CELEBRITY ENTERTAINMENT INC, 10KSB, 1997-05-09

CELEBRITY ENTERTAINMENT INC
10KSB, 1997-05-09
HOTELS, ROOMING HOUSES, CAMPS & OTHER LODGING PLACES

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
-------------------------------------

FORM 10-KSB

(mark one)
[ X ] ANNUAL REPORT UNDER SECTION 13
OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996

[ ] TRANSITION REPORT PURSUANT TO SECTION 13
OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File No. 0-19196
----------------------------------

CELEBRITY ENTERTAINMENT, INC.
(Name of Small Business Issuer in its Charter)

Delaware 11-2880337
(State of or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)

214 Brazilian Avenue, Suite 400, Palm Beach, Florida 33480 561/659-3832
(Address of principal executive offices. Issuer's telephone number.)
-----------------------------------------
Securities registered pursuant to Section 12(b) of the Act: None.

Securities registered pursuant to Section 12(g) of the Act as of December 31,
1996: Common Stock, $0.0001 par value per share.

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act during the past 12 months (or for
such shorter period that the issuer was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. YES [X]
NO [ ]

Check if disclosure of delinquent filers pursuant to Item 405 of Regulation S-B
is not contained in this form, and no disclosure will be contained, to the best
of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. [ ]

State issuer's revenues for its most recent fiscal year. $252,735.

The aggregate market value of the voting stock held by non-affiliates computed
by reference to the average closing bid and ask prices of such stock on May
5, 1997 was approximately $377,058.

The number of shares outstanding of the issuer's Common Stock, $ 0.0001 par
value, as of December 31, 1996 was 304,408.

Transitional Small Business Disclosure Format (check one):

Yes [ ] No [ X ]

CELEBRITY ENTERTAINMENT, INC.
FORM 10-KSB
For the Year Ended December 31, 1996

INDEX

HEADING PAGE

PART I
Item 1. Description of Business 1
Item 2. Description of Property 9
Item 3. Legal Proceedings 9
Item 4. Submission of Matters to a Vote of Security Holders 9

PART II
Item 5. Market for Common Equity and Related
Stockholder Matters 10
Item 6. Management's Discussion and Analysis or
Plan of Operation 11
Item 7. Financial Statements 16
Item 8. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure 16

PART III
Item 9. Directors, Executive Officers, Promoters
and Control Persons; Compliance with
Section 16(a) of the Exchange Act 16
Item 10. Executive Compensation 18
Item 11. Security Ownership of Certain Beneficial Owners
and Management 20
Item 12. Certain Relationships and Related Transactions 21
Item 13. Exhibits and Reports on Form 8-K 22

SIGNATURES 25

PART 1

ITEM 1. DESCRIPTION OF BUSINESS

Celebrity Entertainment, Inc. (Formerly Celebrity Resorts, Inc. and
hereinafter referred to as the "Company") was organized pursuant to the laws of
the State of Delaware on July 27, 1987 under the name of Celebrity Fish Camps
and RV Parks, Inc. for the purpose of owning, developing, marketing and
operating a destination resort community and fish camp (the "Resort") on Orange
Lake near Ocala, Florida. The Company operates the Resort and currently focuses
its operations on sales of site and facilities, usage of Resort facilities by RV
owners and outdoor sports people, and organization of rallies by RV owners and
other special interest groups.

On November 3, 1993, the Company changed its name from Celebrity Resorts,
Inc. to Celebrity Entertainment, Inc. Also on November 3, 1993 each share of
the Company's outstanding and treasury common stock was reclassified and
converted into one-twentieth of one share of Common Stock (the "1993 Reverse
Split").

On August 3, 1995, each share of the Company's outstanding and treasury
stock was reclassified and converted into one-fifth of one share of Common Stock
(the "1995 Reverse Split").

On March 12, 1997, each share of the Company's outstanding and treasury
stock was reclassified and converted into one-fiftieth of one share of Common
Stock (the "1997 Reverse Split").

The principal executive offices of the Company are located at 214
Brazilian Avenue, Suite 400, Palm Beach, Florida 33480 and its telephone number
is (561) 659-3832.

Business

The Resort

The Resort offers extensive outdoor recreational activities including
fishing, golf and swimming. The Company believes that the Resort successfully
creates an environment where a broad base of guests can share the Resort
facilities with one another. Management intends to continue to expand the
facilities and increase the number of sites and housing units at the Resort.
Special promotions, such as fishing and golf tournaments, fishing clinics,
outdoor music festivals, and theme-based rallies are scheduled throughout the
season. During the 1996-97 season, approximately 38 rallies were held at the
Resort, ranging in attendance from 15 RV units to over 100 RV units. Combined
scheduled and anticipated rallies during the 1997-98 season exceed 75.
Management continues to pursue the marketing of the rally concept because the
rally program is expected to grow in market share of the attendance and use of
the Resort. Management believes that the quality of fishing, golf and
recreational activities and the standards maintained in the operation of the
Resort facilities will continue to attract new and repeat visitors.

As indicated above, the Company is continuing the process of completing
the Resort. The Company expects that, when fully completed, the Resort will
include sites to accommodate approximately 300 recreational vehicles ("RV's"),
approximately 50 semi-permanent mobile cabins ("Park Models"), approximately 50
free standing housing units ("Housing Units"), camping facilities and a variety
of ancillary amenities, including a restaurant, swimming pool, baseball field,
golf course, miniature golf course, tennis courts, basketball and other athletic
courts, outdoor game areas, hiking trails, a clubhouse and general store, social
and activities pavilion, 3-D archery range and other resort facilities. The
Company employs a six-person recreational staff to manage rally and support
activities and to organize activities for children, adults and families, such as
barbecues, arts and crafts projects, dances, exercise classes, parties,
tournaments and a broad range of games. The Company also provides year-round
maintenance and security staff at the Resort.

At December 31, 1996, the Resort operated 138 RV and Park Model sites
which are fully equipped with water, sewer and electric hook-ups, 125 RV sites
with water and sewer hook-ups only, and 11 Housing Units. The support and
athletic facilities currently completed and available for use include: (i) a
lodge with six bedrooms and three baths; (ii) a main building with a reception
area, three offices, restrooms, an exercise/aerobics room, a small meeting room
and a central dining/social room (which has the capacity to hold up to two
hundred persons) with a commercial kitchen attached; (iii) a country store with
convenience food and automotive supplies; (iv) a gift shop; (v) a bait and
tackle shop; (vi) a marina and boat house with fishing boats; (vii) a nine-hole
golf course with driving range and putting green; (viii) horseshoe pits; (ix)
picnic facilities including an oversized gas/wood barbecue; (x) volleyball and
shuffleboard courts; and (xi) nature walk paths and bike trails. The Company
plans to complete during 1997 electric hook-ups to 30 of the existing 125
partially completed RV sites, the construction of and partial hook-ups (water
and sewer) for an additional 30 RV sites, a bath house, baseball field, and 3-D
archery range at a combined cost of approximately $75,000. The Company will
attempt to raise the funds to accomplish this expansion; however, no assurances
can be given that the Company will be successful in securing the required
capital on favorable terms, or on any terms. See "Management's Discussion and
Analysis or Plan of
Operation."

Seasonality

The Resort historically experiences seasonal use of its facilities.
Presently the principal period of active use during the year is November through
May, which period accounts for approximately 70% of all revenue generate by the
Resort. The Company's plans to expand the facilities of the Resort include the
expectation that greater use will prevail year-round so that the higher-use
season would be defined as October through July. As a result, the lower-use
season would be reduced to two or three months of the year, which months are
likely to be summer months.

Resort Climate

Generally, the nature and success of a fishing and golfing-oriented resort
is dependent in considerable part upon prevailing conditions at the 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 fishing in Orange Lake, the Company's ability to
market use of the Resort may be adversely affected and attendance at the Resort
may be impaired. The Resort is not located in a hurricane, tornado or flash
flood area and has not historically experienced dramatic climatic changes. To
the extent that Florida experiences hurricanes, such storms have historically
had a more material impact on coastal areas and not on inland areas such as the
area in which the Resort property is located. Based on historic data, the
average temperature at the Resort property will tend to be approximately 78
degrees in the winter (December-March), 81 degrees in the spring (April-May), 86
degrees in the summer (June-August) and 80 degrees in the fall (September-
November). Although Orange Lake has experienced growth of vegetation from time
to time, such growth has not materially adversely affected fishing, but has
reduced the number of pleasure craft on Orange Lake. The Company does not
anticipate that any growth of vegetation would be so substantial as to preclude
or materially affect fishing or the use of pleasure craft on Orange Lake in the
future. While management does not anticipate the occurrence of climatic events
which would adversely effect the business or operations of the Resort, there can
be no assurance that such events will not occur.

Marketing Strategy

The Company directs its marketing efforts to RV owners and other
individuals who have an active interest in family-oriented outdoor recreational
activities. The Company also targets individuals seeking to vacation in
Florida, including those persons who wish to visit such family vacation spots as
Disney World, Epcot Center, Universal Studios, Cape Canaveral, Sea World and
Silver Springs. In its marketing effort, the Company emphasizes its proximity
to these and other resort facilities, and to such central Florida cities as
Gainesville and Orlando. The Company varies its marketing strategies in order
to respond to changes in the awareness and appreciation of the Resort, regional
marketing characteristics and the economic climate.

The Company has established an on-site sales facility. Prospective
visitors may be invited to attend a sales presentation via the Company's direct
mail solicitations, personal referral, or other marketing methods. Prospective
visitors may also be invited to travel to the Resort to tour the facilities with
a salesperson. During 1996, the Company continued its marketing efforts so as
to encourage destination use of the Resort, whereby visitors remain at the
Resort for extended periods of time, as well as promotion of the Resort as an
organizer and host of rallies and other group functions. In addition, the
Company is establishing associations with approximately 400 other resorts which
represent memberships in excess of 400,000 persons in order to provide its
visitors with a network of affiliated recreational resorts throughout the region
and the country.

The Company's on-site facilities 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.
Should the Company fail to control its sales techniques, regulatory enforcement
action by the federal or state regulatory body could result. The Company
believes that it is in compliance with the applicable federal and state consumer
protection and consumer credit laws. The Company has and will continue to
structure its sales practices to preclude or reduce regulation under federal and
state laws.

The principal goal of marketing is to promote destination use of the
Resort and rallies and other group functions. Daily/nightly reservations or
facilities use is a secondary goal, since long-term and group use of the Resort
account for the majority of the revenue generated by the Resort. The marketing
effort is comprised of advertising and sales. Advertising is implemented
through the use of display ads in RV and vacation publications, direct mail
solicitations to RV owners and a Company-produced periodical magazine, "Trav'l,"
which features notices of planned Resort activities and articles of interest to
RV owners and campers. The goal of advertising is to present the Resort to
potential individual and group visitors. On-site efforts are directed to
promotion of facilities usage and over 90% of all sales revenue results from on-
site personal sales efforts. Special incentives, such as free use of some
facilities or additional nights' use of water, sewer and electric hook-ups at no
charge are used to induce on-site visitors to continue to visit and use the
Resort facilities and/or to commit to longer-term stays.

During 1996, the Company expanded its marketing efforts by increasing the
number of promotions and events involving dealers who offer Park Models and RV's
for sale, and visitors who are members of regional or national RV and camping
organizations. The Company is currently implementing a plan pursuant to which
its magazine, "Trav'l," and other literature are distributed though an informal
network of RV and Park Model dealers with the focus on such efforts concentrated
on the Southeastern and Midwestern regions of the United States. Representatives
of the Company regularly contact RV and Park Model dealers and organizations to
assist in the planning and promotion of rallies during which visitors are
invited to use the Resort during particular periods (usually one week each).
In connection with these rallies, the Company offers special price schedules and
promotes planned events.

