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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-SB/A
(Amendment No. 1)
Pursuant to Section 12(b) or (g) of the Securities Exchange Act of 1934
BILTMORE VACATION RESORTS, INC.
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(Name of Registrant as Specified in its Charter)
NEVADA
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(State of Other Jurisdiction of Incorporation or Organization)
88-0355447
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(I.R.S. Employer Identification Number)
2110 EAST FLAMINGO ROAD, SUITE 110
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LAS VEGAS, NEVADA 89119
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(Address of Principal Executive Offices, including Zip Code)
(702) 650-2889
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(Issuer's Telephone Number, including Area Code)
Securities to be registered pursuant to Section 12(b) of the Act:
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TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH
TO BE REGISTERED EACH CLASS IS TO BE REGISTERED
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NONE NONE
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Securities to be registered pursuant to Section 12(g) of the Act:
$0.001 PAR VALUE COMMON STOCK
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(Title of class)
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BILTMORE VACATION RESORTS, INC.
FORM 10 SB
TABLE OF CONTENTS
PART I
Item 1. Description of Business
Item 2. Management's Discussion and Analysis or Plan of Operation
Item 3. Description of Properties
Item 4. Security Ownership of Certain Beneficial Owners and Management
Item 5. Directors, Executive Officers, Promoters, and Control Persons
Item 6. Executive Compensation
Item 7. Certain Relationships and Related Transactions
Item 8. Description of Securities
PART II
Item 1. Market Price of and Dividends on Registrant's Common Equity
and Other Stockholder Matters
Item 2. Legal Proceedings
Item 3. Changes in and Disagreements with Accountants
Item 4. Recent Sales of Unregistered Securities
Item 5. Indemnification of Directors and Officers
FINANCIAL STATEMENTS
PART III
Item 1. Index to Exhibits
Item 2. Description of Exhibits
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PART I
ITEM 1. DESCRIPTION OF BUSINESS
SPECIAL NOTICE REGARDING FORWARD-LOOKING STATEMENTS
Certain information in this Registration Statement includes
forward-looking statements within the meaning of applicable securities laws that
involve substantial risks and uncertainties including, but not limited to,
market acceptance of our products and services, the sufficiency of financial
resources available to us, economic, competitive, and governmental factors
affecting our operations, marketing, services, prices, and other factors
described in this Registration Statement. Our actual results could differ
materially from those suggested or implied by any forward-looking statements as
a result of such risks.
GENERAL
We are a fully integrated real estate development and management
company specializing in timeshare/fractional Vacation Ownership Resorts
("Vacation Ownership Resorts"). We intend to design, develop, build, market,
sell, and manage Vacation Ownership Resorts and we intend to offer for sale to
the general public timeshare/fractional Vacation Ownership Interests ("Vacation
Ownership Interests") in Vacation Ownership Resorts, located in major tourist
destinations. Vacation Ownership Interests typically entitle the buyer to a
fully furnished residence in any one of our soon-to-be-completed Vacation
Ownership Resorts and to participate in our Exchange Program with other Vacation
Ownership Resorts.
ORGANIZATION
On February 28, 1998, Biltmore Vacation Village, Inc., a diversified
real estate company (wholly owned by Mr. George Wuagneux) contributed the
Bullhead project and related debt to a newly formed Nevada legal entity,
Biltmore Vacation Resorts, Inc. On February 28, 1998, Biltmore Vacation Resorts,
Inc., acquired control of Cyber Information, Inc., an inactive public shell
corporation, with no assets or liabilities in a reverse merger transaction. On
the same date, Cyber Information, Inc., changed its name to Biltmore Vacation
Resorts, Inc.
Biltmore Vacation Resorts, Inc., later formed four (4) Nevada wholly
owned subsidiaries and one (1) Nevada affiliate designated as follows: Biltmore
Vacations LLC was formed on October 28, 1998, and is wholly owned by Biltmore
Vacation Resorts, Inc.; St. Tropez Vacations LLC was formed on October 28, 1998,
and is wholly owned by Biltmore Vacation Resorts, Inc.; Sage Design Builders,
Inc., was formed on March 22, 1998, and is wholly owned by Biltmore Vacation
Resorts, Inc.; Nevada Realty and Management, Inc., was formed on November 12,
1998, and is wholly owned by Biltmore Vacation Resorts, Inc.; Dynamic Design
Architecture LLC was formed on December 31, 1998, and is 30% owned by Sage
Design Builders, Inc., and 70% owned by Mr. Dennis Rusk, a licensed architect in
Nevada. Notwithstanding, Dynamic Design Architecture is deemed to be a
controlled affiliate for the following reasons: (1) the majority owner (Mr.
Dennis Rusk) has agreed that all management rights, duties, and responsibilities
are granted to the Company; (2) Mr. Rusk has agreed that the Company, and not
Mr. Rusk, is liable for all losses attributable to his majority (70%) ownership
in Dynamic Design Architecture; and (3) Mr. Rusk has agreed that all future
profits up to $5,000,000 are payable to the Company. (Biltmore Vacation Resorts,
Inc., and the aforementioned Nevada subsidiaries/affiliates are collectively
referred to as the "Company".)
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PRINCIPAL PRODUCTS AND SERVICES
The central product and service which we offer is the Vacation
Ownership Interest in our two Vacation Ownership Resorts currently under
development. A Vacation Ownership Interest is a fee simple property interest
transferred to the purchaser by means of a "Warranty Deed". The purchaser thus
receives all the rights and title afforded by real property law concerning
realty fee simple interests. Acquisition of our Vacation Ownership Interest
entitles the purchaser to partial ownership in a fully-appointed residential
accommodation in any one of our two Vacation Ownership Resorts, currently under
development, as well as participation in our Exchange Program with other
worldwide Vacation Ownership Resorts. Essentially, the Vacation Ownership Resort
concept is vacation time redefined as "part ownership" in a resort property.
Thus, our Company offers fee simple Vacation Ownership Interests in resort real
property for specified fixed-week intervals. Our Customers may purchase one-week
Vacation Ownership Interest intervals, or additional intervals, at a particular
vacation ownership resort and receive a warranty deed ("Deed") conveying title
and evidencing the fee simple acquisition. The Deed specifically identifies the
particular vacation ownership resort, the building, the unit and the interval
week, or weeks. The Vacation Ownership Interest contains a "bundle of rights"
typical of real property, such as the characteristic of perpetuity, along with
the attendant tax advantages of real property ownership. Biltmore thus offers
its customers the advantage of true real property ownership combined with
flexible long-term vacation potential. Vacation Ownership Interests which we
intend to sell at our two Vacation Ownership Resorts currently under development
are located in well-known tourist destinations and will include all traditional
amenities such as swimming pools, spas, restaurants, access to golf courses,
marinas, beaches, tennis, and other quality recreational facilities. Above all,
our customers are not limited to accommodations at one of our Vacation Ownership
Resorts. Our Company's internal vacation ownership exchange program, in
conjunction with Resort Condominiums International, Inc. ("RCI Exchange
Program"), permits our future customers access to the Vacation Ownership
Interests to accommodations in over 3,500 Vacation Ownership Resorts worldwide.
Our affiliation with the RCI Exchange Program offers our future customers
tremendous flexibility in their vacation planning, a wide variety of vacation
options, and easy access to an expansive array of worldwide destinations.
DIVERSIFIED REAL ESTATE FUNCTIONS AND CUSTOMER SERVICES
Our Company, and through its subsidiaries and affiliates, provides a
variety of functions and customer services which operates to control a real
estate project from beginning to end. These functions and customer services are
rendered directly in-house by our organization without necessitating
out-sourcing to non-affiliated companies. Among other things, this capacity
enables us to attain more accurate and reliable cost-control and project
scheduling. To illustrate this important difference between our Company and
other Vacation Ownership Resort companies, listed below are the following scope
of functions and related customer services which we intend to provide in-house:
o ACQUISITION of improved and unimproved real estate;
o DESIGN of the entire real estate project, turning initial
concepts into working drawings, construction renderings,
architectural, construction blueprints, and plans;
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o ARRANGING FINANCING for the acquisition, development and
construction phases of the real estate project;
o DEVELOPMENT of the real estate project;
o CONSTRUCTION of the real estate project to final completion;
o MARKETING AND SALES of all Vacation Ownership Interests during
and after construction;
o CUSTOMER FINANCING of the sale of individual Vacation
Ownership Interests Units (providing direct consumer loans);
o OPERATION AND MANAGEMENT on a continuing basis of the
completed Vacation Ownership Resort.
In summary, our Company's organization offers diversified functions and
customer services ranging from locating real estate projects and arranging
acquisition and construction financing to designing, developing, and
constructing the real estate project. We also provide direct consumer loans to
our customers, along with managing and operating the Vacation Ownership Resort
after it is completed, and after all Vacation Ownership Interests are sold. Our
Company will thus maintain a recurring revenue stream from inception and for the
future.
OUR PARENT COMPANY: We supervise and control various real estate
operations and services, through our subsidiaries and affiliates, including
acquisition, development, finance, construction, marketing, property operations,
and management. Our Parent Company directly supervises: (1) arranging the
financing for the acquisition, development, and construction of our Vacation
Ownership Resorts; (2) financing the direct retail sales of our Vacation
Ownership Interests in its Vacation Ownership Resorts; and (3) financing our
commercial paper originating from customer retail sales and consumer loans on
our Vacation Ownership Interests. Our Parent Company also intends to directly
manage each Vacation Ownership Resort, providing a continuing revenue stream to
the Company, after the Vacation Ownership Resort is completed and all Vacation
Ownership Interests are sold.
SUBSIDIARIES AND AFFILIATES: Through its subsidiaries and affiliates,
we directly provide an entire range of real estate functions and services:
DYNAMIC DESIGN ARCHITECTURE, LLC, ("Dynamic Design Architecture"), was
formed as a Nevada Limited Liability Company on December 31, 1998. It
intends to render a full range of architectural and design services for
our Vacation Ownership Resorts. Dynamic Design Architecture is 30%
owned by Sage Design Builders, Inc., although it is a controlled
affiliate of the Company (see above).
SAGE DESIGN BUILDERS, INC. ("Sage"), was formed as a Nevada Corporation
on March 22, 1998. It intends to build and construct our Vacation
Ownership Resort designed by its affiliate, Dynamic Design Architecture
(see above). Sage is wholly owned by our Parent Company.
NEVADA REALTY AND MANAGEMENT, INC. ("Nevada Realty"), was formed in
Nevada on November 12, 1998. It intends to market and sell our
Company's Vacation Ownership Interests for our Vacation Ownership
Resorts designed by our affiliate, Dynamic Design Architecture, and
constructed by our subsidiary, Sage. Nevada Realty is wholly owned by
our Parent Company.
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BILTMORE VACATION LLC ("Biltmore Vacation LLC") was formed in Nevada on
October 28, 1998, to provide capital for the development of the
Bullhead project. Biltmore Vacation LLC is wholly owned by our Parent
Company.
ST. TROPEZ VACATIONS LLC ("St. Tropez Vacations LLC") was formed as a
Nevada Limited Liability Company on October 28,1998, to provide capital
for the development of the St. Tropez Real Property. St. Tropez
Vacation LLC is wholly owned by our Parent Company.
VACATION OWNERSHIP RESORTS UNDER DEVELOPMENT
The Company currently has two Vacation Ownership Resorts under
development as follows: (1) The Biltmore Vacation Village Resort, which is
located in Bullhead City, Arizona, directly across the Colorado River from
Laughlin, Nevada; and (2) the St. Tropez Vacation Resort, which is located in
Las Vegas, Nevada, across the street from the Hard Rock Cafe' and Casino, two
blocks from the Las Vegas Strip.
