U.S. SECURITIES AND EXCHANGE COMMISSION Washington,
D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended December 31, 2004
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number 0-24641
IMMUNOTECHNOLOGY CORPORATION
(Name of Small Business Issuer as specified in its charter)
Delaware 84-1016435
------------------------------- -------------------
(State or other jurisdiction of (I.R.S. employer
incorporation or organization identification No.)
1661 Lakeview Circle, Ogden, UT 84403
-------------------------------------
(Address of principal executive offices)
Registrant's telephone no., including area code: (801) 399-3632
N/A
Former name, former address, and former fiscal year, if
changed since last report.
Securities registered pursuant to Section 12(b) of the Exchange Act: None
Securities registered pursuant to Section 12(g) of the Exchange Act: $.00001
par value common stock
Check whether the Issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for
such shorter period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days. Yes X No.
Indicate by check mark whether the registrant is an accelerated filer (as
defined in rule 12b-2 of the Exchange Act). Yes___ No X.
Common Stock outstanding at March 8, 2005 - 5,000,000 shares of $.00001 par
value Common Stock.
DOCUMENTS INCORPORATED BY REFERENCE: NONE
FORM 10-QSB
FINANCIAL STATEMENTS AND SCHEDULES
IMMUNOTECHNOLOGY CORPORATION
For the Quarter ended December 31, 2004
The following financial statements and schedules of the registrant are
submitted herewith:
PART I - FINANCIAL INFORMATION
Page of
Form 10-QSB
Item 1. Financial Statements: -----------
Unaudited Balance Sheet 3
Unaudited Statements of Operations 4
Unaudited Statements of Cash Flows 5
Notes to Financial Statements 6 - 8
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 9
Item 3. Controls and Procedures 13
PART II - OTHER INFORMATION
Page
----
Item 1. Legal Proceedings 13
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 13
Item 3. Defaults Upon Senior Securities 13
Item 4. Submission of Matters to a Vote of Security Holders 13
Item 5. Other Information 13
Item 6. Exhibits 13
2
IMMUNOTECHNOLOGY CORPORATION
(A Development Stage Company)
Balance Sheets
ASSETS
December 31, June 30,
2004 2004
------------ ------------
(Unaudited)
CURRENT ASSETS
Cash $ 21 $ -
------------ ------------
TOTAL ASSETS $ 21 $ -
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Bank overdraft $ - $ 122
Accounts payable and accrued expenses 63,705 53,483
Note payable 85,004 21,807
Loans from officer (Note 3) 201,648 100,628
Option liability 12,168 -
Accrued interest - 1,700
------------ ------------
Total Current Liabilities 362,525 177,740
------------ ------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY (DEFICIT)
Preferred stock, par value $0.00001 per share
Authorized - 10,000,000 shares
Issued - none - -
Common stock, par value $0.00001 per share
Authorized - 100,000,000 shares
Outstanding - 5,000,000 shares 50 50
Paid-in capital 457,494 441,994
Accumulated deficit prior to the development stage (151,332) (151,332)
Accumulated deficit during the development stage (668,716) (468,452)
------------ ------------
Total Stockholders' Equity (Deficit) (362,504) (177,740)
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT) $ 21 $ -
============ ============
The accompanying notes are an integral part of these financial statements.
