, Biomerica has contracted with an animal
testing facility which the Company is able to utilize where immunization
technology is used.
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RISK FACTORS
NO ASSURANCE OF SUCCESSFUL PRODUCT DEVELOPMENT
The Company has completed in vitro clinical work validating the
feasibility of encapsulating allergens with liposomes as a form of allergy
treatment. After the completion of the in vitro clinical work, the modified
allergy immunotherapy was successfully tested as part of a clinical validation
using small animals. The Company's laboratory studies and clinical trials have
demonstrated that the modified immunotherapy agents supplied by its patented
therapeutics suppress the production of IgE in patient serum, which is believed
to be necessary to control IgE mediated disease, while at the same time
stimulating the production of anti-allergen IgG.
The Company's sales of laboratory testing services are minimal and
therefore the Company has been incurring losses. There can be no assurance that
the Company will be able to increase business to a degree where the Company will
become profitable. In order to develop saleable products from the Company's
patent positions, the Company will need to raise additional capital or form a
strategic alliance with another company. The Company will need funds to conduct
preclinical and clinical trials to determine the efficacy of any products it may
develop. There can be no assurance that the Company will be able to raise the
capital needed to bring products based on its patent positions to market or that
it will be able to form a strategic alliance with a company that will enable it
to proceed with developing its products. If capital is raised and products
developed there can be no assurance that the products will meet FDA standards.
There can be no assurance that the Company's therapeutic products will be proven
effective therapy for allergy treatment. There can be no assurance that
unforeseen problems will not develop with the Company's technology or product
and there can be no assurance that the products will be a success commercially
and that the Company will have the funds to market them competitively. There can
be no assurance that research and discoveries by other companies or individuals
will cause AIT's potential products to be useless or obsolete and that the
Company will be able to keep up with other companies once a product is
developed.
It will take at least several years before the Company could possibly
develop saleable products once the Company raises additional capital. The timing
of development of a saleable product is long and uncertain at this point.
Results of studies and clinical trials performed to date on the Company's
products may not be indicative of final results. Significant research,
development, preclinical and clinical testing, regulatory approval and other
such functions must occur before a potentially successful product could be
developed. There can be no assurance that the products will be safe and
efficacious in clinical trials or that the products could be produced in
commercial quantities at acceptable costs or be successfully or profitably
marketed. There can be no assurance that the products will gain commercial
acceptance among health care providers, third-party payors or patients.
Even if the Company is able to raise additional capital, it still
expects to continue to incur losses in order to develop potential products. The
Company's future capital requirements could depend on and increase as a result
of many factors, including progress in its research and development programs,
the progress of preclinical and clinical testing, the time and costs involved in
obtaining regulatory approvals, the costs involved in preparing, filing,
prosecuting, maintaining, enforcing and defending patent claims, competing
technological and market developments, the terms of any collaborative
arrangements that the Company may enter into, the ability of the Company to
establish research, development and commercialization arrangements pertaining to
the Company's products, the cost of establishing manufacturing facilities, the
cost of commercialization activities, and the demand for the Company's products
if and when approved.
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HAZARDOUS MATERIALS
The Company's research and development involves the controlled use of
hazardous materials and chemicals. Although the Company believes that safety
procedures for handling and disposing of such materials comply with the
standards prescribed by state and Federal regulations, the risk of accidental
contamination or injury from these materials cannot be completely eliminated. In
the event of such an accident, the Company could be held liable for any damages
that result and any such liability could exceed the resources of the Company.
The Company may incur substantial costs to comply with environmental
regulations.
LIMITED MARKET FOR COMPANY'S STOCK AND STOCK PRICE VOLATILITY
Although the Company traded on the Over the Counter (OTC) Bulletin
Board system under the symbol ALIM, its stock was thinly traded and the stock
prices were volatile. There can be no assurance that there ever will be a
substantial market for the stock or of the ability of stockholders to sell their
securities at the price they ask. Many factors can affect the price of the stock
including earnings of the Company, success of the research and development, the
success of securing additional funding, changes in government regulations, the
general market conditions and many other such factors. The market value of the
Company's Common Stock is subject to significant fluctuations and holders of the
Company's shares are likely to find it difficult to dispose of, or to obtain
accurate quotations as to the market value of, the Common Stock.
In addition, the Company's Common Stock currently is subject to certain
requirements under the Securities Exchange Act of 1934 (Exchange Act) that are
applicable to securities defined as "penny stock". Any broker engaging in a
transaction in the Common Stock is required to provide any customer with a risk
disclosure document, disclosure of market quotations, if any, disclosure of the
compensation of the broker-dealer and its salesperson in the transaction and
monthly account statements showing the market values of the Common Stock held in
the customer's accounts. The bid and offer quotation and compensation
information must be provided prior to effecting the transaction and must be
contained on the customer's confirmation. Since brokers are subject to the
"penny stock" rules when engaging in transactions in the Company's Common Stock,
they may be less willing to engage in such transactions, thereby making it more
difficult for purchasers in this offering to dispose of their shares.
Pursuant to new rules adopted by the National Association of Securities
Dealers (NASD), the Company's Common Stock must be registered under Section
12(g) of the Exchange Act to remain qualified for trading on the OTC Bulletin
Board. Since the Company did not obtain final clearance for its Form 10-SB
Registration Statement from the Securities and Exchange Commission (SEC) on or
before August 1, 1999, the Company's Common Stock was no longer qualified for
trading on the OTC Bulletin Board. Even though the Company was unable to meet
these requirements, its Common Stock may continue to be traded on the OTC market
on what are called "pink sheets". As a result, holders of the Company's shares
may find it even more difficult to dispose of, or to obtain accurate quotations
as to the price of the Company's Common Stock. The Company anticipates that its
Common Stock will once again be qualified to trade on the OTC Bulletin Board
once this Amendment No. 2 to the Company's Form 10-SB Registration Statement
clears SEC comments.
DILUTION
If the Company succeeds in raising the additional capital that it needs
to proceed with further research, substantial dilution of the current
shareholder base may occur. This may effect the sale price of the Company's
common stock.
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NO ASSURANCE OF FDA APPROVAL
The FDA and other agencies require lengthy laboratory and clinical
testing before such therapeutic remedies may be approved for marketing. These
are both time-consuming and costly. Approvals are not guaranteed and there could
be changes in government policies and regulations. The Company's experience with
such procedures is minimal.
If a product were approved, then manufacturing facilities would need to
be established. These facilities are also subject to oversight by regulatory
agencies. Approvals may be withdrawn or limited if facilities do not meet
government standards or unforeseen problems occur after marketing.
Government regulation may delay or prevent the marketing of any product
AIT develops. There can be no assurance that approvals will be given for any
product on a timely basis or at all. It cannot be determined how this would
impact AIT financially, but it could have a material adverse affect on the
Company. There is also no way to foresee the extent or impact of future
government regulations.
ABILITY TO PROTECT INTELLECTUAL PROPERTY
AIT currently holds four U.S. patents. If AIT is not successful in
protecting its intellectual property it could affect AIT's ability to compete
successfully in the future.
YEAR 2000
Many currently installed computer systems and software products are
coded to accept only two digit entries in the date code field. These systems and
software products will need to accept four digit entries to distinguish 21st
century dates from 20th century dates. As a result, computer systems and/or
software used by many companies may need to be upgraded to comply with such year
2000 requirements or risk system failure or miscalculations, potentially causing
disruptions of normal business activities. The Company relies on computers,
systems and applications to operate and monitor certain aspects of its business.
Certain of the Company's computers and computing systems have not been upgraded
to year 2000 compliant equipment. In addition, failure of the Company's third
party service providers and vendors to adequately address the problems relating
to the year 2000 could materially disrupt the Company's operations. Accordingly,
the change to the year 2000, could have a material adverse effect on the
Company's business, results of operations and financial condition.
CONCENTRATED CONTROL
Biomerica, Inc. owns approximately 74.6% of AIT common stock.
Therefore, Biomerica has the ability to control the outcome on all matters
requiring stockholder approval, including the election and removal of directors,
or any potential collaboration with other investors, among other things.
SUBSTANTIAL COMPETITION
There are many large companies which have much greater resources than
AIT that the Company would have to compete against. Although there are no
companies utilizing the exact technology AIT proposes to use, there are other
technologies which the Company would have to compete with, as well as other
companies. These companies have much greater experience in all areas of the
business than AIT. These companies have well-established research and
development, manufacturing, marketing and sales capabilities. The Company is
aware of the following possible competition in this area: Abello S.A. (Madrid,
Spain) is working in the area of using liposomes as an adjuvant in allergy
Immunotherapy. We are not aware of any product using such an adjuvant
currently available from Abello, S.A. Immunotec, Inc. is working in the area
of oral allergy immuno-therapy by using a carrier solution. We are not aware of
any product using such a solution currently available from Immunotec, Inc.
