UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2000
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period from
__________ to: _________
Commission File Number: 333-06966
IMMECOR CORPORATION
(Name of small business issuer in its charter)
California
(State or jurisdiction of incorporation or
Organization)
68-0324628
(I.R.S. Employer Identification No.)
100 Professional Center Drive, Rohnert Park, California 94928-2137
(Address of principal executive offices)
(707) 585-3036
(Issuer's Telephone Number)
Securities registered under Section 12(b) of the Exchange Act:
None
Securities registered under Section 12(g) of the Exchange Act:
Common Stock, Without Par Value
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes [X] No []
(APPLICABLE ONLY TO CORPORATE ISSUERS)
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date. 5,806,128 shares of common
stock as of October 30, 2000.
Transitional Small Business Disclosure Format Yes [ ] No [X]
IMMECOR CORPORATION
INDEX
TABLE OF CONTENTS
PART I
FINANCIAL INFORMATION
Item 1. Balance sheet at December 31, 1999 and September 30, 2000
Income Statements for the nine months ended September 30, 1999 and 2000
Statements of cash flows for the nine months ended September 30, 1999
and 2000
Item 2. Management's Discussion and Analysis or Plan of Operation
PART II
OTHER INFORMATION
Item 1. Legal proceedings
Item 2. Changes in securities
Item 3. Defaults upon senior securities
Item 4. Submission of matters to a vote of security holders
Item 5 Other information
Item 6. Exhibits and Reports on Form 8-K
FORWARD LOOKING STATEMENTS
Immecor Corporation (the "Company") cautions readers that certain
important factors may affect the Company's actual results and could cause such
results to differ materially from any forward-looking statements that may be
deemed to have been made in this Form 10-QSB or that are otherwise made by or on
behalf of the Company. For this purpose, any statement contained in the Form
10-QSB that are not statements of historical fact may be deemed to be
forward-looking statements. Without limiting the generality of the foregoing,
words such as "may", "expect", "believe", "anticipate", "intend", "could",
"estimate", or "continue" or the negative other variations thereof or comparable
terminology are intended to identify forward-looking statements. Factors that
may affect the Company's results include, but are not limited to, the Company's
limited history of profitability, its dependence on a limited number of
customers and key personnel, its possible need for additional financing and its
dependence on certain industries. The Company is also subject to other risks
detailed herein or detailed from time to time in the Company's filings with the
Securities and Exchange Commission.
PART I
ITEM 1. FINANCIAL INFORMATION
Page
The following Financial Statements are filed as part of this report:
Balance Sheets 3
Income Statements 4
Statements of Cash Flows 5
Notes to Financial Statements 6
IMMECOR CORPORATION
Balance Sheets
ASSETS
Dec. 31, Sep. 30,
1999 2000
CURRENT ASSETS
Cash $ 57,788 $ 664,655
Certificate of Deposit 0 300,000
Accounts receivables
(net of allowance for doubtful amounts of $18,749 in 1999 and $19,500 in 2000) 989,972 2,736,846
Inventories 1,159,638 3,604,527
Notes receivable - 178,067
Prepaid and other assets 59,476 9,858
Deferred tax assets 13,681 13,199
Total current assets 2,280,555 7,507,151
EQUIPMENT AND IMPROVEMENTS -net 125,601 145,491
Total Assets $ 2,406,156 $7,652,642
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Line of credit $ 350,890 $ 483,639
Notes payable, due within one year 5,318 1,333
Accounts payable 1,380,692 1,443,351
Accrued Liabilities - 1,243,000
Other liabilities 165,214 899,372
Sales tax payable 351,774
Federal income tax payable - 1,100,781
Total current liabilities 1,902,114 5,523,250
Long-term Liabilities
Note payable, due after one year 3,189 4,457
Deferred income taxes 16,536 17,812
Total long-term liabilities 19,725 22,269
Total liabilities 1,921,839 5,545,519
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
Preferred stock, no par value, 20,000,000 shares authorized; no shares issued
and outstanding Common stock, no par value, 50,000,000 shares authorized;
issued and outstanding, 1999 and 2000: 5,806,128 288,855 288,855
Retained earnings 195,462 1,818,268
Total shareholders' equity 484,317 2,107,123
Total liabilities and shareholders' equity $2,406,156 $7,652,642
The accompanying notes are an integral part of these financial statements
IMMECOR CORPORATION
Income Statement
Nine months ended September 30,
(unaudited)
1999 2000
(restated) (unaudited)
Net sales $ 6,809,709 $ 19,680,581
Cost of sales 5,767,021 13,853,296
Gross profit 1,042,688 5,827,285
