As filed with the Securities and Exchange Commission on June 28, 1996.
Registration No. 33-65265
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
AMENDMENT NO. 2 to FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
CELEBRITY ENTERTAINMENT, INC.
(Exact name of registrant as specified in its charter)
Delaware 11-2880337
(State of incorporation) (I.R.S. Employer I.D. No.)
214 Brazilian Avenue, Suite 400, Palm Beach, FL 33480
(407) 659-3832
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
James J. McNamara
President & Chief Executive Officer, Celebrity Entertainment, Inc.
214 Brazilian Avenue, Suite 400, Palm Beach, FL 33480
(407) 659-3832
(Name and address of agent for service)
Copies of all communications, including all communications
sent to the agent for service should be sent to:
Julia K. O'Neill, Esq.
Fleming & O'Neill, Two Newton Place, Suite 200, Newton, MA 02158
(617) 965-8990
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of the registration statement.
If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box.
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box.
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b)under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering.
If this Form is a post-effective amendment filed pursuant to Rule 462(c)under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box.
CALCULATION OF REGISTRATION FEE
<TABLE>
<S> <C> <C> <C> <C>
Proposed Proposed
Maximum Maximum
Maximum Aggregate Amount of
Title of Each Class of Amount to be Offering Offering Registration
Securities to be Registered (1) registered Price Price Fee
Per
Share
Common Stock Issuable upon 393,721 (2) 0 0 0
conversion of outst. Class A
Pref'd
Common Stock Issuable upon 317,517 (3) 0 0 0
conversion of outst. Class A
Pref'd
Common Stock Issuable upon 362,400 (4) 0 0 0
conversion of uniss'd Class A
Pref'd
Common Stock Issuable upon 20,000 (5) 0 0 0
conversion of outst. cnvtibl.
notes
Common Stock Issuable upon 65,925 (6) $3.00 $197,775 $68.20
exercise of outst. Common Wts.
Common Stock Issuable upon 30,000 (6) $2.50 75,000 25.86
exercise of outst. Common Wts.
Common Stock Issuable upon 30,000 (7) $2.50 75,000 25.86
exercise of outst. Common Wts.
Common Stock Issuable upon 80,000 (6) $2.00 160,000 55.17
exercise of outst. Common Wts.
Common Stock Issuable upon 80,000 (7) $2.00 160,000 55.17
exercise of outst. Common Wts.
Common Stock Issuable upon 40,000 (6) $1.25 50,000 17.24
exercise of outst. Common Wts.
Common Stock Issuable upon 40,000 (7) $1.25 50,000 17.24
exercise of outst. Common Wts.
Common Stock Issuable upon 100,000 (8) $2.50 250,000 86.21
exercise of outst. Common Opts.
Common Stock Issuable upon 100,000 (7) $2.50 250,000 86.21
exercise of outst. Common Opts.
Common Stock Issuable upon 1,100,000 (9) $0.50 550,000 189.65
exercise of outst. Common Opts.
Common Stock Issuable upon 1,100,000 (7) $0.50 550,000 189.65
exercise of outst. Common Opts.
Common Stock outstanding 1,197,276 $1.28125 $1,534,010 $528.97
(7)(10)
Total $1,345.43
</TABLE>
(1) Pursuant to Rule 416 promulgated under the Securities Act of 1933, this
Registration Statement also covers any additional shares of Common Stock which
may become issuable by reason of anti-dilution provisions contained in such
securities.
(2) Registered for issuance:
393,721 common shares issuable upon conversion by approximately 382
holders of 589,000 shares of Class A Preferred Stock;
(3) Registered for resale:
317,517 common shares to be issued in a private placement to one holder of
475,000 Class A Preferred Shares which were issued in a private placement.
(4) Registered for issuance:
362,400 common shares issuable upon conversion by approximately 213
holders of Class A Preferred Warrants subsequent to the exercise of said
warrants;
(5) Registered for issuance:
20,000 common shares to certain noteholders of the Company who have agreed
to convert said notes in exchange for common shares;
(6) Registered for issuance:
Comprising a portion of a total of 215,925 common shares to approximately
195 holders of common stock purchase warrants upon the exercise of said
warrants;
(7) Registered for resale.
(8) 100,000 common shares issuable to two holders of common stock options who
are officers and directors of the Company, upon exercise of said options;
(9) 1,100,000 common shares to holders of common stock options, two of whom
are officers and directors of the Company, upon exercise of said options.
(10) Pursuant to Rule 457(h), the offering price and registration fee are
computed on the basis of the average of the high and low prices
reported for the common stock of the registrant on the Nasdaq SmallCap Market on
June 27, 1996, which were $1.375 and $1.1875 per share, respectively.
Exhibit Index Appears on Page: 22
Total Number of Pages: 24
The registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with section 8(a) of the
Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission acting pursuant to said section 8(a),
may determine.
PROSPECTUS Dated June 28, 1996
CELEBRITY ENTERTAINMENT, INC.
This combined prospectus (the "Prospectus") and the registration statement
of which this Prospectus forms a part (the "Registration Statement") relate to
the issuance of 711,238 shares of common stock of Celebrity Entertainment, Inc.,
a Delaware corporation (the "Company"), $.0001 par value per share (the "Common
Stock") issuable by the Company upon conversion of 1,064,000 shares of
outstanding Class A Convertible 8% Preferred Stock, $0.01 par value per share
(the "Class A Preferred Stock") (including 285,638 shares of Common Stock
reserved for payments of accrued dividends upon conversion); the issuance by the
Company of 362,400 shares of Common Stock issuable upon conversion of 906,000
shares of Class A Preferred Stock issuable upon exercise of 906,000 outstanding
Class A Redeemable Preferred Stock Purchase Warrants (the "Class A Warrants");
20,000 Shares of Common Stock issuable by the Company upon conversion of
outstanding convertible promissory notes; 215,925 Shares of Common Stock
issuable upon exercise of 215,925 outstanding Common Stock Warrants (registered
for issuance by the Company; 150,000 of which are also registered for resale by
the Selling Security Holders); the issuance of 1,200,000 Shares of Common Stock
issuable upon exercise of 1,200,000 outstanding Common Stock Options (registered
for issuance by the Company and for resale by the Selling Security Holders); and
1,197,276 Shares of Common Stock previously issued to the Selling Security
Holders (registered for resale by the Selling Security Holders) described
herein.
The following table summarizes the numbers and types of shares being
registered hereby by the Company and the Selling Security Holders and the
proceeds to the Company and Selling Security Holders.
No. And Type of Registered for Issuable upon Proceeds to
Security issuance or what event issuer or other
resale, by whom persons
393,721 shares For issuance by Upon conversion 0
common stock company of outstanding
Class A
convertible
preferred
317,517 shares For resale by $381,020
common stock Selling Security (estimated based
Holders on current
market price) to
Selling Security
Holders
362,400 shares For issuance by Upon conversion 0
common stock company of pref'd stock
issuable on
exercise of
outstanding
warrants
20,000 shares For issuance by Upon conversion 0
common stock company of outstanding
notes
215,925 shares For issuance by Upon exercise of $452,093 to
common stock company outstanding Company
common stock
warrants
150,000 shares For resale by $180,000
(also included Selling Security (estimated based
in number Holders on current
directly above) market price) to
Selling Security
Holders
1,200,000 shares For issuance by Upon exercise of $800,000 to
common stock company outstanding Company
common stock
options
1,200,000 shares For resale by $1,440,000
(these shares also Selling Security (estimated based
listed directly Holders on current
above) market price) to
Selling Security
Holders
TOTAL PROCEEDS $1,252,093 to
Company
$2,001,020
(estimated) to
Selling Security
Holders
Does not take into account expenses of offering, estimated at $24,642. This
figure consists of SEC registration fees of $1,642: printing costs of $5,000;
legal fees and expenses of $10,000, accounting fees of $7,000; and miscellaneous
expenses of $1,000. The Selling Security Holders will not pay any of the
expenses of the offering.
