U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
ANNUAL REPORT
PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended Commission File Number: 0-18109
December 31, 1995
Exact name of small business issuer as specified in its charter
BCAM INTERNATIONAL, INC.
(formerly BIOMECHANICS CORPORATION OF AMERICA)
State or other jurisdiction of IRS Employer
incorporation or organization: New York Identification No.: 13-3228375
Address of principal executive offices:
1800 Walt Whitman Road,
Melville, New York 11747
(516) 752-3550
Securities registered under Name of each exchange on
Section 12(b) of the Exchange Act: which registered:
Common Stock, $.01 par value Boston Stock Exchange
NASDAQ
Securities registered under Section 12(g) of the Exchange Act:
Common Stock, $.01 par value
Common Stock Purchase Warrants
Units consisting of three common shares and
two redeemable Class A Warrants
Check whether the registrant (1) filed all reports to be filed by Section
13 or 15 (d) of the 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 if disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of the registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB [ ].
Registrant's revenues for its most recent fiscal year were $752,077.
The aggregate market value of the registrant's common stock held by
non-affiliates as of March 15, 1996, was $16,426,774, based on the average of
the bid and asked prices of such stock on March 15, 1996 as reported by NASDAQ.
The number of shares outstanding of the registrant's common stock as of
March 15, 1996 was 14,857,233.
DOCUMENTS INCORPORATED BY REFERENCE
Proxy Statement for the 1996 Annual Meeting incorporated by reference into
Part III of this Form 10-KSB.
Transitional Small Business Disclosure Format (check one): Yes __; No X_
<PAGE>
PART I
ITEM 1. DESCRIPTION OF BUSINESS
BCAM International Inc. (formerly Biomechanics Corporation of America prior
to a name change effected June 22, 1995), (the "Company") was organized in 1984
under the laws of the State of New York. The Company's subsidiaries include BCA
Services, Inc. (formerly ErgoRisk Services, Inc., prior to a name change
effected on October 25, 1995), was organized on December 3, 1993 under the laws
of the State of New York and BCAM Technologies, Inc. (formerly BCA Associates,
Inc., prior to a name change effected on November 1, 1995), was organized on
January 28, 1993 under the laws of the State of New York.
GENERAL
Since its inception, the Company has provided consulting services in
ergonomics and biomechanics and has developed and marketed ergonomic software.
Since 1990, the Company has developed and licensed its patented surface
technology. The Company is engaged in the following: (I) intelligent technology
(II) ergonomic consulting services and (III) software development. Intelligent
technology and ergonomic consulting services presently account for substantially
all revenues generated by the Company.
(I) INTELLIGENT SURFACE TECHNOLOGY
During the course of the Company's performance of ergonomic product,
workplace analysis and redesign and ergonomic workplace assessment services, the
Company from time to time develops certain knowledge and data which it is able
to embody into proprietary technology. When this occurs and it is believed the
technology is a significant enhancement from the status quo, the Company files
for patent protection under the laws of the United States.
Over the past several years, the Company has developed and patented its
Intelligent Surface Technology. Intelligent Surface Technology enables surfaces
to automatically adjust themselves to better fit the user by measuring body
distribution and comfort and reshaping the surface in real time. The Company has
identified uses for this technology in the areas of seating and footwear.
The Company and McCord Winn Textron, Inc. ("Textron") signed a Development
and License Agreement in 1993 (initial agreement signed in March 1993, later
amended in October 1993) whereby the Company granted an exclusive license to
Textron, including the right to sublicense, to use the patents and know-how in
the manufacture, use and sale of seats, and seating components for (a) the
transportation industry, (b) wheelchairs, (c) office furniture applications and
(d) hospital beds. The initial term of the license has been extended to April 1,
1996. Textron is entitled to renew the license for an additional period
commencing on April 2, 1996 and ending December 31, 2009 or, if later, the
expiration of all patents still being used by Textron.
If Textron does not accrue a certain amount of minimum royalties for sales
of products incorporating Intelligent Seat Technology designed for the
transportation industry, then the Company may convert the license granted to
Textron into a non-exclusive license, but only with respect to products designed
for the transportation industry.
On September 29, 1993, the Company reached an agreement with Lear Siegler
Seating Corporation ("Lear Seating") and Textron resolving the claim made by
Lear Seating on June 9, 1993 notifying the Company and claiming co-inventor
status relating to the use of the Intelligent Seat Technology in the production
of automobile seats. As part of the agreement, Lear Seating will receive a
royalty-free license to use the Intelligent Seat Technology only with its own
seats in exchange for withdrawing all claims of ownership of the Intelligent
Seat Technology.
The Company and Textron have agreed to revise the Textron licensing
agreement in order to help expedite the commercialization of the applications
licensed to Textron. The Company recorded a reserve of $149,000 in 1994, which
represented the estimated expenses of providing additional services to Textron.
In January 1994, the Company and Reebok International Ltd. ("Reebok")
signed a world-wide exclusive licensing and development agreement for the
footwear, athletic, sport and fitness equipment fields of use. Under the Company
patents, Reebok has the exclusive right to sub-license, make, use, and sell
products and components thereof and to use the Company's proprietary information
relating to microprocessor-based interactive systems for controlling one or more
load bearing surfaces. The fields of medical equipment and orthopedic devices
are specifically excluded from the Reebok license.
In September 1994, the Company signed a licensing agreement with Lumex,
Inc. ("Lumex") granting Lumex an exclusive world-wide license with a right to
sublicense, manufacture, have manufactured, utilize and exploit the Company's
Intelligent Surface Technology in the medical procedure equipment field of use,
excluding non-medical recliner chairs, wheel chairs, office chairs and seats,
hospital beds, transportation seats and fitness equipment. The Lumex licensing
agreement terminates on the expiration of the last patent subject to the
licensing agreement, unless sooner terminated for breach of the licensing
agreement or insolvency of either party. Lumex paid the Company an up-front fee
on the execution of the licensing agreement and will also make royalty payments
based on all products sold by Lumex or a sublicensee of Lumex. To maintain
exclusivity of the license, Lumex must pay certain minimum royalties.
Revenue from Intelligent Surface Technology accounted for 13% of revenue in
1995 versus 23% in 1994 and 44% in 1993. The 1995 and 1994 revenue was generated
from the Reebok and Lumex licensing agreements and the 1993 revenue was
generated from the Textron licensing agreement.
The Company's intelligent load bearing surface technology is an interface
that matches various man-made devices to each person's body. Although the
Company's intelligent load bearing surface technology adjusts the surface based
upon pressure, other intelligent surface technologies can be developed that can
adjust the surfaces based upon other factors of comfort.
In order for the Company to increase the number of licensees and improve
its technology, the Company is seeking to provide the following products and
services:
1. A growing portfolio of patents in intelligent interfaces.
2. One or more key components in the intelligent interface system.
3. Application development capability.
4. Collaborative research & development, especially in the quantitative
measurement of comfort and fit for the Company's licensees,
with universities and other research centers.
The Company has identified markets that can benefit from the technology and
have not yet been licensed. It is actively pursuing the leading companies within
those markets in order to increase the number of licensees. The Company is also
seeking to work with current licensees to extend applications of intelligent
interfaces to new sublicensees.
(II) ERGONOMIC CONSULTING SERVICES
ERGONOMIC PRODUCT ANALYSIS AND REDESIGN SERVICES
The Company, through its subsidiary, BCA Services, Inc., has been retained
by product manufacturers to apply ergonomic analysis to the design and
evaluation of their products under development or developed. The Company
utilizes its proprietary technology and its laboratories and technical staff to
analyze, improve and effect changes to existing products and to product designs.
The Company has been retained by manufacturers of a wide range of products such
as automobiles, automobile seats, hand tools, furniture and other consumer
products. Ergonomic assessments of product, tool and human dimension features
generally require extremely accurate 3-dimensional assessment of a product and
its use, and are generally performed in the Company's ergonomics research
laboratories.
The Company provides industrial clients services based on its proprietary
technologies, techniques and know-how, including:
* Collaborative research and development with universities and industrial
clients.
* Product assessment and product enhancement services that will:
- Assess a client's products
- Assess a client's potential new products
- Assess a client's products that will be used by the client for its
own internal purposes.
* New product design consulting services.
* Best-in-class studies - objective comparison of a client's products to a
competitor's similar products, in order to maximize the client's
market share.
The Company has developed data acquisition systems and laboratory
procedures, which permit the Company to evaluate a wide range of products
including automobiles, footwear, hand tools, furniture and consumer product
packaging. Certain of these proprietary technologies have been developed by the
Company solely for use in performing its analysis and redesign services and
others are integrated with a customer's products or technology. The Company's
systems are generally portable, thereby allowing for both laboratory and on-site
applications. This provides the Company with flexibility in selecting the most
appropriate methodology for the required measurement task. The more significant
systems, currently used by the Company in performing analysis and redesign
service contracts, as well as for technology integration, are described below:
COMPUTERIZED PRESSURE DISTRIBUTION SENSOR MAT is a system which measures
the pressure generated by human contact with specific objects such as tools,
furniture and other products. Company technicians attach flexible sensors to a
very thin tape-like material or to larger mat arrays, which adhere and conform
to the shape of an object or the body's interface with a product. The circuits
convert skin contact pressures to electrical voltages which can be measured,
displayed and analyzed using the Company's proprietary software. The Company
utilizes these data to determine what portions of an object receive more or less
pressure during use. As a result, the Company can determine specifically how and
to what degree a user comes in contact with the product and make recommendations
for design improvements.
