-----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, Nty1VRnTeZkQHAN4nRDZqDA1VXQmeonNy4s0UFPTxzY2Pea+uTmB8vQZOYhWfW5O 17FaQcTYLK9LXVA+YWT/wA== 0000906602-98-000191.txt : 19980817 0000906602-98-000191.hdr.sgml : 19980817 ACCESSION NUMBER: 0000906602-98-000191 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19980630 FILED AS OF DATE: 19980814 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: 98689939 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 June 30, 1998 [ ] 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 August 12, 1998: Common Stock, par value $.10 per share 2,428,884 ============================================== IMMUCELL CORPORATION INDEX TO FORM 10-Q June 30, 1998 PART I: FINANCIAL INFORMATION PAGE ITEM 1. UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS Consolidated Balance Sheets- June 30, 1998 and December 31, 1997 3-4 Consolidated Statements of Operations for the three and six month periods ended June 30, 1998 and 1997 5 Consolidated Statement of Stockholders' Equity for the six month period ended June 30, 1998 6 Consolidated Statements of Cash Flows for the six month periods ended June 30, 1998 and 1997 7 Notes to Unaudited Consolidated Financial Statements 8-10 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 10-12 PART II: OTHER INFORMATION Items 1 through 6 12-13 Signatures 13 IMMUCELL CORPORATION PART 1. FINANCIAL INFORMATION ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED BALANCE SHEETS ASSETS
June 30, December 31, 1998 1997 ----------- ------------ (unaudited) CURRENT ASSETS: Cash and cash equivalents $1,352,379 $1,021,324 Accounts receivable, net 326,800 681,267 Inventories 535,101 474,526 Prepaid expenses and accrued interest 72,780 27,041 ---------- ---------- Total current assets 2,287,060 2,204,158 EQUIPMENT, BUILDING AND IMPROVEMENTS, at cost: Laboratory and manufacturing 825,011 807,969 equipment Building and improvements 583,472 580,822 Office furniture and equipment 63,212 60,953 Land 50,000 50,000 ---------- ---------- 1,521,695 1,499,744 Less - Accumulated depreciation 738,680 710,361 ---------- ---------- Net equipment, building and improvements 783,015 789,383 INVESTMENTS IN JOINT VENTURES 224,669 236,669 OTHER ASSETS 840 840 ---------- ---------- TOTAL ASSETS $3,295,584 $3,231,050 ========== ==========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. IMMUCELL CORPORATION CONSOLIDATED BALANCE SHEETS LIABILITIES AND STOCKHOLDERS' EQUITY
June 30, December 31, 1998 1997 --------- --------- (unaudited) CURRENT LIABILITIES: Accrued expenses s $ 191,973 $ 174,298 Accounts payable 135,831 157,223 Current portion of long term debt 16,519 230,274 --------- --------- Total current liabilities 344,323 561,795 LONG TERM DEBT: Notes payable -- 142,191 Mortgage loan 462,119 197,556 --------- --------- Total long term debt 462,119 339,747 STOCKHOLDERS' EQUITY: Common stock, Par value--$.10 per share Authorized--8,000,000 shares Issued--2,818,482 and 2,804,482 shares at June 30,1998 and December 31, 1997, respectively 281,848 280,448 Capital in excess of par value 8,338,907 8,319,701 Accumulated deficit (5,544,878) (5,683,906) Treasury stock, at cost -- 389,598 shares (586,735) (586,735) --------- --------- Total stockholders' equity 2,489,142 2,329,508 --------- --------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $3,295,584 $3,231,050 ========= =========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
IMMUCELL CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE AND SIX MONTH PERIODS ENDED JUNE 30, 1998 and 1997 (Unaudited) Three Months Ended Six Months Ended June 30, June 30, ---------------------- ---------------------- 1998 1997 1998 1997 ---------- ---------- ---------- ---------- REVENUES: Product sales $ 818,251 $ 837,515 $2,128,650 $2,045,874 Technology licensing income -- -- -- 75,000 Grant income 38,136 10,000 62,772 26,881 ---------- ---------- ---------- ---------- Total revenues 856,387 847,515 2,191,422 2,147,755 ---------- ---------- ---------- ---------- COSTS AND EXPENSES: Product costs 397,726 385,270 950,724 913,860 Research and development expenses 215,491 318,723 411,861 524,725 Sales and marketing expenses 175,035 205,026 417,639 447,728 General and administrative expenses 156,416 136,095 294,310 297,313 ---------- ---------- ---------- ---------- Total costs and expenses 944,668 1,045,114 2,074,534 2,183,626 ---------- ---------- ---------- ---------- OTHER