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BP International Inc – ‘10KSB’ for 5/31/01 – EX-99.1

On: Wednesday, 8/29/01 · For: 5/31/01 · Accession #: 1019687-1-500760 · File #: 0-26189

  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

 8/29/01  BP International Inc              10KSB       5/31/01    2:66K                                    Publicease Inc/FA

Annual Report — Small Business — Form 10-KSB
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10KSB       Annual Report -- Small Business                       13     67K 
 2: EX-99.1     Miscellaneous Exhibit                                 20     70K

EX-99.1 — Miscellaneous Exhibit

EX-99.1 1st Page of 20 TOC ↑Top Previous Next ↓Bottom Just 1st
 
Exhibit 99.1                                                                    

 ALLERGY IMMUNO TECHNOLOGIES, INC.

CONTENTS

            REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS          FS-2

FINANCIAL STATEMENTS                                

Balance Sheet FS-3                          

                Statements of Operations                                FS-4

                Statements of Shareholders' Deficit                     FS-5

                Statements of Cash Flows                                FS-6

                Notes to Financial Statements                   FS-7 - FS-20

EX-99.1 2nd Page of 20 TOC 1st Previous Next ↓Bottom Just 2nd
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS                              

Board of Directors                                                              
Allergy Immuno Technologies, Inc.                                               

We have audited the accompanying balance sheet of Allergy Immuno Technologies,  
Inc. (the "Company") as of May 31, 2001, and the related statements of          
operations, shareholders' deficit and cash flows for the years ended May 31,    
2001 and 2000. These financial statements are the responsibility of the         
Company's management. Our responsibility is to express an opinion on these      
financial statements based on our audits.                                       

We conducted our audit in accordance with auditing standards generally accepted 
in the United States of America. Those standards require that we plan and       
perform the audit to obtain reasonable assurance about whether the financial    
statements are free of material misstatement. An audit includes examining, on a 
test basis, evidence supporting the amounts and disclosures in the financial    
statements. An audit also includes assessing the accounting principles used and 
significant estimates made by management, as well as evaluating the overall     
financial statement presentation. We believe that our audits provide a          
reasonable basis for our opinion.                                               

In our opinion, the financial statements referred to above present fairly, in   
all material respects, the financial position of Allergy Immuno Technologies,   
Inc. as of May 31, 2001, and the results of its operations and its cash flows   
for the years ended May 31, 2001 and 2000 in conformity with accounting         
principles generally accepted in the United States of America.                  

The accompanying financial statements have been prepared assuming that the      
Company will continue as a going concern. As discussed in Note 1 to the         
financial statements, the Company has suffered recurring losses from operations 
and has a net capital deficiency. These conditions, among others, raise         
substantial doubt about the Company's ability to continue as a going concern.   
Management's plans in regard to these matters are also described in Note 1. The 
financial statements do not include any adjustments that might result from the  
outcome of this uncertainty.                                                    

                                                          BDO SEIDMAN, LLP
Costa Mesa, California                                                          
August 10, 2001                                                                 

FS-2

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                                               ALLERGY IMMUNO TECHNOLOGIES, INC.

                                                                   BALANCE SHEET

MAY 31,                                                                     2001
--------------------------------------------------------------------------------

ASSETS                                                                          

CURRENT ASSETS                                                                  
  Cash                                                             $     9,455
Accounts receivable, less allowance                                       
    for doubtful accounts of $5,102                                      7,474
  Inventory                                                              3,769
  Prepaid and other current assets                                       3,653
--------------------------------------------------------------------------------

Total current assets                                                     24,351 

FIXED ASSETS, net of accumulated depreciation of $46,276                    367 

PATENTS, net of accumulated amortization of $6,546                       10,724 
--------------------------------------------------------------------------------

                                                                   $    35,442
================================================================================

LIABILITIES AND SHAREHOLDERS' DEFICIT                                           

CURRENT LIABILITIES                                                             
  Accounts payable and accrued expenses                            $    11,733
  Due to affiliate                                                     295,825
--------------------------------------------------------------------------------

                                                                       307,558
--------------------------------------------------------------------------------

SHAREHOLDERS' DEFICIT                                                           

Preferred stock, par value $1.00 per share;                               
100,000 shares authorized; no                                         
    shares issued and outstanding                                           --
Common stock, par value $.001 per share;                                  
50,000,000 shares authorized; 17,170,390                              
    shares issued and outstanding at May 31, 2001                       17,170
  Additional paid in capital                                         1,777,388
   Accumulated deficit                                               (2,066,674)
--------------------------------------------------------------------------------

Total shareholders' deficit                                            (272,116)
--------------------------------------------------------------------------------

                                                                   $    35,442
================================================================================

See report of independent certified public accountants and accompanying 
notes to financial statements.

