SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 10-QSB
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For Quarter Ended March 31, 1998 Commission File No. 0-18377
NuOASIS RESORTS INC.
(Exact name of registrant as specified in its charter)
Nevada
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification Number)
84-1126818
4695 MacArthur Court, Suite 530, Newport Beach, CA 92660 (Address of
principal executive offices) (Zip Code)
(949) 833-5381
(Registrant's telephone number, including area code)
N/A
(Former Address, if changed since last report)
N/A
(Former Zip Code, if changed since last report)
N/A
(Former telephone number, 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 shorter period that the Company was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes No X
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes
of capital stock, as of the latest practicable date.
Common Stock $.01 par; 65,930,300 shares as of May 31, 1998.
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NuOASIS RESORTS INC.
INDEX
Page
PART I
Item 1. Financial Statements
Consolidated Condensed Balance Sheet as of
March 31, 1998 (unaudited) ............................1
Consolidated Condensed Statements of Operations for the
Three and Nine Months Ended March 31, 1998
and 1997 (unaudited) ..................................3
Consolidated Condensed Statements of Cash Flows for the
Nine Months Ended March 31, 1998 and 1997 (unaudited)..4
Notes to Consolidated Condensed Financial Statements ........6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations....................10
PART II
Item 1. Legal Proceedings...........................................15
Item 2. Changes In Securities.......................................15
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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<TABLE>
<CAPTION>
NuOASIS RESORTS INC.
Consolidated Condensed Balance Sheets
As of March 31, 1998 (Unaudited)
ASSETS March 31,
1998
(Unaudited)
- ------------------------------------------------------------------------------- ----------------------
<S> <C>
Current assets:
Cash and cash equivalents $ 1,729,902
Accounts receivable, net 341,483
Due from affiliates 2,069,703
Inventory 33,920
Other current assets 255,219
Total current assets 4,430,227
Property and equipment
Food manufacturing equipment 1,068,935
Gaming equipment 1,305,519
Other 144,310
Accumulated depreciation and amortization (1,065,884)
Total property and equipment 1,452,880
Other assets:
Equity investments 5,354,816
Security deposits 1,512,782
Intangible assets, net 2,179,578
Total other assets 9,047,176
TOTAL ASSETS $ 14,930,283
</TABLE>
See accompanying notes to these consolidated condensed financial statements
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<TABLE>
<CAPTION>
NuOASIS RESORTS INC.
Consolidated Condensed Balance Sheets
As of March 31, 1998 (Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
March 31,
1998
(Unaudited)
- ---------------------------------------------------------------------------------- --------------------
<S> <C>
Current liabilities:
Accounts payable, trade $ 401,343
Accrued expenses 1,209,612
Due to affiliates 847,097
Current maturities of long-term debt 349,815
Total current liabilities 2,807,867 Long term liabilities:
Long-term debt 1,523,018
Total long term liabilities 1,523,018
Total liabilities 4,330,885
Commitments and contingencies
Minority interest 3,720,433
Stockholders' equity
Preferred stock, $.01 par value; 25,000,000 shares authorized;
24,000,000 Series D shares issued and outstanding 240,000
Common stock, $.01 par value; 75,000,000 shares authorized;
65,914,300 shares issued and outstanding 659,143
Additional paid-in-capital 53,151,512
Accumulated deficit (37,229,265)
Cost of treasury shares (9,942,425)
Total stockholders' equity 6,878,965
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 14,930,283
</TABLE>
See accompanying notes to these consolidated condensed financial statements
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<TABLE>
<CAPTION>
NuOASIS RESORTS INC.
