<PAGE>
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB/A
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2000
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 0-28681
CCM MANUFACTURING TECHNOLOGIES, INC.
-------------------------------
(EXACT NAME OF SMALL BUSINESS ISSUER AS SPECIFIED IN ITS CHARTER)
Delaware 52-2201514
------------------------------- ---------------
(State or other jurisdiction of (I.R.S.Employer
incorporation or organization) Identification No.)
15635 Vision Drive
Pflugerville, Texas 78660-3203
---------------------------------------------------
(Address of principal executive offices (zipcode))
512/251-3484
----------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the last 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 No X
As of October 11, 2000, 13,527,083 shares of the registrants common stock,
$0.0001 par value were outstanding.
<PAGE>
CCM MANUFACTURING TECHNOLOGIES, INC. AND SUBSIDIARIES
(FORMERLY MAYFORD ACQUISITION CORPORATION)
INDEX
<TABLE>
<CAPTION>
PART 1 - FINANCIAL INFORMATION Page No.
--------
<S> <C>
Item 1. Financial Statements
Consolidated Balance Sheets at June 30, 2000 (unaudited)
and December 31, 1999 3
Consolidated Statements of Operations for the six and three months ended
June 30, 2000 and 1999 (unaudited) 5
Consolidated Statements of Cash Flows for the six months ended
June 30, 2000 and 1999 (unaudited) 6
Notes to Consolidated Financial Statements 8
Item 2. Management's Discussion and Analysis or Plan of Operation 10
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 14
Item 2. Changes in Securities and Use of Proceeds 14
Item 3. Defaults Upon Senior Securities 14
Item 4. Submission of Matters to a Vote of Security Holders 14
Item 5. Other Information 14
Item 6. Exhibits and Reports on Form 8-K 15
SIGNATURES 15
</TABLE>
2
<PAGE>
PART I -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CCM MANUFACTURING TECHNOLOGIES, INC. AND SUBSIDIARIES
(FORMERLY MAYFORD ACQUISITION CORPORATION)
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
(Unaudited) December 31,
ASSETS June 30, 2000 1999
-------------- ------------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents.......................... $ 33,255 $ 11,649
Accounts receivable, net of allowance for doubtful
accounts of $0 and $9,197 at June 30, 2000 and
December 31, 1999, respectively.................... 363,140 545,433
Inventories........................................ 500,991 603,485
Prepaid expenses................................... 11,009 35,107
---------- -----------
Total current assets........................ 908,395 1,195,674
PROPERTY AND EQUIPMENT
Machinery and equipment............................ 1,072,867 1,072,867
Furniture and fixtures............................. 47,617 47,617
Automobiles........................................ 1,500 1,500
Leasehold improvements............................. 896 896
---------- -----------
1,122,880 1,122,880
Accumulated depreciation and
amortization.................................... (928,880) (884,763)
---------- -----------
Net property and equipment.................. 194,000 238,117
OTHER ASSETS............................................ 33,887 33,219
EXCESS OF COST OVER FAIR VALUE OF NET
ASSETS OF COMPANIES ACQUIRED, net.................. 1,746,321 1,843,339
---------- -----------
TOTAL ASSETS............................................ $2,882,603 $ 3,310,349
========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
3
<PAGE>
CCM MANUFACTURING TECHNOLOGIES, INC. AND SUBSIDIARIES
(FORMERLY MAYFORD ACQUISITION CORPORATION)
CONSOLIDATED BALANCE SHEETS - Continued
<TABLE>
<CAPTION>
(Unaudited) December 31,
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) June 30, 2000 1999
------------- -------------
<S> <C> <C>
CURRENT LIABILITIES
Line of credit................................................. $ 182,167 $ 252,257
Current portion of long-term debt.............................. 247,994 200,000
Notes payable to shareholders.................................. 681,853 1,142,698
Current portion of capital lease obligations................... 44,833 42,792
Accounts payable............................................... 792,502 1,035,706
Accrued liabilities............................................ 142,939 172,403
Deferred compensation.......................................... 100,865 232,000
------------- ------------
Total current liabilities..................................... 2,193,153 3,077,856
LONG-TERM LIABILITIES
Long-term debt, less current portion............................ 329,667 391,667
