Immunotechnology Corporation Form 10-QSB 12/31/05

U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549


FORM 10-QSB


ý QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarter ended December 31, 2005

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number 0-24641


IMMUNOTECHNOLOGY CORPORATION
(Name of Small Business Issuer as specified in its charter)

 
Delaware
  
84-1016435
  
 
(State or other jurisdiction of
  
(I.R.S. employer
  
 
incorporation or organization
  
identification No.)
  

1661 Lakeview Circle, Ogden, UT 84403
(Address of principal executive offices)

Registrant’s telephone no., including area code: (801) 399-3632

N/A
Former name, former address, and former fiscal year, if changed
since last report.

Securities registered pursuant to Section 12(b) of the Exchange Act: None

Securities registered pursuant to Section 12(g) of the Exchange Act: $.00001 par value common stock

Check whether the Issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No ¨

Indicate by check mark whether the registrant is an accelerated filer (as defined in rule 12b-2 of the Exchange Act). Yes ¨ No ý

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ý No ¨

Common Stock outstanding at February 7, 2006 - 5,120,016 shares of $.00001 par value Common Stock.

DOCUMENTS INCORPORATED BY REFERENCE: NONE





FORM 10-QSB

FINANCIAL STATEMENTS AND SCHEDULES
IMMUNOTECHNOLOGY CORPORATION

For the Quarter ended December 31, 2005

The following financial statements and schedules of the registrant are submitted herewith:

PART I - FINANCIAL INFORMATION
Page of
Form 10-QSB
Item 1.
Financial Statements:
  
     
 
Balance Sheets
     
 
Statements of Operations
     
 
Statements of Cash Flows
     
 
Notes to Interim Unaudited Financial Statements
     
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
     
Item 3.
Controls and Procedures

PART II - OTHER INFORMATION
Page

Item 1.
Legal Proceedings
     
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
     
Item 3.
Defaults Upon Senior Securities
     
Item 4.
Submission of Matters to a Vote of Security Holders
     
Item 5.
Other Information
     
Item 6.
Exhibits




 

2


IMMUNOTECHNOLOGY CORPORATION
(A Development Stage Company)
BALANCE SHEETS


ASSETS
      
   
December 31,
  
June 30,
  
   
2005
  
2005
  
   
(Unaudited)
      
Current Assets
              
Cash
  
$
57
  
$
11,775
  
TOTAL ASSETS
  
$
57
  
$
11,775
  
               
LIABILITIES AND STOCKHOLDERS' DEFICIT
      
Current Liabilities
              
Accrued expenses
  
$
88,778
  
$
106,538
  
Short-term notes payable
    
173,197
   
131,602
 
Loans from officers
   
221,112
   
199,282
 
Total current liabilities
    
483,087
   
437,422
 
               
Stockholders' Deficit
              
Preferred Stock, par value $0.00001, authorized 10,000,000 shares;
             
issued and outstanding - none
   
-
   
-
 
Common Stock, par value $0.00001, authorized 100,000,000 shares;
             
5,120,016 shares issued and outstanding
   
51
   
51
 
Paid-in Capital
    
533,377
   
517,877
 
Accumulated deficit prior to the developmental stage
    
(151,332
)
  
(151,332
)
Accumulated deficit during the developmental stage
    
(865,126
)
  
(792,243
)
Total Stockholders Deficit
    
(483,030
)
  
(425,647
)
               
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT
  
$
57
  
$
11,775
  




 

See notes to interim unaudited financial statements
 



3


IMMUNOTECHNOLOGY CORPORATION
(A Development Stage Company)
STATEMENTS OF OPERATIONS
(Unaudited)

                   
From Inception of
 
                   
the Developmental
  
           
Stage,
  
   
For the Six Months Ended
  
For the Three Months Ended
  
July 1, 1992
  
   
December 31,
  
December 31,
  
through
 
   
2005
  
2004
  
2005
  
2004
  
December 31, 2005
  
Operating Expenses:
                                
