UNITED STATES OF AMERICA
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 March 31, 2001
[ ] 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 68-0324628
(State or jurisdiction of incorporation or (I.R.S. Employer Identification No.)
Organization)
3636 North Laughlin Rd. Bldg 150 Santa Rosa California, 95403-1027
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(Address of principal executive offices)
(707) 636-2550
(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 March 31, 2001.
Transitional Small Business Disclosure Format Yes [ ] No [X]
IMMECOR CORPORATION
INDEX
TABLE OF CONTENTS
PART I
FINANCIAL INFORMATION
Item 1. Balance sheet at March 31, 2001
Statements of operations for the three months ended March 31, 2000
and 2001
Statements of cash flows for the three months ended March 31, 2000
and 2001
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 Condensed Financial Statements are filed as part of
this report:
Balance Sheet 3
Statements of Operations 4
Statements of Cash Flows 5
Notes to Financial Statements 6
IMMECOR CORPORATION
Condensed Balance Sheet
March 31, 2001
(unaudited)
ASSETS
2001
CURRENT ASSETS
Cash $ 717,304
Accounts receivables
(net of allowance for doubtful amounts of $22,000 ) 574,209
Inventories 4,551,459
Notes receivable 105,588
Prepaid and other assets 107,621
Deferred income taxes 128,000
-------
Total current assets 6,184,181
EQUIPMENT AND IMPROVEMENTS -net 461,498
--------
Total Assets $ 6,184,181
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Line of credit $ 310,305
Notes payable, due within one year 557,727
Accounts payable 756,309
Accrued liabilities 349,107
Other liabilities 2,758
Income taxes payable 1,558,884
---------
Total current liabilities 3,535,090
LONG-TERM LIABILITIES
Deferred income taxes 32,200
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, 5,806,128 shares 288,855
Retained earnings 2,789,534
---------
Total shareholders' equity 3,078,389
----------
Total liabilities and shareholders' equity $ 6,645,679
=============
The accompanying notes are an integral part of these financial statements
IMMECOR CORPORATION
Condensed Statements of Operations
Three months ended March 31,
(unaudited)
2000 2001
---- ----
Net sales $ 6,058,638 $ 2,873,554
Cost of sales 4,607,818 1,941,638
---------- ----------
Gross profit 1,450,820 931,916
Selling, general and administrative expenses 526,002 798,486
-------- ---------
Operating income 924,818 133,430
Interest expense 12,329 31,423
Interest income 47 3,561
Other income - 12,050
-------- ---------
Income before income taxes 912,536 117,618
Income tax expense (benefit) 370,000 (94,250)
-------- ---------
NET INCOME $ 542,536 $ 211,868
=============== =============
Net income per share - basic and diluted $ 0.09 $ 0.04
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
Condensed Statements of Cash Flows
Three months ended March 31,
(unaudited)
2000 2001
------ ----
Increase (decrease) from cash
Cash flows from operating activities:
Net income $ 542,536 $ 211,868
Reconciliation of net income (loss) to net cash provided (used) by
operating activities:
Depreciation and amortization 4,170 28,794
Deferred income taxes 31,000 51,600
Changes in current assets and liabilities:
Accounts receivable 1,872,966 2,316,904
Inventories (342,232) (1,765,767)
Prepaid and other assets 17,270 56,237
Accounts payable 1,348,851 (1,501,450)
Accrued Liabilities 45,508 (926,146)
Income Tax Payable 401,000 (151,571)
------------ ------------
Net cash provided (used) by operating activities 113,167 (1,679,532)
Cash flows from investing activities:
Purchase of property and equipment (27,625) (59,247)
Proceeds from notes receivable - 93,319
Issued notes receivable (8,877) -
Proceeds from disposal of equipment 12,000
-------------- -----------
Net cash (used) provided by investing activities (36,502) 46,072
Cash flows from financing activities:
Net (repayments)borrowings from line of credit (350,890) 310,305
Proceeds from notes payable 227,722 -
Principal payments on notes payable (1,154) (36,581)
Advances from shareholders 25,000 -
-------------- ---------------
Net cash (used) provided by financing activities (99,322) 273,724
------- -------
NET DECREASE IN CASH (22,657) (1,359,736)
Cash balance - beginning of period 57,788 2,077,040
--------- ---------
Cash balance - end of period 35,131 717,304
--------- ---------
Non-cash transactions
Conversion of accounts payable to note payable - 590,488
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest 12,329 31,423
Income taxes 412,000 15,000
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 generally accepted accounting principles 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, 2000.
The financial statements presented herein as of and for the three
months ended March 31, 2001 and March 31, 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. There are no potentially
dilutive securities.
Note 2: Line of Credit
The Company has a $1,500,000 line of credit, which expires December 20, 2001.
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 majority shareholder. The advance outstanding on the line of credit as
of March 31, 2001 was $310,305.
Note 3: Sales to One Major Customer
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 84% and 73% of total sales in 2001, and 2000 respectively. The Company is
attempting to expand its customer base to lessen the effect of having one major
customer.
