-----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, RhdxlOeOAqrguyBwe/0zB5pkxyHGSzo7UwmN2jF8CWoPbd2rVm/xFvb9NJunr19K HYYeCJclhZkfGIbPvAlQqg== 0001039962-01-500012.txt : 20010820 0001039962-01-500012.hdr.sgml : 20010820 ACCESSION NUMBER: 0001039962-01-500012 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20010630 FILED AS OF DATE: 20010817 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: 1934 Act SEC FILE NUMBER: 333-06966 FILM NUMBER: 1717254 BUSINESS ADDRESS: STREET 1: 3636 NORTH LAUGHLIN RD. #150 CITY: SANTA ROSA STATE: CA ZIP: 95403 BUSINESS PHONE: 7076362550 MAIL ADDRESS: STREET 1: 100-105 PROFESSIONAL DR CITY: ROHNERT PARK STATE: CA ZIP: 94928 10QSB 1 a10q62001.txt IMMECOR CORPORATION 10QSB 6/30/2001 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 June 30, 2001 [ ] 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 August 14, 2001. Transitional Small Business Disclosure Format Yes [ ] No [X] IMMECOR CORPORATION INDEX TABLE OF CONTENTS PART I FINANCIAL INFORMATION Item 1. Condensed balance sheets (unaudited) at June 30, 2001 and December 31, 2000 Condensed statements of operations (unaudited) for the three and six months ended June 30, 2000 and 2001 Condensed statements of cash flows (unaudited) for the six months ended June 30, 2000 and 2001 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 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. IMMECOR CORPORATION Condensed Balance Sheets ASSETS
June 30, December 31, 2001 2000 ---- ---- (unaudited) (audited) CURRENT ASSETS Cash $ 498,636 $ 2,077,040 Accounts receivables, less (allowance for doubtful amounts of $22,000) 509,590 2,891,113 Inventories 3,484,495 2,785,692 Notes receivable 96,496 198,907 Prepaid and other assets 41,621 163,858 Deferred income taxes 187,000 167,200 --------- -------- Total current assets 4,817,838 8,084,903 EQUIPMENT AND IMPROVEMENTS -net 440,332 443,045 ------- ------- Total Assets $ 5,258,170 $ 8,726,855 ============ =========== LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Line of credit $ 36,741 $ - Notes payable, due within one year 456,493 3,820 Accounts payable 505,281 2,848,247 Accrued liabilities 446,065 1,278,010 Other liabilities 5,754 - Income taxes payable 1,300,535 1,710,455 --------- --------- Total current liabilities 2,750,869 5,840,532 Deferred income taxes 14,500 19,800 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, 5,806,128 shares 288,855 288,855 Retained earnings 2,203,946 2,577,668 ----------- --------- Total shareholders' equity 2,492,801 2,866,523 --------- --------- Total liabilities and shareholders' equity $ 5,258,170 $ 8,726,855 ============= ===========
The accompanying notes are an integral part of these financial statements IMMECOR CORPORATION Condensed Statements of Operations (unaudited)
Six Months Ended Three Months Ended June 30, June 30, 2000 2001 2000 2001 ---- ----- ---- ---- Net sales $ 12,286,060 $ 5,246,065 $ 6,227,422 $ 2,372,511 Cost of sales 10,196,662 4,247,465 5,588,843 2,305,827 ---------- --------- --------- --------- Gross profit 2,089,398 998,600 638,579 66,684 Selling, general and administrative expenses 1,198,563 1,629,568 672,651 831,082 --------- --------- ------- ------- Operating income (Loss) 890,835 (630,968) (33,982) (764,398) Interest expense (32,651) (43,227) (20,322) (11,804) Interest income 1,392 21,385 1,345 18,217 Other income 22,081 38,765 22,081 26,322 ------- ------- -------- -------- Income (loss) before income taxes 881,657 (614,045) (30,878) (731,663) Income tax expense (benefit) 721,208 (240,323) 351,208 (146,073) --------- ---------- --------- --------- NET INCOME (Loss) $ 160,449 $ (373,722) $ (382,208) $ (585,590) Net income (loss) per share - basic and diluted $ 0.02 $ (0.06) $ (0.07) $ (0.10) Weighted average shares outstanding - basic and diluted 5,806,128 5,806,128 5,806,128 5,806,128
The accompanying notes are an integral part of these financial statements IMMECOR Condensed Statement of Cash Flows For six months ended June 30, 2001 and June 30, 2000
2000 2001 ------ ---- Cash flows from operating activities Net Income (loss) $ 160,449 $ (373,722) Reconciliation of net income (loss) to net cash provided by (used) in operating activities: Depreciation and amortization 4,170 53,824 Deferred income taxes (91,141) (25,100) Write off obsolete inventory 44,835 583,138 Changes in current assets and liabilities: Accounts receivable (1,545,921) 2,381,523 Inventories (236,778) (1,281,941) Prepaid and other assets 7,730 122,237 Accounts payable 221,931 (1,746,724) Accrued liabilities 1,444,629 (831,945) Income taxes payable 812,349 (409,920) --------- ----------- Net cash provided (used in)operating activities 822,253 (1,528,630) Cash flows from investing activities: Purchase of property and equipment (66,534) (63,111) Proceeds from notes receivable - 