UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
/ X / QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Quarter Ended September 30, 1996
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ____________to ______________.
Commission File Number: 0-27256
CEEE GROUP CORPORATION
(Exact name of small business issuer as specified in its charter)
COLORADO 13-3858917
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
2200 Corporate Boulevard, Suite 317, Boca Raton, Florida 33431
(Address of principal executive offices)
Registrant's telephone no., including area code: (561) 995-2190
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 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 / /
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date.
Class Outstanding as of September 30, 1996
- ----------------------------------- ---------------------------------------
Common Stock, $.001 par value 9,021,533
<PAGE>
TABLE OF CONTENTS
Heading Page
PART I. - FINANCIAL INFORMATION
Item 1. Financial Statements................................................1
Consolidated Balance Sheet - September 30, 1996 (Unaudited)
and December 31, 1995.............................................2
Consolidated Statement of Operations - Three months
and nine months ended September 30, 1995 and 1996 (Unaudited).... 3
Consolidated Statement of Cash Flows - Nine months ended
September 30, 1995 and 1996 (Unaudited)...........................4
Notes to Consolidated Financial Statements (Unaudited)........... 5-6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.......................................7-8
PART II. - OTHER INFORMATION
Item 1. Legal Proceedings...................................................9
Item 2. Changes In Securities...............................................9
Item 3. Defaults Upon Senior Securities.....................................9
Item 4. Submission of Matters to a Vote of Securities Holders...............9
Item 5. Other Information...................................................9
Item 6. Exhibits and Reports on Form 8-K....................................9
Signatures.........................................................10
-i-
<PAGE>
PART I
Item 1. Financial Statements
The following unaudited Financial Statements for the period ended
September 30, 1996, have been prepared by CEEE Group Corporation (the
"Company").
CEEE GROUP CORPORATION
Consolidated Financial Statements
September 30, 1996 and December 31, 1995
<PAGE>
CEEE GROUP CORPORATION
Consolidated Balance Sheet
ASSETS
<TABLE>
<CAPTION>
December 31, September 30,
1995 1996
------------ -----------
(Unaudited)
<S> <C> <C>
Current assets:
Cash $200,677 $ 408,764
Accounts receivable 13,250 61,500
Due from related parties 11,096 44,096
Prepaid expenses and other receivables 25,092 29,348
-------- ---------
Total current assets 250,115 543,708
Property assets - at cost, less accumulated
depreciation and amortization of $285
and $10,746 1,138 128,316
Other assets 10,625 14,702
-------- ---------
Total assets $261,878 $ 686,726
======== =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 12,449 $ 83,701
Income taxes payable 90,500 -
Loan payable - stockholders - 40,600
-------- ---------
Total current liabilities 102,949 124,301
Stockholders' equity - Note 2:
Common stock - par value $.001 authorized -
10,000,000 shares; issued and outstanding
8,500,033 shares and 9,021,533 shares 8,500 9,021
Additional paid-in capital 476,609 939,456
Accumulated deficit (326,180) (386,052)
-------- ---------
Total stockholders' equity 158,929 562,425
-------- ---------
Total liabilities and stockholders' equity $261,878 $ 686,726
======== =========
</TABLE>
See accompanying notes to financial statements.
-2-
<PAGE>
CEEE GROUP CORPORATION
Consolidated Statement of Operations
(Unaudited)
<TABLE>
<CAPTION>
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
1995 1996 1995 1996
--------- --------- --------- ----------
<S> <C> <C> <C> <C>
Consulting fee income - Note 3 $ 228,449 $ 49,352 $ 405,805 $363,084
--------- ---------- --------- ----------
Costs and expenses:
Management fee - affiliate 90,000 - 165,800 -
General and administrative 47,691 214,198 92,100 453,049
Interest Income - (2,314) - (2,314)
--------- ---------- --------- ----------
Total costs and expenses 137,691 211,884 257,900 450,735
--------- ---------- --------- ----------
Operating income (loss) 90,758 (162,532) 147,905 (87,651)
Other income (loss) - sale of
investment securities - (4,871) - 5,379
--------- ---------- ------- ----------
Income (loss) before provision for
income taxes 90,758 (167,403) 147,905 (82,272)
--------- ---------- ------- ----------
Provision (credit) for income taxes 34,290 (41,00) 45,728 (22,400)
--------- ---------- ------- ----------
Net income (loss) $ 56,468 $(126,403) $102,177 $ (59,872)
========= ========= ======== ==========
Net income (loss) per
common share - Note 4 $ .01 $ (.01) $ .01 $ (.01)
========= ========= ======== ===========
Weighted average number of
common shares
outstanding - Note 4 8,894,597 8,952,542 8,894,597 8,913,908
========= ========== ========= =========
</TABLE>
See accompanying notes to financial statements.
