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 9/30/97 Commission 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 October 28, 1996
<PAGE>
INDEX
PART I - FINANCIAL INFORMATION
Page No.
Item 1. Financial Statements
Balance Sheet as of September 30, 1996 and
March 31, 1996 3-4
Statement of Operations for the Quarter
ended September 30, 1997 and 1996 5
Statement of Operations for the Six Month Periods
ended September 30, 1997 and 1996 6
Statement of Cash Flows for the six months ended
September 30, 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
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 11
Item 2. Changes in Securities 11
Item 3. Defaults by the Company upon its
Senior Securities 11
Item 4. Submission of Matter to a Vote of
Security Holders 11
Item 5. Other Information 11
Item 6. Exhibits and Reports of Form 8-K 11
SIGNATURE 12
Page 2
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
C.E.C. INDUSTRIES CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 1997 AND MARCH 31, 1997
ASSETS
SEPTEMBER MARCH 31,
30, 1997 1997
UNAUDITED
Current Assets
Cash and Cash Equivalents $2,796 $786
Inventory 181,199 181,199
Trading Securities at Market Value
(Cost at September 30, 1997 and
March 31, 1997 $2,656,656) 213,625 2,910,480
------- ---------
Total Current Asset 397,620 3,092,465
Other Assets
Security Deposits 4,012 4,012
Accounts Receivable - Related Parties 220,635 220,635
Notes Receivable - Related Parties 163,000 163,000
Accrued Interest Receivable -
Related Parties 17,993 11,473
Patents, at Cost (Net of Accumulated
Amortization of $14,250 and $9,500) 87,446 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 4,571,535 4,569,765
--------- ---------
Total Assets $4,969,155 $7,662,230
========== ==========
Prepared without audit.
Page 3
<PAGE>
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 1997 AND MARCH 31, 1997
LIABILITIES AND STOCKHOLDERS' EQUITY
SEPTEMBER MARCH 31,
30, 1997 1997
UNAUDITED
Current Liabilities
Accounts Payable $381,310 $239,919
Notes Payable - Related Parties 378,781 378,781
-------- -------
Total Current Liabilities 760,091 618,700
Stockholders' Equity
Convertible Preferred Stock, Par Value
$.001 Per Share, Authorized
100,000,000 Shares, Issued and
Outstanding 10,663,041 Shares at
September 30, 1997 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 September 30, 1997 and
March 31, 1997 886,840 886,840
Paid In Capital 8,572,104 8,572,104
Retained Earnings - A Deficit (5,260,543) (2,426,077)
---------- ----------
Total Stockholders' Equity 4,209,064 7,043,530
--------- ---------
Total Liabilities and Stockholders' Equity $4,969,155 $7,662,230
========== ===========
Prepared without Audit
Page Four
<PAGE>
C.E.C. INDUSTRIES CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE QUARTER ENDED SEPTEMBER 30, 1997 AND 1996
1997 1996
UNAUDITED
Income
Sales $1,133 $835,590
Royalty Income 318 0
------ --------
Total Income 1,451 835,590
Cost of Sales 0 664,228
------ -------
Gross Profit 1,451 171,362
Selling, General and Administrative
Expenses 98,793 237,273
Other Income (Expense)
Interest Income 3,260 20,530
Temporary Decrease in Marketable
Securities (1,042,991) 0
Interest Expense (9,813) (65,722)
Gain on sale of investment 0 1,195,132
----------- ---------
1,049,544 1,149,940
(Loss) Before Income Taxes (1,146,886) 1,149,132
Provision for Income Taxes 0 0
----------- ----------
Net (Loss) $(1,146,886) $1,048,142
=========== ==========
Loss Per Common and Common Share
Equivalent:
Net (Loss) $(0.06) $0.03
====== =====
Prepared Without Audit
Page Five
<PAGE>
C.E.C. INDUSTRIES CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS PERIODS ENDED SEPTEMBER 30, 1997 AND 1996
1997 1996
UNAUDITED
Income
Sales $1,730 $1,806,313
Royalty Income 1,101 0
------ ----------
Total Income 2,831 1,806,313
Cost of Sales 380 1,681,228
------ ---------
Gross Profit 2,451 125,213
Selling, General and Administrative
Expenses 179,419 520,999
Other Income (Expense)
Interest Income 6,520 41,230
Temporary Decrease in Marketable
Securities (2,696,855) 0
Interest Expense (17,099) (374,507)
Gain on sale of investment 0 1,175,132
