<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
----------------------------------------------------------------------
AMENDMENT NO. 2
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) October 31, 1997
CEC PROPERTIES, INC.
----------------------------------------------------------------------
[Exact Name of Registrant as specified in its Charter]
Delaware 0-188 13-1919940
- -------- ----- ----------
[state or other [Commission File No.] [IRS Employer
jurisdiction of Identification No.]
Incorporation]
1500 W. Balboa, Suite 201, Newport Beach, California 92663
----------------------------------------------------------------------
[Address of principal executive offices; Zip Code]
Registrant's Telephone No., including Area Code: (949) 673-2282
----------------------------------------------------------------------
Former address, if changed since last report
<PAGE>
Item 7. Financial Statements.
- ------- ---------------------
(a) Attached are the financial statements filed in
connection with the acquisition reported in the
Company's Form 8-K for the event reported October 31,
1997, marked Exhibit A.
(b) Proforma financial information attached and marked,
Exhibit B.
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 hereunto duly authorized.
CEC PROPERTIES, INC.
Dated: November 23, 1998
By: /s/ Paul Balalis
----------------------------
Paul Balalis, President
2
<PAGE>
CLASSIC GOLF MANAGEMENT, INC.
MARIETTA, GEORGIA
AUDITED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
EXHIBIT A
-
3
<PAGE>
Classic Golf Management, Inc.
Marietta, Georgia
We have audited the accompanying balance sheets of Classic Golf Management,
Inc., as of December 31, 1996 and 1995 and the related statements of income and
retained earnings and cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted this audit 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 statements 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 Classic Golf Management,
Inc., as of December 31, 1996 and 1995, and the results of its operations and
its cash flows for the years then ended, in conformity with generally accepted
accounting principles.
/s/ John Fuller Jr.
John Fuller, Jr., C.P.A. P.C.
Athens, Georgia
September 25, 1998
4
<PAGE>
Classic Golf Management, Inc.
Balance Sheets
As of December 31, 1996 and 1995
ASSETS
1996 1995
CURRENT ASSETS:
Cash in Bank $ 24,360 $ 340
Accounts receivable, trade
(less allowance for doubtful
accounts of $92,000) 0 0
Receivable from Officer 680 -
--------- ---------
Total Current Assets 25,040 340
PROPERTY AND EQUIPMENT:
At cost (less accumulated depreciation
of $16,130) 22,400 6,140
OTHER ASSETS:
Real Estate Investment 43,000 25,000
Total Assets $ 90,440 $ 31,480
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Payable to Classic Golf Shops 2,500 2,500
Accounts Payable 18,860 27,050
Payable to Officers - 4,320
Short term Loans Payable 51,470 -
--------- ---------
Total Current Liabilities 72,830 33,870
--------- ---------
Total Liabilities 72,830 33,870
SHAREHOLDERS' EQUITY:
Common Stock ($1 par value, authorized
200,000 shares, issued and outstanding
20,580 shares) 20,580 20,580
Paid in Capital 980 980
Retained Earnings (Deficit) (3,950) (23,950)
--------- ---------
Total Shareholders' Equity 17,610 (2,390)
--------- ---------
Total Liabilities and
Shareholders' Equity $ 90,440 $ 31,480
========= =========
See accompanying notes to financial statements
5
<PAGE>
Classic Golf Management, Inc.
Statement of Income and Retained Earnings
For the Years Ended December 31, 1996 and 1995
1996 1995
Income $652,570 $426,610
Less: Commissions and Project Costs 571,350 337,030
--------- ---------
Gross Profit 81,220 89,580
Operating Expenses
Depreciation 3,740 -
Administration 17,390 8,690
Auto 7,910 6,410
Office 30,880 10,940
Bad Debt Expense - 92,000
--------- ---------
Total Operating Expenses 59,920 118,040
Net Income (Loss) from Operations 21,300 (28,460)
Loss on Sale of Auto (1,300) -
--------- ---------
Net Income for the Year 20,000 (28,460)
Retained Earnings (Deficit),
Beginning of the Year (23,950) 4,510
--------- ---------
Retained Earnings (Deficit),
End of the Year $ (3,950) $(23,950)
========= =========
See accompanying notes to financial statements
6
<PAGE>
Classic Golf Management, Inc.
