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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE Securities
EXCHANGE ACT OF 1934
For the quarterly period ended: September 30, 1996.
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
ACT OF 1934
For the transition period from _______ to _____________.
Commission file number 33-12613-NY
CELESTIAL VENTURES CORPORATION
(Exact name of Small Business Issuer as specified in its charter)
NEVADA 22-2814206
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(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
382 Route 59, Section 310, Monsey, New York 10952
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(Address of principal executive offices)
(914) 369-0132
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(Issuer's telephone number, including area code)
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(Former Name, Former Address and Former Fiscal Year, if Changed
Since Last Report)
Check whether the issuer has: (1) filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
X Yes No
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APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding for each of the issuer's
classes of common equity, as of the latest practicable date:
Number of shares of Common Stock outstanding as of October 3, 1996:
1,129,053.
Transitional Small Business Disclosure Format (check one)
Yes No X
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PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
Celestial Ventures Corporation and Subsidiaries
Condensed Consolidated Balance Sheet
September 30,
1996
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Assets:
Current Assets
Cash $ 8,726
Accounts Receivable 193,032
List Rental Receivable --
Inventory 151,192
Prepaid Expenses and Sundry Receivables 97,495
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Total Current Assets 450,445
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Property, Plant and Equipment 47,815
Less: Accumulated Depreciation (14,900)
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Net Property, Plant and Equipment 32,915
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Other Assets
Intangible Assets (Net) 916,666
Other 16,215
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Total Other Assets 932,881
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Total Assets $1,416,241
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See Accompanying Notes to Condensed Consolidated Financial Statements
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CELESTIAL VENTURES CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
September 30,
1996
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Liabilities
Current Liabilities
Accounts Payable $ 92,278
Current portion of long term debt 489,453
Loan payable - shareholder 27,000
Accrued Expenses and Sundry Liabilities 94,088
Notes Payable --
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Total Current Liabilities 702,819
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Long-Term Liabilities
Notes Payable --
Loan Payable Officer --
Long term debt 333,105
Net liabilities of discontinued operations --
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Total Long-Term Liabilities 333,105
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Total Liabilities 1,035,924
Redeemable Common Stock 806,250
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Shareholders' (Deficit)
Shareholders Equity:
Preferred Stock 272
Common Stock 1,076
Additional Paid-In-Capital 4,817,487
Accumulated Deficit (5,244,768)
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Total Shareholders' (Deficit) (425,933)
Total Liabilities and Shareholders' (Deficit) $1,416,241
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See Accompanying Notes to Condensed Consolidated Financial Statements
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CELESTIAL VENTURES CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED
September 30, September 30,
1996 1995
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Revenues
Sales $205,192 $215,758
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Cost of Sales 53,612 32,980
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Gross Profit 151,580 182,778
Operating Expenses
General and Administrative Expenses 193,872 207,889
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Net (Loss) Before Other Income (Deductions) (42,292) (25,111)
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Other Income (Deductions)
Interest Expense -- (18,750)
Interest Income -- 9,293
Forgiveness of Debt -- 9,000
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Total Other Income (Deductions) -- (457)
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Discontinued operations
(Loss) from operations of discontinued
subsidiaries - net of taxes -- --
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Net (Loss) $(42,292) $(25,568)
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Net (Loss) Per Share $(.04) $(.01)
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See Accompanying Notes to Condensed Consolidated Financial Statements
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CELESTIAL VENTURES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED
September 30, September 30,
1996 1995
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Cash Flows from Operating Activities
Net (Loss) (42,292) (25,568)
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Adjustments to reconcile net income to
net cash flows from operating activities:
Depreciation 4,349 4,360
Amortization 16,667 16,667
Interest on redeemable common stock -- 18,750
Changes in assets and liabilities:
Decrease (increase) in:
Accounts receivable (65,020) (62,192)
Inventory 1,845 (47,781)
Prepaid expenses (62,461) (241,039)
Other (7,731) 25,854
Increase (decrease) in:
Accounts payable (9,853) 77,490
Accrued expenses and sundry liabilities 45,975 42,189
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Total adjustments (76,229) (165,702)
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Net cash used in operating activities (118,521) (191,270)
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Cash Flows From Investing Activities:
Purchase of property & equipment (2,150) (32,440)
Deficit of acquired company -- (283,060)
Purchase of assets from Re-Prod Inc -- (1,315,000)
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Net cash used in investing activities (2,150) (1,630,500)
Cash Flows From Financing Activities:
Proceeds from loans - net 135,447 458,332
Financial of purchase of Re-Prod Inc assets:
Note Payable -- 250,000
Redeemable common stock -- 750,000
Redemption of preferred stock -- (611)
Issuance of common stock -- 360,570
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Payments of shareholders' loans (18,000) --
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Net cash provided by financial activities 117,447 1,818,291
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Net decrease in cash (3,224) (3,479)
Cash beginning of period 11,950 3,562
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Cash end of period $8,726 $83
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See Accompanying Notes to Condensed Consolidated Financial Statements
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CELESTIAL VENTURES CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
Celestial Ventures Corporation was organized under
the laws of the State of Nevada on January 28, 1987.
