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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2002
[ ] 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
(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 September 30, 2002.
Transitional Small Business Disclosure Format Yes [ ] No [X]
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IMMECOR CORPORATION
INDEX
TABLE OF CONTENTS
PART I
FINANCIAL INFORMATION
Item 1. Balance sheets at September 30, 2002 (unaudited) and June 30, 2002
Statements of operations (unaudited) for the three months ended
September 30, 2001 and 2002
Statements of cash flows (unaudited) for the three months ended
September 30, 2001 and 2002
Notes to condensed financial statements (unaudited)
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
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 statements 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. Such risks, uncertainties and changes in condition,
significance, value and effect could cause our actual results to differ
materially from those anticipated events. Although we believe that the
assumptions underlying the forward-looking statements are reasonable, any of
these assumptions could prove inaccurate, including, but not limited to,
statements as to our future operating results and business plans. We disclaim
any intention or obligation to update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise.
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IMMECOR CORPORATION
Balance Sheets
<Table>
<Caption>
ASSETS
September 30, June 30,
2002 2002
(unaudited)
Current assets:
Cash $ 720,109 $ 482,855
Accounts receivable, net of allowance for doubtful
accounts of $22,000 and $22,000 465,956 740,887
Inventories, net of inventory reserve of $288,710 and $288,914 1,483,123 1,676,993
Notes receivable - current 25,854 26,448
Deposits 41,976 41,976
Total current assets 2,737,018 2,969,159
Property and equipment, net 327,750 358,665
Notes receivable 129,057 55,191
Total assets $ 3,193,825 $ 3,383,015
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Line of credit $ 206,765 $ 388,627
Note payable - 34,250
Accounts payable 414,685 368,146
Accrued bonuses 113,244 113,244
Accrued liabilities 160,644 199,258
Income taxes payable - 40,524
Total current liabilities 895,338 1,144,049
Stockholders' equity:
Common stock, no par value, 50,000,000 shares authorized:
5,806,128 shares issued and outstanding 288,855 288,855
Retained earnings 2,009,632 1,950,111
Total stockholders' equity 2,298,487 2,238,966
Total liabilities and stockholders' equity $ 3,193,825 $ 3,383,015
</Table>
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IMMECOR CORPORATION
Statements of Operations
<Table>
<Caption>
For the three months
ended September 30,
2002 2001
(unaudited)
Net sales $ 2,553,747 $ 2,261,970
Cost of sales 1,820,760 1,392,431
Gross profit 732,987 869,539
Operating expenses:
Sales and marketing 63,142 28,844
Research and development 102,297 177,733
General and administrative 454,689 615,128
Operating income 112,859 47,834
Other income (expense):
Other income (expense) 27 (21,629)
Interest income 3,450 6,125
Interest expense (9,311) (178,201)
Income (loss) before income taxes 107,025 (145,871)
Income tax provision (benefit) 47,504 (18,266)
Net income (loss) $ 59,521 $ (127, 605)
Net income (loss) per share -
basic and diluted $ 0.01 $ (0.02)
Weighted average shares
outstanding - basic and diluted 5,806,128 5,806,128
</Table>
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IMMECOR CORPORATION
Statements of Cash Flows
<Table>
<Caption>
For the three months
ended September 30,
2002 2001
(unaudited)
Cash flows from operating activities:
Net income (loss) $ 59,521 $ (127,605)
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Depreciation and amortization 30,915 24,992
Deferred income taxes - 126,800
Reserve for inventories (204) 50,000
Cash effect of changes in operating assets and liabilities:
Accounts receivable 274,931 147,985
Inventories 194,074 681,774
Prepaid expenses - (125,412)
Accounts payable 46,539 (854,714)
Accrued bonuses and liabilities (38,614) (74,400)
Income taxes payable (40,524) (851,833)
Net cash provided by (used in) operating activities 526,638 (1,002,413)
Cash flows from investing activities:
Proceeds from notes receivable 7,291 1,650
Issuance of notes receivable (80,563) -
Net cash (used in) provided by investing activities (73,272) 1,650
Cash flows from financing activities:
Net borrowings (repayments) from line of credit (181,862) 139,984
Borrowings from note payable - 455,186
Repayments on note payable (34,250) (76,005)
Net cash (used in) provided by financing activities (216,112) 519,165
Net change in cash 237,254 (481,598)
Cash, beginning of period 482,855 498,636
Cash, end of period $ 720,109 $ 17,038
</Table>
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IMMECOR CORPORATION
NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Unaudited)
Note 1: Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited interim financial statements included in this
Form 10-QSB have been prepared by the Company in accordance with accounting
principles generally accepted in the United States of America for interim
financial information and pursuant to the rules and regulations of the
Securities and Exchange Commission. Accordingly, they do not contain all
of the information and footnotes required by accounting principles generally
accepted in the United States of America for complete financial statements.
