SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d) of
the
Securities Exchange Act of 1934
For the fiscal year ended April 30, 1997
Commission File No. 0-8299
CAMELOT CORPORATION
(Exact Name of Company as specified in its charter)
Colorado 84-0691531
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Camelot Place, 17770 Preston Road, Dallas,
Texas 75252
(Address of principal executive office)
(Zip Code)
Company's telephone number, including area code: (972)
733-3005
Securities registered pursuant to Section 12(g) of the Act:
Name of eachexchange
on
Title of each class which registered
$0.01 par Value Common Stock NASDAQ
Indicate by check mark whether the Company (1) has filed
all reports required to be filed by Section 13 or 15(d)
of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the
Company was required to file such reports), and (2) has
been subject to such filing requirements for the past 90
days.
Yes X No ____
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained
herein, and will not be contained, to the best of
Company's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K.
Based on the price of $3.6875, at July 28,1997, the
aggregate market
value of the voting stock held by nonaffiliates of the
Company was
$4,754,463.
The number of shares outstanding of the Company's common
stock, $0.01 par value, was 1,472,672 at July 28, 1997.
DOCUMENTS INCORPORATED BY REFERENCE
Form 8-K dated May 20, 1997 with amendments.
PART 1
Item 1. Business
Camelot Corporation ("Registrant" or "the Company")is
a holding
company with subsidiaries in technology and
telecommunications.
The Company was incorporated in Colorado on
September 5, 1975,
and completed a $500,000 public offering of its common
stock in March 1976.
The Company has made several acquisitions and divestment's
of
businesses unrelated to its present activities (see
Acquisition and Divestment History) and during the years
ended April 1994 and April 1995, undertook a restructuring
which involved the
sale or closure of all subsidiaries operating in prior
financial periods.
The Company's activities are conducted through
subsidiaries. Third Planet Publishing, Inc., (`Third
Planet") (established in January 1995) is a research and
development company developing leading edge technology in
both hardware and software solutions for audio and video
conferencing over the Internet. mrcdrom.com, inc.
("mrcdrom.com"), (established in March 1997) is a
Internet catalog retailer of software. Camelot
Internet Access Services, Inc. ("CIAS"), (established
in June 1996) is a provider of Internet access services.
Alexander Mark Investments (USA), Inc. ("AMI") (80%
acquired in May 1997) is a U.S. public holding company
whose 57% owned subsidiary, Meteor Technology plc
("Meteor") is a U.K. public company. Meteor's two
primary subsidiaries are DigiPhone International Ltd
which is the worldwide distributor of all the
products of Third Planet, and Meteor Payphones Ltd an
operator of approximately 2,000 payphones.
Third Planet Publishing
Third Planet is an innovative technological
research and development company focusing on hardware
and software solutions for audio and video
communications over the Internet. Third Planet is at the
culmination of a 30 month development program for Internet
video conferencing and telephony and has made its new
products available for licensing to major Personal
Computer ("PC") manufacturers.
Third Planet released its first product, DigiPhone,
in October 1995. The product represented a
telecommunications breakthrough by permitting the full-
duplexing of voice over the Internet making real time
worldwide voice communications possible for PC users at
the cost of a monthly Internet connection fee. The
current version of the product, called DigiPhone
Deluxe includes modern telephone features such as speed
dialing, voice messaging, caller ID, call record and
play back, conference calling, amongst others.
Conversations are encrypted and completely private
unlike the commonly used IRC connections or Internet
chat rooms in competing software.
In April 1996, Third Planet commenced a development
program for DigiPhone 2.0, the latest
version of DigiPhone which included multi-
protocol frameworks enabling DigiPhone to communicate with
any other standards based Internet telephony software.
The frameworks are based on component technology that
will allow the development of new functionality for
the DigiPhone communications engine. This new
approach will allow DigiPhone to evolve more quickly in
a rapidly maturing Internet telephony market.
DigiPhone 2.0 will be available in approximately the last
quarter of 1997.
In May 1996, Third Planet announced a development
program for an Internet telephony handset specifically
designed to enable superior voice communications over
the Internet. Proficia is an audio handset which connects
to a multimedia PC, eliminating the need for a headset,
microphone or speakers. It provides quality sound
for Internet telephony, computer telephony and multi-
media applications, and is available for licensing.
The principle focus of Third Planet's research and
development department has been on the development of
VideoTalk, a video conferencing system for the Internet.
Third Planet has applied for a patent for VideoTalk, which
is a complete hardware and software system which,when
connected
to a multimedia PC, enables full duplex video conferencing
over the Internet and over local and wide area networks.
Uniquely,VideoTalk will operate in the background while not
detracting from the PC's ability to run other
software programs simultaneously. It uses a PCI plug-and-
play card that provides high quality audio and video
while achieving extremely low processor load. VideoTalk
does not require a sound card or a video capture card,
and allows communications over the Internet with only a
28.8 kbps modem. The VideoTalk unit includes a NTSC or
PAL color video camera, a special version of the
Proficia telephony handset and both the VideoTalk
and DigiPhone 2.0 software. Discussions with PC
manufacturers regarding the licensing of VideoTalk for
inclusion with forthcoming platforms have commenced.
VideoTalk is capable of video conferencing at 15
frames per second over a 28.8 modem. This is a major
breakthrough, as competing technologies currently
struggle to achieve 2 or 3 frames per second over the
Internet. VideoTalk offloads almost all of the audio
and video processing onto its own processors. This
frees the personal computer for other tasks, such as
application sharing, while ensuring the video comes
through at a frame rate that software-only solutions
simply cannot match.
VideoTalk features a modular framework, simplifying
upgrades and expansions. This flexibility will allow
third party developers to utilize VideoTalk and its
powerful processors as the engine for their own programs.
VideoTalk's technical features include:
Multi-point conferencing
High frame rate
Low processor load
Expandable system
CIF, QCIF, and SQCIF formats
Dual NTSC or PAL video input
Echo cancellation
Full duplex audio/video
Outstanding speech quality
H.323 compliant
Open architecture
Firmware upgradeable
Scaleable hardware and software
MIPS-based accelerated video processing
Built-in frame grabber and audio amplifier
VideoTalk is available for licensing to major PC
manufacturers.
In June 1997, a successful demonstration of all
the three new products was held in Atlanta at
COMDEX/Spring 97'. These products were enthusiastically
received with VideoTalk being featured on COMDEX TV as a
show highlight.
Through a series of transactions in July 1996,
November 1996 and May 1997 the worldwide marketing rights
for all Third Planet products are exclusively with
DigiPhone International Ltd., a subsidiary of Meteor
Technology plc a public company affiliated with
Registrant.
Meteor Technology plc
Subsequent to the financial year end, Registrant,
through its acquisition of 80% of AMI obtained control
of Meteor, a U.K. listed public company (see Acquisition
and Divestment History). Meteor's two operational
subsidiaries, are DigiPhone International Ltd. and Meteor
Payphones Ltd. DigiPhone International is the worldwide
distributor for all products developed by Third Planet.
Meteor Payphones owns and/or operates approximately
2,000 payphones in the United Kingdom, which business it
is intended to expand both by internal growth and by
acquisitions.
mrcdrom.com, inc.
In April 1997, Registrant announced a new
Internet shopping company called mrcdrom.com, a
subsidiary, which will sell software titles over its
World Wide Web Site. It also announced the filing of a
registration statement to raise up to $12,000,000 through
an initial public offering ("IPO") over the Internet,
offering up to three million shares, at $4.00 per
share. The Company will be offering its shares
exclusively over the Internet with no underwriter and
with a minimum subscription of $200 for 50 shares.
Following the offering if all shares offered are sold
the Company will have 9,000,000 shares outstanding.
Camelot, who will retain a 60% shareholding subsequent to
the IPO, transferred to mrcdrom.com approximately
$511,428 of inventory, cash, trademarks and other
assets. The mrcdrom.com Internet catalogue is currently
being test marketed via its World Wide Web site at
http://www.mrcdrom.com.
This new business grew out of the experience and
resources of Registrant's previous software retail chain
called Mr. CD-ROM Stores, Inc., which was closed during
the financial period. The Company took a charge in
the amount of $745,521 related to the closing of the
stores. The Company believes that in the long run this
action will be good for the Company as it restructures
the operations into an Internet catalogue.The Company
will offer a wide selection of one-stop computer software
shopping through a secure site on the Internet.
Customers are offered a large selection of titles
as well as competitive pricing and can run searches in
various categories, check order status, and click on a
button to add software to their virtual shopping
baskets. To execute orders customers click on a button
and are prompted to supply shipping and payment details.
A registration statement relating to these
securities has been filed with the Securities and
Exchange Commission but has not yet become effective.
These securities may not be sold nor may offers to buy
be accepted prior to the time the registration statement
becomes effective. This document shall not constitute an
offer to sell or the solicitation of an offer to buy nor
shall there be any sale of these securities in any
State in which such offer, solicitation or sale would
be unlawful prior to registration or qualification under
the securities laws of any such State.
Camelot Internet Access Services, Inc.
An Internet services provider formed in January
1996 using the UUNet backbone, this subsidiary's principle
activities are the provision of support services for
Registrant
and the provision of Internet access to users of DigiPhone
who
would otherwise be unable to access the Internet. Due
to the intense competition experienced by the Internet
access industry, Registrant has no plans to expand the
current limited activities of this company.
PCAMS
In February 1997, Registrant acquired from Meteor
the U.S.A. and Canadian rights to PCAMS software, a
payphone contract and management system originally
developed for Meteor's payphone subsidiary. This
reflects the intention of Management to broaden the scope
of Registrant's involvement in the telecommunication
industry. Management believes that the passage of the
Telecommunications Act of 1996 followed by the release of
new payphone compensation rules by the Federal
Communications
Commission in response to the Act has
significantly improved the outlook for this industry,
and that the acquisition of PCAMS software enables
Registrant to improve the capabilities of independent
payphone providers. Management will seek to utilize
PCAMS software both by offering such software to
independent providers and by seeking acquisitions
of payphone businesses.
Competition
The technology and telecommunications industry is highly
competitive. The Company's competitors include other
national and regional companies many which have
substantially greater financial and other resources
than the Company which may give them certain
competitive advantages. There are many companies entering
the technological and telecommunications markets with new
products and this trend is expected to continue. The
ability of Registrant to effectively compete in the
future depends on a number of factors including its
ability to create and/or acquire products that customers
will accept and respond to and comply with the changing
nature
of regulations in the manne which they are interpreted.
Registrant's businesses may be effected by a variety of
factors,including but not limited to general economic
trends, additional and existing competition,
marketing programs, special or unusual events, and
acquisitions made by the Company.
Trademarks and Trade Names
"Mr. CD-ROM", "DigiPhone", "VideoTalk", "Proficia",
"People are Talking", "Call Anywhere. Talk Forever.
Never Pay Long Distance" and "Kids University" are
registered or have been applied for in the United
States patent and trademark office and where appropriate
with foreign regulatory bodies as service marks or
trademarks of the Company. The Company believes the
strength of its trademarks and service marks benefits
its businesses and intends to continue to protect and
promote its registered common law trademarks and service
marks.
Acquisition and Divestment History
On September 16, 1988, the Company acquired
Stock Transfer Company of America, Inc. ("STCA"), a
transfer agent, for 6,666 newly issued common shares
of the Company (post reverse split). In connection
with this transaction, Daniel Wettreich was appointed a
Director, Chairman and Chief Executive Officer and
Jeanette Fitzgerald was appointed a Director. On April
11, 1994, following a decision by the Directors of the
Company to discontinue financial services activities,
STCA was sold to a company affiliated with Mr. Wettreich
for book value, $13,276. (See Item 13. Certain
Relationships and Related Transactions).
On March 2, 1990, the Company's subsidiary, Beecher
Energy, Ltd. ("Beecher") was listed on the Vancouver Stock
Exchange in an initial public offering. The Company
sold its 69% shareholdings in Beecher on July 6, 1994 for
C$400,000, (US $288,293).
In January 1991, the Company acquired for
$200,000
cash an 80% majority interest in Forme Capital, Inc.
("Forme") a publicly traded real estate company from
the wife of Mr. Wettreich. In September 1993, the
Company sold to Forme for $466,571 two office
properties
and then sold all its investment in Forme for cash
(approximately $40,000) to Mrs. Wettreich. These
transactions were approved by the shareholders of the
Company
at the Annual Meeting held on February 15, 1994.
Other acquisitions were as follows:
Date Name Business Cost
March 1991 Vesta Land Title Company Titles $120,000
July 1991 Business Investigations Investigations 312,231
July 1992 McKee-Blanchard Appraisals 32,203
September 1992 First Appraisal Group Appraisals 15,000
June 1994 Maxmedia Distributing Software Distribution 168,500
These companies ceased doing business in July 1994,
July 1994, November 1993, November 1993, and May 1995,
respectively.
In July, 1993, Registrant acquired approximately
40% of the issued share capital of Goldstar Video
Corporation ("GVC"), a video marketing company for a net
price of $92,432. Registrant also made a $150,000 secured
loan to GVC. Further, Goldstar Entertainment, Inc. ("GEI")
a subsidiary of Registrant acquired certain licenses and
other
assets from GVC for $375,000. Thereafter Registrant's
subsidiary Camelot Entertainment, Inc. commenced business
as a
video marketing company. On October 20, 1993, GVC filed
for protection from creditors under Chapter 11 of the
Bankruptcy Code which was converted to Chapter 7 on
February 4, 1994. Registrant was not a controlling
shareholder
of GVC. The Company's subsidiary Camelot Entertainment, Inc.
filed under Chapter 7 of the US Bankruptcy laws in January
1995.
In November 1995, Registrant appointed Firecrest
Group plc a public company, as exclusive distributor for
DigiPhone in the United Kingdom and Ireland in consideration
for $1,950,575 payable by shares equal to approximately 10%
of
Firecrest. In March 1996 all relations with Firecrest were
terminated and Registrant sold all its shares in Firecrest
in market
transactions. Subsequently, Firecrest sold its DigiPhone
rights to
Meteor. In July 1996, Registrant sold the European
rights to distribute DigiPhone to DigiPhone Europe Ltd
which became a subsidiary of Meteor. The consideration was
5,000,000 pounds of loan stock which was subsequently
converted
into Meteor shares. In November 1996 Registrant sold the
international DigiPhone rights to Meteor for 1,000,000
pounds
of loan stock which subsequently was converted into Meteor
shares.
In May 1997, DigiPhone International a Meteor subsidiary
became the
exclusive marketing company for all Third Planet products on
a
worldwide basis.
In May 1997, Registrant acquired approximately 80%
of AMI whose principle asset is approximately 57% of
Meteor. The consideration (post reverse split) payable
to the seller, Adina, Inc. ("Adina") was 892,015
Preferred Shares, Series J of Registrant and 453,080
Preferred Shares, Series J in deferred consideration.
Following the transaction Adina has 49% of the voting
rights
attributable to the currently issued and outstanding
common
and preferred shares of Registrant. Mr. Wettreich is a
director
of Adina and did not participate in any directors' votes in
relation to this transaction.
Discontinued Activities - See Item 7. Management
Discussion and Analysis of Financial
Conditions and Results of Operations
Employees
As of July 1, 1997, the Company employs 39 people on
a full time basis. The Company believes that it has good
employee relations.