INCOME (EXPENSE): Equity in earnings of joint venture -- -- 13,000 -- Interest and other income 19,550 11,999 33,766 20,297 Interest expense 11,502 19,350 24,626 36,892 ---------- ---------- ---------- ---------- Net other income (expense) 8,048 (7,351) 22,140 (16,595) ---------- ---------- ---------- ---------- NET (LOSS) PROFIT $ (80,233) $ (204,950) $ 139,028 $ (52,466) ========== ========== ========== ========== NET (LOSS) PROFIT PER COMMON SHARE: Basic $ (.03) $ (.09) $ .06 $ (.02) Diluted $ (.03) $ (.09) $ .05 $ (.02) ========== ========== ========== ========== WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: Basic 2,428,884 2,334,064 2,424,025 2,331,814 Diluted 2,428,884 2,334,064 2,574,875 2,331,814 ========== ========== ========== ==========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. IMMUCELL CORPORATION CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY FOR THE SIX MONTH PERIOD ENDED JUNE 30, 1998 (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, 1997 2,804,482 $280,448 $8,319,701 $(5,683,906) 389,598 $(586,735) $2,329,508 Net Profit -- -- -- 139,028 -- -- 139,028 Exercise of Stock Options 14,000 1,400 19,206 -- -- -- 20,606 --------- ------- ---------- ---------- ------- -------- --------- BALANCE, June 30, 1998 2,818,482 $281,848 $8,338,907 $(5,544,878) 389,598 $(586,735) $2,489,142 ========== ======== ========== ========== ======= ======== =========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. IMMUCELL CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIX MONTH PERIODS ENDED JUNE 30, 1998 AND 1997 (Unaudited)
Six Months Ended June 30, CASH FLOWS FROM OPERATING ACTIVITIES: -------------------- 1998 1997 ---- ---- Net profit (loss) $ 139,028 $ (52,466) Adjustments to reconcile net profit (loss) to net cash provided by operating activities- Depreciation and amortization 53,230 48,087 Changes in: Accounts receivable 354,467 75,635 Inventories (60,575) 78,684 Prepaid expenses and accrued interest (45,739) (56,820) Accounts payable (21,392) (100,284) Accrued expenses 20,175 40,363 --------- -------- Net cash provided by operating activities 439,194 33,199 --------- -------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of equipment, building and improvements, net (46,862) (23,050) Equity in earnings of joint ventures 12,000 (17,000) --------- -------- Net cash used for investing activities (34,862) (40,050) --------- -------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from debt obligations 480,000 -- Payments of debt obligations (571,383) (111,860) Proceeds from exercise of stock options 20,606 5,843 Stock issuance costs (2,500) -- --------- -------- Net cash used for financing activities (73,277) (106,017) --------- -------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 331,055 (112,868) BEGINNING CASH AND CASH EQUIVALENTS 1,021,324 1,044,441 --------- --------- ENDING CASH AND CASH EQUIVALENTS $1,352,379 $ 931,573 ========= ========= CASH PAID FOR INTEREST $ 24,614 $ 37,094 ========= =========
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, 1997, 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) (LOSS) PROFIT PER COMMON SHARE Effective for the 1997 fiscal year, the Company adopted STATEMENT OF FINANCIAL ACCOUNTING STANDARDS NO. 128 - EARNINGS PER SHARE. The Statement requires dual presentation of basic and diluted profit per share of common stock on the consolidated statements of operations. The Statement does not effect the weighted average basis of reporting the net loss per share. Basic profit per share of common stock has been determined by dividing net profit by the weighted average number of shares of common stock outstanding during the period. Diluted profit per share reflects the potential dilution that would occur if existing stock options were exercised. The following is a reconciliation of the dual presentations of (loss) profit per share for the periods presented:
Net Common (Loss) (Loss) Profit Shares Profit (NUMERATOR) (DENOMINATOR) PER SHARE ------------- ------------- --------- THREE MONTHS ENDED JUNE 30, 1998 Basic loss per share $ (80,233) 2,428,884 $(0.03) ======= Dilutive potential shares 0 ---------- --------- Diluted loss per share $ (80,233) 2,428,884 $(0.03) THREE MONTHS ENDED JUNE 30, 1997 Basic loss per share $(204,950) 2,334,064 $(0.09) Dilutive potential shares 0 ======= ---------- --------- Diluted loss per share $(204,950) 2,334,064 $(0.09) ========== ========= ======= SIX MONTHS ENDED JUNE 30, 1998 Basic profit per share $ 139,028 2,424,025 $ 0.06 Dilutive potential shares 150,850 ======= ---------- --------- Diluted profit per share $ 139,028 2,574,875 $ 0.05 ========== ========= ======= SIX MONTHS ENDED JUNE 30, 1997 Basic loss per share $ (52,466) 2,331,814 $(0.02) Dilutive potential shares 0 ======= ---------- --------- Diluted loss per share $ (52,466) 2,331,814 $(0.02) ========== ========= =======
