<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[X] Quarterly Report under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarterly period ended March 31, 1997
--------------
Commission file number 1-10790
-------
INDUSTRIAL TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 04-2596252
- ------------------------------- ------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
One Trefoil Drive, Trumbull, CT 06611
- ------------------------------- ----------------
(Address of Principal Executive Offices) (Zip Code)
(203) 268-8000
--------------------------------------------------------------------
(Issuer's Telephone Number, including Area Code)
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d)of the Securities Exchange Act of 1934 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 March 31, 1997, the registrant had outstanding 5,529,548 shares
of Common Stock, $.01 par value.
Transitional Small Business Disclosure Format.
Yes No X .
--- ---
<PAGE> 2
INDEX
INDUSTRIAL TECHNOLOGIES, INC.
<TABLE>
<CAPTION>
Page No.
PART I - FINANCIAL INFORMATION
<S> <C> <C>
Item 1. Financial Statements (Unaudited) 3-6
Consolidated Balance Sheets,
March 31, 1997, and September 30, 1996 3
Consolidated Statements of Operations, Three
Months and Six Months Ended, March 31, 1997, and 1996 4
Consolidated Statements of Cash Flows, Six
Months Ended March 31, 1997, and 1996 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 9
Item 5. Other Information 9
Item 6. Exhibits and Reports on 8-K 9
SIGNATURES 10
</TABLE>
2
<PAGE> 3
PART I - FINANCIAL INFORMATION
INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
March 31, September 30,
1997 1996
----------- -------------
Assets (Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents.......................................... $ 351,060 $ 298,630
Trade accounts receivable, less allowance for doubtful
accounts of $63,883 in fiscal 1997 and $56,791
in fiscal 1996................................................... 1,708,546 954,347
Inventories........................................................ 1,971,103 1,883,838
Prepaid expenses and other current assets.......................... 138,819 44,410
------------ ------------
Total current assets............................................ 4,169,528 3,181,225
Property and equipment, net.......................................... 63,141 25,987
Intangible and other assets, net..................................... 82,048 65,213
Costs in excess of net assets of business acquired................... 3,113,050 3,266,780
------------ ------------
Total assets.................................................... $ 7,427,767 $ 6,539,205
============ ============
Liabilities and Stockholders' Equity
Current liabilities:
Notes payable...................................................... $ 1,355,310 $ 440,425
Accounts payable................................................... 1,081,940 945,216
Accrued expenses................................................... 943,434 864,010
Warranty and installation costs.................................... 306,999 297,860
Deferred revenue and customer deposits............................. 338,212 430,436
------------ ------------
Total current liabilities....................................... 4,025,895 2,977,947
Long-term debt....................................................... 180,000 180,000
------------ ------------
Total liabilities............................................... 4,205,895 3,157,947
Stockholder's equity:
Common stock, $.01 par value, authorized 14,000,000
shares; issued and outstanding 5,529,548 shares in
fiscal 1997 and 5,368,298 shares in fiscal 1996.................. 55,295 53,682
Additional paid-in capital......................................... 13,064,957 13,048,832
Accumulated deficit................................................ (9,898,380) (9,721,256)
------------ ------------
Total stockholders' equity...................................... 3,221,872 3,381,258
------------ ------------
Total liabilities and stockholders' equity........................... $ 7,427,767 $ 6,539,205
============ ============
</TABLE>
The accompanying Notes to Consolidated Financial Statements are an integral
part of these financial statements
3
<PAGE> 4
INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARY
Consolidated Statements of Operations
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
-------------------------- --------------------------
March 31, March 31, March 31, March 31,
1997 1996 1997 1996
-------------------------- ---------------------------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Net sales ................................................ $1,787,253 $1,706,956 $4,182,210 $3,354,425
Cost of goods sold ....................................... 1,025,318 824,822 2,299,748 1,668,957
Gross profit ......................................... 761,935 882,134 1,882,462 1,685,468
Operating expenses:
Selling ................................................ 342,695 389,700 740,018 741,469
General and administrative ............................. 402,129 332,941 772,106 718,378
Engineering ............................................ 133,036 113,803 330,737 213,478
Amortization of costs in excess of
net assets of business acquired ...................... 76,865 76,866 153,731 153,731
-------------------------- --------------------------
Total operating expenses ............................. 954,725 913,310 1,996,592 1,827,056
-------------------------- --------------------------
Operating loss ..................................... (192,790) (31,176) (114,130) (141,588)
-------------------------- --------------------------
Interest expense, net ................................ (36,689) (29,047) (75,748) (55,490)
Other income, net .................................... 35,579 -- 12,756 --
-------------------------- --------------------------
Total other income (expense) ....................... (1,110) (29,047) (62,992) (55,490)
Net loss ........................................... $ (193,900) $ (60,223) $ (177,122) $ (197,078)
========================== ==========================
Loss per share ..................................... $ (0.04) $ (0.01) $ (0.03) $ (0 .04)
========================== ==========================
Weighted average common shares outstanding ............... 5,486,937 5,218,298 5,459,225 5,218,298
========================== ==========================
</TABLE>
The accompanying Notes to Consolidated Financial Statements are an integral
part of these financial statements.