FS-3

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                                                                [Download Table]
                                                   ALLERGY IMMUNO TECHNOLOGIES, INC.

                                                            STATEMENTS OF OPERATIONS


YEARS ENDED MAY 31,                                        2001              2000   
------------------------------------------------------------------------------------

                                                                                    
NET SALES                                              $    100,270    $     79,976 

Cost of sales                                                86,982          94,361 
------------------------------------------------------------------------------------

GROSS INCOME (LOSS)                                          13,288         (14,385)
------------------------------------------------------------------------------------

OPERATING EXPENSES                                                                  
   General and administrative                                79,026         111,099 
   Research and development                                      --          52,600 
------------------------------------------------------------------------------------

Total operating expenses                                     79,026         163,699 
------------------------------------------------------------------------------------

OPERATING LOSS                                              (65,738)       (178,084)

OTHER INCOME, NET                                             3,884           1,098 
------------------------------------------------------------------------------------

LOSS BEFORE INCOME TAXES                                    (61,854)       (176,986)

Income tax expense                                              800             800 
------------------------------------------------------------------------------------

NET LOSS                                               $    (62,654)   $   (177,786)
====================================================================================

Per share data (basic and diluted):                                                 

NET LOSS                                               $         --    $       (.01)
====================================================================================

Weighted average number of common shares outstanding     17,170,390      17,170,390 
====================================================================================

See report of independent certified public accountants and accompanying 
notes to financial statements.

FS-4

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                                                        [Enlarge/Download Table]
                                                                  ALLERGY IMMUNO TECHNOLOGIES, INC.

                                                                STATEMENTS OF SHAREHOLDERS' DEFICIT


                                    COMMON STOCK          ADDITIONAL                          TOTAL
                           ---------------------------       PAID-IN    ACCUMULATED   SHAREHOLDERS'
                                SHARES         AMOUNT        CAPITAL        DEFICIT         DEFICIT
---------------------------------------------------------------------------------------------------

                                                                                                   
Balances at June 1, 1999    17,170,390    $    17,170    $ 1,777,388   $(1,826,234)      $ (31,676)

Net loss                            --             --             --      (177,786)       (177,786)
---------------------------------------------------------------------------------------------------

Balances at May 31, 2000    17,170,390         17,170      1,777,388    (2,004,020)       (209,462)

Net loss                            --             --             --       (62,654)        (62,654)
---------------------------------------------------------------------------------------------------

Balances at May 31, 2001    17,170,390    $    17,170    $ 1,777,388   $(2,066,674)      $(272,116)
===================================================================================================

See report of independent certified public accountants and accompanying 
notes to financial statements.

FS-5

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                                               ALLERGY IMMUNO TECHNOLOGIES, INC.

                                                        STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED MAY 31,                                 2001        2000    
--------------------------------------------------------------------------------

CASH FLOWS FROM OPERATING ACTIVITIES                                            
   Net loss                                              $ (62,654)   $(177,786)
Adjustments to reconcile net loss to net cash                             
used in operating activities:                                         
    Depreciation and amortization                           1,480        2,697
     Provision for allowance for doubtful accounts          (4,235)      (1,848)
    Gain on sale of land                                   (3,722)          --
Changes in operating assets and liabilities:                          
      Accounts receivable                                   8,765        3,394
      Inventory                                               608        2,079
      Other receivable - consulting                            --      100,000
       Prepaid and other current assets                        949       (1,323)
      Accounts payable and accrued expenses                 2,188        1,826
      Due to affiliate                                     13,812           --
--------------------------------------------------------------------------------

Net cash used in operating activities                      (42,809)     (70,961)
--------------------------------------------------------------------------------

CASH FLOWS FROM INVESTING ACTIVITIES                                            
   Purchases of property                                       (61)      (2,643)
  Sale of land held for investment                         49,722           --
--------------------------------------------------------------------------------

Net cash provided by (used in) investing activities         49,661       (2,643)
--------------------------------------------------------------------------------

CASH FLOWS FROM FINANCING ACTIVITIES                                            
  Advances from affiliate                                      --       74,005
--------------------------------------------------------------------------------

Net change in cash                                           6,852          401 

Cash at beginning of year                                    2,603        2,202 
--------------------------------------------------------------------------------

Cash at end of year                                      $   9,455    $   2,603 
================================================================================

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:                               
CASH PAID DURING THE YEAR FOR:                                            

    Income taxes                                        $     800    $     800
================================================================================

See report of independent certified public accountants and accompanying 
notes to financial statements.

