FORM 8-K/A
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES ACT OF 1934
Date of Report (Date of earliest event reported): October 19, 1998
OASIS RESORTS INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter.)
Nevada
(State of incorporation or organization)
0-9476 48-0680109
(Commission File Number) (I.R.S. Employee Identification No.)
3753 Howard Hughes Parkway, Suite 200, Las Vegas, Nevada
(Address of principal executive offices)
89103
(Zip Code)
Registrant's telephone number, including area code: (702) 892-3742
Flexweight Corporation, 915 N. Wells, Wendover, NV 89883
(Former name or former address, if changed since last report)
<PAGE>
Introduction
Pursuant to Items 7 (a) and Item 7 (b) of the Securities and Exchange
Commission's (the "Commission") General Instructions for Form 8-K Oasis Resorts
International, formerly Flexweight Corporation (the "Company") hereby amends
Item 7 (a) and 7 (b) of its Current Report on Form 8-K, filed with the
Commission on October 26, 1998 to file pro forma financial information for the
Company reflecting the acquisition of assets from NuOasis International, Inc.
("NuOasis") which was effective October 19, 1998.
Item 7. FINANCIAL STATEMENTS AND EXHIBITS
Item 7 (a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED
Filed herewith as part of this report are the following financial
statements: Oasis Resorts International, Inc. (i) Report of Independent
Auditors, (ii) Statement of Net Assets Acquired as of June 30, 1998, (iii)
Statement of Operations and Comprehensive Loss of the Net Assets Acquired for
the year ended June 30, 1998, (iv) Statements of Stockholder's Deficit of the
Net Assets Acquired for the year ended June 30, 1998, (v) Statements of Cash
Flows of the Net Assets Acquired for the year ended June 30, 1998, and (vi)
Notes to Financial Statements.
Item 7 (b) UNAUDITED PRO FORMA FINANCIAL INFORMATION
Filed herewith as part of this report are the Company's unaudited pro forma
condensed consolidated balance sheet as of June 30, 1998 and the unaudited pro
forma condensed consolidated Statements of Operations for the year ended June
30, 1998 and the notes thereto. As a result of this event, the Company changed
its fiscal year end from August 31 to June 30.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
OASIS RESORTS INTERNATIONAL, INC.
Formerly Flexweight Corporation
(Registrant)
Dated: July 24, 2000 By: /s/ Walter Sanders
Walter Sanders,
Chairman of the Board and President
Dated: July 24, 2000 By: /s/ Jon L. Lawver
Jon L. Lawver,
Director
<PAGE>
OASIS RESORTS INTERNATIONAL, INC.
(Formerly Flexweight Corporation)
Index to Financial Statements
Description Page
Financial Statements of Net Assets Acquired from NuOasis International, Inc.
Independent Auditors' Report................................................ F-2
Statement of Net Assets Acquired as of June 30, 1998........................ F-3
Statement of Operations and Comprehensive Loss
of the Net Assets Acquired for the year ended June 30, 1998............... F-4
Statements of Owner's Deficit of the Net Assets Acquired
for the year ended June 30, 1998.......................................... F-5
Statement of Cash Flows of the Net Assets Acquired
for the year ended June 30, 1998.......................................... F-7
Unaudited Condensed Consolidated Pro Forma Financial Statements
Introduction to Unaudited Pro Forma Condensed
Consolidated Financial Statements..........................................F-19
Unaudited Pro Forma Condensed Consolidated
Balance Sheet at June 30, 1998.............................................F-20
Unaudited Pro Forma Condensed Consolidated Statement of
Operations for the year ended June 30, 1998................................F-21
Notes to Financial Statements...............................................F-22
F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors
Oasis Resorts International, Inc.
(Formerly Flexweight Corporation)
We have audited the accompanying statement of net assets acquired by Oasis
Resorts International, Inc. ("Oasis") from NuOasis International, Inc.,
("NuOasis") as of June 30, 1998, and the related statement of operations,
owner's capital (deficit) and cash flows of the net assets acquired from NuOasis
for the year then ended. These financial statements are the responsibility of
NuOasis's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, 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 financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets acquired by Oasis from NuOasis as of June
30, 1998, and the results of operations and cash flows of the net assets
acquired from NuOasis for the year then ended, in conformity with generally
accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
NuOasis operations acquired by Oasis will continue as a going concern. As
discussed in Note 2 to the financial statements, the entity has recurring losses
from operations since its inception. It requires substantial long-term financing
to complete certain projects, as well as working capital financing to meet its
past-due and current obligations. These factors raise substantial doubt about
the entity's ability to continue as a going concern. Management's plans in
regard to these matters are also described in Note 2. The financial statements
do not include any adjustments that might result from the outcome of this
uncertainty.
