management continued to pull the company out of debt.

The fast food company yesterday reported earnings of $168,034, or 26 cents a share, for the six months ended July 31.

The company recorded a loss in the same period last year of $83,848 after extraordinary expenses of $142,324 connected with the closure of the Burnaby Street outlet in October.

Sales in the first half of the company's financial year were $1.55 million compared with sales of $1.63 million in the same period last year. Assets, including cash holdings of $190,252, amounted to $228,680 at July 31. Fixed assets, after provision for depreciation and obsolescence, amounted to about $1.43 million.

The company had liabilities of $408,262 million, including a bank loan of $229,957. Liabilities were $908,327 and a bank loan of $704,336 a year ago.

The company paid off another $100,000 on the bank loan in August, reducing it to $119,059.

KFC was in dire straits at the end of 1996, losing money at about $400,000 a year and accumulated losses of $1 million. At the time, KFC had racked up debts of $1.5 million -- including the bank loan and had no cash resources to call on.

Lines Overseas Management Ltd. stepped in to advance the company $100,000 and underwrite a rights issue to raise about $800,000. The company closed its Burnaby Street outlet and renegotiated its lease for the remaining Queen Street location.

A new executive committee to the board of directors was formed with overall responsibility for day-to-day management of the company.