Item 2. Properties
Real Estate
Company leases, pursuant to a ten (10) year
lease , a 10,000 square feet office building in Dallas,
Texas which it occupies as its corporate headquarters
from a company affiliated with the President. The
annuallease payment equates to $80,000. Company also
leases pursuant to a five (5) year lease, 19,950 square
feetoffice and warehouse building in Dallas, Texas
which it occupies as a distribution center for
mrcdrom.com, Camelot Distributing and as programming
and publishing facilities for Third Planet Publishing.
The annual lease payment varies each year and for the
last fiscal year equates to $65,431. The Company considers
all office and warehouse space leased adequate for its
needs. Mr. CD-ROM Stores currently leases four retail
units in Dallas, Texas which they are in the process
of negotiating with landlords in order to terminate
the leases.
Item 3. Legal Proceedings
No material legal proceedings to which the Company
is a party is subject or pending and no such proceedings
are known by the Company to be contemplated. In the
normal course of business, the Company has been sued
as detailed below. The Company believes there is no
validity to these suits, and has denied plaintiff's
allegations.
The Company has been sued by a creditor of a previous
subsidiary. The Plaintiffs alleges that the Company is
the alter ego of the previous subsidiary and is
therefore liable for its debts. The Company believes
the allegations are groundless and intends to
vigorously defend itself in litigation.
The Company has been sued for breach of lease of a
retail unit previously occupied by Mr. CD-ROM Stores,
Inc. The Company intends to show failure on the part of
the landlord to relet the space.
There are no proceedings to which any director,
officer or affiliate of the Company, or any owner of
record (or beneficiary) of more than 5% of any class of
voting securities of the Company is a party adverse to
the Company.
Item 4. Submission of Matters to a Vote of Security
Holders
A special shareholder's meeting was held on
July 14, 1997 approving a one for forty reverse stock
split of all outstanding common shares and outstanding
Preferred Shares, Series J.
Item 5. Market for Company's Common Equity and Related
Stockholder Matters
The Company's common stock trades on the NASDAQ
Small-Cap Market under the symbol CAMLD (such symbol to
change to CAML on August 15, 1997). The following
table sets forth the quarterly high and low prices of
the common stock for the period from May 1, 1995 through
April 30, 1997 (post reverse split). Real-time price
information is provided from quotations take from monthly
reporting by NASDAQ. They reflect inter-dealer prices,
without retail mark-up, mark-down or commission, and
may not necessarily represent actual transactions. <PAGE>
Real Time
1996
High Low
First July 31, 1995 $ 97.50 $60.00
Second October 31, 1995 281.25 77.50
Third January 31, 1996 196.25 92.50
Fourth April 30, 1996 127.50 68.75
1997
First July 31, 1996 102.50 37.50
Second October 31, 1996 60.00 43.75
Third January 31, 1997 35.00 23.75
Fourth April 30, 1997 15.00 3.75
As of July 18, 1997, the Company had 9,664
shareholders of which there were 1,191 shareholders on
record of Company's common stock and 8,473 additional
beneficial owners. On July 14, 1997 the Company's
shareholders approved a one for forty reverse stock split
on all the outstanding common and preferred shares,
Series J resulting in 1,472,672 common shares and
1,345,295
preferred shares, Series J outstanding. As the
number of
shares outstanding are limited, the Company's shares
trade
continuously with some heavy volume trading days.
On September 30, 1997, the Company issued a news
release stating that NASDAQ had halted trading in the
company's common shares on September 26, 1997 while
NASDAQ reviewed requested information about the Company's
activities. The Company promptly provided all requested
information and NASDAQ permitted the resumption of
the Company's shares on October 6, 1997. There was no
impact on Company operations.
Item 6. Selected Financial Data
A comparison of various financial data
pertaining to the Company's operations over the past
five fiscal years is as follows:
1997 1996 1995 1994
1993
Net sales $1,887,617 $3,002,049 $1,184,469 $-
$-
Income (loss)
from continuing (12,996,369) (4,314,788)(2,335,977)
(1,567,312)(256,320)
operations
Income (loss)
from discon-
tinued opera-
tions - (250,925)(1,182,927)
(402,981) (435,772)
Income (loss)
per share from (20.45) (12.54) (9.17)
(8.30) (3.79)
continuing
operations
Total assets 6,772,07 16,701,8 2,098,97
3,309,13 3,337,49
6 63 4 2
4
Long-term debt - - - -
633,528
Company's software subsidiaries commenced operations
during
fiscal 1995 (See Item 1. Business).
On January 30, 1995, Company's subsidiary Camelot
Entertainment filed under Chapter 7 of the US Bankruptcy
Code.
On April 11, 1994, Company disposed of its
subsidiary STCA, and on July 8, 1994 discontinued Vesta
Land Title Company and Business Investigations its remaining
financial service subsidiaries (See Item 1. Business).
On July 6, 1994, Company disposed of its 69%
interest in Beecher Energy, Ltd., a company trading on
the Vancouver Stock Exchange representing its energy
interests (See Item 1. Business).
On September 11, 1993, the Company disposed of its
investment in Forme Capital, a real estate holding company
(See Item 1. Business).
Item 7. Management Discussion and Analysis of
Financial Condition and Results of Operations
Certain information within this Item 7 and
throughout this Form 10-K contain forward looking
statements. These statements are subject to certain
risks and uncertainties that could cause actual results to
differ materially from those set forth including but not
limited to Camelot's dependence upon outside
suppliers, upon the continued ability to create and/or
acquire products that customers will accept; the impact
of competition and the changing competitors; the changing
nature of regulations and the manner in which they are
interpreted; and pricing pressures in addition to normal
economic and world factors beyond the control of the
Company; the Company's ability to create competitive
products; changes in technology and the ability to obtain
patents and trademarks.
1997
Although the Company's historical financial results
for the year ended April 30, 1997 were not good,
Management believes that this is very typical for a
company primarily involved in research and
development. Management believes that Registrant's
principal subsidiary Third Planet is now at the
culmination of a 30 month software and hardware
development program for Internet video conferencing
and telephony which will yield positive results for the
Company in the future.
The Company's revenue for the year was $1,887,617
compared with $3,002,049 in 1996. Net loss for the
period was $12,996,369 compared with $4,565,713 the
previous year. These results are due to a
combination of limited revenues from DigiPhone, the
closure of the retail software stores and continuing
research and development costs which were largely
expensed. Further, other expenses of $4,675,189
relating
to losses on disposition of assets, investment in
affiliate, marketable securities and a note receivable
allowance impacted the results. Revenues consisted
of sales of licensing rights,paid primarily with the
issuance of free trading stock by the entity acquiring
the licensing rights; minimal sales of the Digiphone
product, and sales during the time the stores were
operating.
The expenses consisted of the store operating expenses, the
marketing and distribution expenses for the Digiphone and
primarily the research and development costs for the
VideoTalk, Digiphone 2.0 and Proficia. These high
research and development costs allowed the Company to be
on the cutting edge of the known technology in the
videoconferencing field thereby putting it in position to
offer a product, Video Talk, that will be well received.
Due to the closing of the stores during the year any
depreciation and amortization attributable to the assets
in the stores were immediately expenses thereby
increasing the depreciation and amortization line item.
The Other Expense line in the Statement of Operations
includes a loss on the disposition of the assets
relating to the closing of the stores, and a note
receivable allowance which reflects a decrease in the
value of the collateral of the loan to an officer. The
loss on investment in affiliate resulted from
management's decision to change the method whereby the
stock of Meteor was classified to the equity method
due to the amount of control the Company has over
Meteor Technology. There are common directors and the
Chairman is the same for both companies along with Camelot
owning approximately 15% of Meteor. This resulted in an
adjustment to the value of the Meteor stock to reflect
the current market value.
The Consolidated Balance Sheets for the period show
stockholders' equity of $6,078,509 compared with
$15,680,168 for the previous year. Total assets were
$6,772,076 compared with $16,701,863 in 1996. The
decrease in stockholders' equity and total assets was due
to losses.
The Consolidated Statements of Cash Flows reflects,
in addition to the items noted above, cash received
from the sale of marketable securities in the amount of
$1,027,612, a loan to an officer in the amount of
$1,814,000 and 3,410,500 in proceeds from the sale of
preferred stock to help finance the research and
development efforts. The items noted above along with
the expenses from the research and development efforts
resulted in the Company having a net decrease in cash.
During the year, substantial financial
(approximately $2,375,000 compared to $1,319,000, and
$163,000 for the years ended April 30, 1996,and 1995
respectively) and managerial resources were expended
in the continuing research and development of Internet
video conferencing and Internet telephony, and Management
believes that significant progress was made in this
regard. Through its affiliated company, DigiPhone
International, Registrant has made available for
licensing Third Planet's three new products which
products are to being offered to the major PC
manufacturers.
During the financial year, Registrant's activities
resulted in the following.
Completion and shipping through retail distribution
channels of DigiPhone Deluxe
A development program for multi-protocol framework for
DigiPhone 2.0
The filing of a worldwide patent for VideoTalk
A thirty-day version of DigiPhone for downloading over
the
Internet
The launch of Camelot Internet Access Services
An agreement with Lucent Technologies to license
Lucent's voice
codec for future versions of DigiPhone
Completed DigiPhone for Mac
Completed arrangements for worldwide distribution of
Third Planet
products with DigiPhone International, an affiliate of
the
Company
Listed Registrant's securities on the Frankfurt Stock
Exchange
Acquired PCAMS Software
Filed an initial registration statement for mrcdrom.com,
inc.
Acquired a controlling interest in AMI
Demonstrated its new technology at COMDEX/Spring in
Atlanta
The Company's subsidiary Mr. CD-ROM Stores, Inc.
closed its six retail locations during the period and
transferred the majority of its assets to a fellow
subsidiary mrcdrom.com (See Item 1. Business).
The Company took a charge against revenues for
$745,521 as a result of the closing of these stores.
The Company has actively worked with the landlords of
the sites of the stores to reduce its exposure pursuant to
the leases. Further, the Company has limited its losses due
to its transfer of assets to mrcdrom.com.
Management believes its future profitability and
revenues will result from licensing its VideoTalk,
DigiPhone 2.0, and Proficia technology to PC
manufacturers and (subject to a successful conclusion of
the initial public offering of mrcdrom.com), from the sale
of software and ancillary products over the Internet.
Management also intends to expand its interests in the
payphone
industry both through its affiliate Meteor Payphones and
through
developing and/or acquiring payphone interests in the
United States and Canada.
1996
The Company made substantial progress during the
year ending April 30, 1996. The Company's revenue for the
year was $3,002,049 compared with $1,184,469 in 1995, an
increase of 153%. Net loss for the period was $4,565,713
compared with a loss for the previous year of $3,518,904.
These
results are due to a combination of revenue from DigiPhone,
license fees received from European distribution rights
for DigiPhone, revenue from the five newly opened Mr. CD-
ROM Stores, and increased general and administrative
costs related to the development and marketing of
DigiPhone.
The consolidated balance sheets for the period show
stockholders' equity of $15,680,168 compared with
($87,049) for the financial year ended April 30, 1995.
Total assets were $16,701,863 compared with
$2,098,874 in April 1995. The substantial increase in
stockholders' equity and total assets was due to
the completion of private placements.
During the April 1996 period, the Company's
subsidiary Third Planet completed shipments of its
preliminary orders for the Windows 3.1 version of
DigiPhone. This software achieved widespread retail
distribution, and by the end of the third quarter the
first production run had sold out. Subsequent retail
reorders were limited in anticipation of the Windows
95 version of DigiPhone which commenced shipment in May
1996 along with DigiPhone Deluxe. DigiPhone Deluxe has
enhanced
telephone features including conference calling
capability, voice mail, speed dialing, voice sound
effects, conversion recording and playback, and macro
command capabilities. It comes with a full suite of
Internet tools including an e-mail program, a
newsreader, an FTP program, and a telnet program. In
addition, a free Windows 95 upgrade for the existing
DigiPhone software is available. Both DigiPhone and
DigiPhone Deluxe have two licenses in each retail box.
Effectively, this provides two Windows 95 compatible
licenses
for DigiPhone or DigiPhone Deluxe for the price of one,
and enables consumers to immediately start Internet
telephone conversations with a family member or a friend
without any extra cost.
During the April 1996 period, the Company
announced the acquisition of e-Phone, formerly known as
NetPhone, the only Macintosh compatible computer software
that enables voice communication over the Internet. The
purchase price was $593,000 payable $350,000 in Camelot
restricted common shares valued at $207.50 per share and
the balance in cash. In addition, New Paradigm will
also receive for a five year period $1 per unit and 10%
of OEM revenue derived from the software. The technology
of e-Phone was incorporated by Third Planet into a
Macintosh compatible version of DigiPhone called
"DigiPhone For Mac". The cost of acquisition was written
off in the 1997 financial period.
The appointment of Firecrest Group PLC as exclusive
distributor for DigiPhone in the United Kingdom and
Ireland, occurred during the period under review. The
consideration for the granting of the UK and Ireland
exclusive rights was $1,950,575 payable by issuance
by Firecrest of 1,856,453 ordinary shares equal to
approximately 10% of the increased share capital of
Firecrest. Firecrest is a media and marketing company
in the United Kingdom.
The rights for Scandinavia were conditionally
purchased in January 1996 by Telepartner Holdings A/S, a
Copenhagen, Denmark based company, which is the leading
telephone database services company in Scandinavia. The
consideration for the exclusive distribution rights was
$1,000,000 payable by the issuance to Camelot of
shares in Telepartner equal to 2.7% of the share capital of
Telepartner. Due to the non-receipt of consideration, the
Company terminated the agreement in May 1996.
In July, 1996, after the financial year end,
the Company concluded an agreement with DigiPhone
Europe, Ltd., whereby it appointed DigiPhone Europe,
Ltd. as exclusive distributor for DigiPhone
and DigiPhone Deluxe in Europe, excluding the
United Kingdom and Ireland. The consideration for the
rights was 5,000,000 pounds 6% loan stock (approximately
$7,500,000). DigiPhone Europe, Ltd. is a London, England
based European software marketing company which merged
with Telecom Credit Europe, PLC ("TCE"), a public company
listed on the Alternative Investment Market of the
London Stock Exchange. Following the merger, Camelot
owns approximately 16% of TCE. The majority
stockholder of TCE, Danny Wettreich, is also Chairman
and Chief Executive Officer of Camelot. Mr. Wettreich
did not participate in any Directors' vote in relation
to this transaction.
During the period the Company opened five Mr. CD-
ROM Stores in the Dallas, Texas area. The retail stores
range in size from 1,000 square feet to 3,000 square
feet, and specialize in CD-ROM software with up to 2,000
titles in stock. These Mr. CD-ROM corporate stores were
intended to be the first of a previously announced target
of 100 corporate and franchise stores to be opened
by Christmas 1996. However, results from the stores led
Management to the conclusion that the retail concept was
not viable, and the stores were closed in 1997.
On January 26, 1996, the Company announced that it
has concluded an agreement with UUNet. Technologies,
Inc. whereby it will use UUNet's Internet backbone
for the Company's newly formed subsidiary, Camelot
Internet Access Services, Inc. ("Camelot Internet"). The
use of UUNet's exclusive alternate Internet backbone
facilities enables Camelot Internet to instantly
establish itself as a nationwide quality Internet service
provider. Camelot Internet was officially launched in
June 1996 at which time its nationwide services commenced.
Camelot Internet is offered as part of Camelot's
DigiPhone Deluxe software package.
At the world's first Internet Telephony
conference, held in London, England on April 18-19 and
called "Dialing The Net", Danny Wettreich, Chairman and
Chief Executive Officer of Camelot, disclosed a
development program for the DigiPhone Multi-Protocol
Frameworks. These frameworks will enable DigiPhone to
communicate with any other standards-based Internet
Telephony software.