Consolidated Condensed Statements of Operations
for Three and Nine Months Ended
March 31, 1998 and 1997 (Unaudited)
Three Months Ended Nine Months Ended
March 31, March 31,
---------------------------------------- ----------------------------------------
1998 1997 1998 1997
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
- ------------------------------------------ ------------------- ------------------ ------------------ ------------------
<S> <C> <C> <C> <C>
Gaming revenue $ 182,776 $ - $ 202,841 $ -
Food sales revenue 166,586 348,591 595,090 1,060,737
Total revenue 349,362 348,591 797,931 1,060,737
Cost of food sales 96,139 197,594 342,116 678,460
Total cost of sales 96,139 197,594 342,116 678,460
Gross profit 253,223 150,997 455,815 382,277
Depreciation and amortization 275,279 37,781 405,968 98,449
Legal and professional fees 350,192 472,909 992,342 1,640,356
Loss on sale of assets - 89,213 - 456,943
Write down of goodwill - - - 3,318,107
Selling, general and administrative
expenses 1,747,064 563,497 3,632,909 1,061,544
Minority interest (392,381) - (815,767) -
Operating income (loss) (1,726,931) (1,012,403) (3,759,637) (6,193,122)
Other income (expense):
Equity in income (losses) in affiliates 223,098 (457,974) 395,229 (744,040)
Interest expense (87,485) (74,026) (85,104) (121,932)
Total other income (expense) 135,613 (532,000) 310,125 (865,972)
Net income (loss) before income tax
provision (1,591,318) (1,544,403) (3,449,512) (7,059,094)
Income tax benefit (provision) - - - -
Net income (loss) $ (1,591,318) $ (1,544,403) $ (3,449,512) $ (7,059,094)
Net income (loss) per common share: $ (.03) $ (.03) $ (.07) $ (.15)
Weighted average number of common
shares outstanding used to compute
net income (loss) per common share: 50,754,633 48,453,745 49,478,411 46,199,447
</TABLE>
See accompanying notes to these consolidated condensed financial statements
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<TABLE>
<CAPTION>
NuOASIS RESORTS INC.
Consolidated Condensed Statements of Cash Flows
for the Nine Months Ended
March 31, 1998 and 1997 (Unaudited)
Nine Months Ended
March 31,
-----------------------------------------------------
1998 1997
(Unaudited) (Unaudited)
-------------------------- --------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (3,449,512) $ (7,059,094)
Adjustments to reconcile net income (loss) to net cash
provided (used) by operating activities:
Depreciation and amortization 405,968 98,449
Effect of services exchanged for stock 500,468 323,766
Effect of exercise of options - 5,300
Loss on sale of assets - 456,943
Write off of goodwill - 3,318,107
Minority interest (815,756) -
Equity in losses in affiliates (395,229) 744,040
Increases (decreases) in changes in assets and liabilities:
Accounts receivable and due from affiliate 4,106,961 3,875,096
Inventory 1,253 19,886
Other assets (255,219) (8,253)
Security deposits 461,797 -
Accounts payable (2,547,220) 12,817
Accrued expenses 1,144,058 (188,169)
Due to affiliates (1,314,885) 822,331
Net cash provided (used) by operating activities (2,157,316) 2,421,219
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of leasehold improvements and equipment (52,864) -
Proceeds from sale of assets 1,882,214 524,111
Net cash provided (used) by investing activities 1,829,350 524,111
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds received from issuance of debt 2,031,134 100,000
Proceeds received from repayment of shareholder notes receivable - 198,758
Principal payments on notes payable (550,000) (3,188,686)
Net cash (used) provided by financing activities 1,481,134 (2,889,928)
Net increase (decrease) in cash 1,153,168 55,402
Cash and cash equivalents, beginning of period 576,734 50,436
Cash and cash equivalents, end of period $ 1,729,902 $ 105,838
</TABLE>
See accompanying notes to these consolidated condensed financial statements
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<CAPTION>
NuOASIS RESORTS INC.
