=====================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1999
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
0-15507
Commission file number
IMMUCELL CORPORATION
___________________________________________
(Exact name of registrant as specified in its charter)
DELAWARE 01-0382980
__________________________ _________________________
(State or other jurisdiction (I.R.S. Employer
of incorporation) Identification No.)
56 Evergreen Drive
Portland, ME 04103
____________________________________________
(Address of principal executive office and zip code)
(207) 878-2770
____________________________________________
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
Class of Securities: Outstanding at November 11, 1999:
Common Stock, par value $.10 per share 2,445,084
=====================================================================
<PAGE>
IMMUCELL CORPORATION
INDEX TO FORM 10-Q
September 30, 1999
PART I: FINANCIAL INFORMATION Page
ITEM 1. UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS
Consolidated Balance Sheets-
September 30, 1999 and December 31, 1998 3-4
Consolidated Statements of Operations for the
three and nine month periods ended September 30, 1999 and 1998 5
Consolidated Statement of Stockholders' Equity for the
nine month period ended September 30, 1999 6
Consolidated Statements of Cash Flows for the
nine month periods ended September 30, 1999 and 1998 7
Notes to Unaudited Consolidated Financial Statements 8-10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS 10-13
PART II: OTHER INFORMATION
Items 1 through 6 13
Signatures 13
<PAGE>
<TABLE>
<CAPTION>
IMMUCELL CORPORATION
PART 1. FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS
ASSETS
September 30, December 31,
1999 1998
---------- ----------
(unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $1,769,132 $1,538,905
Accounts receivable, net of
allowance for doubtful accounts
of $42,000 and $44,000 at
September 30, 1999 and December 31,
1998, respectively 457,506 249,754
Inventories 450,554 475,949
Prepaid expenses 57,718 45,516
---------- ----------
Total current assets 2,734,910 2,310,124
PROPERTY, PLANT AND
EQUIPMENT, at cost:
Laboratory and manufacturing
equipment 835,956 837,179
Building and improvements 584,110 583,472
Office furniture and equipment 63,418 68,540
Land 50,000 50,000
---------- ----------
1,533,484 1,539,191
Less - accumulated depreciation 856,783 789,419
---------- ----------
Net property, plant and
equipment 676,701 749,772
INVESTMENT IN JOINT VENTURE -- 84,111
OTHER ASSETS 840 840
---------- ----------
TOTAL ASSETS $3,412,451 $3,144,847
========== ==========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
<TABLE>
<CAPTION>
IMMUCELL CORPORATION
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
September 30, December 31,
1999 1998
---------- ----------
(unaudited)
<S> <C> <C>
CURRENT LIABILITIES:
Accrued expenses $ 206,075 $ 286,333
Accounts payable 104,882 140,312
Current portion of long term debt 18,295 17,257
---------- ----------
Total current liabilities 329,252 443,902
LONG TERM DEBT:
Mortgage loan 439,534 453,349
---------- ----------
Total long term debt 439,534 453,349
STOCKHOLDERS' EQUITY:
Common stock, Par value--$.10 per share
Authorized--8,000,000 shares
Issued--2,818,482 shares
at September 30, 1999 and
December 31, 1998 281,848 281,848
Capital in excess of par value 8,338,907 8,338,907
Accumulated deficit (5,390,355) (5,786,424)
Treasury stock, at cost --
389,598 shares (586,735) (586,735)
---------- ----------
Total stockholders' equity 2,643,665 2,247,596
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $3,412,451 $3,144,847
========== ==========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
<TABLE>
<CAPTION>
IMMUCELL CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE
AND NINE MONTH PERIODS ENDED SEPTEMBER 30, 1999 and 1998
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------------- -----------------------
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
REVENUES:
Product sales $1,112,496 $ 981,037 $3,468,079 $3,109,687
Grant income 46,683 135,873 137,828 198,645
---------- ---------- ---------- ----------
Total revenues 1,159,179 1,116,910 3,605,907 3,308,332
---------- ---------- ---------- ----------
COSTS AND EXPENSES:
Product costs 521,907 515,443 1,573,999 1,466,168
Research and development
expenses 188,180 339,281 605,972 751,141
Sales and marketing
expenses 215,712 196,961 640,852 614,600
General and administrative
expenses 103,351 125,160 312,417 419,469
---------- ---------- ---------- ----------
Total costs and expenses 1,029,150 1,176,845 3,133,240 3,251,378
---------- ---------- ---------- ----------
