<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter ended January 31, 1997 Commission File No. 0-8299
CAMELOT CORPORATION
(Exact Name of Registrant as Specified in its Charter)
Colorado 84-0691531
(State of 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)
Registrant's telephone number, including area code: (972) 733-3005
Indicate by check mark whether the Registrant (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 Registrant was
required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the close of the period covered by this
report.
Shares outstanding at
Class January 31, 1997
Common stock, $0.01 par value 25,404,029
<PAGE>
CAMELOT CORPORATION AND SUBSIDIARIES
I N D E X
Page No.
Part I FINANCIAL INFORMATION (UNAUDITED):
Item 1. Consolidated Balance
Sheets 3
Consolidated Statements of
Operations 5
Consolidated Statements of
Cash Flows 6
Notes to Consolidated
Financial Statements 9
Items 2. Management's Discussion
and Analysis of Financial
Condition and Results of
Operations 9
Part II OTHER INFORMATION 12
<PAGE>
CAMELOT CORPORATION AND SUBSIDIARIES
PART I: FINANCIAL INFORMATION
ITEM 1. Financial Statements
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
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January 31, 1997 April 30, 1996
(Unaudited) (Audited)
CURRENT ASSETS
Cash and cash equivalents $4,185,265 $9,870,599
Trading securities 3,484,315 1,341,508
Securities available for sale 8,268 945,777
Accounts receivable, net of allowance
for doubtful accounts of $12,836 and
$11,415 at January 31, 1997 and
April 30, 1996 322,433 241,837
Prepaid expenses 125,866 215,073
Inventories, net of allowance for
obsolescence of $584,969 and $198,000
at January 31, 1997 and April 30, 1996 870,500 1,272,973
Total current assets 8,996,647 13,887,767
PROPERTY, PLANT AND EQUIPMENT - AT COST
Office equipment and fixtures 1,587,614 1,363,484
Leasehold improvements 121,922 222,124
Less accumulated depreciation (593,731) (453,450)
Total property, plant and
equipment - at cost 1,115,805 1,132,158
OTHER ASSETS
Preferred stock - related party 530,917 530,917
Licenses and product development, net of
$500,745 and $151,979
accumulated amortization at
January 31, 1997 and April
30, 1996 1,211,289 1,141,021
Other 1,864,220 10,000
Total other assets 3,606,426 1,681,938
$13,718,878 $16,701,863
</TABLE>
<PAGE>
CAMELOT CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (continued)
LIABILITIES AND STOCKHOLDERS' EQUITY
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January 31, 1997 April 30, 1996
(Unaudited) (Audited)
CURRENT LIABILITIES
Accounts payable $ 630,725 $ 777,181
Accrued expenses 190,009 194,329
Net current liabilities of
discontinued operations - 50,185
Total current liabilities 820,734 1,021,695
STOCKHOLDERS' EQUITY
Common stock, $.01 par value,
50,000,000 shares authorized,
26,553,835 and 19,452,191
shares issued at January 31,
1997 and April 30, 1996,
respectively 265,538 194,522
Preferred stock, $.01 par value,
100,000,000 shares authorized,
3,548,056 and 10,143,389
shares issued and outstanding at
January 31,1997 and April 30,
1996 respectively 35,481 101,434
Additional paid-in capital 33,725,957 30,410,954
Accumulated deficit (18,335,613) (12,186,463)
Unrealized gain (loss) on
available-for-sale securities - (50,548)
Less: treasury stock, at cost,
1,149,806 and 1,149,806
shares at January 31, 1997
and April 30, 1996 (2,714,575) (2,714,575)
Notes receivable related to
purchase of common stock (78,644) (75,156)
Total stockholders' equity 12,898,144 15,680,168
$13,718,878 $16,701,863
</TABLE>
See accompanying notes to these consolidated financial statements.