The Company also promotes corporate retreats at the Resort facility, which
provide executives, managers and personnel of companies and organizations the
opportunity to visit the Resort for a scheduled period of time to participate in
and make use of golf, fishing, social gatherings, business meetings and other
activities related to their business. The Resort marketing director continues
to pursue contacts with candidates for this program and it is anticipated that
increased response and use of the Resort will result from this approach during
1997.

Membership; Membership Rights and Obligations; Fees

The Company previously marketed memberships which entitled members to
utilize an RV site or to use Company-owned RV's and Housing Units for a
daily/nightly or weekly fee. This type of membership does not convey any
ownership interest in the Company, the Resort, the Resort Property or its
facilities, nor does it entitle members to use specific RV sites or campsites
within the Resort. During 1995, due to reduced public interest in purchasing
memberships, the Company ceased sales of memberships, although it continues to
honor existing memberships. Existing members pay annual dues of $299 to
maintain their membership. Memberships are not transferable during the initial
two years after purchase thereof except to a family member or by operation of
law. Thereafter, memberships may be transferred by sale, gift, or inheritance
but may not be transferred more than once. Memberships expire upon the death of
the member or such member's permitted transferee. The Company does not permit
transfers at a price higher than the purchase price paid by the original member
plus a 10% transfer charge payable to the Company. All transfers, sales,
inheritances or gifts of memberships are subject to the Company's prior consent.
Transferees are accepted as lifetime members and issued lifetime membership
cards admitting them to the Resort only after the Company has consented to the
transfers and the transferees have executed new membership contracts which
provide for annual dues at the then-current level for new memberships. The
Company does not have any present intention to repurchase memberships or
locate purchasers for members who wish to sell their memberships. Each
membership entitles the member to use an RV site or to utilize a Company owned
Park Model for a daily/nightly or weekly usage fee. There are no restrictions
on how many times a member may visit the Resort during any given year. However,
to allow all members reasonable access to the Resort, a member is permitted to
stay at the Resort for a maximum of up to 14 consecutive days, after which the
member may not stay at the Resort for the immediately subsequent seven days,
unless vacancy of other sites permits an extended stay. As of December 31,
1996, there were 102 memberships to the Resort.

The Company believes that the Florida statutes governing timeshares are
not applicable to the Resort memberships and that current maintenance of its
Resort memberships are not limited thereby. Government regulations promulgated
by various other states may include provisions which, among other things, affect
the manner in which the Company may maintain memberships and regulate the
transferability of memberships. The Company undertakes to comply with all such
applicable regulations.

Membership Agreements

The Company's members have each executed a membership agreement defining
their rights and obligations with respect to use of the Resort facilities (the
"Membership Agreements"). Under the Membership Agreements, members are required
to pay annual maintenance fees, subject to annual increases. The Company
structures its membership fees such that members' fees and/or dues are less than
the fees charged on a per-night basis to non-members seeking to use the Resort
facilities.

Membership Financing Arrangements

The Company previously sold some of its memberships pursuant to
installment sales agreements which permitted a purchaser to finance a portion of
his or her membership cost over time. The installment payments consist of
principal and interest with the payment terms and the rate of interest
determined by the then prevailing interest rates, the size of the down payment
and the term of the financing. The Company has contracted with a finance
company for the management and collection of fees pursuant to these installment
sales agreements.

Additional Visitor Privileges

The Company has entered into an agreement with Passport America,
an association of privately-owned campgrounds and RV sites located throughout
the United States, that affords its network of members for a nominal fee
(currently $40 annually) and subject to certain limitations, the right to
utilize facilities at all campgrounds and RV sites that are members of the
Resort Parks International network. Pursuant to the terms of such agreement,
members of the Resort Parks International network of campgrounds are entitled to
utilize the Resort facilities for a nominal fee.

Employees

The Company had a total of 8 full-time employees at December 31, 1996.

Environmental Regulation

The Company has no knowledge of any federal, state or local environmental
compliance regulations which materially affect operations of the Resort and the
Company has not been required to expend material amounts of capital to comply
with environmental protection statutes. While it is impossible to predict the
application and impact, if any, of any future environmental regulations and laws
on the operations and development of the Resort, the Company does not anticipate
that expenditures related to compliance with any such future laws or regulations
will be material. There can be no assurance, however, that the Company will be
able to comply with such laws and regulations.

Competition

In connection with the resort business, the Company competes with other
companies who operate destination resorts and who market memberships usable at
multiple destination campground locations. The majority of such companies are
well-established in the industry and have substantially greater financial and
marketing resources and name recognition than the Company and operate a greater
number of resort campgrounds. The Company has entered into a relationship which
will permit its RV unit owners to utilize other RV locations. The Company
believes that its ability to compete successfully for visitor usage is based in
part on the attractiveness and location of the Resort and its reputation in the
RV and outdoor sports community as offering premium facilities. Although there
are currently six parks and 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 Resort
facilities. The Company believes that, currently, the largest of such other
camps can accommodate a maximum of 30 RV's.

The Company also competes with other resort facilities and theme parks in
Central Florida which are far better established, are better known and have
greater financing and marketing capabilities than the Resort. Such other
facilities include, among others, Disney World, Universal Studios, Silver
Springs, Cypress Gardens and Cape Canaveral. The Company intends to increase
its efforts in marketing the Resort facilities to vacationers visiting such
other resorts.

Investment in Publishing Company

During 1996 the Company acquired an interest through the purchase of 8%
cumulative convertible preferred stock in Princeton Media Group, Inc. ("PMG")
(an affiliated company), which is traded on the Nasdaq under the symbol PMGIF.

PMG publishes 22 well-established lifestyle and special interest magazines
which are distributed throughout the United States and internationally. The
magazines include Oui, Fitness Plus, Karate International, Livewire and Lady's
Circle Patchwork Quilts. Each magazine targets a niche market consisting of
readers with an active interest in a particular lifestyle or activity. This
type of reader traditionally remains loyal to particular magazine titles for
several years. The magazines' combined readership is approximately 2.4 million
per month. PMG also leases and operates a 70,000 square foot printing facility
located in Sussex, Wisconsin, just outside of Milwaukee, which prints the
majority of PMG's own magazines and also performs printing services for
unrelated third parties. The plant currently prints 9.4 million magazines, 13.8
million catalogues, and 44.8 million brochures per year.

As of December 31, 1996, PMG reported assets in excess of $18,000,000,
operating revenues in excess of $8,500,000 and a net loss of $3,700,000, after
unusual charges of $3,300,000. The Company's preferred stock is convertible
into common stock of PMG and, if converted, would represent approximately 22% of
the total voting interest in PMG, assuming the conversion of all outstanding
securities of PMG. The Company intends to evaluate and to solicit potential
purchasers of its ownership interest in PMG on a continuing basis to obtain the
greatest benefit to the Company.

Investment in Oil and Gas Development

During 1996, pursuant to a letter of intent, the Company loaned $465,000 to
a start-up corporation (the "Corporation") whose assets and operations include
working interests in eight oil and gas wells and the exploration, development
and production of oil and gas pursuant to a mineral lease on approximately
10,000 acres near Breckenridge, Texas. Prior to the Company's loans to the
Corporation and negotiations concerning a possible business combination, the
Company received a valuation (the "Valuation") by an independent petroleum
engineering company. The Valuation represents that value of the oil and gas
reserves underlying the Corporation's mineral lease rights may be in excess of
$11,000,000. The letter of intent between the Company and the Corporation
provides that the Company will fund the Corporation's operations pending the
signing of a definitive stock purchase agreement providing for the Company to
purchase 80% of the stock in the Corporation. The letter of intent further
provides that if the parties are unable to come to a definitive agreement, the
amounts provided by the Company will then constitute indebtedness which will be
repaid with interest at prime plus 1.5% per annum, not to exceed 12% per annum.
Although the letter of intent called for the execution of the definitive
agreement on or before April 4, 1997, no such agreement has yet been completed.
The Company is still attempting to negotiate the definitive stock purchase
agreement with the Corporation. In view of the speculative nature of the
Corporation's activities, management has provided an allowance for the amount
loaned. The Corporation has no history of operations and no profits to date.

The Company entered into the transaction with the Corporation pursuant to
management's determination that a suitable acquisition candidate should be
identified and might be operating in a line of business unrelated to the
Company's resort business. Management believes that the acquisition of
the Corporation, if it occurs, is likely to be beneficial to the Company. The
Company has access to professionals and experts in the energy industry who have
agreed to provide their services to the Company if the acquisition does occur,
and members of management have business colleagues with substantial experience
in the oil and gas industry. Management is confident in its ability to evaluate
the quality and services of such professionals and experts through independent
verification of qualifications, contact with references, and discussions with
colleagues experienced in the oil and gas industry.

If the Company and the Corporation determine to undergo a business
combination, the Company would undertake to adequately fund the Corporation's
current endeavors, through the raising of capital either by private placement,
registered offering or Regulation S (foreign) stock sales, and would seek to
fully exploit and expand the Corporation's holdings and business opportunities
in the oil and gas industry to provide value for the Company's shareholders. If
the Company and the Corporation do not complete a business combination, the
Company anticipates that the Corporation will repay to the Company all amounts
advanced, together with interest and a possible carried or royalty interest in
the Corporation's operations, through a combination of cash and a promissory
note.

The Corporation owns 140,000 shares of common stock of the Company (the
"Shares"), which it purchased with a $1,312,500 promissory note secured by all
of the assets of the Corporation. If the business combination between the
Company and the Corporation is consummated, the Shares will revert to the
Company and the note issued in payment for the Shares will be cancelled. In the
event the business combination is not consummated, the Company expects to
convert part or all of the funds advanced to the Corporation to a promissory
note payable to the Company by the Corporation and further expects that the
Shares will be returned to the Company and that the note issued in payment for
the Shares will be cancelled.

Loans to Radio Station Group

During 1996 the Company loaned, at various times, approximately $1,700,000
to certain limited partnerships in Illinois with a common general partner (the
"Radio Group") which partnerships were formed to acquire and operate radio
stations in metered markets in market sizes generally ranking above number 75.
At December 31, 1996, the Company was owed $266,000 by the Radio Group which was
repaid in full during the first quarter of 1997. The Radio Group repaid to the
Company all principal loan amounts together with interest, fees, and an
ownership interest in the seven radio stations acquired by the Radio Group
through the use of the funds provided by the Company.

The Company initiated negotiations with the Radio Group during the fourth
quarter of 1996 in order to complete a business combination between the two
entities. Such a combination was not consummated, due to constraints imposed by
the structure of the Radio Group's limited partnerships and the covenants with
its limited partners. As of the date of this filing, the Company is negotiating
a consulting agreement with the managers of the Radio Group which will provide,
among other things, for the Radio Group to identify and co-manage radio stations
to be acquired by the Company. Two such stations have been identified and the
Company is negotiating with the owners for the acquisition of one of the
stations. The consulting arrangement with the Radio Group provides that the
Radio Group will locate for potential acquisition by the Company such number of
radio stations, located in geographically concentrated areas of the U.S., that
the group of stations under control of the Company by December 31, 1997 will
result in aggregate asset values of approximately $2,500,000 and generate annual
net revenues of at least $750,000. It is further anticipated that the radio
station acquisition program will continue during 1998 and possibly longer, with
the intention to accumulate a group of geographically concentrated assets that
will operate profitably for the Company and also would attract possible
purchasers of such station groups who would pay a purchase price significantly
greater than the Company's investment. However, there is no assurance that any
radio station will ultimately be acquired or that, if acquired, any such station
or stations will provide net revenues to the Company.