Operating income 130,029 (59,935) 472,667 56,954
---------- ---------- ---------- ----------
OTHER (EXPENSE) INCOME:
Equity in loss of
joint venture (78,004) (89,617) (97,134) (76,617)
Interest and other income 21,139 15,940 50,414 49,705
Interest expense (9,976) (10,339) (29,878) (34,965)
---------- ---------- ---------- ----------
Net other expense (66,841) (84,016) (76,598) (61,877)
---------- ---------- ---------- ----------
NET PROFIT (LOSS) $ 63,188 $ (143,951) $ 396,069 $ (4,923)
========== ========== ========== ==========
NET PROFIT (LOSS) PER
COMMON SHARE:
Basic $ 0.03 $ (0.06) $ 0.16 $ (0.00)
Diluted $ 0.02 $ (0.06) $ 0.16 $ (0.00)
========== ========== ========== ==========
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING:
Basic 2,428,884 2,428,884 2,428,884 2,425,662
Diluted 2,529,706 2,428,884 2,496,130 2,425,662
========== ========== ========== ===========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
<TABLE>
<CAPTION>
IMMUCELL CORPORATION
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE NINE MONTH PERIOD ENDED SEPTEMBER 30, 1999
(Unaudited)
Common Stock
$.10 Par Value Capital in Treasury Stock Total
------------------ Excess of Accumulated ----------------- Stockholders'
Shares Amount Par Value Deficit Shares Amount Equity
------ ------ ----------- ------------ ------ ------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE,
December 31, 1998 2,818,482 $281,848 $8,338,907 $(5,786,424) 389,598 $(586,735) $2,247,596
Net Profit -- -- -- 396,069 -- -- 396,069
-----------------------------------------------------------------------------------------------------
BALANCE,
September 30, 1999 2,818,482 $281,848 $8,338,907 $(5,390,355) 389,598 $(586,735) $2,643,665
=====================================================================================================
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
<TABLE>
<CAPTION>
IMMUCELL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE
NINE MONTH PERIODS ENDED SEPTEMBER 30, 1999 AND 1998
(Unaudited)
Nine Months Ended
September 30,
--------------------------
1999 1998
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net profit (loss) $ 396,069 $ (4,923)
Adjustments to reconcile net
profit (loss) to net cash provided
by operating activities-
Depreciation 77,249 75,358
Equity share in joint venture loss 84,111 81,617
Changes in:
Accounts receivable (207,752) 255,638
Inventories 25,395 (39,596)
Prepaid expenses (12,202) (28,808)
Accounts payable (35,430) 31,898
Accrued expenses (80,258) 41,635
---------- ----------
Net cash provided by
operating activities 247,182 412,819
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant
and equipment, net (4,178) (51,381)
Distribution from joint
venture -- 25,000
---------- ----------
Net cash used for
investing activities (4,178) (26,381)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from debt obligation -- 480,000
Payments of debt obligations (12,777) (575,300)
Proceeds from exercise of stock options -- 20,606
Stock issuance costs -- (2,500)
---------- ----------
Net cash used for
financing activities (12,777) (77,194)
---------- ----------
NET INCREASE IN CASH AND
CASH EQUIVALENTS 230,227 309,244
BEGINNING CASH AND CASH EQUIVALENTS 1,538,905 1,021,324
---------- ----------
ENDING CASH AND CASH EQUIVALENTS $1,769,132 $1,330,568
========== ==========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
IMMUCELL CORPORATION
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(1) Basis of Presentation
The accompanying financial statements have been prepared by ImmuCell
Corporation (the "Company") without audit, and reflect the adjustments,
all of which are of a normal recurring nature, that are, in the opinion of
management, necessary for a fair statement of the results for the interim
periods presented. Certain information and footnote disclosures normally
included in the annual financial statements which are prepared in
accordance with generally accepted accounting principles have been
condensed or omitted. Accordingly, the Company believes that although the
disclosures are adequate to make the information presented not misleading,
these financial statements should be read in conjunction with the financial
statements and the notes to the financial statements as of December 31,
1998, contained in the Company's Annual Report to shareholders on Form 10-K
as filed with the Securities and Exchange Commission.
The consolidated financial statements of the Company include the accounts
of the Company and its wholly-owned subsidiary, the Kamar Marketing Group,
Inc. All intercompany accounts and transactions have been eliminated in
consolidation.
