-----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, Nbe8SzARXVIshA7YKQLTXXVObsVPOwWJF5JRMgavVAzb5GH1hCm/7IS/bkPfb8H4 ORHNrB+n5tBY3GAJX6GCgg== 0001039962-00-000002.txt : 20000331 0001039962-00-000002.hdr.sgml : 20000331 ACCESSION NUMBER: 0001039962-00-000002 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19990930 FILED AS OF DATE: 20000330 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: 584538 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] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1999 [ ] 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. Employer Identification No.) 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 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. 1,935,376 shares of common stock as of September 30, 1999. Transitional Small Business Disclosure Format Yes [ ] No [X] - 1 - IMMECOR CORPORATION INDEX TABLE OF CONTENTS PART I FINANCIAL INFORMATION Item 1. Balance sheets at September 30, 1998 and 1999 Statements of income for the nine months ended September 30, 1998 and 1999 Statements of cash flows for the nine months ended September 30, 1998 and 1999 Statements of shareholders' equity for the nine months ended September 30, 1998 and 1999 Item 2. Management's Discussion and Analysis or Plan of Operation 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 statement 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. PART I ITEM 1. FINANCIAL INFORMATION Page The following Financial Statements are filed as part of this report: Balance Sheets 3 Statements of Income 4 Statements of Cash Flows 5 Statements of Shareholder Equity 6 Notes to Financial Statements 7 IMMECOR CORPORATION Balance Sheets Period ended September 30, (unaudited) ASSETS
1998 1999 ---- ---- CURRENT ASSETS Cash $ 231,274 $ (232,341) Accounts receivables (net of allowance for doubtful accounts of $10,478 in 1998 and 18,750 in 1999 ) (Note 2) 456,382 1,063,952 Inventories (Note 3) 381,319 996,123 Notes receivable - 136,565 Prepaid and other assets 11,856 18,923 Deferred income taxes 18,737 18,737 -------- ---------- Total current assets 1,099,568 2,001,959 Equipment and improvements. net (Note 4) 45,535 131,443 ------ ------- Total Assets $ 1,145,103 $ 2,133,402 ------------ ------------ LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Notes payable, due within one year (Note 7) $ 4,115 $ 144,453 Accounts payable 233,635 854,003 Accrued liabilities 22,257 3,084 Advances from shareholders (Note 6) 643 75,103 Customer deposits 3,912 - Employee benefits - 7,602 Taxes payable 160,662 193,154 ---------- -------- Total current liabilities 425,224 1,277,399 LONG-TERM LIABILITIES Note payable, due after one year (Note 5) 9,559 9,680 Deferred income taxes 10,454 10,454 -------- --------- Total long-term liabilities 20,013 20,134 -------- --------- Total liabilities $ 445,237 $ 1,297,533 ------------ ------------ COMMITMENTS AND CONTINGENCIES SHAREHOLDERS' EQUITY Preferred stock, no par value, 20,000,000 shares authorized; no shares issued and outstanding Common stock, no par value, 50,000,000 shares authorized; issued and outstanding, 1998: 2,428,226; 1999: 1,935,376 (Note 10) 292,196 284,872 Retained earnings 407,670 550,998 ------------- ------------ Total shareholders' equity 699,866 835,869 ------------------------- Total liabilities and shareholders' equity $ 1,145,103 $ 2,133,402 --------------------------------- The accompanying notes are an integral part of these financial statements - 3 - IMMECOR CORPORATION Statement of Income Period ended September 30, (unaudited) 1998 1999 ------------ --------- Net sales $ 3,593,334 $ 6,809,709 Cost of sales 2,660,905 5,586,316 ------------- ------------- Gross profit 932,429 1,223,393 Operating costs and expenses Selling, general and administrative expenses 614,544 882,915 Depreciation and amortization 11,692 - --------- --------- Total operating costs and expenses 626,236 882,915 Operating income 306,193 340,428 Interest income 1,538 549 Other income - (6,854) Interest expense (13,279) (20,510) ----------- --------- Income (loss) before income taxes 294,452 313,663 Income taxes 120,000 7,810 ---------- ---------- Net income (loss) $ 174,452 $ 305,853 ------------------------------- Net income per share - basic and diluted $ 0.072 $ 0.158 Weighted average shares outstanding - basic and diluted 2,428,226 