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 June 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. 2,435,376 shares of common
stock as of June 30, 1999.
Transitional Small Business Disclosure Format Yes [ ] No [X]
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<PAGE>
IMMECOR CORPORATION
INDEX
TABLE OF CONTENTS
PART I
FINANCIAL INFORMATION
Item 1. Balance sheets at June 30, 1998 and 1999
Statements of income for the six months ended June
30, 1998 and 1999 Statements of cash flows for the
six months ended June 30, 1998 and 1999 Statements of
shareholders' equity for the six months ended June
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
<PAGE>
IMMECOR CORPORATION
Balance Sheets
Period ended June 30,
(unaudited)
ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
1998 1999
---- ----
CURRENT ASSETS
Cash $ 99,480 $ 37,307
Accounts receivables (net of allowance for doubtful accounts of
$10,478 in 1998 and 18,749 in 1999 ) 775,986 1,105,427
Inventories 188,490 677,540
Notes receivable - 140,801
Prepaid and other assets 9,481 24,538
Deferred taxes 17,683 18,737
-------------- --------------
Total current assets 1,091,120 2,004,350
Misc revenue - (2,762)
EQUIPMENT AND IMPROVEMENTS -net 48,176 131,485
------ -------
Total Assets $ 1,139,296 $ 2,133,073
-------------- --------------
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable, due within one year $ 3,985 $ 487,424
Accounts payable 203,888 787,367
Accrued liabilities 8,549 3,084
Advances from shareholders 643 -
Customer deposits 2,858 -
Employee IRA deductions - 2,986
Income taxes 205,546 157,670
-------------- ------------
Total current liabilities 425,469 1,438,531
LONG-TERM LIABILITIES
Note payable, due after one year 10,619 11,783
Deferred income taxes 10,822 10,454
-------------- ------------
Total long-term liabilities 21,441 22,237
-------------- ------------
Total liabilities $ 446,910 $ 1,460,768
-------------- ------------
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: 2,435,376. 297,845 286,573
Retained earnings 394,541 385,732
-------------- -----------
Total shareholders' equity 692,386 672,305
-------------- -----------
Total liabilities and shareholders' equity $ 1,139,296 $ 2,133,073
-------------- --------------
The accompanying notes are an integral part of these financial statements
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IMMECOR CORPORATION
Statement of Income
Period ended June 30,
(unaudited)
1998 1999
---- ----
Net sales $ 2,503,369 $ 4,280,288
Cost of sales 1,797,114 3,542,070
-------------- --------------
Gross profit 706,255 738,218
Selling, general and administrative expenses 437,320 576,148
-------------- --------------
Operating income 268,935 162,070
Interest income 1,191 202
Other income - 900
Interest expense (4,603) (6,963)
--------------- --------------
Income before income taxes 265,523 156,209
Income taxes 104,200 -
-------------- --------------
NET INCOME $ 161,323 $ 156,209
-------------- -------------
Net income per share - basic and diluted $ 0.066 $ 0.064
Weighted average shares outstanding - basic and diluted 2,427,730 2,435,376
The accompanying notes are an integral part of these financial statements
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IMMECOR CORPORATION
Statement of Cashflows
Period ended June 30,
(unaudited)
1998 1999
------ ------
Increase (decrease) from cash
Cash from operations:
Net income (loss) $ 161,324 $ 156,209
Reconciliation of net income (loss) to net
cash used by operating activities:
Depreciation and amortization 25,472 40,145
Changes in current assets and liabilities 713,827 694,542
Net cash used by operating activities 900,623 773,840
Cash flows from investing activities:
Additions to property and equipment - 94,131
Net cash used by investing activities - 94,131
Cash flows from financing activities:
Proceeds from common stock - -
Increase in loan payable - 487,189
Repayments on capital lease 11,784 10,619
Net cash provided by financing activities 11,784 497,808
Net increase in cash and cash equivalents 1,398,766 2,649,102
Cash and cash equivalents at beginning of period 99,480 38,359
Cash and cash equivalents at end of period $ 1,299,286 $ 2,610,743
---------------- --------------
Supplemental disclosure of cash flow information:
Cash paid during the period for interest $ 0.80 $ 6,961
The accompanying notes are an integral part of these financial statements
</TABLE>
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IMMECOR CORPORATION
Statement of Shareholders' Equity
Period ended June 30,
(unaudited)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Number of Retained
Outstanding Common Earnings
Shares Stock (Deficit) Total
Balance-December 31, 1998 2,435,376 $ 288,855 $ 278,838 $ 567,693
Six months ended
June 30, 1999 (unaudited)
Offering costs (2,282) (2,282)
Adjustments to net income (49,315) (49,315)
Net income - - 156,209 156,209
---------- ------------- ------------ ----------
Balance, June 30, 1999 2,435,376 $ 286,573 $ 385,732 $ 672,305
---------- ------------- ------------ ----------