<PAGE>
CAMELOT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
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<S> <C> <C>
Three Months Ended Nine Months Ended
January 31 January 31,
1997 1996 1997 1996
SALES $479,468 $3,338,103 $9,031,893 3,921,556
COST OF SALES 358,030 410,165 1,520,880 530,202
GROSS PROFIT (LOSS) 121,438 2,927,938 7,511,013 3,391,354
OPERATING EXPENSES:
General and
administrative 1,786,698 2,491,058 5,818,783 4,315,299
Depreciation
and amortization 204,334 126,598 621,016 206,291
1,991,032 2,617,656 6,439,799 4,521,590
INCOME (LOSS) FROM
OPERATIONS (1,869,594) 310,282 1,071,214 (1,130,236)
OTHER INCOME (EXPENSES):
Interest expense (10,343) (1,009) (10,343) (11,298)
Interest income 88,685 50,642 306,183 57,361
Dividend income-affiliate 11,664 11,664 34,993 34,993
Unrealized loss
-Trading securities (2,099,200) 1,326,714 (6,599,688) 1,326,714
Loss on disposition
of asset (3,650) (35,929) (660,367) (41,033)
(2,012,844) 1,352,082 (6,929,222) 1,366,737
INCOME (LOSS) FROM
CONTINUING OPERATIONS (3,882,438) 1,662,364 (5,858,008) 236,501
DISCONTINUED OPERATIONS:
Gain (Loss) on disposal (289,477) (70,622) (291,143) (56,467)
(289,477) (70,622) (291,143) (56,467)
NET INCOME (LOSS) (4,171,915) 1,591,742 (6,149,151) 180,034
DIVIDENDS ON PREFERRED
STOCK (12,432) (140,570) (90,434) (200,692)
NET LOSS ATTRIBUTABLE TO
COMMON STOCKHOLDERS $(4,184,347) $1,451,172 $(6,239,585) $ (20,658)
INCOME (LOSS) PER SHARE:
Loss from continuing
operations $(.155) $ 0.113 $ (.249) $ 0.017
Income (Loss)from
discontinued operations $(.012) (0.005) (.012) (0.004)
Dividends on preferred
stock (.000) (0.009) (.004) (0.015)
NET LOSS PER COMMON SHARE $(.167) $0.099 $(.265) $(0.002)
WEIGHTED AVERAGE OF
COMMON STOCK
OUTSTANDING 25,035,618 14,710,644 23,528,941 13,487,209
</TABLE>
See accompanying notes to these consolidated financial statements.
<PAGE>
CAMELOT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
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Nine Months Ended
January 31,
1997 1996
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) (6,149,151) $ 180,034
Adjustments to reconcile net income (loss)
to net cash from operating activities:
Securities received as revenue (7,627,000) (2,950,575)
Depreciation and amortization 621,016 206,291
Gain on sale of subsidiary - -
(Gain) loss on disposal of assets 990,285 41,033
Non cash transactions for services - 387,391
Write down (up) of securities to
market value 6,599,688 (1,326,714)
Write-off (provision) uncollectable
accounts receivable 1,421 -
Provisions for inventory obsolescence 386,969 -
Change in assets and liabilities
Accounts receivable (112,980) (302,380)
Prepaid expenses and other 89,207 (295,986)
Inventories 15,504 (997,215)
Accounts payable and accrued
expenses (200,961) 442,770
Net cash used by operating
activities (5,386,002) (4,615,351)
CASH FLOW FROM INVESTING ACTIVITIES:
Purchases of property and equipment (589,058) (807,217)
Purchases of marketable securities (2,457,003) -
Proceeds from sale of property
and equipment - 11,500
Proceeds from disposition of assets
of discontinued operations - -
Proceeds from sale of marketable
securities 1,731,436 93,447
Loan to Director of Company (1,800,000) -
Deposits (23,256) -
Licenses and product development (481,517) (541,835)
Net cash used by investing
activities (3,619,398) (1,244,105)
CASH FLOW FROM FINANCING ACTIVITIES:
Sale of common stock - 3,281,549
Sale of preferred stock 3,410,500 9,418,666
Redemption of preferred stock - (66,134)
Dividends on preferred stock (90,434) (200,692)
Redemption of subsidiary preferred stock - (264,044)
Payments on debt - (186,000)
Net cash provided (used)
by financing activities 3,320,066 11,983,345
NET INCREASE (DECREASE) IN CASH (5,685,334) 6,123,889
CASH AT BEGINNING OF PERIOD 9,870,599 149,529
CASH AT END OF PERIOD $4,185,265 $6,273,418
SUPPLEMENTAL INFORMATION:
Cash paid for interest $ -0- $ 11,298
Cash paid for taxes - $ -
</TABLE>
See accompanying notes to these consolidated financial statements.