102,411 Proceeds from disposal of equipment - 12,000 ---------- ---------- Net cash provided by (used in) investing activities (66,534) 51,300 Cash flows from financing activities: Net borrowings (repayments)from line of credit (223,775) 36,741 Proceeds from notes payable 1,540 - Principal payments on note payable - (137,815) Advances from shareholders 93,389 - ------------ ---------- Net cash used in financing activities (128,846) (101,074) NET CHANGE IN CASH 626,873 (1,578,404) Cash balance - beginning of period 57,788 2,077,040 --------- --------- Cash balance - end of period $ 684,661 $ 498,636 ============ ============== Non-cash transactions Conversion of accounts payable to note payable $ - $ 590,488 Supplemental disclosure of cash flow information: Cash paid during the period for: Interest $ 32,593 $ 43,227 Income taxes $ 57,348 $ 250,000
The accompanying notes are an integral part of these financial statements IMMECOR CORPORATION NOTES TO THE CONDENSED FINANCIAL STATEMENTS (Unaudited) 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 accounting principles generally accepted in the United States of America, 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, 2000. The financial statements presented herein as of and for the three and six months ended June 30, 2001 and June 30, 2000 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 (loss) per share amounts are based on the weighted average number of common stock shares outstanding in each period. There are no potentially dilutive securities. Note 2: Line of Credit The Company has a $1,500,000 line of credit, which expires December 20, 2001. 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 majority shareholder. The advance outstanding on the line of credit as of June 30, 2001 was $36,741. Note 3: 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. One customer accounted for 84% and 91% of total sales in 2000, and 2001, respectively. The Company is attempting to expand its customer base to lessen the effect of having one major customer. Note 4: Note Payable On January 5, 2001, the Company entered into a zero interest bearing note agreement with a subcontractor to convert the amount recorded through accounts payable for the value of integration work performed during 2000. The note was a mutual agreement from both parties and provides for bi-weekly payments of $30,000 until the contract is paid in full. The outstanding balance as of June 30, 2001 was $455,186. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. RESULTS OF OPERATIONS Three Months and Six Months ended June 30, 2001 and 2000 Net Sales Net sales decreased by $(3,854,911) or (62)% from $6,227,422 for the three months ended June 30, 2000 to $2,372,511 for the three months ended June 30, 2001 and net sales decreased by $(7,039,995) or (57)% from $12,286,060 for the six months ended June 30, 2000 to $5,246,065 for the six months ended June 30, 2001 respectively. The lower demand for systems was primarily due to the general economic slowdown and weaker demand for technology related products. Revenues are derived from sales of systems, distribution of hardware, and development of new products. Sales of systems accounted for approximately 88% of net revenues in the second quarter of fiscal 2000 and approximately 95% of our revenues in the second quarter of 2001. We expect sales to remain steady through out the next quarter as we launch prototype systems into full production by the end of the third quarter of 2001. Gross Profit Gross profits decreased from $5,588,843 for the three months ended June 30, 2000 to $2,305,827 for the three months ended June 30, 2001. As a percentage of net sales, gross profits decreased from 89.7% for the three months ended June 30, 2000 to 2.81% for the three months ended June 30, 2001. The decrease in gross margin as a percentage of sales was primarily due to obsolete inventory write-offs for an amount of $583,138. The inventory was written off in the second quarter due to discontinued products and engineering change orders from a corporate customer during the second quarter. Without the write-off of inventory, gross profits would have been $1,581,738 or 30% for the six months ended June 30, 2001. The Company believes it has written off all obsolete inventories and the profit margins for next quarter will be in line with normal operations. Gross profits decreased from $2,089,399 for the six months ended June 30, 2000 to $998,600 for the six months ended June 30, 2001. As a percentage of net sales, gross profits increased from 17.3% for the six months ended June 30, 2000 to 19% for the six months ended for June 30, 2001. The increase in gross margin as a percentage of sales was primarily due to an increased leverage of our manufacturing costs by outsourcing key components globally while decreasing our