AN INVESTMENT IN THESE SECURITIES INVOLVES A HIGH DEGREE OF RISK. SEE "RISK
FACTORS" APPEARING IMMEDIATELY AFTER THE PROSPECTUS SUMMARY, ON PAGE 9.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Each share of Common Stock entitles the registered holder thereof to one
vote on all matters that may be voted upon by stockholders of the Company at
meetings thereof. There are no preemptive, conversion, redemption or cumulative
voting rights applicable to the Common Stock. If so declared, the holders of
the Common Stock are entitled to receive such dividends and other distributions
of the Company subject to the rights of the holders of the Preferred Stock
having a dividend preference over the Common Stock.
As stated above, 1,197,276 shares of Common Stock previously issued are
being registered pursuant to the Securities Act of 1933, as amended (the
"Securities Act") for offer and sale by the Selling Security Holders. In
addition, 215,925 shares of Common Stock issuable upon exercise of 215,925
outstanding Common Stock Warrants are being registered for issuance and 150,000
of such shares are being registered for resale by the Selling Security Holders,
and 1,200,000 shares of Common Stock issuable upon exercise of 1,200,000
outstanding Common Stock Options are being registered for issuance and for
resale by the Selling Security Holders. Sales of such securities, or even the
potential of such sales, could have an adverse effect on the market prices of
the securities. The Selling Security Holders will receive the proceeds from the
sale of the securities being offered by such Selling Security Holders and the
Company will receive the proceeds from the exercise, if any, of the Common Stock
Warrants, Common Stock Options, and Class A Warrants. All costs incurred in
connection with the registration of such securities are being borne by the
Company. See "Selling Security Holders."
The Common Stock commenced quotation on NASDAQ on February 18, 1994. On
June 27, 1996, the high and low prices for the Common Stock were
$1.375 and $1.1875, respectively.
While the Common Stock is currently listed for quotation on NASDAQ, there
can be no assurance given that the Company will be able to satisfy the
requirements for continued listing on NASDAQ or that such quotation will
otherwise continue; nor can there be any assurance given that any market for the
Company's securities will continue or will be sustained. See "Risk Factors-No
Assurance of Continued Public Market or Continued NASDAQ Listing."
The Selling Security Holders, directly or through agents, dealers or
underwriters to be designated from time to time, may sell the securities
described herein from time to time upon terms to be determined at the time of
sale. To the extent required, the number of such securities, the respective
purchase prices and public offering prices, the names of any agents, dealers or
underwriters and any applicable commissions or discounts with respect to a
particular offer, will be set forth in an accompanying prospectus supplement.
The Selling Security Holders reserve the sole right to accept or reject, in
whole or in part, any proposed purchase of the securities being offered by them
pursuant hereto. The Selling Security Holders and any agents, dealers, or
underwriters that participate with the Selling Security Holders in the
distribution of their respective securities may be deemed to be "underwriters"
within the meaning of the Securities Act, and any commissions received by them
and any profits on the resale of such securities may be deemed to be
underwriting commissions or discounts under the Securities Act. Under
applicable rules and regulations promulgated under the Securities Exchange Act
of 1934 (the "Exchange Act"), any person engaged in a distribution of securities
may not simultaneously bid for or purchase securities of the same class for a
period of two business days prior to the commencement of such distribution. In
addition and without limiting the foregoing, the Selling Security Holders will
be subject to applicable provisions of the Exchange Act and the rules and
regulations thereunder, including, without limitation, Rules 10b-5, 10b-6 and
10b-7, in connection with transactions in the securities to be sold by them
during the effectiveness of the Registration Statement of which this Prospectus
forms a part. All of the foregoing may affect the marketability of the
securities to be offered and sold by the Selling Security Holders.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THE OFFERING DESCRIBED HEREIN OTHER THAN
THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, ANY SUCH INFORMATION
OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY OR ANY OTHER PERSON. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO
SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE
SECURITIES TO WHICH IT RELATES, NOR DOES IT CONSTITUTE ANY OFFER OF SUCH
SECURITIES TO ANY PERSON IN ANY JURISDICTION IN WHICH SUCH OFFER IS UNLAWFUL.
THE DELIVERY OF THIS PROSPECTUS AT ANY TIME DOES NOT IMPLY THAT THE INFORMATION
CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Exchange
Act and in accordance therewith files reports, proxy statements and other
information with the Securities and Exchange Commission (the "Commission").
Such reports, proxy statements and other information may be inspected and copied
at the Commission's public reference room located in Room 1024 at 450 Fifth
Street, N.W., Washington, D.C. 20549 and at the Commission's Regional Offices
located at Northwestern Atrium Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661 and at 7 World Trade Center, 13th Floor, New York, New
York 10048. Copies of such materials may also be obtained at prescribed rates
from the Public Reference Section of the Commission located in Room 1024 at 450
Fifth Street, N.W., Washington, D.C. 20549.
The Company has filed with the Commission a Registration Statement
relating to the securities offered hereby pursuant to the provisions of the
Securities Act. This Prospectus forms a part of the Registration Statement;
however, it does not contain all the information set forth in the Registration
Statement, the exhibits and schedules thereto, and the documents incorporated
herein and/or therein by reference. For further information with respect to the
Company and the securities offered hereby, reference is made to such
Registration Statement, the exhibits and schedules thereto and the documents
incorporated herein and therein by reference. Summaries of and references to
various documents in this Prospectus do not purport to be complete and in each
case reference is made to the copy of such document which has been filed as an
exhibit to or incorporated by reference into the Registration Statement.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company specifically incorporates herein by reference the following
documents which have been heretofore filed with the Commission:
1. Amendment No. 2 to Annual Report of Celebrity Entertainment, Inc. on
Form 10-KSB for the fiscal year ended December 31, 1995, filed with
the Commission on June 28, 1996;
2. Amendment No. 1 to Annual Report of Celebrity Entertainment, Inc. on
Form 10-KSB for the fiscal year ended December 31, 1995, filed with
the Commission on April 19, 1996 (File No. 0-19196);
3. Annual Report of Celebrity Entertainment, Inc. on Form 10-KSB for
the fiscal year ended December 31, 1995, filed with the
Commission on April 15, 1996 (File No. 0-19196);
4. Amendment No. 1 to Form 10-QSB of Celebrity Entertainment, Inc. for
the quarter ended March 31, 1996, filed with the Commission on
June 28, 1996;
5. Quarterly Report of Celebrity Entertainment, Inc. on Form 10-QSB
for the quarter ended March 31, 1996, filed with the Commission
on May 15, 1996 (File No.0-19196);
6. Report by Celebrity Entertainment, Inc. On Form 10-C relating to
the Issuer's Preferred Stock filed with the Commission on June 30,
1995;
7. Report by Celebrity Entertainment, Inc. On Form 10-C relating
to the Issuer's Common Stock filed with the Commission on June 30,
1995; and
8. Report by Celebrity Entertainment, Inc. On Form 10-C relating
to the Issuer's Common Stock filed with the Commission on August 3,
1995.
Any document filed by the Company with the Commission pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to
the date hereof, and prior to the termination of the offering of the
securities subject hereto, shall each be deemed to be incorporated by
reference herein and shall each be deemed to be a part hereof from the
date on which each such document is filed.
Any statement contained in a document incorporated herein by reference
shall be deemed to be modified or superseded for purposes of this Prospectus to
the extent that a statement contained herein modifies or supersedes such
statement. Any statement so modified or superseded shall not be deemed to
constitute a part hereof except as so modified or superseded.
The Company will provide without charge to each person to whom a
Prospectus is delivered, upon the written or oral request of any such person, a
copy of any or all of the documents incorporated herein by reference, exclusive
of exhibits thereto unless such exhibits are specifically incorporated by
reference into the information that has been incorporated into this Prospectus.
