FORM 10-QSB/A
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Quarterly Report Under Section 13 or 15(d) of
the Securities Exchange Act of 1934
For Quarter Ended: September 30,1995
Commission File Number: 0-15754
CREATIVE TECHNOLOGIES CORP.
(Exact name of registrant as specified in its charter)
NEW YORK 11-2721083
(State or other jurisdiction of (IRS Employer Identification Number)
incorporation of organization)
170 53rd Street, Brooklyn, New York 11232
(Address of principal executive offices) (Zip Code)
(718) 492- 8400
(Registrant's telephone number, including area code)
(Former name, former address and former fiscalyear, if changed
since last report) 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
Indicate the number of shares outstanding of each of
the issuer's classes of Common Stock, as of the latest
practicable date.
Common Stock, Par Value $.03 5,827,854
(Title of each class) (Outstanding at September 30, 1995)
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CREATIVE TECHNOLOGIES CORP.
INDEX
PART I - FINANCIAL INFORMATION PAGE
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 1
PART II - OTHER INFORMATION
Signatures 2
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Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Liquidity and Capital Resources
The Company designs, manufactures and
distributes small electric appliances that are
used in the home kitchen. Currently, the
Company's top selling items are a series of fresh
pasta making machines and the Grill Express, a
novel food griller.
In 1993, the Company obtained a short term
loan in the amount of $1,000,000 from an entity one
of whose director is a director of the Company.
The loan currently bears interest at 18% per annum.
The loan was renewed from time to time and is
currently due September 30, 1996. During the third
quarter of 1995 the Company repaid loans of $250,000,
borrowed on a short term basis $250,000 from
others at interest of 18% per annum, and borrowed
$1,000,000 from Shawmut Capital
Corporation ("Shawmut") (see below). At September 30,
1995, the Company had a total of $3,497,000 in notes
payable outstanding of which $2,830,000 are
guaranteed by two major shareholders one of whom is
an officer of the Company. The loans were used for
seasonal working capital and the Company expects
to repay these loans out of working capital
and profits, if any, derived from
operations, from other borrowings, or from
additional equity to be raised through a private
placement.
For the nine month period ended September 30,
1995, net cash used by operating activities was
$5,822,000, net cash of $651,000 was used in
investing activities and net cash of $6,737,000 was
provided by financing activities. As a
result, for the nine month period ended September 30,
1995, cash increased by $264,000 to $681,000. The
Company has a satisfactory relationship with its
suppliers. The accounts receivable increased to
$4,073,000 at September 30, 1995 from
$1,370,000 at December 31, 1994, reflecting the
change from a factoring arrangement in which the
company factored its accounts receivables to a
line of credit secured in part by the accounts
receivables. The accounts payable and other
liabilities decreased to $1,306,000 at September 30,
1995 from $3,430,000 at December 31, 1994.
Until April 19, 1995, the Company sold
substantially all of its trade receivables at
various levels of recourse to Rosenthal &
Rosenthal, Inc. (the "factor"). The factor
preapproved the sales which the Company sold to
the factor. The factor made advances to the
Company and charged the Company 2% above prime. The
factoring commissions payable at the time of
purchase were one percent of the first $10,000,000 of
the receivables sold to the factor, .875% of
the next $10,000,000 and .75% on all sales of
receivables over $20,000,000. The Company no
longer factors its receivables.
On April 19, 1995, the Company obtained a one
year credit facility from Shawmut in the total
amount of up to $15,000,000 consisting of a term
loan of $1,000,000 and revolving credit facility of
up to $15,000,000 less the outstanding amount of the
term loan. The term loan was payable in
twelve equal monthly installments and is
guaranteed by a major stockholder who is an
officer of the Company. The revolving credit
facility is limited to advance rates against
available Eligible Accounts and Eligible Inventory (as
defined in the agreement).
The Company pays interest on the Term Loan and on
the outstanding revolving credit loans at the rate
of 1.25% over the prime rate of the Shawmut Bank
Connecticut, N.A. and pays certain additional
fees.
The loan agreement requires the Company to
maintain certain levels of profitability, working
capital, tangible net worth, net cash flow and
interest coverage ratio and places certain other
restrictions on the Company. At September 30,
1995 the Company was in default of certain of
these covenants. The Company and Shawmut entered
into a Post Default Agreement effective November 1,
1995, in which Shawmut agreed to continue to extend
financing to the Company and to forebear from
accelerating the loans until December 31, 1995, to
limit loans available under the credit facility to
$5,500,000 and to slightly reduce the advance rates
against Eligible Accounts. The
Company is presently in discussion with various
lending institutions seeking replacement
financing.
Pursuant to a private placement the Company
expects to raise $2,000,000 in new capital by the
sale of 2,000,000 shares of common stock at a $1 per
share. During the month of September 1995 the Company
sold 830,000 shares. The Company expects to raise
additional equity.
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CREATIVE TECHNOLOGIES CORP.
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.
CREATIVE TECHNOLOGIES CORP.
Registrant
Dated : January 4, 1996 By: S/Richard Helfman
Richard Helfman, President