/s/ McKennon, Wilson & Morgan, LLP
McKennon, Wilson & Morgan, LLP
Irvine, California
April 4, 2000
F-2
<PAGE>
Statement of Net Assets Acquired
by OASIS RESORTS INTERNATIONAL, INC.
From NuOASIS INTERNATIONAL, INC.
June 30, 1998
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Cash and cash equivalents $ 104,454
Accounts receivable, net 619,284
Inventory 171,237
Marketable securities (Note 4) 929,000
Total current assets 1,823,975
Receivable from Lessor (Note 3) 984,892
Lease deposit (Note 6) 1,000,000
Investment, at cost (Notes 2 and 3) 2,000,000
Other 239,701
Total assets $ 6,048,568
LIABILITIES AND OWNER'S DEFICIT
Accounts payable $ 1,711,633
Due Lessor (Notes 3, 6 and 8) 1,829,265
Accrued liabilities 832,012
Due Parent 1,220,619
Total current liabilities 5,593,529
Due Affiliate (Notes 1, 3 and 9) 13,000,000
Total liabilities 18,593,529
Commitments and contingencies (Note 6)
Owner's deficit (Notes 1, 2, 7 and 9):
Owner's capital 10,345,833
Accumulated deficit (13,369,089)
Accumulated other comprehensive loss (521,705)
Notes receivable from Resorts (9,000,000)
Total owner's deficit (12,544,961)
Total liabilities and owner's deficit $ 6,048,568
</TABLE>
See accompanying notes to these financial statements.
F-3
<PAGE>
Statements of Operations and Comprehensive Loss
of Net Assets Acquired
by OASIS RESORTS INTERNATIONAL, INC.
from NuOASIS INTERNATIONAL, INC.
For The Year Ended June 30, 1998
<TABLE>
<CAPTION>
<S> <C>
Revenues $ 5,292,604
Costs of revenues 5,512,702
Gross profit (loss) (220,098)
Selling, general and administrative expenses 1,244,870
Impairment of long-lived assets (Notes 2 and 3) 3,453,000
Loss from operations (4,917,968)
Interest expense 31,591
Net loss (4,949,559)
Other comprehensive income (loss):
Unrealized loss on marketable
securities (590,000)
Foreign currency translation adjustment 79,005
Comprehensive loss $ (5,460,554)
</TABLE>
See accompanying notes to these financial statements.
F-4
<PAGE>
Statement of Owner's Capital (Deficit) and Comprehensive Loss
of Net Assets Acquired
by OASIS RESORTS INTERNATIONAL, INC.
from NuOASIS INTERNATIONAL, INC.
For The Year Ended June 30, 1998
<TABLE>
<CAPTION>
Other Notes
Owner's Accumulated Comprehensive Receivable From
Capital Deficit Loss Resorts Total
<S> <C> <C> <C> <C> <C>
Balances, July 1, 1997 $ 12,137,707 $ (8,419,529) $ (10,710) $ - $ 3,707,468
Recapitalization by NuOasis 10,657,000 - - (10,000,000) 657,000
Shares of Oasis assigned from
NuOasis for lease deposit
- - - 1,000,000 1,000,000
Constructive dividend to CPL (13,000,000) - - - (13,000,000)
Capital contributions 551,126 - - - 551,126
Net loss and comprehensive loss - (4,949,559) (510,995) - (5,460,554)
Balances, June 30, 1998 $(13,369,088) $ (521,705) $ (9,000,000) $(12,544,960)
$ 10,345,833
</TABLE>
See accompanying notes to these financial statements.
F-5
<PAGE>
Statement of Cash Flows
of Net Assets Acquired
by OASIS RESORTS INTERNATIONAL, INC.
from NuOASIS INTERNATIONAL, INC.
For The Year Ended June 30, 1998
<TABLE>
<CAPTION>
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C>
Net loss $ (4,949,559)
Adjustments to reconcile net loss to
net cash provided by (used in) operating activities:
Write-off of note receivable from Club Hammamet 1,905,000
Impairment of SALT equity investment and Cleopatra Cap Gammarth
Casino interest 1,548,000
Changes in operating assets and liabilities:
Accounts receivable (357,793)
Inventory 22,764
Other current assets 2,231
Accounts payable 635,720
Accrued liabilities 157,070
Due Lessor 1,247,019
Net cash provided by operating activities 210,452
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of equipment (52,597)
Advances on note receivable from Club Hammamet (154,200)
Other assets 424,647
Net cash provided by investing activities 217,850
CASH FLOWS FROM FINANCING ACTIVITIES:
Advances to Lessor (984,892)
Repayment of short-term bank loans (300,000)
Repayments from NuOasis (252,574)
Capital contributions 551,126
Net cash used in financing activities (986,340)
Foreign currency effect on cash 79,005
Net decrease in cash (479,033)
Cash and cash equivalents at beginning of year 583,487
Cash and cash equivalents at end of year $ 104,454
</TABLE>
See accompanying notes to these financial statements.
