<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
----------------------------------------------------------------------
AMENDMENT NO. 1
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 heretunto duly authorized.
CEC PROPERTIES, INC.
Dated: October 7, 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.
MARIETTA, GEORGIA
COMPILATION OF FINANCIAL STATEMENTS
FOR THE SEVEN MONTH PERIOD ENDED JULY 31,1997
10
<PAGE>
Classic Golf Shops, Inc.
Marietta, Georgia
Gentlemen:
I have compiled the accompanying balance sheet of Classic Golf Shops, Inc.
as of July 31, 1997, and the related statements of income and retained earnings
and cash flows for the seven month period then ended, in accordance with
Statements on Standards for Accounting and Review Services issued by the
American Institute of Certified Public Accountants.
A compilation is limited to presenting in the form of financial statements
information that is the representation of management. I have not audited or
reviewed the accompanying financial statements, and accordingly, do not express
an opinion or any other form of assurance on them.
Management has elected to omit substantially all of the disclosures required
by generally accepted accounting principles. If the omitted disclosures were
included in the financial statements, they might influence the user's
conclusions about the Company's financial position and results of operations.
Accordingly, these statements are not designed for those who are not informed of
such matters.
/s/ John P. Fuller Jr.
John P. Fuller, Jr. CPA
September 9, 1997
11
<PAGE>
Classic Golf Management , Inc.
Combined Balance Sheets
July 31, 1997
Unaudited
ASSETS
Cash in Bank $ 88,233.30
Investment 46,000.00
Prepaid Tax 1,500.00
Accounts Receivable 4,200.00
-------------
Total Current Assets $ 139,933.30
Fixed Assets
Equipment $ 20,000.00
Office Furniture 3,530.00
Vehicles 42,386.54
-------------
Total Fixed Assets $ 65,916.54
Less Accumulated Depreciation $ (20,820.00) $ 45,096.54
------------- -------------
Total Assets $ 185,029.84
=============
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts Payable $ 52,122,59
Loan from Classic Golf Shop 11,000.00
Provision for Income Tax -
Short Term Portion of Long Term Debt 30,933.91
-------------
Total Current Liabilities $ 94,056.50
Long Term Debt Net of Current Portion 39,198.12
-------------
$ 133,254.60
Shareholders' Equity
Common Stock $ 20,580.00
Paid in Capital 980.00
Retained Earnings 30,215.22 51,775.22
------------- -------------
$ 185,029.84
12
<PAGE>
Classic Golf Management, Inc.
Combined Statement of Income and Retained Earnings
For the Seven Month Period Ended July 31,1997
Unaudited
Income $ 582,645.65
Less: Commissions and Project Costs 506,625.90
-------------
Gross Profit 76,019.75
Operating Expenses
Depreciation $ 4,690.00
Administration 8,542.29
Auto 3,252.01
Office 25,063.06 $ 41,547.36
------------- -------------
Net Income from Operations $ 34,472.39
Provision for Income Tax -
-------------
Net Income for the Year $ 34,472.39
Retained Earnings, January 1, 1997 $ 6,012.95
Prior Period Adjustment (10,270.12) (4,257.17)
------------- -------------
Retained Earnings, July 31, 1997 $ 30,215.22
=============
13
<PAGE>
Classic Golf Management, Inc.
Balance Sheet
July 31, 1997
Unaudited
ASSETS
Cash in Bank $ 26,554.16
Investment 1,500.00
Prepaid Tax 4,200.00
Accounts Receivable 46,000.00
-------------
Total Current Assets $ 78,254.16
Fixed Assets
Equipment $ 20,000.00
Office Furniture 3,530.00
Vehicles 42,386.54
-------------
Total Fixed Assets $ 65,916.54
Less Accumulated Depreciation $ (20,820.00) $ 45,096.54
------------- -------------
Total Assets $ 123,350.70
=============
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts Payable $ 11,255.12
Transfer from Classic Golf Shops 11,000.00
Provision for Income Tax -
Sort Term Portion of Long Term Debt 26,274.91
-------------
Total Current Liabilities $ 48,530.03
Long Term Debt Net of Current Portion 39,198.12
Shareholders' Equity
Common Stock $ 20,580.00
Paid in Capital 980.00
Retained Earnings 14,062.55 35,622.55
------------- -------------
$ 123,350.70
14
<PAGE>
Classic Golf Management, Inc.
