<PAGE> 1
U. S. SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-KSB
[X] Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934.
<TABLE>
<CAPTION>
<S> <C>
For the fiscal year ended: Commission File Number:
September 30, 1998 0-13615
------------------------- -----------------------
</TABLE>
CELLCOM CORP.
- --------------------------------------------------------------------------------
(Name of Small Business Issuer as specified in Its charter)
<TABLE>
<CAPTION>
<S> <C>
Delaware 06-1106964
- ------------------------------- ---------------------------------
(State or other jurisdiction of (IRS Employer Identification Number)
incorporation or organization)
</TABLE>
520 South Fourth Street, Las Vegas, Nevada 89101
--------------------------------------------------------------------
(Address of principal executive offices, including zip code)
(702) 474-9920
--------------------------------------------------------------------
(Issuer's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.001 par value
-----------------------------------
(Title of class)
Check whether the Issuer (1) filed all reports required to be filed by the
Section 13 or 15(d) of the Securities Exchange Act during the past 12 months (or
such shorter period that the registrant was required to file such reports), and
(2) has been subject to the filing requirements for the past 90 days.
X Yes No
------ -------
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of Registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-KSB or any amendment to this Form 10-KSB.
X
------
Issuer's revenues for the most recent fiscal year are $0.
The aggregate market value of the Registrant's Common Stock held by
non-affiliates of the Registrant as of November 24, 1998 was $312,505. On such
date, the closing price of the Company's Common Stock was $.02.
Yes X No
------ -------
ISSUER'S INVOLVED IN BANKRUPTCY PROCEEDINGS FOR THE LAST FIVE YEARS
Check whether the Issuer has filed all documentation and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act of 1934 after the
distribution of securities under a plan confirmed by a court.
X Yes No
------ -------
Transitional small business disclosure format.
The registrant had 15,625,272 shares of Common Stock outstanding as of November,
24, 1998.
<PAGE> 2
PART I.
ITEM 1. BUSINESS
(a) GENERAL DEVELOPMENT OF BUSINESS
Cellcom Corp., which was incorporated in the State of Delaware on October
26, 1983 (hereinafter the "Registrant" or the "Company"), was engaged in the
purchase and resale of cellular telephone service through July 28, 1992 at which
time the Company sold substantially all of its assets as described below.
Cellular telephone service is access to a cellular telephone system through the
assignment of an individual mobile telephone number, which enables the
subscriber to make local and long distance telephone calls. The Company obtained
such service from local cellular telephone system operators ("Cellular
Carriers") who have received licenses from the Federal Communications Commission
to construct and operate cellular telephone systems in specific geographical
areas. The Company purchased the service in accordance, where applicable, with
the Cellular Carriers' wholesale tariffs filed with the local regulatory
agencies and resold the service to its subscribers according to the Company's
retail rates, or retail tariffs, if required by state regulatory agencies. As a
reseller of cellular telephone service, the Company did not have a license to
construct, operate or own a cellular telephone system.
Prior to 1992, the Company experienced declining working capital, net
operating losses, negative cash flow and an increased rate of customer
deactivations in certain markets. Consequently, Management and the Board of
Directors concluded that it was in the best interest of the Company to enter
into the sale described below and contemporaneously seek protection from its
creditors under the United States Bankruptcy Code.
On April 16, 1992, the Company and its subsidiaries filed voluntary
petitions for relief under Chapter 11 of the United States Bankruptcy Code. On
July 28, 1992, the Company sold substantially all of its assets to Nationwide
Cellular Service, Inc. ("Nationwide"). The sale was consummated after receiving
the requisite approvals from the Bankruptcy Court and governmental regulatory
agencies. In connection with the sale, Nationwide assumed the secured
indebtedness to the Company's senior secured creditor, Cellular Carriers and
customer security deposits on July 28, 1992. Prior to the closing of the sale
and pursuant to an Option Agreement between Nationwide and the Company's senior
subordinated noteholders dated April 15, 1992, Nationwide issued 702,007 shares
of its common stock to Cellcom's senior subordinated noteholders in exchange for
the senior subordinated notes and warrants issued by Cellcom and in connection
with the sale, such notes and warrants were canceled. At July 28, 1992, the
closing price of Nationwide's common stock on Nasdaq was $6.75. The Company
received $2,300,000 from the sale in cash plus $800,000 in reimbursement of
postpetition bankruptcy costs to be paid by the Company.
