FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended July 31, 1998
Commission File No. 000-23115
CTI INDUSTRIES CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 36-2848943
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
22160 North Pepper Road, Barrington, Illinois 60010
(Address of principal executive offices) (Zip Code)
(847) 382-1000
(Registrant's telephone number, including area code)
Registrant 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 and
has been subject to such filing requirements for the past 90 days.
APPLICABLE ONLY TO CORPORATE ISSUERS:
COMMON STOCK, $.065 par value, 2,737,495 outstanding Shares and CLASS B
COMMON STOCK, $.91 par value, 1,098,901 outstanding Shares, as of July 31, 1998.
<PAGE>
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
The following consolidated financial statements of the Registrant are
attached to this Form 10-QSB:
1. Interim Balance Sheet as of July 31, 1998 and Balance
Sheet as of October 31, 1997.
2. Interim Statements of Operations for the three and
nine month periods ending July 31, 1998 and July 31,
1997.
3. Interim Statements of Cash Flows for the nine month
periods ending July 31, 1998 and July 31, 1997.
The Financial Statements reflect all adjustments which are, in the
opinion of management, necessary to a fair statement of results for the periods
presented.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operation
Results of Operations
Net Sales. For the fiscal quarter ended July 31, 1998, net sales
increased to $4,382,000 from $3,346,000 for the same quarter of 1997, an
increase of approximately 31%. The Company experienced increases in sales, as
compared to the third quarter of fiscal 1997, in each of its product lines --
mylar balloons, latex balloons and printed and laminated films. Net sales for
the first nine months of fiscal 1998 were $15,714,000 as compared to $12,082,000
for the same period of 1997.
Cost of Sales. For the quarter ended July 31, 1998, cost of sales
decreased to 52.6% of net sales as compared to 58.6% of net sales in the third
fiscal quarter of 1997. The decrease was a result of increased production
absorbing a greater portion of overhead. Cost of goods sold were 57.3% of net
sales for the first nine months of fiscal 1998, as compared to 60.8% for the
same period of 1997.
Administrative. For the quarter ended July 31, 1998, administrative
expenses were $654,000, or 14.9% of sales as compared to $435,000, or 13.0% of
sales for the same fiscal quarter of 1997. Administrative expenses were
$1,877,000 or 11.9% of net sales for the first nine months of fiscal 1998, as
compared to $1,336,000 or 11.1% of net sales for the first nine months of 1997.
The increase was due in part to increased costs resulting from the Company's
status as a public company, and an increase in administrative salaries.
Selling. For the quarter ended July 31, 1998, selling expenses were
$635,000, or 14.5% of net sales, as compared to $679,000, or 20.3% of net sales
for the third fiscal quarter of 1997. The decrease was due to the Company's
ability to increase sales while maintaining selling expense levels. For the
2
<PAGE>
first nine months of fiscal 1998 selling expenses were $2,083,000 or 13.3% of
net sales as compared to $2,043,000 or 16.9% of net sales for the first nine
months of 1997.
Advertising and Marketing. For the quarter ended July 31, 1998,
advertising and marketing expenses were $463,000 or 10.6% of net sales as
compared to $156,000 or 4.7% of net sales in the third fiscal quarter of 1997.
Advertising and marketing expenses were $1,404,000 or 8.9% of net sales for the
first nine months of 1998 as compared to $625,000 or 5.2% of net sales for the
same period of 1997. The increase in these expenses was a result of catalogue
printing costs and service fees and rebates paid on national account sales
programs.
Net Income or Loss. For the quarter ended July 31, 1998, the Company
had income before income taxes of $162,000 as compared to a loss before income
taxes of $44,000 for the third fiscal quarter of 1997. The provision for income
tax for the third quarter of fiscal 1998 was $47,000 resulting in net income of
$115,000 as compared to no provision for the same quarter of 1997. For the third
quarter of 1998, the entire income of $115,000 was allocable to Common Stock. In
the third quarter 1997, $33,000 of dividends were allocated to then outstanding
Convertible Preferred Stock, resulting in a loss applicable to Common Stock of
$76,000. Convertible Preferred Stock was converted to Class B Common Stock in
November of 1997. For the nine months ended July 31, 1998, net income was
$679,000 (all attributed to Common Stock) as compared to $347,000 for the first
nine months of fiscal 1997 (with $97,000 being allocable to Convertible
Preferred Stock and $250,000 allocable to Common Stock).