A 30 day free trial of DigiPhone Version 1.03
software is available through the Company's web site on
the Internet. To access this free offer, users
download the software from the Company's web page,
http://www.digiphone.com. The only system requirement
for potential users are a multimedia PC, Internet access
and web browser software. At the end of the 30 day
trial, users can purchase a full version of DigiPhone
or DigiPhone Deluxe software by calling a tollfree
number. Users will also be provided with a list of
retailers that carry DigiPhone Deluxe software. To gain
additional exposure for DigiPhone software, Camelot will,
in the future, offer this 30 day trial version bundled
with various third party hardware products and through
Internet access provider services.
Subsequent to the period under review, the Company
announced that it has applied for a patent for
VideoTalkT, a video and audio communications system
for the Internet. VideoTalk is a complete hardware
and software system which, when connected to a multimedia
PC, enables full duplex video and audio conferencing
over the Internet. It will provide significant advantages
to users as VideoTalk does not require a soundcard or a
video capture card. VideoTalk will come with a new
version of DigiPhone 2.0 which will include the
recently announced Multi-Protocol Framework allowing
voice communication with other Internet telephony software.
VideoTalk's features are designed to incorporate new
leading edge audio and video compression technology to
enable connections over devices such as 28.8 kbps
modems.
VideoTalk is designed with an expansion peripheral
interface that enables attachments to be added to the
VideoTalk unit. Third Planet will provide API
specifications so that other developers can take
advantage of the features and processing power of
VideoTalk in their applications.
The Company also announced the Proficia, an
Internet telephony handset which is specifically
designed to enable superior voice communications over
the Internet. The handset attaches to the side of a
computer monitor and functions in a similar way to a
telephone handset, thus eliminating the necessity for a
headset or microphone and speakers when Internet voice
communication software is used.
Management expects its principal revenue and
profitability will emanate from DigiPhone derivative
software products and from license fees, and intends to
concentrate the majority of its management and
financial resources on the development and successful
marketing of Internet related products produced by its
subsidiary Third Planet.
1995
During the year ended April 1995, Company
completed its restructuring which involved the sale or
closure of all previously owned subsidiaries and
established three new operating subsidiaries,
namely Third Planet Publishing, Inc., (established in
January 1995), Mr. CD-ROM Stores, Inc. (established in
December 1994) and Camelot Distributing, Inc.
(established in April 1995). Camelot Distributing
acquired the inventory and customer list of Maxmedia
Distributing which was acquired by the Company in July
1994 and has now ceased trading. Due to the fact
that trading operations for these subsidiaries commenced
various times during the financial year, and to the fact
that no prior history exists for the ongoing operations of
Company, Company is of the belief that the financial results
for the year ended April 1995, and a comparison with prior
period financial statements is not indicative of the
future results of Company.
The results of operations of the discontinued
operations and the assets sold or to be sold are presented
in the financial statements as discontinued operations.
Prior year statements of operations have been restated
for comparative purposes with the result that no sales or
related financial information is shown due to the fact
that the Company's CD-ROM software subsidiaries commenced
operations during the fiscal year and did not generate
any revenues during previous fiscal years.
Company's continuing operations had sales of
$1,184,469 in fiscal 1995 compared with $-0- for 1994.
Company had a loss from operations of $2,348,155
compared with a loss from operations in fiscal 1994 of
$1,138,387. Net loss for fiscal 1995 was $3,518,904
which includes loss from discontinued operations of
$1,182,927 which compares with a loss from discontinued
operations for fiscal 1994 of $402,981.
The primary reasons for the loss from continuing
operations was due to the start up costs relating to
the commencement of CD-ROM software operations in its
newly formed subsidiaries, and the decision to
discontinue Company's other businesses. In addition to
start up costs for its new subsidiary, its subsidiary
Maxmedia which was located in Orlando was closed, and the
Company incurred relocation costs of personnel,inventory,
fixtures and equipment to Dallas which is a non-recurring
one time costs. Mr. CD-ROM Stores incurred costs
outside the normal course of business due to the testing
and retesting of various retail concept in its Orlando
retail unit in order to establish a permanent long
term Mr. CD-ROM retail trading format.
Further, Third Planet Publishing incurred programming
and data processing costs relating to the creation of
the CD-ROM interactive catalog and in relation to
DigiPhone which management has decided to expense.
The consolidated balance sheets for 1995 shows
stockholders' equity of ($87,049) compared with
$1,408,498 for fiscal 1994. Total assets were
$2,098,874 compared with $3,309,132. The decrease in
stockholder's equity is due to a combination of the
loss from operations and the loss from discontinued
operations. Subsequent to the year end substantial
increases in stockholders equity occurred due to private
placements of restricted common and preferred stock and
the conversion to common stock of debt owing to an
affiliate of the President of Company, all of which
resulted in an increase in equity of $1,875,000 during
the three month period ending July 1995.
Company began its CD-ROM software operations by the
acquisition of Maxmedia Distributing, a Florida based
distributor of CD-ROM software in July 1994. The
customer base of Maxmedia is now being serviced by
Camelot Distributing, a CD-ROM distributor supplying
independent retailers from distribution facilities in
Dallas, Texas.
Mr. CD-ROM Stores was established in December
1994 with the opening of a retail concept store in
Orlando, Florida. This store, which was on a six month
lease, provided an opportunity to refine Mr. CD-ROM's
retail concept during which time retail franchise
documentation and approvals were obtained from the
majority of states in the USA. A company owned store
was opened in Dallas in July 1995 and an additional
four retail units opened by December 1995 in the Dallas
area.
Third Planet Publishing commenced operations in
January 1995 and shortly thereafter acquired the
worldwide distribution rights to DigiPhone, the world's
first full duplex Internet phone system. Third Planet
expanded the number of software programmers developing
the DigiPhone technology and arranged for quality retail
distribution as well as establishing marketing and
advertising plans for launching DigiPhone.
Subsequent to the period ended April 1995, the
Company completed a private placement of restricted
common and preferred shares raising $1,200,000 for the
Company. The investors are an investment fund managed
by Suisse Finance Corporation and have agreed not to
dispose of their common shares for a minimum of twelve
months. The preferred shares can convert into common
shares over a nine month period in equal monthly
installments.
Discontinued Activities
During the year Company's directors determined to
discontinue its remaining non CD-ROM software activity
and accordingly its subsidiary Camelot Entertainment,
Inc., a video distribution company filed Chapter 7
liquidation under the US Bankruptcy laws in January 1995.
Company's only continuing material liability in relation
to Camelot Entertainment is a corporate guarantee in
the original amount of $200,000 to a creditor of
Camelot Entertainment. Such corporate guarantee has
been fully allowed for in Company's financial
statements. (See Item 3. Legal Proceedings). Revenues
of Camelot Entertainment which are not shown in the
financial statements as they are discontinued
operations were $694,666 for fiscal 1995 compared with
$2,597,366 for the previous year. Loss from
Operations for fiscal 1995 was $406,057 compared with
$1,563,174.
As reported in the 1994 financial statements, Company's
controlling 69% interest in Beecher Energy, Ltd. was sold
on May 31, 1994. The transaction was closed in late
July 1994. Also as disclosed in the 1994 financial
statements, Company's subsidiary Business Investigations
which provided investigation services to financial
institutions
and Vesta Land Title Company which provided title insurance
services both discontinued operations on July 8, 1994.
Liquidity and Capital Resources
1997
Net cash used by operating activities for 1997 was
$5,555,018 compared with $6,740,073 in 1996. Net
cash used by investing activities in 1997 was
$4,587,734 compared with net cash used by
investing activities of $1,889,146 in 1996. This was
primarily due to the net loss of $12,996,369 in 1997
compared with $4,565,713 the previous year. Net cash
provided by financing activities was
$3,302,152 compared with $18,350,289 the previous year.
Sales of
common and preferred stock were $3,410,500 compared with
$22,330,214 in 1996. See Management's Discussion above
for more detail.
Registrant's requirement for additional financial
resources
primarily results from the continuing research and
development costs of its subsidiary Third Planet.
Registrant believes that its current development program
will shortly be concluded, but believes that continued
research and development will be required to maintain
a technological lead which management believes that
Third Planet currently has. Accordingly, management
is aware of the need for additional cash resources to
be obtained for the continuance of
research and development and anticipates that such
financial resources will primarily come from the private
placement of Registrants' common and preferred stock.
Management believes that license fees received from
Third Planet's products will generate revenues and cash
flow towards the end of the current financial period.
The activities of Registrant's subsidiary, mrcdrom.com
are dependent on its initial public offering (See Item
1. Business). Registrant has no plans for significant
capital expenditures during the next twelve months.
Management believes that cash provided by financing
activities and licensing fees as well as revenue from sale
of
software over the Internet together with the present
level of cash resources available to the Registrant
will be sufficient for its needs over the next twelve
months. Management believes that should the Company
require additional cash resources it can incur borrowing
as Registrant has no long-term corporate debt. There
are no known trends demands, commitments or events
that would result in or that is reasonably likely to
result in the Company's equity increasing or decreasing in
a material way other than the potential use of cash
resources for investment in the Company's subsidiaries
in the normal course of business or additional fund
raising.
1996
Net cash used by operating activities for 1996 was
$6,740,073 compared with $2,207,683 in 1995. Net
cash used by investing activities was $1,889,146
compared with net cash received of $28,482 in 1995.
This was primarily due to product development and
software costs of $608,800 compared with $40,000in 1995,
to the purchase of minority interests of $264,044 ($0 in
1995), to the issuance of a note receivable in the amount of
$312,400 ($0 in 1995) and to purchases of property and
equipment of $1,087,658 ($195,589 in 1995).
Net cash provided by financing activities was
$18,350,289 compared with $2,290,941 the previous year.
Sales of common stock and preferred stock were
$22,330,214 compared with $1,623,847 in 1995. These
transactions substantially improved the liquidity of the
Company and helped raise stockholders' equity by
$15,767,262 in 1996.
The Company's plans for capital expenditures relate
principally to capital costs likely to be incurred in
opening of additional retail units. Management does
not anticipate any liquidity problems and believes that
the anticipated level of revenue generated by the
Company together with the present level of cash resources
available to the Company will be sufficient for its
needs. Management believes that should the Company
require additional cash resources, it can raise
additional cash
resources from the sale of common and preferred
stock and/or by incurring borrowing. Management is
aware that the Company has no long term corporate debt.
Management
believes that it is well positioned to make arrangements for
additional
debt should the need arise. There are no knowntrends,
demands,
commitments, or events that would result in or that is
reasonably likely
to result in the Company's liquidity increasing or
decreasing in a
material way other than the potential use of cash resources
for investment
in the Company's subsidiaries and the normal course of
business.
Management continued to demonstrate its ability
to attract private investment during the nine months
ended January 31, 1996. The Company raised $22,330,214 in
private placements of restricted common and convertible
preferred stock. The preferred stock yields range from
9% to 12% and can be converted into common shares of the
Company in limited amounts during agreed time frames
subsequent to issuance and in unlimited amounts
thereafter. The conversion rate is equal to an agreed upon
discount on the prevailing market price of the Company
shares
at the time of the conversion.
<PAGE>
1995
Net cash used by operating activities was
$2,207,683 in 1995 compared with $2,145,545 in 1994.
This was primarily due to the net loss of $3,518,904
compared to $1,970,293 in 1994. The most significant
adjustments to reconcile net loss to net cash from operating
activities were a write off of discontinued subsidiaries of
$560,577. Net cash provided by investing activities of
$28,482
compares with cash used of $160,239 for the previous year.
Net cash provided by financing activities was
$2,290,941 compared with net cash provided during the
previous year of $1,067,171. Sales of common stock of
$1,623,847 compares with $517,322 in fiscal 1994.
Subsequent to the period under review,
Company completed $1,425,000 Private Placements and
converted $450,000 debt owing to an affiliate of the
President
of Company to common stock. These transaction substantially
improve the liquidity of Company, and raised stockholder's
equity by $1,875,000 in the quarter ended July 31, 1995.
Management does not anticipate any liquidity
problems and believes that the anticipated level of
revenue generated by Company together with the present
level of cash resources available to Company will be
sufficient for its needs. Management believes however
that should sales of DigiPhone and or revenues generated
from retail units be less than anticipated that it will
experience liquidity problems. Management believes that
should Company require additional cash resources, it
can raise such additional cash resources from the sale
of common stock and/or by incurring borrowings from its
directors or entities affiliated with directors and
from
unrelated financial institutions. Management is aware
that other than indebtedness owing to an entity
affiliated with its President, Company has no corporate
debt. Management believes that it is well positioned
to make arrangements for additional debt should the need
arise.
There are no known trends, demands, commitments or events
that would
result in or that are reasonably likely to result in
the
Company's liquidity increasing or decreasing in any
material way other than the potential use of cash
resources for investment in Company's subsidiaries in the
normal course of business.
Item 8. Financial Statement and
Supplementary Data Index to Consolidated
Financial Statements Page
Report of Independent Auditors - 1997 F-1
Consolidated Financial Statements
Balance Sheets - April 30, 1997 and 1996 F-2 and
F-3
Statements of
Operations for the years
ended April 30, 1997, 1996 and 1995 F-4
Statements of Stockholders' Equity for the
years ended April 30, 1997, 1996 and 1995 F-5 through
F-7
Statements of Cash Flows for the years ended
April 30, 1997, 1996 and 1995 F-8 and
F-9
Notes to
Consolidated Financial Statements F-10
through
F-25
Consolidated Schedule F-26
The information itemized above are included in Part
IV, Item 14
as Exhibit (a) (1) and begins at F-1 following page 29.
Also included is the unaudited information regarding
proven oil
and gas reserves.
Item 9. Disagreements on Accounting and Financial
Disclosure
Lane Gorman Trubitt, L.L.P., were the auditors for
the fiscal
year ended April 30, 1997 and have performed the audit for
every past
fiscal year since 1994. There were no disagreements
between the Company and the auditors regarding a policy
or disclosure.
PART III
Item 10. Directors and Executive Officers of the Company
The following persons serve as directors and/or officers of
the
Company as of July 2, 1996:
Name Age Position Period
Term
Served
Expires
Daniel Wettreich 45 Chairman and September 16,1988
Next Annual
Chief Executive
Meeting
Officer, President,
Director
Jeanette P.
Fitzgerald 36 Vice President and September 16, 1988
Next Annual
General Counsel,
Meeting
Secretary,
Director
Allan S. Wolfe 65 Director May 24, 1993
Next Annual
Meeting
Bruce
Baldwin 64 Director June 28, 1997
Next Annual
Meeting
Robert B.
Gregory 45 Vice President July 1,1996
N/A
of Finance
David D.
McCurley 31 Vice President June 10,1996
N/A
& Chief Technical
Officer
Daniel Wettreich
Daniel Wettreich is Chairman and Chief
Executive Officer, President and Director of the Company
since September 1988. He is also a Director and
Officer of all its subsidiaries(1). Since 1981, he has
been the President and Director of Wettreich
Financial Consultants, Inc., a financial consulting
company. Since July 1996, he has been Director and
Chief Executive Officer of Meteor Technology plc, a
United Kingdom based public company. Additionally, he
currently holds directors positions in the following
public companies: Forme Capital, Inc., a real estate
company, Adina, Inc. and Alexander Mark Investments
(USA), Inc. which are public holding companies, and
Malex, Inc., and Tussik, Inc. which are dormant
companies seeking merger opportunities. In July 1993,
he was appointed Director of Goldstar Video
Corporation(2) following an investment by the Company.