---------- ---------
(2,707,434) 841,855
(Loss) Before Income Taxes (2,884,402) 446,049
Provision for Income Taxes 0 0
----------- --------
Net (Loss) $(2,884,402) $446,049
=========== ========
Loss Per Common and Common Share
Equivalent:
Net (Loss) $(0.16) $0.03
====== =====
Prepared Without Audit
Page Six
<PAGE>
C.E.C. INDUSTRIES CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS PERIOD ENDED SEPTEMBER 30, 1997 AND 1996
UNAUDITED
1997 1996
Cash Flows From Operating Activities
Net Loss $(2,884,402) $446,069
Temporary Decrease in Trading Securities 2,696,855 0
Gain on Sale of Assets 0 (1,195,132)
Adjustments to Reconcile Net Loss to Net Cash
Used in Operating Activities
Depreciation and Amortization 4,750 14,112
(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 0 446,001
(Increase) decrease in Inventory 0 (19,259)
(Increase) decrease in Other Assets (6,520) 88,824
Increase (decrease) in Accounts Payable 47,925 494,556
Decrease in Accrued Liabilities 0 (272,085)
--------- --------
Total Adjustments 2,836,475 281,137
--------- --------
Net Cash Provided By Operating Activities 47,925 727,206
Cash Flows From Investing Activities
Sale of Land 0 1,554,185
Capital expenditures 0 (262,533)
Excess of purchase price of asset over cost 0 (30,035)
--------- ---------
Net Cash Used in Investing Activities 0 1,261,617
Cash Flows From Financing Activities
Principal Payments on Debt 0 (2,124,906)
Proceeds From Sale of Common Stock 0 204,120
Proceeds From Notes Payable 49,935 222,964
Notes Receivable - Related Parties 0 (306,810)
Payments received on notes receivable 0 17,000
--------- ----------
Net Cash Provided By Financing Activities 49,935 (1,987,632)
--------- ----------
Net Increase (Decrease) in Cash and
Cash Equivalents 2,010 1,191
Cash and Cash Equivalents at
Beginning of Year 786 3,276
Cash and Cash Equivalents at End of Year $2,796 $4,467
========== ==========
Prepared without Audit
Page Seven
<PAGE>
C.E.C. INDUSTRIES CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE QUARTER ENDED SEPTEMBER 30, 1997 AND 1996
Supplemental Disclosures of Cash Flow Information
Cash Paid During the Year
For Interest $9,813 $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 September
30, 1997, the results of operation for the six months ended September 30,
1997 and 1996 the cash flows for the six months ended September 30, 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 September 30, 1997
The Sales for the three months ended September 30, 1997, were $1,451
compared to sales for the three months ended September 30, 1996 of $835,590.
Sales in 1997 consisted of revenues from Silent Radio fees and oil royalties.
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 $273,860
in 1996 to $98,793 in 1997 due to decreases in professional fees. Interest
expense decreased from $65,722 in 1996 to $9,813 in 1997 due to accrued
interest.
Management's Discussion and Analysis of Financial Condition and
Results of Operations for the Six Months Ended September 30, 1997
The Sales for the six months ended September 30, 1997, were $2,831
compared to sales for the six months ended September 30, 1996 of $1,806,313.
Sales in 1997 consisted of revenues from Silent Radio fees of $1,730 and oil
royalties of $1,101.
The Company depended on short term financing for its operating
expenses during the first and second quarter of 1997. Management is seeking
acquisitions that would produce a continual cash flow.
Selling, General and administrative expenses decreased from $520,999
in 1996 to $179,419 in 1997 due to decreases in professional fees. Interest
expense decreased from $304,507 in 1996 to $17,094 in 1997 due to a decrease
in Debt.
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 Ten
<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
None.
Prepared without Audit
Page Eleven
<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.
January 30, 1998 /s/Gerald Levine
(Date) Gerald Levine, President
Chief Operations Officer
January 30, 1998 /s/Marie A. Levine
(Date) Principal Fanincial and
Accounting Officer
<PAGE>
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