Requests for any of the foregoing documents should be directed to J. William
Metzger, Secretary, Celebrity Entertainment, Inc., 214 Brazilian Avenue, Suite
400, Palm Beach, Florida 33480 at (407) 659-3832.
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by reference to, and
should be read in conjunction with, the more detailed information appearing
elsewhere in this Prospectus and the information incorporated herein by
reference. Unless otherwise indicated, all share and per share amounts set
forth hereinafter have been adjusted to reflect a 1:5 reverse stock split which
occurred in August 1995; a 1:20 reverse stock split which occurred in November
1993; and a 2:1 stock split which occurred in May 1991. Each prospective
investor is urged to read this Prospectus in its entirety and the information
and documents incorporated herein by reference.
The Company
Celebrity Entertainment, Inc. (the "Company") was organized pursuant to
the laws of the State of Delaware in July 1987 for the purpose of owning,
developing, marketing and operating a destination resort community and fishing
camp (the "Resort") on Orange Lake near Ocala, Florida. The principal executive
offices of the Company are located at 214 Brazilian Avenue, Suite 400, Palm
Beach, Florida 33480 and its telephone number is (407) 659-3832.
The Offering
The Registration Statement of which this Prospectus forms a part relates
to the issuance of 711,238 shares of Common Stock issuable upon conversion of
1,064,000 shares of outstanding Class A Preferred Stock (including 285,638
shares of Common Stock reserved for payments of accrued dividends upon
conversion); the issuance of 362,400 shares of Common Stock issuable upon
conversion of 906,000 shares of Class A Preferred Stock issuable upon exercise
of 906,000 outstanding Class A Warrants; 20,000 Shares of Common Stock issuable
upon conversion of outstanding convertible promissory notes; 215,925 Shares of
Common Stock issuable upon exercise of 215,925 outstanding Common Stock Warrants
(registered for issuance; 150,000 of which are also registered for resale);
1,200,000 Shares of Common Stock issuable upon exercise of 1,200,000 outstanding
Common Stock Options (registered for issuance and for resale); and 1,197,276
Shares of Common Stock previously issued (registered for resale).
Use of Proceeds
The Company will receive the proceeds from the exercise, if any, of the
Common Stock Options, Common Stock Warrants, and the Class A Warrants. The
Company intends to use such proceeds, if any, for general working capital
purposes. The Company will not receive any proceeds from the sale of the
securities offered by the Selling Security Holders.
Risk Factors
Investment in the securities being offered hereby is highly speculative
and involves substantial risk including, but not limited to, the Company's
ongoing capital requirements, operating losses, working capital deficit, lack of
cash dividends, the Company's potential need for additional financing, the
Company's reliance on senior management, "penny stock" regulations,
competition, seasonality of the Company's Resort, lack of assurance with respect
to listing of the Company's securities on NASDAQ and governmental regulation.
See "Risk Factors."
RISK FACTORS
THE SECURITIES OFFERED HEREBY ARE SPECULATIVE IN NATURE AND INVOLVE A HIGH
DEGREE OF RISK. THE SECURITIES OFFERED HEREBY SHOULD BE PURCHASED ONLY BY
PERSONS WHO CAN AFFORD TO LOSE THEIR ENTIRE INVESTMENT. THEREFORE, EACH
PROSPECTIVE INVESTOR SHOULD, PRIOR TO PURCHASE, CONSIDER VERY CAREFULLY THE
FOLLOWING RISK FACTORS, AS WELL AS ALL OF THE OTHER INFORMATION SET FORTH
ELSEWHERE IN THIS PROSPECTUS AND THE DOCUMENTS INCORPORATED HEREIN BY REFERENCE.
Ongoing Capital Requirements.
The Company currently requires commitments for approximately $200,000 to
maintain and expand its ongoing business during calendar year 1996 and
approximately $240,000 to satisfy past due obligations. Also, the Company may
require additional funds in the future in order to conduct its business. It is
the Company's intention to continue to develop and complete the Company's Resort
facility at a total projected cost of approximately $100,000, to be expended
during the 1996 and 1997 resort seasons. Although management expects the cash
flow from its Resort operations to improve over the next twelve months and to be
sufficient to fund such operations at current levels during such period, the
Company may, however, require additional financing to further develop the
Resort. If such additional financing is required, there can be no assurance
that the Company will be able to successfully negotiate or obtain such
additional financing; nor can there be any assurance that, if available, such
additional financing will be on terms favorable or acceptable to the Company.
The absence of such additional financing or the lack of available funds on
favorable terms could have a material adverse impact on the businesses and
operations of the Company.
Net Losses and Working Capital Deficit
Since its inception, the Company has experienced net losses in the
aggregate amount of $10,063,435 through December 31, 1995. In addition, the
Company had a working capital deficit of $778,341 at December 31, 1995. In the
past, the Company has experienced cash flow difficulties and has delayed payment
on certain debt obligations, which has raised substantial doubts as to the
Company's ability to continue as a going concern. The Company anticipates that
the discontinuation of its television production subsidiary as of December 31,
1994, together with a combination of approximately $700,000 of capital raised
during 1995 through the sale of the Company's common stock and recent reductions
in debt and debt service requirements totaling approximately $350,000, will
serve to improve the Company's working capital and liquidity position.
Notwithstanding such financings and reductions, there can be no assurance that
cash flows from operations will be sufficient to meet the Company's working
capital requirements and, consequently, the Company may experience operating
losses and working capital deficits in the future. There can be no assurance
that the Company will be able to meet its monthly mortgage obligation or the
final principal and interest payment on the Resort mortgage.
Lack of Dividends
The Company has not paid any cash dividends on its Common Stock since its
incorporation and does not anticipate paying any such dividends in the
foreseeable future.
Outstanding Warrants and Options
The Company has outstanding the following warrants and options:
(i) warrants to purchase 215,925 shares of Common Stock (the "Common Stock
Warrants"); (ii) options to purchase 1,200,000 shares of Common Stock (the
"Common Stock Options"); and (iii) warrants to purchase 362,400 shares of Class
A Preferred Stock (the "Class A Warrants"). The Company expects that it will
grant additional Common Stock Options pursuant to its stock option plans to
officers, directors, employees and consultants of the Company. The Company's
1994 Directors Stock Option and Appreciation Rights Plan contains a formula
providing for the grant of options on the second Monday of December of each year
to directors of the Company. Holders of warrants and options are likely to
exercise them when, in all likelihood, the Company could obtain additional
capital on terms more favorable than those provided by the warrants and options.
Further, while its warrants and options are outstanding, the Company's ability
to obtain additional financing on favorable terms or to utilize its equity
securities in connection with acquisitions may be adversely affected.
Future Issuances of Stock by the Company
The Company has authorized capital stock of 25,000,000 shares of Common
Stock, $.0001 par value per share, and 2,000,000 shares of Preferred Stock, $.01
par value per share, all of which 2,000,000 shares have been designated Class A
Preferred Stock. As of the date hereof, there were outstanding 4,414,753 shares
of Common Stock, 1,064,000 shares of Class A Preferred Stock, 906,000 Class A
Warrants, 215,925 Common Stock Warrants, and 1,200,000 Common Stock Options, and
promissory notes convertible into 20,000 shares of Common Stock. In light of
the Company's one-for-five reverse split of its Common Stock which occurred in
August 1995, currently each share of Class A Preferred Stock can be converted
into two/fifths of a share of Common Stock, assuming the effectiveness of a
registration statement with respect thereto. If all the outstanding Class A
Preferred Stock were converted into Common Stock and all Common Stock Options
and Common Stock Warrants were exercised (assuming no exercise of the Class A
Warrants nor conversion of outstanding convertible promissory notes), there
would be an additional 1,841,525 shares of Common Stock outstanding plus a
currently undetermined amount representing dividends in kind, or an aggregate of
more than 6,256,278 outstanding shares of Common Stock. Assuming exercise of
the outstanding Class A Warrants and conversion of the Class A Preferred Stock
underlying such warrants, there would be an additional 362,400 shares of Common
Stock outstanding; further assuming conversion of all outstanding convertible
promissory notes of the Company into an additional 20,000 shares of Common
Stock, there would be an aggregate of more than 6,638,678 outstanding shares of
Common Stock.
