-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OfrqI3GfmsSeydmdP0WGUBqSGUSyKzwrDsmZpH7xTY/fZrHc9pzmILQ1KE9F2gil vHdbYi8x8J8mxLcewkmjDA== 0001039962-99-000003.txt : 19990208 0001039962-99-000003.hdr.sgml : 19990208 ACCESSION NUMBER: 0001039962-99-000003 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980930 FILED AS OF DATE: 19990205 FILER: COMPANY DATA: COMPANY CONFORMED NAME: IMMECOR CORP CENTRAL INDEX KEY: 0001039962 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRONIC COMPUTERS [3571] IRS NUMBER: 680324628 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 333-06966 FILM NUMBER: 99521810 BUSINESS ADDRESS: STREET 1: 100-105 PROFESSIONAL CENTER DR CITY: ROHNERT PARK STATE: CA ZIP: 94928-2137 BUSINESS PHONE: 7075853036 MAIL ADDRESS: STREET 1: 100-105 PROFESSIONAL DR CITY: ROHNERT PARK STATE: CA ZIP: 94928 10QSB 1 QUARTERLY REPORT 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 THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1998 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE 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. EmployerIdentificationNo.) Organization) 100 Professional Center Drive, Rohnert Park, California 94928-2137 (Address of principal executive offices) (707) 585-3036 (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 Securities 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 [ ] As of September 30, 1998, there were 2,435,376 shares of the issuer's Common Stock, without par value, outstanding. IMMECOR CORPORATION INDEX PART I. FINANCIAL INFORMATION Item 1. Consolidated Balance Sheets at September 30, 1997 and 1998 Consolidated Statements of Income for the three months and nine months ended September 30, 1997 and 1998 Consolidated Statements of Cash Flows for the nine months ended September 30, 1997 and 1998 Consolidated Statements of Shareholders' Equity for the nine months ended September 30, 1997 and 1998 Condensed Notes to Financial Statements Financial Data Sheet 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 Signatures PART I FINANCIAL INFORMATION
IMMECOR CORPORATION Balance Sheets (unaudited) Nine months ended September 30, 1997 1998 ---- ---- ASSETS Current Assets: Cash $ 31,731 $ 231,274 Accounts receivable (net of allowance for doubtful accounts of$20,000,$20,478) 647,600 456,382 Inventories 285,434 381,319 Notes receivable 5,283 - Prepaid expenses and other current assets 10,550 11,856 Deferred income taxes 7,034 18,737 ----- ------ Total current assets 987,632 1,099,568 Equipment and improvements, net 53,036 45,535 Offering costs (Note 7) 49,818 - --------------------------------------- Total assets $ 1,090,486 $ 1,145,103 ------------- -------------- LIABILITIES and SHAREHOLDERS' EQUITY Current Liabilities: Notes payable, due within one year (Note 2) $ 61,221 $ 4,115 Accounts payable 327,111 233,635 Accrued liabilities 92,242 22,257 Advances from shareholders (Note 3) 1,261 643 Customer deposits - 3,912 Income taxes 118,350 160,662 ------- ------- Total current liabilities 600,185 425,224 Long-term Liabilities: Notes payable, due after one year (Note 2) 13,639 9,559 Deferred income taxes - 10,454 ----------------------------------- Total long-term liabilities 13,639 20,013 ------ ------ Total liabilities 613,824 445,237 Commitments and Contingencies (Note 4) Shareholders' Equity: Common stock, no par value, 50,000,000 shares autho- rized; 2,421,000 and 2,435,376 shares issued and - - outstanding (Note7) 320,500 292,196 Preferred Stock,no par value,20,000,000 shares autho- rized; no shares issued and outstanding Retained earnings (deficit) 156,162 407,670 ------- ------- Total shareholders' equity 476,662 699,866 ------- ------- Total liabilities and shareholders'equity $ 1,090,486 $ 1,145,103 ------------ ------------
See accompanying notes to to financial statements
IMMECOR CORPORATION STATEMENTS OF CASH FLOWS (unaudited) Three months ended Nine months ended September 30, September 30, 1997 1998 1997 1998 Net sales (Note 5) 1,502,228 1,089,965 3,858,002 3,593,334 Cost of sales 1,144,227 863,791 2,966,421 2,660,905 ---------- --------- --------- --------- Gross profit 358,001 226,174 891,581 932,429 Operating costs and expenses: Selling, general and administrative expenses 217,687 184,966 547,801 614,544 Depreciation and amortization 3,818 3,950 10,454 11,692 ----- ----- ------ ------ Total operating costs and expenses 221,505 188,916 558,255 626,236 ------- ------- ------- ------- Operating income 136,496 37,258 333,326 306,193 Interest income 944 347 3,239 1,538 Interest expense ( 1,731) ( 8,676) ( 1,731) (13,279) - ----- - ----- - ----- ------- Income (loss) before income taxes 135,709 28,929 334,834 294,452 Income taxes (Note 6) 55,900 15,800 126,950 120,000 ------ ------ ------- ------- Net income (loss) 79,809 13,129 207,884 174,452 Net income (loss) per share 0.033 0.005 0.086 0.072 Weighted average shares outstanding 2,421,000 2,434,368 2,421,000 2,429,943
See accompanying notes to to financial statements