</TABLE>
The accompanying notes are an integral part of these financial statements
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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 June 30, 1999 and for
the six months June 30, 1999 and 1998 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 June 30:
<TABLE>
<CAPTION>
<S> <C> <C>
1998 1999
----- -----
Accounts receivable $ 484,644 $ 1,124,176
Less allowance for doubtful accounts 18,749 18,749
------------ --------------
$ 465,895 $ 1,105,427
Note 3: Inventory
Inventories consist of the following as of June :
1998 1999
----- -----
Purchased parts $ 259,225 $ 528,481
Finished systems 102,598 149,059
------------- -------------
$ 361,823 $ 677,540
Note 4: Equipment and Improvements
Equipment and improvements consist of the following as of June 30:
1998 1999
---- ------
Equipment and Furniture $ 52,490 $ 102,981
Transportation equipment 24,814 68,649
------------ -------------
77,304 171,630
Less accumulated depreciation 25,472 40,145
------------ -------------
$ 51,832 $ 131,485
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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 June 30, 1999 and for
the six months June 30, 1999 and 1998 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 June 30:
1998 1999
------ ------
Accounts receivable $ 484,644 $ 1,124,176
Less allowance for doubtful accounts 18,749 18,749
------------ -------------
$ 465,895 $ 1,105,427
Note 3: Inventory
Inventories consist of the following as of June :
1998 1999
------ -----
Purchased parts $ 259,225 $ 528,481
Finished systems 102,598 149,059
------------- -------------
$ 361,823 $ 677,540
Note 4: Equipment and Improvements
Equipment and improvements consist of the following as of June 30:
1998 1999
---- ------
Equipment and Furniture $ 52,490 $ 102,981
Transportation equipment 24,814 68,649
------------ -------------
77,304 171,630
Less accumulated depreciation 25,472 40,145
------------ -------------
$ 51,832 $ 131,485
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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 68% and 67% of total sales in 1998 and 1997 respectively. The Company is
attempting to 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 years ended
December 31:
1998 1999
----- -----
Currently payable:
Federal $ 16,905 $ 116,157
State 8,130 19,468
Deferred taxes 5,526 10,454
------------ ------------
$ 30,561 $ 146,079
</TABLE>
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<PAGE>
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.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Years Ende Six months Ended
December 31, June 30,
-1997- -1998- -1998- -1999-
------- -------- ------- ------
Statements
Net sales......................................... 100.00% 100.00% 100.00% 100.00%
Cost of sales .................................. 76.43 78.12 71.80 82.75
Gross profit ..................................... 23.57 21.88 28.21 17.24
Depreciation and amortization .................... 0.25 0.38 0 .03 0.99
Selling, general and administrative expenses ..... 14.90 20.14 11.52 9.06
Total operating costs and expenses ............... 15.15 20.52 6.07 4.53
Operating income (loss) .......................... 8.67 1.73 10.67 3.62
Interest income (loss) ........................... 0.07 0.05 0 .02 0.01
Interest expense.................................. (0.05) (0.12) - 0.16
Income (loss) before income taxes................. 8.69 1.67 10.60 3.63
Income Tax ...................................... 3.37 0.67 4.20 2.71
Net income (loss) ................................ 5.32 1.00 6.44 3.64
</TABLE>
Net Sales
Net sales increased by $1,775,321or 70.87 % from $2,504,966 for the six months
ended June 30, 1998 (the "1998 period") to $4,280,287 for the six months ended
June 30, 1999 ("the 1999 period").
The net sales increase resulted primarily from increased demand from major
customers responsible for the majority of the Company's sales. Sales to the
major customers for high-end specialty computers have continued to increase
steadily since the Company has been able to meet strict shipping deadlines and
to maintain high quality control standards. Orders on the books of the Company
indicate that this trend will continue during the third quarter of 1999.
Nevertheless, the loss of the 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 decreased from $265,524 in the 1998
period to $156,209 in the 1999 period because of an increase in expenses for
existing and additional warehouse and assembly space, and additional equipment.
Selling, General and Administrative Expenses
Selling, general and administrative expenses decreased as a percentage of net
sales from 11.52 % in the 1998 period to 9.06 % 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 June 30, 1998 and June 30, 1999 the Company had net working capital of
$659,456 and $415,382, respectively. The $244,074 decrease in working capital
from 1998 to 1999 was primarily due to an increase in payables and inventory in
order to sustain the Company's accelerated growth.