ITEM 2. DESCRIPTION OF PROPERTY, EXECUTIVE OFFICE AND LEASE

The land upon which the Resort is located consists of approximately 110
acres of property (the "Resort Property") owned by the Company. The Resort is
centrally located on Orange Lake, approximately 11 miles north of Ocala,
Florida, 13 miles south of Gainesville, Florida, 20 miles from Silver Springs in
Ocala, Florida, 1-1/2 hours from Universal Studios in Orlando, Florida and 1-1/2
hours from Sea World in Florida. Orange Lake covers approximately 22,000 acres
with undercover which is characteristically ideal for bass and other game fish.
It is connected to a smaller lake by a waterway, Cross Creek.

The Resort Property is encumbered by a mortgage securing indebtedness owed
to AmSouth Bank. The note bears a fixed interest rate of 9% with monthly
payments of $5,650 and the remaining principal and interest due in May 1997 in
the amount of $420,462. The Company has been in negotiation with alternative
financial institutions for the refinancing of the mortgage and management
believes that such refinancing will be successful. As of December 31, 1996, the
principal amount due under the mortgage was $429,786. Real estate taxes on the
property are approximately $37,000 per year. The Company believes the insurance
maintained on the Resort property is adequate.

The Company maintains an executive office on Palm Beach and pays rent of
$2,033 per month on a month-to-month lease basis.

ITEM 3. LEGAL PROCEEDINGS

None.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE
OF SECURITY HOLDERS

None.

PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS

The following table sets forth, for the periods indicated, the reported
high and low bid price quotations for the Common Stock for the periods
indicated as reported by the Nasdaq SmallCap Market. Such quotations reflect
inter-dealer prices, but do not include retail mark-ups, mark-downs, or
commissions and may not necessarily represent actual transactions.

Common Stock (1)

Bid
Period of Quotation High Low

1996
First Quarter 164 1/16 90 5/8
Second Quarter 128 1/8 56 1/4
Third Quarter 67 3/16 4 11/16
Fourth Quarter 10 15/16 4 11/16

1995

First Quarter 120 5/16 46 7/8
Second Quarter 148 7/16 62 1/2
Third Quarter 187 1/5 76 9/16
Fourth Quarter 150 56 1/4

(1) Quotes have been restated to adjust for the 1995 (1:5) and 1997 (1:50)
Reverse Splits.

As of December 31, 1996, there were 304,408 shares of Common Stock
outstanding. As of the same date, there were approximately 275 holders of
record of the Common Stock, 285 holders of record of Common Stock Warrants and
10 holders of record of Common Stock Options. The number of beneficial holders
of Common Stock totaled 1,074 as of the same date.

The Company has not paid any cash dividends on its Common Stock since its
incorporation and anticipates that, for the foreseeable future, earnings, if
any, will continue to be retained for use in the Company's business and will
continue to be utilized to fund its operations.

As of May 6, 1997, the Company's Common Stock is no longer quoted on the
Nasdaq Smallcap Market reporting system. The Company intends to fulfill the
requirements necessary to have the Common Stock quoted on the OTC Bulletin Board
immediately upon filing of this Form 10-KSB with the Securities and Exchange
Commission. The Company anticipates that such quotation will commence in the
near future; however, there can be no assurance that such will occur. The
Company further anticipates reapplication for quotation on the Nasdaq Smallcap
reporting system as soon as it is able to meet the initial listing criteria.

Recent Sales of Unregistered Securities

The Company sold 140,000 shares of common stock on November 5, 1996 in a
private placement exempt from registration pursuant to Section 4(2) of the
Securities Act to an oil and gas development company in exchange for a secured
promissory note in the principal amount of $1,312,500. (See "Description of
Business - Investment in Oil and Gas Development.") No commissions were paid.

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS
OR PLAN OF OPERATION

Forward-looking Statements

Statements contained in this Form 10-KSB regarding the Company's future
prospects or profitability constitute forward-looking statements and as such,
must be considered with caution and with the understanding that various factors
could cause actual results to differ materially from those in such forward-
looking statements. Such factors include but are not limited to (i) the
inability of the Company to complete a business combination or acquisition as
anticipated, (ii) the securing of financing sufficient to fund such business
combination, acquisition, or the expansion of the Resort, and/or (iii) change in
operating results provided by the Resort or any newly-acquired operations due to
economic or competitive conditions or otherwise.

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.

Results of Operations

Fiscal Year Ended December 31, 1996 Compared to Fiscal Year Ended December 31,
1995

Revenues for the fiscal year ended December 31, 1996, amounted to
$252,735 compared to $142,052 for the fiscal year ended December 31,
1995. Revenues were derived from memberships paid in full, dues and resort
operations. The increase in revenues resulted from a greater number of
special events, marketing and selling to the changing needs of recreational
resort users.

Selling, general and administrative expenses were $3,879,059 for the
fiscal year ended December 31, 1996, compared to $2,322,135 for the fiscal year
ended December 31, 1995, an increase of $1,556,924. The increase is due
principally to costs associated with issuances of the Company's securities in
connection with various consulting arrangements.

During the fiscal year ended December 31, 1996, interest expense of
$2,719,145 was charged to operations, compared with $2,763,578 during the fiscal
year ended December 31, 1995. Of the interest expense incurred in
1996, a non-cash expense of $2,584,145 was related to the writeoff of debt
discount and debt issue costs associated with convertible debentures issued in
1996.

In March, 1997, prior to the issuance of the Company's financial
statements for the year ended December 31, 1996, the SEC clarified its position
regarding the accounting for convertible securities when the conversion feature
provides a beneficial discount to the security holder, resulting in a writeoff
in 1996 of all debt discount and debt issue costs associated with convertible
debentures issued in 1996. The total of this noncash writeoff of debt discount
and issue costs was $2,584,145. Under the Company's prior accounting method in
1996 these noncash charges would have been amortized in 1997 and part of 1998.
The change in accounting method will result in 100% of these debt discounts and
debt issue costs being taken in 1996 and therefore 1997 and 1998 earnings will
not be reduced by these costs as originally anticipated. (See Note 8 of the
financial statements for additional detail.)

At December 1, 1996, unused net operating losses for income tax purposes,
expiring in various amounts from 2005 through 2011, of approximately $11,579,000
may be available for carryforward against future years' taxable income.
However, as a result of the consummation of several common stock transactions
during the year, these net operating losses may be limited under the provisions
of Section 382 of the Internal Revenue Code of 1986, as amended. The tax benefit
of these losses of approximately $4,541,000 has been offset by a valuation
allowance due to it being more likely than not that the deferred tax asset will
not be realized.

Liquidity and Capital Resources

Liquidity and capital resources are hereinafter discussed in three broad
categories: operating activities, investing activities and financing
activities.

Operating Activities

The revised marketing and sales approach, initiated in 1995 in response to
changing interests of the public away from memberships in favor of destination
and special interest resort amenities, has resulted in an increase in cash flows
from operations for the current year, which trend is expected to continue in
future years.

Cash increased $433,258 from $11,252 at December 31, 1995 to $444,510 at
December 31, 1996. Net cash used for operating activities was $1,930,428 for
the year ended December 31, 1996 compared with cash used for operating
activities of $690,805 during the year ended December 31, 1995. The increase
of $1,239,623 was due primarily to the following factors.

Increase in operating loss 875,211
Net decrease in noncash items
charged to operations 97,247
including stock and stock
options issued un payment of
finders' fees, consulting fees,
provision for doubtful accounts
Net change in current assets
and liabilities resulting
in the use of cash 267,165

Total 1,239,623

Investing Activities

During the year ended December 31, 1996 cash was used for investing
activities in the amount of $2,078,161 compared to net cash used by investing
activities in the amount of $12,213 during the year ended December 31, 1995.
The increase in cash used by investing activities related primarily to the
investment in PMG in the amount of $1,298,234 and the increase in loans to the
Corporation for oil and gas exploration in the amount of $465,000.

Financing Activities

During the years ended December 31, 1996 and December 31, 1995, the
Company had net cash flows provided by financing activities of $4,471,678 and
$711,992, respectively, primarily from proceeds from the sale of convertible
debentures ($3,147,774) and common stock ($1,562,494) during 1996. The
convertible debentures and the common stock were sold pursuant to Regulation S
to non-U.S. residents. The common stock was sold at a fixed price lower than
the then-current market price of the Company's common stock. The convertible
debentures were sold on the basis of a conversion, at the holders election, at a
discount to the bid price of the Company's common stock which is the lower of
10% below the stock price as of the date of sale of the debenture or 15% or 35%
below the stock price as of the conversion date. In addition, fees were paid to
agents for commissions related to the sale of the common stock and the
convertible debentures. During 1996 the Company converted approximately
$800,000 face amount of convertible debentures, out of a total of $3,842,800
face value sold. As a result of the decrease in the stock price of the
Company's common stock following such conversions, requests for subsequent
conversions were rejected by the Company and the Company and the debenture
owners are currently negotiating an agreement pursuant to which the Company will
repay a certain amount to the debenture owners over a period of time. It is
anticipated that such agreement will be completed during 1997. The convertible
debentures are due March 1, 1998.

The Company, from time to time, receives proceeds from the exercise of
outstanding common stock options and warrants, and uses the proceeds as
working capital. During 1995, the Company received $400,325 from such
exercises.

During 1996 the Company engaged consultants to provide services to the
Company relating principally to possible business combinations with other
companies, and expanding the Company's relationships with possible
market-makers. The Company granted 568,000 shares of its common stock to such
consultants through a combination of direct grants of shares and options to
purchase shares of the Company's common stock. These shares were registered
pursuant to a filing on Form S-8, which the Company completed during 1996 and
which provided for a 500,000 shares to be granted together with options to be
granted for an additional 500,000 shares. The efforts of the consultants
resulted in the identification of a restaurant chain, with which the Company did
not complete an anticipated business combination, as well as the identification
and securing of arrangements for the Company's investments in, loans to and/or
letters of intent with PMG, the oil and gas Corporation, and the radio station
group. The consultants also provided improved market support for the Company's
publicly-traded securities as well as expanded opportunities for possible
business combinations.

Management's Plans

As shown in the accompanying financial statements, the Company has
experienced significant operating losses and negative cash flow from operations
in recent years and has an accumulated deficit of $16,309,483, at December 31,
1996. During the year ended December 31, 1996, the Company generated revenues
from resort operations; however, it reported a net loss of $6,246,048 and has
negative working capital of $84,007. These conditions raise substantial doubt
about the Company's ability to continue as a going concern.

Management's plans to improve the financial position and operations with
the goal of sustaining the Company's operations for the next twelve months and
beyond include:

Continuing to complete the development of the Resort Property during the 1996-97
resort seasons. The additional facilities that will be provided by such
improvements are expected to enhance the operating revenue and cash flow of the
Resort facilities. The Company will require a minimum of an additional $75,000
to complete the development;

Refinancing the Company's mortgage note with the possibility of obtaining
additional funds for working capital from the new mortgage loan;

Arranging with a company (related through common directorship) to provide funds
on a monthly basis as a loan, collateralized by the preferred stock which the
Company owns in such company, or the sale of such stock to provide working
capital and investment capital for the funding of a business combination;

Arranging for the conversion or repayment of the convertible debt through the
sale of the Company's equity securities; and

Acquiring assets and operations of one or more entities for which the Company
has been in negotiation with the expectation that such business combination, if
completed, would provide additional cash flow and net income.

Though management believes the Company will secure additional capital
and/or attain one or more of the above goals, there can be no assurance that any
acquisition, financing or other plan will be effected. Any acquisition or
securities offering is subject to the Company's due diligence, the state of the
general securities markets and of the specific market for the Company's
securities, and any necessary regulatory review.

While the Company believes that its plans for the Resort, additional
funding, or possible business combination have the reasonable capability of
improving the Company's financial situation and ensuring the continuation of its
business, there can be no assurance that the Company will be successful in
carrying out its plans and the failure to achieve them could have a material
adverse effect on the Company.

