10-Q 1 a1qtrq2001ascii.txt FIRST QTR 2001 UNITED STATES OF AMERICA SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-QSB [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 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 March 31, 2001. Transitional Small Business Disclosure Format Yes [ ] No [X] IMMECOR CORPORATION INDEX TABLE OF CONTENTS PART I FINANCIAL INFORMATION Item 1. Balance sheet at March 31, 2001 Statements of operations for the three months ended March 31, 2000 and 2001 Statements of cash flows for the three months ended March 31, 2000 and 2001 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 Condensed Financial Statements are filed as part of this report: Balance Sheet 3 Statements of Operations 4 Statements of Cash Flows 5 Notes to Financial Statements 6

~~Dec.~~IMMECOR CORPORATION Condensed Balance Sheet March 31, ~~Sep.~~2001 ~~30,~~(unaudited) ~~1999~~ASSETS ~~2000~~2001 CURRENT ASSETS Cash $ 57717,~~788~~304 ~~$ 664,655 Certificate of Deposit 0 300,000~~ Accounts receivables (net of allowance for doubtful amounts of $1822,~~749~~000 ~~in 1999 and $19,500 in 2000~~) ~~989~~574,~~972~~209 ~~2,736,846~~ Inventories 14,~~159~~551,~~638~~459 ~~3,604,527~~ Notes receivable ~~- 178~~105,~~067~~588 Prepaid and other assets 59107,~~476~~621 ~~9,858~~ Deferred ~~tax~~income ~~assets~~taxes 13128,~~681~~000 ~~13,199~~------- Total current assets 26,~~280~~184,~~555~~181 ~~7,507,151~~ EQUIPMENT AND IMPROVEMENTS -net ~~125~~461,~~601~~498 ~~145,491~~-------- Total Assets $ 26,~~406~~184,~~156~~181 ~~$7,652,642~~ LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Line of credit $ ~~350~~310,~~890~~305 ~~$ 483,639~~ Notes payable, due within one year 5557,~~318~~727 ~~1,333~~ Accounts payable 1756,~~380,692~~309 ~~1,443,351~~ Accrued ~~Liabilities~~liabilities ~~- 1~~349,~~243,000~~107 Other liabilities ~~165~~2,~~214~~758 ~~899,372~~Income ~~Sales~~taxes ~~tax~~ payable ~~351,774 Federal income tax payable -~~ 1,~~100~~558,~~781~~884 --------- Total current liabilities 13,~~902~~535,~~114~~090 ~~5,523,250 Long~~LONG-~~term~~TERM ~~Liabilities~~LIABILITIES ~~Note payable, due after one year 3,189 4,457~~ Deferred income taxes 1632,~~536~~200 ~~17,812 Total long-term liabilities 19,725 22,269 Total liabilities 1,921,839 5,545,519~~ 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 and 2000:~~ 5,806,128 ~~288,855~~shares 288,855 Retained earnings ~~195~~2,~~462 1~~789,~~818,268~~534 --------- Total shareholders' equity ~~484~~3,~~317 2~~078,~~107,123~~389 ---------- Total liabilities and shareholders' equity $~~2,406,156~~ $76,~~652~~645,~~642~~679 =============

The accompanying notes are an integral part of these financial statements

~~1999~~IMMECOR ~~2000~~CORPORATION ~~(restated)~~Condensed Statements of Operations Three months ended March 31, (unaudited) 2000 2001 ---- ---- Net sales $ 6,~~809~~058,~~709~~638 $ 192,~~680~~873,~~581~~554 Cost of sales 54,~~767~~607,~~021~~818 131,~~853~~941,~~296~~638 ---------- ---------- Gross profit 1,~~042~~450,~~688~~820 5931,~~827,285~~916 Selling, general and administrative expenses ~~882~~526,~~915~~002 2798,~~536,973~~486 -------- --------- Operating income ~~159~~924,~~773~~818 3133,~~290~~430 Interest expense 12,~~312~~329 31,423 Interest income ~~549~~47 3,~~500~~561 Other income ~~(6,854)~~ - ~~Interest expense (20~~12,~~510)~~050 ~~(59,345)~~-------- --------- Income before income taxes ~~132~~912,~~958~~536 3117,~~234,467~~618 Income ~~taxes~~tax 7expense (benefit) 370,~~810~~000 1(94,~~611,661~~250) -------- --------- NET INCOME $ ~~125~~542,~~148~~536 $1 211,~~622,806~~868 =============== ============= Net income per share - basic and diluted $ 0.0209 $ 0.2804 Weighted average shares outstanding - basic and diluted 5,806,128 5,806,128