3
IMMUNOTECHNOLOGY CORPORATION
(A Development Stage Company)
Statements of Operations
(Unaudited)
From Inception
of the
Development
Stage, July 1,
For the Six Months Ended For the Three Months 1992 through
December 31, Ended December 31, December 31,
------------------------- ------------------------- -----------
2004 2003 2004 2003 2004
------------ ------------ ------------ ------------ -----------
REVENUE - - - - -
------------ ------------ ------------ ------------ -----------
OPERATING EXPENSES
Professional fees $ 34,975 $ 19,376 $ 13,241 $ 13,886 $ 333,701
Transfer agent 385 500 310 450 6,361
Taxes & licenses - 229 - - 1,637
Bank fees & service
charges 240 346 156 188 4,885
Travel 24,847 9,348 5,278 9,348 143,331
Office expense - 1,787 - - 12,037
Rescind USSC deal 125,000 - - - 125,000
Misc. 134 - - - 134
Interest expense 14,683 3,216 8,827 1,899 41,231
------------ ------------ ------------ ------------ -----------
Total Operating
Expenses 200,264 34,802 27,812 25,771 668,317
------------ ------------ ------------ ------------ -----------
NET LOSS $ (200,264)$ (34,802) $ (27,812)$ (25,771) $ (668,317)
============ ============ ============ ============ ===========
Basic Loss per Common
Share $ (0.04)$ (0.01) $ (0.01)$ (0.01)
============ ============ ============ ============
Weighted Average Number
of Common Shares 5,000,000 5,000,000 5,000,000 5,000,000
============ ============ ============ ============
The accompanying notes are an integral part of these financial statements.
4
IMMUNOTECHNOLOGY CORPORATION
(A Development Stage Company)
Statements of Cash Flows
(Unaudited)
From
Inception of
Development
For the Six Months Ended Stage on
December 31, July 1, 1992
------------------------- Through
2004 2003 Dec. 31, 2004
----------- ------------ -------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (200,264) $ (34,802)$ (668,317)
Contributed services 15,500 - 46,500
Amortization of debt costs 2,153 - 2,153
Adjustments to reconcile net loss to net
cash used by operating activities:
Increase (decrease) in accrued expenses 8,522 (12,142) 59,029
------------ ------------ ------------
Net Cash Used by Operating Activities (174,089) (46,944) (560,635)
------------ ------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Advance to an officer - - (10,000)
Repayment of advance to an officer - - 10,000
------------ ------------ ------------
Net Cash Provided by Investing Activities - - -
------------ ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Bank overdraft (122) (996) -
Advances from an officer 111,704 48,200 489,329
Proceeds from notes payable 73,212 - 102,519
Repayments of advances to an officer (10,684) - (31,192)
------------ ------------ ------------
Net Cash Provided by Financing Activities 174,110 47,204 560,656
------------ ------------ ------------
NET INCREASE IN CASH 21 260 21
CASH AT BEGINNING OF YEAR - - -
------------ ------------ ------------
CASH AT END OF PERIOD $ 21 $ 260 $ 21
============ ============ ============
Supplementary Disclosures:
Interest paid in cash $ - $ - $ 2,211
Cash paid for taxes $ - $ - $ -
The accompanying notes are an integral part of these financial statements.
5
IMMUNOTECHNOLOGY CORPORATION
(A Development Stage Company)
Notes to Financial Statements
December 31, 2004 and June 30, 2004
NOTE 1 - CONDENSED FINANCIAL STATEMENTS
The accompanying financial statements have been prepared by the
Company without audit. In the opinion of management, all adjustments
(which include only normal recurring adjustments) necessary to present
fairly the financial position, results of operations and cash flows at
December 31, 2004 and for all periods presented have been made.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with accounting principles
generally accepted in the United States of America have been condensed
or omitted. It is suggested that these condensed financial statements
be read in conjunction with the financial statements and notes thereto
included in the Company's June 30, 2004 audited financial statements.
The results of operations for the period ended December 31, 2004 are
not necessarily indicative of the operating results for the full year.
NOTE 2 - GOING CONCERN
The Company's financial statements are prepared using accounting
principles generally accepted in the United Stated of America
applicable to a going concern which contemplates the realization of
assets and liquidation of liabilities in the normal course of
business. However, the Company does not have significant cash or other
material assets, nor does it have an established source of revenues
sufficient to cover its operating costs and to allow it to continue as
a going concern. Until that time, the stockholders have committed to
covering the operating costs of the Company.
