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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 1 TO
FORM 10-QSB/A
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 For the quarterly period ended: March 31, 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
------------------------------- -------------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
382 Route 59, Section 310, Monsey, New York 10952
-------------------------------------------------
(Address of principal executive offices)
(914) 369-0132
-------------------------------------------------
(Issuer's telephone number, including area code)
------------------------------------------------------------
(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
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 April 3, 1996: 14,285,878.
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 Sheets
March 31,
1996
---------
Assets
Current Assets
Cash and Cash Equivalents $ 30
Accounts Receivable 84,253
List Rental Receivable 33,551
Inventory 212,472
Prepaid Expenses and Sundry Receivables 231,252
-------
Total Current Assets 561,558
-------
Property, Plant and Equipment 43,621
Less: Accumulated Depreciation 7,797
-------
Net Property, Plant and Equipment 35,824
-------
Other Assets
Intangible Assets (Net) 949,999
Security Deposits 5,885
-------
Total Other Assets 955,884
-------
Total Assets $1,553,266
=========
See Accompanying Notes to Condensed Consolidated Financial Statements
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CELESTIAL VENTURES CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
March 31,
1996
---------
Liabilities and Shareholders' Equity
Current Liabilities
Accounts Payable $78,886
Accrued Expenses and Sundry Liabilities 51,122
Notes Payable 547,566
-------
Total Current Liabilities 677,574
-------
Long-Term Liabilities
Notes Payable 95,892
Loan Payable Officer 10,750
Net liabilities of discontinued operations 278,542
-------
Total Long-Term Liabilities 385,182
-------
Total Liabilities 1,062,756
---------
Redeemable Common Stock 796,875
-------
Shareholders' Equity (Deficit)
Shareholders Equity
Preferred Stock 278
Common Stock 13,536
Additional Paid-In-Capital 4,519,391
Accumulated Deficit (4,839,570)
-----------
Total Shareholders' Equity (Deficit) (306,365)
Total Liabilities and Shareholders' Equity (Deficit) $(1,553,266)
============
See Accompanying Notes to Condensed Consolidated Financial Statements
1
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CELESTIAL VENTURES CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS ENDED MARCH 31
1996 1995
------------- ----------
Revenues
Sales $915,629 --
------- --
Cost of Sales 241,692 --
------- --
Gross Profit 673,937 --
Operating Expenses
General and Administrative Expenses 748,008 --
------- --
Net (Loss) Before Other Income (Deductions) (74,071) --
-------- --
Other Income (Deductions)
Interest Expense (46,875)
Interest Income 23,293 --
Forgiveness of Debt 9,000 --
----- --
Total Other Income (Deductions) 14,588 --
------ --
Discontinued operations
(Loss) from operations of discontinued
subsidiaries - net of taxes -- $(1,551,459)
Net (Loss) before Taxes $(88,653)
Income Taxes (571) --
--------- ---------
Net (Loss) $(89,224) $(1,551,459)
======== ===========
Net Profit (Loss) Per Share $(.01) $(.17)
===== =====
See Accompanying Notes to Condensed Consolidated Financial Statements
2
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CELESTIAL VENTURES CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31
1996 1995
------------ ----------
Revenues
Sales $232,836 --
------- --
Cost of Sales 79,348 --
------ --
Gross Profit 153,488 --
Operating Expenses
General and Administrative Expenses 218,482 --
------- --
Net Profit (Loss) Before Other
Income (Deductions) (64,994) --
-------- --
Other Income (Deductions)
Interest Expense (18,750)
Interest Income 7,000 --
-----
Total Other Income (Deductions) 11,750 --
------ --
Discontinued operations
(Loss) from operations of discontinued
subsidiaries - net of taxes -- $(229,427)
Net (Loss) before taxes $(76,744) --
Income Taxes (571) --
------------ -------------
Net (Loss) $(77,315) $(229,427)
======== =========
Net (Loss) Per Share $(.01) $(.03)
====== =====
See Accompanying Notes to Condensed Consolidated Financial Statements
3
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CELESTIAL VENTURES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED MARCH 31, 1996
Cash Flows from Operating Activities
Net Loss $(89,224)
--------
Adjustments to reconcile net income to net cash
flows from operating activities:
Depreciation 7,797
Amortization 50,001
Interest on redeemable common stock 46,875
Changes in assets and liabilities:
Decrease (increase) in:
Accounts receivable (10,804)
Inventory (4,472)
Prepaid expenses (231,252)
Deposits 23,325
Increase (decrease) in:
Accounts payable 24,364
Accrued expenses and sundry liabilities 51,122
------
Total adjustments (43,044)
--------
Net cash used in operating activities (132,268)
---------
Cash Flows From Investing Activities:
Purchase of property, plant & equipment (43,621)
Deficit of acquired company (283,060)
Purchase of assets from Re-Prod Inc (1,315,000)
-----------
Net cash used in investing activities (1,641,681)
Cash Flows From Financing Activities:
Proceeds from loans - net of payments 404,208
Financing 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 366,820
-------
Net cash provided by financing activities 1,770,417
Net decrease in cash (3,532)
Cash beginning of the period 3,562
-----
Cash end of the period $ 30
==
4
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CELESTIAL VENTURES CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 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 and application of powder coating onto
industrial materials. 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- and
nine-month period ended March 31,1996 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.
