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FORM 10-QSB
SECURITIES & EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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(Mark One)
X Quarterly Report Under Section 13 or 15(d) of the Securities
--- Exchange Act of 1934
For the Quarterly period ended September 30, 1995
or
Transition Report Pursuant to Section 13 or 15(d) of the
--- Securities Exchange Act of 1934
For the Transition period from to
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Commission File Number 0-18864
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DEBBIE REYNOLDS HOTEL & CASINO, INC.
(Exact name of registrant as specified in its charter)
NEVADA 88-0335924
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
305 CONVENTION CENTER DRIVE, LAS VEGAS, NEVADA 89109
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(Address of principal executive offices - Zip Code)
(702) 734-0711
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(Registrant's telephone number, including area code)
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(Former name, former address, or 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
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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.
9,913,631 common shares were outstanding as of November 17, 1995.
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This filing consisting of 16 sequentially numbered pages. The exhibit index is
located at sequentially numbered page 15.
Page 1 of 16
<PAGE>
FORM 10-QSB
DEBBIE REYNOLDS HOTEL & CASINO, INC.
FORM 10-QSB FOR THE QUARTER ENDED SEPTEMBER 30, 1995
TABLE OF CONTENTS
Page
----
PART I. FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Balance Sheets:
As of September 30, 1995 (unaudited) and December 31, 1994 3
Unaudited Consolidated Statement of Operations:
For the nine months ended September 30, 1995 and 1994 4
For the three months ended September 30, 1995 and 1994 5
Unaudited Consolidated Statements of Cash Flows:
For the nine months ended September 30, 1995 and 1994 6
Notes to Consolidated Financial Statements 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION 11
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS 14
ITEM 2. CHANGES IN SECURITIES 14
ITEM 3. DEFAULTS UPON SENIOR SECURITIES 15
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 15
ITEM 5. OTHER INFORMATION 15
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 15
SIGNATURES 16
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Page 2 of 16
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Part I. Item 1. Financial Statements
DEBBIE REYNOLDS HOTEL & CASINO, INC.
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 1995 AND DECEMBER 31, 1994
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
ASSETS 1995 1994
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(Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 20,000 $ 112,000
Accounts receivable 1,054,000 1,131,000
Other 587,000 455,000
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Total current assets 1,661,000 1,698,000
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Land and building 6,758,000 5,057,000
Furniture and equipment 4,642,000 2,342,000
Construction in progress -- 2,917,000
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11,400,000 10,316,000
Less accumulated depreciation 1,618,000 889,000
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Net property and equipment 9,782,000 9,427,000
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Other assets:
Deposits and other 1,670,000 1,399,000
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Total assets $ 13,113,000 $ 12,524,000
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt $ 834,000 $ 535,000
Accounts payable and accrued liabilities 2,673,000 1,804,000
Other 738,000 433,000
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Total current liabilities 4,245,000 2,772,000
Long-term debt, net of current maturities 7,300,000 6,627,000
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Total liabilities 11,545,000 9,399,000
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Commitments and contingencies
Shareholders' equity:
Preferred stock, $.0001 par value. Authorized 50,000,000
shares, 2,000,000 designated Series AA, 320,594 and 667,904
shares issued and outstanding, respectively
--
Common stock, $.0001 par value. Authorized 25,000,000
shares, 9,853,572 and 8,083,904 shares issued and
outstanding, respectively
1,000 1,000
Additional paid-in capital 11,765,000 9,547,000
Accumulated deficit (10,198,000) (6,423,000)
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Total shareholders' equity 1,568,000 3,125,000
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Total liabilities and shareholders' equity $ 13,113,000 $ 12,524,000
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</TABLE>
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Page 3 of 16
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FORM 10-QSB
DEBBIE REYNOLDS HOTEL & CASINO, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
(UNAUDITED)
<TABLE>
<CAPTION>
1995 1994
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<S> <C> <C>
Revenue:
Timeshare $ 3,078,000 $ 1,333,000
Rooms 1,919,000 2,154,000
Showroom 1,416,000 1,143,000
Restaurant -- 310,000
Museum 301,000 --
Other 704,000 512,000
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Total revenue 7,418,000 5,452,000