The Company's activities consist of ownership of
various diversified businesses. These businesses are
involved in "Business to Business" direct mail
marketing. Effective June 30, 1995, the Company
changed its year end from October 31 to June 30.
NOTE A: Significant Accounting Policies
1. The accompanying unaudited condensed consolidated
financial statements have been prepared in
accordance with generally accepted accounting
principles for interim financial information and
with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include
all of the information and footnotes required by
generally accepted accounting principles for
complete financial statements. In the opinion of
management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair
presentation have been included. Operating results
for the three-month period ended September 30, 1995
is not necessarily indicative of the results that
may be expected for the year ended June 30,1996.
For further information, refer to the consolidated
financial statements and footnotes thereto included
in the Registrant Company and Subsidiaries' annual
report on Form 10-K for the year ended June 30, 1996.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS.
The consolidated balance sheet as of September 30, 1996 and the consolidated
statement of operations for the three months ended September 30, 1996 and 1995
have been derived from the unaudited financial records of the Company. These
financial statements reflect all adjustments, consisting only of normal
recurring items, which in the opinion of management are necessary to fairly
state the Company's financial position and results of operations for the period
presented.
Financial Condition
The Company's financial condition remained relatively unchanged at September
30, 1996 compared to June 30, 1996.
Current assets increased from $328,033 at June 30, 1996 to $450,445 at September
30, 1996 representing an increase of 37% or $122,412. This increase as mostly
attributable to Accounts Receivable and prepaid expenses which increased $65,020
and $77,461, respectively. Property, plant and equipment had decreased from
$35,114 at June 30, 1996 to $32,915 at September 30, 1996 representing a
decrease of 6% or $2,199. Other assets decreased from $941,817 at June 30, 1996
to $932,881 at September 30, 1996 representing a decrease of 1% or $8,936. The
Company experienced an increase in current liabilities from $451,213 at June 30,
1996 to $702,819 at September 30, 1996, representing an increase of 55% or
$251,606. The Company also experienced a decrease in long-term liabilities from
$431,142 at June 30, 1996 to $333,105 at September 30, 1996 representing a
decrease of 23% or $98,037. Shareholders Equity was decreased from $(383,641) at
June 30, 1996 to ($425,933) representing a decrease of 11% or $42,242.
Effect of Inflation
The impact of inflation on the Company's financial condition and results of
operations has not been significant.
Liquidity and Capital Resources
The Company has financed its working capital requirements, capital expenditures
and acquisitions through cash flows generated from operations, debt, and sale
of common stock.
Cash used in operations for the three months ended September 30, 1996 was
$118,521. The Company had $21,016 in depreciation and amortization expense which
did not require cash outlay for the three months ended September 30, 1996.
The major use of funds in operations was an increase of prepaid expenses of
$62,461, an increase of inventories of $1,845, and an increase in accounts
receivable of $65,020.
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PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Legal Proceedings
Although there are no material legal proceedings pending against the Company, as
of the date of this Report, Celestial Realty Group. Inc., the Company's inactive
wholly owned subsidiary was involved in a lawsuit which was filed in the Circuit
Court for Eleventh Judicial Circuit in and for Dade County, Florida by Mystic
Pines, a Florida joint venture on June 13, 1990.
Progress of the Case
As of the date of this Report, the Company has no further standing to seek the
relief as set forth in its amended complaint. This is based upon a court ordered
award of the lawsuit to NCNB bank. NCNB owned the mortgage on the subject
property and as a result of a foreclosure action, the lawsuit was awarded to
NCNB to satisfy the deficiency. The Company has had no choice but to disallow
any assets reflecting a favorable outcome in this action.
The Company filed on February 21, 1996 a complaint against Re-Prod, Inc. and its
stockholder Jacob Lahav in Federal Court in the Southern District of New York,
White Plains, File Number 961274, which seeks a modification of the purchase
price of the assets of Re-Prod, Inc. The Company contends that certain assets,
including accounts receivable, which the Company was purchasing did not exist at
the time of the acquisition. As a result the Company has suspended payments
under a $250,000 payable to Re-Prod, Inc. and will not honor other terms of the
acquisition.