BILTMORE VACATION VILLAGE RESORT: Our Company is currently developing a
264-unit vacation ownership resort project known as "Biltmore Vacation Village",
located on a site consisting of approximately 19.99 acres in Bullhead City,
Arizona, a popular tourist destination directly across the Colorado River from
Laughlin, Nevada. Design for this project was initiated by Dynamic Design
Architecture in November of 1998 and features a Spanish Mediterranean
architectural style. Drawings and specifications for this project were submitted
for approval to Bullhead City in early August of 1999 and a ground breaking
ceremony was held on August 17th, 1999 to announce commencement of construction
for our Vacation Ownership Resort. This is a master planned project to be built
in five (5) phases.
Phase One involves mass grading of the entire project site. Sage
commenced construction on November 1, 1999. The estimated completion date for
the sitework is the end of calendar year 2000 and will entail approximately
296,000 cubic yards of earthwork, 76,000 square feet of retaining walls, all
underground utility work, paving, landscaping and perimeter vision walls. Phase
One will include a reception and registration area, restaurant/nightclub,
spa/fitness center, two (2) residential fractional ownership buildings (42 units
each), maintenance building, streets, walkways, landscaping and all future
building pads for all subsequent phases (2-5) of construction (foundation and
concrete floor slabs will be cast in Phase One for each residential building).
The total budgeted cost to complete Phase One is approximately $40,000,000.
Phase Two involves constructing a Residential Building consisting of
one 32-unit fractional ownership residential building. This residential building
will be a 68,000 square foot, 3-story framed structure housing a total of 32
suites. Each suite is a 1,500 square foot, 2 bay lockout unit (each unit is
actually a combination of two smaller units, one of approximately 600 square
feet, the other approximately 900 square feet), each 900 square foot unit
features a large living area, kitchen, master bedroom and bath, and the 600
square foot portion consists of a kitchenette/living area, bath and large
bedroom. The estimated budget cost to complete Phase Two is approximately
$7,000,000.
Phase Three involves constructing a Residential Building consisting of
one 42-unit fractional ownership residential building. The estimated budget cost
to complete Phase Three is approximately $9,000,000.
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Phase Four involves constructing a Residential Building consisting of
one 42-unit fractional ownership residential building. The estimated budget cost
to complete Phase Four is approximately $9,000,000.
Phase Five involves constructing two Residential Buildings consisting
of two 32-unit fractional ownership residential buildings. The estimated budget
cost to complete Phase Five is approximately $14,000,000.
ST. TROPEZ VACATION RESORT: Our Company intends to develop and convert
an existing hotel and shopping center located in Las Vegas, known as the St.
Tropez Hotel and Shopping Center, into the St. Tropez Vacation Resort ("St.
Tropez"). We have entered into a purchase agreement to acquire the St. Tropez
for $30,000,000 and we have obtained a loan commitment to finance this
acquisition and to pay for development costs for Phase One of $41,500,000.
Biltmore Vacation Resorts, Inc. plans to close this transaction on or before
August 2, 2000. The debt capital received in excess of the purchase price,
$11,500,000, will be used to pay for construction, furniture, fixtures,
equipment, and financing charges for the first of a two-phase real estate
project.
Project design was initiated by Dynamic Design Architecture in March of
1999. The St. Tropez is a non-gaming resort property located at 455 E. Harmon
Avenue, on the Southwest corner of Harmon Avenue and Paradise Blvd. It is
situated on a 7.5 acre site just two blocks east of the famous Las Vegas Strip,
directly across the street from the Hard Rock Cafe Hotel and Casino. It is
within minutes of the University of Nevada-Las Vegas Campus and McCarren
International Airport. Originally developed in 1987, the St. Tropez is a
medium-sized, non-gaming hotel in a city filled with large mega-resort hotels
and casinos. The St. Tropez currently contains 150 guest room suites in ten (10)
two-story buildings on approximately 4.25 acres. Our Company will operate the
project as a Hotel before and during the conversion as a small, well-furnished,
all-suite Residential Vacation Ownership Resort. Our Company will commence the
conversion of the St. Tropez in two (2) phases. Phase One is the remodel and
conversion of existing hotel rooms into luxurious suites; the remodel and
renovation of existing retail space; and the development of a sales office.
Phase Two is the long-range planned demolition of the existing Phase One retail
space and the design and construction of a new ten-story tower.
In Phase One, the room suites will be remodeled and converted into
Vacation Ownership Interests. Exterior public spaces, such as the swimming pool
area and fitness center will be renovated and upgraded. The building exteriors
will be upgraded with new stucco as needed; new paint and new roofing will be
provided throughout the project. The existing suites, which are in three sizes,
will be redecorated and remodeled as required to meet the high standards our
Company has set for its Vacation Ownership Resorts. Sage, as general contractor,
has determined that each of the ten (10) buildings will be phased separately,
allowing certain buildings within the St. Tropez complex to continue operating
in their current hotel capacity while Sage remodels and converts the suites in
other buildings to Vacation Ownership Interests. Air conditioning systems
throughout will be updated with more energy-efficient equipment. Each building
will receive fresh paint, additional trim, and landscaping as needed to enhance
the overall resort experience. In addition to room and building renovation, the
interior courtyard (a lush park-like space) will be improved in order to refine
this beautiful area of the complex. The pool and spa will also be brought to a
like-new condition. Estimated budget cost to complete Phase One is approximately
$9,000,000.
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In Phase Two, the entire existing retail center on the 3.5-acre corner
lot (see Phase Two description above) will be demolished and a new ten (10)
story tower ("Tower") multi-use complex will be designed and built. The new
Tower will be situated on the corner directly opposite the world famous Hard
Rock Cafe Hotel and Casino. The Tower will be designed for our Company's
high-end customers. A three (3) story parking facility (levels below grade, at
grade and above grade) will include two stories of usable space above. These two
(2) floors will house the resort lobby, meeting rooms, fitness center/spa,
administration offices, a 120 - 150 seat restaurant and related kitchen
facility, a bar/nightclub and all of the related "back-of-house" facilities
required to operate a world class resort. Atop the public spaces will be a
rooftop garden, outdoor swimming pool, tennis courts and outdoor bar. The first
floor (1 of 6) of guest suites will rise immediately adjacent to this rooftop
plaza (the first floor suites will open onto the plaza). Six floors of suites
totaling 220 units will complete the residential portion of the vacation
ownership resort. Because of its proximity to McCarran International Airport, we
requested and received approval from the FAA and McCarran's Director of Aviation
to build the planned ten-story Tower. The Tower will contain 220 elevated guest
units, each approximately 1,450 square feet inside, and will feature amenities
including large living rooms, kitchen, patio/balcony, master bedroom and bath,
and guest bedroom, bath and kitchenette. Each unit will command an impressive
view of the Las Vegas Valley. A 6,000 square foot fitness center/spa is planned
with an exercise workout room, massage therapy, facials, hair and nail salon,
and retail sales area of related products. A large meeting space of 9,000 square
feet will be provided for guests who require accommodations to entertain or
conduct meetings. These meeting rooms will be adjacent to the kitchen facility,
allowing St. Tropez to offer catering for the meeting facility. A 2,500 square
foot swimming pool area with two small spas and one large spa will be provided
on the rooftop pool deck area. Also located here will be the tennis facility (4
courts), outdoor bar, and the entire deck area will relate to the fitness
center/spa discussed earlier. The estimated budget cost to complete Phase Two is
approximately $85,000,000.
MARKETING AND SALES
We intend to market and sell Vacation Ownership Interests through both
off-site and on-site sales centers.
OFF-SITE SALES CENTERS: We plan to operate two off-site sales centers,
one in Las Vegas, Nevada, and the other in Laughlin, Nevada; we also plan
additional off-site sales centers by the end of 2000. Biltmore currently intends
to locate these sales centers in major metropolitan areas, which can be
conveniently toured during evenings and weekends. The centers, which will be
leased, are generally the most cost effective marketing method because they
reduce the need for on-site tours of our Vacation Ownership Resorts and are more
easily accessible to our target customers.
ON-SITE SALES CENTERS: We intend to utilize a variety of marketing
techniques to generate on-site tours, including mini-vacations resulting from
telemarketing and targeted mailings, retail center kiosks, in-house marketing to
renters, marketing to current owners of Vacation Ownership Interests and
referrals.
SALES REPRESENTATIVES: Our sales representatives are a critical
component to our sales and marketing efforts. We plan to attract, train and keep
a dedicated sales force. All actively engaged Sales Representatives will be
licensed under the guidelines of the Department of Real Estate by the governing
regulatory body where each sales center is located. We will provide sales
instruction and training, coupled with the sales representative's particular
knowledge of each resort. Our sales staff will be required to guide each
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customer through a written disclosure statement regarding the Vacation Ownership
Interest to be sold prior to our customer entering into a purchase agreement.
This disclosure statement will set forth all relevant information regarding
ownership of a Vacation Ownership Interest at our Vacation Ownership Resorts,
under development, and must be signed by every purchaser. We will disclose
through this statement all material and relevant information a customer may
require in making an informed decision regarding the prospective purchase of a
Vacation Ownership Interest. At closing, our customers will be provided with a
toll-free customer service telephone number to facilitate any additional
information requests. To support our marketing and sales efforts, we plan to
develop a computer database to track our vacation ownership resort marketing and
sales programs. Our management team believes that as our Vacation Ownership
Resort operations grow, this database will become an increasingly significant
asset and will enable it to take advantage of less costly marketing and referral
opportunities.
CUSTOMER FINANCING: We believe that over 75% of our customers will
utilize our in-house loan services to finance their purchase of a Vacation
Ownership Interest. These customers will be required to make a down payment of
at least 10% of the sales price of the Vacation Ownership Interest. The balance
of the purchase price is typically financed for a period of seven to ten years
at a fixed interest rate. The adequacies of our reserve for loan losses shall be
determined by management and reviewed on a regular basis, considering, among
other factors, historical frequency of default, loss experience, present and
expected economic conditions as well as the quality of Sales Receivables. We
believe that our financing will be attractive to purchasers who find it
convenient for one company to handle all facets of the purchase of Vacation
Ownership Interests.
LOAN UNDERWRITING: Consistent with industry practice, financing
Vacation Ownership Interests is not subject to extensive loan underwriting
criteria. Prior to extending such financing, we will perform a thorough
commercial credit check of each customer. While we require only a minimum down
payment of 10% of the purchase price, we will encourage purchasers to make
increased down payments by offering the incentive of a lower interest rate. In
addition, purchasers who elect to participate in our pre-authorized payment
plans will receive a discounted interest rate.
COLLECTION POLICIES: We plan to bear the risk of customer defaults
under our Sales Receivables Financing Facility (see "Sale of Receivables"
below). We intend to accrue interest on the facilitity's loans to purchasers of
Vacation Ownership Interests until such loans are deemed uncollectible, at which
point the facility will commence foreclosure proceedings. Upon obtaining title,
we will return the Vacation Ownership Interest to Inventory for resale. (After
comparing results with other publicly traded companies having resorts with the
same underlying quality - the default rate experienced is less than 2%.) We plan
to closely monitor our loan accounts and determine whether to foreclose on a
case-by-case basis. If a purchaser of a Vacation Ownership Interest defaults on
the mortgage during the early part of the loan amortization period, we will not
have recovered our marketing, selling (other than certain sales commissions),
and general and administrative costs relating to such Vacation Ownership
Interest. Although in certain jurisdictions we may seek recourse against a
defaulting customer for the sales price of a Vacation Ownership interest,
current company policy will not require pursuit of such remedies.