There may be other competitors of which the Company is not currently aware.
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The technology that the Company proposes to develop is an unproven
technology. Currently many companies make products for the treatment of
allergies. The treatments usually involve the patient undergoing a lengthy
series of injections with allergens in order to build up a resistance to same.
There are other products in the allergy treatment market which use oral pills
and inhalants such as Claritin brand pharmaceuticals. However, these
technologies afford temporary relief, while LEA products are designed to give
patients longer term relief from allergic reactions.
ABSENCE OF SALES AND MARKETING ORGANIZATION
The Company has no experience in sales, marketing and distribution of
its proposed products. Although the Company currently has sales and has
performed marketing functions for sales of laboratory testing services, the
sales and marketing of the proposed products is substantially different from
that already experienced by the Company. If the Company develops any products
with commercial potential AIT may need to develop other means to market these
products than is currently available to them. This may involve hiring suitable
personnel or forming alliances with distributors who could perform those
functions. There can be no assurance that the Company will be successful in
establishing these networks or that if they are established, that they will be
successful.
ASSISTANCE FROM BIOMERICA
The Company has received substantial help from Biomerica in the form of
loans of capital and personnel services in order to function. It is estimated
that such services would cost more than is being charged by Biomerica (since
Biomerica already has such systems and personnel in place) if the Company were
to have to take care of these functions itself. There is no assurance that
Biomerica will be able to continue this help indefinitely into the future.
ATTRACTION OF NEW EMPLOYEES
The Company will also need to attract additional personnel in order to
proceed with the development of any new products and there can be no assurance
that the Company will be able to do so. The Company's ability to hire additional
personnel will be dependent upon the raising of additional capital or the
formation of an alliance with another company.
COMPETITION
The immunotherapy market in the United States is dominated by four
companies, all of which have substantially greater resources and business
experience than the Company.
The independent clinical laboratory industry in the U.S. and in
California is highly competitive and fragmented. According to one industry
source, there are approximately 4,500 independent clinical laboratories in the
U.S. These independent clinical laboratories fall into two separate categories:
(1) smaller, local laboratories that generally offer fewer tests and services
and (2) larger laboratories. The Company is a small laboratory.
GOVERNMENT REGULATION AND LICENSES
GENERAL
Numerous aspects of AIT's operations, including its testing processes,
its business practices and in some instances, the amount and methods by which it
is paid, are subject to governmental regulation at the Federal, state and/or
local levels.
In order to bring oral or inhalant type products to market, the Company
would have to obtain or license other technology as well as file for other FDA
clearances. Such filing would require a substantial amount of resources.
11
<PAGE>
FEDERAL AND STATE CLINICAL LABORATORY LICENSING
All clinical laboratories operating in the United States, with limited
exceptions, are required to obtain Federal certification pursuant to the
Clinical Laboratory Improvement Act (CLIA) and its implementing regulations. The
law and its implementing regulations impose, as conditions for such
certification, requirements relating to test processes, personnel
qualifications, facilities and equipment, record keeping, quality control,
quality assurance and participation in proficiency testing. The same regulatory
requirements also apply as conditions for participation in the Medicare and
Medicaid programs. CLIA regulations vary depending on the complexity of the
methodologies performed by the laboratory. Compliance is verified by periodic
on-site inspections. Sanctions for failure to meet CLIA/Medicare certification
requirements include suspension or revocation of certification, criminal
penalties, injunctive actions to close the laboratory, civil penalties or
imposition of specific plans of correction to remedy alleged deficiencies.
Licensing requirements similar to those imposed pursuant to CLIA also apply at
the state level, with similar sanctions for noncompliance. Effective January 1,
1996, California Senate Bill 113 ("SB 113") became law and amended the
California laws governing clinical laboratories to make them at least as
stringent as CLIA was as of January 1, 1994.
The Company currently holds an annually renewed clinical laboratory
license with the Department of Health Services, State of California. The current
license expires December 31, 1999. The Company also holds a clinical laboratory
license from the state of Florida. This current license expires November 11,
2000 and is renewed every two years. The Company holds a CLIA Certificate of
Compliance, which is a requirement of the Federal government for clinical
laboratories. This certificate expires in February 2001 and is renewed every two
years. Although the Company has never failed to obtain renewals, its business
operations would be materially and adversely affected if it were unable to do
so.
FEDERAL AND STATE BILLING AND FRAUD AND ABUSE LAWS
The Federal Medicare laws impose specific billing requirements on
clinical laboratories. Generally, laboratories are required to bill the Medicare
program directly rather than billing physicians or beneficiaries.
SPECIMEN TRANSPORTATION
Regulations of the Department of Transportation, the Public Health
Service, and the Postal Service apply to the transportation of clinical
laboratory specimens.
REGULATIONS FOR PRODUCTS FOR HUMAN THERAPEUTIC USE
Regulation by governmental authorities in the United States and other
countries is a significant factor for the Company's ongoing research and
development activities. In order to test clinically, to produce and to market
products for human therapeutic use, mandatory procedures and safety standards
established by the FDA and comparable agencies in foreign countries must be
followed. The standard process required by the FDA before a pharmaceutical agent
may be marketed in the United States includes (i) preclinical tests, (ii)
submission to the FDA of an application for an Investigational New Drug ("IND"),
which must become effective before human clinical trials may commence, (iii)
adequate and well-controlled human clinical trials to establish the safety and
efficacy of the drug in its intended application, (iv) submission to and
acceptance by, the FDA of an NDA (New Drug Application)with respect to drugs or
a Product License Application("PLA") with respect to biologics, and (v) FDA
approval of the NDA or PLA prior to any commercial sale or shipment of the drug
or biologic (any materials Derived from a living organism, including human,
animal or plant).
In addition to obtaining FDA approval for each product, each domestic
drug manufacturing establishment must be registered or licensed by the FDA.
Domestic manufacturing establishments are subject to inspections by the FDA and
by other federal, state and local agencies and must comply with Good
Manufacturing Practices as appropriate for production.
12
<PAGE>
Clinical trials are typically conducted in three sequential phases, but
the phases may overlap. In Phase I, the initial introduction of the drug to
humans, the drug is tested for dosage and tolerance. Phase II involves detailed
evaluation of safety and efficacy. Phase III trials consist of larger scale
evaluation of safety and efficacy and may require larger patient numbers,
depending on the clinical indication for which marketing approval is sought. The
process of completing clinical testing and obtaining FDA approval for a new
product is likely to take a number of years and require the expenditure of
substantial resources. The FDA may also require post marketing testing and
surveillance programs to monitor the drug's efficacy and possible side effects.
Results of these post marketing programs may prevent, or limit, the further
marketing of the products.
Sales of pharmaceutical products outside of the United States are
subject to regulatory requirements that vary widely from country to country. In
the European Union ("EU"), the general trend has been toward coordination of
common standards for clinical testing of new drugs. Generally, the level of
regulation in the EU and other foreign jurisdictions is somewhat less
comprehensive and burdensome than regulation in the United States, but there are
differences and, in a few instances, foreign regulations may be more burdensome
than FDA requirements. The time required to obtain regulatory approval from the
comparable regulatory agencies in each foreign country may be longer or shorter
than that required for FDA approval.
In addition, the Company is and may be subject to regulation under
state and federal law regarding occupational safety, laboratory practices, the
use and handling of radioisotopes, environmental protection and hazardous
substance control and to other present and possible future local, state, federal
and foreign regulation.
13
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
THE FOLLOWING DISCUSSION OF THE FINANCIAL CONDITION AND RESULTS OF
OPERATIONS OF THE COMPANY SHOULD BE READ IN CONJUNCTION WITH THE CONSOLIDATED
FINANCIAL STATEMENTS AND NOTES THERETO INCLUDED ELSEWHERE IN THIS REPORT.
THIS DISCUSSION CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS
AND UNCERTAINTIES. THE COMPANY'S ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE
ANTICIPATED IN THESE FORWARD-LOOKING STATEMENTS AS A RESULT OF CERTAIN FACTORS,
INCLUDING, BUT NOT LIMITED TO, COMPETITION, WHICH HAS AND WILL CONTINUE TO PUT
PRICE PRESSURE ON THE COMPANY.