Capital lease obligations, less current portion................. 69,458 96,045
------------- ------------
Total long term liabilities................................... 399,125 487,712
------------- ------------
Total liabilities.............................................. 2,592,278 3,565,568
STOCKHOLDERS' EQUITY (DEFICIT)
Preferred stock, $0.0001 par value, 25,500,000 shares
authorized, none issued and outstanding at June 30, 2000
and December 31, 1999......................................... - -
Series A Preferred stock, $0.0001 par value, 3,000,000 shares
authorized, 2,972,504 and 1,375,413 shares issued and
outstanding at June 30, 2000 and December 31, 1999,
respectively (liquidation preference of $4,458,756 and
$2,063,120 at June 30, 2000 and December 31, 1999,
respectively)................................................. 297 138
Series B Preferred stock, $0.0001 par value,1, 500,000 shares
authorized, none issued and outstanding at June 30, 2000 and
December 31, 1999............................................. - -
Class A Common stock., $0.0001 par value, 60,000,000 shares
authorized, 13,527,083 and 11,812,500 shares issued and
outstanding at June 30, 2000 and December 31, 1999,
respectively.................................................. 1,353 1,181
Class B Common stock, $0.0001 par value, 10,000,000 shares
authorized, none issued and outstanding at June 30, 2000
and December 31, 1999......................................... - -
Additional paid-in-capital..................................... 2,857,216 1,051,047
Accumulated deficit............................................ (2,568,541) (1,307,585)
------------- ------------
Total stockholders' equity (deficit).......................... 290,325 (255,219)
------------- ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)............ $ 2,882,603 $ 3,310,349
============= ============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements
4
<PAGE>
CCM MANUFACTURING TECHNOLOGIES, INC. AND SUBSIDIARIES
(FORMERLY MAYFORD ACQUISITION CORPORATION)
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
(Unaudited) (Unaudited)
Three Months Ended June 30, Six Months Ended June 30,
----------------------------- ---------------------------
2000 1999 2000 1999
------------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net sales............................... $ 712,358 $ 867,826 $ 1,515,025 $ 1,776,086
Cost of sales........................... 921,386 675,694 1,853,870 1,369,727
----------- ----------- ------------ -----------
Gross profit (loss)..................... (209,028) 192,132 (338,845) 406,359
Selling, general and administrative..... 389,354 380,286 865,355 554,389
----------- ----------- ------------ -----------
Loss from operations.................... (598,382) (188,154) (1,204,200) (148,030)
Other income (expenses)
Interest expense....................... (43,923) (30,850) (92,028) (51,062)
Other, net............................. (72) 627 35,272 (1,592)
----------- ----------- ------------ -----------
Total other income (expenses)........... (43,995) (30,223) (56,756) (52,654)
----------- ----------- ------------ -----------
Loss before provision for income taxes.. (642,377) (218,377) (1,260,956) (200,684)
Provision for income taxes.............. - - - -
----------- ----------- ------------ -----------
Net loss................................ $ (642,377) $ (218,377) (1,260,956) $ (200,684)
=========== =========== ============ ===========
Net loss attributable
to common stockholders................. $ (642,377) $ (218,377) (1,260,956) $ (200,684)
=========== =========== ============ ===========
Basic and diluted net loss per share
attributable to common stockholders.... $ (0.05) $ (0.02) $ (0.10) $ (0.02)
=========== =========== ============ ===========
Number of weighted average shares
of common stock outstanding............ 13,283,127 11,812,500 12,689,754 11,812,500
=========== =========== ============ ===========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements
5
<PAGE>
CMM MANUFACTURING TECHNOLOGIES, INC. AND SUBSIDIARIES
(FORMERLY MAYFORD ACQUISITION CORPORATION)
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
(Unaudited)
Six Months Ended
June 30,
-------------------------
2000 1999
------------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(1,260,956) $(200,684)
Adjustments to reconcile net loss to net cash
used by operating activities:
Depreciation and amortization.......................... 44,117 34,102
Amortization of excess of cost over fair value of net
assets of companies acquired.......................... 97,018 19,416