Recent Accounting Pronouncements

See "Summary of Significant Accounting Policies" footnote to the Company's
Financial Statements for information relating to recent accounting
pronouncements.

ITEM 7. FINANCIAL STATEMENTS

The following financial statements and schedules are included in this
Annual Report on Form 10-KSB following Item 13:

Index to Financial Statements

Report of Independent Certified Public Accountants F-2
Balance Sheet F-3
Statement of Operations F-5
Statement of Stockholders' Equity F-6
Statement of Cash Flows F-7
Notes to Financial Statements F-8

ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE

The information called for by Item 8 is incorporated herein by reference
to the Company's Form 8-K dated April 29, 1997 and filed with the SEC on April
30, 1997.

PART III

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND
CONTROL PERSONS; COMPLIANCE WITH SECTION 16(a)
OF THE EXCHANGE ACT

The directors and executive officers of the Company as of December 31,
1996 are listed below.

Name Age Position Held

James J. McNamara 48 President, Chief Executive Officer and
Director
J. William Metzger 48 Executive Vice President, Chief
Financial Officer, Controller,
Secretary, Treasurer and Director
David J. Critchfield 46 Director

Each of the Company's directors has been elected to serve until the next
annual meeting of the stockholders of the Company and until each of their
respective successors has been elected and qualified or until death,
resignation, removal or disqualification. Vacancies in the existing Board are
filled by a majority vote of the remaining directors on the Board. The
Company's executive officers are appointed by and serve at the discretion of the
Board.

Biographies of the directors and executive officers of the Company are set
forth below:

James J. McNamara has been the President, Chief Executive Officer and a
director of the Company since June 1993, at which time the Company acquired PSI,
which was formed by Mr. McNamara in 1991. During 1993-1994 Mr. McNamara created
and executively produced 61 half-hour episodes of "The NEWZ" television series
for PSI. Mr. McNamara has been involved in the music and entertainment business
since 1971. Mr. McNamara first became involved in the motion picture business
in 1979 when he assumed management of "Hardly Working," a motion picture which
had encountered severe financial and production related problems. Largely as a
result of Mr. McNamara's efforts, "Hardly Working" was distributed by Twentieth
Century-Fox and became one of the highest grossing independently-produced
pictures of 1981. From 1981 through 1985, Mr. McNamara developed various motion
picture properties while maintaining offices at Twentieth Century-Fox in Los
Angeles and commencing centralization of his operations in Palm Beach, Florida.
In 1986, Mr. McNamara formed Entertainment, Inc., a Florida corporation which
became the managing general partner of Premiere, Ltd., a limited partnership
formed to develop motion pictures and television projects. Premiere, Ltd.
developed a portfolio of projects including "Super Force," a half-hour action-
adventure television series produced in association with Viacom Enterprises,
which also distributed the series worldwide in first-run syndication. From 1988
until 1991, Mr. McNamara created and executively produced 48 episodes of "Super-
Force." Premiere, Ltd. is no longer actively engaged in the development of
motion picture and television projects. Premiere ceased to operate as a going
concern in October 1991 due to cash flow difficulties experienced by Premiere.
Mr. McNamara is chairman and chief executive officer of Princeton Media Group,
Inc. an Ontario, Canada corporation quoted on the Nasdaq Smallcap market which
is engaged in the publishing and distribution of several lifestyle and
entertainment periodicals. Mr. McNamara holds no directorships in any other
companies with a class of securities registered on a national exchange or which
are required to file annual, quarterly or other periodic reports with the
Commission. During the past five years, Mr. McNamara has principally been
involved in the creation and production of television projects, the management
of PMG, and the management of the Company.

J. William Metzger has been Executive Vice President, Chief Financial
Officer, Controller, Secretary, Treasurer and a director of the Company since
June 1993 at which time the Company acquired PSI. Mr. Metzger assisted Mr.
McNamara in the "Hardly Working" project and was chiefly responsible for the re-
editing, completion and promotion of the film. He has worked with Mr. McNamara
since that time as a development executive in the offices at Twentieth Century-
Fox and as Executive Vice-President of Entertainment, Inc. and PSI and as a
control person of Premiere. Mr. Metzger holds no directorships in any other
company with a class of securities registered on a national exchange or which is
required to file annual, quarterly, or other periodic reports with the
Commission. During the past five years, Mr. Metzger has principally been
involved in the production of television projects and the management of the
Company.

David J. Critchfield has been a director of the Company since May, 1995.
He has been the Secretary and Treasurer of TeleMatrix, Inc., a privately-held
telephone manufacturer and retailer based in Coral Springs, Florida, since its
inception in November, 1992. From 1990 until 1992 he served as Vice President
and Secretary/Treasurer of TeleConcepts, Inc., a publicly traded company
involved in the telecommunications industry. From 1985 through 1990, Mr.
Critchfield was Treasurer and Controller of Petro 85, Inc., an oil and gas
drilling and production company located in Kansas.

As of December 31, 1996, no committees of the Board of Directors had been
established.

Compliance with Section 16(a) of the Exchange Act of 1934

Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's officers and directors, and persons who
own more than 10% of a registered class of the Company's equity securities, to
file reports of ownership and changes in ownership of equity securities of the
Company with the Securities and Exchange Commission (SEC) and Nasdaq. Officers,
directors and greater-than-10% shareholders are required by the SEC regulations
to furnish the Company with copies of all Section 16(a) forms they file.

During 1996, Mr. McNamara did not file a required Form 5. Mr. Metzger did
not file a required Form 4 and a required Form 5 during fiscal 1996.

ITEM 10. EXECUTIVE COMPENSATION

The following table sets forth the aggregate cash compensation paid for
services rendered to the Company during the last three fiscal years by the
Company's Chief Executive Officer during the last fiscal year and the Company's
most highly compensated executive officers who served as such during fiscal 1996
whose total annual salary and bonus exceeded $100,000.

SUMMARY COMPENSATION TABLE

<TABLE>
Long Term Compensation
Annual Compensation Awards Payouts
<S> <C> <C> <C> <C> <C> <C> <C> <C>

Other Restricted All Other
Name and Annual Stock Options/ LTIP Compen-
Principal Year Salary Bonus Compensa- Awards SARs (#) Payments (#) sation
Position ($) ($) tion ($) ($)
($)

James J. 1996 55,125 106,755 - - - - -
McNamara 1995 26,250(1) - 103,511(2) - 1,000(3)(4) - -
CEO

J. William 1996 55,125 20,607 - - - - -
Metzger 1995 26,250(1) - 103,511(2) - 1,000(3)(4) - -
Exec. V-P

</TABLE>

(1) Earned but not paid.
(2) This figure represents the fair market value of common stock received upon
cashless exercise of stock option for forgiveness of indebtedness, minus the
amount of indebtedness forgiven.
(3) Exercise price $25.00 per share, expiring 9/1/98.
(4) All options indicated were granted in consideration of Messrs. McNamara's
and Metzger's waiving earned but unpaid salary in the amount of $26,250 each for
1995.

Stock Options

No options were granted to any of the named executive officers during 1996.

<TABLE>

Aggregated Option/SAR Exercises and Fiscal Year-End Option/SAR Values
<S> <C> <C> <C> <C> <C> <C>
Name Shares Number of Securities Value of
Acquired On Value Underlying Unexercised in the
exercise (#) Realized Options/SAR's at FY- Money Options/SAR's
End (#) at FY-End ($)
Exercisable Unexercisable Exercisable Unexercisable
James J. 0 0 2,000 0 0 0<PAGE>
McNamara
J. William 0 0 2,000 0 0 0
Metzger

</TABLE>

Mr. McNamara and Mr. Metzger are each a party to an employment agreement
with the Company providing for their services until December 31, 1998 at a
current annual salary of $55,125 each with a 5% annual escalation.

Directors are not compensated for their services as members of the Board
of Directors of the Company.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT

The following table sets forth, as of the date hereof, certain information
with respect to the beneficial ownership of outstanding shares of the Company's
common stock by: (i) each person known by the Company to be the beneficial
owner of five percent or more of its outstanding common stock, (ii) each
director and named executive officer of the Company individually and (iii) all
executive officers and directors of the Company as a group.

Name and Address of Common Percent of
Beneficial Owner Stock Common Stock Owned (1)

James J. McNamara
214 Brazilian Avenue, Suite 400
Palm Beach, FL 33480 3,496(2) 0.8 %

J. William Metzger
214 Brazilian Avenue, Suite 400
Palm Beach, FL 33480 3,266(3) 0.8 %

David J. Critchfield
214 Brazilian Avenue, Suite 400
Palm Beach, FL 33480 0 0%

UC Financial 346,362(4) 46.5%
c/o Barry Globerman, Esq.
110 E. 59th St., 23d Fl.
New York, NY 10022

Meson Investments, Ltd. 279,720(5) 41.3%
c/o Barry Globerman, Esq.
110 E. 59th St., 23d Fl.
New York, NY 10022

Torah Vechesed Le'Ezra Vesad 228,342(6) 36.5%
c/o Barry Globerman, Esq.
110 E. 59th St., 23d Fl.
New York, NY 10022

Douglas Pedrie 140,000(7) 35.0%
Energex, Inc.
P.O. Box 1424
Abilene, TX 79604

Maslo Fund Ltd. 154,634(8) 28.0%
c/o Barry Globerman, Esq.
110 E. 59th St., 23d Fl.
New York, NY 10022

Walsh Investments Limited 128,493(9) 24.4%
c/o Barry Globerman, Esq.
110 E. 59th St., 23d Fl.
New York, NY 10022

Madison Trading Ltd. 98,689(10) 19.9%
c/o Barry Globerman, Esq.
110 E. 59th St., 23d Fl.
New York, NY 10022

Devoiry Goldstein 61,020(11) 13.3%
c/o Barry Globerman, Esq.
110 E. 59th St., 23d Fl.
New York, NY 10022

Eurodisc, Ltd. 50,000 12.6%
P.O. Box 3950
Nassau, Bahamas

Ester Blass 55,944(5) 12.3%
c/o Barry Globerman, Esq.
110 E. 59th St., 23d Fl.
New York, NY 10022

EBC Zurich AG 55,944(5) 12.3%
c/o Barry Globerman, Esq.
110 E. 59th St., 23d Fl.
New York, NY 10022

Marcos Kohn 49,968(12) 11.2%
c/o Barry Globerman, Esq.
110 E. 59th St., 23d Fl.
New York, NY 10022

Hershel Goldberg 44,156(13) 10.0%
c/o Barry Globerman, Esq.
110 E. 59th St., 23d Fl.
New York, NY 10022

William Anthony King 42,774(14) 9.7%
c/o Barry Globerman, Esq.
110 E. 59th St., 23d Fl.
New York, NY 10022

Int'l Keren Nisuin 27,972(5) 6.6%
c/o Barry Globerman, Esq.
110 E. 59th St., 23d Fl.
New York, NY 10022

Societe Financier Mirelis SA 27,972(5) 6.6%
c/o Barry Globerman, Esq.
110 E. 59th St., 23d Fl.
New York, NY 10022

Ephraim Saghi 27,972(5) 6.6%
c/o Barry Globerman, Esq.
110 E. 59th St., 23d Fl.
New York, NY 10022

All Officers and Directors
As A Group (3 persons) 6,762 0.17 %

(1) The numbers in this column add up to greater than 100% due to the method of
calculation of percentage ownership of securities beneficially owned but not
currently outstanding.
(2) Includes 1,496 shares directly owned and 2,000 shares beneficially owned
pursuant to options currently exercisable.
(3) Includes 1,266 shares directly owned and 2,000 shares beneficially owned
pursuant to options currently exercisable.
(4) Includes 10,697 shares directly owned and 335,664 shares beneficially
owned pursuant to convertible debentures.
(5) Beneficially owned pursuant to convertible debentures.
(6) Includes 4,566 shares directly owned and 223,776 shares beneficially
owned pursuant to convertible debentures.
(7) Record owner is Energex, Inc., a company wholly owned and controlled by
Mr. Pedrie.
(8) Includes 6,382 shares directly owned and 148,252 shares beneficially
owned pursuant to convertible debentures.
(9) Includes 2,619 shares directly owned and 125,874 shares beneficially
owned pursuant to convertible debentures.
(10 Includes 6,382 shares directly owned and 92,308 shares beneficially
owned pursuant to convertible debentures.
(11) Includes 5,076 shares directly owned and 55,944 shares beneficially
owned pursuant to convertible debentures.
(12) Includes 2,415 shares directly owned and 47,552 shares beneficially
owned pursuant to convertible debentures.
(13) Includes 2,198 shares directly owned and 41,958 shares beneficially
owned pursuant to convertible debentures.
(14) Includes 816 shares directly owned and 41,958 shares beneficially
owned pursuant to convertible debentures.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

During 1996 the Company acquired an interest through the purchase of 8%
cumulative convertible preferred stock in Princeton Media Group, Inc. ("PMG").
James J. McNamara is the Chief Executive Officer and Chairman of PMG and is the
President, Chief Executive Officer and Chairman of the Company.

