UNITED STATES
SECURITIES AND EXCHANGE COMMISION
Washington D.C. 20549
SCHEDULE 14D-1
Tender offer statement pursuant to section 14(d) of the
Securities Exchange Act of 1934
(Amendment No.)
STRATOSPHERE CORPORATION
________________________________________________________________
__________
(Name of Subject Company [Issuer])
CONTINENTAL WELLNESS CASINOS, INC.
________________________________________________________________
______
Bidder)
Common Stock
________________________________________________________________
______
(Title of Class Securities)
863106100
________________________________________________________________
______
(CUSIP Number of Class Securities)
American Securities Transfer & Trust, Inc. Box 1596, Denver, CO
80201
________________________________________________________________
______
(Name, address and Telephone Numbers of Person Authorized to
Receive
Notices and Communications on behalf of Bidder)
Calculation of Filing Fee
Transaction
Amount of
filing fee
valuation * $17,517,931.00
$3,503.58
* Set forth the amount on which the filing fee is calculated
and state how it was determined
- ------- Check box if any part of the fee is offset as provided
by Rule 0-11(a)(2) and identify the filing with which
the offsetting fee
was previously paid. Identify the previous filing
by registration statement number, or the Form or
Schedule and the date of its filing.
Amount Previously Paid: None
Form of Registration No.: CIK 0000887531
Filing Party: CONTINENTAL WELLNESS
CASINOS, INC.
Date Filed : October 15, 1997
Note: The remainder of this cover page is only to be
completed if this Schedule 14D-1 (or amendment thereto) is
being filed, inter alia, to satisfy the reporting requirements
of section 13(d) of the Securities Exchange Act of
1934. See General Instructions D, E and F to Schedule 14D-1.
* The remainder of this cover page shall be filled out for
a reporting person's initial filing on this form
with respect to the subject class of
Securities, and for any subsequent amendment
containing information which would alter the disclosure
provided in a prior cover page.
The information required in the remainder of this cover
page shall not be deemed to be "filed" for the
purpose of Section 18 of the Securities
Exchange Act of 1934 ("Act") or otherwise subject to the
liabilities of that section of the Act but shall be subject
to all other provisions of the Act (however, see the Notes).
SEC 1747 (7-97)
Potential persons who are to respond to the collection of
information contained in
this form
Previous editions obsolete are not
required to respond unless the form displays a currently
valid OMB control number.
1) Name of Reporting Persons CONTINENTAL WELLNESS
CASINOS, INC.
I.R.S. Identification Nos. of Above Persons (entities
only). 84-068-7501
2) Check the Appropriate Box if a Member of a Group (See
Instructions)
(a) Not
Applicable
(b)
3) SEC Use Only
4) Sources of Funds (See Instructions) WC & OO
5) Check if Disclosure of Legal Proceedings
is Required Pursuant to Items
2(e) or 2(f).
6) Citizenship or Place of Organization
Colorado Corporation
7) Aggregate Amount Beneficially Owned by Each Reporting
Person None
8) Check if the Aggregate Amount in Row 7
Excludes Certain Shares (See
Instructions). Not Applicable
9) Percent of Class Represented by Amount in Row 7
Not Applicable
10) Type of Reporting Person (See Instructions)
CO
2
Item 1. Security and Subject Company
(a) Stratosphere Corporation
2000 Las Vegas Boulevard South
Las Vegas, Nevada 89104
(b) 58,393,105 shares of Registrant's Common Stock
[c] The Company owns and operates the Stratosphere
Tower, Casino
& Hotel ("Stratosphere")
a major destination resort
containing a fully integrated
casino/hotel, observation tower and
entertainment complex. The
high price of the securities is $0.36 and the low was $0.25.
The
Company was delisted from the Pacific Stock Exchange and
the NASDAQ
National Exchange,
however the Company is appealing the
NASDAQ National Exchange delisting but the chances
to stay
listed are very low.
Item 2. Identity and Background
[a] Continental Wellness Casinos, Inc. , a Colorado
corporation.
[b] 1820 E. Garry Avenue, Suite # 109, Santa Ana,
California 92705.
[c] The Company is engaged in the mining and
production of
precious metals, Life Extension
Health Programs and hotel and casinos operations
in the future.