FS-6

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                                               ALLERGY IMMUNO TECHNOLOGIES, INC.

                                                   NOTES TO FINANCIAL STATEMENTS

1.      SUMMARY OF                 ORGANIZATION                                 
SIGNIFICANT                                                     
 ACCOUNTING                 Allergy Immuno Technologies, Inc. (the
     POLICIES                   "Company") provides specialized diagnostic
                                testing services to physicians and clinics
                               located throughout the United States. The
                               Company is a majority-owned subsidiary of
                             Biomerica and has historically received
                                support for operations and management from
Biomerica.

         ACCOUNTS RECEIVABLE

                                  Accounts receivable consists of fees due the
                             Company for testing provided to various
                                  physicians, clinics and unrelated companies.
                                 The Company extends credit to its customers
                           and generally performs ongoing credit
                                evaluations of such customers. The Company
                               does not require collateral to secure its
                                accounts receivable. The Company maintains
                                   reserves for potential credit losses based on
                                 the Company's historical experience related
       to credit losses.

INVENTORY 

                                 Inventory, comprised principally of various
                                  chemicals and testing kits, is stated at the
                                   lower of cost (first-in, first-out method) or
                                market. Market is determined by comparison
                             with recent purchases or net realizable
value.    

  FIXED ASSETS

                                 Fixed assets, which are primarily comprised
                                of furniture and fixtures, are recorded at
                                  cost and depreciated using the straight-line
                                   method over the estimated useful lives of the
                               assets, which are generally from three to
                                  five years. Depreciation expense included in
                               the accompanying statements of operations
                                   totaled $0 and $2,337 for the years ended May
                                   31, 2001 and 2000, respectively. Expenditures
                              for additions and major improvements are
                                capitalized. Repairs and maintenance costs
                            are charged to operations as incurred.

FS-7

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                                               ALLERGY IMMUNO TECHNOLOGIES, INC.

                                                   NOTES TO FINANCIAL STATEMENTS

1.      SUMMARY OF                 PATENTS                                      
SIGNIFICANT                                                     
      ACCOUNTING                 The Company holds certain patents which are
     POLICIES                   amortized on a straight-line basis over 17
      (CONTINUED)                years. Amortization expense included in the
                           accompanying statements of operations
                               amounted to $1,480 and $360 for the years
                                ended May 31, 2001 and 2000, respectively.

         REVENUE RECOGNITION

                                  Revenue is recognized upon completion of the
                  diagnostic testing services.

       ADVERTISING COSTS

                          The Company reports the costs of all
                                   advertising as expense in the period in which
                                 those costs are incurred. Advertising costs
                                were $0 and $1,227 for the years ended May
                      31, 2001 and 2000, respectively.

  INCOME TAXES

                              The Company accounts for income taxes in
                            accordance with Statement of Financial
                                   Accounting Standards No. 109, "ACCOUNTING FOR
                                  INCOME TAXES." Under the asset and liability
                               method of Statement No. 109, deferred tax
                                   assets and liabilities are recognized for the
                             future tax consequences attributable to
                                 differences between the financial statement
                             carrying amounts of existing assets and
                                 liabilities and their respective tax bases.
                             Deferred tax assets and liabilities are
                                  measured using enacted tax rates expected to
                                   apply to taxable income in the years in which
                                 those temporary differences are expected to
                                  be recovered or settled. Under Statement No.
                                109, the effect on deferred tax assets and
                             liabilities of a change in tax rates is
                             recognized in income in the period that
                              includes the enactment date. A valuation
                                allowance is provided for certain deferred
                                   tax assets if it is more likely than not that
                             the Company will not realize tax assets
                through future operations.

FS-8

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                                               ALLERGY IMMUNO TECHNOLOGIES, INC.

                                                   NOTES TO FINANCIAL STATEMENTS

1.      SUMMARY OF                 ACCOUNTING ESTIMATES                         
SIGNIFICANT                                                     
     ACCOUNTING                 The preparation of financial statements in
        POLICIES                   conformity with generally accepted accounting
 (CONTINUED)                principles requires management to make
                               estimates and assumptions that affect the
                                reported amounts of assets and liabilities
                             and disclosure of contingent assets and
                              liabilities at the date of the financial
                             statements, and the reported amounts of
                               revenues and expenses during the reported
                             period. Actual results could materially
                  differ from those estimates.