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Operating expenses:
Timeshare 2,224,000 947,000
Rooms 1,282,000 1,098,000
Showroom 1,858,000 1,431,000
Restaurant 468,000 569,000
Museum 223,000 --
General and administrative costs 3,163,000 4,439,000
Depreciation and amortization 884,000 576,000
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Total operating expenses 10,102,000 9,060,000
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Loss from operations (2,684,000) (3,608,000)
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Other income (expense):
Relief of debt -- 7,000
Interest expense (1,091,000) (394,000)
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Total other income
(expense) (1,091,000) (387,000)
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Net loss $ (3,775,000) $ (3,995,000)
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Loss per weighted-average common
and common share equivalents
outstanding:
Net loss per share $ (.46) $ (.62)
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Weighted-average number of
common shares and common
share equivalents
outstanding 8,171,970 6,436,493
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</TABLE>
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Page 4 of 16
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FORM 10-QSB
DEBBIE REYNOLDS HOTEL & CASINO, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
(UNAUDITED)
<TABLE>
<CAPTION>
1995 1994
---- -----
<S> <C> <C>
Revenue:
Timeshare $ 684,000 $1,333,000
Rooms 614,000 755,000
Showroom 431,000 375,000
Restaurant -- 119,000
Museum 117,000 --
Other 331,000 177,000
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Total revenue 2,177,000 2,759,000
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Operating expenses:
Timeshare 475,000 947,000
Rooms 445,000 321,000
Showroom 549,000 505,000
Restaurant 468,000 257,000
Museum 118,000 --
General and administrative costs 920,000 1,568,000
Depreciation and amortization 373,000 157,000
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Total operating expenses 3,348,000 3,755,000
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Loss from operations (1,171,000) (996,000)
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Other income (expense):
Interest income -- 2,000
Interest expense (289,000) (202,000)
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Total other income (expense) (289,000) (200,000)
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Net loss $(1,460,000) $(1,196,000)
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Loss per weighted-average common and common
share equivalents outstanding:
Net loss per share $ (.18) $ (.15)
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Weighted-average number of common
shares and common share equivalents
outstanding 8,289,830 7,727,292
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</TABLE>
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Page 5 of 16
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FORM 10-QSB
DEBBIE REYNOLDS HOTEL & CASINO, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
(UNAUDITED)
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net loss for the period $(3,775,000) $(3,995,000)
Adjustments to reconcile net income to net
cash provided by operations 1,675,000 678,000
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Net cash used in operating activities (2,100,000) (3,317,000)
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Cash flows from investing activities:
Purchases of property and equipment (1,084,000) (2,746,000)
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Net cash used in investing activities (1,084,000) (2,746,000)
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Cash flows from financing activities:
Additional investments from shareholder 2,218,000 3,747,000
Net increase in long-term debt 874,000 2,926,000
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Net cash provided by financing activities 3,092,000 6,673,000
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Net increase (decrease) in cash (92,000) 610,000
Cash at beginning of period 112,000 306,000
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Cash at end of period $ 20,000 $ 916,000
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Supplemental disclosures of cash flow
information:
Interest paid on borrowings $ 1,091,000 $ 171,000
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</TABLE>
Supplemental disclosures of noncash investing and financing
activities:
In March 1994, a subsidiary of the Company acquired
Debbie Reynolds Hotel & Casino, Inc. (DRHC) in exchange
for issuing 2,350,833 shares of common stock.
The Company fully divested itself of its wholly-owned
subsidiary, SWTV Production Services, Inc., (SWTV) in
exchange for the 2,126,540 shares of the Company's
common stock owned by the Company's former President.
The 2,126,540 shares were canceled on March 31, 1994.
In March 1994, an officer, director and principal
shareholder made an additional capital contribution
through the conversion of $1,761,000 of debt to equity.
In March 1994, a subsidiary of the Company acquired
Maxim Properties Company (Maxim) in exchange for
issuing 2,850,833 shares of common stock valued at
$400,000.
In March 1994, certain of the Company's lenders and
related parties converted debt of $3,264,000 in
exchange for 1,284,842 shares of common stock.