F-6
<PAGE>
Statement of Cash Flows
of Net Assets Acquired
by OASIS RESORTS INTERNATIONAL, INC.
from NuOASIS INTERNATIONAL, INC. (continued)
For The Year Ended June 30, 1998
<TABLE>
<CAPTION>
<S> <C>
Supplemental Disclosure of Cash Flows -
Cash paid during the year for interest $ 31,591
Non-Cash Financing and Investing Activities:
Capital contribution of marketable securities by Parent 657,000
Lease deposit exchanged for note receivable from Resorts 1,000,000
Constructive dividend resulting from notes payable issued to
affiliate in exchange for assets $13,000,000
</TABLE>
See accompanying notes to these financial statements.
F-7
<PAGE>
Notes to Consolidated Financial Statements
of the Net Assets Acquired
by OASIS RESORTS INTERNATIONAL, INC.
from NuOASIS INTERNATIONAL, INC.
1 - Organization and History
Oasis Resorts International Inc., herein referred to as "Oasis" or the
"Company", holds 20 acres of partially developed land in Oasis, Nevada.
Management intends to develop a hotel and casino; however, development has been
delayed until additional financing can be obtained. The Company was in the
development stage prior to acquiring the assets of NuOasis International, Inc.
("NuOasis" or the "Parent").
On October 19, 1998, the Company entered into an exchange agreement with
NuOasis, a wholly-owned subsidiary of NuOasis Resorts, Inc. ("Resorts") to
acquire NuOasis's 75% interest in Cleopatra Palace Resorts and Casinos Ltd.
("CPRC"). CPRC was formed to acquire all of the equity interest owned by NuOasis
in Cleopatra Cap Gammarth, Limited ("CCGL") which intends to operate the
Cleopatra Cap Gammarth Casino, a right to re-acquire an interest in Cleopatra
Hammamet Limited, which operates the casino Cleopatra Hammamet Casino, and
Cleopatra's World, Inc. ("CWI") which operates the Le Palace Hotel & Resort at
Cap Gammarth (see Note 3). All of the properties are located in Tunisia.
Cleopatra Palace Ltd. ("CPL") is a predecessor company to CPRC, an entity
controlled by NuOasis which previously held the interests in the Cleopatra
Hammamet Casino and the Cleopatra Cap Gammarth Casino.
2 - Basis of Presentation and Principles of Accounting
Basis of Presentation
The accompanying financial statements include the historical assets and
liabilities, and the historical operations of the net assets acquired by Oasis
from NuOasis for the period presented. The net assets acquired are herein
referred to as the "Entity". The accompanying financial statements include
expenses, both direct and indirect, of the Parent, which were incurred for the
benefit of the Entity.
Going Concern Considerations
The Entity has recurring losses from operations, and at June 30, 1998, the
Company has a working capital deficit of approximately $3.8 million. The Entity
requires approximately $7 to $10 million of immediate working capital to
complete the final phase of construction of the Le Palace Hotel & Resort and the
Cleopatra Cap Gammarth Casino, market the hotel and casino as a destination
resort, as well as service certain past-due trade creditors. NuOasis is
currently a plaintiff in litigation with the owners of the Cleopatra Cap
Gammarth Casino due to delays in the completion of the project by the owner.
NuOasis has received a judgment for the benefit of the Entity totaling
approximately $292 million against Societe D'Animation et de Loisirs
Touristique, a Tunisian corporation ("SALT"), the ultimate collectibility of
which is unknown (see Note 3). The Entity is a defendant in a matter initiated
by the owners of the Le Palace Hotel & Resort for 1999 rents unpaid by the
Entity. At June 30, 1998, the Entity owed approximately $1.8 million under the
lease agreement.
F-8
<PAGE>
Notes to Financial Statements
of the Net Assets Acquired
by OASIS RESORTS INTERNATIONAL, INC.
from NuOASIS INTERNATIONAL, INC. (continued)
2 - Basis of Presentation and Principles of Accounting (continued)
These factors raise substantial doubt about the Entity's ability to continue as
a going concern. Management's plans with respect to these matters include
obtaining sources of capital to complete the projects, and pay its past-due
trade creditors and rents. Meanwhile, the Entity will attempt to perfect its
judgment against the landlords of SALT. There are no assurances that such
financing will be consummated on terms favorable to the Entity, if at all, nor
that the Entity will be successful in collecting on its judgment against SALT.
No adjustments have been made to the accompanying financial statements as a
result of this uncertainty.
Fiscal Year End
The Company utilizes June 30 as its fiscal year end.
Cash and Cash Equivalents
Cash equivalents include short-term, highly liquid investments with maturities
of three months or less at the time of acquisition.
Marketable Securities
The Entity accounts for its equity securities as available-for-sale securities.
