bankruptcy earlier this year, lost $600,087 in the seven months to January 31, compared to $414,276 lost in the 1996 financial year ended June 30.

However Donald Lines, chairman of the board, said the company was being revamped by a new management team which took over in February and had made a "modest'' operating profits for the three months to April.

This month the team closed KFC's Burnaby Street outlet which had accounted for $172,000 of the losses to January 31 and was continuing to accumulate them at a rate of $2,000 a month.

The company had an operating loss of $119,787 for the seven months to January 31 compared to a loss of $90,054 for the 1996 financial year, according to the latest financial report. The report also showed KFC had a deficit of $1.44 million by January 31.

"All of that's history,'' Mr. Lines said. "We have taken a scissors to the excess and cleaned up what needed to be cleaned up.'' He said there was still some more issues to be addressed in the revitalisation of the company including the write off and selling of unneeded or obsolete assets which are still on the books. The company will also have to find a tenant for its closed outlet which it has leased on a long term basis.

The company's financial year was changed to January 31 to reflect the takeover. Shareholders will be presented with a proposals to amend the company's bylaws and will be updated about other changes at a June 12 annual general meeting.

KFC was bailed out in February by a Lines Overseas Management Ltd. sponsored rights offering to existing shareholders which raised $887,674 in new capital.

LOM, which is run by two of Mr. Lines' sons, received $67,540 for underwriting the issue.

LOM also lent KFC $100,000 as a bridging loan, which was repaid in March. KFC also owes money to the Bank of Bermuda, from which it borrowed $1 million in the 1995 financial year.

KFC's accountants state in the current financial report: "If the company is not able to maintain the support of the bank and its creditors, there is substantial doubt that it will be able to realise its assets and discharge its liabilities in the normal course of business, and the amounts realised for the assets may be materially less than the amounts at which they are carried on the balance sheet.'' RESTAURANT EAT