Statement of Income and Retained Earnings
For the Seven Month Period Ended July 31,1997
Unaudited
Income $ 78,060.77
Less: Commissions and Project Costs 51,051.80
-------------
Gross Profit 27,008.97
Operating Expenses
Depreciation $ 4,690.00
Administration 1,140.00
Auto 2,146.82
Office 12,656.36 $ 20,633.18
------------- -------------
Net Income from Operations $ 6,375.79
Provision for Income Tax -
-------------
Net Income for the Year $ 6,375.79
Retained Earnings, January 1, 1997 $ (13,243.12)
Prior Period Adjustment (10,270.12)
-------------
Retained Earnings as Adjusted (23,513.24)
Add Transfers from Sugar Creek 31,200.00
-------------
Retained Earnings, July 31, 1997 $ 14,062.55
=============
15
<PAGE>
Classic Golf Management, Inc.
Sugar Creek
Balance Sheet
July 31, 1997
Unaudited
ASSETS
Cash in Bank $ 58,944.06
Payroll Reserve Acct 2,735.08
-------------
Total Current Assets $ 61,679.14
Fixed Assets
Office Furniture $ -
Vehicles -
Less Accumulated Depreciation $ - $ -
------------- -------------
Total Assets $ 61,679.14
=============
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts Payable $ 40,867.47
Notes Payable 4,659.00
-------------
Total Liabilities $ 45,526.47
Shareholders' Equity
Common Stock $ -
Paid in Capital -
Retained Earnings 16,152.67 16,152.67
------------- -------------
$ 61,679.14
16
<PAGE>
Classic Golf Management, Inc.
Sugar Creek
Statement of Income and Retained Earnings
For the Period Ended July 31,1997
Unaudited
Income $ 504,584.88
Less: Commissions and Project Costs 455,574.10
-------------
Gross Profit $ 49,010.78
Operating Expenses
Depreciation $ -
Administration 7,402.29
Auto 1,105.19
Office 12,406.70 $ 20,914.18
------------- -------------
Net Income from Operations $ 28,096.60
Provision for Income Tax -
-------------
Net Income for the Year $ 28,096.60
Retained Earnings, January 1, 1997 19,256.07
Less: Transfers (31,200.00)
-------------
Retained Earnings, July 31, 1997 $ 16,152.67
=============
17
<PAGE>
Classic Golf Management, Inc.
Statement of Cash Flows
For the Seven Month Period Ended July 31,1997
Unaudited
Cash Flows From Operating Activities:
Net Income $ 34,472
Adjustments to Reconcile Net Income to
Net Cash Provided by Operating Activities: 4,690
Depreciation and Amortization
(Increase)Decrease in:
Accounts Receivable (4,200)
Other Assets (1,500)
Increase (Decrease) in:
Accounts Payable 32,958
Payable to Classic Golf Shops 11,000
-------------
Net Cash Provided by Operating Activities 77,420
Cash Flows Used by Investing Activities:
Purchase of Equipment (13,547)
-------------
Net Cash Used by Investing Activities (13,547)
-------------
Increase in Cash 63,873
Cash at Beginning of Period 24,360
-------------
Cash at End of Period $ 88,233
=============
Supplemental Disclosures:
Non cash investing and financing activities for the period ended July
31, 1997 consist of financing equipment purchases in the amount of $15,520.
Interest payments $ 4,080
Tax payments 0
18
<PAGE>
CLASSIC GOLF SHOPS, INC.
MARIETTA, GEORGIA
AUDITED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
19
<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
20
<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
21
<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
22
<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
23
<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
24
<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
25
<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
26
<PAGE>
CLASSIC GOLF SHOPS, INC.
MARIETTA, GEORGIA
COMPILATION OF FINANCIAL STATEMENTS
FOR THE SEVEN MONTH PERIOD ENDED JULY 31,1997
27
<PAGE>
Classic Golf Shops, Inc.
Marietta, Georgia
Gentlemen:
I have compiled the accompanying balance sheet of Classic Golf Shops,
Inc. as of July 31, 1997, and the related statements of income and retained
earnings and cash flows for the seven month period then ended, in accordance
with Statements on Standards for Accounting and Review Services issued by the
American Institute of Certified Public Accountants.