In connection therewith, the Entity records unrealized gains and losses as a
component of shareholders' equity. Realized gains and losses are recorded in
operations. The Entity uses the specific identification method for accounting
for its marketable securities.
Impairment of Long-lived Assets
The Entity assesses the recoverability of long-lived assets by determining
whether the depreciation and amortization of property and goodwill over their
remaining life can be recovered through projected undiscounted future cash
flows. The amount of impairment, if any, is measured based on fair value and is
charged to operations in the period in which such impairment is determined by
management.
Investments, at cost
The Entity holds a 9% equity interest in SALT. This investment is carried at
cost, less amounts deemed necessary to reflect the asset at its net realizable
value. The investment was exchanged from CPL to CWI with a carrying value of
$3.1 million. CPL had also incurred costs of $424,000 in connection with its
interest. During 1998, management determined the investment was impaired, and
accordingly, they recorded a provision for loss of $1.5 million in fiscal 1998.
The impairment was based on collection of the money judgement against SALT and
certain of its shareholders (see Note 3). The carrying value at June 30, 1998 is
$2 million.
F-9
<PAGE>
Notes to Financial Statements
of the Net Assets Acquired
by OASIS RESORTS INTERNATIONAL, INC.
from NuOASIS INTERNATIONAL, INC. (continued)
2 - Basis of Presentation and Principles of Accounting (continued)
Foreign Currency
The financial statements of the Entity's non-U.S. operations are translated into
U.S. dollars for financial reporting purposes. The assets and liabilities of
non-U.S. operations whose functional currencies are other than the U.S. dollar
are translated at rates of exchange at fiscal year-end, and revenues and
expenses are translated at average exchange rates for the fiscal year. The
cumulative translation effects are reflected in stockholders' equity. Foreign
currency gains and losses on transactions denominated in other than the
functional currency of an operation are reflected in other income (expense).
Revenue Recognition
Revenues from hotel operations are recorded when the services are rendered.
Revenues from food and beverage sales are recognized upon delivery of the
product and service.
Provision for Income Taxes
The Entity accounts for its income taxes using the separate-return basis under
an asset and liability method, whereby deferred tax assets and liabilities are
determined based on temporary differences between bases used for financial
reporting and income tax reporting purposes. Income taxes are provided based on
the enacted tax rates in effect at the time such temporary differences are
expected to reverse. A valuation allowance is provided for certain deferred tax
assets if it is more likely than not that the Entity will not realize tax assets
through future operations.
The Entity's net deferred tax assets at June 30, 1998, consist of net operating
loss carryforwards amounting to approximately $10 million. At June 30, 1998, the
Entity provided a 100% valuation allowance for these net operating loss
carryforwards totaling $3.5 million. During the year ended June 30, 1998, the
Entity's valuation allowance increased $1.7 million. The Entity's annual use of
net operating loss carryforwards are limited due to the change in ownership
experienced in 1998. No benefit for income taxes has been provided since all
deferral tax assets have been fully reserved. Income tax expense is not material
to the accompanying statements of operations. The Entity's significant temporary
differences in the reporting of financial statements and income taxes are
impairments of assets totaling $1.5 million related to its SALT interest and
Cleopatra Cap Gammarth Casino lease.
Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
F-10
<PAGE>
Notes to Financial Statements
of the Net Assets Acquired
by OASIS RESORTS INTERNATIONAL, INC.
from NuOASIS INTERNATIONAL, INC. (continued)
2 - Basis of Presentation and Principles of Accounting (continued)
Reporting Comprehensive Income
The Entity reports the components of comprehensive income using the income
statement approach. Comprehensive income includes net income, as well as certain
non-shareholder items that are reported directly within a separate component of
owners' equity and bypass operations. Components which give rise to the other
comprehensive income are foreign currency translations adjustments and temporary
gains and losses on marketable securities.
Accounting for Derivative Instruments and Hedging Activities
The Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging
Activities" (FAS 133). Under the provisions of FAS 133, the Entity will be
required to recognize all derivatives as either assets or liabilities in the
statements of financial position and measure these instruments at fair value.
The Entity has adopted FAS 133 during fiscal 1999. Currently, the Entity does
not have any instruments that would qualify as derivatives under FAS 133.
Accordingly, the Entity does not believe that FAS 133 would have a material
impact on its current financial position or results of operations.
Financial assets with carrying values approximating fair value include cash and
cash equivalents, marketable securities, notes receivable and other investments.
Financial liabilities with carrying values approximating fair value include
accounts payable and accrued interest, and notes payable. Notes due to and from
related parties have no readily ascertainable fair value.
3 - Tunisian Operations
Le Palace Hotel & Resort
During fiscal 1997, NuOasis exchanged 600,000 shares of common stock of The
Hartcourt Companies Inc., valued at approximately $862,000 based on a national
quotation system, for a 50% equity ownership in CWI. CWI is the lessee of the Le
Palace Hotel & Resort surrounding the Cleopatra Cap Gammarth Casino (see Note 8
for discussion of this lease).