(2) Inventories
As of September 30, 1999, inventories include raw materials aggregating
approximately $37,000 for a product that has not been approved by the
appropriate government regulatory agency. Regulatory approval is required
before commercial sales of this product can be initiated. Should such
approval not be obtained, this inventory would have to be written-off.
Inventories consist of the following:
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
---- ----
<S> <C> <C>
Raw materials $ 95,818 $ 61,938
Work-in-process 331,121 383,691
Finished goods 23,615 30,320
--------- --------
$ 450,554 $ 475,949
========= =========
</TABLE>
(3) Debt Obligations
The Company has long term debt obligations, net of current maturities, as
follows:
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
---- ----
<S> <C> <C>
8.62% Bank mortgage, collateralized by
first security interest in building,
due 1999 to 2003 $457,829 $470,606
Less current portion 18,295 17,257
-------- --------
Long term debt $439,534 $453,349
======== ========
</TABLE>
The mortgage, which was entered into in May 1998, has a 15 year
amortization schedule with interest payable at the fixed rate of 8.62% per
year for the first five years. The Company intends to repay the then
outstanding principal at the end of this five year period, but the mortgage
does provide the option of resetting at a new fixed interest rate to be
determined at that time for one additional five year period. Principal
payments under this mortgage obligation, due in monthly installments
subsequent to September 30, 1999, aggregate approximately the following:
$5,000 - 1999; $19,000 - 2000; $20,000 - 2001; $22,000 - 2002; and $392,000
- - 2003.
IMMUCELL CORPORATION
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
(4) Profit (Loss) per Common Share
The basic profit per share and the net loss per share of common stock are
determined by dividing the net profit or loss by the weighted average
number of shares of common stock outstanding during the period. The
diluted profit per share reflects the potential dilution that would occur
if existing stock options were exercised.
(5) Segment and Significant Customer Information
The Company principally operates in the business segment described in Note
1 to its Annual Report on Form 10-K for the year ended December 31, 1998.
The Company's primary customers for the majority of its 1999 product sales
(63% and 74% for the three and nine month periods ended September 30, 1999,
respectively) are in the United States dairy and beef industries. Sales to
foreign customers, who are principally in the dairy industry, aggregated
35% and 25% of product sales for the three and nine month periods ended
September 30, 1999, respectively. Government grant income amounted to
approximately 4% ($47,000) and 12% ($136,000) of total revenues in the
three month periods ended September 30, 1999 and 1998, respectively, and
approximately 4% ($138,000) and 6% ($199,000) of total revenues in the nine
month periods ended September 30, 1999 and 1998, respectively.
In 1998, the Company adopted Statement of Financial Accounting Standards
No. 131. The prior year's segment information has been restated to present
the Company's two reportable segments: (1) Animal Health Products and (2)
Research and Development ("R&D"). The accounting policies of the segments
are the same as those described in Note 2 to the Company's Annual Report on
Form 10-K for the year ended December 31, 1998. The Company evaluates the
performance of its segments and allocates resources to them based on
contribution before allocation of corporate overhead charges. The table
below presents information about reported segments for the three and nine
month periods ended September 30, 1999 and 1998:
<TABLE>
<CAPTION>
Three Months Ended September 30, Animal Health
1999: (in thousands) Product R&D Other Total
------------- --- ----- -----
<S> <C> <C> <C> <C>
Product Sales $ 1,093 -- $ 19 $ 1,112
Grant Income -- $ 47 -- 47
------- ----- ----- -------
Total Revenues 1,093 47 19 1,159
Product Costs 512 -- 10 522
Research and Development Expenses -- 188 -- 188
Sales and Marketing Expenses 216 -- -- 216
Other Expenses -- -- 170 170
------- ----- ----- -------
Net Profit (Loss) $ 365 $(141) $(161) $ 63
======= ===== ===== =======
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Three Months Ended September 30, Animal Health
1998: (in thousands) Products R&D Other Total
------------- --- ----- -----
<S> <C> <C> <C> <C>
Product Sales $ 960 -- $ 21 $ 981
Grant Income -- $ 136 -- 136