4
<PAGE> 5
INDUSTRIAL TECHNOLOGIES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
Six Months Ended
--------------------------------
March 31, March 31,
1997 1996
----------- -----------
(Unaudited) (Unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net loss......................................................... $(177,122) $(197,078)
Adjustment to reconcile net loss to net cash
provided by (used for) operating activities:
Depreciation................................................... 2,797 9,810
Amortization of costs in excess of net assets
of business acquired......................................... 153,731 153,731
Changes in net assets and liabilities:
Trade accounts receivable.................................... (754,199) 169,888
Inventories.................................................. (87,265) (193,917)
Prepaid expenses and other current assets.................... (111,244) (33,288)
Accounts payable............................................. 136,724 202,508
Accrued expenses............................................. 79,424 (40,315)
Warranty and installation costs.............................. 9,139 (104,422)
Deferred revenue and customer deposits....................... (92,224) 167,509
--------- ---------
Net cash provided by (used for) operating activities....... (840,239) 134,426
--------- ---------
Cash flows from investing activities:
Capitalization of product software............................... (39,951) (12,033)
Other............................................................ -- 859
--------- ---------
Net cash used for investing activities..................... (39,951) (11,174)
--------- ---------
Cash flows from financing activities:
Net borrowings (payments) on revolving credit agreement.......... 914,882 (131,436)
Payments on notes payable........................................ -- (37,000)
Proceeds (costs) from issuance of common stock net of costs...... 17,738 --
--------- ---------
Net cash provided by (used for) financing activities....... 932,620 (168,436)
--------- ---------
Net increase in cash and cash equivalents.......................... 52,430 (45,184)
Cash and cash equivalents at beginning of period:.................. 298,630 214,448
--------- ---------
Cash and cash equivalents at end of period:........................ $ 351,060 $ 169,264
========= =========
Supplemental disclosures of cash flow information
Cash paid during period for:
Interest......................................................... $ 75,748 $ 52,684
========= =========
</TABLE>
The accompanying Notes to Consolidated Financial Statements
are an integral part of these financial statements.
5
<PAGE> 6
INDUSTRIAL TECHNOLOGIES, INC., AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. NATURE OF BUSINESS
Industrial Technologies, Inc., ("INTI" or the "Company"), is a
manufacturer of advanced sensing, monitoring, computer processing, and surface
inspection systems used in diverse industrial manufacturing and other
applications. INTI's specialized product divisions are directed to the common
mission of developing and implementing products and technologies for the
improvement of manufacturing productivity and quality.
INTI instruments, computers and turnkey systems are designed and
manufactured to meet the diverse needs and demanding conditions found in process
measurement and control applications. INTI serves its clients in a broad
spectrum of industries ranging from aerospace, communications and industrial
equipment suppliers to specialized web process manufacturers in the paper,
plastics, non-woven materials, glass, steel, film, photo-sensitives, aluminum,
and rubber industries. INTI's products and systems are dedicated to improving
manufacturing efficiencies and quality required to maintain leadership in highly
competitive global markets.