GENERAL
The Company currently generates revenue by providing clinical testing
services to doctors, clinics and drug firms in specialized areas of allergy and
sensitivity determinations. Test samples are sent to the Company's laboratory
for evaluation and the results of the tests are reported to the customer
(doctors, clinics, or other).
The Company is also engaged in the development and commercialization of
novel bio-pharmaceutical products for the treatment of allergies. The Company
has obtained four patents on technology relating to the treatment of allergies.
Additional financing will be required for the Company to complete the
development of its technology. The Company is not expected to engage in further
research or development until it obtains such additional financing. In
connection with these efforts, the Company may enter into a strategic alliance
or joint venture to finance the cost of such further research and development.
There are no current revenues from research projects. In addition, because there
are no current research projects, current research will have no impact on future
revenues.
The Company's laboratory facilities are located next to its office in
Newport Beach, California. At the same facilities ancillary support services
such as accounting and office support are provided by Biomerica. AIT pays
Biomerica a monthly fee of approximately $1,350 for these services.
RESULTS OF OPERATIONS
FISCAL YEAR ENDED MAY 31, 1999, COMPARED TO FISCAL YEAR ENDED
MAY 31, 1998
Revenues for the year ended May 31, 1999 were $70,351 as compared to
$99,071 in the prior year period. This represents a decrease of $28,720 or 29%
from the previous period. The decrease of sales was primarily due to lower sales
volume for existing accounts. Cost of sales as a percentage of sales increased
from 107% to 127% due to higher material costs and fixed labor cost.
General and administrative expenses decreased from $125,708 to $64,679
during the twelve-month period ended May 31, 1999, as compared to the twelve
month period ended May 31, 1998. The decrease was $61,029 or 48.5%. The decrease
was due to lower payroll costs resulting from the termination of employment of
the Company's former president. The former president of the Company was hired to
help raise capital for the Company, among other things. Since it did not appear
that this was impending, and since the Company was incurring large losses, the
position was terminated until such time as the Company raises additional
capital. For the year ended May 31, 1999 research and development expenses were
$300 compared to $39 for the same period in fiscal 1998. The Company received no
revenues from research for the year ended May 31, 1999.
There are currently no known events or uncertainties which may impact
revenues, sales or operating income. There are not currently any research
projects which comprise any of the Company's revenues.
Other income increased for the year ended May 31, 1999 to $102,323 from
$493 in fiscal due to the $100,000 which was received in June, but accrued in
May 1999. Included in other income was $100,000 of consulting income. The
Company was negotiating a potential alliance with Hollister-Stier, LLC (formerly
Bayer Allergy Group). However, it was agreed that the best way to proceed was
for the largest shareholder of Hollister-Stier to pay the Company a consulting
fee and grant it options. Therefore, the Company earned $100,000 from the
largest shareholder of Hollister-Stier, LLC, as compensation in return for
consulting services.
The Company also received an option to purchase 10,000 shares of
Hollister-Stier, LLC, a private Company, which is a manufacturer, distributor
and marketer of medical allergens in the United States. The Company did not
record any value related to this option because the option has no readily
determinable fair value. These consulting services were nonrecurring and it is
not anticipated that there will be any future revenue derived from this source.
14
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
As of May 31, 1999, the Company had cash of $2,000 compared to $3,562
for the previous year. Its current working capital deficit was $90,000 as
compared to a deficit of $110,600 for the previous year.
The Company has been experiencing losses and has had to rely on
borrowings from Biomerica, Inc., which owns approximately 74.5% of the
outstanding stock of AIT. Management believes that losses will continue during
fiscal 1999. Biomerica has agreed to provided continued financial and management
support, if necessary, through the end of the Company's 2000 fiscal year. As of
May 31, 1999 the Company owed Biomerica $208,008. 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.
YEAR 2000 COMPLIANCE; YEAR 2000 READINESS DISCLOSURE
TO THE FULLEST EXTENT PERMITTED BY LAW, THE FOLLOWING DISCUSSION IS A
"YEAR 2000 READINESS DISCLOSURE" WITHIN THE MEANING OF THE YEAR 2000 INFORMATION
AND READINESS DISCLOSURE ACT 105 P.L. 271. COMPLIANCE WITH THE YEAR 2000
INFORMATION AND READINESS ACT DOES NOT PRECLUDE CLAIMS FOR VIOLATIONS OF
FEDERAL SECURITIES LAWS.
BACKGROUND
Many of the world's computer systems and programs currently record
years in a two-digit format. Such computer systems or programs that have
date-sensitive software or hardware may recognize a date using "00" as the year
1900 rather than the year 2000, and therefore, may be unable to recognize,
interpret or use dates in and beyond the year 1999 correctly. Because the
activities of many businesses are affected by dates or are date-related, the
inability of these systems or programs to use such date information correctly
could result in system failures or disruptions and lead to disruptions of
business operations in the United States and internationally (the "Year 2000
Problem"). In the case of the Company, such disruptions may include, among other
things, an inability to maintain accurate records, send invoices, or engage in
similar routine business activities.
ASSESSING THE IMPACT OF THE YEAR 2000 PROBLEM ON THE COMPANY'S
OPERATIONS
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 material. The accounting and
record-keeping software that is employed at AIT is actively supported by the
developer/vendor and is in wide currency in varied commercial milieus.
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 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 effect on the Company. Any additional computer hardware needed
to become Year 2000 compliant will not impose a material expense on the Company.
The Company has conducted a survey of readiness of suppliers and has
not received negative information from any material vendor. The Company's two
principal customers have indicated that they are Year 2000 compliant and we have
no indication that other customers are not Year 2000 compliant. Biomerica and
the Company share computer networks and therefore the same statements apply to
Biomerica with respect to Year 2000 readiness, except that Biomerica has a
broader base of customers than the Company, and should therefore be less
impacted by any one customer having Year 2000 problems.
15
<PAGE>
CONTINGENCY PLANNING
The Company has not developed any plan to address contingencies arising
from the Year 2000 problem. Consequently, no assurance can be given that any
potential failure of in-house or third-party systems will not increase the
Company's operating costs or create uncertainties that may have an adverse
effect on the Company's operating results or financial condition.
NEW ACCOUNTING PRONOUNCEMENTS
In June 1997, the FASB issued SFAS No. 130, REPORTING COMPREHENSIVE
INCOME, and SFAS No. 131, DISCLOSURES ABOUT SEGMENTS OF AN ENTERPRISE AND
RELATED INFORMATION. SFAS No. 130 requires that an enterprise report by major
components and as a single total, the change in its net assets during the period
from nonowner sources; and SFAS No. 131 establishes annual and interim reporting
standards for an enterprises operating segments and related disclosures about
its products, services, geographic areas and major customers. Adoption of these
statements will not impact the Company's financial position, results of
operations or cash flows and any effect will be limited to the form and content
of its disclosures. Both statements are effective for fiscal years beginning
after December 15, 1997, with earlier application permitted. SFAS No. 130 is
applicable to interim financial statements. However, the Company has no elements
of other comprehensive income.
DESCRIPTION OF PROPERTY
The Company currently leases 1,600 square feet of office and laboratory
space in Newport Beach, California, on a month-to-month basis, at a rate of
$1,400 per month, plus taxes and insurance. The property is in good condition
and sufficient to meet the needs of the Company at this time. The Company does
not plan to obtain additional space in the foreseeable future. However, if the
Company obtains a research and marketing partner or raises additional funds the
need would arise for acquiring additional space. The facilities are leased from
Mrs. Ilse Sultanian and JSJ Management (one of the partners of which, Janet
Moore, is an officer, director and stockholder of the Company). (See Item 7,
"Certain Relationships and Related Transactions").
At the same facilities ancillary support services such as accounting
and office support are provided by Biomerica. AIT pays Biomerica a monthly fee
of approximately $1,350 for these services.
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN SHAREHOLDERS
Except as otherwise indicated, the following table sets forth certain
information regarding the beneficial ownership of the Company's capital stock as
of May 31, 1999, by: (i) each of the Company's directors and officers, (ii) each
person or entity who beneficially owned more than five percent of the Company's
capital stock, and (iii) all directors and executive officers of the Company as
a group. Unless otherwise indicated, the address of each named beneficial owner
is the same as that of the Company's principal office located at 1531 Monrovia
Avenue, Newport Beach, California 92663.
