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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 March 31, 2003
[ ] 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 March 31, 2003.
Transitional Small Business Disclosure Format Yes [ ] No [X]
IMMECOR CORPORATION
INDEX
TABLE OF CONTENTS
PART I
FINANCIAL INFORMATION
Item 1. Balance sheets at March 31, 2003 (unaudited) and June 30, 2002
Statements of operations for the three and nine months ended
March 31, 2003 and 2002 (unaudited)
Statements of cash flows for the nine months ended
March 31, 2003 and 2002 (unaudited)
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.
IMMECOR CORPORATION
Balance Sheets
ASSETS
<Table>
<Caption>
March 31, June 30,
2003 2002
(unaudited) (audited)
Current assets:
Cash $ 472,665 $ 482,855
Accounts receivable
(less allowance for doubtful accounts of $22,000 and $22,000) 896,917 740,887
Inventories (less inventory reserves of $220,812 and $439,830) 1,594,869 1,676,993
Notes receivable - current 10,589 26,448
Prepaid and other assets 47,074 41,976
Total current assets 3,022,114 2,969,159
Equipment and improvements, net 266,188 358,665
Notes receivable 137,029 55,191
Total assets $ 3,425,331 $ 3,383,015
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Line of credit $ 499,693 $ 388,627
Note payable -- 34,250
Accounts payable 504,523 368,146
Accrued liabilities 121,171 199,258
Accrued bonuses -- 113,244
Taxes payable 1,069 40,524
Total current liabilities 1,126,456 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 2,010,020 1,950,111
Total stockholders equity _ 2,298,875 2,238,966
Total liabilities and stockholders' equity $ 3,425,331 $ 3,383,015
</Table>
The accompanying notes are an intergral part of these financial statements
IMMECOR CORPORATION
Statements of Operations
<Table>
<Caption>
For the three months ended, For the nine months ended,
March 31, March 31,
2003 2002 2003 2002
(unaudited) (unaudited)
Net sales $ 1,804,412 $ 1,777,548 $ 6,191,451 $ 6,298,285
Cost of sales 1,232,333 992,317 4,463,343 5,095,979
Gross profit 572,079 785,231 1,728,108 1,202,306
Sales and marketing 52,124 63,599 178,204 60,407
Research and development 3,238 38,070 105,906 113,298
General and administrative 469,393 593,246 1,242,094 1,412,410
Operating income (loss) 47,324 90,316 201,904 (383,809)
Other (income) expense
Interest expense 10,783 12,823 31,025 200,002
Interest income (2,746) (2,359) (8,656) (9,513)
Other (income) expense (242) (188) (220) 25,083
(Loss) income before income taxes 39,485 80,040 179,755 (599,381)
Income tax expense (benefit) (0) 20,570 118,224 13,346
Net (loss) income $ 39,485 $ 59,470 $ 61,531 $ (586,035)
Net (loss) income per share -
basic and diluted $0.006 $0.01 $0.01 $(0.10)
Weighted average shares used in
computing net income (loss) per
share, basic and diluted 5,806,128 5,806,128 5,806,128 5,806,128
</Table>
IMMECOR CORPORATION
Statements of Cash Flows
<Table>
<Caption>
For the nine months ended,
March 31,
2003 2002
(unaudited)
Cash flows from operating activities:
Net (loss) income $ 61,531 (586,035)
Adjustments to reconcile net (loss) income to net cash
provided by (used in) operating activities:
Depreciation and amortization 92,477 35,676
Deferred income taxes -- 187,000
Reserve for inventories -- (439,830)
Changes in operating assets and liabilities:
Accounts receivable (157,172) 82,979
Income tax recoverable -- (359,727)
Inventories 82,944 2,433,656
Prepaid and other assets (5,098) (236)
Accounts payable 136,378 (282,166)
Accrued expenses (192,477) (79,400)
Income taxes payable (39,455) (1,300,535)
Net cash (used in) provided by operating activities (20,871) (349,758)
Cash flows from investing activities:
Purchase of property and equipment -- --
Proceeds from notes receivable 16,705 30,093
Increase in notes receivable (82,837) (3,375)
Net cash provided by (used in) investing activities (66,132) 26,718
Cash flows from financing activities:
Net borrowings (repayments) from line of credit 111,066 245,789
Borrowings from note payable -- -
Repayments on note payable (34,250) (386,307)
Net cash provided by financing activities 76,816 (140,518)
Net change in cash (10,187) (463,558)
Cash balance, beginning of period 482,855 498,636
Cash balance, end of period $ 472,665 $ 35,078
</Table>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
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 and for the three
and nine months ended March 31, 2003 and March 31, 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.