On June 1, 1998, CWI acquired certain interests from CPL for $13 million in
notes payable. The assets acquired consisted of an equity interest of 9% in
SALT, with a carrying value of $3.1 million, the leasehold interest in the
Cleopatra Cap Gammarth Casino, with a carrying value of approximately $424,000,
and a receivable from the Societe Loisirs Club Hammamet ("Club Hammamet") with a
face value of $1.9 million. Since the historical carrying value of the assets
acquired of $5.4 million have been reported in these financial statements for
the periods presented, the purchase price of $13 million was deemed a
constructive dividend to this related party as reflected in the accompanying
statement of owner's deficit during the year ended June 30, 1998, since the
assets were under common control at the date of acquisition.
F-11
<PAGE>
Notes to Financial Statements
of the Net Assets Acquired
by OASIS RESORTS INTERNATIONAL, INC.
from NuOASIS INTERNATIONAL, INC. (continued)
3 - Tunisian Operations (continued)
In connection with a letter agreement dated April 26, 1998, effective June 1,
1998, the Entity was recapitalized, and increased its interest to 60% equity
ownership in CWI with $10 million of notes due from Resorts (Note 9), marketable
securities consisting of 2,000,000 shares of Resorts valued at $254,000 and
280,000 shares of common stock of The Hartcourt Companies, Inc. valued at
$403,000 (Note 4); a Put/Option Agreement between Resorts and J. Monterosso
dated August 22, 1997 with no carrying value and a face value of $715,000 and a
promissory note dated August 22, 1997 with no carrying value, and a balance due
of $1,135,000 at the date of recapitalization. The debtor of these notes is in
bankruptcy; therefore, the ultimate collection of amounts due the Entity is
uncertain. The aggregate historical value of these assets, including the notes
of $10 million, was approximately $10.7 million at the date of transfer as
reflected in the accompanying statements of owner's deficit for the year ended
June 30, 1998.
In connection with the reorganization of CPRC (see below), the Entity
effectively increased its ownership interest to 80% in CWI through the purchase
of an additional equity interest from an individual affiliated with the Entity
and existing shareholder of CPRC. No value was attributed to this transaction
since CWI had no significant net assets.
Cleopatra Cap Gammarth Casino
CCGL has rights to lease a 200,000 square foot casino and Las Vegas-style
showroom presently under construction, and substantially complete, pursuant to a
Casino Lease Agreement and Operating Management Contract with "STTG" or the
"Lessor". The lessor and landlord, STTG, has been unable to complete the final
construction of the Cleopatra Cap Gammarth Casino, causing significant delays in
opening the casino and inducing losses to be incurred by the Entity. See Note 8
for further discussion of this lease arrangement.
On July 13, 1998, the NuOasis, on behalf of the Entity, filed a civil complaint
for damages in the U.S. District Court, District of Nevada against SALT and
several other defendants. On July 2, 1999, the District Court adjudged and
decreed compensatory damages in the amount of $292 million plus interest, and
$10 million in punitive damages. Management is proceeding in Tunisia to collect
upon its money judgement. No amounts have been recorded in these financial
statements as a result of this potential gain contingency.
F-12
<PAGE>
Notes to Financial Statements
of the Net Assets Acquired
by OASIS RESORTS INTERNATIONAL, INC.
from NuOASIS INTERNATIONAL, INC. (continued)
3 - Tunisian Operations (continued)
Hammamet Casino
In October 1994, Cleopatra entered into an agreement with Club Hammamet to lease
and operate a 60,000 square foot casino and French-style cabaret recently
completed in Hammamet, Tunisia (the "Hammamet Casino"). On or about September
26, 1997, in order to finance the remaining expenditures on the Hammamet Casino,
the Entity and Club Hammamet entered into an agreement with Cedric International
Company Inc., a Panamanian corporation ("Cedric") pursuant to which the Entity
and Cedric each agreed to contribute $1.5 million to the capital of Club
Hammamet in making the first annual lease payments on the Hammamet Casino, the
Company pledged to Cedric its 70% interest in Hammamet Casino. The Entity and
Cedric agreed that Cedric will return such interest when and if the Entity
reimburses Cedric for all funds advanced prior to September 26, 1998 (on an
all-or-nothing basis), plus interest at the rate of 15% per annum. The Entity
did not reimburse Cedric, due to sustained losses at the Hammamet Casino, and
the Entity forfeited its right to reacquire its interest in Hammamet Casino.
Accordingly, the Entity impaired its interest in Hammamet Casino and charged
operations $1.9 million in fiscal 1998.