16
<PAGE>
Name and Address Shares Beneficially Percentage Beneficially
Of Beneficial Owner Owned Owned (1)
------------------- ------------------- -----------------------
Common Stock
Biomerica, Inc.(2) 12,797,108 74.6%
Zackary Irani 155,000 *
Dr. Robert Orlando 162,000 *
Janet Moore (3) 865,350 5.0%
Officers and Directors
as a group (3 individuals) 13,979,458 81.4%
----------
*Less than one percent
(1) Beneficial ownership is determined in accordance with the applicable rules
under the 1934 Act. In computing the number of shares beneficially owned by
a person and the percentage ownership of that person, shares of Common
Stock subject to options held by that person that are currently
exercisable, or become exercisable within 60 days from the date hereof, are
deemed outstanding. However, such shares are not deemed outstanding for
purposes of computing the percentage ownership of any other person.
Percentage ownership is based on 17,170,390 shares of Common Stock
outstanding.
(2) Shares controlled by Zackary Irani.
(3) Includes 20,000 shares of Common Stock owned by Ms. Moore's minor children.
<TABLE>
<CAPTION>
DIRECTORS, EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES
Name Age Position Term of Director Expires
---- --- -------- --------
<S> <C> <C> <C>
Zackary Irani 33 Chief Executive 1999
Officer, Chairman of
The Board & Director
Dr. Robert Orlando 60 Director 1999
Janet Moore 48 Director, Chief 1999
Financial Officer, Chief
Accounting Officer &
Secretary
</TABLE>
The Company currently does not have any officers other than its Chief
Executive Officer, Chief Financial Officer, Chief Accounting Officer and
Secretary, who are responsible for the Company's daily operations.
Zackary S. Irani is Director, Chief Executive Officer and Chairman of
the Board of AIT. He is currently President and Chairman of Biomerica, Inc.,
which owns 74.6% of AIT. He has been with Biomerica over twelve years and holds
a B.S. degree from Chapman University and an MBA from the University of
California, Irvine. Mr. Irani serves as a director of Lancer Orthodontics and
Biomerica and has been a director of AIT since 1992.
17
<PAGE>
Dr. Robert Orlando serves as the Medical Director of AIT and has been a
member of the board since 1986. Dr. Orlando is a pathologist as well as a
biophysicist and immunologist. Dr. Orlando, a graduate of the New Jersey
University of Medicine and the University of Chicago, is the Chief Pathologist
at Beverly Hospital. Dr. Orlando is a director of Biomerica and Lancer
Orthodontics. Dr. Orlando has been a director of AIT since 1986.
Janet Moore serves as Director, Secretary, Chief Financial Officer and
Chief Accounting Officer of AIT. She has worked for Biomerica for over
twenty-two years and holds a B.S. degree in business from Pepperdine University.
She is a Director of Lancer Orthodontics and Biomerica. Janet Moore has been a
Director of AIT since April 1997.
EXECUTIVE COMPENSATION
The following table sets forth information concerning the compensation
received for the fiscal years ended May 31, 1999, 1998 and 1997 for services
rendered to the Company in all capacities by the Company's Chief Executive
Officer and Chairman of the Board.
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------
ANNUAL COMPENSATION LONG TERM COMPENSATION
--------------------------------- -------------------------------------
AWARDS PAYOUTS
------------------------ -------
NAME AND PRINCIPAL SALARY BONUS OTHER ANNUAL RESTRICTED SECURITIES LTIP ALL OTHER
POSITION YEAR ($) ($) COMPENSATION STOCK UNDERLYING PAYOUTS COMPENSATION
($) AWARD(S) OPTIONS/ ($) ($)
($) SARS (#)
----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Zachary Irani, 1999 -0- -0- -0- -0- -0- -0- -0-
Chief Executive 1998 -0- -0- -0- 50,000 -0- -0- -0-
Officer and 1997 -0- -0- -0- -0- -0- -0- -0-
Chairman of the
Board (1)(2)
----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) All other compensation in the form of perquisites and other personal
benefits has been omitted because the aggregate amount of such perquisites
and other personal benefits constituted the lesser of $50,000 or 10% of the
total annual salary and bonus of the named executive for such year.
(2) Biomerica charges the Company a monthly administrative fee of $1,350 which
covers accounting, telephone, executive services, office supplies and other
miscellaneous expenses. Mr. Irani is not paid a salary by Biomerica for his
services to the Company, however, included in the $1,350 per month is $500
for Mr. Irani's services to the Company.
STOCK OPTION GRANTS
During fiscal 1998, the Company agreed to grant options to purchase
1,135,000 shares of Common Stock to the directors and an employee of AIT, and
Biomerica, the Company's parent. The stock options will be granted at an
exercise price equal to the fair market value of the Common Stock as determined
(i) upon the completion of an offering of securities yielding proceeds to the
Company of $3,000,000 or more, or (ii) upon the completion of a merger with or
an acquisition of a company having assets of more than $6,000,000. The options
will be exercisable over the five-year period beginning on the grant date.
The Company has not entered into any employment agreements with its
officers or employees. Directors do not receive cash compensation for their
services, but may be reimbursed for reasonable expenses and may receive stock
options in consideration of their services.
18
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company leases on a month-to-month basis 1,600 square feet of
laboratory and office space for $1,400 per month, plus insurance and taxes. The
space is leased from Mrs. Ilse Sultanian and JSJ Management. Ms. Janet Moore, an
officer, director and shareholder of the Company, is a partner at JSJ
Management.
The Company currently contracts with Biomerica for certain accounting
and general administrative services. The Company pays Biomerica an aggregate
monthly fee of approximately $1,350 for these services. In addition, the Company
has received certain financial and technical assistance from Biomerica in
connection with the development of its technology. The Company's Chairman of the
Board and Secretary are officers, directors and significant shareholders of
Biomerica.
DESCRIPTION OF SECURITIES
The Company's authorized equity capitalization consists of 50,000,000
shares of voting Common Stock, par value $.001 and 100,000 shares of preferred
stock, par value $1.00 per share. As of May 1, 1999, there were 17,170,390
shares of Common Stock issued and outstanding. No shares of preferred stock have
been issued as of the date of this Registration Statement.
COMMON STOCK
Holders of common stock are entitled to receive dividends when, as and
if declared by the board of directors, out of funds legally available therefore.
There have been no dividends declared and management does not anticipate any
dividends in the near future due to lack of funds. Dividends on any outstanding
shares of preferred stock may be required to be paid in full before payment of
any dividends on the common stock. Upon liquidation, dissolution or winding up
of the Company, holders of common stock are entitled to share ratably in assets
available for distribution after payment of all debts and other liabilities and
subject to the prior rights of any holders of any preferred stock then
outstanding.
Holders of common stock are entitled to one vote per share with respect
to all matters submitted to a vote of shareholders and do not have cumulative
voting rights. Accordingly, holders of a majority of the common stock entitled
to vote in any election of directors may elect all of the directors standing for
election, subject to the voting rights (if any) of any preferred stock that may
be outstanding. The Company's Articles of Incorporation and Bylaws contain no
restrictions on the repurchase by the company of shares of the common stock or
preferred stock. All the outstanding shares of common stock are, and additional
shares of common stock will be, when, issued, validly issued, fully paid and
nonassessable.
PREFERRED STOCK
The Company is authorized to issue up to 100,000 shares of Preferred
Stock, par value $1.00 per share, the rights, preference and privileges of which
may be determined from time to time by the Board of Directors. The Board of
directors is authorized to designate with respect to each series of preferred
stock the number of shares in each such series, the dividend rates and dates of
payment, voluntary and involuntary liquidation preferences, redemption prices,
if any, whether or not dividends shall be cumulative and, if cumulative, the
date or dates from which the same shall be cumulative, the sinking fund
provisions if any, and the terms and conditions on which shares can be converted
into or exchanged for shares of another class or series, and the voting rights,
if any. As of the date hereof, there were no shares of Preferred Stock issued
and outstanding. Any preferred stock issued will rank prior to the common stock
as to dividends and as to distributions in the event of liquidation, dissolution
or winding up of the Company. The ability of the Board of Directors to issue
preferred stock, while providing flexibility in connection with possible
acquisitions and other corporate purposes, could, among other things, adversely
affect the voting powers of holders of Common Stock, and could delay, deter or
prevent a change in control of the Company. The Preferred Stock will, when
issued, be fully paid and nonassessable.
19
<PAGE>
PART II
ITEM. 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON STOCK AND
OTHER SHAREHOLDER MATTERS.
The Company's Common Stock is traded on the NASDAQ's OTC Bulletin Board
under the symbol "ALIM". The high and low closing bid information for the
Company's Common Stock during the years ended May 31, 1997 and 1998, as well as
the interim nine-month period ended February 28, 1999, is based on information
received from Bloomberg, L.P. and Nasdaq Trading and Market Services.
