<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 10549
QUARTERLY REPORT UNDER SECTION 13 or 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended Commission file number
March 31, 1998 0-20217
(Exact name of registrant as appended in its charter)
CONTINENTAL WELLNESS CASINOS TRUST
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) identification
No.)
Nevada 84-0687501
(Address of principal executive offices) (Zip
Code)
2205 Purple Majesty Court
Las Vegas, Nevada 89117-2747
(Registrant's telephone number, including area code)
(702) 240-4408
<PAGE> 2
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 of 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 report), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date.
[S][C] <CX TABLE-ONE>
Title of Class March 31, 1998
Common Class "A" 90,250,877
Common Class "B" 5,266,960
<PAGE> 3
CONTINENTAL WELLNESS CASINOS TRUST
Index
Part I FINANCIAL INFORMATION Page
Item 1 Financial Statements
Consolidated Balance Sheets 2
Consolidated Statements of
Operations 4
Consolidated Statements of
Cash Flows 5
Notes to Consolidated
Financial Statements 7
Item 2 Management's Discussion and
Analysis of Financial
Condition and Results of
Operations 11
Part II OTHER INFORMATION
Item 1 Legal Proceedings 14
Item 2 Changes in Securities 14
Item 3 Defaults upon Senior
Securities 14
Item 4 Submission of Matters to a
Vote of Security Holders 14
Item 5 Other Information 14
Item 6 Exhibits and Reports on
Form 8-K 15
<PAGE> 4
PART I - FINANCIAL INFORMATION
ITEM 1. - Financial Statements
<PAGE> 5
CONTINENTAL WELLNESS CASINOS TRUST
A
REAL ESTATE INVESTMENT TRUST
BALANCE SHEETS
MARCH 31, 1998 AND MARCH 31, 1997
March 31, March 31,
1998 1997
[CAPTION] (Dollars In Thousands)
ASSETS
Gold in storage (Note 2) $ 27,317 $ 27,317
Investment in stocks 0.175 -
Deferred charges and other assets (Note 3)
Deferred mining exploration costs and
Deferred operating expenses 5,534 3,365
Proven reserves (Note 5)
Gold 2,032,380 2,665,600
Silver 112,955 91,580
Total assets $ 2,178,186 2,787,862
Loans payable (Note 12) - 31
STOCKHOLDERS' EQUITY
Common stock, Class "A" $0.003 par value
Authorized shares-500,000,000
Issued and outstanding-90,250,877 in 1997;
90,028,877 in 1996 271 270
Common stock, Class "B" no par value, with a stated
value of 51.00 per share.
Authorized shares-50,000,000 in 1997 and 1996
Issued and outstanding-5,266,960 in 1997 and 1996 5,266 5,266
Capital in excess of par (Note 14) 2,172,649
Total Liabilities and Stockholders' equity
See accompanying notes to Financial Statements.
March 15,1998
<PAGE> 6
CONTINENTAL WELLNESS CAS!NOS TRUST
AREAL ESTATE INVESTMENT TRUST
Statement of Cash Flows
For the quarter ended March 31, 1998
(Dollars in Thousands)
Cash and cash equivalents at beginning of year $ -
Cash flows from operating activities
Payment of accrued payroll (594)
Payments to suppliers (280)
Net cash provided by operating activities (874)
Cash flows from financing activities
Proceeds from sale of common stocks 1,480
Attorney's fees (100)
Commission to stock broker (486)
SEC fee (20)
Net cash flows from financing activities 874
Cash and cash equivalents at end of year $ -
See accompanying notes to Financial Statements
March 15, 1998
<PAGE> 7
CONTINENTAL WELLNESS CASINOS TRUST
A
REAL ESTATE INVESTMENT TRUST
NOTES TO FINANCIAL STATEMENTS
March 31, 1998
1. SUMMARY OF SIGINIFICANT 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 Quincv, Plumas County, California, and
is engaged in the exploration of said mines for the production of precious
metal 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 read! for operation and development.