4 - Marketable Securities
The Entity has the following available-for-sale securities as of June 30, 1998:
<TABLE>
<CAPTION>
Investee Shares Market Value Cost
<S> <C> <C> <C>
NuOasis Resorts Inc. 2,000,000 $ 214,000 $ 254,000
The Hartcourt
Companies, Inc. 880,000 715,000 1,265,000
Totals $ 929,000 $ 1,519,000
</TABLE>
Subsequent to fiscal 1998, NuOasis, on behalf of the Entity, liquidated 880,000
shares of the Hartcourt companies for $463,000. In connection therewith, the
Entity recorded a provision for loss of $803,000 subsequent to fiscal 1998.
5 - Lease deposit
The Entity is required to maintain a lease deposit totaling $3 million for the
benefit of the leaseholders of the Le Palace Hotel. In fiscal 1998, NuOasis
pledged 200,000 shares of Oasis common stock valued at $1 million as collateral
for the lease deposit. Subsequent to fiscal 1998, the Entity was deficient in
the collateral held for the lease deposit due to a decline in value of the
securities. In February 2000, Oasis issued 2.75 million shares of its common
stock to provide additional security under the lease arrangement. Based on the
value of such shares of common stock, the Entity may be required to deposit
additional collateral.
F-13
<PAGE>
Notes to Financial Statements
of the Net Assets Acquired
by OASIS RESORTS INTERNATIONAL, INC.
from NuOASIS INTERNATIONAL, INC. (continued)
6 - Commitments and Contingencies
Leases
CCGL and CWI are lessees under lease agreements related to the Cleopatra Cap
Gammarth Casino and the Le Palace Hotel, respectively, which require annual
lease payments to be made, monthly or quarterly, over their respective terms,
which range from 14 to 20 years (also see Note 3). The Entity has not begun
operations at the casino; therefore, this lease is not yet in effect. Upon
consummating the lease, the Entity will be required to pay the amounts reflected
in the table below. Management expects the lease to be consummated by August
2000. Future annual minimum lease payments by these entities in each of the next
five years and thereafter are as follows:
<TABLE>
<CAPTION>
Amounts Due
Cap
Year Ending Gammarth Le Palace
June 30 Casino Hotel Total
<S> <C> <C> <C> <C>
1999 $ - $ 3,397,146 $ 3,393,146
2000 - 3,741,000 6,741,000
2001 3,000,000 4,007,150 7,007,150
2002 3,300,000 4,287,650 7,587,650
2003 3,600,000 4,587,785 8,187,785
Thereafter 81,600,000 57,781,819 136,381,819
$ 91,500,000 $ 77,802,550 $169,302,550
</TABLE>
Prior to taking possession of the Cleopatra Cap Gammarth Casino under its lease
agreement, the Entity is required to make a lease deposit totaling $1 million.
Total rent expense included in operations under the Le Palace Hotel lease for
the year ended June 30, 1998 was $2.0 million.
Litigation
The Entity has been a party to litigation with STTG due to significant delays in
completing the Le Palace Hotel & Resorts. Through April 2000, the Entity has not
paid rents to STTG in connection with its lease arrangement. However, the Entity
has paid opening costs and purchased equipment totaling approximately $1.8
million which were the responsibility of STTG. STTG filed a complaint and
received an arbitration award for calendar year lease rental payments for 1997
and 1998, net of amounts expended by the Entity. At June 30, 1999, the Entity
owed STTG approximately $3.4 million for the net rental payments under the
agreement. Also, see Note 3 for discussion of amounts due to the Entity from
STTG.
The Entity is subject to claims and suits that arise from time to time out of
the ordinary course of its business. Through April 2000, management of the
Entity is not aware of any claims that will have a material impact on the
Entity's business, financial condition or results of operations which are not
reflected in the accompanying financial statements.
F-14
<PAGE>
Notes to Financial Statements
of the Net Assets Acquired
by OASIS RESORTS INTERNATIONAL, INC.
from NuOASIS INTERNATIONAL, INC. (continued)
7 - Owner's Deficit
In connection with the recapitalization on June 1, 1998, the Entity received
contributions from NuOasis of $10,000,000 of notes receivable from Resorts and
$657,000 in marketable securities. Immediately thereafter, in order to meet the
lease deposit requirements of the Le Palace Hotel, the Entity received shares of
Flexweight's common stock held by NuOasis, valued at $1 million, in exchange for
a reduction of $1 million in notes receivable from Resorts. See Note 3 and below
for further discussion.
As discussed in Note 3, the Entity acquired certain assets and liabilities from
CPL which were part of the control group, and included in the assets and
liabilities, as well as the operations of the net assets acquired for all
periods presented (see basis of presentation). Accordingly, the $13 million in
notes issued to CPL for such assets, is treated as a constructive dividend in
the accompanying consolidated statement of owner's capital (deficit) for the
year ended June 30, 1998.
