UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C., 20549
FORM 10-Q
(Mark One)
X Quarterly report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 for the quarterly period
ended March 31, 1995 or
Transition report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 for the transition period
from to .
Commission File No. 1-4385
DUNES HOTELS AND CASINOS INC.
(Exact name of registrant as specified in its charter)
NEW YORK 11-1687244
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4045 South Spencer, Suite 206, Las Vegas, Nevada 89119
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (702) 732-7474
NOT APPLICABLE
Former name, former address and former fiscal year, if changed
since last report
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
Applicable Only to Corporate Issuers
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable
date.
Outstanding at
Class May 10, 1995
Common Stock, $.50 par value 6,460,096 shares
DUNES HOTELS AND CASINOS INC. AND SUBSIDIARIES
QUARTERLY REPORT ON FORM 10-Q
FOR THE PERIOD ENDED MARCH 31, 1995
INDEX
PAGE
Part I. Financial Information
ITEM 1. FINANCIAL STATEMENTS
Consolidated Condensed Balance Sheets
March 31, 1995 and December 31, 1994 3
Consolidated Condensed Statements of Loss
for the three months ended March 31, 1995
and 1994 5
Consolidated Condensed Statements of Cash Flows
for the three months ended March 31, 1995
and 1994 6
Notes to Consolidated Condensed Financial
Statements, March 31, 1995 and 1994 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS 13
Part II. Other Information
ITEM 1. LEGAL PROCEEDING 17
ITEM 2. CHANGES IN SECURITIES 17
ITEM 3. DEFAULT UPON SENIOR SECURITIES 17
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 17
Signatures 18
<TABLE>
<CAPTION>
DUNES HOTELS AND CASINOS INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
MARCH 31, 1995 AND DECEMBER 31, 1994
ASSETS
March December
31, 1995 31, 1994
(Unaudited)
(Dollars in thousands)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 590 $ 874
Marketable securities 428 855
Receivables:
Trade 359 514
Notes:
Related parties 357
Real estate sales 363 335
Current maturities of long-term notes receivable 663 655
Growing crop inventory 74
Prepaid expenses 257 249
----------- ----------
Total current assets 2,734 3,839
----------- ----------
Real estate held for development and sale 7,492 7,951
----------- ----------
Property and equipment, less accumulated
depreciation and amortization, 1995, $277;
1994, $261 4,728 4,744
----------- ----------
OTHER ASSETS:
Long-term notes receivable, less current
maturities:
Related parties, including interest,
less allowance of $2,989
in 1995 and $2,968 in 1994 1,154 1,123
Officer and director, less allowance of
$456 in 1995 and $427 in 1994 481 421
Other, less allowance of $1,194 in 1995
and $1,174 in 1994 704 530
Deferred tax asset, net of allowance of
$16,427 in 1995 and 1994
Investments 2,265 1,346
Deferred costs and other 8 8
----------- ----------
4,612 3,428
----------- ----------
$ 19,566 $ 19,962
=========== ===========
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY
March December
31, 1995 31, 1994
(Unaudited)
(Dollars in thousands)
<S> <C> <C>
CURRENT LIABILITIES:
Short-term debt, contract payable $ 31 $ 76
Current portion of long-term debt 22 22
San Antonio Savings Association (SASA) 11,985 11,985
Trade payables 115 174
Accrued expenses and other 147 58
Accrued preferred stock dividend 974 956
Deferred income 100 23
Income taxes, current 247 247
----------- ----------
Total current liabilities 13,621 13,541
----------- ----------
OTHER lIABILITIES:
Long-term debt, net of current portion 138 146
----------- ----------
138 146
----------- ----------
CONTINGENCIES - NOTE 7
SHAREHOLDERS' EQUITY:
Preferred stock - authorized 10,750,000
shares ($.50 par); issued 10,512 shares,
Series B $7.50 cumulative Preferred
stock, aggregate liquidation value $2,175 5 5
Common stock, $.50 par; authorized
25,000,000 shares; issued 7,799,780 shares,
outstanding 6,460,096 shares 3,900 3,900
Capital in excess of par 25,881 25,881
Deficit (22,149) (21,681)
----------- ----------
7,637 8,105
Treasury stock at cost; Preferred - Series B,
902 shares, Common 1,339,684 shares (1,830) (1,830)
----------- ----------
Total shareholders' equity 5,807 6,275
----------- ----------
$ 19,566 $ 19,962
=========== ===========
See notes to consolidated condensed financial statements.
