<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(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, 1997
[ ] TRANSITION REPORT UNDER SECTION 13 or 15(d) OF THE
EXCHANGE ACT
For the transition period from to
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Commission file number 1-13886
CAM DESIGNS INC.
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(Exact name of small business issuer as specified in its charter)
Delaware 75-2257039
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State or other jurisdiction of (IRS Employer
ncorporation 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
- ---- -------
As of January 1, 1998, 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.
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INDEX
Page No.
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PART 1 FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements (Index) 1
Consolidated Balance Sheet as of
November 30, 1997 2 - 3
Consolidated Statements of Earnings
for the Six Months Ended
November 30, 1997 and 1996 4
Consolidated Statements of Cash Flows
for the Six Months Ended
November 30, 1997 and 1996 5 - 6
Consolidated Statement of Shareholder's
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
<PAGE>
CAM Designs Inc and Subsidiaries
--------------------------------
Unaudited Condensed Consolidated Balance Sheet
----------------------------------------------
<TABLE>
<CAPTION>
November 30, 1997 May 31, 1997
$ $
<S> <C> <C>
Assets
Current assets
Cash and cash equivalents 25,930 545,515
Contract billings receivable 4,124,414 4,289,450
Inventories 988,960 562,401
Other current assets 1,210,016 736,359
---------------- ---------------
Total current assets 6,349,320 6,133,725
Fixed assets
Investments 1,721 1,721
Property and machinery:
Freehold property 332,475 328,218
Leasehold property 519,250 538,822
Plant and machinery 10,328,977 9,392,186
Less accumulated depreciation (6,569,711) (5,881,455)
---------------- ---------------
Net property, plant and machinery 4,610,991 4,377,771
---------------- ---------------
Goodwill, less accumulated
amortisation 74,430 74,488
Deferred tax asset 206,980 205,501
---------------- ---------------
11,243,442 10,793,206
---------------- ---------------
</TABLE>
<PAGE>
CAM Designs Inc and Subsidiaries
--------------------------------
Unaudited Condensed Consolidated Balance Sheet
----------------------------------------------
<TABLE>
<CAPTION>
November 30, 1997 May 31, 1997
$ $
<S> <C> <C>
Liabilities
Current liabilities
Bank Overdraft 2,920,229 350,606
Current instalments of obligations
under bank loan 19,717 19,465
Current instalments of obligations
under capital leases 656,761 648,353
Current instalment of obligations
under loan 244,892 147,656
Billings in excess of costs and
estimated earnings on uncompleted
contracts - 510,072
Trade accounts payable 2,413,195 3,229,899
Income taxes payable - -
Accrual and other expenses 3,367,300 3,007,975
Promissory notes - 214,000
-------------- ---------------
Total current liabilities 9,622,094 8,128,026
Obligations under capital leases
excluding current instalments 341,153 468,833
Obligations under bank loan
excluding current instalments 219,137 228,981
-------------- ---------------
Total liabilities 10,182,384 8,825,840
-------------- ---------------
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
Currency translaiton adjustment (48,365) 171,222
Treasury Stock (475,000) (475,000)
Retained earnings (2,647,592) (1,960,871)
-------------- ---------------
Total stockholders' equity 1,061,058 1,967,366
-------------- ---------------
11,243,442 10,793,206
============== ===============
</TABLE>
See accompanying notes to unaudited condensed consolidated financial statements.
