UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(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, 1999
[ ] 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
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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
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(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
Baysham Court, Sellack, Ross-on-Wye, Herefordshire, England Hr9 6QR
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(Address of principal executive offices)
(011) 44-1-989-563473
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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 April 10, 1999, there were 2,642,375 shares of Class A Common Stock issued
and outstanding.
TOTAL PAGES IN THIS REPORT: 14 (including cover page & Exhibits)
1
<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, 1999 2-3
Consolidated Statements of Earnings for the
Nine Months Ended February 28, 1999 and 1998 4
Consolidated Statements of Cash Flows for
the Nine Months ended February 28, 1999 and 1998 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
SIGNATURE 12
1
<PAGE>
CAM Designs Inc and Subsidiaries
Unaudited Condensed Consolidated Balance Sheet
February 28, 1999 May 31 1998
$ $
Assets
Current assets
Cash and cash equivalents 3,065
Contract billings receivable 25,000 2,626,267
Inventories 704,918
Other current assets 245,297
-------------- ---------------
Total current assets 25,000 3,579,547
Fixed assets
Investments 1,708
Property and machinery:
Freehold property 326,465
Leasehold property 535,945
Plant and machinery 10,558,872
Less accumulated depreciation (6,482,240)
--------------- ---------------
Net property, plant and machinery 4,939,042
--------------- ---------------
Goodwill, less accumulated
amortization 46,555 46,555
Deferred tax asset 65,498
--------------- ---------------
71,555 8,632,350
--------------- ---------------
<PAGE>
CAM Designs Inc and Subsidiaries
Unaudited Condensed Consolidated Balance Sheet
February 28, 1999 May 31, 1998
$ $
Liabilities
Current liabilities
Bank Overdraft 39,350 1,846,708
Current instalments of obligations
under bank loan 19,361
Current instalments of obligations
under capital leases 845,209
Current instalment of obligations
under loan 199,988
Billings in excess of costs and
estimated earnings on uncompleted - -
contracts
Trade accounts payable 113,400 1,710,078
Income taxes payable - -
Accrual and other expenses 8,000 3,109,355
Promissory notes - -
------------- ----------------
Total current liabilities 160,750 7,730,699
Obligations under capital leases
excluding current instalments 213,603
Obligations under bank loan
excluding current instalments 364,135
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Total liabilities 160,750 8,308,437
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Stockholders' equity
Class 'A' common stock, $0.001 par value
Authorized 9,000,000 issued 2,642,859 shares in 1998 & 2,250,000 shares in 1997
2,643 2,643
Class 'A' convertible Preferred Stock, $0.001 par value
Authorized 1,000,000 issued 800 shares in 1998 1 1
Additional paid-in capital 6,242,375 6,242,375
Retained earnings
Currency translation adjustment 237,283
Accumulated deficit (5,859,214) (5,683,389)
Treasury stock: 75,000 common stock at cost (475,000) (475,000)
-------------- ----------------
Total stockholders' equity (89,195) 323,913
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71,555 8,632,350
========== =========
See accompanying notes to unaudited condensed consolidated financial statements.
<PAGE>
CAM Designs Inc and Subsidiaries
Unaudited Condensed Consolidated Statements of Operations
June 1 to June 1 to June 1 to June 1 to August 31,
August 31, August 31, August 31,
1997 1997 1998 1998
$ $ $ $
Revenue
Automotive industry 4,892,912 4,892,912 1,980,561 1,980,561
Aerospace industry 605,320 605,320 496,108 496,108
Placement of Personnel 1,674,374 1,674,374 1,773,648 1,773,648
------------ ----------- ----------- -----------
7,172,606 7,172,606 4,250,317 4,250,317
------------ ----------- ----------- -----------
Operating Costs and
expenses
Selling general and
administrative expenses 7,716,490 7,716,490 4,374,872 4,374,872
Depreciation 186,504 186,504 175,480 175,480
------------ ----------- ----------- -----------
7,902,994 7,902,994 4,550,352 4,550,352
------------ ----------- ------------ ----------
Operating profit
Other income/expense (730,388) (730,388) (300,035) (300,035)
Investment income 23,097 23,097 - -
Interest expense (29,600) (29,600) 48,114 48,114
Gain on sale of equipment - - - -
------------ ----------- ------------ ----------
Income before taxes (736,891) (736,891) (348,149) (348,149)
------------ ----------- ------------ -----------
Income taxes Provision (220,000) (220,000) 114,889 114,889
------------ ----------- ------------ -----------
Net income (516,891) (516,891) (233,260) (233,260)
------------ ----------- ------------ -----------
See accompanying notes to unaudited consolidated financial statements.
