<PAGE>
UNITED STATES
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 February 28, 1997
[ ] TRANSITION REPORT UNDER SECTION 13 or 15(d) OF THE EXCHANGE ACT
For the transition period from ________ to ________
Commission file number 1-13886
CAM DESIGNS INC.
(Exact name of small business issuer as specified in its charter)
Delaware 75-2257039
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
Birmingham Road, Allesley Coventry CV59QE
(Address of principal executive offices)
(011) 44-203-407-700
(Issuer's telephone number)
________________________________________________________
(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 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 ___
As of April 18, 1997, there were 2,175,000 shares of Class A Common Stock issued
and outstanding.
TOTAL PAGES IN THIS REPORT: 14 (including cover page & Exhibits)
<PAGE>
CAM DESIGNS, INC.
INDEX
Page No.
--------
PART 1 - FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements (Index) 1
Consolidated Balance Sheet as of
February 28, 1997 and May 31, 1996. 2-3
Consolidated Statements of Earnings
for the Nine Months ended
February 28, 1997 and 1996 4
Consolidated Statements of Cash Flows
for the Nine Months ended
February 28, 1997 and 1996 5-6
Consolidated Statement of Shareholders
Equity 7
Notes to Consolidated Financial
Statements 8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 9-10
PART II - OTHER INFORMATION
Item 3. Exhibits and Reports on Form 8-K 11
SIGNATURES 12
1
<PAGE>
CAM Designs Inc and Subsidiaries
Unaudited Condensed Consolidated Balance Sheet
February 28, 1997 May 31, 1996
$ $
Assets
Current assets
Cash and cash equivalents 1,248,154 4,432,278
Contract billings receivable 4,052,536 5,023,691
Inventories 2,882,589 356,882
Other current assets 359,786 315,049
---------- ----------
Total current assets 8,543,065 10,127,900
Fixed assets
Investments 1,610 1,515
Property and machinery:
Freehold property 317,225 303,433
Leasehold property 503,610 473,893
Plant and machinery 8,614,507 7,139,474
Less accumulated depreciation (5,701,784) (4,592,685)
Net property, plant and machinery 3,733,558 3,324,115
---------- ----------
12,278,233 13,453,530
========== ==========
2
<PAGE>
CAM Designs Inc and Subsidiaries
Unaudited Condensed Consolidated Balance Sheet
February 28, 1997 May 31, 1996
$ $
Liabilities
Current liabilities
Current instalments of obligations
under bank loan 12,931 18,085
Current instalments of
obligations under capital leases 322,012 482,368
Billings in excess of costs and
estimated earnings on
uncompleted contracts - 361,394
Trade accounts payable 2,879,219 2,523,485
Income taxes payable 841,913 1,261,749
Accrual and other expenses 1,817,880 2,006,374
Promissory notes 214,000 214,000
---------- ----------
Total current liabilities 6,087,955 6,867,455
Obligations under capital
leases excluding current instalments 799,239 851,353
Obligations under bank Loan excluding
current instalments 247,380 240,081
Deferred income taxes 12,558 11,817
---------- ----------
Total liabilities 7,147,132 7,970,706
---------- ----------
Stockholders' equity
Class 'A' common stock, $0.001 par value
Authorised 7,000,000 issued 2,250,000 2,250 2,250
Additional paid-in capital 4,229,765 4,229,765
Treasury stock (475,000) -
Retained earnings 1,374,086 1,250,809
---------- ----------
Total stockholders' equity 5,131,101 5,482,824
---------- ----------
12,278,233 13,453,530
========== ==========
See accompanying notes to unaudited condensed consolidated financial statements.
