SUPPLEMENT #1
SUPPLEMENT DATED NOVEMBER ____, 1998
TO PROSPECTUS DATED OCTOBER 17, 1997.
CHARTHOUSE SUITES VACATION OWNERSHIP, INC.
This Supplement should be read in conjunction with the
Prospectus dated October 17, 1997, and where the Supplement and
the Prospectus conflict, this Supplement (as amended by any later
supplements) shall control. Capitalized, but undefined, terms
have the meaning set forth in the Prospectus.
STATUS OF OFFERING
To date no Charthouse Suites Vacation Interests, with Rental
Pool Arrangement (the "Interests") have been sold.
GUARANTEED RENTAL ARRANGEMENT OR CASH DISCOUNT PROGRAM
As an incentive to early purchasers of the Interests,
Holders may elect to receive guaranteed rental payments, at
varying rates for each Class of Interest, for their Unit Weeks
for a specified number of weeks. Under this guaranteed rental
arrangement, Holders who purchase prior to April 1, 1999 may
designate six Unit Weeks and receive a guaranteed rental rate for
the Unit Week. Holders purchasing between April 1, 1999 and June
30, 1999 may designate four Unit Weeks and receive a guaranteed
rental rate. Holders purchasing between July 1, 1999 and
September 30, 1999 may designate two Unit Weeks. Holders
purchasing after September 30, 1999 are not eligible to
participate in this guaranteed rental arrangement. The
guaranteed rental rate paid under this arrangement is a walk-in,
nightly off-season rate that has been arbitrarily selected by the
Company and is set forth at page 39 of the Prospectus. See
"Guaranteed Rental Agreement" for a description of the
arrangement, the guaranteed rates and certain conditions. The
guaranteed rental arrangement must be exercised by October 17,
2002.
In lieu of the guaranteed rental arrangement, early Holders
may elect to receive a cash discount to the subscription price by
surrendering rights to the guaranteed rental arrangement.
Holders purchasing between April 1, 1999 and June 30, 1999 may
elect to receive a 3% discount from the purchase price of an
Interest. Holders purchasing between July 1, 1999 and September
30, 1999 may elect to receive a 1-1/2% discount from the purchase
price of an Interest. Holders purchasing after September 30,
1999 may not participate in this cash discount program. See
"Guaranteed Rental Arrangement."
NO MINIMUM
There is no requirement that any minimum number of Interests
be sold in the offering. However, if fewer than 76 Interests are
sold by October 1, 1999, the Company has the right to cancel the
Interests upon the repayment of the paid subscription amount to
the Holders, less amounts for certain payments or benefits
received by the Holder. See "Plan of Distribution" for a
description. The 76 Interest minimum was arbitrarily selected by
the Company. If the Interests are canceled, a written notice on
or before November 30, 1999, will be sent to all Holders. With
that notice, Holders will receive the net amount of any refund
and an accounting of that calculation as to benefits. The sole
shareholder of the Company, Jeffrey Keierleber, has agreed to
invest additional funds in the Company if it is necessary in
order to repay any such amounts. Affiliates of the Company may
purchase Interests without limitation as to amount. See "Plan of
Distribution."
HOTEL
Upon purchase of the Chart House Hotel, the Company will own
both the hotel (described on pages 17-18 of the prospectus) and
the attached marina. The marina will not be part of the rental
pool and its results are not described below.
The following is updated performance results as if the
Rental Pool had been operating for the periods set forth below.
DERIVED AVERAGE UNIT WEEK RENTAL REVENUE
<TABLE>
<S> <C> <C> <C> <C>
For the Nine For the Years Ended December 31
Months Ended 1997 1996 1995
September 30,
1998
Rental Income (Actual) $377,790 $457,495 $465,244 $328,232
Pro Forma Rental Pool Fee (5%) (18,889) (22,875) (23,262) (16,412)
Pro Forma Net Rental Revenue (95%) $358,901 $434,620 $441,982 $311,820
Number of Unit Weeks 39 52 52 52
Number of Hotel Suites 25 25 25 25
Pro Forma Average Unit Week Rental $ 368 $ 334 $ 340 $ 240
Revenue
</TABLE>
RENTAL POOL
PRO FORMA STATEMENT OF RENTAL POOL REVENUES
(UNAUDITED)
<TABLE>
<S> <C> <C> <C> <C>
For the Nine Months For the Years Ended December 31,
Ended
September 30, 1998 1997 1996 1995
Rental Income $377,790 $457,495 $465,244 $328,232
Less Property Management Fee (5.0%) (18,889) (22,875) (23,262) (16,412)
358,901 434,620 441,982 311,820
Other Income* 6,504 16,935 16,179 14,444
Total Revenues $365,405 $451,555 $458,161 $326,264
*Other income (i.e. interest income, vending income and telephone income) is included inthe pro forma computation of
rental pool revenues because all such income generated shall be included in the rental pool. The above example
assumes that 100% of the Unit Weeks are placed into the rental pool at all times and such income will be
distributed to Rental Pool participants under that assumption.
