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 September 30, 1996
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[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT
For the transition period from ________ to_______
Commission file number 0-18109
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BCAM INTERNATIONAL, INC.
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(Exact name of small business issuer as specified in its charter)
New York 13-3228375
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1800 Walt Whitman Road, Melville, New York 11747
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(Address of principal executive offices)
(516) 752-3550
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(Issuer's telephone number)
Not applicable
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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 Securities 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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Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. Yes No
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State the number of shares outstanding of each of the issuer's classes of
common equity as of the latest practicable date: 14,877,233
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Transitional Small Business Disclosure Format (check one): Yes No X
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1
FORM 10-QSB
BCAM INTERNATIONAL, INC.
PART I. FINANCIAL INFORMATION:
Item 1. Financial Statements
Condensed Consolidated Balance Sheet--September 30, 1996 (Unaudited).... ......3
Condensed Consolidated Statements of Operations - Three Months
and Nine Months Ended September 30, 1996 and 1995 (Unaudited)...............4
Condensed Consolidated Statements of Cash Flows - Nine Months Ended
September 30, 1996 and 1995 (Unaudited).....................................5
Notes to Condensed Consolidated Financial Statements - September 30, 1996
(Unaudited)....................................................................6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.........................................7
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K......................................9
SIGNATURES....................................................................10
INDEX OF EXHIBITS.............................................................11
2
BCAM International, Inc.
Condensed Consolidated Balance Sheet (Unaudited)
September 30, 1996
Assets
Current assets:
Cash and cash equivalents $ 1,434,089
Held to maturity securities -
Accounts receivable, less allowance for doubtful accounts of $11,245 169,378
Prepaid expenses and other current assets 176,922
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Total current assets 1,780,389
Property, plant, and equipment, at cost:
Furniture and fixtures 220,318
Equipment 587,511
Leasehold improvements 50,519
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858,348
Less accumulated depreciation and amortization (649,036)
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209,312
Other assets, principally patents (net of accumulated amortization of $202,067) 252,102
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Total assets $ 2,241,803
==================
Liabilities and shareholders' equity Current liabilities:
Accounts payable $ 86,027
Secured notes payable 600,000
Accrued expenses and other current liabilities 126,634
Deferred revenue 34,000
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Total current liabilities 846,661
Other liabilities 12,550
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,
15,640,415 shares issued and 14,877,233 shares outstanding 156,404
Paid-in surplus 14,984,139
Deficit (12,858,851)
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2,281,692
Less 763,182 treasury shares (899,100)
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1,382,592
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Total liabilities and shareholders' equity $ 2,241,803
==================
See accompanying notes
3
BCAM International, Inc.
Condensed Consolidated Statements of Operations (Unaudited)
Three months ended September 30 Nine months ended September 30
----------------------------------- -----------------------------------
1996 1995 1996 1995
---------------- ---------------- ---------------- ----------------
Net revenue $ 173,182 $ 158,485 $ 383,903 $ 572,881
Costs and expenses:
Direct costs of revenue 107,505 143,147 156,793 531,310
Selling, general and administrative 294,467 450,652 1,369,782 1,274,513
Research, development and engineering 32,897 43,432 79,457 152,838
---------------- ---------------- ---------------- ----------------
Total operating expenses 434,869 637,231 1,606,032 1,958,661
---------------- ---------------- ---------------- ----------------
Net loss from operations (261,687) (478,746) (1,222,129) (1,385,780)
Interest income (expense), net 8,894 40,707 50,428 141,820
---------------- ---------------- ---------------- ----------------
Net loss $ (252,793) $ (438,039) $ (1,171,701) $ (1,243,960)
================ ================ ================ ================
Net loss per share $ (0.02) $ (0.03) $ (0.08) $ (0.08)
================ ================ ================ ================
Weighted average number of common
shares outstanding 14,877,233 14,857,233 14,864,605 14,804,852
================ ================ ================ ================
See accompanying notes
4
BCAM International, Inc.