Statement of Cash Flows
For the Years Ended December 31, 1996 and 1995
1996 1995
CASH FLOWS FROM (USED BY) OPERATING ACTIVITIES
Net Income (loss) $ 20,000 $(28,460)
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 3,740 -
Loss on Sale of Assets 1,300 -
Increase (decrease) in
Accounts payable (8,190) 26,600
Payable to Officers (5,000) -
Payable to Classic Golf Shops - 2,500
--------- ---------
Net Cash Provided by
operating activities 11,850 640
CASH FLOWS FROM (USED BY) INVESTING ACTIVITIES
Sale of Assets 15,000 -
CASH FLOWS FROM (USED BY) FINANCING ACTIVITIES
Repayment of Loans (2,830) -
NET INCREASE (DECREASE) IN CASH 24,020 640
CASH AT BEGINNING OF YEAR 340 (300)
--------- ---------
CASH AT END OF YEAR $ 24,360 $ 340
========= =========
SUPPLEMENTAL DISCLOSURES:
Non cash investing and financing activities in 1996 consist of
financing equipment, purchases in the amount of $36,300 and land investment of
$18,000.
1996 1995
Interest payments $ 3,300 -
Tax payments - $420
See accompanying notes to financial statements
7
<PAGE>
Classic Golf Management, Inc.
Notes to Financial Statements
For the Years Ended December 31, 1996 and 1995
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
A. NATURE OF OPERATIONS - The Corporation was incorporated
January 1, 1988 under the laws of the State of Georgia. The
principal business activity is that of managing golf courses.
B. BASIS OF ACCOUNTING - The Company prepares its financial
statements on the accrual basis of accounting whereby revenue
is recognized when earned and expenses recorded when incurred.
C. USE OF ESTIMATES - The preparation of financial statements in
conformity with generally accepted accounting principles
requires management to make estimates and assumptions that
affect certain reported amounts and disclosures. Accordingly,
actual results could differ from those estimates.
D. DEPRECIATION - Property and Equipment are carried on the books
at cost. Depreciation on property and equipment is taken,
using both the straight-line and accelerated methods over
their estimated useful lives. Estimated useful lives of
property and equipment range from three to eight years.
E. INCOME TAXES - As of December 31, 1995, the Company had a net
operating loss carryforward for federal and state income tax
purposes totaling approximately $28,460. This loss
carryforward will be utilized at December 31, 1996. As a
result, no provision for taxes is included in the accompanying
financial statements.
F. CASH EQUIVALENTS - For purposes of the statement of cash
flows, the Corporation considers all highly liquid debt
instruments purchased with a maturity of three months or less
to be cash equivalents. The Corporation had no such
equivalents as of December 31, 1996 or 1995.
See accompanying accountant's report.
8
<PAGE>
Classic Golf Management, Inc.
Notes to Financial Statements
For the Years Ended December 31, 1996 and 1995
2. RELATED PARTY TRANSACTIONS
Classic Golf Management and Classic Golf Shops are related parties.
Milton Abell is a shareholder in both Corporations.
Payables to related parties consisted of the following as of December
31, 1996 and 1995.
1996 1995
Payable to Classic Golf Shops 2,500 2,500
Payable to Shareholders (680) 4,320
3. REAL ESTATE INVESTMENTS
The Corporation has a financial interest in two land parcels. The
investment is carried at cost.
4. SHORT TERM NOTES
The Corporation has two short term loans at December 31, 1996. The
first loan was due on September 15, 1996. Payments have been made on
the principal and interest. The first loan has an interest rate of 15%
and the balance due of $31,140. The second loan is for the down payment
of equipment in the amount of $20,000 with an interest of 10%. The
balance due is $20,330.
See accompanying accountant's report
9
<PAGE>
Classic Golf Management, Inc.
