SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1995
------------------
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT
For the transition period from to
Commission file number 0-18109
BCAM INTERNATIONAL, INC. (formerly Biomechanics Corporation of America)
(Exact name of small business issuer as specified in its charter)
New York 13-3228375
-------- ----------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1800 Walt Whitman Road, Melville, New York 11747
(Address of principal executive offices)
(516) 752-3550
(Issuer's telephone number)
Not applicable
(Former name, former address and former fiscal year,
if changed since last report.)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act 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___
Check whether the registrant filed all documents and reports required
to be filed by Section 12, 13 or 15(d) of the Exchange Act after the
distribution of securities under a plan confirmed by a court. Yes___ No___
State the number of shares outstanding of each of the issuer's classes
of common equity as of the latest practicable date: 14,857,233
----------
Transitional Small Business Disclosure Format (check one): Yes ____ No X
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FORM 10-QSB
BCAM INTERNATIONAL, INC.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheet--September 30, 1995 (Unaudited)..........3
Condensed Consolidated Statements of Operations - Three Months
and Nine Months Ended September 30, 1995 and 1994 (Unaudited)..............4
Condensed Consolidated Statements of Cash Flows - Nine Months Ended
September 30, 1995 and 1994 (Unaudited)....................................5
Notes to Condensed Consolidated Financial Statements - September 30, 1995
(Unaudited)................................................................6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations............................................7
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.....................................8
SIGNATURES....................................................................9
INDEX OF EXHIBITS............................................................10
2
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<TABLE>
<CAPTION>
BCAM International, Inc.
Condensed Consolidated Balance Sheet (Unaudited)
September 30, 1995
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 2,538,333
Accounts receivable, less allowance for doubtful accounts of $3,326 315,074
Prepaid expenses and other current assets 93,794
--------------------
Total current assets 2,947,201
Property, plant, and equipment, at cost:
Furniture and fixtures 220,318
Equipment 587,511
Leasehold improvements 50,519
--------------------
858,348
Less accumulated depreciation and amortization (558,790)
--------------------
299,558
Other assets, principally patents (net of accumulated amortization of $144,538) 197,805
--------------------
Total assets $ 3,444,564
====================
Liabilities and shareholders' equity
Current liabilities:
Accounts payable $ 12,996
Accrued expenses and other current liabilities 376,845
--------------------
Total current liabilities 389,841
Other liabilities 5,490
Acquisition preferred stock, par value $.01 per share:
authorized 750,000 shares; no shares issued or outstanding -
Common shareholders' equity:
Common stock, par value $.01 per share; authorized 40,000,000 shares,
15,620,415 shares issued and 14,857,233 shares outstanding 156,204
Paid-in surplus 15,033,759
Deficit (11,241,630)
--------------------
3,948,333
Less 763,182 treasury shares (899,100)
--------------------
3,049,233
--------------------
Total liabilities and shareholders' equity $ 3,444,564
====================
See notes to condensed consolidated financial statements (unaudited).
</TABLE>
3
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<TABLE>
<CAPTION>
BCAM International, Inc.
Condensed Consolidated Statements of Operations (Unaudited)
Three months ended September 30 Nine months ended September 30
---------------------------------------- --------------------------------------
1995 1994 1995 1994
------------------ ------------------ ------------------ ----------------
<S> <C> <C> <C> <C>
Net revenue $ 158,485 $ 224,130 $ 572,881 $ 1,085,809
Interest and other income 40,707 51,657 141,820 133,261
------------------ ------------------ ------------------ ----------------
199,192 275,787 714,701 1,219,070
------------------ ------------------ ------------------ ----------------
Costs and expenses:
Direct costs of revenue 131,478 136,851 558,125 677,514
Selling, general and administrative 505,753 546,235 1,396,769 1,511,716
Research and development - 61,837 3,767 122,017
------------------ ------------------ ------------------ ----------------
637,231 744,923 1,958,661 2,311,247
------------------ ------------------ ------------------ ----------------
Net (loss) $ (438,039) $ (469,136) $ (1,243,960) $ (1,092,177)
================== ================== ================== ================
Net (loss) per share $ (0.03) $ (0.03) $ (0.08) $ (0.07)
================== ================== ================== ================
Weighted average number of common
shares outstanding 14,857,233 14,670,466 14,804,852 14,660,855
================== ================== ================== ================
See notes to condensed consolidated financial statements (unaudited).