Note 4: Note Payable
On January 5, 2001 the Company entered into a zero interest bearing note
agreement with a subcontractor to convert the amount recorded through accounts
payable for the value of integration work performed during 2000. The note was a
mutual agreement from both parties and provides for bi-weekly payments of
$30,000 until the contract is paid in full.
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.
Three Months Ended
March 31,
2000 2001
---- ----
Net sales......................................... 100.00% 100.00%
Cost of sales .................................. 76.06 67.57
Gross profit ..................................... 23.95 32.43
Selling, general and administrative expenses ..... 8.61 27.79
Operating income ................................. 15.26 5.65
Interest expense ................................. 0.20 1.09
Interest income................................... 0.00 0.12
Other income...................................... 0.00 0.42
Income before income taxes........................ 15.06 4.09
Income Tax (benefit).............................. 6.10 (3.28)
Net income (loss) ................................ 8.95 (7.37)
Net Sales
Net sales decreased by $(3,185,084) or (52.57)% from $6,058,638 for the three
months ended March 31, 2000 to $2,873,554 for the three months ended March 31,
2001.
The net sales decrease resulted primarily from a slow down in the demand for
technology products combined with a slow down in the overall economy. Sales to
the major customers and corporate accounts have continued to slow down for the
first period of 2001. Orders on the books of the Company indicate that this
trend will continue during the remainder of the second quarter of 2001 period.
The Company is currently working with its corporate customers to release new
products for which the Company's customers will then undertake detailed
procedures relating to the evaluation, testing, implementation and acceptance of
the Company's products and services. Any and all time and material associated
with the production of a prototype are expensed before completion of a final
product. This evaluation process results in a variable sales cycle, and makes it
difficult to predict if or when revenues will be earned. Further, gross margins
may be adversely impacted in an effort to complete the sales cycle. The
Company's net sales results may be adversely impacted in future periods by its
variable sales cycle.
Gross Profit
As a percentage of net sales, gross profits decreased from $1,450,820 or 23.95%
for the three months ended March 31, 2000 to $ 931,916 or 32.43% for the three
months ended March 31, 2001. The Company continues to develop new products with
increased profit margins. The decrease in gross profit from $1,450,820 for the
three months ended March 31, 2000 to $931,638 for the three months ended March
31, 2001 was a direct result of lower sales of lower end products with lower
profit margins and an increase in sales of products with higher margins.
Selling, General and Administrative Expenses
Selling, general and administrative expenses increased $272,484 or 51.8% from
$526,002 for the three months ended March 31, 2000 to $798,486 for the three
months ended March 31, 2001. The increase is due to higher rents for the new
location, increased payroll costs for additional personnel and materials
associated with the new location during the three months ended March 31, 2001.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Liquidity and Capital Resources Continued:
On March 31, 2000 and 2001 the Company had net working capital of $900,686 and
$2,649,091 respectively. The increase in working capital from 2000 to 2001 was
primarily due to an increased level of inventory and reduction of accounts
payable.
The Company had net cash used by operating activities of $(1,679,532) for the
three months ended March 31, 2001 compared to net cash provided by operating
activities of $113,167 for the three months ended March 31, 2000. The
$(1,792,699) difference was primarily due to changes in accounts receivable,
inventory and accounts payable due to lower sales for the three months ended
March 31, 2001.
The Company had net cash provided by investing activities of $46,072 for the
three months ended March 31, 2001 compared to net cash used by investing
activities of $(36,502) for the three months ended March 31, 2000. The $82,574
difference relates primarily to proceeds from notes receivable.
The Company had net cash provided by financing activities of $273,724 for the
three months ended March 31, 2001 compared to net cash used by financing
activities of $(99,322) for the three months ended March 31, 2000. The $373,046
relates primarily to increase in short-term borrowings due to a decrease in
sales for the three months ended March 31, 2001.
The Company is working with the appropriate tax agencies to pay the 2000 period
taxes. The Company anticipates that is has sufficient working capital through
future sales and short term borrowing to sustain operations for the remainder
for the fiscal year of 2001.
PART II.
OTHER INFORMATION
Item 1. Legal Proceedings
There are no legal proceedings pending against the Company during the period
ending March 31, 2001.
Item 2. Changes in Securities
There were no changes in rights of securities holders during the period ending
March 31, 2001.
Item 3. Defaults upon Senior Securities
There were no defaults upon senior securities during the period ending March 31,
2001.
Item 4. Submission of Matters to a Vote of Security-Holders
There were no matters submitted to the vote of securities holders during the
period ending March 31, 2001.
Item 5. Other Information
There were no major contracts signed during the period during the period ending
March 31, 2001.
Item 6. Exhibits and Reports on Form 8-K
There were no filings of Exhibits and Reports on Form 8-K during the period
ending March 31, 2001.
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 CORPRATION
Date: May 12, 2001 By: /s/ Wil. L. Lindgren
----------------------------
Wil L. Lindgren
Chief Financial Officer
Date: May 12, 2001 By: /s/ Heinot H. Hintereder
------------------------------
Heinot H. Hintereder
President & Chief Executive Officer