Selling, general and administrative expenses 882,915 2,536,973
Operating income 159,773 3,290,312
Interest income 549 3,500
Other income (6,854) -
Interest expense (20,510) (59,345)
Income before income taxes 132,958 3,234,467
Income taxes 7,810 1,611,661
NET INCOME $ 125,148 $1,622,806
Net income per share - basic and diluted $0.02 $0.28
Weighted average shares outstanding - basic and diluted 5,806,128 5,806,128
The accompanying notes are an integral part of these financial statements
IMMECOR CORPORATION
Statement of Cash Flow
Period Ending September 30,
1999 2000
(restated) (unaudited)
Increase (decrease) from cash
Cash from operations:
Net income $ 125,148 $ 1,622,806
Reconciliation of net income to net cash provided by operating activities:
Depreciation 39,045 28,501
Changes in current assets and liabilities (594,138) (1,259,341)
Net cash provided by operating activities 429,945 683,491
Cash flows from investing activities:
Additions to property and equipment (85,381) (48,391)
Net cash used in investing activities (85,381) (48,391)
Cash flows from financing activities
Line of Credit, net 216,493 132,749
Proceeds from issuance of common stock (3,983) -
Notes Receivable
(136,565) (158,266)
Net cash provided by (used in) financing activities 75,945 (28,234)
Net (decrease) increase in cash and cash equivalents (439,381) 606,866
Cash and cash equivalents at beginning of period 207,040 57,788
Cash and cash equivalents at end of period $(232,341) $664,654
Supplemental disclosure of cash flow information:
Cash paid during the period for interest $20,510 $59,345
The accompanying notes are an integral part of these financial statements
IMMECOR CORPORATION
NOTES TO THE INTERIM UNAUDITED CONDENSED FINANCIAL STATEMENTS
Note 1: Summary of Significant Accounting Policies
Basis of Presentation
The financial statements included in this Form 10-QSB have been
prepared by the Company, without audit, pursuant to the rules and regulations of
the Securities and Exchange Commission. 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, pursuant to such rules and regulations, although
management believes the disclosures are adequate to make the information
presented not misleading. The results of operations for any interim period are
not necessarily indicative of results for a full year. These statements should
be read in conjunction with the financial statements and related notes included
in the Company's Annual Report on Form 10-KSB for the year ended December 31,
1999.
The financial statements presented herein as of December 31, 1999 and
September 30, 2000 and for the nine months ended September 30, 1999 and 2000
reflect, in the opinion of management, all material adjustments consisting only
of normal recurring adjustments necessary for a fair presentation of the
financial position, results of operations and cash flow for the interim periods.
Earnings per share amounts are based on the weighted average number of
common stock shares outstanding in each period, as adjusted for a 2:1 stock
split in 2000.
Note 2: Certificate of Deposit
A certificate of deposit was opened with Westamerica Bank for a term of 6
months. The certificate supports a non-revocable standby letter of credit that
expires on 01-13-01. The CD allows Immecor to establish trade credit history
with a key foreign supplier.
Note 3: Receivables consist of the following as of :
December 31, September 30,
1999 2000
Accounts receivable $ 1,008,721 $ 2,756,346
Less allowance for doubtful accounts 18,749 19,500
$ 989,972 $ 2,736,846
Note 4: Inventory
Inventories consist of the following as of : December 31, September 30,
1999 2000
Purchased parts $ 904,518 $ 2,162,716
Finished systems 255,120 1,441,811
$ 1,159,638 $ 3,604,527
Note 5: Notes Receivable
Notes receivable consists of the following as of :
December 31, September 30,
1999 2000
Employee Bonus Plan $ - $ 158,266
Customer and Employee Notes - 19,801
Total $ - $ 178,067
IMMECOR CORPORATION
NOTES TO THE INTERIM UNAUDITED CONDENSED FINANCIAL STATEMENTS
Note 6: Equipment and Improvements
Equipment and improvements consist of the following as of : December 31, September 30,
1999 2000
Equipment and Furniture $ 126,001 $ 181,698
Transportation equipment 68,649 68,649
194,650 250,347
Less accumulated depreciation 69,049 104,856
$ 125,601 $ 145,491
Note 7: Line of Credit
The Company has a $1,500,000 line of credit which expires December 20, 2000.
Advances under the line of credit can not exceed 80% of eligible accounts
receivable and is secured by a security interest in all accounts receivable,
inventory and equipment. The line of credit is also personally guaranteed by the
Company's major shareholder. The advance outstanding on the line of credit as of
September 30, 2000 was $483,639.
