SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF SECURITIES EXCHANGE ACT OF
1934
For the quarterly period ended: June 30, 1998
Commission file number: 1-12840
CSL LIGHTING MANUFACTURING, INC.
(Exact name of registrant as specified in its charter)
Delaware 95-4463033
(State of incorporation) (I.R.S. employer identification No.)
27615 Avenue Hopkins, Valencia, California 91355-3447
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including Area Code: 805-257-4155
Indicate by check 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 |_|
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: 14,215,632 shares of common
stock, $.01 par value, as of August 14, 1998.
<PAGE>
CSL LIGHTING MANUFACTURING, INC.
INDEX
PART I. - FINANCIAL INFORMATION PAGE
----
Item 1. Financial Statements
Condensed Balance Sheets at
December 31, 1997 and
June 30, 1998 (Unaudited)..................................... 3 - 4
Condensed Statements of Operations
for the six months ended
June 30, 1997 (Unaudited) and
June 30, 1998 (Unaudited)...................................... 5
Condensed Statements of Operations
for the three months ended
June 30, 1997 (Unaudited) and June 30, 1998
(Unaudited).................................................... 6
Condensed Statements of Cash Flows
for the six months ended June 30, 1997 (Unaudited)
and June 30, 1998 (Unaudited).................................. 7
Notes to Unaudited Condensed Financial Statements.............. 8 - 10
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations.................................................. 11 - 15
PART II - OTHER INFORMATION............................................ 15
SIGNATURES............................................................. 16
2
<PAGE>
CSL LIGHTING MANUFACTURING, INC.
CONDENSED BALANCE SHEETS
ASSETS
DECEMBER 31, JUNE 30,
1997 1998
---------- ----------
(Unaudited)
CURRENT ASSETS:
Cash $ 152,000 $ 20,000
Accounts receivable, net of
allowance for doubtful
accounts of $194,000 at
December 31, 1997, and
$200,000 at June 30, 1998 2,228,000 1,852,000
Inventories 4,346,000 4,558,000
Other current assets 578,000 372,000
---------- ----------
7,304,000 6,802,000
PROPERTY AND EQUIPMENT, at cost,
net of accumulated depreciation and
amortization of $1,696,000 at December 31,
1997 and $1,915,000 at June 30, 1998 1,365,000 1,167,000
OTHER ASSETS 116,000 113,000
---------- ----------
$8,785,000 $8,082,000
========== ==========
The accompanying notes are an integral part of these condensed balance sheets
3
<PAGE>
CSL LIGHTING MANUFACTURING, INC.
CONDENSED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
DECEMBER 31, JUNE 30,
1997 1998
------------ ------------
(Unaudited)
CURRENT LIABILITIES:
Current portion of long - term debt $ 2,483,000 $ 2,122,000
Bank overdraft -- 95,000
Current portion of notes payable
to stockholders 78,000 78,000
Accounts payable 1,038,000 968,000
Accrued expenses 712,000 567,000
------------ ------------
4,311,000 3,830,000
------------ ------------
LONG - TERM LIABILITIES:
Long - term debt, net of current portion 119,000 119,000
Subordinated convertible notes 1,525,000 1,457,000
Deferred rent 206,000 195,000
------------ ------------
1,850,000 1,771,000
------------ ------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value:
Authorized - 1,000,000 shares
Issued and Outstanding - none -- --
Common stock, $.01 par value:
Authorized - 30,000,000 shares
Issued and Outstanding -
13,552,000 shares at December 31, 1997
14,215,632 shares at June 30, 1998 136,000 138,000
Additional paid-in-capital 16,075,000 16,148,000
Less - Shares held in treasury (1,218,000) (1,218,000)
Deferred compensation (510,000) (477,000)
Retained deficit (11,859,000) (12,110,000)
------------ ------------
2,624,000 2,481,000
------------ ------------
$ 8,785,000 $ 8,082,000
============ ============
The accompanying notes are an integral part of these condensed balance sheets
4
<PAGE>
CSL LIGHTING MANUFACTURING, INC.
