<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 For the quarterly period ended September 30, 1999
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 For the transition period from _____ to _____
-----------
COMMISSION FILE NUMBER: 33-18521-NY
CREATIVE MASTER INTERNATIONAL, INC.
(Exact name of small business issuer in its charter)
- --------------------------------------------------------------------------------
DELAWARE 11-2854355
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CASEY IND. BLDG., 8TH FLOOR
18 BEDFORD RD., TAIKOKTSUI
KOWLOON, HONG KONG N/A
(Address of principal executive offices) (Zip Code)
- --------------------------------------------------------------------------------
ISSUER'S TELEPHONE NUMBER: 011-852-2396-0147
Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 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 4,999,322 shares of the Company's common stock outstanding on October
31, 1999.
Transitional Small Business Disclosure Format (check one): YES [ ] NO [X]
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
Unaudited Consolidated Condensed Statements of Operations
- for each of the three-month and nine-month periods ended
September 30, 1999 and 1998 1
Consolidated Condensed Balance Sheets - as of September 30,
1999 (unaudited) and December 31, 1998 (audited) 2
Unaudited Consolidated Condensed Statements of Cash Flows
- for each of the nine-month periods ended September 30, 1999 and 1998 3
Notes to Consolidated Condensed Financial Statements 4
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS 5
PART II - OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS 9
ITEM 2 - CHANGES IN SECURITIES AND USE OF PROCEEDS 9
ITEM 3 - DEFAULTS UPON SENIOR SECURITIES 9
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 9
ITEM 5 - OTHER INFORMATION 9
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K 9
</TABLE>
<PAGE>
CREATIVE MASTER INTERNATIONAL, INC. AND SUBSIDIARIES
Unaudited Consolidated Statements of Operations
(in thousands of United States dollars, except per share amounts)
<TABLE>
<CAPTION>
Three months ended Sept 30, Nine months ended Sept 30,
1999 1998 1999 1998
<S> <C> <C> <C> <C>
Net sales $ 10,730 $ 9,804 $ 30,645 $ 24,129
Cost of goods sold (8,189) (8,045) (22,656) (18,303)
----------- ----------- ----------- -----------
Gross profit 2,541 1,759 7,989 5,826
----------- ----------- ----------- -----------
Selling, general and administrative expenses (1,444) (1,077) (4,307) (3,070)
Interest income 19 3 88 17
Interest expense (34) (88) (125) (208)
Other income and expense, net 28 279 104 308
Gain on sale of long-term investment 0 0 143 0
Amortization of goodwill (28) (24) (76) (70)
----------- ----------- ----------- -----------
Income before income taxes and minority interests 1,082 852 3,816 2,803
----------- ----------- ----------- -----------
Provision for income taxes (124) (131) (361) (359)
----------- ----------- ----------- -----------
Income before minority interests 958 721 3,455 2,444
----------- ----------- ----------- -----------
Cumulative effect of Accounting Change
- -write-off of deferred expenditure, net of tax 0 0 (201) 0
Minority interests (248) (56) (564) (370)
----------- ----------- ----------- -----------
Net income $ 710 $ 665 $ 2,690 $ 2,074
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Earnings per common share
- -Basic 0.14 0.18 0.54 0.55
Shares outstanding
- -Basic 4,999,322 3,749,322 4,999,322 3,749,322
</TABLE>
The accompanying notes are an integral part of these financial statements.
