-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, D15GvDTGLyGvvUf8CdtzhtlmVvkNpj0xNzljy0rcDU+ztFFA8/W9cHa4vVoyspJ5 RW/ncS6MMao9zlFXZnpm4g== 0000931763-98-000972.txt : 19980417 0000931763-98-000972.hdr.sgml : 19980417 ACCESSION NUMBER: 0000931763-98-000972 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19980416 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: GREAT AMERICAN HOTELS & RESORTS INC CENTRAL INDEX KEY: 0000879586 STANDARD INDUSTRIAL CLASSIFICATION: HOTELS & MOTELS [7011] IRS NUMBER: 581956846 STATE OF INCORPORATION: GA FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-19852 FILM NUMBER: 98595270 BUSINESS ADDRESS: STREET 1: 120 FIRESTONE POINTE STE 100 CITY: DULUTH STATE: GA ZIP: 30155 BUSINESS PHONE: 4044763936 MAIL ADDRESS: STREET 1: 3300 HOLCOMB BRIDGE RD STREET 2: STE 290 CITY: NORCROSS STATE: GA ZIP: 30092 FORMER COMPANY: FORMER CONFORMED NAME: GREAT AMERICAN RESORTS INC /GA/ DATE OF NAME CHANGE: 19960428 10QSB 1 FORM 10QSB U.S. SECURITIES AND EXCHANGE COMMISSION Washimgton, D.C. 20549 FORM 10-QSB [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934 [FEE REQUIRED] For the Quarterly Period Ended September 30, 1996. [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934 [NO FEE REQUIRED] Commissioner file number: 0-19852 GREAT AMERICAN HOTELS & RESORTS, INC. (Name of small business issuer in its charter) Georgia 58-1956846 (State or other jurisdiction of (IRS employer identification number) incorporation or organization) 3300 Holcomb Bridge Road, Suite 290, Norcross, Georgia 30092 (Address of principal executives' offices) (Zip code) (770) 798-8500 (Issuer's telephone number) Securities registered under Section 12(b) of the Exchange Act: None Securities registered under Section 12(g) of the Exchange Act: Title of Class: Class A Common Stock, no par value. Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to the filing requirements for the past 90 days. Yes No X -------- -------- The registrant had 3,510,571 shares of common stock outstanding as of February 28, 1998. 1 GREAT AMERICAN HOTELS AND RESORTS, INC. AND SUBSIDIARIES INDEX
Part I. Financial Information Page No. -------- Item 1. Condensed Consolidated Financial Statements Consolidated Balance Sheets -- 3 September 30, 1996 (unaudited) and June 30, 1996 Consolidated Statements of Income -- 5 Three Months Ended September 30, 1996 (unaudited) and 1995 Consolidated Statements of Cash Flow -- 6 Three Months Ended September 30, 1996 (unaudited) and 1995 Notes to Consolidated Financial Statements 8 Item 2. Management's Discussion and Analysis of Financial Condition 10 And Results of Operations Part II. Other Information Item 1. Legal Proceedings 10 Item 2. Changes in Securities 10 Item 3. Defaults Upon Senior Securities 11 Item 4. Submission of Matters to a Vote of Security Holders 11 Item 5. Other Information 11 Item 6. Exhibits and Reports on Form 8-K 11 Signatures 12
2 PART I - FINANCIAL INFORMATION ITEM 1 - FINANCIAL STATEMENTS GREAT AMERICAN HOTELS & RESORTS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS September 30, 1996 (unaudited) and June 30, 1996
September 30, 1996 June 30, 1996 ------------------ ------------- ASSETS Current Assets: Cash and cash equivalents $ 245,021 $ 513,199 Restricted cash 0 38,188 Note receivable 0 206,859 Stock subscription receivable 229,326 229,326 Deposits 0 236,601 Accounts receivable 157,205 43,436 Property and equipment held for sale 0 89,730 ------------------ ------------- TOTAL CURRENT ASSETS 631,552 1,357,339 Property and Equipment: Land 1,981,066 884,981 Resort rental units 4,544,925 4,440,030 Furniture and equipment 605,935 599,925 Office building and improvements 441,715 441,715 ------------------ ------------- Accumulated depreciation (506,901) (441,142) ------------------ ------------- NET PROPERTY AND EQUIPMENT 7,066,740 5,925,509 Other assets: Deferred acquisition costs 573,324 513,322 Debt issue costs, net 120,300 139,866 Prepayments and deposits 4,628 8,817 ------------------ ------------- TOTAL OTHER ASSETS 698,252 662,005 ------------------ ------------- TOTAL ASSETS $8,396,544 $7,944,853 ------------------ -------------
