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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
FORM 10-QSB
(Mark One)
X
- - ------ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the period ended June 30, 1996.
or
- - ------ Transition Report Pursuant to Section 13 OR 15(D) of the Securities
Exchange Act of 1934
For the transition period from to .
-------- --------
Commission File No. 0-9614
CADEMA CORPORATION
- - --------------------------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
DELAWARE 88-0160741
- - --------------------------------------------------------------------------------
(State or other jurisdiction of (IRS Employer I.D. Number)
incorporation or organization)
c/o Number One Corporation 50 Washington Street. Norwalk CT 06854
- - -----------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (203) 854-6711
--------------
(Former name, former address and former fiscal year, if changed since last
report.) - N/A
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
--- ---
There were 10,905,549 shares of the Registrant's common stock outstanding as of
June 30, 1996.
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CADEMA CORPORATION
FORM 10-QSB
INDEX
PART 1. FINANCIAL INFORMATION
Item 1 - Financial Statements 3
Balance Sheets - June 30, 1996 and
December 31, 1995
Statements of Operations - Six months ended 4
June 30, 1996 and June 30, 1995
Statements of Operations - Three months ended 5
June 30, 1996 and June 30, 1995
Statements of Cash Flows - Three months ended 6
June 30, 1996 and June 30, 1995
Notes to Financial Statements 7
Item 2 - Management's Discussion and Analysis of 8-9
Financial Condition and Results of Operations
PART II. OTHER INFORMATION
Signatures 10
Exhibit 27 11
The accompanying condensed financial statements have been prepared by the
Company, without audit, and reflect all adjustments which are, in the opinion of
management, necessary to a fair statement of the results of operations,
financial position, and statements of cash flows for the interim periods. The
statements have been prepared in accordance with the rules and regulations of
the Securities and Exchange Commission, but omit certain information and
footnote disclosures necessary to present the statements in accordance with
generally accepted accounting principles.
These condensed financial statements should be read in conjunction with the
financial statements and notes thereto included in the Company's Annual Report
on Form 10-KSB for the year ended December 31, 1995. Management believes that
the disclosures are adequate to make the information presented herein not
misleading.
2
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CADEMA CORPORATION AND SUBSIDIARY
---------------------------------
<TABLE>
CONSOLIDATED BALANCE SHEETS
---------------------------
<CAPTION>
June 30, 1996 December 31,1995
------------- ----------------
ASSETS
------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 56,613 $ 13,177
Trading securities (Cost 672,947 in 563,125 511,125
1996 and 661,047 in 1995) (Note 2)
Accounts receivable, net 71,691 18,807
Other current assets 178 712
----------- -----------
TOTAL CURRENT ASSETS 691,607 543,821
NOTE RECEIVABLE (Note 3) 345,000 345,000
----------- -----------
TOTAL ASSETS $ 1,036,607 $ 888,821
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES:
Accounts Payable -- --
Accrued Liabilities 34,725 13,000
Contract Deposits -- --
----------- -----------
TOTAL CURRENT LIABILITIES 34,725 13,000
Accrued dividends on preferred stock 594,235 509,344
Minority Interest in Subsidiary (Note 3) 7,296 7,296
----------- -----------
TOTAL LIABILITIES 636,256 529,640
Commitments and contingencies
STOCKHOLDERS' EQUITY
Series A 8% Cumulative Convertible
Preferred Stock, par value $.01 per
share; authorized 5,000,000 shares;
issued, 485,123 shares in 1996
and 1995 4,851 4,851
Series B 8% Cumulative Convertible
Preferred Stock, par value, $.01 per
share, authorized, 150,000 shares,
none issued
Common Stock, par value, $.01 per share; -- --
authorized 50,000,000 shares; issued
10,935,549 shares in 1996 and 1995 109,356 109,356
Additional paid-in capital 7,765,904 7,765,904
Accumulated deficit (7,383,390) (7,424,560)
Less: Treasury stock at cost
Common shares (75,000) (75,000)
Preferred shares (21,370) (21,370)
----------- -----------
TOTAL STOCKHOLDERS' EQUITY 400,351 359,181
----------- -----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 1,036,607 $ 888,821
=========== ===========
</TABLE>
The accompanying notes to the consolidated financial statements
are an integral part of these balance sheets.
