CELEBRITY ENTERTAINMENT INC, 10KSB, 1998-04-15

CELEBRITY ENTERTAINMENT INC
10KSB, 1998-04-15
HOTELS, ROOMING HOUSES, CAMPS & OTHER LODGING PLACES

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U.S. 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, 1997

[ ] 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,
1997: 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.
[X]

State issuer's revenues for its most recent fiscal year. $257,735.

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 April
13, 1998 was approximately $-0-.

The number of shares outstanding of the issuer's Common Stock, $ 0.0001 par
value, as of December 31, 1997 was 262,690.

Transitional Small Business Disclosure Format (check one):

Yes [ ] No [ X ]

CELEBRITY ENTERTAINMENT, INC.
FORM 10-KSB
For the Year Ended December 31, 1997

INDEX

HEADING PAGE

PART I
Item 1. Description of Business 3
Item 2. Description of Property 9
Item 3. Legal Proceedings 9
Item 4. Submission of Matters to a Vote of Security Holders 10

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 14
Item 8. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure 14

PART III
Item 9. Directors, Executive Officers, Promoters
and Control Persons; Compliance with
Section 16(a) of the Exchange Act 14
Item 10. Executive Compensation 16
Item 11. Security Ownership of Certain Beneficial Owners
and Management 17
Item 12. Certain Relationships and Related Transactions 19
Item 13. Exhibits and Reports on Form 8-K 20

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 sites 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, 1997, the Resort operated 138 RV and Park Model sites
which are fully equipped with water, sewer and electric hook-ups, 220 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 1998 electric hook-ups to 100 of the existing 220
partially completed RV sites, a bath house, baseball field, and 3-D archery
range at a combined cost of approximately $100,000. If the Company retains the
Resort, it 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 generated 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 1997, 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 1997, the Company continued to expand 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
1998.

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, 1997,
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. As of December 31, 1997, all collections had been completed
and the contract with the finance company was concluded. There are no further
membership installments to be collected.

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 7 full-time employees at December 31, 1997.

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 Oil and Gas Development

During 1997, the Company concluded its business relationship with a
start-up corporation (the "Corporation") with regard to the exploration,
development and production of oil and gas pursuant to a mineral lease on
approximately 9,500 acres near Breckenridge, Texas (the "Lease"). The Company
had previously loaned certain amounts to the Corporation which had obtained
rights to the Lease, as part of negotiations concerning a possible business
combination. Additionally, the Corporation had purchased 140,000 shares of the
Company's common stock. In connection with a settlement agreement completed in
September 1997 among the Company, the Corporation and certain individuals (the
"Settlement Agreement"), the Company paid certain amounts to certain parties and
entities and undertook the obligation to continue to pay amounts over a schedule
of eight to 20 months. Additionally, the Corporation returned the stock to the
Company. As a result of the Settlement Agreement, the Company acquired the
undivided rights to the Lease. Pursuant to the requirements of the Lease, the
Company provided the financing for the drilling of two oil and gas wells on the
Lease property in August 1997 and January 1998. One of the wells will not
deliver any production and was capped. The other well demonstrates evidence of
the possibility of oil and gas reserves and production from this well is
anticipated to commence during April 1998. Among other requirements and
obligations, the Lease contains a continuous drilling provision so that the
Company must drill a new well every 120 days in order to maintain its rights to
the Lease. The Company anticipates that the development and production of the
mineral rights pursuant to the Lease will enable the Company to realize
profitable operations from the continued management of the operations or to
resell the Lease to a third party. Several established oil and gas entities
have expressed interest in purchasing the Company's existing wells and
production and the rights to the Lease. However, there is no assurance that
either the production of mineral reserves will return net profits to the Company
or that a transaction can be consummated with a purchaser of the production and
the Lease. The Company has engaged professionals and experts in the energy
industry who are providing their services to the Company for the management and
supervision of the production activities and the fulfillment and preservation of
the Lease rights and obligations.