The accompanying notes are an integral part of these financial statements

~~1999~~IMMECOR ~~2000~~CORPORATION ~~(restated)~~Condensed Statements of Cash Flows Three months ended March 31, (unaudited) 2000 2001 ------ ---- Increase (decrease) from cash Cash flows from ~~operations~~operating activities: Net income $ ~~125~~542,~~148~~536 $ 1211,~~622,806~~868 Reconciliation of net income (loss) to net cash provided (used) by operating activities: Depreciation 39and amortization 4,~~045~~170 28,~~501~~794 Deferred income taxes 31,000 51,600 Changes in current assets and liabilities: Accounts receivable 1,872,966 2,316,904 Inventories (~~594~~342,~~138~~232) (1,~~259~~765,~~341~~767) Prepaid and other assets 17,270 56,237 Accounts payable 1,348,851 (1,501,450) Accrued Liabilities 45,508 (926,146) Income Tax Payable 401,000 (151,571) ------------ ------------ Net cash provided (used) by operating activities ~~429~~113,~~945~~167 ~~683~~(1,~~491~~679,532) Cash flows from investing activities: ~~Additions~~Purchase toof property and equipment (8527,~~381~~625) (4859,~~391~~247) Proceeds from notes receivable - 93,319 Issued notes receivable (8,877) - Proceeds from disposal of equipment 12,000 -------------- ----------- Net cash (used) inprovided by investing activities (8536,~~381~~502) ~~(48~~46,~~391)~~072 Cash flows from financing activities: ~~Line~~Net of(repayments)borrowings ~~Credit,~~from ~~net~~line ~~216~~of credit (350,~~493~~890) ~~132~~310,~~749~~305 Proceeds from ~~issuance~~notes ofpayable ~~common stock (3~~227,~~983)~~722 - ~~Notes~~Principal ~~Receivable~~payments on notes payable (~~136~~1,~~565~~154) (~~158~~36,~~266~~581) ~~Net~~Advances ~~cash~~from ~~provided~~shareholders by25,000 - -------------- --------------- Net cash (used in) provided by financing activities ~~75,945~~ (2899,~~234~~322) ~~Net~~273,724 ~~(decrease)~~------- ~~increase~~------- inNET ~~cash~~DECREASE ~~and~~IN ~~cash~~CASH ~~equivalents~~ (~~439~~22,~~381~~657) ~~606~~(1,~~866~~359,736) Cash ~~and~~balance ~~cash~~- ~~equivalents at~~ beginning of period ~~207,040~~ 57,788 ~~Cash~~2,077,040 ~~and~~--------- ~~cash~~--------- ~~equivalents~~Cash atbalance - end of period ~~$(232~~35,~~341)~~131 ~~$664~~717,~~654~~304 --------- --------- 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~~Interest ~~$20~~12,~~510~~329 ~~$59~~31,~~345~~423 Income taxes 412,000 15,000