In connection with a financing transaction completed on June 30, 1995,
Mr. McNamara and Mr. Metzger forgave an aggregate of $138,350 of accrued salary
and benefits owed to them by the Company, and agreed to the cancellation of
7,500 then outstanding options to purchase common stock. In exchange, they
received 1,000 options each to purchase common stock at an exercise price of
$25.00, which were deemed simultaneously exercised for forgiveness of debt;
1,000 options each to purchase common stock at an exercise price of $25.00 which
remain outstanding; and 1,000 options each to purchase common stock at an
exercise price of $125.00 which remain outstanding. The outstanding options
have an expiration date of 9/1/98.

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

No reports on Form 8-K were filed during the last quarter of the period covered
by this report. A report on Form 8-K dated April 29, 1997 was filed with the
SEC on April 30, 1997 relating to a change in the Company's auditors.

Exhibits:

Exhibit
Number Exhibit

All Exhibits are incorporated herein by reference if not attached hereto.

2.1 Restated Financing Agreement and Letter of Intent dated June 30, 1995,
filed as Exhibit 2.1 to the Company's Annual Report on Form 10-KSB for
the year ended December 31, 1995, File No. 0-19196, filed with the
Securities and Exchange Commission on April 15, 1996.

3.1 Certificate of Incorporation of the Company, filed as Exhibit 3.01 to the
Company's Registration Statement on Form S-1, File No. 33-40203.

3.2 Certificate of Amendment of Certificate of Incorporation of the Company
filed in the office of the Secretary of State of Delaware January 28,
1988, filed as Exhibit 3.02 to the Company's Registration Statement on
Form S-1, File No. 33-40203.

3.3 Amended and Restated By-Laws of the Company, filed as Exhibit 3.3 to the
Company's Registration Statement on Form S-2, File No. 33-69744.

3.4 Certificate of Amendment of Certificate of Incorporation of the Company
filed in the office of the Secretary of State of Delaware April 27, 1990,
filed as Exhibit 3.02 to the Company's Registration Statement on Form S-1,
File No. 33-40203.

3.5 Certificate of Amendment of Certificate of Incorporation of the Company
filed in the office of the Secretary of State of Delaware February 18,
1993, filed as Exhibit 3.5 to the Company's Registration Statement on Form
S-2, File No. 33-69744.

3.6 Certificate of Amendment of Certificate of Incorporation of the Company
filed in the office of the Secretary of State of Delaware (November 3,
1993) and filed as an exhibit to the Company's Form 10-QSB, File No. 0-
19196, filed with the Securities and Exchange Commission on November 19,
1993.

3.7 Certificate of Correction of Certificate of Designation of the Company
filed in the office of the Secretary of State of Delaware on July 28,
1995, filed as Exhibit 3.7 to the Company's Annual Report on Form
10-KSB for the year ended December 31, 1995, File No. 0-19196, filed
with the Securities and Exchange Commission on April 15, 1996.

3.8 Certificate of Increase of Number of Shares of Class A Convertible 8%
Stock of the Company filed in the office of the Secretary of State of
Delaware on July 28, 1995, filed as Exhibit 3.8 to the Company's Annual
Report on Form 10-KSB for the year ended December 31, 1995, File No.
0-19196, filed with the Securities and Exchange Commission on April 15,
1996.

3.9 Certificate of Amendment of Certificate of Incorporation of the Company
filed in the office of the Secretary of State of Delaware on July 28,
1995, filed as Exhibit 3.9 to the Company's Annual Report on Form 10-KSB
for the year ended December 31, 1995, File No. 0-19196, filed with the
Securities and Exchange Commission on April 15, 1996.

4.1 Specimen Common Stock Certificate, filed as Exhibit 4.01 to the Company's
Registration Statement on Form S-18, File No. 33-33035A.

4.2 Specimen Class A Convertible Preferred Stock Certificate, filed as Exhibit
4.2 to the Company's Annual Report on Form 10-KSB for the year ended
December 31, 1994, File No. 0-19196, filed with the Securities and
Exchange Commission on April 17, 1995.

4.3 Form of Warrant Agreement among the Company, I.A. Rabinowitz & Co., and
American Stock Transfer & Trust Company, as warrant agent, filed as
Exhibit 4.3 to the Company's Annual Report on Form 10-KSB for the year
ended December 31, 1994, File No. 0-19196, filed with the Securities
and Exchange Commission on April 17, 1995.

4.4 Specimen Common Stock Purchase Warrant, filed as Exhibit
4.4 to the Company's Annual Report on Form 10-KSB for the year ended
December 31, 1994, File No. 0-19196, filed with the Securities and
Exchange Commission on April 17, 1995.

4.5 Form of Class A Preferred Stock Warrant, filed as Exhibit
4.5 to the Company's Annual Report on Form 10-KSB for the year ended
December 31, 1994, File No. 0-19196, filed with the Securities and
Exchange Commission on April 17, 1995.

4.6 Form of Representative's Unit Purchase Warrant, filed as Exhibit
4.6 to the Company's Annual Report on Form 10-KSB for the year ended
December 31, 1994, File No. 0-19196, filed with the Securities and
Exchange Commission on April 17, 1995.

4.7 Warrant of (ITI) Glendale, Inc. relating to 100,000 shares of Common
Stock, filed as Exhibit 4.7 to the Company's Registration Statement on
Form S-2, File No. 33-69744.

4.8 Warrant of David A. Johnson relating to 100,000 shares of Common Stock,
filed as Exhibit 4.8 to the Company's Registration Statement on Form S-2,
File No. 33-69744.

4.9 Certificate of Designation, Number, Powers, Preferences and Relative,
Participating, Optional and Other Special Rights and the Qualifications,
Limitations, Restrictions, and other Distinguishing Characteristics of
Preferred Stock of the Company, filed in the Secretary of State of
Delaware's office on July 31, 1990, filed as Exhibit 4.11 to the Company's
Registration Statement on Form S-2, File No. 33-69744.

4.10 Amended Certificate of Designation, Number, Powers, Preferences and
Relative, Participating, Optional and Other Special Rights and the
Qualifications, Limitations, Restrictions, and other Distinguishing
Characteristics of Preferred Stock of the Company, filed in the Secretary
of State of Delaware's office on February 18, 1993, filed as Exhibit 4.12
to the Company's Registration Statement on Form S-2, File No. 33-69744.

4.11 Form of Certificate of Designation Setting Forth the Preferences, Rights
and Limitations of Preferred Stock, which will designate the Class A
Preferred Stock, filed as Exhibit 4.13 to the Company's Registration
Statement on Form S-2, File No. 33-69744.

4.12 Form of New Common Stock Certificate (Post 1993 Reverse Split), filed as
Exhibit 4.14 to the Company's Registration Statement on Form S-2, File No.
33-69744.

10.1 1992 Stock Option Plan of the Company, filed as Exhibit 10.14 to the
Company's Registration Statement on Form S-2, File No. 33-69744.

10.2 Agreement between the Company and Resort Parks International, Inc., filed
as Exhibit 10.15 to the Company's Registration Statement on Form S-2, File
No. 33-69744.

10.3 Form of Celebrity Resorts, Inc. Membership Agreement, filed as Exhibit
10.16 to the Company's Registration Statement on Form S-2, File No. 33-
69744.

10.4 Form of Celebrity Resorts, Inc. Promissory Note (for membership sales),
filed as Exhibit 10.21 to the Company's Registration Statement on Form S-
2, File No. 33-69744.

10.5 Note and Mortgage Modification and Agreement Regarding Closing of Loan
dated as of May 2, 1994 by and between the Company and AmSouth Bank of
Florida, filed as Exhibit 10.23 to the Company's Annual Report on Form 10-
KSB for the year ended December 31, 1994 (File No. 0-19196).

10.6 Employment Agreement between James J. McNamara and the Company dated as of
January 27, 1994 filed as Exhibit 10.24 to the Company's Annual Report on
Form 10-KSB for the year ended December 31, 1994 (File No. 0-19196).

10.7 Employment Agreement between J. William Metzger and the Company dated as
of January 27, 1994 filed as Exhibit 10.25 to the Company's Annual Report
on Form 10-KSB for the year ended December 31, 1994 (File No. 0-19196).

10.8 Letter of Intent between the Company and Energex, Inc.

27 Financial Data Schedule.
________________

SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the
Registrant caused this report to be signed on its behalf by the
undersigned thereunto duly authorized, this 8th day of May, 1997.

CELEBRITY ENTERTAINMENT, INC.

By: /s/ James J. McNamara
James J. McNamara
President and Chief Executive Officer

In accordance with the Exchange Act, this report has been signed below
by the following persons on behalf of the Registrant and in the
capacities and on the dates indicated.

Signature Title Date

/s/ James J. McNamara President, Chief Executive May 8, 1997
James J. McNamara Officer and Director

/s/ J. William Metzger Executive Vice President, May 8, 1997
J. William Metzger Chief Financial Officer,
Controller, Secretary,
Treasurer and Director

Report of Independent Certified Public Accountants

The Board of Directors
Celebrity Entertainment, Inc.
Palm Beach, Florida

We have audited the balance sheet of Celebrity Entertainment, Inc. as of
December 31, 1996 and the related statements of operations, stockholders'
equity and cash flows for the year then ended. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Celebrity Entertainment, Inc.
at December 31, 1996 and the results of its operations and its cash flows for
the year then ended in conformity with generally accepted accounting principles.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As described in Note 2 to the
financial statements, the Company has experienced significant operating
losses, has an accumulated deficit and has negative working capital at
December 31, 1996. These conditions raise substantial doubt about the
Company's ability to continue as a going concern. Management's plans in regard
to these matters are also described in Note 2. The financial statements do not
include any adjustments that might result from the outcome of this
uncertainty.

/s/Holyfield Associates, PA
Holyfield Associates, PA
West Palm Beach, Florida
May 8, 1997

Report of Independent Certified Public Accountants

The Board of Directors
Celebrity Entertainment, Inc.
Palm Beach, Florida

We have audited the statements of operations, stockholders' equity and cash
flows of Celebrity Entertainment, Inc. for the year ended December 31, 1995.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements
based on our audit.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the results of operations of Celebrity Entertainment,
Inc. and its cash flows for the year ended December 31, 1995 in conformity with
generally accepted accounting principles.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As described in Note 2 to the
financial statements, the Company has experienced significant operating
losses, has an accumulated deficit and has negative working capital at
December 31, 1995. These conditions raise substantial doubt about the
Company's ability to continue as a going concern. Management's plans in regard
to these matters are also described in Note 2. The financial statements do not
include any adjustments that might result from the outcome of this
uncertainty.