Radio Station Acquisition

During 1997 the Company initiated negotiations with a group of companies
who are in the business of acquiring and managing radio stations (the "Radio
Group"). The Company previously had loaned funds to the Radio Group for the
purchase of stations by the Radio Group. Said loans were repaid with interest
on schedule. The Company is contemplating the completion of 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. Several stations have been identified. The consulting
arrangement with the Radio Group, if entered into, would provide 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, 1998 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, if entered into, would continue during 1999 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 Company is in default with respect to payments due
pursuant to the note. The note bears a fixed interest rate of 9% with monthly
payments of $5,650 and the remaining principal and interest was due in May 1997
in the amount of $420,462. AmSouth Bank commenced a foreclosure action in the
Circuit Court for the Fifth Judicial Circuit, Marion County, Florida, seeking
foreclosure of the mortgage to satisfy the indebtedness evidenced by the
promissory note. The amounts currently due, including costs, total
approximately $487,000. A foreclosure sale is scheduled for April 28, 1998.
The Company is not contesting the foreclosure, but is seeking to refinance or
sell the property prior to that date. The Company has received three written
offers to purchase the property, each of which contains material conditions to
closing. The Company has also received a written mortgage commitment in the
amount of $350,000 but to date has not secured additional commitments which
would allow the payoff of the AmSouth indebtedness. It is unclear at this date
whether the Company will be successful in consummating a sale or refinancing
prior to April 28, 1998; if the Company is not successful, it appears the
property will be sold at foreclosure.

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
$2,904 per month on a month-to-month lease basis.

ITEM 3. LEGAL PROCEEDINGS

The Company is a party to the following legal proceedings:

1. Litigation commenced in the Supreme Court of New York, County of New
York by Maslo Fund Ltd., Walsh Investments Limited and Madison Trading, Inc.
alleging breach by the Company of certain convertible debentures; damages sought
in the amount of $715,000 plus costs. The parties have entered into a
Settlement Agreement and two amendments thereto calling for total payments of
$770,522.01 by the Company to the plaintiffs at scheduled intervals ending Jan.
15, 1999, and delivery of a mortgage from the Company to plaintiffs to secure
such payments. The Agreement provides that if the Company fails to meet its
obligations thereunder, the plaintiffs have the right to have a judgment entered
against the Company for the full amount due.

2. Foreclosure action by AmSouth Bank described in Item 2 above.

3. Garnishment action brought by Francis G. Walsh et al. seeking to
garnish funds allegedly owed by the Company to David Jakobot et al., in Palm
Beach County Circuit Court. This action seeks to direct to certain third
parties payment of sums allegedly owed by the Company to David Jakobot et al.
The Company is not anticipated to incur any loss or damage as a result of this
action, other than legal expenses.

4. Litigation commenced by U.C. Financial in the United States District
Court, Southern District of New York alleging breach of convertible debentures.
The Company is in settlement negotiations with the plaintiff and anticipates a
settlement providing for the Company to pay the plaintiff approximately $700,000
over a period of a year. If the parties are unable to settle and the legal
action proceeds, Management expects damages to be assessed against the Company
in an amount of not less than $700,000.

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

1997
First Quarter $ 3 1/2 $ .03
Second Quarter 2 1/2 .03
Third Quarter - -
Fourth Quarter - -

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

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

As of December 31, 1997, there were 262,690 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 hopes to fulfill the
requirements necessary to have the Common Stock quoted on the OTC Bulletin Board
soon after the filing of this Form 10-KSB with the Securities and Exchange
Commission. A broker-dealer has tentatively agreed to act as principal market-
maker for the Company's stock, which is necessary in order to have the stock
quoted on the OTC Bulletin Board. 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.

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, settlement of outstanding debt and litigation, 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, 1997 Compared to Fiscal Year Ended December 31,
1996

Revenues for the fiscal year ended December 31, 1997, amounted to $257,735
compared to $252,735 for the fiscal year ended December 31, 1996. 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 $1,619,141 for the
fiscal year ended December 31, 1997, compared to $3,879,059 for the fiscal year
ended December 31, 1996, a decrease of $2,259,918. The decrease is due
principally to a reduction in costs associated with issuances of the Company's
securities in connection with various consulting arrangements.

During the fiscal year ended December 31, 1997, interest expense of
$253,003 was charged to operations, compared with $2,719,145 during the fiscal
year ended December 31, 1996. 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.