Financial Condition
Liquidity and Capital Resources. Cash flow used in operations during
the nine months ended July 31, 1998, was $2,477,000. This resulted primarily
from increased sales and resulting increases in accounts receivable and
inventory of over $3,928,000. During the first nine months of 1997, the Company
had cash flows used in operations of $643,000 mainly as a result of increases in
accounts receivable and inventory of $968,000.
At October 31, 1997, the Company maintained a cash balance of $237,000.
In November of 1997, the Company sold 1,725,000 shares of its Common Stock at
$4.00 per share in an initial public offering. The net proceeds from the
offering to the Company were approximately $5,500,000. The Company's cash
balance at July 31, 1998 was $764,000.
Investment Activities. During the nine months ended July 31, 1998 and
July 31, 1997, the Company invested $1,999,000 and $471,000, respectively, in
machinery and equipment and merchandise displays at customer locations. The
Company also invested in and advanced to its Mexican supplier of latex balloons
$1,350,000 in the first nine months of 1998.
Financing Activities. For the nine months ended July 31, 1998, the
Company generated $6,389,000 in financing activities, primarily as a result of
the proceeds of the Company's initial public offering of its Common Stock in
November of 1997 and the proceeds of long-term debt. Cash flow provided by
financing activities for the nine months ended July 31, 1997, was $1,303,000
resulting primarily from the proceeds of a private placement of notes to related
3
<PAGE>
parties and advances on lines of credit. In May, 1998, the Company restructured
its bank debt, consolidating certain term loans at reduced interest rates and
increasing its line of credit.
The Company believes that existing capital resources and cash generated
from operations, will be sufficient to meet the Company's requirements for at
least 12 months.
Seasonality. In the mylar product line, sales have historically been
seasonal with approximately 20% to 27% of annual sales of mylar being generated
in December and January and 11% to 13% of annual mylar sales being generated in
June and July in recent years. The sale of latex balloons and laminated film
products have not historically been seasonal.
Forward Looking Statements. Forward looking statements made in this
filing involve material risks and uncertainties that could cause actual results
and events to differ materially from those set forth, or implied, including (i)
the Company's ability to enter into contracts with licensors, suppliers,
distributors, and strategic partners, (ii) the Company's growth strategy and
(iii) anticipated trends in the Company's business, as well as other risks and
uncertainties reported in the Company's other SEC filings.
Part II. OTHER INFORMATION
Item 1. Legal Proceedings
Not applicable.
Item 2. Changes in Securities
In March and May of 1996, a group of investors made an equity
investment of $1,000,000 in the Company in return for 1,098,901 shares of
Preferred Stock, $.91 par value. Each share of Preferred Stock was entitled to
an annual cumulative dividend of 13% of the purchase price, and was convertible
into one share of Common Stock. The shares of Preferred Stock, voting separately
as a class, were entitled to elect four of the Company's directors.
In July, 1997, the Company effected a recapitalization (the
"Recapitalization") without a formal reorganization. As part of the
Recapitalization, the Board of Directors approved the creation of Class B Common
Stock, approved a 1 for 2.6 reverse stock split on both the Common Stock and
Preferred Stock, and negotiated a conversion of all then outstanding shares of
the Company's Convertible Preferred Stock into an aggregate of 1,098,901 shares
of Class B Common Stock. The conversion was effective upon the closing of the
initial public offering of the Company's Common Stock in November of 1997. The
shares of Class B Common Stock contain rights identical to shares of Common
Stock, except that shares of Class B Common Stock, voting separately as a class,
have the right to elect four of the Company's seven directors. Shares of Common
Stock and Class B Common Stock, voting together as a class, vote on all other
matters, including the election of the remaining directors. The
recapitalization, initial public offering and related transactions were approved
by written consent of the shareholders.
4
<PAGE>
Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable.
Item 5. Other Information
On August 24, 1998, the Company purchased an additional office and
warehouse facility adjacent to the current Company headquarters in Barrington,
Illinois for $1,585,000. The building contains 28,700 square feet of office and
warehouse space, set on 5 acres of land. The purchase was bank financed.