Net Earnings Per Share of
Common Stock and Common
Stock Equivalent (0.24) (0.09)
Weighted Average Common
Shares and Common Stock 2,524,538 2,669,053
equivalents
<PAGE>
CAM Designs Inc
Unaudited Condensed Consolidated Statements of Cash Flow
CAM Designs CAM Designs
Inc Inc
June 1 to June 1 to
February 28, 1998 February 28, 1999
$ $
Cash flows from operating activities:
Net profit/(loss) (1,048,231) (175,825)
Adjustments to reconcile net cash provided by operating activities:
Depreciation 479,308 0
Change in operating assets and liabilities:
Change in receivables 149,858 0
Change in Other Current Assets (1,692,104) 0
Change in accounts payable (724,135) 11,400
Change in other liabilities (93,289) 0
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Net cash provided by operating
activities (2,928,593) (164,425)
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Cash flows from investing activities:
Purchases of plant and equipment (428,179) 0
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Net cash used in investing
activities: (482,179) 0
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Cash flows from financing activities:
Repurchase of stock -
Repayment of borrowings (14,535) 0
<PAGE>
Repayment of promissory note (214,000) -
Capital element of finance lease
repayments (252,301) 0
Stock Issue 1,043,750 0
Bank Overdraft 2,324,892 0
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Net cash provided/(used in) by
financing activities 2,887,806 0
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Effect of receivership of UK Co.'s (566,386)
see note below
Net increase/(decrease) in
cash and cash equivalents
Cash and cash equivalents at
beginning of period 545,515 (1,846,708)
Write off of bank overdraft -see below 1,642,680
Movement in Cash (522,966) 401,961
Exchange gain 13,519 (237,283)
------------ ------------
Cash and cash equivalents at
end of period 36,068 (39,350)
========== ==========
The change of $11,400 in accounts payable for the period to February 28, 1999
represents an increase in creditors in that quarter. See accompanying notes to
unaudited condensed consolidated financial statements.
In view of the trading position of the major subsidiaries it would be misleading
to account for it in the above cash flow movements through operating activities
other than the loss for the period where assets/liabilities have been
extinguished in the UK.
Effect of receivership of UK Co.'s.
Write off of :Net current assets (3,554,547)
:Investments (1,708)
:Fixed Assets (4,939,042)
:Deferred Tax (65,498)
:Liabilities 6,351,729
:Bank Overdraft 1,642,680
TOTAL NET EFFECT (566,386)
<PAGE>
CAM Designs Inc
Unaudited Condensed Consolidated Statements of Shareholders' Equity
<TABLE>
<CAPTION>
Additional Currency Accumulated Treasury Total
Treasury Convertible paid in translation deficit stock stockholders
Stock preferred stock Capital adjustment equity
<S> <C> <C> <C> <C> <C> <C> <C>
$ $ $ $ $ $ $
CAM Designs Inc
Balance at Nov. 30, 1998 2,643 1 6,242,375 0 (5,847,114) (475,000) (77,095)
Net Loss - - - - 12,100 - 12,100
Dividends declared - - - - - - -
Acquisition of 75,000
common shares - - - - - - -
Exchange Difference - - - - - - -
-------- --------- ----------- ------- ------------ ---------- ---------
Balance at Nov. 30 1998 2,643 1 6,242,375 0 (5,859,214) (475,000) (89,195)
-------- --------- ----------- ------- ------------ ---------- ---------
</TABLE>
See accompanying notes to the unaudited consolidated condensed financial
statements.