IMMUCELL CORPORATION NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (3) INVENTORIES Inventories consist of the following:
June 30, December 31, 1998 1997 ---- ---- Raw materials $ 52,942 $ 17,583 Work-in-process 413,366 376,673 Finished goods 68,793 80,270 -------- ------- $535,101 $474,526 ======== =======
(4) DEBT OBLIGATIONS The Company has long term debt obligations, net of current maturities, as follows:
June 30, December 31, 1998 1997 ---- ---- 8.62% Bank mortgage, collateralized by first security interest in building, due 1998 to 2003 $478,638 -- 9.5% Bank mortgage, collateralized by first security interest in building -- $202,856 10% Note payable to bank, collateralized by accounts receivable inventory and certain fixed assets -- 146,180 10.27% Note payable to bank, collateralized by accounts receivable, inventory and certain fixed assets -- 123,456 9.62% Note payable to bank, collateralized by accounts receivable, inventory and certain fixed assets -- 97,529 --------- --------- 478,638 570,021 Less current portion 16,519 230,274 --------- --------- Long term debt $462,119 $339,747 ========= =========
In May 1998, the Company refinanced its bank debt obligations by entering into a $480,000 mortgage loan secured by the Company's building located at 56 Evergreen Drive in Portland, Maine and using these proceeds, together with an additional $29,000 in cash, to repay all of the then outstanding bank debt obligations. The new mortgage 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 June 30, 1998, aggregate approximately the following: $8,000 - 1998; $17,000 - 1999; $19,000 - 2000; $21,000 - 2001; $22,000 - 2002; and $392,000 - 2003. IMMUCELL CORPORATION NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (5) INCOME TAXES The Company's taxable income was fully offset by available net operating loss carryforwards. (6) NEW ACCOUNTING PRONOUNCEMENTS In June 1997, the Financial Accounting Standards Board issued STATEMENT OF FINANCIAL ACCOUNTING STANDARDS (SFAS) NO. 130 - REPORTING COMPREHENSIVE INCOME, which requires the separate reporting of all changes to shareholders' equity, and 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. Both statements are effective for financial statements issued for fiscal years beginning after December 15, 1997. The Company has not determined the impact of the new standards, but does not expect them to have a material impact to existing financial reporting. 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 SIX MONTH PERIODS ENDED JUNE 30, 1998 Total revenues equalled $856,000 and $2,191,000 for the three and six month periods ended June 30, 1998, respectively, as compared to $848,000 and $2,148,000 in the comparable periods in 1997. The 1998 grant income was recognized under a federally sponsored research grant in support of one of the Company's passive antibody development programs. The 1997 grant income was recognized under a federally sponsored research grant in support of the development of the Company's water test. The $75,000 in technology licensing income 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. Product sales decreased by $19,000 (2%) to $818,000 and increased by $83,000 (4%) during the three and six month periods ended June 30, 1998, respectively, in comparison to the same periods in the prior year. Sales of First Defense and the Kamar Heatmount{TM} Detector aggregated 96% and 95% of total product sales during the three and six month periods ended June 30, 1998, respectively. Comparatively, sales of these two products aggregated 92% and 93% of total product sales during the three and six month periods ended June 30, 1997. Sales of these two products increased by 2% and 6% during the three and six month periods ended June 30, 1998, respectively, as compared to the same periods 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. to 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. Extending this license was an important element of the Company's