From January 1985 to February 1988 he was a founding
director of Phoenix Network, Inc., a telecommunications
company listed on the American Stock Exchange. Mr.
Wettreich was an executive with two London, England
merchant banks in the mid 1970's. Subsequently he was
owner/manager of a private distribution company, and
thereafter Chief Financial Officer of a $60 million
retailer listed on the London Stock Exchange. Mr.
Wettreich has a Bachelor of Arts in Business
Administration from the University of Westminster, London,
England.
Jeanette P. Fitzgerald
Jeanette Fitzgerald is Vice President and
General Counsel, Corporate Secretary and a Director of
the Company since September 1988. She is a director and
secretary of the Company's subsidiaries(1). She is a
member of the State Bar of Texas and the Business Law
section.
Since July 1996, she has been a Director of Meteor
Technology plc.
She is also the Corporate Secretary and Director of
Wettreich Financial Consultants, Inc., and of Malex, Inc.,
Tussik, Inc. and Alexander Mark Investments (USA), Inc.,
which are public companies. In July 1993, she was
appointed Director of Goldstar Video Corporation(2)
following an investment by the Company. Previous to these
positions, from 1987 to 1988 she worked as a staff
attorney and in the compliance department at H.D.
Vest, Inc., a holding company with subsidiaries
including a securities brokerage firm. She graduated
from Texas Tech University School of Law receiving
both a Doctorate of Jurisprudence and a Masters of
Business Administration in May 1986, and from the
University of Michigan with a Bachelors of Business
Administration in December 1982.
<PAGE>
Allan S. Wolfe
Allan S. Wolfe has been a Director of the Company
since May, 1993. He is Chairman and President of
Database Technologies, Inc., a public company providing
database software to the insurance industry from May 1986
to the present. He is also, since 1984, a director and
Chief Executive Officer of Pathfinder Data Group ("PDG"),
a database company. A subsidiary of PDG, Pathfinder
Data, Inc., filed for protection from creditors
under Chapter 11 and has since been converted to
Chapter 7.
Bruce Baldwin
Bruce Baldwin has been a Director of the Company
since May 1997. He is the principal of the Law Office
of Bruce Baldwin since 1992. Previous to that he was a
principal of Bruce Baldwin & Associates from 1988 to
1992. He graduated from Georgia Institute of
Technology, graduating with a B.S. in chemistry and
obtained a Bachelor of Law Degree from Mercer University
in 1961.
Robert B. Gregory
Robert Gregory is the Vice President of Finance for
the Company since July 1996. He is a director of Adina,
Inc. since January 1997, and of Alexander Mark Investments
(USA), Inc. since December 1996 both of which are public
companies. He was previously Director of Finance of Jenkens
& Gilchrist,one of Texas's largest law firms,prior to which
he
was controller of Memorex Telex Corporation, a manufacturer
of
computer equipment. Previously, from 1985 he was controller
of the communications division of Electronic Data Systems,
an international provider of information technology. In
addition
to being a Certified Public Accountant, he has an MBA from
Creighton University and a BS in Accounting from the
University
of Nebraska.
David D. McCurley
David McCurley is Vice President and Chief Technical
Officer of the Company since June 1996. He was
previously Vice President of Programming of Third Planet
Publishing, Inc., since 1994. Previously,
from 1989, he was Systems Coordinator for South Trust
Bank.
(1) A subsidiary, Camelot Entertainment, Inc., filed
Chapter 7 liquidation in January 1995.
(2) Goldstar Video filed for protection from creditors
pursuant to Chapter 11 in October 1993, and has
converted to a liquidation proceeding.
Item 11. Executive Compensation
The following table lists all cash compensation
exceeding $100,000 paid to Company's executive officers
for services rendered in all capacities during the
fiscal year ended April 30, 1997. No bonuses were
granted to any officer, nor was any compensation deferred.
<PAGE>
<TABLE>
SUMMARY COMPENSATION TABLE
<S> <C> <C> <C> <C>
Annual CompensationLong-Term Compensation
Payouts
Awards
Restr
Name and Pri Other icted Option LTIP All Other
ncipal Yea Salar Bonu Annual Stock s/ Payout Compensati
Position r y s Compen Award SARs s on
sation (s)
Daniel 199 - - - - 25,000 - $
Wettreich 5 $208, - - - 25,000 - (1)
Chairman and 199 333 - - - 175,00 - $
CEO(1) 6 $250, 0 (1)
199 000 $
7 (1)
Jeanette P. 199 - - - - 43,75 - $
Fitzgerald 5 N/A - - - 0 - (1)
Vice 199 N/A - - - N/A - $
President, 6 875 (1)
General 199 $
Counsel and 7 (1)
Secretary
(1)
</TABLE>
(1) Daniel Wettreich and Jeanette Fitzgerald, Directors
and Officers of Company, were employees of a company
affiliated
with Mr. Wettreich, which company provided the Company with
management services until July 1995 and was paid $-0-,
$44,000, and $286,000 for the years ended April 30,
1997, 1996 and 1995 respectively. In July 1995, Mr.
Wettreich and Ms. Fitzgerald became employees of
Company and Mr. Wettreich entered into an employment
contract with Company.
Directors of the Company are reimbursed for
reasonable expenses incurred in attending meetings of
the Board of Directors. Mr. Bruce Baldwin receives
$500.00 per month.
Company has no compensatory plans or arrangements
whereby any executive officer would receive payments from
the Company or a third party upon his resignation,
retirement or termination of employment, or from a
change in control of Company or a change in the officer's
responsibilities following a change in control other
than Mr.
Wettreich.
On July 1, 1995, Company entered into an employment
contract with Mr. Wettreich whereby he was employed as
Chairman, Chief Executive Officer and President of the
Company for a period of ten years at an annual salary
of $250,000 and a cash bonus equal to 5% of the
Company's annual profits before taxation. In the
event of Mr. Wettreich's death during the term of the
agreement, Company will pay annual death benefits of
$250,000 for a period of four years.
Mr. Wettreich may terminate his employment after the date
of
a change in control of the Company. A change in control
is defined as any person other than Mr. Wettreich or
his family interests becomes beneficial owner, directly
or indirectly of common stock of the Company
representing 30% or more of the Company's issued and
outstanding common stock or if the Incumbent Board
as defined, ceases to constitute a majority of the
board of directors. If Mr. Wettreich terminates his
employment after a change of control in the company, he
shall be paid (i) the base salary and any bonuses payable
to him under the agreement or (ii) an amount equal to
the product of the annual base salary and bonus paid to
Mr. Wettreich during the year preceding the termination
date multiplied by five whichever of (i) or (ii) is
more. In the circumstances whereby Mr. Wettreich
terminates his employment for good reason, as defined,
he will receive payments in accordance with the
payments received if termination occurs after a change
of control of the Company
Item 12. Security Ownership of Certain Beneficial
Owners and Management
The following table sets forth as of July 18, 1997
information known to the management of the Company
concerning the beneficial ownership of Common Stock by
(a) each person who is known by the Company to be the
beneficial owner of more than five percent of the shares
of Common Stock outstanding, (b) each director at that
time, of the Company (including principal directors of
subsidiaries) owning Common Stock, and (c) all
directors and officers of the Company (including
principal directors of subsidiaries) as a group
(8 persons).
Name and Address of Amount and
Nature of
Percent
Beneficial Owner Beneficial Ownership
of
Class
Daniel Wettreich 1,728,621 (1)(2)(8)
57.3% 17770 Preston Road
Dallas, Texas 75252
Jeanette P. Fitzgerald 153,210
(3) 5.3%
17770 Preston Road
Dallas, Texas 75252
Allan Wolfe 6,625 (4)
* 390 South River Road
Suite 5
Bedford, NH 03110
Bruce Baldwin 2,000 (5)
*
8150 Central Expressway
Suite 100
Dallas, Texas 75206
David McCurley 21,500 (6)
* 17770 Preston Road
Dallas, Texas 75252
Robert Gregory 1,437,505 (7)(8)
50.8% 17770 Preston Road
Dallas, Texas 75252
All Officers and Directors 1,822,996 (1)(2)(3)(4)(5)(6)
58.6% as a group (6 persons) (7)(8)
* Under 0.1%
Adina, Inc. 1,345,295 (8)
47.7% 17770 Preston Road
Dallas, Texas 75252
(1) 60,366 of these shares are owned by AM Investments Ltd.
a U.K. company ("AM") of which Mr. Wettreich is a director
and officer. 25,000 of these shares are owned by Wettreich
Financial Consultants, Inc. ("WFC"), a Texas company of
which Mr. Wettreich is a director and officer. 16,250 of
these shares are owned by Forme Capital, Inc., ("Forme"),
a Delaware company of which Mr. Wettreich is a director
and officer. 81,710 of these shares are owned by Meteor
Technology plc ("Meteor"), a UK company of which Mr. Wettreich
is a director and officer. 1,345,295 of these
are Preferred Stock owned by Adina, Inc.,("Adina") a
Delaware corporation of which, Mr. Wettreich is a director
and officer. Mr. Wettreich has disclaimed any beneficial
interest in the shares owned by AM, WFC, Forme, Meteor and
Adina.
(2) Includes options to purchase 200,000 shares granted to
Daniel Wettreich, which options are not exercised.
(3)Includes options to purchase 53,750 shares granted to
Jeanette Fitzgerald, which options are not exercised.
16,250 of these shares are owned by Forme of which Ms.
Fitzgerald is an officer and director. 81,710 of these
shares are owned by Meteor of which Ms. Fitzgerald is an
officer and director. Ms. Fitzgerald has disclaimed any
beneficial interest in the shares owned by Meteor and Forme.
(4) Includes an option to purchase 6,625 shares granted to Allan
Wolfe, which option is not exercised.
(5) Includes an option to purchase 2,000 shares granted to Bruce
Baldwin, which option is not exercised.
(6) Includes an option to purchase 21,500 shares granted to David
McCurley, which option is not exercised.
(7) Includes options to purchase 10,500 shares granted to Robert
Gregory, which options are not exercised. Includes 1,345,295
Preferred Shares owned by Adina of which Mr. Gregory is an officer
and director.Includes 81,710 shares owned by Meteor a company
which is majority owned by Alexander Mark Investments (USA), Inc. of
which Mr. Gregory is a director. Mr. Gregory has disclaimed any
beneficial interest in the shares owned by Adina and Meteor.
(8) Includes 1,345,295 Preferred Shares, Series J of the Company.
These shares are owned by Adina, Inc. of which Mr.Wettreich and Mr.
Gregory are directors and officers. They have disclaimed all beneficial
ownership in the shares. (See Item 13. Certain Relationships and
Related Transactions).
Item 13. Certain Relationships and Related Transactions
On May 20, 1997 Registrant subscribed (post reverse) 1,345,295
restricted Preferred Shares, Series J Camelot Corporation("Camelot")
with payment by the transfer of 6,029,921 restricted common shares of
Alexander Mark Investments (USA), Inc. to Camelot. 892,215 of the
Preferred Shares were issued upon execution of the Agreement and 453,080
are issuable as deferred consideration. The deferred consideration will
be issued as new common shares of Camelot are issued in such a manner so that
the additional Preferred Shares are issued at the same time
and in the same quantity as any new common shares. The Preferred Shares
have one vote per share and vote with the common shares, are non
convertible, non-yielding and are subordinate to outstanding preferred
shares but have a liquidation preference over common shares.
The Company paid management fees of $44,000 in 1996
to Wettreich Financial Consultants, Inc. ("WFC"), a
company affiliated with the President of the Company.
These management services consisted of the provision of
the services of the President and Corporate Secretary of
Company. The amount was determined by the time, effort,
and skill required to provide these services. The
President and the Corporate Secretary of Company were
employees of WFC and during the fiscal year ended April
1995, received no compensation from Company.
Stock Transfer Company of America, Inc., a company
affiliated with the President of the Company provided
services during the year ended April 1997 and 1996, as a
securities transfer agent. A total of $35,158 and $16,598
were paid by Company for these services. In the opinion
of the Board of Directors, the terms of these transactions
was as fair to the company as could have been made with
an unaffiliated party.
The Company leases 10,000 square feet of offices
from Forme Capital, Inc., a company affiliated with the
President of the Company. The lease is for a term of 5
years commencing September 1993 at $8 per square foot.
Total rent paid during fiscal 1997 and 1996 was $80,000,
respectively. The lease agreement and transactions
related thereto were approved by a vote of Company's
shareholders.
The Company received loans from Forme totaling
$406,000 in fiscal 1995. Payments of $236,000 and
$190,000 were made in fiscal years 1996 and 1995,
respectively. Forme converted the remaining balance of
$450,000 to common stock during fiscal 1996. Total
interest paid during fiscal 1996 was $11,615 and 1995 was
$35,961.
During fiscal 1997 and 1996, Company received
dividend payments from Forme Capital, Inc., Preferred
Shares Series C in the amount of $46,657 for 1997 and
$46,657 for 1996.
On January 17, 1996, the Company's
disinterested directors approved a secured loan to the
Corporate Secretary in the amount of $75,156. This loan
bears interest at a rate 6% per annum.
On August 1,1996, the Company's disinterested directors
approved a secured loan to the Corporate Secretary in the
amount of $14,000. This loan bears interest at a rate of
6% per annum and has been repaid as of January 31, 1997.
On September 25, 1996 the Company's
disinterested directors approved a secured loan to the
President of the Company in the amount of $1,800,000.
This loan bears interest at a rate of 6% per annum.
On March 4, 1997, the Company acquired the US and
Canadian rights to PCAMS software a payphone contract
and management system software from Meteor Technology, plc
payable by the cancellation of 2,000,000 pounds of loan
stock owed to the Company by Meteor and 500,000 pounds by
the issuance by the Company to Meteor of 80,960 restricted
common shares. Mr. Wettreich and Ms. Fitzgerald who are
directors of both companies did not participate in any
directors votes in relation to this transaction.
On May 20, 1997, the Company's subsidiary Third
Planet amended the terms of its existing distribution
agreement with DigiPhone International a subsidiary
of Meteor. Mr. Wettreich and Ms. Fitzgerald who are
directors of these companies did not participate in any directors
votes in relation to this transaction.
In May, 1997, the Company accepted a Preferred
Share, Series J stock subscription by Adina, Inc., a
public company of which Mr. Wettreich and Mr. Gregory
are directors and officers. Mr. Wettreich did not
participate in any directors vote in respect to
this transaction. The consideration for the issuance
of the Preferred Shares was the transfer of eighty
(80%) percent of AMI a public company whose major
asset is fifty-seven (57%) percent of the
outstanding ordinary shares of Meteor. The Preferred
Shares, Series J have one vote per share voting with
the common shares, have a liquidation preference over
the common shares but are subordinate to the outstanding
Preferred Shares, are not convertible and pay no
dividend. They also are subject to a forward or reverse
split in any instances for which the common shares are
subject to a forward or reverse split on the exact same
basis.
On May 30, 1997, the Company subscribed for
500,000 pounds 1997-2007 10% unsecured redeemable loan
stock of Meteor by paying cash. Mr. Wettreich and Ms. Fitzgerald
who are directors of both companies did not participate in any directors
votes in relation to this transaction.
