SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
Amendment Number 1 to Form 10-QSB
[ 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 EXCHANGE ACT OF 1934
For the transition period from________________ to________________
Commission file number 0-19196
CELEBRITY ENTERTAINMENT, INC.
(Exact name of registrant as specified in its charter)
(Formerly Celebrity Resorts, Inc.)
Delaware 11-2880337
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
214 Brazilian Avenue #400, Palm Beach, Florida 33480
(Address of principal executive offices)
(407) 659-3832
(Registrant's telephone number including area code)
Indicate by check mark whether the registrant (1) has 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.
Yes X No______
Class Outstanding at Outstanding at
May 15, 1996: June 27, 1996:
Common Stock, $.0001 par value 3,474,753 4,414,753
Preferred Stock, $.01 par value 1,064,000 1,064,000
CELEBRITY ENTERTAINMENT, INC.
INDEX
Page Number
PART I. FINANCIAL INFORMATION 2
Item 1. Financial Statements
Balance Sheet 3
Statement of Operations 4
Statement of Cash Flows 5
Statement of Stockholders' Equity 6
Notes to Financial Statements 6
Item 2. Management's Discussion and Analysis
or Plan of Operation 7
PART II. OTHER INFORMATION 9
Item 1. Legal Proceedings 9
Item 2. Changes in Securities 9
Item 3. Defaults Upon Senior Securities 9
Item 4. Submission of Matters to a
Vote of Security Holders 9
Item 5. Other Information 10
Item 6. Exhibits and Reports on Form 8-K 10
Signatures
PART I. FINANCIAL INFORMATION
The condensed financial statements for the periods ended March 31, 1996
and March 31, 1995 included herein have been prepared by Celebrity
Entertainment, Inc., (the "Company") without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission (the "Commission"). In
the opinion of management, the statements include all adjustments necessary to
present fairly the financial position of the Company as of March 31, 1996 and
the results of operations and cash flows for the three-month periods ended March
31, 1996 and 1995.
The Company's results of operations during the first three months of the
Company's fiscal year are not necessarily indicative of the results to be
expected for the full fiscal year.
The financial statements included in this report should be read in
conjunction with the financial statements and notes thereto in the Company's
Annual Report on Form 10-KSB for the fiscal year ended December 31, 1995.
<PAGE>
Celebrity Entertainment, Inc.
Condensed Balance Sheet
March 31, 1996
<TABLE>
<S> <C>
Unaudited
Assets
Current Assets:
Cash $ 120,159
Prepaid expenses 17,615
Total current assets 137,774
Property and equipment, net 3,165,120
Other assets:
Note receivable - affiliates 225,000
Other assets 273
Total other assets 225,273
Total assets $ 3,528,167
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable $ 293,279
Accrued expenses 99,132
Deferred revenue 56,942
Notes payable 4,494
Current maturities of long-term debt 30,087
Total current liabilities 483,934
Long-term debt 422,823
Stockholders' equity:
Preferred stock, $0.01 par value:
2,000,000 shares authorized
Designated as Class A 8% Convertible:
1,525,000 shares designated;
1,064,000 shares outstanding 10,640
Common stock, $0.0001 par value:
25,000,000 shares authorized;
3,089,753 shares outstanding 309
Additional paid-in capital 13,853,160
Accumulated deficit (10,450,526)
Less notes receivable arising from
Issuance of preferred and common stock (792,174)
Total stockholders' equity 2,621,409
Total liabilities and stockholders' equity $ 3,528,167
See accompanying notes to financial statements.
</TABLE>
Celebrity Entertainment, Inc.
Condensed Statement of Operations
Unaudited
Three Months Ended
March 31,
1996 1995
Revenues:
Resort membership sales $21,416 $ 12,522
Resort operations 49,500 38,922
Total revenues 70,916 51,514
Selling, general and
administrative 456,791 193,390
Operating loss (385,875) (141,876)
Other income (expenses):
Interest income 692 1,674
Interest expense (1,908) (12,502)
(1,216) (10,828)
Net loss $ (387,091) $ (152,704)
Per common share:
Net loss $ (0.15) $ (0.07)
Weighted average number of
common shares outstanding 2,543,945 2,038,767
See accompanying notes to financial statements.