-3-
<PAGE>
CEEE GROUP CORPORATION
Consolidated Statement of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
For the Nine Months
Ended September 30,
1995 1996
---------- ----------
<S> <C> <C>
Operating activities:
Net income (loss) $102,177 $ (59,872)
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Depreciation and amortization 213 10,461
Consulting fees received in the form of
investment securities (19,600) (26,246)
Expenses paid by stockholder -- 873
Gain on sale of investments -- (5,379)
Change in operating assets and liabilities:
(Increase) decrease in assets:
Accounts receivable (9,529) (48,250)
Due from related parties -- (33,000)
Other -- (17,337)
Increase (decrease) in liabilities:
Accounts payable and accrued expenses 11,851 71,252
Income taxes payable 45,728 (90,500)
Loan payable - stockholders -- 40,600
-------- ---------
Net cash provided by (used in) operating activities 130,840 (157,398)
-------- ---------
Investing activities:
Proceeds from sale of investments -- 40,628
Additions to property assets (1,423) (137,639)
Net cash (used in) investing activities (1,423) (97,011)
-------- ---------
Financing activities:
Proceeds from sale of common shares 90 470,746
(net of issuance costs)
Purchase of treasury shares -- (8,250)
Net cash provided by financing activities 90 462,496
-------- ---------
Net increase in cash 129,507 208,087
Cash, beginning of period -- 200,677
Cash, end of period $129,507 $ 408,764
======== =========
Supplemental cash flows information:
Cash paid for interest $ -- $ -
--====== =========
Cash paid for taxes $ -- $ 90,500
=====--= =========
</TABLE>
See accompanying notes to financial statements.
-4-
<PAGE>
CEEE GROUP CORPORATION
Notes to Consolidated Financial Statements (Unaudited)
Note 1 - BASIS OF PREPARATION
The accompanying unaudited interim financial statements include
all adjustments (consisting only of those of a normal recurring
nature) necessary for a fair statement of the results for the
interim periods. The results of operations and cash flows for the
nine month period ended September 30, 1996 are not necessarily
indicative of the results of operations or cash flows to be
reported for the full year ending December 31, 1996.
Note 2 - BUSINESS COMBINATION
On July 16, 1996, the Company entered into an Exchange of Stock
Agreement and Plan of Reorganization (the "Stock Exchange
Agreement"). Under the terms of the Stock Exchange Agreement, the
Company acquired all of the shares of Atlantic International
Capital, Ltd. ("Atlantic Capital"), a Delaware corporation, in
exchange for an aggregate of 25,183,759 shares of its common
stock, of which 7,000,000 shares were immediately issuable and
18,183,759 shares were to be issued following an increase in the
Company's authorized capital. The Company plans to satisfy this
obligation by issuing approximately 6,061,253 shares of Common
Stock to the former Atlantic Capital stockholders following a
1-for-3 share exchange upon the consummation of a merger with and
into its wholly-owned subsidiary, Atlantic International
Entertainment, Ltd. which was approved by the Company's
stockholders on November 18, 1996. Upon consummation of the
merger, the Company's authorized capital will increase to
100,000,000 shares of Common Stock, $.001 par value and
10,000,000 shares of Preferred Stock, $.001 par value. The
combination has been accounted for as a reverse acquisition, and
the combined entity intends to operate under the name Atlantic
International Entertainment, Ltd. The consolidated balance sheet
as of September 30, 1996 does not reflect the effects of the
recapitalization, issuance of the additional common shares, or
the reverse stock split, all of which were approved by the
stockholders on November 18, 1996.
CEEE has conducted only limited operations prior to 1984, and has
been substantially inactive since that time. It previously
considered itself to be a development stage company as defined in
Statement of Financial Accounting Standards No. 7.
Note 3 - MAJOR CUSTOMERS
Consulting fees derived from major customers are tabulated as
follows:
-5-
<PAGE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
-------------------------------- -----------------------------------
1995 1996 1995 1996
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Customer A 21% -- 26% 9%
Customer B 3% -- 30% 9%
1ustomer C 22% -- 12% 35%
Customer D -- 91% -- 12%
Customer E 49% -- 29% --
</TABLE>
Note 4 - PER SHARE DATA
Per share data are based on the weighted average number of
common shares outstanding during the respective periods,
retroactively adjusted to reflect the common shares issued in
exchange for all outstanding common shares of Atlantic
International Capital, Ltd., including the additional shares
authorized by the Company's stockholders on November 18, 1996
(Note 2), and the effects of a 1-for-3 reverse stock split,
also approved on November 18, 1996.
-6-
<PAGE>
CEEE GROUP CORPORATION
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RECENT DEVELOPMENTS
On July 16, 1996, the Company entered into an Exchange of
Stock Agreement and Plan of Reorganization (the "Stock
Exchange Agreement") with Atlantic International Capital,
Ltd., a Delaware corporation ("Atlantic Capital") and the
shareholders of Atlantic Capital. In connection with the Stock
Exchange Agreement, the Company acquired all of the issued and
outstanding shares of Atlantic Capital and the former
shareholders of Atlantic Capital received an aggregate of
7,000,000 shares of the Company's authorized but previously
unissued common stock. Pursuant to the terms of the Stock
Exchange Agreement, the Company is obligated to issue an
additional 18,183,759 shares of the Company's common stock.
