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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
October 1, 2002
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(Date of earliest event reported)
IMMUCELL CORPORATION
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(Exact name of registrant as specified in its charter)
0-15507
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(Commission file number)
DELAWARE 01-0382980
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(State or other jurisdiction (I.R.S. Employer
of incorporation) Identification No.)
56 Evergreen Drive
Portland, ME 04103
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(Address of principal executive offices and zip code)
(207) 878-2770
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(Registrant's telephone number, including area code)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On October 1, 2002, the Company agreed to accept $930,000 from Kamar,
Inc. of Steamboat Springs, Colorado in consideration of the early termination of
a product license. Since 1988, the Company had marketed the Kamar(R)
Heatmount(R) Detector, a product used to detect standing heat in cows, under an
exclusive license from Kamar that was set to expire on December 31, 2004. The
$930,000 approximates the expected net contribution from the product over the
remaining twenty-seven months of the license term, had it not been terminated.
As this license had no book value, the full amount of the proceeds represents a
pre-tax gain of $930,000 before associated legal and accounting fees. As a
result of this transaction, sales, cost of sales and marketing expenses will be
reduced accordingly beginning October 1, 2002. The accompanying pro forma
financial information gives effect to this transaction as if it occurred as of
the beginning of the periods for the pro forma Statements of Operations and as
of June 30, 2002 for the pro forma Balance Sheet.
The Company received $200,000 at closing and the remaining $730,000
balance is due, pursuant to a short-term note, no later than October 31, 2002.
The short-term note is secured by a trademark security agreement. The Company
expects to collect approximately $261,000 in accounts receivable from customers
over the next thirty to sixty days pertaining to related sales made prior to
October 1, 2002. The Company expects to transfer related product inventory on
hand at September 30, 2002 to Kamar for approximately its cost of $158,000 no
later than October 15, 2002.
A summary of this transaction was provided in a press release dated
October 3, 2002, a copy of which is filed as Exhibit 99 to this Current Report
on Form 8-K and is incorporated herein by this reference.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(b) Unaudited pro forma financial information
Schedule 1. Unaudited pro forma Statement of Operations for the year ended
December 31, 2001.
Schedule 2. Unaudited pro forma Statement of Operations for the six months ended
June 30, 2002.
Schedule 3. Unaudited pro forma Balance Sheet as of June 30, 2002.
(c) Exhibits
2. Termination of Distribution and Licensing Agreement dated October
1, 2002.
99. Press release of the Registrant dated October 3, 2002.
SIGNATURE
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
Date October 15, 2002 /s/ Michael F. Brigham
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Michael F. Brigham
President and Chief Executive Officer
INDEX TO SCHEDULES
Schedule Sequential
Number Description Page number(s)
------ ----------- --------------
1. Unaudited pro forma Statement of Operations for the year
ended December 31, 2001. 4
2. Unaudited pro forma Statement of Operations for the six months
ended June 30, 2002. 5
3. Unaudited pro forma Balance Sheet as of June 30, 2002. 6-7
On October 1, 2002, the Company agreed to accept $930,000 from Kamar,
Inc. of Steamboat Springs, Colorado in consideration of the early termination of
a product license. Since 1988, the Company had marketed the Kamar(R)
Heatmount(R) Detector, a product used to detect standing heat in cows, under an
exclusive license from Kamar that was set to expire on December 31, 2004. The
$930,000 approximates the expected net contribution from the product over the
remaining twenty-seven months of the license term, had it not been terminated.
As this license had no book value, the full amount of the proceeds represents a
pre-tax gain of $930,000 before associated legal and accounting fees. As a
result of this transaction, sales, cost of sales and marketing expenses will be
reduced accordingly beginning October 1, 2002. The pro forma financial
information provided in Schedules 1-3 gives effect to this transaction as if it
occurred as of the beginning of the periods for the pro forma Statements of
Operations and as of June 30, 2002 for the pro forma Balance Sheet.
The Company received $200,000 at closing and the remaining $730,000
balance is due, pursuant to a short-term note, no later than October 31, 2002.
