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, 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 (I.R.S. Employer Identification No.)
or 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, 2003.
Transitional Small Business Disclosure Format Yes [ ] No [X]
IMMECOR CORPORATION
INDEX
TABLE OF CONTENTS
PART I
FINANCIAL INFORMATION
Item 1. Balance sheets at September 30, 2003 (unaudited) and June 30, 2003
Statements of operations (unaudited) for the three months ended
September 30, 2002 and 2003
Statements of cash flows (unaudited) for the three months ended
September 30, 2002 and 2003
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.
The accompanying notes are an integral part of these financial statements.
IMMECOR CORPORATION
Balance Sheets
ASSETS
<Caption>
September 30, June 30,
2003 2003
(unaudited)
Cash $ 629,228 $ 493,057
Accounts receivable, net of allowance for doubtful
accounts of $12,945 and $22,000 757,814 785,029
Inventories, net of inventory reserve of $10,000 and $80,811 1,592,124 1,458,828
Notes receivable - current 3,046 29,116
Prepaid expenses 184,715 158,096
Federal income tax receivable 73,353 73,353
Deferred Tax Asset 29,012 29,012
Total current assets 3,269,292 3,026,491
Property and equipment, net 207,618 236,372
Notes receivable 200,300 124,998
Total assets $ 3,677,210 $ 3,387,861
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Line of credit $ 423,357 $ 351,064
Accounts payable 627,283 453,894
Accrued liabilities 109,757 101,298
Deferred taxes ___ 105,094 96,027
Total current liabilities 1,265,491 1,002,283
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 2,122,864 2,096,723
Total stockholders' equity 2,411,719 2,285,578
Total liabilities and stockholders' equity $ 3,677,210 $ 3,387,861
IMMECOR CORPORATION
Statements of Operations
For the three months
ended September 30,
2003 2002
(unaudited)
Net sales $ 2,414,080 $ 2,553,747
Cost of sales 1,628,668 1,820,760
Gross profit 785,412 732,987
Operating expenses:
Sales and marketing 26,186 63,142
Research and development 201,373 102,297
General and administrative 501,328 454,689
Operating income 56,525 112,859
Other income (expense):
Other income (expense) 1,983 27
Interest income 1,192 3,450
Interest expense (17,716) (9,311)
Income (loss) before income taxes 41,984 107,025
Income tax provision (benefit) 15,843 47,504
Net income (loss) $ 26,141 $ 59,521
Net income (loss) per share -
basic and diluted $ .01 $ .01
Weighted average shares
outstanding - basic and diluted 5,806,128 5,806,128
</Table>
IMMECOR CORPORATION
Statements of Cash Flows
<Table>
<Caption>
For the three months
ended September 30,
2003 2002
(unaudited)
Cash flows from operating activities:
Net income (loss) $ 26,141 $ 59,521
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Depreciation and amortization 28,754 30,915
Deferred income taxes 9,067 -
Reserve for inventories 70,811 (204)
Cash effect of changes in operating assets and liabilities:
Accounts receivable 27,215 274,931
Inventories (204,107) 194,074
Prepaid expenses (26,619)
Accounts payable 173,389 46,539
Accrued bonuses and liabilities 1,683 (38,614)
Income taxes payable 6,776 (40,524)
Net cash provided by (used in) operating activities 113,110 526,638
Cash flows from investing activities:
Proceeds from notes receivable 26,070 7,291
Issuance of notes receivable (75,302) (80,563)
Net cash (used in) provided by investing activities (49,232) (73,272)
Cash flows from financing activities:
Net borrowings (repayments) from line of credit 72,293 (181,862)
Borrowings from note payable -- -
Repayments on note payable -- (34,250)
Net cash (used in) provided by financing activities 72,293 (216,112)
Net change in cash 136,171 237,254
Cash, beginning of period 493,057 482,855
Cash, end of period $ 629,228 $ 720,109
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, 2003 as filed with the
Securities and Exchange Commission.
The unaudited financial statements presented herein as of September 30, 2003,
and the twelve months ended June 30, 2003 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, 2003 is
derived from the audited financial statements included in the Company's Annual
Report on Form 10-KSB for the year ended June 30, 2003.
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 68% and 76% of total sales for the three months ended
September 30, 2003 and 2002, respectively. The Company is continuing to expand
its marketing efforts to further diversify its customer base.
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
Inventories are stated at the lower of cost or market with cost determined on
the first-in, first-out method. The Company reviews the levels of its
inventories in light of current and forecasted demands to identify and provide
reserves for obsolete, slow-moving and non-saleable inventory. During the three
months ended for September 30, 2003 and twelve months ended June 30, 2003, the
Company reserves of approximately $10,000 and $80,811, respectively.
Note 5: Line of Credit
The Company has a $1,000,000 line of credit, which expires May 13, 2004.
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 September 30, 2003 was
approximately $49,000.
Note 6: Income Taxes
The effective income tax rates for the three months ended September 30, 2003 and
2002 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 September 30, 2003 and
June 30, 2003, are amounts due from stockholder-employees of approximately
$93,926 and $96,700, respectively. Deferred salaries due to
stockholder-employees are approximately $92,103 and $58,744 at September 30,
2003 and June 30, 2003, respectively.
Note 9: Recent Accounting Pronouncements
In January 2003, the Financial Accounting Standards Board ("FASB") issued FASB
Interpretation No.46, "Consolidation of Variable Interest Entities"
("FIN No.46"). FIN No.46 applies to variable interest entities created after
January 31, 2003 and to variable interest entities in which an enterprise
obtains an interest after that date. It applies in the first fiscal year or
interim period beginning after June 15, 2003, to variable interest entities in
which an enterprise holds an interest that it acquired before February 1, 2003.