The Company has assessed its readiness for year 2000 in terms of its
current computer hardware and software and the capabilities of its major
suppliers. Based on this assessment the Company does not believe that year 2000,
and the Company's preparation for year 2000, will have a material effect on its
operations.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits*
(b) The Company has not filed a Current Report during the
quarter covered by this report.
* Also incorporated by reference the Exhibits filed as
part of the SB-2 Registration Statement of the
Registrant, effective November 5, 1997, and
subsequent periodic filings.
5
<PAGE>
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.
Dated: September 10, 1998 CTI INDUSTRIES CORPORATION
By: /s/ Stephen M. Merrick
---------------------------------------
Stephen M. Merrick, Chief Executive
Officer and Principal Financial Officer
6
<PAGE>
CTI Industries Corporation and Subsidiary
Consolidated Balance Sheet
<TABLE>
<CAPTION>
July 31, 1998 October 31, 1997
(Unaudited) (See note)
------------ ------------
ASSETS
<S> <C> <C>
Current assets:
Cash $ 764,332 $ 237,230
Accounts Receivable (less allowance for
doubtful accounts of $169,915 and $136,050
at July 31, 1998 and October 31, 1997) 3,081,669 3,045,696
Inventories 8,758,765 5,073,861
Deferred tax assets 327,035 327,035
Other 896,320 483,652
------------ ------------
Total current assets 13,828,121 9,167,474
Property and equipment:
Machinery and equipment 7,864,687 6,711,978
Building 2,196,442 2,175,713
Office furniture and equipment 1,482,638 1,058,150
Land 250,000 250,000
Leasehold improvements 161,885 147,128
Projects under construction 789,251 402,714
------------ ------------
12,744,903 10,745,683
Less : accumulated depreciation (7,531,455) (6,851,148)
------------ ------------
Total property and equipment, net 5,213,448 3,894,535
Other assets:
Deferred IPO costs -- 445,067
Deferred financing costs, net 48,187 56,671
Invesment in subsidiaries 884,375 81,816
Note receivable 715,422 300,000
Deferred tax assets 272,063 272,063
------------ ------------
Total other assets 1,920,047 1,155,617
------------ ------------
TOTAL ASSETS $ 20,961,616 $ 14,217,626
============ ============
<FN>
See accompanying notes
</FN>
</TABLE>
7
<PAGE>
CTI Industries Corporation and Subsidiary
Consolidated Balance Sheet
<TABLE>
<CAPTION>
July 31, 1998 October 31, 1997
(Unaudited) (See note)
------------ ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
Current liabilities:
Accounts payable $ 2,741,473 $ 3,725,500
Line of credit 3,184,094 3,017,940
Stock redemption contract payable - current portion -- 30,533
Notes payable - current portion 445,318 580,097
Accrued liabilities 1,558,755 871,182
------------ ------------
Total current liabiliites 7,929,640 8,225,252
Long-term liabilities:
Notes payable 3,951,025 2,885,151
Subordinated debt 865,000 865,000
------------ ------------
Total long-term liabilities 4,816,025 3,750,151
Redeemable common stock 416,651 450,000
Stockholders' equity:
Convertible preferred stock - $.91 par value,
2,000,000 shares authorized,
1,098,901 shares issued and outstanding,
including accumulated dividends of
$63,917 at October 31, 1997 -- 1,063,917
Common stock - $.065 par value, 11,000,000 shares
authorized, 2,898,980 (July 31, 1998) and
1,154,584 (October 31, 1997) shares issued,
2,737,495 (July 31, 1998) and
1,010,202 (October 31, 1997) shares outstanding 188,434 75,048
Class B common stock - $.91 par value,
1,100,000 shares authorized, 1,098,901 shares
outstanding at July 31, 1998 1,000,000 --
Paid-in-capital 5,554,332 248,348
Retained earnings 1,857,940 1,179,274
Foreign currency translation adjustment 23,994 51,036
Less:
Treasury stock - 161,485 (July 31, 1998) and (404,049) (370,700)
144,382 (October 31, 1997) shares at cost
Redeemable common stock (416,651) (450,000)
Stock subscription receivable (4,700) (4,700)
------------ ------------
Total stockholders' equity 7,799,300 1,792,223
------------ ------------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 20,961,616 $ 14,217,626
============ ============
<FN>
Note: The balance sheet at October 31, 1997 has been derived from the audited
consolidated financial statements at that date, but does not include all of the
information and footnotes required by generally accepted accounting principles
for complete statements.