Preferred stock issued as compensation................. 30,000 -
Change in operating assets and liabilities
Accounts receivable................................... 182,293 (196,609)
Inventories........................................... 102,494 (232,678)
Prepaid expenses...................................... 24,098 (1,970)
Other assets.......................................... (668) (1,655)
Accounts payable...................................... (243,204) 367,451
Accrued liabilities................................... (29,464) (32,228)
Deferred compensation................................. 217,115 -
----------- ----------
Cash flows used in operating activities (837,157) (244,855)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment.................... - (652)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sale of preferred stock.................. 928,250 -
Net activity on line of credit......................... (70,090) 17,107
Additional capital contributed......................... - 62,000
Proceeds from long-term debt........................... 154,869 -
Repayment of long-term debt............................ (168,875) -
Payments on capital leases............................. (24,546) (16,577)
Net proceeds on notes payable to shareholders.......... 39,155 166,456
----------- ----------
Cash flows provided by financing activities 858,763 228,986
----------- ----------
Net increase (decrease) in cash and cash equivalents 21,606 (16,521)
Cash and cash equivalents, beginning of period 11,649 20,068
----------- ----------
Cash and cash equivalents, end of period $ 33,255 $ 3,547
=========== ==========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements
6
<PAGE>
CMM MANUFACTURING TECHNOLOGIES, INC. AND SUBSIDIARIES
(FORMERLY MAYFORD ACQUISITION CORPORATION)
CONSOLIDATED STATEMENTS OF CASH FLOWS - Continued
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES
(Unaudited)
Six Months Ended
June 30
----------------------
2000 1999
-------- -------
NON-CASH FINANCIAL AND INVESTING ACTIVITIES:
--------------------------------------------
Issuance of Class A common stock as payment
of compensation $348,250 $ -
======== =======
Issuance of Class A common stock in exchange for
note payable to shareholders $500,000 $ -
======== =======
SUPPLEMENTAL DISCLOSURE:
------------------------
Cash paid for interest during period $ 92,000 $51,000
======== =======
The accompanying notes are an integral part of these consolidated financial
statements.
7
<PAGE>
CMM MANUFACTURING TECHNOLOGIES, INC. AND SUBSIDIARIES
(FORMERLY MAYFORD ACQUISITION CORPORATION)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited financial statements of CCM Manufacturing
Technologies, Inc.("CCM" or "Company") and subsidiaries have been prepared from
the records of the Company in accordance with generally accepted accounting
principles. These financial statements reflect all adjustments which are, in the
opinion of management, necessary to provide a fair statement of the results of
operations and financial position for the interim periods. The current interim
period reported herein should be read in conjunction with the Company's Form 8-
K/A and the related financial statements included therein.
The results of operations for the three and six months ended June 30, 2000 are
not necessarily indicative of the results that may be expected for the year
ending December 31, 2000.
NOTE B - GOING CONCERN
The consolidated financial statements have been prepared on the assumption that
the Company will continue as a going concern. The Company incurred a net loss of
$1,260,956 during the six-month period ended June 30, 2000. Cash used in
operating activities for the same period aggregated $837,157. Current
liabilities at June 30, 2000 of $2,193,153 exceed current assets of $908,395 by
$1,284,758. The Company's continued existence depends upon the success of
management's efforts to raise the additional capital necessary to meet the
Company's obligations as they come due and to obtain sufficient capital to
execute its business plan. The Company intends to obtain additional capital
primarily through the issuance of preferred stock. There can be no degree of
assurance given that the Company will be successful in completing additional
financing transactions. The consolidated financial statements do not include any
adjustments to reflect the possible effects on the recoverability and
classification of assets or classification of liabilities which may result from
the inability of the Company to continue as a going concern.
