<PAGE> 1
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 September 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
October 25, 1996.
1
<PAGE> 2
CADEMA CORPORATION
FORM 10-QSB
INDEX
PART 1. FINANCIAL INFORMATION
Item 1 - Financial Statements 3
Balance Sheets - September 30, 1996 and
December 31, 1995
Statements of Operations - Nine months ended 4
September 30, 1996 and September 30, 1995
Statements of Operations - Three months ended 5
September 30, 1996 and September 30, 1995
Statements of Cash Flows - Nine months ended 6
September 31, 1996 and September 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
<PAGE> 3
<TABLE>
CADEMA CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
<CAPTION>
September 30, 1996 December 31,1995
------------------ ----------------
<S> <C> <C>
ASSETS
------
CURRENT ASSETS:
Cash and cash equivalents $ 61,798 $ 13,177
Trading securities (Cost 762,222 in 702,000 511,125
1996 and 661,047 in 1995) (Note 2)
Accounts receivable, net 18,807 18,807
Other current assets 1,056 712
----------- -----------
TOTAL CURRENT ASSETS 783,661 543,821
NOTE RECEIVABLE (Note 3) 345,000 345,000
----------- -----------
TOTAL ASSETS $ 1,128,661 $ 888,821
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES:
Accounts Payable -- --
Accrued Liabilities -- 13,000
Constract Deposits -- --
----------- -----------
TOTAL CURRENT LIABILITIES -- 13,000
Accrued dividends on preferred stock 636,681 509,344
Minority Interest in Subsidiary (Note 3) 7,296 7,296
----------- -----------
TOTAL LIABILITIES 643,977 529,640
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 (7,299,057) (7,424,560)
Less: Treasury stock at cost
Common shares (75,000) (75,000)
Preferred shares (21,370) (21,370)
----------- -----------
TOTAL STOCKHOLDERS' EQUITY 484,684 359,181
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,128,661 $ 888,821
=========== ===========
</TABLE>
The accompanying notes to the consolidated financial statements
are an integral part of these balance sheets.
3
<PAGE> 4
<TABLE>
CADEMA CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 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 22,636 23,686
-------- ---------
Total operating expenses 22,636 23,686
-------- ---------
Loss from operations (22,636) (11,459)
OTHER INCOME (EXPENSE):
Trading securities
Transactions (Note 2)
Realized gains (losses) 184,410 40,246
Change in unrealized losses 89,700 7,385
Interest income -- --
Interest expense -- --
Dividend income 1,365 1,232
Other income -- --
Minority Interest (Note 3) -- (4,060)
-------- ---------
Total other income (expense) 275,475 44,803
-------- ---------
INCOME (LOSS) FROM OPERATIONS BEFORE TAXES 252,839 33,344
PROVISION FOR INCOME TAXES -- --
NET INCOME (LOSS) 252,839 33,344
PREFERRED DIVIDENDS EARNED 127,336 135,535
-------- ---------
NET INCOME (LOSS) APPLICABLE TO
COMMON STOCK (Note 2) $125,503 $(102,191)
======== =========
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
4
<PAGE> 5
<TABLE>
CADEMA CORPORATION AND SUBSIDIARY
---------------------------------
CONSOLIDATED STATEMENTS OF OPERATIONS
-------------------------------------
FOR THE THREE MONTHS ENDED SEPTEMBER 30
---------------------------------------
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
REVENUE (Note 2) $ - $ -
COST OF GOODS SOLD - -
-------- -------
GROSS PROFIT - -
OPERATING EXPENSES:
General and administrative 5,925 5,721
-------- -------
Total operating expenses 5,925 5,721
-------- -------
Loss from operations (5,925) (5,721)
OTHER INCOME (EXPENSE):
Trading securities
Transactions (Notes 2)
Realized gains (losses) 82,700 -
Change in unrealized losses 49,600 57,785
Interest income - -
Interest expense - -
Dividend income 403 210
Other income - -
Minority Interest (Note 3) - -
-------- -------
Total other income (expense) 132,703 57,995
-------- -------
INCOME (LOSS) FROM OPERATIONS 126,778 52,274
PROVISION FOR INCOME TAXES - -
-------- -------
NET INCOME (LOSS) 126,778 52,274
PREFERRED DIVIDENDS EARNED 42,445 42,445
-------- -------
NET INCOME (LOSS) APPLICABLE TO
COMMON STOCK (Note 2) $ 84,333 $(9,829)
======== =======
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING (Note 2) 10,905,549 10,905,549
LOSS PER COMMON AND COMMON EQUIVALENT SHARE:
Primary $.01 $(.00)
==== =====
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these statements
5
<PAGE> 6
<TABLE>
CADEMA CORPORATION AND SUBSIDIARY
---------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
FOR THE NINE MONTHS IN THE PERIOD ENDED SEPTEMBER 30
----------------------------------------------------