strategy to maintain and grow animal health product sales. The gross margin percentage on products sales was 51% for the three month period ended June 30, 1998 and 54% for the three month period ended June 30, 1997 and was 55% for the six month periods ended June 30, 1998 and 1997. The gross margin decreased by $32,000 (7%) during the three month period ended June 30, 1998 as compared to the respective period in 1997. The gross margin increased by $46,000 (4%) during the six month period ended June 30, 1998 as compared to the respective period in 1997. The changes in gross margin are consistent with the comparable changes in product sales. Research and development expenses declined by $103,000 (32%) during the second quarter of 1998 as compared to the second quarter of 1997 and declined by $113,000 (22%) during the six months ended June 30, 1998 as compared to the respective period in 1997. 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. In 1998, increased funding has been invested in the development of new animal health products that fit the Company's strategy of delivering cost saving, beneficial products directly to veterinarians and to dairy and beef farmers. Research and development expenses exceeded technology licensing and grant income by $177,000 during the three month period ended June 30, 1998 and by $309,000 during the comparable period in 1997. Research and development expenses exceeded technology licensing and grant income by $349,000 during the six month period ended June 30, 1998 and by $423,000 during the comparable period in 1997. Research and development expenses aggregated 25% and 19% of total revenues during the three and six month periods ended June 30, 1998, respectively. Comparatively, research and development expenses aggregated 38% and 24% of total revenues during the three and six month periods ended June 30, 1997, respectively. Sales and marketing expenses decreased by $30,000 (15%) during the three month period ended June 30, 1998 compared to the same period in 1997, aggregating 21% of product sales in the 1998 period compared to 24% in 1997. Sales and marketing expenses decreased by $30,000 (7%) during the six month period ended June 30, 1998 compared to the same period in 1997, aggregating 20% of product sales in the 1998 period compared to 22% in 1997. General and administrative expenses increased by $20,000 (15%) during the three month period ended June 30, 1998 and decreased by $3,000 (1%) during the six month period ended June 30, 1998 compared to the same periods in 1997, 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 loss of $80,000 for the three month period ended June 30, 1998. In order to aggressively develop new products, the Company expects to incur operating losses in the future. 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 from their inception to June 30, 1998 was not material. AgriCell has installed a commercial production facility to manufacture lactoferrin, a nutritional protein derived from cheese whey, and has initiated limited sales. 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. LIQUIDITY AND CAPITAL RESOURCES Total assets increased by approximately $65,000 to $3,296,000 at June 30, 1998 from $3,231,000 at December 31, 1997. Cash and cash equivalents increased by approximately $331,000 to $1,352,000 at June 30, 1998 from $1,021,000 at December 31, 1997. Net working capital increased by $300,000 to $1,943,000 at June 30, 1998 from $1,642,000 at December 31, 1997. Stockholders' equity increased by $160,000 to $2,489,000 at June 30, 1998 from $2,330,000 at December 31, 1997. The Company obtained a $710,000 Phase II Small Business Innovation Research grant in September 1997. As of July 1, 1998, approximately $447,000 was available under this grant to fund additional development expenses, approximately 64% of which are intended to be performed under contract by outside laboratories. 