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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 For the quarterly period ended June 30, 2000
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 For the transition period from to
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BILTMORE VACATION RESORTS, INC.
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(Name of Registrant as Specified in its Charter)
NEVADA 88-0355447
------ ----------
(State of Other Jurisdiction (I.R.S. Employer Identification Number)
of Incorporation or Organization)
2110 EAST FLAMINGO ROAD, SUITE 110
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LAS VEGAS, NEVADA 89119
-----------------------
(Address of Principal Executive Offices, including Zip Code)
(702) 650-2889
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(Issuer's Telephone Number, including Area Code)
NOT APPLICABLE
(Former name, former address and former fiscal year,
if changed since last report)
Check where the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes [X] No [ ]
There were 4,405,948 shares outstanding of the registrant's Common
Stock as of June 30, 2000.
Transactional small business disclosure format (check one):
Yes [ ] No [X]
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BILTMORE VACATION RESORTS, INC.
INDEX
PART I Financial Information
Item 1 Financial Statements
Condensed Consolidated Balance Sheet at
June 30, 2000 (unaudited)
Condensed Consolidated Statements of Operations
For the Three Months and the Six Months Ended
June 30, 2000 and 1999 (unaudited)
Condensed Consolidated Statements of Cash Flow
For the Six Months Ended June 30, 2000 and 1999 (unaudited)
Notes to Condensed Consolidated Financial Statements
(unaudited)
Item 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations or Plan of Operations
PART II Other Information
Item 1 Legal Proceedings
Item 2 Changes in Securities and Use of Proceeds
Item 3 Defaults Upon Senior Securities
Item 4 Submission of Matters to a Vote of Security Holders
Item 5 Other Information
Item 6 Exhibits and Reports on Form 8-K
SIGNATURES
2
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PART I
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
BILTMORE VACATION RESORTS, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
Condensed Consolidated Balance Sheet
(Unaudited)
June 30, 2000
-------------
ASSETS
Real estate projects $ 7,120,073
Cash 72,729
Property and equipment 259,020
Other 1,010
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$ 7,452,832
=============
LIABILITIES AND SHAREHOLDERS' EQUITY
Notes payable $ 3,222,500
Due to affiliate 550,000
Accounts payable 480,223
Accrued liabilities 249,218
-------------
TOTAL LIABILITIES 4,501,941
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COMMITMENTS AND CONTINGENCIES -
SHAREHOLDERS' EQUITY:
Common stock 4,406
Additional paid-in capital 5,128,010
Deficit accumulated during the development stage (2,181,525)
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TOTAL SHAREHOLDERS' EQUITY 2,950,891
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$ 7,452,832
=============
The accompanying notes are an integral part of these financial statements.
3
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BILTMORE VACATION RESORTS, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
Condensed Consolidated Statements of Operations
(Unaudited)
Three months ended June 30,
--------------------------------
2000 1999
--------------- ---------------
General and administrative $ 253,041 $ 207,372
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OPERATING LOSS (253,041) (207,372)
--------------- ---------------
Interest expense (2,104) (11,077)
--------------- ---------------
NET LOSS $ (255,145) $ (218,449)
=============== ===============
BASIC AND DILUTED NET
LOSS PER SHARE $ (0.06) $ (0.06)
=============== ===============
BASIC AND DILUTED WEIGHTED
AVERAGE COMMON SHARES 4,391,289 3,912,444
=============== ===============
The accompanying notes are an integral part of these financial statements.
4
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BILTMORE VACATION RESORTS, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
Condensed Consolidated Statements of Operations
(Unaudited)
Cumulative
Six months ended June 30, from inception
-------------------------------- (February 28, 1998)
2000 1999 to June 30, 2000
--------------- --------------- ------------------
General and administrative $ 537,697 $ 408,530 $ 2,148,812
--------------- --------------- -----------------
OPERATING LOSS (537,697) (408,530) (2,148,812)
--------------- --------------- -----------------
Interest expense (8,545) (15,741) (32,713)
--------------- --------------- -----------------
NET LOSS $ (546,242) $ (424,271) $ (2,181,525)
=============== =============== =================
BASIC AND DILUTED NET
LOSS PER SHARE $ (0.13) $ (0.11)
=============== ===============
BASIC AND DILUTED WEIGHTED
AVERAGE COMMON SHARES 4,293,777 3,911,605
=============== ===============
The accompanying notes are an integral part of these financial statements.
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<TABLE>
BILTMORE VACATION RESORTS, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
Condensed Consolidated Statements of Cash Flows
(Unaudited)
<CAPTION>
Cumulative
Six months ended June 30, from inception
-------------------------------------- (February 28, 1998)
2000 1999 to June 30, 2000
------------------- ------------------- -------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (546,242) $ (424,271) $ (2,181,525)
Adjustments to reconcile net income to
net cash used by operating activities:
Amortization of stock compensation - 200,000 230,000
Depreciation and amortization 19,924 85,789 118,723
Common stock issued as compensation - - 1,213,622
Common stock issued in lieu of financing fees 15,767 - 634,375
Increase in real estate projects (1,377,399) (987,850) (5,775,773)
(Increase) decrease in other assets 34,867 (2,020) 7,390
Increase in accounts payable 378,883 - 480,223
Increase (decrease) in accrued liabilities 107,937 (8,006) 235,569
------------------- ------------------- -------------------
Net cash used by operating activities (1,366,263) (1,136,358) (5,037,396)
------------------- ------------------- -------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of equipment - (101,950) (311,645)
------------------- ------------------- -------------------
Net cash used by investing activities - (101,950) (311,645)
------------------- ------------------- -------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock 663,000 217,847 2,928,431
Cash contributed at inception - - 11,073
Proceeds from notes payable 639,677 1,059,000 3,462,267
Payments on notes payable and due
to affiliate (30,000) - (980,000)
------------------- ------------------- -------------------
Net cash provided by financing activities 1,272,677 1,276,847 5,421,771
------------------- ------------------- -------------------
Net increase in cash (93,586) 38,539 72,730
CASH, BEGINNING OF PERIOD 166,315 158,680 -
------------------- ------------------- -------------------
CASH, END OF PERIOD $ 72,729 $ 197,219 $ 72,730
=================== =================== ===================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid, net of amounts capitalized $ 8,545 $ 15,741 $ 32,713
=================== =================== ===================
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 $ 111,177 $ 217,847 $ 2,210,163
=================== =================== ===================
The accompanying notes are an integral part of these financial statements.