Professional fees
  
$
66,574
  
$
34,975
  
$
32,084
  
$
13,241
  
$
486,876
  
Transfer agent
    
1,233
   
385
   
733
   
310
   
9,144
 
Taxes and licenses
    
-
   
-
   
-
   
-
   
2,725
 
Bank fees and service
                                
charges
    
188
   
240
   
108
   
156
   
5,402
 
Travel
    
7,042
   
24,847
   
3,811
   
5,278
   
137,605
 
Office expense
    
87
   
-
   
-
   
-
   
12,304
 
Rescind USSC merger
    
-
   
125,000
   
-
   
-
   
125,000
 
Miscellaneous expense
    
190
   
134
   
190
   
-
   
190
 
Interest Expense
    
18,819
   
14,683
   
9,995
   
8,827
   
106,730
 
                                 
Total operating expenses
    
94,133
   
200,264
   
46,921
   
27,812
   
885,976
 
                                 
Gain on Extinguishment of debt
    
21,250
   
-
   
21,250
   
-
   
21,250
 
                                 
Net Loss
 
$
(72,883
)
$
(200,264
)
$
(25,671
)
$
(27,812
)
$
(864,726
)
                                 
Net Loss per share, Basic and Diluted
  
$
(0.01
)
$
(0.04
)
$
(0.01
)
$
(0.01
)
      
                                 
Weighted Average Number of Common Shares
    
5,120,016
   
5,000,016
   
5,120,016
   
5,000,016
       



 
See notes to interim unaudited financial statements


4



IMMUNOTECHNOLOGY CORPORATION
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
(Unaudited)

           
From Inception of
 
           
the Developmental
 
           
Stage,
 
   
For the Six Months ended
  
July 1, 1992
  
   
December 31,
  
through
 
 
  
2005
  
2004
  
December 31, 2005
 
Cash Flow from Operating Activities:
                    
Net Loss
  
$
(72,883
)
$
(200,264
)
$
(864,726
)
Adjustments to reconcile net loss to net cash used in operations:
                    
Contributed services
    
15,500
   
15,500
   
77,500
 
Stock option expenses
    
-
   
2,153
   
32,884
 
Gain on extinguishment of debt
    
(21,250
)
  
-
   
(21,250
)
Increase (decrease) in accrued expenses
    
3,490
   
8,522
   
103,544
 
Net Cash Used in Operating Activities
    
(75,143
)
  
(174,089
)
  
(672,048
)
                     
Cash Flow from Investing Activities
                    
Advance to an officer
    
-
   
-
   
(10,000
)
Repayment of advance to an officer
    
-
   
-
   
10,000
 
Net Cash Provided by Investing Activities
    
-
   
-
   
-
 
                     
Cash Flow from Financing Activities:
                    
Bank overdraft
    
-
   
(122
)
  
-
 
Exercise of options
    
-
   
-
   
12,000
 
Advances from officer
    
52,330
   
111,704
   
607,059
 
Repayments to advances from officer
    
(30,500
)
  
(10,684
)
  
(129,458
)
Proceeds from notes payable
    
178,114
   
73,212
   
369,023
 
Repayments on notes payable
    
(136,519
)
  
-
   
(186,519
)
Net Cash Provided by Financing Activities
    
63,425
   
174,110
   
672,105
 
                     
Net (Decrease) Increase in Cash
    
(11,718
)
  
21
   
57
 
                     
Cash Balance at Beginning of Period
    
11,775
   
-
   
-
 
                     
Cash Balance at End of Period
  
$
57
  
$
21
  
$
57
  
                     
Supplemental Disclosures of Cash Flow Information
                    
Interest Paid
  
$
22,786
  
$
-
  
$
45,767
  

 
See notes to interim unaudited financial statements


5



IMMUNOTECHNOLOGY CORPORATION
(A Development Stage Company)
NOTES TO INTERIM UNAUDITED FINANCIAL STATEMENTS

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Business Organization

ImmunoTechnology Corporation (the “Company” or “IMUO”) was incorporated on November 30, 1989 under the laws of the State of Delaware. ImmunoTechnology Corporation historically operated a medical test laboratory until 1992. Presently, the Company has no operations and is considered as a development stage company.

Presentation of Interim Information

The accompanying financial statements have been prepared by the Company without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations and cash flows at December 31, 2005 and for all periods presented have been made.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. It is suggested that these condensed financial statements be read in conjunction with the financial statements and notes thereto included in the Company’s June 30, 2005 audited financial statements. The results of operations for period ended December 31, 2005 are not necessarily indicative of the operating results for the full year.

Use of estimates

The preparation of the accompanying financial statements in conformity with accounting principles generally accepted in the United States (U.S. GAAP) requires management to make certain 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 reporting period. Actual results could differ from those estimates.