CONDENSED STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30,
(UNAUDITED)
<TABLE>
<CAPTION>
1997 1998
------------ ------------
<S> <C> <C>
NET SALES $ 6,461,000 $ 6,517,000
COST OF GOODS SOLD 3,806,000 3,854,000
------------ ------------
2,655,000 2,663,000
------------ ------------
OPERATING EXPENSES:
Selling 1,617,000 1,425,000
General and administrative 1,526,000 1,254,000
------------ ------------
3,143,000 2,679,000
------------ ------------
Loss from operations (488,000) (16,000)
------------ ------------
OTHER INCOME (EXPENSE):
Interest income 1,000 1,000
Interest expense - financing obligations (148,000) (163,000)
Interest expense - conversion discount, interest
and additional stock conversion bonus
for convertible notes (508,000) (72,000)
------------ ------------
(655,000) (234,000)
------------ ------------
Loss before provision for income taxes (1,143,000) (250,000)
PROVISION FOR INCOME TAXES 1,000 1,000
------------ ------------
NET LOSS $ (1,144,000) $ (251,000)
============ ============
WEIGHTED AVERAGE NUMBER OF SHARES
OF COMMON STOCK OUTSTANDING 9,249,000 13,772,000
============ ============
NET LOSS PER COMMON SHARE - BASIC $ (0.12) $ (0.02)
============ ============
</TABLE>
The accompanying notes are an integral part of these
condensed financial statements
5
<PAGE>
CSL LIGHTING MANUFACTURING, INC.
CONDENSED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED JUNE 30,
(UNAUDITED)
<TABLE>
<CAPTION>
1997 1998
------------ ------------
<S> <C> <C>
NET SALES $ 3,263,000 $ 2,989,000
COST OF GOODS SOLD 1,975,000 1,802,000
------------ ------------
1,288,000 1,187,000
------------ ------------
OPERATING EXPENSES:
Selling 848,000 729,000
General and administrative 780,000 607,000
------------ ------------
1,628,000 1,336,000
------------ ------------
Loss from operations (340,000) (149,000)
------------ ------------
OTHER INCOME (EXPENSE):
Interest income 1,000 1,000
Interest expense - financing obligations (77,000) (79,000)
Interest expense - conversion discount, interest
and additional stock conversion bonus
for convertible notes (333,000) (37,000)
------------ ------------
(409,000) (115,000)
------------ ------------
Loss before provision for income taxes (749,000) (264,000)
PROVISION FOR INCOME TAXES -- --
------------ ------------
NET LOSS $ (749,000) $ (264,000)
============ ============
WEIGHTED AVERAGE NUMBER OF SHARES
OF COMMON STOCK OUTSTANDING 10,053,000 13,995,000
============ ============
NET LOSS PER COMMON SHARE - BASIC $ (0.07) $ (0.02)
============ ============
</TABLE>
The accompanying notes are an integral part of these
condensed financial statements
6
<PAGE>
CSL LIGHTING MANUFACTURING, INC.
CONDENSED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30,
(UNAUDITED)
<TABLE>
<CAPTION>
1997 1998
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(1,144,000) $ (251,000)
Adjustments to reconcile net loss to
net cash (used in) provided by operating activities:
Deferred compensation 33,000 33,000
Depreciation and amortization 310,000 257,000
Provision for doubtful accounts (199,000) 47,000
Interest expense associated with fixed
conversion discounts and additional stock bonus 433,000 --
Decrease (increase) in assets:
Accounts receivable (223,000) 329,000
Inventories (47,000) (212,000)
Other (281,000) 177,000
Increase (decrease) in liabilities:
Bank overdraft -- 95,000
Accounts payable (136,000) (70,000)
Accrued expenses 132,000 (138,000)
Deferred rent (4,000) (11,000)
----------- -----------
Net cash (used in) provided by operating activities (1,126,000) 256,000
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (87,000) (21,000)
Other assets 4,000 (6,000)
----------- -----------
Net cash used in investing activities (83,000) (27,000)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Additions to long-term borrowings 220,000 --
Proceeds from the sale of subordinated convertible debt 1,000,000 --
Repayments of long-term debt (5,000) (361,000)
Additional costs associated with the sale of common stock (13,000) --
----------- -----------
Net cash (used in) provided by financing activities 1,202,000 (361,000)
----------- -----------
NET DECREASE IN CASH (7,000) (132,000)
CASH, beginning of period 7,000 152,000
----------- -----------
CASH, end of period $ -- $ 20,000
=========== ===========
</TABLE>
The accompanying notes are an integral part of these
condensed financial statements
7
<PAGE>
CSL LIGHTING MANUFACTURING, INC.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The accompanying unaudited condensed financial statements have been prepared in
accordance with the requirements of Form 10-QSB and, therefore, do not include
all information and footnotes which would be presented were such financial
statements prepared in accordance with generally accepted accounting principles.