1,935,376 The accompanying notes are an integral part of these financial statements - 4 - IMMECOR CORPORATION Statement of Cashflows Period ended September 30, (unaudited) 1998 1999 ----------- ---------- Increase(decrease) from cash Cash from operations: Net income (loss) $ 174,452 $ 305,853 Reconciliation of net income (loss) to net cash used by operating activities: Depreciation and amortization 11,692 - Changes in current assets and liabilities (142,945) 136,003 Net cash provided (used) by operating activities 41,175 441,856 Cash flows from investing activities: Additions to property and equipment (31,897) (7,501) Net cash provided (used) by investing activities (31,897) (7,501) Cash flows from financing activities: Proceeds from common stock 70,911 - Increase in loan payable (39,880) 140,459 Repayments on capital lease - 10,212 Net cash provided (used) by financing activities (48,644) 150,671 Net increase in cash and cash equivalents Cash and cash equivalents at beginning of period 164,125 37,307 Cash and cash equivalents at end of period $ 231,274 $ (232,341) ----------- ------------- Supplemental disclosure of cash flow information: Cash paid during the period for interest $ 3,279 $ 20,510
The accompanying notes are an integral part of these financial statements - 5 - IMMECOR CORPORATION Statement of Shareholders' Equity Period ended September 30, (unaudited)
Number of Retained Outstanding Common Earnings Shares Stock (Deficit) Total Balance-December 31, 1998 2,435,376 $ 288,855 $ 278,838 $ 567,693 Nine months ended September 30, 1999 (unaudited) Litigation settlement returned shares (Note 10) (500,000) Offering costs (3,983) (3,983) Adjustments to net income (49,315) (49,315) Net income - - 321,475 321,475 ---------- --------- ------------- ----------- Balance-September 30, 1999 1,935,376 $ 284,872 $ 550,998 $ 835,870 ---------- ----------- ------------- -----------
The accompanying notes are an integral part of these financial statements - 6 - IMMECOR CORPORATION NOTES TO THE INTERIM UNAUDITED CONDENSED FINANCIAL STATEMENTS Note 1: Summary of Significant Accounting Policies Basis of Presentation The financial statements included in this Form 10-QSB have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted, pursuant to such rules and regulations, although management believes the disclosures are adequate to make the information presented not misleading. The results of operations for any interim period are not necessarily indicative of results for a full year. These 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 December 31, 1998. The financial statements presented herein as of September 30, 1999, 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. Earnings per share amounts are based on the weighted average number of common stock shares outstanding in each period. Note 2: Receivables consist of the following as of September 30:
1998 1999 ----------- ---------- Accounts receivable $ 476,860 $ 1,082,702 Less allowance for doubtful accounts 20,478 18,750 ----------- ------------ $ 465,895 $ 1,063,952 Note 3: Inventory Inventories consist of the following as of September : 1998 1999 ---------- ----------- Purchased parts $ 285,989 $ 747,092 Finished systems 95,330 249,031 ----------- ----------- $ 381,319 $ 996,123 Note 4: Equipment and Improvements Equipment and improvements consist of the following as of September 30: 1998 1999 --------- ----------- Equipment and Furniture $ 54,013 $ 100,526 Transportation equipment 29,813 68,649 ----------- ----------- 83,826 169,175 Less accumulated depreciation 33,293 39,045 ----------- ---------- $ 50,534 $ 130,130 - 7 - IMMECOR CORPORATION NOTES TO THE INTERIM UNAUDITED CONDENSED FINANCIAL STATEMENTS Note 5: Note Payable Note payable consists of the following as of September 30: 1998 1999 ----------------------- Note payable, collaterized by vehicle, payable in monthly installments of $443 including interest of 10.5% through September 2001 $ 13,674 $ 9,680 Less amount due in one year 4115 1,329 ---------- ----------- $ 9,559 $ 8,351