</TABLE>
ALLOCATION OF RENTAL POOL REVENUES ON AVERAGE AMONG
CLASSES OF INTERESTS
(UNAUDITED)
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
For the
Nine
Months
Ended
NUMBER OF OFF DAILY September 30,
ROOMS/ SEASON GROSS 1998
SUITES TOTAL ANNUAL NIGHTLY POTENTIAL
RENTAL DAYS WALK-IN RENTAL For the Years Ended December 31,
PER CLASS RATE INCOME 1997 1996 1995
Class A 6 2,190 $70 $420 $ 64,348 $ 79,519 $ 80,682 $ 57,455
Class B 4 1,460 $75 $300 $ 45,963 $ 56,799 $ 57,630 $ 41,039
Class C 6 2,190 $85 $510 $ 78,137 $ 96,559 $ 97,972 $ 69,767
Class D 6 2,190 $120 $720 $110,311 $136,319 $138,313 $ 98,495
Class E 2 730 $130 $260 $ 39,834 $ 49,226 $ 49,946 $ 35,568
Class F 1 365 $175 $175 $ 26,812 $ 33,133 $ 33,618 $ 23,940
25 9,125 $2,385 $365,405 $451,555 $458,161 $326,264
</TABLE>
PRO FORMA DISTRIBUTIONS PER INTEREST FOR EACH CLASS OF INTERESTS
(AVERAGE INCLUDING OTHER INCOME)
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Class Total Per Interest
For the Years Ended December 31,
Number of For the 1997 1996 1995 For the 1997 1996 1995
Interests Nine Months (48 Unit (48 Unit (48 Unit Nine
Ended Weeks) Weeks) Weeks) Months
September Ended
30, 1998 September
30, 1998
Class A 36 $ 59,398 $ 73,402 $ 74,476 $ 53,036 $1,650 $2,039 $2,069 $1,473
Class B 24 $ 42,427 $ 52,430 $ 53,197 $ 37,883 $1,768 $2,185 $2,217 $1,578
Class C 36 $ 72,126 $ 89,131 $ 90,435 $ 64,400 $2,004 $2,476 $2,512 $1,789
Class D 36 $101,825 $125,833 $127,674 $ 90,918 $2,828 $3,495 $3,546 $2,526
Class E 12 $ 36,770 $ 45,440 $ 46,104 $ 32,832 $3,064 $3,787 $3,842 $2,736
Class F 6 $ 24,749 $ 30,584 $ 31,032 $ 22,098 $4,125 $5,097 $5,172 $3,683
150 $337,296 $416,820 $422,918 $301,167
</TABLE>
CERTAIN OCCUPANCY INFORMATION
The following unaudited information sets forth the financial
results and percentage occupancy for the nine months ended
September 30, 1998, and for the years ended December 31, 1997,
1996 and 1995, respectively.
CHART HOUSE SUITES HOTEL
RESULTS BY CLASS OF INTERESTS
<TABLE>
<S> <C> <C> <C> <C>
For the Nine
Months Ended
September 30, For the Years Ended
December 31,
Average Occupancy 1998 1997 1996 1995
Class A 70% 71% 77% 63%
Class B 62% 63% 69% 58%
Class C 66% 63% 69% 51%
Class D 46% 38% 45% 38%
Class E 58% 58% 61% 59%
Class F* 92% 80% 91% 97%
All Units 72% 65% 65% 54%
Average Unit Week
Rental Amount
(Collected)
Class A $522 $476 $442 $397
Class B $567 $491 $474 $426
Class C $534 $508 $449 $396
Class D $795 $725 $672 $563
Class E $818 $797 $821 $709
Class F* $918 $891 $614 $574
</TABLE>
*Primarily rented on a monthly basis in 1995 and 1996.
See the Form 10-KSB for 1997 and the Form 10-QSB for the
quarter ended June 30, 1998, both of which are attached to the
Supplement and incorporated by reference hereby for additional
information and the audited financial statements.
Mr. Harry S. Pangas
November 2, 1998
Page
Writer's Direct Dial:(414) 277-5119
E-Mail: [email protected]
November 2, 1998
VIA TELECOPY AND FEDERAL EXPRESS
Harry S. Pangas, Esq.
Securities and Exchange Commission
Judiciary Plaza, 450 Fifth Street
Washington, DC 20549
RE: Charthouse Suites Vacation Ownership, Inc. (the
"Company")
Form s-11
File No. 333-13571
Dear Mr. Pangas:
In response to your comment letter dated October 23, 1998, we
hereby enclose a copy of our revised Supplement to the prospectus
and have summarized the Company's response and position as to your
comments. For your convenience, a copy of your comment letter is
attached hereto. As you will note, the Company has updated certain
dates and the information therein to include information through
September 30, 1998.
GENERAL
1. We have revised the financial statements to the prospectus as
requested (marked page shows suggested changes.
ACCOUNTING COMMENTS
NOTE 7 - FORM A ACQUISITION (UNAUDITED)
2. We have updated the information as requested.
GENERAL
3. We have revised the prospectus as requested.
We have also revised the third sentence of Note 7 - Pro Forma
Acquisition (Unaudited) to read as follows:
Decade will provide financing for the whole purchase
price of approximately $1.8 million through an
unsecured demand note payable with interest only
payable monthly at 8% and the anticipated net proceeds
shall be used to pay the note on the Hotel.
* * * * *
Thank you for your review and assistance.
Very truly yours,
QUARLES & BRADY
/s/ Walter J. Skipper
Walter J. Skipper
WJS/jab
Enclosures
250259.32306
cc: Mr. Michael G. Sweet
Conrad G. Goodkind, Esq.