Consolidated Condensed Statements of Cash Flows
for the Nine Months Ended
March 31, 1998 and 1997 (Unaudited) (Continued)
Nine Months Ended
March 31,
1998 1997
(Unaudited) (Unaudited)
------------------------- --------------------
<S> <C> <C>
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION
Cash paid for:
Interest $ 28,111 $ 34,336
Income taxes $ - $ -
Non-cash investing and financing activities:
Purchase of Peony Garden (Note 3) for note payable $ - $ -
Exercise of option for reduction of debt $ - $ 29,200
Purchase of NPC (Note 2) for notes payable $ - $ 1,200,000
Purchase of NPC (Note 2) for accrued liability $ - $ 125,000
Effects of the consolidation of Cleopatra Hammamet
Cash $ 563,648 $ -
Account receivable $ 4,133,044 $ -
Gaming equipment $ 1,260,331 $ -
Security deposits $ 1,975,134 $ -
Accounts payables $ 1,429,104 $ -
Stockholders' equity $ 6,485,193 $ -
</TABLE>
See accompanying notes to these consolidated condensed financial statements
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NuOASIS RESORTS INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
March 31, 1998 (Unaudited)
Note 1. General
Description of Business
NuOasis Resorts, Inc., formerly, Nona Morelli's II, Inc. ("Resorts" or the
"Company"), was incorporated in Colorado on February 6, 1989, became public in
1990, and was reincorporated in Nevada in January 1998. Through subsidiaries the
Company (a) develops, owns, leases, manages and operates hotels, gaming casinos
and related operations (b) manufactures and distributes specialty food products,
and (c) invests in and develops real estate interests. As an ancillary operation
to its hotel and gaming operations the Company provides entertainment services
and is a purveyor of food and beverages.
Basis of Presentation
The accompanying unaudited consolidated condensed financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for complete
consolidated financial statements. In the opinion of management, all normal
adjustments, consisting of normal recurring accruals, considered necessary for a
fair presentation have been included. The unaudited consolidated condensed
financial statements include the consolidated condensed balance sheet as of
March 31, 1998, and the related consolidated condensed statements of operations
and cash flows of the Company and its subsidiaries for the three and nine months
ended March 31, 1998 and 1997. These unaudited consolidated condensed financial
statements should be read in conjunction with the audited consolidated financial
statements included in the Company's Form 10-KSB for its fiscal year ended June
30, 1997 ("Fiscal 97"). The results of operations for the three and nine months
ended March 31, 1998 are not necessarily indicative of the operating results for
the full year.
Principles of Consolidation and Management Estimates
The unaudited condensed consolidated financial statements, and references
therein to the Company, include the accounts of the Company and its
subsidiaries: NuOasis Properties Inc. ("NuOasis Properties"), Fantastic Foods
International Inc. ("Fantastic Foods"), ACI Asset Management Inc. ("ACI"),
Casino Management of America, Inc. ("CMA"), NuOasis Laughlin, Inc. ("NuOasis
Laughlin"), NuOasis Las Vegas Inc. ("NuOasis Las Vegas") and NuOasis
International Inc. ("NuOasis International") and its subsidiaries, Cleopatra
Palace Limited ("Cleopatra"), Cleopatra Gammarth Limited ("Cleopatra Gammarth"),
Cleopatra Hammamet Limited ("Cleopatra Hammamet"), and Cleopatra's World Inc.
("Cleopatra's World") . All material inter-company accounts and transactions
have been eliminated in consolidation.
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 the date of such statements, and the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates. In the opinion of management, all normal
adjustments, consisting of normal recurring accruals, considered necessary for a
fair presentation have been included.
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NuOASIS RESORTS INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
March 31, 1998 (Unaudited)
Reclassification of Prior Year Amounts
To enhance comparability, the Fiscal 1997 financial statements have been
reclassified, where appropriate, to conform with the financial statement
presentation used in this current fiscal year ending June 30, 1998 ("Fiscal
1998").
Going Concern
The Company has experienced recurring net losses and has limited liquid
resources. Management's intent is to continue searching for additional sources
of capital and new operating opportunities. The Company intends to continue
operating with minimal overhead through Fiscal 98, with key administrative
functions to be provided by consultants who are compensated primarily in the
form of the Company's common stock. Management estimates that the Company will
need to utilize its common stock to fund its operations through fiscal year
1998. Accordingly, the accompanying unaudited consolidated condensed financial
statements have been presented under the assumption the Company will continue as
a going concern.