3 GREAT AMERICAN HOTELS & RESORTS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS September 30, 1996 (unaudited) and June 30, 1996
September 30, 1996 June 30, 1996 ------------------ ------------- LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Accounts payable $ 424,724 $ 288,714 Accrued expenses 59,107 112,593 Common stock to be issued 180,579 0 Current maturities of long term debt 780,403 671,232 ------------------ ----------- TOTAL CURRENT LIABILITIES 1,444,813 1,072,539 Long term debt less current maturities 6,053,695 5,356,138 ----------------- ----------- TOTAL LIABILITIES $ 7,498,508 $ 6,428,677 ----------------- ----------- Stockholders' equity: Preferred stock, no par value, 16,000,000 shares authorized, none issued -- -- Series A preferred stock, no par value, 4,000,000 shares authorized, 81,000 issued and outstanding, liquidation value of $10 per share 761,935 766,680 Common stock Class A, no par value, 20,000,000 shares authorized, 2,623,519 issued, 2,598,515 outstanding 5,569,181 5,565,538 Common stock Class B, no par value, 10,000,000 shares authorized, none issued -- -- Common stock Class C, no par value, 2,000,000 shares authorized, 200,000 issued and outstanding 100 100 Treasury stock, 25,004 shares, at cost -- -- Additional paid in capital 250,875 211,875 Accumulated deficit (5,684,055) (5,028,017) -------------- ---------- TOTAL STOCKHOLDERS' EQUITY 898,036 1,516,176 -------------- ---------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 8,396,544 $ 7,944,853 -------------- -----------
4 GREAT AMERICAN HOTELS & RESORTS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME For the Three Months Ended September 30, 1996 (unaudited) and 1995
Three months ended Three months ended September 30, 1996 September 30, 1995 ------------------ ------------------ REVENUES Rental $ 246,959 $ 231,815 Travel agency 28,158 6,169 Other income 18,031 24,291 ---------- ---------- 293,148 262,275 OPERATING EXPENSES Rental 309,191 230,042 Travel agency 28,746 (1,134) Salaries & wages * 61,870 36,900 General & administrative * 238,163 325,437 Depreciation & amortization 85,381 45,301 ---------- ---------- 723,351 636,546 INCOME (LOSS) FROM OPERATIONS (430,203) (374,271) GAIN (LOSS) ON THE SALE OF PROPERTY (70,751) 52,074 OTHER INCOME (EXPENSE) 0 0 MINORITY INTEREST IN LOSS OF CONSOLIDATED SUBSIDIARY 0 32,719 INTEREST INCOME (EXPENSE) (139,860) (153,406) ---------- ---------- NET INCOME (LOSS) ($640,814) ($442,884) ---------- ---------- NET INCOME (LOSS) PER SHARE OF COMMON STOCK ($0.24) ($0.27) WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING DURING PERIOD 2,684,999 1,660,990
* Excludes travel agency 5 GREAT AMERICAN HOTELS & RESORTS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASHFLOW For the Three Months Ended September 30, 1996 (unaudited) and 1995
Three months ended Three months ended September 30, 1996 September 30, 1995 ------------------ ------------------ OPERATING ACTIVITIES: Net loss ($640,814) ($442,884) Adjustments to reconcile net loss to cash used by operating activities: Depreciation and amortization 85,381 45,301 Stock issued for services and settlements 12,643 -- Minority interest in loss of Consolidated subsidiary -- 32,719 Loss on the sale of property held for sale 70,751 -- Changes in operating assets and liabilities: (Inc) dec. in accounts receivable 93,090 (18,170) (Inc) dec. in prepaid and other 19,566 (6,958) (Inc) dec. in accounts payable 136,010 42,414 (Inc) dec. in accrued expenses (53,486) 24,235 ---------- --------- NET CASH USED IN OPERATING ACTIVITIES (276,859) (323,343) INVESTING ACTIVITIES: Purchase and construction of property and equipment (1,206,990) (80,949) Proceeds from sale of property and equipment held for sale 21 43,578 Payment of organization costs -- (655) Payment of advances receivable -- (249,000) Proceeds (payments) on deposits 180,790 (82,585) ---------- --------- NET CASH USED IN INVESTING ACTIVITIES (1,026,179) (369,611)