Note 2. BASIS OF PRESENTATION
In the opinion of management, the accompanying unaudited consolidated
financial statements reflect all necessary, normal and recurring adjustments
which are required to present fairly the financial position of the Company and
its subsidiary as of March 31, 1997, and the results of operations and cash
flows for the three months and six months ended March 31, 1997, and March 31,
1996. Certain information and footnote disclosures normally included in the
annual financial statements, which are prepared in accordance with generally
accepted accounting principles, have been condensed or omitted. Accordingly, the
Company believes that although the disclosures are adequate to make the
information presented not misleading, these financial statements should be read
in conjunction with the annual financial statements of the Company and notes
thereto, contained in the Company's Form 10-KSB, for the fiscal year ended
September 30, 1996. The results of operations for the three month and six month
periods ended March 31, 1997, are not necessarily indicative of those that may
be expected for the full fiscal year.
Note 3. COMMITMENTS AND CONTINGENCIES
The Company has entered into employment agreements with certain officers.
The agreements are for terms ranging from one year to five years and provide for
a base salary and certain benefits which are specified in each of the
agreements. Each of the agreements also provide for severance pay for
termination under certain circumstances which are defined in the agreements. The
minimum annual commitments under the agreements are 1997: $376,000; and 1998:
$251,167.
INTI's wholly owned subsidiary, Intec Corp., is currently working with the
Department of Environmental Protection of the State of Connecticut (CT-DEP) to
review, and to clear, all adverse findings with respect to the
Tetrachloroethylene Analysis performed in May 1992. This analysis was performed
in conjunction with the CT-DEP Property Transfer Program. A follow-up analysis
was made as recently as May 1996. Although the levels of the contaminant have
decreased substantially, they still remain above acceptable levels. Appropriate
methods are being and will be employed to lower these levels. Tests will
continue until compliance levels have been met. The Company has spent
approximately $35,000 to date. The Company believes the resolution of this
matter will not have a material impact on the financial position, results of
operations or cash flows of the Company.
Note 4. INVENTORIES
The components of inventories are as follows:
<TABLE>
<CAPTION>
March 31, 1997 September 30, 1996
-------------- ------------------
<S> <C> <C>
Raw materials and subassemblies net of revenues $ 1,403,195 $1,341,073
Work in process 455,313 435,156
Finished goods 112,595 107,609
----------- ----------
$ 1,971,103 $1,883,838
=========== ==========
</TABLE>
6
<PAGE> 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
Three Months Ended March 31,1997, Compared to Three Months Ended March 31, 1996
The Company had net sales for the three months ended March 31, 1997
(the "current quarter"), of $1,787,253 compared to $1,706,956 for the three
months ended March 31, 1996 (the "prior year quarter"). The increase of $80,297
primarily reflects the larger backlog of orders at the beginning of the current
quarter versus the prior year quarter and an increase in deliveries emanating
from that backlog.
The Company generated gross profits of $761,935 (42.6% of net sales)
for the current quarter compared to gross profits of $882,134 (51.7% of net
sales) for the prior year quarter. The 13.6% decrease in amount and the decrease
in gross profit percentage relate to product and market mix. Product mix has a
direct effect on cost and market mix has a direct effect on selling price;
therefore, the combination affects gross profit. As to the decrease in gross
profit percentage, certain system configurations included continuing extra costs
that were not immediately recoverable from European customers, i.e., CE
certification required for shipments into the European Common Market. In
addition, slippage in service and spare parts volume, normally higher gross
profit business, had a further negative impact on gross profit. The Company
expects improvement, but there can be no assurance that this will occur.
Selling, general and administrative expenses for the current quarter
were $744,824 (41.7% of net sales) compared to $722,641 (42.3% of net sales) for
the prior year quarter. The increase in expense is due primarily to increased
legal and professional expense plus the addition of personnel in the selling and
general and administrative functional areas. The decrease in expense to net
sales percentage is a result of increased net sales.
Engineering expenses for the current quarter were $133,036 compared to
the prior year quarter of $113,803. This increase reflects the continuing
programs to accelerate new product development. The major areas of increase
continue to be additional personnel and increased use of outside specialized
consultants.
Amortization of costs in excess of net assets of business acquired are
the same for the current and prior quarters and will continue to be so during
the remaining established life of the asset.