NOTE C - LOSS PER SHARE
Basic net loss per share is computed by dividing net loss by the weighted
average number of common shares outstanding for the period. Diluted loss per
share is computed by dividing net loss by the weighted average number of common
shares outstanding for the period. CCM's common stock equivalents are not
included in the diluted loss per share for June 30, 2000 and 1999 as they are
antidilutive. Therefore, diluted and basic loss per share are the same.
NOTE D - NOTES PAYABLE TO SHAREHOLDERS
The Company has unsecured note payables due to several shareholders totaling
$681,853 at June 30, 2000. The notes bear interest at 9.5% per annum and
payments are made as cash flow permits with the total outstanding balance of
principal and accrued interest due September 2, 2000.
8
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NOTE E - LONG TERM DEBT
Long-term debt at June 30, 2000 consists of the following:
Installment note payable to financial institution, due in monthly
installments of $8,333, including interest at the 30 day rate
of commercial paper plus 3.25%, matures August 2004,
secured by all assets of the Company excluding accounts
receivable and inventory $ 429,667
Installment note payable to financial institution, due in weekly
principal installments of $2,000, interest is payable monthly
at the prime rate plus 5.5% matures December 2000,
secured by accounts receivable, inventory, and equipment
and personally guaranteed by certain shareholders
(cross-collateralized with the line of credit) 50,000
Installment note payable to vendor due in monthly installments
of $20,092 including 10% interest, matures November 2000,
secured by certain inventories 97,994
---------
577,661
Less current portion 247,994
---------
Long-term debt, less current portion $ 329,667
=========
NOTE F - REVERSE MERGER
Pursuant to an agreement and Plan of Reorganization dated June 19, 2000, Syntec
Acquisition Corp. ("Acquisition") entered into a reverse merger acquisition
agreement with Mayford Acquisition Corporation ("Mayford"), a publicly held
"shell" Delaware Corporation. Mayford purchased 100% of Acquisition's
outstanding stock in a tax free reorganization. Mayford issued 13,527,083
shares of its $.0001 par value Class A common stock and 2,972,504 shares of its
$.0001 par value Series A convertible preferred stock in exchange for all of the
outstanding common and preferred shares of Acquisition. Also effective June 19,
2000, Mayford changed its name to CCM Manufacturing Technologies, Inc. For
accounting purposes, the merger was treated as a recapitalization of Acquisition
with Acquisition as the acquirer (a reverse merger).
9
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The following discussion is intended to provide an analysis of the Company's
financial condition and Plan of Operation and should be read in conjunction with
the Company's financial statements and the notes thereto. The matters discussed
in this section that are not historical or current facts deal with potential
future circumstances and developments. Such forward-looking statements include,
but are not limited to, the development plans for the growth of the Company,
trends in the results of the Company's development, anticipated development
plans, operating expenses and the Company's anticipated capital requirements and
capital resources. The Company's actual results could differ materially from the
results discussed in the forward-looking statements.
This report contains forward-looking statements within the meaning of Section
27A of the Securities Act of 1933, and Section 21E of the Exchange Act of 1934.
Although the Company believes that the expectations reflected in the forward-
looking statements and the assumptions upon which the forward-looking statements
are based are reasonable, it can give no assurance that such expectations and
assumptions will prove to be correct.
GENERAL
CCM Manufacturing Technologies, Inc. (the "Company") is a contract service
provider of design, manufacturing and testing services to the electronics
industry, headquartered in Austin, Texas. Through its wholly owned subsidiary,
Syntec Corporation, the Company provides product realization services to
original equipment manufacturers in the industrial, computer and
telecommunications industries. The Company offers a full range of services
including product development and design, material procurement and management,
prototyping, assembly, testing, manufacturing, final system box build,
distribution and after market support. CCM is a certified MBE by the National
Minority Supplier Development Council (NMSDC) and a certified Historically
Underutilized Business (HUB) by the State of Texas.
