<PAGE>
U. S. 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 June 30, 1996
or
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the transition period from ________________ to ______________
Commission file No. 0-18139
CREATIVE RESOURCES, INC.
(Name of small business issuer in its charter)
NEVADA 22-2798898
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
26 MILL PLAIN ROAD, SUITE B
DANBURY, CT 06811
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: (203) 778-5002
Check whether the Registrant (1) has filed all reports required to be filed
by Section 13 or 15(d) of the 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 [ ].
State the number of shares outstanding of each of the issuer's classes of
common stock as of July 26, 1996.
Class Outstanding
----- -----------
Common Stock ($.01 par value) 34,483,110
1
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CREATIVE RESOURCES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, March 31,
1996 1996
------------ ------------
ASSETS (unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 261,189 $ 399,405
Notes receivable 3,490 3,256
----------- -----------
TOTAL CURRENT ASSETS 264,679 402,661
Furniture, fixtures and equipment, at cost, less accumulated
depreciation of $8,350 and $7,878 at June 30, and
March 31, 1996 respectively 6,385 4,761
----------- -----------
$ 271,064 $ 407,422
=========== ==========
LIABILITIES AND CAPITAL DEFICIT
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 13,141 $ 138,371
Accrued compensation 223,912 202,500
Liabilities from discontinued operations 550,911 550,911
Current maturities of capital lease obligations 3,021 2,893
----------- -----------
TOTAL CURRENT LIABILITIES 790,985 894,675
Capital lease obligations, less current maturities 2,324 3,129
----------- -----------
TOTAL LIABILITIES 793,309 897,804
----------- -----------
CAPITAL DEFICIT:
Preferred stock, $1 par value, 500,000 shares authorized:
Series A, 8% cumulative convertible preferred stock,
$1 redemption value, 210,000 shares issued and outstanding 210,000 210,000
Common stock, $.01 par value, 100,000,000 shares authorized,
34,483,110 shares issued and outstanding 344,831 344,831
Additional paid-in capital 753,600 753,600
Deficit (1,830,676) (1,798,813)
----------- -----------
TOTAL CAPITAL DEFICIT (522,245) (490,382)
----------- -----------
$ 271,064 $ 407,422
=========== ==========
</TABLE>
2
<PAGE>
CREATIVE RESOURCES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Three months ended
June 30,
1996 1995
---- ----
(unaudited)
<TABLE>
<CAPTION>
<S> <C> <C>
Income
Other income $ 3,740 $ 466
Management fees - 60,000
Gain on sale of investment - 86,381
-------- --------
3,740 146,847
Expense
General and administrative expenses 50,467 81,698
-------- --------
(Loss) income from continuing operations before income taxes (46,727) 65,149
Taxes on income - -
-------- --------
Net (loss) income from continuing operations (46,727) 65,149
Income from discontinued operations 14,864 2,935
Loss on sale of business segment - (3,828)
-------- --------
NET (LOSS) INCOME $(31,863) $ 64,256
======== ========
Earnings per share:
Loss from continuing operations $ - $ -
======== ========
Income from discontinued operations $ - $ -
======== ========
Net loss (income) $ - $ -
======== ========
WEIGHTED AVERAGE SHARES OUTSTANDING 34,483,110 34,483,110
========== ==========
</TABLE>
3
<PAGE>
CREATIVE RESOURCES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS
<TABLE>
<CAPTION>
Three months ended
June 30,
1996 1995
---- ----
(unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net (loss) income $ (31,863) $ 64,256
Adjustments to reconcile net (loss) income
to net cash absorbed by
operating activities:
Depreciation and amortization 472 617
Loss on sale of business segment - 3,827
Gain on sale of investment - (86,381)
Changes in assets and liabilities:
Other assets - 221
Accounts payable and accrued expenses (125,230) (31,534)
Accrued compensation 21,412 -
Liabilities from discontinued operations - (97,720)
--------- ---------
Net cash absorbed by
operating activities (135,209) (146,714)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
(Increase) decrease in notes receivable (234) 103
Purchase of equipment (2,096) -
Disposition of business segment - 661,590
--------- ---------
Net cash (used) provided
by investing activities (2,330) 661,693
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of long-term debt (677) (754)
--------- ---------
Net cash absorbed by
financing activities (677) (754)
--------- ---------
NET (DECREASE) INCREASE IN CASH
AND CASH EQUIVALENTS (138,216) 514,225
CASH AND CASH EQUIVALENTS at beginning of period 399,405 3,278
--------- ---------
CASH AND CASH EQUIVALENTS at end of period $ 261,189 $ 517,503
========= =========
</TABLE>
4
<PAGE>
CREATIVE RESOURCES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - PRINCIPLES OF CONSOLIDATION:
- -------------------------------------
The consolidated financial statements include the accounts of Creative
Resources, Inc. and its wholly owned subsidiaries. All significant intercompany
transactions and balances have been eliminated.
The consolidated balance sheet as of June 30, 1996 and the related
consolidated statements of operations and cash flows for the three month periods
ended June 30, 1996 and 1995 are unaudited. In the opinion of management, all
adjustments necessary for a fair presentation of such financial statements have
been included and consist only of normal recurring items.