SALES OF RECEIVABLES: We plan to sell our Vacation Ownership Interest
Sales Receivables to a subsidiary of the Parent Company, Nevada Realty (the
"Sales Receivables Financing Facility" or "Financing Facility").Our Financing
Facility will typically pledge the Vacation Ownership Interest Sales Receivables
to an independent, non-affiliated financial institution as security for loans
made to our Financing Facility. These secured loans will provide the capital,
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which the Financing Facility will use to purchase the Receivables from our
Parent Company. Thus, the Financing Facility will provide us with non-recourse
interim funding for our Sales Receivables, pending their permanent bundling and
sale of pooled Sales Receivables securitization transactions ("Pooled Commercial
Paper"). We plan to be able to provide a significant portion of our future
development from capital provided by this Receivables Facility.
SERVICING SALES RECEIVABLES: Servicing our Sales Receivables includes
collecting payments from borrowers and remitting such funds to the owners,
lenders, or investors in such receivables, accounting for receivables principal
and interest, making advances when required, contacting delinquent borrowers,
foreclosing in the event that defaults are not remedied, and performing other
administrative duties.
CUSTOMER SERVICE: We plan to provide full-time customer service
representatives to respond to customer inquiries. At closing all purchasers will
be provided with toll-free customer service numbers to facilitate additional
information requests. Customer service surveys will be sent to each purchaser
annually to measure customer satisfaction and to alert us to problems, if any.
VACATION OWNERSHIP EXCHANGE NETWORKS: According to the American Resort
Developers Association, the primary reason cited by consumers for purchasing a
Vacation Ownership Interest is the ability to exchange their Vacation Ownership
Interest for accommodations at other resorts through worldwide exchange
networks. Membership in an exchange network allows the owner of a Vacation
Ownership Interest at one of our resorts to exchange their dedicated unit
interval for a similar unit interval at another participating resort, based upon
availability and the payment of a nominal exchange fee. A Vacation Ownership
Interest can be exchanged by listing it as available with the exchange network
affiliated with the owner's home resort and requesting occupancy at another
participating resort, indicating the preferred resort or geographic area, the
size of the unit desired, and the period during which occupancy is desired. This
exchange network assigns a rating to each listed Vacation Ownership Interest,
which is based upon a number of factors, including the location and size of the
unit, the quality of the vacation ownership resort and the time of year during
which the exchanging owner's Vacation Interest is available. The network then
attempts to satisfy the exchange request by providing occupancy in a
participating resort with a similar rating. Our Vacation Ownership Exchange
Program with RCI's Exchange Program allows the purchaser of the Vacation
Ownership Interest to vacation in over 3,500 Vacation Ownership Resorts. In
addition, we have been granted by RCI its coveted Gold Crown Rating for Biltmore
Vacation Village in Bullhead City, Arizona, currently under development. RCI's
Gold Crown Rating is the highest award given by RCI, and is bestowed upon
approximately 10% of RCI resorts. The ratings are normally based upon comment
cards received by RCI members who have actually stayed in the resort. Once
development of the Vacation Ownership Resort project is fully completed, we must
continue to provide the highest quality product and service in order to retain
the Gold Crown rating. The net affect of a coveted Gold Crown rating is that a
Gold Crown Vacation Ownership Interest is in high demand and will exchange
equally for another Gold Crown Vacation Ownership Interest. Conversely, a Gold
Crown Vacation Ownership Interest will exchange for a non-Gold Crown Vacation
Ownership Interest at an exchange rate of at least two-to-one.
COMPETITION: The company competes with other Vacation Ownership
Resorts, as well as hotels, motels, condominium developments, and second homes.
Competition is based primarily upon attractiveness and location of the resort
property and amenities. In addition to the direct competition of individual
resorts, other competitors also include alternative accommodation such as
hotels, motels, bed and breakfasts, and small Vacation Ownership operators
located within the immediate geographic vicinity of each of the Company's
resorts.
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The Vacation Ownership industry historically has been highly fragmented
and dominated by a very large number of local and regional resort developers and
operators, each with limited portfolios. More recently, many of the world's most
widely recognized lodging, hospitality, and entertainment companies have begun
to develop and sell Vacation Ownership's under their brand names. Many entities
with which the Company competes have significantly greater access to financial,
sales and marketing, and other resources than those of the Company and may be
able to grow at a more rapid rate or more profitably as a result. Management
anticipates that competition will increase in the future as a result of
consolidation in the vacation ownership industry.
GOVERNMENT REGULATIONS: The Company's marketing and sales activities
and other resort operations are subject to extensive regulation by the federal
government and the states in which the Company's resorts are located and in
which its Timeshare Ownerships are marketed and sold. Federal legislation to
which the Company is, or may be, subject includes the Federal Trade Commission
Act, the Fair Housing Act, the Truth-in-Lending Act, the Real Estate Settlement
Procedures Act, the Equal Credit Opportunity Act, the Interstate Land Sales Full
Disclosure Act, the Telemarketing and Consumer Fraud and Abuse Prevention Act,
and the Civil Rights Acts of 1964, 1968, and 1991. Many states have adopted
legislation as well as specific laws and regulations regarding the sale of
Timeshare Ownerships. The laws of most states require a designated offering
statement describing the Company and all material aspects of the resort and the
sale of Timeshare Ownerships at such resort. In addition, the laws of most
states in which the Company sells Timeshare Ownerships grant the purchaser of
such an interest the right to rescind a contract of purchase at any time within
a statutory rescission period, which generally ranges from three to ten days.
Furthermore, most states have other laws which regulate the Company's
activities, such as real estate licensor laws, travel sales licensor laws,
anti-fraud laws, telemarketing laws, prize, gift and sweepstakes laws, labor
laws, and various regulations governing access and use of the Company's resorts
by disabled persons. The Company shall fully comply with all applicable federal,
state, local, and foreign laws and regulations to which it is currently subject.
RISK FACTORS
An investment in our Company is highly speculative and involves a high
degree of risk. Our Company's proposed business operation is subject to all
risks inherent in any new or unproven business venture. These risk factors set
forth below are not a complete list of all risk factors that may affect our
Company or its stock.
DEVELOPMENT STAGE COMPANY: We are a development stage enterprise which
has not formally commenced operations. We have not generated any revenue to
date; we are not profitable; and we cannot guarantee that we will be profitable
in the future. Our primary activities to date have been limited to the
following: (i) developing our business model; (ii) arranging capital financing
for the development of Phase One of the Biltmore Vacation Village; (iii)
arranging capital financing for the acquisition and renovation of Phase One of
the St. Tropez; and (iv) pursuing strategic relationships with certain banks,
financial institutions, and capital partners for debt and equity capital. The
Company's success is dependent upon the successful development and marketing of
its proposed products and services, as to which there is no assurance.
Unanticipated problems, expenses, and delays are frequently encountered
establishing a new business, developing new products, and providing new
services. These potential problems may include, but are not limited to,
competition, inadequate market expertise, and setbacks in sales and marketing.
The failure of the Company to meet any of these conditions would have a
materially adverse effect upon our business, operating results, financial
condition, and may force the Company to reduce or cease operations. No assurance
can be given that the Company can or will ever operate profitably.
9
<PAGE>
NEED FOR ADDITIONAL CAPITAL: The Company's current cash on hand of
$511,764 is insufficient to meet our business objectives described herein and
substantial additional capital will have to be raised, if it can be raised, to
meet our business objectives. In the past the Company has relied primarily upon
internal financing from its founder, officer and director, Mr. George Wuagneux.
There is no guarantee that such internal financing from Mr.Wuagneux will be
available in the future, and if such financing is available, it will not be
sufficient to meet the Company's capital requirements to finance its proposed
plan of operations for the next twelve months. The Company's future capital
requirements will depend on many factors, including the availability of equity
and debt financing, cash flow from operations, progress in the development and
sale of its products and services, competing market developments, and the
Company's ability to market its products and services successfully. Any further
equity financings could result in dilution to the Company's stockholders.
Sources of debt financing may result in higher interest expense and possible
restrictions on dividend distributions. Additional financing, if available, may
be on terms unfavorable to the Company. If additional capital is not obtained,
the Company may be required to reduce or cease operations.
DEPENDENCE ON KEY PERSONNEL: The Company is greatly dependent on the
services of George Wuagneux, the Company's Director, President, and CEO. The
loss of his services would have a materially adverse effect on the operations of
the Company. The Company believes that its future success will also depend in
part upon its ability to attract, retain, and motivate qualified personnel.
There can be no assurance that the Company will be successful in attracting and
retaining such personnel. Competition for such personnel is intense.
CONTROL OF COMPANY AND DEPENDENCE ON MANAGEMENT. The Company's
President currently owns 2,851,253 Shares, or 67.25%, of the issued and
outstanding common stock. Cumulative voting for the election of directors is not
allowed. Accordingly, the Company's President will be able to control the Board
of Directors of the Company and to direct the Company's affairs. Therefore,
Investors may have to depend on the judgment and efforts of the current
Directors and Officers to carry out the Company's business affairs. The existing
Officers are not under employment agreements with the Company.
DIFFICULTY OF PLANNED EXPANSION: MANAGEMENT OF GROWTH: The Company
plans to substantially expand its level of operations. The Company's operating
results will be adversely affected if additional capital is not obtained and net
revenue is not increased sufficiently to compensate for the increase in capital
expenditures and operating expenses caused by this expansion. In addition, the
Company's planned expansion of operations may cause significant strain on the
Company's management, financial resources, and other resources. To manage its
growth effectively, the Company must continue to improve and expand its existing
resources and management information systems, and must attract, train and
motivate qualified managers and employees. There can be no assurance, however,
that the Company will be able to successfully achieve these goals. If the
Company is unable to manage growth effectively, its operating results will be
adversely affected.
In addition to the foregoing risks, businesses are often subject to
risks that are not foreseen or fully appreciated by management.
10
<PAGE>
INFORMATION AVAILABLE TO STOCKHOLDERS
Shortly after this Registration Statement becomes effective, we will be
required to file annual, quarterly and special reports, proxy statements, and
other information with the SEC. You can read and copy any of this information at
the SEC's public reference rooms in Washington, D.C., New York and Chicago.
Please call the SEC at (800) SEC-0330 if you would like further information on
the public information rooms. This information is also available from the SEC's
web site at HTTP://WWW.SEC.GOV.
In the future we intend to distribute annual reports containing audited
financial statements and other information to our stockholders after the end of
each fiscal year. We do not intend to regularly distribute quarterly reports to
our stockholders, but we will gladly send them to you upon your written request
to our Corporate Secretary. Potential investors should keep in mind that other
material risks could arise.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Certain statements contained in the following Management's Discussion
of Plan of Operations including, without limitation, statements containing the
words "believe", "anticipate", "estimate", "expect" and words of similar
meaning, constitute forward-looking statements that involve risks and
uncertainties. Our actual results could differ materially from those anticipated
in these forward-looking statements as a result of certain factors set forth in
other parts of this document.
GENERAL
We remain optimistic about our future, but our prospects must be
considered and evaluated in light of the risks, operating and capital
expenditures required, and uncertainty of economic conditions that may impact
our customers. Emerging companies are characterized by a high degree of market
and financial risk that should be considered in evaluating our financial results
and future prospects. To achieve and sustain profitability, we must successfully
launch, market and establish our real estate products and services, successfully
develop new real estate products and services, meet the demands of our
customers, respond quickly to changes in our market, attract and retain
qualified employees, and control expenses and cash usage, as well as continue to
attract significant capital investments.