These statements should be read in conjunction with the Company's Annual report
on Form 10-KSB which contain audited financial information as of December 31,
1997 and 1996. In the opinion of management, these interim financial statements,
when read in conjunction with Management's Discussion and Analysis contained in
this report, reflect all adjustments necessary for a fair presentation of the
financial position and results of operations for the periods presented. The
results of operations and cash flows for such periods are not necessarily
indicative of results to be expected for the full year.
Certain prior year financial information has been reclassified to conform to
current year presentation.
2. WEIGHTED AVERAGE NUMBER OF SHARES
Net income or loss per share is based upon the weighted average number of shares
outstanding during the period in accordance with SFAS 128 "Earnings Per Share".
3. INVENTORIES
Inventories include costs of materials, labor and manufacturing overhead, and
are stated at the lower of cost (weighted average) or market and consist of the
following at December 31, 1997 and June 30, 1998:
December 31, June 30,
1997 1998
---- ----
Raw Material $1,042,000 $1,021,000
Finished Goods 3,304,000 3,537,000
---------- ----------
$4,346,000 $4,558,000
========== ==========
4. INCOME TAXES
Under FASB Statement No. 109, Accounting for Income Taxes, deferred tax assets
may be recognized for temporary differences that will result in deductible
amounts in future periods and for loss carry-forwards. A valuation allowance is
recognized if, based on the weight of available evidence, it is more likely than
not that some portion or all of the deferred tax asset will not be realized.
Based on the Company's operating history, and inception to date accumulated
deficit, all of the Company's deferred tax assets are offset by a valuation
allowance.
The current provision for income taxes for the six months ended June 30, 1998
consists of the minimum state tax.
8
<PAGE>
5. STATEMENTS OF CASH FLOWS
Supplemental cash flows disclosures for the six months ended June 30, 1997 and
1998 are as follows:
1997 1998
---- ----
Interest paid $138,000 $154,000
======== ========
Income taxes paid $ 1,000 $ 1,000
======== ========
The Company incurred the following non-cash transactions for the six months
ended June 30, 1997:
Write off of subordinated debt issuance costs in connection with the
conversion of subordinated debt to common stock of $264,000;
Write off of subordinated debt accrued interest canceled in connection
with the conversion of subordinated debt to common stock of $137,000;
Reclassification of long term asset costs to property, plant and equipment
of $164,000;
The Company converted $2,831,000 of subordinated debt to common stock
during the first half of 1997.
The Company incurred the following non-cash transactions for the six months
ended June 30, 1998:
Write off of subordinated debt issuance costs in connection with the
conversion of subordinated debt to common stock of $7,000;
The Company converted $68,000 of subordinated debt to common stock during
the first half of 1998.
6. DEBT
Bank Debt
At June 30, 1998 the Company had an outstanding balance of $2,107,000 on its
bank line of credit and term loan. The line of credit and term loan bear
interest at 11.25 percent and 11.5 percent, respectively, and are due in October
1998. The Company is of the opinion that its current lender will refinance its
debt under the similar terms that are in place as of June 30, 1998. However,
there can be no assurance that the Company will be able to refinance its line of
credit or term debt on terms acceptable to the Company or at all.
Subordinated Convertible Notes
During 1996 and 1997, the Company raised operating capital through the placement
of six different series of Subordinated Convertible Notes bearing interest at
rates ranging from six to twelve percent. Each series could be converted into
common stock commencing 90 days after issuance at discounted conversion prices
based on 75 or 80 percent of the average bid price for the five days preceding
the notice of conversion.
At June 30, 1998 the Company had three series of Subordinated Convertible Notes
outstanding totaling $1,457,000. During the second quarter of 1998, $68,000 of
subordinated convertible notes were converted to approximately 626,000 shares of
common stock. Interest rates for these notes range from seven to twelve percent.
9
<PAGE>
The $325,000 twelve percent Subordinated Convertible Note matured on November
27, 1997. The Company has informed the debt holder that such note is subordinate
to the bank.
10
<PAGE>
Item 2 - Management's Discussion and Analysis of Financial Conditions and
Results of Operations:
Certain statements made in this form 10 - QSB are "forward looking statements
(within the meaning of the Private Securities Litigation Reform Act of 1996)
regarding the plans and objectives of management for future operations. Such
statements involve known and unknown risks, uncertainties and other factors that
may cause actual results, performance or achievements of the Company to be
materially different from any future results, performance or achievements
expressed or implied by such forward-looking statements. The forward-looking
statements included herein are based on current expectations that involve
numerous risks and uncertainties. The Company's plans and objectives are based,
in part, on assumptions involving the continued expansion of business.