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 At the Annual Meeting of Stockholders held on June 12, 1998, the stockholders voted to elect the Board of Directors for the next ensuing year and to approve an amendment to the Company's 1989 Stock Option and Incentive Plan increasing the number of shares of the Company's common stock reserved for issuance under such Plan from 290,000 to 340,000 shares. Each of the six nominees recommended by management to the stockholders was re-elected to the Board. The following list by name of director shows how the votes were cast for each director: Anthony B. Cashen (for: 1,886,617; withhold: 49,374), Thomas C. Hatch (for: 1,893,133; withhold: 42,858), George W. Masters (for: 1,893,337; withhold: 42,654), William H. Maxwell (for: 1,892,287; withhold: 43,704), John R. McKernan, Jr. (for: 1,892,313; withhold: 43,678) and Mitchel Sayare (for: 1,892,287; withhold: 43,704). The proposal to amend the 1989 Stock Option and Incentive Plan was approved by the stockholders. The voting tabulation was as follows: For: 1,787,629, Against: 130,716, Abstain: 17,646 and Broker non-votes: 0. Item 5. Other Information None IMMUCELL CORPORATION PART II. OTHER INFORMATION (Continued) Item 6. Exhibits and Reports on Form 8-K (a) Exhibits 4.1 $480,000 Note Payable to Peoples Heritage Bank dated May 6, 1998. 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: August 12, 1998 By: /S/ THOMAS C. HATCH Thomas C. Hatch President and Chief Executive Officer Date: August 12, 1998 By: /S/ MICHAEL F. BRIGHAM Michael F. Brigham Chief Financial Officer, Treasurer and Secretary IMMUCELL CORPORATION Exhibit Index 4.1 $480,000 Note Payable to Peoples Heritage Bank dated May 6, 1998. 27.1 Financial Data Schedule (for electronically filed copies only). IMMUCELL CORPORATION Exhibit 4.1 $480,000 Note Payable to Peoples Heritage Bank dated May 6, 1998 EX-4.1 2 PEOPLES HERITAGE BANK NOTE $480,000 May 6, 1998 FOR VALUE RECEIVED, the undersigned Maker promises to pay to the order of PEOPLES HERITAGE BANK the principal sum of Four Hundred Eighty Thousand Dollars ($480,000) (or so much thereof as may be advanced from time to time) together with interest thereon: . for the initial five (5) year portion of the term hereof at a fixed interest rate of Eight and One-Half Percent (8.5%) per annum; AND THEREAFTER . at a fixed rate of interest equal to the Lender's cost, as of the date five (5) years from the date hereof, of borrowing funds from the Federal Home Loan Bank, plus Three Percent (3%) per annum. Equal consecutive monthly payments of principal and interest in the amount of Four Thousand Seven Hundred Sixty-One Dollars and Sixty-Nine Cents ($4,761.69) each, shall be payable, commencing on June 6, 1998 and continuing on the same day of each month thereafter until May 6, 2008 ("Maturity Date"), when all Amounts Owing Hereunder shall be due and payable in full. Lender reserves the right to adjust the amount of the monthly principal and interest payments, at the time of the interest rate adjustment, to reflect the change in interest rate, if any, and to generally preserve a hypothetical fifteen (15) year amortization schedule commencing on the date hereof, provided, however, that this shall not be deemed to extend the Maturity Date. DEFINITIONS. As used herein the following terms shall have the meanings assigned: a. "Amounts Owing Hereunder" shall mean the entire outstanding principal balance of this Note; all accrued, unpaid interest; and all charges and expenses payable by the Maker to Lender under the Loan Documents, including, without limitation, all unpaid Prepayment Fees, Late Payment Fees and Default Interest, if any. b. "Lender" shall mean PEOPLES HERITAGE BANK, its successors and assigns, including any subsequent holder hereof. c. "Loan Document(s)" shall mean this Note, any other debt instrument of the Maker held by Lender, and all other agreements, documents or writings evidencing, governing or securing the indebtedness and obligations of the Maker to Lender, including, without limitation, all guaranties and security therefor. d. "Maker" shall mean IMMUCELL CORPORATION, a Delaware corporation. e. "Parties Liable Herefor" shall mean the Maker and any guarantor, indorser, accommodation party or other surety hereafter arising. All undertakings and obligations of Parties Liable Herefor shall be joint and several. PREPAYMENT PREMIUM. All unscheduled partial or full prepayments of principal hereunder are subject to the obligation of all Parties Liable Herefor to pay to the holder hereof a prepayment premium in the amount of Five Percent (5%) of the principal amount prepaid during the first year of the term hereof, Four Percent (4%) of the principal amount prepaid during the second year of the term hereof, Three Percent (3%) of the principal amount prepaid during the third year of the term hereof, Two Percent (2%) of the principal amount prepaid during the remainder of the term