U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
-------------------------------------
FORM 10-QSB
(mark one)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13
OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1999
[ ] 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
(Address of principal executive offices.)
(561)659-3832
Issuer's telephone number.)
-----------------------------------------
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 [ ]
The number of shares outstanding of the issuer's Common Stock, $ 0.0001 par
value, as of November 14, 1999 was 262,690.
Transitional Small Business Disclosure Format (check one):
Yes [ ] No [ X ]
<PAGE><PAGE>
CELEBRITY ENTERTAINMENT, INC.
FORM 10-QSB
For the Nine Months Ended September 30, 1999
INDEX
Page Number
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
(Unaudited)
Consolidated Balance Sheet
Consolidated Statements of Operations
Consolidated Statements of Cash Flows
Consolidated Statement of Stockholders' Equity
Notes to Consolidated Financial Statements
Item 2. Management's Discussion and Analysis
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
<PAGE><PAGE>
Celebrity Entertainment, Inc.
Consolidated Balance Sheet
September 30, 1999
(Unaudited)
Assets
Current assets:
Cash $ 1,010
Total current assets 1,010
Property and equipment, cost 30,573
Less accumulated depreciation ( 23,730)
Property and equipment, net 6,843
Other assets:
Investment in oil and gas lease, net 1,716,221
Less: allowance for impairment in value (1,716,221)
Total assets $ 7,853
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable $ 323,720
Accrued expenses
191,300
Notes payable - debenture settlement 320,534
Convertible debentures payable 1,640,000
Notes payable 60,000
Note payable - officer 86,346
Accrued expenses 357,662
Advances 26,900
Total current liabilities 3,006,462
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 (20,821,392)
Less treasury stock, 10,100 shares common
and 475,000 shares preferred, at cost (500,000)
Total stockholders' equity ( 2,998,609)
Total liabilities and stockholders' equity $ 7,853
See accompanying notes to financial statements.
<PAGE> Celebrity Entertainment, Inc.
Consolidated Statements of Operations
(Unaudited)
<TABLE>
Three Months Ended Nine Months Ended
September 30, September 30,
1999 1998 1999 1998
<S> <C> <C> <C> <C>
Revenues:
Resort operations $ - $ 28,932 $ - $ 169,287
Oil and gas 2,520 23,848 24,748 47,275
Total revenues 2,520 52,780 24,748 216,562
Selling, general &
administrative 10,090 269,406 68,512 923,820
Operating profit (loss) ( 7,570) ( 216,626)( 43,764) ( 707,258)
Other income (expenses):
Interest income - 15,311 - 42,134
Forgiveness of debt - - - 9,897
Interest expense - ( 50,410) - ( 225,720)
Loss on disposition of stock - - - ( 4,982)
Total other income (expenses) - ( 35,099) - ( 178,671)
Net loss $ ( 7,570)$( 251,725) $(43,764)$( 885,929)
Basic and diluted loss per share:
Loss before extraordinary item $ (0.64)$ (1.11) $ ( 1.98) $( 5.23)
Extraordinary income - - - 0.04
Net loss $ ( 0.64)$ (1.11) $ ( 1.98) $( 5.19)
See accompanying notes to the financial statements.