The Company has reserved an aggregate of 3,741,435 shares of Common Stock
for issuance (i) upon conversion of the Class A Preferred Stock, including
dividends payable in kind which commence being payable on January 1, 1996, and
including Class A Preferred Stock issuable upon exercise of the Class A
Warrants, (ii) upon exercise of the outstanding Common Stock Warrants, (iii)
upon exercise of the outstanding Common Stock Options, (iv) upon conversion of
the outstanding convertible promissory notes, (v) pursuant to the Company's
Registration Statement on Form S-8 effective as of April 2, 1996, and (vi) upon
exercise of options to be granted under the Company's stock option plans
including 375,000 shares reserved for grants to be made pursuant to the stock
option plans of the Company adopted in 1994. Although there are no present
plans, agreements or undertakings with respect to the Company's issuance of any
unreserved shares of stock or related convertible securities, other than as
disclosed herein, the issuance of any of such securities by the Company could
have anti-takeover effects insofar as they could be used as a method of
discouraging, delaying or preventing a change in control of the Company. Such
issuance could also dilute the public ownership of the Company. Inasmuch as the
Company may, in the future, issue authorized shares of Common Stock without
prior stockholder approval, there may be substantial dilution to a stockholder's
pro rata ownership interest in the Company. Given that the Company is
authorized to issue more capital stock, there can be no assurance that the
Company will not do so.
Future Sales of Stock by Stockholders
As of the date hereof, the Company's current stockholders own an aggregate
of 3,474,753 shares of Common Stock. Of such shares, 1,197,276 are deemed to be
"restricted securities" as that term is defined in Rule 144, promulgated under
the Securities Act. Such "restricted securities" may only be sold in compliance
with Rule 144 or pursuant to an effective registration statement. All of such
"restricted securities" are available for sale by the Selling Security Holders
pursuant to registration herein. See "Selling Security Holders." A sale of
shares by current stockholders may have a depressing effect upon the market
price of the securities of the Company. To the extent that these shares enter
the market, the value of the securities existent in the market may be reduced.
Potential Change in Voting Control of the Company
As of the date of this filing, management of the Company owned
approximately 3.2% of the 4,414,753 shares of Common Stock issued and
outstanding, exclusive of any options or warrants. However, given that each
share of Class A Preferred Stock entitles the holder thereof to four (non-
cumulative) votes on each matter submitted to the holders of Common Stock for a
vote thereon, the holders of the currently outstanding 1,064,000 shares of
Class A Preferred Stock would be entitled to vote, in the aggregate, the
equivalent of 4,256,000 shares of Common Stock, thus diluting the voting control
of management and other holders of Common Stock of the Company. If such
1,064,000 shares of Class A Preferred Stock were converted to 425,600 shares of
Common Stock, management would own approximately 3% of the then outstanding
4,840,353 shares of Common Stock. In addition, if the outstanding Class A
Warrants were exercised and the Class A Preferred Stock issued thereon converted
to 362,400 shares of Common Stock, then management would own 2.7% of the then
outstanding 5,202,753 shares of Common Stock. If the outstanding Class A
Preferred Stock and the Class A Preferred Stock underlying the outstanding
Class A Warrants were converted into Common Stock, the Common Stock Warrants
exercised, the Common Stock Options exercised, and outstanding convertible
promissory notes converted, then management's ownership would be 6.7% of the
then outstanding 6,638,678 shares of Common Stock. The Financing Group
currently owns 800,000 shares, or 18%, of the Company's outstanding Common
Stock, as well as options to purchase 1,000,000 shares of the Company's
Common Stock.
No Assurance of Continued Public Market or NASDAQ Listing
The Company's Common Stock is quoted as a small capitalization security on
NASDAQ under the symbol "CLEB." There can be no assurance that the Company will
be able to continue to satisfy the requirements for quotation on NASDAQ or that
any other quotation will continue. There can be no assurance that the trading
market for the Company's securities will continue. If, for any reason, a public
trading market is not continued for the Company's securities, investors in such
securities may have difficulty selling their securities should they desire to do
so.
In order to qualify for initial listing on NASDAQ a company must have,
among other things, at least $4,000,000 in total assets, $2,000,000 in total
capital and surplus, $1,000,000 in market value of public float and minimum bid
price of $3.00 per share. For continued listing, a company must have, among
other things, $2,000,000 in total assets, $1,000,000 in total capital and
surplus, $1,000,000 in market value of public float and a minimum bid price of
$1.00 per share. The Company has satisfied the requirements for quotation on
NASDAQ in connection with the Company's Common Stock currently listed thereon
and has maintained its eligibility therefor, but if the Company becomes unable
to satisfy the requirements for continued quotation on NASDAQ, trading, if any,
in the Common Stock offered hereby would be conducted in the over-the-counter
market in the "pink sheets" of the National Quotation Bureau, Inc. or on the
NASD OTC Electronic Bulletin Board. As a result, an investor may find it more
difficult to dispose of, or to obtain accurate quotations as to the price of,
such securities.
"Penny Stock" Regulations
The Commission has adopted regulations which define a "penny stock" to be
any equity security that has a market price (as defined) of less than $5.00 per
share, subject to certain exceptions. For any transaction involving a penny
stock, unless exempt, the rules require the delivery, prior to the transaction,
of a disclosure schedule prepared by the Commission relating to the penny stock
market. A broker-dealer effecting transactions in penny stocks must disclose
the commissions payable to both the broker-dealer and any registered
representative, current quotations for the securities and, if the broker-dealer
is the sole market maker, the broker-dealer must disclose this fact and the
broker-dealer's presumed control over the market. Finally, monthly statements
must be sent disclosing recent price information for the penny stock held in the
account and information on the limited market in penny stocks. While many
NASDAQ-listed securities would be covered by the definition of penny stock,
transactions in a NASDAQ-listed security would be exempt from all but the sole
market maker provision of the penny stock regulations for: (i) issuers who have
$2,000,000 in tangible assets ($5,000,000 if the issuer has not been in
continuous operation for three years); (ii) transactions in which the customer
is an institutional accredited investor; and (iii) transactions that are not
recommended by the broker-dealer. In addition, transactions in a NASDAQ-listed
security directly with a NASDAQ market maker for such securities would be
subject only to the sole market maker disclosure and the disclosure with respect
to commissions to be paid to the broker-dealer and the registered
representative. The above-described rules may materially adversely affect the
liquidity for the market of the Company's securities and may impair the ability
of the holders thereof to sell or otherwise dispose of such securities.
Use of Proceeds
The Company will not receive any proceeds from the offer and sale of the
securities by the Selling Security Holders but will receive proceeds from the
exercise, if any, of outstanding warrants and options, including the Class A
Warrants, Common Stock Warrants and Common Stock Options. The Company intends
to use the proceeds, if any, from the exercise of such options and warrants to
fund the operations of the Company including additional Resort improvements and
general working capital. There can be no assurance that any of such warrants or
options will be exercised. See "Use of Proceeds."
Reliance on Senior Management
The operations of the Company are dependent in large part upon the efforts
of Mr. James J. McNamara, President of the Company, and Mr. J. William Metzger,
Vice President. The loss of the services of Mr. McNamara or Mr. Metzger could
adversely affect the conduct and operation of the businesses of the Company. In
the event of such loss there can be no assurance that the Company would be able
to obtain or employ a qualified replacement on acceptable terms.