[d] Not applicable.
[e] No criminal proceedings or traffic violations or
similar
misdemeanor has occurred.
[f] No civil proceedings against the Company has
taken place.
[g] United States of America citizenships.
Item 3. Past Contacts, Transactions or Negotiations with the
Subject Company.
[a] None has taken place.
3
[1] Not applicable
[2] Not applicable
[b] None has taken place
Item 4. Source and Amount of Funds or Other Consideration
[a] From gold reserves owned by the Company and by
the exchange
of Company Common Stock.
[b] No funds will be borrowed by the Company.
[1] Not applicable
[2] Not applicable
[c] Not applicable
Item 5. Purpose of Tender Offer and Plans or Proposals of the
Bidder
The purpose or purposes of the tender offer is for our
Company to
convert the hotel into a Life
Extension Membership Club and pre-sell all the
rooms to our members
on a pre-paid basis
therefore producing great amounts of revenues which
will liquidate all
outstanding debt of the issuer.
[a] No merger, reorganization or liquidation
involving the subject
company or any of its
subsidiaries will occur.
[b] None will take place.
[c] Some of the directors and management will take
place to make
the business better.
[d] None will take place.
[e] Not applicable.
[f] The securities are already delisted or in the
process of being
delisted from the exchanges that They traded.
[g] Not applicable.
Item 6. Interest in Securities of the Subject Company
[a] As of March 21, 1997 58,393,105 shares of
the Registrant's
Stock were outstanding. The
aggregate market value of the Common Stock held
by non-
affiliates of the Registrant on such date based
upon the sale
price of the Common Stock reported by NASDAQ on March 21, 1997
was $36,919,744.
[b] No information available to us by the issuer.
1. Not applicable
4
2. Not applicable
Item 7. Contracts, Arrangements, Understanding or Relationship
with Respect
to the Subject Company's
Securities.
None of the above the bidder has been involved with.
Item 8. Persons retained, employed or to be compensated
American Securities Transfer and Trust, Inc.
P.O. Box 1596
Denver, Colorado 80201
Will be compensated for doing the Tender Offer on
behalf of the bidder
for a compensation from
$7,500.00 to $10,000.00 depending on the time taken
for the tender
offer.
Item 9. Financial Statements of Certain Bidders
Financial Statements of the bidder enclosed herewith.
1. Audited Financial Statement of the bidder dated
October 31,
1996.
[a] Unaudited Financial Statement of the bidder
dated July
31, 1997.
2. The above Financial Statements are the same as
filed with the
Commission as Securities and Exchange Commission
Form 10-K
and 10-Q in accordance with the requirements of section
13[a]
or 15[d] of the Act.
Item 10. Additional Information
[a] No material contracts, arrangements,
understandings, or
relationships between the
bidder or anyone exists.
[b] Applicable regulatory requirements have been
complied
to.
[c] Not applicable
[d] Not applicable
[e] None pending
[f] The bidder intends to exchange the issuer's
Common
Stock for Gold Certificates with
maturity of three years and bearing interest
at the rate
of Ten Percent payable annually
in the arrear and the price of gold floor at
$330.00 per
troy ounce or the bidder will
exchange one of the Bidder's Common share
for twenty
of the Issuer's Common shares
Remembering that if the Common Stock is
delisted from
the NASDAQ National Market
the shares will have no price and at present
they have a
negative net worth.
5
CONTINENTAL WELLNESS CASINOS, INC.
BALANCE SHEETS
OCTOBER 31, 1996 AND OCTOBER 31, 1995
CONTINENTAL WELLNESS CASINOS, INC.
OCTOBER 31, 1996 AND OCTOBER 31, 1995
CONTENTS
Pages
Independent Auditor's Report 1
Financial Statements
Balance Sheets 2
Notes to Financial Statements 3 - 5
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and Stockholders
Continental Wellness Casinos, Inc.
Laguna Hills, California
I have audited the accompanying balance sheets of Continental
Wellness Casinos, Inc.
as of October 31, 1996 and October 31, 1995. These financial
statements are the
responsibility of the Company's management. My responsibility
is to express an
opinion on these financial statements based on my audit.
I conducted my audit in accordance with generally accepted
auditing standards.