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Page 6 of 16
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FORM 10-QSB
DEBBIE REYNOLDS HOTEL & CASINO, INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
SEPTEMBER 30, 1995 AND DECEMBER 31, 1994
(1) BASIS OF PRESENTATION
(A) CORPORATE ORGANIZATION
The accompanying consolidated financial statements
include the accounts of Debbie Reynolds Hotel & Casino,
Inc., formerly Halter Venture Corporation (Halter) and
its wholly-owned subsidiaries Debbie Reynolds Management
Company, Inc., formerly Debbie Reynolds Hotel & Casino,
Inc. (DRHC) and Debbie Reynolds Resorts, Inc. (DRRI)
(collectively the Companies). The December 31, 1994
balance sheet data was derived from audited financial
statements of the Debbie Reynolds Hotel & Casino, Inc.,
but does not include all disclosures required by
generally accepted accounting principles. Users of
financial information provided for interim periods should
refer to the annual financial information and footnotes
contained in the Annual Report on Form 10-KSB when
reviewing the interim financial results presented herein.
All intercompany accounts and transactions have been
eliminated in consolidation.
In the opinion of management, the accompanying unaudited
interim financial statements are prepared in accordance
with the instructions on Form 10-QSB and contain all
material adjustments, consisting only of normal recurring
adjustments, necessary to present fairly the financial
condition, results of operations and cash flows of the
Company for the respective interim periods presented.
The current period results of operations are not
necessarily indicative of results which ultimately will
be reported for the full year ending December 31, 1995.
On November 18, 1994, the shareholders of the Company
elected at their annual shareholders' meeting to change
the name of the Company from Halter Venture Corporation
to Debbie Reynolds Hotel & Casino, Inc.
(B) MERGER
Effective February 11, 1994, Halter entered into an
Agreement of Merger and Plan of Reorganization, as
amended and restated on March 10, 1994 (Agreement), with
Maxim Properties Company (Maxim), a privately held
Colorado corporation, DRHC and Hamlett Production, Ltd.
(HPL), both privately held Nevada corporations, and
others. The mergers contemplated by the Agreement were
consummated as of March 22, 1994. Under the Agreement,
HPL Acquisition Corporation, a wholly-owned subsidiary of
Halter, merged with and into DRHC, formerly HPL, the
surviving corporation (the DRHC Merger). In addition,
MPC Acquisition Corporation, another wholly-owned
subsidiary of Halter, merged with and into Maxim, the
surviving corporation (the Maxim Merger). The DRHC
Merger and the Maxim Merger are referred to herein
collectively as the "Mergers."
Pursuant to the Mergers, Halter acquired all of the
outstanding securities of DRHC and Maxim in exchange for
the issuance of 2,850,833 shares of Halter's common stock
to the Maxim shareholders and other related parties and
2,350,833 shares of Halter's common stock to the DRHC
shareholder. Prior to the closing, DRHC merged with and
into HPL, and
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Page 7 of 16
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FORM 10-QSB
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DEBBIE REYNOLDS HOTEL & CASINO, INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS, Continued
HPL changed its name to Debbie Reynolds Hotel & Casino,
Inc. In connection with the Mergers, DRHC obtained
financing consisting of convertible promissory notes
in the amount of $2,553,500 and one other note of
$800,000. In conjunction with the Mergers, the
convertible notes were converted into 851,167 shares
of Halter's common stock. In connection with the Maxim
merger, $300,000 of the other note was contributed to
the Company.
In conjunction with the Mergers, pursuant to a
Divestiture Agreement dated March 23, 1994, Halter
divested itself of its wholly-owned subsidiary, SWTV
Production Services, Inc. (SWTV), to Halter's former
President in exchange for the 2,126,540 shares of common
stock of Halter owned by the former President. The
2,126,540 shares were then canceled on March 31, 1994.
SWTV was acquired by Halter on April 22, 1993 and from
that time until divestiture conducted the sole business
operations of Halter.
For accounting purposes, the Mergers were accounted for
as a recapitalization of DRHC, with DRHC the acquirer and
the surviving corporation. The Company continued to
operate under the Halter name until the shareholders
meeting in November 1994, when it was changed to DRHC.
