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, 2000
[ ] 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) ofthe Exchange Act:
None
Securities registered under Section 12(g) ofthe 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 June 30, 2000.
Transitional Small Business Disclosure Format Yes [ ] No [X]
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IMMECOR CORPORATION
INDEX
TABLE OF CONTENTS
PART I
FINANCIAL INFORMATION
Item 1. Balance sheets at December 31, 1999 and June 30,
2000 Statements of income for the six months ended
June 30, 1999 and 2000 Statements of cash flows for
the six months ended June 30, 1999 and 2000
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
Notes to Financial Statements 6
<PAGE>
IMMECOR CORPORATION
Balance Sheets
ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
December 31, June 30,
1999 2000
----- -----
(unaudited)
Current Assets
Cash $ 57,788 $ 684,661
Accounts receivables (Note 2)
(net of allowance for doubtful amounts of $18,749 in 1999 and $19,500 in 2000 ) 989,972 2,511,643
Inventories (Note 3) 1,159,638 1,426,966
Notes receivable - 24,250
Prepaid and other assets (Note 7) 59,476 67,206
Deferred tax assets 13,681 64,728
Total current assets 2,280,555 4,779,454
---------- ---------
EQUIPMENT AND IMPROVEMENTS -net (Note 4) 125,601 169,425
------- -------
Total Assets $ 2,406,156 $ 4,948,879
------------ ----------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Line of credit (Note 6) $ 350,890 $ 127,115
Notes payable, due within one year (Note 5) 5,318 3,147
Accounts payable 1,380,692 1,678,873
Accrued liabilities (Note 10) 165,214 1,600,000
Advances from shareholders - 93,389
Other liabilities - (10,618)
Sales tax payable - 19,595
Income tax payable - 812,349
---------- -----------
Total current liabilities 1,902,114 4,323,850
Long-term Liabilities
Note payable, due after one year (Note 5) 3,189 3,820
Deferred income taxes 16,536 (23,558)
--------- ------------
Total long-term liabilities 19,725 (19,738)
-------- ------------
Total liabilities 1,921,839 4,304,112
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, 1999: 2,435,376; 2000: 5,806,128 288,855 288,856
Retained earnings 195,462 355,911
-------- ------------
Total shareholders' equity 484,317 644,767
------- ------------
Total liabilities and shareholders' equity $ 2,406,156 $ 4,948,879
--------- ------------
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)
1999 2000
----- -----
(restated) (unaudited)
Net sales (Note 8) $ 4,280,288 $ 12,286,060
Cost of sales 3,614,632 10,151,826
----------- -------------
Gross profit 665,656 2,134,233
Selling, general and administrative expenses 576,148 1,198,563
--------- -------------
Operating income 89,498 935,670
Interest income 202 1,392
Inventory writeoff (44,835)
Other income 1,102 22,081
Interest expense (6,962) (32,651)
-------- --------------
Income before income taxes 97,764 881,657
Income taxes (Note 9) 58,611 721,208
-------- -------------
NET INCOME $ 39,153 $ 160,449
Net income per share - basic and diluted (Note 11) $ 0.016 $ 0.028
Weighted average shares outstanding - basic and diluted 2,435,376 5,806,128
The accompanying notes are an integral part of these financial statements
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IMMECOR CORPORATION
Statement of Cash Flow
Period ended June 30,
1999 2000
------ ------
(restated) (unaudited)
Increase (decrease) from cash
Cash flows from operating activities:
Net income $ 39,153 $ 161,315
Adjustments to reconcile net income to net cash (used in) provided by operating
activities:
Depreciation 4,170 4,170
Deferred taxes (1,054) (91,141)
Change in assets and liabilities:
Accounts and notes receivable (329,441) (1,545,921)
Inventory (416,488) (191,943)
Prepaids and others (15,057) 7,730
Accounts payable 766,979 221,931
Accrued liabilities (5,465) 1,443,763
--------- --------------
Income taxes payable (47,876) 812,349
Net cash (used in) provided by operating activities (47,348) 822,253
Cash flows from Investing activities:
Purchase of fixed assets (87,479) (47,994)
Notes receivable issued (140,801) 0
---------- ------------
Net cash (used in) provided by investing activities (228,280) (47,994)
Cash flows from financing activities
Repayment of Line of Credit 483,439 (223,775)
Proceeds from notes payable 0 1,540
Payments on note payable 0 0
Advances from shareholders (643) 93,389
---------- ---------
Net cash (used in) provided by financing activities 483,960 (128,846)
Net increase (decrease) in cash (169,733) 626,873
Cash beginning of period 207,040 57,788
----------- ------------
Cash at end of period $37,307 $684,661
----------- ------------
Supplemental disclosure of cash flow information Cash paid during period for:
Interest $ 653 $32,593
Income taxes $86,500 $57,348
</TABLE>
The accompanying notes are an integral part of these financial statements
5
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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, 1999.