----- ----- ---- ------
Total Revenues 960 136 21 1,117
Product Costs 495 -- 20 515
Research and Development Expenses -- 339 -- 339
Sales and Marketing Expenses 197 -- -- 197
Other Expenses -- -- 210 210
----- ----- ---- ------
Net Profit (Loss) $ 268 $(203) $(209) $ (144)
===== ===== ==== ======
</TABLE>
IMMUCELL CORPORATION
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
<TABLE>
<CAPTION>
Nine Months Ended September 30, 1999: Animal Health
(in thousands) Products R&D Other Total
------------- --- ----- -----
<S> <C> <C> <C> <C>
Product Sales $ 3,420 -- $ 48 $ 3,468
Grant Income -- $ 138 -- 138
------- ----- ----- -------
Total Revenues 3,420 138 48 3,606
Product Costs 1,554 -- 20 1,574
Research and Development Expenses -- 606 -- 606
Sales and Marketing Expenses 641 -- -- 641
Other Expenses -- -- 389 389
------- ----- ----- -------
Net Profit (Loss) $ 1,225 $(468) $(361) $ 396
======= ===== ===== =======
</TABLE>
<TABLE>
<CAPTION>
Nine Months Ended September 30, 1998: Animal Health
(in thousands) Products R&D Other Total
------------- --- ----- -----
<S> <C> <C> <C> <C>
Product Sales $ 3,058 -- $ 52 $ 3,110
Grant Income -- $ 198 -- 198
-------- ----- ----- ------
Total Revenues 3,058 198 52 3,308
Product Costs 1,431 -- 35 1,466
Research and Development Expenses -- 751 -- 751
Sales and Marketing Expenses 615 -- -- 615
Other Expenses -- -- 481 481
-------- ----- ----- ------
Net Profit (Loss) $ 1,012 $(553) $(464) $ (5)
======== ====== ===== ======
</TABLE>
PART I. FINANCIAL INFORMATION (Continued)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS FOR THE THREE AND NINE MONTH PERIODS ENDED SEPTEMBER 30,
1999
Total revenues equalled $1,160,000 and $3,606,000 for the three and nine
month periods ended September 30, 1999, respectively, as compared to
$1,117,000 and $3,308,000 in the comparable periods in 1998. Grant income
in 1999 and 1998 was recognized under a federally sponsored research grant
in support of the Company's passive antibody development programs, and
grant income in 1999 included a portion of a $25,000 research grant from
the State of Maine.
Product sales increased by $131,000 (13%) to $1,112,000 during the three
month period ended September 30, 1999, in comparison to the same period in
the prior year. Product sales increased by $358,000 (12%) to $3,468,000
during the nine month period ended September 30, 1999, in comparison to the
same period in the prior year. Sales of First Defense<reg-trade-mark> and
the Kamar<reg-trade-mark> Heatmount{TM} Detector aggregated 95% and 94% of
total product sales during the nine month periods ended September 30, 1999
and 1998, respectively. Sales of these two products increased by 12%
during the nine month period ended September 30, 1999, as compared to the
same period of the prior year. In July 1998, the Company entered into a
four year extension to the term of its product license from Kamar, Inc. for
the Kamar Heatmount Detector from December 31, 1999 through December 31,
2003, subject to the right of either party to give 12 months' notice of
early termination.
Gross margin as a percentage of product sales was 53% and 47% during the
three month periods ended September 30, 1999 and 1998, respectively. The
gross margin increased by $125,000 (27%) during the three month period
ended September 30, 1999 as compared to the respective period in 1998.
Gross margin as a percentage of product sales was 55% and 53% during the
nine month periods ended September 30, 1999 and 1998, respectively. The
gross margin increased by
IMMUCELL CORPORATION
PART I. FINANCIAL INFORMATION (Continued)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
$251,000 (15%) during the nine month period ended September 30, 1999 as
compared to the respective period in 1998.
Research and development expenses decreased by $151,000 (45%) to $188,000
during the three month period ended September 30, 1999 and decreased by
$145,000 (19%) to $606,000 during the nine month period ended September 30,
1999, as compared to the respective periods in 1998. Research and
development expenses aggregated 16% and 30% of total revenues during the
three month periods ended September 30, 1999 and 1998, respectively, and
17% and 23% of total revenues during the nine month periods ended September
30, 1999 and 1998, respectively. Research and development expenses
exceeded grant income by $141,000 (which amount equals 13% of product
sales) and by $203,000 (which amount equals 21% of product sales) during
the three month periods ended September 30, 1999 and 1998, respectively.