6 GREAT AMERICAN HOTELS & RESORTS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASHFLOW For the Three Months Ended September 30, 1996 (unaudited) and 1995
Three months ended Three months ended September 30, 1996 September 30, 1995 ------------------ ------------------ FINANCING ACTIVITIES: Change in restricted cash 38,188 (6,292) Proceeds from mortgage notes payable and long term debt, net of debt-issue costs 900,500 -- Principal payments on mortgage notes payable and long term debt (93,772) (339,896) Proceeds from issuance of Series A Preferred Stock, net of issue costs -- 41,945 Proceeds from issuance of Class A Common Stock, net of issue costs 184,222 -- Proceeds from subscription receivable -- -- Increase in subscriptions receivable -- 382,500 Other 5,722 (10,020) ---------- -------- NET CASH PROVIDED BY FINANCING ACTIVITIES 1,034,860 68,237 INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (268,178) (624,717) CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 513,199 604,923 ---------- -------- CASH AND CASH EQUIVALENTS, END OF PERIOD $ 245,021 ($19,794) ---------- --------
7 GREAT AMERICAN HOTELS & RESORTS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS September 30, 1996 (unaudited) 1. PRESENTATION OF INTERIM FINANCIAL INFORMATION In the opinion of the management of Great American Hotels & Resorts, Inc. and subsidiaries (the "Company"), the accompanying "unaudited" consolidated financial statements include all normal adjustments considered necessary to present fairly the financial position as of September 30, 1996, and the results of operations for the three months ended September 30, 1996 and 1995, and cash flows for the three months ended September 30, 1996 and 1995. Interim results are not necessarily indicative of results for a full year. The condensed consolidated financial statements and notes are presented as permitted by Form 10Q, and do not contain certain information included in the Company's audited consolidated financial statements and notes for the fiscal year ended June 30, 1996. 2. ORGANIZATION Great American Hotels & Resorts, Inc. ("GAR") was incorporated under the laws of the State of Georgia on July 29, 1991. The Company was formed for the purpose of engaging in the business of purchasing, developing and managing properties in the overnight resort rental market in areas throughout the world. The accompanying financial statements include the accounts of Great American Hotels & Resorts, Inc. and its six wholly owned subsidiaries: Great American Honeymoon Resorts, Inc., Great American Travel Network, Inc., Great American Resorts of Florida, Inc., Great American Casinos, Inc., Great American Resorts of Biloxi, Inc. and Gold Coast Security Trust Properties, Inc. All significant intercompany balances, transactions and stockholdings have been eliminated. 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CASH AND CASH EQUIVALENTS--For purposes of the statements, the Company considers all money market accounts and highly liquid debt instruments purchased with an original maturity of three months or less to be cash equivalents. PROPERTY AND EQUIPMENT--Property, improvements and equipment are recorded at cost. Expenses for repairs and maintenance are charged to expense as incurred and additions and improvements that significantly extend the lives of assets are capitalized. Upon the sale or other retirement of depreciated property, the costs and accumulated depreciation are removed from the related accounts and any gain or loss is reflected in operations. Depreciation is provided using the straight line and accelerated methods based upon the useful lives of the depreciable assets ranging from five to thirty nine years. DEFERRED ACQUISITION COSTS--Deferred acquisition costs include professional fees and other direct costs related to the evaluation of prospective property acquisitions. If the acquisitions are completed, the costs are included as property costs. If a prospective property is not