              STOCK-BASED COMPENSATION

                           During 1995, the Financial Accounting
                                   Standards Board issued Statement of Financial
                                Accounting Standards No. 123 ("SFAS 123"),
                                "ACCOUNTING FOR STOCK-BASED COMPENSATION",
                                which defines a fair value based method of
                              accounting for stock-based compensation.
                           However, SFAS 123 allows an entity to
                                   continue to measure compensation cost related
                          to stock and stock options issued to
                             employees using the intrinsic method of
                         accounting prescribed by Accounting
                                 Principles Board Opinion No. 25 ("APB 25"),
                                 "ACCOUNTING FOR STOCK ISSUED TO EMPLOYEES".
                          Entities electing to remain with the
                               accounting method of APB 25 must make pro
                                  forma disclosures of net income and earnings
                               per share, as if the fair value method of
                             accounting defined in SFAS 123 had been
                                 applied. The Company has elected to account
                                   for its stock-based compensation to employees
   under APB 25.

                         FAIR VALUE OF FINANCIAL INSTRUMENTS

                                   The Company has financial instruments whereby
                            the fair market value of the financial
                              instruments could be different than that
                           recorded on a historical basis on the
                                accompanying balance sheets. The Company's
                            financial instruments consist of cash,
                                   accounts receivable and accounts payable. The
                                 carrying amounts of the Company's financial
                                  instruments approximate their fair values at
   May 31, 2001.

FS-9

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                                               ALLERGY IMMUNO TECHNOLOGIES, INC.

                                                   NOTES TO FINANCIAL STATEMENTS

1.      SUMMARY OF                 ACCOUNTING FOR THE IMPAIRMENT OF LONG-LIVED  
SIGNIFICANT                ASSETS                               
ACCOUNTING                                                      
 POLICIES                   The Company follows the guidance under
      (CONTINUED)                Statement of Financial Accounting Standards
                            121, "ACCOUNTING FOR THE IMPAIRMENT OF
                                 LONG-LIVED ASSETS AND FOR LONG-LIVED ASSETS
                                TO BE DISPOSED OF", ("SFAS 121"). SFAS 121
                                  requires impairment losses to be recorded on
                               long-lived assets used in operations when
                                  indicators of impairment are present and the
                             undiscounted cash flows estimated to be
                                 generated by those assets are less than the
                            assets' carrying amount. SFAS 121 also
                             addresses the accounting for long-lived
                                 assets that are expected to be disposed of.
                                Management has determined that there is no
                                   impairment of long-lived assets as of May 31,
2001.     

                  CONCENTRATION OF CREDIT RISK

                               The Company provides credit in the normal
                                course of business to customers throughout
                                the United States and foreign markets. The
                                 Company performs ongoing credit evaluations
                                   of its customers. The Company does not obtain
                                  collateral with which to secure its accounts
                                receivable. The Company maintains reserves
                                for potential credit losses based upon the
                                Company's historical experience related to
    credit losses.

                             During the year ended May 31, 2001, the
                           Company had two major customers which
                                accounted for approximately 19% and 11% of
                              net sales. During the year ended May 31,
                                 2000, the Company had three major customers
                                which accounted for approximately 24%, 13%
           and 13% of net sales.

                                  At May 31, 2001, the Company was owed $1,707
                              or 14% and $1,575 or 13% of net accounts
                    receivable from two customers.

FS-10 

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                                               ALLERGY IMMUNO TECHNOLOGIES, INC.

                                                   NOTES TO FINANCIAL STATEMENTS

1.      SUMMARY OF                 GOING CONCERN                                
SIGNIFICANT                                                     
     ACCOUNTING                 The accompanying financial statements have
  POLICIES                   been prepared assuming the Company will
       (CONTINUED)                continue as a going concern. During the year
                             ended May 31, 2001 ("Fiscal 2000"), the
                                   Company experienced a net loss of $62,654 and
                                had negative cash flows from operations of
                           $42,809. In addition, the Company had
                                   substantial working capital and shareholders'
                              deficits at May 31, 2001. These factors,
                                 among others, raise substantial doubt about
                                  the Company's ability to continue as a going
                              concern. The financial statements do not
                               include any adjustments that might result
                           from the outcome of this uncertainty.

                                 There can be no assurances that the Company
                                will be able to successfully implement its
                            plans, including generating profitable
                                operations, generating positive cash flows
                                   from operations and obtaining additional debt
                                   and equity capital to meet present and future
              working capital demands.