Celebrity Entertainment, Inc.
Condensed Statement of Cash Flows
Unaudited
Three months ended March 31, 1996 1995
Cash flows from operating activities:
Net loss $ (387,091) $ (152,704)
Adjustments to reconcile net loss to net
cash used by operating activities:
Depreciation and amortization 28,980 26,434
Stock issued as payment for consulting
fees 202,387 -
Change in current assets and liabilities:
Prepaid expenses (10,945) 4,098
Other assets (273) (273)
Accounts payable and accrued expenses (43,102) 89,091
Deferred membership revenue 3,868 8,809
Net cash used for operating activities (206,176) (24,545)
Cash flows from investing activities:
Purchase of equipment (3,957) -
Net cash used for investing activities (3,957) -
Cash flows from financing activities:
Repayments on loan payable (6,707) -
Repayments of long-term debt - (11,112)
Repayments of notes payable (222,929) -
Increase in note payable - officer - 37,212
Notes receivable from issuance of stock (275,167) -
Proceeds from sale of common stock 823,843 -
Net cash provided by financing activities 319,040 26,100
Increase in cash and cash equivalents 108,907 1,555
Cash and cash equivalents, beginning of 11,252 2,278
period
Cash and cash equivalents, end of period $ 120,159 $ 3,833
Supplemental disclosure of cash paid for:
Interest $ 1,908 $ 12,502
Income taxes - -
See accompanying notes to financial statements.
Celebrity Entertainment, Inc.
Statement of Shareholders' Equity
Three Months Ended March 31, 1995
<TABLE>
Unaudited
Notes
Receivable
Arising from
Additional Issuance of
Preferred Stock Common Stock Paid-In Accumulated Preferred &
Shares Amount Shares Amount Capital Deficit Commom Stock
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1996 1,064,000 $10,640 2,366,753 $237 $12,827,004 ($10,063,435) (792,174)
Issuance of common stock - - 723,000 $ 72 1,026,156 - -
Net loss - - - - - (387,091) -
Balance at March 31, 1996 1,064,000 $10,640 3,089,753 $309 $13,853,160 ($10,450,526) (792,174)
</TABLE>
See accompanying notes to financial statements.
CELEBRITY ENTERTAINMENT, INC.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
1. Basis of Presentation
The accompanying financial statements have been prepared by the Company without
audit, pursuant to the rules and regulations of the Commission. In the opinion
of management, these financial statements include all adjustments necessary to
present fairly the financial position of the Company as of March 31, 1996 and
the results of operations and cash flows for the three-month periods ended March
31, 1996 and 1995. The Company's results of operations during the first three
months of the Company's fiscal year are not necessarily indicative of the
results to be expected for the full fiscal year. The financial statements
included in this report should be read in conjunction with the financial
statements and notes thereto in the Company's 1995 Form 10-KSB and any
amendments thereto.
2. Net Loss Per Common Share
Net loss per common share is computed using the weighted average number
of shares outstanding during each period. Common stock equivalents have not
been included since the effect of such inclusion would be antidilutive.
3. Acquisition and Discontinued Operations
On June 15, 1993, the Company acquired the outstanding common stock of
Production Services International, Inc. ("PSI") in exchange for 402,672 shares
of the Company's common stock. The acquisition of PSI was accounted for using
the purchase method of accounting. Accordingly, (a) the results of PSI's
operations were included in the statement of operations from the date of
acquisition and (b) the total acquisition cost has been allocated to the assets
and liabilities of PSI based on their relative estimated fair values at the
date of purchase. At June 15, 1993, PSI's liabilities exceeded its
assets (at their fair market value) by $150,558, and accordingly, the excess
of the purchase price over the deficiency in the net assets acquired equaled
$553,230. This goodwill amount was being amortized over seven years.
Operations of PSI Discontinued
On March 1, 1995, certain creditors of PSI filed a petition with the United
States Bankruptcy Court in the middle district of Florida in Orlando, requesting
an order for relief under Chapter 11 of the Bankruptcy Code. The petition
asserted claims of amounts owed as a result of a television series which ceased
production in November 1994. Such claims are for amounts in excess of the
accounts payable and PSI is negotiating with the three creditors who initiated
the filing toward a settlement of their claims. This petition was withdrawn in
favor of a workout plan developed by the Company.