Net Income (Loss)Per Share
Basic earnings (loss) 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 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 and cash flows. One
customer accounted for 60% and 80% of total sales for the three months ended
March 31, 2003 and 2002, respectively. One customer accounted for 69% and 85%
of total sales in the nine months ended March 31, 2003 and 2002, respectively.
The Company is attempting to expand its customer base to lessen the effect
of having one major customer.
Note 3: 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. The line of credit is also personally guaranteed by the Company's
majority stockholder. The available borrowing base on the line of credit as of
March 31, 2003 was approximately $79,200.
Note 4: Income Taxes
The effective income tax rates for the nine months ended September 30, 2001 and
2000 are based on the federal statutory income tax rate, increased for the
effect of state income taxes, and decreased by the effect of nondeductible
expenses and other temporary differences.
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Note 5: Recent Accounting Pronouncements
In November 2002, the FASB's Emerging Issues Task Force, or EITF, finalized
EITF Issue 00-21, "Revenue Arrangements with Multiple Deliverables." EITF 00-21
addresses how to determine whether an arrangement involving multiple
deliverables contains more than one unit of accounting. It also addresses how
arrangement consideration should be measured and allocated to the separate
units of accounting in an arrangement. EITF 00-21 does not apply to
deliverables in arrangements to the extent the accounting for such deliverables
are within the scope of other existing higher-level authoritative accounting
literature. The Company does not believe that the adoption of EITF Issue 00-21
will have a significant effect on its financial statements or operations.
In December 2002, the FASB issued SFAS No.148, "Accounting for Stock-Based
Compensation Transition and Disclosure, an amendment of FASB Statement No.123.
SFAS No.148 provides alternative methods of transition for a voluntary change
to the fair market value based method of accounting for stock-based
compensation. The Company does not presently expect to make such a voluntary
change. In addition, SFAS No.148 amends the disclosure requirements of SFAS
No.123 to require 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 and have
been reflected in Note 2, Stock Based Compensation. The Company does not
believe that the adoption will have an impact on its financial statements.
In November 2002, FASB Interpretation No.45, "Guarantor's Accounting and
Disclosure Requirements for Guarantees, Including Indirect Guarantees of
Indebtedness of Others, an Interpretation of FASB Statements No.5, 57, and 107
and Rescission of FASB Interpretation No.34, (FIN 45) was issued. FIN 45
clarifies the requirements of SFAS No.5, Accounting for Contingencies, relating
to guarantors accounting for, and disclosure of, the issuance of certain types
of guarantees. The disclosure provisions of FIN 45 are applicable to interim or
annual periods that end after December 15, 2002, and did not have an impact on
the March 31, 2003 financial statements. The provisions for initial recognition
and measurement under FIN 45 are effective on a prospective basis for guarantees
that are issued or modified after December 31, 2002. The initial recognition
and measurement provisions under FIN 45 did not have any impact on the
Company's financial statements.
On January 17, 2003, the Financial Accounting Standards Board
(FASB or the Board) issued FASB Interpretation No.46, (FIN 46), Consolidation
of Variable Interest Entities. The provisions will be the guidance that
determines (1)whether consolidation is required under the controlling financial
interest model of Accounting Research Bulletin No. 51 (ARB 51), Consolidated
Financial Statements 51 (or other existing authoritative guidance) or,
alternatively, (2)whether the variable interest model under FIN 46 should be
used to account for existing and new entities. At this time, the Company does
not have any entities that would be covered under FIN 46.
RESULTS OF OPERATIONS FOR THE Three and Nine Months ended March 31,2003 and 2002
Net Sales
Net sales increased by $26,864 or 1.5% from $1,777,548 for the three months
ended March 31, 2002 to $1,804,412 for the three months ended March 31, 2003
and net sales decreased by $106,834 or 1.7% from $6,298,285 for the nine months
ended March 31, 2002 to $6,191,451 for the nine months ended March 31, 2003
respectively. The decline in sales is primarily due to the lower demand for
systems as a result of the general economic slowdown and weaker demand for
technology related products. This decrease reflected the overall sluggishness
of the United States economy in the first three months of 2003 causing
customers and prospective customers to defer technology purchases.