2. GOLD IN STORAGE.NT 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 5358.90 per troy ounce. The market values of gold per
troy ounce as of December 31, 1997 and October 31, 1996 are $290.34 and
$380.80. respectively. At these prices, the gold in storage would carry fair
market values of $22,098,358 in 1997 and $28,983,450 in 1996
3. DEFERRED CHARGES AND OTHER ASSETS
This consists of In Thousand Dollars
Deferred Mining Exploration Costs $ 3,253
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.
Deferred Operating Expenses
Related to additional sale of Common "A" shares
(See Statement of Cash Flows) $1,480
Prior years expenses 801
Total Operating Expenses 2,281
Total Deferred Charges and Other Assets $ 5,534
<PAGE> 8
3 DEFERRED MENING 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. In 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 60% of the Company's Class A"
common stock as of March 31, 1998.
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.
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 December, 31, 1997 and October 31, 1996 are as follows:
03-31-98 03-31-97
(Dollars in Thousands)
Gold : 7,000,000 troy ounces
@$290.34/troy ounce $2,032,380
@$380.80/troy ounce $2,665,600
Silver : 19,000,000 troy ounces
@$5.945/troy ounce 112,955
@$4 82/troy ounce _________ ___91,580
$2,145,335 $2,757,180
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.
<PAGE> 9
7 CONTENGENCIES:
The Company is not involved in any legal proceeding which is considered to
be ordinary routine litigation incident to its business.
8 TAXES:
The Company has not filed a federal income tax retum 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.
10 ACQUISTION OF A HOTEL AND CASINO IN LAS VEGAS, NEVADA
The Company is in the process of concluding the purchase of the Maxim Hotel
and Casino in 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 Gand 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 3,966,960 class -A"
restricted common shares to Joseph Witzman in payment office Company's
obligation to him of$180,953 75.
The outstanding shares in 1997 of 90,250,877 and 90.028,877 in 1996 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
Issued under SEC Regulation "S" 222,000
Balance 10/31/97 90,250,877
<PAGE> 10
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 (formerly Grand American International
Corporation). This was paid in March, 1997.
13 Unsecured and unrecorded personal loans of prior years were paid for the
year ended, December 31, 1997 These accounts were charged to Deferred Charges
and Other Assets.
14 CAPITAL IN EXCESS OF PAR
It is the excess of Total Assets over Liabilities and Common Stock "A" and "B"
15 CHNNGE OF NAME OF END OF ACCOUNTING YEAR
The Board of Directors adopted on December 22, 1997 the following resolutions:
a) The name of the Company was changed to Continental Wellness Casinos Trust
A Real Estate Investment Trust
b) The accounting year was changed from October 31 December 31
16 The March 31, 1998 quartely balance sheet was per my
unaudited report.
17. On March 18, 1998 the Company signed a Letter of Intent
to purchase the Maxim Hotel and Casino Las Vegas, Nevada
for $45,000,000. The hotel has total revenue of $66,000,000
and net income of $6,000,000.
18. On March 14, 1998 the Company signed a Letter of Intent
to purchase the Desert Inn Hotel and Casino Las Vegas, Nevada
for $400,000,000. The hotel has total revenue of $142,700,000
and the EBITDA of $25,000,000.
19. On April 8, 1998 the Company signed an offer to purchase
all the issued and outstanding shares of common stock of
Riviera Holding Corporation, operators of the Riviera Hotel
and Casino Las Vegas, Nevada at the rate of $15.00 per share
to all stockholders of record. The Riviera Holding Corporation
has a total revenue of $40,931,000 and net income of $4,838,000.
<PAGE> 11
INDEX
Page
Report on Projected Income Statement 1
Projected Income Statement 2
<PAGE> 12
To the Board of Directors and Stockholders
Continental Wellness Casinos Trust
A Real Estate Investment Trust
Las Vegas, Nevada
I have assembled, from information provided by management, the forecasted
statement of income for the year ended, December 31, 1998.
This projection is prepared for the acquisition of a hotel, casino and Life
Extension Program in Las Vegas, Nevada. This financial forecast omits the
summary of significant accounting policies. I have not compiled or examined
the forecast and express no assurance of any kind on it. Furthermore, there
will usually be differences between the forecasted and actual results because
events and circumstances frequently do not occur as expected, and those
differences may be material. I have no responsibility to update this report for
events and circumstances after the date of this report.
