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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
FORM 10-QSB
(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the period ended September 30, 2002.
or
[_] Transition Report Pursuant to Section 13 OR 15(D) of the Securities
Exchange Act of 1934
For the transition period from ________ to ________.
Commission File No. 0-9614
CADEMA CORPORATION
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(Exact name of small business issuer as specified in its charter)
DELAWARE 88-0160741
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(State or other jurisdiction of (IRS Employer I.D. Number)
incorporation or organization)
c/o Number One Corporation 50 Washington Street Norwalk CT 06854
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (203) 854-6711
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(Former name, former address and former fiscal year,
if changed since last report.) - N/A
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 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 [_]
There were 10,921,122 shares of the Registrant's common stock outstanding as of
November 8, 2002.
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CADEMA CORPORATION
FORM 10-QSB
INDEX
PART 1. FINANCIAL INFORMATION
Item 1 - Financial Statements
Consolidated Balance Sheets - September 30, 2002 and
December 31, 2001 3
Consolidated Statements of Operations -
Nine months ended September 30, 2002 and
September 30, 2001 4
Consolidated Statements of Operations -
Three months ended September 30, 2002 and
September 30, 2001 5
Consolidated Statements of Cash Flows -
Nine months ended September 30, 2002 and
September 30, 2001 6
Notes to Financial Statements 7
Item 2 - Management's Discussion and Analysis of 8
Financial Condition and Results of Operations
Item 4 - Controls and Procedures 9
PART II. OTHER INFORMATION
Signatures 10
Certifications Pursuant to Section 302 11
Exhibit 99 12
The accompanying condensed financial statements have been prepared by the
Company, without audit, and reflect all adjustments, which are, in the opinion
of management, necessary to present a fair statement of the results of
operations, financial position, and cash flows for the interim periods. The
statements have been prepared in accordance with the rules and regulations of
the Securities and Exchange Commission, but omit certain information and
footnote disclosures necessary to present the statements in accordance with
generally accepted accounting principles.
These condensed financial statements should be read in conjunction with the
financial statements and notes thereto included in the Company's Annual Report
on Form 10-KSB for the year ended December 31, 2001. Management believes that
the disclosures are adequate to make the information presented herein not
misleading.
2
CADEMA CORPORATION AND SUBSIDIARY
BALANCE SHEETS
ASSETS September 30, December 31,
------ 2002 2001
------------ ------------
CURRENT ASSETS:
Cash $ 584 $ 666
Trading securities (Cost $560,083 in
2002 and $610,249 in 2001) 274,762 285,288
Other current assets -- 1,620
------------ ------------
TOTAL ASSETS $ 275,346 $ 287,574
============ ============
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
----------------------------------------
CURRENT LIABILITIES:
Accrued liabilities $ 26,241 $ 16,000
------------ ------------
TOTAL CURRENT LIABILITIES 26,241 16,000
Accrued dividends on preferred stock 1,648,407 1,523,681
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TOTAL LIABILITIES 1,674,648 1,539,681
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STOCKHOLDERS' DEFICIENCY
Series A 8% Cumulative Convertible
Preferred Stock, par value $.01 per share
authorized 5,000,000 shares; issued
476,423 shares in 2002 and 2001 4,764 4,764
Series B 8% Cumulative Convertible
Preferred Stock, par value, $.01 per
share, authorized, 150,000 shares,
none issued -- --
Common Stock, par value, $.01 per share;
authorized 50,000,000 shares, issued
10,951,122 shares in 2002 and 2001 109,511 109,511
Additional paid-in capital 7,765,836 7,765,836
Accumulated deficit (9,183,043) (9,035,848)
Less: Treasury stock at cost
Common shares (75,000) (75,000)
Preferred shares (21,370) (21,370)
------------ ------------
TOTAL STOCKHOLDERS' DEFICIENCY (1,399,302) (1,252,107)
------------ ------------
TOTAL LIABILITIES AND
STOCKHOLDERS' DEFICIENCY $ 275,346 $ 287,574
============ ============
The accompanying notes to the consolidated financial statements
are an integral part of these statements.
3
CADEMA CORPORATION AND SUBSIDIARY
STATEMENTS OF OPERATIONS-UNAUDITED
FOR THE NINE MONTHS ENDED SEPTEMBER 30,
2002 2001
------------ ------------
REVENUE $ -- $ --
COST OF GOODS SOLD -- --
------------ ------------
GROSS PROFIT -- --
OPERATING EXPENSES:
General and administrative 21,867 21,936
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Total operating expenses 21,867 21,936
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Loss from operations (21,867) (21,936)
OTHER INCOME (EXPENSE):
Gain on sale of joint venture
Interest -- 253,750
Trading securities
Transactions
Realized losses (1,906) (18,088)
Change in Unrealized
Gains (losses) 1,275 (47,595)
Dividend income 29 181
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Total other income (expense) (602) 188,248
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INCOME (LOSS) BEFORE INCOME TAXES (22,469) 166,312
PROVISION FOR INCOME TAXES -- --
------------ ------------
NET INCOME (LOSS) (22,469) 166,312
PREFERRED DIVIDENDS EARNED 124,726 123,856
------------ ------------
NET INCOME (LOSS) APPLICABLE TO
COMMON STOCKHOLDERS $ (147,195) $ 42,456
============ ============
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING 10,921,122 10,921,122
============ ============
INCOME (LOSS) PER COMMON SHARE
BASIC AND DILUTED $ (.01) $ .00
============ ============
The accompanying notes to the consolidated financial statements
are an integral part of these statements.