The Company is not operating, and will attempt to locate a new
business (operating company), and offer itself as a merger vehicle for
a company that may desire to go public through a merger rather than
through its own public stock offering.
NOTE 3 - RELATED PARTY TRANSACTIONS
During the six months ended December 31, 2004, officers advanced the
company a total of $111,704.
NOTE 4 - MATERIAL EVENTS
On August 11, 2004 the Company signed an agreement rescinding the
Agreement and Plan of Merger with Ultimate Securities Systems
Corporation (USSC). The rescission called for a payment of $125,000
from the Company to USSC. Non affiliated individuals loaned $110,000
to the Company for this purpose, and the Company's president has
loaned approximately $40,000 additionally to the Company since June
30, 2004. The above noted loans accrue interest at a rate of 10% and
are due on demand. Payment of $125,000 was made in full in August
2004.
6
IMMUNOTECHNOLOGY CORPORATION
(A Development Stage Company)
Notes to Financial Statements
December 31, 2004 and June 30, 2004
NOTE 5 - CONTRIBUTED SERVICES
During the three months ended December 31, 2004 an officer of the
Company contributed services to the Company valued at $15,500. This
contribution has been accounted for as an increase in additional
paid-in-capital.
NOTE 6 - OPTIONS ISSUED
During the three months ended December 31, 2004, the Company issued
options to non-employees as an incentive to loan money to the Company.
The options allow the holders to purchase 120,000 shares of common
stock at an exercise price of $0.10 per share, and will expire two
years from the date of issuance. These are the only outstanding
options of the Company and are summarized below:
December 31,
2004
---------------------------
Weighted
Average
Exercise
Shares Price
------------ ------------
Outstanding, beginning of year - -
Granted 120,000 $ 0.10
Expired/Cancelled - -
Exercised - -
------------ ------------
Outstanding end of year 120,000 $ 0.10
============ ============
The Company applies SFAS No. 123 for warrants issued, which requires
the Company to estimate the fair value of each options issued at the
grant date by using the Black-Scholes pricing model with the following
assumptions:
Risk-free interest rate 3.39%
Expected life 2 Years
Expected volatility 2.39
Dividend yield 0.0
As a result of applying SFAS No. 123, the Company recorded the fair
value of $12,168 as an offset to the notes payable during the six
months ended December 31, 2004. The fair value of $12,168 will be
amortized over the life of the loans to interest expense. As of the
date of these financial statements the Company does not have any
available authorized shares to issue if the above noted options are
exercised. Therefore, the fair value of the options will be shown as a
liability to the Company.
7
NOTE 7 - REVERSE STOCK SPLIT
On December 16, 2004 the majority of the company's stockholders
approved a 1 for 10 reverse stock split of its common stock. All
references to common shares have been retroactively restated to
reflect this stock split.
8
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Cautionary Statement Regarding Forward-looking Statements
This report may contain "forward-looking" statements. Examples of forward-
looking statements include, but are not limited to: (a) projections of revenues,
capital expenditures, growth, prospects, dividends, capital structure and other
financial matters; (b) statements of plans and objectives of the Company or its
management or Board of Directors; (c) statements of future economic performance;
(d) statements of assumptions underlying other statements and statements about
the Company and its business relating to the future; and (e) any statements
using the words "anticipate," "expect," "may," "project," "intend" or similar
expressions.
General
The Company was incorporated on November 30, 1989, in the state of
Delaware. The Company's predecessor was LJC Corporation, a Utah corporation,
organized on November 8, 1984 ("LJC"). On October 7, 1989, LJC acquired
ImmunoTechnology Laboratories, Inc., a Colorado corporation ("ITL"), by means of
a stock-for-stock exchange with the shareholder of ITL. As a result of this
transaction, ITL became a wholly owned subsidiary of LJC. On October 10, 1989,
LJC changed its name to ImmunoTechnology Laboratories, Inc. ("ITL-UT").