</TABLE>
<TABLE>
<CAPTION>
DUNES HOTELS AND CASINOS INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF LOSS
THREE MONTHS ENDED MARCH 31, 1995 AND 1994
UNAUDITED
1995 1994
(Dollars in thousands,
except per share)
<S> <C> <C>
Income from real estate operations:
Sales $ 457 $ 204
Cost of sales 478 190
----------- -----------
(21) 14
----------- -----------
Rental income 135 93
Storage and drying income 42
----------- -----------
177 93
----------- -----------
156 107
Operating expenses, including depreciation
expense of $16,000 in 1995 and 1994 724 671
----------- -----------
Loss from operations before other (charges) credits (568) (564)
----------- -----------
Other (charges) credits:
Interest and dividend income, less allowance
of $49 in 1994 156 132
Interest expense (4) (2)
Partnership loss (64)
Other 27 17
----------- -----------
115 147
----------- -----------
Net loss $ (453) $ (417)
=========== ===========
Net loss per common share $ (0.07) $ (0.06)
=========== ===========
See notes to consolidated condensed financial statements.
</TABLE>
<TABLE>
<CAPTION>
DUNES HOTELS AND CASINOS INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1995 AND 1994
UNAUDITED
1995 1994
(Dollars in thousands)
<S> <C> <C>
Cash flows from operating activities:
Net cash provided by operating activities $ 839 $ 70
----------- -----------
Cash flows from investing activities:
Decrease in cash held in escrow 36
Increase in real estate held for sale (146)
Increase in investments (1,043)
Increase in notes receivable (72) (6)
Purchase of securities (86)
----------- -----------
(1,115) (202)
----------- -----------
Cash flows from financing activities:
Decrease in long-term debt (8) (4)
(Decrease) increase in short-term debt 70
----------- -----------
(8) 66
----------- -----------
Increase (decrease) in cash and cash
equivalents (284) (66)
Cash and cash equivalents, beginning
of period 874 520
----------- -----------
Cash and cash equivalents, end of period $ 590 $ 454
=========== ===========
See notes to consolidated condensed financial statements.
</TABLE>
DUNES HOTELS AND CASINOS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
MARCH 31, 1995 AND 1994
UNAUDITED
1. Summary of significant accounting policies:
The accompanying consolidated financial statements include
the accounts of the Company and its wholly-owned
subsidiaries Continental California Corporation
(Continental), Dunes, Inc., Dunes Hotel and Casino of
Atlantic City, Inc. (DAC), M & R Corporation (MRC) and
MRC's subsidiary M & R Investment Company, Inc. (MRI) and
MRI's subsidiaries SHF Acquisition Corporation (SHF) and
Southlake Acquisition Corporation (Southlake). The Company
has been advised by the State of New Jersey, Department of
State, Division of Commercial Recording that neither Dunes,
Inc. nor DAC filed reports required by state statute for
two consecutive years. As a result, as of February 8,
1995, the State of New Jersey revoked the active status of
Dunes, Inc. and DAC, which can result in denial of their
privilege of doing business under their respective current
names. The Company has no current plans to resume
operations or pursue business opportunities in New Jersey
and does not intend to contest the action.
The Company did not consolidate Pine Ridge Joint Venture
(PRJV), a joint venture in which the Company has a 51%
interest at March 31, 1995, because the Company intends to
liquidate its interest in 1995. PRJV is accounted for on
the equity method.