</TABLE>
4
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<TABLE>
<CAPTION>
BCAM International, Inc.
Condensed Consolidated Statements of Cash Flows (Unaudited)
Nine months ended September 30
---------------------------------------------
1995 1994
-------------------- ------------------
<S> <C> <C>
Operating activities
Net (loss) $ (1,243,960) $ (1,092,177)
Adjustments to reconcile net (loss) to net cash (used in)
operating activities
Depreciation and amortization 126,105 103,149
Amortization of premium on held to maturity securities - 7,510
Accrued interest on held to maturity securities (107,198) (44,046)
Loss on sale of available for sale securities - 5,992
Issuance of common shares in lieu of compensation - 29,117
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable (195,219) 128,413
Decrease (increase) in prepaid expenses and other
current assets 136,686 (71,697)
(Increase) in other assets (32,109) (135,448)
(Decrease) increase in accounts payable, accrued
expenses and other current liabilities (310,828) 53,142
(Decrease) in other liabilities (29,241) (16,804)
-------------------- ------------------
Net cash (used in) operating activities (1,655,764) (1,032,849)
-------------------- ------------------
Investing activities
Purchase of property, plant and equipment (5,188) (69,814)
Purchase of available for sale securities - (143,298)
Purchase of held to maturity securities (1,299,782) (4,161,884)
Proceeds from available for sale securities - 2,281,331
Proceeds from held to maturity securities 4,535,000 2,179,161
Proceeds from sale of equipment 1,200 1,050
-------------------- ------------------
Net cash provided by investing activities 3,231,230 86,546
-------------------- ------------------
Financing activities
Net proceeds from sale of common stock and exercise of
warrants - 90,255
Redemption of convertible preferred stock - (16,473)
Payment of registration and issuance costs (77,234) (29,644)
-------------------- ------------------
Net cash (used in) provided by financing activities (77,234) 44,138
-------------------- ------------------
Increase (decrease) in cash and cash equivalents 1,498,232 (902,165)
Cash and cash equivalents at beginning of period 1,040,101 1,757,653
==================== ==================
Cash and cash equivalents at end of period $ 2,538,333 $ 855,488
==================== ==================
See notes to condensed consolidated financial statements (unaudited).
</TABLE>
5
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BCAM International, Inc.
("the Company")
Notes to Condensed Consolidated Financial Statements
(Unaudited)
September 30, 1995
1. Basis of Presentation
On June 22, 1995, the Company's shareholders approved a change of the
name of the corporation from Biomechanics Corporation of America to BCAM
International, Inc.
The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting
principles for interim financial information and with the instructions to
Form 10-QSB. Accordingly, they 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 accruals) considered necessary for a fair
presentation have been included. Operating results for the three-month and
nine-month periods ended September 30, 1995 are not necessarily indicative
of the results that may be expected for the year ending December-31, 1995.
For further information, refer to the consolidated financial statements and
footnotes thereto included in the Company's annual report on Form-10-KSB
for the year ended December 31, 1994.
2. Per Share Data
Net loss per share has been computed on the basis of the weighted
average number of common shares outstanding for each of the periods
presented. Common share equivalents have been excluded since their effect
is anti-dilutive.
3. Income Taxes
The Company accounts for income taxes in accordance with Financial
Accounting Standards Board ("FASB") Statement No. 109, "Accounting for
Income Taxes". The Company has not reflected a benefit for income taxes in
the accompanying condensed consolidated statements of operations for the
three months and nine months ended September 30, 1995 and 1994 since the
future availability of net operating loss carryforwards have been offset in
full by valuation allowances in accordance with FASB Statement No. 109.
4. Significant Customers
During the three months ended September 30, 1995, two customers
accounted for approximately $67,000 and $32,000, or 62% of net revenue.
During the three months ended September 30, 1994, three customers accounted
for approximately $100,000, $53,000 and $50,000 or 90% of net revenue.