During 1997 the Company earned $501,250 in dividends and interest, an
increase over the $99,421 interest income in 1996. The increase of $401,829 is
due primarily to $490,000 in dividends received on the Company's preferred stock
investment.

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 resulted in 100% of these debt discounts and
debt issue costs being taken in 1996.(See Note 8 of the financial statements for
additional detail.)

At December 1, 1997, unused net operating losses for income tax purposes,
expiring in various amounts from 2005 through 2012, of approximately $10,722,000
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 $4,460,000 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 decreased $322,974 from $444,510 at December 31, 1996 to $121,536 at
December 31, 1997. Net cash used for operating activities was $1,107,046 for
the year ended December 31, 1997 compared with cash used for operating
activities of $1,930,428 during the year ended December 31, 1996. The decrease
of $823,382 was due primarily to the reduction in 1997 of stock and stock
options granted for consulting fees, together with a reduction in charges
related to issuance of the Company's securities.

Investing Activities

During the year ended December 31, 1997 cash was provided by investing
activities in the amount of $641,810 compared to net cash used by investing
activities in the amount of $2,078,161 during the year ended December 31, 1996.
The increase in cash provided by investing activities related primarily to the
return on the investment in preferred stock of a related party in the amount of
$1,298,234 and related dividends $346,762, offset by the increase in investment
in oil and gas exploration in the amount of $991,222.

Financing Activities

During the years ended December 31, 1997 and December 31, 1996, the
Company had net cash flows provided by financing activities of $142,262 and
$4,441,847, respectively, primarily from proceeds from the sale of convertible
debentures in the amount of $3,144,774 and common stock in the amount of
$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, the
Company did not process requests for subsequent conversions. The Company is
currently in default with respect to these debentures. Certain holders have
filed suit (see "Legal Proceedings") and others have threatened to do so. The
Company and certain of the debenture owners are currently negotiating an
agreement pursuant to which management anticipates 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 1998. The convertible debentures
became due March 31, 1998.

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 $17,581,387, at December 31,
1997. During the year ended December 31, 1997, the Company generated revenues
from resort operations; however, it reported a net loss of $789,404 and has
negative working capital of $3,679,975. 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 the following possibilities:

1. Preempting the pending foreclosure sale of the Resort Property by entering
into a contract for sale of the Resort Property, which would be expected to
provide the Company sufficient cash after repayment of the existing mortgage
obligations to settle a substantial portion of the outstanding debt related to
the convertible debentures as well as provide investment and working capital.
The Company has received three written offers to purchase the Resort Property,
each of which contains material conditions to closing.
2. Preempting the pending foreclosure sale of the Resort Property by refinancing
the Company's mortgage note with the possibility of obtaining additional funds
for Resort improvements, debt settlement and working capital from the new
mortgage loans. This would enable the Company to continue the development of
the Resort, which would be expected to enhance the operating revenue and cash
flow of the Resort operation. The Company would require a minimum of an
additional $100,000 to further develop the Resort. The Company has secured
a mortgage loan commitment of $350,000, but has not secured sufficient
commitments to allow it to pay off the mortgage currently in default. The
Company continues to seek such additional commitments.
3. Arranging for the conversion or repayment of the convertible debt through the
sale of the Company's debt and/or equity securities.
4. Acquiring assets and operations of one or more entities 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.

Management believes that the above plans for the Resort, if the Company
is successful in achieving any of such plans, have the reasonable capability of
improving the Company's financial situation and ensuring the continuation of its
business. However, there can be no assurance that the Company will be
successful in carrying out any of such 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
Balance Sheet
Statement of Operations
Statement of Stockholders' Equity
Statement of Cash Flows
Notes to Financial Statements

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

None.
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,
1997 are listed below.

Name Age Position Held

James J. McNamara 49 President, Chief Executive Officer and
Director
J. William Metzger 49 Executive Vice President, Chief
Financial Officer, Controller,
Secretary, Treasurer and 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. Mr. McNamara has been involved in the
media, music and entertainment industry 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. During 1993-1994 Mr. McNamara created and
executively produced 61 half-hour episodes of "The NEWZ" television series for
PSI. 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.

