-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, E9GCSCpCgf+jWhgGjHOFHBI3mqbLhKs22wEEaGMqKQ+3ofbx3sWtuEBo+vzzoY1L GyyARoLeRnbHzw58Ex3lRg== 0000906602-97-000185.txt : 19971117 0000906602-97-000185.hdr.sgml : 19971117 ACCESSION NUMBER: 0000906602-97-000185 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971114 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: IMMUCELL CORP /DE/ CENTRAL INDEX KEY: 0000811641 STANDARD INDUSTRIAL CLASSIFICATION: IN VITRO & IN VIVO DIAGNOSTIC SUBSTANCES [2835] IRS NUMBER: 010382980 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-12934 FILM NUMBER: 97720016 BUSINESS ADDRESS: STREET 1: 56 EVERGREEN DR CITY: PORTLAND STATE: ME ZIP: 04103 BUSINESS PHONE: 2078782770 MAIL ADDRESS: STREET 1: 56 EVERGREEN DRIVE CITY: PORTLAND STATE: ME ZIP: 04103 10-Q 1 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, 1997 [ ] 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 12, 1997: Common Stock, par value $.10 per share 2,334,064 IMMUCELL CORPORATION INDEX TO FORM 10-Q September 30, 1997 PART I: FINANCIAL INFORMATION Page ITEM 1. UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS Consolidated Balance Sheets- September 30, 1997 and December 31, 1996 3-4 Consolidated Statements of Operations for the three and nine month periods ended September 30, 1997 and 1996 5 Consolidated Statement of Stockholders' Equity for the nine month period ended September 30, 1997 6 Consolidated Statements of Cash Flows for the nine month periods ended September 30, 1997 and 1996 7 Notes to Unaudited Consolidated Financial Statements 8-9 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 9-11 PART II: OTHER INFORMATION Items 1 through 6 11 Signatures 12 IMMUCELL CORPORATION PART 1. FINANCIAL INFORMATION ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED BALANCE SHEETS ASSETS
September 30, December 31, 1997 1996 ---------- ---------- (unaudited) Cash and cash equivalents $ 798,160 $1,044,441 Accounts receivable, net 346,986 370,798 Inventories 595,188 648,276 Prepaid expenses and accrued interest 56,618 25,747 ---------- ---------- Total current assets 1,796,952 2,089,262 EQUIPMENT, BUILDING AND IMPROVEMENTS, at cost: Laboratory and manufacturing 813,823 754,891 equipment Building and improvements 580,747 580,747 Office furniture and equipment 59,026 54,977 Land 50,000 50,000 ---------- ---------- 1,503,596 1,440,615 Less - Accumulated depreciation 691,688 623,987 ---------- ---------- Net equipment, building and improvements 811,908 816,628 INVESTMENTS IN JOINT VENTURES 241,669 224,669 OTHER ASSETS 840 840 ---------- ---------- TOTAL ASSETS $2,851,369 $3,131,399 ========== ==========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. IMMUCELL CORPORATION CONSOLIDATED BALANCE SHEETS LIABILITIES AND STOCKHOLDERS' EQUITY
September 30, December 31, 1997 1996 ---------- ---------- (unaudited) CURRENT LIABILITIES: Accrued expenses s $ 176,988 $ 185,256 Accounts payable 217,574 269,585 Current portion of long term debt 247,470 229,322 ---------- ---------- Total current liabilities 642,032 684,163 LONG TERM DEBT: Notes payable 183,172 367,165 Mortgage loan 198,942 202,857 ---------- ---------- Total long term debt 382,114 570,022 STOCKHOLDERS' EQUITY: Common stock, Par value--$.10 per share Authorized--8,000,000 shares Issued--2,723,662 and 2,719,162 shares at September 30,1997 and December 31, 1996, respectively 272,366 271,916 Capital in excess of par value 8,145,184 8,139,791 Accumulated deficit (6,003,592) (5,947,758) Treasury stock, at cost -- 389,598 shares (586,735) (586,735) ---------- ---------- Total stockholders' equity 1,827,223 1,877,214 ---------- ---------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $2,851,369 $3,131,399 ========== ==========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. IMMUCELL CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE AND NINE MONTH PERIODS ENDED SEPTEMBER 30, 1997 and 1996 (Unaudited)
Three Months Ended Nine Months Ended September 30, September 30, ------------------ ------------------- 1997 1996 1997 1996 --------- --------- --------- --------- REVENUES: Product sales $ 958,770 $ 937,310 $3,004,644 $2,971,469 Collaborative research and development revenue -- -- 75,000 65,000 Grant income 22,000 74,000 48,881 244,961 --------- --------- --------- --------- Total revenues 980,770 1,011,310 3,128,525 3,281,430 --------- --------- --------- --------- COSTS AND EXPENSES: Product costs 429,664 481,683 1,343,524 1,377,171 Research and development expenses 280,767 301,174 805,492 1,121,782 Sales and marketing expenses 152,618 172,803 600,346 535,440 General and administrative expenses 113,521 153,888 410,833 481,507 --------- --------- --------- --------- Total costs and expenses 976,570 1,109,548 3,160,195 3,515,900 --------- --------- --------- --------- Interest and other income 8,908 9,419 29,205 35,329 Interest expense (16,477) (17,761) (53,369) (54,408) --------- --------- --------- --------- Net interest and other expense (7,569) (8,342) (24,164) (19,079) --------- --------- --------- --------- NET LOSS $ (3,369) $ (106,580) $ (55,834) $ (253,549) ========= ========= ========= ========= NET LOSS PER SHARE $ (.00) $ (.05) $ (.02) $ (.11) ========= ========= ========= ========= WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 2,334,064 2,329,564 2,332,564 2,314,443 ========= ========= ========= =========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. IMMUCELL CORPORATION CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY FOR THE NINE MONTH PERIOD ENDED SEPTEMBER 30, 1997 (Unaudited)
Common Stock $.10 Par Value Capital in Treasury Stock Total --------------------- Excess of Accumulated ------------------- Stockholders' SHARES AMOUNT PAR VALUE DEFICIT SHARES AMOUNT EQUITY --------- ------- --------- ---------- -------- -------- --------- BALANCE, December 31, 1996 2,719,162 $271,916 $8,139,791 $(5,947,758) 389,598 $(586,735) $1,877,214 Net Loss -- -- -- (55,834) -- -- (55,834) Exercise of Stock Options 4,500 450 5,393 -- -- -- 5,843 --------- ------- --------- ---------- -------- -------- --------- BALANCE, September 30, 1997 2,723,662 $272,366 $8,145,184 $(6,003,592) 389,598 $(586,735) $1,827,223 ========= ======= ========= ========== ======== ======== =========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. IMMUCELL CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTH PERIODS ENDED SEPTEMBER 30, 1997 AND 1996 (Unaudited)
Nine Months Ended September 30, ----------------------- 1997 1996 ---- ---- CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ (55,834) $ (253,549) Adjustments to reconcile net loss to net cash provided by (used for) operating activities- Depreciation and amortization 72,901 88,718 Changes in: Accounts receivable 23,812 (2,422) Inventories 53,088 (56,573) Prepaid expenses and accrued interest (30,871) (24,924) Accounts payable (52,011) (56,331) Accrued expenses and deferred income (8,268) (40,658) --------- --------- Net cash provided by (used for) operating activities 2,817 (345,739) --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of equipment, building and improvements, net (68,181) (361,355) Investments in joint ventures (17,000) (134,127) Decrease in other assets -- 1,310 --------- --------- Net cash used for investing activities (85,181) (494,172) --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES: Payments of debt obligations (169,760) (124,008) Proceeds from exercise of stock options 5,843 38,102 Proceeds from debt obligation -- 200,000 --------- --------- Net cash (used for) provided by financing activities (163,917) 114,094 --------- --------- NET DECREASE IN CASH AND CASH EQUIVALENTS (246,281) (725,817) BEGINNING CASH AND CASH EQUIVALENTS 1,044,441 1,550,011 --------- --------- ENDING CASH AND CASH EQUIVALENTS $ 798,160 $ 824,194 ========= ========= CASH PAID FOR INTEREST $ 53,913 $ 54,505 ========= ========= NON-CASH INVESTING ACTIVITIES: TRANSFER OF NET FIXED ASSETS TO JOINT VENTURE $ -- $ 94,669 ========= =========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. IMMUCELL CORPORATION NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (1) BASIS OF PRESENTATION The accompanying 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, 1996, contained in the Company's Annual Report 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) NEW ACCOUNTING PRONOUNCEMENTS In February 1997, the Financial Accounting Standards Board ("FASB") issued STATEMENT OF FINANCIAL ACCOUNTING STANDARDS ("SFAS") NO. 128 - EARNINGS PER SHARE. This Statement is effective for financial statements issued for periods ending after December 15, 1997 with earlier application not permitted. The Statement requires dual presentation of basic and diluted earnings per share on the income statement. The Statement does not effect the weighted average basis of reporting the net loss per share. In June 1997, the FASB issued SFAS NO. 131 - DISCLOSURES ABOUT SEGMENTS OF AN ENTERPRISE AND RELATED INFORMATION, which revises existing guidelines about the level of financial disclosure of a Company's operations. The Statement is effective for financial statements issued after December 15, 1997. The Company has not determined the impact of the new standard, but does not expect it to have a material impact to existing financial reporting. (3) NET LOSS PER COMMON SHARE The net loss per common share has been computed by dividing the net loss by the weighted average number of common shares outstanding during the period. Common stock equivalents outstanding have not been included in the net loss per share computation, as the effect would be antidilutive, thereby decreasing the net loss per common share. (4) INVENTORIES Inventories consist of the following:
