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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 November 30, 1996
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[ ] TRANSITION REPORT UNDER SECTION 13 or 15(d) OF THE
EXCHANGE ACT
For the transition period from ______ to ______
Commission file number 1-13886
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CAM DESIGNS INC.
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(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
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(Address of principal executive offices)
(011) 44-203-407-700
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(Issuer's telephone number)
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(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
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As of January 1, 1997, there were 2,250,000 shares of Class A Common Stock
issued and outstanding.
TOTAL PAGES IN THIS REPORT: 14 (including cover page & Exhibits)
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CAM DESIGNS, INC.
INDEX
Page No.
PART 1 - FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements (Index) 1
Consolidated Balance Sheet as of
November 30, 1996 2-3
Consolidated Statements of Earnings
for the Six Months ended
November 30, 1996 and 1995 4
Consolidated Statements of Cash Flows
for the Six Months ended
November 30, 1996 and 1995 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
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CAM Designs Inc and Subsidiaries
Unaudited Condensed Consolidated Balance Sheet
November 30, 1996 May 31, 1996
$ $
Assets
Current assets
Cash and cash equivalents 2,488,905 4,432,278
Contract billings receivable 4,686,300 5,023,691
Inventories 1,258,610 356,882
Other current assets 432,106 315,049
----------- -----------
Total current assets 8,865,921 10,127,900
Fixed assets
Investments 1,670 1,515
Property and machinery:
Freehold property 329,047 303,433
Leasehold property 522,377 473,893
Plant and machinery 8,817,875 7,139,474
Less accumulated depreciation
and amortisation (5,720,405) (4,592,685)
----------- -----------
Net property, plant and machinery 3,948,894 3,324,115
----------- -----------
12,816,485 13,453,530
=========== ===========
2
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CAM Designs Inc and Subsidiaries
Unaudited Condensed Consolidated Balance Sheet
November 30, 1996 May 31, 1996
$ $
Liabilities
Current liabilities
Current instalments of obligations
under bank loan 13,413 18,085
Current instalments of
obligations under capital leases 411,988 482,368
Billings in excess of costs and
estimated earnings on
uncompleted contracts - 361,394
Trade accounts payable 1,982,864 2,523,485
Income taxes payable 1,070,794 1,261,749
Accrual and other expenses 2,304,248 2,006,374
Promissory notes 214,000 214,000
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Total current liabilities 5,997,307 6,867,455
Obligations under capital
leases excluding current instalments 838,689 851,353
Obligations under bank Loan excluding
current instalments 246,933 240,081
Promissory notes - -
Deferred income taxes 13,026 11,817
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Total liabilities 7,095,955 7,970,706
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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 1,963,515 1,250,809
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Total stockholders' equity 5,720,530 5,482,824
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12,816,485 13,453,530
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See accompanying notes to unaudited condensed consolidated financial statements
3
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CAM Designs Inc
Unaudited Condensed Consolidated Statements of Operations
CAM Designs Inc CAM Designs Inc
Sept 1 to June 1 to Sept 1 to June 1
November 30, November 30, November 30, November 30
1995 1995 1996 1996
$ $ $ $
Revenue.
Automotive
industry. 5,126,399 6,649,154 5,778,379 9,623,905
Aerospace
industry. 1,105,352 1,542,805 989,774 1,502,400
Placement of
Personnel. 828,789 1,059,787 858,254 1,793,290
---------- ---------- ---------- ----------
7,060,540 9,251,746 7,626,407 12,919,595
---------- ---------- ---------- ----------
Operating Costs
and expenses.
Selling general
and
administrative
expenses. 6,285,899 8,117,378 7,368,066 12,007,440
Depreciation. 177,060 241,334 178,893 350,009
---------- ---------- ---------- ----------
6,462,959 8,358,712 7,546,959 12,357,449
---------- ---------- ---------- ----------
Operating
profit. 597,581 893,034 79,448 562,146
Other income/
expense.
Investment
income. 40,841 54,947 17,194 44,667
Interest
expense. - (1,995) (16,570) (16,570)
Gain on sale
of equipment. - - - -
Income ---------- ---------- ---------- ----------
before taxes. 638,422 945,986 80,072 590,243
---------- ---------- ---------- ----------
Income taxes.