The short-term note is secured by a trademark security agreement. The Company
expects to collect approximately $261,000 in accounts receivable from customers
over the next thirty to sixty days pertaining to related sales made prior to
October 1, 2002. The Company expects to transfer related product inventory on
hand at September 30, 2002 to Kamar for approximately its cost of $158,000 no
later than October 15, 2002.
Further details about the pro forma adjustments are set forth in the
notes appearing at the end of the pro forma financial information. The pro forma
financial information is not necessarily indicative of the operating results or
financial position that would have occurred had the product license been
terminated at the beginning of the periods presented or as of the end of the
period presented, nor is it necessarily indicative of future operating results
or financial condition.
EXHIBIT INDEX
Exhibit Sequential
Number Description Page number(s)
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2. Termination of Distribution and Licensing Agreement
dated October 1, 2002 9-12
99. Press release of the Registrant dated October 3, 2002. 13
Schedule 1
ImmuCell Corporation
Pro forma Statement of Operations
Unaudited
Year Ended Adjustments Pro forma
December 31, 2001 (Note 1) Adjusted
REVENUES:
Product sales 6,395,140 2,468,235 3,926,905
Grant income 132,581 0 132,581
Royalty income 78,595 0 78,595
Technology licensing income 45,450 0 45,450
Sale of option to technology 25,000 0 25,000
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Total revenues 6,676,766 2,468,235 4,208,531
COSTS AND EXPENSES:
Product costs 3,214,984 1,539,616 1,675,368
Research and development 0
expenses 849,174 0 849,174
Sales and marketing 0
expenses 1,358,563 673,961 684,602
General and administrative 0
expenses 583,161 0 583,161
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Total costs and expenses 6,005,882 2,213,577 3,792,305
Net operating income 670,884 254,658 416,226
Interest and other income 62,671 0 62,671
Interest expense (36,515) 0 (36,515)
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Net interest and other 26,156 0 26,156
INCOME BEFORE TAXES 697,040 254,658 442,382
TAX EXPENSE 276,605 101,055 175,550
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NET INCOME 420,435 153,603 266,832
Net Income per Common Share:
Basic $ 0.15 $ 0.05 $ 0.10
Diluted $ 0.15 $ 0.06 $ 0.09
Weighted Average Common
Shares Outstanding:
Basic 2,717,857 2,717,857 2,717,857
Diluted 2,836,309 2,836,309 2,836,309
Schedule 2
ImmuCell Corporation
Pro forma Statement of Operations
Unaudited
Six Months Ended Adjustment Pro forma
June 30, 2002 (Note 1) Adjusted
REVENUES:
Product sales 3,180,518 1,642,238 1,538,280
Grant income 190,260 0 190,260
Royalty income 25,767 0 25,767
Technology licensing income 27,270 0 27,270
Sale of option to technology 30,000 0 30,000
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Total revenues 3,453,815 1,642,238 1,811,577
COSTS AND EXPENSES:
Product costs 1,704,956 1,012,806 692,150
Research and development 0
expenses 416,663 0 416,663
Sales and marketing 0
expenses 774,727 401,696 373,031
General and administrative 0
expenses 299,762 0 299,762
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Total costs and expenses 3,196,108 1,414,502 1,781,606
Net operating income 257,707 227,736 29,971
Interest and other income 14,259 0 14,259
Interest expense (19,707) 0 (19,707)
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Net interest and other (5,448) 0 (5,448)
INCOME BEFORE TAXES 252,259 227,736 24,523
TAX EXPENSE 105,828 95,540 10,288
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NET INCOME 146,431 132,196 14,235
Net Income per Common Share:
Basic $ 0.05 $ 0.04 $ 0.01
Diluted $ 0.05 $ 0.04 $ 0.01
Weighted Average Common
Shares Outstanding:
Basic 2,734,998 2,734,998 2,734,998
Diluted 2,809,248 2,809,248 2,809,248
Schedule 3
IMMUCELL CORPORATION
PRO FORMA BALANCE SHEET
UNAUDITED
As of June 30, Adjustments Pro forma
2002 (Note 2) Adjusted
ASSETS
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CURRENT ASSETS:
Cash and cash equivalents 1,299,280 200,000 1,499,280
Short-term investments 489,145 0 489,145
Short-term note receivable 0 730,000 730,000
Accounts receivable, net of
allowance for doubtful
accounts of $38,000 741,198 0 741,198