LUIS R. HIDALGO, Jr.
Certified Public Accountant
March 15, 1998
<PAGE> 13
CONTINENTAL WELLNESS CASINOS TRUST
A
REAL ESTATE INVESTMENT TRUST
PROJECTED INCOME STATEMENT
For the year ended, December 31, 1993
INCOME: (Dollars In Thousands)
Life Extension Membership Club $ 100,000
Hotel and Casino, Las Vegas, Nevada 75,000
Gold and Silver Mine Properties 150,00
Miscellaneous Income 25,000
Total Income 350,000
EXPENSES:
Life Extension Membership Club 61,704
Hotel and Casino, Las Vegas, Nevada 51,200
Gold and Silver Mines Properties 41,200
Other Expenses 754
Total Expenses 154,858
Net Income $ 195,142
<PAGE> 14
CONTINENTAL WELLNESS CASINOS TRUST
ITEM 2 Management's Discussion and Analysis of
Financial Condition and Results
of Operations
Results of Operations
Summary of significant Accounting Policies Nature of
the Business of Continental Well Casinos, Incorporated,
a Colorado corporation which was incorporated October
29, 1974. The Company is engaged in the discovery and
development of precious metals mining properties
located at Quincy, Plumas County, California which
consists of 750 acres of land where 39 unpatented mines
claims are located. All assessment work has been done
at the mines and all the reports had been filed with
the Bureau of Land Management, Sacramento, California
and the County of Plumas in accordance with the mining
rules and regulations. The Company has permit to
operate in small scale the mines from the United
States Forestry Department, Quincy, California. The
Company intends in going into a big mining venture to
recover the gold and silver in the proven reserves as
soon as the price of gold increases in value.
The Company is in the process of getting their Live
Longer Center, a Longevity Members Association, with
the purpose of making people live longer by using
Preventive Medicine with the genes testing for
discovery of predominant illness in the different
subjects and repair said genes by genetic engineering
followed with a program of exercise and nutrition. The
member signs for a period of ten years and receives one
week of care at the Center. The cost for this program
is $ 1,000.00 per year per member and the fee is
refundable by the member group insurance and it is also
tax deductible making it a good way to slow down the
cost of medical treatments that are out of control. For
the starting of this program the Company is using the
real estate that was acquired.
<PAGE> 15
Liquidity and Capital Resources
The expansion and diversification of the Registrant's
business has occurred selectively for the past two
years through the development of the Registrant's mines
for the production of gold and silver and other
precious metals. The Registrant is in the organization
of their Longevity Center, a Welllness
Resort for Life Extension. The strategic and aggressive
growth program enables the Registrant to provide future
earnings for the Company. The Registrant is confident
that the organization program of the Longevity Center,
a Well Resort for Life Extension
will increase sales and resulting cash flow.
<PAGE> 16
PART II - OTHER INFORMATION
<PAGE> 17
Item 1. Legal Proceedings
As of January 31, 1997 the Company was not
A party to any material legal proceedings
other than ordinary routine litigations
incidental to its business.
Item 2. Changes in Securities
Not applicable
Item 3. Defaults Upon Senior Securities
Not applicable
Item 4. Submission of Matters to a vote of Security
Holders
Not applicable
Item 5. Other Information
Not applicable
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
"A" Geological Evaluation of Gold Claims
Reserves.
(b) Reports on Form 8-K
(1). Amendment No. 7, dated March 26, 1998
<PAGE> 18
SIGNATURES
Pursuant to the requirements of Section 13 of 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.
CONTINENTAL WELLNESS CASINOS, INC.
By (S) FRED CRUZ DATED: 4/11/98
Fred Cruz
President and Chief Executive
Officer
By (S) FERNANDO JUAN DATED: 4/11/98
Fernando Juan
Vice President and Chief
Financial
<PAGE> 19
GEOLOGIC EVALUATION OF GOLD CLAIMS
IN
PLUMAS COUNTY, CALIFORNIA
EXHIBIT "A"
<PAGE> 20
STICKEL & ASSOCIATES
P.O. Box 91, Tustin, Ca. 92681 (714)751-4742
May 14, 1985
Minerals, Mining and Energy Corp.
