SECURITIES AND EXCHANGE C012415510N
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
June 30, 1998 0-2 0217
(Exact name of registrant as appended in its charter)
CONTINENTAL WELLNESS CASINOS TRUST
(State or other jurisdiction of
incorporation or organization) (I.R.S. Employer identification No.)
Nevada 84-068750
(Address of principal executive offices) (Zip Code)
2205 Purple Majesty Court
Las Vegas, Nevada 89117
(Registrant's telephone number,
including area code)
(702) 240
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] [C]<TABLE-ONE>
Title of Class June 30, 1998
Common Class "A" 90, 250,877
Common Class "B" 5,266,960
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
CONTINENTAL WELLNESS CASINOS TRUST
A
REALESTATE INVESTMENT TRUST BALANCE SHEETS
JUNE 30, 1998 AND JUNE 30, 1998
(TABLE> 2 [C] [C]
June 30, June 30,
(S> 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)
STOCKHOLDERS' EQUITY 31
Common stock, Class "A" $0.003 par value
Authorized shares-500,000,000
Issued and outstanding-90,250,877 in 90,028,877 in 271 270
Common stock, Class "B" no par value, with a stated
value of $1.00 per share.
Authorized shares-50,000000 in1998 and 1997
Issued and outstanding-5,266,960 in 1998 and 1997 5,266 5,266
Capital in excess of par (Note 14) 2,172,649 2,782,295
Total Liabilities and Stockholders' equity $ 2,178,186 $ 2,787,862
See accompanying notes to Financial Statements.
June 30, 1998
CONTINENTAL WELLNESS CASINOS TRUST
A
REAL ESTATE INVESTMENT TRUST
Statement of Cash Flows
For the quarter ended June 30, 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
CONTINENTAL WELLNESS CASINOS TRUST
A
REAL ESTATE IN VESTMENT TRUST
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. 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 June 30, 1998 and June 30, 1997 are $290.34 and $380.80.
respectively. At these prices, the gold in storage would carry
fair market values of $22,09S.358 in 1998 and 528,983,450 in 1997.
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 2281
Total Deferred Charges and Other Assets $ 5,534.
4. DEFERRED MINING EXPLORATION COSTS
Deferred mining exploration costs were incurred in prior years
with the amounts being estimate 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.
5. RELATED PARTY TRANSACTIONS
Grand American Bank Trust owns approximately 60% of the Company's
Class "A" common stock as of
6. 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 ubjective
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 01 silver The values of these
reserves based on average market prices as of December 31, 997 and
October 31, 1996 are as follows;
3 06/30/98 6/30/97
(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
7. 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.
8. CONTINGENCIES.
The Company is not involved in any legal proceeding which is considered to
be ordinary routine litigation incident to its business.
9. TAXES.
The Company has not filed a federal income tax return because there are no
earnings to report
10. 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
11. ACQUISITION 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
12. 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 approves 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 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 1 7,000,000
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
13. 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
14. 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
15. CAPITAL IN EXCESS OF PAR- It is the excess of Total Assets over
Liabilities and Common Stock "A" and "B"
16. CHANGE 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.
17. The June 30, 1998 quarterly balance sheet was per my unaudited report.
18. 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.
19. 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
hotels total revenue of $142,700,000 and the EBITDA of $25,000,000.
20. 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.
INDEX
Page
Report on Projected Income Statement 1
Projected Income Statement 2
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
June 30, 1998
CONTINENTAL WELLNESS CASINOS TRUST
A
REAL ESTATE INVESTMENT TRUST
PROJECTED INCOME STATEMENT
For the year ended, December 31, 1998
INCOME: (Dollars in Thousands)
Life Extension Membership Club $ 100,000
Hotel and Casino, Las Vegas, Nevada 75,000
Gold and Silver Mine Properties 150,000
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
CONTINENTAL WELLNESS CASINOS TRUST
ITEM 2 Management's Discussion and Analysis ofFinancial 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.
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 Wellness 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.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
As of 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
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: August 24, 1998
Fred Cruz
President and Chief Executive Officer
By (S) FERNANDO JUAN DATED: August 24, 1998
Fernando Juan
Vice President and Chief Financial
GEOLOGIC EVALUATION OF GOLD CLAIMS
IN
PLUMAS COUNTY, CALIFORNIA
EXHIBIT "A"
STICKEL & ASSOCIATES
P.O. Box 91, Tustin, CA 92681 (714) 751
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
conconsisting of 750 acres.
References: 1) Geology of the Pulga and Bucks Lake Quadrangles, 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 Win. 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.
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
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 metals.
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, 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