Net Loss Per Share 

Basic net loss per share includes no dilution and is computed by dividing net loss available to common stockholders by the weighted average number of common stock outstanding for the period. Diluted net loss per share does not differ from basic net loss per share since potential shares of common stock are anti-dilutive for all periods presented.

 


6

IMMUNOTECHNOLOGY CORPORATION
(A Development Stage Company)
NOTES TO INTERIM UNAUDITED FINANCIAL STATEMENTS

NOTE 2 - GOING CONCERN

The Company’s financial statements are prepared using U.S. GAAP applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. However, the Company does not have significant cash or other material assets, nor does it have an established source of revenues sufficient to cover its operating costs and to allow it to continue as a going concern. Until that time, the stockholders have committed to covering the operating costs of the Company.

The Company is not operating, and will attempt to locate a new business (operating company), and offer itself as a merger vehicle for a company that may desire to go public through a merger rather than through its own public stock offering.

NOTE 3 - ACCRUED EXPENSES

Accrued expenses consist of the following:

     
December 31,
  
June 30,
  
     
2005
 
2005
  
     
(Unaudited)
      
 
Legal and professional fees payable
  
$ 81,576
 
$ 93,003
 
 
Accrued interest-others
  
6,279
 
13,535
 
 
Other accrued expenses
  
923
 
0
 
 
Total
  
$ 88,778
 
$ 106,538
 

NOTE 4 - SHORT-TERM NOTES PAYABLE

The Company has borrowed funds under promissory notes with non-related parties. The notes bear interest from 7% to 10% per annum, and are due either within one year or on demand. On August 9, 2005, all short-term notes payable and related accrued interest amounting to $143,113, were assigned to three non-affiliated parties. The Company issued amended and restated convertible promissory notes on three of the assigned amounts, aggregate of $89,261, providing that they are convertible into the Company’s common stocks at $0.01215839 per share. The amended and restated notes bear interest at 10% per annum and are due on July 27, 2006. Interest is payable ninety (90) days after the date of the note agreements.

During the six months ended December 31, 2005, the Company borrowed an additional $35,000 from these and other non-affiliated parties. The notes bear interest at 10% per annum and are due on demand.

7

IMMUNOTECHNOLOGY CORPORATION
(A Development Stage Company)
NOTES TO INTERIM UNAUDITED FINANCIAL STATEMENTS

NOTE 4 - SHORT-TERM NOTES PAYABLE (Continued)

Short-term notes payable consists of the following:

     
December 31,
  
June 30,
  
     
2005
 
2005
  
     
(Unaudited)
      
 
Due on demand notes
  
$ 83,936
 
$ 131,602
 
 
Convertible debt
  
89,261
 
0
 
 
Total
  
$ 173,197
 
$ 131,602
 

NOTE 5 - NET LOSS PER SHARE

The following table sets forth the computation of basic and diluted net loss per share:

 
For Six Months ended
  
For Three Months ended
 
December 31,
  
December 31,
 
2005
 
2004
  
2005
 
2004
Numerator:
              
Net Loss
$ (72,883)
 
$ (200,264)
  
$ (25,671)
 
$ (27,812)
Denominator:
              
Weighted Average
Number of Shares
5,120,016
 
5,000,016
 
5,120,016
 
5,000,016
               
Net loss per share-
Basic and Diluted
$ (0.01)
  
$ (0.04)
  
$ (0.01)
  
$ (0.01)

As the Company incurred net losses for the three and six months ended December 31, 2005, it excluded from the calculation of diluted net loss per share approximately 7,341,597 and 6,117,998 shares, respectively, related to the convertible debt as they were anti-dilutive. For additional information see Note 4.

As the Company incurred net losses for the three and six months ended December 31, 2004, the effect of dilutive securities (in-the-money stock options) totaling 84,322 equivalent shares and 62,611 equivalent shares, respectively, has been excluded from the calculation of diluted net loss per share because it was anti-dilutive.



8

IMMUNOTECHNOLOGY CORPORATION
(A Development Stage Company)
NOTES TO INTERIM UNAUDITED FINANCIAL STATEMENTS

NOTE 6 - EXTINGUISHMENT OF DEBT

At December 31, 2005, the Company extinguished an account payable and related accrued interest of $21,250 which was included in other income.

