-----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, Vph5XWraCg4rfq6F3UPL5xSSD21qyGrcx9wcJxSZCAl2BllqvxpZsGmOfn3jBYPF dhOgpbPNaeL5J7j2P+Zxpg== 0000931763-98-001242.txt : 19980511 0000931763-98-001242.hdr.sgml : 19980511 ACCESSION NUMBER: 0000931763-98-001242 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19980508 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: 98613567 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 Washington, 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 December 31, 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 December 31, 1996 (unaudited) and June 30, 1996 Consolidated Statements of Income- 5 Three and Six Months Ended December 31, 1996 (unaudited) and 1995 Consolidated Statements of Cash Flow- 6 Three and Six Months Ended December 31, 1996 (unaudited) and 1995 Notes to Consolidated Financial Statements 8 Item 2. Management's Discussion and Analysis of Financial 10 Condition 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 December 31, 1996 (unaudited) and June 30, 1996 (In thousands, except per share data) December 31, 1996 June 30, 1996 ----------------- ------------- ASSETS Current Assets: Cash and cash equivalents $ 244 $ 513 Restricted cash 0 38 Note receivable 0 207 Stock subscription receivable 364 229 Due from shareholder 33 0 Accounts receivable 58 44 Deposits 150 237 Property and equipment held for sale 0 89 ------ ------ TOTAL CURRENT ASSETS 849 1,357 Property and Equipment: Land 1,981 884 Resort rental units 4,554 4,442 Furniture and equipment 611 599 Office building and improvements 441 441 ------ ------ Accumulated depreciation (573) (441) ------ ------ NET PROPERTY AND EQUIPMENT 7,014 5,925 Other assets: Deferred acquisition costs 433 514 Debt issue costs, net 100 139 Due from affiliate 179 0 Prepayments and deposits 6 9 ------ ------ TOTAL OTHER ASSETS 718 662 ------ ------ TOTAL ASSETS $8,581 $7,944 ------ ------ 3 GREAT AMERICAN HOTELS & RESORTS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS December 31, 1996 (unaudited) and June 30, 1996 (In thousands, except per share data) December 31, 1996 June 30, 1996 ----------------- ------------- LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Accounts payable $ 245 $ 288 Accrued expenses 90 113 Common stock to be issued 548 0 Current maturities of long term debt 1,299 671 ------ ------ TOTAL CURRENT LIABILITIES 2,182 1,072 Long term debt less current maturities 5,560 5,356 ------ ------ TOTAL LIABILITIES 7,742 6,428 ------ ------ MINORITY INTEREST 394 0 ------ ------ 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 754 766 Common stock Class A, no par value, 20,000,000 shares authorized, 2,623,519 issued, 2,598,515 outstanding 5,569 5,565 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 1 1 Treasury stock, 25,004 shares, at cost -- -- Additional paid in capital 260 211 Accumulated deficit (6,139) (5,027) ------ ------ TOTAL STOCKHOLDERS' EQUITY 445 1,516 ------ ------ TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $8,581 $7,944 ------ ------ 4 GREAT AMERICAN HOTELS & RESORTS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME For the Three and Six Months Ended December 31, 1996 (unaudited) and 1995
(In thousands, except share data) Three months ended Six months ended December 31, December 31, ------------------ ----------------------- 1996 1995 1996 1995 ---- ---- ---- ---- REVENUES Rental $ 142 $ 172 $ 390 $ 404 Travel Agency 13 4 41 10 Other Income 23 21 41 45 ------ ------ ------ ------ 178 197 472 459 OPERATING EXPENSES Rental 242 288 551 517 Travel agency 14 15 43 14 Salaries & wages 40 19 102 56 General & administrative 127 110 366 436 Depreciation & amortization 83 45 168 91 ------ ------ ------ ------ 506 477 1,230 1,114 LOSS FROM OPERATIONS (328) (280) (758) (655) GAIN (LOSS) ON THE SALE OF PREOPERTY 11 14 (60) 66 OTHER INCOME (EXPENSE) 0 (33) 0 (33) MINORITY INTEREST IN LOSS OF CONSOLIDATED SUBSIDIARY 0 28 0 (5) INTEREST EXPENSE (138) (145) (278) (298) ------ ------ ------ ------ NET INCOME (LOSS) $ (455) $ (416) $(1,096) $ (925) ------ ------ ------ ------ NET INCOME (LOSS) PER SHARE OF COMMON STOCK $(0.17) $(0.17) $ (0.42) $(0.43) WEIGHTED AVERAGE NUMBER 2,625 2,464 2,655 2,168 OF COMMON SHARES OUTSTANDING DURING PERIOD
5 GREAT AMERICAN HOTELS & RESORTS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASHFLOW For the Six Months Ended December 31, 1996 (unaudited) and 1995 (In thousands, except share data)