Research and development expenses exceeded grant income by $468,000 (which
amount equals 13% of product sales) and by $552,000 (which amount equals
18% of product sales) during the nine month periods ended September 30,
1999 and 1998, respectively. In 1999, increased internal resources have
been invested in the development of new animal health products that fit the
Company's objective of commercializing its proprietary technologies and
helping dairy and beef producers and their veterinarians manage disease and
reproduction in their herds. In 1998, these expenses were incurred
primarily to develop specific antibodies to be used to prevent and/or treat
gastrointestinal infections in humans. Additionally, funds have been
invested in the development of a product to detect infectious pathogens in
water and in the development of a process to manufacture lactoferrin, a
nutritional milk protein derived from cheese whey.
Management believes that the expenses incurred resulting from the investment in
the research and development of new products is necessary to foster growth for
the Company in the future. Beginning in 1998, the Company determined to
increase development of new animal health products and to decrease its
internally funded research and development investment in products targeted
towards the human health care markets. Because funding requirements for these
animal health programs are less than the requirements for the human health
programs, the Company anticipates that it will be able to record a profit for
the year ended December 31, 1999, as compared to 1998 when a small loss of
$5,000 during the first nine months of the year increased to a net loss of
$103,000 for the year ended December 31, 1998. The Company has made no
provision for income taxes because of the availability of sufficient net
operating loss carryforwards.
Sales and marketing expenses increased by $19,000 (10%) during the three
month period ended September 30, 1999 compared to the same period in 1998,
aggregating 19% of product sales in the 1999 period compared to 20% in
1998. Sales and marketing expenses increased by $26,000 (4%) during the
nine month period ended September 30, 1999 compared to the same period in
1998, aggregating 18% of product sales in the 1999 period compared to 20%
in 1998. General and administrative expenses decreased by $22,000 (17%)
during the three month period ended September 30, 1999 and by $107,000
(26%) during the nine month period ended September 30, 1999 in comparison
to the same periods in 1998, as the Company continues its efforts to
control these expenses while incurring all the necessary costs associated
with being a publicly held company. The December 1998 reorganization of
the Company's management team to focus on growing a profitable animal
health business resulted in much of the decrease in general and
administrative expenses.
In the third quarter of 1996, the Company established a joint venture,
AgriCell Company, LLC ("AgriCell"), with Agri-Mark, Inc. of Methuen,
Massachusetts. AgriCell has installed a commercial production facility in
Middlebury, Vermont to manufacture bovine lactoferrin, a nutritional
protein derived from cheese whey. Sales of lactoferrin have been
significantly less than expected due principally to the financial crisis in
South Korea and Japan, the primary markets for lactoferrin. This negative
development resulted in a non-cash charge of approximately $97,000 ($78,000
of which loss was recorded in the third quarter) against the Company's
equity interest in AgriCell during 1999. In comparison, the non-cash
charge against the Company's equity interest in AgriCell aggregated
approximately $136,000 for the year ended December 31, 1998, $90,000 of
which was recorded in the third quarter of 1998. As of September 30, 1999,
the investment in joint venture asset was reduced to zero. Further joint
venture losses would have no effect on the Company's books.
A key component of the Company's proprietary milk protein purification
technology (which has been assigned to AgriCell for the production of
lactoferrin and licensed to an Australian dairy co-operative for the
production of whey
IMMUCELL CORPORATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
protein isolate and certain other milk proteins) is subject to a license from a
third party company. To maintain the exclusivity of this third party license,
the Company, together with its partners, must achieve certain performance
milestones. In the third quarter of 1999, the exclusivity of this third party
license was successfully extended to at least December 31, 2000.
LIQUIDITY AND CAPITAL RESOURCES
Total assets increased by approximately $268,000 to $3,412,000 at September
30, 1999 from $3,145,000 at December 31, 1998. Cash and cash equivalents
increased by approximately $230,000 to $1,769,000 at September 30, 1999
from $1,539,000 at December 31, 1998. Net working capital increased by
$539,000 to $2,406,000 at September 30, 1999 from $1,866,000 at December
31, 1998. Stockholders' equity increased by $396,000 to $2,644,000 at
September 30, 1999 from $2,248,000 at December 31, 1998.
The Company obtained a $710,000 Phase II Small Business Innovation Research
grant in September 1997. As of October 1, 1999, approximately $101,000 was
available under this grant to fund additional development expenses relating
to the DiffGAM{TM} clinical development program.
The Company believes that it has sufficient capital resources to meet its
working capital requirements and to finance its ongoing business operations
during the next twelve months.