The Company's contract manufacturing services are provided primarily on a
turnkey basis, where the Company procures certain or all of the materials
required for product assembly. Turnkey services include material procurement and
warehousing, in addition to manufacturing, and involve greater resource
investment and inventory risk management than consignment services. Turnkey
manufacturing currently represents almost all of the Company's sales. Turnkey
sales typically generate higher net sales and higher gross profit dollars with
lower gross margin percentages than consignment sales due to the inclusion of
component costs, and related markup, in the Company's net sales. However, the
Company takes on the risk of inventory management, and a change in component
costs can directly impact the average selling price, gross margins and the
Company's net sales. Due to the nature of turnkey manufacturing, the Company's
quarterly and annual results are affected by the level and timing of customer
orders, fluctuations in materials costs, and the degree of automation used in
the assembly process.
Since a substantial portion of the Company's sales are derived from turnkey
manufacturing, net sales can be negatively impacted by component shortages and
their lead-times. Shortages of key electronic components which are provided
directly from customers or suppliers and their lead-times can cause
manufacturing interruptions, customer rescheduling issues, production downtime
and production set-up and restart inefficiencies. From time to time, allocations
of components can be an integral part of the electronics industry and component
shortages and extended lead-time issues can occur with respect to specific
industries or particular components (such as memory and logic devices). In such
cases, supply shortages could substantially curtail production of some or all
assemblies utilizing a particular component. In addition, at various times
industry wide shortages of electronic components have occurred, particularly for
memory and logic devices. Over the past twelve plus months the marketplace for
certain electronic components, primarily in the telecommunications and wireless
markets (in particular flash memory, tantalum capacitors, and SAW filters), has
tightened from recent periods. In addition, recent tightening has occurred with
complex, high layer count (12 layers and above) raw printed circuit boards
(PCBs). This has resulted in the extension of certain component lead-times,
increased pricing and in certain instances has resulted in the allocation of
such components by the suppliers. In response to this dynamic environment, the
Company has initiated a plan whose primary purpose is to create strong supplier
alliances to assure a steady flow of components at competitive prices, and
mitigate shortages. The Company has established strategic relationships with key
component suppliers to improve shortage and pricing issues. However, because of
the
10
<PAGE>
limited number of suppliers for certain electronic components and whether
further tightening in the marketplace for components could result in missed
deliveries or de-commits from our suppliers, along with other supply and demand
concerns, the Company can neither eliminate component shortages nor determine
the timing or impact of such shortages on the Company's results. In addition,
because we provide our customers component procurement services, we may bear the
risk of price increases for these components if we are unable to purchase them
at the same price that we agree with our customer on the pricing for the
components. As a result, the Company's sales and profitability can be affected
from period to period. In order to attempt to mitigate the Company's financial
risk of component price increases, the Company regularly reviews and adjusts for
price fluctuations with customers.
Many of the industries for which the Company currently provides electronic
products are subject to rapid technological changes, product obsolescence,
increased competition, and pricing pressures. These and other factors which
affect the industries or the markets that the Company serves, and which affect
any of the Company's major customers in particular, could have a material
adverse effect on the Company's results of operations. The Company depends on a
relatively small number of customer for the majority of its revenues - the
result of a strategic business decision made in 1999. The Company began
transitioning its customer base during the past year, implement the new
strategy, ensure customer focus, and to balance current production capabilities
with the growth objectives. This transition involved moving towards developing
long-term relationships with select OEMs with whom the Company could develop
significant synergies. The Company's status as a certified minority business
enterprise (MBE) is a key differentiator, especially in the communications
industry. XEL Communications, Inc. is the first OEM to select CCM as one of
their EMS providers with the anticipation of leveraging the minority
manufactured content provided by the Company as a competitive differentiator.