Assumptions relating to the foregoing involve judgments with respect to, among
other things, future economic, competitive and market conditions and future
business decisions, all of which are difficult or impossible to predict
accurately and many of which are difficult or impossible to predict accurately
and many of which are beyond the control of the Company. Although the Company
believes that its assumptions underlying the forward looking statements are
reasonable, any of the assumptions could prove inaccurate and, therefore, there
can be no assurance that the forward looking statements included in this report
will prove to be accurate. In light of the significant uncertainties inherent in
the forward-looking statements included herein, particularly in view of the
Company's operations, the inclusion of such information should not be regarded
as a representation by the Company or any other person that the objectives and
plans of the Company will be achieved.
Overview:
The Company's strategy is to exploit new markets for its product offering,
increase the size and scope of its product offerings and maximize the
efficiencies of its manufacturing and distribution network on a worldwide basis.
In furtherance of this strategy, during 1996 and 1997, the Company expanded its
operations to include a presence in Asia, Europe and Africa. In the first half
of 1998 the Company introduced three new product offerings, "Primary Colors",
"Spotz", and "Tableau" for release in the third quarter of 1998. Additionally,
Management continues to implement cost cutting procedures pertaining to general,
selling and administrative expenses. Management has focused its product
offerings into four core product categories resulting in a reduction in SKU's.
The Company will continue to offer new and innovative products while maintaining
its focus on the four core product categories. In the first half 1998 the
Company realized significant benefit from its cost cutting measures. As a result
of these cost cutting measures for the six months ended June 30, 1998 the
Company's earnings before depreciation, amortization and charges related to the
Company's subordinated notes was $102,000.
The Company currently has overseas joint venture distribution agreements
in China, Hong Kong, Singapore, The Philippines, Malaysia, Vietnam, The
Sultanate of Oman, Morocco, Indonesia and Taiwan. Management believes that its
recent entry into these markets together with the current fiscal crisis in Asia
has adversely impacted its ability to penetrate many of these markets. As such,
during the first half of 1998 the Company refocused its sales effort into the
domestic marketplace
Going Concern Consideration
The Company has suffered recurring losses from operations and has a retained
deficit at June 30, 1998 of $12,110,000 that raises substantial doubt about the
Company's ability to continue as a going concern. In addition, the Company is
currently out of compliance with the NASDAQ Small cap market listing
requirements. For continued listing, on the NASDAQ SmallCap Market, a company
among other criteria, must have at least $2,000,000 of total net tangible assets
(or $35,000,000 of market capitalization or $500,000 in net income in two of the
last three years), 500,000 shares in the Public Float, a market value of its
public float of $1,000,000 and a
11
<PAGE>
minimum bid price of $1.00 per share. At June 30, 1998 the Company met all of
the requirements for its continued listing on the NASDAQ SmallCap Market except
for the minimum bid price requirement of $1.00. The Company may not meet this
requirement in the near future. The Company has filed a proxy statement
requesting shareholder approval for a 1 for 13 reverse stock split. This
shareholders meeting is currently scheduled for August 28, 1998. NASDAQ has
granted an extension to the Company for continued listing till August 31, 1998
at which time the Company must meet all the aforementioned criteria for
continued listing on the NASDQ small cap market. There is no assurance that the
Company's common stock will continue to be listed on the NASDQ Small cap market.
Management has evaluated its current operations and has focused the Company's
efforts and developed plans to generate operating income and sustain the
Company's operations through fiscal 1998. Management's plans include the
following:
o The Company is currently in the process of exploring a strategic
partnership and/or a synergistic merger to expand its product offerings.
o The Company will continue to evaluate its costs and reduce expenditures as
warranted.
o The Company plans to expand its existing markets worldwide and increase
the size and scope of its product offerings. Management believes that the
continued development of its distribution relationships, along with
increasing the size and scope of its product offerings will support the
Company's growth effort in the worldwide markets.
o The Company will seek to raise additional capital as necessary.
There can be no assurance that the Company's expansion efforts, development of
distribution relationships, merger with a strategic partner or efforts to raise
additional capital will be successful or will enable the Company to meet its
current operating needs. In addition, there can be no assurance that the
Company's products will be successful in its foreign or domestic markets or that
the Company will be able to produce and distribute products in sufficient
quantities or at sufficient price levels to make its expansion effort
profitable.
