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
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
CAMELOT CORPORATION AND SUBSIDIARIES
PART I: FINANCIAL INFORMATION
ITEM 1. Financial Statements
CONSOLIDATED BALANCE SHEETS
ASSETS
(In Thousands)
<TABLE>
<S> <C> <C>
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>
CAMELOT CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (continued)
LIABILITIES AND STOCKHOLDERS' EQUITY
(In Thousands)
<TABLE>
<S> <C> <C>
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, 388,651 and 2,438,056
shares issued and outstanding at
July 31, 1997 and April 30, 1997
respectively 15.4 24.4
Additional paid-in capital 38,744.7 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 3,680.2 5,378.5
$ 7,328.3 $ 8,244.3
</TABLE>
See accompanying notes to these consolidated financial statements.
CAMELOT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(In Thousands, Except Share and Per Share Data)
<TABLE>
<S> <C> <C>
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.
CAMELOT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(In Thousands)
<TABLE>
<S> <C> <C>
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)
NONCASH INVESTING AND FINANCING ACTIVITIES
Three Months Ended
July 31,
1997 1996
During the quarter ended July 31, 1996, the Company
(643.9)
recognized a loss on the August 1996 disposal of the
remaining investment in Firecrest.
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
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 balance sheet consolidates numbers from the Camelot April
30, 1997 Audited Financial Statements, the April 30, 1997 Audited
Financial Statements of Alexander Mark and the May 31, 1997 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 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 held by the
shareholders of Alexander Mark and 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 of the newly acquired payphone business in the
United Kingdom and the continued expenditure on the product
development of the Internet products, primarily VideoTalk. 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.
The Company restated its financials due to the acquisition of eighty
percent (80%) Alexander Mark Investments(USA), Inc. which occurred on
May 20, 1996. The restated financial statements, originally filed in
the form 8-K of that date properly reflect the impact of that
acquisition on the financial statement thereby presenting a more
accurate picture to investors.
The consolidated balance sheets for the period show stockholders'
equity of $3,680,200 compared with $5,378,500 or 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 decrease in cash and the
operating loss both of which are attributable to restructuring of the
payphone and VideoTalk product development as noted above.
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, and continues to anticipate that its principal
revenue and profitability will emanate from these hardware and
software products. As previously announced, the Company intends to
seek out license agreements with major Original Equipment
Manufacturers and Fortune 500 companies.
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 sales from its
Internet software and video products will generate its principal
revenues and cash flow for the Company during the next twelve months.
Management does not anticipate any liquidity problems over the next
twelve months 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 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
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) 1991 Incentive Stock Option Plan: Incorporated by
reference to
proxy statement for 1991.
(b) 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: March 16, 1998
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