During the nine months ended September 30, 1995, two customers
accounted for $151,000 and $84,000, or 41% of net revenue. During the nine
months ended September 30, 1994, two customers accounted for approximately
$616,000 and $175,000 or 73% of net revenue
6
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The September 30,1995 Form 10-QSB represents the third quarterly
report after the Form 10-KSB for the year ended December 31, 1994 and
accordingly should be read in conjunction with the aforementioned document
and represents a comparison between the quarter ended September 30, 1995
and the quarter ended September 30, 1994.
Results of Operations
Net revenue is derived from services rendered and the sale of products
that are adjunct to services, generally pursuant to fixed price contracts
with terms of less than one year. The Company's policy is to recognize
revenue when services are rendered or when the related products are
shipped.
Direct costs include salaries, equipment purchases for contracts,
consulting fees and certain other costs. Gross profit may fluctuate from
period to period. Factors influencing fluctuations include the nature and
volume of services provided to individual customers which affect contract
pricing, the Company's success in estimating contract costs (principally
professional time), the timing of hiring new professionals who may require
training before gaining certain efficiencies and customer demands.
The following is a summary of net revenue, direct costs, and gross
profit for the periods indicated.
<TABLE>
<CAPTION>
Three Months Ended September 30, Nine Months Ended September 30,
-------------------------------- -------------------------------
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net services revenue $158,485 $224,130 $572,881 $1,085,809
Direct costs of services 131,478 136,851 558,125 677,514
-------- -------- -------- --------
Gross profit $ 27,007 $87,279 $14,756 $408,295
Gross profit % 17% 39% 3% 38%
</TABLE>
Net revenue decreased by $65,645, to $158,485, during the three months
ended September 30, 1995, as compared to the same period in 1994. The
decrease was primarily due to the revenue recognition of $52,000 relating
to a special agreement to sell equipment to an Indonesian government agency
("IPTN") in 1994, whereas none was recognized in 1995.
For the nine months ended September 30, 1995, as compared to the same
period in 1994, net revenue decreased by $512,928, to $572,881. The
decrease was primarily due to the revenue recognition of $616,000 relating
to IPTN in 1994, versus only $35,000 in 1995.
Direct costs decreased by $5,373, to $131,478, in the quarter ended
September 30, 1995, as compared to the same period in 1994. For the nine
months ended September 30, 1995, direct costs decreased by $119,389, to
$558,125. The decreases are primarily due to the reduction in sales,
however, since the Company maintains a fixed direct labor base, direct
costs generally do not decrease proportionately with net revenue decreases.
Consequently, direct costs for the quarter ended September 30, 1995
increased as a percentage of revenue to 83% from 61% for the same period in
1994. Similarly, for the nine months ended September 30, 1995, direct costs
increased to 97% from 62% for the same period in 1994.
Gross profit, as a result of the above, decreased by $60,272 to
$27,007 for the quarter ended September 30, 1995 from a gross profit of
$87,279 for the quarter ended September 30, 1994. Also as a result of the
above, for the nine months ended September 30, 1995, gross profit decreased
by $393,539 to $14,756 from a gross profit of $408,295 for the nine month
period ended September 30, 1994.
7
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Interest and other income decreased by $10,950 for the three months
ended September 30, 1995 compared to the three months ended September 30,
1994. The decrease is due to a decrease in assets available for investment.
Interest and other income increased by $8,559 for the nine months ended
September 30, 1995 compared to the nine months ended September 30, 1994.
The increase is due to a loss incurred on available for sale securities in
the 1994 period, partially offset by a decline in the interest earned due
to a decrease in assets available for investment.
Selling, general and administrative expenses decreased by $40,482 and
$114,947 for the three months and nine months ended September 30, 1995,
respectively, as compared to the same periods in 1994. These decreases are
primarily attributable to a reduction in salaries and benefits as a result
of the elimination of certain positions.
Net loss, as a result of the above, for the three months and nine
months ended September 30, 1995, was $438,039 and $1,243,960, respectively,
as compared to a net loss of $469,136 and $1,092,177 for the comparable
periods in 1994.
There was no tax benefit for the three months and nine months ended
September 30, 1995 and 1994 due to losses which have increased the net
operating loss carryforward and which were offset by valuation allowances.