4
CADEMA CORPORATION AND SUBSIDIARY
STATEMENTS OF OPERATIONS-UNAUDITED
FOR THE THREE MONTHS ENDED SEPTEMBER 30,
2002 2001
------------ ------------
REVENUE $ -- $ --
COST OF GOODS SOLD -- --
------------ ------------
GROSS PROFIT -- --
OPERATING EXPENSES:
General and administrative 6,896 7,059
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Total operating expenses 6,896 7,059
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Loss from operations (6,896) (7,059)
OTHER INCOME (EXPENSE):
Trading securities
Transactions
Realized losses (281) (22,231)
Change in unrealized losses (88,565) (151,080)
Dividend income 27 23
------------ ------------
Total other income (expense) (88,819) (173,288)
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LOSS BEFORE INCOME TAXES (95,715) (180,347)
PROVISION FOR INCOME TAXES -- --
------------ ------------
NET LOSS (95,715) (180,347)
PREFERRED DIVIDENDS EARNED 41,576 41,575
------------ ------------
NET LOSS APPLICABLE TO
COMMON STOCKHOLDERS $ (137,291) $ (221,922)
============ ============
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING 10,921,122 10,921,122
============ ============
LOSS PER COMMON SHARE
BASIC AND DILUTED $ (.01) $ (.02)
============ ============
The accompanying notes to the consolidated financial statements
are an integral part of these statements.
5
CADEMA CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED
FOR EACH OF THE NINE MONTHS IN THE PERIOD ENDED SEPTEMBER 30,
2002 2001
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ (22,469) $ 166,312
Adjustments to reconcile net income
(loss) to net cash used in operating activities
Realized gain on sale of joint venture
Interest -- (253,750)
Realized loss on sale of trading
Securities 1,906 18,088
Unrealized (gain) loss in value
of trading securities (1,275) 47,595
Decrease in other current assets 1,620 1,458
Increase (decrease) in accrued liabilities 10,241 (12,000)
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Net cash used in operating activities (9,977) (32,297)
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CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of marketable securities 9,895 26,099
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Net cash provided by investing activities 9,895 26,099
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Net decrease in cash and
cash equivalents (82) (6,198)
Cash and cash equivalents -
Beginning of Period 666 9,533
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Cash and cash equivalents -
End of Period $ 584 $ 3,335
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SUPPLEMENTAL DISCLOSURES OF NON-CASH
INVESTING AND FINANCING ACTIVITIES
Preferred Stock Dividends Accrued $ 124,726 $ 123,856
============ ============
Sale of joint venture interest:
Receipt of trading securities $ -- $ 297,500
Satisfaction of note receivable -- (43,750)
------------ ------------
Realized gain recognized $ -- $ 253,750
============ ============
The accompanying notes to the consolidated financial statements
are an integral part of these statements.
6
CADEMA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS UNAUDITED
NINE MONTHS IN THE PERIOD ENDED SEPTEMBER 30, 2002
(1) NATURE OF BUSINESS AND CURRENT OPERATING ENVIRONMENT:
The principal business of Cadema Corporation (the "Company") is the
financing and operating of business enterprises with the potential to
generate profits and cash flow. Currently the Company is exploring possible
acquisitions and mergers throughout the United States and abroad, as it has
done in the past, seeking to enter into new operating businesses and to use
the Company's liquid assets in connection therewith.
As part of this strategy, the Company entered into a joint venture
agreement with Danzer Industries, Inc. (formerly Global Environmental,
Inc.) in December 1993. During 2001, the Company sold its interest in the
joint venture. As a result of this transaction, the statements of
operations and cash flows include the consolidated activities of Cadema
Corporation and Subsidiary up until June 21, 2001, the sale of the
Company's joint venture interest.
While the principal business of the Company is the financing and operating
of business enterprises with the potential to generate profits and cash
flow, it still intends to invest in and sell marketable securities as
outlined in a plan approved by stockholders in 1988.
The Company intends to continue to invest in trading securities, including
but not limited to stocks, bonds, options and warrants.