(C) DESCRIPTION OF BUSINESS
DRHC owns and operates a hotel, gift shop and showroom
and leases space to a third party for the operation of a
gambling casino and leases space to an affiliate for the
operation of a bar and restaurant located on Convention
Center Drive in Las Vegas, Nevada (collectively, the
Property). Additionally, during the quarter ended March
31, 1995, the Company completed construction on the
Debbie Reynolds Hollywood Movie and Memorabilia Museum
(Museum), which opened on April 1, 1995. The Company's
operations also include the development and sale of
timesharing units in the Debbie Reynolds Hotel (Hotel)
through DRRI. The Company obtained a timeshare license
which was granted by the Nevada Real Estate Board on
June 28, 1994.
On April 20, 1994, DRHC entered into an agreement with
Hollywood Restaurant, Inc. to terminate the existing
restaurant lease and began operating the restaurant,
"Celebrity Cafe". In August 1994, the restaurant was
leased to the affiliate that operates the bar and liquor
operations.
(2) CAPITAL STOCK TRANSACTIONS
See (Item 2) Management's Discussion and Analysis, (2)
Liquidity and Capital Resources, for additional discussions
of the Company's capital stock transactions.
(3) BORROWINGS
On March 22, 1994, the Company obtained a $2,500,000 loan
from Bennett Management & Development Corp. (Bennett), the
proceeds of which have been used to replace an existing
mortgage on the Hotel and for general corporate purposes.
The loan bears interest at 13% and is
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Page 8 of 16
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FORM 10-QSB
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DEBBIE REYNOLDS HOTEL & CASINO, INC.
Notes to Unaudited Financial Statements, Continued
due March 22, 1997. The loan requires principal and interest payments
equal to $1,200 per timeshare interval sold. In consideration of the loan
the Company issued Bennett 25,000 shares of its common stock.
Ms. Reynolds, a stockholder and chairman of the board of directors of the
Company has personally guaranteed the loan. Bennett has waived the
principal and interest payments since May 15, 1995.
In June 1994, the Company obtained a $1,000,000 loan from TPM
Financial/Source Capital, the proceeds were principally used to continue
construction of the Museum and for general corporate purposes. The loan
bears interest at 13%. The loan requires principal and interest payments
equal to $1,000 per timeshare interval sold. The loan is secured by a
second deed of trust. The loan is due June 15, 1996.
In December 1994, the Company obtained a $1,100,000 loan from TPM
Financial/Source, the proceeds were principally used to continue
construction of the Museum and for general corporate purposes. The loan
bears interest at the greater of 12% or 4% over prime and is due December
1, 1996. The loan is secured by a third deed of trust. The loan requires
principal and interest payments equal to $1,500 per time share interval
sold.
In January 1995, World Venture Trust, an unaffiliated company, loaned the
Company $275,000. The loan bore interest at 10% and was due on April 26,
1995. The loan was secured by the Company's real and personal property,
including the Debbie Reynolds Hotel & Casino. The loan was convertible, at
the option of the holder, after maturity, into 200,000 shares of the
Company's common stock. The Company paid off this loan in September of
1995.
In February 1995, the Company obtained a $525,000 loan from Bennett, the
proceeds of which were principally used in the construction of the museum,
timeshare conversions and for general corporate purposes. The loan bears
interest at 13% and is due on March 22, 1997.
In April 1995, the Company obtained a $500,000 loan from TPM
Financial/Source Capital, the proceeds of which were principally used in
the construction of the museum and for general corporate purposes. The
loan bore interest at 13% and was due June 25, 1995. This loan was issued
as an addition to the lenders second mortgage. The company paid off this
loan in November of 1995.
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Page 9 of 16
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FORM 10-QSB
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DEBBIE REYNOLDS HOTEL & CASINO, INC.
