SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934.
For Quarter Ended 12/31/97Commission File Number 1-6203
C.E.C. Industries Corp.
(Exact name of registrant as specified in its charter)
Nevada 87-0217252
(State or other Jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
23 Cactus Garden Drive, F-60, Green Valley, Nevada 89014
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 702-893-4747
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark 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 ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS.
Indicated by check mark whether the registrant has filed all documents
and reports required to be filed by Sections 12, 13 or 15(d) of the
Securities Exchange Act of 1934 subsequent to the distribution of securities
under a plan confirmed by a court.
Yes 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.
17,881,795 Common Shares on December 31, 1997
INDEX
PART I - FINANCIAL INFORMATION
Page No.
Item 1. Financial Statements
Balance Sheet as of December 31, 1997 and
March 31, 1997 3- 4
Statement of Operations for the Quarter ended
December 31, 1997 and 1996 5
Statement of Operations for the nine months ended
December 31, 1997 and 1996 6
Statement of Cash Flows for the nine months ended
December 31, 1997 and 1996 7-8
Notes to Financial Statements 9
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operation 10 - 11
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 12
Item 2. Changes in Securities 12
Item 3. Defaults by the Company upon its
Senior Securities 12
Item 4. Submission of Matter to a Vote of
Security Holders 12
Item 5. Other Information 12
Item 6. Exhibits and Reports of Form 8-K 12
SIGNATURE 13
Page Two
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
C.E.C. INDUSTRIES CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1997 AND MARCH 31, 1997
ASSETS
DECEMBER MARCH 31,
31, 1997 1997
UNAUDITED
Current Assets
Cash and Cash Equivalents $1,647 $786
Inventory 181,199 181,199
Trading Securities at Market Value (Cost at
December 31, 1997 and March 31, 1997 $2,656,656) 36,900 2,910,480
-------- ----------
Total Current Asset 219,746 3,092,465
Other Assets
Security Deposits 4,012 4,012
Accounts Receivable - Related Parties 272,000 220,635
Notes Receivable - Related Parties 163,000 163,000
Accrued Interest Receivable - Related Parties 21,253 11,473
Patents, at Cost (Net of Accumulated Amortization
of $16,625 and $9,500) 85,071 92,196
Investment - Limited Partnership 300,000 300,000
Artworks 1,747,199 1,747,199
Coal Reserves 800,000 800,000
Oil and Gas Interests 1,231,250 1,231,250
---------- ---------
Total Other Assets 4,623,785 4,569,765
---------- ----------
Total Assets $4,843,531 $7,662,230
========== ==========
Prepared without audit.
Page Three
<PAGE>
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1997 AND MARCH 31, 1997
LIABILITIES AND STOCKHOLDERS' EQUITY
DECEMBER MARCH 31,
31, 1997 1997
UNAUDITED
Current Liabilities
Accounts Payable $513,171 $239,919
Notes Payable - Related Parties 378,781 378,781
--------- ---------
Total Current Liabilities 891,952 618,700
Stockholders' Equity
Convertible Preferred Stock, Par Value
$.001 Per Share, Authorized 100,000,000
Shares, Issued and Outstanding
10,663,041 Shares at December 31, 1997 and
and March 31, 1997 10,663 10,663
Common Stock, Par Value $.05 Per Share,
Authorized 50,000,000 shares;
Issued and Outstanding, 17,736,795
Shares at December 31, 1997 and March 31, 1997 886,840 886,840
Paid In Capital 8,572,104 8,572,104
Retained Earnings - A Deficit (5,518,028) (2,426,077)
----------- -----------
Total Stockholders' Equity 3,951,579 7,043,530
--------- ---------
Total Liabilities and Stockholders' Equity $4,843,531 $7,662,230
Prepared without Audit
Page Four
<PAGE>
C.E.C. INDUSTRIES CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE QUARTER ENDED DECEMBER 31, 1997 AND 1996
1997 1996
UNAUDITED
Income
Sales $777 $0
Royalty Income 114 0
Fees 0 5,337,944
----- ----------
Total Income 891 5,337,944
Cost of Sales 0 1,962,929
----- ----------
Gross Profit 891 3,375,015
Selling, General and Administrative Expenses 74,212 1,377,275
Other Income (Expense)
Interest Income 3,260 41,230
Temporary Decrease in Marketable Securities (176,725) 0