NOTE 7 -  RELATED PARTY TRANSACTIONS

During the six months ended December 31, 2005, an officer advanced the Company a total of $52,330, including accrued interest of $10,230. The outstanding balance including accrued interest as of that date was $221,122.
 
A former officer and director of the Company (who resigned in November 2004) is a principal of a consulting firm to which the Company paid professional fees totaling $21,392 during the six months ended December 31, 2005. Additional fees in the amount of $50,566 had not yet paid as of that date and were included in accrued expenses.

NOTE 8 -  CONTRIBUTED SERVICES

During the six months ended December 31, 2005 and 2004, an officer of the Company contributed services to the Company valued at $15,500 each period. This contribution has been accounted for as an increase in paid-in-capital.

NOTE 9 - STOCK OPTIONS

During the six months ended December 31, 2004, the Company issued options to non-employees as an incentive to loan money to the Company. The options allow the holder to purchase 120,000 shares of common stock at an exercise price of $0.10 per share, and will expire two years from the date of issuance. The options were all exercised at June 30, 2005. There were no option activities during the current year. A summary of the status of stock options issued by the Company as of December 31, 2004 is presented below:

           
Weighted
  
       
Number of
  
Average
  
       
Shares
  
Exercise Price
  
 
Outstanding at beginning of year
-
 
$ -
 
 
Granted
    
120,000
 
0.10
 
 
Exercised
    
-
 
-
 
 
Outstanding at end of period
120,000
 
$ 0.10
 
 
 

 
9
IMMUNOTECHNOLOGY CORPORATION
(A Development Stage Company)
NOTES TO INTERIM UNAUDITED FINANCIAL STATEMENTS

 
NOTE 9 - STOCK OPTIONS (Continued)

The Company applies SFAS No. 123 for options issued, which requires the Company to estimate the fair value of each options issued at the grant date by using the Black-Scholes pricing model with the following assumptions:

 
Risk-free interest rate
3.39%
  
 
Expected life
2 Years
  
 
Expected volatility
2.39
  
 
Dividend yield
0.00
  

As a result of applying SFAS No. 123, the Company recorded the fair value of $12,168 against the notes payable during the six months ended December 31, 2004. The fair value of $12,168 is being amortized over the life of the options to interest expense. As of December 31, 2004, the Company did not have any available authorized shares to issue if the above noted options were exercised. Therefore, the fair value of the options was shown as a liability to the Company.

NOTE 10 - REVERSE STOCK SPLIT

On December 16, 2004, the majority of the Company’s stockholders approved a 1 for 10 reverse stock split of its common stock, which was effective in March 2005. All references to common shares have been retroactively restated to reflect the reverse stock split.

NOTE 11 - RECISSION OF MERGER

On April 21, 2003, the Company entered into an Agreement and Plan of Merger with Ultimate Securities Systems Corporation (USSC). Pursuant to the Agreement, the Company filed a Form S-4 Registration Statement relating the shares to be issued in the merger. In August 2004, the Company and USSC mutually agreed to terminate the Agreement. As part of the parties’ agreement to terminate the Agreement, the Company paid USSC a termination fee of $125,000, which was funded by non-related individuals and an officer.

NOTE 12 - SEGMENT INFORMATION

SFAS No. 131, Disclosures about Segments of an Enterprise and Related Information, requires that a publicly traded company must disclose information about its operating segments when it presents a complete set of financial statements. Since the Company is not operating; it has no reportable segment.





10



ITEM 2
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Cautionary Statement Regarding Forward-looking Statements

This report may contain “forward-looking” statements. Examples of forward- looking statements include, but are not limited to: (a) projections of revenues, capital expenditures, growth, prospects, dividends, capital structure and other financial matters; (b) statements of plans and objectives of the Company or its management or Board of Directors; (c) statements of future economic performance; (d) statements of assumptions underlying other statements and statements about the Company and its business relating to the future; and (e) any statements using the words “anticipate,” “expect,” “may,” “project,” “intend” or similar expressions.