The Company will satisfy this obligation by issuing
approximately 6,061,253 shares following the merger with and
into its wholly-owned subsidiary, Atlantic International
Entertainment, Ltd., and the resulting 1-for-3 share exchange,
as described below. Following the execution of the Stock
Exchange Agreement and the subsequent issuance of the
additional shares of the Company's common stock, the former
shareholders of Atlantic Capital will own approximately 94% of
the Company's issued and outstanding shares of common stock.
On October 31, 1996, the Company issued 365,200 shares of
Common Stock in a private placement of its securities. The
Company received net proceeds of approximately $339,636.
On November 18, 1996, the Company entered into an Agreement
and Plan of Merger pursuant to which the Company will be
merged with and into a wholly-owned Delaware subsidiary
thereby, among other things, (a) changing its name to
"Atlantic International Entertainment, Ltd.", (b) increasing
the number of shares of authorized capital stock and (c)
authorizing the receipt by the holders of its Common Stock of
one share for each three shares held by them as of the date of
the merger. The Company's shareholders approved the Agreement
and Plan of Merger on November 18, 1996, and such agreement
will become effective upon filing the required documents in
the States of Delaware and Colorado.
-7-
<PAGE>
RESULTS OF OPERATIONS
As a result of the Stock Exchange Agreement, the business of
Atlantic Capital became the business of the Company.
Accordingly, the majority of the operational results shown on
the financial statements reflect activity from Atlantic
Capital, since CEEE was a development stage company for 1995
and through July, 1996. The Company currently develops and
markets products and services which are offered and operated
via the Internet and World Wide Web. The Company's operations
are focused on two major industries which include Internet
gaming transactions and international distribution of medical
products and equipment.
The Company incurred expenses of $214,198 in the three months
ended September 30, 1996 and $453,049 for the nine months
ended September 30, 1996. Such expenses were primarily
attributable to research and development costs for a virtual
casino and sports book.
During the three month and nine month periods ended September
30, 1996, the Company had a net loss of $126,403 and $59,872,
respectively. Revenue was only $49,352 for the third quarter
because the Company focused its attention away from consulting
services and to the development of consumer and business
products and services that are offered and operated via the
Internet and World Wide Web.
During 1996 funds of approximately $470,746 were generated
from the sale of 521,500 shares of common stock.
In the opinion of management, inflation has not had a material
effect on the operation of the Company.
-8-
<PAGE>
CEEE GROUP CORPORATION
PART II
Item 1. Legal Proceedings
There are presently no material pending legal proceedings in which the
Company is a party or to which any of its property is subject.
Item 2. Changes in Securities
This Item is not applicable to the Company.
Item 3. Defaults Upon Senior Securities
This Item is not applicable to the Company.
Item 4. Submission of Matters to a Tote of Security Holders
This Item is not applicable to the Company.
Item 5. Other Information
This Item is not applicable to the Company.
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits
27 Financial Data Schedule
b) Reports on Form 8-K
The Company filed with the Commission, a report on Form 8-K and
Form 8- K/A dated July 16, 1996, reporting the acquisition of
Atlantic International Capital, Ltd. pursuant to that certain
Exchange of Stock Agreement and Plan of Reorganization, and the
resulting change in control.
-9-
<PAGE>
CEEE GROUP CORPORATION
In accordance with the requirements of the Securities Exchange Act of
1934, the Registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
CEEE Group Corporation
Date: November 19, 1996 By:/s/ Richard A. Iamunno
------------------------------
(Signature)
Richard A. Iamunno, President
and Chief Executive Officer
Date: November 19, 1996 By:/s/ Norman Hoskin
------------------------------
(Signature)
Norman J. Hoskin, Treasurer
(Principal Financial and
Principal Accounting Officer)
-10-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from the Company's
financial statements for the nine months ended September 30, 1996 and is
qualified in its entirety by reference to such statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 408,764
<SECURITIES> 1,621
<RECEIVABLES> 133,323
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 543,708
<PP&E> 139,062
<DEPRECIATION> 10,746
<TOTAL-ASSETS> 686,726
<CURRENT-LIABILITIES> 124,301
<BONDS> 0
0
0
<COMMON> 9,021
<OTHER-SE> 562,425
<TOTAL-LIABILITY-AND-EQUITY> 686,726
<SALES> 363,084
<TOTAL-REVENUES> 371,058
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 453,330
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,666
<INCOME-PRETAX> (82,272)
<INCOME-TAX> (22,400)
<INCOME-CONTINUING> (59,872)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (59,872)
<EPS-PRIMARY> (.01)
<EPS-DILUTED> 0
</TABLE>