The Company has no compensatory plans or arrangements
whereby any executive officer would receive payments from
the Company or a third party upon his resignation,
retirement or termination of employment, or from a
change in control of the Company or a change in the
officer's responsibilities following a change in control
other than Mr. Wettreich. Under the 1996 Stock
Option Plan or under the Company's 1991 Outside
Directors Stock Option Plan options granted under these
plans contain provisions pursuant to which the unvested
portions of outstanding options become immediately
exercisable and fully vested upon a merger of the
Company in which the Company's stockholders do not
retain, directly or indirectly, at least a majority
of the beneficial interest in the voting stock of the
Company or its successor, if the successor corporation
fails to assume the outstanding options or
substitute options for the successor
corporation's stock to replace the outstanding
options. The outstanding options will terminate to the extent
they are not exercised as of consummation of the merger,
or assumed or substituted for by the successor corporation.
PART IV
Item 14. Exhibits, Financial Statement Schedules,and Reports
on Form 8-K
(a) (1) The following financial statements are included
herein for fiscal year ended April 30, 1997.
Index to Consolidated Financial Statements Page
Report of Independent Auditors - 1997 F-1
Consolidated Financial Statements
Balance Sheets - April 30, 1997 and 1996 F-2 and
F-3
Statements of Operations for the years
ended April 30, 1997, 1996 and 1995 F-4
Statements of Stockholders' Equity for the
years ended April 30, 1997, 1996 and 1995 F-5 through
F-7
Statements of Cash Flows for the years ended
April 30, 1997, 1996 and 1995 F-8 and
F-9
Notes to Consolidated Financial Statements F-10
through
F-25
(a) (2) Consolidated Schedule F-26
(a) (3) Exhibits included herein:
3(a) Articles of Incorporation Incorporated by
reference to Form 10 Registration
Statement filed on June 23, 1976.
3(b) Bylaws Incorporated by Reference as immediately above.
10 (b) 1991 Outside Directors' Stock Option Plan
Incorporated by reference to the Proxy Statement for
April 13,1992 Annual Meeting of Shareholders and
the Proxy Statement for January 3,1997 Annual
Meeting of Shareholders.
1996 Employee Stock Option Plan Incorporated by
reference to the Proxy Statement for January
3,1997 Annual Meeting of Shareholders
22(a) Subsidiaries
(7) Reports on Form 8-K:
Report filed May 20, 1997 reporting Item 2
and 7 with amendments.
<PAGE>
EXHIBIT 22(a)
SUBSIDIARIES
AS OF JULY 5, 1997
Third Planet Publishing, Inc. 100%
Mr. CD-ROM Stores, Inc. 100%
Camelot Distributing, Inc. 100%
Kids University, Inc. 100%
Maxmedia Distributing, Inc. 100%
Camelot Internet Access Services, Inc. 100%
Camelot Business Investigations, Inc. 100%
Camelot Energy, Inc. 100%
Software @ Cost + 10%, Inc. 100%
mrcdrom.com, inc. 100%
Alexander Mark Investments (USA), Inc. 80%
Atlantic Media, Inc. 100%
Camelot Creative Design, Inc. 100%
SIGNATURES
Pursuant to the requirements of Section 13 or
15(d) of the Securities Exchange Act of 1934, the
Company has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly
authorized.
CAMELOT CORPORATION
(Company)
By: /s/Daniel Wettreich
President
Date: November 20, 1997
Pursuant to the requirements of the Securities
Exchange Act of 1934, this report has been signed below
by the following persons on behalf of the Company
and in the capacities and on the dates indicated.
By: /s/Daniel Wettreich
Director; President and CEO
(principal executive
officer and
principal financial
officer)
Date: November 20, 1997
By: /s/Jeanette
Fitzgerald
Director; Secretary;
Vice President and
General Counsel
Date: November 20, 1997
By: /s/Robert Gregory
Vice President Finance (principal accounting officer)
Date: November 20, 1997
By: /s/Allan Wolfe
Director
Date: November 20, 1997
By: /s/ Bruce Baldwin
Director
Date: November 20, 1997
30
REPORT OF INDEPENDENT CERTIFIED PUBLIC
ACCOUNTANTS
Board of Directors and
Stockholders Camelot
Corporation and
Subsidiaries
We have audited the accompanying consolidated
balance sheets of Camelot Corporation and
Subsidiaries as of April 30, 1997 and 1996 and the
related consolidated statements of operations,
stockholders' equity, and cash flows for each of the
three years in the period ended April 30, 1997.
These financial statements are the responsibility
of the Company's management. Our
responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance
with generally accepted auditing standards. Those
standards require that we plan and perform the
audit to obtain reasonable assurance about whether
the financial statements are free of
material
misstatement. An audit includes examining, on a
test basis,
evidence supporting the amounts and disclosures in
the financial statements. An audit also includes
assessing the accounting principles used and
significant estimates made by management, as well
as evaluating the overall financial statement
presentation. We believe our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements
referred to above present fairly, in all material
respects, the consolidated financial position of
Camelot Corporation and Subsidiaries as of April
30, 1997 and 1996, and the consolidated results of
their operations and their consolidated cash flows
for each of the three years in the period ended
April 30, 1997, in conformity with generally
accepted accounting principles.
We have also audited Schedule II of Camelot
Corporation and Subsidiaries for each of the three
years in the period ended April 30, 1997. In our
opinion, this schedule presents fairly, in all
material respects, the information required to be
set forth therein.
Lane, Gorman & Trubitt, LLP
Dallas, Texas
July 7, 1997
F-1
<PAGE>
CAMELOT CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
April 30,
1997 1996
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 3,029,999 $ 9,870,599
Trading securities - 1,341,508
Securities available for
sale 8,268 945,777
Accounts receivable, net of
allowance for doubtful
accounts of $19,947 and
$11,415 at April 30,1997
and 1996, respectively 162,592 241,837
Prepaid expenses 167,769 215,073
Inventories, net of allowance
forobsolescence of $494,744
and $198,000 at April 30,
1997 and 1996,respectively 530,926 1,272,973
Total current assets 3,899,554 13,887,767
PROPERTY AND EQUIPMENT - AT COST
Office equipment and fixtures 1,534,173 1,363,484
Leasehold improvements 64,154 222,124
1,598,327 1 ,585,608
Less accumulated depreciation (669,535) (453,450)
and amortization
928,792 1,132,158
INVESTMENT IN AFFILIATE - -
OTHER ASSETS
Note receivable - officer,net
of allowance of $889,000 968,189 -
Preferred stock-related party 530,917 530,917
Licenses, trademarks and product
development, net of accumulated
amortization of $31,000 and $151,979
at April 30,1997 and 1996,
respectively 421,510 1,141,021
Other 23,114 10,000
Total other assets 1,943,730 1,681,938
$ 6,772,076 $16,701,863
See accompanying notes to consolidated financial statements
F-2
CAMELOT CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets -Continued
April 30,
1997 1996
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 470,577 $ 777,181
Accrued expenses 222,990 194,329
Net current liabilities of
discontinued operations - 50,185
Total current liabilities 693,567 1,021,695
STOCKHOLDERS' EQUITY
Common stock, $.01 par value,
50,000,000 shares authorized,
881,763 and 486,305 shares issued
at April 30,1997 and 1996, respectively 8,818 4,863
Preferred stock, $.01 par value,
100,000,000 shares authorized,
2,438,056 and 10,143,389 shares
issued and outstanding at April 30,
1997 and 1996, respectively 24,381 101,434
Additional paid-in capital 34,021,361 30,600,613
Accumulated deficit (25,182,832) (12,186,463)
Less net unrealized loss on
available-for-sale securities - (50,548)
Less treasury stock, at cost,
28,745 shares at April 30, 1997
and 1996 (2,714,575) (2,714,575)
Less note receivable from
officer related to purchase
of common stock (78,644) (75,156)
Total stockholders' equity 6,078,509 15,680,168
$ 6,772,076 $16,701,863
See accompanying notes to consolidated financial statements
F-3<PAGE>
CAMELOT CORPORATION AND
SUBSIDIARIES Consolidated
Statements of Operations
Years Ended April 30,
1997 1996 1995
REVENUES $1,887,617 $3,002,049 $ 1,184,469
COSTS AND EXPENSES
Cost of sales 1,559,189 645,127 905,330
General and administrative 7,164,354 6,233,501 2,511,108
Provision for inventory
obsolescence 495,942 198,000 -
Depreciation and
amortization 1,462,459 354,419 116,186
Total costs and expenses 10,681,944 7,431,047 3,532,624
LOSS FROM OPERATIONS (8,794,327) (4,428,998) (2,348,155)
OTHER INCOME (EXPENSE)
Interest and
miscellaneous 426,490 152,278 1,370
Dividend income - related
party 46,657 46,657 46,657
Loss on disposition of
assets (509,292) (126,931) -
Loss on investment in
affiliate (2,693,087) - -
Note receivable allowance (889,000) - -
Realized loss on sale of
marketable securities (583,810) - -
Unrealized gain on
marketable securities - 53,821 -
Interest expense-related
party - (11,615) (35,849)
Total other income (expense)(4,202,042) 114,210 12,178
LOSS FROM CONTINUING
OPERATIONS (12,996,369) (4,314,788) (2,335,977)
DISCONTINUED OPERATIONS
Loss from operations - - (622,350)
Loss on disposals - (250,925) (560,577)
Loss from discontinued
operations - (250,925) (1,182,927)
NET LOSS (12,996,369) (4,565,713) (3,518,904)
DIVIDENDS ON PREFERRED
STOCK ( 95,234) (575,414) (19,200)
NET LOSS ATTRIBUTABLE TO
COMMON STOCKHOLDERS $(13,091,603) $(5,141,127) $ (3,538,104)
LOSS PER SHARE:
LOSS FROM CONTINUING
OPERATIONS (20.45) (12.54) (9.17)
LOSS FROM DISCONTINUED
OPERATIONS (.00) (.73) (4.64)
DIVIDENDS ON PREFERRED
STOCK (.15) (1.67) (.08)
NET LOSS PER COMMON SHARE $ (20.60) $ (14.94) $ (13.89)
WEIGHTED AVERAGE NUMBER OF
COMMON STOCK AND COMMON STOCK
EQUIVALENT SHARES OUTSTANDING 635,467 344,119 254,651
See accompanying notes to consolidated financial statements
F-4
<PAGE>
<TABLE>
CAMELOT CORPORATION AND SUBSIDIARIES
Consolidated Statements of Stockholders' Equity - continued
For the Period from May 1, 1994 through April 30, 1997
<S> <C> <C> <C> <C> <C>
Common Common Preferre Preferr Additional
Stock Stock d Stock ed Paid in
Shares Amount Shares Stock Capital
Amount
Balance at April
30, 1994 $215,790 $ 2,158 $239190 $2,392 $5,882,486
Conversion of
preferred stock 250 3 (50,000) (500) 497
to common stock:
Series C
Preferred Stock
cash dividends - - - - (19,200)
related party
Payment of
common stock 3,145 31 - - (31)
subscribed at
April 30, 1994
Sale of common
stock for cash 63,084 631 - - 1,623,216
Purchase of
Maxmedia
Distributing, 5,125 51 - 143,449
Inc.
Compensation for
services 3,327 33 - - 120,480
Change in net
unrealized - - - - -
losses on
available for
sale securities
Net loss - - - - -
Balance at April
30, 1995 290,721 $2,907 $189,190 $1,892 $7,750,897
</TABLE>
See accompanying notes to consolidated financial statements
<PAGE>
<TABLE>
CAMELOT CORPORATION AND SUBSIDIARIES
Consolidated Statements of Stockholders' Equity - continued
For the Period from May 1, 1994 through April 30, 1997
<S> <C> <C> <C> <C> <C>
Accumulate Unreali Treasury Stock Total
d Deficit zed Stock Subscri Stockholde
Losses ption rs' Equity
on Receiva (Deficit)
Availab ble
le For
Sale
Securit
ies
Balance at April
30, 1994 $(4,101,84 $ $(170,44 $(206,2 $1,408,498
6) - 2) 50)
Conversion of -
preferred stock
to common stock: - - - -
Series C
Preferred Stock
cash dividends - - - - (19,200)
related party
Payment of -
common stock - - 206,250 206,250
subscribed at
April 30, 1994
Sale of common
stock for cash - - - - 1,623,847
Purchase of
Maxmedia
Distributing, - - - 143,500
Inc.
Compensation for
services - - - 120,513
Change in net
unrealized - (51,553 - - (51,553)
losses on )
available for
sale securities
Net loss (3,518,904 - - - (3,518,904
) )
Balance at April
30, 1995 $(7,620,75 $(51,55 $(170,44 $- $(87,049)
0) 3) 2)
</TABLE>
See accompanying notes to consolidated financial statements
<PAGE>
<TABLE>
CAMELOT CORPORATION AND SUBSIDIARIES
Consolidated Statements of Stockholders' Equity - continued
For the Period from May 1, 1994 through April 30, 1997
<S> <C> <C> <C> <C> <C>
Common Common Preferre Preferr Additional
Stock Stock d Stock ed Paid in
Shares Amount Shares Stock Capital
Amount
Balance at April
30, 1995 290,721 $ 2,907 189,190 $1,892 $7,750,897
Conversion of
preferred stock 8,608 86 (888,000 (8,880) 8,794
to common stock: 56,844 569 ) (53,333 52,764
Series BB 53,709 537 (5,333,3 ) 34,713
Series G 33) (35,250
Series H (3,525,0 )
00)
Sale of common
stock for cash 54,844 548 - - 3,281,001
Sale of
Preferred Stock 19,766,6 197,666 18,850,999
for cash 66
Common stock
issued for 5,079 51 - - 737,341
services
Common stock
issued to
officers for 1,500 15 - 75,141
note receivable.
Change in net
unrealized - - - - -
losses on
available for
sale securities
Retirement of
Series D - - (66,134) (661) (65,473)
preferred stock
Common stock
issued to pay 15,000 150 - - 449,850
note payable to
related party
Purchase of - - - - -
treasury stock
Preferred stock
dividends to: - - - - (19,200)
Related - - - - (556,214)
parties
Other parties
Net loss - - - - -
Balance at April
30, 1996 486,305 $4,863 10,143,3 $101,43 $30,600,61
89 4 3
</TABLE>
<PAGE>
<TABLE>
CAMELOT CORPORATION AND SUBSIDIARIES
Consolidated Statements of Stockholders' Equity - continued
For the Period from May 1, 1994 through April 30, 1997
<S> <C> <C> <C> <C> <C>
Accumulat Unreal Treasury Stock Total
ed ized Stock Subscrip Stockhol
Deficit Losses tion ders'
on Receivab Equity
Availa le (Deficit
ble )
For
Sale
Securi
ties
Balance at
April 30, $(7,620,7 $(51,5 $(170,442 $- $(87,049
1995 50) 53) ) )
Conversion of
preferred
stock to - - - - -
common stock: - - - - -
Series BB - - - - -
Series G
Series H
Sale of
common stock - - - - 3,281,54
for cash 9
Sale of
preferred - - - - 19,048,6
stock for 65
cash
Common stock
issued for - - - - 737,392
services
Common stock
issued to
officer for - - - (75,156) -
note
receivable
Change in net
unrealized - 1,005 - - 1,005
losses on
available-for-
sale
securities
Retirement of
Series D - - - - (66,134)
preferred
stock
Common stock
issued to pay - - - - 450,000
note payable
to related
party
Purchase of
treasury - - (2,544,13 - (2,544,1
stock 3) 33)
Preferred
stock - - - - (19,200)
dividends to: - - - - (556,214
Related )
parties
Other
parties
Net loss (4,565,71 - - - (4,565,7
3) 13)
Balance at
April 30, (12,186,4 $ $(2,714,5 $ $15,680,
1996 63) (50,54 75) (75,156) 168
8)
</TABLE>
See accompanying notes to consolidated financial statements
<PAGE>
<TABLE>
CAMELOT CORPORATION AND SUBSIDIARIES
Consolidated Statements of Stockholders' Equity - continued
For the Period from May 1, 1994 through April 30, 1997
<S> <C> <C> <C> <C> <C>
Common Common Preferre Preferr Additional
Stock Stock d Stock ed Paid in
Shares Amount Shares Stock Capital
Amount
Balance at April
30, 1996 486,305 $ 4,863 10,143,3 $101,43 $30,600,61
89 4 3
Conversion of
preferred stock 1,922 19 (112,000 (1,120) 1,101
to common stock: 165,920 1,659 ) (99,083 97,424
Series BB 144,688 1,447 (9,908,3 ) (11,153)
Series G 33) (12,600
Series H (1,260,0 )
00)
Sale of
Preferred Stock 3,590,00 35,900 3,374,600
for cash 0
Common stock
issued for 1,968 20 - - (20)
services
Common stock
issued for 80,960 810 - - 31,574
software
acquisitions
Accrued interest
on stock
subscription - - - - -
receivable.