Reliance on Future Business Combination
The financial support of the Company is dependent in large part upon the
continuation of funding resulting from the efforts of the Company's management
and its majority stockholders. During the nine-month period ended September 30,
1995, the Company entered into a Financing Agreement and Letter of Intent (the
"Financing Agreement") with representatives of a private financing group (the
"Financing Group"). Pursuant to the terms of the Financing Agreement, the
Company issued to the Financing Group a promissory note in the principal amount
of $200,000 payable on December 1, 1995 in return for the Financing Group's
payment of $200,000 in cash to the Company. This note was paid in full
subsequent to December 31, 1995. In addition, the Financing Group purchased
200,000 shares of the Company's common stock in return for a cash payment of
$100,000 to the Company; and 800,000 of the Company's common shares together
with 475,000 of the Company's Class A 8% Convertible preferred shares, payment
for which was made by a secured promissory note payable to the Company. In
connection with the completion of additional funding which the Financing Group
has agreed to provide, the Company has granted to the Financing Group options to
purchase 900,000 additional shares of common stock of the Company (if the
Financing Group were to exercise all of such options, the group would own,
immediately after such exercise, 1,700,000 shares, or 38.9%, of the Company's
outstanding common stock; such exercise could result in a change of control of
the Company to that extent).
The Company and the Financing Group have entered a period of negotiation
and due diligence in order to complete a proposed business combination of the
Company and one or more of the entities controlled or represented by the
Financing Group. The Financing Group has introduced several candidates for
business combination to the Company which the Company is currently analyzing,
which candidates include an entity which manages, promotes and operates several
destination golf and fishing resort facilities similar to that of the Company's
as well as entities in other lines of commerce including printing, publishing,
and restaurant operations. The Company is considering several of these
candidates for a possible business combination and has reached but has not yet
established a probable transaction with any particular candidate. If such a
business combination is effected, it is anticipated that a public offering or
other sale 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 and the combining company's operations. However, there can be no
assurance that any proposed business combination will be effected. Any such
business combination and related public offering is subject to the combining
entity's acceptance of the Company's 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 combination.
Discontinuation of Former Subsidiary
In June 1993, the Company acquired Production Services International, Inc.
("PSI"), a Delaware corporation headquartered in Palm Beach, Florida. The
Company acquired all the issued and outstanding capital stock of PSI in exchange
for 402,672 newly-issued shares of the Company's common stock valued at
$402,672. The management of the Company recognized that the financial condition
of PSI at December 31, 1994 was such that the Company was not able to exercise
control over the operations of PSI, and that unless immediate financing were
obtained under conditions acceptable to the distributor of PSI's principal
television series production (the "Series"), bankruptcy of PSI was inevitable.
As of December 31, 1994, the Company abandoned its investment in PSI and
deconsolidated the assets, liabilities and operations of the PSI subsidiary on
its financial statements. Accordingly, the total acquisition cost, valued at
$402,672, has been written off as of December 31, 1994 in connection with the
abandonment of the Company's investment in PSI's operations. An involuntary
petition for bankruptcy was filed in March 1995 by the series distributor and
two other creditors against PSI and its production subsidiary for alleged non-
payment of obligations related to the production of the series. During 1995,
PSI and its major creditor (the "Distributor") reached a settlement resulting in
the withdrawal of the involuntary bankruptcy petition and the Company provided
$225,000 as payment to the Distributor and the other petitioning creditors and
agreed further to assist PSI in establishing a fund to satisfy the remaining
claims from other creditors. Commencing in 1995, PSI has been pursuing an
effort to identify and quantify all outstanding claims of indebtedness related
to PSI's operations in order to formulate a proposed cash settlement of all such
claims. As of the date hereof, the Company expects to pay an additional amount
of approximately $207,000 in settlement of the remainder of such claims. Should
the Company fail in its fulfillment of funding the cash settlements related to
such indebtedness, certain creditors may initiate, individually or collectively,
lawsuits or bankruptcy petitions against the Company. There can be no assurance
that the Company will be able to satisfy the obligations related to such
settlements.
Competition
In connection with its resort business, the Company competes with other
companies which operate destination resorts and which market memberships usable
at multiple destination campground locations. The majority of such companies
are well-established in the industry, have substantially greater financial and
marketing resources and name recognition than the Company, and operate a greater
number of resort campgrounds. The Company believes that its ability to compete
successfully for membership sales is based in part on the attractiveness and
location of the Resort. Although there are currently six fish camps operating
on Orange Lake, management believes that none individually offers facilities
comparable to those which the Company presently offers and will be able to offer
upon completion of the planned Resort facilities.
No Assurance of Additional Resort Development
The Company had originally designed an overall plan for the Resort to
construct and offer for use by the public a total of 350 recreational vehicle
("RV") sites, 50 freestanding housing units (the "Housing Units") and a variety
of fishing, athletic and social facilities. Presently, the Company has
constructed a significant portion of the facilities planned for the Resort,
including 108 fully equipped RV sites, 125 RV sites equipped with water and
sewer hook-ups only, 11 Housing Units, and much of the support services,
recreational and leisure facilities. The Company hopes in the near future, if
working capital is sufficient, to complete approximately 50 RV sites which
currently have only water and sewer hook-ups, construct a bath house, and
increase marketing and sales efforts. As funds from Resort operations become
available, the Company intends to improve and develop existing and new Resort
amenities such as the fishing, golfing and athletic facilities, and if deemed
advisable by the Company, to complete additional RV sites. While the costs of
such further development are subject to change based upon various circumstances,
including increased cost of labor, material, and delays, the Company anticipates
that the 50 RV sites, bath house, additional marketing and sales efforts and
miscellaneous items can be completed at a cost of $100,000. Any other
additional construction will be completed with funds, if any, generated by sales
of Resort memberships and operating revenues. There can be no assurance,
however, that these revenues will be available or if available will be allocated
to or sufficient for any additional development of the Resort. The Company
recognizes that unforeseen labor shortages, the inability to obtain labor and/or
materials, the inability of certain contractors to perform (or to perform on a
timely basis due to strikes), adverse weather conditions, acts of God or other
circumstances beyond the control of the Company could delay further construction
of the Resort facility and could have an adverse effect on the operations of the
Resort.
Sales of Memberships and Lease Arrangements
The Company offers memberships and variable-term leases which entitle
members to utilize the Resort's facilities, RV sites, RVs and Housing Units for
a daily/nightly, weekly, semi-annual or annual fee. It is the Company's
intention to market the facility as a destination resort for longer stays by
individuals, groups and rallies. The variable-term lease arrangement will be
marketed aggressively during the 1996-97 season. As of December 31, 1995, the
Company had approximately 210 current memberships. The Company actively markets
the resort to camping, fishing, golfing and other sports enthusiasts through
print and mail advertising and through sales arrangements with RV dealerships
and park model manufacturers which offer Resort memberships and park models at
discounted prices to purchasers of new vehicles. There can be no assurance that
such marketing program will produce any sales of Resort memberships or variable-
term lessees. Lack of sales of memberships and leases may have a significant
adverse impact on the revenues of the Company and the operation and development
of the Resort.
Seasonality and the Resort's Dependence Upon Climatic Conditions
Generally, the nature and success of a fishing and golfing-oriented resort
is dependent in considerable part upon prevailing conditions at a resort
property, including climate. To the extent that dramatic climatic changes, such
as hurricanes or extended unseasonable weather, may adversely affect the Resort
property or the viability of fish in Orange Lake, the Company's ability to
market memberships may be adversely affected and attendance at the Resort may be
impaired. While management does not anticipate the occurrence of climatic
events which would adversely affect the business or operations of the Resort,
there can be no assurance that such events will not occur.