The Company had net interest expense of $36,689 for the current quarter
compared to $29,047 in the prior year quarter. This increase is partially due to
increased borrowing for the period and an increase for part of the period in the
rate of interest paid.
Other income (net) in the amount of $35,579 is largely due to foreign
exchange gains.
The net loss of $193,900 in the current quarter compared to a loss of
$60,223 in the prior year quarter. Higher cost of goods, continuing product
development efforts and increased general and administrative expense all
contributed to the loss. Although there are no assurances that performance will
improve, management anticipates that the higher level of development and selling
and marketing efforts will produce favorable results in the future.
Six Months Ended March 31, 1997, Compared to Six Months Ended March 31 ,1996
The Company had net sales for the six month period ended March 31,
1997, (the "current half year") of $4,182,210 as compared to $3,354,425 for the
six month period ended March 31, 1996 (the "prior half year"). The increase of
$827,785 reflects improved INTI sales performance.
The Company generated gross profits of $1,882,462 (45.0% 0f net sales)
for the current half year compared to a gross profit of $1,685,468 (50.2% of net
sales) for the prior half year. The increase of $196,994 relates to improved
INTI sales, and the decrease in gross profit percentage reflects more aggressive
pricing, expenses related to CE certification required for shipments to the
European Common Market and slippage in higher margin service and spare parts
volume. The Company expects improvement, but there can be no assurance that this
will take place.
7
<PAGE> 8
Selling, general and administrative expenses for the current half year
of $1,512.124 (36.2% of net sales) compared to $1,459,847 (43.5% of net sales)
for the prior half year. The increase, as previously mentioned, is due primarily
to increased legal and professional expense and the addition of personnel in the
selling and general and administrative functional areas. The decrease in
percentage to net sales is a result of increased net sales.
The engineering expenses for the current half year were $330,737 as
compared with $213,478 for the prior half year. The increase of $117,259 is
primarily due to an acceleration of the development of new software for both
existing and planned new products.
Interest expense for the current half year of $75,748 compares to
$55,490 for the prior half year. This increase of $20,258 is due to increased
borrowing under the Company's working capital line of credit.
Other income net of other expense for the current half year of $12,756
compares to other income of $0 for the prior half year. Most of this income is
the net result of favorable foreign currency exchange for the current half year.
The net loss of $177,122 for the current half year compares to a net
loss of $197,078 for the prior half year. The improvement of $19,956 is
primarily the result of improvement in gross profit dollars due to higher net
sales.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary source of liquidity at March 31, 1997, consisted
of $351,060 of cash plus the borrowing power under the Company's revolving
credit loan agreement ("Loan Agreement") which provides a $1,500,000 revolving
credit line at an annual interest rate of 4% over the prime interest rate as
published in the Wall Street Journal. The loan matures on October 31, 1999,
unless sooner terminated at the option of the lender at which time all amounts
outstanding will be due and payable. At March 31, 1997, the Company had borrowed
$1,355,310 under the Loan Agreement and $144,690 of additional borrowings would
have been available if there had been additional eligible accounts receivable.
The revolving loan requires interest to be paid monthly and has a maximum
borrowing base of: the lesser of $1,500,000 or the aggregate of (1) 80% of the
Company's eligible domestic accounts receivable, (2) 80% of the Company's
eligible accounts receivable covered by irrevocable letters of credit, (3) the
lesser of 80% of the Company's European eligible open accounts receivable or
$500,000, and (4) a $500,000 demand loan which is payable in installments of
approximately $16,700 of principal scheduled to commence in April 1997. The
April 1997 and the May 1997 installments of principal have been deferred by the
lender to June 1997. From November 1996 through March 1997 payments were
scheduled on interest only on the $500,000 demand loan. The Company is in
compliance with the covenants of this lending agreement. In addition, the
Company realized $89,963 from the exercise of certain warrants during the three
month period ended March 31, 1997.