Six months ended Six months ended December 31, 1996 December 31, 1995 ----------------- ----------------- OPERATING ACTIVITIES: Net loss $(1,096) $(925) Adjustments to reconcile net loss to cash used by operating activities: Depreciation and amortization 168 91 Stock issued for services and settlements 23 31 Minority interest in loss of consolidated subsidiary 0 5 Loss on the sale of property held for sale 60 -- Net cash required by discontinued operations -- (55) Changes in operating assets and liabilities: (Inc) dec in accounts receivable 160 (6) (Inc) dec in prepaid and other 5 (2) (Inc) dec in due from affiliates (180) -- (Inc) dec in accounts payable (43) 16 (Inc) dec in accrued expenses (25) (46) ------- ----- NET CASH USED IN OPERATING ACTIVITIES (928) (891) INVESTING ACTIVITIES: Purchase and construction of property and equipment (1,221) (269) Proceeds from sale of property and equipment held for sale 45 151 Payment of organization costs -- (1) Payment of advances receivable -- (248) Proceeds (payments) on deposits 167 (121) ------- ----- NET CASH USED IN INVESTING ACTIVITIES (1,009) (488)
6 GREAT AMERICAN HOTELS & RESORTS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASHFLOW For the Six Months Ended December 31, 1996 (unaudited) and 1995 (In thousands, except share data)
Six months ended Six months ended December 31, 1996 December 31, 1995 ----------------- ----------------- FINANCING ACTIVITIES: Change in restricted cash 38 (6) Proceeds from mortgage notes payable and long term debt, net of debt-issue costs 933 -- Principal payments on mortgage notes payable and long term debt (101) (296) Proceeds from issuance of Series A Preferred Stock, net of issue costs -- 42 Proceeds from issuance of Class A Common Stock, net of issue costs 529 396 Proceeds from issuance of Class A 20% Cumulative Preferred Participating Stock, net of issue costs 381 -- Proceeds from subscription receivable 215 506 Increase in subscriptions receivable (350) -- Other 24 45 ------- ----- NET CASH PROVIDED BY FINANCING ACTIVITIES 1,669 687 INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (268) (692) CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 513 605 ------- ----- CASH AND CASH EQUIVALENTS, END OF PERIOD $ 245 $ (87) ------- -----
7 GREAT AMERICAN HOTELS & RESORTS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 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" condensed consolidated financial statements include all normal adjustments considered necessary to present fairly the financial position as of December 31, 1996, and the results of operations for the three months and six months ended December 31, 1996 and 1995, and cash flows for the six months ended December 31, 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 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 being 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 assets and 8 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. Caragh later agreed to purchase an additional 350,000 shares for $1.00 per share. As of December 31, 1996, the Company had received $825,000 from Caragh Holdings towards the subscription and has a stock subscription receivable of $364,000. 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 December 31, 1996 was a deficit of ($1,333,000) as compared to a surplus of $285,000 for the year ended June 30, 1996. Contributing to the reduction of working capital was the Company's net loss for the six month period of ($1,096,000) which was only partially offset by other factors affecting working capital; accounts receivable, accounts payable, deposits, etc. 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. In addition, during the quarter ended December 31, 1996, the Company had $543,000 in mortgage notes payable become current further weakening the Company's working capital position. 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 December 31, 1996, the Company incurred losses from continuing operations of ($466,000) and a gain on the sale of property of $11,000 for a total net loss of ($455,000). Rental revenues for the quarter decreased 17% from the prior year period. Lost roomnights resulting from the sale of the Hilton Head Cottages were the major contributor to the reduction in rental revenues. 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 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 is in the process of negotiating all past due amounts and intends to seek a reduction in the interest rate for the notes in the near future. The Company has successfully negotiated with several of the individual noteholders to arrange payment plans and/or extend due dates. 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 December 31, 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 FINANCIAL DATA SCHEDULE
5 6-MOS JUN-30-1997 JUL-01-1996 DEC-31-1996 244,000 0 455,000 0 0 849,000 7,587,00 573,000 8,581,000 2,182,000 0 0 754,000 5,569,000 (5,878,000) 8,581,000 431,000 472,000 0 0 1,290,000 0 278,000 (1,096,000) 0 (1,096,000) 0 0 0 (1,096,000) (0.42) (0.42)
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