Note 2. Significant Events During The Quarter Ended March 31, 1998
In January 1998, the Company received consideration that reduced the principle
balance due under a note due (the "Monterosso Note") and Put/Option Agreement
(the "Put") with the President of Group V Corporation ("GRPV"), formerly a
controlled subsidiary.
Also, in January 1998, the Company effected its reincorporation in the State of
Nevada and, simultaneously, changed its name from Nona Morelli's II Inc. to
NuOasis Resorts Inc.
Note 3. Long-Term Debt
In connection with the opening of the "Casino Cleopatra Hammamet" in December
1997, NuOasis International received loans from the President of the Company and
an unrelated party in the amounts of $780,000 and $289,984, respectively, which
were evidenced by notes bearing interest at 10% per annum and $1,000 per month,
respectively. Both advances have a principal balance of $113,111 and zero,
respectively, and have been classified as long term debt at March 31, 1998 and
is eliminated as an inter-company transaction in consolidation.
In December 1997, NuOasis International issued a note in the amount of $500,000
(the "GRPV Note") in connection with the purchase of Replacement Property (see
Note 2). The subject note bears interest at 6% per annum, is due July 1998 and
has a principal balance of $500,000 at March 31, 1998. In January 1998 Resorts
acquired the GRPV Note as part of a three party exchange and is eliminated as an
inter-company transaction in consolidation.
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NuOASIS RESORTS INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
March 31, 1998 (Unaudited)
Note 4. Commitments and Contingencies
Capital Requirements of Cleopatra, Cleopatra Hammamet and Cleopatra's World
At March 31, 1998, Cleopatra had approximately $1,000,000 remaining to be paid
as security deposits and advance rent before it could take possession of the
Casino Cleopatra Cap Gammarth. Additionally, there was approximately $2,500,000
remaining to be paid for furniture, fixtures and equipment, bankroll and
pre-opening costs before the casino could open for business.
To finance the remaining expenditures on the Casino Cleopatra Cap Gammarth, the
Company is negotiating possible joint ventures with foreign investment groups
and attempting early collections of its receivables. The Casino Cleopatra Cap
Gammarth is expected to be completed in June 1998.
During Fiscal 1997, Cleopatra's World made a partial payment under its Hotel
Lease Agreement related to the Le Palace Hotel (the "Hotel Lease") and the
Cleopatra Palace Resort at Cap Gammarth (the "Gammarth Resort"). In Fiscal 1997
Cleopatra's World filed a request for arbitration in its dispute with the
developer of the Cap Gammarth Resort claiming that the developer had breached
the terms of the Lease by not completing for occupancy, on a timely basis, the
hotel, the shopping arcade, the health club or the beach club comprising the
Resort in accordance with the terms of the Lease, causing Cleopatra's World
significant loss of revenue and profits. In Fiscal 1998 the matter was removed
from the arbitration calendar by mutual agreement between the parties. However,
the dispute was not resolved and, subsequent to the close of the quarter ended
March 31, 1998, Cleopatra's World re-filed its request for arbitration with a
claim for US$15 Million in lost profits and damages. The date for arbitration
has not yet been set.
As to any future projects undertaken by the Company, additional project
financing will be required. Capital investments may include all or some of the
following: acquisition and development of land; acquisition of leasehold
investments and contract rights; and, construction of other facilities. In
connection with development activities relating to potential acquisitions or new
jurisdictions, the Company also makes expenditures for professional services
which are expenses as incurred. The Company's financing requirements would
depend upon actual development costs, the amounts and timing of such
expenditures, the amount of available cash flow from operations and the
availability of other financing arrangements, agreements, selling equity
securities, and selling or borrowing against assets (including current
facilities). The Company may also consider strategic combinations or alliances.
Although there can be no assurance that the Company can effectuate any of the
financing strategies discussed above, the Company believes that if it determines
to seek any additional licenses to operate gaming activities or permits to
conduct hotel operations in other jurisdictions it should be able to raise
sufficient capital to pursue its strategic plan.