The Company has no long-term volume commitments from its customers, and lead-
times for customer orders and product-life cycles continue to contract. Although
the Company obtains firm purchase orders and/or schedules from its customers,
they typically do not make firm orders for delivery of products more than 30 to
90 days in advance. The Company does not believe that the backlog of expected
product sales covered by firm purchase orders is a meaningful measure of future
sales since orders may be canceled and volume levels can be changed or delayed
at any time. The timely replacement of delayed, canceled or reduced programs
with new business cannot be assured. In recent periods, an increasing percentage
of the Company's sales have been sales to its largest customers, which may
increase the Company's dependence upon them. Because of these and other factors,
there can be no assurance that the Company's historical sales growth rate will
continue.
The Company participates within the EMS segment of the electronics industry.
This segment is currently growing at a faster rate than the overall electronics
industry, being spurred by the wave of manufacturing outsourcing by
communications OEMs. The EMS segment is comprised of a large number of
companies, with only a few attaining significant market share. The Company's
growth plan calls for a mix of both internal growth - fueled by increased
business from some current key customers combined with an expansion in the
overall customer base through focused prospecting - and external growth gained
through the acquisition of businesses that complement the Company's model and
strategy by delivering incremental capabilities, vertical integration, or
geographic coverage.
The Company believes that its growth has been achieved in significant part by
its approach to partnering with customers. In order to achieve expanded sales
growth, the Company must continue to generate additional sales from existing
customers from both current and future programs, and must successfully market to
new customers. In addition, the Company must continue to attract and retain top
quality product development engineers in order to continue to expand its design
and development services. Because of these and other factors, there can be no
assurance that the Company's historic growth rate or profitability levels will
continue.
Costs and the management of labor and equipment efficiencies for new programs
and new customers can have an effect on the Company's gross margins. Due to
these and other factors, gross margins can be negatively impacted early on in
the life cycle of new programs. In addition, labor efficiency and equipment
utilization rates ultimately achieved and maintained by the Company for new and
current programs impact the Company's gross margins.
11
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The Company continues to look for opportunities for geographical expansion that
will improve the Company's ability to provide services to its customers.
Geographical expansion and growth by acquisition can have an effect on the
Company's operations. The successful integration and operation of an acquired
business, requires communication and cooperation among key managers, along with
the transition of customer relationships. Acquisitions also involve risks
including the retention of key personnel and customers, the integration of
information systems and purchasing operations, the management of an increasingly
larger and more geographically dispersed business, and the diversion of
management's attention from other ongoing business concerns. In addition, while
the Company anticipates cost savings, operating efficiencies and other synergies
as a result of its acquisitions, the consolidation of functions and the
integration of departments, systems and procedures present significant
management challenges. The Company cannot assure that it will successfully
accomplish those actions as rapidly as expected. Also, the Company cannot assure
the extent to which it will achieve cost savings and efficiencies in any
transaction or expansion. There can be no assurance that the Company will
successfully manage the integration of new locations or acquired operations, and
the Company may experience certain inefficiencies that could negatively impact
the results of operations or the Company's financial condition. Additionally, no
assurance can be given that any past or future acquisition by the Company will
enhance the Company's business.
The Company operates in a highly competitive industry. The Company faces
competition from a number of domestic and foreign electronic manufacturing
services companies, some with financial and manufacturing resources
significantly greater than the Company's. The Company also faces competition in
the form of current and prospective customers that have the capabilities to
develop and manufacture products internally. In order to remain a viable
alternative, the Company must continue to enhance its total engineering and
manufacturing technologies.
Other factors that could adversely affect forward-looking statements include the
level of overall growth in the electronics industry, the Company's ability to
integrate and extract value from acquired operations, the Company's ability to
secure new customers and maintain its current customer base, the results of cost
reduction efforts, material cost fluctuations and the adequate availability of
components and related parts for production, the effect of changes in average
selling prices, the risk of customer delays or cancellations in both on-going
and new programs, the effect of start-up costs related to new programs and
facilities, the overall economic conditions, the impact of increased
competition, the ability to attract and retain both technical and management
personnel and other factors and risks detailed herein and in the Company's other
Securities and Exchange Commission filings.