acquired, the costs are expensed. DEBT ISSUE COSTS--Debt issue costs represent the direct costs of issuing debt securities. These costs are amortized over the term of the related debt. INCOME TAXES--The Company accounts for incomes taxes under Statement of Financial Accounting Standards No. 109 ("SFAS No. 109"). Temporary differences are differences between the tax basis of 8 assets and liabilities and their reported amounts in the financial statements that will result in taxable or deductible amounts in future years. NET LOSS PER SHARE OF COMMON STOCK--Net loss per share is computed by dividing the net loss after deducting preferred stock dividends for the period by the weighted average number of shares of common stock outstanding during the period. 4. STOCK SUBSCRIPTION RECEIVABLE The Company issued 400,000 shares of Class A common stock to Caragh Holdings during August 1995 as a deposit on the purchase of a parcel of land. Such purchase was later cancelled by mutual consent of the parties. Caragh Holdings may purchase the shares by paying $2.00 per share to the Company until December 31, 1997, at which time any non-purchased shares will be returned to the Company. In related agreements, Caragh Holdings agreed to purchase an additional 300,000 shares of Class A common stock, 200,000 for $3.20 per share and 100,000 for $2.00 per share or $840,000. The Company issued the 300,000 shares of stock to Caragh Holdings in September 1995 and has received $610,674 from Caragh Holdings towards the subscription. As of September 30, 1996, the Company had recorded a $229,326 stock subscription receivable. 5. SUBSEQUENT EVENTS During September 1996, the Company formed a wholly owned subsidiary, Gold Coast Security Trust Properties, Inc. ("Gold Coast"), a Florida corporation. In a private placement, Gold Coast offered to sell 1,000 shares of its Class A 20% cumulative participating preferred shares for $1,000 per share. Through February 28, 1998, Gold Coast had sold 940 shares for gross proceeds of approximately $939,768. On May 1, 1997, Gold Coast acquired a 65% interest in the issued and outstanding stock of Jacjon, Inc. ("Jacjon"), a Florida corporation. The remaining 35% interest was acquired by an outside investor. The purchase price was $1,261,617 in cash, $3,233,090 in mortgage and notes payable and $396,000 in acquisition costs. Jacjon owns the 229 room Days Inn / Super 8 and the attached restaurant in Vero Beach, Florida. The acquisition was recorded using the purchase method of accounting by which the assets are valued at fair market value at the date of acquisition. The purchase price allocation is as follows:
Land $ 671,347 Buildings 3,790,246 Furniture, fixtures, etc. 276,214 Other assets 152,900 ---------- $4,890,707
In June 1997, the Company formed a majority owned subsidiary, Orlando Security Trust, Ltd. ("Orlando"). The Company owns 74.25% of the limited partner interest and 100% of the general partner interest for a total ownership percentage of 75.25%. On June 27, 1997, Orlando purchased 100% of the issued and outstanding shares of ASIG, Inc. ("ASIG"), a Florida corporation. ASIG owns the 56 room Ramada Limited in Orlando, Florida. The purchase price was $479,388 in cash, $1,979,651 in mortgage and notes payable and $242,789 in acquisition costs. The acquisition was recorded using the purchase method of accounting by which the assets are valued at fair market value at the date of acquisition. The purchase price allocation is as follows:
Land $ 354,263 Buildings 2,025,116 Furniture, fixtures, etc. 264,375 Other assets 58,074 --------- $2,701,828