The Company had net cash provided by operating activities of $900,623 in the
1998 period compared to net cash provided by operating activities of $773,840 in
the 1999 period. The $126,783 difference relates primarily to an increase in
accounts receivables and inventory levels.
The Company had net cash provided by financing activities of $11,784 in the 1998
period compared to net cash used by financing activities of $497,808 in the 1999
period. The $486,024 difference relates primarily to financing of new products
and higher inventory levels for the new products.
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<PAGE>
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. 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 and the case has been set for trial in September of 1999. There is no
assurance of the outcome of the litigation. Although the Company is the
Plaintiff and does not incur the risk of an adverse judgment, the litigation
costs of the action may be material to any individual interim period or fiscal
year and may be material to the outstanding share balance.
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
There were no major contracts signed during the period.
Item 6. Exhibits and Reports on Form 8-K
The Company filed one (1) report on Form 8-K during this period, announcing the
leasing of additional office and warehouse space in the City of Santa Clara.
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 6, 1999 By: /s/ Wil. L. Lindgren
-----------------------
Wil L. Lindgren
Chief Financial Officer
Date: August 6, 1999 By: /s/ Heinot H. Hintereder
-----------------------
Heinot H. Hintereder
President & CEO
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<PAGE>
LEGEND IMMECOR CORPORATION
<TABLE>
<CAPTION>
<S> <C> <C>
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 JUN-30-1998 JUN-30-1999
EXCHANGE-RATE 1 1
CASH 99480 37307
SECURITIES 0 0
RECEIVABLES 796464 1105427
ALLOWANCES 20478 18749
INVENTORY 188490 677540
CURRENT-ASSETS 1091120 2004350
PP&E 77519 156023
DEPRECIATION 29343 40145
TOTAL-ASSETS 1139296 2133073
CURRENT-LIABILITIES 425469 1438531
BONDS 0 0
PREFERRED-MANDATORY 0 0
PREFERRED 0 0
COMMON 297845 286573
OTHER-SE 394541 385732
TOTAL-LIABILITY-AND-EQUITY 1139296 2133073
SALES 2503369 4280288
TOTAL-REVENUES 2503369 4280288 CGS
1797114 3542070
TOTAL-COSTS 2234434 4118218
OTHER-EXPENSES 0 0
LOSS-PROVISION 0 0
INTEREST-EXPENSE 4603 6963
INCOME-PRETAX 265523 156209
INCOME-TAX 104200 0
INCOME-CONTINUING 161323 156209
DISCONTINUED 0 0
EXTRAORDINARY 0 0
CHANGES 0 0
NET-INCOME 161323 156209
EPS-PRIMARY .066 .064
EPS-DILUTED .066 .064
</TABLE>
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<PAGE>
IMMECOR CORPORATION
Shareholder Information
Period ended June 30,
(unaudited)
Management's Discussion and Analysis of Financial Condition and Results of
Operations.
Net Sales - Net sales increased by $1,775,321or 70.87 % from $2,504,966 for the
six months ended June 30, 1998 (the "1998 period") to $4,280,287 for the six
months ended June 30, 1999 ("the 1999 period"). The net sales increase resulted
primarily from increased demand from major customers responsible for the
majority of the Company's sales. Sales to the major customers for high-end
specialty computers have continued to increase steadily since the Company has
been able to meet strict shipping deadlines and to maintain high quality control
standards. Orders on the books of the Company indicate that this trend will
continue during the third quarter of 1999. Nevertheless, the loss of the 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 decreased from
$265,524 in the 1998 period to $156,209 in the 1999 period because of an
increase in expenses for existing and additional warehouse and assembly space,
and additional equipment.
Selling, General and Administrative Expenses - Selling, general and
administrative expenses decreased as a percentage of net sales from 11.52 % in
the 1998 period to 9.06 % 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 June 30, 1998 and June 30, 1999 the Company
had net working capital of $659,456 and $415,382, respectively. The $244,074
decrease in working capital from 1998 to 1999 was primarily due to an increase
in payables and inventory in order to sustain the Company's accelerated growth.
The Company had net cash provided by operating activities of $900,623 in the
1998 period compared to net cash provided by operating activities of $773,840 in
the 1999 period. The $126,783 difference relates primarily to an increase in
accounts receivables and inventory levels. The Company had net cash provided by
financing activities of $11,784 in the 1998 period compared to net cash used by
financing activities of $497,808 in the 1999 period. The $486,024 difference
relates primarily to financing of new products and higher inventory levels for
the new products.