Insurance
The Company maintains casualty and liability insurance for the operation
of the Resort and for the continued construction and development of its
facilities. While management of the Company believes that its Resort and
facilities are adequately insured, there can be no assurance that the Company
will be able to renew such insurance policies as such policies become due and if
such policies are renewable, there can be no assurance that the premium payments
thereof would not increase prohibitively. If such insurance policies are not
renewed, there can be no assurance that the Company would be able to find
suitable alternative policies at reasonable premium payment rates. Failure by
the Company to obtain casualty and liability insurance in adequate amounts could
have a material adverse effect on the operations of the Company and could expose
the Company to the risk of significant losses resulting from any casualty or
liability claims not adequately covered by insurance.
Government Regulations - Permits Required For Operation Of Resort
The Company is required to obtain governmental regulatory approvals to
operate the Resort, including water treatment permits, sanitary sewage permits,
health permits, sales and use tax permits and permits relating to food, beverage
and alcohol sales. Although the Company believes it is and will be in
compliance in all material respects with the current requirements of these
authorities, the Company is unable to predict the effect of future developments
in the laws or regulations administered by federal, state and local authorities
having jurisdiction over its activities. The Company's failure to obtain or
renew any of such licenses or approvals could have a material adverse affect on
the Company's ability to complete the Resort and to continue the Resort's
operations.
Government Regulations - Leases
The Company has obtained a submerged land lease, which is scheduled to
expire on July 15, 1998, from the Board of Trustees of the Internal Improvement
Trust Fund of the State of Florida to construct and operate a commercial marine
facility with fuel facilities (the "Lease"). Pursuant to the terms of the
Lease, the Company pays approximately $2,700 per year to the State of Florida.
Future renewal of the Lease is at the sole option of the State of Florida.
Although the Company does not know of any reason why the requisite authorities
of the State of Florida would decline to renew the Lease, in the event the Lease
is not renewed, the Company would be required to cease utilizing that portion of
the Resort as a commercial marina. Such discontinuance could have a materially
adverse effect on the Company's revenues and its ability to operate the Resort
and to market memberships thereto, since the Company would not be able to offer
its guests boating and fishing facilities on Orange Lake.
Government Regulations - Membership Sales
The Company's sales activities include the use of direct mail solicitation
and the use of on-site sales facilities. The Company's promotional and sales
activities are subject to regulation under federal and state consumer protection
and consumer credit laws and are typically subject to review by consumer
protection agencies having broad discretionary authority. The Company
undertakes to comply with all such regulations. However, there can be no
assurances that the Company will be able to comply with any or all state
regulations or that future legislation or regulations will not have an adverse
effect upon the Company's business.
THE COMPANY
The Company was organized pursuant to the laws of the State of Delaware in
July 1987 for the purpose of owning, developing, marketing and operating a
destination resort community and fishing camp on Orange Lake near Ocala,
Florida. In June 1993, the Company acquired all of the issued and outstanding
capital stock of Production Services International, Inc., then a development
stage Delaware corporation ("PSI"), organized in December 1991 for the purpose
of performing and providing production management services and facilities
leasing to companies engaged in the production of filmed entertainment projects.
In December 1994, the Company discontinued its investment in PSI and wrote off
the acquisition cost.
The Company is engaged in the business of management, promotion and
development of a destination golf and fishing resort facility known as the
"Celebrity Resort." Management is currently seeking appropriate candidates for
one or more business combinations with the Company.
The principal executive offices of the Company are located at 214
Brazilian Avenue, Suite 400, Palm Beach, Florida 33480 and its telephone number
is (407) 659-3832.
USE OF PROCEEDS
The Company will not receive any of the proceeds from the offer and sale
of the securities held by the Selling Security Holders. The Company will
receive the proceeds, if any, from the exercise of the Common Stock Options,
Common Stock Warrants, and Class A Warrants. It is extremely unlikely that a
holder of an option or warrant would choose to exercise such security unless the
exercise price were less than the current market price of the security issuable
upon exercise. Currently the exercise price of the Class A Warrants is
approximately four times the market price of the Common Shares issuable upon
conversion of the Class A Preferred Stock purchasable upon such exercise, and
thus the Class A Warrants are highly unlikely to be exercised in the foreseeable
future. The Board of Directors may determine in the future to lower the exercise
price of some or all outstanding Class A Warrants, which it has authority to do.
No plans are in place to do so at this time.
The Company intends to use the proceeds, if any, from the exercise of the
options and warrants for general working capital purposes.
SELLING SECURITY HOLDERS
The Registration Statement of which this Prospectus is a part also relates
to the offer and sale of up to an aggregate of 1,197,276 shares of Common Stock
previously issued to certain security holders; the offer and sale of up to
317,517 Shares of Common Stock issuable upon conversion of 475,000 shares of
outstanding Class A Preferred Stock; the offer and sale of up to an aggregate of
150,000 Shares of Common Stock issuable upon exercise of 150,000 outstanding
Common Stock Warrants; and the offer and sale of 1,200,000 Shares of Common
Stock issuable upon exercise of 1,200,000 outstanding Common Stock Options.
The following table sets forth the beneficial ownership of the securities
of the Company held by each person who is a Selling Security Holder and by all
Selling Security Holders as a group.
<TABLE>
<S> <C> <C> <C>
Number of Number of
shares of shares Amount to be
common stock offered in owned after
owned before this completion of
Name of Beneficial owner offering offering offering
Same as prev.
(1) col.(2)
Carolyn Carrano 2,542 0
Gilbert Fiorentino 1,271 0
Richard & Lorraine Grabowski 3,813 0
Glenn M. Janowsky 5,085 0
Richard Litsky 2,542 0
Brad Muller 129,305 0
Lloyd Muller 2,542 0
Eugene L. Nakamura 2,542 0
M.J. Robinson 3,813 0
Leroy Tinsley 509 0
Brazilian Realty 30,240 0
Michael D. Herman 647,517 (3) 0
TeleMatrix, Inc. of CT. 600,000 (4) 0
James. J. McNamara 224,786 (5) 0
J. William Metzger 168,286 (6) 0
Leo & Barbara Whigham 200,000 0
David A. Johnson 50,000 0
Joseph J. Bianco 10,000 0
Peter J. Dekom 10,000 0
Harry & Ida Kaufman 40,000 (7) 0
Jack E. Bock 30,000 0
Lawrence H. Feder 10,000 (8) 0
Fleming & O'Neill 10,000 (8) 0
David Shue 5,000 0
Peter Lynch 15,000 0
Kimberli Critchfield 100,000 (8) 0
Dale Pelletier 10,000 (8) 0
Carol Martino 25,000 0
Jeff Matloff 10,000 (8) 0
Lisa A. Mercado 5,000 (8) 0
Debra Herman 500,000 0
Island Star, Inc. 10,000 (8) 0
TOTAL 2,864,793 0 0
</TABLE>
(1) Consisting solely of currently outstanding common shares unless
otherwise indicated.
(2) All numbers are the same as the number shown in the previous column
with respect to that particular person or entity. Assumes, with respect to
each respective security holder, conversion of all Class A Preferred shares
owned to common shares and exercise of all warrants and options owned.
(3) Includes 205,000 shares of common stock currently outstanding; 125,000
shares of common stock to be issued upon exercise of outstanding options;
and 317,517 shares of common stock to be issued upon conversion of preferred
stock, including dividends.
(4) Includes 200,000 shares of common stock currently outstanding and 400,000
shares of common stock to be issued upon exercise of outstanding options.
(5) Includes 124,786 shares of common stock currently outstanding and 100,000
shares of common stock to be issued upon exercise of outstanding options.
(6) Includes 68,286 shares of common stock currently outstanding and 100,000
shares of common stock to be issued upon exercise of outstanding options.
(7) Includes 20,000 shares of common stock currently outstanding and 20,000
shares of common stock to be issued upon exercise of outstanding options.
