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 July 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 July 31, 1997
Common stock, $0.01 par value 1,515,774
<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 8
Items 2. Management's Discussion
and Analysis of Financial
Condition and Results of
Operations 9
Part II OTHER INFORMATION 11
<PAGE>
CAMELOT CORPORATION AND SUBSIDIARIES
PART I: FINANCIAL INFORMATION
ITEM 1. Financial Statements
CONSOLIDATED BALANCE SHEETS
ASSETS
(In Thousands)
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July 31, 1997 April 30, 1997
(Unaudited) (Audited/Adjusted)
CURRENT ASSETS
Cash and cash equivalents $ 2,370.8 $ 3,667.2
Securities available for sale 8.3 8.3
Accounts receivable, net of allowance for
doubtful accounts of $19,947 and $19,947
at July 31, 1997 and April 30, 1997 518.1 493.8
Prepaid expenses 158.7 167.8
Inventories, net of allowance for
obsolescence of $495,145 and $494,744 at
July 31, 1997 and April 30, 1997 660.0 644.2
Total current assets 3,715.9 4,981.3
PROPERTY, PLANT AND EQUIPMENT - AT COST
Office equipment and fixtures 2,067.3 2,055.8
Leasehold improvements 64.2 64.2
Less accumulated depreciation (861.3) (800.7)
Total property,plant and equipment-at cost 1,270.2 1,319.3
OTHER ASSETS
Note receivable - officer, net of allowance
of $889,000 996.5 968.2
Preferred stock - related party 530.9 530.9
Licenses and product development, net of
$35,395 and $31,000 accumulated amortization
at July 31, 1997 and April 30, 1997 763.5 421.5
Other 51.3 23.1
Total other assets 2,342.2 1,943.7
$ 7,328.3 $ 8,244.3
</TABLE>
<PAGE>
CAMELOT CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (continued)
LIABILITIES AND STOCKHOLDERS' EQUITY
(In Thousands)
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July 31, 1997 April 30, 1997
(Unaudited) (Audited/Adjusted)
CURRENT LIABILITIES
Accounts payable $ 2,629.1 $ 2,642.8
Accrued expenses 190.8 223.0
Total current liabilities 2,819.9 2,865.8
STOCKHOLDERS' EQUITY
Common stock, $.01 par value, 50,000,000
shares authorized, 1,515,774 and 881,763
shares issued at July 31, 1997 and
April 30, 1997, respectively 15.2 8.8
Preferred stock, $.01 par value, 100,000,000
shares authorized, 1,528,351 and 2,438,056
shares issued and outstanding at
July 31, 1997 and April 30,
1997 respectively 15.3 24.4
Additional paid-in capital 38,744.8 38,737.1
Accumulated deficit (31,425.5) (30,597.5)
Less: treasury stock, at cost,
28,795 and 28,745 shares at July 31,
1997 and April 30, 1997 (2,756.7) (2,715.7)
Dividends (4.7) -
Notes receivable related to purchase of
common stock (80.0) (78.6)
Total stockholders' equity 4,508.4 5,378.5
$ 7,328.3 $ 8,244.3
</TABLE>
See accompanying notes to these consolidated financial statements.
<PAGE>
CAMELOT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(In Thousands, Except Share and Per Share Data)]
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Three Months Ended
July 31,
1997 1996
REVENUE $ 1,662.0 $ 767.0
COST OF SALES 2,055.2 328.4
GROSS PROFIT(LOSS) (393.2) 438.6
OPERATING EXPENSES:
General and administrative 2,151.4 2,283.0
Depreciation and amortization 229.4 217.9
2,380.8 2,500.9
LOSS FROM OPERATIONS (2,774.0) (2,062.3)
OTHER INCOME (EXPENSES):
Interest expense (43.1) (3.1)
Interest income 55.6 110.5
Dividend income - affiliate 11.6 11.7
Gain (Loss) on disposition of assets 1.0 (643.9)
Other - -
Total other income (expense) 25.1 (524.8)
INCOME (LOSS) FROM CONTINUING
OPERATIONS (2,748.9) (2,587.1)
DISCONTINUED OPERATIONS:
Loss on disposal (.4) (413.1)
(.4) (413.1)
NET INCOME(LOSS) (2,749.3) (3,000.2)
DIVIDENDS ON PREFERRED STOCK (4.7) (73.2)
NET INCOME (LOSS) ATTRIBUTABLE TO
COMMON STOCKHOLDERS $ (2,754.0) $ (3,073.4)
INCOME (LOSS) PER SHARE:
Income(loss) from continuing operations $ (2.539) $ (4.584)
Loss from discontinued operations (.000) (.732)
Dividends on preferred stock (.004) (.130)
NET INCOME(LOSS) PER COMMON SHARE $ (2.543) $ (5.446)
WEIGHTED AVERAGE OF COMMON
STOCK OUTSTANDING 1,082,966 564,315
</TABLE>
See accompanying notes to these consolidated financial statements.