On August 20, 1993, the Company filed a Modified Consolidated Plan of
Reorganization (the "Plan") with the Bankruptcy Court. The "Post Confirmation
Order" was dated and notice was given on October 7, 1993. The Plan called for a
consolidation of the Company and its subsidiaries for tax and accounting
purposes and for the Company to continue to pursue collection of contingent
assets. Pursuant to the terms of the Plan, the Company has settled all
administrative, secured and priority claims. All funds remaining after these
distributions have been distributed among the unsecured creditors and the
Company.
As of September 30, 1995, all administrative, secured and priority claims
were settled in the amount of $479,000. In addition, the Company distributed
$418,133 to the unsecured creditors and $415,000 to the reorganized Company. All
distributions to the unsecured creditors have been made with the exception of
the recovery of the net operating loss benefit. Under the terms of the
settlement, the unsecured creditors are entitled to one quarter of the tax
savings from the net operating loss utilization for five years following the
Bankruptcy Petition which ends after 1997. (See Part II, Item 6.)
2
<PAGE> 3
(b) FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS
During the last three fiscal years, the Company was not engaged in any
industry segments. The Company currently has no operations.
(c) NARRATIVE DESCRIPTION OF BUSINESS
OPERATIONS
As described above, on April 16, 1992, the Company and each of its
subsidiaries filed voluntary petitions for relief under Chapter 11 of the United
States Bankruptcy Code in the United States Bankruptcy Court for the Southern
District of New York.
The Company currently has no operations. It is principally engaged in
managing its assets (principally cash) and administering its liabilities and
bankruptcy claims. The Company has been, and is, in the process of evaluating
potential business opportunities which could be attained by merger or
acquisition. If the Company embarks on a new business venture, no assurance can
be given regarding the future success of such a business due to all the
attendant costs and risks associated with starting or acquiring a new business.
EMPLOYEES
The Company currently has no employees.
(d) FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC OPERATIONS AND EXPORT
SALES
The Company does not have any foreign operations or sales.
ITEM 2. PROPERTIES
None.
ITEM 3. LEGAL PROCEEDINGS
Other than the aforementioned bankruptcy proceedings, the Company is not a
party to any legal proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the fourth
quarter of fiscal year 1998.
PART II.
ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS
(a) The Company's common stock is traded in the over-the-counter market.
The following table sets forth the high and low closing bid prices for the
Company's common stock for the periods indicated, as reported by brokers and
dealers making a market in the common stock:
<TABLE>
<CAPTION>
Fiscal 1998 Fiscal 1997
---------------------------------- -------------------------------
Quarter High Low High Low
------- -------- -------- -------- -------
<S> <C> <C> <C> <C>
First $ .02 $ .02 $ 0.06 $ 0.025
Second $ .05 $ .015 $ 0.045 $ 0.025
Third $ .03 $ .02 $ 0.045 $ 0.02
Fourth $ .03 $ .015 $ 0.0325 $ 0.02
</TABLE>
3
<PAGE> 4
The aforesaid quotations do not represent actual transactions and do not
include retail mark-ups, mark-downs or commissions.
(b) As of November 24, 1998, there were 765 holders of record of the
Company's common stock.
(c) The Company has not paid any dividends on its common stock since its
inception.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF CONTINUING OPERATIONS
LIQUIDITY , CAPITAL RESOURCES AND RESULTS FROM CONTINUING OPERATIONS
The Company does not have sufficient cash to pay its current and
anticipated operating expenses for the following fiscal year. During the fiscal
year ended September 30, 1998, the company incurred administrative expenses of
$51,000. In January 1998 a stock sale was transacted which provided cash
resources and additional funding will be obtained as needed from the same
source. In connection with the stock acquisition on January 12, 1998, the
Company's additional paid in capital and related operating account increased by
the related amount. Total funds transferred amounted to $61,000, net of
commission charges and acquisition legal fees.
The Company has a net operating loss carryforward ("NOL") of approximately
$9.6 million for both financial reporting and income tax purposes. The Company
expects to use this NOL to offset earnings in potential business opportunities
subject to limitations on use as described below. If the Company embarks on a
new business venture no assurance can be given regarding the future success of
such a business due to all the attendant costs and risks associated with
starting or acquiring a new business.
See Item 1(a) above, General Development of Business, regarding the
Company's bankruptcy filing and the sale of substantially all of its assets and
the assumption and cancellation of substantially all its liabilities.
