<Page>
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 December 31, 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 December 31, 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 December 31, 2002 (unaudited) and June 30, 2002
Statements of operations (unaudited) for the three and six months ended
December 31, 2001 and 2002
Statements of cash flows (unaudited) for the six months ended December
31, 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
ASSETS
<Table>
<Caption>
December 31, June 30,
2002 2002
(unaudited)
Current assets:
Cash ............................................................................ $ 620,283 $ 482,855
Accounts receivable, net of allowance for doubtful
accounts of $22,000 and $22,000 ................................................. 433,268 740,887
Inventories, net of inventory reserve of $220,812 and $288,914 .................. 1,431,960 1,676,993
Notes receivable - current ...................................................... 16,763 26,448
Deposits ........................................................................ 51,976 41,976
Total current assets ....................................................... 2,554,250 2,969,159
Property and equipment, net ..................................................... 296,835 358,665
Notes receivable ................................................................ 138,341 55,191
Total assets ............................................................... $2,989,426 $3,383,015
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Line of credit .................................................................. $ 302,558 $ 388,627
Note payable .................................................................... -- 34,250
Accounts payable ................................................................ 187,935 368,146
Accrued bonuses ................................................................. 73,251 113,244
Accrued liabilities ............................................................. 164,781 199,258
Taxes payable ................................................................... 1,557 40,524
Total current liabilities .................................................. 730,082 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 ............................................................... 1,970,489 1,950,111
Total stockholders equity ................................................. 2,259,344 2,238,966
Total liabilities and stockholders equity ................................. $2,989,426 $3,383,015
</Table>
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IMMECOR CORPORATION
Statements of Operations
<Table>
<Caption>
For the three months For the six months
ended December 31, ended December 31,
2002 2001 2002 2001
(unaudited) (unaudited)
Net sales ....................... $ 1,833,292 $ 2,258,761 $ 4,387,039 $ 4,520,737
Cost of sales ................... 1,410,250 2,711,231 3,231,010 4,103,662
Gross profit ............... 423,042 (452,464) 1,156,029 417,075
Operating expenses:
Sales and marketing ........ 62,938 38,716 126,080 65,560
Research and development ... 371 20,425 102,668 298,188
General and administrative . 318,012 12,354 772,701 527,452
Operating income ........... 41,721 (521,959) 154,580 (474,125)
Other income (expense):
Other income (expense) ..... (49) (3,665) (22) (25,271)
Interest income ............ 2,460 1,029 5,910 7,154
Interest expense ........... (10,931) (8,979) (20,242) (187,179)
Income (loss) before income taxes 33,201 (533,549) 140,226 (679,421)
Income tax provision (benefit) .. (70,720) 25,491 (118,224) (7,224)
Net income (loss) .......... $ (37,519) $ (508,058) $ 22,002 $ (686,645)
Net income (loss) per share -
basic and diluted ........ $ (0.006) $ (0.09) $ (0.003) $ (0.12)
Weighted average shares
outstanding - basic and diluted . 5,806,128 5,806,128 5,806,128 5,806,128
</Table>
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IMMECOR CORPORATION
Statements of Cash Flows
<Table>
<Caption>
For the six months
ended December 31,
2002 2001
unaudited)
Cash flows from operating activities:
Net income (loss) .............................................. $ 20,002 $ (686,645)
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Depreciation and amortization ............................. 61,830 35,719
Deferred income taxes ..................................... -- 172,500
Reserve for inventories ................................... 68,102 199,386
Cash effect of changes in operating assets and liabilities:
Accounts receivable ....................................... 307,619 78,966
Income tax recoverable .................................... -- (380,297)
Inventories ............................................... 176,931 1,451,977
Prepaid expenses .......................................... (10,000) 14,520
Accounts payable .......................................... (180,211) 406,385
Accrued bonuses and liabilities ........................... (74,470) (229,618)
Income taxes payable ...................................... (38,967) (1,300,535)
Net cash provided by (used in) operating activities ...... 330,836 (237,642)
Cash flows from investing activities:
Proceeds from notes receivable ................................. 12,677 48,369
Issuance of notes receivable ................................... (86,142) (50,369)
Net cash (used in) provided by investing activities ...... (73,465) (2,000)
Cash flows from financing activities:
Net borrowings (repayments) from line of credit ................ (86,069) 142,737
Borrowings from note payable ................................... -- --
Repayments on note payable ..................................... (34,250) (371,307)
Net cash (used in) provided by financing activities ...... (120,319) (228,570)
Net change in cash ....................................... 137,052 (468,212)
Cash, beginning of period ........................................... 482,855 498,636
Cash, end of period ................................................. $ 619,907 $ 30,424
</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 December 31, 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 74% and 95% of total sales for the three months ended
December 31, 2002 and 2001, respectively. The Company sales personnel are
attempting 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
For the three months ended December 31, 2002, the Company adjusted inventory
reserves by $68,102, no further adjustments were made to inventory.
Note 5: Line of Credit
The Company has a $1,500,000 line of credit, which expires December 20, 2003.
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 the Company's majority stockholder. The
available borrowing base on the line of credit as of December 31, 2002 was
$302,558.