ERGOTRACK is a measurement tool which permits the recording and display of
static shapes and dimensions of objects, tools, equipment and furniture. The
system works by bouncing sonic waves off the moving object and then converting
such information into digital form which is readable by a
computer-automated-design ("CAD") system. This system contains proprietary
software designed and developed by the Company which utilizes existing hardware.
ErgoTrack permits the Company's ergonomists to incorporate realistic digitized
versions into CAD design studies.
COMPUTERIZED VIDEO DIGITIZING SYSTEM converts video images of an employee
performing tasks to digital data. This tool is utilized to quantify the range
and angle of particular motions during the performance of a task, allowing the
Company to analyze the forces and to estimate the stress on various body parts.
DIGITAL ELECTROMYOGRAPHIC BIOFEEDBACK uses biofeedback in conjunction with
software designed and developed by the Company to allow it to measure the muscle
tension of an employee during the performance of specific tasks. Electrodes from
a biofeedback machine are connected to specific muscles of an employee to record
the reactions of the muscle groups to given movements. Electromyographic
biofeedback is particularly useful where a company is experiencing repeated
employee injury as a result of the performance of particular tasks.
WRIST STRESS MONITOR is a microprocessor based measurement device used to
measure muscle activities and wrist deviations associated with using hand tools
and tasks which require hand movements and hand force exertions. This
measurement system collects and stores electromyographic responses of selected
muscle groups and wrist deviation data in real time. The data can be downloaded
for cost data analysis. This is a valuable tool for the Company in assessing
various hand tool designs and evaluating wrist stress experienced by computer
operators. In conjunction with the computerized biomechanical and physiological
measurements, the Company has utilized structured interviews and questionnaires
in the product evaluation processes. The Company has developed various
structured interview and questionnaire protocols for different applications.
The Company views its provision of ergonomic product and analysis and
redesign services not only as a separate source of revenue, but also as a
potential source of data and ideas both for the development of integrated
customer products and for the modification and/or development of existing or new
systems.
Ergonomic Product Analysis and Redesign Services provided 60% of the
Company's revenue in 1995, 70% of the Company's revenue in 1994 and 23% of the
Company's revenue in 1993.
ERGONOMIC WORKPLACE RISK ASSESSMENT SERVICES
The Company, through its subsidiary, BCA Services, Inc., provides ergonomic
services to evaluate the work method, work stations and tools utilized by
employees in order to advise its clients on ways to improve productivity,
enhance product or service quality and reduce musculoskeletal injuries.
Using computer-aided, biomechanical assessment devices, the Company
monitors and measures the amount of physical stress to an individual employee
caused by the performance of particular tasks and segregates the individual body
movements involved in the performance of such tasks. The Company may then
analyze the effects of the work performed on an employee's back, neck, wrist,
elbows, shoulder, knee joint, or cardiovascular system. In addition, the Company
can measure the physical relationship between equipment and tools used by
employees, and the reach and lifting requirements, working heights and range of
motion required for the use of such equipment. Following the completion of its
analysis of a particular process or method, the Company may make recommendations
to a client regarding the redesign of the workplace through engineering
retrofit, of certain tools or equipment used in the client's manufacturing
process, or of the methods used by a client in the manufacturing process.
Workplace ergonomic risk assessment services are provided through:
ERGONOMIC ASSESSMENT OF RISK OR LIABILITY (EARLY(R))
In 1992, the Company developed a new ergonomics assessment program to help
industry meet OSHA guideline requirements and to provide for a thoroughly
objective and consistent workplace review which will support cost-effective job
modifications. It is called the EARLY(R) System and it is a program that
integrates a formal ergonomic and biomechanical risk factor assessment with
injury/illness data and employee feedback into a database that ranks work
stations by the likelihood of developing musculoskeletal injuries by body part
and operation. By utilizing client personnel or third party resellers to collect
the injury/illness data (after training by the Company), the Company is able to
reduce client costs substantially below those for a full ergonomic workplace
assessment.
The EARLY(R)System is the centerpiece for a full-service industrial
ergonomics program. As a result of the findings from the ergonomic assessment
performed within EARLY(R), a client receives:
*A summary of high, moderate and low risk-of-injury operations.
*A prioritized listing of operations for ergonomic intervention.
*A listing of each operation's risk by body part.
*Suggested ergonomic enhancements that can be made to address identified risks.
*An action plan for ergonomic intervention.
TOTAL ERGONOMIC QUALITY(R) (TEQ)
The Company markets a service for preparing and implementing a corporate
TEQ plan to:
* Ergonomically analyze all jobs with biomechanical risk using EARLY(R)
or on-site ergonomic assessments.
* Propose engineering retrofit or redesign of risky workplaces.
* Produce redesign of tools and work methodologies where needed.
* Provide ergonomic and biomechanics training to management, supervisory
and other personnel.
* Develop an injury tracking and cost/benefit tracking system.
* Demonstrate a proactive corporate ergonomics program in anticipation of
OSHA standards or visits for compliance.
In December 1993, the Company established BCA Services, Inc. and
contributed the EARLY(R) business in exchange for 4,200,000 shares of BCA
Services, Inc., $.01 par value per share common stock. The Company was the sole
shareholder of all the outstanding shares of BCA Services, Inc. at that time.
BCA Services, Inc. was created to take full advantage of proposed federal
legislation by OSHA for stricter workplace safety standards.
On December 27, 1993, the Company sold 100,000 shares of BCA Services, Inc.
to Polaris Partners, 1., L.P. for the sum of $100,000. On February 16, 1995, the
Company agreed to exchange the 100,000 shares of BCA Services, Inc. common stock
owned by Polaris Partners, 1., L.P. for 100,000 shares of the Company's Common
Stock.
In April 1994, the Company recruited a president for BCA Services, Inc. and
in the subsequent months, recruited a sales and marketing team to sell the
EARLY(R) System. It was anticipated that OSHA ergonomic legislation would be
released in September 1994 and the team assembled would take advantage of
stricter workplace safety standards. Legislation was not passed in 1994 and
there was no indication from OSHA as to when legislation might be passed.
Legislation could have increased the demand for the Company's workplace
ergonomic risk assessment services. With no indication from OSHA as to when
legislation might be passed, the Company took steps to downsize BCA Services,
Inc. in the fourth quarter of 1994, changing the marketing direction from a
broad-based approach to a selective market approach.
On July 20, 1994, BCA Services, Inc. signed a joint venture agreement to
distribute its ergonomic services in Canada exclusively through ErgoRisk
Services, Inc. (Canada). On December 21, 1994, the Company agreed to terminate
its joint venture with ErgoRisk Services, Inc. (Canada). The joint venture was
terminated in conjunction with the Company's decision to change its marketing
plans from a broad-based approach to a selective market approach. Under the
termination agreement, the Company purchased 100% of the common stock of
ErgoRisk Services Inc. (Canada) for $65,000. The investment in ErgoRisk
Services, Inc. (Canada) was written off in 1994.
On February 22, 1996, BCA Services, Inc. terminated its joint venture with
Sandler Occupational Medicine Associates, Inc. The joint venture, which was
entered into in August 1995, was designed to market, promote and sell ergonomic
and medical consulting services with respect to the prevention and management of
treatment of Cumulative Trauma Disorder.
Ergonomic Workplace Risk Assessment Services provided 27% of the Company's
revenues in 1995, 7% of the revenues in 1994 and 33% of the revenues in 1993.
(III) SOFTWARE DEVELOPMENT
The Company has developed and owns the rights to computer assisted motion
analysis software, Mannequin(R). Mannequin(R) is an ergonomic drawing and design
program that enables the user to render 3-dimensional humanoid figures on a
personal computer. These figures can be articulated into any position and then
can be viewed from any angle, distance or perspective. The result of that view
can be printed, plotted or exported to other graphics software for further
enhancement of the image. The figures can walk, bend, reach and grasp objects. A
user can test the functionality of the design of almost anything used by humans.
The Company uses Mannequin(R) internally to service its clients in the ergonomic
consulting services business and intends to re-market the program to third
parties beginning in 1996.
SALES AND MARKETING
The Company's strategy for its intelligent technology is to align with
strong partners that can commercialize the Company's technology in the
marketplace. This was the basis for signing licensing agreements with Textron,
Reebok and Lumex. The Company has identified markets that can benefit from the
technology and have not yet been licensed. It is actively pursuing the leading
companies within those markets in order to increase the number of licensees. The
Company is also seeking to work with current licensees to extend applications of
intelligent interfaces to new sublicensees. The sales effort is being done
primarily by senior management.
The Company plans to market its product services in the following manner:
1. Taking the strengths of the Company and match the Company's know-how to
the needs of potential customers in any industry where comfort is an important
factor in the marketing of the products or services.
2. Advertising in the appropriate trade publications.
3. Participating in selected trade shows.
4. Direct sales effort with experienced salespeople.
RESEARCH AND DEVELOPMENT
During 1995 the Company was engaged in the further development of
Mannequin(R) and the technology of several of the components relating to certain
applications of the intelligent surface technology. For certain other
applications, significant development is required. In 1994 and 1993 the Company
incurred $120,470 and $57,208, respectively, of research and development
expenditures. In the area of Intelligent Product Services, the licensees may
share in development costs through the payment of licensing fees.
COMPETITION
The Company believes that ergonomic services are provided by a number of
university research laboratories located both in the United States and elsewhere
in the world. In addition, business consultants now incorporate ergonomic
principles into their traditional practices and these consultants also compete
on a limited basis with the Company.
Hospitals and rehabilitation centers who have traditionally offered
services to local industry to rehabilitate injured workers also compete with the
Company. Some of these centers now seek to provide their clients with resources
for the prevention of occupational injuries.