The tax loss carryforward expires during the years 2001 through 2006. The
Internal Revenue Code of 1986 as amended (the "Code"), imposes substantial
limitations under certain circumstances on the use of tax loss carryforwards
upon the occurrence of an "ownership change" (as defined in Section 382 of the
Code). An "ownership change" can result from issuance of equity securities by
the Company, purchases of the Company's securities in the secondary market or a
combination of the foregoing.
ITEM 7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial information required by Item 8 is included elsewhere in this
report (see Part IV, Item 13).
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS AND ACCOUNTING AND
FINANCIAL DISCLOSURE
As indicated in the Representation of Public Accountants, Cellcom Corp, the
Company, has contracted with Bradshaw Smith and Co., a Las Vegas based CPA Firm,
to audit the enclosed financial statements. An 8-K was filed with the S.E.C. on
December 7, 1998 incorporating the above changes.
4
<PAGE> 5
PART III
ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Set forth below are the names of the directors and executive officers of
the Company along with certain information relating to business experience of
each of the listed directors and officers.
<TABLE>
<CAPTION>
Name Age Position With Company
---- --- ---------------------
<S> <C> <C>
Jay H. Brown 57 Chairman, Chief Executive Officer
and President
William S. Taylor 37 Executive Vice President,
Secretary and Director
David A. Obal 34 Chief Financial Officer
and Director
</TABLE>
Directors are elected until the next annual meeting of stockholders or
until their successors are duly elected and qualified. Officers serve at the
discretion of the Board of Directors. The Board of Directors does not have
Audit, Compensation or Nomination committees.
Jay H. Brown has been Chairman, Chief Executive Officer and President since
the Company's formation in October 1983, and devoted substantially all of his
time to the Company's business affairs from February 1, 1989 through July 31,
1992. Since August 1992, he has worked as a management consultant for Nationwide
Cellular Service, Inc. and has practiced law in Las Vegas, Nevada.
William S. Taylor has been a Director of the Company since June 1989. He
also serves as Executive Vice President and Secretary. Mr Taylor was employed by
the Company from 1984 through May 31, 1992 in various sales and marketing
capacities. Since June 1992, Mr. Taylor has operated as a cellular and office
product wholesaler in New Jersey. Mr. Taylor currently holds the position of
officer and director of Electronics Communication Corp. He is a member of the
Radio Club of America.
David A. Obal has been a Director and Chief Financial Officer of the
Company since February 8, 1994. From October 1993 through February 1994, he was
employed by the Company as Finance Manager. From October 1992 through September
1993, he was retained by the Company as a consultant. Between July 1988 and
October 1992, he held various finance positions with the Company.
Except with respect to the Company's bankruptcy filing, during the past
five years, no Director or Executive Officer of the Registrant has been involved
in any legal proceedings which is material to an evaluation of the ability or
integrity of such Director or Executive Officer.
Section 16(a) of the Securities and Exchange Act of 1934 requires the
Company's Officers, Directors and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission.
Officers, Directors and ten percent shareholders are required by regulation to
furnish the Company with copies of all Section 16(a) forms they file. Based
solely on the
Company's copies of such forms received or written representations from certain
reporting persons that no Form 5's were required for those persons, the
requirements applicable to its officers, directors and greater than ten percent
beneficial owners were complied with.
ITEM 10. EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table summarizes the aggregate compensation paid by the
Company to the Chief Executive Officer. No executive officer of the Company
received total compensation in excess of $100,000 during the last three years:
5
<PAGE> 6
<TABLE>
Annual Compensation Long-Term Compensations
------------------------- ------------------------------
Awards Payouts
------ -------
Other Restricted Long-Term
Name and Annual Stock Option Incentive All Other
Principal Position Year Salary$ Bonus$ Compensation Awards SARs Payouts Compensation
- ------------------ ---- ------- ------ ------------ ------ ---- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Jay H. Brown 1998 0 0 0 0 0 0 0
Chairman, Chief 1997 0 0 0 0 0 0 0
Executive Officer 1996 0 0 0 0 0 0 0
and President
</TABLE>
The Company does not have any long-term incentive compensation plans.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of the date of
this report, with respect to the beneficial ownership (as defined in Rule 13d-3
under the Securities and Exchange Act of 1934) of shares of common stock, the
Company's sole voting securities, by each person known to the Company to be the
beneficial owner of 5% or more of the Company's Common Stock, by each director
and by all officers and directors as a group.