3
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CADEMA CORPORATION AND SUBSIDIARY
---------------------------------
<TABLE>
CONSOLIDATED STATEMENTS OF OPERATIONS
-------------------------------------
FOR THE SIX MONTHS ENDED JUNE 30
--------------------------------
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
REVENUE (Note 2) $ -- $ 39,052
COST OF GOODS SOLD -- 26,825
----------- -----------
GROSS PROFIT -- 12,227
OPERATING EXPENSES:
General and administrative 16,711 17,965
----------- -----------
Total operating expenses 16,711 17,965
----------- -----------
Loss from operations (16,711) (5,738)
OTHER INCOME (EXPENSE):
Trading securities
Transactions (Notes 2)
Realized gains (losses) 101,710 40,246
Change in unrealized losses 40,100 (50,400)
Interest income -- --
Interest expense -- --
Dividend income 962 1,022
Other income -- --
Minority Interest (Note 3) -- (4,060)
----------- -----------
Total other income (expense) 142,772 (13,192)
----------- -----------
INCOME (LOSS) FROM OPERATIONS BEFORE TAXES 126,061 (18,930)
PROVISION FOR INCOME TAXES -- --
----------- -----------
NET LOSS 126,061 (18,930)
PREFERRED DIVIDENDS EARNED 84,891 93,090
----------- -----------
NET LOSS APPLICABLE TO
COMMON STOCK (Note 2) $ 41,170 $ (112,020)
=========== ===========
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING (Note 2) 10,905,549 10,905,549
LOSS PER COMMON AND
COMMON EQUIVALENT SHARE:
Primary $ .00 $ (.01)
=========== ===========
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these statements
4
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CADEMA CORPORATION AND SUBSIDIARY
---------------------------------
<TABLE>
CONSOLIDATED STATEMENTS OF OPERATIONS
-------------------------------------
FOR THE THREE MONTHS ENDED JUNE 30
----------------------------------
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
REVENUE (Note 2) $ -- $ --
COST OF GOODS SOLD -- --
----------- -----------
GROSS PROFIT -- --
OPERATING EXPENSES:
General and administrative 5,429 4,523
----------- -----------
Total operating expenses 5,429 4,523
----------- -----------
Loss from operations (5,429) (4,523)
OTHER INCOME (EXPENSE):
Trading securities
Transactions (Notes 2)
Realized gains (losses) 85,585 40,246
Change in unrealized losses 22,783 (56,845)
Interest income -- --
Interest expense -- --
Dividend income 962 720
Other income (122) --
Minority Interest (Note 3) -- --
----------- -----------
Total other income (expense) 109,208 (15,879)
----------- -----------
INCOME (LOSS) FROM OPERATIONS 103,779 (20,402)
PROVISION FOR INCOME TAXES -- --
----------- -----------
NET LOSS 103,779 (20,402)
PREFERRED DIVIDENDS EARNED 42,446 46,545
----------- -----------
NET LOSS APPLICABLE TO
COMMON STOCK (Note 2) $ 61,333 $ (66,947)
=========== ===========
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING (Note 2) 10,905,549 10,905,549
LOSS PER COMMON AND
COMMON EQUIVALENT SHARE:
Primary $ .01 $ (.01)
=========== ===========
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these statements
5
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CADEMA CORPORATION AND SUBSIDIARY
---------------------------------
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
FOR THE SIX MONTHS IN THE PERIOD ENDED JUNE 30
----------------------------------------------
<CAPTION>
1996 1995
--------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) from continuing operations $ 126,061 $(18,930)
Adjustments to reconcile net income
(loss) to net cash used in operating
activities
Loss (gain) on sale of trading
securities (101,710) (40,246)
Change in unrealized loss in value
of trading securities (40,100) 50,400
(Increase) decrease in accounts receivable (52,884) 3,952
Decrease (Increase) in other receivables and
current assets 534 570
Increase (Decrease) in accounts payable and
accrued liabilities 21,725 (28,075)
Increase (Decrease) in contract deposits -- (6,890)
Increase in Minority Interest -- 4,060
--------- --------
Net cash provided by (used in) continuing
operating activities (46,374) (35,159)
--------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of marketable securities (170,525) (82,500)
Proceeds from sale of marketable securities 260,335 104,246
--------- --------
Net cash provided by (used in) investing
activities 89,810 21,746
--------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of Note Receivable -- (11,610)
--------- --------
Net cash (used in)
financing activities -- (11,610)
--------- --------
Net increase (decrease) in cash and
cash equivalents 43,436 (25,023)
Cash and cash equivalents -
Beginning of period 13,177 49,177
--------- --------
Cash and cash equivalents -
End of period 56,613 24,154
========= ========
SUPPLEMENTAL DISCLOSURES
Interest Payments -- --
Income Tax Paid -- --
========= ========
SUPPLEMENTAL DISCLOSURES OF NON-CASH
TRANSACTIONS
Preferred Stock Dividends Earned 85,891 93,090
========= ========
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these statements.