Certain large corporations have established ergonomic positions to satisfy
internal needs and have begun to incorporate ergonomic programs into their
ordinary health and safety activities. To the extent that the Company provides
training programs or manuals to any of such clients, the needs of such clients
for the Company's consulting services may decline. In addition, many of the
larger insurance companies are offering ergonomic services to their insurers as
one possible method of reducing musculoskeletal injuries and the claims that
result therefrom.
Although the Company believes that few other companies currently offer a
broad range of ergonomic consulting services, it may be expected that if the
Company is successful in developing its business, substantially larger companies
with significantly greater financial, technical and employee resources will
compete with the Company.
To date, the Company has pursued companies that establish ergonomic
programs for its services and products based upon their perceived awareness of
the benefits of ergonomics.
SUPPLIERS
The Company provides services. The minimal amount of materials that the
Company uses in its business are obtained from numerous suppliers. The Company
is not dependent on any particular supplier.
MAJOR CUSTOMERS
During the year ended December 31, 1995, BE Aerospace, Inc., Remington Arms
Company, Inc. and Reebok accounted for 29%, 12% and 11%, respectively, and 52%,
in the aggregate, of net revenue. During the fiscal year ended December 31,
1994, an Indonesian government agency, Aircraft Industry of Indonesia ("IPTN"),
Reebok and Lumex accounted for 59%, 17% and 9%, respectively, and 85%, in the
aggregate, of net revenue. During the fiscal year ended December 31, 1993,
Textron, U.S. Surgical Corp. and Long Island Lighting Company ("LILCO")
accounted for 44%, 6% and 6%, respectively, and 56%, in the aggregate, of net
revenue. Because the Company is often retained to consult with respect to
particular problems or to present particular seminars or training sessions, it
is usually retained for limited periods of time and may not perform services
pursuant to long-term contracts and its services may not typically be needed by
clients after the completion of particular assignments. No assurance can be
given that the Company will continue to be retained by any of its major clients
beyond the current period or that such clients will find additional tasks to be
performed by the Company in the future.
GOVERNMENT REGULATION
The Company's present and currently proposed activities are not generally
subject to government regulation in the United States or other countries. It is
possible that certain products developed by the Company in the future, as an
adjunct to its principal ergonomics business, might be deemed under new
legislation or regulations to be "medical devices" or otherwise be subject to
regulation by the Federal Food and Drug Administration or similar agencies. In
the event that any product is subject to such governmental regulation, the
Company may be required to obtain the necessary approvals which could delay or,
in certain circumstances, prevent the introduction to the marketplace of such
product and result in significant additional expense.
The Company cannot predict the extent to which it may be affected by
legislative and other regulatory developments. However, it does believe that the
policies adopted by OSHA with respect to ergonomically related enforcement
activities at the workplace have affected and will continue to affect the demand
for its services.
The costs and effects of complying with environmental laws by the Company
are not material.
PROPRIETARY INFORMATION
The Company intends to seek to protect its proprietary training materials,
computer software or technology which it has or may develop through the use of
United States patents or copyrights, common-law trade secret protection,
trademarks and service marks, and contractual arrangements. These patent,
copyright and trade secret laws generally do not protect the "ideas" or
"concepts" reflected in such products, materials or software. Accordingly, there
is no assurance that other competitors may not develop products, materials or
software which can be utilized for similar training functions or which perform
similar or identical functions as the Company's proprietary products or
software.
Eight United States patents have been issued to the Company, including
three patents for its intelligent surface technology. The Company has applied
for six additional United States patents. However, there can be no assurance
that its software programs are entitled to patent protection or that the claims
in the pending patent applications otherwise will be issued as patents or that
any issued patents will provide the Company with significant competitive
advantages. Further, there is no assurance that challenges will not be
instituted against the enforceability of any patent owned by the Company or, if
instituted, that such challenges will not be successful. The cost of litigation
to uphold the validity and prevent infringement can be substantial. Furthermore,
there can be no assurances that others have not independently developed or will
not independently develop similar technologies or will not develop distinctively
patentable technologies duplicating the Company's technology or that they will
not design around the patentable aspects of the Company's technology.
Certain of the Company's training manuals and materials, and its principal
proprietary software programs have been copyrighted by the Company and
accordingly are protected to the extent provided by United States copyright
laws. Copyright protection is not available to two of the Company's training
programs - Principles of Ergonomics and Back Injury Prevention. Both were
developed under contract with the Department of Labor and are therefore in the
public domain. The legal and factual issues arising in copyright litigation are
often both complex and unclear and any attempt to enforce the Company's
copyright against any infringement will face both the high cost of litigation
and the uncertainty of the result.
The Company believes that, except for the patents for its Intelligent
Surface Technology, none of its issued or pending patents or copyrights is
material to the Company's business or financial condition.
In some cases, the Company may rely on trade secrets to protect its
proprietary technology. There can be no assurances that trade secrets will be
developed and maintained, that secrecy obligations will be honored or that
others will not independently develop similar or superior technology. To the
extent that consultants, key employees or third parties apply technological
information independently developed by them or by others to Company projects,
disputes may arise as to the ownership of such information, which may not be
resolved in favor of the Company.
The Company also relies and will continue to rely on intellectual property
and confidential disclosure arrangements with its employees, advisers,
consultants, suppliers of goods and services and potential joint venture
partners and licensees. There can be no assurances that these arrangements will
be honored or that other companies will not acquire information which the
Company considers to be proprietary. Moreover, there can be no assurances that
other companies will not independently develop "know-how" comparable to or
superior to that of the Company.
EMPLOYEES
As of March 15, 1996 the Company had 14 full-time employees. The Company
believes that its growth will depend in large part on its ability to attract and
retain skilled professional and managerial employees, and intends to hire such
personnel as business and financial conditions warrant. The Company identifies
its professional and managerial candidates through various sources, including
advertising, use of professional recruiters and through its contacts in the
academic and business communities. The Company has been able, to date, to
attract and retain these skilled employees by offering competitive salaries and
benefits and by virtue of what it believes to be its status as one of the few
companies currently offering a broad range of ergonomic consulting services and
ergonomic products and state-of-the-art technology and laboratory facilities.
Additionally, the Company has the ability to subcontract work to third parties
including universities and professors, directly. While competition for such
qualified persons has eased over the past year, there is no assurance that the
Company will be successful in recruiting or retaining qualified professional and
managerial personnel sufficient to enable it to expand and develop its business
to the extent contemplated. None of the Company's employees is represented by a
labor union. The Company believes that its relationship with its employees is
satisfactory.
ITEM 2. DESCRIPTION OF PROPERTY
The Company has leased office space in Melville, New York since 1990. The
Company recently renewed the lease for an additional five-year term, expiring on
March 31, 2000, at an average annual cost of approximately $18 per square foot.
The office contains approximately 10,000 square feet and is located at 1800 Walt
Whitman Road, Melville, New York. The facility includes four biomechanics
research laboratories which are used both for testing and the design of products
and is adequate for the Company's operations.
ITEM 3. LEGAL PROCEEDINGS
There are no material legal proceedings pending against the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
The Common Stock of BCAM is quoted primarily on the NASDAQ Small Cap Market
under the symbol BCAM. It is also traded on the Boston Stock Exchange under the
symbol BAM.
The following table sets forth the high and low closing bid quotations for
the Common Stock as reported by NASDAQ and the Boston Stock Exchange for each
calendar quarter during 1995 and 1994. The NASDAQ Small Cap market quotations
reflect inter-dealer prices without retail markup, markdown or commission and do
not necessarily represent actual transactions.
NASDAQ
1995 High Bid Low Bid
First Quarter 1 1/16 3/4
Second Quarter 1 9/32 7/8
Third Quarter 1 21/32 31/32
Fourth Quarter 2 1
1994 High Bid Low Bid
First Quarter 3 7/16 2 9/32
Second Quarter 2 7/16 1 5/16
Third Quarter 2 1 7/16
Fourth Quarter 1 7/8 31/32
Boston Stock Exchange
1995 High Bid Low Bid
First Quarter 1 1/32 11/16
Second Quarter 1 1/8 1/2
Third Quarter 1 19/32 13/16
Fourth Quarter 1 23/32 1
1994 High Bid Low Bid
First Quarter 2 1/2 2 1/4
Second Quarter 1 13/16 1 9/16
Third Quarter 1 3/4 1 1/2
Fourth Quarter 1 7/8 15/16
HOLDERS
There were approximately 404 record holders of the Company's Common Stock
as of March 15, 1996.
DIVIDENDS
The Company has paid no cash dividends on its Common Stock since its
inception and does not anticipate paying cash dividends on its Common Stock in
the foreseeable future.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS - 1995 vs. 1994
The Company often provides services pursuant to contracts providing for a
fixed price or a fixed hourly rate. In setting its price for services, the
Company seeks to estimate the man hours that will be required to provide the
services. To the extent that the Company underestimates the man hours that will
be required, or the expenses it will incur in performing a contract, the Company
could realize a loss on any particular contract.
Gross profit increased by $197,885 in 1995 as compared to 1994. The
increase was primarily attributable to lower margin revenue in 1994 associated
with the Indonesian Contract (defined below) and certain additional costs
accrued in 1994 relating to the licensing fees of intelligent products. A
comparison of the two years is shown below:
Year Ended December 31,
-----------------------
1995 1994
--------- ------------
Net Revenue $ 752,077 $1,138,304
Direct Costs 556,586 1,140,698
--------- ------------
Gross Profit (loss) $ 195,491 $ (2,394)
========= ============
Gross Profit Percentage 26% -
========= ============
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.