        NET LOSS PER SHARE

                                  The Financial Accounting Standards Board has
                              issued Statement of Financial Accounting
                             Standards No. 128, "EARNINGS PER SHARE"
                           ("SFAS 128"). SFAS 128 is primarily a
                               disclosure standard which requires public
                                   companies to present basic earnings per share
                                (EPS) and, if applicable, diluted earnings
                             per share, instead of primary and fully
                              diluted earnings per share. Basic EPS is
                                  computed by dividing net income for the year
                                 by the weighted average number of shares of
                               common stock outstanding during the year.
                             Diluted EPS is computed by dividing net
                                (loss) income for the year by the weighted
                                  average number of shares of common stock and
                                 common stock equivalents outstanding during
the year. 

FS-11 

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                                               ALLERGY IMMUNO TECHNOLOGIES, INC.

                                                   NOTES TO FINANCIAL STATEMENTS

1.      SUMMARY OF                 The following table illustrates the required 
  SIGNIFICANT                disclosure of the reconciliation of the
       ACCOUNTING                 numerators and denominators of the basic and
POLICIES                   diluted EPS computations.            
(CONTINUED)                                                     

                                                                [Download Table]

                            FOR THE YEAR ENDED MAY 31, 2001  
                         ------------------------------------
                            Loss         Shares     Per Share
                         (Numerator)  (Denominator)   Amount 
-------------------------------------------------------------

                                                             
BASIC EPS -                                                  

  Loss available to                                          
   common shareholders   $  (62,654)   17,170,390      $  -- 

EFFECT OF DILUTIVE                                           
   SECURITIES -                                              

  Options                        --            --         -- 
-------------------------------------------------------------

DILUTED EPS -                                                

  Loss available to                                          
   common shareholders                                       
   plus assumed                                              
   conversions           $  (62,654)   17,170,390      $  -- 
=============================================================

FS-12 

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                                               ALLERGY IMMUNO TECHNOLOGIES, INC.

                                                   NOTES TO FINANCIAL STATEMENTS

1.      SUMMARY OF                                                              
SIGNIFICANT                                                     
ACCOUNTING                                                      
POLICIES                                                        
(CONTINUED)                                                     

                                                                [Download Table]

                            FOR THE YEAR ENDED MAY 31, 2000  
                         ------------------------------------
                            Loss         Shares     Per Share
                         (Numerator)  (Denominator)   Amount 
-------------------------------------------------------------

                                                             

BASIC EPS -                                                  

  Loss available to                                          
   common shareholders   $ (177,786)   17,170,390      $(.01)

EFFECT OF DILUTIVE                                           
   SECURITIES -                                              

  Options                        --            --         -- 
-------------------------------------------------------------

DILUTED EPS -                                                

  Loss available to                                          
   common shareholders                                       
   plus assumed                                              
   conversions           $ (177,786)   17,170,390      $(.01)
=============================================================

              LIMITATIONS ON DIVIDENDS

                            Pursuant to state laws, the Company is
                                 currently restricted, and may be restricted
                             for the foreseeable future, from making
                                  dividends to its stockholders as a result of
                                 its accumulated deficit as of May 31, 2001.

         HAZARDOUS MATERIALS

                            The Company's research and development
                              involves the controlled use of hazardous
                                   materials and chemicals. Although the Company
                                  believes that safety procedures for handling
                                 and disposing of such materials comply with
                                   the standards prescribed by state and Federal
                         regulations, the risk of accidental
                                  contamination or injury from these materials
                                   cannot be completely eliminated. In the event
                               of such an accident, the Company could be
                                 held liable for any damages that result and
                                   any such liability could exceed the resources
                           of the Company. The Company may incur
                      substantial costs to comply with
                environmental regulations.

FS-13 

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                                               ALLERGY IMMUNO TECHNOLOGIES, INC.

                                                   NOTES TO FINANCIAL STATEMENTS

1.      SUMMARY OF                 NEW ACCOUNTING PRONOUNCEMENTS                
SIGNIFICANT                                                     
      ACCOUNTING                 In June 1997, the FASB issued SFAS No. 130,
     POLICIES                   "REPORTING COMPREHENSIVE INCOME". SFAS No.
     (CONTINUED)                130 requires that an enterprise report, by
                                 major components and as a single total, the
                                change in its net assets during the period
                               from nonowner sources. The Company has no
                             elements of other comprehensive income.

                            In June 1998, the Financial Accounting
                                   Standards Board issued Statement of Financial
                          Accounting Standards (SFAS) No. 133,
                                "Accounting for Derivative Instruments and
                         Hedging Activities." This statement
                                 establishes account and reporting standards
                             for derivative instruments and requires
                                 recognition of all derivatives as assets or
                               liabilities in the statement of financial
                                  position and measure of those instruments at
                                  fair value. SFAS No. 133, as amended by SFAS
                                   No. 137, is effective for all fiscal quarters
                              of fiscal years beginning after June 15,
                                 2000. The Company currently does not engage
                              in derivative or hedging activities, and
                                 accordingly, there will be no impact to its
                            consolidated financial statements upon
                                 implementation in the Company's fiscal year
2002.     