The Company requires additional capital to finance current operations,
make enhancements to and expansions of its manufacturing capacity in accordance
with its business strategy, and for working capital for inventory and accounts
receivable. The Company is seeking such additional funds through public or
private debt. On April 21, 1997, the Company received a commitment letter of the
Connecticut Development Authority ("CDA") approving the Company's application
for a seven year term loan in the principal amount of $500,000, which commitment
has been accepted by the Company. Definitive documentation is in preparation,
and the Company expects the loan to close in mid-June, although there can be no
assurance that this will occur. Without such future financing, the Company's
ability to finance its operations and growth will be severely limited.
At March 31, 1997, the Company's backlog of customer orders was
approximately $1,724,000 compared to approximately $2,500,000 at April 3, 1996
and approximately $2,700,000 at January 15, 1997. The Company is seeking to
offset this decrease in the backlog in the following quarters through an
increase in the rate of new proposals, although there can be no assurance that
such proposals will result in orders.
CAPITAL EXPENDITURES
The Company does not have any material commitments for capital
expenditures at this time.
EFFECT OF INFLATION
The Company believes that inflation has not had a material effect on
its results of operations or financial condition during the last two fiscal
years.
8
<PAGE> 9
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On February 26, 1997, the lessor of the Company's Trumbull,
Connecticut facility filed an action in the Bridgeport Housing Session of the
Superior Court of Connecticut seeking eviction of the Company for non-payment
of additional rents in accordance with the terms of the lease, which action is
pending. During the pendency of the litigation, the Company has continued to
occupy the facility while making timely use and occupancy payments to the
lessor. The Company is negotiating with the lessor to have the lease
reinstated, but there can be no assurance that these negotiations will lead to a
favorable conclusion, in which event, if unsuccessful in the lawsuit, the
Company would be required to relocate its operations to another facility.
The Company is not involved in any other material litigation which is
not routine and/or incidental to its business and which would have a material
impact on the financial position of the Company.
ITEM 5. OTHER INFORMATION
On April 2, 1997, Tancred V. Schiavoni tendered his resignation as a
Director of the Company and advised the Company that he would not stand for
reelection as a Director of the Company at its Annual Meeting on April 15, 1997.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits. The following exhibits are filed herewith:
10.9 Amendment dated January 30, 1997, to the
Commercial Revolving Loan, Demand Loan
and Security Agreement with American
Commercial Finance Corporation. dated
November 1, 1996.
27 Financial Data Schedule
(b) There were no reports on Form 8-K filed during the quarter
ended March 31, 1997.
9
<PAGE> 10
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
INDUSTRIAL TECHNOLOGIES, INC.
Date: May 15, 1997 By: /s/ Joseph Schlig
-------------------
Joseph Schlig, Chief Financial
Officer, Vice President,
Treasurer and Secretary
10
<PAGE> 11
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Sequentially
Numbered Page
Description of Exhibit Number
---------------------- ------
<S> <C> <C>
10.9 Amendment dated January 30, 1997, to the Commercial Revolving Loan,
Demand Loan and Security Agreement with American Commercial Finance
Corporation dated November 1, 1996
27 Financial Data Schedule
</TABLE>
11
<PAGE> 1
EXHIBIT 10.9
January 30, 1997
American Commercial Finance
Corporation
433 South Main Street
West Hartford, CT 06110
Ladies and Gentlemen:
Reference is hereby made to that certain Commercial Revolving Loan,
Demand Loan and Security Agreement dated November 1, 1996 (the "Loan Agreement")
between Industrial Technologies, Inc. ("ITI") and Intec Europe, Ltd. ("INTEC"
and collectively, with ITI, the "BORROWERS") and American Commercial Finance
Corporation ("ACFC"), and that certain letter agreement dated December __, 1996
(the "LETTER AGREEMENT") among the Borrowers, ACFC, Gerald W. Stewart and Joseph
Schlig (collectively, the "FIDELITY GUARANTORS"), and Intec Corp. (the
"CORPORATE GUARANTOR" and collectively, with the Fidelity Guarantors, the
"GUARANTORS"). Capitalized terms not expressly defined herein shall have the
definitions assigned to them in the Loan Agreement and the Letter Agreement.