General
Immunotechnology Corporation is an inactive company with limited assets and no operations. We have been inactive for several years. In 2003 we entered into a merger agreement to acquire an operating company. We filed a registration statement on Form S-4 to register securities which we intended to issue in connection with such merger. In August 2004, we terminated the merger agreement we had previously entered into and we withdrew the Form S-4 before it was declared effective. We are now looking for alternative acquisition targets. Because we have no cash assets, we will be required to issue shares of our common stock in connection with any merger or other acquisition transaction into which we enter. We have identified a Target Business (defined below) as a potential acquisition candidate, but as of the date of this Form 10-QSB, we have not entered into any definitive agreement with such Target Business and there can be no assurance we will do so.

Business Plan

Our current business plan is to serve as a vehicle for the acquisition of, or the merger or consolidation with another company (a “Target Business”). We intend to utilize our limited current assets, equity securities, debt securities, borrowings or a combination thereof in effecting a Business Combination with a Target Business which we believe has significant growth potential. Our efforts in identifying a prospective Target Business are expected to emphasize businesses primarily located in the United States; however, we reserve the right to acquire a Target Business located primarily elsewhere. While we may, under certain circumstances, seek to effect Business Combinations with more than one Target Business, as a result of our limited resources we will, in all likelihood, have the ability to effect only a single Business Combination.


11

We may affect a Business Combination with a Target Business which may be financially unstable or in its early stages of development or growth. To the extent we affect a Business Combination with a financially unstable company or an entity in its early stage of development or growth (including entities without established records of revenue or income), we will become subject to numerous risks inherent in the business and operations of financially unstable and early stage or potential emerging growth companies. In addition, to the extent that we affect a Business Combination with an entity in an industry characterized by a high level of risk, the Company will become subject to the currently unascertainable risks of that industry. An extremely high level of risk frequently characterizes certain industries which experience rapid growth. Although management will endeavor to evaluate the risks inherent in a particular industry or Target Business, there can be no assurance that we will properly ascertain or assess all risks.

Assignment of Notes and Potential Transactions

From 2003-2005, we were loaned funds by several of our shareholders and others to fund our expenses and to pay for the expenses and fees incurred in connection with our rescission of a proposed merger transaction. In August 2005, approximately $143,113 of the promissory notes representing these loans were assigned, with our consent, by the lenders/note holders to Calico Capital, LLC, Arc Investment Partners, LLC and RP Capital, LLC. (collectively the “New Note Holders”). In connection with such assignment, the original note holders have been repaid in full by the New Note Holders. We have entered into Amended and Restated Convertible Notes with the New Note Holders in place of $80,000 of the previous promissory notes. With accrued interest the principal amount of the Amended and Restated Notes is $89,261.40. The remaining promissory notes, now in the principal amount of $53,852.04, have the same terms and conditions as the original promissory notes. These transactions occurred following the end of our 2005 fiscal year. In August and September 2005, the New Note Holders made direct loans of an additional $20,000 to the Company.

The New Note Holders have indicated that they intend to attempt to locate one or more potential Business Combination to be presented to the Company for consideration as an acquisition candidate.

We have had numerous discussions with a particular Target Business concerning an acquisition transaction, however, as of the date of this Form 10-QSB, we have not entered into a letter of intent nor a definitive acquisition agreement with such Target Business. The terms being discussed would result in a change of control of the Company both in terms of stock holder votes and management.

At such time, if ever, as we have entered into a definitive agreement with the Target Business, additional disclosure will be provided to our shareholders about the terms of such transaction.


12

We anticipate that at some time in the future, the New Note Holders will convert their New Notes into shares of our common stock, however, there can be no assurance that such conversion will occur. If such conversion were to occur, it may involve a change of control of the Company. Such note conversion may occur in connection with the completion of a Business Combination, may occur independently of Business Combination or may not occur at all. There is no written agreement between the Company and the New Note Holders regarding a potential Business Combination.

There can be no assurance that the New Note Holders will refer a potential Business Combination to the Company, or that their New Notes will be converted into shares of the Company’s common stock.

Financial Condition

Total assets at December 31, 2005 were $57, all of which was cash. As of June 30, 2005, the Company had cash of $11,775 and liabilities of $ 437,422.

The Company’s total liabilities as of December 31, 2005 were $483,087. The Company’s liabilities include, but are not limited to; $221,112 loans from officers, $173,197 in other loans and $88,778 accrued expenses.