2. The books and records are maintained on the accrual
method of accounting.
3. Inventories:
Inventories are stated at the lower of cost (first-in,
first-out basis), or market.
4. Investments are accounted for using the equity method
of accounting.
5. Property and Equipment:
Property and equipment are stated at cost less
accumulated depreciation and amortization. The
Company depreciated and amortizes its property and
equipment primarily by the straight-line method over
the estimated economic life of the assets for
financial reporting purposes.
6. Intangible Assets:
Intangible Assets are capitalized and are being
amortized using the straight-line method over 15
years.
7. The consolidated financial statements include accounts
of its wholly-owned subsidiaries. All material
intercompany transactions have been eliminated.
8. Income Taxes:
The Company has adopted the Statement of Financial
Accounting Standards 109. Statement 109 uses the
assets and liability method, deferred taxes, assets,
and liabilities are recognized for the estimated
future tax consequences attributable to differences
between the financial statement carrying amounts of
existing assets and liabilities and their respective
tax bases.
5
NOTE B: Accounts Receivable:
Accounts Receivable is derived from sales in the
ordinary course of business. As of March 31, 1996, no
allowance for doubtful accounts has been provided and
all known bad debts have been written off.
NOTE C: Inventories:
Inventories at March 31, 1996 are made up of finished
goods, in the Company's warehouse.
NOTE D: Property and Equipment:
Major classifications of property and equipment and
their respective lives are summarized below:
March 31 Depreciable
1996 Lives
-------- -----------
Equipment 39,998 7-10 years
Furniture & fixtures 3,623 5 years
------
Total 43,621
Accumulated depreciation 7,797
------
35,824
======
Depreciation expense totaled $5,059 for the nine
months ended March 31, 1996.
NOTE E: Intangible Assets:
Intangible assets are made up of the following:
March 31 Amortizable
1996 Lives
-------- -----------
Customer list 850,000 15 years
Trademarks 100,000 15 years
Telephone numbers 50,000 15 years
---------
Total 1,000,000
Accumulated amortization 50,001
---------
Net Intangible assets 949,999
=========
NOTE F: Investment:
In August 1995, the Company sold all of its
wholly-owned subsidiaries with the exception of U.S.
Powder Coatings, Inc, to Turkey DeLite International,
Inc. ("Turkey DeLite") for $1,900,000 in cash,
promissory notes, and common stock accounting for 34%
of the issued and outstanding stock of Turkey DeLite.
Pursuant to the purchase agreement, this transaction
was effective as of May 1, 1995.
The sales price consisted of a combination of
1,250,000 shares of restricted common stock of Turkey
DeLite and additional 300,000 shares of restricted
common stock of Turkey DeLite wherein the Company can
cause said shares to be registered for public sale
after one year from the effective date; an additional
$200,000, of which $150,000 is represented by a short
term note with interest at 8% per annum, and the
balance of $50,000 is due in four quarterly
installments of $12,500 at an interest rate of 8% per
annum payable after payments of $150,000 short term
note; a $150,000 promissory note due in the fifth
year, with interest due quarterly at 8% per annum. In
addition, 350,000 shares of Turkey DeLite's common
stock will be held in escrow pending the payment of
certain debts of the subsidiaries by Turkey DeLite
which is the guarantor of the debts. The principles
followed
6
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NOTE F: Investment (Continued):
by the parties in determining the consideration were
as follows: The subsidiaries were valued at book
value and Turkey DeLite's shares were valued at the
then current market value.