September 30, December 31, 1997 1996 ---- ---- Raw materials $ 37,161 $ 55,682 Work-in-process 446,620 548,083 Finished goods 111,407 44,511 -------- -------- $595,188 $648,276 ======== ========
IMMUCELL CORPORATION NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (5) DEBT OBLIGATIONS The Company has long term debt obligations, net of current maturities, as follows:
September 30, December 31, 1997 1996 ---- ---- 9.5% Bank mortgage, collateralized by first security interest in building, due 1997 to 2000 $204,118 $207,728 10.27% Note payable to bank, collateralized by accounts receivable, inventory and certain fixed assets, due 1997 to 1998 157,894 256,054 10% Note payable to bank, collateralized by accounts receivable, inventory and certain fixed assets, due 1997 to 2000 157,510 189,701 9.62% Note payable to bank, collateralized by accounts receivable, inventory and certain fixed assets, due 1997 to 1999 110,062 145,861 -------- -------- 629,584 799,344 Less current portion 247,470 229,322 -------- -------- Long term debt $382,114 $570,022 ======== ========
Principal payments under the above debt obligations due subsequent to September 30, 1997 are approximately as follows: $60,000 - 1997; $230,000 - 1998; $104,000 - 1999; and $236,000 - 2000. 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, 1997 Total revenues equalled $981,000 and $3,129,000 for the three and nine month periods ended September 30, 1997, respectively, as compared to $1,011,000 and $3,281,000 in the comparable periods in 1996. Collaborative research and development revenue and grant income decreased by $52,000 (70%) and by $186,000 (60%) during the three and nine month periods ended September 30, 1997, respectively. The 1997 grant income was recognized under a federally sponsored research grant to support the development of the Company's water test. The 1996 grant income was recognized under two federally sponsored research grants in support of the Company's passive antibody development programs, which research funding was complete as of December 31, 1996. The $75,000 licensing fee recognized during the first quarter of 1997 was received for an option payment on a license to use the Company's milk processing technology for the production of whey protein isolate and certain other proteins. The $65,000 in collaborative research and IMMUCELL CORPORATION ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) development revenue recognized during the first quarter of 1996 supported a portion of the Company's effort to develop a process to manufacture lactoferrin, a nutritional milk protein derived from cheese whey. Product sales increased by $21,000 (2%) to $959,000 and by $33,000 (1%) to $3,005,000 during the three and nine month periods ended September 30, 1997, respectively, in comparison to the same periods in the prior year. Sales of First Defense and the Kamar Heatmount{TM} Detector aggregated 96% and 94% of total product sales during the three and nine month periods ended September 30, 1997, respectively. Comparatively, sales of these two products aggregated 96% and 89% of total product sales during the three and nine month periods ended September 30, 1996. Sales of these two products increased by 3% and 8% during the three and nine month periods ended September 30, 1997, respectively, as compared to the same periods of the prior year. The gross margin percentage on products sales was 55% for the three and nine month periods ended September 30, 1997 and was 49% and 54% for the three and nine month periods ended September 30, 1996, respectively. The improved gross margin percentage in 1997 reflects the benefit of improved manufacturing efficiencies. The gross margin increased by $73,000 (16%) during the three month period ended September 30, 1997 as compared to the respective period in 1996. The gross margin increased by $67,000 (4%) during the nine month period ended September 30, 1997 as compared to the respective period in 1996. Research and development expenses decreased by $20,000 (7%) during the third quarter of 1997 as compared to the third quarter of 1996 and declined by $316,000 (28%) during the nine months ended September 30, 1997 as compared to the respective period in 1996. 