At a special meeting of the shareholders of ITL-UT, the shareholders
approved a proposal to redomicile ITL-UT in the state of Delaware, by forming a
Delaware corporation and merging ITL-UT into the Delaware corporation, and
changing the its name to ImmunoTechnology Corporation. The merger was effective
on December 21, 1989. As a result of the merger, ITL-UT no longer exists. ITL
was formed for the purpose of engaging in the business of operating a medical
test related laboratory. The Company's only business has been the operation of
ITL, whose operations were discontinued in 1992.
Since discontinuing the operations of ITL, the Company has been seeking
potential business acquisition or opportunities to enter in an effort to
commence business operations.
On April 21, 2003, we entered into an Agreement and Plan of Merger with
Ultimate Security Systems Corporation. In August 2004, the Company and USSC
agreed to terminate the Merger Agreement. We had filed a Form S-4 registration
statement with the Securities and Exchange Commission to register shares we
intended to issue in connection with the merger, but as a result of the
termination of the Agreement, in August, 2004, we withdrew such registration
statement from the Securities and Exchange Commission before it was declared
effective. As part of our termination agreement with USSC, we paid USSC a
termination fee of $125,000. We are currently looking for an alternative
acquisition transaction.
9
Business Plan
Our current business plan is to serve as a vehicle for the acquisition of,
or the merger or consolidation with another company (a "Target Business"). We
intend to utilize our limited current assets, equity securities, debt
securities, borrowings or a combination thereof in effecting a Business
Combination with a Target Business which we believe has significant growth
potential. Our efforts in identifying a prospective Target Business are expected
to emphasize businesses primarily located in the United States; however, we
reserve the right to acquire a Target Business located primarily elsewhere.
While we may, under certain circumstances, seek to effect Business Combinations
with more than one Target Business, as a result of our limited resources we
will, in all likelihood, have the ability to effect only a single Business
Combination.
We may effect a Business Combination with a Target Business which may be
financially unstable or in its early stages of development or growth. To the
extent we effect a Business Combination with a financially unstable company or
an entity in its early stage of development or growth (including entities
without established records of revenue or income), we will become subject to
numerous risks inherent in the business and operations of financially unstable
and early stage or potential emerging growth companies. In addition, to the
extent that we effect a Business Combination with an entity in an industry
characterized by a high level of risk, the Company will become subject to the
currently unascertainable risks of that industry. An extremely high level of
risk frequently characterizes certain industries which experience rapid growth.
Although management will endeavor to evaluate the risks inherent in a particular
industry or Target Business, there can be no assurance that we will properly
ascertain or assess all risks.
Financial Condition
Total assets at December 31, 2004 were $21. As of June 30, 2004, the
Company had no assets and liabilities $177,740.
The Company's total liabilities as of December 31, 2004 were $362,525. The
Company's liabilities include, but are not limited to; $201,648 loans from
officers, in $85,004 other loans and $63,705 accrued expenses. As of December
31, 2004, the Company's liabilities included $12,168 attributed to an option
liability. The option liability arises from the Company's granted options to
purchase 1,200,000 shares of its common stock at a price of $.01 per share. The
Company has 50,000,000 shares of its common stock authorized and 50,000,000
shares of common stock issued. The outstanding options may not be exercised
unless and until the Company increases the number of authorized shares of common
stock or reduces the number of shares of common stock outstanding. Management of
the Company intends to adopt resolutions to increase the number of authorized
shares as well as to effect a reverse stock split.
Effective on or about March 16, 2005, the Company will effect a 1 for 10
reverse stock split pursuant to a Certificate of Amendment to Certificate of
Incorporation filed with the State of Delaware. Pursuant to the Certificate of
Amendment, the Company's authorized common stock will be increased from
50,000,000 shares to 100,000,000 shares and the Company's authorized Preferred
Stock will be increased from 5,000,000 shares to 10,000,000 shares.