<PAGE>
CAM Designs Inc and Subsidiaries
--------------------------------
Unaudited Condensed Consolidated Statements of Operations
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<TABLE>
<CAPTION>
Sept 1 to June 1 to Sept 1 to June 1 to
November 30, November 30, November 30, November 30,
1996 1996 1997 1997
$ $ $ $
<S> <C> <C> <C> <C>
Revenue
Automotive industry 5,126,399 6,649,154 4,434,263 9,327,175
Aerospace industry 1,105,352 1,542,805 539,880 1,145,200
Placement of Personnel 828,789 1,059,787 1,726,552 3,400,926
--------------- -------------- --------------- --------------
7,060,540 9,251,746 6,700,695 13,873,301
--------------- -------------- --------------- --------------
Operating Costs and expenses
Selling general and
administrative expenses 6,285,899 8,117,378 6,908,512 14,625,002
Depreciation 177,060 241,334 104,704 291,208
--------------- -------------- --------------- --------------
6,462,959 8,358,712 7,013,216 14,916,210
--------------- -------------- --------------- --------------
Operating profit 597,581 893,034 (312,521) (1,042,909)
Other income/expense - - - -
Investment income 40,841 54,947 94 23,191
Interest expense - (1,995) (188,799) (218,399)
Gain on sale of equipment - - - -
--------------- -------------- --------------- --------------
Income before taxes 638,422 945,986 (501,226) (1,238,117)
--------------- -------------- --------------- --------------
Income taxes Provision 212,160 316,902 (163,000) (383,000)
--------------- -------------- --------------- --------------
Net income 426,262 629,084 (338,226) (855,117)
--------------- -------------- --------------- --------------
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
<TABLE>
<S> <C> <C> <C> <C>
Net Earnings Per Share of
Common Stock and Common
Stock Equivalent 0.17 0.33 - -
Net loss per Share of Common
Stock - - (0.15) (0.39)
Weighted Average Common
Shares and Common Stock
equivalents 2,925,000 2,146,485 - -
Weighted Average Common
Shares - - 2,175,000 2,175,000
</TABLE>
<PAGE>
CAM Designs Inc
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Unaudited Condensed Consolidated Statements of Cash Flow
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<TABLE>
<CAPTION>
CAM Designs CAM Designs
Inc Inc
June 1 to June 1 to
November 30, 1996 November 30, 1997
$ $
<S> <C> <C>
Cash flows from operating
activities:
Net profit/(loss) 391,163 (855,117)
Adjustments to reconcile
net cash provided by
operating activities:
Depreciation 350,009 241,334
Change in operating assets
and liabilities:
Change in receivables 805,484 220,631
Change in Other Current Assets (903,943) (857,557)
Change in accounts payable (755,434) (859,295)
Change in other liabilities (607,149) (227,192)
---------------- -----------------
Net cash provided by operating
activities (719,870) (2,337,196)
---------------- -----------------
Cash flows from investing
activities:
Purchases of plant and equipment (620,464) (479,418)
---------------- -----------------
Net cash used in investing
activities: (620,464) (479,418)
---------------- -----------------
Cash flows from financing
activities:
Repurchase of stock (475,000) -
Repayment of borrowings (22,926) (12,975)
Repayment of promissory note - (214,000)
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
Capital element of finance lease
repayments (207,669) (135,445)
Bank Overdraft - 2,596,050
---------------- -----------------
Net cash provided/(used in) by
financing activities (705,595) 2,233,630
---------------- -----------------
Net increase/(decrease) in
cash and cash equivalents
Cash and cash equivalents at
beginning of period 4,432,278 545,515
Movement in Cash (2,045,929) (582,984)
Exchange gain 102,556 63,399
---------------- -----------------
Cash and cash equivalents at
end of period 2,488,905 25,930
================ =================
</TABLE>
See accompanying notes to unaudited condensed consolidated financial statements.
<PAGE>
CAM Designs Inc
---------------
Unaudited Condensed Consolidated Statements of Shareholders' Equity
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<TABLE>
<CAPTION>
Additional Total
Treasury Common paid in Retained Stock-holders
Stock Stock Capital earnings Equity
$ $ $ $ $
<S> <C> <C> <C> <C> <C>
CAM Designs Inc
Balance at August 31, 1997 (475,000) 2,250 4,229,765 (2,309,366) 1,447,649
Loss for the period - - - (338,226) (338,226)
Exchange Difference - - - (48,365) (48,365)
------------ ------------ ------------ -------------- ---------------
Balance at November 30, 1997 (475,000) 2,250 4,229,765 (2,695,957) 1,061,058
------------ ------------ ------------ -------------- ---------------
</TABLE>
See accompanying notes to the unaudited consolidated condensed financial
statements.
<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 (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 operating 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,
1997.
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 30, 1997 and 1996 and cash flows for the
periods ended November 30, 1997 are not necessarily indicative of the
results to be expected for the entire fiscal year ending May 31, 1998.