High Low
---- ---
Year Ended May 31, 1997:
Quarter ended May 31, 1997........................... * *
Quarter ended February 28, 1997...................... .0001 .0001
Quarter ended November 30, 1996...................... * *
Quarter ended August 31, 1996........................ * *
Year Ended May 31, 1998:
Quarter ended May 31, 1998........................... * *
Quarter ended February 28, 1998...................... * *
Quarter ended November 30, 1997...................... * *
Quarter ended August 31, 1997........................ * *
Year Ended May 31, 1999:
Quarter ended May 31, 1999........................... .04 .03125
Quarter ended February 28, 1999...................... .13 .03125
Quarter ended November 28, 1998...................... * *
Quarter ended August 31, 1998........................ * *
* Indicates a period in which no trades took place and for which no bid prices
were posted.
II-1
<PAGE>
The quotations reflect inter-dealer price, without mark-up, mark-down
or commission and may not represent actual transactions. The stock is thinly
traded and transactions in the stock are sporadic and infrequent.
As of March 31, 1999, there were 773 shareholders of record of the
Company's common stock and 0 holders of the Company's preferred stock.
The Company has not declared or paid any cash dividends on its common
stock and does not intend to declare or pay any cash dividends in the
foreseeable future. The payment of dividends, if any, is within the discretion
of the Board of Directors and will depend on the Company's earnings, if any, its
capital requirements, and financial condition and other such factors as the
Board of Directors may consider.
ITEM 2. LEGAL PROCEEDINGS.
None
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS.
Effective April 13, 1999 the Company's Board of Directors recommended
and approved BDO Seidman, LLP as independent public accountants, to audit the
consolidated financial statements of the Company for the year ending May 31,
1999 and to perform other appropriate services as directed by the Company
management and Board of Directors. In connection with the engagement of BDO
Seidman, LLP, the Company dismissed Corbin & Wertz on April 13, 1999, who had
been engaged to audit the Company's financial statements for the prior fiscal
years. The audit reports provided by Corbin & Wertz for the fiscal years ended
May 31, 1998 and 1997 did not contain any adverse opinion or a disclaimer of
opinion nor was any report modified as to uncertainty, audit scope or accounting
principles. There were no disagreements between the Company and Corbin & Wertz
on any matter of accounting principles or practices, financial statement
disclosure or auditing, scope or procedure. Prior to the engagement of BDO
Seidman, LLP there were no consultations by the Company and BDO Seidman, LLP
relating to disclosable disagreements with Corbin and Wertz, how accounting
principles would be applied by BDO Seidman, LLP to a specific transaction, or
the type of an opinion BDO Seidman, LLP might render.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES.
During fiscal 1999 the Company issued 1,916,429 shares of common stock
to Biomerica in exchange for debt of $134,150. The shares were issued in private
transactions pursuant to the exemption available under Section 4(2) of the
Securities Act of 1933, as amended, and other applicable exemptions from
registration and qualification under federal and state securities laws.
During fiscal 1998 the Company issued 30,000 shares of common stock to
the then president of the Company for services rendered and 5,000 to an employee
for services rendered. The shares were issued in private transactions pursuant
to the exemption from registration available under Section 4(2) of the
Securities Act of 1933, as amended, and other applicable exemptions from
registration and qualification under federal and state securities laws.
During fiscal 1997 the Company issued 400,000 shares of common stock to
directors of the Company for services rendered. The shares were issued in
private transactions pursuant to the exemption from registration available under
Section 4(2) of the Securities Act of 1933, as amended, and other applicable
exemptions from registration and qualification under federal and state
securities laws.
II-2
<PAGE>
ITEM 5. INDEMNIFICATION AND LIMITATION OF LIABILITY OF DIRECTORS
The Certificate of Incorporation limits the liability of directors and
officers to the fullest extent permitted under Delaware General Corporation Law.
As allowed by Delaware Revised Statutes, the Certificate of Incorporation and
Bylaws of the Company provide that the liability of the directors of the Company
for monetary damages shall be eliminated to the fullest extent permissible under
Delaware law. This is intended to eliminate the personal liability of a director
for monetary damages in an action brought by or in the right of the Company for
breach of a director's duties to the Company or its shareholders except for
liability for acts or omissions that involve intentional misconduct or knowing
and culpable violation of law, for acts or omissions that a director believes to
be contrary to the best interests of the Company or its shareholders or that
involve the absence of good faith on the part of the director, for any
transaction from which a director derived an improper personal benefit, for acts
or omissions that show a reckless disregard for the director's duty to the
Company or its shareholders in circumstances in which the director was aware, or
should have been aware, in the ordinary course of performing a director's
duties, of a risk of serious injury to the Company or its shareholders, for acts
or omissions that constitute an unexcused pattern of inattention that amounts to
an abdication of the director's duty to the Company or its shareholders, with
respect to certain contracts in which a director has a material financial
interest and for approval of certain improper distributions to shareholders or
certain loans or guarantees. This provision does not limit or eliminate the
rights of the Company or any shareholder to seek non-monetary relief such as an
injunction or rescission in the event of a breach of a director's duty of care.
II-3
<PAGE>
PART F/S
FINANCIAL STATEMENTS
See "Index to Consolidated Financial Statements" for a listing of the
consolidated financial statements filed with this Form 10-SB.
ALLERGY IMMUNO TECHNOLOGIES, INC.
CONTENTS
-------------------------------------------------------------------------------
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS,
BDO SEIDMAN, LLP FS-2
INDEPENDENT AUDITORS' REPORT, CORBIN & WERTZ FS-3
FINANCIAL STATEMENTS
Balance Sheet as of May 31, 1999 FS-4
Statements of Operations FS-5
Statements of Shareholders' Deficit FS-6
Statements of Cash Flows FS-7
Notes to Financial Statements FS-8 - FS-20
Statements of Operations (unaudited)
November 30, 1999 and 1998 FS-21
Balance Sheet as of November 30, 1999 FS-22 - FS-23
(unaudited)
Statements of Cash flows (unaudited)
November 30, 1999 and 1998 FS-24
Statement of Changes in Shareholders'
Deficit (unaudited) November 30, 1999 FS-25
Notes to Financial Statements (unaudited)
November 30, 1999 FS-26 - FS-27
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors
Allergy Immuno Technologies, Inc.
We have audited the accompanying balance sheet of Allergy Immuno Technologies,
Inc. (the "Company") as of May 31, 1999, and the related statements of
operations, shareholders' deficit and cash flows for the year then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Allergy Immuno Technologies,
Inc. as of May 31, 1999, and the results of its operations and its cash flows
for the year then ended in conformity with generally accepted accounting
principles.
BDO SEIDMAN, LLP
Costa Mesa, California
July 29, 1999
FS-2
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Allergy Immuno Technologies, Inc.
We have audited the accompanying statements of operations, shareholders' deficit
and cash flows for the year ended May 31, 1998 of Allergy Immuno Technologies,
Inc. (the "Company"). These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the consolidated financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the results of operations and cash flows of Allergy
Immuno Technologies, Inc. for the year ended May 31, 1998, in conformity with
generally accepted accounting principles.
CORBIN & WERTZ
Irvine, California
June 29, 1998
FS-3
<PAGE>
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
May 31, 1999
-------------------------------------------------------------------------------
ASSETS
CURRENT ASSETS
Cash $ 2,202
Accounts receivable, less allowance for doubtful accounts
of $11,185 13,550
Inventory 6,456
Other receivable _ consulting 100,000
Prepaid and other current assets 3,279
-------------------------------------------------------------------------------
Total current assets 125,487
FIXED ASSETS, net of accumulated depreciation of $43,940 -
LAND HELD FOR INVESTMENT 46,000
PATENTS, net of accumulated amortization of $4,706 12,564
-------------------------------------------------------------------------------
$ 184,051
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
<PAGE>
ALLERGY IMMUNO TECHNOLOGIES, INC.
BALANCE SHEET
May 31, 1999
--------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' DEFICIT
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 7,719
Due to affiliate 208,008
--------------------------------------------------------------------------------
215,727
SHAREHOLDERS' DEFICIT
Preferred stock, par value $1.00 per share; 100,000 shares
authorized; no shares issued and outstanding -
Common stock, par value $.001 per share; 50,000,000
shares authorized; 17,170,390 shares issued and
outstanding at May 31, 1999 17,170
Additional paid in capital 1,777,388
Accumulated deficit (1,826,234)
--------------------------------------------------------------------------------
Total shareholders' deficit (31,676)
--------------------------------------------------------------------------------
$ 184,051
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
See accompanying notes to financial statements.