Balance Sheet
September 30, 1998
Unaudited
Assets
Current Assets
Cash in Bank 44,202
Accounts Receivable 4,808
Prepaid Expense 46,375
--------
Total Current Assets 95,385
Fixed Assets:
Equipment 26,200
Office Furniture 4,612
Vehicles 42,387
--------
73,199
Less Accumulated Depreciation 21,600
--------
Fixed Assets, net 51,599
--------
Total Assets 146,984
========
Liabilities and Shareholders Equity
Current Liabilities:
Accounts Payable 57,371
Provision for Income Tax 1,500
Notes Payable 50,285
--------
Total Current Liabilities 109,156
Shareholders Equity:
Common Stock 20,580
Paid in Capital 980
Retained Earnings 16,268
--------
Total Shareholders Equity 37,828
--------
Total Liabilities and Shareholders Equity 146,984
========
10
<PAGE>
Classic Golf Management, Inc.
Statement of Income and Retained Earnings
Nine Month Period Ended September 30, 1998
Unaudited
Income 796,431
Less: Commissions and Project Costs 732,181
-----------
Gross Profit 64,250
Operating Expenses:
Depreciation 9,000
Administration 11,953
Auto 1,971
Office 25,169
------------
48,093
-----------
Net Income from Operations 16,157
Provision for Income Tax 1,500
-----------
Net Income for the Year 14,657
Retained Earnings, January 1, 1997 6,013
Prior Period Adjustment -4,402
-----------
Retained Earnings, September 30, 1997 16,268
===========
11
<PAGE>
Classic Golf Management, Inc.
Statement of Cash Flows
Nine Month Period Ended September 30, 1998
Unaudited
Cash Flows From Operating Activities:
Net Income 14,657
Adjustments to Reconcile Net Income to Net Cash
Provided by Operating Activities:
Depreciation 9,000
( Increase) Decrease in
Accounts Receivable -4,130
Increase (Decrease) in
Accounts Payable 36,011
Income Tax Provision 1,501
----------
Net Cash Provided by Operating Activities 57,039
Cash Flows Used by Investing Activities:
Purchase of Assets -10,659
----------
Net Cash Used by Investing Activities -10,659
Cash Flows Used by Financing Activities:
Repayment of Loans -26,538
----------
Net Cash Used by Financing Activities -26,538
----------
Net Increase in Cash 19,842
Cash at Beginning of Year 24,360
----------
Cash at End of Year 44,202
==========
Supplemental Disclosures:
Non cash investing and financing activities in 1997 consist of financing
equipment purchase in the amount of $27,390.
Interest Payments 2,270
Tax Payments 0
12
<PAGE>
CLASSIC GOLF SHOPS, INC.
MARIETTA, GEORGIA
AUDITED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
13
<PAGE>
Classic Golf Shops, Inc.
Marietta, Georgia
We have audited the accompanying balance sheets of Classic Golf Shops,
Inc., as of December 31, 1996 and 1995 and the related statements of income,
changes in stockholders' equity and cash flows for the years then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted this audit 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 statements 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 Classic Golf Shops,
Inc., as of December 31, 1996 and 1995, and the results of its operations and
its cash flows for the years then ended, in conformity with generally accepted
accounting principles.
/s/ John Fuller, Jr.
John Fuller, Jr., C.P.A. P.C.
Athens, Georgia
September 25, 1998
14
<PAGE>
Classic Golf Shops, Inc.
Balance Sheets
As of December 31, 1996 and 1995
ASSETS
1996 1995
--------- ---------
CURRENT ASSETS:
Cash in Bank $ 1,610 $ 1,182
Receivable from Classic
Golf Management 2,500 2,500
Inventory 66,680 65,230
Advances to officers 7,590 10,420
--------- ---------
Total Current Assets 78,380 89,970
PROPERTY AND EQUIPMENT-AT COST:
At cost (less accumulated depreciation
of $6,880) 1,050 1,750
Other Assets 2,750 20
--------- ---------
Total Assets $ 82,180 $ 91,740
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts Payable 10,320 24,680
--------- ---------
Total Current Liabilities 10,320 24,680
--------- ---------
Total Liabilities 10,320 24,680
SHAREHOLDERS' EQUITY
Common Stock ($1 par value, authorized
200,000 shares, issued and outstanding
2,000 shares) 2,000 2,000
Paid in Capital 60,000 60,000
Retained Earnings 9,860 5,060
--------- ---------
Total Shareholders' Equity 71,860 67,060
--------- ---------
Total Liabilities and
Shareholders' Equity $ 82,180 $ 91,740
========= =========
See accompanying notes to financial statements
15
<PAGE>
Classic Golf Shops, Inc.