(8) Common stock to be issued upon exercise of outstanding options.
The Company believes that all of the securities represented are owned of
record by each individual named as beneficial owner and further believes that,
unless as specifically indicated above, each individual has sole voting and
dispositive power with respect to the shares of Common Stock owned by each of
them. Each Selling Security Holder may, but is not required to, sell all of the
shares of Common Stock owned by such Selling Security Holder. No Selling
Security Holder will own more than 1% of the Common Stock after completion of
this offering. Mr. McNamara has been President, Chief Executive Officer and a
director of the Company since June 1993. Mr. Metzger has been Executive Vice
President, Chief Financial Officer, Secretary, Treasurer and a director of the
Company since June 1993. Mr. Herman and TeleMatrix, Inc. of Connecticut are the
joint obligors pursuant to a secured promissory note payable to the Company in
the principal amount of $500,000 and are obligated to assist the Company in
obtaining further equity financing. No other Selling Security Holder has held
any position or office, or has had any material relationship with the Company or
any of its affiliates, within the past three years.
PLAN OF DISTRIBUTION
The shares of Common Stock issuable upon exercise of outstanding Common
Stock Options and Common Stock Warrants will be issued by the Company subsequent
to the date hereof upon exercise of such options and warrants and the Company
will receive the net proceeds, if any, thereof. The shares of Common Stock
issuable upon conversion of Class A Preferred Stock and convertible notes will
be issued by the Company subsequent to the date hereof upon conversion of such
shares and notes. No sales commissions will be paid in connection with the
offer and sale of such securities, except as follows: To the extent that I.A.
Rabinowitz & Co. solicits the exercise of any outstanding Class A Warrants, it
may receive a fee equal to four percent of the exercise price of the Class A
Warrants so exercised provided that: (i) the market price of the Company's
Common Stock is greater than the then exercise price of such warrant, (ii) such
exercise was solicited by a member of the National Association of Securities
Dealers, Inc., (iii) the Class A Warrant was not held in a discretionary
account, (iv) disclosure of the compensation arrangements was made to the
customer, (v) the solicitation of such exercise does not violate Rule 10b-6 (as
such rule or any successor rule may be in effect as of such time of exercise)
promulgated under the Exchange Act and (vi) the solicitation of the exercise is
in compliance with NASD Notice to Members 81-38.
In order to facilitate the exercise of the Common Stock Warrants and
Common Stock Options and the conversion of Class A Preferred Stock, the Company
will furnish, at its expense, such number of copies of this Prospectus to the
record holders of such securities as such record holders may request, together
with instructions that copies of this Prospectus be delivered to the beneficial
owners thereof. In connection with the offer and sale of Common Stock by the
Selling Security Holders, the beneficial owners thereof have undertaken to
deliver this Prospectus to the purchasers of such securities in accordance with
the Securities Act and to comply with applicable provisions of the Exchange Act
including, without limitation, Rule 10b-6 thereunder, in connection with
transactions in the Company's securities during the effectiveness of the
Registration Statement.
Persons who wish to exercise the Class A Warrants or Common Stock
Warrants, unless such specific instruments instruct that delivery shall be
directly to the Company, must deliver the executed warrant certificates with
the purchase forms, duly executed, accompanied by payment in the form of a
certified or bank cashier's check or money order payable to the Company (or
cash), for the number of warrants exercised to American Stock Transfer & Trust
Company, 40 Wall Street, New York, New York 10005. Persons who wish to exercise
Common Stock Options must deliver to the Company the executed option certificate
with the purchase forms, duly executed accompanied by payment in the form of a
certified or bank cashier's check or money order payable to the Company (or
cash) for the number of options exercised. All such payments hereinbefore
described must be received prior to termination of the exercise period thereof.
The Company shall then issue such fully paid and non-assessable shares of Common
Stock to the warrant holder or option holder as specified on the warrant or
option certificates so tendered. Warrants and options not exercised prior to
termination of the exercise period will expire.
Persons wishing to convert Class A Shares must exercise their conversion
right by giving written notice that the holder elects to convert a stated number
of Class A shares into Common Stock and surrendering the certificate(s) for the
shares to be so converted to the Company's transfer agent, American Stock
Transfer & Trust Company, 40 Wall Street, New York, NY 10005 at any time during
its usual business hours on the date set forth in the notice, together with a
statement of the name or names (with address and taxpayer identification or
social security number) in which the certificate or certificates for shares of
Common Stock shall be issued. Each Class A share is currently convertible into
two-fifths of one share of Common Stock, subject to adjustment for dividends and
the like.
Persons wishing to convert convertible promissory notes must exercise
their conversion right in accordance with the provisions of their respective
notes.
The Selling Security Holders, directly or through agents, dealer or
underwriters to be designated from time to time, may sell the securities
described herein from time to time upon terms to be determined at the time of
sale. To the extent required, the number of such securities, the respective
purchase prices and public offering prices, the names of any agents, dealers or
underwriters and any applicable commissions or discounts with respect to a
particular offer, will be set forth in an accompanying Prospectus Supplement.
The Selling Security Holders reserve the sole right to accept or reject, in
whole or in part, any proposed purchase of the securities being offered by them
pursuant hereto. The Selling Security Holders and any agents, dealers, or
underwriters that participate with the Selling Security Holders in the
distribution of their respective securities may be deemed to be "underwriters"
within the meaning of the Securities Act, and any commissions received by them
and any profits on the resale of such securities may be deemed to be
underwriting commissions or discounts under the Securities Act. Under
applicable rules and regulations promulgated under the Exchange Act, any person
engaged in a distribution of securities may not simultaneously bid for or
purchase securities of the same class for a period of two business days prior to
the commencement of such distribution. In addition and without limiting the
foregoing, the Selling Security Holders will be subject to applicable provisions
of the Exchange Act and the rules and regulations thereunder, including, without
limitation, Rules 10b-5, 10b-6 and 10b-7, in connection with transactions in the
securities to be sold by them during the effectiveness of the Registration
Statement of which this Prospectus is a part. All of the foregoing may affect
the marketability of the securities to be offered and sold by the Selling
Stockholders. In connection with the offer and sale, if any, of the securities
described herein by the beneficial owners thereof, such beneficial owners have
undertaken to deliver this Prospectus to the purchasers of such securities in
accordance with the Securities Act and to comply with applicable provisions of
the Exchange Act, including, without limitation, Rule 10b-6 thereunder, in
connection with transactions in such securities during the effectiveness of the
Registration Statement of which this Prospectus is a part.
LEGAL MATTERS
Certain legal matters in connection with the issuance of the securities
being offered hereby will be passed upon for the Company by Fleming & O'Neill,
Newton, Massachusetts.
EXPERTS
The audited financial statements for the fiscal years ended December 31,
1995 and December 31, 1994 that are incorporated by reference in this Prospectus
have been audited by BDO Seidman, LLP, independent certified public accountants,
to the extent and for the periods set forth in their report incorporated herein
by reference, and are incorporated herein in reliance upon such report given
upon the authority of said firm as experts in auditing and accounting. The
financial statements for the fiscal years ended December 31, 1995 and December
31, 1994 contained an explanatory paragraph regarding uncertainties existing at
the time as to the ability of the Company to continue as a going concern.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law empowers a corporation
to indemnify its directors and officers and to purchase insurance with respect
to liability arising out of the performance of their duties as directors and
officers provided that this provision shall not eliminate or limit the liability
of a director (i) for any breach of the director's duty of loyalty to the
corporation or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii)
arising under Section 174 of the Delaware General Corporation Law, or (iv) for
any transaction from which the director derived an improper personal benefit.
The Delaware General Corporation Law provides further that the
indemnification permitted thereunder shall not be deemed exclusive of any other
rights to which the directors and officers may be entitled under the
corporation's by-laws, any agreement, vote of shareholders or otherwise.