Notes to Unaudited Financial Statements, Continued
In August 1995, the company obtained a $2,000,000 loan from Bennett Funding
International. Ltd., the proceeds of which were principally used to pay
off existing debt and for general corporate purposes, $340,000 of which was
advanced to the Company in May of 1995. The loan bears interest at 14% and
is due August 23, 1999. The loan is secured by the company's real and
personal property, including Debbie Reynolds Hotel & Casino. Ms. Reynolds,
a stockholder and chairman of the board of the Company, has personally
guaranteed the loan.
(4) CONTINGENCIES
The Company and its subsidiaries are defendants in a number of lawsuits,
currently pending. See Part II (Other Information), Item 1 (Legal
Proceedings) for a description of these lawsuits against the Company.
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Page 10 of 16
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FORM 10-QSB
PART I. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
(1) OVERVIEW
The accompanying consolidated financial statements include the accounts of
Debbie Reynolds Hotel & Casino, Inc. (the Company), formerly Halter Venture
Corporation (Halter) and its present wholly-owned subsidiaries, Debbie
Reynolds Management Company, Inc., formerly Debbie Reynolds Hotel & Casino,
Inc. (DRHC) and its wholly-owned subsidiary, Debbie Reynolds Resorts, Inc.
(DRRI). The accompanying consolidated financial statements reflect the
historical operations of DRHC and DRRI only and do not include the
financial results of Halter's former wholly owned subsidiary, SWTV
Production Service, Inc., which comprised substantially all of the
operating results reported in Halter's 1993 Annual Report on Form 10-KSB.
The mergers discussed below have been accounted for as a recapitalization
of the Company with DRHC as the acquiror and survivor.
Effective February 11, 1994, Halter entered into an agreement of merger and
plan of reorganization as amended and restated on March 10, 1994 with DRHC
and others. Under the agreement HPL Acquisition Corporation, a wholly-
owned subsidiary of the Company merged with and into DRHC with the
surviving corporation being DRHC and its subsidiary, DRRI. Pursuant to the
merger, Halter acquired all of the outstanding securities of DRHC. In
conjunction with the mergers and pursuant to a divestiture agreement,
Halter divested itself of its wholly-owned subsidiary SWTV Production
Services, Inc.
On November 18, 1994, the shareholders of the Company elected at their
annual shareholders' meeting to change the name of the Company from Halter
Venture Corporation to Debbie Reynolds Hotel & Casino, Inc.
(2) LIQUIDITY AND CAPITAL RESOURCES
In January 1995, World Venture Trust, an unaffiliated company, loaned the
Company $275,000. The loan bore interest at 10% and was due on April 26,
1995. The loan was secured by the Company's real and personal property,
including the Debbie Reynolds Hotel & Casino. The loan was convertible, at
the option of the holder, after maturity, into 200,000 shares of the
Company's common stock. The company paid off this loan in September of
1995.
In February 1995, the Company obtained a $525,000 loan from Bennett
Management & Development (Bennett), the proceeds of which were principally
used in the construction of the museum, timeshare conversions and for
general corporate purposes. The loan bears interest at 13% and is due on
March 22, 1997.
In April 1995, the Company obtained a $500,000 loan from TPM
Financial/Source Capital, the proceeds of which were principally used in
the construction of the museum and for general corporate purposes. The
loan bore interest at 13% and was due June 25, 1995. This loan was issued
as an addition to the lenders second mortgage. The loan was paid off in
November 1995.
In August 1995, the Company obtained an additional $2,000,000 loan from
Bennett, the proceeds of which were principally used to pay off existing
debt and for general corporate purposes, $340,000 of which was advanced to
the Company in May of 1995. The loan bears interest at 14% and is
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FORM 10-QSB
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MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION, CONTINUED
due August 25, 1999. This loan is secured by the company's real and
personal property, including the Debbie Reynolds Hotel & Casino. Ms.
Reynolds, a stockholder and chairman of the board of the Company, has
personally guaranteed the loan.
The Company is currently in default in the payment of various accounts
payable aggregating approximately $1,800,000.