6
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CADEMA CORPORATION
------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
SIX MONTHS ENDED JUNE 30, 1996
------------------------------
(1) NATURE OF BUSINESS:
-------------------
The principal business of Cadema Corporation (the Company) is the financing
and operating of business enterprises with the potential to generate
profits and cash flow. As part of this strategy, the Company entered into a
joint venture agreement with Global Environmental, Inc. in December 1993,
this has resulted in the Company being the majority owner of an operating
subsidiary, Global Environmental Offshore Company, which is engaged in
providing design, assembly and project management services related to the
construction of air pollution control systems in international markets.
Currently The Company continues to explore possible acquisitions and
mergers, as it has done in the past, seeking to enter into new operating
businesses and to use the Company's liquid assets in connection therewith.
While the principal business of the Company is the financing and operating
of business enterprises with the potential to generate profits and cash
flow, it still intends to invest in and sell marketable securities as
outlined in a plan approved by stockholders in 1988. The Company intends to
continue to invest in marketable securities, including but not limited to
stocks, bonds, options and warrants. The Company now holds and currently
expects to invest primarily in the stock of smaller, lesser known and often
more speculative companies, which while entailing above-average risk, offer
the potential of above-average reward.
There are significant risk factors affecting the Company, including
potential operating losses it may incur from operating ventures, the
volatility of market values of its investment securities portfolio, and the
possible need for additional capital. These and other factors may adversely
affect the Company's future operations.
(2) SIGNIFICANT ACCOUNTING POLICIES:
--------------------------------
Cash and cash equivalents
-------------------------
For purposes of the Statements of Cash Flows, the Company considers its
short-term investments which have a maturity of three (3) months or less to
be cash equivalents.
Revenues
--------
Revenues are the result of contract revenues recognized utilizing the
percentage of completion method of accounting. Contract revenues are the
total of contract costs, which include all direct material and labor costs
and those indirect costs related to contract performance, and provisions
for estimated gain or loss on the contracts.
7
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(2) SIGNIFICANT ACCOUNTING POLICIES: (CONT.)
-------------------------------
Trading Securities
------------------
The Company has adopted Statement of Financial Accounting Standards (SFAS)
("Statement") No. 115, "Accounting for certain Investments in Debt and
Equity Securities." The Company's adoption of the Statement requires its
marketable securities to be classified as "trading" and accounted for at
fair market value, with unrealized gains and losses reported as a component
of net income.
Net Income (Loss) Per Common Share
----------------------------------
Net income (loss) per common share is based upon net income less preferred
stock dividends. All convertible preferred stock series presently have an
anti-dilutive effect and, accordingly, have been excluded from per share
calculations.
(3) JOINT VENTURE
-------------
On December 31, 1993 the Company entered into a Joint Venture Agreement
with Global Environmental, Inc., a New York corporation, to create the
Joint Venture entity Global Environmental Offshore Company. The Joint
Venture Company engages in contracting for the design and installation of
Air Pollution Control equipment and facilities in areas located outside the
United States. Under the terms of the Joint Venture Agreement, the Company
contributed $350,000 (paid on January 11, 1994) and received 51% control of
the Joint Venture.