RESULTS OF OPERATIONS
NET SALES
Net sales for the three months ended June 30, 2000, decreased $155,468 (18%) to
$712,358 from $867,826 for the same period in the prior fiscal year. Net sales
for the six months ended June 30, 2000, decreased $261,061 (15%) to $1,515,025
from $1,776,086 for the same fiscal period in the prior fiscal year. The
decrease in net sales was largely attributable to a severe industry wide
material/components shortage, which in turn effected the Company's cash flow and
subsequent ability to procure additional parts inventory. The Company believes
that it has made significant progress in alleviating the materials/components
shortage issues by establishing strategic alliances with some of the industries
largest materials/components suppliers.
GROSS PROFIT
The Company incurred a gross loss of $209,028 for the three months ended June
30, 2000 compared to a gross profit of $192,132 for the same period in the prior
fiscal year. The Company incurred a gross loss of $338,845 for the six months
ended June 30, 2000 compared to a gross profit of $406,359 for the same period
in the prior fiscal year. The decrease in the gross profit was due primarily to
an increase in materials/components costs due to the industry wide
material/components shortage and a 15% increase in personnel in the
direct/indirect labor module, and manufacturing burden. The Company's gross
margin also reflects a number of factors which can vary from period to period,
including
12
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product mix, the level of start-up costs and efficiencies of new programs,
product life cycles, sales volumes, price erosion within the electronics
industry, capacity utilization for surface mount and other equipment, labor
costs and efficiencies, the management of inventories, component pricing and
shortages, average sales prices, the mix of turnkey and consignment business,
fluctuations and timing of customer orders, changing demand for customer's
products and competition within the electronics business.
OPERATING EXPENSES
Selling, general and administrative (SG&A) expenses increased $9,068 (2%) to
$389,354 for the three months ended June 30, 2000 from $380,286 for the same
period in the prior fiscal year. SG&A increased $310,966 to $865,355 for the
six months ended June 30, 2000 from $554,389 for the same period in the prior
fiscal year. The increase in 2000 is largely due to additional costs associated
with the Company intensifying its sales and marketing efforts, coupled with
increases in personnel in the purchasing and engineering departments and legal
fees associated with the reverse acquisition of Mayford Acquisition Corporation.
LIQUIDITY AND CAPITAL RESOURCES
Cash flows used in operating activities were $837,157 for the six month period
ending June 30, 2000 compared to $244,855 for the same period in the prior
fiscal year. Cash used in operations was primarily due to increases in cost of
goods sold, and selling, general, and administrative expenses adjusted for
changes in operating assets and liabilities. Additional cash to finance
operations came from the proceeds of sale of preferred stock.
The Company utilizes available cash, debt and operating leases to fund its
operational needs. The Company utilizes operating leases primarily in situations
where technical obsolescence concerns are determined to out weigh the benefits
of financing the equipment purchase.
Because the Company's cash needs have increased significantly, the Company
expects to renegotiate and increase the size of its credit agreements with its
banks in the near term so as to provide sufficient funding levels for
anticipated working capital needs to support growth, significant expansion of
its current facilities and for potential additional acquisitions. The Company's
credit facilities, its leasing capabilities, cash and projected cash from
operations should be sufficient to meet its working capital and capital
requirements through fiscal 2000 and the foreseeable future. As the Company
reviews its capital needs, the Company may seek to raise additional capital
through the issuance of either public or private equity securities to finance
anticipated future growth.
While there can be no assurance that future financing will be available on terms
acceptable to the Company, the Company may seek to raise additional capital
through the issuance of either public or private debt or equity securities to
finance future acquisitions. Debt financing may require the Company to pledge
assets as collateral. Equity financing may result in dilution to stockholders.
Failure to arrange additional financing could affect the Company's ability to
continue to expand its operations.
The Company has not paid dividends on its preferred stock, but has reinvested
its earnings to support its working capital and expansion requirements. The
Company intends to continue to utilize its earnings in the development and
expansion of the business and does not expect to pay cash dividends in the
foreseeable future.