Change in net
unrealized - - - - -
losses on
available for
sale securities
Retirement of
Series F - - (15,000) (150) 150
preferred stock
Preferred stock
dividends to: - - - - (19,200)
Related - - - - (76,034)
parties
Other parties
Net loss - - - - -
Balance at April
30, 1997 881,763 $8,818 2,438,05 $24,381 $34,021,36
6 1
</TABLE>
<PAGE>
<TABLE>
CAMELOT CORPORATION AND SUBSIDIARIES
Consolidated Statements of Stockholders' Equity - continued
For the Period from May 1, 1994 through April 30, 1997
<S> <C> <C> <C> <C> <C>
Accumulat Unreal Treasury Stock Total
ed ized Stock Subscrip Stockhol
Deficit Losses tion ders'
on Receivab Equity
Availa le (Deficit
ble )
For
Sale
Securi
ties
Balance at
April 30, $(12,186, $(50,5 $(2,714,5 $(75,156 $15,680,
1996 463) 48) 75) ) 168
Conversion of
preferred
stock to - - - - -
common stock: - - - - -
Series BB - - - - -
Series G
Series H
Sale of
preferred - - - - 3,410,50
stock for 0
cash
Common stock
issued for - - - - 737,392
services
Common stock
issued to
officer for - - - (75,156) -
note
receivable
Common stock
issued for - - - - -
services
Accrued
interest on - - - (3,488) (3,488)
stock
subscription
receivable
Change in net
unrealized - 50,548 - - 50,548
losses on
available for
sale
securities
Retirement of
Series F - - - - -
preferred
stock
Preferred
stock - - - - (19,200)
dividends to: - - - - (76,034)
Related
parties
Other
parties
Net loss (12,996,3 - - - (12,996,
69) 369)
Balance at
April 30, (25,182,8 $ - $(2,714,5 $ $6,078,5
1997 32) 75) (78,644) 09
</TABLE>
See accompanying notes to consolidated financial statements
<PAGE>
F-7
CAMELOT CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Years Ended April 30,
<TABLE>
<S> <C> <C> <C>
1997 1996 1995
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(12,996,369) $(4,565,713) $(3,518,904)
Adjustments to reconcile net loss
to net cash used in operating activities:
Non cash transactions for services 387,391 120,513
Accrued interest addition to related
party note receivable (60,677) - -
Securities received as revenue (64,000) (1,950,575) -
Depreciation and amortization 1,462,459 354,419 116,186
Undistributed loss in minority interest
in subsidiaries - - (1,336)
Loss on disposal of assets 509,292 191,918 22,535
Loss on sale of trading securities 313,896 - -
Loss on sale of available for sale
securities 269,914 - -
Write up of securities to market value - (53,821) -
Provision for uncollectable accounts
receivable 8,532 10,887 41,500
Provision for inventory obsolescence 495,942 198,000 -
Note receivable allowance 889,000 - -
Loss on investment in affiliate 2,693,087 - -
Proceeds from trading securities 1,027,612 - -
Loss on disposal of discontinued
operations - - 560,577
Change in assets and liabilities, net of effect from
purchase of subsidiaries:
Accounts receivable (68,987) (212,107) 797,005
Prepaid expenses 47,304 (183,449) (16,188)
Inventories 246,105 (864,908) (23,865)
Other assets - - (5,366)
Accounts payable and accrued
expenses (277,943) 88,151 (300,340)
Obligations-discontinued operations (50,185) (140,266) -
Net cash used in operating activities (5,555,018) (6,740,073) (2,207,683)
CASH FLOW FROM INVESTING ACTIVITIES:
Purchases of property and equipment (636,364) (1,087,68) (195,589)
Investment in affiliate (2,457,003) - -
Collections received on notes receivable 14,000 - 67,028
Proceeds from sale of property and
equipment - 11,500 31,500
Proceeds from available for sales
securities 718,143 93,447 -
Proceeds from return of deposits - 14,765 6,000
License, trademarks and product
development (412,510) (608,800) (40,000)
Purchase of subsidiary - - (25,000)
Proceeds from sale of subsidiary - - 184,543
Issuance of note receivable-related party (1,814,000) - -
Issuance of note receivable - (312,400) -
Net cash provided by (used in) investing
activities (4,587,734)(1,889,146) 28,482
CASH FLOWS FROM FINANCING ACTIVITIES:
Sales of common stock - 3,281,549 1,623,847
Payments received on common stock
subscribed - - 206,250
Sale of preferred stock 3,410,500 19,048,665 -
Sale of subsidiary preferred stock - - 264,044
Redemption of preferred stock - (66,134) -
Deferred offering costs (13,114) - -
Dividends paid (95,234) ( 575,414) (19,200)
Purchase of treasury stock - (2,544,133) -
Payments on debt - (294,200) (190,000)
Proceeds (payment)-notes payable
-related parties - (236,000) 406,000
Redemptions of subsidiary preferred stock - (264,044) -
Net cash provided by financing activities 3,302,152 18,350,289 2,290,941
NET INCREASE (DECREASE) IN CASH ( 6,840,600) 9,721,070 111,740
CASH AT BEGINNING OF YEAR 9,870,599 149,529 37,789
CASH AT END OF YEAR $ 3,029,99 $ 9,870,599 $ 149,529
</TABLE>
See accompanying notes to consolidated financial statements
F-8
CAMELOT CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Years Ended April 30,
1997 1996 1995
Supplemental information:
Cash paid for interest $ - $11,615 $ 38,681
Cash paid for income taxes $ - $ - $ -
NONCASH INVESTING AND FINANCING ACTIVITIES
As discussed in Note 11, in fiscal 1997, the Company's Preferred Stock
was converted to the Company's restricted common stock as follows:
112,000 Series BB Preferred for 1,922 shares of restricted common
9,908,333 Series H Preferred for 165,920 shares of restricted common
1,260,000 Series I Preferred for 144,688 shares of restricted common
In fiscal 1997, the Company received securities in the amount of
$139,700 in satisfaction of a trade account receivable.
In fiscal 1997, the Company issued 80,960 shares of
restricted common stock for software acquisition.
As discussed in Note 9, in fiscal 1996, the Company issued 15,000
shares of restricted common stock in settlement of $450,000 of
promissory notes to a related party, Forme Capital, Inc.
In fiscal 1996, the Company issued 1,687 shares of restricted common
stock, with an agreed value of $350,000, for acquisition of software.
As discussed in Note 11, in fiscal 1996, the Company's Preferred Stock
was converted to the Company's restricted common stock as follows:
888,000 Series BB Preferred for 8,608 shares of restricted common
5,333,333 Series G Preferred for 56,844 shares of restricted common
3,525,000 Series H Preferred for 53,709 shares of restricted common
As discussed in Note 14, in fiscal 1996, an officer of the Company
executed a 6% interest bearing note in the principal amount of $75,156
to exercise stock options.
In fiscal 1996, the Company exercised its option to
purchase 400,000 shares of stock in another company in
satisfaction of a note receivable in the amount of $312,400.
In fiscal 1996, the Company issued notes payable in
the amount of $294,200 for acquisitions of software.
As discussed in Note 2, in fiscal 1995, the Company acquired 100% of
the common stock of Maxmedia Distributing, Inc., and Maxmedia
Publishing, Inc., in exchange for $25,000 in cash plus 5,125 shares of
the Company's restricted common stock valued at $143,500.
As discussed in Note 11, in fiscal 1995, the outstanding Series C
Preferred Stock was converted to 250 shares of the Company's restricted
common stock.
During fiscal 1997, 1996 and 1995 there was a $50,548, $1,005, and
$51,553 change in net unrealized losses on available-for-sale
securities.
See accompanying notes to consolidated financial statements
F-9
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business Activity and Principles of Consolidation
The consolidated financial statements include Camelot Corporation and
its majority-owned subsidiaries (collectively the "Company"). The
Company is primarily engaged in the retailing, distribution and
publishing of computer software. The Company sells software products
through national distributors and through an Internet web page
catalog. During 1997, the Company ceased selling its software
products through Mr. CD-ROM and Software @ Cost + 10% retail stores
which were located in the Dallas Metroplex. The Company is also
engaged as an Internet service provider. Discontinued operations of
certain subsidiaries were involved in video marketing and
distribution, financial services, real estate rentals, and oil and gas
exploration and development. Significant intercompany accounts and
transactions have been eliminated.
Cash and Cash Equivalents
The Company considers all highly liquid investments with original
maturities of three months or less to be cash equivalents. The
company and its subsidiaries maintain cash balances at several
financial institutions and a brokerage firm in Dallas, Texas. Cash
equivalents were composed primarily of investments in a money market
account. The Company believes it is not exposed to any significant
credit risk on cash and cash equivalents.
Inventories
Inventories of computer software held for resale, are stated at the
lower of cost or market using the weighted average cost method. Other
inventories, were stated at the lower of cost or market using the
first in, first out (FIFO) method, until their disposition in fiscal
1995. An allowance for inventory obsolescence is maintained to
provide for an estimate of inventory items that have declined in
value.
Property and Equipment
Property and equipment are carried at cost, less accumulated
depreciation. Major additions and betterments are capitalized while
replacements and maintenance and repairs that do not improve or extend
the life of the respective assets are expensed. Leasehold
improvements are amortized over the lesser of the term of the related
lease or the estimated useful lives of the assets. When property is
retired or otherwise disposed of, the related costs and accumulated
depreciation are removed from the accounts and any gain or loss is
reflected in operations.
Depreciation and amortization of property and equipment s provided on
the straight-line method over the following estimated useful lives:
Office furniture and fixtures 7 years
Computer and office equipment 5 years
Computer software 5 years
Leasehold Improvements Length oflease ranging to
5 years
Software Development
Certain software development costs are capitalized upon the
establishment of technological feasibility for each product or process
and capitalization ceases when the product is available for general
release to customers or is put into service. The establishment of
technological feasibility and the ongoing assessment of recoverability
of capitalized software development costs require considerable
judgment by management with respect to certain external factors,
including, but not limited to, anticipated future revenues, estimated
economic life and changes in software and hardware technology.
Research and development costs related to software development that
has not reached technological feasibility are expensed as incurred.
F-10
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued
Software development costs are amortized utilizing the straight-line
method over the estimated economic lives of the related products not
to exceed two years. Amortization of capitalized software costs for
April 30, 1997, 1996 and 1995 was $1,105,021, $138,979 and $0,
respectively, which included a write down of $646,408 in 1997 to
reflect an impairment of net realizable value. Capitalized software
development costs were $302,510 and $1,014,021 at April 30, 1997 and
1996, respectively, net of accumulated amortization of $0 and
$138,979, respectively. Total research and development costs charged to
general and administrative expenses were approximately $2,375,000,
$1,319,000 and $163,000 for the years ended April 30, 1997, 1996 and 1995.
Trademark and Licenses
Trademarks and licenses are stated at cost, net of accumulated
amortization, which is provided using the straight-line method over 5
to 10 years.
Store Preopening Costs
Store preopening costs are capitalized and amortized over twelve
months.
Loss Per Share
Loss per common share is computed on the basis of the weighted average
number of common shares outstanding during the respective periods.
Outstanding stock warrants, options and preferred shares are excluded
from the computations as their effect would be anti- dilutive.
During 1997, 312,530 common shares were issued upon conversion of
preferred shares. Had this conversion of preferred stock occurred on
May 1, 1996, net loss per common share would have been $16.71 for
1997.
During 1996, 119,161 common shares were issued upon conversion of
preferred shares and 15,000 common shares were issued to retire debt.
Had this conversion of preferred stock and the retirement of debt
occurred on May 1, 1995, net loss per common share would have been
$11.20 for 1996.
Software Revenue Recognition
Revenue from sales of software is generally recognized upon delivery
of the software provided that no significant obligations remain and
collection of the resulting receivable is deemed probable.
Advertising Costs
Advertising costs, included in general and administrative expenses,
are charged to operations when the advertising first takes place and
were $989,248, $1,648,071 and $129,436 for 1997, 1996 and 1995,
respectively.
Income Taxes
Deferred income taxes are determined using the liability method under
which deferred tax assets and liabilities are determined based upon
differences between financial and tax basis of assets and liabilities.
F-11
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued
Reclassifications
Certain reclassifications have been made to the financial statements
to conform to the 1997 presentation.
Fair Value of Financial Instruments
Fair value of financial instruments are estimated to approximate the
related book value, unless otherwise indicated, based on market
information available to the Company.
Impairment of Long-Lived Assets
Impairment losses are recorded on long-lived assets and certain
identifiable intangible assets held and used in operations whenever
events or changes in circumstances indicate that the carrying amount
of an asset may not be recoverable.
Use of Estimates
In preparing financial statements in conformity with generally
accepted accounting principles, management is required to make
estimates and assumptions that affect the reported amounts of assets
and liabilities, the disclosure of contingent assets and liabilities
at the date of the financial statements, and the reported amounts of
revenues and expenses during the reporting period. Actual results
could differ from those estimates.
2. ACQUISITIONS
On March 31, 1997, a wholly-owned subsidiary of the Company was
formed. The Company acquired 100% of the common stock of mrcdrom.com,
inc., in exchange for $100,000 in cash, $511,428 of inventory, $30,464
of equipment and $26,000 of other assets. mrcdrom.com, inc. is
engaged in selling software products through an Internet web page
catalog. In March 1997, the Board of Directors approved the filing of
a registration statement under the Securities Act of 1933, for a
public offering of 3,000,000 shares of mrcdrom.com, inc. common stock.
On June 17, 1994, the Company acquired 100% of the common stock, of
Maxmedia Distributing, Inc., and Maxmedia Publishing, Inc., in
exchange for $25,000 in cash plus 5,125 shares of the Company's
restricted common stock valued at $143,500. The acquired companies
are engaged in the distribution and publishing of CD- ROM software.
The acquisition was accounted for by the purchase method of
accounting, and the purchase price exceeded the estimated fair value
of net assets acquired by $201,421. Amortization of the excess
purchase price was amortized over a fifteen year period until the
unamortized balance was written off in fiscal year 1996.
On March 2, 1994, the Company entered into an agreement with Americomm
Properties, Inc. ("Americomm") to assign unencumbered, interests in
certain licenses to the wireless cable system in Manhattan, Kansas.