Note 8: Note Payable
Note payable consists of the following as of December 31, September 30,
1999 2000
Note payable, collateralized by vehicle, payable in
monthly installments of $443 including interest of
10.5% through September 2001 $ 8,507 $ 5,790
Less amount due in one year 5,318 1,333
$ 3,189 $ 4,457
Note 9: Accrued Liabilities
Due to recent shortages for components used in the Company's products destined
for the semiconductor industry, the Company entered a procurement agreement as
follows: components from various manufacturers are delivered to the Company's
warehouse in quantities matching the Company's book of orders. Upon inspection,
testing, and certification, the accepted components are used in production. The
accrued liability shown on the Company's interim balance sheet is current an
estimate of the value of components received before acceptance. Accepted
components are payable within 120 days of billing date without a discount. The
amount currently carried by the Company is $1,149,611.
The Company has also accrued a total of $93,389 for sales commissions due to the
Executive Vice President of Sales and Marketing. The accrual is subordinated to
Deutche Financial Services and is due for release first quarter of 2001.
IMMECOR CORPORATION
NOTES TO THE INTERIM UNAUDITED CONDENSED FINANCIAL STATEMENTS
Note 10: Sales to Major Customers
A material part of the Company's business is dependent upon sales to major
customers, the loss of which would have a material adverse effect on the
Company's financial position and results of operation. One customer accounted
for 72% and 83% of total sales for nine months ended September 30,2000. The
Company is attempting to expand its sales force to increase the customer base to
lessen the effect of having major corporate customers.
Note 11: Income Taxes
Income taxes consists of the following for period ended:
December 31, September 30,
1999 2000
Currently payable:
Federal $ (21,960) $ 1,100,781
State 800 351,774
Deferred taxes (6,412) (17,812)
Total $ (27,572) $ 1,434,743
Note 12: Number of Shares of Common Stock Outstanding
The following adjusts the number of outstanding shares of common stock for the
nine months ended September 30, 2000 to reflect the following:
1) The Company filed a lawsuit against three shareholders who were formerly
officers and directors of the Company seeking rescission of the issuance of
500,000 shares of common stock in the acquisition of Advanced Network
Communications, Inc., in 1994. The litigation was settled effective August 31,
1999, resulting in the return of 500,000 shares of common stock to the Treasury
of the Company, reducing the number of outstanding shares of Common Stock from
2,435,376 to 1,935,376.
2) On October 13, 1999, the Company held a special meeting of stockholders in
which they voted for the approval of a three for one forward split of the
outstanding shares of common stock of the Company. The Board of Directors
approved the split and requested the stock transfer agent of the Company to
distribute the additional shares to the Company's stockholders effective May 1,
2000.
3) Number of shares outstanding June 30, 1999: 2,435,376
Number of shares outstanding August 31, 1999: 1,935,376
Number of shares outstanding June 30, 2000: 5,806,128
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Financial Condition and Results of Operations:
The following table sets forth, as a percentage of sales, certain items included
in the Company's financial statements.
Nine Months Ended
September 30,
-1999- -2000-
Net sales........................................ 100.0 100.0
Cost of sales .................................... 84.6 70.3
Gross profit ..................................... 15.3 29.6
Selling, general and administrative expenses ..... 13.0 12.8
Operating income ................................ 2.3 16.7
Interest income and other income ................. (0.1) -
Interest expense.................................. (0.3) (0.3)
Income before income taxes........................ 1.9 16.4
Income Tax ...................................... 0.1 8.1
Net income (loss) ................................ 1.8 8.2
Net Sales
Net sales increased by $12,870,872 or 189.7% from $6,809,709 for the nine months
ended September 30, 1999 (the "1999 period") to $19,680,581 for the nine months
ended September 30, 2000 ("the 2000 period").
The Company's sales of high end specialty servers increased by $1,496,769 or
26.1% from $5,730,959 for the first six months of 2000 to $7,227,728 for the
first nine months ended September 30, 2000. The Company also experienced a
decrease in desktop sales by $(154,084) or -29.3% from $524,794 for the six
months of 2000 to $370,713 for the nine months ended September 30,2000. Sales to
corporate accounts remain steady while sales of individual systems have
declined. Corporate systems include servers, processors, and managers. The
Company has increased sales to its primary customer, and acknowledges that this
may have a material effect on the Company's financials. Currently the Company is
expanding its sales force and while also increasing additional distribution
channels. The primary customer is a billion dollar company that purchases
corporate systems and utilizes Immecor's system integration services.