Net revenue is derived from services rendered and 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. Net revenue decreased by
$386,227 in 1995 from 1994.
Net revenue includes the following:
Year Ended December 31,
------------------------
1995 1994
---------- ----------
Intelligent surface technology(1) $ 96,473 $ 262,000
Ergonomic product analysis and redesign(2) 451,508 800,135
Ergonomic workplace risk assessment(3) 204,096 76,169
---------- ----------
$ 752,077 $1,138,304
========== ==========
(1) Revenue from licensing and development fees of intelligent surface
technology declined $165,527 in 1995 from 1994 and accounted for 13% of net
revenue in 1995 versus 23% in 1994. The revenue in both 1995 and 1994 is
attributable to the two licensing agreements signed in 1994 with Reebok for
Intelligent Footwear and Athletic Sport and Fitness Equipment and Lumex for
Intelligent Medical Procedure Equipment. Revenue from intelligent products
includes the initial payments for licensing the Intelligent Surface Technology
as well as fees associated with the development of the prototypes for the
specific applications.
(2) Ergonomic product analysis and redesign provided 60% of the Company's
revenue in 1995 compared to 70% in 1994. The $348,627 decrease in 1995 from 1994
reflects a contract primarily to resell computer equipment with IPTN (the
"Indonesian Contract") for $700,000 which accounted for $665,000 of revenue in
1994 and only $35,000 in 1995.
(3) Revenue from ergonomic workplace assessment increased $127,927 in 1995
from 1994 and accounted for 27% of net revenue in 1995 versus 7% in 1994. The
increase is primarily attributed to the Company's success in obtaining
additional contracts with certain utilities.
Direct costs decreased $584,112, to $556,586 in 1995 from $1,140,698 in
1994 primarily due to: (1) costs in 1994 associated with the Indonesian Contract
which represented 47% of the total cost of sales and (2) a change in estimate in
1994 on certain licensing agreements, whereby the Company recorded approximately
$224,000 of additional costs and accruals for losses on certain contracts.
Selling, general and administrative expenses decreased $420,408, or 18%, to
$1,918,817 in 1995 from $2,339,225 in 1994. The decrease was primarily
attributable to a reduction in salaries and benefits as a result of the
elimination of certain positions and the reduction in certain marketing
expenses.
The Company's research and development costs increased $20,297 to $140,767
in 1995 from $120,470 in 1994. The increase reflects the costs to develop
several components relating to certain applications of the intelligent surface
technology. During 1995 the Company progressed in the development of the
technology of several of the components relating to certain applications of the
intelligent surface technology. For certain other applications, significant
development is required. In the area of Intelligent Surface Technology, the
licensees may share in development costs through the payment of licensing fees.
In 1993 the Company incurred $57,208 of research and development costs.
Interest and other income increased $19,977 to $174,613 in 1995 from
$154,636 in 1994. The increase is primarily attributable to net realized losses
in 1994 of $61,612 on the sale of available-for-sale securities. This was
partially offset by the reduction of interest income in 1995, which reflects the
reduction of assets available for investment as compared to 1994.
The loss on investments recognized in 1994 includes the following two
items: 1) In December 1994, the Company agreed to terminate its joint venture
with ErgoRisk Services, Inc. (Canada). Under the terms of the joint venture
entered into in July 1994, the Company granted ErgoRisk Services, Inc. (Canada)
an exclusive right to market the EARLY(R) System in Canada. The joint venture
was terminated in conjunction with the Company's decision to change its
marketing plans from a broad based approach to a selective market approach.
Under the termination agreement, the Company purchased 100% of the common stock
in ErgoRisk Services, Inc. (Canada) for $65,000, and subsequently wrote off the
investment. 2) The Company recognized a loss of $16,500 from the write-off of
the remaining investment of a partnership interest.
Due to the net losses and the accounting rules in accordance with Financial
Accounting Standards Board Statement No. 109, there was no provision for income
taxes in 1995 and 1994.
As a result of all of the above, the net loss in 1995 decreased $699,473 to
$1,689,480 from $2,388,953 in 1994.
LIQUIDITY AND CAPITAL RESOURCES
Cash, cash equivalents and held-to-maturity securities decreased $1,959,263
to $2,208,858 at December 31, 1995 from $4,168,121 at December 31, 1994.
Consequently, working capital decreased $1,562,020 to $2,155,767 at December 31,
1995 from $3,717,787 at December 31, 1994. The decreases were primarily
attributable to the net loss incurred in 1995.
The Company expects that its working capital, together with revenue from
operations, will be sufficient to meet liquidity and capital requirements
through 1996. It may be necessary for the Company to raise additional funds in
1996 in order to accelerate the commercialization of the Intelligent Surface
Technology and the remarketing of Mannequin(R). Longer term cash requirements
are dictated by a number of external factors, which include, among others, the
Company's ability to introduce new competitive products and services, and
license its Intelligent Surface Technology for additional applications.
The Company has no material commitments for any future capital
expenditures.
Accounts receivable, net of the allowance for doubtful accounts, increased
to $135,995 at December 31, 1995, from $119,855 at December 31, 1994. Three
customers comprised 83% of the balance at December 31, 1995.
Prepaid expenses and other current assets increased slightly to $233,585 at
December 31, 1995 from $230,480 at December 31, 1994. Other current assets
principally include profits and expenses for services rendered but are not yet
billable.
Accounts payable, accrued expenses and sundry liabilities decreased to
$422,671 at December 31, 1995 from $700,669 at December 31, 1994. The decrease
resulted primarily from the Company's performance in 1995 which satisfied a
significant portion of the accruals made in 1994 relating to the downsizing of
the ergonomic workplace assessment services, accruals for services to be
provided in excess of revenue received or to be received, accruals for
professional fees in connection with the filing of the Company's Form SB-2 and
Form S-3 Registration Statements and accruals related to written off
investments.
In April, 1995, the Company agreed to exchange a shareholder's investment
in one of the Company's subsidiaries for 100,000 common shares of the Company.
The investor had purchased shares of the subsidiary in 1993 for $100,000,
resulting in the recording of deferred revenue. As a result of the exchange
agreement, the deferred revenue was converted into the Company's common stock
($1,000) and paid-in-surplus ($99,000) accounts.
The Company's net revenue was $752,077 in 1995. The Company does not
anticipate any royalty revenue in 1996 associated with its current licensing
agreements. The Company believes that commercialization of its Intelligent
Surface Technology through the licensing agreements will commence in 1997 and
continue in subsequent years. Revenue will be generated in 1996 through product
ergonomic consulting services, ergonomic workplace assessments and revenue that
may result if the Company is successful in licensing its Intelligent Surface
Technology for additional applications.
ITEM 7. FINANCIAL STATEMENTS
The response to Item 7 is submitted as a separate section of this Report.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
Not applicable.
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS, COMPLIANCE
WITH SECTION 16(A) OF THE EXCHANGE ACT
Pursuant to General Instruction E(3) for Form 10-KSB, the information
required by Item 405 of Regulation S-B is hereby incorporated by reference from
the Company's definitive proxy statement, to be filed pursuant to Regulation 14A
within 120 days after the end of the last fiscal year.
ITEM 10. EXECUTIVE COMPENSATION Pursuant to General Instruction E(3) for
Form 10-KSB, the information required by this Item 10 is hereby incorporated by
reference from the Company's definitive proxy statement, to be filed pursuant to
Regulation 14A within 120 days after the end of the last fiscal year.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Pursuant to General Instruction E(3) for Form 10-KSB, the information
required by this Item 11 is hereby incorporated by reference from the Company's
definitive proxy statement, to be filed pursuant to Regulation 14A within 120
days after the end of the last fiscal year.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Pursuant to General Instruction E(3) for Form 10-KSB, the information
required by this Item 12 is hereby incorporated by reference from the Company's
definitive proxy statement, to be filed pursuant to Regulation 14A within 120
days after the end of the last fiscal year.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
3.1 Restated Certificate of Incorporation(1)
3.2 Restated and Amended By-Laws(1)
4.1 Underwriter's Unit Purchase Option(4)
4.2 Finder's Unit Purchase Option(4)
4.3 Warrant Agreement(4)
4.4 Form of Senior Secured Convertible Promissory Note (5)
4.5 Form of Class C common Stock Purchase Warrant(5)
4.6 Form of Class D Common Stock Purchase Warrant(5)
4.7 RevisedForm of Amendment No. 1 to Warrant Agreement(7)
4.8 Revised Form of Class E Common Stock Purchase Warrant(7)
10.1 Stock Redemption Agreement(1)
10.2 1989 Stock Option Plan(1)
10.3 Employment Agreement with Dr. Clifford M. Gross(1)
10.4 Employment Agreement with Arthur Fein(1)
10.5 Bridge Warrant(1)
10.6 Bridge Note and Related Loan Agreement(1)
10.7 Consulting Agreement with Lear Siegler Seating Corporation(1)
10.8 Extension Agreement to Redemption Agreement (Exhibit 10.1)
10.9 Consulting Agreement dated August 1, 1988 with NRC Resources Group,Inc.(1)
10.10 General Release of NRC Resources Group, Inc.(1)
10.11 Mortgage Note and Related Loan Agreement and Mortgage and Security
Agreement(1)
10.12 Second Extension Agreement to Redemption Agreement(4)
10.13 Merger and Acquisition Agreement with D.H. Blair & Co., Inc.(4)
10.14 1989 Nonstatutory Stock Option Plan(2)
10.15 Consulting Agreement with D.H. Blair & Co., Inc.(4)
10.16 Consulting Agreement with Steelcase, Inc.(2)
10.17 License and Manufacturing Agreement with MicroComputer Accessories,
Inc.(4)
10.18 Employment Agreement with Cynthia Roth(4)
10.19 Employment Agreement with Kenneth Goodman(4)
10.20 Form of Employment Agreement with Ava Stern(4)
10.21 Form of Employment Agreement with William G. Sirois(4)
10.22 Lease of Premises at 1800 Walt Whitman Road, Melville, New York(4)
10.23 Consulting Agreement dated as of February 1, 1990 with NRC Resources
Group, Inc.(4)
10.24 Underwriting Agreement (for IPO) with D.H. Blair & Co., Inc.(4)
10.25 Securities Purchase Agreement dated June 25, 1991 among the Company, the
Purchasers and D.H. Blair & Co., Inc. (5)