<PAGE>
Management Discussion and Analysis of Financial Condition and Result of
Operations
General
The Company, has severed its United Kingdom connections, which
represented the Company's operational activities and is attempting to clear its
liabilities, collect cash proceeds represented by several assets, and prepare to
seek either an acquisition or to be, itself, acquired by another entity. The
remaining assets of the Company are comprised of (I) a potential stream of
income of up to $150,000 under a contract of sale, based upon future sales
during the next several years deriving from the Company's previous sale of its
Reucker Manufacturing Co. operations in Detroit, Michigan, and (ii)
approximately $25,000 due and owing it from a contract with a U.S. based auto
entity. The amount, if any, of the future earnings which may actually be derived
under the Reucker contract cannot be presently ascertained. As for the second
contract, the Company has been attempting to collect sums it alleges are owing
thereunder but has been frustrated by the debtor's refusal, as at this date, to
make payment. Accordingly, no assurance can be made that any part of the
foregoing sums will actually be paid to the Company.
There are estimated to be due and owing by the Company approximately
$113,400 to suppliers, professionals and others. In addition, there are two
claims pending by a former public relations firm, and a former financial
consultant, respectively. The Company is vigorously contesting the claims
against it (the first of which is in litigation) and is asserting cross-claims
and/or counterclaims; however, the outcome of these matters cannot be predicted.
The Company plans to negotiate with persons to whom monies are due, in an
attempt to reduce the sum due and owing to these persons or entities and/or
settle the same with a payment in cash and/or shares of the Company's common
stock. No assurance can be made that the foregoing accounts payable and claims
will be ultimately settled by the Company on terms acceptable to it. If the
Company is to conduct a search for an acquisition or merger partner, it will
require funding to do so and to negotiate and/or consummate any such
transaction.
<PAGE>
Liquidity and Capital Resources
For reasons indicated above, the Company's liquidity is nil, it has
negative working capital, and it must seek sources of both temporary and
long-term financing for the continuation of its existence and for the purpose of
implementing its search for a merger or other strategic partner. A subsidiary of
the Company has sought to extend a US banking facility, as yet no formal
response has been received of this request. As noted above, there can be no
assurance that such source of financing will be available for the Company, heat
it will be able to enter into a new business, or that it will survive as a
viable entity.
Net Operating Losses
Because the losses were largely generated by the UK discontinued
operations, it does not presently appear likely that the Company will have the
availability of significant loss carry forwards applicable against future U.S.
tax liabilities, if any.
Year 2000 Compliance
In light of the Company's reduced operations the relevance of Year 2000
compliance is limited.
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 revenues from contracts, inability to reach
satisfactory agreements with creditors, and inability to identify and conclude a
transaction with a strategic or other partner.
<PAGE>
Part II
Other Information
Item 6. Exhibits
(a) Exhibits
(I) Calculation of Earnings Per Share - Exhibit 11.
(ii) Edgar-Financial Data Schedule - Exhibit 27.
8-K Reports
(b) The following reports on Form 8-K were filed during the
quarter in reference.
(I) Form 8-K Report dated October 21, 1998.
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: April 13, 1999
CAM DESIGNS, INC.
/s/ John R. Davidson
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John R. Davidson
Chairman of the Board,
President and Chief Financial Officer
(Principal Financial Officer)
Exhibit A
CAM Designs Inc
EPS Calculation for period November 1, 1998 to February 28, 1999
Total loss as per unaudited consolidated interim accounts
Add: Net assumed interest income for whole period
(12,100)
---------
Adjusted net loss (12,100)
Net loss per total weighted average (12,100)
---------
= $0.01 cents/shares
EPS Calculations for period June 1, 1998 to February 28, 1999
Total income as per unaudited consolidated interim accounts
Add: Net assumed interest income for whole period (175,825)
---------
Adjusted net income (175,825)
Net Loss per total weighted average (175,825)
---------
= $0.07 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> MAY-31-1999
<PERIOD-START> NOV-1-1998
<PERIOD-END> FEB-28-1998
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 25,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 25,000
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 25,000
<CURRENT-LIABILITIES> 148,650
<BONDS> 0
<COMMON> 2,643
0
1
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 71,155
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (163,725)
<INCOME-TAX> 0
<INCOME-CONTINUING> (163,725)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (163,725)
<EPS-PRIMARY> (0.06)
<EPS-DILUTED> (0.06)
</TABLE>
