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 the Quarter Ended September 30, 2000 Commission File No. 0-18377
NuOASIS RESORTS, INC.
(Exact name of registrant as specified in its charter)
Nevada 84-1126818
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
4695 MacArthur Court, Suite 1450, Newport Beach, California 92660
(Address of principal executive offices) (Zip Code)
(949) 833-5381
(Registrant's telephone number, including area code)
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; 66,914,300 shares as of December 1, 2000
<PAGE>
NuOASIS RESORTS, INC.
INDEX
Page
PART I
Item 1. Financial Statements
Consolidated Balance Sheet as
of September 30, 2000 (unaudited)............................. 2
Consolidated Statements of Operations
and Comprehensive Loss for the Three
Months Ended September 30, 2000 and 1999 (unaudited).......... 3
Consolidated Statements of Cash Flows
for the Three Months Ended September 30, 2000
and 1999 (unaudited).......................................... 4
Notes to Consolidated Financial Statements ..................... 5
Item 2. Management's Discussion and Analysis of
Financial Condition and Results
of Operations..................................................7
PART II
Item 1. Legal Proceedings................................................ 8
Item 2. Changes In Securities............................................ 8
Item 3. Defaults Upon Senior Securities.................................. 8
Item 4. Submission Of Matters To A Vote of Security Holders.............. 8
Item 5. Other Information................................................ 8
Item 6. Exhibits And Reports On Form 8-K................................. 8
Signatures....................................................... 9
1
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NuOASIS RESORTS, INC.
Condensed Consolidated Balance Sheet
September 30, 2000
(Unaudited)
<TABLE>
<S> <C>
ASSETS
Cash and cash equivalents $ 74,000
Other current assets 2,000
Investment 4,766,000
Total current assets 4,842,000
Investment 561,000
Total assets $ 5,403,000
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Accounts payable $ 243,000
Accrued liabilities 1,302,000
Due to affiliates, net 1,914,000
Notes payable to CPL 10,011,000
Notes payable 100,000
Total current liabilities 13,570,000
Commitments and contingencies
Stockholders' equity (deficit):
Preferred stock, Series D, $.01 par value;
24,000,000 shares authorized, issued and outstanding
(aggregate liquidation value of up to $10,000,000) 240,000
Common stock, $.01 par value; 75,000,000 shares authorized;
66,914,300 shares issued and outstanding 669,000
Additional paid-in-capital 42,386,000
Common stock subscriptions receivable (11,000)
Accumulated deficit (51,451,000)
Total stockholders' equity (deficit) (8,167,000)
Total liabilities and stockholders' equity (deficit) $ 5,403,000
</TABLE>
See accompanying notes to these condensed consolidated financial statements
2
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NuOASIS RESORTS, INC.
Condensed Consolidated Statements of Operations and Comprehensive Loss
For the Three Months Ended
September 30, 2000 and 1999 (Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
September 30,
2000 1999
<S> <C> <C>
Revenues $ - $ 1,731,000
Cost of revenues - 2,136,000
Gross profit (loss) - (405,000)
Selling, general and administrative expenses 103,000 781,000
Total expenses 103,000 781,000
Equity in (loss) of unconsolidated
subsidiaries (996,000) -
Loss from operations (1,099,000) (1,186,000)
Interest income (expense), net 51,000 (137,000)
Gain on sale of investments 55,000 -
Loss from continuing operations (993,000) (1,323,000)
Discontinued operations:
Loss from discontinued operations (4,000) -
Gain on sale of discontinued operations 602,000 -
Net loss $ (395,000) $ (1,323,000)
Other comprehensive income (loss):
Foreign currency translation adjustment - 72,000
Comprehensive loss $ (395,000) $ 1,251,000)
Basic and diluted net loss per common share (.01) $ (.02)
Weighted average common shares
included in basic and fully diluted
shares outstanding 66,914,300 66,914,300
</TABLE>
See accompanying notes to these condensed consolidated financial statements
3
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NuOASIS RESORTS, INC.
Condensed Consolidated
Statements of Cash Flows
for the Three Months Ended
September 30, 2000 and 1999 (Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
September 30,
2000 1999
<S> <C> C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (395,000) $ (1,236,000)
Adjustments to reconcile net loss to net cash
(used) provided by operating activities:
Gain on sale of subsidiary (602,000) -
Gain on sale of securities (55,000) -
Depreciation and amortization - 2,000
Increases (decreases) in changes in assets
and liabilities:
Accounts receivable - (64,000)
Other assets - (2,000)
Accounts payable 27,000 (26,000)
Accrued expenses (200,000) 177,000
Due to affiliates, net (92,000) 1,240,000
Net cash (used) provided by operating activities (1,317,000) 91,000
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of securities 152,000 -
Effect on cash from previously
consolidated subsidiary 353,000 -
Net cash provided by investing activities 505,000 -
Foreign currency effect on cash - 100,000
Net (decrease) increase in cash (812,000) 191,000
Cash and cash equivalents, beginning of period 886,000 121,000
Cash and case equivalents, end of period $ 74,000 $ 312,000
Non-cash investing and financing activities:
Sale of Subsidiary in exchange for relief $ 26,000 $ -
relief of liabilities
</TABLE>
See accompanying notes to these condensed consolidated financial statements
4
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NuOASIS RESORTS, INC.