Sales
Sales increased by $56,000 or 1.0% from $6,461,000 for the six months ended June
30, 1997, to $6,517,000 for the six months ended June 30, 1998, and sales
decreased by $274,000 or 8.4% from $3,263,000 for the three months ended June
30, 1997, to $2,989,000 for the three months ended June 30, 1998. The decrease
in sales for the three months ended June 30, 1998 over the three months ended
June 30, 1997 is attributable to the Company's decrease in foreign sales
primarily in Asia. The small increase in overall domestic sales for the three
and six months ended June 30, 1998 as compared to the three and six months ended
June 30, 1997 is attributable to the Company focus on the domestic market.
Gross Profit
Gross profit increased by $8,000 or 0.3%% from $2,655,000 for the six months
ended June 30, 1997, to $2,663,000 for the six months ended June 30, 1998. Gross
profit decreased by $101,000 or 7.8% from $1,288,000 for the three months ended
June 30, 1997 to $1,187,000 for the three months ended June 30, 1998. Gross
profit as a percentage of net sales decreased 0.2% from 41.1% for the six months
ended June 30, 1997, to 40.9% for the six months ended June 30, 1998. Gross
profit as a percentage of net sales increased 0.2% from 39.5% for the three
months ended June 30, 1997, to 39.7% for the three months ended June 30, 1998.
The Company's margins, as a percentage of sales has remained consistent. The
dollar decrease in the Company's margins for the three months ended June 30,
1998 as compared to the three months ended June 30, 1997 is due to lower sales
during the three months ended June 30, 1998 as compared to the prior period.
12
<PAGE>
Selling Expense
Selling expenses as a percentage of net sales for the six months ended June 30,
1997 and 1998 were 25.0%, and 21.9%, respectively. Selling expenses as a
percentage of net sales for the three months ended June 30, 1997 and 1998 were
26.0% and 24.4%, respectively. For the three and six months ended June 30, 1998,
selling expenses were $729,000 and $1,425,000, respectively. For the three and
six months ended June 30, 1997, selling expenses were $848,000 and $1,617,000,
respectively.
The decrease in selling expense for the six and three months ended June 30, 1998
compared to the three and six months ended June 30, 1997, is attributable to
reduced expenditures for the Company's foreign operations, primarily in China,
and the reduction of certain sales and advertising salaries.
General and Administrative Expenses
General and administrative expenses decreased by $272,000 or 17.8 % from
$1,526,000 for the six months ended June 30, 1997, to $1,254,000 for the six
months ended June 30, 1998. General and administrative expenses decreased by
$173,000 or 22.2% from $780,000 for the three months ended June 30, 1997 to
$607,000 for the three months ended June 30, 1998. The decrease in general and
administrative expenses form the three and six months ended June 30, 1998 as
compared to the prior periods is attributable to reductions in salaries, foreign
travel and related expenses.
Other Income and (Expense)
Other income and expense as a percentage of net sales for the three months ended
June 30, 1997 and 1998 were 12.5% and 3.8%, respectively. Other income and
expense expenses as a percentage of net sales for the six months ended June 30,
1997 and 1998 were 10.1% and 3.6%, respectively. For the three months ended June
30, 1997 and 1998, other income and expense were $409,000 and $115,000,
respectively. For the six months ended June 30, 1997 and 1998 other income and
expense were $655,000 and $234,000, respectively. The decrease in other income
and expense for the three and six months ended June 30, 1998 as compared to the
same prior periods is primarily due to the Company, in the first half of 1997,
recognizing $433,000 of interest expense from the issuance of 6% subordinated
notes convertible into common stock at a 25% discount. In accordance with
generally accepted accounting principles the Company was required to account for
the discount conversion feature of these subordinated convertible notes as
interest expense. The Company has not issued any convertible subordinated notes
in fiscal 1998. The increase in the Company's interest expense from financing is
due to additional borrowings on the Company's bank line of credit.
Provision for Income Taxes
The provision for income taxes for the three months ended March 31, 1997 and
1998 reflects the minimum state tax due.
13
<PAGE>
Liquidity and Capital Resources
During the first half of 1998, the Company provided cash from operations of
$256,000. The net cash provided from operations is primarily attributable to the
Company's earnings before depreciation, amortization, non-cash interest, and
other non-cash expenses. In addition, the Company has aggressively pursued the
collections of its accounts receivable. Further, the Company used cash from
operations to pay down its accounts payable and accrued expenses.