Liquidity and Capital Resources
Cash, cash equivalents and marketable securities were $2,538,333 as of
September 30, 1995, compared to $4,168,121 as of December 31, 1994. Working
capital was $2,557,360 as of September 30, 1995, compared to $3,717,787 as
of December 31, 1994. The decrease of $1,160,427 or 31.2% in working
capital was primarily attributable to the use of working capital for the
net loss incurred in the nine months ended September 30, 1995. Further
losses by the Company will result in additional reductions of working
capital.
The Company expects that its working capital, together with revenue
from operations will be more than sufficient to meet any liquidity and
capital requirements for the remainder of 1995.
The Company has no material commitments for any future capital
expenditures.
For the balance of 1995, the Company does not anticipate any royalty
revenue associated with its current licensing agreements. Revenue will be
generated through product analysis and redesign services, ergonomic
workplace analysis and redesign services and revenue that may result if the
Company is successful in licensing its Intelligent Surface Technology for
additional applications.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27 Financial Data Schedule
(b) Reports on Form 8-K
On July 10, 1995, the Company filed with the Securities and Exchange
Commission a Form 8-K dated July 5, 1995, reporting the change of the name of
the Company from Biomechanics Corporation of America to BCAM International, Inc.
Such name change was effective on June 23, 1995.
8
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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, thereunto duly authorized.
BCAM INTERNATIONAL, INC.
Dated: November 10, 1995 By: /s/ Michael Strauss
----------------- -------------------
Michael Strauss
Chairman of the Board of Directors
Chief Executive Officer
Dated: November 10, 1995 By: /s/ Daniel Benjamin
----------------- -------------------
Daniel Benjamin
Chief Financial Officer
Corporate Secretary
9
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INDEX OF EXHIBITS
Exhibit No. Exhibit
27 Financial Data Schedule
10
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Exhibit 27
BCAM International, Inc.
Financial Data Schedule (Unaudited)
As of September 30, 1995 and the Nine Months Then Ended
<TABLE>
<S> <C> <C>
Item
Number Item Description Amount
- - --------------- --------------------------------------------------------- ----------------
5-02(1) cash and cash items $ 2,538,333
5-02(2) marketable securities 0
5-03(3)(a)(1) notes and accounts receivable - trade 318,400
5-02(4) allowances for doubtful accounts 3,326
5-02(6) inventory 0
5-02(9) total current assets 2,947,201
5-02(13) property, plant and equipment 858,348
5-02(14) accumulated depreciation 558,790
5-02(18) total assets 3,444,564
5-02(21) total current liabilities 389,841
5-02(22) bonds, mortgages and similar debt 0
5-02(28) preferred stock - mandatory redemption 0
5-02(29) preferred stock - no mandatory redemption 0
5-02(30) common stock 156,204
5-02(31) other stockholders' equity 2,893,029
5-02(32) total liabilities and stockholders' equity 3,444,564
5-03(b)1(a) net sales of tangible products 0
5-03(b)1 total revenues 714,701
5-03(b)2(a) cost of tangible goods sold 0
5-03(b)2 total costs and expenses applicable to sales and revenues 558,125
5-03(b)3 other costs and expenses 1,400,536
5-03(b)5 provision for doubtful accounts and notes 8,199
5-03(b)(8) interest and amortization of debt discount 0
5-03(b)(10) income/(loss) before taxes and other items (1,243,960)
5-03(b)(11) income tax expense 0
5-03(b)(14) income/(loss) continuing operations (1,243,960)
5-03(b)(15) discontinued operations 0
5-03(b)(17) extraordinary items 0
5-03(b)(18) cumulative effect-changes in accounting principles 0
5-03(b)(19) net income/(loss) (1,243,960)
5-03(b)(20) earnings per share - primary $ (0.08)
5-03(b)(20) earnings per share - fully diluted Note 2
Note: 1) This schedule contains summary financial information extracted from the
Condensed Consolidated Balance Sheet, Condensed Consolidated
Statements of Operations and Condensed Consolidated Statements
of Cash Flows, and is qualified in its entirety by reference to such
financial statements.
2) Earnings per share - fully diluted is anti-dilutive, and therefore not
reported.
11
</TABLE>