3
<PAGE>
CAM Designs Inc and subsidiaries
Unaudited Condensed Consolidated Statements of Operations
Dec 1 to June 1 to Dec 1 to June 1 to
February 29, February 29, February 28, February 28
1996 1996 1997 1997
$ $ $ $
Revenue
Automotive
industry 6,369,404 13,018,558 5,249,999 14,873,904
Aerospace
industry 678,710 2,221,515 714,742 2,217,142
Placement of
Personnel 798,267 1,858,054 962,637 2,755,927
--------- ---------- --------- ----------
7,846,381 17,098,127 6,927,378 19,846,973
--------- ---------- --------- ----------
Operating Costs
and expenses
Selling general
and
administrative
expenses 7,114,380 15,231,758 7,307,132 19,314,572
Depreciation 120,475 361,809 189,225 539,234
--------- ---------- --------- ----------
7,234,855 15,593,567 7,496,357 19,853,806
--------- ---------- --------- ----------
Operating profit
Other income/
expense 611,526 1,504,560 (568,979) (6,833)
Investment
income 42,836 97,783 15,288 59,995
Interest
expense - (1,995) (18,828) (35,398)
--------- ---------- --------- ----------
Income
before taxes 654,362 1,600,348 (572,519) 17,724
--------- ---------- --------- ----------
Income taxes
Provision (218,075) (534,977) 193,080 (6,000)
--------- ---------- --------- ----------
Net income 436,287 1,065,371 (379,439) 11,724
--------- ---------- --------- ----------
Net Earnings
Per Share of
Common Stock
and Common
Stock Equivalent $0.16 $0.49 - $0.038
Net loss per
Share of Common
Stock - - ($0.17) -
Weighted
Average Common
Shares and
Common Stock
equivalents 2,925,000 2,405,990 - 2,641,051
Weighted
Average Common
Shares - - 2,175,000 -
See accompanying notes to unaudited consolidated financial statements
4
<PAGE>
CAM Designs Inc and subsidiaries
Unaudited Condensed Consolidated Statements of Cash Flow
June 1 to June 1 to
February 29, February 28,
1996 1997
$ $
Cash flows from
operating activities: 1,065,371 11,724
Net profit
Adjustments to reconcile
net cash provided by
operating activities:
Depreciation 361,809 539,234
Change in operating
assets and liabilities
net of effect of
acquisition of
subsidiary:
Change in receivables 664,716 971,155
Change in Other
Current Assets (48,258) (2,570,444)
Change in accounts
payable 1,199,291 355,734
Change in other
liabilities (597,777) (1,044,724)
---------- ----------
Net cash provided
by operating activities 2,645,152 (1,737,321)
---------- ----------
Cash flows from investing
activities:
Purchases of plant
and equipment (956,740) (633,645)
Purchase of subsidiary (1,681,491) -
---------- ----------
Net cash used in investing
activities: (2,638,231) (633,645)
---------- ----------
5
<PAGE>
Dividends Paid (31,633) -
Net Proceeds from sale of
common stock 4,583,971 -
Repurchase of Stock - (475,000)
Receipt of Loan 266,000 -
Repayment of
borrowings (83,400) (27,587)
Capital element of
finance lease
repayments (197,054) (383,106)
Bank Overdraft (10,995) -
Net cash provided/(used in)
by financing activities 4,526,889 (885,693)
Net increase in cash
Cash at beginning
of period 57,453 4,432,278
Movement in Cash 4,533,810 (3,256,658)
Exchange gain (140,382) (72,534)
Cash at end of period 4,450,881 1,248,154
See accompanying notes to unaudited condensed consolidated financial statements.
6
<PAGE>
CAM Designs Inc and subsidiaries
Unaudited Condensed Consolidated Statements of Shareholders' Equity
Additional Total
Treasury Common paid in Retained stockholders'
Stock Stock capital earnings equity
$ $ $ $ $
CAM Designs Inc
Balance at May
31, 1996 - 2,250 4,229,765 1,250,809 5,482,824
Profit for the
period - - - 11,724 11,724
Dividends declared - - - (75,000) (75,000)
Shares Repurchased (475,000) - - - (475,000)
Exchange Difference - - - 186,553 186,553
-------- ----- --------- --------- ---------
Balance at February
28, 1997 (475,000) 2,250 4,229,765 1,374,086 5,131,101
-------- ----- --------- --------- ---------
See accompanying notes to the unaudited
consolidated condensed financial statements.