Notes to Condensed Consolidated Financial
Statements for the Three Months Ended
September 30, 2000
Note 1 - Organization and History
NuOasis Resorts, Inc. (the "Company" or "Resorts") was incorporated in Colorado
on February 6, 1989 and became public in 1990. In January 1998, the Company was
re-incorporated in the state of Nevada. Through subsidiaries, the Company
invests in, leases, manages and operates hotels, legalized gaming casinos, and
related operations. The Company also provides food and ancillary services in
connection with its hotel and gaming operations, and prior to fiscal 2000,
manufactured and distributed specialty food products.
Effective September 30, 2000, the Company assigned its interest in Fantastic
Foods, Inc.("FFI") to Eurasia Finance and Development Corp. ("Eurasia"), a
Company controlled by a director of the Company and President of FFI. In the
transaction, Eurasia agreed to assume full responsibility for all liabilities,
including any contingent liabilities that might exist and to forgive the Company
of its obligation to pay the approximately $628,000 due to FFI. Since 1999, FFI
has been inactive, as such there were only minimal results from discontinued
operations to report. Primarily due to the forgiveness of debt, the Company
recognized a gain on sale of discontinued operations of $602,000.
At June 30, 2000, the Company had an ownership interest in Oasis Resorts
International, Inc. ("ORI") that exceeded 50%, and as a result, the Company
consolidated the accounts of ORI with its financial statements. During the
quarter ended September 30, 2000, the Company disposed of certain of its shares
of ORI common stock, and ORI issued additional shares of its common stock to a
party other than the Company. These transactions decreased the Company's
ownership interest in ORI to approximately 47% at September 30, 2000. Based on
this level of ownership interest, and on management's expectation that the
Company's ownership interest will continue decreasing in future periods, the
accounts of ORI are no longer consolidated in the Company's financial
statements.
Note 2 - Basis of Presentation and Principles of Accounting
Going Concern Considerations
The Company has recurring losses from operations, and at September 30, 2000, the
Company has a working capital deficit of $8.7 million. Further, the Company's
largest asset is an investment in ORI, which requires approximately $6 million
of immediate working capital to service certain past-due trade creditors of the
Le Palace Hotel & Resort and it will require additional capital to meet
obligations as they become due during the next 12 months. These factors raise
substantial doubt about the Company's ability to continue as a going concern.
Management's plans with respect to these matters are as follows:
1. Assist ORI to acquire the Le Palace Hotel and the adjacent complex in Cap
Gammarth (collectively the "Cap Gammarth Complex"), which excludes the Cap
Gammarth Casino. By acquiring the property, management expects to eliminate
approximately $4.2 million dollars of accrued rental payments to Societe
Touristique Tunisie-Golfe ("STTG" or "Lessor") for operation of the Le
Palace Hotel. ORI's management has tendered an offer to acquire the Cap
Gammarth Complex for approximately $18.0 million and has obtained a
financing commitment that it believes is adequate to fund the acquisition
of and complete the development of this real property, as well as pursue
the acquisition of similar properties. The Le Palace Hotel currently is
generating positive cash flow before the accrual of rent. Management
believes that the cash flow from operations will be sufficient to service
the current operating liabilities if the acquisition is successful. There
are no assurances that the acquisition of the cap Gammarth Complex will be
completed.
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NuOASIS RESORTS, INC.
Notes to Condensed Consolidated Financial
Statements for the Three Months Ended
September 30, 2000 (continued)
2. Should the acquisition of the Cap Gammarth Complex by ORI, not be
completed, ORI's management intends to continue to seek a legal reprieve
based upon the fact that the parties have been unable to negotiate a long
term solution. The Lessor is currently seeking an injunction to remove CWI
from the Le Palace Hotel. In the event ORI management is unsuccessful in
its arbitration or legal actions, or fails to pay the past-due rent
payments, CWI will in all likelihood lose its rights to operate the Le
Palace Hotel.