Interest Expense (10,698) (109,554)
Other Expenses (3,761)
Gain on sale of investment 0 (1,195,132)
-------- ----------
(184,168) (1,267,217)
-------- ----------
(Loss) Before Income Taxes (257,484) 730,523
Provision for Income Taxes 0 0
--------- ---------
Net (Loss) $(257,484) $730,523
========= ========
Loss Per Common and Common Share
Equivalent:
Net (Loss) $(0.01) $0.04
====== =====
Prepared Without Audit
Page Five
<PAGE>
C.E.C. INDUSTRIES CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS PERIODS ENDED DECEMBER 31, 1997 AND 1996
1997 1996
UNAUDITED
Income
Sales $2,507 $0
Royalty Income 1,215 0
Fees 0 7,144,257
------ ----------
Total Income 3,722 7,144,257
Cost of Sales 380 3,644,029
Gross Profit 3,342 3,500,228
Selling, General and Administrative Expenses 253,631 1,989,274
Other Income (Expense)
Interest Income 9,780 82,460
Temporary Decrease in Marketable Securities (2,873,580) 0
Interest Expense (27,797) (484,061)
Gain on sale of investment 0 (23,761)
---------- ---------
(2,891,597) (425,362)
(Loss) Before Income Taxes (3,141,886) 1,176,592
Provision for Income Taxes 0 0
---------- ----------
Net (Loss) $(3,141,886) $1,176,592
=========== ==========
Loss Per Common and Common Share
Equivalent:
Net (Loss) $(0.17) $0.07
====== =====
Prepared Without Audit
Page Six
<PAGE>
C.E.C. INDUSTRIES CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS PERIOD ENDED DECEMBER 31, 1997 AND 1996
UNAUDITED
1997 1996
Cash Flows From Operating Activities
Net Loss $(3,141,886) $1,176,592
Temporary Decrease in Trading Securities 3,873,580 0
Adjustments to Reconcile Net Loss to Net Cash
Used in Operating Activities
Depreciation and Amortization 7,125 22,191
(Gain) Loss on Investments 0 20,000
Common Stock Issued for Professional Services 0 204,120
Changes in Assets and Liabilities
Decrease in Restricted Cash 0 500,000
Decrease in Accounts Receivable 0 275,822
(Increase) decrease in Inventory 0 (14,259)
(Increase) decrease in Other Current Assets 0 24,781
(Increase) decrease in Other Assets (6,520) 306,560
Increase (Decrease) in Accounts Payable 47,925 175,245
Increase (Decrease) in Accrued Liabilities 0 (335,667)
--------- --------
Total Adjustments 3,144,177 1,178,793
--------- ---------
Net Cash Provided By Operating Activities 2,291 2,355,385
Cash Flows From Investing Activities
Purchase of Securities 0 (3,151,644)
Sale of Land 0 4,181,346
Capital Expenditures 0 (277,621)
Notes Receivable - Related Parties 0 (284,760)
Excess of purchase price of asset over cost 0 (30,035)
-------- ---------
Net Cash Used in Investing Activities 0 437,286
Cash Flows From Financing Activities
Sale of Equipment 8,800
Principal Payments on Debt 0 (3,151,644)
Proceeds From Sale of Common Stock 0 475,920
Proceeds From Notes Payable 49,935 308,350
Loans to Related Parties (51,365) (62,831)
Payment Received on Notes Receivable 0 17,000
-------- ----------
Net Cash Provided By Financing Activities (1,430) (2,790,355)
Net Increase (Decrease) in Cash and Cash Equivalents 861 2,316
Cash and Cash Equivalents at Beginning of Year 786 3,276
Cash and Cash Equivalents at End of Year $1,647 $5,592
====== =======
Prepared without Audit
Page Seven
<PAGE>
C.E.C. INDUSTRIES CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE QUARTER ENDED December 31, 1997 AND 1996
Supplemental Disclosures of Cash Flow Information
Cash Paid During the Year
For Interest $10,698 $143,401
======= ========
Income Taxes $0 $0
======= =========
Prepared without Audit
Page Eight
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Statement of Information Furnished
The accompanying unaudited consolidated financial statements have been
prepared in accordance with Form 10Q instructions and in the opinion of
management contains all adjustments (consisting of only normal recurring
accruals) necessary to present fairly the financial position as of December
31, 1997, the results of operation for the nine months ended December 31,
1997 and 1996 and the cash flows for the nine months ended December 31, 1997
and 1996. These results have been determined on the basis of generally
accepted accounting principles and practices and applied consistently with
those used in the preparation of the company's 1997 Annual Report on Form
10-K.