<TABLE>
<CAPTION>
Title of Name and Address Nature of % of
Class of Beneficial Owner Ownership # of Shares Class(1)
- ----- ------------------- --------- ----------- --------
<S> <C> <C> <C> <C>
Common Jay H. Brown Record and 3,931,774 25.2%
Stock 520 South Fourth St. Beneficial
Las Vegas, NV 89101
Common William S. Taylor Record and 933,331 6.0%
Stock 50 Springbrook Rd. Beneficial
Livingston, NJ 07039
Common David Obal Record and 100,000 (3) .. (2)
Stock 405 Groft Way Beneficial
Henderson, NV 89015
Common Joseph W. Namath Record and 1,333,332 (4) 8.5%
Stock and James Walsh Beneficial
300 East 51st Street
New York, NY 10022
Common SBK Investment Partners Record and 966,666 6.2%
Stock 605 Third Avenue Beneficial
New York, NY 10158
Common Tassinari Family Trust Record and 1,000,000 6.4%
Stock Post Office Box 81890 Beneficial
Las Vegas, NV 89180
Common All Officers and Record and 4,965,105 31.8%
Stock Directors as a Beneficial
Group (consisting
of 3 persons)
</TABLE>
- ----------------------------------------
(1) All percentages are based on a total of 15,625,272 shares outstanding as of
November 24, 1998.
(2) Represents less than 1%.
(3) Represents 100,000 shares issuable upon exercise of incentive stock
options.
(4) Includes 666,666 shares of Common Stock owned of record by Joseph W. Namath
and 666,666 shares of Common Stock owned of record by James Walsh. The
Company has been advised by Messrs. Namath and Walsh that for the purposes
of Section 16(a) of the Securities Exchange Act of 1934, each beneficially
owns the shares owned of record by the other.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During the fiscal year ended September 30, 1994, the Company granted
100,000
6
<PAGE> 7
incentive stock options to David Obal, a Director and officer of the
Company. These options expire in January 1999.
PART IV.
ITEM 13. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) 1. The financial statements and schedules listed in the accompanying
index to financial statements are filed as a part of this Form 10-K
report.
2. Exhibits.
2.1 Certificate of Incorporation of the Company (incorporated herein
by reference to the Company's Registration Statement on Form S-18,
File No. 2-88633-NY, effective March 16, 1984).
2.2 Amendments to the Certificate of Incorporation of the Company
(incorporated by reference to the Company's annual report on Form 10-K
for the fiscal year ended September 30, 1990).
2.3 By-Laws of the Company (incorporated herein by reference to the
Company's Registration Statement on Form S-18, File No. 2-88633-NY,
effective March 16, 1984).
10.1 The Company's 1985 Incentive Stock Option Plan, as amended
(incorporated by reference to the Company's Registration Statement on
Form S-8, File No. 33-30985, which became effective on September 29,
1989).
10.2 Bankruptcy Court Order dated May 29, 1992 approving the sale of
substantially all of the assets of the Company under an Asset Purchase
Agreement pursuant to 11 U.S.C. Paragraph 363 (b) and (f).
(incorporated by reference to the Company's annual report on Form 10-K
for the fiscal year ending September 30, 1992).
7
<PAGE> 8
21 Subsidiaries of the Registrant.
23.1 Consent of Independent Public Accountants.
(b) Reports on Form 8-K
None
8
<PAGE> 9
CELLCOM CORP. AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
<S> <C>
Report of Independent Public Accountants.......................................................10
Consolidated Financial Statements:
Consolidated Balance Sheet as of September 30, 1998 .....................................11
Consolidated Statements of Operations for the Years Ended September
30, 1998 and September 30, 1997 .......................................................12
Consolidated Statements of Changes in Stockholders' Deficit for the
Years Ended September 30, 1998 and September 30, 1997 .................................13
Consolidated Statements of Cash Flows for the Years Ended September
30, 1998 and September 30, 1997 .......................................................14
Notes to the Consolidated Financial Statements...........................................15
</TABLE>
9
<PAGE> 10
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Stockholders
Cellcom Corp. and subsidiaries
Las Vegas, Nevada
We have audited the accompanying consolidated balance sheet of Cellcom Corp. (a
Delaware corporation) and subsidiaries as of September 30, 1998 and the related
consolidated statements of operations, changes in stockholders' deficit and cash
flows for the year then ended. These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these financial statements of Cellcom Corp. and subsidiaries as of September 30,
1997 and for the year then ended, were audited by other auditors whose report
dated January 12, 1998, included an explanatory paragraph that described the
recurring losses from operations and discussed in Note 6 to the financial
statements.