IMMECOR CORPORATION STATEMENTS OF CASH FLOWS (unaudited) Nine months ended September 30, 1997 1998 ---- ---- Operating Activities: Net income $ 207,884 $ 174,452 Adjustments to reconcile net income to net cash net cash provided by (used in) operating activities: Depreciation 10,454 11,692 Provision for losses on accounts receivable 10,000 10,000 Deferred income taxes 7,800 (12,024) Disposal of equipment 10,367 - Changes in: Accounts and notes receivable (276,761) 54,044 Inventories (156,013) (38,161) Income taxes 118,350 28,937 Prepaid expenses and all other (6,000) (2,625) Accounts payable 72,737 (87,756) Accrued liabilities and customer deposits 58,777 (97,384) ------ ------- Net cash provided by (used in) operating activities 57,595 41,175 ------ ------ Investing Activities: Purchase of equipment (31,897) (2,272) Net assets acquired in purchase of Intelnet (Note 8) - - -------- ------- Net cash provided by (used in) investing activities (31,897) (2,272) ------- ------ Financing Activities: Proceeds from sale of common stock (Note 7) - 70,911 Additions to notes payable 74,860 - Offering costs (33,580) (39,880) Principal payments on notes payable (29,606) (2,785) Shareholder advances (60,318) - ------- ------- Net cash provided by (used) financing activities (48,644) 28,246 ------- ------ Increase (decrease) in cash (22,946) 67,149 Cash balance, beginning of period 54,677 164,125 ------ ------- Cash balance, end of period $ 31,731 $ 231,274 ----------- ------------ Supplemental Disclosure of Cash Flow information: Cash paid during the year for: Interest $ 1,731 $ 13,279 ----------- ------------ Income taxes $ 800 $ 111,603 ----------- ------------
See accompanying notes to to financial statements
IMMECOR CORPORATION STATEMENTS OF SHAREHOLDERS' EQUITY (unaudited) Retained Common Preferred Earnings Stock Stock (Deficit) Total Balance, December 31, 1996 $ 320,500 $ - (51,722) $268,778 Nine months ended September 30, 1997 (unaudited) Net income - - 207,884 207.884 --------------------------------------------------- Balance, September 30, 1997 $ 320,000 $ - $ 156,162 $ 476,662 --------------------------------------------------- Balance, December 31, 1997 $ 256,602 $ - $ 233,218 $ 489,820 Nine months ended September 30, 1998 (unaudited) Common Shares issued (14,376) 75,474 - - 75,474 Offering costs (Note 7) (39,880) - - (39,880) Net income - - 174,452 174,452 Balance, September 30, 1998 $ 292,196 $ $ 407,670 $ 699,866 ---------------------------------------------------
See accompanying notes to to financial statements IMMECOR CORPORATION Notes to Financial Statements Nine months ended September 30, 1997 and 1998 (unaudited) Note 1: Basis of presentation Immecor Corporation has prepared the financial statements on an accrual basis of accounting. The accompanying unaudited financial statements have been prepared from the records of the Company and, in the opinion of management, include all adjustments (consisting of normal recurring accruals) necessary to present fairly the financial position at September 30, 1997 and 1998, the interim results of operations for the three and nine months periods ended September 30, 1997 and 1998, the interim cash flows for the nine months ended September 30, 1997 and 1998, and the interim changes in shareholders' equity for the nine months ended September 30, 1997 and 1998. During 1996 the Company had a division which operated under the name of Computer 2000. During the second quarter of 1997 the division's operations were merged with Immecor Corporation and it no longer operated as a separate division. Its results of operations for 1997 are included in the accompanying financial statements. Accounting policies followed by the Company are described in Note 1 to the audited financial statements in the Company's Annual Report on Form 10KSB for the year ended December 31, 1997. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted for purposes of these financial statements
Note 2: Notes Payable September 30, following: 1997 1998 ---- ---- Line of credit with Westamerica with interest at 3.5% over prime rate with a maturity date of April 30, 1999. Additional terms of the line of credit are described below. $ 57,546 $ - Note payable to GMAC, secured by transportation equipment, payable in monthly installments of $443 including interest of 10.5% through September 2001 17,314 13,674 ------ ------ 74,860 13,674 Total notes payable due within one year 61,221 4115 ------ ---- Total notes payable due after one year $ 13,639 $ 9,559 --------- ---------