We have incurred significant losses since February 28, 1998, with an
accumulated deficit of $1,926,380 at March 31, 2000. There can be no assurance
that we will achieve or sustain profitability and we believe that we will incur
a net loss in 2000.
PLAN OF OPERATION
We have started developing the Bullhead project in Arizona and we are
in the process of completing the acquisition of the St.Tropez project in Nevada.
During the next 12 months, we intend to continue to finance our operations by
raising capital through either debt or equity financing. We also anticipate to
generate revenue by pre-selling Vacation Ownership Interests in the Bullhead
project, provided our real estate application to sell Vacation Ownership
Interests is approved by the Arizona and Nevada Departments of Real Estate.
Furthermore, we intend to generate additional revenue by selling Vacation
Ownership Interests in the St. Tropez property project (assuming the St. Tropez
Real Property acquisition is ultimately closed by August 2, 2000, as scheduled)
and provided our real estate application to sell the Vacation Ownership
Interests is approved by the Nevada Department of Real Estate. In either event,
we intend to commence the
11
<PAGE>
pre-sale of Vacation Ownership Interests in the Bullhead Real Property and sell
Vacation Ownership Interests in the St. Tropez Real Property in the fourth
quarter of 2000. We believe the Bullhead Vacation Village Resort will require
approximately $40,000,000 in capital in the next twelve months to accomplish our
goals for this real estate project. We have not obtained a commitment for debt
or equity capital from any party in order to pay for the costs of development
and construction for the first 12 months for the Bullhead Vacation Village
Resort. We also believe the St. Tropez Vacation Resort will require
approximately $39,000,000 in capital in the next twelve months to accomplish our
goals for this real estate project. We have obtained a loan commitment from
M.K.D. Capital Corp., of approximately Forty-one Million Five Hundred Thousand
Dollars ($41,500,000) in order to pay for the purchase of the real property
(approximately $30,000,000) and the balance (approximately $11,500,000) for the
costs of renovation and construction for the St. Tropez Real Property project
for the next twelve months. This assumes the aforementioned loan timely funds
with the scheduled acquisition of the real property by August 2, 2000. Our
Company is in negotiations with various banking, other financial institutions
and private parties regarding additional debt and equity financing of the
development of the Bullhead Real Property and the acquisition and renovation of
the St. Tropez Real Property. Nonetheless, our Company has not secured any
commitments for equity or debt capital to develop both of our real estate
projects currently or to continue our operations, other that the aforementioned
loan commitment from M.K.D. Capital Corp.
Our Company currently employs 20 people, including employees of our
subsidiaries. We believe the number of employees will increase to approximately
40 during the next twelve months as we continue to develop our real estate
projects and marketing of the Vacation Ownership Interests.
LIQUIDITY
Although we have been successful in our capital raising efforts to meet
previous operating requirements, there is no guarantee that we will be
successful in future capital raising efforts. At the time of this registration
statement, we had insufficient cash reserves necessary to meet current operating
requirements for the next twelve months. We are currently in negotiations to
obtain additional debt and equity funding, but no commitment has been obtained.
In the event we were to be unsuccessful in our fund raising, we would be
required to significantly reduce cash outflows through the reduction or
elimination of marketing, sales, development, capital, and administrative
expenditures, resulting in decreased potential revenue and potential
profitability, or cessation of operations. As a result, we received a going
concern opinion from our independent auditors in 1999. Any new funding raised
may have a dilutive effect on our existing shareholders. We expect to have
capital expenditures for real property development and construction of
approximately $79,000,000 for the next twelve months, as we continue to develop
and construct our Bullhead Real Property project, and acquire and renovate our
St. Tropez Real Property project.
ITEM 3. DESCRIPTION OF PROPERTIES
Our corporate offices are at 2110 East Flamingo Road, Suites 109 and
110, for a combined office space of 7,283 square feet. On June 14, 1999, we
renewed a pre-existing lease on Suite 110 and entered into a new lease on Suite
109. They will both expire June 30, 2003. We have additional offices across the
street at 2080 E. Flamingo Road, Suite 217, with office space of 1,357 square
feet. We entered into this lease on May 19, 1999, and it will expire on July 31,
2004.
12
<PAGE>
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information regarding beneficial
ownership as of March 31, 2000, of the Company's Common Stock, by any person who
is known to the Company to be the beneficial owner of more than 5% of the
Company's voting securities and by each Director and by Officers and Directors
of the Company as a group.
<TABLE>
<CAPTION>
Number of Shares Percentage
Name and Address Beneficially Owned: of Class
---------------- ------------------- --------
<S> <C> <C>
George Wuagneux / (1) 2,851,253 64.932
President, CEO & Director
Biltmore Vacation Village, Inc.
230 E. Flamingo Road
Las Vegas, NV 89119
Edward Wuagneux 0 0.000
Secretary & Director
6500 Peppermill Drive
Las Vegas, NV 89146
Robert Hayward 110 0.003
Vice President & Director
3052 Emerald Wind Street
Henderson, NV 89012
Larry B. Lombard 0 0.000
------------------- --------------
CFO & Director (2)
23401 Rockrose
Mission Viejo, CA 92692
All current Directors & Officers 2,851,363 64.935
As a group (4 persons)
</TABLE>
Footnotes:
(1) Mr. George Wuagneux owns 100% of Biltmore Vacation Village,
Inc. ("BVVI"), and is deemed the beneficial owner of all
2,851,253 Shares owned by BVVI.
(2) Mr. Larry B. Lombard resigned on May 16, 2000, and Ms. Tennie
Sedlacek was appointed CFO and Director in his place.
CHANGES IN CONTROL: There are no present arrangements or pledges of the
Company's securities which may result in a change in control of the Company.
13
<PAGE>
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL PERSONS
Identification of Directors and Executive Officers: The following table
sets forth the names of all current and former Directors and Executive Officers
of the Company. These persons will serve until the next annual meeting of the
Stockholders, or until the successors are elected, or appointed and qualified,
or their prior resignations or terminations.
<TABLE>
<CAPTION>
POSITIONS
NAME AGE HELD SINCE RESIGNED
---- --- ---- ----- --------
<S> <C> <C> <C> <C>
George Wuagneux (1) 67 Chairman, President, 2/28/98 - - -
Chief Executive
Officer and Director
Secretary and Treasurer 2/28/98 6/12/98
John Kromer 57 Secretary, Treasurer 6/12/98 1/28/99
and Director
Edward Wuagneux (1) 64 Treasurer 1/29/99 12/15/99
Secretary and Director 1/29/99 - - -
Robert S. Hayward 51 Vice President of Sales 12/15/99 - - -
& Marketing and Director
Larry B. Lombard (2) 39 Chief Financial Officer 12/15/99 5/16/00
and Director
</TABLE>
-------------------
FOOTNOTES:
(1) George Wuagneux and Edward Wuagneux are brothers.
(2) Larry B. Lombard resigned as Chief Financial Officer and Director of
the Company as of May 16, 2000, and Ms. Tennie Sedlacek was appointed
Chief Financial Officer and Director in his place on the same date.
BUSINESS EXPERIENCE
GEORGE WUAGNEUX, serves as Chairman, President, and Chief Executive
Officer of the Company with over 30 years of experience in all aspects
of the real estate development and management, including, but not
limited to, acquiring, designing, building, marketing, and selling
multiple real estate projects in Florida.
EDWARD WUAGNEUX, serves as Secretary of the Company with over 26 years
of experience as a licensed general contractor. He is also President of
Sage, a subsidiary of the Company, which functions as the builder of
the Company's Real Estate Projects. He has built condominiums,
14
<PAGE>
multi-family projects, retirement villages, golf courses, single family
developments, office buildings, shopping centers and nursing homes. His
duties also include interfacing with zoning boards, commissioners, and
other government officials in the construction industry.
ROBERT HAYWARD, serves as the Vice President of Sales and Marketing of
the Company, with over 20 years of experience in marketing and selling
Vacation Ownership Interests. He is also President of Nevada Realty, a
subsidiary of the Company, which functions as the marketer and seller
of the Vacation Ownership Interests. Mr. Hayward graduated from college
with two Bachelor of Science Degrees in Marketing and Accounting. He
has been in the Vacation Ownership Industry since 1981 and has sold
Vacation Ownership Interests for various resorts on the Eastern
Seaboard.
LARRY LOMBARD, served as Chief Financial Officer, and Director of the
Company from 12/15/99 to 5/16/00 (resigned). His expertise includes tax
compliance, tax planning, internal accounting controls, and procedures
for both private and public companies. Mr. Lombard's experience
includes computer system design and implementation, including
accounting systems and manufacturing systems. Mr. Lombard is a graduate
of UCLA with a Bachelor of Science in Business Economics and a minor in
Accounting and has taken numerous continuing education courses in
taxation, business strategies and finance. He is currently awaiting his
Certified Public Accountant certification.
JOHN KROMER, served as Secretary, Treasurer, and Director of the
Company from 6/12/98 to 1/28/99 (resigned). Mr. Kromer has over ten
years experience in real estate development and general contracting,
with general contractor licenses in Nevada and Arizona. Mr. Kromer is a
licensed pilot and a former Naval Officer.
TENNIE SEDLACEK, has served as Chief Financial Officer and Director of
the Company since 5/16/00. Mrs. Sedlacek's experience encompasses over
twenty years of experience as controller and chief financial officer in
the residential and commercial construction industry.
FAMILY RELATIONSHIPS: Mr. George Wuagneux and Mr. Edward Wuagneux are
brothers. Other than the foregoing, there are no family relationships between
any director or executive officer.
INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS: During the past five years,
no present or former director, executive officer, or person nominated to become
a director or an executive officer of the Company was:
(1) a general partner or executive officer of any business against
which any bankruptcy petition was filed, either at the time of
the bankruptcy or two years prior to that time;
(2) convicted in a criminal proceeding or named subject to a
pending criminal proceeding (excluding traffic violations and
other minor offenses);
15
<PAGE>
(3) subject to any order, judgment or decree, not subsequently
reversed, suspended or vacated, of any court of competent
jurisdiction, permanently or temporarily enjoining, barring,
suspending or otherwise limiting his Involvement in any type
of business, securities, or banking activities; or
(4) found by a court of competent jurisdiction (in a civil
action), the commission or the commodity Futures Trading
Commission to have violated a federal or state securities or
commodities law, and the judgement has not been reversed,
suspended or vacated.
ITEM 6. EXECUTIVE COMPENSATION
The following table summarized information regarding the salary and
bonuses we paid George Wuagneux, our CEO, and John Kromer, our Treasurer, from
June 12, 1998 to January 28, 1999, from the inception of our Company on February
28, 1998 to December 31, 1999. George Wuagneux and John Kromer were the only
officers who received total annual compensation in excess of $100,000.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
------------------------------------------------------------------------------------------------------------------------------
Long Term Compensation
------------------------------------------------------------------------------------------------------------------------------
Annual Compensation Awards Payouts
==============================================================================================================================
(a) (b) (c) (d) (e) (f) (g) (h) (i)
------------------------------------------------------------------------------------------------------------------------------
Restricted Securities
Name and Principal Other Annual Stock Underlying All Other
Position Year Salary Bonus Compensation Awards Options Payouts Compensation
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
George Wuagneux 1999 $200,000 0 0 0 0 0 0
------------------------------------------------------------------------------------------------------------------------------
Chief Executive Officer 1998 $150,000 $743,750 0 0 0 0 0
------------------------------------------------------------------------------------------------------------------------------
John Kromer 1999 0 0 0 0 0 0 0
Treasurer 1998 0 $328,126 0 0 0 0
==============================================================================================================================
</TABLE>
In October 1998, the Company issued 500,000 shares of its restricted
common stock to George Waugneux in full satisfaction of his 1998 salary and
performance bonus and his 1999 salary. Also in October, 1998, the Company issued
150,000 shares of its restricted common stock to John Kromer as a performance
bonus representing the total consideration owed to Mr. Kromer (see Item 4, Part
II).