The results of operations for any interim period are not necessarily indicative
of results for a full year. These financial 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 June 30, 2002 as
filed with the Securities and Exchange Commission.
The unaudited financial statements presented herein as of September 30, 2002,
and for the six months ended June 30, 2002 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. The financial
data and other information disclosed in these notes to the financial statements
related to these periods are unaudited. The balance sheet data at June 30,
2002 is derived from the audited financial statements included in the
Company's Annual Report on Form 10-KSB for the year ended June 30, 2002.
Basic and Diluted Net Income Per Share
Basic earnings per share amounts are computed using the weighted average number
of common stock shares outstanding in each period. There are no potentially
dilutive securities.
Note 2: Sales to 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 and cash flows. One
customer accounted for 76% and 87% of total sales for the three months ended
September 30, 2002 and 2001, respectively. The Company has hired additional
sales personnel in an attempt to expand its customer base to lessen the effect
of having one major customer.
Note 3: Cash Equivalents
The Company considers all highly liquid investments with an original maturity
of three months or less to be cash equivalents.
Note 4: Inventories
Included in cost of sales for the three months ended September 30, 2001 is
approximately $586,000 of inventory write-downs related to obsolete,
slow-moving or non-saleable inventory. For the three months ended
September 30, 2002, the Company did not make any significant adjustments to
its inventory reserves.
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Note 5: Line of Credit
The Company has a $1,500,000 line of credit, which expires December 20, 2002.
Advances under the line of credit cannot exceed 80% of eligible accounts
receivable and is collateralized by all accounts receivable, inventory and
equipment, and a personal guarantee by one of the Company's stockholder.
The available borrowing base on the line of credit as of September 30, 2002
was approximately $140,280.
Note 6: Income Taxes
The effective income tax rates for the three months ended September 30, 2002
and 2001 are based on the federal statutory income tax rate, increased for the
effect of state income taxes, and decreased by the effect of graduated rates,
nondeductible expenses and other permanent differences.
Note 7: Change in Fiscal Year
The Company changed its fiscal year end from December 31, to June 30, effective
July 1, 2002. Accordingly, the Company is presenting quarterly
unaudited financial statements and accompanying notes for the quarters ended
September 30, 2002 and 2001 on this Form 10Q-SB.
Note 8: Related Party Transactions
Included in the Companys notes receivable at September 30, 2002 and June 30,
2002, are amounts due from stockholder-employees of approximately $83,000
and $22,000, respectively. Also included in accrued bonuses and accrued
liabilities are deferred bonus and salaries due to stockholder-employees of
approximately $157,000 and $198,000 at September 30, 2002 and June 30, 2002,
respectively.
Note 9: Recent Accounting Pronouncements
In June 2001, the FASB issued Statement of Financial Accounting Standards
(SFAS)No. 142, Goodwill and Other Intangible Assets, which changes the
accounting for goodwill from an amortization method to an impairment-only
approach. Amortization of goodwill, including goodwill recorded in past
business combinations, will cease upon adoption of SFAS No. 142. SFAS No.
142 is effective for the Company's transition period beginning January 1, 2002.
The Company's adoption of SFAS No. 142 had no effect on the Companys results
of operations or financial position.
In August 2001, the FASB issued SFAS No. 144, Accounting for the Impairment or
Disposal Of Long-Lived Assets, which establishes one accounting model to be
used for long-lived assets to be disposed of by sale, whether previously used
or newly acquired. SFAS No. 144 is effective for the Company's transition
period beginning January 1, 2002. The Companys adoption of SFAS No. 144 had no
effect on the Company's results of operations or financial position.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
RESULTS OF OPERATIONS FOR THE Three Months ended September 30, 2002 and 2001
Net Sales
Net sales increased by $291,777 or 13% from $2,261,970 for the three months
ended September 30, 2001 to $2,553,747 for the three months ended September 30,
2002.
The increase in sales is primarily due to new customers that have diversified
the customer base. The Company does acknowledge that a continued downturn in
the economic conditions and a continued weak demand for technology related
products may have an adverse effect on the Company's financial results.
<Page>
Gross Profit
Gross profits decreased $136,552 or 16% from $869,539 for the three months
ended September 30, 2001 to $732,987 for the three months ended September 30,
2002. As a percentage of net sales, gross profits decreased from 38% for the
three months ended September 30, 2001 to 29% for the three months ended
September 30, 2002.
The decrease in gross profit as a percentage of net sales can be attributed to
new customer sales that carry a lower profit margin. The Company acknowledges
that pricing pressures due to the competitive market, changes in sales volume,
and changes in customer demand due to the slow economy, may adversely impact
our gross profits in upcoming quarters.