<PAGE>
CAMELOT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(In Thousands)
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Three Months Ended
July 31,
1997 1996
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income(loss) $ (2,748.9) $(2,999.6)
ADJUSTMENTS TO RECONCILE NET GAIN(LOSS)
TO NET CASH FROM OPERATING ACTIVITIES:
Depreciation and amortization 161.9 217.9
(Gain) loss on disposal of assets 14.1 643.9
Write-off(provision) uncollectible
accounts receivable - (5.0)
Write-down of Distribution Agreement 453.3 -
Provision for inventory obsolescence .4 (1.3)
Change in assets and liabilities
Accounts and accrued receivables 147.1 (500.4)
Prepaid expenses 9.1 59.4
Inventories 171.3 (113.4)
Accounts payable and accrued expenses 516.8 329.6
Net cash used by operating
activities (1,274.9) (2,368.9)
CASH FLOW FROM INVESTING ACTIVITIES:
Purchases of property and equipment (24.3) (1,206.4)
Purchases of marketable securities - (1,230.1)
Loan to Director of Company (29.6) 729.8
Deposits (5.3) -
Licenses and product development (367.7) (244.2)
Net cash used by investing activities (426.9) (1,950.9)
CASH FLOW FROM FINANCING ACTIVITIES:
Sale of common stock 5.0 2,319.6
Sale of preferred stock - -
Dividends on preferred stock (4.7) (73.2)
Purchase of Treasury Stock (41.0) -
Net cash provided by financing activities (40.7) 2,246.4
NET INCREASE (DECREASE) IN CASH (1,742.5) (2,073.4)
CASH AT BEGINNING OF PERIOD 4,113.4 9,870.6
CASH AT END OF PERIOD $ 2,370.9 $ 7,797.2
SUPPLEMENTAL INFORMATION:
Cash paid for interest $ 71.2 $ 6.1
</TABLE>
See accompanying notes to these consolidated financial statements.
CAMELOT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(In Thousands)
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NONCASH INVESTING AND FINANCING ACTIVITIES
Three Months Ended
July 31,
1997 1996
During the quarter ended July 31, 1996,
the Company recognized a loss on the
August 1996 disposal of the remaining
investment in Firecrest. (643.9)
During the period under review, Meteor
Technology, plc expensed the UK,
Ireland Distribution Rights to DigiPhone. (453.5)
During the period under review, Meteor
Technology issued shares in settlement
for rent obligations for property previously
occupied by Telecredit Telekommunications GmbH (318.4)
During the quarter ended July 31, 1997,
the Company's preferred stock was converted
to common stock as follows:
2,255,000 Series I preferred for 662,181 shares of
restricted common
</TABLE>
<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,
1997.
The consolidated financial statements include the accounts of the
Company, all majority owned subsidiaries and the majority owned
company, Alexander Mark Investments (USA), Inc. ("Alexander Mark").
Alexander Mark is the majority owner of Meteor Technology, plc
("Meteor"). The April 30, 1997 adjusted balance sheet consolidates
numbers from the April 30, 1997 Audited Financial Statements of the
Company, the April 30, 1997 Audited Financial Statements of Alexander
Mark and the May 31, 1997 adjusted Audited Financial Statements of
Meteor. Adjustments were made to eliminate intercompany transactions
and for the conversion of Meteor's numbers from pounds to US Dollars.
Accumulated deficit increased by $828,000 which represents the portion
of earning recognized in the first quarter that were not shown in the
April 30, 1997 balance sheet.The Meteor financial presentation is
based on the accounting rules of the United Kingdom. The balance
sheet reflects adjustments to present financial statements per US GAAP
accounting rules. The adjustments included presenting current assets
first on the balance sheet, reclassing creditors payable due within
one year to the liability section from the current asset section and
combining reserve amount and profit and loss account into retained
earnings. The assets and liability amounts were not changed.The
accounting rules of the United Kingdom only require financial
statements of public companies to be published every six months.