The licenses require Federal Communications Commission approval to
provide assignability and transferability. Licenses and the related
acquisition costs of $73,465 were written off in fiscal year 1996.
3. ACCOUNTS RECEIVABLE AND CREDIT RISK
The Company's trade receivables at April 30, 1997 are primarily due
from major computer software distributors. The Company believes it is
not exposed to significant credit risk.
F-12
<PAGE>
4. INVENTORIES
Included in the accompanying April 30, 1997 balance sheet is inventory
of computer software at a carrying value of $530,926, which represents
management's estimate of its net realizable value. The computer
software industry is characterized by rapid technological advancement
and change. Should demand prove to be significantly less than
anticipated, the ultimate realizable value of such products will
probably be less than the amount shown in the balance sheet.
Major classes of inventories consist of the following at April 30,:
1997 1996
Software $1,025,670 $1,470,973
Less:Allowance for slow moving
and obsolescence 494,744 198,000
NET $ 530,926 $1,272,973
5. MARKETABLE SECURITIES
The Company adopted, effective for the year ended April 30, 1995,
Statement of Financial Accounting Standards No. 115 "Accounting for
Certain Investments in Debt and Equity Securities". Under this
statement, investments in available-for-sale securities are measured
at fair value with net unrealized gains and losses reported in equity.
Investments that are bought are held principally for the purpose of
selling them in the near future are classified as trading securities.
Trading securities are measured at fair value with net realized gains
and losses reported in the statement of operations. The fair value of
marketable securities is determined based on quoted market prices for
those securities. The net unrealized holding loss decreased by
$50,548 and $1,005 during the years ended April 30,1997 and 1996,
respectively. The cost, unrealized gains and losses, and fair values
of the Company's available-for-sale securities and trading securities
at April 30, 1997 and 1996 are summarized as follows:
Cost Gross Gross Estimated
Unrealized Unrealized Fair
Gains Losses Value
1997
Available-
for-sale
Securities $ $ $ $
Common stock 8,268 - - 8,268
1996
Available-
for-sale
Securities $ $ $ $
Common stock 996,325 - 50,548 945,777
Trading
Securities
53,820 - 1,341,508 1,287,688
Common stock
$ $ $ $
2,284,013 53,820 50,548 2,287,285
F-13<PAGE>
5. MARKETABLE SECURITIES - Continued
Sales proceeds and gross related gains and losses on securities are as
follows:
1997 1996 1995
Cost basis $ $ $
2,329,565 134,480 -
Proceeds 1,745,755 93,447 -
Realized - - -
gains
Reali zed 583,810 41,033 -
losses
The Company uses the specific identification method to determine the
cost of securities sold.
Results of operations for 1997, 1996 and 1995 include a charge of $ -0
$53,821, and $-0- for unrealized gains on trading securities.
Stockholders' equity includes an unrealized loss of $0, $50,548, and
$51,553 at April 30, 1997, 1996 and 1995, respectively.
6. NOTE RECEIVABLE - OFFICER
During fiscal 1997, the Company loaned the President and Chief
Executive Officer of the Company $1,800,000. The loan is evidenced by a
nonrecourse note, which bears interest at 6%, with all principal and
accrued interest due November 14, 2006. The note is collateralized by
approximately 33,500 shares of common stock of the Company which had a
market value of $1,800,000 on September 25, 1996 and is not subject to
additional calls for security regardless of any changes in the value
of the stock. At April 30, 1997, these shares had a market value of
approximately $209,000. The allowance of $889,000 is primarily to
provide for impairment of the collateral as a result of the
fluctuation in the value of the collateral. The allowance, which is
adjusted on a annual basis, is computed from a formula which utilizes
the average price of the Company's common stock using a twelve month
period.
7. INVESTMENT IN AFFILIATE
The Company holds a 15.2% interest in Meteor Technology PLC
("Meteor"), a public telecommunications company traded on the
Alternative Investment Market of the London Stock Exchange. The
investment is accounted for under the equity method because the
Company exercises significant influence over Meteor's operating and
financial activities. Due to certain factors, the Company has
determined that the carrying value of its investment exceeds the
estimated recovery value. Accordingly, a provision of $2,693,087 has
been charged to operations in 1997 reducing its carrying value of
Meteor to zero and suspended the equity method of accounting for its
investment in Meteor.
8. ACCRUED EXPENSES
The following is a summary of accrued expenses at April30,:
1997 1996
Taxes $ 2 6,811 $ 56,550
General and administrative 2,452 35,244
Fees 34,000 36,000
Compensation 41,503 32,864
Lease obligations 115,099 -
Other 3,125 33,671
$ 222,990 $ 194,329
F-14
9. NOTES PAYABLE - RELATED PARTY
In fiscal 1996, the remaining balance of the notes payable to Forme
Capital, Inc. (Forme), a corporation majority-owned by the wife of the
President of the Company was settled by payment of $236,000 cash and
issuance of 15,000 shares of the Company's restricted common stock
valued at $450,000. The weighted average interest rate on the short
term borrowings was 8% for fiscal 1996 and 1995.
10. INCOME TAXES
The Company files a consolidated Federal tax return. The Company had
no current State or Federal income tax expense for each of the years
ended April 30, 1997, 1996 and 1995.
Deferred tax assets and liabilities are determined based on the
difference between financial statement and tax basis of assets and
liabilities as measured by the currently enacted tax rates. Deferred
tax expense or benefit is the result of the changes in deferred tax
assets and liabilities.
Deferred income taxes arise principally from the temporary differences
between financial statement and income tax recognition of allowance
for doubtful accounts, note receivable allowance, investment valuation
adjustments, inventory reserve and from net operating losses.
The components of deferred taxes at April 30, in the accompanying
balance sheets are summarized below:
1997 1996
Allowance for doubtful accounts $ 6,782 $ 1,880
Inventories 168,213 66,795
Other 3,958 3,570
Note receivable allowance 302,260 -
Investment valuation adjustment 915,650 (1,113)
Capital loss carryforward 117,817 117,817
Net operating loss carryforward 6,862,390 3,846,783
8,377,070 4,035,732
Less valuation allowance (8,377,070) (4,035,732)
Deferred tax asset-net $ - $ -
At April 30, 1997, the Company has approximately $20,184,000 of unused
Federal net operating loss carryforwards, which expire in the years
2003 through 2012.
Approximately $640,000 of the net operating loss carryforwards for tax
purposes are limited due to statutory changes in the tax law in
connection with the change in more than 50% ownership of the Company
in 1988. Because of statutory requirements in the law, that portion
of the net operating loss carryforward applicable to the period prior
to the ownership change is limited to use of approximately $35,800 per
year until it expires. As the net operating losses expire, at a
minimum, approximately $425,000 of the tax net operating loss
carryforward will not be available for the Company's future use.
F-15
<PAGE>
11. STOCKHOLDERS' EQUITY
Common Stock
The brother of the President of the Company purchased 13,750 and
20,833 shares of the Company's restricted common stock for $470,312
and $497,375 in various transactions during fiscal 1996 and 1995,
respectively.
Unrelated third parties purchased 16,094 and 42,251 shares of the
Company's restricted common stock for $795,612 and $1,126,472 in
various transactions during fiscal 1996 and 1995, respectively.
During fiscal 1996, a company affiliated with the President purchased
13,750 shares of the Company's restricted common stock for $1,108,594.
During fiscal 1996, the President purchased 11,250 shares of the
Company's restricted common shares for $907,031.
Preferred Stock
The Company has 100,000,000 authorized shares of $.01 par value
preferred stock with rights and preferences as designated by the board
of directors at the time of issuance. The Company has the following
series of preferred stock issued and outstanding at April 30, 1997:
Number of Shares
Series of Originally
Preferred Stock AuthorizedIssued Outstanding
Value
A 2,000 2,000 - -
B 75,000 75,000 - -
C 50,000 50,000 - -
D 66,134 66,134 - -
E 108,056 108,056
108,056 1,081
F 15,000 15,000 - -
BB 1,000,0001,000,000 - -
G 5,333,333 5,333,333 -
- -
H 17,000,00013,433,333 - -
I 10,000,000 3,590,000 2,330,000 23,300
TOTAL 33,649,52323,672,856 2,438,056$ 24,381
During fiscal 1997, 112,000 shares of Series BB were
converted to
1,922 shares of the Company's restricted common stock.
During fiscal 1997, 9,908,333 shares of Series H were
converted to
165,920 shares of the Company's restricted common
stock.
During fiscal 1997, 1,260,000 shares of Series I were
converted to
144,688 shares of the Company's restricted common
stock.
During fiscal 1997, 15,000 shares of Series F were
retired.
F-16
11. STOCKHOLDERS' EQUITY - Continued
During fiscal 1996, the Series G shares outstanding were converted to
56,844 shares of the Company's restricted common stock.
During fiscal 1996, 888,000 shares of Series BB were converted to
8,608 shares of the Company's restricted common stock.
During fiscal 1996, 3,525,000 shares of Series H were converted to
53,709 shares of the Company's restricted common stock.
During fiscal 1996, the outstanding shares of Series D, owned by the
wife of the President, were redeemed for $66,134.
During fiscal 1995, the outstanding Series C were converted to 250
shares of the Company's restricted common stock.
Series E preferred shares owned by a trust affiliated with the
President of the Company are entitled to receive a cumulative dividend
equivalent to $1,600 per month. Dividends in the amount of $19,200
were declared and paid each of the years ended April 30, 1997, 1996
and 1995.
Series BB preferred shares ("Series BB") are entitled to receive a
dividend of 12% payable quarterly. The Series BB are convertible to
common shares at thirty percent off the closing price of the common
shares. Dividends in the amount of $70,040 were paid in 1996.
Series G preferred shares ("Series G") are entitled to receive a
dividend of 9% payable quarterly. The Series G are convertible to
common shares at twenty percent off the closing price of the common
shares. All shares will automatically be converted into common shares
two years after issuance. Dividends in the amount of $139,151 were
paid in 1996.
Series H preferred shares ("Series H") are entitled to receive a
dividend of 9% payable quarterly. The Series H are convertible to
common shares at twenty percent off the closing price of the common
shares. Dividends in the amount of $76,034 and $225,055 were paid in
1997 and 1996, respectively.
Series I preferred shares ("Series I") are entitled to receive a
cumulative dividend of 7%, payable in common shares of the Company.
The Series I are convertible to common shares at twenty percent off
the closing price of the common shares. All shares will automatically
be converted into common shares two years after issuance.
Any split or combination of common shares requires a simultaneous
split or combination of each series of preferred shares and visa
versa. Upon liquidation or dissolution of the Company, holders of
each series of preferred shares are entitled to receive, to the extent
of their par value, pro rata with other preferred shareholders and
before holders of common shares, all assets legally available for
distribution to stockholders. Each series of preferred shares issued
as of fiscal year-end is non-voting.
12. STOCK OPTIONS
Camelot Corporation
The Company adopted the 1991 Employee Stock Option Plan (the Plan) in
April 1992, reserving 3,750 shares of the Company's common stock for
issuance upon the exercise of options granted under the Plan. On
April 30, 1993, the board amended and the shareholders approved to
increase the number of common shares to 16,250 available for issuance
under this plan. The options may be purchased as Incentive Stock
Options at 100% of fair market value of the common stock or as
supplemental stock options at not less than 85% of the fair market
value of the common stock at the date of grant.
F-17
12. STOCK OPTIONS - Continued
The terms of the options under the Plan may not exceed 10 years. No
options may be granted under the Plan after April, 2002. The Company
has determined to use the 1991 Employee Stock Option Plan for non
employee directors and has amended the Plan to specifically cover
directors. Other than a name change to the 1991 Outside Director
Stock Option Plan and as set out above, the Plan will otherwise stay
the same.
In October 1996 the Company adopted the 1996 Stock Option Plan. At
that time the Company canceled all outstanding options from the 1991
plan and granted the equal number of options from the 1996 plan. The
plan reserves 200,000 shares of the Company's common stock upon
exercise of the options granted under the plan. The exercise price
for the options is equal to the Fair Market Value of a share of
Common Stock on the Grant Date. The per share exercise price of any
option granted to a person who at the time of grant owns stock
possessing more than 10% of the total combined voting power of all
classes of stock of the Company or any parent or subsidiary
corporation of the Company must be at least 110% of the fair market
value of a share of the Company's common stock on the date of grant,
and the term of such option cannot exceed five years.
The term of the options under the 1996 plan may not exceed 10 years.
No options may be granted under the Plan after October 2006. During
1997, the exercise price of the options granted under the 1991 and
1996 plans was changed to $5.00 per share.
Under the 1996 plan, 175,000 options were granted to the President of
the Company, however he was not eligible for options under the 1991
plan. An additional 3,500 options were granted to officers during
fiscal 1997.
Outstanding stock options outside the Plan were 86,250 and 87,500 at
April 30, 1997 and 1996, respectively.
The following schedule summarizes the changes in the
Plans:
1997 1996 1995
Options outstanding at 94,600 95,825 94,375
beginning at year
Granted 185,538 7,194 6,325
Exercised - ( 4,637) -
Canceled ( 4,750) ( 3,782) (4,875)
Options outstanding at 275,388 94,600 95,825
end of year
Options exercisable at 275,388 94,600 95,825
end of year
Average price of
options:
Granted during year $ 49.348 $98.324 $48.928
Exercised during - 62.208 -
year
Canceled during year 52.160 80.140 47.692
Outstanding at end 12.160 31.828 29.932
of year
F-18
12. STOCK OPTIONS - Continued
mrcdrom.com, inc.
mrcdrom.com, inc. has approved two stock option plans, a 1997
Incentive Stock Option Plan (the "Incentive Stock Option Plan") and
the 1997 Directors' Stock Option Plan (the "Director's Stock Option
Plan") in March 1997, reserving 500,000 shares of common stock for
issuance upon the exercise of options granted under the Plans. The
Incentive Stock Option Plan is available to all employees of
mrcdrom.com, inc. (including officers and employee directors). The
Director's Stock Option Plan is available for all nonemployee
directors of mrcdrom.com, inc. The option exercise price is equal to
the fair market value of a share of common stock on the grant date
unless the optionee is granted more than 10% of the maximum number of
shares available for issuance under the Plans in which case the
exercise price is equal to 110% of the fair market value of a share of
common stock on the date of grant. The term of the options under the
Plans may not exceed 10 years.
The following schedule summarized the changes in the
Plans:
Incentive Stock Option Plan
1997 1996 1995
Options outstanding at
beginning of year
Granted 408,800 - -
Exercised - - -
Canceled
- - -
Options outstanding at end
of year 408,800 - -
Options exercisable at end
of year 408,800 - -
Average price of options
Granted during year $ $ $
4.00 - -
Exercised during year - - -
Canceled during year - - -
Outstanding at end of 4.00 - -
year
Director's Stock Option Plan
1997 1996 1995
Options outstanding at
beginning of year
Granted 15,000 - -
Exercised - - -
Canceled - - -
Options outstanding at end
of year 15,000 - -
Options exercisable at end
of year 15,000 - -
Average price of options
Granted during year $ $ $
4.00 - -
Exercised during year - - -
Canceled during year - - -
Outstanding at end of 4.00 - -
year
F-19
12. STOCK OPTIONS - Continued
The Company granted stock options to purchase 423,800 shares of
mrcdrom.com common stock to officers and directors of mrcdrom.com,
inc.
The Company recognized and measures compensation costs related to
stock option plans utilizing the intrinsic value based method.