<Page>
Note 6: Income Taxes
The effective income tax rates for the three months ended December 31, 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: Related Party Transactions
Included in the Company's notes receivable at December 31, 2002 and June 30,
2002, are amounts due from stockholder-employees of approximately $83,000 and
$21,000, respectively. Also included in accrued bonuses and accrued liabilities
are deferred bonus and salaries due to stockholder-employees of approximately
$167,000 and $198,000 at December 31, 2002 and June 30, 2002, respectively.
Note 8: 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 Company's 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 Company's 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 SIX MONTHS AND Three Months ended
December 31, 2002 and 2001
Net Sales
Net sales decreased by $725,469 or 32% from $2,258,761 for the three months
ended December 31, 2001 to $1,833,292 for the three months ended December 31,
2002. Net sales decreased $133,698 or 3% from $4,520,737 for the six months
ended December 31, 2001 to $4,387,039 for the six months ended December
31, 2002.
The decrease in sales is due to a weaker economy and a weak demand for
technology related products. The Company does acknowledge that a continued
downturn in the economic conditions and a continued weak demand for technology
related products could have an adverse effect on the Company's financial
results.
Gross Profit
Gross profits increased $875,506 or 193% from $(452,464) for the three months
ended December 31, 2001 to $423,042 for the three months ended December 31,
2002. As a percentage of net sales, gross profits increased from (20)% for the
three months ended December 31, 2001 to 23% for the three months ended December
31, 2002.
Gross profits increased $738,954 or 177% from $417,075 for the six months ended
December 31, 2001 to $1,156,029 for the six months ended December 31, 2002. As
a percentage of net sales, gross profits increased from 9% for the six months
ended December 31, 2001 to 26% for the six months ended December 31, 2002.
<Page>
The increase in gross profit as a percentage of net sales can be attributed to
new customer sales, new product sales that carry a higher profit margin and the
change in the fiscal year end period. 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 future gross
profits in upcoming quarters.
Operating Expenses
Sales and marketing expenses increased $24,222 from $38,716 for the three
months ended December 31, 2001 to $62,938 for the three months ended
December 31, 2002. Sales and marketing expenses increased $60,520 from $65,560
for the six months ended December 31, 2001 to $126,080 for the six months ended
December 31, 2002. The increase in expenses are due to costs associated with
the expansion of our sales staff, marketing materials and website improvements
in order to expand our customer base.
Research and development expense decreased $20,054 from $20,425 for the three
months ended December 31, 2002 to $371 for three months ended
December 31, 2002. Research and development expenses decreased $195,520 from
$298,188 for the six months ended December 31, 2001 to $102,668 for the six
months ended December 31, 2002. The decrease is primarily due cyclical nature
of the Company's development cycle for new products. The Company expenses all
of research and development costs as they are incurred. 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 increased $305,658 from $12,354 for the
three months ended December 31, 2001 to $318,012 for the three months ended
December 31, 2002. General and administrative expenses increased $245,249 from
$527,452 for the six months ended December 31, 2001 to $772,701 for the six
months ended December 31, 2002. The increase is due to the change in fiscal
year end and expenses associated with the change of the fiscal year end.
Liquidity and Capital Resources
On December 31, 2002 and June 30, 2002, the Company had net working capital of
$1,824,168 and $1,825,110 respectively. The decrease in working capital of $942
from June 30, 2002 to December 31, 2002 was primarily due a reduction in
current assets.
The Company had net cash provided in operating activities of $330,836 for the
six months ended December 31, 2002 compared to net cash used in operating
activities of $(237,642) for the six months ended December 31, 2001. The
$568,478 increase is primarily due to lower payments on accounts payable,
accrued bonuses and liabilities, income taxes payable and a net income during
the six months ended December 31, 2002, versus a net loss during the six months
ended December 31, 2001.
<Page>
The Company had net cash used in investing activities of $(73,465) for the six
months ended December 31, 2002 compared to net cash used in investing
activities of $(2,000) for the six months ended December 31, 2001. The $71,465
increase relates primarily to the issuance of new notes receivable to certain
stockholder-employees.
The Company had net cash used in financing activities of $(120,319) for the six
months ended December 31, 2002 compared to net cash used in financing
activities of $(228,570) for the six months ended December 31, 2001. The
$108,251 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 technology equipment and medical 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 six 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 December 31, 2002. In October 2002, the Company received a lawsuit from
R.G. Technical for approximately $63,000, stating that the 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
December 31, 2002.
Item 3. Defaults upon Senior Securities
There were no defaults upon senior securities during the period ended
December 31, 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 December 31, 2002.
Item 5. Other Information
There were no major contracts signed during the period ended December 31, 2002.
Item 6. Exhibits and Reports on Form 8-K
There were no exhibits or Form 8-K filed during the period ended
December 31, 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: February 18, 2002
By: /s/ Heinot H. Hintereder
- ----------------------------
Heinot H. Hintereder
Chief Executive Officer
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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: February 18, 2002
By: /s/ William L. Lindgren
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William L. Lindgren
Chief Financial Officer