As of December 31, 1997, 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.

ITEM 10. EXECUTIVE COMPENSATION

The following table sets forth the aggregate cash compensation paid for
services rendered to the Company during the last two 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 1997
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. 1997 57,887 - - - - - -
McNamara 1996 55,125 106,755 - - - - -
CEO

J. William 1997 57,887 - - - - - -
Metzger 1996 55,125 20,607 - - - - -
Exec. V-P

</TABLE>

Stock Options

No options were granted to any of the named executive officers during 1996
or 1997.
<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
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

James J. McNamara
214 Brazilian Avenue, Suite 400
Palm Beach, FL 33480 3,496(1) 1.3 %

J. William Metzger
214 Brazilian Avenue, Suite 400
Palm Beach, FL 33480 3,266(2) 1.2 %

All Officers and Directors
As A Group (2 persons) 6,762(3) 2.5 %

(1) Includes 1,496 shares directly owned and 2,000 shares beneficially owned
pursuant to options currently exercisable.
(2) Includes 1,266 shares directly owned and 2,000 shares beneficially owned
pursuant to options currently exercisable.
(3) Includes 2,762 shares directly owned and 4,000 shares beneficially owned
pursuant to options currently exercisable.

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")and
in 1997 all of the stock was completely redeemed and related dividends were
paid. 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.

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., filed as Exhibit
10.8 to the Company's Annual Report on Form 10-KSB for the year ended
December 31, 1996 (File No. 0-19196).

10.9 Agreement between Passport America and the Company dated February 14,
1995.

10.10 Settlement Agreement among the Company, Energex Oil, Inc.; Douglas Ross
Pedrie; First American of Breckenridge, Inc.; David A. Jakobot; and Rhonda
Salters Jakobot, dated September 3, 1997, filed as Exhibit 10.1 to the
Company's Quarterly Report on Form 10-QSB for the period ended September
30, 1997 (File No. 0-19196).

27.1 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 15th day of April, 1998.

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 April 15, 1998
James J. McNamara Officer and Director

/s/ J. William Metzger Executive Vice President, April 15, 1998
J. William Metzger Chief Financial Officer,
Controller, Secretary,
Treasurer and Director

Report of Independent 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, 1997 and the related statements of operations, stockholders' equity
and cash flows for the two years 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, 1997 and the results of its operations and its cash flows for
the two years 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,
1997. 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
April 10, 1998

Celebrity Entertainment, Inc.
Balance Sheet
December 31, 1997

Assets
Current Assets:
Cash $ 121,536
Accounts receivable 32,065
Total current assets 153,601

Property and equipment:

Land 670,780
Buildings and improvements 2,885,593
Equipment 157,805
Furniture and fixtures 60,243
Total property and equipment, cost 3,774,421
Less: accumulated depreciation and amortization ( 765,771)

Total property and equipment, net 3,008,650

Other assets:
Note receivable - related party 472,500
Investment in warrants - related party 29,200
Investment in oil and gas lease, net 1,251,221

Total assets $ 4,915,172

Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable $ 286,145
Accrued expenses 453,522
Notes payable - related parties 390,965
Mortgage note payable 419,910
Convertible debentures payable 1,640,000
Current portion of long-term debt 643,034

Total current liabilities 3,833,576

Long-term debt 328,500

Stockholders' equity:
Preferred stock, $0.01 par value: 2,000,000 shares authorized
Designated as Class A 8% convertible:
1,525,000 shares designated; 1,064,000 shares issued
($5,320,000 total liquidation preference) 10,640
Common stock, $0.0001 par value: 25,000,000 shares authorized;
262,690 shares issued 26
Additional paid-in capital 18,312,117
Accumulated deficit (17,098,887)
Less treasury stock, 10,100 shares common
and 475,000 shares preferred, at cost (500,000)
Unrealized gain on investment 29,200

Total stockholders' equity 753,096

Total liabilities and stockholders' equity $ 4,915,172

See accompanying notes to financial statements.

Celebrity Entertainment, Inc.