See accompanying notes
</FN>
</TABLE>
8
<PAGE>
CTI Industries Corporation and Subsidiary
Consolidated Statement of Operations
<TABLE>
<CAPTION>
Quarter Ended July 31 Year to Date July 31
1998 1997 1998 1997
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net Sales $ 4,382,322 $ 3,345,970 $ 15,713,903 $ 12,082,091
Cost of Sales 2,306,868 1,962,088 9,001,445 7,346,119
------------ ------------ ------------ ------------
Gross profit on sales 2,075,454 1,383,882 6,712,458 4,735,972
Operating expenses:
Administrative 654,174 435,133 1,877,480 1,335,518
Selling 634,743 678,987 2,083,467 2,042,852
Advertising and marketing 462,716 156,235 1,403,864 624,579
------------ ------------ ------------ ------------
Total operating expenses 1,751,633 1,270,355 5,364,811 4,002,949
------------ ------------ ------------ ------------
Income from operations 323,821 113,527 1,347,648 733,023
Other income (expense):
Interest income 32,924 -- 124,501 --
Interest expense (193,561) (167,276) (561,897) (471,218)
Lease income 32,573 -- 54,742 --
Income from investments (56,644) -- (6,188) --
Other 23,119 10,191 70,863 85,328
------------ ------------ ------------ ------------
Total other expense (161,589) (157,085) (317,979) (385,890)
------------ ------------ ------------ ------------
Income before income taxes 162,232 (43,558) 1,029,669 347,133
Income tax expense (benefit) 46,800 -- 351,000 --
------------ ------------ ------------ ------------
Net income 115,432 (43,558) 678,669 347,133
Dividends applicable to convertible
preferred stock -- (32,500) -- (97,500)
------------ ------------ ------------ ------------
Income applicable to common shares $ 115,432 $ (76,058) $ 678,669 $ 249,633
============ ============ ============ ============
Basic income per common and
common equivalent shares $ 0.03 $ (0.08) $ 0.18 $ 0.25
============ ============ ============ ============
Diluted income per common
and common equivalent shares $ 0.03 $ (0.08) $ 0.16 $ 0.16
============ ============ ============ ============
Weighted average number of shares and
equivalent shares of common stock
outstanding
Basic 3,825,954 1,010,202 3,785,523 996,099
============ ============ ============ ============
Diluted 4,110,965 1,010,202 4,124,527 2,221,809
============ ============ ============ ============
<FN>
See accompanying notes
</FN>
</TABLE>
9
<PAGE>
CTI Industries Corporation and Subsidiary
Consolidated Statement of Cash Flows
<TABLE>
<CAPTION>
Nine Months Ended July 31
1998 1997
(Unaudited) (Unaudited)
------------ ------------
<S> <C> <C>
Cash Flow Provided by Operations:
Net income $ 678,669 $ 347,133
Adjustment to reconcile net income:
Depreciation and amortization 688,790 383,936
Equity in earnings of P&TF and CTF 6,188 --
Gain on sale of property and equipment -- (42,942)
Provision for losses on A/R & inventory 207,500 89,554
Change in assets and liabilities:
Change in accounts receivable (81,610) (478,945)
Change in inventory (3,846,766) (489,234)
Change in other assets 166,978 (312,575)
Change in accounts payable & accrued expenses (296,620) (139,492)
------------ ------------
Total Cash Flow Used by Operations (2,476,871) (642,565)
Cash Flow Provided by Investing Activities:
Proceeds from sale of property and equipment -- 2,942
Purchases of property and equipment (1,999,220) (471,312)
Investment in and advances to P&TF (1,350,000) --
Investment in joint venture (8,747) (60,260)
------------ ------------
Total Cash Flow Used by Investing Activities (3,357,967) (528,630)
Cash Flow Provided by Financing Activities:
Stock redemption contract payments (30,533) (60,709)
Advances on line of credit 14,380,000 4,813,520
Repayments on line of credit (14,213,846) (4,312,855)
Proceeds from issuance of long term debt 2,344,959 218,000
Proceeds from issuance of short term debt 850,000 --
Repayment of long term debt (1,413,866) (318,847)
Repayment of short term debt (850,000) --
Proceeds from debt issued to related parties -- 865,000
Proceeds from issuance of preferred stock -- 160,000
Proceeds from issuance of common stock 5,401,883 --
Proceeds from warrants exercised 17,650 --
Conversion of preferred stock (1,000,000) --
Proceeds from conversion of preferred stock 1,000,000 --
Purchase treasury stock (33,349) --
