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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB/A
[X] Quarterly Report under Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the fiscal quarter ended November 30, 1996
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Commission file number 0-17642
CREATIVE LEARNING PRODUCTS, INC.
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(Name of small business issuer as specified in its charter)
New Jersey 22-2930106
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
150 Morris Avenue, Suite 205, Springfield, NJ, 07081
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(Address of principal executive offices)
(201) 467-0266
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(Issuer's telephone number)
Check whether the issuer: (1) 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 _____
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As of January 17, 1997, 18,258,467 shares of the Common Stock
were outstanding.
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CREATIVE LEARNING PRODUCTS, INC. AND SUBSIDIARIES
Item 2.
Management's Discussion and Analysis or Plan of Operations
RESULTS OF OPERATIONS
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The following discussion relates to operations.
SALES
Sales for the quarter and six months ended November 30, 1996
decreased by $424,362 or 78% and $660,381 or 73%, respectively,
as compared with sales for the corresponding prior year periods.
The decreases were principally due to lower sales volume
resulting from a shift in emphasis from marketing videos and
other products to gaming projects.
GROSS PROFIT
Gross profit for the quarter and six months ended November 30,
1996 decreased by $177,151 or 69% and $320,760 or 68%,
respectively, as compared with gross profit for the corresponding
prior year periods. Gross profit margins for the quarter and six
months ended November 30, 1996 were 68% and 61%, respectively, as
compared with 47% and 52%, respectively, for the corresponding
prior year periods. The declines were principally due to fixed
overhead costs applied to the lower sales volumes for the current
periods.
SELLING EXPENSES
Selling expenses for the quarter and six months ended November
30, 1996 decreased by $194,750 or 90% and $260,374 or 82%,
respectively, as compared with these expenses in the
corresponding prior year periods. The decreases were principally
due to a shift in expenses from marketing videos and other
products to emphasis on potential gaming projects which have not
as yet produced revenues.
GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses for the quarter and six
months ended November 30, 1996 increased by $228,157 or 48% and
$254,151 or 27%, respectively, as compared with these expenses in
the corresponding prior year periods. The increases were
principally due to financial and gaming consulting expenses and
litigation costs incurred during the current periods.
RESERVE FOR GAMING PROJECTS
Reserve for gaming projects for the quarter and six months
ended November 30, 1996 increased by $235,087 or 216% and
$216,519 or 630%, respectively, as compared with this expense in
the
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corresponding prior year periods. The increases were
principally due to the adjustment in the prior periods of Seneca
Project costs previously reserved and consulting and other
project costs reserved for during the current periods.
WARRANT EXERCISE AND DEBT CONVERSION EXPENSES
Warrant exercise expense of $250,000 for the quarter and six
months ended November 30, 1996 and debt conversion expense of
$476,293 and $518,854 for the quarter and six months ended
November 30, 1995, respectively, were due to the issuances of the
Common Stock during the periods to reflect the excess of the then
current market values of the Common Stock over the transaction
prices when issued.
INTEREST EXPENSE
Interest expense for the quarter and six months ended November
30, 1996 increased by $17,851 or 193% and $24,612 or 81%,
respectively, as compared with interest expense for the
corresponding prior year periods. The increases were principally
due to the interest on the mortgage on property purchased in
February 1996.
NAFTA
The North American Free Trade Act does not have a significant
effect on the consolidated operations.
INFLATION
Inflation does not have an impact on the consolidated
operations.
LIQUIDITY AND CAPITAL RESOURCES
CLP's cash position was $112,726 as of November 30, 1996 as
compared with $541,610 as of May 31, 1996 or a decrease of
$428,884. Cash flows from operating activities during the six
months ended November 30, 1996 used cash of $1,473,505 due to the
net loss of $1,372,566 adjusted for depreciation and amortization
of $122,750, reserve for gaming projects of $182,127, warrant
exercise expenses of $292,600, a gain of $211,983 from the sale
of an operating division of CLP, an increase in prepaid expenses
(principally financial and gaming consulting fees) and other
current assets of $440,999 and a net change in other operating
items requiring cash of $45,434.
During the six months ended November 30, 1996, CLP expended
$195,744 for gaming projects and $554,331 for the purchase of a
vessel for the purpose of converting it into an offshore gaming
vessel or an aggregate of $750,075 in net cash used in investing
activities.
The net cash provided by financing activities during the six
months ended November 30, 1996 was $1,794,696, consisting of net
short-term borrowings of $41,652 and proceeds of $1,800,000 from
issuances of stock offset by the repayment of long-term debt of
$46,956. These proceeds funded operational requirements, gaming
project costs and vessel purchase costs. Operating liabilities of
$511,684 were converted to Common Stock during the six months
ended November 30, 1996.
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The Company had received, as of December 31, 1996, $1,525,000
in proceeds from private placements and the exercises of
warrants. The Company also seeks to receive additional funds from
private placements and the exercises of other warrants and
options during the balance of fiscal 1997. On January 13, 1997,
the Company filed a registration statement under the Securities
Act of 1933, as amended, which relates to the resale of the
underlying shares of Common Stock to be issued upon the exercise
of many of these warrants and options which may encourage
exercise by the holders when the registration statement is
declared effective. However, there can be no assurance as to
when, if at all, and in what amounts these warrants and options
may be exercised, especially in view of the current market prices
for the Common Stock. As a result of these sources of funds the
Company believes that it has sufficient resources to fund its
operations, including those related to the gaming projects, for
at least the balance of fiscal 1997. However, there can be no
assurance as to when, if at all, the gaming projects and other
activities will generate sufficient cash flow from operations so
as not to be dependent on additional financing. In addition, to
open and operate all aspects of the gaming projects and other
activities may require additional financing after fiscal 1997,
even if the gaming projects and other activities are then
generating sufficient cash flow from operations to fund CLP's
operating requirements, which is not the current projection.
Should additional financing be required, there can be no
assurance that it will be available or, if available, available
on acceptable terms. See the sections "Branson Project", "Gaming
Vessel Project" and "Other Gaming Projects" in Item 1 to the Form
10-KSB.
As of November 30, 1996 and the date of this filing, there were
no commitments for material capital expenditures other than those
related to the Christian County Site (see the sections "Branson
Project", in Item 1 and the section "Liquidity and Capital
Resources" in Item 6 to the Form 10-KSB). However, the Company
currently estimates that it will require approximately
$15,000,000 to make the gaming vessel (see Note 2 to Unaudited
Consolidated Financial Statements) operational.
CLP expects that the proceeds from the planned sales of equity
securities during the next 12 months will provide adequate funds
to meet operating requirements. There can be no assurance,
however, that CLP will consummate such security sales to meet the
above.
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.
Dated: March 17, 1997
CREATIVE LEARNING PRODUCTS, INC.
By: /s/ PETER J. JEGOU
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Peter J. Jegou
President and Chief Executive Officer
By: /s/ WALTER J. KRZANOWSKI
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Walter J. Krzanowski
Treasurer and Chief Financial Officer