Immecor Corporation has a $500,000 line of credit to finance short-term working capital needs. Advances under the line of credit can not exceed 80% of eligible accounts receivable and is secured by a security interest in all accounts receivable, inventory and equipment. The line of credit is also personally guaranteed by the Company's major shareholder. There were no unpaid advances on the line of credit as of September 30, 1998. Maturities of long-term debt are as follows for the twelve months ending September 30: 1999 $ 4,115 2000 4,530 2001 5,029 ------------- $ 13,674 ------------ Note 3: Advances from Shareholders The Company receives advances from some of the corporate officers who are also major shareholders to meet working capital requirements. These advances are generally repaid within 30 to 60 days. Note 4: Commitments and Contingencies Long-Term Lease: Immecor Corporation leases its corporate headquarters under a non-cancelable operating lease which expires in January 2001. Immecor is also obligated to pay to the lessor its pro-rata share of utilities for the building on a monthly basis. Immecor also leases equipment under a non-cancelable operating lease which expires in July 2003 and is obligated to pay the majority of all expenses for the equipment. Minimum future rental payments under all lease agreements as of September 30, 1998 are as follows for the twelve months ended: 1999 $ 69,486 2000 71,810 2001 16,500 2002 11,400 2003 9,500 ---- ----- $ 178,696 Rental expenses under the above leases were $39,389 and $49,292 for the nine months ended September 30, 1997 and 1998, respectively. IMMECOR CORPORATION Notes to Financial Statements, continued Nine months ended September 30, 1997 and 1998 (unaudited) Litigation: The Company filed a lawsuit against three shareholders who were formerly officers and directors of the Company seeking rescission of the issuance of 500,000 shares of the Company's common stock in the acquisition of Advanced Network Communications, Inc. in 1994. In addition, the Company is seeking the return of funds it believes were embezzled and taken through fraud during 1994 by the three defendants. The Company and its legal counsel are rigorously pressing this litigation but the case has not been set for trial. It is unlikely that the trial will commence before the end of 1998; there is no assurance of the outcome of the litigation. All legal expenses relating to this case have not been significant to date and have been expensed as incurred as reflected in the accompanying financial statements. Note 5: Sales to Major Customers 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 operations. One customer individually accounted for over 10% of the Company's sales for the nine months ended September 30, 1997. Sales to this customer aggregated over 63% of total sales for this period. One customer individually accounted for over 10% of the Company's sales for the nine months ended September 30, 1998. Sales to this customer aggregated over 76% of total sales for this period. The Company is attempting to expand its customer base to lessen the effect of having major customers. Note 6: Income Taxes The provision for income taxes as a percentage of pretax income was 37.9% for the nine months ended September 30, 1997 and 40.8% for the nine months ended September 30, 1998. The Company believes that the applied tax rates accurately reflect its actual tax provision with appropriate consideration for deferred income taxes. Deferred income taxes (benefits) reflect the tax effect of temporary differences between the amounts of assets and liabilities for financial reporting and amounts as measured for tax purposes. Note 7: Stock Offering The Company's initial direct public offering filed with the Securities and Exchange Commission became effective November 18, 1997. California approved the filing effective December 19, 1997. The price per share of common stock has been set at $5.25 and the Company will receive $3,937,500 assuming all 750,000 shares are sold. There is no minimum number of shares that have to be sold. Offering costs which had been classified as another asset at September 30, 1997 were recorded as a reduction of common stock proceeds once the offering became effective and any offering costs incurred from September 30, 1997 through September 30, 1998 have also been recorded as a reduction of common stock proceeds received. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. Net Sales. Net sales decreased by $264,668 or 6.9% from $3,858,002 for the nine months ended September 30, 1997 to $3,593,334 for the nine months ended September 30, 1998. Net sales decreased by $412,263 or 27.4% from $1,502,228 for the three months ended September 30, 1997 to $1,089,965 for the three months ended September 30, 1998. The primary reason for the decrease in sales as described above was caused by decreased orders from major customers due to the Asian crisis. Gross Profit. As a percentage of net sales, gross profits increased from 23.1% for the nine months ended September 30, 1997 to 25.9% for the nine months ended September 30, 1998. This increase related to higher margins realized on high-end customized specialty computers during 1998 compared to the 1997 period. For the three months ended September 30, 1998, gross profits decreased from 23.8% for the third quarter of 1997 to 20.8% for the third quarter of 