These standards require that I plan and perform the audit to
obtain reasonable
assurance about whether the financial statements are free of
material misstatements.
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 principals used and significant estimates made by
management, as well as
evaluating the overall financial statement presentation. I
believe that my audit
provides a reasonable basis for my opinion.
In my opinion, the balance sheets referred to above present
fairly, in all material
respects , the financial position of Continental Wellness
Casinos, Inc. as of October
31, 1996 and October 31, 1995 in conformity with generally
accepted accounting
principals.
(S) LUIS R. HIDALGO
LUIS R. HIDALGO
Certified Public Accountant
November 29, 1996
2056 Stevely Avenue
Long Beach, Ca. 90815
Tel. (310) 430-4249 Fax (310) 430-3382
CONTINENTAL WELLNESS CASINOS, INC.
BALANCE SHEETS
October 31, 1996 and October 31, 1995
1996 1995
(Dollars In Thousands)
ASSETS
Gold in storage (Note 2)
$ 27,317
$ 27,317
Deferred charges and other assets
Deferred mining exploration costs (Note 3)
3,253 3,253
Deferred promotion and operating expenses
112 -
Total assets $
30,682 $ 30,570
LIABILITIES AND STOCKHOLDERS' EQUITY
Loans Payable-Note 12 $
31
STOCKHOLDER'S EQUITY
Common Stock, Class "A" $0.003 par value
Authorized shares -500,000,000 in 1996;
100,000,000 in 1995
Issued and outstanding-90,028,877 in 1996;
38,803,405 in 1995 $
270 $ 116
Common stock, Class "B" no par value
Authorized shares-50,000,000 in 1996 and 1995.
Issued and outstanding-3,266,960 in 1996 and 1995
33 33
Capital in excess of par
30,348 30,421
Total Stockholders' equity
$
30,651
Total Liabilities and Stockholders' Equity
$
30,682 $ 30,570
See accompanying notes to Financial Statements.
2
CONTINENTAL WELLNESS CASINOS, INC.
PRO-FORMA
PROFIT AND LOST STATEMENT
PRO-FORMA
PROFIT AND LOST STATEMENT
AS OF OCTOBER 31, 1996
(Dollars in Thousands)
EARNINGS:
Life Extension Membership Club $100,000
Maxim Hotel and Casino Las Vegas, Nevada
75,000
Gold and Silver Mines Properties
150,000
Total Earnings 350,000
EXPENSES:
Life Extension Membership Club
61,704
Maxim Hotel and Casino Las Vegas, Nevada
41,200
Gold and Silver Mines Properties
41,200
Total Expenses 154,858
PROFIT OR LOSS
195,142
2a
CONTINENTAL WELLNESS CASINOS, INC.
NOTES TO FINANCIAL STATEMENTS
October 31, 1996
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Description of Business - The Company is engaged in the
mining development
industry. Since October 22, 1974, the Company has owned
and operated
thirty-nine (39) mines and one (1) mill site at Quincy, Plumas
County, California, and is engaged in the exploration of
said mines for the
production of precious metals like gold and silver. The
Company also applied
for a license in Las Vegas, Nevada to conduct Life Extension
programs and to operate hotels and casinos.
Currency Transactions - There are no assets and liabilities
of operations
outside the United States which need
to be translated into U.S. dollars using exchange rates.
Development Costs - The Company will not capitalize
property taxes on its
mining properties until the mines
are ready for operation and development.
2. GOLD IN STORAGE AT BONDED WAREHOUSE:
On October 9, 1990, the Company deposited at NDS, United
States Customs
Bonded Warehouse located at 19801 SO. Santa Fe Ave.,
Rancho Dominguez,
California, 90221, six (6) 55 gallon drum containers of gold
dust (powder form) 999.5 pure weighing 76,112 troy ounces
with a value of
$27,316,600 based on the gold
floor price of $358.90 per troy ounce. The market values of
gold per troy ounce
as of October 31, 1996 and
October 31, 1995 are $378.00 and $384.30, respectively. At
these prices, the
gold in storage would carry fair
market values of $28,770,336 in 1996 and $29,249,841 in
1995.
3. DEFERRED MINING EXPLORATION COSTS
Deferred mining exploration costs were incurred in prior
years with the
amounts being estimated based on
the prevailing costs of mining exploration at that time due
to the absence of
supporting documentation.