If for any reason, Cleopatra, Cleopatra's World or NuOasis International are
unable to borrow or otherwise meet their commitments under the Hotel Lease or
current agreements to provide the furniture, fixtures, equipment and working
capital to open the Casino Cleopatra Cap Gammarth, or to finance the marketing
and operation of the Gammarth Resort in its presently unfinished condition (as a
result of a series of defaults by the developer/lessor), the Company may be
required to intercede and provide the requisite financing and working capital,
or be forced to sell all or a portion of the respective interests, or lose the
respective rights to the projects and properties entirely.
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NuOASIS RESORTS INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
March 31, 1998 (Unaudited)
Note 5. Subsequent Events
During the fourth quarter of Fiscal 1998, the Company entered into agreements
with its subsidiaries - Cleopatra's World, Cleopatra Palace and NuOasis
International - to reposition its international gaming and hotel management
activities along the lines of its two themes - "Cleopatra" and "NuOasis".
In April 1998, Cleopatra Palace transferred certain of its interests to
Cleopatra's World for $13 million in promissory notes. In May 1998, pursuant to
an agreement with Cleopatra Palace, the Company agreed to accept the transfer of
the account receivable due to Cleopatra Palace from Cleopatra Hammamet Limited
("Cleopatra Hammamet") in the principle amount of $1,217,062 and securities
owned by Cleopatra Palace in full satisfaction of the $1,501,722 owed to the
Company by Cleopatra Palace. In June 1998, pursuant to an agreement with
Cleopatra's World, the Company agreed to provide additional working capital in
consideration for an increase in its equity in Cleopatra's World to 60% from 50%
and the Company assigned to Cleopatra's World the Monterosso Note, the Put and
ten (10) negotiable Promissory Notes, each in the principal amount of
$1,000,000.
In connection with the Company's agreement with Cleopatra's World, pursuant to
an agreement with NuOasis International, the Company assigned to NuOasis
International its interest in the Cleopatra Hammamet receivable and NuOasis/GRPV
Note in exchange for NuOasis International providing Cleopatra's World with
2,000,000 shares of the Company's stock.
As a result of these transactions the interests in the Tunisian entities and
Cleopatra's World are owned directly by Resorts, and NuOasis International's
sole asset consists of its 'NuOasis Resort & Casino' theme and its development
stage investments in certain Caribbean projects yet to be acquired.
Also, in June 1998, the Company adopted resolutions to make a distribution of
its equity interest ("Spinoff"), in certain subsidiaries, including Fantastic
Foods, NuOasis Properties, CMA, ACI, NuOasis Laughlin, and NuOasis Las Vegas.
The Company entered into a Distribution Agreement and prepared a Form 10-SB
Registration Statement on each of the subsidiaries in the Spinoff which will be
filed with the Securities and Exchange Commission at some time following the
close of fiscal 1998. In regard to the Spinoffs, the Company is currently
seeking potential underwriters and market makers to secure market makers for the
shares of each of the subsidiaries and underwriters to effect a private
placement of the shares of each such subsidiary to raise working capital for
each entity following the Spinoffs.
On June 14,1998, together with the holder of the Company's Series D Convertible
Preferred Stock, the Company agreed to extend for two (2) years the expiration
of the rights of the Series D Preferred holders(s) right to convert such
preferred stock into shares of the Company's common stock.
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ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(a) Significant Developments During the Quarter Ended March 31, 1998
Group V Corporation
In January 1998, the Company received consideration that reduced the principle
balance due under the Monterosso Note and the Put to $1,080,000 and $720,000,
respectively, at March 31, 1998.
(b) Going Concern
The Company has experienced recurring net losses, has limited liquid
resources, negative working capital. Management's intent is to continue
searching for additional sources of capital and, in the case of NuOasis
International, new casino gaming and hotel management opportunities. In the
interim, the Company intends to continue operating with minimal overhead and key
administrative functions provided by consultants who are compensated in the form
of the Company's common stock. It is estimated, based upon its historical
operating expenses and current obligations, that the Company may need to utilize
its common stock for future financial support to finance its needs during fiscal
1998. Accordingly, the accompanying consolidated financial statements have been
presented under the assumption the Company will continue as a going concern.