Inventories 764,070 (158,220) 605,850
Current portion of deferred
tax asset 78,650 0 78,650
Prepaid expenses 165,658 0 165,658
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Total current assets 3,538,001 771,780 4,309,781
PROPERTY, PLANT AND
EQUIPMENT, AT COST:
Laboratory and manufacturing
equipment 1,273,366 0 1,273,366
Building and improvements 1,300,137 0 1,300,137
Office furniture and equipment 89,984 0 89,984
Land 50,000 0 50,000
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2,713,487 0 2,713,487
Less - accumulated deprec 1,046,539 0 1,046,539
Net property, plant and
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equipment 1,666,948 0 1,666,948
DEFERRED TAX ASSET 1,515,780 (390,135) 1,125,645
PRODUCT RIGHTS AND OTHER
ASSETS, NET OF AMORTIZATION
of $81,000 289,208 0 289,208
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TOTAL ASSETS 7,009,937 381,645 7,391,582
Schedule 3
IMMUCELL CORPORATION
PRO FORMA BALANCE SHEET
UNAUDITED
As of June 30, Adjustments Pro forma
2002 (Note 2) Adjusted
LIABILITIES AND STOCKHOLDERS' EQUITY
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CURRENT LIABILITIES:
Accounts Payable 294,777 (158,220) 136,557
Accrued Expenses 228,077 0 228,077
Deferred Revenue 72,280 0 72,280
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Total current liabilites 595,134 (158,220) 436,914
LONG-TERM LIABILITIES:
Long-term portion of deferred
revenue 200,000 0 200,000
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Total long-term liabilites 200,000 0 200,000
STOCKHOLDERS' EQUITY:
Common stock 312,558 0 312,558
Capital in excess of par value 8,935,649 0 8,935,649
Accumulated deficit (2,446,669) 539,865 (1,906,804)
Treasury stock at cost (586,735) 0 (586,735)
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Total stockholders' equity 6,214,803 539,865 6,754,668
TOTAL LIABILITIES AND STOCK-
HOLDERS' EQUITY 7,009,937 381,645 7,391,582
ImmuCell Corporation
Notes to Unaudited Pro Forma Financial Information
Note 1
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The unaudited pro forma statements of operations for the year ended December 31,
2001 (Schedule 1) and for the six months ended June 30, 2002 (Schedule 2) give
effect to the disposition of the product license covering the sale of the
Kamar(R) Heatmount(R) Detector product in consideration of $930,000 as of the
beginning of the periods reported. The reported sales and cost of sales figures
were reduced by the amounts attributable to the licensed product. Additionally,
the reported sales and marketing expenses were reduced by the cost of
advertisement placements and marketing royalties pertaining directly to the
licensed product. No pro forma adjustment was made to reflect any overhead or
general and administrative costs, as none of these amounts are directly
attributable to the product license that has been terminated. The historical tax
rates of 39.68% and 41.95% for the twelve month period ended December 31, 2001
and for the six month period ended June 30, 2002, respectively, were utilized in
estimating the pro forma tax provisions. These unaudited pro forma financial
statements should be read in conjunction with the historical financial
statements and notes thereto of ImmuCell Corporation.
Note 2
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The unaudited pro forma balance sheet as of June 30, 2002 (Schedule 3) gives
effect to the disposition of the product license covering the sale of the
Kamar(R) Heatmount(R) Detector product in consideration of $930,000 as of June
30, 2002. The increase in cash of $200,000 was received on October 1, 2002. The
$730,000 note receivable is due from Kamar by October 31, 2002. Approximately
$158,000 in inventory shall be acquired by Kamar by October 15, 2002 and net
against amounts due from the Company to Kamar as of September 30, 2002. The
historical tax rate of 41.95% for the six month period ended June 30, 2002 was
applied to the $930,000 pre-tax gain to allocate approximately $390,000 against
the Company's long-term deferred tax asset. Approximately $261,000 in accounts
receivable is expected to be collected from customers within the thirty to sixty
days after September 30, 2002. This unaudited pro forma financial statement
should be read in conjunction with the historical financial statements and notes
thereto of ImmuCell Corporation.