A compilation is limited to presenting in the form of financial
statements information that is the representation of management. I have not
audited or reviewed the accompanying financial statements, and accordingly, do
not express an opinion or any other form of assurance on them.
Management has elected to omit substantially all of the disclosures
required by generally accepted accounting principles. If the omitted disclosures
were included in the financial statements, they might influence the user's
conclusions about the Company's financial position and results of operations.
Accordingly, these statements are not designed for those who are not informed of
such matters.
/s/ John P. Fuller, Jr.
John P. Fuller, Jr. CPA
September 9, 1997
28
<PAGE>
Classic Golf Shops, Inc.
Balance Sheet
July 31, 1997
Unaudited
ASSETS
Cash in Bank $ 21,652.09
Accounts Receivable 1,810.00
Receivable from Classic Golf Management 13,588.00
Inventory 94,860.00
Other Current Assets 14,459.00
-------------
Total Current Assets $ 146,369.09
Fixed Assets
Equipment $ 7,934.00
Less Accumulated Depreciation $ (6,884.00) $ 1,050.00
-------------
Other Assets 2,752.00
-------------
Total Assets $ 150,171.09
=============
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts Payable $ 20,700.00
Shareholders' Equity
Common Stock $ 2,000.00
Paid in Capital 60,000.00
Retained Earnings 67,471.09 129,471.09
------------- -------------
Total Liabilities and Shareholders' Equity $ 150,171.09
=============
29
<PAGE>
Classic Golf Shops, Inc.
Statement of Income and Retained Earnings
For the Seven Month Period Ended July 31,1997
Unaudited
Income $ 210,348.60
Less: Cost of Goods and Services 134,429.61
-------------
Gross Profit $ 75,918.99
Operating Expenses
Rent $ 5,145.00
Administration 7,334.70
Auto 1,000.00
Professional Services 5,900.00 $ 19,379.70
-------------- -------------
Net Income from Operations $ 56,539.29
Net Income for this Period $ 56,539.29
Retained Earnings, January 1, 1997 21,822.00
Less: Partners Distribution (10,890.20)
-------------
Retained Earnings, July 31, 1997 $ 67,471.09
=============
30
<PAGE>
Classic Golf Shops, Inc.
Statement of Cash Flows
For the Seven Month Period Ended July 31,1997
Unaudited
Cash Flows From Operating Activities:
Net Income $ 56,540
Adjustments to Reconcile Net Income to
Net Cash Provided by Operating Activities:
(Increase)Decrease in:
Accounts Receivable (5,220)
Inventory (28,180)
Other Assets (2,590)
Increase (Decrease) in:
Accounts Payable 10,382
-------------
Net Cash Provided by Operating Activities 30,932
Cash Flows Used by Financing Activities:
Shareholder Distributions (10,890)
-------------
Net Cash Used by Financing Activities (10,890)
-------------
Increase in Cash 20,042
Cash at Beginning of Period 1,610
-------------
Cash at End of Period $ 21,652
=============
Supplemental Disclosures:
Interest payments 0
Tax payments 0
31
<PAGE>
The following pro forma information is intended to show how the October 31, 1997
stock purchase transaction of Classic Golf Management, Inc. ("CGM, Inc.") and
the asset purchase transactions of entities owned by Milton Abell and known as
Classic Golf Shops, Golf 101, and Hydroturf ("M. Abell") might have affected the
historical financial statements of the Registrant had the transaction been
consummated at an earlier date. For this purpose, the transaction is recorded in
the pro forma financial statements as if it had taken place at the beginning of
the Registrant's most recently completed fiscal year, October 31, 1996, and pro
forma results are carried forward to July 31, 1997, the Registrant's most
recently completed interim quarter.