The financial statements and notes are presented as permitted by Form
10-QSB and do not contain certain information proscribed by generally accepted
accounting principles. For further information concerning the Company's
accounting policies and certain transactions, refer to the Company's annual
report on Form 10-KSB.
NOTE 2 - DESCRIPTION OF BUSINESS:
- ---------------------------------
Creative Resources, Inc. ("CRI") and subsidiaries, collectively (the
"Company"), has disposed of or discontinued all significant operations. It is
presently meeting its working capital requirements through its cash balances and
collections of its receivables.
The accompanying financial statements have been prepared assuming that
the Company will continue as a going concern. The Company has suffered losses
and has a judgment and a claim asserted against it. See Note 10 of the Company's
March 31, 1996 annual report on Form 10-KSB. As a result, these matters raise
substantial doubt as to the Company's ability to continue as a going concern.
The Company's plan is to acquire or merge with a viable business and defend or
resolve legal proceedings against it. There can be no assurance that the Company
will be successful in achieving any objective of its plan. The financial
statements do not include any adjustment that might result from the outcome of
this uncertainty.
NOTE 3 - EARNINGS PER SHARE:
- ----------------------------
Net income per common share is based on the weighted average number of
common shares outstanding during the three month periods ended June 30, 1996 and
1995 respectively, after giving effect to the recapitalization described in the
Company's annual report on Form 10-KSB.
5
<PAGE>
NOTE 4 - CASH FLOW INFORMATION:
- -------------------------------
The Company had the following transactions:
Three months ended
June 30,
1996 1995
---- ----
Cash paid for income taxes $ - $ -
==== ====
Cash paid for interest $ 116 $ 467
==== ====
NOTE 5 - COMMITMENTS AND CONTINGENCIES:
- ---------------------------------------
The Company has legal proceedings pending against it. See Note 10 of the
Company's March 31, 1996 annual report on Form 10-KSB. The Company has agreed to
indemnify its current and former directors and officers against any losses or
liabilities arising out of their service with the Company, including any losses
or liabilities arising out of these legal proceedings. The Company believes that
no material liability, in excess of the amount provided, will result from the
outcome of these proceedings.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Introduction
- ------------
The Company has disposed of or discontinued all significant operations.
It is presently meeting its working capital requirements through its cash
balances and collections of its receivables. The Company is actively seeking a
viable business to acquire or with which to merge.
Operating Results
- -----------------
Income, which consists of capital gain, management fees, interest and
other miscellaneous income, was $3,740 and $146,847 for the three months ended
June 30, 1996 and 1995 respectively. The decrease in 1996 was attributable to a
decrease in both management fee income and gain on sale of an investment. Income
from management fees and gain on sale of investment are not expected to recur.
Expenses, which consist of general and administrative, salaries and
interest, were $50,467 and $81,698 for the three months ended June 30, 1996 and
1995 respectively. The decrease for 1996 was primarily attributable to a
decrease in salary and professional services expenses.
6
<PAGE>
Impact of Inflation
- -------------------
The Company believes its operations are not significantly affected by
inflation.
Liquidity and Future Outlook
- ----------------------------
The Company is presently meeting its working capital requirements from
its cash balances and collections of its receivables. Although there can be no
assurance, the Company believes it has sufficient financial resources to sustain
its operations for the next twelve months, provided the judgment against the
Company as noted in Item 3 of the Company's March 31, 1996 annual report on Form
10-KSB is not enforced.
The Company's financial statements have been prepared assuming that the
Company will continue as a going concern. The Company has suffered losses and
has a judgment and a claim asserted against it. These conditions raise
substantial doubt as to the Company's ability to continue as a going concern.
The Company's plan is to acquire or merge with a viable business and
defend or resolve legal proceedings against it. There can be no assurance that
the Company will be successful in achieving any objectives of its plan. The
Company's plan is being implemented by its sole officer and director, who is
currently serving without regular cash compensation.
PART II. OTHER INFORMATION
ITEM 1: LEGAL PROCEEDINGS
None
ITEM 2: CHANGES IN SECURITIES
None
ITEM 3: DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5: OTHER INFORMATION
None
ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K
None
7
<PAGE>
SIGNATURES
----------
In accordance with Section 13 or 15(d) of the Exchange Act of 1934, the
Registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
CREATIVE RESOURCES, INC.
(Registrant)
By: /s/ Dennis R. Williamson
---------------------------
Dennis R. Williamson
President
August 9, 1996
8
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-START> APR-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 261,189
<SECURITIES> 0
<RECEIVABLES> 3,490
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 264,679
<PP&E> 14,735
<DEPRECIATION> 8,350
<TOTAL-ASSETS> 271,064
<CURRENT-LIABILITIES> 790,985
<BONDS> 0
0
210,000
<COMMON> 344,831
<OTHER-SE> (1,077,076)
<TOTAL-LIABILITY-AND-EQUITY> 271,064
<SALES> 0
<TOTAL-REVENUES> 3,740
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 116
<INCOME-PRETAX> (46,727)
<INCOME-TAX> 0
<INCOME-CONTINUING> (46,727)
<DISCONTINUED> 14,864
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (31,863)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