FS-4
<PAGE>
<TABLE>
ALLERGY IMMUNO TECHNOLOGIES, INC.
STATEMENTS OF OPERATIONS
<CAPTION>
Years Ended May 31, 1999 1998
-------------------------------------------------------------------------------------------
<S> <C> <C>
NET SALES $ 70,351 $ 99,071
Cost of sales 89,131 106,051
-------------------------------------------------------------------------------------------
GROSS LOSS (18,780) (6,980)
-------------------------------------------------------------------------------------------
OPERATING EXPENSES
General and administrative 64,679 125,708
Research and development 300 39
-------------------------------------------------------------------------------------------
Total operating expenses 64,979 125,747
-------------------------------------------------------------------------------------------
OPERATING LOSS (83,759) (132,727)
OTHER INCOME, NET 102,323 493
-------------------------------------------------------------------------------------------
INCOME (LOSS) BEFORE INCOME TAXES 18,564 (132,234)
Income tax expense 800 800
-------------------------------------------------------------------------------------------
NET INCOME (LOSS) $ 17,764 $ (133,034)
-------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------
Per share data (basic and diluted):
NET INCOME (LOSS) $ .00 $ (.01)
-------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------
Weighted average number of common shares outstanding 17,170,390 15,389,080
-------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------
See accompanying notes to financial statements.
</TABLE>
FS-5
<PAGE>
<TABLE>
<CAPTION>
ALLERGY IMMUNO TECHNOLOGIES, INC.
STATEMENTS OF SHAREHOLDERS' DEFICIT
---------------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------------
Common Stock COMMON STOCK SUBSCRIBED Additional Total
------------------------- ------------------------ Paid-in Accumulated Shareholders'
Shares Amount Shares Amount Capital Deficit Deficit
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balances at June 1, 1997 15,218,961 $ 15,219 - $ - $ 1,642,739 $ (1,710,964) $ (53,006)
Issuance of stock for
services 35,000 35 - - 2,415 - 2,450
Common stock subscribed
in exchange for debt - - 1,916,429 1,916 132,234 - 134,150
Net loss - - - - - (133,034) (133,034)
---------------------------------------------------------------------------------------------------------------------------------
Balances at May 31, 1998 15,253,961 15,254 1,916,429 1,916 1,777,388 (1,843,998) (49,440)
Issuance of common stock
in exchange for common
stock subscribed 1,916,429 1,916 (1,916,429) (1,916) - - -
Net income - - - - - 17,764 17,764
---------------------------------------------------------------------------------------------------------------------------------
Balances at May 31, 1999 17,170,390 $ 17,170 - $ - $ 1,777,388 $ (1,826,234) $ (31,676)
---------------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------------
See accompanying notes to financial statements.
</TABLE>
FS-6
<PAGE>
<TABLE>
<CAPTION>
ALLERGY IMMUNO TECHNOLOGIES, INC.
STATEMENTS OF CASH FLOWS
-------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------
For the Years Ended May 31, 1999 1998
-------------------------------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ 17,764 $ (133,034)
Adjustments to reconcile net income (loss) to net cash
used in operating activities:
Depreciation and amortization 2,596 1,609
Stock issued for services - 2,450
Provision for allowance for doubtful accounts (297) (8,351)
Changes in operating assets and liabilities:
Accounts receivable 11,289 5,128
Inventory 555 1,596
Other receivable _ consulting (100,000) -
Prepaid and other current assets 927 1,595
Accounts payable and accrued expenses 2,138 (9,759)
-------------------------------------------------------------------------------------------
Net cash used in operating activities (65,763) (138,766)
-------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property - (535)
Increase in patents - (3,461)
-------------------------------------------------------------------------------------------
Net cash used in investing activities - (3,996)
-------------------------------------------------------------------------------------------
CASH FLOWS PROVIDED BY FINANCING ACTIVITIES
Advances from affiliate 64,403 142,939
-------------------------------------------------------------------------------------------
Net change in cash (1,360) 177
Cash at beginning of year 3,562 3,385
-------------------------------------------------------------------------------------------
Cash at end of year $ 2,202 $ 3,562
-------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
CASH PAID DURING THE YEAR FOR:
Interest $ - $ -
-------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------
Income taxes $ 800 $ 800
-------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------
See accompanying notes to financial statements.
</TABLE>
FS-7
<PAGE>
ALLERGY IMMUNO TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
1. SUMMARY OF ORGANIZATION
SIGNIFICANT
ACCOUNTING Allergy Immuno Technologies, Inc. (the "Company") provides
POLICIES specialized diagnostic testing services to physicians and
clinics located throughout the United States. The Company is
a majority-owned subsidiary of Biomerica and has historically
received support for operations and management from
Biomerica. Biomerica has agreed to provided continued
financial and management support, if necessary, through the
end of the Company's 2000 fiscal year.
ACCOUNTS RECEIVABLE
Accounts receivable consists of fees due the Company for
testing provided to various physicians, clinics and unrelated
companies. The Company extends credit to its customers and
generally performs ongoing credit evaluations of such
customers. The Company does not require collateral to secure
its accounts receivable. The Company maintains reserves for
potential credit losses based on the Company's historical
experience related to credit losses.
INVENTORY
Inventory, comprised principally of various chemicals and
testing kits, is stated at the lower of cost (first-in,
first-out method) or market. Market is determined by
comparison with recent purchases or net realizable value.
FIXED ASSETS
Fixed assets, which are primarily comprised of furniture and
fixtures, are recorded at cost and depreciated using the
straight-line method over the estimated useful lives of the
assets, which are generally from three to five years.
Depreciation expense included in the accompanying statements
of operations totaled $1,636 and $663 for the years ended May
31, 1999 and 1998, respectively. Expenditures for additions
and major improvements are capitalized. Repairs and
maintenance costs are charged to operations as incurred.
FS-8
<PAGE>
ALLERGY IMMUNO TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
1. SUMMARY OF PATENTS
SIGNIFICANT
ACCOUNTING The Company holds certain patents which are amortized on a
POLICIES straight-line basis over 17 years. Amortization expense
(CONTINUED) included in the accompanying statements of operations
amounted to $960 and $946 for the years ended May 31, 1999
and 1998, respectively.
REVENUE RECOGNITION
Revenue is recognized upon completion of the diagnostic
testing services.
ADVERTISING COSTS
The Company reports the costs of all advertising as expense
in the period in which those costs are incurred. Advertising
costs were $779 and $63 for the years ended May 31, 1999 and
1998, respectively.
INCOME TAXES
The Company accounts for income taxes in accordance with
Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes." Under the asset and liability
method of Statement No. 109, deferred tax assets and
liabilities are recognized for the future tax consequences
attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their
respective tax bases. Deferred tax assets and liabilities
are measured using enacted tax rates expected to apply to
taxable income in the years in which those temporary
differences are expected to be recovered or settled. Under
Statement No. 109, the effect on deferred tax assets and
liabilities of a change in tax rates is recognized in income
in the period that includes the enactment date. A valuation
allowance is provided for certain deferred tax assets if it
is more likely than not that the Company will not realize tax
assets through future operations.
FS-9
<PAGE>
ALLERGY IMMUNO TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
1. SUMMARY OF ACCOUNTING ESTIMATES
SIGNIFICANT
ACCOUNTING The preparation of financial statements in conformity with
POLICIES generally accepted accounting principles requires management
(CONTINUED) to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses
during the reported period. Actual results could materially
differ from those estimates.
STOCK-BASED COMPENSATION
During 1995, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 123 ("SFAS
123"), "Accounting for Stock-Based Compensation", which
defines a fair value based method of accounting for stock-
based compensation. However, SFAS 123 allows an entity to
continue to measure compensation cost related to stock and
stock options issued to employees using the intrinsic method
of accounting prescribed by Accounting Principles Board
Opinion No. 25 ("APB 25"), "Accounting for Stock Issued to
Employees". Entities electing to remain with the accounting
method of APB 25 must make pro forma disclosures of net income
and earnings per share, as if the fair value method of
accounting defined in SFAS 123 had been applied. The Company
has elected to account for its stock-based compensation to
employees under APB 25.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company has financial instruments whereby the fair market
value of the financial instruments could be different than
that recorded on a historical basis on the accompanying
balance sheets. The Company's financial instruments consist
of cash, accounts receivable and accounts payable. The
carrying amounts of the Company's financial instruments
approximate their fair values at May 31,1999.