<PAGE>
CAMELOT CORPORATION AND SUBSIDIARIES
SCHEDULE OF NONCASH ACTIVITIES
(UNAUDITED)
Nine Months Ended
January 31,
1997 1996
On July 11, 1995, the Company issued $ $450,000
600,000 shares of restricted common
stock to Forme Capital, Inc. ("Forme")
for $450,000. In connection therewith,
Forme applied principal of $450,000 to
certain promissory notes of the Company
owed to Forme.
On August 8,1995,the Company issued 326,530 599,999
shares of restricted common stock for
prepaid advertising.
On August 17,1995 the Company issued notes 294,200
payable for acquisition of software.
On August 31,1995 and September 29, 1995, 57,286
the Company issued 28,643 shares of
restricted common stock for compensation
of services.
On October 31,1995,the Company issued 67,470 350,000
restricted common stock for acquisition of
software
On January 31,1996, the President of the Company 843,750
executed a 6% interest bearing note to exercise
a stock option to acquire 1,000,000 shares of
Company's common stock. This transaction was
rescinded in the fourth quarter of FY96.
On January 31, 1996, another officer of the Company 75,156
executed a 6% interest bearing not to exercise stock
option to acquire 60,000 shares of the Company's
common stock.
During the quarter ended July 31, 1996, 7,627,000
the Company concluded a distribution
agreement with a subsidiary of Meteor
Technology PLC in exchange for stock
in Meteor.
During the nine months ended January 31, (6,599,688)
1997, the Company recognized an unrealized
writedown of it's investment in Meteor
Technology PLC.
During the quarter ended July 31, 1996, (643,878)
the Company recognized a loss on the
August 1996 disposal of the remaining
investment in Firecrest.
During the quarter ended January 31, (341,347)
1997,the Company wrote-off the
leasehold improvements and fixtures
for the four Software @ Cost+10%
stores closed.
During the nine months ended January 31, 1997, the Company's
preferred stock was converted to common stock as follows:
112,000 Series BB preferred for 76,877 shares of
restricted common
333,332 Series G preferred for 224,770 shares of
restricted common
9,908,333 Series H preferred for 6,412,027 shares of
restricted common
150,000 Series I preferred for 309,238 shares of
restricted common
<PAGE>
CAMELOT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
ITEM 1. Financial Statements and Principles of Consolidation
The accompanying condensed consolidated financial statements have
been prepared in accordance with the instruction to Form 10-Q, and do
not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting of
normal recurring adjustments) considered necessary for a fair
presentation have been included. These statements should be read in
conjunction with the audited financial statements and notes thereto
included in the Registrant's annual Form 10-K filing for the year
ended April 30, 1996.
The consolidated financial statements include the accounts of the
Company and all majority-owned subsidiaries. All intercompany
transactions have been eliminated.
ITEM 2. Management Discussion and Analysis of Financial Condition
and Results of Operations
The Company's revenue for the quarter ending January 31, 1997 was
$479,468 compared with $3,338,103 in 1996. Net loss for the three
month period was $4,171,915 compared with a gain for the previous year
of $1,591,742. These results are due to further write-down of value
of Trading Securities, and operating expenses in excess of current
gross profits.
The consolidated balance sheets for the period show stockholders'
equity of $12,898,144 compared with $15,680,168 for the financial year
ended April 30, 1996. Total assets were $13,718,878 compared with
$16,701,863.
During the period under review, the Registrant's subsidiary Third
Planet Publishing, Inc. introduced two new products, Say It! and
Proficia. Say It! which began distribution to the market in February,
is an Internet voice mail program allowing for voice e-mails instead
of text e-mail messages. Say It! works with Windows 3.1, Windows 95
and Mac0s7.5. It is not necessary for the recipient to have the Say
It! program to hear the message. Say It! is more convenient than
sending traditional text e-mail messages and works on a PC or
Macintosh just like a recorder. When you run Say It! you simply press
record and Say It! compresses your voice into a .wav file. You can
then play it back and make sure it says exactly what you want it to
say and then send it, and the recipient receives the .wav file in
their e-mail program. The recipient does not need any additional
software to hear your message. The retail selling price is expected
to be $14.95.