The financial statements of the Joint Venture are consolidated with the
Company's results in the statements of this report. The portion of the
Joint Venture's income that is not applicable to the Company is recorded as
Minority Interest on the Statement of Operations. That income along with
the Global Environment Inc.'s capital contribution to the Joint Venture is
recorded under the caption "Minority Interest in Subsidiary" on the Balance
Sheet
Notes issued by Global Environment Inc. to the Joint Venture are carried on
the Balance Sheet as Notes Receivable.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATION
The principal business of Cadema Corporation (the Company) is the financing
and operating of business enterprises with the potential to generate
profits and cash flow. Currently the Company's sole operating subsidiary,
Global Environmental Offshore Company, engages in contracting for the
design and
8
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installation of Air Pollution Control equipment and facilities for
international markets. The Company continues to explore possible
acquisitions and mergers as it has done in the past, seeking to enter into
new operating situations with it can utilize its liquid assets.
While the principal business of the Company is the financing and operating
of business enterprises with the potential to generate profits and cash
flow, it still intends to invest in and sell marketable securities as
outlined in a plan approved by stockholders in 1988.
RESULTS OF OPERATIONS
There were no revenues in the first six months of 1996, as the Company's
operating subsidiary Global Environmental Offshore Company had no revenue
activity. In 1995, the operating activity of Global Environment Offshore
Company produced revenues of 39,052.
Operating expenses for the first six months of 1996 were $16,711 and
represented administrative expenses of the parent Company. These expenses
compared favorably to 1995 operating expense of $17,965 which included
operating expenses of the operating subsidiary. For the three months ended
June 30, 1996 operating expenses of $4,523 were also below the same period
1995 expenses of $5,429.
Other income in the second quarter totaled a gain of $109,208 as compared
to a 1995 loss of $15,879. This contrast is due to a favorable valuation
adjustment to the Company's marketable securities portfolio, and larger
gains recognized on the sale of stock during 1996. For the first half of
1996, other income of $142,772 exceeded the same period of 1995, a loss of
$13,192, due to better results from the Company's marketable securities
portfolio.
The net income applicable to common stock for the second quarter, after an
accrual for a Preferred Stock dividend, was $61,333 or $.00 per share. For
the same quarter of the prior year, poorer performance by the Company's
securities portfolio caused a loss of $66,947 or $.00 per share to be
recognized. For the first half of 1996, the company recognized net income
of $41,170 as compared to a 1995 first half loss of $112,020; the move
favorable performance of the Company's securities portfolio in 1996 more
the offset the lack of revenues from its operating subsidiary.
9
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LIQUIDITY AND CAPITAL RESOURCES
Liquidity and working capital increased by $126,061 to $656,882 in the
first half of 1996 due primarily to the performance of the Company's
marketable securities portfolio.
The Company believes it has sufficient working capital to meet its
liquidity needs over the next twelve months.
PART II
- - -------
Items 1 thru 5: Not Applicable
- - ---------------
Item 6: Exhibits - Exhibit 27 Financial Data Schedule
- - -------
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
CADEMA CORPORATION
Dated: July 6, 1996 By: /s/ Roger D. Bensen
------------------------------------
ROGER D. BENSEN
Chairman of the Board and
Chief Executive Officer
10
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<EXCHANGE RATE> 1
<CASH> 56,613
<SECURITIES> 563,125
<RECEIVABLES> 71,691
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 691,607
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,036,607
<CURRENT-LIABILITIES> 34,725
<BONDS> 0
<COMMON> 4,851
0
109,356
<OTHER-SE> 286,144
<TOTAL-LIABILITY-AND-EQUITY> 1,036,607
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 16,711
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 126,061
<INCOME-TAX> 0
<INCOME-CONTINUING> 126,061
<DISCONTINUED> 0
<EXTRAORDINARY> 84,891
<CHANGES> 0
<NET-INCOME> 41,170
<EPS-PRIMARY> .00
<EPS-DILUTED> .00
</TABLE>