7750 El Camino Real, Suite K
Rancho La Costa, California 92008
Attention: Stewart Douglas, President
Subject: Review of Literature and Inspection of Gold
Claims in Plumas County, California, Black-
hawk, Alan, MMC and Dean Lode Claims con-
consisting of 750 acres.
References: 1) Geology of the Pulga and Bucks Lake
Quadran-
gles, Butte and Plumas Counties, California, USGS Prof.
Paper 731, date 1973.
2) Examination and Sampling of the Blackhawk
and Section 13 Claims, Plumas County,
California, by Wm. H. Bird, date June 1,
1976.
3) Bucks Lake Quadrangle, Map, USGS,
1:62,500, DATE 1950.
Gentlemen
This letter presents our present geological engineering
evaluation of the subject gold and silver claims that
are
located in Plumas County, California.
<PAGE> 21
We visited and inspected the property on April 19 and 20, 1985. The property
consists of approximately 750 acres of lode claims with a reported overlying
of a few placer claims. The properties lie about 5 and 11 miles directly west
of Quincy on the Bucks Lake Road.
The claims are named Blackhawk, Alan, MMC, and Dean. The Blackhawk, Alan and
MMC claims lie in the northwest corner of Section 13, T24N, R8E.
CONSULTANTS IN APPLIED GEOLOGY, GEOPHYSICS AND
ENGINEERING
<PAGE> 22
Letter Report
MM&E Corporation
May 14, 1985
GEOLOGY
These claims lie along the southwest and northwest
borders of a northwest trending zone or band of highly
fractured peridotite altered to serpentine. Broad
fault zones bound the peridotite bodies or bands and
there are no indications of heat alteration. There has
been no production from hard rock mining, however,
significant placer hydraulicking and sluicing has
occurred. The placer deposits occur in two periods of
erosion, the Present and the Tertiary. Although,
concentrations of gold have only been found in the
Blackhawk and Dean claims, it does occur scattered
throughout the peridotite.
PRESENCE OF GOLD AND SILVER
Reference 2 indicates that there is a conservative 10,000,000 tons of hard
rock ore reserves. Rock Chip and channel samples were obtained from 10 to 50
foot sections of road cuts and outcrops on these claims and it is reported -
assayed high in gold (Au). The highest gold value was 2.80 oz /ton, however,
the overall average was .7 oz/ton. Silver (Ag) ranged from a trace to
2.62 oz/ton. These values varied greatly, depending upon the freshness of the
outcrop. Assays also indicated the presence of platinoid. Total amount of gold
and silver in these claims is 7,000,000 oz. of gold and 19,000,000 oz. Of
silver. These figures were compiled from data presented in Reference 2.
It is reported that during the summer of 1983, approximately $30,000 worth of
placer gold was dredged from one of the creeks flowing through the Blackhawk
claims. This gold was dredged from an area of the creek about 100 yards long.
Stickel 7 Associates warrant that our services are performed within the limits
prescribed by our clients,
<PAGE> 23
with the usual thoroughness and competence of the geological engineering
profession. No other warranty or representation, either expressed or implied,
is included or intended in our proposals or reports or contracts.
We appreciate the opportunity of presenting this report. If you have any
questions, please contact this office.
Very truly yours,
STICKEL & ASSOCIATES
By (S) J. F. STICKEL
J. F. STICKEL RG 2999
JFS/hr
April 25, 1986
It is our opinion that the described and proven "indicated" ore reserves are
based on data as described above.
STICKEL & ASSOCIATES
By (S) J. F. STICKEL
J. F. STICKEL
RG 2999
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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<ARTICLE> 5
<CASH>(IN 000)
[PERIOD-TYPE] 3-MOS
[FISCAL-YEAR-END] 12/31/98
[PERIOD-END] 03/31/98
[CASH] $27,317
<SECURITIES> $5,537
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 32,851.175
<PP&E> 0
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<TOTAL-ASSETS> $2,178,186
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0
0
<EQUITY UNIT> $5,537
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> $2,178,186
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
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