Meteor's fiscal year end is May 31 and their last six month Interim
Financials were issued for November 30, 1996. The three month results
for the period ending July 31, 1997 and 1996 include the published six
month results of Meteor for periods commencing on December 1, 1995 and
1996 and ending on May 31, 1996 and 1997, respectively.The financial
statements include the 20 per cent minority interest in the
outstanding voting share capital of Alexander Mark not owned by the
Company. Meteor's financial statements were converted from British
Pounds to US Dollars based on US accounting guidelines. The
conversion rate for the balance sheet was based on the published
exchange rate at July 31, 1997 and April 30, 1997, one pound equals
$1.64 and $1.62, respectively. The conversion used for the statement
of operations was based on an average exchange rate for the six months
ended July 31, 1997 and 1996. This conversion rate was one pound
equals $1.65 for period ended May 31, 1997 and $1.53 for period ended
May 31, 1996.
ITEM 2. Management Discussion and Analysis of
Financial Condition and Results of Operations
The Company's revenue for the quarter ended July 31, 1997 was $1,662,000
compared with $767,000 in the comparable quarter of 1996.
Net loss for the three month period was $2,748,900 compared with a
loss of for the previous year of $2,587,100 These results are due to
the restructuring by Meteor of the newly acquired payphone business
in the United Kingdom and the continued expenditure by Third Planet on
the development of Internet products, primarily VideoTalk. Further, a write
down of $453,500 was made by Meteor of the Digiphone UK distribution rights
to comply with UK accounting requirements.
VideoTalk 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. It uses a
PCI plug-and-play add-in card that provides high quality audio and
video while achieving extremely low processor load. VideoTalk does
not require a soundcard or a video capture card, and allows
communication over the Internet with only a 28.8 Kbps modem. The unit
includes the VideoTalk card, a color video camera, a special version
of the Proficia telephony handset, and both the VideoTalk and
Digiphone 2.0 software. The consolidated balance sheets for the period
show stockholders' equity of $4,508,400 compared with $5,378,500 for
the financial year ended April 30, 1997. Total assets were $7,328,300
compared with $8,244,300 for the comparable period. The decrease in
stockholders' equity and total assets was due to the operating
loss.Management continues to concentrate the majority of its
management and financial resources on the development and successful
marketing of Internet related software and hardware products produced
by its subsidiary, Third Planet Publishing, and continues to
anticipate that its principal revenue and profitability will emanate
from these hardware and software products. As previously announced,
the Company has commenced negotiations with major Original Equipment
Manufacturers to license its technology.
Liquidity and Capital Resources
Net cash used by operating
activities for the three months ended July 31, 1997 was $1,274,900
compared with $2,368,900 in 1996. Net cash used by investing
activities was $426,900 compared with $1,950,900 in 1996. Net cash
used by financing activities was $40,700 compared with net cash
provided of $2,246,400 in 1996. Cash and securities of $2,370,800
compares with $4,495,400 at April 30, 1997. The Company's plans for
capital expenditures relate principally to the purchase of property
and equipment to further its hardware and software development
program. Management believes that its Internet products and its
payphone operations will generate its principal revenues and cash flow
for the Company during the next twelve months. 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. However, Management
believes that additional cash resources may be needed if the
anticipated level of revenues are not achieved, or are not achieved
timely. 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.<PAGE>
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
On July 14, 1997 the shareholders voted on and
approved a one for forty reverse stock split of the outstanding common
shares.
Item 5. Exhibits and Reports on Form 8-K.
(a) Exhibits: 3(1) Articles of Incorporation:
Incorporated by reference to
Registration Statement filed
on Form 10, June 23, 1976.
3(2) Bylaws: Incorporated by reference as
immediately above.
(10) 1996 Incentive Stock Option Plan:
Incorporated by reference to
proxy statement for 1997.
Reports on Form 8-K: Form 8-K dated May 20, 1997
with amendments
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: September 15, 1997
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<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> APR-30-1998
<PERIOD-END> JUL-31-1997
<CASH> 2370800
<SECURITIES> 83000
<RECEIVABLES> 518100
<ALLOWANCES> 19947
<INVENTORY> 660000
<CURRENT-ASSETS> 3715900
<PP&E> 1270200
<DEPRECIATION> 861300
<TOTAL-ASSETS> 7328300
<CURRENT-LIABILITIES> 2819900
<BONDS> 0
0
15300
<COMMON> 15200
<OTHER-SE> 4477900
<TOTAL-LIABILITY-AND-EQUITY> 7328300
<SALES> 166200
<TOTAL-REVENUES> 393200
<CGS> 2055200
<TOTAL-COSTS> 2380800
<OTHER-EXPENSES> (25100)
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<INCOME-PRETAX> 2749300
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<DISCONTINUED> 400
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2749300)
<EPS-PRIMARY> (2.539)
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