The financial statements presented herein as of June 30, 1999 and for
the six months ended 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 per share amounts are based on the weighted average number of
common stock shares outstanding in each period.
Note 2: Receivables
Receivables consist of the following as of June 30:
<TABLE>
<CAPTION>
<S> <C> <C>
1999 2000
----- ------
Accounts receivable $ 1,008,721 $ 2,531,143
Less allowance for doubtful accounts 18,749 19,500
----------- ------------
$ 989,972 $ 2,511,643
Note 3: Inventory
Inventories consist of the following as of June 30:
1999 2000
----- ------
Purchased parts $ 800,150 $ 946,106
Finished systems 359,488 405,474
---------- ------------
$ 1,159,638 $ 1,351,581
Note 4: Equipment and Improvements
Equipment and improvements consist of the following as of June 30:
1999 2000
----- ------
Equipment and Furniture $ 126,001 $ 122,421
Transportation equipment 68,649 68,649
-------- ------------
194,650 191,070
Less accumulated depreciation 69049 21,645
-------- ------------
$ 125,601 $ 169,425
</TABLE>
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IMMECOR CORPORATION
NOTES TO THE INTERIM UNAUDITED CONDENSED FINANCIAL STATEMENTS
Note 5: Note Payable
Note payable consists of the following as of June 30:
1999 2000
-------- -----
Note payable, collaterized by vehicle, payable in
monthly installments of $443 including interest of
10.5% through September 2001 $ 8,505 $ 6,967
Less amount due in one year 5,316 3,147
--------- --------
$ 3,189 $ 3,820
Note 6: Line of Credit
The Company has a $1,500,000 line of credit which expires December 20, 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
June 30, 2000 was $127,115
Note 7: Commitments
The Company leases two premises under a 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 for the periods ended
June 30 are as follows:
Lease One Lease Two
City of Rohnert Park City of Santa Clara
2000 $ 29,418 $ 24,796
2001 0 51,600
2002 0 51,600
--------------- -----------
$ 29,418 $ 127,996
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, who
designated the Company "Strategic Supplier" in 1999, accounted for 72% and 83%
of total sales in 1999 and 2000 respectively. The Company is attempting to
expand its sales force to increase the customer base to lessen the effect of
having major corporate customers.
Note 9: Income Taxes
The provision for income taxes consists of the following for the first six
months June 30, 2000:
2000
Currently payable:
Federal $ 721,208
State 19,595
Deferred taxes 64,728
-------------------
$ 805,531
IMMECOR CORPORATION
NOTES TO THE INTERIM UNAUDITED CONDENSED FINANCIAL STATEMENTS
Note 10: Accrued Liabilities
Due to recent shortages for components used in the the Company's products
destined for the semiconductor industry, the Company entered a procurement
agreement as follows: components from various manufacturers are delivered to the
Company's warehouse in quantities matching the Company's book of orders. Upon
inspection, testing and certification, the accepted components are used in
production. The accrued liability shown on the Company's interim balance sheet
is currently an estimate of the value of components received before acceptance,
actual billing and production. Accepted components are payable within 120 days
of billing date without discount. The Company estimates these accrued
liabilities to be paid during the third quarter period, which ends September 30,
2000.
Note 11: Number of Shares of Common Stock Outstanding
Note 11 adjusts the number of outstanding shares of common stock for the six
months ended June 30, 1999 to reflect the following:
1) 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.
2) On October 13, 1999, the Company held a special meeting of stockholders in
which they voted for the approval of a three for one forward split of the
outstanding shares of common stock of the Company. The Board of Directors
approved the split and requested the stock transfer agent of the Company to
distribute the additional shares to the Company's stockholders effective May 1,
2000.
3) Number of shares outstanding June 30, 1999: 2,435,376
Number of shares outstanding August 31, 1999: 1,935,376
Number of shares outstanding June 30, 2000: 5,806,128
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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.
Six months Ended
June 30,
Statements of Income Data: -1999- -2000-
Net sales 100.00% 100.00%
Cost of sales .................................. 82.8 82.0
Gross profit ..................................... 17.2 17.0
Depreciation and amortization .................... .9 -
Selling, general and administrative expenses ..... 9.06 9.0
Total operating costs and expenses ............... 4.53 9.0
Operating income (loss) .......................... 3.62 7.0
Interest income (loss) ........................... .01 -
Interest expense.................................. .16 -
Income (loss) before income taxes................. 3.6 7.0
Income Tax ...................................... 2.71 5.0
Net income (loss) ................................ .94 1.0
Net Sales
Net sales increased by $8,005,772 or 187% from $4,280,288 for the six months
ended June 30, 1999 (the "1999 period") to $12,286,060 for the six months ended
June 30, 2000 ("the 2000 period"). The significant increase in sales during the
first six months of 2000 is primarily due to an increase in the demand for the
Company's main product and the introduction of two new computer system products
used in yield management applications for the semiconductor industry. Corporate
systems, which include servers, processors, and industrial managers continue
to remain the primary component of unit sales. The Company's primary customer
designated Immecor Corporation it's strategic supplier for computer hardware
and system integration services. Sales of hardware increased 358% during the
first six months system integration services sales increased 35% during the same
period.