We have conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Cellcom Corp. and subsidiaries
as of September 30, 1998 and the results of their operations and their cash
flows for the year ended September 30, 1997, in conformity with generally
accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 6 to the
financial statements, the Company has suffered recurring losses from operations
and has a net capital deficiency that raises substantial doubt about its ability
to continue as a going concern. Management's plans in regard to these matters
are also described in Note 6. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
BRADSHAW SMITH & CO.
Las Vegas, Nevada
January 4, 1999
10
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CELLCOM CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1998
- --------------------------------------------------------------------------------
(Dollar amounts in thousands except for per share amounts)
<TABLE>
<CAPTION>
ASSETS 1998
<S> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 11
Accounts receivable 5
----------
TOTAL ASSETS 16
==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable 16
Taxes payable 53
----------
TOTAL CURRENT LIABILITIES 69
----------
COMMITMENTS AND CONTINGENCIES (Note 4)
STOCKHOLDERS' DEFICIT
Common stock, $.001 par value; 100,000,000
shares authorized and 15,625,272 shares
issued and outstanding. 15
Additional paid-in capital 11,046
Accumulated deficit (11,114)
-----------
TOTAL STOCKHOLDERS' DEFICIT (53)
-----------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 16
===========
</TABLE>
SEE NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
11
<PAGE> 12
CELLCOM CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEARS ENDED SEPTEMBER 30, 1998 AND 1997
- -------------------------------------------------------------------------------
(Dollar amounts in thousands except for per share amounts)
<TABLE>
<CAPTION>
<S> <C> <C>
1998 1997
-------- --------
OPERATING EXPENSES:
General and administrative expenses $ 51 $ 125
Interest income 0 (2)
----------- -----------
NET <LOSS> $ (51) $ (123)
=========== ===========
NET <LOSS> PER SHARE $ (.00) $ (.01)
=========== ===========
WEIGHTED AVERAGE NUMBER OF SHARES 15,625,272 11,558,605
=========== ==========
</TABLE>
SEE NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
12
<PAGE> 13
CELLCOM CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT
FOR THE YEARS ENDED SEPTEMBER 30, 1998 AND 1997
- -------------------------------------------------------------------------------
(Dollar amounts and number of shares in thousands)
<TABLE>
<CAPTION>
ADDI-
COMMON STOCK TIONAL
------------ PAID-IN ACCUMULATED
SHARES PAR VALUE CAPITAL DEFICIT TOTAL
------ --------- ------- ------- -----
<S> <C> <C> <C> <C> <C>
BALANCE, SEPTEMBER 30, 1996 11,559 12 10,989 (10,940) 61
Net <Loss> - - - (123) (123)
------ --------- ------- ------- -----
BALANCE, SEPTEMBER 30, 1997 11,559 12 10,989 (11,063) (62)
Net <Loss> - - - (51) (51)
------ --------- ------- ------- -----
BALANCE, SEPTEMBER 30, 1998 15,625 15 11,046 (11,114) (53)
====== ========= ======= ============================
</TABLE>
SEE NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
13
<PAGE> 14
CELLCOM CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED SEPTEMBER 30, 1998 AND 1997
- -------------------------------------------------------------------------------
(Dollar amounts in thousands)
<TABLE>
<CAPTION>
1998 1997
-------- -----
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net (loss) $(51) $(123)
Adjustments to reconcile net (loss) to net cash
provided by operating activities:
Changes in operating assets and liabilities
Increase in accounts receivable (2) (1)
Decrease in Prepaid Expenses 0 2
Increase (decrease) in accounts payable (8) 5
--------------------------
NET CASH USED IN OPERATING ACTIVITIES (61) (117)
CASH PROVIDED BY FINANCING ACTIVITIES
Issuance of Common Stock 61
--------------------------
NET DECREASE IN CASH AND CASH EQUIVALENTS 0 (117)
CASH AND CASH EQUIVALENTS
AT BEGINNING OF YEAR 11 128
--------------------------
CASH AND CASH EQUIVALENTS
AT END OF YEAR $11 $11
==========================
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
INTEREST RECEIVED $0 $2
===== ====
REORGANIZATION EXPENSES PAID $0 $0
===== ====
</TABLE>
SEE NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
14
<PAGE> 15
CELLCOM CORP. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION - The consolidated financial statements include
the accounts of Cellcom Corp. and its subsidiaries which comprise the
"Company." All significant intercompany accounts and transactions have been
eliminated in consolidation.