10.26 Security Agreement dated as of June 25, 1991 between the Company and D.H.
Blair & Co., Inc., as Purchasers' Representative(5)
10.29 Employment Agreement dated as of June 20, 1991 between David A. Deutsch
and the Company(5)
10.30 Letter of Understanding between Kenneth A. Goodman and the Company(5)
10.31 Employment Agreement dated as of August 1, 1991 between Joel Sher and the
Company(5)
10.32 Amendment to 1989 Stock Option Plan(5)
10.33 Distributor Agreement with Techexport, Inc.(3)
10.34 Partnership Agreement dated December 28, 1992 for Ergonomic Solutions
Group (ESG)(8)
10.35 License Agreement dated December 28, 1992, between the Company and ESG (8)
10.36 Development and Licensing Agreement dated March 5, 1993 between the
Company and McCord Winn Textron, Inc. (8)
10.37 Agreement dated August 22, 1992 between the Company and PT Industry
Pesawat Terbang Nusantara (IPTN) (8)
10.38 Further Amendments to 1989 Stock Option Plan (8)
10.39 Amendment to Development and Licensing Agreement dated October 27, 1993
between the Company and McCord Winn Textron. (10)
10.40 Investors Consulting Agreement with Strategic Growth International Inc.(9)
10.41 Agreement dated December 22, 1993 between the Company and PT Industri
Pesawat Terbank Nusantara (IPTN)(9)
10.42 Agreement dated September 29, 1993 between the Company, McCord Winn
Textron, Inc. and Lear Seating Company. (9)
10.43 Development and Licensing Agreement dated January 4, 1994 between the
Company and Reebok International Ltd. (9)
10.44 Development and License Agreement dated September 28, 1994 between the
Company and Lumex, Inc.
10.45 Employment Agreement dated October 13, 1994 between Michael Strauss and
the Company (10)
10.46 Letter Agreement dated February 15, 1996 between the Company and McCord
Winn Textron, Inc. to extend the Development and License Agreement
dated March 5, 1993 (Filed Herewith)
21.00 Subsidiaries of the Company (Filed Herewith)
27.00 Financial Data Schedule (Filed Herewith)
(1) Filed as an Exhibit to Registrant's Registration Statement on Form S-18
(file no. 33-31282) and incorporated herein by reference thereto.
(2) Filed as an Exhibit to Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 1989 (file no. 0-18109) and incorporated herein
by reference thereto.
(3) Filed as an Exhibit to the Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 1991 (file no. 0-18109) and incorporated herein
by reference thereto.
(4) Filed as an Exhibit to Registrant's Registration Statement on Form S-1 (file
no. 33-38204) and incorporated herein by reference thereto.
(5) Filed as an Exhibit to Post Effective Amendment No. 1 to Registrant's
Registration Statement on Form S-1 (file no. 33-38204) and incorporated herein
by reference thereto.
(6) Filed as an Exhibit to Post Effective Amendment No. 2 to Registrant's
Registration Statement on Form S-1 (file no. 33-38204) and incorporated herein
by reference thereto.
(7) Filed as an Exhibit to Post-Effective Amendment No. 3 to Registrant's
Registration Statement on Form S-1 (file no. 33-38204) and incorporated herein
by reference thereto.
(8) Filed as an Exhibit to Registrant's Annual Report on Form 10-KSB for the
fiscal year ended December 31, 1992 (file no. 0-18109) and incorporated herein
by reference thereto.
(9) Filed as an Exhibit to Registrant's Annual Report on Form 10-KSB for the
fiscal year ended December 31, 1993 (file no. 0-18109) and incorporated by
reference thereto.
(10) Filed as an Exhibit to Registrant's Form 10-QSB/A filed December 5, 1994
amending the Form 10-QSB for quarterly period ended September 30, 1994 (file no.
0-18109) and incorporated by reference thereto.
(11) Filed as an Exhibit to Registrant's Form 10-QSB/A for the fiscal year ended
December 31, 1993 (file no. 0-18109) and incorporated by reference thereto.
(12) Filed as an Exhibit to Registrant's Form 10-KSB for the fiscal year ended
December 31, 1994 (file no. 0-18109) and incorporated by reference thereto.
AVAILABLE INFORMATION
Registrant will furnish any exhibits listed but not contained herein to any
beneficial owner of its securities upon receipt of a written request from such
person. Requests should be directed to Shareholder Relations Department, BCAM
International, Inc., 1800 Walt Whitman Road, Melville, New York 11747. (b)
During the fourth quarter of the period covered by this Report, the Company
filed no reports on Form 8-K.
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
has caused this report to be signed on its behalf by the undersigned, thereto
duly authorized.
BCAM International, Inc.
By: /s/ Michael Strauss
--------------------
Michael Strauss
Chairman of the Board
of Directors
Chief Executive Officer
(Principal Executive Officer)
Date: March 29,1996
By: /s/ Daniel Benjamin
-------------------
Daniel Benjamin
Chief Financial Officer and
Corporate Secretary
(Principal Accounting Officer)
Date: March 29, 1996
<PAGE>
In accordance with the Exchange Act, this report has been signed below by
the following persons on behalf of the registrant and in the capacities and on
the dates indicated.
/s/ Michael Strauss Chairman of the Board March 29, 1996
Michael Strauss of Directors
and Chief Executive Officer
(Principal Executive Officer)
/s/ Daniel Benjamin Chief Financial Officer and March 29, 1996
Daniel Benjamin Corporate Secretary
(Principal Accounting Officer)
/s/ Robert P. Wong Director, Vice Chairman and March 29, 1996
Robert P. Wong Chief Technology Officer
/s/ Julian H. Cherubini Director March 29, 1996
Julian H. Cherubini
/s/ Lawrence N. Cohen Director March 29, 1996
Lawrence N. Cohen
/s/ Joel L. Gold Director March 29, 1996
Joel L. Gold
/s/ Glenn F. Santmire Director March 29, 1996
Glenn F. Santmire
<PAGE>
Annual Report On Form 10-KSB
Item 7, Item 13(a) and (b)
List Of Financial Statements
Certain Exhibits
Consolidated Financial Statements
Year ended December 31, 1995
BCAM International, Inc.
(formerly Biomechanics Corporation of America)
Melville, New York
<PAGE>
Form 10-KSB - Item 13(a) and (b)
BCAM International, Inc.
(formerly Biomechanics Corporation of America)
Index of Financial Statements
The following consolidated financial statements of BCAM International, Inc.
(formerly Biomechanics Corporation of America) are included in Item 7:
Report of Independent Auditors..........................................F-1
Consolidated balance sheet - December 31, 1995..........................F-2
Consolidated statements of operations -
Years ended December 31, 1995 and 1994................................F-3
Consolidated statements of common shareholders' equity -
Years ended December 31, 1995 and 1994................................F-4
Consolidated statements of cash flows -
Years ended December 31, 1995 and 1994 ...............................F-5
Notes to consolidated financial statements...... .......................F-6
<PAGE>
ERNST & YOUNG LLP
Report of Independent Auditors
Shareholders and Board of Directors
BCAM International, Inc.
We have audited the accompanying consolidated balance sheet of BCAM
International, Inc., (formerly Biomechanics Corporation of America) as of
December 31, 1995, and the related consolidated statements of operations,
shareholders' equity and cash flows for each of the two years in the period
ended December 31, 1995. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
BCAM International, Inc. at December 31, 1995, and the consolidated results of
their operations and their cash flows for each of the two years in the period
ended December 31, 1995, in conformity with generally accepted accounting
principles.
/s/ Ernst & Young LLP
Melville, New York
February 27, 1996
F-1
<PAGE>
<TABLE>
<CAPTION>
BCAM International, Inc.
(formerly Biomechanics Corporation of America)
Consolidated Balance Sheet
December 31, 1995
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 701,686
Held-to-maturity securities 1,507,172
Accounts receivable - trade, less allowance for doubtful accounts of $38,326
135,995
Prepaid expenses and other current assets 233,585
-------------------
Total current assets 2,578,438
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 584,371
-------------------
273,977
Other assets, principally patents (net of accumulated amortization of $159,979)
181,812
-------------------
Total assets $ 3,034,227
===================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 52,382
Accrued expenses and sundry liabilities 370,289
-------------------
Total current liabilities 422,671
Other liabilities 7,843
Commitments and contingencies -
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 (11,687,150)
-------------------
3,502,813
Less 763,182 treasury shares (899,100)
-------------------
2,603,713
-------------------
Total liabilities and shareholders' equity $ 3,034,227
===================
See accompanying notes.
F-2
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BCAM International, Inc.