Dividends paid (63,917) (61,210)
------------ ------------
Total Cash Flow Provided by Financing Activities 6,388,981 1,302,899
Effect of exchange rate changes on cash (27,041) --
------------ ------------
Increase (Decrease) in Cash and Equivalents 527,102 131,704
Cash and Equivalents at Beginning of Period 237,230 130,818
------------ ------------
Cash and Equivalents at End of Period $ 764,332 $ 262,522
============ ============
Supplemental disclosures:
Cash paid for interest $ 553,123 $ 432,272
Cash paid for income taxes $ 180,000 $ --
Non-cash financing activities:
Assets exchanged for settlement of debt -- $ 40,000
Common stock warrants exercised in exchange for
contractual services received -- $ 19,500
<FN>
See accompanying notes
</FN>
</TABLE>
10
<PAGE>
July 31, 1998
Note 1 - Basis of Presentation
The accompanying unaudited 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 and Article 10 of
Regulation S-X. 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 nine-month period ended July 31, 1998
are not necessarily indicative of the results that may be expected for the year
ended October 31, 1998. For further information, refer to the consolidated
financial statements and footnotes thereto included in the Registrant Company
and Subsidiaries' annual report on Form 10-KSB for the year ended October 31,
1997.
Note 2 - P&TF Transaction
On January 26, 1998, the Company and Pulidos et Terminados Finos S.A. de C.V.
("P&TF") entered into an agreement under which (i) the Company subscribed for
45% of the outstanding capital stock of P&TF for $800,000, (ii) the Company
loaned to P&TF $850,000 secured by certain latex balloon manufacturing
equipment, and (iii) the 1995 equipment purchase agreement between the parties
was cancelled with respect to 2 pieces of latex balloon manufacturing equipment,
which equipment is now owned by CTI and leased to P&TF. The purchase of the
capital stock was effective February 1, 1998, and the purchase price for the
capital stock was paid by (i) applying $400,000 of advances made to P&TF prior
to closing and (ii) a cash payment for the balance. The $400,000 debt owing to
the Company from the 1995 acquisition was extinguished as a result of the
cancellation of the sales of the two pieces of equipment to P&TF. Funding for
the purchase of the P&TF stock was provided from general operating funds of the
Company and, for the loan to P&TF, by a loan to the Company from First American
Bank. At the time of the transaction, the suspension of payments proceeding
relating to P&TF (in the nature of a Chapter XI bankruptcy reorganization
proceeding) was terminated.
Note 3 - Commitments
In April 1998, the Company entered into an agreement to purchase new extrusion
equipment. The equipment is anticipated to cost approximately $1,941,000, and
will be financed by a new loan to the Company from First American Bank.
In August 1998, the Company entered into an agreement to purchase the building
located next to its current facility. The purchase price of the building is
$1,585,000, and will be financed by a new mortgage loan to the Company from
First American Bank.
Note 4 - Debt Restructuring
In May 1998, the Company restructured its debt with First American Bank. The new
credit arrangements provide for consolidation of certain term loans at reduced
interest rates, and an increase in the revolving line of credit from $3,250,000
to $4,000,000.
Note 5 - Earnings Per Share
In November 1997, the Company adopted the provisions of SFAS No. 128, "Earnings
per Share". Adoption of this pronouncement did not have a material impact on the
Company's financial statements. The provisions of SFAS No.
128 were applied to the prior period presented.
Basic income per common share is computed by dividing income available to common
shareholders, net income less preferred stock dividends, if applicable, by the
weighted average number of shares of common stock outstanding during each
period.
11
<PAGE>
July 31, 1998
Diluted income per common share for the quarter ended July 31, 1998 and year to
date July 31, 1998 is computed by dividing net income by the weighted average
number of shares of common stock and common stock equivalents (stock options and
warrants), unless anti-dilutive, during the period.
