<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 December 31, 1997
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 2B
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 February 2, 1998.
Class Outstanding
----- -----------
Common Stock ($.01 par value) 34,983,110
1
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
CREATIVE RESOURCES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
Dec. 31, March 31,
1997 1997
---- ----
ASSETS (unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 1,828 $ 68,549
Prepaid expenses 5,000 -
Notes receivable 1,597 2,236
---------- ----------
TOTAL CURRENT ASSETS 8,425 70,785
Furniture, fixtures and equipment, at cost, less accumulated
depreciation of $7,039 and $6,024 at Dec. 31, and
March 31, 1997 respectively 3,462 4,477
---------- ----------
$ 11,887 $ 75,262
========== ==========
LIABILITIES AND CAPITAL DEFICIT
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 39,180 $ 12,107
Officer loan payable 500 -
Dividends payable 25,200 25,200
Accrued compensation 100,000 257,650
Current maturities of capital lease obligations 606 3,129
---------- ----------
TOTAL CURRENT LIABILITIES 165,486 298,086
---------- ----------
TOTAL LIABILITIES 165,486 298,086
---------- ----------
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,
34,983,110 shares issued and outstanding 349,831 349,831
Additional paid-in capital 758,600 758,600
Deficit (1,472,030) (1,541,255)
---------- ----------
TOTAL CAPITAL DEFICIT (153,599) (222,824)
---------- ----------
$ 11,887 $ 75,262
========== ==========
</TABLE>
2
<PAGE>
CREATIVE RESOURCES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Three months ended
Dec. 31,
1997 1996
---- ----
(unaudited)
<S> <C> <C>
Income
Other income $ 9 $ 2,735
Expense
General and administrative expenses 12,573 81,686
------- -------
Loss from continuing operations before income taxes (12,564) (78,951)
Taxes on income - -
------- -------
Net loss from continuing operations (12,564) (78,951)
Income from discontinued operations 1,485 560,058
------- -------
(Loss) income before extraordinary items (11,079) 481,107
Extraordinary item - gain on extinguishment
of debt 162,554 -
------- -------
NET INCOME $151,475 $481,107
======= =======
Earnings per common share:
Loss from continuing operations $ - $ -
====== ======
Income from discontinued operations $ - $ .01
====== ======
(Loss) income before extraordinary items $ - $ .01
====== ======
Extraordinary items $ - $ -
====== ======
Net income $ - $ .01
====== ======
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 34,983,110 34,483,110
========== ==========
</TABLE>
3
<PAGE>
CREATIVE RESOURCES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Nine months ended
Dec. 31,
1997 1996
---- ----
(unaudited)
<S> <C> <C>
Income
Other income $ 400 $ 8,900
Management fees - 519
-------- --------
400 9,419
Expense
General and administrative expenses 102,130 213,433
-------- --------
Loss from continuing operations before income taxes (101,730) (204,014)
Taxes on income - -
-------- --------
Net loss from continuing operations (101,730) (204,014)
Income from discontinued operations 8,401 570,347
-------- --------
(Loss) income before extraordinary items (93,329) 366,333
Extraordinary item-gain on extinguishment
of debt 162,554 -
-------- --------
NET INCOME $ 69,225 $ 366,333
======== ========
Earnings per common share:
Loss from continuing operations $ - $ (.01)
===== =====
Income from discontinued operations $ - $ .02
===== =====
(Loss) income before extraordinary items $ - $ .01
===== =====
Extraordinary items $ - $ -
===== =====
Net income $ - $ .01
===== =====
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 34,983,110 34,483,110
========== ==========
</TABLE>
4
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
DECREASE IN CASH AND CASH EQUIVALENTS
<TABLE>
<CAPTION>
Nine months ended
Dec. 31,
1997 1996
---- ----
(unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 69,225 $ 366,333
Adjustments to reconcile net income
to net cash used in
operating activities:
Depreciation and amortization 1,015 1,316
Elimination of loss provision - (530,162)
Changes in assets and liabilities:
Prepaid expenses (5,000) (11,233)
Accounts payable and accrued expenses 27,073 (120,287)
Accrued compensation (157,650) 34,737
Liabilities from discontinued operations - (20,749)
-------- --------
Net cash used in
operating activities (65,337) (280,045)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Collection of notes receivable 639 604
Purchase of equipment - (2,096)
-------- --------
Net cash provided by (used in)
investing activities 639 (1,492)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of long-term debt (2,523) (2,122)
Proceeds from officer loan 500 -
-------- --------
Net cash used in
financing activities (2,023) (2,122)
-------- --------
NET DECREASE IN CASH
AND CASH EQUIVALENTS (66,721) (283,659)
CASH AND CASH EQUIVALENTS at beginning of period 68,549 399,405
-------- --------
CASH AND CASH EQUIVALENTS at end of period $ 1,828 $ 115,746
======== ========
</TABLE>
5
<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 December 31, 1997 and the related
consolidated statements of operations for the three month and the nine month
periods ended December 31, 1997 and 1996 and statements of cash flows for the
nine month periods ended December 31, 1997 and 1996 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.