Proficia expected to be available in March 1997, is an Internet
audio handset. This ergonomically designed handset features a privacy
mode that eliminates the feedback that is encountered by the use of a
microphone and speakers. The Proficia handset functions just like a
telephone so when used with Digiphone Internet Telephony software
applications conversations can be conducted in private instead of
being blasted through not so private speakers. It is designed with an
optical sensor that automatically switches from the privacy mode to
the handsfree mode when placed on the desktop. Speakers and
microphone can be replaced by a Proficia, a single sleek compact
device that brings high quality audio and desktop convenience. For
the multimedia enthusiast the Proficia speaker pass through switch
provides the option to use external speakers or the Proficia handset.
Camelot Internet Access Services has amended its pricing
structure to offer unlimited usage for $19.95 a month as well as
offering five free hours per month with a $2.50 per hour charge after
that.
The Registrant also completed all necessary procedures to have
its common shares listed on the Frankfurt Stock Exchange. With effect
from January 27, 1997, Registrant's common shares have been granted
permission from the Association of Frankfurt Securities Dealers
(Vereinigung Frankfurter Effektenhandler c.V.) to begin trading on the
Third Market Segment of the Frankfurt Stock Exchange. The trading
symbol will be "CAM" with the German Securities - code
(Wertpapierkennnummer) 890 544. The Third Market Segment is intended
for foreign companies who are quoted on overseas stock exchanges and
who require stock trading facilities in Germany. This offers another
venue on which Registrant's common shares may be traded by European
investors.
Subsequent to the period, the Registrant acquired the U.S.
and Canadian rights to PCAMS software a payphone contract and
management system software from Meteor Technology plc ("Meteor").
Meteor is a U.K. public company listed on the Alternative Investment
Market of the London Stock Exchange and is the international
distributor of DigiPhone. The PCAMS software was originally developed
for Meteor's payphone subsidiary and now has been refined and
modified to provide contract and management capabilities on a
universal basis. The consideration for PCAMS was 2,500,000 pounds payable
by the redemption of 2,000,000 pounds of loan stock owed to Camelot by
Meteor and 500,000 pounds by the issuance by Camelot to Meteor of
3,238,400 restricted common shares.
Management continues to concentrate the majority of its
management and financial resources on the development and successful
marketing of Internet related software products produced by its
subsidiary, Third Planet Publishing.
Liquidity and Capital Resources
Net cash used by operating activities for the nine months ended
January 31, 1997 was $5,386,002 compared with $4,615,351 in 1996. Net
cash used by investing activities was $3,619,398 compared with
$1,244,105 in 1996. Net cash provided by financing activities was
$3,320,066 compared with $11,983,345 in 1996. Cash and securities of
$7,677,848 at January 31, 1997 compares with $12,157,884 at April 30,
1996.
The Company's plan for capital expenditures relate principally to
the purchase of property and equipment to further its software
development program. Management 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 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. There are
no known trends, 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 in
the normal course of business.
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
NONE
Item 5. Exhibits and Reports on Form 8-K.
(a) Exhibits:
3(1) Articles of incorporation:Incorporated by reference
Registration Statement filed on Form 10, June 23,1976.
3(2) Bylaws: Incorporated by reference as immediately above.
(10) 1991 Incentive Stock Option Plan: Incorporated by reference
to proxy statement for 1991.
(b) Reports on Form 8-K: Dated December 5, 1996 reporting Item 9.
Sales of Equity Securities pursuant to Regulation S.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned thereto duly authorized.
CAMELOT CORPORATION
(Registrant)
By: /s/ Daniel Wettreich
DANIEL WETTREICH,
President
Treasurer and Principal
Financial Officer
Date: March 14, 1997
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<NAME> CAMELOT CORPORATION
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