<Page>
Gross Profit
Gross profits decreased from $785,231 for the three months ended March 31, 2002
to $572,079 for the three months ended March 31, 2003. As a percentage of net
sales, gross profits decreased from 44% for the three months ended March 31,
2002 to 32% for the three months ended March 31, 2003.
The decrease in gross profit as a percentage of net sales was primarily due to
sales of lower margin products while the company develops new products and
certain fixed costs being spread over lower revenues.
Gross profits increased from $1,202,306 for the nine months ended March 31,
2002 to $1,728,108 for the nine months ended March 31, 2003. As a percentage
of net sales, gross profits increased from 19% for the nine months ended March
31, 2002 to 30% for the nine months ended for March 31, 2003.
The increase in gross profit as a percentage of sales was primarily due to new
customers and new products that were developed during the nine months. 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.
Selling, General and Administrative Expenses
Sales and marketing expenses decreased $11,475 from $63,599 for the three
months ended March 31, 2002 to $52,124 for the three months ended March 31,
2003. The decrease in expenses is primarily due to the reductions in
promotional expenses. Sales and marketing expenses increased $117,797 from
$60,407 for the nine months ended March 31, 2002 to $178,204 for the nine
months ended March 31, 2003. The increase was due to commissions for the nine
month period.
Research and development expense for the three months ended March 31, 2002 and
March 31, 2003 was approximately $113,298 and $105,906, respectively. 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 $123,853 from $593,246 for the
three months ended March 31, 2002 to $469,393 for the three months ended
March 31, 2003. General and administrative expenses decreased $170,316 from
$1,412,410 for the nine months ended March 31, 2002 to $1,242,094 for the nine
months ended March 31, 2003. The decrease is primarily due to staff reductions
and the company controlling expenses.
Liquidity and Capital Resources
On March 31, 2002 and 2003 the Company had net working capital of $2,238,966
and $2,298,875, respectively. The increase in working capital from 2002 to
2003 was primarily due to increased accounts receivable and long term notes
receivable for the nine months ended March 31, 2003.
The Company had net cash used in operating activities of $20,871 for the nine
months ended March 31, 2003 compared to net used in operating activities of
$349,758 for the nine months ended March 31, 2002. The $328,887 difference is
primarily due to the net loss for the nine months ended March 31, 2002 and
reduction in income taxes recoverable.
<Page>
The Company had net cash used by investing activities of $66,132 for the nine
months ended March 31, 2003 compared to net cash provided by investing
activities of $26,718 for the nine months ended March 31, 2002. The $92,850
difference relates primarily to an increase in long term notes.
The Company had net cash provided by financing activities of $76,816 for the
nine months ended March 31, 2003 compared to net cash used by financing
activities of $140,518 for the nine months ended March 31, 2002. The $217,334
difference relates primarily to an decrease in borrowings on line of credit and
decrease in notes payable.
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 three months of 2003. There were
no substantial commitments for purchase orders outside the normal purchase
orders used to secure product as of March 31, 2003.
PART II.
OTHER INFORMATION
Item 1. Legal Proceedings
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.
In January 2003, the Company received a lawsuit from Sarah Aasved for a
complaint for damages relating to sexual discrimination and pregnancy
discrimination. The Company disputes the lawsuit and believes that there isn't
a basis for the lawsuit, and that the Company is requesting the matter to be
dismissed and that the Company will proceed with full legal action against
Sarah Aasved for malicious prosecution.
In January 2003, the Company received a small claims lawsuit from
Maintenance Alternatives Corporation for approximately $3,000, stating that the
Company owed Maintenance Alternatives Corporation money for services performed.
The Company disputes the small claims case, and will defend itself in small
claims court against the action.
There were no other legal proceedings pending against the Company during the
period ending March 31, 2003.
Item 2. Changes in Securities
There were no changes in rights of securities holders during the period ending
March 31, 2003.
Item 3. Defaults upon Senior Securities
There were no defaults upon senior securities during the period ending
March 31, 2003.
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, 2003.
Item 5. Other Information
There were no major contracts signed during the period ending March 31, 2003.
Item 6. Exhibits and Reports on Form 8-K
There were no exhibits or Form 8-K filed during the period ended March 31, 2003.
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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: May 15, 2003
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: May 15, 2003
By: /s/ William L. Lindgren
-------------------------------------------
William L. Lindgren
Chief Financial Officer