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 legal proceeding pending against it. See Note 9 of the Company's March
31, 1997 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 the legal proceeding 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
these uncertainties.
NOTE 3 - EARNINGS PER SHARE:
- ---------------------------
Net income per common share is based on the weighted average number of
common shares outstanding during the three and nine month periods ended December
31, 1997 and 1996 respectively.
6
<PAGE>
NOTE 4 - CASH FLOW INFORMATION:
- ------------------------------
The Company had the following transactions:
Nine months ended
Dec. 31,
1997 1996
---- ----
Cash paid for income taxes $ - $ -
==== ====
Cash paid for interest $ 122 $ 306
==== ====
NOTE 5 - COMMITMENTS AND CONTINGENCIES:
- --------------------------------------
The Company has a legal proceeding pending against it. See Note 9 of the
Company's March 31, 1997 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 this legal proceeding. The Company believes that
no material liability will result from the outcome of this proceeding.
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. The Company is actively seeking a viable business to acquire or with
which to merge.
Operating Results
- -----------------
Income, which consists of interest and management fee income, was $9 and
$2,735 for the three months ended December 31, 1997 and 1996 respectively and
was $400 and $9,419 for the nine months ended December 31, 1997 and 1996
respectively. The decrease for the three and nine month periods in 1997 was
attributable to a decrease in management fee income and a decrease in the cash
balances on which interest income was earned. Income from management fees is not
expected to recur.
Expenses, which consist of general and administrative, salaries and
interest, were $12,573 and $81,686 for the three months ended December 31, 1997
and 1996 respectively and were $102,130 and $213,433 for the nine months ended
December 31, 1997 and 1996 respectively. The decrease for the three and nine
month periods in 1997 was primarily attributable to a decrease in salary and
professional services expenses.
7
<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. Although there can be no assurance, the Company believes it
has sufficient financial resources to sustain its operations for the next month.
The Company must raise additional funds or execute its business plan in order to
continue operations.
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 legal proceeding pending 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 the legal proceeding 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, who is currently
serving without regular cash compensation.
PART II. OTHER INFORMATION
ITEM 1: LEGAL PROCEEDINGS
There are no changes from the Annual Report filed on Form 10-KSB for
the year ended March 31, 1997.
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
8
<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
February 5, 1998
9
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<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-START> APR-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 1828
<SECURITIES> 0
<RECEIVABLES> 1597
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 8425
<PP&E> 10501
<DEPRECIATION> 7039
<TOTAL-ASSETS> 11887
<CURRENT-LIABILITIES> 165486
<BONDS> 0
0
210000
<COMMON> 349831
<OTHER-SE> (713430)
<TOTAL-LIABILITY-AND-EQUITY> 11887
<SALES> 0
<TOTAL-REVENUES> 400
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (101730)
<INCOME-TAX> 0
<INCOME-CONTINUING> (101730)
<DISCONTINUED> 8401
<EXTRAORDINARY> 162554
<CHANGES> 0
<NET-INCOME> 69225
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