1
<PAGE>
CREATIVE MASTER INTERNATIONAL, INC. AND SUBSIDIARIES
Consolidaterd Condensed Balance Sheets
(in thousands of United States dollars)
<TABLE>
<CAPTION>
30-Sep-99 31-Dec-98
ASSETS (UNAUDITED)
<S> <C> <C>
Current assets:
Cash and bank deposits $ 1,352 $ 5,055
Accounts receivable, net 6,101 4,343
Deposits and prepayments 838 681
Inventories, net 4,268 3,787
-------- --------
Total current assets 12,559 13,866
Machinery, equipment and capital leases, net 9,426 5,663
Long-term investment 0 1
Deferred expenditures 0 221
Goodwill/Trademark 834 716
-------- --------
Total assets $ 22,819 $ 20,467
-------- --------
-------- --------
LIABILITIES, MINORITY INTERESTS AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term bank borrowings $ 1,067 $ 1,062
Capital lease obligations, current portion 197 173
Accounts payable 3,045 3,965
Deposits from customers 373 136
Accrued liabilities 2,635 2,914
Loans from directors, current portion 230 222
Taxation payable 365 133
-------- --------
Total current liabilities 7,912 8,605
Capital lease obligations, non-current portion 151 288
Loans from directors, non-current portion 240 444
Deferred taxation 490 220
-------- --------
Total liabilities 8,793 9,557
-------- --------
Minority interests 1,194 618
-------- --------
Stockholders' equity:
Common stock, par value $0.0001:
Authorized - 25,000,000 shares Outstanding and fully paid - 4,999,322 shares 1 1
Preferred stock, par value $0.0001:
Authorized - 5,000,000 shares Outstanding - nil 0 0
Additional paid-in capital 5,765 5,898
Retained earnings 7,083 4,393
Cumulative translation adjustments (17) 0
-------- --------
Total stockholders' equity 12,832 10,292
-------- --------
Total liabilities, minority interests and stockholders' equity $ 22,819 $ 20,467
-------- --------
-------- --------
</TABLE>
The accompanying notes are an integral part of these financial statements.
2
<PAGE>
CREATIVE MASTER INTERNATIONAL, INC. AND SUBSIDIARIES
Unaudited Consolidated Condensed Statements of Cash Flows
For the nine months ended September 30, 1999 AND 1998
(in thousands of United States dollars)
<TABLE>
<CAPTION>
Nine months ended Sept 30,
1999 1998
<S> <C> <C>
Cash flows from operating activities:
Net income $ 2,690 $ 2,074
Depreciation of machinery and equipment 1,160 473
Loss on disposal of fixed assets 109 0
Amortization of goodwill 76 70
Minority interests 564 370
Deferred Expenses written off 221 0
Deferred income taxes 270 184
Gain on sale of long-term investment (143) 0
(Increase) decrease in operating assets-
Accounts receivable, net (725) (2,271)
Deposits and prepayments 33 (337)
Inventories, net (481) (403)
Increase (decrease) in operating liabilities-
Accounts payable (2,450) 1,566
Deposits from customers 237 (122)
Accrued liabilities (362) 1,120
Due to parent company 0 (9)
Taxation payable 206 113
------- -------
Net cash provided by operating activities 1,405 2,828
------- -------
Cash flows from investing activities:
Acquisition of machinery and equipment (4,889) (1,532)
Net cash inflow from acquisition of a subsidiary 131 0
Proceeds from sale of long -term investment 144 0
------- -------
Net cash used in investing activities (4,615) (1,532)
------- -------
Cash flows from financing activities:
Increase in short-term bank loans and overdraft 0 2,450
Repayment of short-term bank loans (30) (2,386)
Increase in import trust receipts bank loans 35 149
Repayment of capital element of capital lease obligations (113) (712)
Decrease in loan from directors (196) (190)
Finance from minority interests of a subsidiary 0 1
Dividend paid to minority interests of subsidiary (40) (58)
Common stock issuance costs (133) (132)
------- -------
Net cash used in financing activities (477) (878)
------- -------
Effect of cumulative translation adjustments (17) 0
Net increase (decrease) in cash and bank deposits (3,703) 418
Cash and bank deposits, as of beginning of period 5,055 471
------- -------
Cash and bank deposits, as of end of period $ 1,352 $ 889
------- -------
------- -------
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
CREATIVE MASTER INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Amounts expressed in United States dollars unless otherwise stated)
1. BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim
financial statements. Certain information and footnote disclosures required
by generally accepted accounting principles for complete financial
statements have been condensed or omitted.
In the opinion of management, all adjustments (which include only normal
recurring adjustments) necessary to present fairly the financial
position, results of operations, and cash flows for the periods
presented have been made. The results of operations for the three-month
and nine-month periods ended September 30, 1999 are not necessarily
indicative of the operating results that may be expected for the entire
year ending December 31, 1999. These financial statements should be read
in conjunction with the Company's Form 10-KSB for the fiscal year ended
December 31, 1998.
The preparation of financial statements in conformity with generally
accepted accounting principles in the United States of America requires
management to make estimates and assumptions that affect certain
reported amounts and disclosures. Accordingly, actual results could
differ from those estimates.
2. RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS
Deferred expenditures reported at December 31, 1998 represent pre-operating
costs incurred for new production facilities. These costs were previously
deferred and amortized on a straight-line basis over three years in
accordance with generally accepted accounting principles.
Effective from January 1, 1999, the group has adopted the newly effected
Statement of Position 98-5 (Reporting on the Costs of Start-Up
Activities), issued by the Accounting Standards Executive Committee of
the American Institute of Certified Public Accountants, which requires
that entities expense start-up costs as they are incurred. Accordingly,
previously capitalized expenses of $201,000, net of tax, were written
off during the first quarter of 1999 as an "accumulative effect of
accounting change."
3. ACQUISITION OF SINAR
During the period, the company acquired 55% of the outstanding shares of
Sinar Industrial Limited (Sinar). Sinar designs and markets a variety of
video and computer game accessories. The range of products include a wide
variety of ergonomic designed joysticks, joypads, steering wheel, light
gun, cable products and multimedia peripherals. The investment represents
the addition of a team of product design specialists which should enhance
the Company's ability to help customers develop a wider range of
complimentary products. The acquisition of Sinar has been accounted for
under the purchase method of accounting.
4
<PAGE>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
PRELIMINARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
The statements contained in this Form 10-QSB that are not purely historical
are forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended and Section 21E of the Securities Exchange
Act of 1934, as amended. These include statements about the Company's
expectations, beliefs, intentions or strategies for the future, which are
indicated by words or phrases such as "anticipate," "expect," "intend," "plan,"
"will," "the Company believes," "management believes" and similar words or
phrases. The forward-looking statements are based on the Company's current
expectations and are subject to certain risks, uncertainties and assumptions.
The Company's actual results could differ materially from results anticipated in
these forward-looking statements. All forward-looking statements included in
this document are based on information available to the Company on the date
hereof, and the Company assumes no obligation to update any such forward-looking
statements.
OVERVIEW
The Company is a leading independent manufacturer of collectible-quality,
die-cast replicas of cars, trucks, buses and other items. Die-cast collectibles
are distinguishable from die-cast toys by their authentic design, exacting
engineering and attention to detail, including abundant use of identifiable
brand names, logos and other licensed marks. The die-cast products the Company
manufactures are 1/6th to 1/160th scale and include as many as 450 parts,
including numerous moveable parts. They are marketed and distributed by the
Company's customers primarily to collectors, hobbyists and enthusiasts at retail
prices ranging from $20 to $200 or more. The Company's customers are leading
U.S. and European marketers and distributors of vehicle replicas and other
collectibles, including Danbury Mint (MBI), Mattel, Hallmark Cards, Action
Performance, Corgi Classics, First Gear and Road Champs.
The Company's mission is to provide the highest level of product quality
and customer service among independent manufacturers of die-cast collectibles.
The Company offers its customers turnkey product development and manufacturing
capabilities that are customized to meet their specific needs. The Company's
vertically integrated process affords complete sourcing of raw materials,
engineering, assembly, quality control and final packaging of die-cast products
in commercial quantities. Depending on the customer's needs, the Company
provides a self-contained production area within one of its factories with
tooling and other production functions dedicated to manufacturing the customer's
products according to its particular design, engineering and quality
requirements. This approach permits customers to closely supervise and control
all aspects of the production process and to protect the confidentiality of
their product design and engineering. The Company's turnkey process enables its
customers to shorten the lead time from conceptual design to product delivery
and to minimize production costs while maintaining high quality and reliability.
The Company has developed a proprietary line of die-cast marine
products. With the acquisition of the Sinar group in July, the Company is
expanding its range of products to computer game peripherals (CGPs). The new
products compliment our die-cast collectibles by broadening the product lines of
some of our existing customers. These products also appeal to an end customer
with similar demographics to our collectors. In the past Sinar has developed and
marketed its products. CMI will provide its experience in manufacturing and
production control to ensure product quality and enhance margins.
All of the Company's manufacturing operations are conducted through are
conducted through Creative Master Limited ("CML"), the Company's wholly-owned
Hong Kong subsidiary, and CML's subsidiaries. CML was co-founded in 1986 by Carl
Ka-Wing Tong and Leo Sheck-Pui Kwok. The Company's manufacturing facilities are
located in the Dongguan region of Guangdong Province, China, approximately 60
miles northwest of Hong Kong. The Dongguan facilities contain an aggregate of
over 500,000 square feet of manufacturing space and related housing for
approximately 6,000 workers.