Statements of Operations

<TABLE>
<S> <C> <C>
Years ended December 31, 1997 1996

Revenues:
Resort operations $ 257,735 $ 252,735

Selling, general and administrative expenses 1,619,141 3,163,885
Bad debts - 715,174

Operating loss (1,361,406) (3,626,324)

Other income (expenses):
Interest income 11,250 99,421
Dividend income 490,000 -
Interest expense (253,003) ( 135,000)
Writeoff of debt discount
and issue costs - (2,584,145)

Total other income(expenses) 248,247 (2,619,724)

Loss before extraordinary income ( 1,113,159) (6,246,048)

Extraordinary income - forgiveness of debt 323,755 -

Net loss $( 789,404) $ (6,246,048)

Basic and diluted loss per share:
Loss before extraordinary item $ ( 5.13) $ ( 91.14)
Extraordinary income .95 -

Net loss $ ( 4.18) $ ( 91.14)

</TABLE>

See accompanying notes to 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, January 1, 1996 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

Issuance of common shares for
convertible debentures - - 98,282 10 - - - 197,449

Warrants received - - - - - - - -

Cancellation of common shares
issued for note - - (140,000) (14) - - - (1,312,486)

Net loss - - - - - - - -

Balance, December 31, 1997 1,064,000 $ 10,640 262,690 $ 26 10,100 475,000 $ 500,000 $ 18,312,117

See accompanying notes to financial statements.
</TABLE>

<TABLE>
Celebrity Entertainment, Inc.
Statements of Stockholders' Equity

Accumulated Stock Subscriptions Unrealized Gain
Deficit Receivable On Investment

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) -

Issuance of common shares for
convertible debentures - - -

Warrants received - - 29,200

Cancellation of common shares issued
for note - 1,312,500 -

Net loss ( 789,404) - -

Balance, December 31, 1997 $ (17,098,887) $ - $ 29,200

See accompanying notes to financial statements.
</TABLE>

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

<S> <C> <C>
Years ended December 31, 1997 1996

Cash flows from operating activities:
Loss before extraordinary item $( 1,113,159) $ (6,246,048)
Adjustments to reconcile net loss to net cash
used for operating activities:
Depreciation and amortization 124,928 117,456
Provision for doubtful accounts - 465,000
Stock issued in payment of consulting fees 187,460 898,230
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
(Increase) decrease in:
Prepaid expenses and accounts receivable ( 17,759) (661)
Note receivable - related party ( 472,500) -
Increase (decrease in:
Accounts payable and accrued expenses 182,642 ( 99,337)
Deferred membership revenues ( 35,886) ( 17,187)
Note payable - related party ( 69,720) -
Due to related party 106,948 -

Net cash used for operating activities (1,107,046) (1,930,428)

Cash flows from investing activities:
Purchase of property and equipment (11,964) (48,927)
Investment in affiliated company - (1,400,000)
Redemption of investment in affiliated company 1,298,234 101,767
Dividends on investment in affiliated company 346,762 -
Investment in oil and gas exploration venture ( 991,222) (465,000)
Loans for radio station acquisitions - (1,566,000)
Loan repayments - 1,300,000

Net cash provided by (used for) investing activities 641,810 (2,078,161)

Cash flows from financing activities:
Proceeds of notes payable 266,000 -
Repayments of notes payable ( 9,876) (277,590)
Settlement of convertible securities ( 113,862) -
Repayments of long-term debt - (29,831)
Proceeds from debentures payable - 3,144,774
Proceeds from the issuance of common stock - 1,562,494
Payments of stock subscriptions receivable - 42,000

Net cash provided by financing activities 142,262 4,441,847

Increase (decrease) in cash and cash equivalents ( 322,974) 433,258

Cash and cash equivalents, beginning of year 444,510 11,252

Cash and cash equivalents, end of year $ 121,536 $444,510

Supplemental cash flow information:
Interest paid $ 95,925 $ -
Income taxes paid $ - $ -

Noncash Investing and financing activities:
Note payable issued in settlement of debentures $ 971,534 $ -
Common stock issued in settlement of debentures $ 10,000 $ -
</TABLE>

The Company received a total of $490,000 in dividends in the redemption of its
investment in an affiliated company of which $143,238 was in the form of stock
of the affiliate. The investment in oil and gas venture includes $260,000 of
accrued expenses. A note receivable subscribing to common stock totaling
$1,321,500 was canceled in exchange for cancellation of the stock. The Company
received warrants valued at $29,200 in conjunction of settlement of its
investment in an affiliated company.