10
The Company will not generate any revenue until and unless it completes a
reverse merger type of acquisition transaction. Until that occurs, if ever, the
Company must attempt to fund its expenses through loans or from the sale of
securities. The Company intends to effect a reverse split of its outstanding
common stock and increase its authorized shares so it has securities available
for sale. There can be no assurance that the Company will be able to borrow
additional funds or sale securities in sufficient amounts to funds its expenses.
Results of Operations
The Company generated no revenues in 2003 or 2004. The Company will not
generate any revenues, if ever, until and unless it merges with an operating
company or raises additional capital for its own operations. There can be no
assurance that either of such events will happen.
The Company had a net loss of $27,812 for the three months ended December
31, 2004. This compares to a net loss of $25,771 for the three months ended
December 31, 2003. The Company had a net loss of $200,264 for six months ended
December 31, 2004 compared to a net loss of $34,802 for the six months period
ended December 31, 2003. The Company's expenses for the six months ended
December 31, 2004 included $125,000 associated with the rescission of the USSC
merger transaction and other expenses consisting of travel, professional fees,
interest and other expenses.
Critical Accounting Policies
This Management's Discussion and Analysis of Financial Condition and
Results of Operations discuss the Company's Financial Statements, which have
been prepared in accordance with accounting principles generally accepted in the
United States. We have terminated our previous operations and such operations
are treated as discontinued operations for financial statement purposes.
We anticipate that in the future, the preparation of our financial
statements will require management to make estimates and assumptions that will
affect reported amounts of assets and liabilities and the disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period. On an
ongoing basis, management will evaluate its estimates and assumptions, including
those related to inventory, income taxes, revenue recognition and restructuring
initiatives. We anticipate that management will base its estimates and judgments
on historical experience of the operations we may acquire and on various other
factors that are believed to be reasonable under the circumstances, the results
of which form the basis for making judgments about the carrying value of assets
and liabilities that are not readily apparent from other sources. Actual results
may differ from these estimates under different assumptions or conditions.
Management believes the following critical accounting policies, among
others, will affect its more significant judgments and estimates used in the
preparation of our Financial Statements following the completion of an
acquisition:
11
Income Taxes. In determining the carrying value of the Company's net
deferred tax assets, the Company will be required to assess the likelihood of
sufficient future taxable income in certain tax jurisdictions, based on
estimates and assumptions, to realize the benefit of these assets. If these
estimates and assumptions change in the future, the Company may record a
reduction in the valuation allowance, resulting in an income tax benefit in the
Company's Statements of Operations. Management will be required to evaluate the
realizability of the deferred tax assets and assesses the valuation allowance
quarterly.
Goodwill and Other Long-Lived Asset Valuations. In June 2001, the FASB
issued SFAS 141, "Business Combinations", and SFAS 142, "Goodwill and Other
Intangible Assets", effective for fiscal years beginning after December 15, 2001
with early adoption permitted for companies with fiscal years beginning after
March 15, 2001. We currently have no intangible assets. At such time as we have
intangible assets, we will adopt the new rules on accounting for goodwill and
other intangible assets, Under the new rules, goodwill and intangible assets
deemed to have indefinite lives will no longer be amortized but will be subject
to annual impairment tests in accordance with the statements. Other intangible
assets will continue to be amortized over their useful lives.
Revenue Recognition. At such time as we have revenues from operations, we
will adopt revenue recognitions policies consistent with generally acceptable
accounting standards.