Note 6: Stockholder Advances 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 90 days. Note 7: Line of Credit The Company has a $500,000 line of credit which expires May 31, 2000. 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. The advance outstanding on the line of credit as of September 30, 1999 was $144,453. Note 8: Commitments The Company leases two premises under two noncancelable operating leases. Operating lease one expires in January 2001, and operating lease two expires in April 2002. The Company is obligated to pay its pro-rate share of utilities for the building on a monthly basis. For lease two the Company is obligated to pay its own utilities and has set up an account with the local utility company. Minimum future rental payments under the lease agreements as of September 30, 1999 are as follows:
Year ending December 31, Lease One Lease Two City of Rohnert Park City of Santa Clara 1999 $ 58,836 $ 26,208 2000 60,998 27,216 2001 5,100 28,224 -------------- ----------------- $ 124,934 $ 81,648
Rental expenses under the above lease(s) were $49,292 and $39,389 for the nine months ended September 30, 1998 and 1999, respectively. - 8 - IMMECOR CORPORATION NOTES TO THE INTERIM UNAUDITED CONDENSED FINANCIAL STATEMENTS Note 8: 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 operation. One customer accounted for 67% and 76% of total sales in 1999 and 1998 respectively. The Company is attempting to hire more sales staff and expand its customer base to lessen the effect of having major customers. Note 9: Income Taxes The provision for income taxes consists of the following for the nine months ended September 30, 1999: 1998 1999 --------------------- Currently payable: Federal $ 133,062 $ 116,157 State 27,600 19,468 Deferred taxes 10,454 10,454 ------------------------- $ 171,116 $ 146,079 Note 10: Reduction of Number of Shares of Common Stock outstanding 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 common stock in the acquisition of Advanced Network Communications, Inc. in 1994. The litigation was settled in the Company's favor effective August 31, 1999, resulting in the return of 500,000 shares of Common Stock to the Treasury of the Company, reducing the number of outstanding shares of Common Stock from 2,435,376 to 1,935,376. - 9 - Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. Financial Condition and Results of Operations: The following table sets forth, as a percentage of sales, certain items included in the Company's financial statements.
Years Ended Nine months Ended December 31, September 30, -1997 -1998- -1998- -1999- ------- --------- --------- -------- Statements of Income Data: Net sales......................................... 100.00% 100.00% 100.00% 100.00% Cost of sales .................................. 76.43 78.12 74.05 82.03 Gross profit ..................................... 23.57 21.88 25.94 17.96 Depreciation and amortization .................... 0.25 0.38 0 .03 00.00 Selling, general and administrative expenses ..... 14.90 20.14 17.10 12.96 Total operating costs and expenses ............... 15.15 20.52 17.42 12.96 Operating income (loss) .......................... 8.67 1.73 8.52 4.99 Interest income (loss) ........................... 0.07 0.05 0.04 0.00 Interest expense.................................. (0.05) (0.12) 0.36 0.30 Income (loss) before income taxes................. 8.69 1.67 8.19 4.60 Income Tax ...................................... 3.37 0.67 3.33 0.11 Net income (loss) ................................ 5.32 1.00 4.84 4.49
Net Sales Net sales increased by $3,216,375 or 89.50 % from $3,593,334 for the nine months ended September 30, 1998 (the "1998 period") to $6,809,709 for the nine months ended September 30, 1999 ("the 1999 period"). The net sales increase resulted primarily from an increase in sales staff and and increased demand from major customers responsible for the majority of the Company's sales. Orders on the books of the Company indicate that this trend will continue during the fourth quarter of 1999. Nevertheless, the loss of a major customers would have a material adverse effect on the Company's financial position and results of operations. Gross Profit As a percentage of net sales, gross profits increased from 25.9% in the 1998 period to 31.20% in the 1999 period. This increase was related to higher margins realized on high-end customized speciaty computers. Selling, General and Administrative Expenses Selling, general and administrative expenses decreased as a percentage of net sales from 17.10 % in the 1998 period to 12.96 % in the 1999 period. The decrease in expenses as a