Statement of Income
For the Years Ended December 31, 1996 and 1995
1996 1995
--------- ---------
Income $270,710 $191,940
Less: Cost of Goods and Services 212,140 185,030
--------- ---------
Gross Profit 58,570 6,910
Operating Expenses
Rent 18,380 3,640
Administration 15,690 6,850
Auto 750 290
Professional Services 6,870 4,830
Depreciation and Amortization 830 550
--------- ---------
42,520 16,160
Net Income (Loss) from Operations 16,050 (9,250)
--------- ---------
Retained Earnings, Beginning of Year 5,060 14,310
Less Shareholders' Distributions 11,250 -
--------- ---------
Retained Earnings, End of Year $ 9,860 $ 5,060
========= =========
See accompanying notes to financial statement
16
<PAGE>
Classic Golf Shops, Inc.
Statements of Changes in Stockholders' Equity
For the Years Ended December 31, 1996 and 1995
Additional
Common Paid-In Retained
Stock Capital Earnings Total
----- ------- -------- -----
Balance January 1, 1995 $ 2,000 - $ 14,310 $ 16,310
Contribution of Capital - 60,000 - 60,000
Net Loss, 1995 - - (9,250) (9,250)
--------- --------- --------- ---------
Balance December 31, 1995 2,000 60,000 5,060 67,060
Net Income, 1996 - - 16,050 16,050
Shareholders' Distributions - - (11,250) (11,250)
--------- --------- --------- ---------
Balance December 31, 1996 $ 2,000 $ 60,000 $ 9,860 $ 71,860
========= ========= ========= =========
See accompanying notes to financial statement
17
<PAGE>
Classic Golf Shops, Inc.
Statements of Cash Flows
For the Years Ended December 31, 1996 and 1995
1996 1995
---- ----
CASH FLOWS FROM (USED BY) OPERATING ACTIVITIES
Net Income (loss) $ 16,050 $ (9,250)
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 830 550
(Increase) decrease in
Accounts receivable - (2,500)
Inventories (1,450) (23,080)
Other assets (2,750) -
Increase (decrease) in
Accounts payable (14,370) (1,620)
--------- ---------
(1,690) (35,900)
CASH FLOWS FROM (USED BY) INVESTING ACTIVITIES
Purchase of equipment (110) (2,190)
Loans to related parties 2,830 (10,410)
--------- ---------
2,720 (12,600)
--------- ---------
CASH FLOWS FROM (USED BY) FINANCING ACTIVITIES
Contribution of Capital - 60,000
Shareholder Distributions (11,240) -
--------- ---------
(11,240) 60,000
--------- ---------
NET INCREASE (DECREASE) IN CASH (10,210) 11,500
CASH AT BEGINNING OF YEAR 1,820 320
--------- ---------
CASH AT END OF YEAR $ 1,610 $ 11,820
========= =========
SUPPLEMENTAL DISCLOSURES:
1996 1995
---- ----
Interest payments 0 0
Tax payments 0 0
See accompanying notes to financial statements
18
<PAGE>
Classic Golf Shops, Inc.
Balance Sheet
September 30, 1998
Unaudited
Assets
Current Assets:
Cash in Bank 23,406
Receivable from Classic Golf Management 6,588
Inventory 103,000
------------
Total Current Assets 132,994
Fixed Assets:
Equipment 2,374
------------
2,374
Less Accumulated Depreciation 2,224
------------
Fixed Assets, net 150
------------
Total Assets 133,144
============
Liabilities and Shareholders Equity
Current Liabilities:
Accounts Payable 48,331
------------
Total Current Liabilities 48,331
Shareholders Equity:
Common Stock 2,000
Paid in Capital 60,000
Retained Earnings 22,813
------------
Total Shareholders Equity 84,813
------------
Total Liabilities and Shareholders Equity 133,144
============
19
<PAGE>
Classic Golf Shops, Inc.
Statement of Income and Retained Earnings
Nine Month Period Ended September 30, 1998
Unaudited
Income 268,043
Less: Costs of Goods and Services 210,031
------------
Gross Profit 58,012
Operating Expenses:
Rent 6,615
Administration 12,246
Depreciation 900
Auto 1,000
Professional Services 12,650
------------
33,411
------------
Net Income 24,601
Retained Earnings, January 1, 1997 9,863
Less: Shareholder Distributions 11,651
------------
Retained Earnings, September 30, 1997 22,813
============
20
<PAGE>
Classic Golf Shops, Inc.