7
<PAGE>
CAM Designs Inc and Subsidiaries
Notes to unaudited condensed consolidated financial statements
1. Organisation
On September 9, 1994, CAM Designs Inc. was incorporated as MGA Holdings Inc. The
company name was changed to CAM Designs Inc ("CAM") on April 18, 1995. CAM is a
holding company and has not engaged in any commercial operations during the
period since incorporation.
On July 27, 1995 the shareholders' of MGA Holdings Limited ("MGA") surrendered
100% of the issued shares of MGA (63,200 cumulative convertible participating
preference shares of 1 pound sterling each, 54,551 ordinary shares of 1 pound
sterling each) to CAM. As a result, MGA became a wholly owned subsidiary of CAM.
The economic environment in which MGA operates is in the United Kingdom and
hence its reporting currency is the UK pound sterling (pound sterling).
2. Basis of presentation
The accompanying unaudited condensed consolidated statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and pursuant to the rules and regulations of the
Securities and Exchange Commission. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. For further information, refer to the
financial statements and footnotes thereto included in the Company's annual
report for the fiscal year ended May 31, 1996.
In the opinion of management, the unaudited condensed consolidated financial
statements contain all adjustments, consisting only of normal recurring
adjustments, considered necessary to present fairly the Company's financial
position at February 28, 1996, results of operations for the periods ended
February 28, 1996 and 1995 and cash flows for the periods ended February 28,
1996 and 1995. The results for the period ended Febraury 28, 1996 are not
necessarily indicative of the results to be expected for the entire fiscal year
ending February 28, 1996.
The effective date of the acquisition of MGA was July 27, 1995. The acquisition
has been accounted for under the purchase method of accounting. Under this
method, the results of MGA Holdings Limited and subsidiaries are included in the
consolidated statement of operations of CAM from the date of acquisition.
Profit and Loss Accounts in foreign currencies are translated into US Dollars at
average rates for the relevant according periods. Assets and Liabilities are
translated at exchange rates ruling at the date of the Group Balance Sheet.
8
<PAGE>
Management Discussion and Analysis of Financial Condition
and Result of Operations
On July 27, 1995, both the consummation of the Company's initial public offering
and its reorganization whereby the Company acquired all of the capital stock of
CAM Designs Ltd. (formerly MGA Holdings Ltd.) took place. For purposes of
permitting a comparison to prior periods, this section utilizes the results for
the Company's fiscal quarters for comparison with those of the comparable
quarter of the Company's prior fiscal year, and ignores the actual date of
acquisition for accounting comparison purposes.
3 months ended February 28, 1997 as compared to 3 Months ended February 28, 1996
Summary of Operations
Sales for the quarter totaled $6.9 million, bringing year to date sales to $19.8
million, an increase of 16% verses the same quarter last year.
However, due to continuing cost-overruns on two contracts previously introduced
in the prior quarter (a contract for customized vehicles and an aerospace
contract), margins have been severely eroded, resulting in a loss after tax
benefits of $379,439. Although both contracts are considered to be of a long
term strategic benefit to CAM's growth, significantly higher costs have been
incurred on current stages of the contracts than was anticipated and have
resulted in the current depressed earnings.
Full year results will be dependent upon a successful outcome of current
discussions with both customers with regards to cost recovery but management
cannot now predict the outcome of such discussions. Although underlying business
in personnel, automotive and aerospace sales continue to be encouraging,
continuing cost overruns on these two projects (particularly the automotive
contract) could further erode margins and result in an operating loss for the
fourth quarter as well.
Consolidation of Ruecker International, acquired for an initial cost of $105,000
(representing its net asset value) will be completed in the fourth quarter and
should have a positive effect on future earnings and growth, as it is currently
operating at 10% gross margins on turnover of approximately $7 million per year.
Ruecker provides the services of designers and engineers to the automotive
industry throughout the world, focusing upon Detroit, Australia and the Far
East.
Liquidity and Capital Resources
On July 27, 1995, the Company consummated its initial public offering of
securities consisting of 575,000 units (including the underwriter's
over-allotment option). Each unit consisted of two shares of Class A Common
Stock and one Class A Purchase Warrant
9
<PAGE>
entitling the holder to purchase one share of Class A Stock at a price of $8.00
per share for a 5 year period.