(formerly Biomechanics Corporation of America)
Consolidated Statements of Operations
Year ended December 31
1995 1994
--------------------------------------
<S> <C> <C>
Net revenue $ 752,077 $ 1,138,304
Interest and other income 174,613 154,636
--------------------------------------
926,690 1,292,940
--------------------------------------
Costs and expenses:
Direct costs of revenue 556,586 1,140,698
Selling, general and administrative 1,918,817 2,339,225
Research and development 140,767 120,470
Loss on investments - 81,500
--------------------------------------
2,616,170 3,681,893
--------------------------------------
Net loss $ (1,689,480) $(2,388,953)
======================================
Net loss per share $ (.11) $ (.16)
======================================
Weighted average number of common shares and common equivalent
shares outstanding 14,818,055 14,681,530
======================================
See accompanying notes.
F-3
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BCAM International, Inc.
(formerly Biomechanics Corporation of America)
Consolidated Statements of Common Shareholders' Equity
COMMON STOCK $.01 PAR VALUE SHARES HELD
------------------------------ PAID-IN IN
SHARES AMOUNT SURPLUS DEFICIT SUBTOTAL TREASURY TOTAL
----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1994 15,372,039 $153,720 $15,015,223 $ (7,608,717) $7,560,226 $(899,100) $ 6,661,126
Shares issued in connection
with private placements 16,870 169 16,584 - 16,753 - 16,753
Exercise of finders options 4,239 42 6,104 - 6,146 - 6,146
Exercise of common stock
warrants 71,767 718 61,495 - 62,213 - 62,213
Exercise of stock options 55,500 555 67,920 - 68,475 - 68,475
Registration and issuance
costs - - (173,268) - (173,268) - (173,268)
Net loss - - - (2,388,953) (2,388,953) - (2,388,953)
----------------------------------------------------------------------------------------------------
Balance at December 31, 1994 15,520,415 155,204 14,994,058 (9,997,670) 5,151,592 (899,100) 4,252,492
Shares issued in connection
with conversion of
BCA Services, Inc. stock 100,000 1,000 99,000 - 100,000 - 100,000
Registration and issuance costs - - (59,299) - (59,299) - (59,299)
Net loss - - - (1,689,480) (1,689,480) - (1,689,480)
===================================================================================================
Balance at December 31, 1995 15,620,415 $156,204 $15,033,759 $(11,687,150) $3,502,813 $(899,100) $ 2,603,713
===================================================================================================
See accompanying notes.
F-4
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BCAM International, Inc.
(formerly Biomechanics Corporation of America)
Consolidated Statements of Cash Flows
Year ended December 31
1995 1994
------------------------------------
<S> <C> <C>
OPERATING ACTIVITIES
Net loss $(1,689,480) $ (2,388,953)
Adjustments to reconcile net loss to net cash used in operating
activities:
Provision for doubtful accounts 34,726 -
Depreciation and amortization 167,127 143,879
Amortization of premium on held-to-maturity securities - 9,966
Interest accretion on held-to-maturity securities (114,370) (110,736)
Loss on sale of available-for-sale securities - 61,612
Changes in operating assets and liabilities:
Accounts receivable (50,866) 65,114
Prepaid expenses and other current assets (3,105) 42,364
Other assets (49,492) (149,404)
Accounts payable, accrued expenses and sundry liabilities
(277,998) 563,467
Other liabilities (26,888) (24,990)
------------------------------------
Net cash used in operating activities (2,010,346) (1,787,681)
------------------------------------
Investing activities
Purchases of property, plant and equipment (5,188) (88,749)
Proceeds from sale of equipment 1,200 1,050
Purchases of available-for-sale securities - (167,820)
Purchases of held-to-maturity securities (2,799,782) (4,161,884)
Proceeds from sale of available-for-sale securities - 2,312,686
Proceeds from sale of held-to-maturity securities 4,535,000 3,211,000
------------------------------------
Net cash provided by investing activities 1,731,230 1,106,283
------------------------------------
Financing activities
Net proceeds from sale of common stock and exercise of warrants
- 85,112
Net proceeds from exercise of stock options - 68,475
Payment of stock registration and issuance costs (59,299) (173,268)
Redemption of convertible preferred stock - (16,473)
------------------------------------
Net cash used in financing activities (59,299) (36,154)
------------------------------------
Decrease in cash and cash equivalents (338,415) (717,552)
Cash and cash equivalents at beginning of year 1,040,101 1,757,653
------------------------------------
Cash and cash equivalents at end of year $ 701,686 $ 1,040,101
====================================
See accompanying notes.
F-5
</TABLE>
<PAGE>
BCAM International, Inc.
(formerly Biomechanics Corporation of America)
Notes to Consolidated Financial Statements
December 31, 1995
1. DESCRIPTION OF BUSINESS AND PRINCIPLES OF CONSOLIDATION
Biomechanics Corporation of America was organized in 1984 to provide a
broad range of consulting services using the principles of ergonomics and
biomechanics. These principles combine elements of engineering and physical
medicine in the design of products, tools and manufacturing processes which are
suited to be more compatible with the human body. As part of its consulting
services, the company utilizes computer analysis and certain proprietary
technology to quantify forces acting on the human body as it engages in
particular activities. Management has decided to concentrate its business on
integrating its patented Intelligent Surface Technology to develop and license
intelligent products. The company also provides product analysis and redesign,
and ergonomic workplace risk assessment services.
On June 22, 1995, the company's shareholders approved a change of the name
of the corporation to BCAM International, Inc.
The consolidated financial statements include the accounts of BCAM
International, Inc. and its subsidiaries, BCA Services, Inc. (formerly ErgoRisk
Services, Inc.), ErgoRisk Services, Inc. (Canada), which was acquired in
December 1994, and BCAM Technologies, Inc. (formerly BCA Associates, Inc.),
which was formed in December 1992, (collectively referred to as the "Company").
BCA Services, Inc. was established in December 1993 to directly focus on
providing comprehensive ergonomic laboratory assessment services to U.S.
manufacturing and service industries for measuring the potential risk of
muscoloskeltal injury. ErgoRisk Services, Inc. (Canada) was purchased for
$65,000 to effectively terminate a joint venture, and was subsequently written
off. The operations of BCAM Technologies, Inc., which were not significant, were
terminated in December 1993.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CASH EQUIVALENTS
The Company considers all highly liquid investments with a maturity of
three months or less when purchased to be cash equivalents. Cash and cash
equivalents at December 31, 1995 consist of demand and money market accounts
with U.S. banks ($48,263) and a money market account with a U.S. investment
institution ($653,423).
F-6
<PAGE>
BCAM International, Inc.
(formerly Biomechanics Corporation of America)
Notes to Consolidated Financial Statements (continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
HELD-TO-MATURITY SECURITIES
Management determines the appropriate classifications of debt securities at
the time of purchase and reevaluates such designation as of each balance sheet
date. The Company has classified $1,507,172 of securities as "held-to-maturity
securities" at December 31, 1995. Debt securities are classified as
held-to-maturity when the Company has the positive intent and ability to hold
the securities to maturity and such securities are stated at amortized cost.
Interest and dividends are included in interest and other income. Realized gains
and losses, and declines in value, if they are judged to be other than
temporary, are also included in interest and other income. For the year ended
December 31, 1995, there was no decline in value of such securities.
At December 31, 1995, the held-to-maturity securities are Federal Farm
Credit Bank Securities and are contractually due to mature within one year.
There are no unrealized gains or losses related to such securities.
USE OF ESTIMATES
REVENUE
Revenue is recognized when products are shipped or as services are
rendered, no significant obligations remain outstanding and collection of the
accounts receivable, in management's estimation, is deemed probable.
PROPERTY, PLANT AND EQUIPMENT
Depreciation is computed using the straight-line method at rates based on
the estimated useful lives of the related assets. The estimated useful lives for
furniture and fixtures is 10 years and equipment is 7 years. Leasehold
improvements are amortized over the lease term or estimated useful life of the
improvements, whichever is shorter.
F-7
<PAGE>
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
PATENTS
Patents, which are initially capitalized at cost, are being amortized by
the straight-line method over the estimated useful lives of the underlying
patents.
RESEARCH AND DEVELOPMENT
Research and development costs are charged to operations in the period
incurred.
INCOME TAXES
The Company accounts for income taxes using Financial Accounting Standards
Board ("FASB") Statement No. 109, "Accounting for Income Taxes." At December 31,
1995, the Company has net operating loss carryforwards of approximately
$12,143,000 for income tax purposes, expiring through 2010.
At December 31, 1995 and 1994, deferred tax assets approximating $4,129,000
and $3,546,000, respectively, arising from the future availability of net
operating loss carryforwards have been offset in full by valuation allowances in
accordance with FASB Statement No. 109.
NET LOSS PER SHARE
Net loss per share has been computed on the basis of the weighted average
number of common shares outstanding. Common stock equivalents have been excluded
because their effect is antidilutive.
FUTURE ACCOUNTING POLICY CHANGES
The FASB has issued Statement No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of," which requires
impairment losses to be recorded on long-lived assets used in operations when
indicators of impairment are present and the undiscounted cash flows estimated
to be generated by those assets are less than the assets' carrying amount. The
Company will adopt Statement No. 121 in 1996 and, based on current
circumstances, does not believe the effect of adoption will be material.
F-8
<PAGE>
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
In 1995, the FASB also issued Statement No. 123, "Accounting for
Stock-Based Compensation," which requires all companies to either recognize
expense for stock-based awards based on their fair market value on the date of
grant, or provide proforma disclosures of the effects "as if" the company had
recognized the stock-based compensation expense. As provided by this new
accounting pronouncement, the Company will adopt the new rules in 1996; however,
management has not yet estimated the potential impact, if any, that these
changes will have on the Company's operating results and financial position.