The Company now holds and currently expects to invest primarily in the
stock of smaller, lesser known and often more speculative companies, which
while entailing above-average risk, offer the potential of above-average
reward. Approximately 96% of the Company's assets at September 30, 2002 is
comprised of an investment in one trading security. This security is traded
on the over the counter bulletin board and is highly volatile. At November
7, 2002, it had an increase in quoted market value of $192,500 from that
reported on September 30, 2002.
There are significant risk factors affecting the Company, including
potential operating losses it may incur from operating ventures, the
volatility of market values of its investment securities portfolio, and the
possible need for additional capital. These and other factors may adversely
affect the Company's future operations.
The accompanying condensed financial statements have been prepared by the
Company, without audit, and reflect all adjustments, which are, in the
opinion of management, necessary to present a fair statement of the results
of operations, financial position, and cash flows for the interim periods.
The statements have been prepared in accordance with the rules and
regulations of the Securities and Exchange Commission, but omit certain
information and footnote disclosures necessary to present the statements in
accordance with generally accepted accounting principles.
These condensed financial statements should be read in conjunction with the
financial statements and notes thereto included in the Company's Annual
Report on Form 10-KSB for the year ended December 31, 2001. Management
believes that the disclosures are adequate to make the information
presented herein not misleading.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATION
The principal business of Cadema Corporation (the Company) is the financing
and operating of business enterprises with the potential to generate
profits and cash flow. The Company continues in its principal business of
seeking and financing business enterprises with the potential to generate
profits and positive cash flow. The Company's previous entry into the
pollution control business is part of this strategy. New opportunities were
evaluated in 2002 but none were deemed appropriate to enter into. Operating
results for the nine month period ended September 30, 2002, are not
necessarily indicative of the results that may be expected for the full
year ending December 31, 2002.
The Company intends to continue using its available funds to purchase,
invest in and sell securities as outlined in a plan approved by
stockholders in 1988.
RESULTS OF OPERATIONS
There were no revenues from operations in the first nine months of 2002 or
2001.
Operating expenses for the first nine months of 2002 were $21,867, in line
with 2001's first nine month's expenses of $21,936 and represented
administrative expenses of the Company.
Other income in the first nine months of 2002 totaled a loss of $602 as
compared to other income in 2001 of $188,248. This contrast is due to a
gain on the sale of the Company's Joint Venture interest and to greater
appreciation in the company's Investment Portfolio in 2002 compared the
same period of 2001. It should be noted that the Company's trading
securities are based on quotations on the over the counter bulletin board
and are point in time estimates. These values should not be used to predict
future earnings or cash flows. Subsequent to September 30, 2002, our
primary equity investment, comprising 96% of our total assets, had an
increase in quoted market value of approximately $87,500.
The net loss applicable to common stockholders for the first nine months of
2002, after an accrual for a Preferred Stock dividend, was a $147,195 or
$.01 per share. For the same period of the prior year, a better performance
by the Company's Investment Portfolio resulted in net income applicable to
common shareholders of $42,456 or $.00 per share being recognized.
LIQUIDITY AND CAPITAL RESOURCES
Liquidity and working capital decreased by $22,469 to $249,105 in the first
nine months of 2002 due to no revenue from the Company's operations. The
Company believes it has sufficient working capital to meet its liquidity
needs over the next twelve months.
8
ITEM 4. CONTROLS AND PROCEDURES
(a) Evaluation of disclosure controls and procedures
The Company's principal executive officer and its principal financial
officer, based on their evaluation of the Company's disclosure controls and
procedures (as defined in Exchange Act Rules 13a -14 (c)) as of a date
within 90 days prior to the filing of this Quarterly Report on Form 10-Q,
have concluded that the Company's disclosure controls and procedures are
adequate and effective for the purposes set forth in the definition in
Exchange Act rules.
(b) Changes in Internal Controls
There were no significant changes in the Company's internal controls or in
other factors that could significantly affect the Company's internal
controls subsequent to the date of their evaluation.
PART II
ITEMS 1 THRU 5: Not Applicable
ITEM 6: Exhibits and Reports on Form 8K
(a) Exhibits
Exhibit 99 - Certification Pursuant to 18 U.S.C Section
1350, As adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
(b) Reports on Form 8-K
None
9
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
CADEMA CORPORATION
Dated: November 8, 2002 By: /s/ Roger D. Bensen
--------------------------------
ROGER D. BENSEN
Chairman of the Board, Chief Executive
Officer and Acting CFO
10
CADEMA CORPORATION
CERTIFICATION PURSUANT TO
RULE 13A-14 OF THE SECURITIES EXCHANGE ACT OF 1934
AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
CERTIFICATION
I, Roger Bensen, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Cadema Corporation;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a. Designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly
report is being prepared
b. Evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date")
c. Presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
a. All significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls
b. Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and material
weaknesses.
Date: November 8, 2002 /s/ Roger D. Benson
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Roger D. Benson
Chairman of the Board, Chief Executive
Officer and Acting CFO
11