By the terms of the settlement agreement with San Antonio
Savings Association, MRI is prohibited from paying
dividends to MRC which, in turn, is prohibited from paying
dividends to the Company.
The nature of the Company's operations is such that
estimates must be used in the preparation of unaudited
interim financial statements. In the opinion of
management, all adjustments, which consisted of normal
recurring entries, which are necessary to a fair statement
of the results for the interim periods have been made. All
intercompany accounts have been eliminated.
2. Description of business:
The Company is engaged principally in real estate investment
and lending activities and with respect to certain
properties, limited agricultural and certain development
operations, the most significant of which has been retail
land sales. The Company considers its business to be
comprised of one segment, the acquisition and development
and sale of real estate.
3. Related party transactions:
John B. Anderson (Anderson), the Company's controlling
stockholder and Chairman of the Board of Directors of the
Company and entities owned or controlled by him (Anderson
Entities) own approximately 67.6% of the Company's common
stock as of May 10, 1995.
From time to time the Company has made loans to various
Anderson Entities and to Directors and Executive Officers
of the Company, details of which are more fully described
in the Company's Form 10-K for the year ended December 31,
1994.
During 1990 and 1991, the Company, through certain of its
subsidiaries, made loans to Rancho Murieta Properties, Inc.
(RMPI) and to CBC Builders, Inc. (CBC) each of which are
Anderson Entities located in Rancho Murieta, California,
details of which are more fully described in the Company's
Form 10-K for the year ended December 31, 1994. See "Item
1. Business - Other Activities - Certain Loans - Rancho
Murieta Properties, Inc./CBC Builders, Inc." In connection
with a settlement agreement (the Agreement) between RMPI,
the Pension Trust Fund for Operating Engineers and Rancho
Murieta Country Club, the Agreement provides for a payment
in satisfaction of certain of the obligations that have
been pledged to SHF and MRI. Pursuant to the terms of an
Inter-Creditor Agreement entered into between SHF, MRI and
RMPI's and CBC's legal counsel, MRI and SHF will receive
approximately $345,000 of the settlement payment sometime
during the current fiscal year.
In connection with its loan to Baby Grand Corp. (BGC), an
Anderson Entity, and litigation between MRI, Bank One,
Arizona, NA, and BGC, MRI purchased from BGC an option to
acquire approximately 1,690 acres of farm land located in
Solano County, California, for a price of $1,043,902, all
of which is more fully described in the Company's Form 10-K
for the year ended December 31, 1994. See "Item 1.
Business - Other Activities - Certain Loans - Baby Grand
Corp."
The loan from the Company to El Dorado Vineyards, Inc., an
entity wholly owned by Andrew Marincovich, a member of the
Company's Board of Directors and Chairman of the Company's
Audit Committee, is described in detail in the Company's
Form 10-K for the year ended December 31, 1994. See "Item
1. Business - Other Activities - Certain Loans -
Directors."
4. Investments:
The Company's investment in PRJV is described in detail in
the Company's Form 10-K for the year ended December 31,
1994, "Item 1. - Business - Real Estate and Related
Activities - AJD Joint Venture."
Summarized condensed financial information of PRJV as of
March 31, 1995 and for the three months then ended is as
follows:
<TABLE>
<CAPTION>
(Dollars in thousands)
<S> <C>
INCOME STATEMENT DATA
Sales $ 451
Cost of sales 508
Loss from operations 125
Net loss 125
BALANCE SHEET DATA
Assets:
Cash $ 39
Work in progress, including land held for sale 2,024
Other 41
-------
$ 2,104
Liabilities and Equity
Accounts payable $ 207
Construction and land loans payable 1,660
Equity 237
-------
$ 2,104
</TABLE>
5. Drying facility:
On March 1, 1995, the Company signed a two year lease with
the new owner of the drying facility located in Sacramento,
California. Annual rental is $54,000. The Company will
pay to California Dehydrating Company (Cal Dehy), an
Anderson Entity, $25,000 for use of the Cal Dehy name.