See accompanying notes to financial statements.

Celebrity Entertainment, Inc.
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

In the fourth quarter of 1997, the Company adopted Statement of Financial
Accounting Standards No. 128, "Earnings per Share." This statement
requires the presentation of basic and diluted earnings per share and replaced
the presentation of primary and fully diluted earnings per share prescribed by
APB Opinion 15. The Company has computed basic and diluted (loss) per share
using the weighted average number of common shares outstanding, since common
stock warrants, and the effect of assuming the conversion of the outstanding
convertible securities were antidilutive in both years.

The following table sets forth the computation of basic and diluted loss per
share:

1997 1996

Loss before extraordinary item $(1,113,159) $(6,246,048)
Less: preferred dividends ( 638,400) ( 675,150)

Loss to common shareholders
before extraordinary income (1,751,559) (6,921,198)

Extraordinary income - forgiveness of debt 323,755 -

Net loss $(1,427,804) $(6,921,198)

Weighted average common shares outstanding 341,375 75,944

Basic and diluted loss per share:
Loss per share before extraordinary income $( 5.13) $( 91.14)
Extraordinary income .95 -

Net loss $( 4.18) $( 91.14)

Revenue Recognition

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

In 1997, the FASB issued Statements No. 130, "Reporting Comprehensive Income,"
and No. 131, "Disclosures about Segments of an Enterprise and Related
Information," which are effective for fiscal years beginning after December 15,
1997. These Statements will have no effect on the Company's financial position
or results of operations.

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 $17,098,887 at December 31, 1997. During
the year ended December 31, 1997 the Company generated revenues from resort
operations; however, it reported a net loss of $789,404 and has negative working
capital of $3,679,975. 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 the following possibilities:

1. Preempting the pending foreclosure sale of the Resort Property by entering
into a contract for the sale of the Resort Property, which would be expected to
provide the Company sufficient cash after repayment of the existing mortgage
obligations to settle a substantial portion of the outstanding debt related to
the convertible debentures as well as provide investment and working capital.
2. Preempting the pending foreclosure sale of the Resort Property by
refinancing the Company's mortgage note with the possibility of obtaining
additional funds for Resort improvements, debt settlement and working capital
from the new mortgage loans. This would enable the Company to continue the
development of the Resort, which would be expected to enhance the operating
revenue and cash flow of the Resort operation. The Company would require a
minimum of an additional $100,000 to further develop the Resort.
3. Arranging for the conversion or repayment of the convertible debt through the
sale of the Company's debt and/or equity securities.
4. Acquiring assets and operations of one or more entities with the expectation
that such business combination, if completed, would provide additional cash flow
and net income.

Management believes that the above plans for the Resort, if the
Company is successful in achieving any of such plans, have the reasonable
capability of improving the Company's financial situation and ensuring the
continuation of its business. However, there can be no assurance that the
Company will be successful in carrying out any of such plans and the failure
to achieve them could have a material adverse effect on the Company.

3. Investments

Preferred Stock

During 1996, the Company purchased 1,334 shares of preferred stock for $1.4
million in a company related by common directorship and management. In 1997 all
of the stock was redeemed and $490,000 in dividends were received by the Company
in final liquidation of the investment. In conjunction with the final
settlement, the Company also received warrants to purchase 81,200 shares of
common stock of the related company at prices ranging from $4.85 to $8.85.
At year-end the warrants were valued at $29,200.

Oil and Gas Lease

Investment in oil and gas lease $1,716,221
Less: allowance for impairment ( 465,000)

Investment in oil and gas lease, net $1,251,221

4. 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. A foreclosure sale is scheduled for April 28, 1998.
The Company is not contesting the foreclosure, but is seeking to refinance or
sell the property prior to that date.

5. Convertible Debentures, Forgiveness of Debt, and Long-term Debt

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 to 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 (EITF Topic D-60).

The SEC stated 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. If the stated maturity of such debt is not substantive, 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 was generally accepted
accounting 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 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 in 1996.