5
<PAGE>
NINE MONTHS ENDED SEPTEMBER 30, 1999 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30,
1998
Net Sales. Net sales for the nine months ended September 30, 1999 were
$30,645,000, an increase of $6,516,000, or 27%, from $24,129,000 for the nine
months ended September 30, 1998. This increase was due primarily to an increase
in sales volume of the Company's products to existing and new customers and the
acquisition of the Sinar group. Sinar sales for the third quarter were
$1,026,000.
Details of individual customers accounting for more than 5% of the Group's
sales are as follows:
<TABLE>
<CAPTION>
Year ended Nine months ended
Dec 31, 1998 Sept 30, 1999
--------------- -----------------
(Unaudited)
<S> <C> <C>
Action Performance Co. Inc. (Incl. Brookfield
Collectors Guild and Paul's Model Art GmbH) 13.9% 24.0%
MBI Inc. 36.7% 22.0%
Mattel Vendor Operations Asia Ltd. 24.1% 11.1%
Corgi Classics Limited 5.3% 10.5%
Hallmark Cards (HK) Ltd. 4.5% 7.6%
First Gear Inc. 4.0% 7.2%
Road Champs Ltd. 5.3% 6.5%
</TABLE>
Cost of goods sold for the nine months ended September 30, 1999 was $22,656,000,
an increase of $4,353,000, or 24%, from $18,303,000 for the nine months ended
September 30, 1998. Gross Margin for the first nine months of 1999 was 26%
compared to 24% for the same period in 1998.
Selling, general and administrative expenses totaled $4,307,000 for the nine
months ended September 30, 1999, an increase of $1,237,000, or 40%, from
$3,070,000 for the nine months ended September 30, 1998. Selling, general and
administrative expenses constituted 14% of net sales for the nine months ended
September 30, 1999 and 13% of net sales for the nine months ended September 30,
1998. Selling, general and administrative expenses increased due to an increase
in administrative and personnel costs to support the increase in sales and
manufacturing capacity and Sinar's SG&A expenses of $157,000.
The change in interest income (expense) and other, net, was primarily
attributable to interest income earned on the remaining proceeds
from the common shares issued in December 1998.
The amortization of goodwill for company for the nine months ended September 30,
1999 and 1998 was $76,000 and $70,000 respectively.
The Company includes in net income before minority interests all net income of
its wholly-owned and majority-owned subsidiaries. The portion of such net income
attributable to minority interests in the subsidiaries held by others is then
deducted. Minority interests for the nine months ended September 30, 1999 and
1998 was $564,000 and $370,000 respectively. Minority interest increased as a
result of the relative profitability of minority held subsidiaries.
The Company's operations are located in Hong Kong which has a corporate tax rate
of 16%. Profits relating to manufacturing operations in China are eligible for a
50% tax credit. The Company's provision for income taxes was $361,000 for the
nine months ended September 30, 1999, reflecting an effective income tax rate of
9%, for the period. The Company's provision for income taxes was $359,000 for
the nine months ended September 30, 1998, reflecting an effective income tax
rate of 13%. The difference in the effective tax rate was due to changes in
contributions from subsidiaries with minority interests and a tax refund of
$70,000 in 1999.
6
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
For the nine months ended September 30, 1999, the Company's operations
generated cash of $1,405,000. The Company's cash balance decreased by
$3,703,000 to $1,352,000 at September 30, 1999, as compared to $5,055,000 at
December 31, 1998.
The Company's working capital decreased to $4,647,000 at September 30, 1999,
as compared to $5,261,000 at December 31, 1998. Net accounts receivable
increased by $1,758,000, or 40%, to $6,101,000 at September 30, 1999, as
compared to $4,343,000 at December 31, 1998 as a result of sales volume
increases. Consistent with practices in the die-cast collectibles and CGP
industries, the Company offers accounts receivable terms to its customers.
This practice has created working capital requirements that the Company
generally has financed with a combination of internally generated cash flow
and credit facilities provided by affiliates and third parties. The Company
has not experienced any significant problems with collection of its accounts
receivable.