In August 1995, the Company offered all holders of the company's units
issued pursuant to the company's Private Placement Memorandums dated March
25, 1994 and November 17, 1994 the opportunity to convert the series of
Series AA Preferred Stock and Debentures constituting part of the units
into restricted shares of the company's Common Stock. Each Series AA
Preferred Stock and Debenture converted into one share of the company's
common stock at the reduced conversion prices of $2.00 and $2.25,
respectively. The total dollar amount converted from the Series AA
Preferred and Debentures was $2,822,510 which converted into 1,328,240
shares of the company's common stock. As additional consideration, the
company also offered the unit holders the right to exercise each Class A
Warrant to purchase two shares of Common Stock (instead of one) at an
exercise price of $1.00 (instead of $5.50) for 60 days from the date of the
offer. Pursuant to the Warrant offer, the company received $81,120 from
the exercise of warrants to purchase 81,120 shares of Common Stock.
The Company is in the process of obtaining additional financing for the
company's capital improvements and to repay existing debt, through a
Regulation S offering under the Securities Act of 1933 (the "Act"). As of
November 17, 1995, the Company has sold 300,000 shares of the company's
common stock totalling net proceeds of approximately $205,000. This
offering of shares is directed soley to persons who are not residents of
the United States. The company is offering a maximum of 2,666,666 shares
at $.75 per share. The shares will not be registered under the Act and may
not be offered or sold in the United States absent registration or an
applicable exemption from registration. In addition, the shares are
subject to a minimum six month restriction on transfer.
The Company had a working capital deficiency of $2,584,000 at September 30,
1995, compared with a working capital deficiency of $1,074,000 at December
31, 1994, an increase of $1,309,000. This increase is attributable to
operating expenses incurred during the first nine months of 1995.
With the Company's recurring losses from operations, working capital
deficit, and debt service obligations, its ability to continue as a going
concern is dependent on its ability to obtain additional financing.
Management of the Company is seeking additional sources of financing to
reduce its debt service obligations, complete certain capital projects and
fund its working capital needs for the 1995 fiscal year. In addition,
management is implementing cost control measures to improve the cash flow
of the Company. However, there can be no assurance that these additional
sources of funding will continue to occur.
(3) REVENUES
Revenues for the quarter ended September 30, 1995 totaled $2,177,000 as
compared to $2,759,000 for the quarter ended September 30, 1994,
representing a 21% decrease for 1995. This decrease is
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Page 12 of 16
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FORM 10-QSB
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MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION, CONTINUED
attributable, in large part, to the decrease of $649,000 in timeshare
sales for the quarter ended September 30, 1995.
The loss from operations for the third quarter 1995 totaled $1,171,000 as
compared to the $996,000 loss for the third quarter 1994. Included in the
1995 third quarter loss from operations is $468,000, which represents a bad
debt allowance for the outstanding receivable due from Celebrity
Restaurants, a company wholly-owned by Ms. Reynolds. The Company is
currently in the process of terminating the oral lease agreement with
Celebrity Restaurants and intends to acquire Celebrity Restaurants during
the fourth quarter of 1995.
The profits from timeshare sales during the third quarter of 1995 decreased
by 45.9% as compared to the third quarter of 1994, due to fewer closings.
Additionally, the Company incurred considerable showroom operating expenses
which resulted in the showroom generating a loss of $118,000 for the
quarter ended September 30, 1995. The net loss for the quarter ended
September 30, 1995 totaled $1,460,000 as compared to $1,196,000 for the
quarter ended September 30, 1994.
Revenue for the nine months ended September 30, 1995 totaled $7,418,000 as
compared to $5,452,000 for the nine months ended September 30, 1994,
representing a 36.1% increase for 1995. This increase is attributable, in
large part, to the addition of $1,745,000 in timeshare sales for the nine
months ended September 30, 1995.
The loss from operations for the nine months ended 1995 totaled $2,684,000
as compared to $3,608,000 for the nine months ended September 30, 1994.
The Company incurred considerable showroom operating expenses which
resulted in the showroom generating a loss of $442,000 for the nine months
ended September 30, 1995. The net loss for the nine months ended September
30, 1995 totaled $3,775,000 as compared to $3,995,000 for the nine months
ended September 30, 1994.
(4) INTEREST EXPENSE
Interest expense increased from $394,000 for the nine months ended
September 30, 1994 to $1,091,000 for nine months ended September 30, 1995
as a result of the increase in borrowings.