/s/ BDO Seidman, LLP
BDO Seidman, LLP
Orlando, Florida
April 8, 1996

Celebrity Entertainment, Inc.

Balance Sheet

December 31,

1996

Assets

Current assets:
Cash and cash equivalents $ 444,510
Prepaid expenses 273
Accounts receivable 7,058
Notes receivable (Note 5) 266,000

Total current assets 717,841

Property and equipment (Note 7)
Land 670,780
Buildings and improvements 2,881,393
Equipment 156,917
Furniture and fixtures 53,367

Total 3,762,457

Less accumulated depreciation and amortization 640,843

Net 3,121,614

Other assets:

Investment in affiliated company (Note 6) 1,298,234

Total assets $ 5,137,689

See accompanying notes to the financial statements.

Celebrity Entertainment, Inc.

Balance Sheet

December 31,
1996

Liabilities and Stockholders' Equity

Current liabilities:
Accounts payable $ 145,245
Accrued expenses 190,931
Deferred membership revenues (Note 4) 35,886
Mortgage note payable (Note 7) 429,786

Total current liabilities 801,848

Convertible debentures (Note 8) 3,020,000

Total liabilities 3,821,848

Commitment and contingencies (Note 12)

Stockholders' equity (Note 9):
Preferred stock, $.01 par value; 2,000,000 shares
authorized
Designated class A 8% convertible;
1,525,000 shares designated,
1,064,000 shares issued 10,640
Common stock, $.0001 par value; 25,000,000 shares
authorized, 304,408 shares issued 30
Additional paid-in capital 19,427,154

Accumulated deficit (16,309,483)
Less treasury stock, 10,100 shares common
and 475,000 shares preferred, at cost (500,000)

Less stock subscriptions receivable (1,312,500)

Total stockholders' equity 1,315,841

Total liabilities and stockholders' equity $ 5,137,689

See accompanying notes to the financial statements.

Celebrity Entertainment, Inc.

Statements of Operations

<TABLE>
<S> <C> <C>
Years ended December 31, 1996 1995

Revenues:
Resort membership sales $ 29,639 $ 24,500
Resort operations 223,096 117,552

Total revenues 252,735 142,052

Selling, general and administrative expenses 3,163,885 2,322,135
Bad debts (Notes 5 and 9) 715,174 -

Operating loss (3,626,324) (2,180,083)

Other income (expenses):
Interest income 99,421 4,740
Interest expense (135,000) (2,763,578)
Writeoff of debt discount
and issue costs (Note 8) (2,584,145) -

Total other income(expenses) (2,619,724) (2,758,838)

Loss from continuing operation (6,246,048) (4,938,921)

Discontinued operations:(Note 3)
Loss from discontinued operations of
television production subsidiary - (431,916)

Net loss (6,246,048) (5,370,837)

Preferred stock dividends (675,150) (321,750)

Net loss applicable to common stock $ (6,921,198) $ (5,692,587)

Loss from continuing operations per common share $ (91.14) $ (216.14)

Loss from discontinued operations $ - $ (18.90)

Net loss per common share $ (91.14) $ (249.12)

Weighted average number of
common shares outstanding 75,944 22,851
</TABLE>
See notes to the financial statements.

<TABLE>

Celebrity Entertainment, Inc.
Statements of Stockholders' Equity

<S> <C> <C> <C> <C> <C> <C> <C> <C>
Treasury Stock Additional
Preferred Stock Common Stock Common Preferred Paid-In
Shares Amount Shares Amount Shares Shares Amount Capital

Balance, December 31, 1994 589,000 $ 5,890 408,753 $ 41 $ - - - $ 6,977,968

1-for-50 reverse stock split (Note 9) - - (400,578) (40) - - - 40

Sale of preferred stock 475,000 4,750 - - - - - 95,250

Sale of common stock - - 20,460 2 - - - 2,167,748

Common stock warrants issued
in payment of consulting fees - - 16,700 2 - - - 2,204,512

Common stock options issued in
payment of officer's salaries - - - - - - - 214,063

Common stock options issued
payment of rent - - - - - - - 82,500

Common stock issued in
payment of debt to officers - - 2,000 - - - - 257,031

Common stock options issued
payment of commission on debt issue - - - - - - - 848,124

Net loss - - - - - - - -

Balance, December 31, 1995 1,064,000 10,640 47,335 5 - - - 12,827,236

Sale of common stock - - 26,000 3 - - - 1,449,491

Options exercised - - 2,000 - - - - 113,000

Common stock issued in
payment of consulting fees - - 9,460 1 - - - 898,230

Common stock option issued in
payment of consulting fees - - - - - - - 117,800

Common stock issued for note
receivable - - 140,000 14 - - - 1,312,486

Discount on debentures - - - - - - - 1,936,119

Conversion of debentures into common
stock - - 79,613 8 - - - 772,792

Purchase of treasury stock in
settlement of notes receivable - - - - 10,100 475,000 500,000 -

Writeoff of subscriptions receivable - - - - - - - -

Net loss - - - - - - - -

Balance, December 31, 1996 1,064,000 $ 10,640 304,408 $ 30 10,100 475,000 $ 500,000 $ 19,427,154

See accompanying notes to the financial statements.
</TABLE>

<TABLE>

Celebrity Entertainment, Inc.
Statements of Stockholders' Equity

Accumulated Stock Subscriptions
Deficit Receivable

Balance, December 31, 1994 $ (4,692,598) $ (100,000)

1-for-50 reverse stock split (Note 8) - -

Sale of preferred stock - (400,000)

Sale of common stock - (292,174)

Common stock warrants issued in
payment of consulting fees - -

Common stock options issued in
payment of officer's salaries - -

Common stock options issued in
payment of rent - -

Common stock issued in
payment of debt to officers - -

Common stock options issued in
payment of commission on debt issue - -

Net loss (5,370,837) -

Balance, December 31, 1995 (10,063,435) (792,174)

Sale of common stock - -

Options exercised - -

Common stock issued in payment
of consulting fees - -

Common stock options issued in
payment of consulting fees - -

Common stock issued for note
receivable - (1,312,500)

Discount on debentures - -

Conversion of debenture into common stock - -

Cash payment on note receivable - 42,000

Purchase of treasury stock in settlement
of notes receivable - 500,000

Writeoff of subscriptions receivable - 250,174

Net loss (6,246,048) -

Balance, December 31, 1996 $ (16,309,483) $ (1,312,500)

See accompanying notes to the financial statements.
</TABLE>

<TABLE>
Celebrity Entertainment, Inc.
Statements of Cash Flows

<S> <C> <C>
Years ended December 31, 1996 1995

Cash flows from operating activities:
Net loss $ (6,246,048) $ (5,370,837)
Adjustments to reconcile net loss to net cash
used for operating activities:
Depreciation and amortization 117,456 115,921
Provision for doubtful accounts 465,000 -
Discount on conversion price of convertible debentures - 2,484,372
Stock issued in payment of consulting fees 898,230 1,512,015
Stock issued in payment of debt to officers - 207,031
Stock options issued in payment of officer salaries - 128,213
Stock options issued in payment of office rent - 82,500
Stock options issued in payment of consulting fees 117,800 -
Writeoff of deferred loan costs and debt discount 2,584,145 -
Writeoff of stock subscriptions receivable 250,174 -

Change in current assets and liabilities:
Prepaid expenses and accounts receivable (661) (197)
Accounts payable and accrued expenses (99,337) 147,510
Deferred membership revenues (17,187) 2,667

Net cash used for operating activities (1,930,428) (690,805)

Cash flows from investing activities:
Purchase of property and equipment (48,927) (12,213)
Increase in investment in affiliated company (1,400,000) -
Redemption of preferred stock in affiliated company 101,767 -
Loans for oil and gas exploration (465,000) -
Loans for radio station acquisitions (1,566,000) -
Loan repayments 1,300,000 -

Net cash used for investing activities (2,078,161) (12,213)

Cash flows from financing activities:
Proceeds of notes payable - 275,850
Repayments of notes payable (277,590) (46,743)
Repayments of long-term debt (29,831) (28,941)
Proceeds from debenture payable 3,144,774 -
Proceeds from the issuance of common stock 1,562,494 511,826
Payments of stock subscriptions receivable 42,000 -

Net cash provided by financing activities 4,471,678 711,992

Increase in cash and cash equivalents 433,258 8,974

Cash and cash equivalents, beginning of year 11,252 2,278

Cash and cash equivalents, end of year $ 444,510 $ 11,252
</TABLE>
See accompanying notes to the financial statements.

Celebrity Entertainment, Inc. and Subsidiary
Notes to financial statements

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization

Celebrity Entertainment, Inc. (the "Company" ), a Delaware
corporation, developed and operates a destination resort community
featuring golf, fishing and recreational activities. The Company markets
memberships in the resort which entitle members to the use of resort
facilities at reduced rates. Income from the resort is seasonal, and on
an annual basis, the Company is required to seek additional financing to
pay long-term debt obligations and the resort's on-going operations,
including payroll, creditors and real estate taxes. Income from the
resort operations is not sufficient to sustain the Company's operations.

Property and Equipment

Property and equipment are stated at cost. Depreciation is computed
over the estimated useful lives (5 to 31.5 years) of the assets
using the straight-line method for financial reporting and
accelerated methods for income tax purposes.

Net Loss Per Common Share

The net loss per common share is computed using the weighted average
number of common shares outstanding during each period after giving
effect to the 1-for-50 reverse stock split described in Note 9.
Common stock equivalents have not been included since they would be
antidilutive.

Revenue Recognition

Memberships sold represent the right to use the resort facilities
upon continuous payment of monthly membership installments, dues and
usage fees. Memberships generally require an initial payment of 10%
upon signing of the contract with the balance payable in monthly
installments over three to five years. The initial payment and all
monthly payments are deferred and recognized as revenues in the
period when the membership fee is paid in full. In the event of a
default in the payment of monthly payments, the member forfeits all
amounts collected by the Company at the time of default, and any
such amounts that were deferred are recognized as revenue. Revenues
from usage fees are recognized on a daily basis as the resort
facilities are used. Dues revenues are deferred and recognized on a
prorata basis over the dues period which ranges from one month to
one year.

Estimates

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results
could differ from those estimates.

Financial Instruments and Concentration of Credit Risk

Financial instruments that potentially subject the Company to
concentrations of credit risk consist principally of cash and accounts
receivable. The Company maintains significant cash deposits primarily
in one financial institution. The company performs periodic evaluations
as part of its investment strategy. Concentrations of credit risk with
respect to accounts receivable are limited due to the relatively
insignificant amount of receivables.

The carrying values of certain on-balance-sheet financial instruments
approximated their fair values. These financial instruments include cash,
accounts and notes receivable, accounts payable, accrued expenses, mortgage
note payable and debentures payable.

Cash and Cash Equivalents

Cash and cash equivalents are all cash balances and highly liquid
investments with original maturities of three months or less.

Recent Accounting Pronouncements

Statement of Financial Accounting Standards No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of,"
issued by the FASB, is effective for financial statements for fiscal years
beginning after December 15, 1995. This standard establishes guidelines
regarding when impairment losses on long-lived assets are recognized and how
impairment losses are measured. This statement did not have a material effect
on the Company's financial position or results of operations in 1996.

On October 23, 1995, the FASB issued Statement of Financial Accounting
Standards No. 123, "Accounting for Stock-Based Compensation." SFAS
No. 123 allows companies to retain the current approach set forth in APB
Opinion No. 25, "Accounting for Stock Issued to Employees," for recognizing
stock-based expense in their financial statements in lieu of the accounting
method prescribed by SFAS No. 123 based on the estimated fair value of employee
stock options. Companies that do not follow the fair value based method are
required to provide expanded footnote disclosures. The provisions of SFAS No.
123 are effective for fiscal years beginning after December 15, 1994. The
Company has elected to follow APB Opinion No. 25, which would require it apply
only the disclosure provisions required under SFAS No. 123. No such disclosures
were required in 1996.