During the year ended December 31, 1995, the Company, at the advice of counsel,
entered into a settlement agreement with PSI's three major creditors to satisfy
$225,000 of existing PSI liabilities. The Company has also agreed to satisfy
liabilities to other creditors of PSI of approximately $207,000. No other
liabilities are expected to be paid on behalf of PSI.
On March 6, 1995, the Company's Board of Directors approved a formal plan to
discontinue the operations and settle the liabilities of PSI by liquidating the
assets of PSI.
As a result of the petition for bankruptcy against PSI and the Company's related
inability to maintain control over PSI, the Company abandoned its investment
in PSI and deconsolidated the assets, liabilities and operations of the PSI
subsidiary on its financial statements in 1994.
4. Management Plans
CEI is in discussions with a representative of a privately-held company who
has provided a verbal commitment to complete a merger of such company with CEI.
Based on the historical performance of the subject company's operations, such a
business combination could result in an increase in annual revenues and net
income to CEI. Upon the completion of the proposed business combination, it is
anticipated that a public offering of securities would be completed, the
proceeds from which, in part, would be used to reduce the liabilities of CEI and
expand CEI's resort operations. However, there can be no assurance that any
proposed acquisition will be effected. Any such acquisition and public offering
is subject to the acquiring entity's acceptance of the financial statements, the
state of the general securities markets and of the specific market for the
Company's securities, and any necessary regulatory review of the securities to
be issued in connection with the merger. The Company has sold certain of its
securities in a private sale through an exemption to registration in order to
reduce its obligations and facilitate the proposed acquisition. The Company is
considering selling additional securities in order to complete the acquisition.
Certain creditors and note holders have informed the Company that the
obligations of the Company to pay them may be exchanged for a number of the
Company's securities.
Although management believes material progress has been achieved toward
acquiring the necessary funding to meet the Company's existing obligations as
well as contemplated capital requirements, as of the date of this filing
substantial additional financial capital is required and, consequently, there
is substantial doubt concerning the Company's ability to continue as a going
concern.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OR PLAN OF OPERATION
General
The Company is principally engaged in the development, ownership,
marketing and operation of a destination resort community and fishing camp
located on Orange Lake near Ocala, Florida.
The Company recognizes revenues related to sales of memberships on the
date that the membership contract is paid in full. Until such time, all partial
payments received on memberships are recorded as deferred membership revenues on
the Company's balance sheet. Any receivable related to the original membership
agreement is netted against the deferred membership revenues. Buyers have a
five day right of rescission with respect to Membership Agreements.
Results of Operations
Three-Month Period Ended March 31, 1996 Compared to Three-Month Period Ended
March 31, 1995
Revenues for the three-month period ended March 31, 1996 amounted to
$70,916 compared to $51,514 for the three-month period ended March 31, 1995,
reflecting an increase of $19,402. Revenues are comprised of memberships paid in
full, dues and resort operations. The increase in revenues reflected for the
three-month period ended March 31, 1996 is a result of improved marketing and
use of the Company's resort facilities. See "Liquidity and Capital Resources."
Selling, general and administrative expenses were $456,791 for the three
months ended March 31, 1996 compared to $193,390 for the three-month period
ended March 31, 1995, representing an increase of $263,401. The increase is due
principally to consulting fees paid with the Company s common stock issued at
substantially below market price.
During the three-month period ended March 31, 1996, $1,908 in interest
expense was charged to operations compared to $12,502 for the three-month period
ended March 31, 1995, reflecting a decrease of $10,594. The decrease was due
principally to the payments of interest on the mortgage note and reduced
payments of the Company's other indebtedness. Interest expense will continue to
be charged to operations as the related debt instruments are amortized over
future years.
Net loss for the three-month period ended March 31, 1996 was $387,091
which represents an increase of $234,387 above the net loss of $152,704 for the
three-month period ended March 31, 1995. The increase is due principally to
consulting fees paid with the Company s common stock issued at substantially
below market price.
Liquidity and Capital Resources
The Company intends to complete the development of the Resort Property
during the 1996-97 resort seasons at a total cost of approximately $100,000.