3. CONVERTIBLE PREFERRED STOCK
In November 1989, the Company issued 2,250,000 shares of convertible
preferred stock in the form of a stock dividend on a pro rata basis to holders
of common stock. Immediately following issuance, 602,680 of such shares were
redeemed by the Company pursuant to a redemption agreement with certain common
shareholders.
The holders of the convertible preferred stock had the right to vote, along
with the holders of the common stock, on any and all matters which stockholders
may vote, and had a nominal noncumulative dividend right entitling them to
receive a dividend in the amount of $.0001 per share before any dividends may be
paid or declared upon any shares of the Company's common stock. Shares of
convertible preferred stock were nontransferable and were subject to mandatory
redemption on April 15, 1994 (if such shares were not previously converted into
common stock), effective as of January 1, 1994, at $.01 per share. The
convertible preferred stock was convertible into common stock at various rates
and times, if certain pretax earnings were achieved. Since the pretax earnings
were not achieved the convertible preferred stock issued was redeemed effective
January 1, 1994, for a total of $16,473.
4. ACQUISITION PREFERRED STOCK
The Company is authorized to issue 750,000 shares of its acquisition
preferred stock, $.01 par value, none of which are presently issued and
outstanding. The acquisition preferred stock is only permitted to be issued as
consideration pursuant to (i) a statutory merger or consolidation as to which
the Company is the surviving entity, (ii) the acquisition by the Company of
substantially all the assets or business of another entity or (iii) the
acquisition by the Company of 50% or more of the voting securities of another
entity. The acquisition
F-9
<PAGE>
4. ACQUISITION PREFERRED STOCK (continued)
preferred stock is issuable from time to time in one or more series. Subject to
prior liquidation rights of the convertible preferred stock, the Board of
Directors is authorized to fix, before issuance, the voting powers, if any, the
designations, preferences and any other rights, qualifications, limitations and
restrictions applicable to each series of acquisition preferred stock,
including, without limitation, dividend rates and conditions, dividend
preferences, conversion and redemption rights and liquidation preferences.
5. COMMON SHAREHOLDERS' EQUITY
On January 24, 1990, the Company issued and sold 1,100,000 units for $4.00
per unit in connection with a public offering. The net proceeds, after
accounting for direct expenses of the offering, were approximately $3,397,000.
On February 26, 1990, the underwriter issued and sold an additional 165,000
units at $4.00 per unit resulting from the exercise of the overallotment option
and the Company received net proceeds of $574,200. Each unit consists of three
shares of common stock and two Class A warrants. Each Class A warrant is
exercisable to purchase one share of common stock and one Class B warrant at a
price of $2.00, subject to adjustment, commencing one year from the date of the
Prospectus (January 17, 1990) until January 17, 1997 (extended from January 16,
1995) subject, in certain circumstances, to earlier redemption by the Company.
As a result of the dilutive effects of private placements (see Note 8) and the
Discounted Warrant Plan (see below), the number of shares issuable under and the
exercise price of the Company's Class B warrants, which may be exercised
commencing upon issuance until January 17, 1997 (extended from January 16,
1995), have been adjusted such that each Class B warrant, as adjusted, entitles
the holder to purchase one and two tenths (1.2) shares (originally one share) of
Common stock at an adjusted price that varies from $2.69 to $3.23 (originally
$3.33 to $4.67) per share. As a result of the issuance of approximately
1,717,000 Class E warrants pursuant to the Discounted Warrant Plan, each Class A
warrant remaining unexercised entitles the holder thereof to purchase one and
two-tenth (1.2) (originally one share) shares of common stock and one Class B
warrant at an adjusted price per share, subject to further adjustment, of $1.72.
Since the Company has satisfied the condition of redemption, namely the closing
bid price of common stock of the Company exceeding $2.67 for a period of 30
consecutive business days, the remaining Class A Warrants were called effective
November 19, 1993. The Company extended the redemption date to December 20, 1993
and 807,659 Class A Warrants were exercised resulting in the
F-10
<PAGE>
5. COMMON SHAREHOLDERS' EQUITY (continued)
issuance of 969,191 shares of common stock and 807,659 Class B Warrants
exercisable to purchase 969,191 shares of common stock and receipt by the
Company of net proceeds of $1,667,008.
In connection with the public offering, the Company sold 110,000 Unit
Purchase Options (the "Unit Options") to the underwriter and a finder on
January 24, 1990 for a nominal consideration. The units purchasable upon
exercise of the Unit Options are identical to the units sold in the public
offering, except that the warrants included therein are not redeemable. The Unit
Options are exercisable at 130% of the public offering price subject to certain
antidilution adjustments. The Unit Options are exercisable during the five-year
period (originally three-years) commencing two years from the date of the public
offering, expiring January 17, 1997. As a result of the dilutive effects of the
private placement, the number of Unit Options has been increased to 127,547 and
the unit price adjusted to $4.35 per unit (originally $5.20 per unit). Pursuant
to a settlement agreement certain Unit Purchase Option holders surrendered for
exercise in full 30,369 units in a cashless transaction that provided them with
85,674 shares of common stock representing the excess of the fair market value
of the common stock and Class A warrants, over the exercise price of the Unit.
At December 31, 1995, there were 97,178 units (underwriter) and 1,568 units
(finder) outstanding.
In October 1991, the Board of Directors of the Company approved a
Discounted Warrant Plan, providing for 1) a reduction in the price of each Class
A warrant which was exercised during the Class A Limited Exercise Period
(expired in 1992) from $2.00 to the discounted price of $1.50 per share of
common stock, and 2) the issuance to each holder who exercised a discounted
Class A warrant during the Class A Limited Exercise Period, a Class E warrant,
in lieu of a Class B warrant, which has the same terms and conditions as the
Class B warrants, except that the price of each Class E warrant was reduced to
the discounted price of $1.25 per share of common stock until the expiration
date on January 17, 1997 (extended from January 16, 1995).
Pursuant to the Discounted Warrant Plan, approximately 1,717,000 Class A
warrants were exercised resulting in the issuance of approximately 1,717,000
shares of common stock and 1,717,000 Class E warrants exercisable to purchase
approximately 1,888,700 shares of common stock and the receipt by the Company of
net proceeds of approximately $2,500,000. During the year ended December 31,
1993, 1,022,825 Class E warrants were exercised resulting in an issuance of
1,125,109 shares of common stock and receipt by the
F-11
<PAGE>
5. COMMON SHAREHOLDERS' EQUITY (continued)
Company of net proceeds of $1,406,464. In connection with the exercise of the E
warrants, options to purchase 38,508 unregistered shares of common stock
exercisable at prices ranging from $3.31 through $3.44 per share were issued to
two registered brokerage houses, as an inducement for their exercise of the
aforementioned Class E warrants. The options are exercisable for 18 months from
the dates of exercise of the Class E warrants (October 1993). In addition,
through December 31, 1992, 202,588 Class E warrants were exercised resulting in
the issuance of approximately 223,000 shares of common stock and the receipt by
the Company of net proceeds of approximately $280,000. In connection with the
Discounted Warrant Plan, the Board of Directors issued in 1992 an aggregate of
166,154 restricted shares of common stock of the Company to two registered
brokers, in full payment of the compensation due them for soliciting the
exercise of the Class A warrants.
In June 1991, Class D warrants exercisable over a five-year term to
purchase 176,250 shares of common stock at $2.00 per share and Class C warrants
exercisable over a five and one-half year term (originally five-year term) to
purchase 200,000 shares of common stock at $1.00 per share were issued in
connection with the private placement (see Note 8). As a result of the exercise
of Class E warrants and pursuant to provisions for adjustment of the exercise
price of the Company's Class D warrants, each Class D warrant entitles the
holder to purchase approximately two and three-tenths (2.3) (originally one
share) shares of common stock at an adjusted price per share, subject to further
adjustment, of approximately $.88 per share and each Class C warrant to purchase
228,571 (originally 200,000) shares of common stock at $.88 per share. Through
December 31, 1995, 173,750 Class D warrants have been exercised resulting in an
issuance of 397,143 shares of common stock and the receipt by the Company of
$347,500 and 63,334 Class C warrants have been exercised resulting in an
issuance of 72,334 shares of common stock and the receipt by the Company of
$63,344.
Effective June 22, 1995, the Company's shareholders voted to increase the
number of authorized common stock from 20 million shares to 40 million shares.
F-12
<PAGE>
5. COMMON SHAREHOLDERS' EQUITY (continued)
Common shares reserved for future issuance as of December 31, 1995 are as
follows:
Units sold in public offering in 1990:
Class B warrants 969,191
Class E warrants 540,745
Third party options (Note 6) 405,000
Unit Options 766,083
1989 Stock Option Plan (Note 6) 452,000
1989 Nonstatutory Plan (Note 6) 100,000
1995 Stock Option Plan 2,000,000
Warrants issued in private placement in 1991 (Note 8):
Class C warrants 156,189
Class D warrants 5,714
-----------------
5,394,922
=================
6. STOCK OPTIONS
In June 1995, the shareholders of the Company approved the adoption of the
1995 Stock Option Plan (the "1995 Plan"). The 1995 Plan provides for the
granting of incentive stock options ("ISOs") and/or nonqualified stock options
to employees, directors or consultants of the Company to purchase an aggregate
of 2,000,000 shares of the Company's common stock. The option price per share
for ISOs granted under the 1995 Plan shall not be less than the fair market
value of the Company's common stock on the date of grant. Furthermore, the
option price per share shall be determined by the Board of Directors. Options
vest based on certain provisions related principally to future services. Options
are exercisable over various periods up to ten years from the date of grant. No
option may be granted under the 1995 Plan after June 2005. At December 31, 1995,
there were 67,500 shares available for granting of future options. The 1995 Plan
replaced all prior option plans and no further options will be granted under the
prior option plans.