No other annual or long term compensation, including awards and
payouts, were paid, issued, or granted to any of our executive officers.
16
<PAGE>
COMPENSATION OF DIRECTORS: There are no standard arrangements pursuant
to which the Company's Directors are compensated for any services provided as a
director. No additional amounts are payable to the Company's Directors for
committee participation or special assignments.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND
CHANGE-IN-CONTROL ARRANGEMENTS: There are no employment contracts, compensatory
plans or arrangements, including payments to be paid by the Company, with
respect to any director or executive officer of the Company which would in any
way result in payments to any such person because of his or her resignation,
retirement, or other termination of employment with the Company or its
subsidiaries, any change in control of the Company, or a change in the person's
responsibilities following a change-in-control of the Company.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
As of March 31, 2000, other than issuance of Shares to executive
officers as compensation or in satisfaction of cash advances, as described in
ITEM 4, Part II, there have been no transactions to which the Company was a
party involving $60,000 or more and in which any director, executive officer, or
holder of more than five percent of our common stock had a material interest.
ITEM 8. DESCRIPTION OF SECURITIES
COMMON STOCK: The Company's authorized common stock consists of
50,000,000 shares of $0.001 par value. As of March 31, 2000, there were
4,391,124 shares of our common stock outstanding. The holders of the Company's
common stock are entitled to one vote per share on each matter submitted to a
vote at a meeting of stockholders. The shares of common stock do not carry
cumulative voting rights in the election of directors. Stockholders of the
Company's common stock have no pre-emptive rights to acquire additional shares
of common stock or other securities. The common stock is not subject to
redemption rights and carries no subscription or conversion rights. All shares
of the common stock now outstanding are fully paid and non-assessable.
NO PREFERRED STOCK: The Company is not authorized to issue any
preferred stock.
NO OUTSTANDING OPTIONS, WARRANTS OR CALLS: There are no outstanding
options, warrants, or calls to purchase any of the authorized securities of the
Company.
REGISTRAR AND TRANSFER AGENT: The Registrar and Transfer Agent for the
Company's common stock is Signature Stock Transfer, Inc. 14675 Midway Road,
Suite 221, Dallas, Texas 75244.
17
<PAGE>
PART II
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON REGISTRANT'S COMMON EQUITY AND OTHER
STOCKHOLDER MATTERS
Until October 1, 1999, our Common Stock was traded on the
Over-The-Counter Market and was quoted on the NASD's OTC Bulletin Board under
the symbol "BVRI". After October 1, 1999, our common stock has traded on the
pink sheets under the symbol "BVVI", the symbol change being a result of the
10:1 reverse split on December 31, 1999. The following table sets forth the
closing high and low bid prices of the Common Stock for the periods indicated.
These prices are believed to be representative inter-dealer quotations, without
retail markup, markdown or commissions, and may not represent prices at which
actual transactions occurred.
BID
---
1998 HIGH LOW
---- ---- ---
1st Quarter (from February 28) 13.75 7.10
2nd Quarter 10.00 6.25
3rd Quarter 6.88 4.69
4th Quarter 7.50 2.19
1999
1st Quarter 8.13 5.00
2nd Quarter 21.25 4.38
3rd Quarter 16.25 8.13
4th Quarter 15.00 3.75
2000
1st Quarter 11.00 5.00
The Company anticipates that the NASD will grant it the right to have
the Company's stock quoted on the OTC Bulletin Board. However, there can be no
assurance that such application will be granted by the NASD.
HOLDERS: The number of record holders of the Company's securities as of
the date of this Registration Statement is approximately 1,039.
DIVIDENDS: The Company has not declared any cash dividends with respect
to this common stock and does not intend to declare dividends in the foreseeable
future.
18
<PAGE>
ITEM 2. LEGAL PROCEEDINGS
In the ordinary course of business, the Company is from time to time
involved in various pending or threatened legal actions. The litigation process
is inherently uncertain and it is possible that the resolution of such matters
might have a material adverse effect upon the financial condition and/or results
of operations of the Company. However, in the opinion of the Company's
management, matters currently pending or threatened against the Company are not
expected to have a material adverse effect on the financial position or results
of operations of the Company.
ITEM 3. CHANGE IN AND DISAGREEMENTS WITH ACCOUNTANTS
None
19
<PAGE>
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES
The Company issued unregistered Shares of its Common Stock and Debt
Securities (Promissory Notes) from February 28, 1998 to March 31, 2000 as
follows:
Fiscal 1998, a total of 1,408,895 Shares of Common Stock valued at
$2,188,762 as follows:
Issued for cash:
<TABLE>
<CAPTION>
1998 Number of Name of Persons Amount of
Dates Common Shares to Whom Issued Consideration
----- ------------- -------------- -------------
<S> <C> <C> <C>
Apr. 1 10,000 Spizman/Simon $ 20,000
----------
Issued to Officers as compensation:
1998 Number of Name of Persons Amount of
Dates Common Shares to Whom Issued Consideration
----- ------------- -------------- -------------
Oct. 29 500,000 George Wuagneux/ $1,093,750
BVVI
Oct. 29 150,000 John W. Kromer $328,126
----------------- ------------
650,000 $1,421,876
------------
Issued as payment for services rendered:
1998 Number of Name of Persons Amount of
Dates Common Shares to Whom Issued Consideration
----- ------------- -------------- -------------
Oct. 29 9,643 Various $21,093
------------
Issued in lieu of financing fees:
1998 Number of Name of Persons Amount of
Dates Common Shares to Whom Issued Consideration
----- ------------- -------------- -------------
Oct. 29 290,000 Balu, Ltd. $634,375
------------
Issued to Officers for repayment of cash advances:
1998 Number of Name of Persons Amount of
Dates Common Shares to Whom Issued Consideration
----- ------------- -------------- -------------
Oct. 29 16,252 George Wuagneux/ $91,418
BVVI ------------
</TABLE>
20
<PAGE>
Fiscal 1999, a total of 338,561 Shares of Common Stock valued at
$2,027,721, as follows:
Issued to Officers as Compensation:
<TABLE>
<CAPTION>
1999 Number of Name of Persons Amount of
Dates Common Shares to Whom Issued Consideration
----- ------------- -------------- -------------
<S> <C> <C> <C>
Feb. 9 110 Robert Hayward $653
-------------
Issued for cash:
1999 Number of Name of Persons Amount of
Dates Common Shares to Whom Issued Consideration
----- ------------- -------------- -------------
Feb. 9 3,233 Reinert/Petosa/Arthur $19,500
-------------
Issued to Officers for repayment of cash advances:
1999 Number of Name of Persons Amount of
Dates Common Shares to Whom Issued Consideration
----- ------------- -------------- -------------
Mar. 30/
June 30/
Sept. 30 335,218 George Wuagneux/ $2,007,568
BVVI ------------
First Quarter of 2000, a total of 143,668 Shares of Common Stock valued
at $678,767 as follows:
Issued for cash:
2000 Number of Name of Persons Amount of
Dates Common Shares to Whom Issued Consideration
----- ------------- -------------- -------------
Jan. 7 40,000 Dian $100,000
Feb. 15 7,000 Benson Equities $63,000
Mar. 31 93,750 LK Ltd. $500,000
------------
$663,000
------------
Issued in lieu of interest:
2000 Number of Name of Persons Amount of
Dates Common Shares to Whom Issued Consideration
----- ------------- -------------- -------------
Feb. 8 2,318 Benson Equities $9,767
Feb. 15 600 Benson Equities $6,000
-------------
$15,767
</TABLE>
All stock issuances were conducted pursuant to Section 4(2) under the
1933 Act without the involvement of Underwriters. Stock issuances other than for
cash were valued at market, generally determined at the low bid quotations.
21
<PAGE>
THE COMPANY ISSUED DEBT SECURITIES (PROMISSORY NOTES) FOR CASH (NO COMMISSION OR
FEES WERE INVOLVED) AT ANNUAL INTEREST RATES OF 8-14% , DUE 36 MONTHS FROM
ISSUANCE AS FOLLOWS:
BILTMORE VACATIONS LLC
Issuance
Date Name Amount
-------------- -------------------------------------------------- -----------
2/23/99 Elaine Gam ITF Burt & Barbara Gam 50,000
2/23/99 Elaine Gam ITF Miriam Jacobs 20,000
3/16/99 Roger Bruce 50,000
3/26/99 Martin Haas 40,000
3/31/99 Eddy Ruiz & Mail Ruiz 50,000
3/31/99 Galloways Investments, Ltd. 50,000
3/31/99 Galloways Investments, Ltd. 25,000
4/9/99 Benson Equities LC, A Nevis Trust 250,000
4/15/99 A. Elizabeth Watson, Ttee 50,000
4/5/99 FNBO Cust. for the Roger C. Bruce IRA 27,500
4/20/99 FNBO Cust. for the Delores H. Olson IRA 50,000
4/26/99 Willard and Margaret Decker, Ttee 50,000
5/4/99 Arvis C. Forrest, Ttee 200,000
6/2/99 Judy Willets 21,500
6/15/99 Judy Willets 40,000
6/23/99 Roger Bruce 35,000
7/5/99 Helen D. Bruce 30,000
7/12/99 Loraine Maurer 30,000
7/20/99 Galloways Investments, Ltd. 50,000
9/16/99 Blaine W. Frew, Ttee 10,000
9/21/99 Martin Haas 10,000
10/1/99 Richard & Esther Gralinski 250,000
10/6/99 Helen D. Bruce 50,000
10/9/99 Benson Equities LC, A Nevis Trust 250,000
10/13/99 Willard and Margaret Decker, Ttee 20,000
10/18/99 Helen Gray 10,000
11/19/99 Roger Bruce 25,000
-----------
TOTAL as of December 31, 1999 1,744,000
1/20/00 Frank Davenport 40,000
2/1/00 Henry W. Diehl, Joann R. Diehl &
Jacqueline K. McCormack 160,000
2/25/00 Lloyd F. Van Sickle & Peggy J. Van Sickle, Ttee 100,000
-----------
TOTAL as of March 31, 2000 2,044,000
-----------
22
<PAGE>
ST. TROPEZ VACATIONS LLC
Issuance
Date Name Amount
-------------- -------------------------------------------------- -----------
12/5/98 Benson Equities LC, a Nevis Trust $ 300,000
---------
TOTAL $ 300,000
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 78.751 (1) of the Nevada Revised Statutes ("NRS") authorizes a
Nevada corporation to indemnify any director, officer, employee, or corporation
agent, "who was, or is, a party or is threatened to be made a party to any
threatened, pending, or completed action, suit, or proceeding, whether civil,
criminal, administrative, or investigative, except an action by or in the right
of the corporation" due to his or her corporate role. Section 78.751(1) extends
this protection "against expenses, including attorney's fees, judgments, fines
and amounts paid in settlement actually and reasonable incurred by him or her in
connection with the action, suit or proceeding if he or she acted in good faith
and in a manner which he or she reasonably believed to be in, or not opposed to,
the best interests of the Corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his or her conduct was
unlawful."