Provision. 212,160 316,902 32,080 199,080
---------- ---------- ---------- ----------
Net income. 426,262 629,084 47,992 391,163
---------- ---------- ---------- ----------
See accompanying notes to unaudited consolidated financial statements
Net Earnings
Per Share of
Common
Stock $0.17 $0.33 $0.03 $0.167
Weighted
Average Common
Shares 2,925,000 2,246,485 2,850,000 2,866,576
4
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CAM Designs Inc
Unaudited Condensed Consolidated Statements of Cash Flow
CAM CAM
Designs Designs
Inc Inc
June 1 to June 1 to
November 30, November 30,
1995 1996
$ $
Cash flows from
operating activities:
Net profit 629,084 391,163
Adjustments to reconcile
net cash provided by
operating activities:
Depreciation 305,365 350,009
Change in operating
assets and liabilities
net of effect of
acquisition of
subsidiary:
Change in receivables 669,793 805,484
Change in Other
Current Assets 102,699 (903,943)
Change in accounts
payable 435,471 (755,434)
Change in other
liabilities 1,224,457 (607,149)
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Net cash provided
by operating activities 3,366,869 (719,870)
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Cash flows from investing
activities:
Purchases of plant
and equipment (634,334) (620,464)
Purchase of Investment - -
Purchase of subsidiary (1,681,491) -
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Net cash used in investing
activities: (2,315,825) (620,464)
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5
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Dividends Paid - -
Net Proceeds from sale of
common stock 4,583,971 -
Repurchase of Stock - (475,000)
Repayment of
borrowings (83,400) (22,926)
Capital element of
finance lease
repayments (19,243) (207,669)
Bank Overdraft (10,995) -
----------- -----------
Net cash provided/(used in)
by financing activities 4,470,333 (705,595)
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Net increase in cash
Cash at beginning
of period 57,453 4,432,278
Movement in Cash 5,521,377 (2,045,929)
Exchange gain (75,174) 102,556
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Cash at end of period 5,503,656 2,488,905
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See accompanying notes to unaudited condensed consolidated financial statements
6
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CAM Designs Inc
Unaudited Condensed Consolidated Statements of Shareholders' Equity
Additional Total
Treasury Common paid in Retained stock-
Stock Stock capital earnings holders'
equity
$ $ $ $ $
CAM Designs Inc
Balance at May - 2,250 4,229,765 1,250,809 5,482,824
31, 1996
Profit for the
period - - - 391,163 391,163
Dividends declared - - - - -
Shares Repurchased (475,000) - - - (475,000)
Exchange Difference - - - 321,543 321,543
-------- ------ ---------- ---------- ----------
Balance at November
30, 1996 (475,000) 2,250 4,229,765 1,963,515 5,720,530
-------- ------ ---------- ---------- ----------
See accompanying notes to the unaudited consolidated condensed financial
statements.
7
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CAM Designs Inc and Subsidiaries
and MGA Holdings Limited and
Subsidiaries Limited
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 (pound)1 each, 54,551
ordinary shares of (pound)1 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)).
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 November 31, 1996, results of operations
for the periods ended November 31, 1996 and 1995 and cash flows for the
periods ended November 31, 1996 and 1995. The results for the period
ended November 31, 1996 are not necessarily indicative of the results to
be expected for the entire fiscal year ending November 31, 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
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Managements 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 reorganisation 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 first fiscal quarter 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 November 30 1996 as compared to 3 Months ended November 30 1995
Summary of Operations
Sales for the quarter totalled $7.6 million against $7.1 million in the same
period last year, bringing year to date sales to $12.9 million verses $9.2
million in the same period last year.
However, because of special circumstances encountered by the Company with
respect to two particular contracts, margins have been adversely impacted,
resulting in net earnings after taxes of approximately $48,000 as compared to
approximately $426,000 generated during the corresponding quarter in the prior
fiscal year. One of these contracts is for customized vehicles, and the current
stage required considerably more effort than had been anticipated by both
parties; the Company is engaged in informal discussions to seek a recovery of
these extra costs from the customer.
In addition, the Company elected to invigorate its aerospace arm by developing
expertise in a potentially highly profitable segment of the market by securing a
short-term technically sophisticated contract at a lower than normal margin.
Management is taking steps to exploit its expanded expertise derived as a
result, by seeking additional contracts and/or extensions of these contracts
which will result in a resumption of the Company's revenue and earnings growth.
Control of overhead costs continues to be tightly controlled and totalled 14% of
revenues in the period.
Interest Income reduced in the period as a result of reduced investments due to
the recently completed partial share buy-back and increased working capital
requirements but is currently forecast to improve over the next quarter.
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 entitling the holder to purchase one
share of Class A stock at a price of $8.00 per share for a 5 year period.
9
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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. The
Company anticipates that the balance of the proceeds of such public offering,
together with funds generated from operations equal to approximately $2.4
million in the aggregate will enable it to fund its operating and capital needs
through at least the current fiscal year and should the Company require
presently unanticipated further funds, approximately $1 million of bank and
finance credit lines are in place.
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 minimised. The level of work-in-progress
has increased over the last fiscal year to the current level of $1.2 million due
to the advanced stages of current large contracts, whereby invoices will be
issued upon delivery of finished vehicles. The Company does not envisage any
difficulty in funding these or other projects over the next twelve months.
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.
In light of the significant uncertainties inherent in the forward looking
statements included herein, the inclusion of such information should not be
regarded as a representation by the Company or any other person that the
objectives and plans of the Company will be achieved.
10
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Part II
Other Information
Item 4. Submission of Matters to a Vote of Security Holders
The Annual Meeting of Stockholders of CAM Designs Inc. was held on
November 4, 1996.
One proposal, subject to stockholder approval, was approved at the
Annual Meeting by a vote of stockholders. Under this proposal,
management nominees for election to the Board of Directors, Messrs.
John R. Davidson, Robert A. Righton, William E. Camplisson, Peter D.
Horbury and Theodore Sall, Ph.D., were re-elected as directors of the
Company to serve until the Annual Meeting of Stockholders and until
their respective successors are duly elected and qualified.
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
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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: January 13, 1997
CAM DESIGNS, INC.
/s/ John R. Davidson
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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
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Exhibit A
CAM Designs Inc
EPS Calculations for period Sept 1, 1996 to November 30, 1996
Total income as per unaudited consolidated interim accounts 47,992
Add: Net assumed interest income for whole period 46,160
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Adjusted net income 94,152
Net income per total weighted average 94,152
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= 3.3 cents/share
EPS Calculations for period June 1, 1996 to November 30,1996
Total income as per unaudited consolidated interim accounts 391,163
Add: Net assumed interest income for whole period 88,473
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Adjusted net income 479,636
Net income per total weighted average 479,636
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= 16.7 cents/shares