</TABLE>
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BILTMORE VACATION RESORTS, INC. AND SUBSIDIARIES
(A Development Stage Company)
Notes to Condensed Consolidated Financial Statements
June 30, 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 and six month periods ended
June 30, 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.
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Shareholders' equity
--------------------
The majority shareholder and president of the Company has advanced
funds to the Company and the outstanding balance of $111,177 was
converted into 14,824 common shares in the second quarter of 2000.
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
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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.
8
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS OR PLAN OF OPERATIONS
THE FOLLOWING DISCUSSION OF OUR FINANCIAL CONDITION AND RESULTS OF
OPERATIONS SHOULD BE READ IN CONJUNCTION WITH THE FINANCIAL STATEMENTS AND NOTE
1. TO THE FINANCIAL STATEMENTS INCLUDED ABOVE. SUCH DISCUSSION CONTAINS
FORWARD-LOOKING STATEMENTS THAT RELATE TO FUTURE EVENTS OR THE COMPANY'S FUTURE
FINANCIAL PERFORMANCE AND INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND
OTHER FACTORS THAT MAY CAUSE THE COMPANY'S OR THE INDUSTRY'S ACTUAL RESULTS,
LEVELS OF ACTIVITY, PERFORMANCE OR ACHIEVEMENTS TO BE MATERIALLY DIFFERENT FROM
ANY FUTURE RESULTS, LEVELS OF ACTIVITY, PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR
IMPLIED BY THESE FORWARD-LOOKING STATEMENTS.
PLAN OF OPERATIONS
The Company has begun development of its timeshare resort project in
Bullhead City, Arizona, and is completing the acquisition of the St. Tropez
Hotel in Las Vegas, Nevada for renovation and conversion into a timeshare
project. The Company obtained a loan commitment from M.K.D. Capital Corp., of
approximately $41,500,000 to purchase the hotel property, and pay the renovation
and construction costs for the first phase of the project. Closing of that loan
was originally to take place on June 2, 2000 but did not take place as scheduled
because of delays occasioned by the lender's failure to timely fulfill its
commitment. The lender has committed to cure its default and close the
transaction by October 1, 2000.
The Company is currently in negotiations with various banking and other
financial institutions, as well as private parties to obtain additional debt and
equity financing to continue development of the Bullhead City project and to pay
for the subsequent phase of development for the St. Tropez project.
LIQUIDITY AND CAPITAL RESOURCES
During the three months ended June 30, 2000, the Company obtained a
loan of $100,000 from its President and CEO, George Wuagneux. This loan, plus
related interest, was repaid through the issuance of 14,824 common shares. The
Company also obtained two short-term loans totaling $236,000, as reflected in
the condensed financial statements. The Company issued no additional new shares
of stock and did not raise cash proceeds from any other sources.
Net cash used in operating activities was $1,366,263 for the six months
ended June 30, 2000. Net operating cash flows for the six months ended June 30,
2000 were primarily attributable to operating losses of $546,242, and the
increase in real estate projects of $1,377,399 offset by an increase in accounts
payable of $378,883.
Net cash provided by financing activities was $1,272,677 for the six
months ended June 30, 2000, primarily attributable to proceeds from issuance of
common stock and notes payable.
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PART II - OTHER INFORMATION
Item 1 LEGAL PROCEEDINGS
None
Item 2 CHANGES IN SECURITIES AND USE OF PROCEEDS
During the period from March 31, 2000 to the date of this filing, the
Company issued a total of 14,824 shares of common stock to Biltmore Vacation
Village, Inc. for conversion of debt totaling $111,177.
The Company intends to finance future activities by (1) obtaining
equity financing through the sale of its stock; (2) obtaining construction loans
and lines of credit from financing institutions to fund construction and
development of its Bullhead City and St. Tropez projects; and (3) selling
vacation ownership units in the projects and using the proceeds to repay the
construction financing.
Item 3 DEFAULTS UPON SENIOR SECURITIES
None
Item 4 SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS
None
Item 5 OTHER INFORMATION
Larry B. Lombard resigned as Chief Financial Officer and Director of
the Company as of May 16, 2000, and Ms. Tennie Sedlacek was appointed as Chief
Financial Officer and Director in his place on the same date.
Item 6 EXHIBITS AND REPORTS ON FORM 8-K
1) Exhibits
27 Financial Data Schedule
10
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SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Date: August 14, 2000 By:/s/ GEORGE WUAGNEUX
---------------------------
George Wuagneux
Director and President
Date: August 14, 2000 By:/s/ EDWARD WUAGNEUX
---------------------------
Edward Wuagneux
Director and Secretary
Date: August 14, 2000 By:/s/ ROBERT S. HAYWARD
---------------------------
Robert S. Hayward
Director and Vice President
Date: August 14, 2000 By:/s/ TENNIE SEDLACEK
---------------------------
Tennie Sedlacek
Director and Chief Financial
Officer
11