On March 14, 1996, Re-Prod, Inc. and Jacob Lahav filed a counter claim against
the Company alleging specific performance on the $250,000 promissory note, fraud
and conversion, breach of contract and securities fraud and against Mr. Irwin
Schneidmill and John Formicola for the enforcement of certain financial
guarantees as well as for common law fraud, securities fraud and fraud and
conversion. The total dollar amount claimed, approximately $1,050,000, exclusive
of interest equals the amount of the original purchase price of Re-prod, Inc.
ITEM 2. CHANGES IN SECURITIES.
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There have been no matters submitted to a vote of security holders
for the period covered by this Report.
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ITEM 5. OTHER INFORMATION.
When used in this Annual Report on Form 10-KSB, the words "estimate",
"project", "intend", "expect" and similar expressions are intended to
identify forward-looking statements regarding events and financial
trends which may affect the Company's future operating results and
financial position. Such statements are subject to risks and
uncertainties that could cause the Company's actual results and
financial position to differ materially. Such factors are described in
detail elsewhere. Readers are cautioned not to place undue reliance on
these forward-looking statements, which speak only as of the date
hereof. The Company undertakes no obligation to publicly release the
result of any revisions to these forward-looking statements to reflect
events or circumstances after the date hereof or to reflect the
occurrence of unanticipated events.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits (numbered in accordance with Item 601 of Regulation S-B).
Exhibit
Numbers Description
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* 3(a) - Certificate of Incorporation of the Company
* 3(b) - Bylaws of the Company
** 4(a) - Form of Common Stock Certificate
** 10(a) - Purchase Agreement between the Company and Gulf Coast
Powder Coatings, Inc., and ATCO Corporation for the
purchase of Gulf Coast Powder Coatings, Inc. by ATCO
Corporation dated August 31, 1995
** 10(b) - Purchase Agreement between the Company and Valves
International, Inc., Central Valve Services, Inc, Alloy
Valve International, Inc. (d/b/a CVC International
and/or T.J. Lingle International) (collectively, the
"Subsidiaries") and ATCO Corporation for the purchase
of the Subsidiaries by ATCO Corporation, dated August
31, 1995.
** 10(c) - Purchase Agreement between Success Direct, Inc., Irwin
Schneidmill, Performance Capital Corporation, Martin
Ewenstein, Brian Ugles, John Ecke and Cathy Santo
("Sellers") and the Company, for the purchase by the
Company of Success Direct, Inc.
** 10(d) - Assignment of contract between Success Direct, Inc. and
the Company for the rights to purchase assets of
Re-Prod, Inc., dated August 31, 1995.
** 10(e) - Purchase Agreement between the Company and Re-Prod,
Inc., for the purchase of certain assets of Re-Prod,
Inc., dated August 31, 1995.
*** 10(f) - Promissory Note in the principal amount of $205,000
bearing interest at 11% per annum between the Company
as borrower and Performance Corporation as lender,
dated August 1, 1995.
*** 10(g) - Promissory Notes dated December 15, 1994 through April
15, 1995 in the aggregate amount of $250,000 ($50,000)
bearing interest at 10% per annum between Success
Direct, Inc. as borrower and Performance Capital
Corporation as lender.
*** 10(h) - Employment Agreement between Irwin Schneidmill and the
Company dated March 1, 1996.
*** 10(i) - Supply contracts between the Company and Eimicke, Ltd.
each dated September 6th, 1990.
*** 10(j) - Indemnity Agreement between the Company and Irwin
Schneidmill and John Formicola, indemnifying them
against liabilities arising from the acquisition of
assets of Re-Prod, Inc.
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- Subsidiaries of the Company
*** 10(k) - Stock Option Certificate and Agreement between the
Company and Irwin Schneidmill dated September 15, 1995.
(b) Reports on Form 8-K - November 21, 1996. The Form 8-K discusses the
Registrant's sale of its wholly owned subsidiary Remarkable Office Products,
Inc.
* Incorporated by reference to the Company's Registration Statement on Form
S-8 dated September 18, 1995.
** Incorporated by reference to the Company's Report on Form 8-K dated August
31, 1995.
*** Incorporated by reference to the Company's Report on Form 10-KSB for the
period ended June 30, 1995.
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SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereto duly
authorized.
CELESTIAL VENTURES CORPORATION
By: /s/ IRWIN SCHNEIDMILL
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Irwin Schneidmill
President, Chief Executive, and
Financial Officer and a Director
Dated: April 4, 1997
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