FS-10
<PAGE>
ALLERGY IMMUNO TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
1. SUMMARY OF ACCOUNTING FOR THE IMPAIRMENT OF LONG-LIVED ASSETS
SIGNIFICANT
ACCOUNTING The Company follows the guidance under Statement of Financial
POLICIES Accounting Standards 121, "Accounting for the Impairment of
(CONTINUED) Long-Lived Assets and for Long-Lived Assets to be Disposed
Of", ("SFAS 121"). SFAS 121 requires impairment losses to be
recorded on long-lived assets used in operations when
indicators of impairment are present and the undiscounted
cash flows estimated to be generated by those assets are less
than the assets' carrying amount. SFAS 121 also addresses
the accounting for long-lived assets that are expected to be
disposed of. Management has determined that there is no
impairment of long-lived assets as of May 31, 1999.
CONCENTRATION OF CREDIT RISK
The Company provides credit in the normal course of business
to customers throughout the United States and foreign
markets. The Company performs ongoing credit evaluations of
its customers. The Company does not obtain collateral with
which to secure its accounts receivable. The Company
maintains reserves for potential credit losses based upon the
Company's historical experience related to credit losses.
During the year ended May 31, 1999, the Company had two major
customers which accounted for approximately 29% and 11% of
net sales. During the year ended May 31, 1998, the Company
had two major customers which accounted for approximately 33%
and 20% of net sales, respectively.
At May 31, 1999, the Company was owed $6,160 or 45%, $4,235
or 31% and $3,003 or 22% of net accounts receivable from
three customers, respectively.
EARNINGS (LOSS) PER SHARE
Earnings (loss) per share is computed using the weighted
average number of common shares and common equivalent
shares, if any, outstanding during each year.
FS-11
<PAGE>
ALLERGY IMMUNO TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
1. SUMMARY OF The Financial Accounting Standards Board has issued Statement
SIGNIFICANT of Financial Accounting Standards No. 128, "Earnings Per
ACCOUNTING Share"("SFAS 128"). SFAS 128 is primarily a disclosure
POLICIES standard which requires public companies to present basic
(CONTINUED) earnings per share (EPS) and, if applicable, diluted earnings
per share, instead of primary and fully diluted earnings per
share. Basic EPS is computed by dividing net income for the
year by the weighted average number of shares of common stock
outstanding during the year. Diluted EPS is computed by
dividing net income for the year by the weighted average
number of shares of common stock and common stock equivalents
outstanding during the year.
The following table illustrates the required disclosure of
the reconciliation of the numerators and denominators of the
basic and diluted EPS computations.
<TABLE>
<CAPTION>
For the Year Ended May 31, 1999
------------------------------------------
Loss Shares Per Share
(Numerator) (Denominator) Amount
-----------------------------------------------------------------
<S> <C> <C> <C>
BASIC EPS -
Income available to
common
shareholders $ 17,764 17,170,390 $ .00
-----------------------------------------------------------------
-----------------------------------------------------------------
EFFECT OF DILUTIVE
SECURITIES -
Options - -
-----------------------------------------------------------------
DILUTED EPS -
Income available
to common
shareholders plus
assumed
conversions $ 17,764 17,170,390 $ .00
-----------------------------------------------------------------
-----------------------------------------------------------------
</TABLE>
FS-12
<PAGE>
<TABLE>
<CAPTION>
1. SUMMARY OF
SIGNIFICANT For the Year Ended May 31, 1998
ACCOUNTING ------------------------------------------
POLICIES Income Shares Per Share
(CONTINUED) (Numerator) (Denominator) Amount
------------------------------------------------------------------
<S> <C> <C> <C>
BASIC EPS -
Loss available to
common
shareholders $ (133,034) 15,389,080 $ (.01)
-----------------------------------------------------------------
-----------------------------------------------------------------
EFFECT OF DILUTIVE
SECURITIES -
Options - -
-----------------------------------------------------------------
DILUTED EPS -
Loss available to
common
shareholders plus
assumed
conversions $ (133,034) 15,389,080 $ (.01)
-----------------------------------------------------------------
-----------------------------------------------------------------
</TABLE>
LIMITATIONS ON DIVIDENDS
Pursuant to state laws, the Company is currently restricted,
and may be restricted for the foreseeable future, from making
dividends to its stockholders as a result of its accumulated
deficit as of May 31, 1999.
FS-13
<PAGE>
ALLERGY IMMUNO TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
1. SUMMARY OF HAZARDOUS MATERIALS
SIGNIFICANT
ACCOUNTING The Company's research and development involves the
POLICIES controlled use of hazardous materials and chemicals.
(CONTINUED) Although the Company believes that safety procedures for
handling and disposing of such materials comply with the
standards prescribed by state and Federal regulations, the
risk of accidental contamination or injury from these
materials cannot be completely eliminated. In the event of
such an accident, the Company could be held liable for any
damages that result and any such liability could exceed the
resources of the Company. The Company may incur substantial
costs to comply with environmental regulations.
NEW ACCOUNTING PRONOUNCEMENTS
In June 1997, the FASB issued SFAS No. 130, "Reporting
Comprehensive Income". SFAS No. 130 requires that an
enterprise report, by major components and as a single total,
the change in its net assets during the period from nonowner
sources. The Company has no elements of other comprehensive
income.
2. LAND HELD Land held for investment consists of a parcel of land located
FOR state of Utah, and is stated at the lower of cost or market.
INVESTMENT
3. SHAREHOLDERS' The Company's authorized equity capitalization consists of
EQUITY 50,000,000 shares of voting Common Stock, par value $.001 and
100,000 shares of preferred stock, par value $1.00 per share.
As of May 31, 1999, there were 17,170,390 shares of Common
Stock issued and outstanding.
Holders of common stock are entitled to receive dividends
when, as and if declared by the Board of Directors, out of
funds legally available therefor. There have been no
dividends declared and management does not anticipate any
dividends in the near future due to lack of funds and legal
restrictions. Dividends on any outstanding shares of
preferred stock may be required to be paid in full before
payment of any dividends on the Common Stock. Upon
liquidation, dissolution or winding up of the Company,
holders of Common Stock are entitled to share ratably in
assets available for distribution after payment of all debts
and other liabilities and subject to the prior rights of any
holders of any Preferred Stock then outstanding.
FS-14
<PAGE>
ALLERGY IMMUNO TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
3. SHAREHOLDERS' Holders of common stock are entitled to one vote per share
EQUITY with respect to all matters submitted to a vote of
(CONTINUED) shareholders and do not have cumulative voting rights.
Accordingly, holders of a majority of the common stock
entitled to vote in any election of directors may elect all of
the directors standing for election, subject to the voting
rights (if any) of any preferred stock that may be
outstanding. The Company's Articles of Incorporation and
Bylaws contain no restrictions on the repurchase by the
Company of shares of the common stock or preferred stock.
All the outstanding shares of common stock are, and
additional shares of common stock will be, when issued,
validly issued, fully paid, and nonassessable.
The Company is authorized to issue up to 100,000 shares of
Preferred Stock, par value $1.00 per share, the rights,
preference and privileges of which may be determined from
time to time by the Board of Directors. The Board if
Directors is authorized to designate with respect to each
series of Preferred Stock the number of shares in each such
series, the dividend rates and dates of payment, voluntary
and involuntary liquidation preferences, redemption prices,
if any, whether or not dividends shall be cumulative and, if
cumulative, the date or dates from which the same shall be
cumulative, the sinking fund provisions, if any, and the
terms and conditions on which shares can be converted into or
exchanged for shares of another class or series, and the
voting rights, if any. As of the date hereof, there were no
shares of Preferred Stock issued and outstanding. Any
Preferred Stock issued will rank prior to the Common Stock as
to dividends and as to distributions in the event of
liquidation, dissolution or winding up of the Company. The
ability of the Board of Directors to issue Preferred Stock,
while providing flexibility in connection with possible
acquisitions and other corporate purposes, could, among other
things, adversely affect the voting powers of holders of
Common Stock. The Preferred Stock will, when issued, be
fully paid and assessable.
FS-15
<PAGE>
ALLERGY IMMUNO TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
3. SHAREHOLDERS' STOCK ISSUANCES
EQUITY
(CONTINUED) During fiscal 1998, the Company issued 35,000 shares of common
stock for services. The services were valued at $2,450.
During fiscal 1998, 1,916,429 shares of the Company's
previously unissued common stock were issued to Biomerica,
Inc., the Company's parent, as partial repayment of amounts
loaned to the Company (see Note 5). Such shares were issued
during fiscal 1999.