Statement of Cash Flows
Nine Month Period Ended September 30, 1998
Unaudited
Cash Flows From Operating Activities:
Net Income 24,601
Adjustments to Reconcile Net Income to Net Cash
Provided by Operating Activities:
Depreciation 900
(Increase) Decrease in
Accounts Receivable -4,091
Inventories -36,321
Other Assets 2,750
Increase (Decrease) in
Accounts Payable 38,007
------------
Net Cash Provided by Operating Activities 25,846
Cash Flows From Investing Activities:
Loans to Related Parties 7,600
------------
Net Cash Provided by Investing Activities 7,600
Cash Flows Used by Financing Activities:
Shareholder Distributions -11,650
------------
Net Cash Used by Financing Activities -11,650
------------
Net Increase in Cash 21,796
Cash at Beginning of Year 1,610
------------
Cash at End of Year 23,406
============
Supplemental Disclosures:
Interest Payments 0
Tax Payments 0
21
<PAGE>
Classic Golf Shops, Inc.
Notes to Financial Statements
For the Years Ended December 31, 1996 and 1995
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
A. NATURE OF OPERATIONS - Classic Golf Shops, Inc. (The Company) was
incorporated April 24, 1991 under the laws of the State of Georgia. The
principal business activity is that of retail golf pro shop selling
merchandise and giving golf lessons to golfers.
B. BASIS OF ACCOUNTING - The Company prepares its financial statements on
the accrual basis of accounting whereby revenue is recognized when
earned and expenses recorded when incurred.
C. USE OF ESTIMATES - The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect certain
reported amounts and disclosures. Accordingly, actual results could
differ from those estimates.
D. INVENTORIES - Inventories are stated at the lower of average cost or
market.
E. DEPRECIATION - Property and Equipment are carried on the books at cost.
Depreciation on property and equipment is taken, using both the
straight-line and accelerated methods over their estimated useful
lives. Estimated useful lives of property and equipment range from
three to eight years.
F. INCOME TAXES - The Company, with the consent of its shareholders,
elected under the Internal Revenue Code to be an S Corporation
effective for the year beginning September 1, 1991. Under the
provisions for an S Corporation, the Company does not pay corporate
income taxes on its taxable income. In lieu of corporate income taxes,
the shareholders are taxed on their proportionate share of the
Company's taxable income. Therefore, no provision for income taxes is
made.
G. CASH EQUIVALENTS - For purposes of the statement of cash flows, the
Corporation considers all highly liquid debt instruments purchased with
a maturity of three months or less to be cash equivalents. The
Corporation had no such equivalents as of December 31, 1996 or 1995.
See accompanying accountant's report
22
<PAGE>
Classic Golf Shops, Inc.
Notes to Financial Statements
For the Years Ended December 31, 1996 and 1995
2. RELATED PARTY TRANSACTIONS
Classic Golf Shops and Classic Golf Management are related parties.
Milton Abell is a shareholder in both Classic Golf Shops and Classic
Golf Management.
Receivable from related parties consisted of the following as of
December 31, 1996 and 1995.
1996 1995
---- ----
Receivable from Classic Golf Management 2,500 2,500
Advances to Officers 7,590 10,420
See accompanying accountant's report
23
<PAGE>
EXHIBIT B
Pro Forma Financial Information
- -------------------------------
On October 31, 1997, Registrant acquired all of the outstanding shares of
Classic Golf Management, Inc., a Georgia corporation, privately owned by Milton
Abell, an unrelated party. The acquired entity manages two golf courses in
Georgia. The transaction was recorded under the purchase method of accounting,
whereby the purchase price is allocated to assets acquired and liabilities
assumed based on fair market value at date of acquisition. The aggregate
purchase price of Classic Golf Management, Inc. was $147,500, paid in cash of
$103,250, notes payable of $29,500 and 29,500 shares of Registrant's common
stock valued at $0.50/share (fair value at date of transaction). $170,000 was
allocated to tangible assets and $85,500 was allocated to liabilities. The
balance of the purchase price of $63,000, was recorded as goodwill to be
amortized over a forty year period on a straight-line basis.