The Company received net proceeds of approximately $4.5 million from such
offering, after underwriting discounts and commissions and other expenses of the
offering. The Company ultimately utilized approximately $1.9 million of such
proceeds to fund the purchase of a portion of the outstanding securities and
liabilities of its British subsidiary from a principle stockholder, NatWest
Ventures, and has utilized approximately $1.5 million of such proceeds for the
expansion of its facilities and the purchase of additional equipment.
On longer term contracts, the Company normally obtains stage payments against
work completed to date to ensure project funding is maintained at reasonable
levels and uncharged work-in-progress minimized. The level of inventories and
work-in-progress has increased over the last fiscal year to the current level of
$2.9 million due to funding of the tooling for a recently secured vehicle
conversion project which will be amortized over the period of the contract and
also due to the two projects discussed hereinabove which have incurred cost
overruns. Recovery of these amounts in full is dependent on successful
discussions with the clients respecting completion of the two projects which
incurred such overruns.
Forward looking Statements
This report contains certain forward looking statements within the meaning of
Section 27A of the Securities Act and Section 21E of the Exchange Act, which are
intended to be covered by the safe harbors created thereby. Although the Company
believes that the assumptions underlying the forward looking statements
contained herein are reasonable, any of the assumptions could be inaccurate, and
therefore, there can be no assurance that the forward looking statements
contained in this report will prove to be accurate. Factors that could cause
actual results to differ from the results specifically discussed in the forward
looking statements included, but are not limited to, the absence of anticipated
contracts or higher than historical costs incurred in performance of contracts.
10
<PAGE>
Part II
Other Information
Item 6. Exhibits
(a) Exhibits
Calculation of Earnings Per Share.
8-K Reports
(b) No reports on Form 8-K were filed during the quarter in reference.
11
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report on Form 10-QSB to be signed on its behalf
by the undersigned thereto duly authorized.
Dated: April 18, 1997
CAM DESIGNS, INC.
s/John R. Davidson
John R. Davidson
Chairman of the Board,
President and Chief Executive Officer
(Principal Executive Officer)
s/Robert A. Righton
Robert A. Righton
Chief Financial Officer and Treasurer
(Principal Financial Officer)
12
<PAGE>
Exhibit A
CAM Designs Inc
EPS Calculations for period Dec 1, 1996 to February 28, 1997
Total loss as per unaudited consolidated interim accounts
Add: Net assumed interest income for whole period (379,439)
---------
Adjusted net loss
Net loss per total weighted average (379,439)
---------
2,175,000
= ($0.17) cents/share
EPS Calculations for period June 1, 1996 to February 28, 1997
Total income as per unaudited consolidated interim accounts 11,724
Add: Net assumed interest income for whole period 88,473
---------
Adjusted net income 100,197
Net income per total weighted average 100,197
---------
2,641,051
= 0.038 cents/shares
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from the
consolidated financial statements and is qualified in its entirety by reference
to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> FEB-28-1997
<PERIOD-START> JUN-01-1996
<PERIOD-END> FEB-28-1997
<CASH> 1,248,154
<SECURITIES> 0
<RECEIVABLES> 4,052,536
<ALLOWANCES> 0
<INVENTORY> 2,882,589
<CURRENT-ASSETS> 8,543,065
<PP&E> 9,435,342
<DEPRECIATION> 5,701,784
<TOTAL-ASSETS> 12,278,233
<CURRENT-LIABILITIES> 6,087,955
<BONDS> 0
<COMMON> 5,131,101
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 12,278,233
<SALES> 19,846,973
<TOTAL-REVENUES> 19,846,973
<CGS> 19,314,572
<TOTAL-COSTS> 19,853,806
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 35,398
<INCOME-PRETAX> 17,724
<INCOME-TAX> 6,000
<INCOME-CONTINUING> 11,724
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 11,724
<EPS-PRIMARY> .038
<EPS-DILUTED> .038
</TABLE>