The Company is required to account for its investment
in Turkey DeLite using the equity method of
accounting. The Company is required to adjust its
investment in Turkey DeLite by 34% of the Income or
Losses from the date of acquisition. As of March 31,
1996 the Company has not received complete financial
data for Turkey DeLite and upon receipt of Turkey
DeLite's financial information, the adjustment is not
expected to have a material impact on these financial
statements. (Notwithstanding the Company's reasonable
requests for current financial information, it has
not been able to obtain this information from the
management of Turkey DeLite, which is not affiliated
with the Company or within its control.)
Turkey DeLite has represented to the Company that the
market for Turkey DeLite common stock is thinly
traded and its market is maintained by one market
maker. As of the date of acquisition, Turkey DeLite
has represented to the Company that the market value
of the 1,550,000 shares of Turkey DeLite was valued
at $1 per share. Currently, the Company's largest
asset is its shareholdings in Turkey DeLite.
A stockholder and former CEO of the Company is the
current CEO and stockholder in Turkey DeLite.
NOTE G: Effective July 1, 1995, Company consummated a
business combination with Success Direct, Inc. which
was accounted for as a reverse acquisition. (A
reverse acquisition is equivalent to the issuance of
stock by Success Direct, Inc. for the net monetary
assets of the Company accompanied by a
recapitalization. The accounting is similar to that
of a pooling of interests, in that the historical cost
basis of the purchased entity is used and no goodwill
is recorded.) The acquisition consisted of the
Company's issuance of 66,667 shares of restricted
common stock (with a par value of $.001), in exchange
for the outstanding shares of Success Direct, Inc.
Success's results from operations have been included
in the Company's consolidated financial statements
from the date of acquisition.
The summarized assets and liabilities of the separate
companies on July 1, 1995, the date of acquisition,
were as follows:
Acquired
Company Company
------- --------
Current Assets $ 28,562 $ 65,891
Property and Equipment - Net - 24,681
Other Assets 4,210 5,992
----- -----
Total Assets 32,772 96,564
------ ------
Current Liabilities 54,552 110,808
Long-Term liabilities 278,540 268,816
------- -------
Total Liabilities 333,062 379,624
------- -------
Total Assets and Liabilities $(300,290) $(283,060)
========= =========
Pro Forma Information as if Success Acquisition
occurred July 1, 1994.
The following unaudited pro forma information is
presented for the acquisition of Success as if the
acquisition had occurred on July 1, 1994. The
operating results for the period July 1, 1995 to
September 30, 1995 are included in the Company's
historical
7
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consolidated statement of operations for
the three months ended September 30, 1995. The pro
forma information does not purport to be indicative of
the results that would have been attained if the
operations had actually been combined during the
periods presented and is not necessarily indicative of
operating results to be expected in the future.
Three months ended
September 30, 1995
------------------
Total Revenues $215,758
Net gain (loss) $(25,568)
Pro forma gain (loss) per share $(.01)
Shares used in computing pro
forma net gain (loss) per share 12,385,878
NOTE H: In connection with the acquisition of Success Direct,
Inc. above, the Company was assigned a contract to
purchase certain assets of Re-Prod, Inc. This
acquisition, effective July 1, 1995, was accounted for
as a purchase. The purchase price of $1,315,000 was
allocated among the assets as follows:
Accounts Receivable $107,000
Inventory 208,000
Customer List 850,000
Trademarks 100,000
Telephone Numbers 50,000
------
$1,315,000
The intangibles (customer list, trademarks, and
telephone numbers) will be amortized over their
estimated useful lives of 15 years.
The purchase price was paid as follows:
Cash $315,000
Note Payable 250,000
Redeemable Common Stock 750,000
--------
$1,315,000
The note bears interest, payable monthly, at 9% per
annum on the unpaid balance. Monthly payments of
principal are also required, equaling the greater of
net list rental income or $10,000. Two of the
Company's shareholders personally guaranteed the
payment of this note.
The Company issued 750,000 shares of stock
(pre-reverse split; or 50,000 shares, post-split)
valued at $1.00 per share. The Company guaranteed,
through the issuance of put options, the value of
375,000 shares (25,000 shares, post-split) of the
common stock to be $1.05 per share by January 1,
1996 and the value of the remaining 375,000 shares
of the common stock to be $1.10 per share by July 1,
1996.
On February 21, 1996, the Company initiated a
lawsuit against Re-Prod, Inc. in Federal Court in
the Southern District of New York, White Plains,
claiming a misrepresentation of the value of the
assets acquired. The Company stopped payments on the
note payable and did not honor the put options (See
Item 2. Litigation).