Condensed Consolidated Statements of Cash Flows (Unaudited)
Nine months ended September 30
------------------------------------------
1996 1995
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Operating activities
Net loss $ (1,171,701) $ (1,243,960)
Reconciliation of net cash provided by (used in) operating activities:
Depreciation and amortization 106,753 126,105
Accrued interest on held to maturity securities 7,172 (107,198)
Changes in operating assets and liabilities:
Accounts receivable (33,383) (195,219)
Prepaid expenses and other current assets 56,663 136,686
Other assets (112,378) (32,109)
Accounts payable, accrued expenses and sundry liabilities (210,010) (310,828)
Deferred revenue 34,000 -
Other liabilities 4,707 (29,241)
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Net cash (used in) operating activities (1,318,177) (1,655,764)
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Investing activities
Purchase of property, plant and equipment - (5,188)
Proceeds from sale of equipment - 1,200
Purchase of held to maturity securities - (1,299,782)
Proceeds from sale of held to maturity securities 1,500,000 4,535,000
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Net cash provided by investing activities 1,500,000 3,231,230
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Financing activities
Net proceeds from short-term debt 600,000 -
Net proceeds from sale of common stock and exercise of options 18,440 -
Payment of stock registration and issuance costs (67,860) (77,234)
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Net cash provided by (used in) financing activities 550,580 (77,234)
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Increase (decrease) in cash and cash equivalents 732,403 1,498,232
Cash and cash equivalents at beginning of period 701,686 1,040,101
================== ==================
Cash and cash equivalents at end of period $ 1,434,089 $ 2,538,333
================== ==================
See accompanying notes
5
BCAM International, Inc.
("the Company")
Notes to Condensed Consolidated Financial Statements
(Unaudited)
September 30, 1996
1. Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-QSB.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Operating results for the three-month and nine-month periods ended September 30,
1996 are not necessarily indicative of the results that may be expected for the
year ending December 31, 1996. For further information, refer to the
consolidated financial statements and footnotes thereto included in the
Company's annual report on Form 10-KSB for the year ended December 31, 1995.
2. Per Share Data
Net loss per share has been computed on the basis of the weighted average
number of common shares outstanding for each of the periods presented. Common
share equivalents have been excluded since their effect is anti-dilutive.
3. Income Taxes
The Company accounts for income taxes in accordance with Financial
Accounting Standards Board ("FASB") Statement No. 109, "Accounting for Income
Taxes". The Company has not reflected a benefit for income taxes in the
accompanying Condensed Consolidated Statements of Operations for the three
months and nine months ended September 30, 1996 and the three months and nine
months ended September 30, 1995, since the future availability of net operating
loss carryforwards have been offset in full by valuation allowances in
accordance with FASB Statement No. 109.
4. Reclassifications
Certain reclassifications have been made to the consolidated financial
statements for the three months and nine months ended September 30, 1995 in
order to conform to the classifications used in the current period.
6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The September 30, 1996 Form 10-QSB represents the third quarterly report
after the Form 10-KSB for the year ended December 31, 1995. The 10-QSB should be
read in conjunction with the aforementioned document, and represents a
comparison between the quarter ended September 30, 1996 and the quarter ended
September 30, 1995.
Results of Operations
Net revenue is derived from services rendered and the 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.
Direct costs, that include salaries, equipment purchases for contracts,
consulting fees and certain other costs, 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 meeting customer demands.
The following is a summary of net revenue, direct costs, and gross profit
for the periods indicated.
Three Months Ended September 30 Nine Months Ended September 30
1996 1995 1996 1995
Net revenue $ 173,182 $ 158,485 $ 383,903 $ 572,881
Direct costs 107,505 143,147 156,793 531,310
--------- --------- --------- ---------
Gross profit $ 65,677 $ 15,338 $ 227,110 $ 41,571
Gross profit % 38% 10% 59% 7%
Net revenue increased by $14,697, to $173,182 during the three months ended
September 30, 1996, as compared to the same period in 1995. Net revenue
decreased by $188,978, to $383,903, for the nine months ended September 30,
1996, as compared to the same period in 1995. Contributing to the decrease was a
decline in Ergonomic Consulting Services revenue, mostly due to customer
postponements to several projects. These projects are expected to be completed
by the end of 1996, or the first quarter of 1997.