Section 78.751 (2) of the NRS also authorizes indemnification of the
reasonable defense or settlement expenses of a corporate director, officer,
employee, or agent who is sued, or is threatened with a suit, by or in the right
of the Corporation. The party must have been acting in good faith and with the
reasonable belief that his or her actions were not opposed to the Corporation's
best interest. Unless the court rules that the party is reasonably entitled to
indemnification, the party seeking indemnification must not have been found
liable to the corporation.
To the extent that a corporate director, officer, employee, or agent is
successful on the merits or otherwise in defending any action or proceeding
referred to in Section 78.751(1) or 78.751(2), Section 78.751(3) of the NRS
requires that he be indemnified "against expenses, including attorney's fees,
actually and reasonably incurred by him or her in connecting with the defense."
Section 78.751 (4) of the NRS limits indemnification under Sections
78.751(1) and 78.751(2) to situations in which either (1) the stockholders, (2)
the majority of a disinterested quorum of directors, or (3) independent legal
counsel determine that indemnification is proper under the circumstances.
Pursuant to Section 78.751(5) of the NRS, the Corporation may advance
an officer's or director's expenses incurred in defending any action or
proceeding upon receipt of an undertaking. Section 78.751(6) (a) provides that
the rights to indemnification and advancement of expenses shall not be deemed
exclusive of any other rights under any by-law, agreements, stockholder vote or
vote of disinterested directors. Section 78.751(6) (b) extends the rights of
indemnification and advancement of expenses for former directors, officers,
employees and agents, as well as their heirs, executors and administrators.
23
<PAGE>
Regardless of whether a director, officer, employee, or agent has the
right to indemnity, Section 78.752 allows the corporation to purchase and
maintain insurance on his behalf against liability resulting from his or her
corporate role.
Article Eight of the Company's Articles of Incorporation provides:
"No officer or director shall be personally liable to the corporation
or its Shareholders for money damages, except as provided in the Nevada
Revised Statutes. The personal liability of a director or officer of
the Corporation for damages for breach of fiduciary duty as a director
or officer shall be limited to acts of omissions which involve
intentional misconduct, fraud, or a knowing violation of law. Further,
each director and each officer of the Corporation may be indemnified by
the Corporation to the full extent allowed by Nevada law and the
details of such indemnification may be stated in a corporate
resolution."
Article 6.09 of the Company's By-laws provides Limited Liability of
Officers and Directors:
"A. The Corporation shall indemnify its officers and directors for any
liability including reasonable costs of defense arising out of any act
or omission of any officer or director on behalf of the Corporation to
the full extent allowed by the laws of the State of Nevada, if the
officer or director in good faith and in a manner the officer or
director reasonably believed to be in, or not opposed to, the best
interests of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe the conduct was
unlawful.
B. Any indemnification under this section (unless ordered by a court)
shall be made by the corporation only as authorized in the specific
case upon a determination that Indemnification of the director or
officer is proper in the circumstances because the officer or director
has met the applicable standard of conduct. Such determination shall be
made by the board of directors by a majority vote of a quorum
consisting of directors who were not parties to such action, suit or
proceeding, or, regardless of whether or not such a quorum is
obtainable and a quorum of disinterested directors so directs, by
independent counsel in a written opinion, or by the stockholders."
We do not currently maintain director's and officer's liability
insurance.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors and Officers of the Company pursuant to the
foregoing provisions, or otherwise, the Company has been advised that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable.
24
<PAGE>
FINANCIAL STATEMENTS:
INDEX TO FINANCIAL STATEMENTS
PAGE
----
Report of Independent Certified Public Accountants F-1
Consolidated Balance Sheet as of December 31, 1999 F-2
Consolidated Statements of Operations for the Year Ended
December 31, 1999, from Inception (February 28, 1998)
to December 31, 1998 and Cumulative from Inception
(February 28, 1998) to December 31, 1999 F-3
Consolidated Statements of Shareholders' Equity from Inception
(February 28, 1998) to December 31, 1999 F-4
Consolidated Statements of Cash Flows for the Year Ended
December 31, 1999, from Inception (February 28, 1998)
to December 31, 1998 and Cumulative from Inception
(February 28, 1998) to December 31, 1999 F-5
Notes to Consolidated Financial Statements - December 31, 1999 F-6 - F-12
Unaudited Condensed Consolidated Balance Sheet as of March 31, 2000 F-13
Unaudited Condensed Consolidated Statements of Operations for
the Three Months Ended March 31, 2000 and 1999 and
Cumulative from Inception (February 28, 1998) to
March 31, 2000 F-14
Unaudited Condensed Consolidated Statements of Cash Flows for
the Three Months Ended March 31, 2000 and 1999 and
Cumulative from Inception (February 28, 1998) to
March 31, 2000 F-15
Notes to Unaudited Condensed Consolidated Financial Statements -
March 31, 2000 F-16 - F-17
25
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
--------------------------------------------------
The Board of Directors and Shareholders
Biltmore Vacation Resorts, Inc.
We have audited the accompanying consolidated balance sheet of Biltmore Vacation
Resorts, Inc. and subsidiaries (a development stage company) (the "Company") as
of December 31, 1999, and the related consolidated statements of operations,
shareholders' equity and cash flows for the year ended December 31, 1999, the
period from inception (February 28, 1998) to December 31, 1998 and for the
period from inception to December 31, 1999. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes, on a test basis, examination of evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall consolidated financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Biltmore Vacation Resorts, Inc. and subsidiaries as of December 31, 1999, and
the results of their consolidated operations and cash flows for the year ended
December 31, 1999, the period from inception (February 28, 1998) to December 31,
1998 and for the period from inception to December 31, 1999, in conformity with
generally accepted accounting principles.
The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 12 to
the consolidated financial statements, the Company has incurred significant
losses since inception and it requires additional capital to fund its
operations. These conditions raise substantial doubt about its ability to
continue as a going concern. Management's plans regarding those matters are also
described in Note 12. The consolidated financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
/s/CACCIAMATTA ACCOUNTANCY CORPORATION
Irvine, California
April 11, 2000
F-1
<PAGE>
BILTMORE VACATION RESORTS, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
Consolidated Balance Sheet
DECEMBER 31, 1999
-----------------
ASSETS
Real estate projects $ 5,742,674
Cash 166,316
Property and equipment 278,944
Other 35,877
-----------------
$ 6,223,811
=================
LIABILITIES AND SHAREHOLDERS' EQUITY
Notes payable $ 2,724,000
Due to affiliate 550,000
Accounts payable 101,340
Accrued liabilities 141,282
-----------------
TOTAL LIABILITIES 3,516,622
-----------------
COMMITMENTS AND CONTINGENCIES -
SHAREHOLDERS' EQUITY:
Common stock, $.001 par value, 50,000,000 shares authorized,
4,247,456 shares issued and outstanding 4,247
Additional paid-in capital 4,338,225
Deficit accumulated during the development stage (1,635,283)
-----------------
TOTAL SHAREHOLDERS' EQUITY 2,707,189
-----------------
$ 6,223,811
=================
The accompanying notes are an integral part of these consolidated
financial statements.
F-2
<PAGE>
<TABLE>
BILTMORE VACATION RESORTS, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
Consolidated Statements of Operations
<CAPTION>
CUMULATIVE
INCEPTION FROM INCEPTION
YEAR ENDED (FEBRUARY 28, 1998) (FEBRUARY 28, 1998)
DECEMBER 31, 1999 TO DECEMBER 31, 1998 TO DECEMBER 31, 1999
--------------------- --------------------- ---------------------
<S> <C> <C> <C>
General and administrative $ 400,238 $ 1,210,877 $ 1,611,115
--------------------- --------------------- ---------------------
OPERATING LOSS (400,238) (1,210,877) (1,611,115)
--------------------- --------------------- ---------------------
Interest expense (16,722) (7,446) (24,168)
--------------------- --------------------- ---------------------
NET LOSS $ (416,960) $ (1,218,323) $ (1,635,283)
===================== ===================== =====================
BASIC AND DILUTED NET
LOSS PER SHARE $ (0.10) $ (0.39)
===================== =====================
BASIC AND DILUTED WEIGHTED
AVERAGE COMMON SHARES 3,977,928 3,137,555
===================== =====================
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
F-3
<PAGE>
<TABLE>
BILTMORE VACATION RESORTS, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
Consolidated Statement of Shareholders' Equity
From inception (February 28, 1998) to December 31, 1999
<CAPTION>
DEFICIT
COMMON STOCK ACCUMULATED
----------------------------------- ADDITIONAL DURING THE UNAMORTIZED TOTAL
NUMBER AMOUNT PAID-IN DEVELOPMENT STOCK SHAREHOLDERS'
OF SHARES PER SHARE TOTAL CAPITAL STAGE COMPENSATION EQUITY
----------------------------------- ------------ ------------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Inception 2,500,000 $ 0.05 $ 2,500 $ 123,489 $ - $ - $ 125,989
Shares issued in recapitalization 433,000 - 433 (433) - - -
Issuance of common stock for cash 10,000 2.00 10 19,990 - - 20,000
Issuance of common stock as compensation 650,000 2.19 650 1,421,226 - (230,000) 1,191,876
Issuance of common stock for services 9,643 2.19 10 21,083 - - 21,093
Issuance of common stock in lieu of
financing fees 290,000 2.19 290 634,085 - - 634,375
Issuance of common stock as repayment
of cash advances from affiliate 16,252 5.62 16 91,402 - - 91,418
Amortization of stock compensation - - - - 30,000 30,000
Net loss - - - (1,218,323) - (1,218,323)
------------- --------- ------------ ------------- ------------- ---------------
BALANCE, DECEMBER 31, 1998 3,908,895 3,909 2,310,842 (1,218,323) (200,000) 896,428
Issuance of common stock for services 110 5.94 - 653 - - 653
Issuance of common stock for cash 3,233 6.03 3 19,497 - - 19,500
Issuance of common stock as repayment
of cash advances from affiliate 335,218 5.60-10.63 335 2,007,233 - - 2,007,568
Amortization of stock compensation - - - - 200,000 200,000
Net loss - - - (416,960) - (416,960)
------------- --------- ------------ ------------- ------------- ---------------
BALANCE, DECEMBER 31, 1999 4,247,456 $ 4,247 $ 4,338,225 $ (1,635,283) $ - $ 2,707,189
============= ========= ============ ============= ============= ===============
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
F-4
<PAGE>
<TABLE>
BILTMORE VACATION RESORTS, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
Consolidated Statements of Cash Flows
<CAPTION>
CUMULATIVE
INCEPTION FROM INCEPTION
YEAR ENDED (FEBRUARY 28, 1998) (FEBRUARY 28, 1998)
DECEMBER 31, 1999 TO DECEMBER 31, 1998 TO DECEMBER 31, 1999
--------------------- --------------------- ---------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (416,960) $ (1,218,323) $ (1,635,283)
Adjustments to reconcile net income to
net cash used by operating activities:
Amortization of stock compensation 200,000 30,000 230,000
Depreciation and amortization 53,724 41,193 94,917
Common stock issued as compensation 653 1,212,969 1,213,622
Common stock issued in lieu of
financing fees - 634,375 634,375
Increase in real estate projects (2,539,884) (1,858,490) (4,398,374)
Increase in other assets (15,521) (11,957) (27,478)
Increase in accounts payable 22,495 78,845 101,340
Increase in accrued liabilities 21,489 119,793 141,282
--------------------- --------------------- ---------------------
Net cash used by operating activities (2,674,004) (971,595) (3,645,599)
--------------------- --------------------- ---------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of equipment (169,430) (142,215) (311,645)
--------------------- --------------------- ---------------------
Net cash used by investing activities (169,430) (142,215) (311,645)
--------------------- --------------------- ---------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock 2,027,069 111,418 2,138,487
Cash contributed at inception - 11,073 11,073
Proceeds from notes payable 1,774,000 1,150,000 2,924,000
Payments on notes payable and due
to affiliate (950,000) - (950,000)
--------------------- --------------------- ---------------------
Net cash provided by financing activities 2,851,069 1,272,491 4,123,560
--------------------- --------------------- ---------------------
Net increase in cash 7,635 158,681 166,316
CASH, BEGINNING OF PERIOD 158,681 - -
--------------------- --------------------- ---------------------
CASH, END OF PERIOD $ 166,316 $ 158,681 $ 166,316
===================== ===================== =====================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid, net of amounts capitalized $ 16,722 $ 7,446 $ 24,168
===================== ===================== =====================
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Real estate contributed $ - $ 1,344,300 $ 1,344,300
Assumption of amounts due to affiliate - (1,300,000) (1,300,000)
Other assets contributed,
including $11,073 in cash - 81,689 81,689
--------------------- --------------------- ---------------------
Common stock issued for net
assets contributed at inception $ - $ 125,989 $ 125,989
===================== ===================== =====================
Repayment of affiliate advances with
common stock $ 2,007,568 $ 91,418 $ 2,098,986
===================== ===================== =====================
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
F-5
<PAGE>
BILTMORE VACATION RESORTS, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
Notes to Consolidated Financial Statements
December 31, 1999
1. BACKGROUND AND BASIS OF PRESENTATION
-- ------------------------------------
On February 28, 1998, Biltmore Vacation Village, Inc. ("BVVI"), a
diversified real estate company owned by George Wuagneux, contributed one
of its projects (the "Bullhead Property") and related debt, at BVVI's
basis, to a newly formed entity, Biltmore Vacation Resorts, Inc. ("BVRI"),
a Nevada corporation, to be developed as a time share resort. Also on
February 28, 1998, BVRI acquired control of Cyber Information, Inc.