The accompanying notes are an integral part of these financial statements 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, 2000. The financial statements presented herein as of and for the three months ended March 31, 2001 and March 31, 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. 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 March 31, 2001 was $310,305. 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 73% of total sales in 2001, and 2000 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. 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. Three Months Ended March 31, 2000 2001 ---- ---- Net sales......................................... 100.00% 100.00% Cost of sales .................................. 76.06 67.57 Gross profit ..................................... 23.95 32.43 Selling, general and administrative expenses ..... 8.61 27.79 Operating income ................................. 15.26 5.65 Interest expense ................................. 0.20 1.09 Interest income................................... 0.00 0.12 Other income...................................... 0.00 0.42 Income before income taxes........................ 15.06 4.09 Income Tax (benefit).............................. 6.10 (3.28) Net income (loss) ................................ 8.95 (7.37) Net Sales Net sales decreased by $(3,185,084) or (52.57)% from $6,058,638 for the three months ended March 31, 2000 to $2,873,554 for the three months ended March 31, 2001. The net sales decrease resulted primarily from a slow down in the demand for technology products combined with a slow down in the overall economy. Sales to the major customers and corporate accounts have continued to slow down for the first period of 2001. Orders on the books of the Company indicate that this trend will continue during the remainder of the second quarter of 2001 period. The Company is currently working with its corporate customers to release new products for which the Company's customers will then undertake detailed procedures relating to the evaluation, testing, implementation and acceptance of the Company's products and services. Any and all time and material associated with the production of a prototype are expensed before completion of a final product. This evaluation process results in a variable sales cycle, and makes it difficult to predict if or when revenues will be earned. Further, gross margins may be adversely impacted in an effort to complete the sales cycle. The Company's net sales results may be adversely impacted in future periods by its variable sales cycle. Gross Profit As a percentage of net sales, gross profits decreased from $1,450,820 or 23.95% for the three months ended March 31, 2000 to $ 931,916 or 32.43% for the three months ended March 31, 2001. The Company continues to develop new products with increased profit margins. The decrease in gross profit from $1,450,820 for the three months ended March 31, 2000 to $931,638 for the three months ended March 31, 2001 was a direct result of lower sales of lower end products with lower profit margins and an increase in sales of products with higher margins. Selling, General and Administrative Expenses Selling, general and administrative expenses increased $272,484 or 51.8% from $526,002 for the three months ended March 31, 2000 to $798,486 for the three months ended March 31, 2001. The increase is due to higher rents for the new location, increased payroll costs for additional personnel and materials associated with the new location during the three months ended March 31, 2001. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. Liquidity and Capital Resources Continued: On March 31, 2000 and 2001 the Company had net working capital of $900,686 and $2,649,091 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 $(1,679,532) for the three months ended March 31, 2001 compared to net cash provided by operating activities of $113,167 for the three months ended March 31, 2000. The $(1,792,699) difference was primarily due to changes in accounts receivable, inventory and accounts payable due to lower sales for the three months ended March 31, 2001. The Company had net cash provided by investing activities of $46,072 for the three months ended March 31, 2001 compared to net cash used by investing activities of $(36,502) for the three months ended March 31, 2000. The $82,574 difference relates primarily to proceeds from notes receivable. The Company had net cash provided by financing activities of $273,724 for the three months ended March 31, 2001 compared to net cash used by financing activities of $(99,322) for the three months ended March 31, 2000. The $373,046 relates primarily to increase in short-term borrowings due to a decrease in sales for the three months ended March 31, 2001. The Company is working with the appropriate tax agencies to pay the 2000 period taxes. The Company anticipates that is has sufficient working capital through future sales and short term borrowing to sustain operations for the remainder for the fiscal year of 2001. PART II. OTHER INFORMATION Item 1. Legal Proceedings There are no legal proceedings pending against the Company during the period ending March 31, 2001. Item 2. Changes in Securities There were no changes in rights of securities holders during the period ending March 31, 2001. Item 3. Defaults upon Senior Securities There were no defaults upon senior securities during the period ending March 31, 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 March 31, 2001. Item 5. Other Information There were no major contracts signed during the period during the period ending March 31, 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 March 31, 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: May 12, 2001 By: /s/ Wil. L. Lindgren ---------------------------- Wil L. Lindgren Chief Financial Officer Date: May 12, 2001 By: /s/ Heinot H. Hintereder ------------------------------ Heinot H. Hintereder President & Chief Executive Officer

Note 3: Receivables consist of the following as of : December 31, September 30, 1999 2000 Accounts receivable $ 1,008,721 $ 2,756,346 Less allowance for doubtful accounts 18,749 19,500 $ 989,972 $ 2,736,846 Note 4: Inventory Inventories consist of the following as of : December 31, September 30, 1999 2000 Purchased parts $ 904,518 $ 2,162,716 Finished systems 255,120 1,441,811 $ 1,159,638 $ 3,604,527 Note 5: Notes Receivable Notes receivable consists of the following as of : December 31, September 30, 1999 2000 Employee Bonus Plan $ - $ 158,266 Customer and Employee Notes - 19,801 Total $ - $ 178,067

Note 6: Equipment and Improvements Equipment and improvements consist of the following as of : December 31, September 30, 1999 2000 Equipment and Furniture $ 126,001 $ 181,698 Transportation equipment 68,649 68,649 194,650 250,347 Less accumulated depreciation 69,049 104,856 $ 125,601 $ 145,491

Note 8: Note Payable Note payable consists of the following as of December 31, September 30, 1999 2000 Note payable, collateralized by vehicle, payable in monthly installments of $443 including interest of 10.5% through September 2001 $ 8,507 $ 5,790 Less amount due in one year 5,318 1,333 $ 3,189 $ 4,457

Income taxes consists of the following for period ended: December 31, September 30, 1999 2000 Currently payable: Federal $ (21,960) $ 1,100,781 State 800 351,774 Deferred taxes (6,412) (17,812) Total $ (27,572) $ 1,434,743

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