Notes Receivable From Resorts
On June 1, 1998, in connection with the recapitalization of the entity by
NuOasis (see Note 3), the Company received a contribution of notes receivable
from Resorts in the amount of $10,000,000. These notes are due on demand and
bear interest at the rate of 6% per annum. Management has reflected such notes
as a reduction of owner's capital (deficit) since the original capitalization
was reflected as additional paid-in capital. Management of Resorts intends to
satisfy these notes with in-kind consideration.
8 - Related Party Transactions
In connection with the operation of the Le Palace Hotel, the Entity provides
employees of Societe Touristique Tunisie-Golfe ("STTG") meals and allowances
while working at the Cap Gammarth complex. In fiscal 1998, the Entity incurred
reimbursable expenses amounting to approximately $985,000. Refer to the
arbitration settlement reached with the Lessor regarding lease payments and
costs incurred by the Entity in Note 8. Management believes that amounts
receivable from the Lessor will be subject to right of offset when the judgement
becomes due. Accordingly, no provision for loss has been reflected against
amounts due from STTG.
9 - Restructuring
As stated in Note 1, NuOasis entered into an exchange agreement to acquire its
75% interest in CPRC on July 1, 1998. CPRC was formed by the management of
NuOasis as a means to consolidate its off-shore hotel and casino operations,
principally in Tunisia. CPRC was a multi-step restructuring, whereby CPRC first
issued 12,553,125 shares to CWI to acquire from CWI its 9% equity interest in
SALT, the SALT Casino Lease rights, and $1.9 million note due from Club
Hammamet; CWI immediately thereafter exchanged 8,490,625 CPRC shares to fully
satisfy the $13 million notes payable to CWI. Then CPRC acquired the remaining
CPL assets for 946,875 shares and a $3 million note due from Resorts, then
acquired an 80% interest in CWI and a 100% interest in Club Hammamet from
NuOasis for 11,500,000 CPRC shares, and finally, CPRC increased its ownership in
CCGL to 90% by assigning to CCGL, $3.5 million of notes due from Resorts and its
rights to the SALT Casino Lease. As a result, CPRC owns an 80% interest in CWI,
a 90% interest in CCGL, a 100% interest in Club Hammamet and a 9% equity
interest in SALT. In addition, the restructuring of CPRC satisfied the $13
million of notes due CPL by CWI, recapitalized the Entity by $10 million, and
reduced a portion of its notes receivable from Resorts by $3 million.
F-15
<PAGE>
OASIS RESORTS INTERNATIONAL, INC.
Unaudited Pro Forma Condensed Consolidated Financial Statements
The accompanying unaudited condensed consolidated pro forma balance sheet at
June 30, 1998 includes the historical balance sheet of Oasis Resorts
International, Inc. (formerly Flexweight Corporation) ("Oasis") from NuOasis
International, Inc. ("NuOasis") as of August 31, 1998, and the assets acquired
by Oasis on October 19, 1998 at their historical bases as of June 30, 1998. The
accompanying unaudited pro forma condensed consolidated balance includes the
adjustments necessary to record the reverse acquisition of Oasis under the
purchase method of accounting, assuming the acquisition occurred on June 30,
1998. The accompanying unaudited condensed consolidated balance also reflects
adjustments for the restructuring of the net assets acquired from NuOasis on
July 1, 1998. This pro forma balance sheet also includes an adjustment to
reflect the conversion of notes payable to NuOasis, valued at $7,000,000, into
8.1 million shares of common stock.
The unaudited pro forma condensed consolidated statements of operations for the
year ended June 30, 1998 give effect to the reverse acquisition as if it had
occurred at the beginning of the period presented.
This pro forma presentation has been prepared utilizing historical financial
statements and notes thereto included herein, as well as pro forma adjustments
as described in the notes to unaudited pro forma condensed consolidated
financial statements.
The unaudited pro forma condensed consolidated financial statements are
presented for illustrative purposes only and do not purport to represent what
the Company's results of operations or financial position would have been had
the acquisition described herein occurred on the dates indicated for any future
period or at any future date, and are therefore qualified in their entirety by
reference to and should be read in conjunction with the historical financial
statements and notes thereto of the Company and the historical financial
statements of NuOasis International, Inc.
