10-Q 1 c2q01c.txt 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 JUNE 30, 2001 [ ] 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 August 14, 2001 was 262,690. Transitional Small Business Disclosure Format (check one): Yes [ ] No [ X ] CELEBRITY ENTERTAINMENT, INC. FORM 10-QSB For the Six Months Ended June 30, 2001 INDEX Page Number PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) Consolidated Balance Sheet Consolidated Statements of Operations Consolidated Statements of Cash Flows 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 Celebrity Entertainment, Inc. Consolidated Balance Sheet June 30, 2001 (Unaudited) Assets Current assets: Cash $ 14 Accounts receivable - affiliate 2,755 Total current assets 2,769 Property and equipment, cost 30,573 Less accumulated depreciation ( 30,573) Property and equipment, net - Other assets: Investment in oil and gas lease, net 1,716,221 Less: allowance for impairment in value (1,716,221) Total assets $ 2,769 Liabilities and Stockholders' Equity Current Liabilities: Accounts payable $ 260,501 Accrued expenses 1,300 Notes payable - debenture settlement 320,534 Convertible debentures payable 1,640,000 Note payable 60,000 Note payable - officer 3,250 Note payable - affiliate 9,230 Notes payable - officer 135,705 Accrued interest 695,028 Total current liabilities 3,125,548 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 (20,946,407) Less treasury stock, 10,100 shares common and 475,000 shares preferred, at cost (500,000) Total stockholders' equity ( 3,122,779) Total liabilities and stockholders' equity $ 2,769

See accompanying notes to financial statements. Celebrity Entertainment, Inc. Consolidated Statements of Operations (Unaudited) Three Months Ended Six Months Ended June 30, June 30, 2001 2000 2001 2000 Revenues: Oil and gas - 1,879 - 1,879 Total revenues - 1,879 - 1,879 Selling, general & administrative 5,450 1,315 11,918 12,756 Depreciation & amortization - 1,529 - 3,058 Operating profit (loss) ( 5,450) ( 965) ( 11,918) ( 13,935) Net loss $ ( 5,450) $( 965) $( 11,918) $( 13,935) Basic and diluted loss per share: Net loss $ ( 0.64) $( 0.61) $( 1.23) $( 1.26) See accompanying notes to the financial statements.

Celebrity Entertainment, Inc. and Subsidiary Consolidated Statement of Cash Flows Unaudited Six months ended June 30, 2001 2000 Cash flows from operating activities: Net loss $( 5,450) $( 13,935) Adjustments to reconcile net loss to net cash used for operating activities: Depreciation and amortization - 3,058 Net cash used in operating activities ( 5,450) ( 10,877) Cash flows from investing activities: Net cash provided by (used in) investing activities - - Cash flows from financing activities: Advances on note receivable - related party 5,450 11,378 Net cash provided by financing activities 5,450 11,378 Increase (decrease)in cash and cash equivalents ( 47) 501 Cash and cash equivalents, beginning of period 61 32 Cash and cash equivalents, end of period $ 14 $ 533 See accompanying notes to financial statements.

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, 2001 and the results of operations and cash flows for the quarters ended and the six months ended June 30, 2001 and 2000. 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 2000 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, 2001 and 2000: 2001 2000 Loss before extraordinary item $( 5,450) $( 13,935) Preferred dividends ( 316,576) ( 316,576) Loss to common shareholders ( 322,026) ( 330,511) Net loss to common shareholders $( 322,026) $( 330,511) Weighted average common shares outstanding 262,690 262,690 Basic and diluted loss per share: Loss per share $( 1.23) $( 1.26) 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 Six-month Period Ended June 30, 2001 Compared to Six-month Period Ended June 30, 2000: Revenues for the six-month period ended June 30, 2001 amounted to $-0- compared to $1,879 for the six-month period ended June 30, 2000, reflecting a decrease of $1,879, due to a reduction in the oil and gas income. Selling, general and administrative expenses were $5,450 for the six months ended June 30, 2001 compared to $1,315 for the six-month period ended June 30, 2000, representing an increase of $4,135. The increase is due principally to the change in maintenance and auditing costs. During the six-month periods ending June 30, 2001 and 2000, $-0- in interest expense was charged to operations. Net loss for the six-month period ended June 30, 2001 was $5,450 which represents a decrease in loss of $8,485 compared to the net loss of $13,935 for the prior-year period. The decrease is due principally to the change in maintenance and auditing expenses. 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 $47 to $14 at June 30, 2001 from $61 at December 31, 2000. Net cash used for operating activities was $5,450 during the six-month period ended June 30, 2001 compared to cash used for operating activities of $10,877 during the six-month period ended June 30, 2000. The change in cash used for operating activities resulted primarily from the Company's minimal accounting and maintenance activities during the negotiations for new operations. Investing Activities During the six-month periods ending June 30, 2001 and 2000, there was no cash provided by investing activities. Financing Activities During the six-month period ended June 30, 2001, net cash provided by financing activities was $5,450 compared with $11,378 provided by financing activities in the six months ended June 30, 2000, resulting from the changes in loans to and from related parties. PART II. OTHER INFORMATION Item 5: Certain Relationships and Related Transactions At December 31, 2000, the Company had notes payable to officers in the total amount of $134,397 bearing interest at prime beginning January 1, 2000. During the first six months of 2001 the loans were increased by $4,558 and they have a combined outstanding balance of $138,955 at June 30, 2001. During the first six months of 2001, certain related parties advanced such sums 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 14, 2001 CELEBRITY ENTERTAINMENT, INC. By: /s/ J. William Metzger J. William Metzger Executive Vice President

CELEBRITY ENTERTAINMENT INC 10-Q