6. San Antonio Savings Association (SASA)/Resolution Trust
Corporation (RTC):
The Company's obligation to SASA/RTC is described in detail
in the Company's Form 10-K for the year ended December 31,
1994, "Item 7. - Management's Discussion and Analysis of
Financial Condition and Results of Operations", and in the
Company's reports on Form 8-K dated February 2, 1995, April
3, 1995 and April 26, 1995.
7. Contingencies:
a. The Company is involved in various legal proceedings
which are considered to be ordinary routine litigation
incident to its business. The Company believes that
the impact, if any, will not materially affect the
Company's operating results or consolidated financial
position.
b. The Company's general liability insurance carrier for
the period August 1982 to November 1983 is in
receivership. The Company's general liability
insurance carrier for the period August 1979 to August
1982 is also in receivership. Insurance coverage for
certain claims pending against the Company are
dependent upon the financial condition of these
insurance companies. Several claims are pending
against the Company for which the Company claims
coverage under policies issued to it by these two
carriers. The potential liability to the Company
cannot be determined. However, the Nevada Insurance
Guaranty Association provides coverage to the Company
similar to that provided under policies by these
general liability carriers subject to certain
limitations, including a limitation of $300,000 for
each covered claim, as set forth in the Nevada
Insurance Guaranty Association Act. The Company
believes that final resolution will not materially
affect consolidated financial position or operating
results.
c. SHF was advised of possible contamination on two sites
at Hamburg Farms, a storage facility for diesel fuels
and an old airstrip which had been used for the loading
and fueling of aircraft applying agricultural chemicals
to the surrounding farm lands. The Company has
completed the cleanup relating to the diesel storage
tanks at a cost of approximately $100,000. Clean up of
the airstrip has required major excavation of
contaminated earth and the treatment and disposal
thereof.
The Company has disposed of a large amount of the
contaminated earth at an approved site for the storage
of toxic wastes. However, 4,000 cubic yards of
contaminated earth still remain to be disposed of. The
Company, through its chemical and toxic clean-up
consultant, has been working with the California State
Environmental Protection Agency, in seeking alternate
means to the disposal in toxic dump sites of chemical
and toxics-laden soil. The State has participated in
the funding of several projects by a number of chemical
treatment firms in efforts to try other detoxification
methods on the soil.
Because of the ongoing testing, the State has not
imposed a disposal date upon the Company. Cost of
disposal is estimated at $100 per cubic yard. The
Company is unable to predict when the ongoing testing
will be complete or what the outcome of these tests
will be. As of December 31, 1994, the Company has paid
$444,000 and accrued $64,000 relating to the clean up,
including the $100,000 expended for the diesel storage
tank. The Company has not made an accrual for the
cost, if any, of removing the contaminated earth
pending the results of the various ongoing tests.
d. The Company has received a notice from the State of
California Franchise Tax Board (FTB) wherein the FTB
alleges that one of the Company's subsidiaries owes
California franchise tax, penalties and interest of
approximately $316,000. The FTB claims that the
Company is not permitted to file a unitary tax return
in California. The Company has retained legal counsel
to resolve the matter with the FTB. The matter is
currently being appealed to the California State Board
of Equalization.
e. In connection with a loan to El Dorado Vineyards, Inc.,
a Company wholly-owned by Andrew Marincovich, a member
of the Company's Board of Directors and member of the
Company's Audit Committee, the Company is currently
evaluating whether the loan transaction adversely
impacts Mr. Marincovich's independence as a Director
serving on the Audit Committee. If Mr. Marincovich
were found not to be independent, the Company may not
be in compliance with the Consent Decree issued by the
Securities and Exchange Commission. The Company is
unable to predict the outcome of this matter.