(c) Liquidity and Capital Resources
Working capital, cash and cash equivalents and current ratios are
reflected in the following table:
March 31, June 30,
1998 1997
(unaudited) (audited)
---------------------- -------------------
Working Capital $ 1,622,360 $ 1,027,674
Cash and Cash Equivalents $ 1,729,902 $ 576,734
Current Ratio 1.58 1.35
(d) Capital Expenditures
General
Resorts has no commitments for material capital expenditures, but its
subsidiaries are seeking financing commitments to complete their various
projects, as follows:
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Capital Requirements
At March 31, 1998, NuOasis International had approximately $1,000,000
remaining to be paid as security deposits and advance rent before it could take
possession of the Casino Cleopatra Cap Gammarth. Additionally, there was
approximately $2,500,000 remaining to be paid for furniture, fixtures and
equipment, bankroll and pre-opening costs to open the casino.
To finance the remaining expenditures on the Cap Gammarth Casino, the
Company is negotiating possible joint ventures between NuOasis International and
foreign investment groups, and attempting early collections of its receivables.
During Fiscal 1997, Cleopatra's World made a partial payment on the Hotel
Lease related to the Le Palace Hotel and the Cap Gammarth Resort. In Fiscal 1997
Cleopatra's World filed a request for arbitration in its dispute with the
developer of the Cap Gammarth Resort claiming that the developer had breached
the terms of the Lease by not completing for occupancy, on a timely basis, the
hotel, the shopping arcade, the health club or the beach club comprising the Cap
Gammarth Resort in accordance with the terms of the Lease, causing Cleopatra's
World significant loss of revenue and profits. In Fiscal 1998 the matter was
removed from the arbitration calendar by mutual agreement between the parties,
and, subsequent to March 31, 1998, Cleopatra's World re-filed its claim for
US$15 Million in lost profits and damages. The dispute has not yet been
resolved.
As to any future projects undertaken by the Company, additional project
financing will be required. Capital investments may include all or some of the
following: acquisition and development of land; acquisition of leasehold
investments and contract rights; and, construction of other facilities. In
connection with development activities relating to potential acquisitions or new
jurisdictions, the Company also makes expenditures for professional services
which are expenses as incurred. The Company's financing requirements would
depend upon actual development costs, the amounts and timing of such
expenditures, the amount of available cash flow from operations and the
availability of other financing arrangements, agreements, selling equity
securities, and selling or borrowing against assets (including current
facilities). The Company may also consider strategic combinations or alliances.
Although there can be no assurance that the Company can effectuate any of the
financing strategies discussed above, the Company believes that if it determines
to seek any additional licenses to operate gaming or permits to conduct hotel
operations in other jurisdictions it will be able to raise sufficient capital to
pursue its strategic plan.
If for any reason, Cleopatra, Cleopatra's World or NuOasis International
are unable to borrow or otherwise meet their commitments under the Hotel Lease
or current agreements to provide the furniture, fixtures, equipment and working
capital to open the Casino Cleopatra Cap Gammarth, or to finance the marketing
and operation of the Cap Gammarth Resort in its presently unfinished condition
(as a result of a series of defaults by the developer/lessor), the Company may
be required to intercede and provide the requisite financing and working
capital, or be forced to sell all or a portion of the respective interests, or
lose the respective rights to the projects and properties entirely.
(e) Cash Flows
Cash used by operating activities was $2,157,316 for the nine months ended
March 31, 1998 as compared to $2,421,219 cash provided by operating activities
for the comparable period last year. The change is primarily attributable to the
write off of goodwill (described below) of $3.3 million during the corresponding
period last year. There was no similar write off during the current period.
Also, the consolidation of Cleopatra Hammamet caused additional usage of cash
during the current period.