On April 13, 1996, the Company issued shares of stocks
valued at $3,252,669
to pay for its obligation arising
thereto.
4. RELATED PARTY TRANSACTIONS
Grand American Bank Trust owns approximately 71 % of the
Company's
Class "A" common stock as of
October 31, 1996.
5. PROVEN GOLD AND SILVER RESERVE:
The process of estimating mineral reserves is very complex,
requiring
significant subjective decision in the
evaluation of available geological, engineering, and
economic data for each
reserve. The data for a given
reserve may change substantially over time as a result of
additional
development activity, production under
varying economic conditions, etc.
3
Consequently, material revision to the existing reserve
estimates may occur in the
future. Although, every reasonable effort was made to ensure
that the reserve
estimates reported represent the most accurate assessment
possible, the significance
of the subjective decision required, the variances in the
available data for various
reserves, make these estimates generally less precise than
other estimates in
connection with financial disclosure. Proven reserves are
estimated quantities of gold
and silver which geological and engineering data demonstrate,
with reasonable
certainty, to be recoverable in future years from known
reserves under existing
economic and operating conditions.
Stickel and Associates, independent consultants in applied
geology, geophysics and
engineering, has estimated 7,000,000 troy ounces of gold and
19,000,000 troy ounces
of silver. The values of these reserves based on average market
prices as of October
31, 1996 and October 31, 1995 are as follows:
10-15-96
10-31-95
(Dollars in
Thousands)
Gold : 7,000,000 troy ounces
@ $378.00/troy ounce $2,646,000
@ $384.30/troy ounce
$2,690,100
Silver : 19,000,000 troy ounces
@ $4.85/troy ounce
92,150
@ $5.34/troy ounce
101,460
$2,738,150
$2,791,560
6. STOCKHOLDERS' EQUITY:
The Company is authorized to issue 50,000,000 shares of no
par value Class
"B" shares. The Company gave
authority to its Board of Directors to issue such Class "B"
stock in one or more
series, and to fix the number
of shares in each series, and all designations, relative
rights, preferences and
limitations of the stock issued
in each series. As of April 13, 1994, the Board of
Directors had exercised the
authority granted.
7. CONTINGENCIES:
The Company is not involved in any legal proceedings which
is considered to
be ordinary routine litigation
incident to its business.
8. TAXES:
The Company has not filed a federal income tax return
because there are no
earnings to report.
9. The Secretary of the State of Colorado Corporation Office
approved the
following on June 6, 1996;
a) The name Grand American International Corporation be
changed to:
Continental Wellness Casinos, Inc.
b) The authorized capital stock, common shares Class "A" of
the Company be
increased from 100,000,000
shares to 500,000,000 shares with a $0.003 par value per
share.
4
10. ACQUISITION OF THE MAXIM HOTEL AND CASINO LAS VEGAS,
NEVADA
The Company is in the process of concluding the purchase of
the Maxim Hotel
and Casino Las Vegas,
Nevada, an 800 room hotel and casino.
11. THE INCREASE OF THE ISSUED AND OUTSTANDING CLASS "A"
COMMON SHARES
The Company on December 6, 1995 by Company Resolution
approved the
issuance of 47,958,512 common "A" shares to pay the mining
exploration cost of
$3,252,669 that was paid by the Grand American Bank
Trust.
The Grand American Bank Trust could not accept the shares
until a legal
opinion is given by the Regulators.
The Legal Opinion was given on February 15, 1996 and the
47,958,512 class
"A' shares were issued to Grand
American Bank Trust in April 1996 by American Securities
Transfer, Inc.
Transfer agent. The Company by
Certificate of Resolution that was approved on March
22, 1996 issued
3,266,960 class "A" restricted common
shares to Joseph Witzman in payment of the Company's
obligation to him of
$180,953.75.
The outstanding shares in 1996 of 90,028,877 and 38,803,405
in 1995 consist
of:
Balance 1/31/94 21,803,405
Issued to Grand American Bank Trust 17,000,000
Balance 10/31/95 38,803,405
Issued to Grand American Bank Trust 47,958,512
Issued to Joseph Witzman 3,266,960
Balance 10/31/96 90,028,877
12. LOANS PAYABLE -This represents the amount owing to Dolores
M. Kelly,
Successor Trustee of the Kelly
Family Exemption, UDT dated January 19, 1984, due
January 1, 1997, and
personally guaranteed by Fred
Cruz, President of Continental Wellness Casinos, Inc.