1998. The decrease was primarily due to lower sales of high margin systems to major customers in the third quarter of 1998. Selling, General and Administrative Expenses. Selling, general and administrative expenses increased as a percentage of net sales from 14.2% for the nine months ended September 30, 1997 to 17.1% for the nine months ended September 30, 1998. For the third quarter of 1998, selling, general and administrative expenses as a percentage of net sales were 17.0% compared to 14.5% for the comparable period in 1997. The primary reason for the increase in 1998 were due to hiring of additional employees, increased compensation levels for employees and decreased sales volume in 1998. Interest Expense. Interest expense was $13,279 for the nine months ended September 30, 1998 compared to $1,731 for the nine months ended September 30, 1997. For the third quarter of 1998 interest expense was $8,676 compared to $1,731 for the third quarter of 1997. The increases in the 1998 periods were caused by interest on unpaid 1997 income tax liabilities which were not fully paid until October 1998. Net Income. For the nine months ended September 30, 1998, the Company had net income of $174,452 compared to $207,884 for the comparable period in 1997. For the third quarter of 1998, the Company had a net income of $13,129 compared to a net income of $79,809 for the comparable period in 1997. These decreases in profitability in the 1998 periods were primarily caused by decreased third quarter sales as described above. Liquidity and Capital Resources. At September 30, 1998, the Company had net working capital of $674,344 compared to $387,447 at September 30, 1997. The increase in working capital from 1997 to 1998 was primarily due to Immecor's continued profitability. The Company had net cash provided by operating activities of $57,595 for the nine months ended September 30, 1997 compared to net cash provided by operating activities of $41,175 for the nine months ended September 30, 1998. The $16,420 difference relates primarily to significant decreases in current liabilities during the 1998 period. The Company had net cash used by financing activities of $48,644 for the nine months ended September 30, 1997 compared to net cash provided by financing activities of $28,246 for the nine months ended September 30, 1998. The $76,890 difference relates to proceeds from sale of common stock in 1998 while in 1997 the Company incurred offering costs before common stock could be sold and the repayment of over $89,000 of notes payable and shareholder advances. The Company believes it can finance its operations for the next twelve months with available cash and with available lines of credit PART II. OTHER INFORMATION Item 1. Legal Proceedings The Company filed a lawsuit against three shareholders who were formerly officers and directors of the Company seeking rescission of the issuance of 500,000 shares of the Company's common stock in the acquisition of Advanced Network Communications, Inc. in 1994. In addition, the Company is seeking the return of funds it believes were embezzled and taken through fraud during 1994 by the three defendants. The Company and its legal counsel are rigorously pressing this litigation but the case has not been set for trial. It is unlikely that the trial will commence before the end of 1998 and there is no assurance of the outcome of the litigation. All legal expenses relating to this case have not been significant to date and have been expensed as incurred as reflected in the accompanying financial statements. Item 2. Changes in Securities There were no changes in rights of securities holders. Item 3. Defaults upon Senior Securities There were no defaults upon senior securities. Item 4. Submission of Matters to a Vote of Security-Holders There were no matters submitted to the vote of securities holders. Item 5. Other Information None. Item 6. Exhibits and Reports on Form 8-K No reports on Form 8-K were filed during the period. SIGNATURES In accordance with the requirements of the Securities and Exchange Commission the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. IMMECOR CORPORATION (Registrant) November 15, 1998 /s/ Heinot H. Hintereder Date President and Chief Executive Officer EX-27 2 FDS --
5 THIS SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS OF IMMECOR CORPORATION FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1998, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. dollars 9-MOS 9-MOS DEC-31-1997 DEC-31-1998 JAN-1-1997 JAN-1-1998 SEP-30-1997 SEP-30-1998 1 1 37731 231274 0 0 672883 476860 20000 20478 285434 381319 987632 1099568 75036 78828 22000 33293 1090486 1145103 600185 425224 0 0 0 0 0 0 320500 292196 156162 407670 1090486 1145103 3858002 3593334 3858002 3593334 2966421 2660905 3524676 3287141 0 0 0 0 1731 13279 334834 294452 126950 120000 207884 174452 0 0 0 0 0 0 207884 174452 .086 .072 .086 .072
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