8. Earnings per share:
Earnings per common share has been computed using the number
of common shares outstanding as of March 31, 1995.
Dividends on non-convertible preferred stock Series B have
been deducted from income or added to the loss applicable
to common shares. Dividends accrued on preferred shares,
in arrears since the second quarter 1982, amount to
$974,000 as of March 31, 1995.
9. Subsequent event:
On May 3, 1995, the Company, through one of its
subsidiaries, acquired, through bidding in indebtedness
owed to the subsidiary in a foreclosure sale, 53
residential lots previously owned by PRJV. The cost of the
lots to the Company was approximately $440,000.
DUNES HOTELS AND CASINOS INC.
QUARTERLY REPORT ON FORM 10-Q
FOR THE PERIOD ENDED MARCH 31, 1995
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
MATERIAL CHANGES IN FINANCIAL CONDITION. As of March 31,
1995, the Company had a deficit working capital of $10,887,000
as compared to a deficit working capital of $9,702,000 as of
December 31, 1994. During the quarter ended March 31, 1995, cash
and cash equivalents decreased by $284,000 from $874,000 at
December 31, 1994 to $590,000 at March 31, 1995. The most
significant sources of cash were provided by operations
($821,000). The most significant use of cash during the quarter
ended March 31, 1995 was the purchase of the Solano County Option
($1,043,00).
The principal demands on the Company's liquidity continues
to be the obligation owing to San Antonio Savings
Association/Resolution Trust Corporation (SASA/RTC); to fund
ongoing expenses at The Fairways; to fund the costs of operations
of Pine Ridge Joint Venture (PRJV); to fund the costs of farming
at El Dorado Vineyards; to fund any payments that may be required
by the first lien holder on the El Dorado Vineyard property and
to fund general and administrative expenses.
The Company believes that the sources of required liquidity
will be cash generated from the storage and drying facility in
Davis, California; anticipated lot sales at The Fairways; land
sales at Hamburg Farms; sale of the El Dorado Vineyards land and
the recovery of a portion of its investment in PRJV. Based on
known commitments, but, however, subject to the possible adverse
effects of SASA/RTC collecting the amount claimed due by SASA/RTC
under the SASA Obligation (as defined below) as described in more
detail below the Company believes that the sources of cash
described will be adequate to fund known liquidity requirements.
In addition to the failure to resolve the SASA Obligation, the
inability to refinance the first lien on the El Dorado Vineyards
property under terms acceptable to the Company will render
essentially uncollectible the obligation from El Dorado
Vineyards. The occurrence of any other presently unknown
material adverse event could hinder the Company's ability to
generate sufficient cash to meet its actual liquidity
requirements. Depending on the magnitude, timing and related
circumstances of the foregoing events, the Company may be
required to liquidate certain or substantially all of its assets
or to take other steps to respond to cash demands and preserve
the Company's assets and operations.
SASA obtained a judgment (the SASA Obligation) against the
Company in 1988 arising from the Company's guarantee of a
$15,000,000.00 loan secured by real property in Atlantic City,
New Jersey. The Company and SASA entered into a settlement
agreement effective June 28, 1988, in connection with the SASA
Obligation (the settlement agreement and the SASA Obligation are
collectively referred to herein as the SASA Obligation). On
January 22, 1992, the Company informed SASA and the Resolution
Trust Corporation (RTC), as receiver for SASA, that it would no
longer make monthly payments on the SASA Obligation because SASA
and the RTC had breached their fiduciary duties under the SASA
Obligation. Subsequent settlement negotiations between the
Company and SASA were not successful.
On November 28, 1994, the RTC recorded a notice of default
and election to sell under a deed of trust securing certain real
property located in San Diego, California, owned by Continental
California Corporation, (Continental) a wholly owned subsidiary
of the Company which real property was pledged as collateral for
the SASA Obligation, alleged to be $19,613,288.77 as of September
22, 1994. Pursuant to California law, the RTC may commence
advertising the sale of the property three months after the
recording date of the notice, with a sale date at least 20 days
after commencement of advertising. The Company has a legal right
to cure the default until 5 business days prior to the date set
for the sale of the property.