In 1989, the shareholders of the Company approved the adoption of a 1989
Stock Option Plan (the "1989 Plan"). The 1989 Plan provided for the granting of
incentive stock options and/or nonqualified stock options to key employees and
consultants to purchase shares of the Company's common stock at a price per
share not less than the fair market value on
F-13
<PAGE>
6. STOCK OPTIONS (continued)
the date of grant. In 1992, the Plan was amended to (a) increase the number of
shares to 1,565,957, (b) permit the granting of nonqualified stock options at a
price per share less than the fair market value of the Company's common stock on
the date of grant and (c) permit options to be exercised up to two years after
termination of employment under certain circumstances. Options vest based on
certain provisions related principally to future services. Options are
exercisable over various periods up to six years from the date of grant.
Pursuant to the terms of the 1995 Plan, no options may be granted under the 1989
Plan subsequent to June 22, 1995.
In 1989, the Company also adopted a Nonstatutory Stock Option Plan (the
"1989 Nonstatutory Plan") for directors. Under the 1989 Nonstatutory Plan, the
Company could grant options for the purchase of an aggregate of 355,000 shares
of common stock at not less than fair market value at the date of grant. The
options expire at various dates. Pursuant to the terms of the 1995 Plan, no
options may be granted under the 1989 Nonstatutory Plan subsequent to June 22,
1995.
Option activity during each of the two years ended December 31, 1995 for
the 1989 Plan and the 1989 Nonstatutory Plan is summarized as follows:
<TABLE>
<CAPTION>
1989 Plan 1989 Nonstatutory Plan
Shares Under Option Shares Under Option
---------------------------------------------------------------
Option price Number of Shares Option price per Number of
per share share shares
----------------------------------------------------------------
<S> <C> <C> <C> <C>
Balance at January 1, 1994 786,008 115,000
Granted $1.63 to $3.47 265,000 $1.68 to $2.56 98,333
Exercised $1.10 to $1.50 (48,000) $1.13 (7,500)
Cancelled/expired $1.31 to $3.19 (15,000) $1.13 (15,000)
----------------- -----------
Balance at December 31,1994 988,008 190,833
Granted $ .92 119,000 -
Cancelled/expired $ .92 to $3.47 (655,008) $1.13 to $2.56 (90,833)
----------------- -----------
Balance at December 31,1995 452,000 100,000
================= ===========
</TABLE>
F-14
<PAGE>
6. STOCK OPTIONS (continued)
Option activity during the year ended December 31, 1995 for the 1995 Plan
is summarized as follows:
1995 Plan
Shares Under Option
--------------------------------
Option price per Number of
share shares
--------------------------------
Balance at January 1, 1995 -
Granted $.92 to $1.68 1,962,500
Cancelled/expired $ .92 (30,000)
-----------
Balance at December 31,1995 1,932,500
===========
In addition, during 1995, the Company granted 300,000 fully vested
nonstatutory stock options at fair market value to a third party, which are
exercisable for a period of eighteen months at a price of $1.05 per share, and
5,000 nonstatutory stock options at fair market value to a third party, which
vest ratably over four years and are exercisable for a period of five years at a
price of $1.52 per share. Further, in 1994 the Company granted 100,000
nonstatutory stock options at fair market value to a third party, which vest
ratably over two years and are exercisable for a period of five years at a price
of $1.69 per share. At December 31, 1995, all of the 405,000 options are
outstanding.
7. LEASES
In May 1995, the Company renewed its office lease for a term extending from
April 1, 1995 through March 31, 2000. Additionally, the Company has entered into
various operating leases for equipment. Future minimum payments under
noncancellable operating leases for years ending December 31 are as follows:
1996 $180,123
1997 186,006
1998 192,030
1999 194,303
2000 49,022
---------------
$801,484
===============
F-15
<PAGE>
7. LEASES (continued)
Rent expense in 1995 and 1994, under all operating leases, was
approximately $179,000 and $185,000, respectively.
8. PRIVATE PLACEMENTS
On June 25, 1991, the Company completed a private placement, for which D.H.
Blair and Co. Inc. ("Blair") acted as placement agent, of $1,762,500 of its
securities, consisting of $1,101,562 of Senior Secured Convertible Promissory
Notes (the "Notes") convertible into Common Stock at $1.00 per share, 660,937
shares of common stock at $1.00 per share and 176,250 Class D warrants
exercisable over a five-year term at $.88 per share (originally $2.00 per share)
for 402,731 shares (originally 176,250 shares) of common stock. These securities
had been sold pursuant to a Securities Purchase Agreement among the Company, the
purchasers and Blair as purchasers' representative (the "Purchase Agreement"),
in a total of 35.25 Units of $50,000 each, consisting of a $31,250 Note, 18,750
shares of common stock and 5,000 Class D warrants. The Company paid Blair a fee
of $176,250 and expenses of $56,750 and issued to Blair, Class C warrants
exercisable over a five-year term to purchase 228,571 shares (originally 200,000
shares) of common stock at $.88 (originally $1.00 per share). All of the Notes
were converted or redeemed in 1992.
During the period commencing in June 1993 and ending in September 1993, the
Company completed four separate private placements ("Private Placements"), of an
aggregate of 1,843,873 shares of the Company's common stock at prices ranging
from $1.10 to $1.15 per share for net proceeds of $2,039,925. The Company paid
commissions in the amount of $35,075 to an individual, granted 100,000 shares of
unregistered common stock and options to purchase an additional 425,000 shares
of common stock at prices ranging from $1.31 to $3.47 per share, in
consideration of services rendered in connection with the Private Placements.
9. DEFERRED REVENUE
On December 27, 1993, the Company sold 100,000 shares (2.4% interest) of
its subsidiary BCA Services, Inc. to Polaris Partners for the sum of $100,000
resulting in the Company recording such amount as deferred revenue. Pursuant to
an exchange agreement dated April 6, 1995, the Company agreed to exchange the
100,000 shares of BCA Services, Inc.
F-16
<PAGE>
9. DEFERRED REVENUE (continued)
for 100,000 shares of BCAM International, Inc., at which time $99,000 of the
deferred revenue was credited to paid-in surplus and $1,000 was credited to
common stock.
10. SIGNIFICANT CUSTOMERS
The Company generated a significant percentage of its revenue from a small
number of customers, as summarized below:
1995 1994
-------------------------------------------------------------------
% of Net % of Net
Customer Revenue Revenue Revenue Revenue
- --------------------------------------------------------------------------------
A $ 217,000 29% $ - -
B 87,000 12% - -
C 84,000 11% 194,000 17%
D 78,000 10% - -
E 35,000 5% 669,000 59%
F 12,000 2% 100,000 9%
At December 31, 1995, three customers accounted for approximately 83% of
the Company's gross accounts receivable. Consistent with industry standards,
receivables are generally payable within 90 to 120 days and collateral is not
required.
F-17
<PAGE>
Exhibit Index
Exhibit Description Page No.
10.46 Letter Agreement between the Company E-1
and McCord Winn Textron, Inc.
27.00 Financial Data Schedule E-2
<PAGE>
Exhibit 10.46
TEXTRON
Textron Inc. 40 Westminster Street
Providence, RI 02903
401/421-2800
February 15, 1996
Via Facsimile: 516-752-3558
Michael Strauss
Chairman of the Board
Chief Executive Officer
BCAM International Inc.
1800 Walt Whitman Road
Melville, NY 11747
RE: Development and License Agreement between BCAM International Inc. and
McCord Winn Textron Inc.
Dear Mr. Strauss:
At the request of Tony Haba, this letter is being written to further extend
the term of the Development and License Agreement between BCAM and McCord Winn
Textron until April 1, 1996.
Please indicate your agreement and acceptance by signing below and
returning one copy to Tony Haba. Thank you.
Very truly yours,
on behalf of McCord Winn Textron
Miriam A. Ross
Corporate Counsel
Agreed and Accepted:
BCAM International Inc.
By: /s/Michael Strauss
Michael Strauss
Chairman of the Board
Chief Executive Officer
cc: G. Daniels
A. Haba
C. Hauff, Esq.
margen/letters/mar049.doc
E-1
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
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.
</LEGEND>
<CIK> 0000856143
<NAME> BCAM International, Inc.
<MULTIPLIER> 1
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<EXCHANGE-RATE> 1.000
<CASH> 701,686
<SECURITIES> 1,507,172
<RECEIVABLES> 174,321
<ALLOWANCES> 38,326
<INVENTORY> 0
<CURRENT-ASSETS> 2,578,438
<PP&E> 858,348
<DEPRECIATION> 584,371
<TOTAL-ASSETS> 3,034,227
<CURRENT-LIABILITIES> 422,671
<BONDS> 0
0
0
<COMMON> 156,204
<OTHER-SE> 2,447,509
<TOTAL-LIABILITY-AND-EQUITY> 3,034,227
<SALES> 0
<TOTAL-REVENUES> 926,690
<CGS> 0
<TOTAL-COSTS> 556,125
<OTHER-EXPENSES> 2,059,584
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (1,689,480)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,689,480)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,689,480)
<EPS-PRIMARY> (0.011)
<EPS-DILUTED> (0.011)
</TABLE>