labor costs associated with cost of goods. The company acknowledges that pricing pressures due to the competitive market, the liquidation of excess inventory, potentially below our costs, changes in sales volume, and changes in customer demand due to the slow economy, may adversely impact our gross margins in upcoming quarters. Selling, General and Administrative Expenses Selling, general and administrative expenses increased $158,521 from $672,561 for the three months ended June 30, 2000 to $831,082 for the three months ended June 30, 2001. As a percentage of net sales, selling, general and administrative expenses increased from 10.8% in 2000 to 35.03% in 2001. The increase is primarily due to revenues significantly decreasing while expenses increased to allocate for accruals for executive and employee bonuses, higher rents due to new location, and continuing to invest in research and development for new products. The Company also paid higher rents than previous periods due to the new headquarters. Research and development expenses consist of payroll and related expenses for certification, fabrication, and cost of materials for prototyping and testing units. Item 2.Management's Discussion and Analysis of Financial Condition and Results of Operations - Continued Research and development expenses for the three months ended June 30, 2001 and June 30, 2000 was $112,364 and $35,080, respectively. Research and development expenses for six months ended June 30, 2001 and June 30, 2000 was $224,895 and $105,300, 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. Selling, general and administrative expenses increased $431,005 from $1,198,563 for the six months ended June 30, 2000 to $1,629,568 for the six months ended June 30, 2001. As a percentage of net sales, selling, general and administrative expenses increased from 9.7% in 2000 to 31% in 2001. The increase is primarily due to a decrease in sales while the company continued to pay higher levels of rent compared to last year, increased R&D expense to produce new products and accrued for year end executive and employee bonuses. Liquidity and Capital Resources Continued: On June 30, 2000 and 2001 the Company had net working capital of $455,604 and $2,066,969 respectively. The increase in working capital from 2000 to 2001 was primarily due to an increased level of inventory and reduction of accounts payable. The Company had net cash used by operating activities of $(1,528,630) for the six months ended June 30, 2001 compared to net cash provided by operating activities of $822,253 for the six months ended June 30, 2000. The $(2,350,883) difference is primarily due to the changes in accounts receivable, inventory and accounts payable due to lower sales for the six months ended June 30, 2001. The Company had net cash provided by investing activities of $51,300 for the six months ended June 30, 2001 compared to net cash used by investing activities of $(66,534) for the six months ended June 30, 2000. The $(117,834) difference relates primarily to proceeds from notes receivable. The Company had net cash used by financing activities of $(101,074) for the six months ended June 30, 2001 compared to net cash used by financing activities of $(128,846) for the six months ended June 30, 2000. The $(27,772) difference relates primarily to an increase in short-term borrowings due to a decrease in sales for the six months ended June 30, 2001. At present, management believes that future cash flow from operations and its existing institutional financing will be sufficient to fund all of the Company's cash requirements for the remaining six months. There were no substantial commitments for purchase orders outside the normal purchase orders used to secure product as of June 30, 2001. PART II. OTHER INFORMATION Item 1. Legal Proceedings There are no legal proceedings pending against the Company during the period ending June 30, 2001. Item 2. Changes in Securities There were no changes in rights of securities holders during the period ending June 30, 2001. Item 3. Defaults upon Senior Securities There were no defaults upon senior securities during the period ending June 30, 2001. 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 June 30, 2001. Item 5. Other Information There were no major contracts signed during the period during the period ending June 30, 2001. Item 6. Exhibits and Reports on Form 8-K There were no filings of Exhibits and Reports on Form 8-K during the period ending June 30, 2001. 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: August 14, 2001 By: /s/ Wil. L. Lindgren ----------------------- Wil L. Lindgren Chief Financial Officer Date: August 14, 2001 By: /s/ Heinot H. Hintereder ----------------------- Heinot H. Hintereder President & Chief Executive Officer -----END PRIVACY-ENHANCED MESSAGE-----