Commencing in 1995, the Company pursued a marketing plan which focuses on the
destination use of the Resort and rallies and other group functions. It is
anticipated that revenues will continue to increase as a result of
sales and facilities use, and that such increase will generate cash flow from
operations sufficient to finance approximately one-half of the completion of the
Resort. While there can be no assurance, the Company is confident that
additional capital that may be obtained from operations and from the planned
financing activities to be initiated during 1996 will facilitate the completion
of RV sites and additional Resort facilities and amenities, which the Company
believes will provide increasing revenue growth through increased
sales and Resort facilities use fees.
Liquidity and capital resources are hereinafter discussed in three broad
categories: operating activities, investing activities and financing
activities.
Cash increased $108,907 to $120,159 at March 31, 1996 from $11,252 at
December 31, 1995. Net cash used for operating activities was $206,176 during
the three-month period ended March 31, 1996 compared to cash used for operating
activities of $24,545 during the three-month period ended March 31, 1995. The
change in cash used for operating activities resulted primarily from consulting
fees paid with the Company s common stock at substantially below market price.
During the three-month period ended March 31, 1996, there was $3,957 used
for investing activities for office equipment, compared with no net cash used
for investing activities during the three-month period ended March 31, 1995.
During the three-month period ended March 31, 1996, net cash provided by
financing activities was $319,040, representing an increase of $292,940 over
net cash provided by financing activities of $26,100 during the three-month
period ended March 31, 1995. The increase is a result primarily of proceeds
realized from the sale of the Company's securities.
Income from the resort is seasonal and on an annual basis the Company is
required to seek additional financing in order to pay long-term debt obligations
and the resort's ongoing operations, including payroll, creditors and taxes.
Income from the resort operations is not sufficient to sustain the Company's
operations. Consequently, the Company has been experiencing a liquidity problem
and must obtain financing in addition to expected revenues from operations in
order to pay its past due obligations and meet its current obligations as they
come due.
The Company is in discussions with a representative of a privately-held
company regarding a possible merger with the Company. The Company is currently
negotiating the terms of a letter of intent regarding the transaction. Based
on the historical performance of the subject company's operations, such a
business combination could result in an increase in annual revenues and net
income to the Company. Upon the completion of the proposed business combination,
it is anticipated that a public offering of securities would be completed, the
proceeds from which, in part, would be used to reduce the liabilities of the
Company and expand the Company's resort operations. However, there can be no
assurance that any proposed acquisition will be effected. Any such acquisition
and public offering is subject to the acquiring entity's acceptance of the
financial statements, the state of the general securities markets and of the
specific market for the Company's securities, and any necessary regulatory
review of the securities to be issued in connection with the merger. The
Company has sold certain of its securities in a private sale through an
exemption to registration in order to reduce its obligations and facilitate
the proposed acquisition. The Company is considering selling additional
securities in order to complete the acquisition. In addition, certain
creditors and note holders have informed the Company that the obligations
of the Company to pay them may be exchanged for a number of the Company's
securities.
Although management believes material progress has been achieved toward
acquiring the necessary funding to meet the Company's existing obligations as
well as contemplated capital requirements, as of the date of this filing
substantial additional financial capital is required and, consequently, there
is substantial doubt concerning the Company's ability to continue as a going
concern.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 2. Changes in Securities
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
None.
(b) Reports on Form 8-K:
None.
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 thereunto duly authorized.
Date: June 27, 1996
CELEBRITY ENTERTAINMENT, INC.
By: /s/ J. William Metzger
J. William Metzger,
Executive Vice-President and
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FINANCIAL
STATEMENTS INCLUDED IN FORM 10-QSB AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 120,159
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 137,774
<PP&E> 3,717,487
<DEPRECIATION> 552,367
<TOTAL-ASSETS> 3,528,167
<CURRENT-LIABILITIES> 483,934
<BONDS> 422,823
<COMMON> 309
0
10,640
<OTHER-SE> 13,853,160
<TOTAL-LIABILITY-AND-EQUITY> 3,528,167
<SALES> 21,416
<TOTAL-REVENUES> 70,916
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1908
<INCOME-PRETAX> (387,091)
<INCOME-TAX> 0
<INCOME-CONTINUING> (387,091)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (387,091)
<EPS-PRIMARY> (0.15)
<EPS-DILUTED> (0.15)
</TABLE>