Article Eleven of the Company's Certificate of Incorporation provides for
the indemnification of the Company's officers and directors to the fullest
extent permitted by the Delaware General Corporation Law.
The effect of the foregoing is to require the Company to indemnify the
officers and directors of the Company for any claim arising against such persons
in their official capacities if such person acted in good faith and in a manner
that he reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. Insofar as
indemnification for liabilities arising under the Securities Act may be
permitted to directors, officers or persons controlling the Company pursuant to
the foregoing provisions, the Company has been informed that in the opinion of
the Securities and Exchange Commission, such indemnification is against public
policy as expressed in the Securities Act and is therefore unenforceable.
No dealer, salesman or any other person has
been authorized to give any information or to make
any representations not contained in this
Prospectus and, if given or made, such information
or representation must not be relied upon as
having been authorized by the Company of any
Representative. This Prospectus does not
constitute an offer to sell or a solicitation of
an offer to buy any of the securities offered
hereby in any jurisdiction to any person to whom
it is unlawful to make such offer or solicitation
in such jurisdiction. Neither the delivery of this
Prospectus nor any sale made hereunder shall,
under any circumstances create any implication
that the information herein is correct as of any
time subsequent to the date hereof, or that there
has been no change in the affairs of the Company
since said date.
TABLE OF CONTENTS
AVAILABLE INFORMATION 5
INCORPORATION OF CERTAIN
DOCUMENTS BY REFERENCE 5
PROSPECTUS SUMMARY 6
RISK FACTORS 7
THE COMPANY 15
USE OF PROCEEDS 16
SELLING SECURITY HOLDERS 16
PLAN OF DISTRIBUTION 17
LEGAL MATTERS 19
INDEMNIFICATION OF
DIRECTORS AND OFFICERS 19
CELEBRITY ENTERTAINMENT, INC.
711,238 Shares of Common Stock issuable upon conversion of 1,064,000 shares
of outstanding Class A Preferred Stock (317,517 shares of which Common Stock
are also registered for resale) (including 285,638 shares of Common Stock
reserved for payments of accrued dividends upon conversion); 362,400 Shares
of Common Stock issuable upon conversion of 906,000 shares of Class A
Preferred Stock issuable upon exercise of 906,000 outstanding Class A Warrants;
20,000 Shares of Common Stock issuable upon conversion of outstanding
convertible promissory notes; 215,925 Shares of Common Stock issuable upon
exercise of 215,925 outstanding Common Stock Warrants (registered for issuance;
150,000 of which are also registered for resale); 1,197,276 Shares of Common
Stock issuable upon exercise of 1,200,000 outstanding Common Stock Options
(registered for issuance and for resale); and 1,203,773 Shares of Common Stock
previously issued (registered for resale).
____________________
PROSPECTUS
____________________
June 28, 1996
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth the estimated expenses payable by the
Company in connection with the issuance and distribution of the securities being
registered pursuant to this Registration Statement. All of the amounts shown
are estimates and will be borne by the Company and not by any of the Selling
Security Holders.
SEC Registration Fee . . . . . . . . . . . . . . . . . . $ 1,642
Printing Costs . . . . . . . . . . . . . . . . . . . . . $ 5,000
Legal Fees and Expenses . . . . . . . . . . . . . . . . . $ 10,000
Accounting Fees . . . . . . . . . . . . . . . . . . . . . $ 7,000
Blue Sky Fees and Expenses . . . . . . . . . . . . . . . $ - 0 -
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . $ 1,000
-----
TOTAL . . . . . . . . . . . . . . . . . . . . $ 24,642
Item 15. Indemnification of Directors and Officers.
Section 145 of the Delaware General Corporation Law empowers a corporation
to indemnify its directors and officers and to purchase insurance with respect
to liability arising out of the performance of their duties as directors and
officers provided that this provision shall not eliminate or limit the liability
of a director (i) for any breach of the director's duty of loyalty to the
corporation or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii)
arising under Section 174 of the Delaware General Corporation Law, or (iv) for
any transaction from which the director derived an improper personal benefit.
The Delaware General Corporation Law provides further that the
indemnification permitted thereunder shall not be deemed exclusive of any other
rights to which the directors and officers may be entitled under the
corporation's by-laws, any agreement, vote of shareholders or otherwise.
Article Eleven of the Company's Certificate of Incorporation provides for
the indemnification of the Company's officers and directors to the fullest
extent permitted by the Delaware General Corporation Law.
The effect of the foregoing is to require the Company to indemnify the
officers and directors of the Company for any claim arising against such persons
in their official capacities if such person acted in good faith and in a manner
that he reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. Insofar as
indemnification for liabilities arising under the Securities Act may be
permitted to directors, officers or persons controlling the Company pursuant to
the foregoing provisions, the Company has been informed that in the opinion of
the Securities and Exchange Commission, such indemnification is against public
policy as expressed in the Securities Act and is therefore unenforceable.
Item 16. Exhibits
Exhibit
Number Exhibit
5.1 * Opinion of Fleming & O'Neill.
23.1 Consent of Independent Certified Public Accountant BDO Seidman, LLP.
23.2 Consent of Fleming & O'Neill (included in Exhibit 5.1).
* Previously filed.
Item 17. Undertakings.
(a) Undertaking Pursuant to Rule 415 under the Securities Act of 1933,
as amended. The Registrant will:
(1) File, during any period in which it offers or sells
securities, a post-effective amendment to this Registration Statement to:
(i) Include any prospectus required by section
10(a)(3)of the Securities Act;
(ii) Reflect in the prospectus any facts or events which
individually or together, represent a fundamental change in
the information in the registration statement of the
securities offered, and the offering of the securities at that
time.
(iii)Include any additional or changed material
information on the plan of distribution.
Provided, however, that paragraphs (4)(1)(i)and (a)(1)(ii)do not apply if the
registration statement is on Form S-3 or Form S-8, and the information required
to be included in the post-effective amendment by those paragraphs is contained
in periodic reports filed by the Registrant pursuant to Section 13 or Section
15(d) of the Securities Exchange Act of 1934 that are incorporated by reference
in the registration statement.
(2) For determining liability under the Securities Act, treat each
post-effective amendment as a new registration statement of the securities
offered, and the offering of the securities at that time to be the initial
bona fide offering.
(3) File a post-effective amendment to remove from registration
any of the securities that remain unsold at the end of the offering.
In the event that a claim for indemnification against such liabilities
(other than the payment by the small business issuer of expenses incurred or
paid by a director, officer or controlling person of the small business issuer
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the small business issuer will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the Town of Palm Beach, Florida, on the 28th day of June,
1996.
Celebrity Entertainment, Inc.
By:/s/ James J. McNamara
James J. McNamara,
President and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the date indicated.
Signatures Name and Title Date
/s/ James J. McNamara James J. McNamara, President, June 28, 1996
Chief Executive Officer and
Director
/s/ J. William Metzger J. William Metzger, Chief June 28, 1996
Financial Officer, Executive
Vice President, Treasurer,
Controller, Secretary
and Director
/s/ David Critchfield David Critchfield, Director June 28, 1996
EXHIBIT 23.1 CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT
BDO SEIDMAN, LLP.
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Celebrity Entertainment, Inc.
Palm Beach, Florida
We hereby consent to the incorporation by reference in the Prospectus
constituting a part of this Registration Statement of our report dated
May 23, 1996, relating to the financial statements of Celebrity Entertainment,
Inc. appearing in the Company's Annual Report on Form 10-KSB for the year
ended December 31, 1995. Our report contains an explanatory paragraph regarding
uncertainties related to the Company's ability to continue as a going concern.
We also consent to the reference to us under the caption "Experts" in the
Prospectus.
/s/ BDO Seidman, LLP
Orlando, Florida BDO Seidman, LLP
June 27, 1996