hereof. All prepayment premiums hereunder shall be due and payable to Lender in all cases of prepayment, whether voluntary or involuntary, including, without limitation, any prepayment arising in connection with the refinancing of this Note whether by Lender or any other party, and whether or not the result of default or acceleration, or collection or enforcement activities of Lender. The Maker hereby acknowledges and agrees that the prepayment premium is neither a penalty nor a form of liquidated damages, but is rather a negotiated element of the borrowing contract entered into herein by the Maker, as a necessary inducement to Lender to make the loan evidenced by this Note. NOTWITHSTANDING THE FOREGOING, no prepayment premium shall be payable as a result of prepayment in connection with a bona fide, arm's-length sale, to an unrelated party, of premises of the Maker at 56 Evergreen Drive, Portland, Maine. LATE PAYMENT FEE. If any agreed payment is not received within fifteen (15) days of when due, then all Parties Liable Herefor shall be liable to Lender for a late payment fee of Six Percent (6.0%) of the total amount of such delinquent payment, to be assessed at the option of Lender at any time while any balance remains outstanding hereunder. DEFAULT INTEREST RATE. Lender shall have the right to charge interest on the unpaid principal balance hereof at an interest rate Three Percent (3%) per annum in excess of the rate of interest otherwise payable as provided herein, for any period during which any Party Liable Herefor shall be in default under any material provision of any Loan Document. In the event of default followed by collection and enforcement activity by Lender, the Default Interest Rate shall accrue and be payable until actual payment and satisfaction of all Amounts Owing Hereunder. 360-DAY YEAR. All interest hereunder shall be computed on the basis of the actual number of days elapsed over a 360-day year. All payments due hereunder shall be payable to PEOPLES HERITAGE BANK at any of its offices, or to such other parties or addresses as Lender may from time to time designate in writing. After the date of this Note, if future advances are made to the Maker under this Note, such advances shall be added to the principal balance due hereunder, shall bear interest as provided in this Note, and shall be governed by all of the terms of this Note. This Note and any extensions, renewals, refinances hereof and substitutions herefor shall be deemed to be secured by the terms of any mortgages or other security documents now held by, or in the future to be granted to, Lender, whether from the Maker or any other Party Liable Herefor, and whether or not such security is described below. Lender shall have the right, without notice, to reduce to possession and to set-off against any and all obligations and liabilities of the Maker any account, deposit or other property of the Maker coming into Lender's possession, or any other claim of the Maker against Lender. This Note and all Amounts Owing Hereunder shall become immediately due and payable, without notice or demand, if a default be made in the obligation to make any required payment of principal and/or interest which continues for fifteen (15) days beyond its due date. This Note and all Amounts Owing Hereunder shall also become due and payable, subject to a fifteen (15) day written notice and cure period, if default be made in the performance of any other obligation referred to in this Note or in any Loan Document or upon the occurrence of any of the following to or by any Party Liable Herefor: death; dissolution; complete or partial liquidation; transfer of a sufficient amount of voting stock such that control is transferred (if any such party is a corporation); transfer of a controlling interest (if any such party is a partnership or limited liability company); suspension of business; termination of existence; insolvency; the appointment of or taking possession by a receiver, trustee, assignee, bailee, creditor, or other custodian of substantially all property; commencement of any kind of insolvency, dissolution or bankruptcy proceeding; attachment, trustee process, lien, levy or similar action (collectively a "Lien") against any sums credited by or due from Lender to any such parties; the transfer of substantial assets to third parties out of the ordinary course of business; default in the Maker's obligations to Lender