                                   In December 1999, the Securities and Exchange
                                 Commission issued Staff Accounting Bulletin
                               No. 101, Revenue Recognition in Financial
                                Statements ("SAB 101"). SAB 101 summarizes
                           certain areas of the Staff's views in
                            applying generally accepted accounting
                          principles to revenue recognition in
                                financial statements. The Company believes
                                   that its current revenue recognition policies
          comply with SAB 101.

                             In March 2000, the Financial Accounting
                     Standards Board ("FASB") issued
                                   Interpretation No. 44 ("FIN 44"), "Accounting
                              for Certain Transactions involving Stock
                         Compensation." The adoption of this
                                   Interpretation did not have a material impact
                                  on the consolidated results of operations or
                        financial position of the Company.

                            In July 2001, the Financial Accounting
                                  Standards Board ("FASB") issued Statement of
                                   Financial Accounting Standards No. 141 ("SFAS
                           141"), "Business Combinations", which

FS-14 

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                                               ALLERGY IMMUNO TECHNOLOGIES, INC.

                                                   NOTES TO FINANCIAL STATEMENTS

1.      SUMMARY OF                 eliminates the pooling method of accounting  
     SIGNIFICANT                for business combinations  initiated after
ACCOUNTING                 June 30, 2001. In addition, SFAS 141 
  POLICIES                   addresses the accounting for intangible
     (CONTINUED)                assets and goodwill acquired in a business
                              combination. This portion of SFAS 141 is
                                   effective for business combinations completed
                               after June 30, 2001. The Company does not
                                 expect SFAS 141 will have a material impact
                            on the Company's financial position or
            results of operations.

                                In July 2001, the FASB issued Statement of
                                   Financial Accounting Standards No. 142 ("SFAS
                              142"), "Goodwill and Intangible Assets",
                                which revises the accounting for purchased
                                goodwill and intangible assets. Under SFAS
                              142, goodwill and intangible assets with
                                  indefinite lives will no longer be amortized
                                 and will be tested for impairment annually.
                            SFAS 142 is effective for fiscal years
                             beginning after December 15, 2001, with
                                  earlier adoption permitted. The Company does
                                   not expect that SFAS 142 will have a material
                                   impact on the Company's financial position or
                              results of operations as a result of the
                  future adoption of SFAS 142.

2.      LAND HELD                  Land held for investment consisted of a      
       FOR INVESTMENT             parcel of land located in the state of Utah.
                                 The land was sold during 2001 for a gain of
                                  $3,722, which is included in other income in
                        the accompanying 2001 statement of
 operations.

3.      SHAREHOLDERS'              The Company's authorized equity              
       EQUITY                     capitalization consists of 50,000,000 shares
                                 of voting common stock, par value $.001 and
                                  100,000 shares of preferred stock, par value
                                $1.00 per share. As of May 31, 2001, there
                                   were 17,170,390 shares of common stock issued
      and outstanding.

                             Holders of common stock are entitled to
                                   receive dividends when, as and if declared by
                                  the Board of Directors, out of funds legally
                            available therefor. There have been no
                                dividends declared and management does not
                                 anticipate any dividends in the near future
                                  due to lack of funds and legal restrictions.
                            Dividends on any outstanding shares of
                                   preferred stock may be required to be paid in
                                 full before payment of any dividends on the
                                 common stock. Upon liquidation, dissolution
                              or winding up of the Company, holders of
                                   common stock are entitled to share ratably in
                             assets available for distribution after
                                payment of all debts and other liabilities
                            and subject to the prior rights of any
                         holders of any preferred stock then
  outstanding.

FS-15 

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                                               ALLERGY IMMUNO TECHNOLOGIES, INC.

                                                   NOTES TO FINANCIAL STATEMENTS

3.      SHAREHOLDERS'              Holders of common stock are entitled to one  
     EQUITY                     vote per share with respect to all matters
     (CONTINUED)                submitted to a vote of shareholders and do
                        not have cumulative voting rights.
                               Accordingly, holders of a majority of the
                                   common stock entitled to vote in any election
                                 of directors may elect all of the directors
                                  standing for election, subject to the voting
                                 rights (if any) of any preferred stock that
                                   may be outstanding. The Company's Articles of
                         Incorporation and Bylaws contain no
                                   restrictions on the repurchase by the Company
                                of shares of the common stock or preferred
                                 stock. All the outstanding shares of common
                                stock are, and additional shares of common
                                 stock will be, when issued, validly issued,
                    fully paid, and nonassessable.