F-16
<PAGE>
OASIS RESORTS INTERNATIONAL, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
BALANCE SHEET AS OF JUNE 30, 1998
<TABLE>
<CAPTION>
Assets
Acquired Adjustments Pro forma
Oasis from NuOasis Note A Consolidated
<S> <C> <C> <C> <C>
Cash $ 3,402 $ 104,454 $ - $ 107,856
Accounts Receivable - 619,284 - 619,284
Marketable securities 350,000 929,000 - 1,279,000
Inventory - 171,237 - 171,237
Other current assets 77,467 - - 77,467
430,869 1,823,975 - 2,254,844
Receivable from Lessor - 984,892 - 984,892
Lease deposit - 1,000,000 - 1,000,000
Land held for development 1,083,001 - 2,616,999 (1) 3,700,000
First trust deed note security deposit 550,000 - - 550,000
Investment, at cost - 2,000,000 - 2,000,000
Other 24,816 239,701 - 264,517
Goodwill - - 7,425,590 (2) 7,425,590
Total Assets $ 2,088,686 $ 6,048,568 $ 10,042,589 $18,179,843
Liabilities and Stockholders' Equity (Deficit)
Accounts payable and accrued liabilities 20,000 2,543,645 - 2,563,645
Due Lessor - 1,829,265 - 1,829,265
Due Parent - 1,220,619 - 1,220,619
First trust deed note payable 550,000 - - 550,000
Current portion of note payable to affiliate 601,223 - - 601,223
Total Current Liabilities 1,171,223 5,593,529 - 6,764,752
Note payable to affiliate, net of
current portion 2,823,777 - - 2,823,777
Due affiliate - 13,000,000 (13,000,000) (3) -
Fair value of notes payable due Parent 7,000,000 (4)
- - (7,000,000) (5) -
Total Liabilities 3,995,000 18,593,529 (13,000,000) 9,588,529
Stockholders' Deficit: -
Common stock & additional paid-in capital 4,331,458 10,345,833 8,136,275 (2) 28,482,108
13,000,000 (3)
(7,000,000) (4)
7,000,000 (5)
(3,000,000) (6)
(4,331,458) (8)
Deficit accumulated during the
development stag (6,237,772) (13,369,089) 6,237,772 (7)(13,369,089)
Accumulated other comprehensive loss - (521,705) - (521,705)
Notes receivable from Resorts - (9,000,000) 3,000,000 (6) (6,000,000)
Total Stockholders' Equity (Deficit) (1,906,314) (12,544,961) 23,042,589 8,591,314
Total Liabilities and Stockholders'
Equity (Deficit) $ 2,088,686 $ 6,048,568 $ 10,042,589 $ 18,179,843
</TABLE>
See notes to Unaudited Pro Forma Condensed Consolidated Financial Statements
F-17
<PAGE>
OASIS RESORTS INTERNATIONAL, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JUNE 30, 1998
<TABLE>
<CAPTION>
Assets
Acquired Adjustments Pro forma
Oasis from NuOasis Note B Consolidated
<S> <C> <C> <C> <C>
Revenues $ - $ 5,292,604 $ - $ 5,292,604
Cost of revenues - 5,512,702 - 5,512,702
Gross profit (loss) - (220,098) - (220,098)
Expenses:
Non-cash compensation 2,361,521 - - 2,361,521
Selling, general and
administrative expenses - 1,244,870 - 1,244,870
Impairment of long-lived assets - 3,453,000 (3,453,000) (9) -
Other 87,593 31,591 831,924 (10) 951,108
Total costs and expenses 2,449,114 4,729,461 (2,621,076) 4,557,499
Net income $ (2,449,114) $ (4,949,559) $2,621,076 $ (4,777,597)
Weighted Average Shares
Outstanding - Basic and Dilutive 986,598 10,724,093
Net Loss Per Share $ (2.48) $ (.45)
</TABLE>
See notes to Unaudited Pro Forma Condensed Consolidated Financial Statements
F-18
<PAGE>
OASIS RESORTS INTERNATIONAL, INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
NOTE A: UNAUDITED PRO FORMA CONDENSED BALANCE SHEET AS OF JUNE 30, 1998
The following pro forma adjustments to the unaudited condensed consolidated
balance sheet are as if the mergers had been completed as of June 30, 1998 and
are not necessarily indicative of what would have occurred if the Merger
actually had been completed as of such date.
(1) Adjustment to record fair value of land based on independent appraisal.
(2) Adjustment to record purchase price of Oasis by NuOasis totaling
$8,136,275 based on 8,136,275 shares retained by Oasis shareholders.
To also record excess of purchase price over the fair value of the net
assets acquired to goodwill.
(3) To record cancellation of amount due affiliate.
(4) Adjustment to record the fair value of note payable to NuOasis.
(5) Adjustment to record conversion of note payable to NuOasis into
8.1 million shares of common stock.
(6) Exchange of note receivable from Resorts for additional assets.
(7) Adjustment to eliminate historical accumulated deficits of $6,237,772.
(8) Adjustment to eliminate the historical common stock and additional
paid-in capital, as a result of the reverse acquisition.
NOTE B: UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF
OPERATIONS FOR THE YEAR ENDED JUNE 30, 1998
The following pro forma adjustment to the Unaudited Pro forma Condensed
Consolidated Statement of Operations are as if the Merger had been completed at
the beginning of the earliest period presented and are not indicative of what
would have occurred had the Merger and related transactions actually been made
as of such date.
(9) To eliminate a non-recurring transaction.
(10) To record amortization of goodwill.
F-19