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Cash provided by investing activities was $1,829,350 for the nine months
ended March 31, 1998 as compared to $524,111 for the comparable period last
year. The change is primarily attributable to the conversion of its marketable
equity securities into cash during the current period.
Cash provided by financing activities was $1,481,134 for the nine months
ended March 31, 1998 as compared to $2,889,928 used by financing activities for
the comparable period last year. The change is primarily attributable to the
Company's newly operational Hammamet Casino issuing additional debt in the
approximate amount of $1.2 million for its working capital purposes and, the
Company making lower principal payments of approximately $2.6 million during the
current period over the same time last year.
(f) Results of Operations
Three Months Ended March 31, 1998 Compared to Three Months Ended
March 31, 1997
The Company's total food sales for the three months ended March 31,
1998 were $166,586 as compared to $348,591 for the comparable period last year,
resulting in a decrease of $182,005. The change is primarily attributable to
unrenewed and expired co-packing agreements.
The Company's total cost of food sales for the three months ended March
31, 1998 were $96,139 as compared to $197,594 for the comparable period last
year, resulting in a decrease of $101,455. The change in total cost of food
sales is primarily attributable to the lower volume experienced during the
current quarter. Relative total cost of sales remained approximately the same
from period to period.
The Company's total gaming revenues for the three months ended March
31, 1998 were $182,776 as compared to none for the comparable period last year.
The increase is attributable to the operations of the new Hammamet Casino. Since
the Casino opened December 7, 1997, there were no gaming revenues earned during
the same period last year.
The Company's total legal and professional fees, and selling, general
and administrative expenses were $350,192 and $1,747,064, respectively, for the
three months ended March 31, 1998, as compared to $472,909 and $563,497,
respectively, for the comparable period last year. The decrease in legal and
professional fees is primarily attributable to fewer professional services
provided by consultants under professional advisory and management agreements
over the same period last year. The increase in selling, general and
administrative expenses is primarily attributable to operations of the new
Hammamet Casino.
The Company's total operating loss for the three months ended March 31,
1998 was $1,726,931 as compared to an operating loss of $1,012,403 for the
comparable period last year. The increase of approximately $700,000 is primarily
attributable to the operations of the new Hammamet Casino which caused selling,
general and administrative expenses to increase.
The Company's total other income for the current period was $135,613,
as compared to $532,000 of other expenses for the same period last year. The
improvement is primarily attributable to income from equity investments, namely
Cleopatra's World Inc., in the amount of $223,098 as opposed to losses from
equity investments of $387,882 during the same period last year. Selected
financial information for Cleopatra's World Inc. is as follows:
[NRI\10Q\033198.QSB]-10
12
<PAGE>
CLEOPATRA'S WORLD INC.
Selected Financial Information (unaudited)
For the Three Months Ended
31 March,
----------------------------------------
1998 1997
------------------ -------------------
Revenues $ 1,800,074 $ 739,927
Cost of operations $ 1,353,878 $ 1,515,692
Net profit (loss) $ 446,196 (775,765)
Nine Months Ended March 31, 1998 Compared to Nine Months Ended March
31, 1997
The Company's total food sales for the nine months ended March 31, 1998
were $595,090 as compared to $1,060,737, for the comparable period last year,
resulting in a decrease of $465,647. The decrease is primarily attributable to
unrenewed and expired co-packing agreements.
The Company's total cost of food sales for the nine months ended March
31, 1998 was $342,116 as compared to $678,460 for the comparable period last
year, resulting in a decrease of $336,344. The decrease in total cost of food
sales is again, primarily attributable to the lower volume experienced during
the current period. The change in sales mix caused a slight improvement of 7% in
relative total cost of sales.
The Company's total gaming revenues for the nine months ended March 31,
1998 were $202,841 as compared to none for the comparable period last year. The
increase is attributable to the operations of the new Hammamet Casino. Since the
Casino opened December 7, 1997, there were no gaming revenues earned during the
same period last year.