("Cyber"), an inactive public shell with no assets or liabilities, in a
reverse merger transaction. For accounting purposes, the combination is
treated as a recapitalization of BVRI.
The accompanying consolidated financial statements include the accounts of
BVRI and its wholly owned subsidiaries, Biltmore Vacations, LLC, St.
Tropez Vacations, LLC, Nevada Realty and Management, Inc., Sage Design
Builders, Inc. and Dynamic Design Architecture, LLC (collectively, the
"Company"). Although Dynamic Design Architecture, LLC is only 30% owned by
Sage Design Builders, Inc., the majority owner has contractually placed
all power and day-to-day decisions in the hands of Sage Design Builders,
Inc. Further, the majority owner is not required to make good on any
losses and has agreed that any future profits up to $5,000,000 will accrue
entirely to Sage Design Builders, Inc.'s benefit. All material
intercompany transactions and accounts have been eliminated in
consolidation.
The Company is classified as a development stage company because its
principal activities involve obtaining the capital necessary to execute
its strategic business plan.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
-- ------------------------------------------
Cash and equivalents
--------------------
The Company considers all liquid investments with a maturity of three
months or less from the date of purchase that are readily convertible into
cash to be cash equivalents. Balances in bank accounts may, from time to
time, exceed federally insured limits.
Real estate property under development
--------------------------------------
Real estate projects are stated at the lower of cost or net realizable
value. Project costs include the cost of the land and land improvements,
engineering and design, construction materials, direct labor and overhead
and interest, taxes and other carrying costs incurred during the
construction period. The amount of interest capitalized during the years
ended December 31, 1999 and 1998 amounted to $224,000 and $ 670,000,
respectively.
Property and equipment
----------------------
Property and equipment are stated at cost. Depreciation is provided for by
the straight-line and double declining balance methods over the estimated
useful lives of the assets.
F-6
<PAGE>
BILTMORE VACATION RESORTS, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
Notes to Consolidated Financial Statements
December 31, 1999
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
-- ------------------------------------------------------
Fair value of financial instruments
-----------------------------------
The fair value of notes payable approximates carrying values based on
interest rates available to the Company and comparison to quoted prices.
The fair value of the amounts due to affiliate cannot be determined due to
the related party nature of the obligation.
Use of estimates
----------------
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect certain reported amounts and disclosures.
Accordingly, actual results could differ from those estimates.
Income taxes
------------
The Company reports certain expenses differently for financial and tax
reporting purposes and, accordingly, provides for the related deferred
taxes. Income taxes are accounted for under the liability method in
accordance with SFAS 109.
Long-lived assets
-----------------
The Company will record potential impairments to its long-lived assets
when there is evidence that events or changes in circumstances have made
recovery of the asset's carrying value unlikely. An impairment loss would
be recognized when the sum of the expected future undiscounted net cash
flows is less than the carrying amount of the asset. The Company has
identified no such impairment losses. All of the Company's long-lived
assets are located in the United States.
Advertising costs
-----------------
Advertising costs are expensed as incurred. Advertising expense for the
periods ended December 31, 1999 and 1998 were $16,735 and $14,262
respectively.
F-7
<PAGE>
BILTMORE VACATION RESORTS, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
Notes to Consolidated Financial Statements
December 31, 1999
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
-- ------------------------------------------------------
Basic and diluted net loss per share
------------------------------------
Basic net loss per share is based upon the weighted average number of
common shares outstanding. Diluted net loss per share is based on the
assumption that all dilutive convertible shares and stock options were
converted or exercised. Dilution is computed by applying the treasury
stock method. Under this method, options and warrants are assumed to be
exercised at the beginning of the period (or at the time of issuance, if
later), and as if funds obtained thereby were used to purchase common
stock at the average market price during the period. The Company has no
potentially dilutive securities, options, warrants or other rights
outstanding. Therefore, basic and diluted net loss per share are the same.
Reportable operating segments
-----------------------------
SFAS No. 131, SEGMENT INFORMATION, amends the requirements for public
enterprises to report financial and descriptive information about their
reportable operating segments. Operating segments, as defined in SFAS No.
131, are components of an enterprise for which separate financial
information is available and is evaluated regularly by a company in
deciding how to allocate resources and in assessing performance. The
financial information is required to be reported on the basis that is used
internally for evaluating segment performance. The Company operates one
business and operating segment.
3. REAL ESTATE PROJECTS
-- --------------------
The Company is in the process of developing the Bullhead Property into a
time share resort. The Bullhead City parcel was contributed to the Company
on February 28, 1998. Subsequently, the Company has begun development of
the property and incurred project costs associated with plans, licenses,
permits, zoning approvals, soil testing, bonds, appraisals, graphics,
design, carrying costs, engineering and architectural fees included in
this project balance.
In addition, the Company has entered into an agreement for the acquisition
and development of the St. Tropez All Suite Resort and Shopping Center for
$30,000,000, subject to obtaining financing. The Company has made a
$400,000 deposit toward the purchase which is being held in escrow and has
incurred preliminary design fees.
Bullhead $ 5,212,988
St. Tropez 529,686
-------------
$ 5,742,674
=============
F-8
<PAGE>
BILTMORE VACATION RESORTS, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
Notes to Consolidated Financial Statements
December 31, 1999
4. PROPERTY AND EQUIPMENT
-- ----------------------
Useful Lives
------------
Office equipment 5 years $ 125,060
Furniture & fixtures 5-7 years 125,569
Leasehold improvements 3-9 years 123,232
--------------
373,861
Accumulated depreciation (94,917)
--------------
$ 278,944
==============
5. NOTES PAYABLE
-- -------------
Promissory notes payable secured by first deed of trust
on lot #6 (maintenance and HVAC equipment
building lot, one of eleven Bullhead property lots),
due in 2001 and 2002, interest at 8% to 14% payable
quarterly $ 2,044,000
Unsecured promissory notes payable at 10% interest
due in October 2000. 650,000
Other 30,000
-------------
$ 2,724,000
=============
Future contractual maturities of the notes payable at
December 31, 1999 are as follows:
2000 $ 680,000
2001 300,000
2002 1,744,000
-------------
$ 2,724,000
=============
F-9
<PAGE>
BILTMORE VACATION RESORTS, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
Notes to Consolidated Financial Statements
December 31, 1999
6. DUE TO AFFILIATE
-- ----------------
The original balance of $1,300,000, assumed with the Bullhead property on
February 28, 1998, represented the obligation incurred by BVVI to obtain
complete title to the project. The Company made a scheduled $750,000
payment in August 1999. The remaining balance of $550,000 at December 31,
1999 is secured by 5 percent of BVVI's outstanding common stock and is
payable in installments beginning after construction financing on the
Bullhead property is obtained, which management expects to occur in
mid-2000.
7. COMMON STOCK
-- ------------
All share amounts have been retroactively adjusted for the 10:1 reverse
split effected December 31, 1999.
In 1998 the Company issued 290,000 shares of common stock in lieu of
financing fees associated with unsecured promissory notes. The $634,375
value of these shares is capitalized financing charges included in the
Bullhead project.
The Company issued 9,643 shares in 1998 and 110 shares in 1999 for
services.
The above stock issuances were valued at market, generally determined by
low bid quotations.
8. RELATED PARTY TRANSACTIONS
-- --------------------------
The Company issued 650,000 shares of common stock to two officers in 1998
in lieu of compensation and consulting fees for 1998 and 1999, valued at
$1,421,876.
The majority shareholder and president of the Company has advanced funds
to the Company and from time to time has converted the outstanding
balances to common shares.
The above stock issuances were valued at market, generally determined by
the low bid quotations.
Included in accrued liabilities are advances from BVVI totaling $33,204.
9. INCOME TAXES
-- ------------
The Company recognizes deferred tax assets and liabilities for temporary
differences between the financial reporting and tax bases of its assets
and liabilities. Deferred tax assets are reduced by a valuation allowance
when deemed appropriate.
At December 31, 1999, the Company has a net operating loss carryforward
for federal tax purposes of $1,635,000 which, if unused to offset future
taxable income, will expire in years beginning in 2018.
F-10
<PAGE>
BILTMORE VACATION RESORTS, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
Notes to Consolidated Financial Statements
December 31, 1999
9. INCOME TAXES (CONTINUED)
-- ------------------------
The Company had deferred tax assets of $556,000 at December 31, 1999
relating to its net operating losses and the Company provided a 100%
valuation allowance for these deferred tax assets. The Company recorded no
benefit for income taxes during the periods presented. During the periods
ended December 31, 1999 and 1998, the Company's total valuation allowance
increased approximately $142,000 and $414,000, respectively.
10. BASIC AND DILUTED LOSS PER SHARE
--- --------------------------------
The following table illustrates the reconciliation of the numerators and
denominators of the basic loss per share computations (the Company has no
potentially dilutive securities, options, warrants or other rights
outstanding).
PERIOD ENDED DECEMBER 31,
----------------------------------
1999 1998
----------------- ----------------
BASIC AND DILUTED LOSS PER SHARE:
---------------------------------
Numerator
---------
Net loss $ (416,960) $ (1,218,323)
----------------- ----------------
Denominator
-----------
Basic and diluted weighted average
number of common shares
outstanding during the period 3,977,928 3,137,555
----------------- ----------------
Basic and diluted loss per share $ (0.10) $ (0.39)
================= ================
11. COMMITMENTS AND CONTINGENCIES
--- -----------------------------
Leases
------
The Company leases its principal facilities at $14,000 per month under
three leases that expire in 2003 and 2004. Annual lease commitments are
$171,000 for each of the years ending December 31, 2000, 2001 and 2002,
$117,000 for the year ending December 31, 2003, and $17,000 for the year
ending December 31, 2004. Rent expense for 1999 and 1998 was $186,000 and
$112,000, respectively.