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.
<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 November, 1997 as compared to 3 Months ended November 30,
1996
Summary of Operations
Sales for the quarter totaled $6.7 million, against $7.6 million for the same
period last year. Year-to-date sales of $13.9 million compared to $12.9 million
for the six months to November 30, 1996 which represents an increase of 7%.
Operating costs of $7 million are 7% down on the same period last year, and
represent the initial results of the realignment enacted in late first quarter
of this year and should further improve in the third quarter. The full benefits
of this reduction will be realized when negotiations for significant new
contracts are finalized and capacity becomes fully utilized as work on these
projects commences.
After tax losses of $0.3 million were incurred and although an improvement on
the first quarter losses of $0.5 million, are still below the 1996/97
comparative periods profits of $47,992. The loss resulted from a combination of
higher sales volume in the personnel placement area (a lower margin business) as
well as exceptional financing costs of $0.2 million due to short term credit
arrangements and the associated costs of under utilized labor.
Although fixed capacity costs have been reduced, as a result of the realignment
program, management considers that present levels need to be maintained to
retain its core skill base for future growth plans.
Management hopes that the aggressive current bidding will result in significant
new orders, so that the recently completed alignment will yield significantly
improved operating results for CAM and establish its position in its targeted
niche markets.
<PAGE>
Liquidity and Capital Resources
Liquidity continues to be very tight and although temporary increased bank
credit lines and deferred creditor terms have been agreed, which has resulted in
significant short term finance costs being incurred, management considers new
loans and/or equity required in order to implement its strategic growth
plans. The company and an investor group are in the final stages of
negotiations for the Company to secure up to approximately $1.5 million of
debt convertible into new equity, which when complete will enable completion
of approximately $3 million of bank credit and loan agreements.
Non-completion of this funding could severely affect the Group's ability to
continue normal operations, although once the funding is secured, management is
confident sufficient resources and future funding options will be available to
allow the Company to progress its strategic objectives with regard to both
operations and future acquisitions and joint ventures.
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, lack of further debt and/or
equity financing, the absence of anticipated contracts or higher than historical
costs incurred in performance of contracts.
<PAGE>
Part II
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Other Information
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Item 6. Exhibits
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(a) Exhibits
---------
(i) Calculation of Earnings Per Share - Exhibit 11.
(ii) Edgar-Financial Data Schedule - Exhibit 27.
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-Q to be signed on its behalf
by the undersigned thereto duly authorized.
Dated: January 12, 1998
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)
<PAGE>
Exhibit A
CAM Designs Inc
EPS Calculations for period September 1, 1997 to August 31, 1997
Total loss as per unaudited consolidated interim accounts (338,226)
Add: Net assumed interest income for whole period --
------------
Adjusted net loss (338,226)
Net loss per total weighted average (338,226)
------------
= $0.15 cents/shares
EPS Calculations for period June 1, 1997 to November 30, 1997
Total income as per unaudited consolidated interim accounts (855,117)
Add: Net assumed interest income for whole period --
------------
Adjusted net income (855,117)
Net Loss per total weighted average (855,117)
------------
= ($0.39) 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.
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAY-31-1998
<PERIOD-START> JUN-01-1997
<PERIOD-END> NOV-30-1997
<CASH> 25,930
<SECURITIES> 0
<RECEIVABLES> 4,124,414
<ALLOWANCES> 0
<INVENTORY> 1,210,016
<CURRENT-ASSETS> 6,349,320
<PP&E> 11,180,702
<DEPRECIATION> 6,569,711
<TOTAL-ASSETS> 11,243,442
<CURRENT-LIABILITIES> 9,622,094
<BONDS> 0
<COMMON> 1,061,058
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 11,243,442
<SALES> 13,873,301
<TOTAL-REVENUES> 13,873,301
<CGS> 14,916,210
<TOTAL-COSTS> 14,916,210
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 218,399
<INCOME-PRETAX> (1,238,117)
<INCOME-TAX> 383,000
<INCOME-CONTINUING> (855,117)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (855,117)
<EPS-PRIMARY> (0.39)
<EPS-DILUTED> (0.39)
</TABLE>