</TABLE>
<TABLE>
Celebrity Entertainment, Inc. and Subsidiary
Consolidated Statement of Cash Flows
Unaudited
Nine months ended September 30, 1999 1998
<S> <C> <C>
Cash flows from operating activities:
Net loss $( 43,764) $( 885,929)
Adjustments to reconcile net loss to net
cash used for operating activities:
Depreciation and amortization 4,587 85,316
Forgiveness of debt - ( 9,897)
Loss on disposition of stock - 4,982
Change in current assets and liabilities:
(Increase) decrease in:
Accounts receivable - 10,668
Prepaid expenses - -
Deposits - ( 2,685)
Accrued interest receivable - ( 40,961)
Increase (decrease) in:
Accounts payable and accrued expenses ( 5,978) 43,609
Accrued interest payable - 150,432
Net cash provided by (used in)
operating activities ( 45,155) ( 644,465)
Cash flows from investing activities:
Purchase of property and equipment - ( 1,644)
Advances on note receivable - related party 43,900 ( 224,419)
Net cash provided by (used in) investing activities 43,900 ( 226,063)
Cash flows from financing activities:
Proceeds from notes - 1,388,896
Payoff of mortgage note - ( 419,910)
Payments on long-term debt - ( 218,560)
Net cash provided by (used in)financing activities - 750,426
Decrease in cash and cash equivalents (1,255) ( 120,102)
Cash and cash equivalents, beginning of period 2,265 121,536
Cash and cash equivalents, end of period $ 1,010 $ 1,434
Supplemental disclosure of cash paid for:
Interest $ - $ 85,486
Income taxes - -
See accompanying notes to financial statements.
</TABLE>
[S]
[C] [C]
<TABLE>
Celebrity
Entertainment, Inc.
Statements of
Stockholders' Equity
(Unaudited)
<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, 1999 1,064,000 $ 10,640 262,690 $
26 10,100 475,000 $ 500,000 $ 18,312,117
Net loss - - -
- - - - - -
Balance at September 30, 1999 1,064,000 $ 10,640 262,690 $
26 10,100 475,000 $ 500,000 $ 18,312,117
</TABLE>
<TABLE>
<S>
<C>
Accumulated
Deficit
Balance, January 1, 1999 $
(20,777,628)
Net loss (
43,764)
Balance at September 30, 1999 $
(20,821,392)
See accompanying notes to the financial statements.
</TABLE>
<PAGE>
CELEBRITY ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation
The accompanying financial statements have been prepared by the Company
without
audit, pursuant to the rules and regulations of the Securities and Exchange
Commission. In the opinion of management, these financial statements include
all adjustments necessary to present fairly the financial position of the
Company as of September 30, 1999 and the results of operations and cash flows
for
the quarter and the nine months ended September 30, 1999 and 1998. The
Company's results of operations during the first nine months of the Company's
fiscal year are not
necessarily indicative of the results to be expected for the full fiscal
year.
The financial statements included in this report should be read in
conjunction
with the financial statements and notes thereto in the Company's 1998 Form
10-KSB.
The Company's wholly-owned subsidiary manages an oil and gas lease in Texas.
Operations of the subsidiary began during the second quarter of 1998 and,
accordingly, the Company is presenting consolidated financial statements
including the assets, liabilities and results of operations of the subsidiary.
2. Basic and Diluted Loss Per Common Share
Basic and diluted loss per common share is computed using the weighted average
number of shares outstanding during each period. Common stock equivalents
have
not been included since the effect of such inclusion would be antidilutive.
The following table sets forth the computation of basic and diluted loss per
share for the three months ended September 30, 1999 and 1998:
1999 1998
Loss before extraordinary item $( 43,764) $( 895,826)
Preferred dividends ( 477,488) (
477,488)
Loss to common shareholders
before extraordinary income ( 521,252) ( 1,373,314)
Extraordinary income - forgiveness of debt - 9,897
Net loss to common shareholders $( 521,252) $( 1,363,417)
Weighted average common shares outstanding 262,690 262,690
Basic and diluted loss per share:
Loss per share before extraordinary income $( 1.98) $( 5.23)
Extraordinary income - .04
Net loss $( 1.98) $( 5.19)
<PAGE><PAGE>Item 2. Management's Discussion and Analysis of Plan of Operation
FORWARD-LOOKING STATEMENTS
Statements contained in this Form 10-QSB 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,
and/or (ii) the securing of financing sufficient to fund such business
combination, acquisition, settlement of outstanding debt and litigation.
General
The Company was engaged in the development, ownership, marketing and
operation of a destination resort community and fishing camp located on Orange
Lake near Ocala, Florida which was sold in 1998. Management is currently
considering alternative business activities for the Company.