In August 2005, approximately $143,000 of our outstanding promissory notes, were assigned, with our consent, by the lenders/note holders to Calico Capital, LLC, Arc Investment Partners, LLC and RP Capital, LLC. (collectively the “New Note Holders”). In connection with such assignment, the original note holders have been repaid in full by the New Note Holders. We have entered into Amended and Restated Convertible Notes with the New Note Holders in place of $80,000 of the previous promissory notes. The remaining promissory notes that were assigned to the New Note Holders have the same terms and conditions as the original notes. These transactions occurred following the end of our 2005 fiscal year.

In August and September 2005, the New Note Holders made direct loans of an additional $20,000 to the Company.

We anticipate that at some time in the future, the New Note Holders will convert their New Notes into shares of our common stock, however, there can be no assurance that such conversion will occur. If such conversion were to occur, it may involve a change of control of the Company. Such note conversion may occur in connection with the completion of a Business Combination, may occur independently of Business Combination or may not occur at all. There is no written agreement between the Company and the New Note Holders regarding a potential Business Combination.

If all of the Amended and Restated Convertible Notes are converted into shares of the Company’s common stock, of which there can be no assurance, we would issue approximately 15,800,000 shares of our common stock in exchange for such converted debt.


13

In order to fund our professional fees and the costs related to locating, analyzing and negotiating potential acquisitions, we must raise additional capital. We may attempt to borrow funds from our officers, shareholders or others and we may attempt to raise additional capital from the sale of our securities in a private offering. Since 1997, our president Mark Scharmann has made numerous advances to the Company as funds were needed for the Company’s expenses. As of December 31, 2005, we owed Mr. Scharmann $221,112. There can be no assurance that we will be able to raise additional capital from either loan or equity transactions. If we are not able to raise additional capital to fund the professional fees related to our annual and quarterly filings with the Securities and Exchange Commission, we may be unable to file the required reports on a timely basis. In such event we would not be able to maintain a quotation on the OTCBB. This could reduce our attractiveness as a merger vehicle.

If we acquire the Target Business we have identified as a potential acquisition target, of which there can be no assurance, we anticipate that our financial condition would significantly change. If such acquisition were to occur, we anticipate that certain current debt would be extinguished and additional capital would be raised from the sale of our common stock for cash. Additionally, the number of shares of our common stock issued and outstanding would be increased significantly.

It is likely that the Company will be required to raise additional capital in order to attract and potential acquisition partner but there can be no assurance that the Company will be able to raise any additional capital. It is also likely that any future acquisition will be made through the issuance of shares of the Company’s common stock which will result in the dilution of the percentage ownership of the current shareholders.

The auditors’ report on the Company’s June 30, 2005 financial statements contains a going concern qualification, which provides that the Company’s ability to continue as a going concern is dependent upon it raising additional capital. The Company will continue to be an inactive company unless and until it raises additional capital and acquires an operating company. There can be no assurance that either will occur.

The Company will not generate any revenue until and unless it completes a reverse merger type of acquisition transaction. Until that occurs, if ever, the Company must attempt to fund its expenses through loans or from the sale of securities. There can be no assurance that the Company will be able to borrow additional funds or sale securities in sufficient amounts to funds its expenses.

Results of Operations

The Company generated no revenues in 2004 or 2005. The Company will not generate any revenues, if ever, until and unless it merges with an operating company or raises additional capital for its own operations. There can be no assurance that either of such events will happen.
 

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The Company had a net loss of $25,671 for the three months ended December 31, 2005 compared to a net loss of $27,812 for the three months ended December 31, 2004. This includes a one-time gain of $21,250 attributed to the extinguishment of $21,250 in debt. Without the extinguishment of this debt, our total loss would have been $46,921. The Company had a net loss of $72,883 for the six months ended December 31, 2005. This compares to a net loss of $200,264 for the six months ended December 31, 2004. The Company’s expenses for the six months ended December 31, 2004 included $125,000 associated with the rescission of the USSC merger transaction and other expenses consisting of travel, professional fees, interest and other expenses. Without the extinguishment of the $21,250 debt referred to above, our total loss for the six month period would have been $94,133.

Critical Accounting Policies 

This Management’s Discussion and Analysis of Financial Condition and Results of Operations discuss the Company’s Financial Statements, which have been prepared in accordance with accounting principles generally accepted in the United States. We have terminated our previous operations and such operations are treated as discontinued operations for financial statement purposes.