(Formerly Grand
American International Corporation)
5
CONTINENTAL WELLNESS CASINOS, INC.
BALANCE SHEETS
JULY 31, 1997 AND 1996
ASSETS
1997
1996
(Dollars in
Thousands)
Gold in storage $24,930
$27,317
Deferred mining exploration costs
3,253
3,253
$28,183
$30,570
STOCKHOLDERS' EQUITY
Common stock, Class "A" $0.003
par value 500,000,000 authorized
shares, issued and outstanding-
90,028,877 shares in 1997 and
38,803,405 in 1996 $ 270
$ 116
Common stock, Class "B" no par
value 50,000,000 authorized shares,
issued and outstanding- 3,266,960 shares
in 1997 and 1996 33
33
Capital in excess of par
$27,880
$30,267
$28,183
$30,570
See accompanying Notes to Financial Statements.
CONTINENTAL WELLNESS CASINOS, INC.
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES :
Description of Business - The Company is engaged in the
mining development
industry. Since October 22,
1974, the Company has owned and operated thirty-nine
(39) mines and one (1)
mill site at Quincy, Plumas
County, California, and is engaged in the exploration of
said mines for the
production of precious metal like
gold and silver.
Currency Transactions - There are no assets and liabilities
of operations
outside the United States which need
to be translated into U.S. dollars using current
exchange rates.
Development Costs - The Company will not capitalize
property taxes on its
mining properties until the mines
are ready for operation and development.
2. GOLD IN STORAGE AT BONDED WAREHOUSE :
On October 9, 1990, the Company deposited at NDS, United
States Customs
Bonded Warehouse located at
19801 So. Santa Fe Ave., Rancho Dominguez, California,
90221, six (6) 55
gallon - drum containers of gold
Dust (powder form) 999.5 pure weighing 76,112 ounces
with a value of $
24,930,000 based on the gold floor
price of $327.55 per troy ounce. The market values of
gold per troy ounce as
of July 31, 1997 and 1996 are
$327.55 and $358.90 respectivelly. At these prices, the
gold in storage would
carry fair market values of
$24,930,000 in 1997 and $ 27,317,000 in 1996.
3. DEFERRED MINING EXPLORATION COSTS
Deferred mining exploration costs were incurred in prior
years with the
amounts being estimated based on
the prevailing costs of mining exploration at that time due
to the absence of
supporting documentation. On
April 13, 1994, the Company issued shares of stock valued
at $3,252,669 to pay
for its obligations arising
hereto.
4. RELATED PARTY TRANSACTIONS :
Grand American Bank Trust owns approximately 71% of the
Company's
Class "A" common stock as of
July 31, 1996.
5. PROVEN GOLD AND SILVER RESERVES :
The process of estimating mineral reserves is very complex,
requiring
significant subjective decision in the
evaluation of available geological, engineering, and
economic data for each
reserve. The data for a given
reserve may change substantially over time as a result of
additional
development activity, production under
varying economic conditions, etc. Consequently, material
revision to the
existing reserve estimates may occur in the future. Although
every reasonable
effort was made to ensure that the reserve estimates reported
represent the most accurate assessment possible, the
significance of the
subjective decision required, the variances in the
available data for various reserves,
make these estimates generally less precise than other
estimates in connection with financial disclosure. Proven
reserves are estimated
quantities of gold and silver
which geological and engineering data demonstrate, with
reasonable certainty,
to be recoverable in the future
years from known reserves under existing economic and
operating conditions.