The Borrowers and the Obligors (collectively, the "OBLIGORS") have
requested that ACFC, and ACFC has agreed to, amend the Loan Agreement and the
Letter Agreement to increase the aggregate advances against European Accounts
which Intec will be eligible to have outstanding at any one time from $250,000
to $500,000. Accordingly, ACFC and the Obligors agree as follows:
1. Section 1.1(yy) of the Loan Agreement is deleted in its entirety and
the following is substituted in lieu thereof:
"(yy) "Revolving Loan Borrowing Base" shall mean an amount equal to the
lesser of: (i) ONE MILLION FIVE HUNDRED THOUSAND DOLLARS ($1,500,000),
or (ii) an amount equal to the aggregate of (1) eighty percent
(80%) of Eligible Accounts which arise out of sales by ITI, plus (2)
the lesser of (A) eighty percent (80%) of Eligible European Accounts,
or (B) FIVE HUNDRED THOUSAND DOLLARS ($500,000), plus (3) eighty
percent (80%) of Eligible Foreign Accounts, provided, however, that
Borrower's eligibility under the Revolving Loan
<PAGE> 2
-2-
the Demand Loan is $500,000, the Borrowers shall be eligible to
borrow $1,000,000 pursuant to subsection (i) of the preceding
sentence."
2. Section 4 of the Letter Agreement is hereby deleted in its entirety
and the following is substituted in lieu thereof:
"4. The aggregate advances against European Accounts at any time shall
not exceed Five Hundred Thousand ($500,000) Dollars."
3. Except as expressly set forth herein, the Loan Agreement and the
Letter Agreement shall remain unmodified and in full force and effect.
If the foregoing is in accordance with your agreement, please evidence
the same by signing below
<TABLE>
<CAPTION>
Witnessed: Very truly yours,
<S> <C>
/s/ Victoria Besse INDUSTRIAL TECHNOLOGIES, INC.
- -----------------------------
/s/ Harry Fontana By /s/ Joseph Schlig
- ----------------------------- ----------------------------
Its VP and Treasurer
/s/ Victoria Besse INTEC EUROPE, LTD.
- -----------------------------
/s/ Harry Fontana By /s/ Joseph Schlig
- ----------------------------- ----------------------------
Its VP and Treasurer
/s/ Victoria Besse INTEC CORP.
- -----------------------------
/s/ Harry Fontana By /s/ Joseph Schlig
- ----------------------------- ----------------------------
Its VP and Treasurer
</TABLE>
<PAGE> 3
-3-
<TABLE>
<CAPTION>
<S> <C>
/s/ Victoria Besse /s/ Joseph Schlig
- ----------------------------- ------------------------------
Joseph Schlig, individually
as Fidelity Guarantor
/s/ Harry Fontana
- -----------------------------
/s/ John Hubertus /s/ Gerald W. Stewart
- ----------------------------- ------------------------------
Gerald W. Stewart, individually
as Fidelity Guarantor
/s/ Barbara Jahr
- -----------------------------
</TABLE>
Review and Agreed to this
30th day of January, 1997.
AMERICAN COMMERCIAL
FINANCE CORPORATION
By Richard Mount
---------------------------
Its President
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-START> OCT-01-1996
<PERIOD-END> MAR-31-1997
<CASH> 351,060
<SECURITIES> 0
<RECEIVABLES> 1,772,429
<ALLOWANCES> (63,883)
<INVENTORY> 1,971,103
<CURRENT-ASSETS> 3,333,917
<PP&E> 1,044,527
<DEPRECIATION> 981,386
<TOTAL-ASSETS> 7,427,767
<CURRENT-LIABILITIES> 4,025,895
<BONDS> 180,000
0
0
<COMMON> 55,295
<OTHER-SE> 3,166,577
<TOTAL-LIABILITY-AND-EQUITY> 7,427,767
<SALES> 4,182,210
<TOTAL-REVENUES> 4,182,210
<CGS> 2,299,748
<TOTAL-COSTS> 4,296,340
<OTHER-EXPENSES> 62,992
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 75,748
<INCOME-PRETAX> (177,122)
<INCOME-TAX> 0
<INCOME-CONTINUING> (177,122)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (177,122)
<EPS-PRIMARY> (0.03)
<EPS-DILUTED> (0.03)
</TABLE>