<CAPTION>
CASH FLOWS FROM OPERATING ACTIVITIES 1996 1995
--------- ---------
<S> <C> <C>
Net income (loss) from continuing operations $ 252,839 $ 33,344
Adjustments to reconcile net income (loss) to
net cash used in operating activities
Loss (gain) on sale of trading securities (184,410) (40,246)
Change in unrealized loss in value of
trading securities (89,700) (7,385)
(Increase) decrease in accounts receivable -- 3,952
Decrease (Increase) in other receivables and
current assets (344) (219)
Increase (Decrease) in accounts payable and
accrued liabilities (13,000) (28,075)
Increase (Decrease) in contract deposits -- (6,890)
Increase in Minority Interest -- 4,060
--------- ---------
Net cash provided by (used in) continuing
operating activities (34,615) (41,459)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of marketable securities (401,387) (82,500)
Proceeds from sale of marketable securities 484,623 104,246
--------- ---------
Net cash provided by (used in) investing
activities 83,236 21,746
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of Note Receivable -- (11,610)
Treasury Stock Purchase -- (7,702)
--------- ---------
Net cash (used in)financing activities -- (19,312)
--------- ---------
Net increase (decrease) in cash and cash equivalents 48,621 (39,025)
Cash and cash equivalents - Beginning of period 13,177 49,177
--------- ---------
Cash and cash equivalents - End of period 61,798 10,152
========= =========
SUPPLEMENTAL DISCLOSURES
Interest Payments -- --
Income Tax Paid -- --
========= =========
SUPPLEMENTAL DISCLOSURES OF NON-CASH TRANSACTIONS
Preferred Stock Dividends Earned 127,336 135,525
========= =========
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these statements.
6
<PAGE> 7
CADEMA CORPORATION
------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
NINE MONTHS ENDED SEPTEMBER 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
<PAGE> 8
(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. The dilutive effect of convertible preferred stock series
have been included in the 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
<PAGE> 9
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 nine 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 in the same period.
Operating expenses for the first nine months of 1996 were $22,636 and
represented administrative expenses of the parent Company. These expenses
compared favorably to 1995 operating expense of $23,686 which included
operating expenses of the operating subsidiary. For the three months ended
September 30, 1996 operating expenses of $5,825 were also similar to the
same period 1995 expenses of $5,721.
Other income in this third quarter totaled a gain of $132,703 as compared
to a 1995 gain of $57,995. This contrast is due to larger gains recognized
on the sale of stock during 1996. For the first nine months of 1996, other
income of $275,475 exceeded the same period 1995 income of $44,803 due to
better results from the Company's marketable securities portfolio.
The net income applicable to common stock for the third quarter, after an
accrual for a Preferred Stock dividend, was $84,333 or $.01 per share. For
the same quarter of the prior year, poorer performance by the Company's
securities portfolio caused a loss of $9,829 or $.00 per share to be
recognized. For the first nine months of 1996, the company recognized net
income of $125,503 as compared to a 1995 first nine months loss of
$102,191; the more favorable performance of the Company's securities
portfolio in 1996 more the offset the lack of revenues from its operating
subsidiary.
9
<PAGE> 10
LIQUIDITY AND CAPITAL RESOURCES
Liquidity and working capital increased by $252,840 to $783,661 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: November 1, 1996 By: /s/ Roger D. Bensen
-------------------------------------
ROGER D. BENSEN
Chairman of the Board and
Chief Executive Officer
10
<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> SEP-30-1996
<EXCHANGE-RATE> 1
<CASH> 61,789
<SECURITIES> 702,000
<RECEIVABLES> 18,807
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 783,661
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,128,661
<CURRENT-LIABILITIES> 0
<BONDS> 0
<COMMON> 4,851
0
109,356
<OTHER-SE> 286,144
<TOTAL-LIABILITY-AND-EQUITY> 1,128,661
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 22,636
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 252,839
<INCOME-TAX> 0
<INCOME-CONTINUING> 252,839
<DISCONTINUED> 0
<EXTRAORDINARY> 127,336
<CHANGES> 0
<NET-INCOME> 125,503
<EPS-PRIMARY> .01
<EPS-DILUTED> .01
</TABLE>