3. Finally, management intends to pursue collection of its judgment against
Societe D'Animation et de Loisirs Touristique, a Tunisian corporation
("SALT"). Management is currently attempting to seek collection by
perfecting its claim in the Tunisian courts. Management believes that it
will successfully perfect its judgement, which is expected to result in the
Company foreclosing on the interest of SALT and the individual defendants'
equity ownership of SALT.
There are no assurances that such financing will be consummated on terms
favorable to ORI, if at all, nor that the Company will be successful in
collecting on its judgment against SALT. No adjustments have been made to the
accompanying consolidated financial statements as a result of these
uncertainties.
Consolidation
The accompanying consolidated financial statements for the quarter ended
September 30, 2000, include the accounts of NuOasis International, Inc.
("NUOI"), the Company's only remaining wholly-owned subsidiary.
The accompanying consolidated financial statements for the quarter ended
September 30, 1999, include the accounts of ORI, NUOI, Casino Management of
America, Inc. ("CMA"), NuOasis Laughlin, Inc. ("NuLA"), NuOasis Las Vegas,
Inc.("NuLV"), NuOasis Properties, Inc. ("NuOP"), ACI Asset Management Inc.
("ACI") and FFI. CMA, NuLA, NuLV, NuOP, and ACI were spun-off in the third
quarter of fiscal year 2000.
All material intercompany accounts and transactions have been eliminated in
consolidation.
Investments
At September 30, 2000, the Company's investments consist of an approximately 47%
interest in ORI, and an unspecified interest in either Dragon Sight
International Amusement Company ("Dragon") or NewCom, Inc. The ORI investment is
accounted for using the equity method of accounting and the Dragon investment is
accounted for using the cost method of accounting.
Unaudited Interim Financial Statements
The interim financial data as of September 30, 2000, and for the three months
ended September 30, 2000 and 1999, is unaudited; however, in the opinion of
management, the interim data includes all adjustments, consisting only of normal
recurring adjustments, necessary to present fairly the Company's financial
position as of September 30, 2000, and the results of its operations and cash
flows for the three months ended September 30, 2000 and 1999.
6
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NuOASIS RESORTS, INC.
Notes to Condensed Consolidated Financial
Statements for the Three Months Ended
September 30, 2000 (continued)
Management of ORI was required to make certain estimates relating to the
operations in Tunisia for the three months ended September 30, 2000. While ORI's
management is of the opinion these estimates fairly state the results for the
period, the actual results may differ materially from those estimates. As ORI is
no longer consolidated with the Company, any change in the results will only
effect the carrying value of the Company's investment in ORI, as well as the
Company's interest in the losses of ORI.
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Results of Operations -
Quarter Ended September 30, 2000 Compared to Quarter Ended
September 30, 1999
As a result of ORI no longer being consolidated with the Company, there
were no revenues in the first quarter of fiscal 2001. Revenues for the first
quarter of fiscal 2000 were $2.0 million which were entirely due to the
operations of the Le Palace Hotel Tunisia. To date, the hotel has not been able
to realize its potential due the failure of the developer to complete certain
amenities at the hotel, the Cap Gammarth Casino and the surrounding properties
associated with the complex.
Total cost of revenues were $1.7 million in the fiscal 2000 first quarter.
Only minimal expenditures are being made to operate the hotel. Selling, general
and administrative costs were $103,000 in fiscal 2001 and only related to the
Company and NuOI. Selling, general and administrative costs were $853,000 in
fiscal 2000 and also included ORI and the operations of the LePalace Hotel
As a result of the Company's assigning FFI to Eurasia Corp., it recognized
a gain on sale of discontinued operations of $602,000. This gain primarily
resulted from the Company no longer being liable for amounts due to FFI.
Liquidity and Capital Resources
The Company's working capital resources during the period ended September
30, 2000 were provided by utilizing the cash on hand at June 30, 2000 and
liquidating certain shares of ORI common stock. The Company has experienced
recurring net losses, has limited liquid resources, and negative working
capital. Management's intent is to continue searching for additional sources of
capital and new casino gaming and hotel management opportunities. In the
interim, the Company intends to continue operating with minimal overhead and key
administrative functions being 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 liquidate shares of ORI common stock to finance its needs during fiscal 2001.
Accordingly, the accompanying consolidated financial statements have been
presented under the assumption the Company will continue as a going concern. See
Notes to Financial Statements for further discussion.
The Company had a cash balance of approximately $74,000 at September 30,
2000.
The Company has no commitments for capital expenditures or additional
equity or debt financing and no assurances can be made that its working capital
needs can be met.
7
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NuOASIS RESORTS, INC.
Notes to Condensed Consolidated Financial
Statements for the Three Months Ended
September 30, 2000 (continued)
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, 2000.
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
8
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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: December 31, 2000 By: /s/ Leonard J. Roman
Leonard J. Roman
Principal Accounting Officer and Director
9