Gross Profit
As a percentage of net sales, gross profits increased from $665,656 in the 1999
period to $2,135,233 in the 2000 period. The Company continues to invest in
development of new products, restructuring production facilities to support its
continued goal of improving and developing efficient procurement, manufacturing
and distribution processes, while developing and introducing new products. The
Company expects to continue to increase its research, development and
engineering spending for the next two quarters of 2000.
Selling, General and Administrative Expenses
Selling, general and administrative expenses increased $622,415 or 108% from
$576,148 in the 1999 period to $1,198,563 in the 2000 period. The increase in
expenses was due primarily to the increased staffing and increased
infrastructure expenses, including information systems such as MRP (Material
Resource Planning) and ERP (Enterprise Resource Planning) to support the
Company's growth pattern. The Company believes that its ability to manage
operating expenses is an important factor in its ability to remain competitive
and successful. The Company will continue to invest in personnel, information
systems and other infrastructure, as well as in research, development and
engineering activities to support its continued growth and to continue to
develop new competitive products and more efficient methods receiving payments
from customers through EDI( electronic data interchange ).
Liquidity and Capital Resources
On June 30, 1999 and June 30, 2000 the Company had net working capital of
$378,441 and $458,059 respectively. The $79,180 increase in working capital from
1999 to 2000 was primarily due to an increase in accounts receivables and cash
in the operating account.
The company had net cash provided by operating activities of $(47,348) in the
1999 period compared to net cash provided by operating activities of $822,253 in
the 2000 period. The $774,905 difference relates primarily to an increase in
accounts receivables due to acclerated growth in sales and cash management.
The Company had net cash used by financing activities of $483,960 in the 1999
period compared to net cash used by financing activities of $(128,846) in the
2000 period. The difference relates primarily to financing of new products and
higher inventory levels for the new products.
-9-
<PAGE>
PART II.
OTHER INFORMATION
Item 1. Legal Proceedings
During this period the Company was sued in Small Claims Court of Sonoma County
in the State of California, Case No. 156522, for the amount of Two Hundred and
Fifty ($250.00) dollars. On 5/18/00 the case was continued at the plaintiff's
request, so the file could be transferred to Superior Court. The trial is
scheduled for 8/14/2000. The Company considers the suit as having no merit.
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
There were no reports 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: August 15, 2000 By: /s/ Wil. L. Lindgren
-----------------------
Wil L. Lindgren
Chief Financial Officer
Date: August 15, 2000 By: /s/ Heinot H. Hintereder
Chief Executive Officer
-----------------------
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LEGEND IMMECOR CORPORATION
MULTIPLIER 1
CURRENCY 1
<TABLE>
<CAPTION>
<S> <C> <C>
PERIOD-TYPE YEAR YEAR
FISCAL-YEAR-END DEC-31-1999 DEC-31-2000
PERIOD-START JAN-1-1999 JAN-1-2000
PERIOD-END JUN-30-1999 JUN-30-2000
EXCHANGE-RATE 1 1
CASH 37307 684661
SECURITIES 0 0
RECEIVABLES 1105427 2531146
ALLOWANCES 18749 19500
INVENTORY 677540 1426966
CURRENT-ASSETS 2004350 4779454
PP&E 156023 169425
DEPRECIATION 40145 21645
TOTAL-ASSETS 2133073 4948879
CURRENT-LIABILITIES 1438531 4323850
BONDS 0 0
PREFERRED-MANDATORY 0 0
PREFERRED 0 0
COMMON 286573 288856
OTHER-SE 385732 355911
TOTAL-LIABILITY-AND-EQUITY 2133073 4948879
SALES 4280288 12286060
TOTAL-REVENUES 4280288 12286060
CGS 3542070 10151826
TOTAL-COSTS 4118218 11350389
OTHER-EXPENSES 0 0
LOSS-PROVISION 0 0
INTEREST-EXPENSE 6962 32651
INCOME-PRETAX 155310 881657
INCOME-TAX 116157 721208
INCOME-CONTINUING 39153 160449
DISCONTINUED 0 0
EXTRAORDINARY 0 0
CHANGES 0 0
NET-INCOME 39153 160449
EPS-PRIMARY .016 .028
EPS-DILUTED .016 .028
</TABLE>
11