Certain information and footnote disclosures normally included in
financial statements presented in accordance with generally accepted
accounting principles have been condensed or omitted. It is suggested that
the accompanying consolidated financial statements be read in conjunction
with the financial statements and notes there to incorporated by reference in
the Company's 1997 Annual Report on Form 10-K.
Prepared without Audit
Page Nine
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations for the Quarter
Ended December 31, 1997
The sales for the three months period ended December 31, 1997 were
$891 compared to sales for the three months ended December 31, 1996 of
$5,337,944. Sales in the third quarter of 1997 consisted of Royalties and
Miscellaneous Sales from the subsidiary Mid-Nevada Art, Inc. Sales in the
third quarter of 1996 consisted of revenues form the sale of the Company's
real estate properties $5,337,944.
The Company depended on short term financing for its operating
expenses during the third quarter of 1997. Management is seeking
acquisitions that would produces a continual cash flow.
Selling, General and Administrative expenses decreased form
$1,377,275 in 1996 to $74,212 in 1997. The majority of expenses during the
third quarter were professional services in the amount of $63,052.
Interest expense decreased form $109,554 in 1996 to $10,698 in 1997
due to a reduction in real estate loans.
Interest income decreased from $41,230 in 1996 to $3.260 in 1997 due
to a reduction in notes receivable and certificates of deposits.
Prepared without Audit
Page Ten
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations for the Nine Months
Period Ended December 31, 1997
The Sales for the nine months ended December 31, 1997, were $3,722
compared to sales for the nine months ended December 31, 1996 of $7,144,257.
Sales in 1997 consisted of revenues from royalties and misc sales from
Mid-Nevada Art, Inc. Sales in 1996 consisted of revenues from the sale of
the Company's real estate properties ($5,935,243), revenues from Auto
Express, Inc. ($1,203,683) and Mid-Nevada Art, Inc. ($5.321).
The Company depended on short term financing for its operating
expenses during the first, second and third quarter of 1997. Management is
seeking acquisitions that would produce a continual cash flow.
Selling, General and administrative expenses decreased from
$1,898,274 in 1996 to $253,631 in 1997. The majority of the expenses during
the quarter were professional services in the amount of $144,007.
Interest expense decrease from $484,061 in 1996 to $27,797 in 1997
mainly due to a reduction in real estate loans.
Interest income decreased from $82,460 in 1996 to $9,780 in 1997 due
to a reduction in notes receivable and certificates of deposits.
Management's Discussion of Notes Payable
As part of the acquisition on March 28, 1996, of Mid-Nevada Art,
Inc., Basia Holding, Inc. and 100% interest in oil and gas leases, the
Company assumed a note payable to C.E.C. Industries Corp. in the amount of
$382,310. During fiscal 1996, principal payments of $3,530 were applied to
the note, leaving a balance at September 30, 1998 of $378,781. The note
is payable on demand and interest is payable at the rate of 8% per annum.
Prepared without Audit
Page Eleven
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 2. Changes in Securities
None..
Item 3. Defaults by the company upon its Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
8-K Filed on February 18, 1998 to report a change in management.
Prepared without Audit
Page Twelve
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
C.E.C. INDUSTRIES CORP.
By: /s/ Marie Levine
July 7, 1998 Marie Levine, President and
Chief Operations Officer
By: /s/ Marie A. Levine
July 7, 1998 Marie A. Levine
Principal Financial and
Accounting Officer