On February 2, 1995, the Company, along with two of its
subsidiaries, filed a complaint in the United States District
Court, Southern District of California, Case No. 950139R(RBB),
against the RTC and SASA. The complaint alleged that the RTC and
SASA have (i) breached their duties under the settlement
agreement, as amended, (ii) breached their duty of good faith and
fair dealing to the Company, and (iii) breached their fiduciary
duties to the Company. Among other things, the Company, and its
subsidiaries, seek relief against the RTC and SASA, as follows:
(i) for an injunction enjoining the RTC and SASA from foreclosing
on, and selling the San Diego real property; (ii) for damages in
excess of $50,000; and (iii) for an accounting by the RTC and
SASA. On April 3, 1995, the United States District Court,
Southern District of California, denied the Company's Motion for
Preliminary Injunction.
On April 26, 1995, Continental received a "Notice of
Trustee's Sale Under Deed of Trust" scheduling a trustee's sale
for May 19, 1995 at 9:00 a.m. of the real property owned by
Continental located in San Diego, California. The trustee's sale
was scheduled at the direction of "RTC as Receiver for San
Antonio Savings" and stated that said sale was to be made "to
satisfy the indebtedness secured by said deed of trust, advances
thereunder, with interest as provided therein, and the unpaid
principal balance due under the Settlement Agreement Dated June
18, 1988." The Notice of Trustee's Sale Under Deed of Trust
stated that "the total amount of the unpaid balance of the
obligation secured by the property to be sold and reasonable
estimated costs, expenses and advances at the time of the initial
publication of the Notice of Sale is: $20,483,558.50 ESTIMATED."
The Company has filed a notice appealing the District
Court's order denying the Motion for Preliminary Injunction.
Additionally, the Company filed a Motion for Injunction Pending
Appeal with the Federal District Court scheduled by the Federal
District Court for May 8, 1995, which was denied. The Company is
seeking stay relief from the Ninth Circuit Court of Appeals.
As described in more detail in the Company's Annual Report
on Form 10-K for the Year Ended December 31, 1994, the Company
believes, among other things, that the amount sought to be
collected by SASA/RTC is substantially in excess of the amount
actually due. See the Company's Annual Report on Form 10-K for
the Year Ended December 31, 1994, Part I, "Item 7, Management's
Discussion and Analysis of Financial Condition and Result of
Operations - Liquidity and Capital Resources." Should SASA/RTC
successfully foreclose on Continental's real property, the
Company's assets and the SASA Obligation, will be diminished to
that extent. The magnitude of the difference between the amount
of the SASA/RTC claim under the SASA Obligation and the amount
believed by the Company to be due is so material as to make a
reasonable estimation of the liquidity demands of satisfying the
SASA Obligation unfeasible. If the full amount claimed due by
SASA/RTC, which was $20,483,558.50 based on the Notice of
Trustee's Sale dated April 26, 1995, is actually found by a court
to be due, the Company does not have the assets or sources of
capital to satisfy said amount within any reasonable short-term
time frame. Depending on the amount found to be actually due by
a court, if any, and the amount to which the Company is entitled
to credit based on the valuation of the formerly owned New Jersey
collateral, management will then be able to assess the
requirements for and the potential sources of repayment, if any.
Therefore, the Company cannot, at this time, accurately predict
the impact of the SASA Obligation on the financial condition of
the Company.
In connection with the operation of the drying facility, the
Company signed a two year lease with the current owner of the
drying facility. Under the new lease, rental expense was reduced
from $60,000 to $54,000 per year. The lease is effective as of
March 1, 1995. The Company will pay $25,000 to California
Dehydrating Company (Cal-Dehy), an entity owned by John B.