EXHIBIT B
32
<PAGE>
CEC Properties, Inc. and Subsidiaries
Pro Forma Financial Information - Condensed Balance Sheet
July 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
Historical Pro Forma Adjustments Pro Forma
-----------------------------
CEC CGM Inc. M. Abell CEC
July 31, Stock Asset July 31,
1997 Purchase Purchase 1997
----------------------------------------------------------------
<S> <C> <C> <C> <C>
Assets:
Inventory 0 15,365 89,998 105,363
Fixed Assets, net
of accum depreciation 809,094 82,918 12,502 904,514
Goodwill, net of accum amortization 0 60,306 0 60,306
Other 32,448 7,506 0 39,954
----------------------------------------------------------------
841,542 166,095 102,500 1,110,137
================================================================
Liabilities and Stockholders' Equity:
Accounts Payable 20,585 60,370 0 80,955
Stockholder Loans Payable 105,375 13,365 19,661 138,401
Mortgages and Notes Payable 767,440 25,895 0 793,335
----------------------------------------------------------------
Total Liabilities 893,400 99,630 19,661 1,012,691
Common Stock 125,667 295 205 126,167
Additional Paid-in-Capital 23,297,402 14,455 10,045 23,321,902
Accumulated Deficit (23,474,927) 51,715 72,589 (23,350,623
----------------------------------------------------------------
Total Stockholders' Equity (51,858) 66,465 82,839 97,446
----------------------------------------------------------------
841,542 166,095 102,500 1,110,137
================================================================
</TABLE>
See accompanying notes to pro forma condensed financial information.
33
<PAGE>
CEC Properties, Inc. and Subsidiaries
Pro Forma Financial Information - Condensed
Income Statement
Year ended October 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
Historical Pro Forma Adjustments Pro Forma
--------------------------
CEC CGM Inc. M. Abell CEC
October 31, Stock Asset October 31,
1996 Purchase Purchase 1996
------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenue:
Sales 0 652,570 270,710 923,280
Rental Income 82,399 0 0 82,399
Gain on Sale of Property 0 (1,300) 0 (1,300)
Gain on Sale of Investment 48,475 0 0 48,475
Other 2,317 0 0 2,317
------------------------------------------------------------
Total Revenue 133,191 651,270 270,710 1,055,171
Expenses:
Cost of Sales 0 571,350 212,140 783,490
Property Operations 32,975 0 0 32,975
Interest 81,096 0 0 81,096
General and Administrative 70,284 56,180 41,690 168,154
Depreciation 21,520 3,740 830 26,090
Amortization 0 1,576 0 1,576
-----------------
------------------------------------------------------------
Total Expenses 205,875 632,846 254,660 1,093,381
------------------------------------------------------------
Net Income (Loss) (72,684) 18,424 16,050 (38,210)
============================================================
Net Income (Loss) per Common Share (0.006) (0.003)
================= =================
Weighted Average Shares Outstanding 12,566,698 12,616,698
================= =================
</TABLE>
See accompanying notes to pro forma condensed financial information.
34
<PAGE>
CEC Properties, Inc. and Subsidiaries
Pro Forma Financial Information - Condensed Income Statement
Nine Months ended July 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
Historical Pro Forma Adjustments Pro Forma
--------------------------
CEC CGM Inc. M. Abell CEC
July 31, Stock Asset July 31,
1997 Purchase Purchase 1997
------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenue:
Sales 0 582,646 210,349 792,995
Rental Income 80,000 0 0 80,000
Gain on Sale of Property 14,000 0 0 14,000
------------------------------------------------------------
Total Revenue 94,000 582,646 210,349 886,995
Expenses:
Cost of Sales 0 506,626 134,430 641,056
Property Operations 36,000 0 0 36,000
Interest 47,000 0 0 47,000
General and Administrative 0 36,857 19,380 56,237
Depreciation 9,000 4,690 0 13,690
Amortization 0 1,182 0 1,182
------------------------------------------------------------
Total Expenses 92,000 549,355 153,810 795,165
------------------------------------------------------------
Net Income 2,000 33,291 56,539 91,830
============================================================
Net Income per Common Share 0.0002 0.007
================= =================
Weighted Average Shares Outstanding 12,616,698 12,616,698
================= =================
</TABLE>
See accompanying notes to proforma condensed financial information.
35
<PAGE>
CEC Properties, Inc. and Subsidiaries
Notes to Pro Forma Condensed Financial Information
July 31,1997
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. All
material intercompany transactions have been eliminated.
Investment Properties
- ---------------------
At July 31, 1997, the Company held three residential rental properties at a
total carrying value of approximately $805,000 subject to mortgages of
approximately $767,000.
36