Management's Plans
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. Completing a transaction which will secure new operations in the Company;
2. Completing successful settlement negotiations with the Company's debenture
holders;
3. Completing a transaction for the renewal of the Company's lease on the oil
and gas property and the resulting sale of the Company's oil and gas well
and/or the renewed lease.
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.
Results of Operations
Nine-month Period Ended September 30, 1999 Compared to Nine-month Period Ended
September 30, 1998:
Revenues for the nine-month period ended September 30, 1999 amounted to
$24,748 compared to $216,562 for the nine-month period ended September 30,
1998,
reflecting a decrease of $191,814. Revenues of the prior year were comprised
of memberships paid in full, dues, resort operations, and oil and gas income
and in the current year only oil and gas income. The decrease in revenues
reflected for the nine-month period ended September 30, 1999 is a result of
the sale of the resort.
Selling, general and administrative expenses were $68,512 for the nine
months ended September 30, 1999 compared to $923,820 for the nine-month period
ended September 30, 1998, representing a decrease of $855,308. The decrease
is due principally to the sale of the resort.
During the nine-month period ended September 30, 1999, $-0- in
interest expense was charged to operations compared to $225,720 charged to
interest expense for the nine-month period ended September 30, 1998. The
decrease is due
to the sale of the resort.
Net loss for the nine-month period ended September 30, 1999 was $43,764
which represents a decrease in loss of $842,165 compared to the net loss of
$885,929 for the prior-year period. The decrease is due principally to
reduction of expenses because of the sale of the resort operations.
Liquidity and Capital Resources
Liquidity and capital resources are hereinafter discussed in three broad
categories: operating activities, investing activities and financing
activities.
Operating Activities
Cash decreased $1,255 to $1,010 at September 30, 1999 from $2,265 at
December 31, 1998. Net cash used for operating activities was $45,155 during
the nine-month period ended September 30, 1999 compared to cash used for
operating activities of $644,465 during the nine-month period ended September
30,
1998. The change in cash used for operating activities resulted primarily from
discontinuing the operations of the resort.
Investing Activities
During the nine-month period ended September 30, 1999, there was
$43,900 provided by investing activities, compared with $226,063 used for
investing activities during the nine-month period ended September 30, 1998.
The change
in cash provided by and used for investing activities is a result of the
changes
in loans to and from related parties.
Financing Activities
During the nine-month period ended September 30, 1998, net cash provided
by
financing activities was $750,426. There were no cash flows related to
financing activities in the nine months ended September 30, 1999.
PART II. OTHER INFORMATION
Item 5: Certain Relationships and Related Transactions
At December 31, 1998, the Company had a note payable to an officer in the
amount of $69,346 bearing interest at prime beginning January 1, 1999. During
the first quarter of 1999 this loan was increased by $17,000 and it has an
outstanding balance of $86,346 at September 30, 1999. In 1999 advances were
made by related parties to cover minimal
operating expenses and audit fees.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits. None.
(b) Reports on Form 8-K. None.
SIGNATURES
In accordance with the requirements of the Exchange Act, the
Registrant caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: November 14, 1999
CELEBRITY ENTERTAINMENT, INC.
By: /s/ J. William Metzger
J. William Metzger
Executive Vice President
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 1,010
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,010
<PP&E> 30,573
<DEPRECIATION> 23,730
<TOTAL-ASSETS> 7,853
<CURRENT-LIABILITIES> 3,006,462
<BONDS> 0
10,640
0
<COMMON> 26
<OTHER-SE> (2,998,609)
<TOTAL-LIABILITY-AND-EQUITY> 7,853
<SALES> 24,748
<TOTAL-REVENUES> 24,748
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 68,512
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (43,764)
<INCOME-TAX> 0
<INCOME-CONTINUING> (43,764)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (43,764)
<EPS-BASIC> (1.98)
<EPS-DILUTED> (1.98)
</TABLE>