YEAR 2000 ISSUE
The Year 2000 issue is the result of computer programs being written using
two digits rather than four to define the applicable year. The Company's
computer equipment and software and devices with imbedded technology that
are time-sensitive may recognize a date using "00" as the year 1900 rather
than the year 2000. This could result in a system failure or
miscalculations causing disruptions of operations, including, among other
things, a temporary inability to process transactions, send invoices, or
engage in similar normal business activities. In the event that the
Company does not effectively address the Year 2000 issue, these functions
could be performed manually on a short-term basis. The Company has
determined that the risks associated with exposure to third parties that
suffer problems with Year 2000 issues are not material because of the
Company's ability to source needed supplies and services from multiple
sources.
In conjunction with a consultant, the Company has reviewed the ability of
its computer equipment and software to function properly with respect to
dates in the Year 2000 and thereafter. For this purpose, the term
"computer equipment and software" includes systems that are commonly
thought of as information technology ("IT") systems, including accounting,
data processing, and telephone/PBX systems, and other miscellaneous
systems, as well as systems that are not commonly thought of as IT systems,
such as alarm systems, fax machines, processing equipment, or other
miscellaneous systems. Based upon its identification and assessment
efforts to date, the Company believes that certain of the computer
equipment and software it currently uses (principally its financial
accounting system and several personal computers) will require replacement
or modification. In addition, in the ordinary course of replacing computer
equipment and software, the Company attempts to obtain replacements that
are Year 2000 compliant. The software and hardware required to address the
Year 2000 issue was identified during the fourth quarter of 1998. The
Company estimates that the total costs of efforts required to address the
Year 2000 issue will not exceed $30,000. These costs, a portion of which
may be capitalized, were incurred during the first quarter of 1999.
Installation of the new software and hardware required to run the general
ledger system was installed during the third quarter. One additional
software package required to operate certain manufacturing equipment is
being installed in the fourth quarter.
FORWARD-LOOKING STATEMENTS
This Quarterly Report contains "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933, and Section 21E of
the Securities Exchange Act of 1934. Such statements include, but are not
limited to, any
IMMUCELL CORPORATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
statements relating to the Company's objectives concerning future profitability
and any other statements that are not historical facts. Such statements
involve risks and uncertainties, including, but not limited to, those risks and
uncertainties relating to difficulties or delays in development, testing,
regulatory approval, production and marketing of the Company's products,
competition within the Company's anticipated product markets, the uncertainties
associated with product development, and other risks detailed from time to time
in filings the Company makes with the Securities and Exchange Commission,
including its Annual Report on Form 10-K and its Quarterly Reports on Form 10-
Q. Such statements are based on management's current expectations, but actual
results may differ materially due to various factors, including those risks and
uncertainties mentioned or referred to in this Quarterly Report.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27.1 Financial Data Schedule (for electronically filed
copies only).
(b) Reports on Form 8-K
None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ImmuCell Corporation
Registrant
Date:November 11, 1999 By:/s/ Michael F. Brigham
Michael F. Brigham
Vice President,
Chief Financial Officer,
Treasurer, Secretary and
Director
IMMUCELL CORPORATION
Exhibit Index
27.1Financial Data Schedule (for electronically filed copies only).
<PAGE>
IMMUCELL CORPORATION
Exhibit 27.1
Financial Data Schedule as of and for the period ended September 30, 1999
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Financial Data Schedule
IMMUCELL CORPORATION
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S UNAUDITED FINANCIAL STATEMENTS FOR THE QUARTERLY PERIOD ENDED
SEPTEMBER 30, 1999 AS REPORTED ON FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 1,769,132
<SECURITIES> 0
<RECEIVABLES> 499,582
<ALLOWANCES> 42,076
<INVENTORY> 450,554
<CURRENT-ASSETS> 2,734,910
<PP&E> 1,533,484
<DEPRECIATION> 856,783
<TOTAL-ASSETS> 3,412,451
<CURRENT-LIABILITIES> 329,252
<BONDS> 439,534
0
0
<COMMON> 2,643,665
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 3,412,451
<SALES> 3,468,079
<TOTAL-REVENUES> 3,605,907
<CGS> 1,573,999
<TOTAL-COSTS> 3,133,240
<OTHER-EXPENSES> 46,720
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 29,878
<INCOME-PRETAX> 396,069
<INCOME-TAX> 0
<INCOME-CONTINUING> 396,069
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 396,069
<EPS-BASIC> 0.16
<EPS-DILUTED> 0.16
</TABLE>