The Company currently has no interests in variable interest entities, and
therefore does not expect adoption of FIN No.46 to have an impact on its
consolidated financial statements.
In April 2003, the FASB issued Statement of Financial Accounting Standards
("SFAS") No.149 "Amendment of Statement 133 on Derivative Instruments and
Hedging Activities". The SFAS No.149 amends and clarifies financial accounting
and reporting for derivative instruments, including certain derivative
instruments embedded in other contracts (collectively referred to as
derivatives) and for hedging activities under SFAS No.133, "Accounting for
Derivative Instruments and Hedging Activities". Subject to certain exception,
this statement is effective for contracts entered into or modified after
June 30, 2003 and for hedging relationships designated after June 30, 2003 and
all provisions of this statement should be applied prospectively. The Company
does not have any derivative instruments outstanding and the adoption of SFAS
No.149 will have no impact on the Company's consolidated financial statements.
In May 2003, the FASB issued SFAS No.150, "Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity". The SFAS
No.150 improves the accounting for certain financial instruments that, under
previous guidance, issuers could account for as equity and requires that those
instruments be classified as liabilities in statements of financial position.
In addition to its requirements for the classification and measurement of
financial instruments in its scope, SFAS No.150 also requires disclosures about
alternative ways of settling the instruments and the capital structure of
entities, all of whose shares are mandatorily redeemable. Most of the guidance
in SFAS No.150 is effective for all financial instruments entered into or
modified after May 31, 2003, and otherwise is effective at the beginning of the
first interim period beginning after June 15, 2003. The Company does not have
financial instruments outstanding and the adoption of SFAS No.150 will have no
impact on the Company's consolidated financial statements.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
RESULTS OF OPERATIONS FOR THE Three Months ended September 30, 2003 and 2002
Net Sales
Net sales decreased by $139,667 or 5.4% from $2,553,747 for the three months
ended September 30, 2002 to $2,414,080 for the three months ended
September 30, 2003.
The decrease in sales is primarily due the slowdown in the economy and the
decrease in corporate capital expenditures. 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 $52,425 or 7% from $732,987 for the three months ended
September 30, 2002 to $785,412 for the three months ended September 30, 2003.
As a percentage of net sales, gross profits increased from 29% for the three
months ended September 30, 2002 to 32% for the three months ended
September 30, 2003.
The increase in gross profit as a percentage of net sales can be attributed to
repairs of older systems and sales of new products that carry a higher 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 decreased $36,956 from $63,142 for the three months
ended September 30, 2002 to $26,186 for the three months ended
September 30, 2003. The decrease in expenses was due to the change in
accounting treatment of draws for sales compensation. The Company now books
all draws as prepaid expenses until the draws are earned.
Research and development expense increased $99,076 from $102,297 for the three
months ended September 30, 2002 to $201,373 for three months ended
September 30, 2003. The increase is due to new customers and their requirements
for technology products. The Company expenses all 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 increased $46,639 from $454,689 for the
three months ended September 30, 2002 to $501,328 for the three months ended
September 30, 2003. The increase is primarily due to an increase in workman's
compensation, liability insurance and outside professional services for 2003.
The Company will continue to monitor expenses throughout 2003.
Income Taxes
Tax provisions and benefits are based upon management's estimate of the
Company's expected annualized effective tax rates.
Liquidity and Capital Resources
On June 30, 2003 and September 30, 2003, the Company had net working capital of
$1,979,984 and $2,003,801 respectively. The increase in working capital of
$23,817 was primarily due to an increase in prepaid expenses and inventory.
The Company had net cash provided in operating activities of $113,110 for the
three months ended September 30, 2003 compared to net cash provided by operating
activities of $526,638 for the three months ended September 30, 2002. The
$413,528 decrease is primarily due to increase in inventory, increase in prepaid
expenses, and increase in accounts payables during the three months ended
September 30, 2003, versus the three months ended September 30, 2002.
The Company had net cash used in investing activities of $(49,232) for the three
months ended September 30, 2003 compared to net cash used in investing
activities of $(73,272)for the three months ended September 30, 2002. The
$24,040 decrease relates primarily to the issuance of new notes receivable to
employees.
The Company had net cash provided by financing activities of $72,293 for the
three months ended September 30, 2003 compared to net used in financing
activities of $(216,112) for the three months ended September 30, 2002. The
$288,405 increase is due to an increase credit line usage, trade debt and a
reduction in notes 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, 2004.
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 received a non-binding arbitration award in its favor,
but 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.
On January 2003 the Company received a lawsuit from a former employee seeking
damages relating to a sex and pregnancy discrimination complaint. The Company
disputes the lawsuit and believes that there is no basis for the lawsuit, and
that the Company is requesting the matter to be dismissed. Immecor is also
seeking legal action against the former employee for malicious prosecution and
employment fraud.
Item 2. Changes in Securities
There were no changes in rights of securities holders during the period ended
September 30, 2003
Item 3. Defaults upon Senior Securities
There were no defaults upon senior securities during the period ended
September 30, 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 ended September 30, 2003.
Item 5. Other Information
There were no major contracts signed during the period ended September 30, 2003
Item 6. Exhibits and Reports on Form 8-K
There were no exhibits or Form 8-K filed during the period ended
September 30, 2003
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, 2003
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, 2003
By: /s/ William L. Lindgren
-------------------------------------------
William L. Lindgren
Chief Financial Officer