Stock-Based Compensation. In December 2002, the FASB issued SFAS 148,
"Accounting for Stock-Based Compensation" -- Transition and Disclosure, which
amends SFAS 123. SFAS 148 provides alternative methods of transition for a
voluntary change to the fair value based method of accounting for stock-based
employee compensation. SFAS 148 also requires prominent disclosures in both
annual and interim financial statements about the method of accounting for
stock-based employee compensation and the effect of the method used on reported
results. As permitted by SFAS 123, we have elected to account for stock-based
compensation using the intrinsic value method prescribed in Accounting
Principles Board ("APB") Opinion No. 25, "Accounting for Stock Issued to
Employees," and related interpretations including Financial Accounting Standards
Board ("FASB") Interpretation No. 44, "Accounting for Certain Transactions
Involving Stock Compensation -- an Interpretation of APB Opinion No. 25," and
have adopted the disclosure-only provisions of SFAS 123. Accordingly, for
financial reporting purposes, compensation cost for stock options granted to
employees is measured as the excess, if any, of the estimated fair market value
of our stock at the date of the grant over the amount an employee must pay to
acquire the stock. Equity instruments issued to non-employees are accounted for
in accordance with FAS 123 and Emerging Issues Task Force ("EITF") Abstract No.
96-18, "Accounting for Equity Instruments That Are Issued to Other Than
Employees for Acquiring, or in Conjunction with Selling Goods or Services."
Interest Rate Risk
We currently have debt and will undoubtedly incur debt to finance our
operations. We anticipate that a substantial amount of our future debt and the
associated interest expense will be subject to changes in the level of interest
rates. Increases in interest rates would result in incremental interest expense.
12
ITEM 3. CONTROLS AND PROCEDURES
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
(a) Evaluation of Disclosure Controls and Procedures
Based on their evaluations as of December 31, 2004, the principal executive
officer and principal financial officer of the Company have concluded that the
Company's disclosure controls and procedures (as defined in Rules 13a-15(e) and
15d-15(e) under the Securities Exchange Act) are effective to ensure that
information required to be disclosed by the Company in reports that the Company
files or submits under the Securities Exchange Act is recorded, processed,
summarized and reported within the time periods specified in the rules and forms
of the SEC.
(b) Changes in Internal Controls
There were no significant changes in the Company's internal controls over
financial reporting or in other factors that could significantly affect these
internal controls subsequent to the date of their most recent evaluation,
including any corrective actions with regard to significant deficiencies and
material weaknesses.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds. We issued
no securities during the quarter ended December 31, 2004.
Item 3. Defaults by the Company on its Senior Securities. None.
Item 4. Submission of Matters to Vote of Security Holders. On December 16,
2004 the holders of 41,257,985 shares of our common stock,
approximately 82.5% of the total shares issued and outstanding,
consented in voting to the proposal to amend the Company's Certificate
of Incorporation for the following purposes:
(i) to increase the total number of shares of common stock authorized
from 50,000,000 to 100,000,000;
(ii) to increase the total number of shares of preferred stock
authorized form 5,000,000 to 10,000,000; and
(iii) to effect a 1-for-10 reverse stock split of our issued and
outstanding common stock.
We filed a preliminary and definitive Information Statement on Schedule 14C in
connection with the Shareholder Consent and mailed a copy of the Information
Statement to each shareholder of record as of December 16, 2004. We anticipate
the 1-for-10 reverse stock split will be effected on or about March 16, 2005. As
13
a result of the reverse stock split, the number of our shares of common stock
issued and outstanding will be reduced from 50,000,000 to 5,000,000 shares.
Item 5. Other Information.
Item 6. Exhibits. 31 Certification of Chief Executive Officer and Chief
Financial Officer Pursuant to Section 302 of the Sarbanes
Oxley Act of 2002.
32 Certification of Chief Executive Officer and Chief
Financial Officer Pursuant to Section 906 of the Sarbanes
Oxley Act of 2002.
SIGNATURE
In accordance with the requirements of the Exchange Act, the Company has
caused this report to be signed on its behalf by the undersigned thereunto duly
authorized.
Dated: March 15, 2005 IMMUNOTECHNOLOGY CORPORATION
By /s/ Mark A. Scharmann
Chief Executive Officer and
Chief Financial Officer
14