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. Research and development expenses exceeded collaborative research and development revenue and grant income by $259,000 during the three month period ended September 30, 1997 and by $227,000 during the comparable period in 1996. Research and development expenses exceeded collaborative research and development revenue and grant income by $682,000 during the nine month period ended September 30, 1997 and by $812,000 during the comparable period in 1996. Sales and marketing expenses decreased by $20,000 (12%) during the three month period ended September 30, 1997 compared to the same period in 1996, aggregating 16% of product sales in the 1997 period compared to 18% in 1996. Sales and marketing expenses increased by $65,000 (12%) during the nine month period ended September 30, 1997 compared to the same period in 1996, aggregating 20% of product sales in the 1997 period compared to 18% in 1996. General and administrative expenses decreased by $40,000 (26%) during the three month period ended September 30, 1997 and by $71,000 (15%) during the nine month period ended September 30, 1997 compared to the same periods in 1996, as the Company continues its efforts to control these expenses while incurring all the necessary costs associated with being a publicly held company. 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. It has been, and continues to be, the Company's strategy to demonstrate efficacy in Phase I/II clinical trials and then actively pursue corporate partners to fund continued development in exchange for marketing rights. The research and development expenses, described above, were the principal cause of the net losses of $3,000 and $56,000 for the three and nine month periods ended September 30, 1997. In order to aggressively develop new products, the Company expects to incur operating losses in the future. IMMUCELL CORPORATION ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) In the third quarter of 1996, the Company made investments in two joint ventures, AgriCell Company, LLC ("AgriCell") and Clearwater Diagnostics Company, LLC ("CDC"). The operating activity of these joint ventures for the period from inception to September 30, 1997 was not material. AgriCell recently completed the installation of a commercial production facility and began manufacturing commercial quantities of bovine lactoferrin, a nutritional milk protein derived from cheese whey. In June 1997, CDC entered into a distribution agreement with an England-based company covering the sales of Crypto-Scan{TM} water diagnostic test in the United Kingdom. This test method is currently being evaluated by the U.S. Environmental Protection Agency. As the production and sales efforts develop, the Company will begin recording its equity share in the operating results of these joint ventures. LIQUIDITY AND CAPITAL RESOURCES Total assets decreased by approximately $280,000 to $2,851,000 at September 30, 1997 from $3,131,000 at December 31, 1996. Cash and cash equivalents decreased by approximately $246,000 to $798,000 at September 30, 1997 from $1,044,000 at December 31, 1996. Net working capital decreased by $250,000 to $1,155,000 at September 30, 1997 from $1,405,000 at December 31, 1996. Stockholders' equity decreased by $50,000 to $1,827,000 at September 30, 1997 from $1,877,000 at December 31, 1996. The Company obtained a $710,000 Phase II Small Business Innovation Research grant from the National Institutes of Health in September 1997 to partially fund further development of its product to prevent Travelers' Diarrhea, TravelGAM{TM} bovine anti-E. COLI immunoglobulins, over the next two years. No grant income under this award was recognized during the periods ended September 30, 1997. 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. 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 IMMUCELL CORPORATION 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 12, 1997 By: /S/ THOMAS C. HATCH Thomas C. Hatch President and Chief Executive Officer Date: November 12, 1997 By: /S/ MICHAEL F. BRIGHAM Michael F. Brigham Chief Financial Officer, Treasurer and Secretary IMMUCELL CORPORATION EXHIBIT INDEX 27.1 Financial Data Schedule (for electronically filed copies only). IMMUCELL CORPORATION EXHIBIT 27.1 Financial Data Schedule EX-27 2 ART. 5 FDS FOR IMMUCELL CORPORATION
5 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, 1997 AS REPORTED ON FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 3-MOS DEC-31-1997 SEP-30-1997 798,160 0 401,552 54,566 595,188 1,796,952 1,503,596 691,688 2,851,369 642,032 382,114 0 0 1,827,223 0 2,851,369 3,004,644 3,128,525 1,343,524 3,160,195 (29,205) 0 53,369 (55,834) 0 (55,834) 0 0 0 (55,834) (.02) (.02)
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