or to any other institutional lender on any debt instrument or documentation governing or securing such debt instrument; or if Lender in good faith deems itself insecure because the prospect of repayment, or the value of any collateral, or the priority of any of the Loan Documents is impaired. Notwithstanding the foregoing there shall be a sixty (60) day grace period for any Party Liable Herefor to obtain dismissal of an involuntary bankruptcy or insolvency proceeding, and a thirty (30) day grace period for any Party Liable Herefor to obtain dismissal of any Lien, by bond or otherwise, provided that Lender shall have the right during such grace periods to take all actions and enforce all rights and remedies which Lender deems necessary or convenient to protect its interests. Any notice required hereunder shall be effective on mailing, by first class mail postage prepaid, to Maker at Maker's last known address. All Parties Liable Herefor acknowledge and agree that Lender may sell or transfer any or all of the Loan Documents, with or without consideration, to a purchaser, whether in a recognized commercial loan secondary market or otherwise, and thereupon all obligations of Lender to the Parties Liable Herefor, if any, shall cease. Delay or failure on the part of Lender in exercising any rights hereunder shall not operate as a waiver of these or any other rights under this Note. After the due date, or acceleration or demand of all Amounts Owing Hereunder, the acceptance by Lender of any payment representing less than the total balance of all Amounts Owing Hereunder shall not constitute a waiver or relinquishment of Lender's right to full and immediate payment of all remaining Amounts Owing Hereunder. All Parties Liable Herefor agree to pay, upon demand, all expenses of any nature, whenever incurred, whether incurred in or out of court, including but not limited to reasonable attorney's fees and costs, which Lender may deem necessary or proper in connection with the collection or satisfaction of the indebtedness, or the administration, supervision, preservation, protection or realization of the Loan Documents or any collateral. Lender is authorized, but not required, to pay at any time and from time to time any or all of such expenses, add the amount of such payment to the amount of the principal indebtedness hereunder and charge interest thereon at the rate specified herein. All Parties Liable Herefor hereby waive demand, presentment, notice of dishonor and protest. This Note shall take effect as if under seal. This Note evidences a loan for business and/or commercial purposes. All Parties Liable Herefor assent to its terms and consent to any and all modifications, extensions or indulgences, to any substitution, exchange or release of collateral and/or to the addition or release of any other party or person primarily or secondarily liable, all without notice, and generally defer all suretyship rights and defenses while any sums remain outstanding hereunder. Each Party Liable Herefor waives all rights of exoneration against any other Party Liable Herefor, and defers all rights of reimbursement, contribution, and subrogation against any other Party Liable Herefor, while any sums remain outstanding hereunder. All Parties Liable Herefor submit to the jurisdiction of the courts of the State of Maine and of the United States of America located within the State of Maine, in connection with any suit or proceeding arising hereunder or under any Loan Document. This Note is secured by a Mortgage on premises at 56 Evergreen Drive, Portland (Lot #3, Evergreen Industrial Park), and by an assignment of leases and a security interest in fixtures and equipment related to the premises. WITNESS: IMMUCELL CORPORATION /S/ DANIEL P. THORNTON By: /S/ MICHAEL F. BRIGHAM Michael F. Brigham, Chief Financial Officer and Treasurer EX-27 3 ART. 5 FDS FOR IMMUCELL CORPORATION IMMUCELL CORPORATION EXHIBIT 27.1 FINANCIAL DATA SCHEDULE AS OF AND FOR THE PERIOD ENDED JUNE 30, 1998
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 JUNE 30, 1998 AS REPORTED ON FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 6-MOS DEC-31-1998 JUN-30-1998 1,352,379 0 371,893 45,093 535,101 2,287,060 1,521,695 738,680 3,295,584 344,323 462,119 0 0 2,489,142 0 3,295,584 2,128,650 2,191,422 950,724 2,074,534 (46,766) 0 24,626 139,028 0 139,028 0 0 0 139,028 .06 .05
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