7
Direct costs decreased by $35,642 and $374,517 for the three months and
nine months ended September 30, 1996, respectively, as compared to the same
periods in 1995. The decrease was primarily due to a more favorable mix of
internal versus external resources in 1996 versus 1995, and the elimination of a
reserve established in 1994.
As a result of the above, gross profit increased by $50,339 for the quarter
ended September 30, 1996 as compared with the same period in 1995, and increased
by $185,539 for the nine months ended September 30, 1996, as compared to the
comparable period in 1995.
Selling, general and administrative expenses decreased by $156,185 for the
three months ended September 30, 1996, as compared to the same period in 1995.
Contributing to the decrease was a reduction in rent expense, and consulting and
legal fees for the current quarter. Selling, general and administrative expenses
increased by $95,269 for the nine months ended September 30, 1996, as compared
with the same period in 1995. This increase was primarily attributable to a
growth in salaries, benefits and related expenses, as a result of the addition
of sales and marketing positions. Also contributing to the increase were
marketing and severance expenses which were one-time in nature.
Research, development and engineering costs decreased by $10,535 to
$32,897, for the three months ended September 30, 1996, and by $73,381 to
$79,457 for the nine months ended September 30, 1996, from the same periods in
1995. This was primarily due to projects in 1995 relating to Intelligent Surface
Technology, which have been completed, as well as the capitalization of software
development costs in 1996.
Interest income decreased by $26,349 for the three months ended September
30, 1996, as compared to the three months ended September 30, 1995, and by
$85,928 for the nine months ended September 30, 1996, as compared to the nine
months ended September 30, 1995. This was due to a decrease in assets available
for investment . Additionally there was interest expense of $5,464 for the three
months and the nine months ended September 30, 1996 due to short term borrowing,
which did not occur in 1995.
As a result, interest income, net of expense, decreased by $31,813 to
$8,894, and decreased by $91,392 to $50,428, respectively, for the three months
and nine months ended September 30, 1996, as compared to the same periods in
1995.
Net loss, as a result of the above, for the three months ended September
30, 1996, was $252,793, as compared to a net loss of $438,039 for the comparable
period in 1995. Net loss for the nine months ended September 30, 1996 was
$1,171,701, as compared to a net loss of $1,243,960 for the same period in 1995.
There was no tax benefit for the three months and nine months ended
September 30, 1996 and the three months and nine months ended September 30,
1995, due to losses which have increased the future availability of the net
operating loss carryforward which has been offset by valuation allowances.
8
Liquidity and Capital Resources
Cash, cash equivalents and marketable securities were $1,434,089 as of
September 30, 1996, compared to $2,208,858 as of December 31, 1995. Working
capital was $933,729 as of September 30, 1996, compared to $2,155,767 as of
December 31, 1995. The decrease of $1,222,038 or 56.7% in working capital was
primarily attributable to the net loss incurred in the nine months ended
September 30, 1996.
The Company expects that its working capital, together with revenue from
operations will be more than sufficient to meet any liquidity and capital
requirements for the remainder of 1996.
The Company has no material commitments for any future capital
expenditures.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits.
27 Financial Data Schedule
(b) Reports on Form 8-K
No reports were filed on Form 8-K during the nine month period ended
September 30, 1996.
9
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
BCAM INTERNATIONAL, INC.
Dated: November 14, 1996 By: /s/ Michael Strauss
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Michael Strauss
Chairman of the Board of Directors
Chief Executive Officer
Dated: November 14, 1996 By: /s/ Robert P. Wong
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Robert P. Wong
Vice Chairman
Interim Chief Financial Officer
10
INDEX OF EXHIBITS
Exhibit No. Exhibit
27 Financial Data Schedule, Unaudited
11