Additionally, on October 31, 1997, Registrant acquired certain assets from
Classic Golf Shops, Inc., an entity owned by Milton Abell. Classic Golf Shops is
a golf apparel and accessory shop located adjacent to the Classic managed
courses. The transaction was recorded under the purchase method of accounting,
whereby the purchase price is allocated to assets acquired and liabilities
assumed based on fair market value at date of acquisition. The aggregate
purchase price of the assets noted above was $102,500, paid in cash of $71,750,
notes payable of $20,500 and 20,500 shares of Registrant's stock valued at
$0.50/share (fair value at date of transaction). The total purchase price of
$102,500 was allocated to tangible assets.
The following pro forma information is intended to show how the October 31, 1997
stock purchase transaction of Classic Golf Management, Inc. and the asset
purchase transaction of Classic Golf Shops might have affected the historical
financial statements of the Registrant had the transactions been consummated at
an earlier date. For this purpose, the transactions are recorded in the pro
forma income statement for the fiscal year ended October 31, 1997 based on the
assumption that the transactions were consummated at the beginning of this
fiscal year. No pro forma balance sheet is presented since the historical
financial statements included in Registrant's Form 10-KSB for October 31, 1997
reflect the acquisitions.
In management's opinion, the unaudited proforma combined results of operations
are not necessarily indicative of the actual results that would have occurred
had the acquisition been consummated at the beginning of the fiscal year ended
October 31, 1997 or of future operations of the combined companies under the
ownership and management of the Company.
24
<PAGE>
CEC Properties, Inc. and Subsidiaries
Pro Forma Financial Information - Condensed Income Statement
Year ended October 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
Historical
Historical --------------------------- Pro Forma Pro Forma
CEC Classic Classic Adjustments CEC
October 31, Golf Mgmt Golf (Note 3 and October 31,
1997 Inc. Shops Note 4) 1997
------------ --------------------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Revenue:
Sales 0 967,653 348,894 0 1,316,547
Gain on Sale of Investment 58,175 0 0 0 58,175
Other 2,080 0 0 0 2,080
------------ --------------------------- ------------ ------------
Total Revenue 60,255 967,653 348,894 0 1,376,802
Expenses:
Cost of Sales 0 908,556 265,369 0 1,173,925
General and Administrative 146,989 56,502 38,562 0 242,053
Depreciation 0 9,000 0 19,083 28,083
Amortization 0 0 0 1,575 1,575
------------ --------------------------- ------------ -------------
Total Expenses 146,989 974,058 303,931 20,658 1,445,636
------------ --------------------------- ------------
Net Loss from Continuing Operations (86,734) (6,405) 44,963 (20,658) (68,834)
============ =========================== ============ =============
Net Loss Per Common Share -
Continuing Operations (0.01) (0.01)
============ =============
Weighted Average Shares Outstanding 12,566,698 12,616,698
============ =============
</TABLE>
See accompanying notes to pro forma condensed financial information.
25
<PAGE>
CEC Properties, Inc. and Subsidiaries
Notes to Pro Forma Condensed Financial Information
October 31, 1997
1. Consolidation
- -----------------
The accompanying pro forma condensed financial information includes the accounts
of the Company and its wholly owned subsidiaries, CEC Properties Corp., a Nevada
corporation and Classic Golf Management, Inc., a Georgia Corporation (and owner
of Classic Golf Shops). All material intercompany transactions have been
eliminated.
2. Basis of Presentation
- -------------------------
The accompanying pro forma condensed income statement includes only income
(loss) from continuing operations. Income from discontinued operations is
omitted.
3. Amortization
- ----------------
The accompanying pro forma condensed income statement includes an adjustment for
the amortization of goodwill recorded in the purchase of Classic Golf
Management, Inc. Goodwill is amortized over a 40 year period on a straight-line
basis.
4. Depreciation
- ----------------
The accompanying pro forma condensed income statement includes adjustments for
the depreciation of the fixed assets acquired in the Classic Golf Management,
Inc. stock purchase and the Classic Golf Shops asset purchase transactions.
Depreciation is provided for over a useful life period five years on a
straight-line basis.
26