CASH AND CASH EQUIVALENTS - All highly liquid instruments with original
maturities of three months or less are considered cash equivalents.
<LOSS> PER SHARE CALCULATIONS - Per share amounts have been calculated
based on 15.6 and 11.6 million weighted average number of common shares
outstanding for the years ended September 30, 1998 and 1997, respectively.
The effects of common stock equivalents are not considered because they are
anti-dilutive.
INCOME TAXES - The Company's policy is to provide for deferred income taxes
resulting from differences in the timing of amounts reported for financial
accounting and income tax purposes. Since the Company has a net operating
loss carryforward, no deferred income taxes have been recorded.
2. PETITION FOR RELIEF UNDER CHAPTER 11
On April 16, 1992, the Company filed voluntary petitions for relief under
Chapter 11 of the United States Bankruptcy Code (the "Petitions") in the
United States Bankruptcy Court for the Southern District of New York (the
"Court"). The Company's existing Directors and officers remained
responsible for the Company's business and assets, subject to supervision
by the Court. Under Chapter 11, certain claims against the Company in
existence prior to the filing of the Petitions under the Federal bankruptcy
laws were stayed while the Company continued business operations as a
debtor-in-possession. These claims were previously reflected in the
accompanying consolidated balance sheets as "liabilities subject to
compromise." Additional claims (liabilities subject to compromise) arose
subsequent to April 16, 1992 resulting from rejection of executory
contracts, including leases, and from the determination by the Court (or as
agreed to by parties in interest) of allowed claims for contingencies and
other disputed amounts. Claims secured against the Company's assets
("Secured Claims") were also stayed, although the holders of such claims
were those secured by substantially all of the Company's assets and by the
outstanding capital stock of the subsidiaries of Cellcom Corp.
The Company received approval from the Court to pay or otherwise honor
certain of its prepetition obligations, including employee wages, customer
claims and agent commissions. The Court approved a Debtor-in-Possession
loan agreement, which provided that an existing creditor was permitted to
continue lending funds to the Company during the postpetition period
through July 28, 1992 under terms substantially the same as those contained
in the original loan agreement. In exchange, this creditor was granted
senior security interests and liens upon substantially all of the Company's
assets. Pursuant to a debt covenant, all cash receipts from subscribers
were forwarded to the Company's senior secured creditor. The Court
established several dates by which creditors were allowed to file claims
against the Company with the Court. Prepetition and postpetition
liabilities reflect those amounts previously reported to the Court pending
the final disposition by the Court of all claims.
On August 20, 1993, the Company filed a Modified Consolidated Plan of
Reorganization (the "Plan") with the Bankruptcy Court. The "Post
Confirmation Order" was dated and notice was given on October 7, 1993. The
Plan called for a consolidation of the Company and its subsidiaries for tax
and accounting purposes and the Company will continue to pursue collection
of contingent assets. Pursuant to the terms of the Plan, the Company has
settled all administrative, secured and priority claims. All funds
remaining after these distributions have been distributed among the
unsecured creditors and the Company. The Company has no operations. It is
principally engaged in
15
<PAGE> 16
controlling its assets (principally cash) and administering its liabilities
and bankruptcy claims. The Company is in the process of evaluating
potential business opportunities which could be attained by merger or
acquisition. In Management's opinion, if the Company embarks on a new
business venture, no assurance can be given regarding the future success of
such a business due to all the attendant costs and risks associated with
starting or acquiring a new business.
3. INCOME TAXES
The Company follows the provisions of SFAS No. 109 "Accounting for Income
Taxes." SFAS No. 109 requires the recognition of deferred tax assets, net
of applicable reserves, related to net operating loss carryforwards and
certain temporary differences. The standard requires recognition of a
deferred tax asset to the extent that realization of such asset is more
likely than not; otherwise, a valuation allowance is applied. As of
September 30, 1997, the Company determined that its deferred tax asset,
primarily its net operating loss carryforward of $9.6 million, did not
satisfy the recognition criteria set forth in the standard and accordingly,
a valuation allowance was recorded to fully reserve the deferred tax asset.