percentage of net sales was primarily due to the increase in revenue. Liquidity and Capital Resources On September 30, 1998 and September 30, 1999 the Company had net working capital of $719,879 and $856,003, respectively. The $136,124 increase in working capital from 1998 to 1999 was primarily due to an increase in accounts receivables, inventory and equipment. The Company had net cash provided by operating activities of $41,175 in the 1998 period compared to net cash provided by operating activities of $441,856 in the 1999 period. The $400,681 difference relates primarily to an increase in revenues and higher margins for customized specialty computers for the nine month period in 1999. The Company had negative net cash used by financing activities of $48,644 in the 1998 period compared to positive net cash provided by financing activities of $150,671 in the 1999 period. The $199,315 difference relates primarily to financing of new products and higher inventory levels for the new products. - 10 - Dates following December 31, 1999 and beyond ( the "Year 2000 Problem") Many existing computer systems and applications, and other devices, use only two digits to identify a year in the date field, without considering the impact of the upcoming change in the century. Such systems and applications could fail or create erroneous results unless corrected. The Company relies on its internal financial systems and external systems of business enterprises such as customers, suppliers, creditors, and financial organizations both domestically and globally, directly and indirectly for accurate exchange of data. The Company has evaluated such systems and believes the cost of addressing the Y2K Problem will not have a material adverse affect on the result of operations or financial position of the Company. However, even though the internal systems of the Company are not materially affected by the Y2K Problem the Company could be affected through disruption in the operation of the enterprises with which the Company interacts. 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 common stock in the acquisition of Advanced Network Communications, Inc. in 1994. The litigation was settled effective August 31, 1999, resulting in the return of 500,000 shares of Common Stock to the Treasury of the Company, reducing the number of outstanding shares of Common Stock from 2,435,376 to 1,935,376. 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 The following matters were submitted to the vote of security holders. The corresponding Proxy Statement was filed August 26, 1999 pursuant to Section 14 (A) of the Security Exchange Act of 1934, and is incorporated by reference: a. Election of Directors; b. Three for One Common Stock Split; c. 2000 Employee Non-Qualified Stock Option Plan; and d. Such other business as may properly come before the meeting. Item 5. Other Information There were no major contracts signed during the period. Item 6. Exhibits and Reports on Form 8-K No exhibits and reports were filed on Form 8-K during this 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 CORPRATION Date: October 10, 1999 By: /s/ Wil. L. Lindgren ----------------------- Wil L. Lindgren Chief Financial Officer Date: October 10, 1999 By: /s/ Heinot H. Hintereder ----------------------- Heinot H. Hintereder President & CEO - 11 - LEGEND IMMECOR CORPORATION MULTIPLIER 1 CURRENCY 1 TABLE S C C PERIOD-TYPE YEAR YEAR FISCAL-YEAR-END DEC-31-1998 DEC-31-1999 PERIOD-START JAN-1-1998 JAN-1-1999 PERIOD-END SEP-30-1998 SEP-30-1999 EXCHANGE-RATE 1 1 CASH 231274 -232341 SECURITIES 0 0 RECEIVABLES 476860 1082702 ALLOWANCES 20478 18750 INVENTORY 381319 996123 CURRENT-ASSETS 1099568 2133402 PP&E 78828 57,391 DEPRECIATION 33293 0 TOTAL-ASSETS 1145103 2133402 CURRENT-LIABILITIES 425224 1277399 BONDS 0 0 PREFERRED-MANDATORY 0 0 PREFERRED 0 0 COMMON 292196 284872 OTHER-SE 407670 550998 TOTAL-LIABILITY-AND-EQUITY 1145103 2133402 SALES 3593334 6809709 TOTAL-REVENUES 3593334 6809709 CGS 2660905 5586316 TOTAL-COSTS 3287141 6469231 OTHER-EXPENSES 0 0 LOSS-PROVISION 0 0 INTEREST-EXPENSE 13279 20510 INCOME-PRETAX 294452 313663 INCOME-TAX 120000 7810 INCOME-CONTINUING 174452 305853 DISCONTINUED 0 0 EXTRAORDINARY 0 0 CHANGES 0 0 NET-INCOME 174452 305853 EPS-PRIMARY .072 .158 EPS-DILUTED .072 .158 - 12 - -----END PRIVACY-ENHANCED MESSAGE-----