In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128, "Earnings per Share." This statement is
required to be adopted for financial statements for periods ending after
December 15, 1997, including interim periods. Earlier application of the
Statement is not permitted: however, once adopted, all prior period earnings per
share data presented must be restated. Accordingly, the Company will implement
the Statement in the last quarter of 1997 and restate earnings per share amounts
back to January 1, 1997. The Statement will supersede APB Opinion No. 15 and
replaces the presentation of "primary earnings per share" with "basic earnings
per share," which will exclude all potentially dilutive securities. These
dilutive securities will be included in an amount to be captioned "dilutive
earnings per share." The Company has not yet determined the impact this
Statement may have on the amounts of earnings or loss per share and related
financial statement disclosures.

In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 129, "Disclosure of Information about Capital
Structure." This statement is required to be adopted for financial statements
for periods ending after December 15, 1997. The Company's disclosures in the
accompanying financial statements meet all the requirements of the Standard.

In March, 1997, at a meeting of the Emerging Issues Task Force (EITF), the SEC
expressed views on accounting for convertible debt, as detailed in Note 8.

2. Going Concern and Management's Plans

As shown in the accompanying financial statements, the Company has experienced
significant operating losses and negative cash flow from operations in recent
years and has an accumulated deficit of $16,309,483 at December 31, 1996.
During the year ended December 31, 1996, the Company generated revenues from
resort operations; however, it reported a net loss of $6,246,048 and has
negative working capital of $84,007. These conditions raise substantial doubt
about the Company's ability to continue as a going concern.

Management's plans to improve the financial position and operations with the
goal of sustaining the Company operations for the next twelve months and beyond
include:

Refinancing the Company's mortgage note with the possibility of obtaining
additional funds for working capital from the new mortgage loan;

Arranging for the conversion or repayment of the convertible debt through the
sale of the Company's equity securities; and

Though management believes the company will secure additional capital
and/or attain one or more of the above goals, there can be no assurance
that any acquisition, financing or other plan will be effected. Any
acquisition or securities offering is subject to the Company's due diligence,
the state of the general securities markets and of the specific market for the
Company's securities, and any necessary regulatory review.

While the Company believes that its plans for the Resort, additional
funding, or possible business combination have the reasonable capability
of improving the Company's financial situation and ensuring the
continuation of its business, there can be no assurance that the
Company will be successful in carrying out its plans and the failure
to achieve them could have a material adverse effect on the Company.

3. Discontinued Operations

On June 15, 1993, the Company acquired the outstanding common stock
of Production Services International, Inc.(PSI)

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.

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 $250,000 of existing PSI liabilities.
The Company has also agreed to satisfy liabilities to other
creditors of PSI, at December 31, 1996 approximately $95,000
remained outstanding. 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.

4. Deferred Membership Revenues

Deferred membership revenues at December 31, 1996 are summarized
as follows:

Membership contracts sold to date which
have not been fully paid $ 83,705
Less membership notes receivable 47,819

$ 35,886

The Company has contracted with a finance company for the management
and collection of the notes receivable for which services it pays a
nominal fee.

5. Notes Receivable

Notes receivable are comprised of the following:

Note receivable, interest at 12%,
collateralized by all assets of the borrower,
repaid January 1997 $266,000
Loan receivable Corporation (Note 6) 465,000
Less allowance for doubtful accounts (465,000)

$266,000

During 1996, the Company loaned $355,000 to a stockholder (the "Stockholder")
(Note 9). In connection with the Company's loan and possible acquisition of an
oil and gas development company (the "Corporation") (Note 6), the loan was
forgiven in consideration for a finder's fee for the Stockholder's
introduction of the Corporation as an acquisition candidate. The finder's fee
is included in selling, general and administrative expenses in the accompanying
Statement of Operations.

6. Investments

Princeton Media Group, Inc.(Affiliated Company)

During 1996, the Company purchased 1334 shares of preferred stock for
$1.4 million, of Princeton Media Group, Inc., a company related by
common directorship and management. The Company had a short-term note
receivable from Princeton due upon demand, with interest accruing at
prime (8.25% as of December 31, 1996). The note balance and related
accrued interest was $6,975 an $83, respectively, as of December 31,
1996. Interest income on the note was $9,059 during 1996. During
1996, certain consultants to both the Company and Princeton had been
compensated with common shares of Princeton. During 1996, the Company
entered into an agreement with Princeton under which it repaid Princeton
$101,767 (15% of the consulting services) through the surrender of 66
shares of its investment in the preferred stock. Princeton Media Group,
Inc. operates a publishing and printing business that owns, publishes,
and prints twenty-two periodicals that have national and international
distribution. Each share of preferred stock entitles the Company
to 4000 votes per share. Dividends are cumulative and accrue at
8% per annum. At December 31, 1996, accumulated dividends amounted to
$35,901.

The preferred stock is convertible into common shares at $1000 per
share at a conversion rate determined by dividing the aggregate
value of the shares being converted, together with all accrued but
unpaid dividends by the average stock price. The average stock price
is defined as the lesser of 80% of the daily closing bid price of common
shares for five consecutive days preceding the date of subscription or
65% of the average daily closing bid price of common shares for five
consecutive days immediately preceding the date of conversion.

The Company accounts for this investment using the cost method.

It is the Company's intent to dispose of this investment in the near
future. At December 31, 1996, the market value of the investment, if
converted into common shares of Princeton, would approximate $1,300,000.

Oil and Gas Corporation

During 1996, pursuant to a letter of intent, the Company loaned $465,000 to
a Texas start-up corporation (the "Corporation") with no history of operations
and no profits to date, which explores, develops and produces oil and gas
pursuant to a mineral lease on approximately 10,000 acres near Breckenridge,
Texas. The letter of intent provides that the Company will fund the
Corporation's operations pending the signing of a definitive stock purchase
agreement providing for the Company to purchase 80% of the stock in the
Corporation. The letter of intent further provides that if the parties are
unable to come to a definitive agreement, the amounts provided by the Company
will then constitute indebtedness which will be repaid with interest at prime
plus 1.5% per annum, not to exceed 12% per annum. Although the letter of intent
called for the execution of the definitive agreement on or before April 4, 1997,
no such agreement has yet been completed. The Company is still attempting to
negotiate the definitive stock purchase agreement with the Corporation. In
view of the speculative nature of the Corporation's activities, management has
provided an allowance for the amount loaned.

7. Mortgage Note Payable

Mortgage note payable to a bank is collateralized by land in Ocala,
Florida, bears interest at 9% and is payable in monthly payments of
$5,650, including principal and interest to May 1997 with the balance
due on June 2, 1997.

8. Convertible Debentures

During 1996, the Company initiated private placements of convertible
debentures to non-U.S. persons under Regulation S issued by the
Securities and Exchange Commission under the Securities Act of 1933,
as amended.

The resulting gross proceeds from all the debentures sold were $3,842,800,
$648,026 of which were paid in investment brokerage commissions and
related fees. The debentures bear interest at 8% per year and are
due March 28, 1998. They are convertible at any time beginning 45
days after issuance into common shares at a conversion price equal to
the lower of:

(a) 65% or 85% of the average closing bid price of the Company's common
stock for the five business days immediately preceding the conversion
date, or

(b) 90% of the average closing bid price of the Company's common stock for
the five business days immediately preceding the date of subscription of
the debenture.

In March 1997, at a meeting of the Emerging Issue Task Force (EITF), the
SEC expressed its views on the accounting for convertible debt with a
nondetachable conversion feature where the conversion feature is
"in the money" (that is, a conversion discount) at the date the security
is issued.

The SEC believes that the conversion discount should be valued and
recognized at the date of issue as additional paid-in capital. The value
being determined is the difference between the conversion price and the
quoted market price of the common stock into which the security is
convertible, multiplied by the number of shares into which the security
may be converted.

For debt securities, the value of the conversion discount and any related issue
costs should be charged to interest expense from the date of issue to the date
the security first becomes convertible. It is the SEC's view that the stated
maturity of such debt is not substantive and therefore the conversion discount
and related issue costs should be amortized over this relatively short period.
Further, if the security is converted before the discount or issue costs are
fully amortized, the unamortized portions of the discount or costs should be
charged to interest expense in the period of conversion, rather than to
additional paid-in capital as is the current practice.

Change in Method

In 1996, upon the issue of the 8% convertible debt securities, the Company had
recognized the value of the discount ($1,936,119 in the manner now prescribed by
the SEC)and was amortizing the discount and related issue costs over the term of
the debt using the interest method. Upon conversion of the debt, the Company
had charged shareholders' equity for any remaining unamortized discount and
costs.

As a consequence of the above, in April 1997, the Company revised its method of
accounting for the conversion discount and issue costs to conform with the SEC's
position and wrote off all of the remaining discount and costs to the 1996
statement of operations. Also, the Company charged to 1996 operations the
discount and cost originally charged to shareholders' equity on the conversion
of debt during 1996. This resulted in a noncash writeoff of debt discount and
debt issue costs of $2,584,145.

9. Stockholders' Equity

Stock Splits

The Company has declared 1-for-5 and 1-for-50 reverse common stock
splits effective August 3, 1995 and March 12, 1997, respectively.
The loss-per-share calculation and all common share information
contained in these financial statements have been retroactively
adjusted to give effect to these stock splits.

Stock Option Plan

Under a 1992 stock option plan the Company is authorized to grant options
and/or stock appreciation rights up to a maximum of 4,000 common shares
to key employees, officers, directors and consultants of the Company at
the discretion of the Board of Directors. There were no options outstanding
under this plan at December 31, 1996 or 1995.

The Company estimates the fair value of stock options at the
grant date by using the Black-Scholes option pricing model with the
following weighted-average assumptions used for grants in 1995: no
dividend yield, volatility of 138%, risk-free interest rate of 5.9%
and an expected life of three years. The Company made no grants of
options to employees during 1996.

Issuance of Common Stock, Options and Treasury Stock

On June 30, 1995, the Company issued 16,000 shares of common stock
at a price of $25 per share and 475,000 shares of Class A convertible
8% preferred stock at a price of $.21 per share as a part of a financing
agreement with a stockholder (the "Stockholder") and its principal stockholder
in order for the Stockholder to provide a loan to the Company
in the amount of $200,000. As an additional part of the
financing agreement, the Company issued to these parties
an option to purchase 8,000 shares of common stock at an exercise
price of $25 per share. The fair market value of the Company's common
stock at the date of issuance of these shares and option was approximately
$128.50 per share. The Company's Class A convertible 8% preferred stock
was delisted by the National Association of Security Dealers in 1995
and therefore has no available current market value. The difference between the
fair market value and the consideration received on the issuance of the shares
and the option amounted to $2,484,372 and was recorded as interest expense in
1995.

The Company accepted notes from the Stockholder and its principal
stockholder for the purchase of the common and preferred stock
shares in the amount of $500,000.

During 1996 the Company repurchased 10,100 shares of common stock
and 475,000 shares of the preferred stock through cancellation of the
Stockholder notes. The transaction was recorded as a purchase of
treasury stock. In addition, the stockholders returned 2,900 of the
common stock options.