Litigation
----------
From time to time the Company is a party to various lawsuits and claims
which have arisen in the normal course of its business. While it is not
possible to predict with certainty the outcome of such litigation and
claims, it is the opinion of Company management, based in part on
consultations with counsel, that the liability of the Company, if any,
arising from the ultimate disposition of any or all such lawsuits and
claims is not material to the consolidated financial statements of the
Company.
F-11
<PAGE>
BILTMORE VACATION RESORTS, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
Notes to Consolidated Financial Statements
December 31, 1999
12. GOING CONCERN
--- -------------
The accompanying consolidated financial statements have been prepared
assuming that the Company will continue as a going concern. This basis of
accounting contemplates the recovery of the Company's assets and the
satisfaction of its liabilities in the normal course of business. Since
inception, the Company has been engaged in organizational activities,
including the acquisition of title to real property, establishing
operating facilities, preliminary architectural design and land
development and obtaining financing. Through December 31, 1999, the
Company had incurred losses of $1,635,283. Successful completion of the
Company's development program and its transition to attaining profitable
operations is dependent upon obtaining financing adequate to fulfill its
development and marketing and sales activities, and achieving a level of
revenues adequate to support the Company's cost structure. Management's
plan of operations anticipates that the cash requirements of the Company
for the next twelve months will be met by obtaining financing. However,
there is no assurance that the Company will be able to implement its plan.
F-12
<PAGE>
BILTMORE VACATION RESORTS, INC.
AND SUBSIDIARIES
(A Development Stage Company)
Condensed Consolidated Financial Statements
(Unaudited)
March 31, 2000
<PAGE>
BILTMORE VACATION RESORTS, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
Condensed Consolidated Balance Sheet
(Unaudited)
MARCH 31, 2000
--------------
ASSETS
Real estate projects $ 6,565,245
Cash 511,764
Property and equipment 286,719
Other 109,572
--------------
$ 7,473,300
==============
LIABILITIES AND SHAREHOLDERS' EQUITY
Notes payable $ 3,119,000
Due to affiliate 550,000
Accounts payable 485,125
Accrued liabilities 224,316
--------------
TOTAL LIABILITIES 4,378,441
--------------
COMMITMENTS AND CONTINGENCIES -
SHAREHOLDERS' EQUITY:
Common stock 4,391
Additional paid-in capital 5,016,848
Deficit accumulated during the development stage (1,926,380)
--------------
TOTAL SHAREHOLDERS' EQUITY 3,094,859
--------------
$ 7,473,300
==============
F-13
<PAGE>
<TABLE>
BILTMORE VACATION RESORTS, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
Condensed Consolidated Statements of Operations
(Unaudited)
<CAPTION>
CUMULATIVE
THREE MONTHS ENDED MARCH 31, FROM INCEPTION
------------------------------------------- (FEBRUARY 28, 1998)
2000 1999 TO MARCH 31, 2000
--------------------- -------------------- ---------------------
<S> <C> <C> <C>
General and administrative $ 284,656 $ 201,158 $ 1,895,771
--------------------- -------------------- ---------------------
OPERATING LOSS (284,656) (201,158) (1,895,771)
--------------------- -------------------- ---------------------
Interest expense (6,441) (4,664) (30,609)
--------------------- -------------------- ---------------------
NET LOSS $ (291,097) $ (205,822) $ (1,926,380)
===================== ==================== =====================
BASIC AND DILUTED NET
LOSS PER SHARE $ (0.07) $ (0.05)
===================== ====================
BASIC AND DILUTED WEIGHTED
AVERAGE COMMON SHARES 4,290,461 3,910,478
===================== ====================
</TABLE>
F-14
<PAGE>
<TABLE>
BILTMORE VACATION RESORTS, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
Condensed Consolidated Statements of Cash Flows
(Unaudited)
<CAPTION>
CUMULATIVE
THREE MONTHS ENDED MARCH 31, FROM INCEPTION
--------------------------------------- (FEBRUARY 28, 1998)
2000 1999 TO MARCH 31, 2000
------------------- ------------------- --------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (291,097) $ (205,822) $ (1,926,380)
Adjustments to reconcile net income to
net cash used by operating activities:
Depreciation and amortization 12,126 70,690 107,043
Common stock issued as compensation - - 1,443,622
Common stock issued in lieu of financing fees 15,767 - 650,142
Increase in real estate projects (822,571) (287,012) (5,220,945)
(Increase) decrease in other assets (73,694) 45,078 (101,173)
Increase in accounts payable 383,785 71,742 485,125
Increase in accrued liabilities 83,034 15,273 224,316
------------------- ------------------- --------------------
Net cash used by operating activities (692,650) (290,051) (4,338,250)
------------------- ------------------- --------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of equipment (19,901) (65,895) (331,546)
------------------- ------------------- --------------------
Net cash used by investing activities (19,901) (65,895) (331,546)
------------------- ------------------- --------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock 663,000 20,153 2,801,487
Cash contributed at inception - - 11,073
Proceeds from notes payable 425,000 385,000 3,349,000
Payments on notes payable and due
to affiliate (30,000) - (980,000)
------------------- ------------------- --------------------
Net cash provided by financing activities 1,058,000 405,153 5,181,560
------------------- ------------------- --------------------
Net increase in cash 345,449 49,207 511,764
CASH, BEGINNING OF PERIOD 166,315 158,680 -
------------------- ------------------- --------------------
CASH, END OF PERIOD $ 511,764 $ 207,887 $ 511,764
=================== =================== ====================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid, net of amounts capitalized $ 6,441 $ 4,664 $ 30,609
=================== =================== ====================
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Real estate contributed $ - $ - $ 1,344,300
Assumption of amounts due to affiliate - - (1,300,000)
Other assets contributed, -
including $11,073 in cash - - 81,689
------------------- ------------------- --------------------
Common stock issued for net
assets contributed at inception $ - $ - $ 125,989
=================== =================== ====================
Repayment of affiliate advances with
common stock $ - $ - $ 2,098,987
=================== =================== ====================
</TABLE>
F-15
<PAGE>
BILTMORE VACATION RESORTS, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
Note to Condensed Consolidated Financial Statements
March 31, 2000
(Unaudited)
1. BACKGROUND AND BASIS OF PRESENTATION
-- ------------------------------------
On February 28, 1998, Biltmore Vacation Village, Inc. ("BVVI"), a
diversified real estate company owned by George Wuagneux, contributed one
of its projects (the "Bullhead Property") and related debt, at BVVI's
basis, to a newly formed entity, Biltmore Vacation Resorts, Inc. ("BVRI"),
a Nevada corporation, to be developed as a time share resort. Also on
February 28, 1998, BVRI acquired control of Cyber Information, Inc.
("Cyber"), an inactive public shell with no assets or liabilities, in a
reverse merger transaction. For accounting purposes, the combination is
treated as a recapitalization of BVRI.
The accompanying consolidated financial statements include the accounts of
BVRI and its wholly owned subsidiaries, Biltmore Vacations, LLC, St.
Tropez Vacations, LLC, Nevada Realty and Management, Inc., Sage Design
Builders, Inc. and Dynamic Design Architecture, LLC (collectively, the
"Company"). Although Dynamic Design Architecture, LLC is only 30% owned by
Sage Design Builders, Inc., the majority owner has contractually placed
all power and day-to-day decisions in the hands of Sage Design Builders,
Inc. Further, the majority owner is not required to make good on any
losses and has agreed that any future profits up to $5,000,000 will accrue
entirely to Sage Design Builders, Inc.'s benefit. All material
intercompany transactions and accounts have been eliminated in
consolidation.
The Company is classified as a development stage company because its
principal activities involve obtaining the capital necessary to execute
its strategic business plan.
Interim periods
---------------
The accompanying unaudited condensed consolidated financial statements do
not include all of the information required by generally accepted
accounting principles for complete financial statements. In the opinion of
the Company's management, all necessary adjustments (consisting of normal
recurring adjustments) for a fair presentation have been included.
Operating results for the three months ended March 31, 2000, are not
necessarily indicative of results for any future period. These statements
should be read in conjunction with the consolidated financial statements
and notes thereto for the year ended December 31, 1999 included in the
Company's Form 10-SB .
Real estate property under development
--------------------------------------
Real estate projects are stated at the lower of cost or net realizable
value. Project costs include the cost of the land and land improvements,
engineering and design, construction materials, direct labor and overhead
and interest, taxes and other carrying costs incurred during the
construction period.
F-16
<PAGE>
BILTMORE VACATION RESORTS, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
Note to Condensed Consolidated Financial Statements
March 31, 2000
(Unaudited)
Notes payable
-------------
The Company issued $300,000 in secured and $125,000 in unsecured
promissory notes during the three month period ended March 31, 2000. The
secured promissory notes bear interest at 8% annually and are due in 2003.
The unsecured promissory notes are expected to be paid in full in 2000.
Shareholders' equity
--------------------
In 2000 the Company issued 2,918 shares of common stock in lieu of
interest associated with secured promissory notes.
The above stock issuances were valued at market, generally determined by
low bid quotations.
The Company sold 140,750 shares of common stock for $663,000 cash during
the three month period ended March 31, 2000.
2. CONTINGENCIES
-- -------------
Litigation
----------
From time to time the Company is a party to various lawsuits and claims
which have arisen in the normal course of its business. While it is not
possible to predict with certainty the outcome of such litigation and
claims, it is the opinion of Company management, based in part on
consultations with counsel, that the liability of the Company, if any,
arising from the ultimate disposition of any or all such lawsuits and
claims is not material to the consolidated financial statements of the
Company.
F-17
<PAGE>
PART III
ITEM 1. INDEX TO EXHIBITS
The exhibits listed and described below in Item 2 are filed herein as
part of this Registration Statement.
ITEM 2. DESCRIPTION OF EXHIBITS
PART III
Item 1. INDEX TO EXHIBITS
The exhibits listed and described below in Item 2 are filed
herein as part of this Registration Statement.
Item 2. DESCRIPTION OF EXHIBITS
The following documents are filed herein as Exhibit Numbers 2, 2.1, 3,
3.1, 3.2, 3.3, 3.4, 21, 23 and 27 as required.
EXHIBIT NO. DESCRIPTION
----------- -----------
2. Stock Purchase Agreement, dated February 28, 1998
2.1 Stock Purchase Settlement Agreement, dated January 19, 2000
3. Amended and Restated By-laws, dated July 31, 1998
3.1 Articles of Incorporation, dated January 29, 1996
3.2 Certificate of Amendment to Articles of Incorporation, dated February
27, 1998
3.3 Certificate of Amendment to Articles of Incorporation, dated July 31,
1998
3.4 Certificate of Amendment to Articles of Incorporation, dated December
21, 1999
21 List of Subsidiaries
23 Consent of Cacciamatta Accountancy Corporation, Independent Auditors
27 Financial Data Schedule
26
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
Registrant has caused this Registration Statement to be signed on its behalf by
the undersigned, thereunto duly authorized.
Date: July , 2000 By:/s/ GEORGE WUAGNEUX
---------------
George Wuagneux
Director and President
Date: July , 2000 By:/s/ EDWARD WUAGNEUX
---------------
Edward Wuagneux
Director and Secretary
Date: July , 2000 By:/s/ ROBERT S. HAYWARD
-----------------
Robert S. Hayward
Director and Vice President
Date: July , 2000 By:/s/ TENNIE SEDLACEK
---------------
Tennie Sedlacek
Director and Chief Financial Officer
27