NOTE I: Notes receivable:
The Company took back two notes and common stock as
consideration for the sale of the Company's
wholly-owned subsidiaries to Turkey DeLite. See Note
F, "Investment".
8
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The sales price consisted of a combination of
1,550,000 shares of common stock of Turkey DeLite.,
issuance of a $150,000 promissory note, and the
payment of $200,000 contingent upon the successful
completion of a stock offering by Turkey DeLite. The
note payable represents the renegotiated balance due
to R.M. Engineering on a note related to the
acquisition of USPC's equipment. The note bears
interest at 4%, and is secured by the equipment.
NOTE J: Note Payable-Short Term:
The Company has an unsecured note payable in the
original amount of $250,000 with interest payable at
10% per annum, payable in minimum monthly
installment of $10,000 per month, due December 31,
1999. As of March 31, 1996 the outstanding balance
due on the note is $176,277.
NOTE K: Long-term Debt:
Long-term debt is payable and secured as follows:
1. Note payable in an original
amount of $202,000, due on demand,
with interest at 10% per annum. $197,000
2. Note payable in an original amount
of $340,000 with interest at
4% per annum. 170,000
3. Note payable with an unsecured
repayment plan with interest at
10% per annum. 250,000
4. Note payable in an original amount
of $24,495 payable in 60 monthly
installments of $567 including
interest with a final payment due
December 30, 1999. 20,181
------
Total 637,181
Less: Current maturities 371,289
-------
Total long-term Debt $ 265,892
========
The debt matures after December 31, 1996 and is due
as follows:
1997 $ 250,000
1998-after 15,892
------
$265,892
=======
NOTE L: Related Party Transactions:
The Company has a loan payable to one of the officers
in the amount of $10,750 payable on demand with
interest payable at a rate of 6%. At March 31, 1996 no
interest has been paid or accrued.
NOTE M: At June 30, 1995, the Company had a net operating
loss carryforward in excess of $1,100,000. The
carryforward will be available for the reduction of
future Federal income tax provisions, the extent and
timing of which are not determinable.
Deferred income taxes include the tax impact of net
operating loss carryforwards. Realization of these
assets is contingent on future taxable earnings. In
accordance with the provisions of SFAS No. 109, a
valuation allowance of $380,000 at March 31, 1996 is
deemed adequate for these and other items which are
not considered probable of realization.
9
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NOTE N: Commitment and Contingencies:
Commitments:
The Company conducts its operations from facilities
that are leased by its wholly owned subsidiary,
Success Direct, Inc., under a four year lease ending
December 30, 1998. The lease calls for monthly rent
payments starting in November 1994 of $1,000.00 per
month plus a pro-rata share of real property taxes.
The Company also leases an automobile expiring June
1997 for monthly payments of $569.
Future Minimum Lease payments for operating leases
at March 31, 1996 are:
Years ended Operating
March 31, 1996 Lease
-------------- ---------
1997 $18,828
1998 15,414
1999 9,000
-----
$43,242
======
Contingencies:
The Company initiated a law suit against Re-Prod, Inc.
claiming damages for misrepresentation of the value of
the assets acquired by the Company's subsidiary.
NOTE O: Earnings Per Share:
Primary earnings per share include the weighted
average number of common shares outstanding. The
weighted average number of common shares outstanding
was 12,874,767 shares.
NOTE P: Other Matters:
On May 29, 1989, the Company, through its wholly-owned
subsidiary, Celestial Realty Group, Inc. entered into
a joint venture agreement with Mystic Pines, Inc. for
the purpose of developing and building single family
homes. The Company contributed $525,000 for a 35%
interest in the venture. In 1990, however, the Company
and Mystic Pines initiated a lawsuit against B.F.
Properties and Reserve Estates and other related
parties and affiliates in order to recoup its
investment. During 1994, the bank which had a security
interest in the lands, foreclosed on the property and
secured a choice in action. In effect, the Company had
lost its security interest in the real property.
As of October 31, 1994, the investment of $525,000 has
been written off the books of the Company as being
uncollectable.
NOTE Q: Subsequent Events:
Pursuant to a Board Resolution the Company declared a
one for fifteen reverse split of the Company's
outstanding common stock. The record date for the
reverse stock split was May 3, 1996.
10
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS.
The consolidated balance sheet as of March 31, 1996 and the
consolidated statement of operations for the nine months ended March 31, 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 changed substantially at March 31, 1996
compared to June 30, 1995. These changes occurred as a result of the purchase of
Success Direct, Inc. ("Success") and certain assets of Re-Prod, Inc.