                              The Company is authorized to issue up to
                                  100,000 shares of preferred stock, par value
                                 $1.00 per share, the rights, preference and
                                privileges of which may be determined from
                                 time to time by the Board of Directors. The
                                   Board of Directors is authorized to designate
                              with respect to each series of preferred
                             stock the number of shares in each such
                             series, the dividend rates and dates of
                        payment, voluntary and involuntary
                                 liquidation preferences, redemption prices,
                               if any, whether or not dividends shall be
                                cumulative and, if cumulative, the date or
                        dates from which the same shall be
                                 cumulative, the sinking fund provisions, if
                                any, and the terms and conditions on which
                                   shares can be converted into or exchanged for
                                shares of another class or series, and the
                                   voting rights, if any. As of the date hereof,
                             there were no shares of preferred stock
                                 issued and outstanding. Any preferred stock
                                   issued will rank prior to the common stock as
                                 to dividends and as to distributions in the
                                  event of liquidation, dissolution or winding
                                 up of the Company. The ability of the Board
                                  of Directors to issue preferred stock, while
                              providing flexibility in connection with
                               possible acquisitions and other corporate
                          purposes, could, among other things,
                                   adversely affect the voting powers of holders
                                of common stock. The preferred stock will,
                                when issued, be fully paid and assessable.

FS-16 

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                                               ALLERGY IMMUNO TECHNOLOGIES, INC.

                                                   NOTES TO FINANCIAL STATEMENTS

3.      SHAREHOLDERS'              STOCK OPTIONS                                
EQUITY                                                          
  (CONTINUED)                During fiscal 1998, the Company granted
                             options to purchase 1,185,000 shares of
                           common stock to various employees and
                                directors, including an option to purchase
                                250,000 shares granted to Biomerica, Inc.,
                                 the parent company. The exercise price will
                               be the fair value of the Company's common
                                 stock on the date (the "Pricing Date") of a
                            successful completion of $3,000,000 in
                                  capital being raised or upon the merger with
                               another company or acquisition of another
                             company with greater than $6,000,000 in
                                assets. The options will vest 50% per year
                                 and expire over five years beginning on the
   Pricing Date.

4.      INCOME TAXES               The tax effect of temporary differences that 
                              give rise to significant portions of the
                             deferred tax assets at May 31, 2001 are
      presented below:

                                                                [Download Table]

MAY 31,                                             2001
--------------------------------------------------------

                                                        
Deferred tax assets:                                    
   Accounts receivable, principally due to              
     allowances for doubtful accounts         $   2,032 
   State net operating loss carryforwards        51,301 
   Federal net operating loss carryforwards     656,546 
   Research and development tax credit                  
     carryforwards                               29,395 
--------------------------------------------------------

Total gross deferred tax assets                 739,274 

Less valuation allowance                       (739,274)
--------------------------------------------------------

Net deferred tax asset                        $      -- 
========================================================

FS-17 

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                                               ALLERGY IMMUNO TECHNOLOGIES, INC.

                                                   NOTES TO FINANCIAL STATEMENTS

4.      INCOME TAXES               Income tax expense attributable to loss from 
      (CONTINUED)                operations for the years ended May 31, 2001
                                and 2000 consists of the following current
 provisions:

                                                                [Download Table]

MAY 31,                           2001        2000 
---------------------------------------------------

                                                   
U.S. Federal                    $   --      $   -- 
State and local                    800         800 
---------------------------------------------------

                                $  800      $  800 
===================================================

                               Income tax expense attributable to income
                              from operations was $800 for each of the
                            years ended May 31, 2001 and 2000, and
                                   differs from the amounts computed by applying
                            the U.S. Federal income tax rate of 35
                                   percent to pretax income from operations as a
              result of the following:

                                                                [Download Table]

May 31,                                      2001         2000   
-----------------------------------------------------------------

                                                                 
Computed "expected" tax (benefit)          $(21,649)   $(60,175) 

Increase (reduction) in income taxes                             
   resulting from:                                               
   Change in the beginning-of-the-year                           
      balance of the valuation allowance                         
      for deferred tax assets allocated                          
      to income tax expense                  21,649      60,175  

   State and local income taxes                 800         800  
-----------------------------------------------------------------

                                           $    800    $    800  
=================================================================

FS-18 

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                                               ALLERGY IMMUNO TECHNOLOGIES, INC.