In 1997, settlement of a portion of the convertible debentures resulted in
forgiveness of debt as follows:

Debentures redeemed $1,380,000
Less: settlement notes issued ( 971,534)
Less: other consideration issued ( 84,711)

Forgiveness of debt $ 323,755

The settlement notes $971,534, bearing interest at 8%, consist entirely of
payments due as follows:

Long-term debt $971,534
Less: current portion (643,034)

Long-term debt, net of current portion, due in 1999 $328,500

6. Related Party Transactions

As detailed in Note 3, in 1996 the Company purchased preferred stock for $1.4
million of a company related by common directorship and in 1997 the stock was
fully redeemed and dividends of $490,000 plus warrants valued at $29,200 as of
December 31, 1997 were received.

In 1996, the Company had a short-term note receivable from the same related
company 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 and $83,
respectively, as of December 31, 1996. The note and interest were paid
in 1997.

In 1997, the Company had a note payable due to the related company in the
amount of $284,017 due upon demand with interest accruing at prime beginning
January 1, 1998 (prime was 8.5% as of December 31, 1997). At December 31, 1997,
the Company had a note payable to an officer in the amount of $106,948 bearing
interest at prime beginning January 1, 1998. At December 31, 1997, the Company
has a note receivable from an officer in the amount of $472,500 bearing interest
at prime beginning January 1, 1998.

7. Stockholders' Equity

Stock Splits

The Company 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. The Company made no grants of options to employees
during 1996 or 1997. At December 31, 1997 and 1996 there were 4,000 options
outstanding to purchase shares at $25 per share expiring September 1, 1998.

Issuance of Common Stock, Options and Treasury Stock

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. Issuances in 1997 of
98,282 shares were in settlement of certain convertible debentures.

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. As detailed in Note 3, in
1997 the note and the related stock were canceled.

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 expired 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 (8,512 shares of common stock assuming complete conversion). 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 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.

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. These
dividends accrued were $638,400 and $353,400 in 1997 and 1996, respectively.
Cumulative dividends in arrears aggregate $1,313,550 and $675,150 at December
31, 1997 and 1996, respectively.

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, 1997.

8. Income Taxes

The Company provides for 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 at December 31, 1997:

Deferred tax assets:
Net operating loss carryforwards $4,204,500
Bad debts 182,000
Consulting fees paid with stock options 73,500

Gross deferred income tax assets 4,460,000
Valuation allowance (4,460,000)

Net deferred income tax assets $ -

The change in the valuation allowance for deferred tax assets was an increase of
$62,333 during 1997. The following summary reconciles differences from taxes at
the federal statutory rate with the effective rate:

Year ended December 31, 1997 1996

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 2012, of approximately $10,722,000 are available at December
31, 1997 for carryforward against future years' taxable income. However, as a
result of the consummation of several common stock transactions, 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 $4,460,000 has been offset by a valuation allowance due to it
being more likely than not that the deferred tax assets will not be realized.

8. Commitment and Contingencies

Litigation

The Company is currently negotiating settlement of claims of approximately $1.5
million related to convertible debentures. The mortgage on the Company's resort
is in foreclosure and the Company is attempting to sell or refinance the
property and pay off the mortgage prior to the foreclosure date (see Note 2).

<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
FINANCIAL STATEMENTS INCLUDED IN FORM 10-KSB AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<CASH> 121,536
<SECURITIES> 0
<RECEIVABLES> 32,065
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 153,601
<PP&E> 3,774,421
<DEPRECIATION> 765,771
<TOTAL-ASSETS> 4,915,172
<CURRENT-LIABILITIES> 3,833,576
<BONDS> 328,500
26
0
<COMMON> 10,064
<OTHER-SE> (17,098,887)
<TOTAL-LIABILITY-AND-EQUITY> 4,915,172
<SALES> 42,789
<TOTAL-REVENUES> 257,735
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,619,141
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 253,003
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,113,159)
<DISCONTINUED> 0
<EXTRAORDINARY> 323,755
<CHANGES> 0
<NET-INCOME> (789,404)
<EPS-PRIMARY> (4.18)
<EPS-DILUTED> (4.18)

</TABLE>