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Page 13 of 16
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FORM 10-QSB
Part II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
One of the Company's subsidiaries is a defendant in litigation
currently pending. The lawsuit alleges breach of brokers agreement.
The Company's subsidiary filed an answer to the allegations on
February 28, 1994. Management and legal counsel for the Company are
of the opinion that the plaintiff's claim is without merit and the
Company will prevail in defending the suit.
On April 28, 1995, Ronald D. Nitzberg and Ron Nitzberg Associates,
Inc., an unaffiliated corporation, filed a lawsuit against the Company
and others in the District Court of Clark County, Nevada, alleging
breach of contract, slander and other claims, relating to his
employment with the Company. The plaintiffs seek damages in the
amount of approximately $245,000 and an unspecified amount of money
damages. The Company has filed a counterclaim against the plaintiff
alleging breach of fiduciary duty and breach of contract asking for
declaratory relief from consulting and stock agreements.
On April 14, 1995, Edward S. Coleman filed a lawsuit against the
Company and others in the District Court of Clark County, Nevada,
alleging breach of covenant of good faith and fair dealing based on
certain services. The plaintiff seeks unspecified money damages in
excess of $10,000.
On January 26, 1995, American Interval Marketing, Inc., filed a
lawsuit in the District Court of Clark County, Nevada, against the
Company and others, alleging breach of contract and reasonable value
of services. The plaintiff seeks damages of approximately $45,000.
On July 14, 1995, Grand Nevada Hotel Corp., filed a lawsuit in the
District Court of Clark County, Nevada, against the Company, alleging
breach of contract and breach of implied duty of good faith. The
plaintiff seeks damages in excess of $10,000.
On July 27, 1995, Norman Eugene Watson, filed a lawsuit against the
Company and others in the District Court of Clark County, Nevada,
alleging breach of contract, fraud and misrepresentation and other
claims. The plaintiff seeks damages in excess of $10,000.
On August 10, 1995, Fiduciary Trust Company International, as Trustee
of the Taylor-Made Ltd. Defined Benefit Pension Plan, filed a lawsuit
in the District Court of Clark County, Nevada, against the Company and
others, alleging breach of contract and unjust enrichment. The
plaintiff seeks damages in excess of $10,000. The Company is
negotiating a settlement with respect to this lawsuit.
On September 1, 1995, Young Electric Sign Company, filed a law suit in
the District Court of County, Nevada against the company and others,
alleging breach of contract. The plaintiff is seeking damages in
excess of $10,000.
Except as otherwise set forth above, the Company is unable to predict,
at this time, the likelihood of the Company prevailing in the above
lawsuits.
Item 2. CHANGES IN SECURITIES
None
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Page 14 of 16
<PAGE>
FORM 10-QSB
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PART II. OTHER INFORMATION, CONTINUED
Item 3. DEFAULTS UPON SENIOR SECURITIES
The Company is in default in respect to the payment of interest on its
8-3/4% senior subordinated convertible debentures due in October 1996
and November 1998. The total amount of the default as of November 17,
1995 is approximately $115,000.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
Item 5. OTHER INFORMATION
The Company is currently in default under the service agreement with
Raymax Productions, a company wholly-owned by Debbie Reynolds, in the
amount of $550,000.
See "Part I, Item 2, Management's Discussion and Analysis or Plan of
Operation" for a description of a current offering by the Company
under Regulation S of the Securities Act of 1933.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
None
(b) REPORTS ON FORM 8-K
During the quarter ended September 30, 1995 the Registrant filed
the following reports on Form 8-K:
Current report on Form 8-K dated July 21, 1995, reporting Item 5
- Other Events.
Current report on Form 8-K dated August 30, 1995, reporting Item
5 - Other Events.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Page 15 of 16
<PAGE>
FORM 10-QSB
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
DEBBIE REYNOLDS HOTEL & CASINO, INC.
By: /s/ Todd Fisher
---------------------------------------------
Todd Fisher, Chief Executive Officer
Date: November 17, 1995
By: /s/ Todd Fisher
---------------------------------------------
Todd Fisher, Chief Financial Officer
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Page 16 of 16
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