Diluted income per common share for the quarter ended July 31, 1997 and year to
date July 31, 1997 is computed by dividing net income by the weighted average
number of shares of common stock and common stock equivalents (stock options,
warrants and convertible preferred stock), unless anti-dilutive, during the
period. The weighted average number of shares and equivalent shares of common
stock outstanding during the period ended July 31, 1997 reflects conversion of
all convertible preferred stock into 1,098,901 shares of common stock as of the
beginning of the period.
Income per common share for the periods ended July 31, 1998 and 1997 was
computed as follows (in thousands, except per share amounts):
CTI Industries Corporation and Subsidiary
<TABLE>
<CAPTION>
Quarter Ended Juy 31 Year to Date July 31
1998 1997 1998 1997
------------------------- -------------------------
Basic
Average shares outstanding:
<S> <C> <C> <C> <C>
Weighted average number of shares of
common stock outstanding during the
period 3,825,954 1,010,202 3,785,523 996,099
=========== =========== =========== ===========
Net income:
Net income $ 115,432 $ (43,558) $ 678,669 $ 347,133
Less preferred stock dividends -- (32,500) -- (97,500)
----------- ----------- ----------- -----------
Amount for per share computation $ 115,432 $ (76,058) $ 678,669 $ 249,633
=========== =========== =========== ===========
Per share amount $ 0.03 $ (0.08) $ 0.18 $ 0.25
=========== =========== =========== ===========
Diluted Average shares outstanding:
Weighted average number of shares of
common stock outstanding during the
period 3,825,954 1,010,202 3,785,523 996,099
Net additional shares assuming stock
options and warrants exercised and
proceeds used to purchase treasury
stock 285,011 -- 339,004 126,809
Additional shares assuming conversion
of convertible preferred stock -- -- -- 1,098,901
----------- ----------- ----------- -----------
Weighted average number of shares and
equivalent shares of common stock
outstanding during the period 4,110,965 1,010,202 4,124,527 2,221,809
=========== =========== =========== ===========
Net income:
Net income $ 115,432 $ (43,558) $ 678,669 $ 347,133
Less preferred stock dividends -- (32,500) -- (97,500)
----------- ----------- ----------- -----------
Income applicable to common shares $ 115,432 $ (76,058) $ 678,669 $ 249,633
Add dividends on preferred stock assumed
converted into common shares -- -- -- 97,500
----------- ----------- ----------- -----------
Amount for per share computation $ 115,432 $ (76,058) $ 678,669 $ 347,133
=========== =========== =========== ===========
Per share amount $ 0.03 $ (0.08) $ 0.16 $ 0.16
=========== =========== =========== ===========
</TABLE>
12
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM FORM 10-QSB FOR THE
QUARTERLY PERIOD ENDED JULY 31, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FORM 10-QSB.
</LEGEND>
<CIK> 0001042187
<NAME> CTI Industries Corporation
<MULTIPLIER> 1,000
<CURRENCY> dollars
<S> <C>
<PERIOD-TYPE> 9-mos
<FISCAL-YEAR-END> OCT-31-1998
<PERIOD-START> NOV-01-1997
<PERIOD-END> JUL-31-1998
<EXCHANGE-RATE> 1.000
<CASH> 764
<SECURITIES> 0
<RECEIVABLES> 3,252
<ALLOWANCES> 170
<INVENTORY> 8,759
<CURRENT-ASSETS> 13,828
<PP&E> 12,745
<DEPRECIATION> 7,531
<TOTAL-ASSETS> 20,962
<CURRENT-LIABILITIES> 7,930
<BONDS> 0
0
0
<COMMON> 1,188
<OTHER-SE> 6,611
<TOTAL-LIABILITY-AND-EQUITY> 20,962
<SALES> 15,714
<TOTAL-REVENUES> 15,714
<CGS> 9,001
<TOTAL-COSTS> 9,001
<OTHER-EXPENSES> 5,121
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 562
<INCOME-PRETAX> 1,030
<INCOME-TAX> 351
<INCOME-CONTINUING> 679
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 679
<EPS-PRIMARY> .18
<EPS-DILUTED> .16
</TABLE>