Stickel and Associates, independent consultants in applied
geology, geophysics
and engineering, has estimated
7,000,000 troy ounces of gold and 19,000,000 troy ounces of
silver. The values
of these reserves based on
average market prices as of January 31, 1997 and 1996 are
as follows :
04-30-97
04-30-96
(Dollars
in
Thousands)
Gold: 7,000,000 troy ounces @ $ 327.55/troy ounce
$2,292,850
@ $358.90 / troy ounce
$2,512,300
Silver: 19,000,000 troy ounces
@ $4.420 / troy ounce 83,980
@ $4.850 / troy ounce
92,150
$2,376,830
$2,604,450
6. STOCKHOLDERS' EQUITY :
The Company is authorized to issue 50,000,000 shares of no
par value Class
"B" shares. The Company
gave authority to the Board of Directors to issue such
Class "B" stock in one
or more series, and to fix the
number of shares in each series, and all designations,
relative rights,
preferences and limitations of the stock
issued in each series. As of April 13, 1994, the Board of
Directors have
exercised the authority granted.
7. CONTINGENCIES :
The Company is not involved in any legal proceedings which
is considered to
be ordinary routine litigation
incident to its business.
8. TAXES
The Company has not filed a federal income tax return
because there are no
earnings to report.
9. BUSINESS SEGMENT INFORMATION :
The Company considers its primary business activity to be
comprised of only
one segment, the development
of mines for the extraction of gold and silver and other
precious metals.
Item 11. Material to Be Filed as Exhibits
[a] None available as yet.
[b] No loan agreement exist.
[c] None available because its not applicable.
[d] Written opinion enclosed herewith marked Exhibit
"A"
[e] Not applicable
[f] None has been made but if made in the future
copies will be
supplied by us.
Signature: After duly inquiry and to the best of my
knowledge and belief, I certify
that the information set forth in this statement is true and
correct.
October 15, 1997
(S) Basil
Costin
BASIL
COSTIN, Executive Vice President,
Director
and
Secretary
6
DONALD E. STUDER, ESQ.
Attorney at Law
3611 Caples Road
West Monroe, Louisiana 71292
Tel. (318) 396-1451 Fax (318) 396-1451
October 10, 1997
Securities and Exchange Commission
Washington D.C. 20549
Re: Continental Wellness Casinos, Inc.
A Colorado Corporation (the "Company")
Dear Sir or Madam :
We have been asked to render our opinion as to the bidder
pertaining the
tax consequences of the tender offer. In this regard, we have
considered the
following :
1. The tender offer of the bidder is exempted from taxes
under the
provisions of Internal Revenue
Services Regulation 368 (a) (1) (B).
Based upon the foregoing considerations, we are of the
opinion that the
Company tender offer for the Common Shares of Stratosphere
Corporation is a
tax free transaction under the provisions of the above Internal
Revenue Services
Regulation.
Very truly yours,
(S) Donald E. Studer
DONALD E. STUDER
California State Bar No. 42669
EXHIBIT "A"
CONTINENTAL WELLNESS CASINOS, INC.
YOU CAN LIVE TO BE
"120"
September 29, 1997
Lyle Berman
Chairman and CEO
Grand Casinos, Inc.
130 Cheshire Lane
Minnetonka, Minnesota 55305
Dear Mr. Berman :
Continental Wellness Casinos, Inc. Herewith reiterates its
desire to acquire all of the
shares of the Stratosphere Hotel and Casino, Stratosphere
Corporation, and
Stratosphere Gaming Corporation owned either individually by
you or by Grand
Casinos, Inc., in the aggregate of approximately 50 % of the
outstanding common
shares, for a purchase price equal to the present market value
of such shares.
The purchase price will be paid with gold 999.5% pure, and
represented by Gold
Certificates issued by our mining company, with a maturity date
of three years from
date of issue priced at a rate of $320.00 per troy ounce,
bearing interest at a rate of
10 % per annum payable in cash in arrears each year.
Please advise as soon as possible if this offer is acceptable
so that it may be concluded
at once. This is an opportunity for you and Grand Casinos to
realize at least some
value from what promises shortly to be a total loss.
We look forward to your favorable response.
Respectfully yours,
CONTINENTAL WELLNESS CASINOS, INC.
(S) FRED CRUZ
FRED CRUZ,
M.D.
President and
CEO
cc: Securities and Exchange Commission
Washington D.C. 20549
Ps: My Private Fax Number is: (714) 837-1239
1820 E. Garry Ave., Suite 109, Santa Ana, Calif.
92705Tel. (714) 477-0370 Fax
(714) 477-2264 Modem (714) 477-2187
EXHIBIT "B"