9 ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS LIQUIDITY AND CAPITAL RESOURCES The Company's working capital at September 30, 1996 was a deficit of ($813,261) as compared to a surplus of $284,800 for the year ended June 30, 1996. Contributing to the reduction working capital was the Company's net loss for the period of ($640,814) which was only partially offset by other factors affecting working capital, accounts receivable, accounts payable, deposits, etc. In addition, during September 1996, the Company purchased land in Hawaii, which required a cash outlay of approximately $160,000 and resulted in an increase of current debt of $167,000. The Company anticipates having to raise additional funds through private securities offerings to finance its operations, meet delinquent obligations (See Part II, Item 3, Defaults Upon Senior Securities) and carry out its business plan, which includes future acquisitions. RESULTS OF OPERATIONS For the quarter ended September 30, 1996, the Company incurred losses from continuing operations of ($570,063) and a loss on sale of property of ($70,751) for a total net loss of ($640,814). Rental revenues totaled $246,959, an increase of 6.5% over the prior year. Though the Company lost room-nights as a result of the sale of the Hilton Head cottages, renovations in Reno were moving toward completion adding capacity in the hotel. The Company continues to recognize operating losses from the Reno property and is currently making changes to management, marketing strategies and other areas in an attempt to enhance the performance of the hotel. Salaries and wages increased significantly over prior year as the Company employed two professionals to assist with future acquisitions. Depreciation expense increased as a result of new depreciation charges on the completed renovations to the Reno property. PART II - OTHER INFORMATION ITEM 1 - LEGAL PROCEEDINGS On November 17, 1995, RRR, INC. d/b/a MAXimum Resort Rentals, Inc., filed a lawsuit in the Beauford County, South Carolina against the Company. The plaintiff was retained by the Company to manage the Company's cottages (sold fiscal 1996) located in Hilton Head, South Carolina. The lawsuit alleges that the Company breached its agreement with the plaintiff when the Company entered into agreements to sell the cottages. The lawsuit seeks actual damages of $3,000,000 plus unspecified punitive damages. The Company believes this lawsuit is without merit and intends to defend it vigorously. The Company is currently in the deposition process and expects the matter to go to trial within the next 90 days. The Company has counterclaimed for $110,000. ITEM 2 - CHANGES IN SECURITIES None. 10 ITEM 3 - DEFAULTS UPON SENIOR SECURITIES As of February 28, 1998, the Company was delinquent on interest payments amounting to $155,994, dividend payments on preferred stock of $180,410 and principal payments on notes to individuals totaling $924,549.
Due Date Principal Obligation -------- -------------------- 06/30/96 $ 11,000 02/06/97 20,000 03/17/97 6,000 04/04/97 63,000 05/31/97 23,000 06/30/97 94,333 08/30/97 12,000 12/01/97 20,000 12/31/97 523,216 01/31/98 142,000 02/16/98 10,000 -------- Total $924,549 --------
The Company intends to renegotiate all past due amounts. The Company has successfully negotiated with several of the individual noteholders to extend and arrange payment plans. ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None. ITEM 5 - OTHER INFORMATION None. ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K Exhibits - None. The Company did not file any reports on form 8-K during the quarter ended September 30, 1996. 11 SIGNATURES In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused the report to be signed on its behalf by the undersigned, thereunto duly authorized. GREAT AMERICAN HOTELS AND RESORTS, INC. Date: By: ------------------- ------------------------------------ Edward L. Bates, President Date: By: ------------------ ------------------------------------- David T. Potts, Chief Operating Officer Date: By: ------------------ ------------------------------------ Rob A. Turner, Chief Financial Officer 12 EX-27 2 FDS
5 3-MOS JUN-30-1997 JUL-01-1996 SEP-30-1996 245,021 0 386,531 0 0 631,552 7,573,641 506,901 8,396,544 1,444,813 0 0 761,935 5,569,181 (5,433,080) 8,396,544 275,117 293,148 0 0 794,102 0 139,860 (640,814) 0 (640,814) 0 0 0 (640,814) (.24) 0
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