The tax loss carryforward expires during the years 2001 through 2006. The
Internal Revenue Code of 1986 as amended (the "Code"), imposes substantial
limitations under certain circumstances on the use of carryforwards upon
the occurrence of an "ownership change" (as defined in Section 382 of the
Code). An "ownership change" can result from issuances of equity
securities by the Company, purchases of the Company's securities in the
secondary market or a combination of the foregoing.
4. COMMITMENTS AND CONTINGENCIES
As of September 30, 1998, the Company had accrued reserves and interest
for certain unpaid, disputed and other tax matters related to various
taxing authorities. These amounts are included in current liabilities in
the financial statements.
5. RELATED PARTY TRANSACTIONS
David Obal, Cellcom Corp.'s Chief Financial Officer, furnished the Company
with rent free facilities for the corporate office for fiscal 1998. Cellcom
Corp. had no operations in 1998. David Obal prepared and filed the required
SEC documents and bookkeeping services, at no charge, which Mr. Obal
conducted out of his personal offices. The amount of overhead which David
Obal absorbed in respect to Cellcom Corp., in unreimbursed direct expenses,
equates to approximately $2,000 for fiscal 1998. Rent expense for Cellcom
Corp. for 1997 was $8,500.
6. GOING CONCERN - SUBSEQUENT EVENT
The Company does not have sufficient cash to pay its current and
anticipated operating expenses for the following fiscal year. During the
fiscal year ended September 30, 1998, the company incurred administrative
expenses of $51,000. In order to provide working capital for the Company,
additional stock was sold at the current market price. Effective January
12, 1998 Cellcom Corp. issued 4,066,667 shares of Common Stock at $.015 per
share. In connection with the stock acquisition on January 12, 1998, the
Company's additional paid in capital and related operating account
increased by the related amount. Total funds received amounted to $61,000,
net of commission charges and acquisition legal fees. These funds provided
working capital for 1998. The above stock purchases will not effect the
ownership structure of the Company nor will it effect the use of the NOL
discussed in Note 3.
16
<PAGE> 17
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Dated: March 17, 1999 CELLCOM CORP.
By: /s/ Jay H. Brown
-----------------
Jay H. Brown, President
In accordance with the Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the Registrant in the
capacities and the date indicated:
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ Jay H. Brown
- ----------------
Jay H. Brown President, Chief March 17, 1999
Executive Officer
and Director
/s/ William S. Taylor
- ---------------------
William S. Taylor Executive Vice March 17, 1999
President, Secretary
and Director
/s/ David A. Obal
- -----------------
David A. Obal Chief Financial and March 17, 1999
Accounting Officer
and Director
</TABLE>
17
<PAGE> 1
Exhibit 21
SUBSIDIARIES OF THE REGISTRANT
<TABLE>
<CAPTION>
State of Incorporation
Name Incorporation
- ------------------------------ ---------------
<S> <C>
Cellcom Telephone Company, Inc. Delaware
Car-Tel Systems Corp. New Jersey
Cellcom Cellular Corp. Delaware
Cellular Dynamics Telephone Company of Connecticut Connecticut
Cellular Dynamics Telephone Company of Boston, Inc. Delaware
Cellular Dynamics Telephone Company of Los Angeles, Inc. California
Cellular Dynamics Telephone Company of San Francisco, Inc. California
Cellular Dynamics Telephone Company of Maryland, Inc. Maryland
Cellular Dynamics Telephone Company, Inc. Nevada
Racehorse Cell-Fone Corp. Delaware
Cellular Dynamics Telephone Company of San Diego, Inc. California
Cellcom Management Company, Inc. Delaware
</TABLE>
18
<PAGE> 1
Exhibit 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference of our report in this 10-KSB, into the Company's previously filed
Registration Statements on Form S-8, File No. 33-30985.
BRADSHAW SMITH & CO.
Las Vegas, Nevada
January 4, 1999
19
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-END> SEP-30-1998
<CASH> 11
<SECURITIES> 0
<RECEIVABLES> 5
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 16
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 16
<CURRENT-LIABILITIES> 69
<BONDS> 0
0
0
<COMMON> 16
<OTHER-SE> (68)
<TOTAL-LIABILITY-AND-EQUITY> 16
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 51
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (51)
<INCOME-TAX> 0
<INCOME-CONTINUING> (51)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (51)
<EPS-BASIC> .00
<EPS-DILUTED> .00
</TABLE>