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PART II -- OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There are no legal proceedings against the Company and the Company is unaware of
any proceedings contemplated against it.
ITEM 2. CHANGES IN SECURITIES
The following information is given with respect to all unregistered securities
sold or issued by the Company in the period covered by this report:
On June 13, 2000, the Company issued 300,000 restricted shares of its common
stock to TPG Capital Corporation, the sole shareholder of Mayford Acquisition
Corporation, pursuant to an Agreement and Plan of Reorganization between Syntec
Acquistion Corporation and Mayford Acquisition Corporation in exchange for 99.9%
of the outstanding shares of common stock of Syntec Acquisition Corporation.
These shares were issued by the Company pursuant to Rule 506, Regulation D of
the Securities Act of 1933.
On June 19, 2000, pursuant to an Agreement and Plan of Reorganization between
Mayford Acquisition Corporation ("Mayford"), Syntec Acquisition Corporation
("Syntec") and the owners of the outstanding shares of Syntec, Mayford acquired
99.9% of the outstanding shares of Syntec from the shareholders thereof in an
exchange of stock at a ratio of one share of Syntec stock for 2.5 shares of
identical class of shares of Mayford, for an aggregate issuance of 13,527,083
shares of Class A common stock of Mayford and 2,972,504 shares of the Series A
preferred stock of Mayford. The outstanding warrants and options of Syntec and
other outstanding rights to purchase shares of common stock of Syntec represent
the right to purchase the equivalent number of shares of common stock of Mayford
(subject to the adjustment provisions therein). On July 14, 2000, pursuant to an
Agreement and Plan of Merger between Mayford and its subsidiary, Syntec, Syntec
was merged with and into Mayford. In connection with the merger, Mayford changed
its name to "CCM Manufacturing Technologies, Inc.". Effective as of June 19,
2000, the officer and director of Mayford resigned and certain other persons
became the officers and directors of the Company, as described in the Form 8-K.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
ITEM 5. OTHER INFORMATION
Not applicable.
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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
4.1 - Current report on Form 8-K filed by the Company on June 28, 2000 and
July 19, 2000, and incorporated herein by reference.
4.2 - Current report on Form 8-K/A filed by the Company on October 20, 2000
and incorporated herein by reference.
(b) Reports on Form 8-K
On June 28, 2000, the Company filed a Current Report on Form 8-K (file No.
000-28681) reporting the acquisition by Syntec of the outstanding shares of
common stock of Mayford from the shareholder thereof in an exchange for an
aggregate of 120,000 restricted shares of common stock of Syntec. No
audited financial statements were filed therewith.
On July 19, 2000, the Company filed a Current Report on Form 8K reporting
the acquisition by Mayford of 99.9% of the outstanding shares of Syntec
from the shareholders thereof in an exchange of stock at a ratio of one
share of Syntec stock for 2.5 shares of identical class of shares of
Mayford, for an aggregate issuance of 13,527,083 shares of Class A common
stock of Mayford and 2,972,504 shares of the Series A preferred stock of
Mayford. The outstanding warrants and options of Syntec and other
outstanding rights to purchase shares of common stock of Syntec represent
the right to purchase the equivalent number of shares of common stock of
Mayford (subject to the adjustment provisions therein). The Company's
Current Report, filed on July 19, 2000, further reported the Company's name
change from "Mayford Acquisition Corporation" to "CCM Manufacturing
Technologies, Inc."
On October 20, 2000, the Company filed a Current Report of Form 8-K/A
which included the audited financial statements of Syntec Acquisition Corp.
and subsidiaries as of and for the periods ended December 31, 1999, June
30, 1999, December 31, 1998 and May 31, 1998 and the unaudited financial
statements of Syntec Acquisition Corp. and subsidiaries as of and for the
quarter ended March 31, 2000.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CCM Manufacturing Technologies, Inc.
By: /s/ Jaime Munoz
----------------------
President
Dated: October 18, 2000
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