The Company's total legal and professional fees, and selling, general
and administrative expenses were $992,342 and $3,632,909, respectively, for the
nine months ended March 31, 1998, as compared to $1,640,356 and $1,061,544,
respectively, for the comparable period last year. The change in legal and
professional fees is primarily attributable to fewer professional services
provided by consultants under professional advisory and management agreements
over the same period last year whereas the increase in selling, general and
administrative expenses is primarily attributable to the operations of the new
Hammamet Casino.
As a result of the acquisition of NPC, during Fiscal 1997, by Group V
(the Company's former controlled subsidiary), the excess of the purchase price
over the fair market value of the net assets acquired was approximately
$3,318,107 and was assumed to be allocated to goodwill. Due to Group V's and
NPC's historical negative cash flows from operations and working capital
deficit, the goodwill of $3,318,107 was immediately written off due to the
uncertainty of realizing any future benefit from this asset ad included in the
Company's Statement of Operations. There was no such write off during the
current period this year.
[NRI\10Q\033198.QSB]-10
13
<PAGE>
The Company's total operating loss for the nine months ended March 31,
1998 was $3,759,637 as compared to an operating loss of $6,193,122 for the
comparable period last year. The decrease of approximately $2.4 million is
primarily attributable to the operations of the new Hammamet Casino discussed
above and the write off of goodwill incurred during the same period last year,
whereas there was no such write off during the current period this year.
The Company's total other income for the current period was $310,125,
as compared to $865,972 of other expenses for the same period last year. The
improvement is primarily attributable to income from equity investments, namely
Cleopatra's World Inc., in the amount of $395,229 as compared to losses from
equity investments of $503,646 during the same period last year. Selected
financial information for Cleopatra's World Inc. is as follows:
CLEOPATRA'S WORLD INC.
Selected Financial Information (unaudited)
For the Nine Months Ended
31 March,
----------------------------------------
1998 1997
------------------ -------------------
Revenues $ 4,618,455 $ 1,352,608
Cost of operations $ 3,827,997 $ 2,359,900
Net profit (loss) $ 790,458 $ (1,007,292)
[NRI\10Q\033198.QSB]-10
14
<PAGE>
PART II: OTHER INFORMATION
Item 1. Legal Proceedings
The Company knows of no significant changes in the status of the
pending litigation or claims against the Company as described in
Form 10-KSB for the Company's fiscal year ended June 30, 1997.
Item 2. Changes In Securities
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission Of Matters To A Vote Of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits And Reports On Form 8-K
(a) Exhibits:
Exhibit Number Description of Exhibit
27 Financial Data Schedule
(b) Reports on Form 8-K:
None
[NRI\10Q\033198.QSB]-10
15
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Company has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.
NuOASIS RESORTS INC.
Dated: July 3, 1998 By: /s/ Fred G. Luke
------------------------------------
Fred G. Luke,
Chief Executive Officer and
Director NuOasis Resorts Inc.
Dated: July 3, 1998 By: /s/ Jon L. Lawver
----------------------------------
Jon L. Lawver, President and
Principal Accounting Person
Fantastic Foods International,
Inc.
[NRI\10Q\033198.QSB]-10
16
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-END> MAR-31-1998
<CASH> 1,729,902
<SECURITIES> 0
<RECEIVABLES> 341,483
<ALLOWANCES> 0
<INVENTORY> 33,920
<CURRENT-ASSETS> 4,430,227
<PP&E> 2,578,764
<DEPRECIATION> (1,065,884)
<TOTAL-ASSETS> 14,930,283
<CURRENT-LIABILITIES> 2,807,867
<BONDS> 0
0
240,000
<COMMON> 659,143
<OTHER-SE> 5,979,822
<TOTAL-LIABILITY-AND-EQUITY> 14,930,283
<SALES> 349,362
<TOTAL-REVENUES> 349,362
<CGS> 96,139
<TOTAL-COSTS> 96,139
<OTHER-EXPENSES> 1,980,154
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 87,485
<INCOME-PRETAX> (1,591,318)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,591,318)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,591,318)
<EPS-PRIMARY> (.03)
<EPS-DILUTED> (.03)
</TABLE>