STOCK OPTIONS
During fiscal 1998, the Company granted options to purchase
1,135,000 shares of common stock to various employees and
directors, including an option to purchase 250,000 shares
granted to Biomerica, Inc., the parent company. The exercise
price will be the fair value of the Company's common stock on
the date (the "Pricing Date") of a successful completion of
$3,000,000 in capital being raised or upon the merger with
another company or acquisition of another company with
greater than $6,000,000 in assets. The options will vest 50%
per year and expire over five years beginning on the Pricing
Date.
FS-16
<PAGE>
ALLERGY IMMUNO TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
4. INCOME The tax effect of temporary differences that give rise to
TAXES significant portions of the deferred tax assets at May 31,
1999 are presented below:
May 31, 1999
--------------------------------------------------------------
Deferred tax assets:
Accounts receivable, principally
due to allowances for doubtful
accounts $ 4,455
State net operating loss
carryforwards 19,643
Federal net operating loss
carryforwards 584,471
Research and development tax
credit carryforwards 29,395
--------------------------------------------------------------
Total gross deferred tax assets 637,964
Less valuation allowance (637,964)
--------------------------------------------------------------
Net deferred tax asset $ -
--------------------------------------------------------------
--------------------------------------------------------------
Income tax expense attributable to loss from operations for
the years ended May 31, 1999 and 1998 consists of the
following current provisions:
May 31, 1999 1998
--------------------------------------------------------------
U.S. Federal $ - $ -
State and local 800 800
$ 800 $ 800
--------------------------------------------------------------
--------------------------------------------------------------
FS-17
<PAGE>
ALLERGY IMMUNO TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
4. INCOME TAXES Income tax expense attributable to income from operations was
(CONTINUED) $800 for each of the years ended May 31, 1999 and 1998, and
differs from the amounts computed by applying the U.S. Federal
income tax rate of 34 percent to pretax income from operations
as a result of the following:
May 31, 1999 1998
--------------------------------------------------------------
Computed "expected" tax benefit $ 6,312 $ (44,960)
Increase (reduction) in income
taxes resulting from:
Change in the beginning-of-
the-year balance of the
valuation allowance for
deferred tax assets allocated
to income tax expense (6,312) 44,960
State and local income taxes 800 800
--------------------------------------------------------------
$ 800 $ 800
--------------------------------------------------------------
--------------------------------------------------------------
As of May 31, 1999, the Company has available Federal and
state net operating loss carryforwards for tax purposes of
approximately $1,719,000 and $337,000, respectively, and
research and development tax credit carryforwards of
approximately $29,000. The aforementioned carryforwards
expire in various years throughout 2011.
The Tax Reform Act of 1986 includes provisions which limit
the Federal net operating loss carryforwards available for
use in any given year if certain events, including a
significant change in stock ownership, occur.
FS-18
<PAGE>
ALLERGY IMMUNO TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
5. RELATED Biomerica, Inc. paid expenses on behalf of the Company of
PARTY $64,403 and $142,939 during fiscal 1999 and 1998,
TRANSACTIONS respectively. Of this, $16,200 represents charges of
$1,350 per month for accounting and administrative services
rendered by Biomerica for the Company in each fiscal year.
The remaining amounts in each year represents advances of
funds to the Company for payment of the Company's own
expenses. The due to affiliate at May 31, 1999 and 1998
represents the related unpaid amounts due to Biomerica.
The advances are non-interest bearing and have no stated due
date. Biomerica does not intend to require repayment of such
advances in fiscal 2000.
Management believes that the charges by Biomerica for its
monthly services are reasonable and fair and that this cost
would be the same for the Company if the Company were
unaffiliated with Biomerica. The breakdown of the $1,350
monthly charge is $600 for accounting services, $500 for
executive and administrative services, $200 for office
expense and $50 for telephone expenses. If extraordinary
services are performed in a month, additional charges are
incurred. The Company does not have a written contract for
services with Biomerica, but engages Biomerica on an as
needed basis.
The average outstanding balance during 1999 and 1998 was
$212,186 and $172,356, respectively. The amount outstanding
at May 31, 1999 is comprised of $142,343 for services and
cash advances and $65,665 for products purchased from
Biomerica.
During fiscal 1998, the Company issued 1,916,429 shares of
its common stock to Biomerica, Inc. as partial repayment of
amounts due. The shares were valued at $0.07 per common
share or $134,150 (see Note 3).
The Company's facilities are leased on a month-to-month basis
at $1,400 per month and are owned by four shareholders of the
Company, one of whom, Janet Moore, is an officer and director
of the Company. Rent expense was $16,800 for each of the years
ended May 31, 1999 and 1998.
FS-19
<PAGE>
ALLERGY IMMUNO TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
6. RETIREMENT Effective September 1, 1986, the Company established a 401(k)
SAVINGS PLAN Plan for the benefit of its employees. The plan permits
eligible employees to contribute to the plan up to the maximum
percentage of total annual compensation allowable under the
limits of Internal Revenue Code Sections 415, 401(k) and 404.
The Company, at the discretion of its Board of Directors, may
make contributions to the plan in amounts determined by the
Board each year. No contributions by the Company have been
made since the Plan's inception.
7. OTHER During the year ended May 31, 1999, the Company performed
INCOME consulting services for an unrelated entity. The Company
received $100,000 in cash in June of 1999 and an option to
acquire 10,000 units of an unrelated entity. The $100,000
has been recorded as an other receivable and other income in
the accompanying financial statements.
FS-20
<PAGE>
<TABLE>
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)
=============== =============== =============== ===============
Weighted average number of common and
Common equivalent shares outstanding: 17,170,390 15,693,797 17,170,390 16,138,467
=============== =============== =============== ===============
</TABLE>
F-21
<PAGE>
ALLERGY IMMUNO TECHNOLOGIES, INC.
BALANCE SHEET (UNAUDITED)
November 30,
1999
---------------
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
===============
The accompanying notes are an integral part of these statements.
F-22
<PAGE>
ALLERGY IMMUNO TECHNOLOGIES, INC.
BALANCE SHEET (UNAUDITED)
November 30,
1999
---------------
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
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 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
===============
The accompanying notes are an integral part of these statements.
F-23
<PAGE>
<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
--------------- ---------------
Cash flows (used in) provided by financing activities:
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
=============== ===============
The accompanying notes are an integral part of these statements.
</TABLE>
F-24
<PAGE>
<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.
F-25
<PAGE>
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:
F-26
<PAGE>
<TABLE>
<CAPTION>
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)
=============== ================ ==============
For the Six Months Ended November 30, 1998
---------------------------------------------------
Income Shares Per Share
(Numerator) (Denominator) Amount
--------------- --------------- ---------------
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
--------------- --------------- ---------------
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)
=============== ================ ==============
For the Three Months Ended November 30, 1998
---------------------------------------------------
Income Shares Per Share
(Numerator) (Denominator) Amount
--------------- --------------- ---------------
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>
F-27
<PAGE>
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.
F-28
<PAGE>
<TABLE>
EXHIBIT INDEX
<CAPTION>
EXHIBIT SEQUENTIALLY
NUMBER DESCRIPTION NUMBERED
------ ----------- --------
<S> <C> <C>
2.1 Agreement and Plan of Merger by and between
Advanced Allergy Research Center Inc., and
Allergy Immuno Technologies, Inc., as filed
with the Secretaries of State of Delaware
and Utah on January 20, 1987.*
3.1 Certificate of Incorporation.*
3.1.1 Certificate of Amendment to Certificate of
Incorporation filed on February 10, 1995.*
3.2 Bylaws of the registrant.*
16.1 Letter on changes in certifying accountants.*
23.1 Consent of Corbin & Wertz.**
27.1 Financial Data Schedule.**
99.1 Press Release dated September 4, 1997.*
99.1.1 Press Release dated January 6, 1999.*
</TABLE>
----------
* Filed with the first amendment to this Registration Statement
on June 25, 1999.
** Being filed herewith.
III-2
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
registrant has caused this Form-10SB to be signed on behalf by the undersigned,
thereunto duly authorized.
ALLERGY IMMUNO TECHNOLOGIES, INC.
(Registrant)
Date: June 12, 2000
By /s/ Zackary S. Irani
---------------------------------------
Zackary S. Irani, Chief Executive Officer
and Chairman of the Board
In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
Signature and Capacity
----------------------
/s/ Zackary S. Irani Dated June 12, 2000
------------------------ --------------
Zackary S. Irani
Chief Executive Officer,
Chairman of the Board and
Director
/s/ Janet Moore Dated June 12, 2000
------------------------ -------------
Janet Moore
Chief Financial Officer,
Chief Accounting Officer and
Director
/s/ Robert A. Orlando, Dated June 12, 2000
------------------------ --------------
Robert A. Orlando, M.D., Ph.D.
Director
III-3