("Re-Prod"), effective July 1, 1995. Prior to the acquisition of Success and the
assets of Re-Prod, the Company had no operating business since the disposition
of its valve and powder coating company businesses, effective, May 1, 1995.
The purchase of Success and certain assets of Re-Prod resulted in an increase of
current assets from $28,562 at June 30, 1995 to $651,558 at March 31, 1996
representing an increase of 2,181% or $622,996. Property, plant and equipment
was increased from $0 at June 30, 1995 to $35,824 at March 31, 1996 representing
an increase of 100% or $35,824. Other assets increased from $4,210 at June 30,
1995 to $955,884 at March 31, 1996 representing an increase of 22,605% or
$951,674. The Company experienced an increase in current liabilities from
$54,572 at June 30, 1995 to $677,574 at March 31, 1996 representing an increase
of 1,412% or $623,002. The Company also experienced an increase in long-term
liabilities from $278,540 at June 30, 1995 to $385,182 at March 31, 1996
representing an increase of 38% or $106,642. Shareholders Equity was decreased
from $(300,290) at June 30, 1995 to $(303,365) at March 31, 1996 representing a
decrease of 1% or $3,075.
Results of Operations
During the nine month period ended March 31, 1996 the Company experienced a net
loss of $(89,224) as compared to a net loss of ($1,551,459) for the nine months
ended March 31, 1995. The net loss of $(89,224) was on sales of $915,629. Cost
of goods sold was $241,692 and operational expenses were $748,008. Other income
of $32,293 was comprised of interest of $23,293 and forgiveness of debt of
$9,000.
Prior to the acquisition of Success and the assets of Re-Prod, the Company had
had no operating business since the disposition of its valve and powder coating
company businesses. (During this period, its remaining powder coating subsidiary
was inactive effective May 1, 1995.) As a result of the acquisition of Success
and certain assets of Re-Prod, effective July 1, 1995, the Company's principal
operating activity has been the direct marketing of "business to business"
office products.
Effect of Inflation
The impact of inflation on the Company's financial condition and results of
operations has not been significant.
11
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Liquidity and Capital Resources
Cash used in operations for the nine months ended March 31, 1996 was $470,369.
The Company had $55,060 in depreciation and amortization expense which did not
require cash outlay for the nine months ended March 31, 1996.
The major use of funds in operations was an increase of prepaid expenses of
$217,883, an increase of inventories of $164,255 and an increase in accounts
receivable of $112,999.
During the nine months ended March 31, 1996 the Company purchased the assets net
of liabilities assumed of Success and certain assets of Re-Prod for 1,750,000
shares of common stock and $315,000 in cash. The balance of the proceeds of the
private placement, approximately $300,000 was used for the acquisition of
certain assets of Re-Prod as well as $100,000 for the option to purchase Nexim
Corp.
Upon the acquisition of Success, the Company assumed $250,000 of Success's
aggregate principal indebtedness to Performance Capital Corporation at the rate
of 10% per annum. Performance Capital has additionally lent the Company $205,000
which will be converted into common stock at the rate of $.15 per share.
The Company intends to satisfy its short term liquidity needs primarily through
operating revenue and borrowing funds from private investors in exchange for
promissory notes and warrants to purchase common stock at the market price on
the day the warrants are granted. One of the Company's principal products are
laminated federal law posters, which include the Federal Minimum Wage poster.
With recent change in the Federal Minimum Wage, the Company anticipates
considerable increases in sales which will fund its long term liquidity needs.
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.
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.
12
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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.
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.
Exhibits and Reports on Form 8-K
(a) Exhibits (numbered in accordance with Item 601 of Regulation S-B).
Exhibit
Numbers Description
* 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 Turkey DeLite
International, Inc. ("ATCO Corporation") for the
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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 Reprod,
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 V.W.
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.
*** 10(k) - Stock Option Certificate and Agreement between the
Company and Irwin Schneidmill dated September 15,
1995.
- Subsidiaries of the Company
(b) Reports on Form 8-K - The Registrant did not file any reports on
Form 8-K during the last quarter of the fiscal year ended June 30, 1995. The
Registrant since the last quarter filed a report on Form 8-K dated August 31,
1995. Such report did not contain required financial statements. An amendment to
the Form 8-K was filed on February 24, 1996.
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* 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
---------------------
Irwin Schneidmill
President, Chief Executive, and
Financial Officer and a Director
Dated: April 4, 1997
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