On June 30, 1995, the Company issued 2,000 shares of common stock
to the officers of the Company in repayment of a note payable in the
amount of $50,000. The officers of the Company also agreed to forego
collection of accrued salaries in the amount of $138,350 ($85,850
related to 1994) and the cancellation of options to purchase 7,500
shares of common stock which were granted in 1995 in exchange for a
vested three year option to purchase 4,000 shares of common stock at
an exercise price of $25 per share for 2,000 shares and $125 per share
for 2,000 shares. The FAS 123 weighted average fair value of the options
granted was $.32 per share. The fair market value of the Company's
common stock at the date of issuance of these shares and option was
approximately $128.50 per share. The difference between the fair market
value and the consideration received on the issuance of the shares
relating to the exchange of debt amounted to $207,031 and was recorded
as interest expense, and the shares relating to the exchange of officers'
salaries amounted to $214,063, of which $128,213 was recorded as salaries
expense in 1995.

Under the provisions of FAS 123, the Company's net loss and loss per
share would have remained as reported for 1996 and been increased to
$5,434,186 and $237.81 per share, respectively, for 1995.

On June 30, 1995, the Company sold for cash 4,000 shares of common
stock to an unrelated third party at a price of $25 per share.

Notes Receivable arising from Issuance of Common Stock

During 1996 the Company sold 140,000 shares of common stock to the Corporation
in exchange for a $1,312,500 secured promissory note. The note
bears interest at 12% per annum, matures on June 30, 1997 and is
secured by all assets of the Corporation.

During 1996 the Company wrote off as uncollectible $250,174 of notes
receivable arising from issuance of common stock in prior years.

Common Stock Warrants

At December 31, 1996, the Company had 31 common stock warrants
outstanding with an exercise price of $1,180 per warrant. They expire
in April, 1997.

Preferred Stock

In 1994, the Company completed a public offering of its securities. The
offering was for 345,000 units consisting of 345,000 shares of $.01 par
value Class A convertible 8% preferred stock and 690,000 Class A preferred
stock purchase warrants. Each share of Class A preferred stock is
convertible into 1/125 (2/5 of a share before the 50 to 1 1997 reverse
common stock split) a share of the Company's common stock at the election
of the holder at any time after January 27, 1995. The Class A preferred
stock is redeemable (subject to certain conditions) at the discretion of
the Company at a redemption price of $7.50 per share. The liquidation
preference of Class A preferred stock is $5.00 plus the accrued and unpaid
dividend to the payment date. The holder of each share of Class A preferred
stock has voting rights equal to 1/125 of a share of common stock. The
arrearage of cumulative dividends is $8.89 per share. The Class A preferred
stock purchase warrants are detachable from the Class A preferred stock
and entitle each holder to purchase one share of Class A preferred stock
at an exercise price of $6 per share through January 1997. As described
above, the company repurchased 475,000 shares of preferred stock as part
of a settlement of a $500,000 stock subscription receivable that was
outstanding as of December 31, 1995.

Preferred Stock Dividends

Beginning on January 1, 1995 the holders of the Class A preferred
stock will receive a cumulative dividend on January 1 of each year of
8% of the redemption value of the preferred stock, if dividends are
declared by the Board of Directors. Such dividends, whether declared
or not, will be paid in the event of a partial or complete liquidation
of the Company, any redemption of preferred stock or upon the conversion
of preferred stock to common stock. At December 31, 1996, cumulative
Dividends in arrears aggregate approximately $675,150, and at December 31,
1995 $321,175.

Preferred Stock Warrants

At December 31, 1996, the Company had 876,000 Class A preferred
stock purchase warrants outstanding. The warrants entitle each
holder to purchase one share of Class A preferred stock at an
exercise price of $6 per share through January 1997.

In connection with the Company's 1994 preferred stock offering,
30,000 unit purchase warrants were issued to the underwriter
of the public offering. The unit purchase warrants are exercisable
into 30,000 stock and 60,000 Class A preferred stock purchase
warrants. None of the preferred stock purchase warrants have been
exercised as of December 31, 1996.

Common Stock Issued as Payment on Consulting Agreements and Rents

During 1996, the Company entered into certain consulting agreements.
In consideration for their services, the consultants were issued 9,460
shares of common stock and 2,000 common stock options. The Company
charged the fair value of these shares and options, $1,016,030, to
1996 operations.

During 1995, the Company issued 16,700 shares of common stock (835,000
shares before the 1997 reverse stock split) for total consideration
of $692,500 as a part of consulting services rendered to the
Company. The fair market value of the shares of common stock at
the date of issuance was $2,204,515. The difference between the fair
market value and the consideration received on the issuance of these
shares amounted to $1,512,015 and was recorded as consulting services
expense.

The consultants were engaged to assist the Company in identifying
various business acquisitions, including the Corporation. In addition
certain consultants provided services related to public relations and
business strategies.

During 1995, the Company's landlord was granted the right to receive
600 shares of common stock (30,000 shares before the 1997 reverse stock
split) in consideration for past rent. The fair market value of the
Company's common stock at that date was $137.50 per share.
Accordingly, the Company recorded $82,500 in additional rent expense
for 1995. The 600 shares were issued in 1996.

Shares Reserved

At December 31, 1996, the Company has reserved common stock for
future issuance as follows:

Stock option plan 4,000
Other options 19,100
Common stock warrants 31

Convertible preferred stock and
related purchase warrants 10,600

33,731

10. Income Taxes

The Company provides pre income taxes as required by Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes." The components
of the net deferred tax assets consist of the following:

1996
Deferred tax assets:
Net operating loss carryforwards $4,540,664
Bad debts 182,345
Amortization 176,777
Non-deductible compensation from
stock options 83,942
Depreciation 3,612
Consulting fees paid with stock options 34,240
Rent paid with stock options 20,587

Gross deferred income tax assets 5,042,167
Valuation allowance (5,042,167)

Net deferred income tax assets $ -

The change in the valuation allowance for deferred tax assets was
an increase of $1,437,411 during 1996.

The following summary reconciles differences from taxes at the federal
statutory rate with the effective rate:

Year ended December 31, 1996 1995

Federal income taxed at statutory rates (34.0%) (34.0%)

Losses without tax benefits 34.0% 34.0%

Income taxes at effective rates 0% 0%

Unused net operating losses for income tax purposes, expiring in
various amounts from 2005 through 2011, of approximately $11,579,000
are available at December 31, 1996 for carryforward against future
years' taxable income. However, as a result of the consummation of
several common stock transactions during the year (Notes 8 & 9), these
net operating losses may be limited under the provisions of Section
382 of the Internal Revenue Code of 1986, as amended. The tax
benefit of these losses of approximately $4,541,000 has been offset
by a valuation allowance due to it being more likely than not that
the deferred tax assets will not be realized.

11. Supplemental Cash Flow Information

Year ended December 31, 1996 1995

Cash paid for interest $ 42,684 $ 54,200

Noncash financing and investing activities:
Purchase of treasury stock in settlement
of notes receivable 500,000 -
Conversion of convertible debentures
into common stock 772,800 -
Note receivable from issuance of
preferred and common stock 1,312,500 792,174

12. Commitment and Contingencies

Litigation

The Company is involved in legal and administrative proceedings and
claims of various types. While any litigation contains an element of
uncertainty, based upon the opinion of the Company's legal counsel,
management presently believes that the outcome of each such
proceedings or claim which is pending or known to be threatened, or
all of them combined, will not have a material adverse effect on the
Company's financial position or results of operations.

13. Fourth Quarter Adjustments

During the fourth quarter of 1996, the Company recorded the following
adjustments:

1996

Interest expense associated with the
convertible debentures payable $ 135,000
Discount on conversion price of
convertible debentures recorded
as interest expense (Note 8) 1,936,119
Loan costs associated with the
above debentures recorded as
interest expense(Note 8) 648,026
Write off of note receivable
as a finder's fee (Note 5) 355,000
Bad debt expense from write-off of notes
receivable from issuance
of common stock 250,174
Write-off of accounts receivable from
affiliate in exchange for business
expense reimbursement 225,881

$3,550,200

Exhibit 10.8
LETTER OF INTENT

Energex, Inc.
Attn: Douglas Pedrie

Dear Mr. Pedrie:

The following will summarize the principal terms of a stock purchase
agreement ("Stock Purchase Agreement") to be entered into between Celebrity
Entertainment, Inc., a Delaware corporation ("Buyer"), Energex, Inc., a Texas
corporation ("Energex") and Douglas Pedrie ("Pedrie"), as the controlling
principal of Energex, as follows:

1. Buyer will purchase from Energex eighty percent (80%) of the
issued and outstanding capital stock in Energex (the "Stock").

2. The purchase price shall be $2,350,000, payable as follows:

(a) $605,000 has previously been paid in cash;
(b) $100,000 shall be paid this date, but Energex shall return
to Buyer $65,000 of said amount no later than February 7,
1997 (resulting in a net amount of $35,000 having been paid
this date);
(c) at least $65,000 shall be paid by February 17, 1996; and
(d) the remainder shall be paid according to a schedule to be
mutually agreed on by the parties (to be attached hereto
upon completion), which schedule shall at a minimum include
payments enabling Energex to meet its obligations to third
parties (provided, however, that this provision shall apply
only to those obligations to third parties of which Buyer
has knowledge as of this date, as they currently exist or as
they are modified with Buyer's consent, and to obligations
arising in the normal course of Energex's business as
described in Authorizations for Expenditure provided in
advance to Buyer by Energex and approved by Buyer); and
Buyer and Energex shall from the date hereof mutually
endeavor to negotiate more beneficial payment schedules with
respect to Energex's obligations to third parties.

If Buyer fails to make payments enabling Energex to meet its obligations to
third parties as set forth above, or otherwise fails to meet such mutually
agreed upon schedule, at any time while the parties are continuing to
negotiate in good faith the Stock Purchase Agreement or have executed the
Stock Purchase Agreement, then Buyer shall forfeit its right to a 10%
ownership interest in Energex as described in item 3 below.

3. The terms of the proposed purchase will be memorialized as soon as
possible in greater detail in a Stock Purchase Agreement, which will contain
provisions as to the disposition of a promissory note owed by Energex to Buyer
in the amount of $1,312,500, the usual selling company's representations and
warranties, specific obligations of the parties pending the Closing and
conditions precedent to Closing, including but not limited to each party's
representatives having made a full, complete and satisfactory investigation of
the business, properties, financial statements, books and records and all
other aspects of the other parties hereto and their businesses. The closing
of the purchase (the "Closing") shall take place simultaneously with the
execution of the Stock Purchase Agreement (the "Closing Date"). In the event
the Closing does not occur on or before April 4, 1997, then all amounts
theretofore advanced by Buyer to Energex shall become an obligation of Energex
with interest at the rate of prime + 1.5% per annum, not to exceed 12% per
annum, all due and payable on terms to be agreed upon, the repayment period
not to exceed 24 months, and Energex shall at the time of execution of such
note transfer to Buyer an undilutable 10% ownership interest in Energex
without voting rights. Energex and/or Pedrie shall have a one-year option to
repurchase such 10% ownership interest at a price to be mutually agreed upon.
If the parties are unable to agree upon such price they shall submit the
matter to a professional appraiser or arbitration.

This Letter of Intent is intended to be binding on the parties hereto,
subject to all parties' satisfactory due diligence. If the foregoing
correctly sets forth our agreement, kindly so indicate by signing and
returning a copy to me.

AGREED AND ACCEPTED Very truly yours,
AS OF THE DATE OF THIS LETTER:
Energex, Inc. Celebrity Entertainment, Inc.

By:/s/ Douglas R. Pedrie By:/s/ J. William Metzger
Douglas Pedrie, President J. William Metzger, Exec. Vice. Pres.

Douglas Pedrie, Individually

<ARTICLE> 5

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<PERIOD-END> DEC-31-1996
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<CURRENT-ASSETS> 717,841
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<DEPRECIATION> 640,843
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0
10,064
<OTHER-SE> 19,427,154
<TOTAL-LIABILITY-AND-EQUITY> 5,137,689
<SALES> 29,639
<TOTAL-REVENUES> 252,735
<CGS> 0
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