The Company's accounts payable and accrued liabilities decreased by
$1,199,000, or 17% to $5,680,000 at September 30, 1999, as compared to
$6,879,000 at December 31, 1998. The decrease in accounts payable and accrued
liabilities was primarily related to settlement of debts relating to fitting
out factory 4 and 5 which were outstanding at the end of 1998.
The Company's inventories increased by $481,000 or 13% to $4,268,000 at
September 30, 1999, as compared to $3,787,000 at December 31, 1998 as a
result of increased purchasing of materials to accommodate increased sales
and manufacturing.
For the nine months ended September 30, 1999, additions to property, plant
and equipment aggregated $4,889,000 as compared to $2,470,000 for the year
ended December 31, 1998. Included in the additions are the capitalized costs
of the proprietary tools produced during the period.
In July 1999 the Company acquired a 55% interest in Sinar Industrial Limited.
Details of assets acquired and liabilities assumed were as follows:
<TABLE>
<S> <C>
$'000
Cash and bank deposits acquired 396
Deposits and prepayments 190
Accounts receivable 1,032
Machinery, equipment and capital leases 143
Accounts payable -1,530
Accrued liabilities -72
Taxation payable -37
Minority interest -23
------
Net assets acquired as of the date
of acquisition 99
======
Share acquired - 55% 54
Goodwill 211
------
Consideration satisfied in cash 265
======
Net cash inflow:
Cash paid 265
Cash and bank deposits 396
------
Net cash inflow -131
======
</TABLE>
We believe that the operating cash flow, combined with cash on hand, bank
lines of credit and other external credit sources, and credit facilities
provided by affiliates or related parties, will be sufficient to meet our
working capital and capital expenditure requirements and provide us with
adequate liquidity to meet our anticipated operating needs for at least the
next 12 months. Although operating activities are expected to provide cash,
to the extent we grow significantly in the future, our operating and
investing activities may use cash and, consequently, this growth may require
us to obtain additional sources of financing.
7
<PAGE>
YEAR 2000 COMPLIANCE
The Company has conducted extensive tests to ascertain the readiness of its
internal computer systems for the year 2000. Systems have been continually
upgraded over the past two years. The Company is not aware of any material
operational issues or costs associated with preparing its internal systems
for the year 2000. However, there can be no assurance that there will not be
a delay in, or increased costs associated with, the Company's implementation
of the necessary systems and changes to address the year 2000 issues. If the
Company is unable to implement such systems and changes in a timely manner,
it could have a material adverse effect on the Company's business, financial
condition and results of operations.
The Company also relies, directly and indirectly, on external systems of
business enterprises such as financial institutions, government agencies,
customers and suppliers for accurate exchange of data. Even if the internal
systems of the Company are not materially affected by the year 2000 issue,
the Company could be affected by disruptions in the operation of the
enterprises with which the Company interacts.
CURRENCY EXCHANGE FLUCTUATIONS
All of the Company's sales are denominated either in U.S. dollars or Hong
Kong dollars, while its expenses are denominated primarily in Hong Kong
dollars and Renminbi, the Chinese currency (RMB). Given the recent Asian
financial crisis, there can be no assurance that the RMB-to-U.S. dollar rate
will remain stable. Although a devaluation of the Hong Kong dollar or RMB
relative to the U.S. dollar would be likely to reduce the Company's expenses,
any material increase in the value of the Hong Kong dollar or RMB relative to
the U.S. dollar would increase the Company's expenses, and could have a
material adverse effect on the Company's business, financial condition and
results of operations. The Company has never engaged in currency hedging
operations and has no present intention to do so.
SEASONALITY
Each year, the Company ceases production for a two-week period due to the
Chinese New Year holiday, which occurs during late January or early February.
This holiday shutdown has typically resulted in lower revenues during the
first quarter of each year than during the other three quarters.
The Company experiences fluctuations in quarterly sales due to the timing of
receipt of orders from customers and product shipments. The Company also
incurs substantial tooling and other costs of manufacturing new products from
three to nine months in advance of obtaining the first customer orders for
the new product. This long lead time may contribute to fluctuations in the
Company's quarterly results of operations.