                                                   NOTES TO FINANCIAL STATEMENTS

4.      INCOME TAXES               As of May 31, 2001, the Company has available
(CONTINUED)                Federal and state net operating loss 
                       carryforwards for tax purposes of
                            approximately $1,931,000 and $580,000,
                                respectively, and research and development
                               tax credit carryforwards of approximately
                               $29,000. The aforementioned carryforwards
                           expire in various years through 2021.

                         The Tax Reform Act of 1986 includes
                            provisions which limit the Federal net
                                operating loss carryforwards available for
                              use in any given year if certain events,
                             including a significant change in stock
       ownership, occur.

5.      RELATED PARTY              Biomerica, Inc. paid expenses on behalf of   
     TRANSACTIONS               the Company of $13,812 and $139,670 during
                                  fiscal 2001 and 2000, respectively. Included
                               in these amounts are $1,450 per month for
                            accounting and administrative services
                                   rendered by Biomerica for the Company in each
                                fiscal year. The remaining amounts in each
                              year represents advances of funds to the
                              Company for payment of the Company's own
                               expenses. The due to affiliate at May 31,
                                 2001 and 2000 represents the related unpaid
                                amounts due to Biomerica. The advances are
                                 non-interest bearing and have no stated due
                                date. Biomerica does not intend to require
                                repayment of such advances in fiscal 2002.

                             Management believes that the charges by
                            Biomerica for its monthly services are
                              reasonable and fair and that these costs
                              would be the same for the Company if the
                                   Company were unaffiliated with Biomerica. The
                               breakdown of the $1,450 monthly charge is
                            $600 for accounting services, $500 for
                                 executive and administrative services, $200
                              for office expense and $50 for telephone
                             expenses. If extraordinary services are
                                  performed in a month, additional charges are
                                   incurred. The Company does not have a written
                               contract for services with Biomerica, but
                              engages Biomerica on an as needed basis.

                                 The average outstanding balance during 2001
                         and 2000 was $288,920 and $245,010,
                                 respectively. The amount outstanding at May
                           31, 2001 is comprised of $212,575 for
                                services and cash advances and $83,250 for
                        products purchased from Biomerica.

FS-19 

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                                               ALLERGY IMMUNO TECHNOLOGIES, INC.

                                                   NOTES TO FINANCIAL STATEMENTS

5.      RELATED PARTY              The Company facilities are leased on a       
       TRANSACTIONS               month-to-month basis at $1,400 per month and
    (CONTINUED)                are owned 50% by a partnership in which a
                               shareholder is a partner. Rentexpense was
                              $16,800 for each of the years presented.

6.      RETIREMENT                 Effective September 1, 1986, the Company     
        SAVINGS PLAN               established  a 401(k) Plan for the benefit of
                              its employees. The plan permits eligible
                                   employees to contribute to the plan up to the
                        maximum percentage of total annual
                                compensation allowable under the limits of
                                Internal Revenue Code Sections 415, 401(k)
                                and 404. The Company, at the discretion of
                      its Board of Directors, may make
                          contributions to the plan in amounts
                           determined by the Board each year. No
                                 contributions by the Company have been made
                 since the Plan's inception.

7.      OTHER INCOME               During the year ended May 31, 1999, the      
                                  Company performed consulting services for an
                            unrelated entity. The Company received
                             $100,000 in cash in June of 1999 and an
                          option to acquire 10,000 units of an
       unrelated entity.

FS-20

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Dates Referenced Herein and Documents Incorporated by Reference

		Referenced-On Page
This ‘10KSB’ Filing	Date	First	Last	Other Filings

	12/15/01	15
Filed on:	8/29/01
	8/10/01	2
	6/30/01	15
For Period End:	5/31/01	2	19
	6/15/00	14
	5/31/00	2	19	10KSB40, DEF 14C, NT 10-K
	5/31/99	20		10KSB, NT 10-K
				List all Filings

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Filing Submission 0001019687-01-500760 – Alternative Formats (Word / Rich Text, HTML, Plain Text, et al.)

BP International Inc – ‘10KSB’ for 5/31/01 – EX-99.1

On: Wednesday, 8/29/01 · For: 5/31/01 · Accession #: 1019687-1-500760 · File #: 0-26189

Previous ‘10KSB’: ‘10KSB’ on 9/14/99 for 5/31/99 · Next: ‘10KSB’ on 10/3/02 for 5/31/02 · Latest: ‘10KSB/A’ on 3/1/06 for 5/31/05

Annual Report — Small Business — Form 10-KSBFiling Table of Contents

EX-99.1 — Miscellaneous Exhibit

Dates Referenced Herein and Documents Incorporated by Reference

Annual Report — Small Business — Form 10-KSB
Filing Table of Contents