U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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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 JUNE 30, 1999
[ ] TRANSITION REPORT PURSUANT TO SECTION 13
OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File No. 0-19196
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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)
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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 August 17, 1999 was 262,690.
Transitional Small Business Disclosure Format (check one):
Yes [ ] No [ X ]
<PAGE><PAGE>
CELEBRITY ENTERTAINMENT, INC.
FORM 10-QSB
For the Six Months Ended June 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>
Celebrity Entertainment, Inc.
Consolidated Balance Sheet
June 30, 1999
<TABLE> (Unaudited)
<S> <C>
Assets
Current assets:
Cash $ 151
Total current assets 151
Property and equipment, cost 30,573
Less accumulated depreciation ( 22,201)
Property and equipment, net 8,372
Other assets:
Investment in oil and gas lease, net 1,716,221
Less: allowance for impairment in value (1,716,221)
Total assets $ 8,523
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable $ 325,020
Accrued expenses
190,000
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 20,000
Total current liabilities 2,999,562
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 (20,813,822)
Less treasury stock, 10,100 shares common
and 475,000 shares preferred, at cost (500,000)
Total stockholders' equity ( 2,991,039)
Total liabilities and stockholders' equity $ 8,523
</TABLE>
See accompanying notes to financial statements.
<PAGE> Celebrity Entertainment, Inc.
Consolidated Statements of Operations
(Unaudited)
<TABLE>
Three Months Ended Six Months Ended
June 30, June 30,
1999 1998 1999 1998
<C> <C> <C> <C>
Revenues:
Resort operations $ - $ 43,360 $ - $ 140,355
Oil and gas 2,960 23,427 22,228 23,427
Total revenues 2,960 66,787 22,228 163,782
Selling, general &
administrative 33,859 380,615 58,422 654,414
Operating profit
(loss) ( 30,899) ( 313,828) ( 36,194) ( 490,632)
Other income (expenses):
Interest income - 14,570 - 26,823
Forgiveness of debt - - - 9,897
Interest expense - ( 135,270) - ( 175,310)
Loss on disposition
of stock - ( 4,982) - ( 4,982)
Total other income
(expenses) - ( 125,682) - ( 143,572)
Net loss $ ( 30,899) $( 439,510) $( 36,194) $( 634,204)
Basic and diluted loss per share:
Loss before
extraordinary item $ ( 2.28) $( 2.28) $( 3.66) $( 3.66)
Extraordinary income - - 0.04 0.04
Net loss $ ( 2.28) $( 2.28) $( 3.62) $( 3.62)
See accompanying notes to the financial statements.
</TABLE>
Celebrity Entertainment, Inc. and Subsidiary
Consolidated Statement of Cash Flows
<TABLE>
Unaudited
Six months ended June 30, 1999 1998
<S> <C> <C>
Cash flows from operating activities:
Net loss $( 36,194) $( 634,204)
Adjustments to reconcile net loss to net
cash used for operating activities:
Depreciation and amortization 3,058 57,954
Forgiveness of debt - ( 9,897)
Loss on disposition of stock - 4,982
Change in current assets and liabilities:
(Increase) decrease in:
Accounts receivable - 4,531
Prepaid expenses - ( 5,000)
Deposits - ( 895)
Accrued interest receivable - ( 25,832)
Increase (decrease) in:
Accounts payable and accrued expenses ( 5,978) ( 42,618)
Accrued interest payable - 113,147
Net cash provided by (used in)
operating activities ( 39,114) ( 537,832)
Cash flows from investing activities:
Purchase of property and equipment - ( 1,644)
Advances on note receivable - related party 37,000 ( 213,612)
Net cash provided by (used in)
investing activities 37,000 ( 215,256)
Cash flows from financing activities:
Payments of long-term debt - ( 182,279)
Proceeds from notes - 1,281,402
Payoff of mortgage note - ( 419,910)
Net cash provided by (used in)
financing activities - 679,213
Decrease in cash and cash equivalents ( 2,114) ( 73,875)
Cash and cash equivalents, beginning of period 2,265 121,536
Cash and cash equivalents, end of period $ 151 $ 47,661
Supplemental disclosure of cash paid for:
Interest $ - $ 76,736
Income taxes - -
See accompanying notes to financial statements.