Gross Profit
Gross profits increased by $4,784,597 or 458% from $1,042,688 for the nine
months ended September 30,1999 ("the 1999 period") to $19,680,581 for the nine
months ended September 30, 2000 ("the 2000 period"). The increase in Company's
gross profits is due to the Company's current product line reaching maturity and
the abi8lity of the Company's purchasing department to acquire components using
cost effective measures. The Company is looking to expand its product lines and
will expect to decrease gross profits for upcommin quarter as more Research and
Development pursues additional products.
Selling, General and Administrative Expenses
Selling, general, and administrative expenses increased $1,654,058 or 187.34%
frin $882,915 in the 1999 period to $2,536,973 in the 2000 period. As a
percentage of sales, SG&A decreased by .07% from 12.96 for the nine months ended
September 30, 1999 to 12.89% for the nine months ended September 30, 2000. The
increase in total expenses is proportionate to the increase in sales while
management has been able to manage operating expenses. The Company continues to
invest in developintg efficient procurement, manufacturing, and distribution
processes. The Company belives that its ability to manage operating expenses is
an important factor in its ability to remain competitive and successful.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations, Continued...
Liquidity and Capital Resources
On December 31, 1999 and September 30, 2000 the Company had net working capital
of $378,441 and $1,983.901 respectively. The $1,605,460 increase in working
capital from 1999 to 2000 was primarily due to an increase in accounts
receivables, inventory levels and an increase in cash. All areas are in direct
relationship to the increase in sales for 2000.
The Company had net cash used by operating activities of $429,945 for 1999
period compared to net cash provided by operating activities of $683,491 in the
nine month period of 2000. The $258,086 difference relates primarily to an
increase in net income, accounts receivable, inventory levels and better cash
management.
The Company has net cash provided by financing activities of $79,945 in the 1999
period compared to net cash used in financing activities of $(28,234)for the
2000 period. The $104,179 difference relates to better AR turnover, improved
cash management,and lesser reliance of debt for cash flow.
PART II.
OTHER INFORMATION
Item 1. Legal Proceedings
There were no legal proceedings against the Company.
Item 2. Changes in Securities
There were no changes in rights of securities holders.
Item 3. Defaults upon Senior Securities There were no defaults upon senior
securities.
Item 4. Submission of Matters to a Vote of Security-Holders There were no
matters submitted to the vote of securities holders.
Item 5. Other Information
There were no major contracts signed during the period.
Item 6. Exhibits and Reports on Form 8-K There were no reports filed on form
8-K.
SIGNATURES
In accordance with the requirements of the Securities and Exchange Commission
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
IMMECOR CORPORATION
Date: October 30, 2000 By: /s/ Wil. L. Lindgren
-----------------------
Wil L. Lindgren
Chief Financial Officer
-------------------------
Date: October 30, 2000 By: /s/ Heinot H. Hintereder
Chief Executive Officer
LEGEND IMMECOR CORPORATION
MULTIPLIER 1
CURRENCY 1
TABLE
S C C
PERIOD-TYPE YEAR YEAR
FISCAL-YEAR-END DEC-31-1999 DEC-31-2000
PERIOD-START JAN-1-1999 JAN-1-2000
PERIOD-END SEP-30-1999 SEP-30-2000
EXCHANGE-RATE 1 1
CASH 57788 964655
SECURITIES 0 0
RECEIVABLES 1082702 2756346
ALLOWANCES 18750 19500
INVENTORY 989972 3604527
CURRENT-ASSETS 2280555 7507151
PP&E 125601 250347
DEPRECIATION 0 104856
TOTAL-ASSETS 2406156 7652642
CURRENT-LIABILITIES 1902114
BONDS 0 0
PREFERRED-MANDATORY 0 0
PREFERRED 0 0
COMMON 288855 288855
OTHER-SE 195462 1818268
TOTAL-LIABILITY-AND-EQUITY 2133402 7652642
SALES 6809709 19680581
TOTAL-REVENUES 6809709 19680581
CGS 5586316 13853296
TOTAL-COSTS 6469231 16390269
OTHER-EXPENSES 0 0
LOSS-PROVISION 0 0
INTEREST-EXPENSE 20510 59345
INCOME-PRETAX 132958 3234467
INCOME-TAX 7810 1611661
INCOME-CONTINUING 125148 1622806
DISCONTINUED 0 0
EXTRAORDINARY 0 0
CHANGES 0 0
NET-INCOME 125148 1622806
EPS-PRIMARY .02 0.28
EPS-DILUTED .02 0.28