Operating Expenses
Sales and marketing expenses increased $34,298 from $28,844 for the three
months ended September 30, 2001 to $63,142 for the three months ended
September 30, 2002. The increase in expenses is due to costs associated
with the expansion of our sales staff in order to expand our customer base
and to better serve and meet our customer needs.
Research and development expense decreased $75,436 from $177,733 for the three
months ended September 30, 2001 to $102,297 for three months ended September
30, 2002. The decrease is due to lesser demand for new products due to
current economic conditions and variations in the Company's normal
development cycle for new products. The Company expenses all of research and
development costs as they are incurred. The Company expects to continue
to invest in system design, and other research and development initiatives.
Research and development expenses consist of payroll and related
expenses for certification, fabrication, and cost of materials for prototyping
and testing units.
General and administrative expenses decreased $160,439 from $615,128 for the
three months ended September 30, 2001 to $454,689 for the three months ended
September 30, 2002. The decrease is primarily due to a nonrecurring tax penalty
in 2001 and other reductions in controllable variable expenses.
Income Taxes
Pre-tax income for the three months ended September 30, 2002, resulted in a tax
provision of $47,504. Tax provisions and benefits are based upon management's
estimate of the Company's expected annualized effective tax rates.
Liquidity and Capital Resources
On September 30, 2002 and June 30, 2002, the Company had net working capital of
$1,841,680 and $1,825,110 respectively. The increase in working capital of
$16,570 from June 30, 2002 to September 30, 2002 was primarily due to the
increase in cash and decrease in the line of credit balance and taxes payable.
The Company had net cash provided in operating activities of $526,638 for the
three months ended September 30, 2002 compared to net cash used in operating
activities of $1,002,413 for the three months ended September 30, 2001. The
$1,529,051 increase is primarily due to lower payments on accounts payable,
accrued bonuses and liabilities, income taxes payable and a net income
during the three months ended September 30, 2002, versus a net loss during the
three months ended September 30, 2001.
The Company had net cash used in investing activities of $73,272 for the
three months ended September 30, 2002 compared to net cash provided by
investing activities of $1,650 for the three months ended September 30, 2001.
The $74,922 decrease relates primarily to the issuance of new notes receivable
to certain stockholder-employees.
<Page>
The Company had net cash used in financing activities of $216,112 for the
three months ended September 30, 2002 compared to net cash provided by
financing activities of $519,165 for the three months ended September 30,
2001. The $735,277 decrease is due to payments on the line of credit and note
payable with no new borrowings on note payable.
Our liquidity is affected by many factors, some of which are based on the
normal ongoing operations of the business, and others of which relate to the
uncertainties in the semiconductor equipment and medical diagnostic equipment
industries. At present, management believes that future cash flows from
operations and its existing institutional financing will be sufficient to fund
all of the Company's cash requirements for the remaining nine months of the
fiscal year ending June 30, 2003.
PART II.
OTHER INFORMATION
Item 1. Legal Proceedings
There were no legal proceedings pending against the Company during the period
ended September 30, 2002. In October 2002, the Company received a lawsuit
from R.G. Technical for approximately $63,000, stating that R.G. Technical
had a contractual agreement with Immecor for services performed on behalf of
Genex, a vendor to Immecor. The Company disputes the lawsuit and believes
that there is not a basis for the current lawsuit, or that Immecor had a
contractual obligation to R.G. Technical. Immecor is requesting that the
lawsuit be dismissed and if the lawsuit is not dismissed, the Company will
proceed with full legal action against R.G. Technical for malicious
prosecution.
Item 2. Changes in Securities
There were no changes in rights of securities holders during the period ended
September 30, 2002.
Item 3. Defaults upon Senior Securities
There were no defaults upon senior securities during the period ended
September 30, 2002.
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 ended September 30, 2002.
Item 5. Other Information
There were no major contracts signed during the period ended September 30, 2002.
Item 6. Exhibits and Reports on Form 8-K
There were no exhibits or Form 8-K filed during the period ended September 30,
2002.
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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.
SIGNATURES
In accordance with Section 13 or 15 (d) of the Exchange Act and Certification
Pursuant to Rules 13a-14 and 15d-14 of the Securities Exchange Act of 1934, as
amended, the registrant has caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
I, Heinot H. Hintereder, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Immecor Corporation;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
Date: December 13, 2002
By: /s/ Heinot H. Hintereder
- ------------------------------
Heinot H. Hintereder
Chief Executive Officer
SIGNATURES
In accordance with Section 13 or 15 (d) of the Exchange Act and Certification
Pursuant to Rules 13a-14 and 15d-14 of the Securities Exchange Act of 1934, as
amended, the registrant has caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
I, William L. Lindgren, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Immecor Corporation;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
Date: December 13, 2002
By: /s/ William L. Lindgren
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William L. Lindgren
Chief Financial Officer