</TABLE>
<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 June 31, 1999 1,064,000 $ 10,640 262,690 $
26 10,100 475,000 $ 500,000 $ 18,312,117
Accumulated
Deficit
Balance, January 1, 1999 $
(20,777,628)
Net loss (
36,194)
Balance at June 30, 1999 $
(20,813,822)
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 June 30, 1999 and the results of operations and cash flows for
the quarters ended and the six months ended June 30, 1999 and 1998. The
Company's results of operations during the first six 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 the development of 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 six months ended June 30, 1999 and 1998:
1999 1998
Loss before extraordinary item $( 36,194) $( 644,101)
Preferred dividends ( 316,576) (
316,576)
Loss to common shareholders
before extraordinary income ( 352,770) ( 960,677)
Extraordinary income - forgiveness of debt - 9,897
Net loss to common shareholders $( 352,770) $( 950,780)
Weighted average common shares outstanding 262,690 262,690
Basic and diluted loss per share:
Loss per share before extraordinary income $( 1.34) $( 3.66)
Extraordinary income - .04
Net loss $( 1.34) $( 3.62)
Item 2. Management's Discussion and Analysis of 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,
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
Six-month Period Ended June 30, 1999 Compared to Six-month Period Ended
June 30, 1998:
Revenues for the six-month period ended June 30, 1999 amounted to
$22,228 compared to $163,782 for the six-month period ended June 30, 1998,
reflecting a decrease of $141,554. 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 six-month period ended June 30, 1999 is a result of the sale
of the resort.
Selling, general and administrative expenses were $58,422 for the six
months ended June 30, 1999 compared to $654,414 for the six-month period
ended June 30, 1998, representing a decrease of $595,992. The decrease
is due principally to the sale of the resort.
During the six-month period ended June 30, 1999, $-0- in
interest expense was charged to operations compared to $175,310 charged to
interest expense for the six-month period ended June 30, 1998. The decrease
is due to the sale of the resort.
Net loss for the six-month period ended June 30, 1999 was $36,194
which represents a decrease in loss of $598,010 compared to the net loss of
$634,204 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 $2,114 to $151 at June 30, 1999 from $2,265 at
December 31, 1998. Net cash used for operating activities was $39,114 during
the six-month period ended June 30, 1999 compared to cash used for
operating activities of $537,832 during the six-month period ended June 30,
1998. The change in cash used for operating activities resulted primarily from
discontinuing the operations of the resort.
Investing Activities
During the six-month period ended June 30, 1999, there was
$37,000 provided by investing activities, compared with $215,256 used for
investing activities during the six-month period ended June 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 six-month period ended June 30, 1998, net cash provided by
financing activities was $679,213. There were no cash flows related to
financing activities in the six months ended June 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 June 30, 1999. During the first six months
of 1999, certain related parties advanced $37,000 to the Company for expenses
related to audit and other professional fees and Company overhead, which
advances were provided on short-term bases at nominal interest rates.
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: August 16, 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> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> JUN-30-1999
<CASH> 151
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 151
<PP&E> 30,573
<DEPRECIATION> 22,201
<TOTAL-ASSETS> 8,523
<CURRENT-LIABILITIES> 2,999,562
<BONDS> 1,640,000
10,640
0
<COMMON> 26
<OTHER-SE> (2,991,039)
<TOTAL-LIABILITY-AND-EQUITY> 8,523
<SALES> 22,228
<TOTAL-REVENUES> 22,228
<CGS> 58,422
<TOTAL-COSTS> 58,422
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (36,194)
<EPS-BASIC> (3.62)
<EPS-DILUTED> (3.62)
</TABLE>