We anticipate that in the future, the preparation of our financial statements will require management to make estimates and assumptions that will affect reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, management will evaluate its estimates and assumptions, including those related to inventory, income taxes, revenue recognition and restructuring initiatives. We anticipate that management will base its estimates and judgments on historical experience of the operations we may acquire and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

Management believes the following critical accounting policies, among others, will affect its more significant judgments and estimates used in the preparation of our Financial Statements following the completion of an acquisition:

Income Taxes. In determining the carrying value of the Company’s net deferred tax assets, the Company will be required to assess the likelihood of sufficient future taxable income in certain tax jurisdictions, based on estimates and assumptions, to realize the benefit of these assets. If these estimates and assumptions change in the future, the Company may record a reduction in the valuation allowance, resulting in an income tax benefit in the Company’s Statements of Operations. Management will be required to evaluate the realizability of the deferred tax assets and assesses the valuation allowance quarterly.


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Goodwill and Other Long-Lived Asset Valuations. In June 2001, the FASB issued SFAS 141, “Business Combinations”, and SFAS 142, “Goodwill and Other Intangible Assets”, effective for fiscal years beginning after December 15, 2001 with early adoption permitted for companies with fiscal years beginning after March 15, 2001. We currently have no intangible assets. At such time as we have intangible assets, we will adopt the new rules on accounting for goodwill and other intangible assets, Under the new rules, goodwill and intangible assets deemed to have indefinite lives will no longer be amortized but will be subject to annual impairment tests in accordance with the statements. Other intangible assets will continue to be amortized over their useful lives.

Revenue Recognition. At such time as we have revenues from operations, we will adopt revenue recognitions policies consistent with generally acceptable accounting standards.

Stock-Based Compensation. In December 2002, the FASB issued SFAS 148, “Accounting for Stock-Based Compensation” -- Transition and Disclosure, which amends SFAS 123. SFAS 148 provides alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. SFAS 148 also requires prominent disclosures in both annual and interim financial statements about the method of accounting for stock-based employee compensation and the effect of the method used on reported results. As permitted by SFAS 123, we have elected to account for stock-based compensation using the intrinsic value method prescribed in Accounting Principles Board (“APB”) Opinion No. 25, “Accounting for Stock Issued to Employees,” and related interpretations including Financial Accounting Standards Board (“FASB”) Interpretation No. 44, “Accounting for Certain Transactions Involving Stock Compensation -- an Interpretation of APB Opinion No. 25,” and have adopted the disclosure-only provisions of SFAS 123. Accordingly, for financial reporting purposes, compensation cost for stock options granted to employees is measured as the excess, if any, of the estimated fair market value of our stock at the date of the grant over the amount an employee must pay to acquire the stock. Equity instruments issued to non-employees are accounted for in accordance with FAS 123 and Emerging Issues Task Force (“EITF”) Abstract No. 96-18, “Accounting for Equity Instruments That Are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling Goods or Services.”

Interest Rate Risk 

We currently have debt and will undoubtedly incur debt to finance our operations. We anticipate that a substantial amount of our future debt and the associated interest expense will be subject to changes in the level of interest rates. Increases in interest rates would result in incremental interest expense.


ITEM 3. CONTROLS AND PROCEDURES
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

(a) Evaluation of Disclosure Controls and Procedures


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Based on their evaluations as of December 31, 2005, the principal executive officer and principal financial officer of the Company have concluded that the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act) are effective to ensure that information required to be disclosed by the Company in reports that the Company files or submits under the Securities Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC.

(b) Changes in Internal Controls

There were no significant changes in the Company’s internal controls over financial reporting or in other factors that could significantly affect these internal controls subsequent to the date of their most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

PART II - OTHER INFORMATION


Item 1.
Legal Proceedings.
   
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds. None.
   
Item 3.
Defaults by the Company on its Senior Securities. None.
   
Item 4.
Submission of Matters to Vote of Security Holders. None
   
Item 5.
Other Information.
   
Item 6.
Exhibit
31 Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 302 of the Sarbanes Oxley Act of 2002.
     
   
32 Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes Oxley Act of 2002.
 

SIGNATURE
 
In accordance with the requirements of the Exchange Act, the Company has caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


 
IMMUNOTECHNOLOGY CORPORATION
   
Date: February 9, 2006
By:  /s/ Mark A. Scharmann
 
Chief Executive Officer
 
Chief Financial Officer
 

 
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