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

The accompanying notes are an integral part of these financial statements

The accompanying notes are an integral part of these financial statements

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

IMMECOR CORP 10-Q