Accordingly, no compensation cost has been recorded. Had compensation
expense been determined on the fair value of awards granted, net loss
and loss per share would have been as follows:
1997
As Reported Pro forma
Net loss $ (12,996,369) $ (13,441,659)
Loss per share $ (20.45) $ (21.15)
1996
As Reported Pro forma
Net loss $ ( 4,565,713) $ ( 4,928,278)
Loss per share $ (12.54) $ (14.32)
The fair value of each option is estimated using the Black-Scholes
option-pricing model with the following assumptions used for grants in
1997 and 1996: risk free interest rate 4.5%; expected life 10 years;
expected volatility 30%; dividend yield 0%. The fair values generated
by the Black-Scholes model may not be indicative of the future
benefit, if any, that may be received by the option holder.
13. MINORITY INTEREST
During the year ended April 30, 1995, a subsidiary of the Company
authorized 15,000,000 shares of $.01 par value preferred stock.
Proceeds from the sale of issued shares, net of expenses of $39,456,
was $264,044. During fiscal 1996, the Company purchased 60,700 shares
of the 10% Convertible Preferred Shares, Series A. The 10%
Convertible Preferred Shares, Series A, have one vote per share, and
no preemptive rights. The dividend is cumulative and must be paid
before any dividends can be paid to the common shareholders. The
Preferred shares have a preference upon liquidation over the Common
shares. The Preferred shares are convertible at a rate of one
Preferred share for each Common share. The Company has the right to
redeem the Preferred shares within twelve months of issuance at $6.00
per share and the second twelve months for $6.60 per share. Dividends
in the amount of $121,968 were paid in 1996. All shares were redeemed
in fiscal year 1996.
14. RELATED PARTY TRANSACTIONS
During fiscal 1997, the Company made a loan to an officer in the
amount of $14,000 bearing interest at 6% which has been repaid as of
April 30, 1997.
F-20
14. RELATED PARTY TRANSACTIONS - Continued
During fiscal 1997, the Company concluded agreements with Meteor
Technology plc ("Meteor"), appointing them as the exclusive
international distributor for DigiPhone and DigiPhone Deluxe,
excluding the United States of America, Canada, the United Kingdom and
Ireland. The consideration for the DigiPhone rights was 6,000,000 pounds,
(approximately $9,312,000) and an additional 1,000,000 poundsin loan stock
was subscribed to, (approximately $1,685,000). During fiscal 1997,
the Company acquired the U.S.A. and Canadian rights to PCAMS software,
which is a payphone contract and management system software from
Meteor. The consideration for the PCAMS software rights was the
cancellation of 2,000,000 pounds of loan stock (approximately $3,370,000)
and the issuance of 80,960 shares of the Company's restricted common
shares. The remaining loan stock was converted into ordinary shares
of Meteor, with the Company owning approximately 15.2% of Meteor.
Because of the significant influence the Company has over Meteor, the
Company has accounted for these transactions as an equity investment
in Meteor. See footnote 7 discussing the Company's investment in
Meteor.
In fiscal year 1996, the Company made a loan to DigiPhone Europe,
Ltd., a subsidiary of Meteor for $30,000. The Chairman and Chief
Executive Officer of Camelot is a majority stockholder of Meteor at
April 30, 1997. Sales of software products to Meteor were $141,905
during fiscal 1997.
The Company received management fees of $72,000, $24,000 and $0 for
the years 1997, 1996 and 1995, respectively, from a securities
transfer agent company affiliated with the President of the Company.
During fiscal 1996, an officer of the Company was given the
opportunity to execute a 6% interest bearing note in principal amount
of $75,156 to exercise stock options. The note receivable, which is
collaterized by the pledge of 1,500 shares of common stock of the
Company is due on January 18, 1998.
The Company received loans from Forme Capital totaling $406,000 in
fiscal year 1995. Payments of $236,000 and $190,000 were made in
fiscal years 1996 and 1995, respectively. Forme converted the
outstanding balance of $450,000 to common stock during fiscal 1996.
During fiscal 1995, the Company issued 375 common shares valued at
$22,500 to a company affiliated with the President of one of the
Company's subsidiaries for a customer mailing list.
The Company owns 21,495 shares of Forme Capital's Series A, 10% Non
cumulative Preferred Stock, 50,000 shares of Series B, 10% Non
cumulative Preferred Stock and 466,571 shares of Series C, 10% Non
cumulative Preferred Stock. The preferred shares have no voting
rights, pay dividends at the discretion of Forme's board of directors,
and have priority for payment upon dissolution of Forme over Forme's
common stock. The Company received dividends of $46,657 from Forme
Capital each of the fiscal years 1997, 1996 and 1995.
During fiscal years 1996 and 1995, a company affiliated with the
President of the Company provided the Company with management and
other services valued at $44,000 and $286,000, respectively. During
fiscal year 1996, the President and the Corporate Secretary became
employees of the Company. Prior to this they were employees of the
affiliate and received no compensation from the Company.
15. COMMITMENTS AND CONTINGENCIES
Leases
The Company rents office space for its corporate headquarters from
Forme under a September 1993 agreement expiring in September 1998.
Rent expense incurred with Forme for fiscal 1997, 1996 and 1995 was
approximately $80,000 each year. The lease included the following
terms and conditions:
F-21
15. COMMITMENTS AND CONTINGENCIES - Continued
1. Forme has an option to buy the Company's furniture and
equipment located on the premises at the Company's book value
during the term of the lease.
2. The Company granted a ten year option to Forme to purchase
50,000 shares of restricted common stock at an exercise price of
$25.00 which includes piggy back rights.
3. Rental payments automatically increase to 150% of prevailing
market rates at the time the President ceases to be a director of
the Company.
In addition, the Company rents office and warehouse space in the
Dallas, Texas area for its subsidiaries.
Total rent expense, all of which were minimum rentals, for fiscal
1997, 1996 and 1995 was approximately $587,478, $268,615 and $106,700,
respectively.
In addition to minimum lease payments, a retail lease agreement
provides for contingent rentals if certain sales levels are reached.
The future minimum lease payments under operating leases for office
and warehouse space that have remaining non-cancelable lease terms in
excess of one year at April 30, 1997, are as follows:
Year EndingRelated Party Other
Total
April 30,
1998 $ 80,000 $ 148,050 $ 228,050
1999 26,667 141,243 167,910
2000 - 139,763 139,763
2001 - 95,000 95,000
2002 - - -
Thereafter - - -
$ 106,667 $ 524,056 $ 630,723
The Company has negotiated or is in the process of negotiating early
termination of its retail lease obligations. An accrual of $115,099
for the settlement of the leases, is included in accrued expenses at
April 30, 1997. If the negotiations are not successful, the ultimate
loss will probably be greater than the accrued amount.
Litigation
During the ordinary course of business, the Company is involved in
legal proceedings and regulatory inquiries which management does not
expect to have a material effect on the financial position of the
Company.
Liquidity and Capital Resources
The consolidated statement of operations presented in the financial
statements reflects net losses for the years ended April 30, 1997,
1996 and 1995. However, the Company has been able to improve it's
financial position through stock offerings and has been able to raise
$3,410,500 in 1997 and $22,330,214 in 1996 through private placements.
As indicated at Note 17, the Company has discontinued all but one
segment to concentrate its efforts toward the retailing, distribution,
and publishing of CD-ROM software.
F-22
15. COMMITMENTS AND CONTINGENCIES - Continued
Management believes that the Company's future success will be achieved
through sales of CD-ROM software and license fees. The Company owns
DigiPhone, a software product which permits the full duplexing of
voice over the Internet.
While management believes the Company is well positioned for future
profitability, there can be no assurance of future success.
Management is aware of the need for additional cash resources to be
obtained for the continuance of research and development and
anticipates that such financial resources will primarily come from
private placement of Camelot's common and preferred stock. Management
believes that license fees received from Third Plant's products will
generate revenues and cash flow towards the end of the current
financial period. Management believes that cash provided by financing
activities and licensing fees as well as revenue from sale of software
over the Internet together with the present level of cash resources
available will be sufficient for its need over the next twelve months.
Management also believes that should the Company require additional
cash resources it can incur borrowing as Camelot has no long-term
debt.
16. SALE OF SUBSIDIARIES
On July 6, 1994, the Company sold its 69% controlling interest in
Beecher Energy, Ltd., for $184,543 resulting in a loss of $82,644.
17. DISCONTINUED OPERATIONS
On January 31, 1995, the Company's video marketing and distribution
subsidiary Camelot Entertainment filed Chapter 7 bankruptcy with the
U.S. Bankruptcy Court. Revenues for this segment for fiscal 1995 were
$694,666. Loss from operations and disposals for fiscal 1996 and 1995
were $250,925 and $406,057, respectively.
Oil and gas revenues for fiscal 1995 were $16,964. Loss from oil and
gas operations for fiscal 1995 were $3,009.
The results of operations of the above subsidiaries have been
presented in the financial statements as discontinued operations.
Current assets of the discontinued operations consisted primarily of
cash and accounts receivable. Current liabilities of the discontinued
operations primarily consist of subsidiary trade payables guaranteed
by Camelot Corporation.
18. INDUSTRY SEGMENT
The Company and its subsidiaries are operating in one industry segment
and are vertically integrated in retailing, distribution, and
publishing of CD-ROM software.
19. SUBSEQUENT EVENTS
In July 1997, the Board of Directors approved a one for forty reverse
stock split of common stock and outstanding preferred shares, Series J
to stockholders of record on July 15, 1997.
The consolidated financial statements, including all references to the
number of shares of common stock and all per-share information, have
been adjusted to reflect the split on a retroactive basis.
On May 29, 1997, the Company advanced 500,000
pounds (approximately $828,250) to Meteor Technology plc ("Meteor") for 10%
unsecured loan stock.
In May 1997, the Board of Directors authorized the creation of a
series of preferred stock, Series J with 60,000,000 shares authorized.
Series J has a par value of $.01 per share, does not pay dividends,
are entitled to vote on matters submitted to a vote of the
stockholders of the Company, and rank junior to all other series of
preferred stock.
F-23
19. SUBSEQUENT EVENTS - Continued
During May of 1997, Camelot Corporation completed a preferred stock
transaction with Adina, Inc. an affiliated company. As a result of
this transaction, Camelot is now a majority owner of Meteor through
Camelot's ownership of Alexander Mark Investments (USA), Inc. The
specific transfers that occurred are as follows:
On May 9, 1997, Alexander Mark Investments (USA), Inc. acquired
40,727,988 ordinary shares (57% of the outstanding shares) in Meteor
from Daniel Wettreich in exchange for 6,787,998 restricted common
shares in Alexander Mark Investments (USA), Inc.
On May 15, 1997, Adina, Inc. accepted the subscription for 42,450,000
restricted common shares of Adina, Inc. by Daniel Wettreich in
exchange for 6,029,921 restricted common shares of Alexander Mark
Investments (USA), Inc.("AMI"). AMI owns 57% of the outstanding
shares of Meteor. Meteor has two active subsidiaries, DigiPhone
International, Ltd. and Meteor Payphones, Ltd.
On May 20, 1997 Adina, Inc. the majority shareholder of Alexander Mark
Investments (USA), Inc. transferred 6,029,921 (80% of the outstanding
shares) to Camelot Corporation as payment for subscription.
On May 20, 1997 Adina, Inc. subscribed 1,345,295 restricted Preferred
Shares, Series J Camelot Corporation, ("Camelot") with payment by the
transfer of 6,029,921 restricted common shares of Alexander Mark
Investments (USA), Inc. to Camelot. 892,215 of the Preferred Shares
were issued upon execution of the agreement and 453,080 are to be
issued as new common shares of Camelot are issued in such a manner so
that the additional Preferred Shares are issued at the same time and
in the same quantity as any newly issued common shares. The Preferred
Shares have one vote per share and vote with the common shares, are
non-convertible, non-yielding and are subordinate to outstanding
preferred shares but have a liquidation preference over common shares.
20. SUPPLEMENTARY OIL AND GAS INFORMATION (UNAUDITED)
All of the Company's oil and gas properties are located in the
continental United States. The following tables reflect information
relating to the Company's oil and gas producing activities.
Results of Operations for Producing Activities
1997 1996 1995
Sales of oil and $ - $ - $16,964
gas
Production costs - - (10,967)
Provision for - - -
depletion
depreciation - - (3,250)
$ - $ - $ 2,747
No costs were incurred in oil and gas property acquisitions,
exploration, development activities and exploration in the three year
period ended April 30, 1997.
Capitalized costs relating to oil and gas producing activities were
zero for the three year period ended April 30, 1997. Oil and gas reserves
were zero for three year period ended April 30, 1997. Proved developed
reserves were zero for the three year period ended April 30, 1997.
F-24
20. SUPPLEMENTARY OIL AND GAS INFORMATION (UNAUDITED) -Continued
Standards measure of discounted future net cash flows
The standardized measure of discounted future net cash flows at April
30, 1997, 1996 and 1995 relating to provided oil and gas reserves were
zero.
Future net cash flows were computed using year-end prices and costs,
and year-end statutory tax rates (adjusted for permanent differences)
that relate to existing proved oil and gas reserves at year-end. The
following are the principle sources of change in the standardized
measure of discounted future net cash flows for each of the years in
the three-year period ended April 30, 1997.
1997 1996 1 995
Beginning of year $ - $ - $ 422,000
Changes resulting from
sales of oil and gas
produced,
net of production costs - - (17,000)
Net changes in prices and
production costs - -
Revisions of previous
quantity estimates - - -
Accretion of discount - - -
Net changes in income
taxes - - -
Disposition of oil and
gas segment - - (405,000)
End of year $ - $ - $ -
21. FOURTH QUARTER ADJUSTMENTS (UNAUDITED)
During the first three quarters of 1997, the Company reported its
investment in Meteor Technology plc ("Meteor") at fair value (SFAS No.
115), therefore revenue for the license agreements with Meteor and the
loss on the market value of Meteor stock was reflected in the
statement of operations. During the fourth quarter of 1997, the
Company reviewed its accounting treatment of its investment in Meteor.
In accordance with Accounting Principles Bulletin Number 18 the
investment in Meteor is properly accounted for using the equity method
of accounting. The aggregate effect of this adjustment was an
approximate $1,263,000 loss recorded on its investment in Meteor.
The Company also reviewed its inventory and receivable valuation
allowances which resulted in a decrease in assets of approximately
$496,000 for inventory and $889,000 for receivables.
F-25
<PAGE>
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
Years Ended April 30, 1997, 1996 and 1995
Description
Allowance deducted
from assets to which
it applies:
<TABLE>
Additions
<S> <C> <C> <C> <C> <C>
Accounts Balance Charged Charged Balance
Receivable at to to at
s Beginni Costs Other Deducti End of
Year Ended ng of and Account ons Period
Period Expense s
s
April 30, $ $ - $ $
1997 11,415 8,532 - 19,947
April 30, 36,419 10,887 - 35,891( 11,415
1996 a)
April 30, 365,448 41,500 - 370,529 36,419
1995 (a)
Notes
Receivable
Year Ended
April 30, $ $ $ $ $
1997 - 889,000 - - 889,000
April 30, - - - -
1996 -
April 75,000 7,972 2 - 82,972( -
30,1995 a)
Inventorie
s
Year Ended
April 30, $ $ $ $ $
1997 198,000 495,942 - 199,198 494,744
April 198,000 - - 198,000
30,1996 -
April - -
30,1995 - - -
</TABLE>