INTERNATIONAL SALES
The Company sells substantially all of its products to customers in the U.S.
and Europe. In the first nine months of 1999 approximately 24.6% of the
Company's net sales were attributable to sales to European customers,
compared with approximately 13.5% for the year ended December 31, 1998. The
U.S. and European governments may, from time to time, impose new quotas,
duties, tariffs, or other charges or restrictions, or adjust presently
prevailing quota, duty or tariff levels, which could adversely affect the
Company's ability to continue to export products to the U.S. and Europe at
current or increased levels.
8
<PAGE>
PART II - OTHER INFORMATIONITEM 1 - LEGAL PROCEEDINGS
NONE
ITEM 2 - CHANGES IN SECURITIES AND USE OF PROCEEDS
NONE
ITEM 3 - DEFAULTS UPON SENIOR SECURITIES
NONE
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company's annual meeting of stockholders was held on July 16, 1999.
All proposals submitted by the Board of Directors to the stockholders for
consideration were approved.
As to the election of directors, the number of votes cast in favor of each
nominee was as follows:
Carl Ka Wing Tong 4,829,280 votes for and 3,245 votes withheld
Leo Sheck Pui Kwok 4,829,280 votes for and 3,245 votes withheld
Chou Kong Seng 4,829,280 votes for and 3,245 votes withheld
Steve Gordon 4,829,280 votes for and 3,245 votes withheld
Clayton Trier 4,829,280 votes for and 3,245 votes withheld
As to the proposal to authorize the Company to enter into indemnity agreements
with its directors and officers, the vote was as follows: 4,623,070 votes for;
206,278 votes against; 3,177 votes abstaining.
As to the proposal to approve an amendment to Article II, Section 2 of the
Company's bylaws to allow a flexible annual meeting date, the vote was as
follows: 4,758,978 votes for; 71,403 votes against; 2,144 votes abstaining.
As to the proposal to approve an amendment to Article IX of the Company's bylaws
to allow the Board of Directors to unilaterally amend the bylaws, the vote was
as follows: 3,627,616 votes for; 246,930 votes against; 2,897 votes abstaining.
As to the proposal to ratify an amendment to the Company's 1998 Stock Option
Plan to increase the number of votes covered by the plan from 420,000 to
650,000, the vote was as follows: 4,690,242 votes for; 139,506 votes against;
2,383 votes abstaining.
As to the proposal to ratify the appointment by the Board of Directors of Arthur
Andersen & Co. as the Company's independent public accountants for the fiscal
year ending December 31, 1999, the vote was as follows: 4,829,707 votes for;
1,785 votes against; 1,033 votes abstaining.
ITEM 5 - OTHER INFORMATION
NONE
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
a. The exhibits listed in the accompanying Index to Exhibits are filed as
part of this report on Form 10-QSB.
b. Reports on Form 8-K: None
9
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Exchange Act, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
CREATIVE MASTER INTERNATIONAL, INC.
Date: November 15, 1999 By: /s/ CARL KA WING TONG
----------------------------
Carl Ka Wing Tong,
President and Chief Executive Officer
Date: November 15, 1999 By: /s/ JOHN REMPEL
----------------------------
John Rempel
Chief Financial Officer (principal
financial officer)
Date: November 15, 1999 By: /s/ SHING KAM MING
----------------------------
Shing Kam Ming
Controller (principal accounting officer)
10
<PAGE>
INDEX TO EXHIBITS
Exhibit
Number Description
- ------ -----------
27 Financial Data Schedule
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 1,352
<SECURITIES> 0
<RECEIVABLES> 6,463
<ALLOWANCES> 362
<INVENTORY> 4,268
<CURRENT-ASSETS> 12,559
<PP&E> 12,812
<DEPRECIATION> 3,386
<TOTAL-ASSETS> 22,819
<CURRENT-LIABILITIES> 7,912
<BONDS> 0
0
0
<COMMON> 1
<OTHER-SE> 12,848
<TOTAL-LIABILITY-AND-EQUITY> 22,819
<SALES> 30,645
<TOTAL-REVENUES> 30,645
<CGS> 22,656
<TOTAL-COSTS> 22,656
<OTHER-EXPENSES> 4,263
<LOSS-PROVISION> 120
<INTEREST-EXPENSE> 125
<INCOME-PRETAX> 3,816
<INCOME-TAX> 361
<INCOME-CONTINUING> 3,455
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> (201)
<NET-INCOME> 2,690
<EPS-BASIC> 0.54
<EPS-DILUTED> 0.54
</TABLE>