Anderson, the Company's controlling stockholder and Chairman of
the Company's Board of Directors, for use of the Cal-Dehy name.
The Company is currently investigating the possibility of
financing costs associated with the farming operations of the El
Dorado Vineyard. The Company is unable to predict what amount,
if any, of financing may be available.
In connection with its loan to Rancho Murieta Properties,
Inc. (RMPI) and CBC Builders, Inc. (CBC), SHF Acquisition
Corporation (SHF) entered into a settlement agreement between
RMPI, CBC, Rancho Murieta Country Club (RMCC) and the Pension
Trust Fund for Operating Engineers. The settlement agreement
confirmed SHF's right to receive payment of the settlement
proceeds which have been pledged to SHF and others. Under terms
of an Inter-Creditor Agreement between MRI, SHF and RMPI's and
CBC's legal counsel, SHF will receive approximately $345,000 of
the settlement proceeds sometime during the current fiscal year.
The Company continues to have ongoing cash requirements,
which may be as much as $400,000 in the next twelve month period,
arising out of environmental cleanup costs at its Hamburg Farm
property. The Company has not made an accrual for the cost, if
any, of removing the contaminated earth pending the results of
the various ongoing tests.
Certain of the matters discussed above are more fully
described in the Company's Annual Report on Form 10-K for the
year ended December 31, 1994. See "Item 7. Management's
Discussion and Analysis of Financial Condition and Results of
Operations."
MATERIAL CHANGES IN RESULTS OF OPERATIONS
When compared to the quarter ended March 31, 1994, net loss
for the quarter ended March 31, 1995, increased by $36,000. The
loss on the sale of lots at The Fairways, $21,000, consisted
primarily of commissions, escrow charges and other selling costs.
The increase in operating expenses of $53,000 was due in large
part to an increase in legal fees resulting from the SASA/RTC
litigation.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDING
See "Part I, Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations" for a discussion
of recent events with SASA/RTC.
ITEM 2. CHANGES IN SECURITIES
The Company's second tier subsidiary, MRI, is prohibited
from paying dividends to MRC which in turn is prohibited from
paying dividends to the Company during the term of the settlement
agreement with San Antonio Savings Association.
ITEM 3. DEFAULT UPON SENIOR SECURITIES
Dividends in arrears. See Note 7 of Notes to Consolidated
Condensed Financial Statements.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
ITEM DESCRIPTION
27.01 Financial Data Schedule
(b) Reports on Form 8-K
Form 8-K, Item 5, dated February 2, 1995.
Form 8-K, Item 5, dated February 9, 1995.
Form 8-K, Item 5, dated April 3, 1995.
Form 8-K, Item 5, dated April 26, 1995.
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT
OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED
ON ITS BEHALF BY THE UNDERSIGNED THEREUNTO DULY AUTHORIZED.
DUNES HOTELS AND CASINOS INC.
Registrant
Date: May 12, 1995 By: /s/ James H. Dale
James H. Dale
Duly Authorized Officer and
Chief Financial Officer
EXHIBIT INDEX
ITEM DESCRIPTION PAGE NO.
27.01 Financial Data Schedule 20
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 590
<SECURITIES> 428
<RECEIVABLES> 3,724
<ALLOWANCES> 4,639
<INVENTORY> 74
<CURRENT-ASSETS> 2,734
<PP&E> 5,005
<DEPRECIATION> 277
<TOTAL-ASSETS> 19,566
<CURRENT-LIABILITIES> 13,621
<BONDS> 0
<COMMON> 3,900
0
5
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 19,566
<SALES> 457
<TOTAL-REVENUES> 634
<CGS> 478
<TOTAL-COSTS> 478
<OTHER-EXPENSES> 724
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4
<INCOME-PRETAX> (453)
<INCOME-TAX> 0
<INCOME-CONTINUING> (453)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (453)
<EPS-PRIMARY> (.07)
<EPS-DILUTED> (.07)
</TABLE>