During the first half of 1998, net cash used in investing activities, of
$27,000, consists primarily of costs relating to the purchase of equipment and
costs relating to trademarks.
For the six months ended June 30, 1998 net cash used in financing activities, of
$361,000, consisted primarily of payments on the Company's bank line of credit.
At June 30, 1998, the Company had an outstanding balance of $2,107,000 on its
bank line of credit and term loan. The line of credit and term loan bears
interest at 11.25 percent and 11.5 percent, respectively, and is due in October
1998. The Company is of the opinion that its current lender will refinance its
debt under the similar terms that are in place as of June 30, 1998. However,
there can be no assurance that the Company will be able to refinance its line of
credit or term debt on terms acceptable to the Company or at all.
The Company believes that it will be able to generate sufficient cash flows to
help support its operations through fiscal 1998. If, however, the Company
generates cash losses from operations it may be required to raise additional
funding to support its operations and or explore alternatives with respect to
future operations of its business including strategic partners or a potential
synergistic merger. The Company is currently in the process of exploring
strategic alliances or merger alternatives. However, there is no assurance that
the Company will consummate any such transaction: the failure of which, absent
other capital raising activity, will significantly impact the Company's ability
to continue operations as a going concern. Further, there can be no assurance
that the Company will be able to generate sufficient cash flows from operations,
or raise additional funding to support the Company's operations, the failure of
which would have a material effect on the Company's operations and financial
position.
The Securities and Exchange Commission ("the Commission") has approved new
maintenance requirements for the NASDAQ SmallCap Market. For continuing listing,
on the NASDAQ SmallCap Market, a company among other criteria, must now have at
least $2,000,000 of total net tangible assets (or $35,000,000 of market
capitalization or $500,000 in net income in two of the last three years),
500,000 shares in the Public Float, a market value of its public float of
$1,000,000 and a minimum bid price of $1.00 per share. At June 30, 1998 the
Company met all of the requirements for its continued listing on the NASDAQ
SmallCap Market, except for the minimum bid price requirement of $1.00. The
Company may not meet this requirement in the near future. The Company has filed
a proxy statement requesting shareholder approval for a 1 for 13 reverse stock
split. This shareholders meeting is currently scheduled for August 28, 1998.
NASDAQ has granted an extension to the Company for continued listing till August
31, 1998 at which time the Company must meet all the aforementioned criteria for
continued listing on the NASDQ SmallCap market. There is no assurance that the
Company's common stock will continue to be listed on the NASDQ Small cap market.
14
<PAGE>
Year 2000 Issue
Management does not anticipate material costs, problems or uncertainties
associated with the year 2000 issue. The Company will rely upon third party
vendors of its software used internally to become Year 2000 compliant.
The Company believes that inflation has not had a material impact on it
operations.
PART II - OTHER INFORMATION
Not Applicable
15
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly authorized and caused the undersigned to sign this Report on
the Registrant's behalf.
CSL LIGHTING MANUFACTURING, INC.
By: /s/ Mark Allen
-----------------
Mark Allen,
Chief Executive Officer
Acting Principal Accounting Officer
Dated: August 14, 1998
16
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from CSL Lighting
Manufacturing Inc. and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 20,000
<SECURITIES> 0
<RECEIVABLES> 2,052,000
<ALLOWANCES> 200,000
<INVENTORY> 4,558,000
<CURRENT-ASSETS> 6,802,000
<PP&E> 3,082,000
<DEPRECIATION> 1,915,000
<TOTAL-ASSETS> 8,082,000
<CURRENT-LIABILITIES> 3,830,000
<BONDS> 3,698,000
0
0
<COMMON> 15,068,000
<OTHER-SE> (12,587,000)
<TOTAL-LIABILITY-AND-EQUITY> 8,082,000
<SALES> 6,517,000
<TOTAL-REVENUES> 6,517,000
<CGS> 3,854,000
<TOTAL-COSTS> 6,533,000
<OTHER-EXPENSES> 234,000
<LOSS-PROVISION> 47,000
<INTEREST-EXPENSE> 235,000
<INCOME-PRETAX> (250,000)
<INCOME-TAX> 1,000
<INCOME-CONTINUING> (251,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (251,000)
<EPS-PRIMARY> (.02)
<EPS-DILUTED> 0
</TABLE>
