UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
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(Mark one)
XX QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
- --------- EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1999
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
- --------- OF 1934
For the transition period from ____________ to ___________
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Commission File Number: 0-26760
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North American Resorts, Inc.
(Exact name of small business issuer as specified in its charter)
Colorado 84-1286065
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(State of incorporation) (IRS Employer ID Number)
15945 Quality Trail North, Scandia, MN 55073
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(Address of principal executive offices)
(612) 433-3522
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(Issuer's telephone number)
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Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. YES NO X
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State the number of shares outstanding of each of the issuer's classes of common
equity as of the latest practicable date: April 27, 2000: 103,293,967
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Transitional Small Business Disclosure Format (check one): YES NO X
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North American Resorts, Inc.
Form 10-QSB for the Quarter ended June 30, 1999
Table of Contents
Page
----
Part I - Financial Information
Item 1 Financial Statements 3
Item 2 Management's Discussion and Analysis or Plan of Operation 8
Part II - Other Information
Item 1 Legal Proceedings 9
Item 2 Changes in Securities 9
Item 3 Defaults Upon Senior Securities 9
Item 4 Submission of Matters to a Vote of Security Holders 9
Item 5 Other Information 9
Item 6 Exhibits and Reports on Form 8-K 9
Signatures 9
2
Part 1 - Item 1 - Financial Statements
North American Resorts, Inc.
Balance Sheets
June 30, 1999 and 1998
(Unaudited)
1999 1998
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ASSETS
------
Current Assets
Cash on hand and in bank $ -- $ --
Net current assets of discontinued operations -- 346,776
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Total current assets -- 346,776
----------- -----------
Other Assets
Organization costs, net of accumulated amortization
of $9,630 and $7,364, respectively 1,700 3,966
Net other assets of discontinued operations -- 488,219
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Total other assets 1,700 492,185
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Total Assets $ 1,700 $ 838,961
=========== ===========
LIABLITIES AND SHAREHOLDERS' EQUITY
-----------------------------------
Current Liabilities
Cash overdraft $ -- $ 2,823
Net current liabilities of discontinued operations -- 623,221
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Total current liabilities -- 626,044
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Commitments and Contingencies
Shareholders' Equity
Preferred stock - No par value
50,000,000 shares authorized; 482,815 and
539,965 shares issued and outstanding, respectively 1,471,583 1,484,728
Common stock - $0.001 par value
300,000,000 shares authorized; 103,293,947 and
102,722,467 issued and outstanding, respectively 103,294 102,722
Additional paid-in capital 3,620,237 3,607,664
Deficit accumulated during the development stage (5,193,414) (4,982,197)
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Total shareholders' equity 1,700 212,917
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Total Liabilities and Shareholders' Equity $ 1,700 $ 838,961
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The accompanying notes are an integral part of these financial statements.
The financial information presented herein has been prepared by management
without audit by independent certified public accountants.
3
North American Resorts, Inc.
Statements of Operations and Comprehensive Income
Six and Three months ended June 30, 1999 and 1998
(Unaudited)
Six months Six months Three months Three months
ended ended ended ended
June 30, June 30, June 30, June 30,
1999 1998 1999 1998
------------- ------------- ------------- -------------
Revenues $ -- $ -- $ -- $ --
------------- ------------- ------------- -------------
Expenses
Amortization of organization costs 1,133 1,133 567 567
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Loss from continuing operations
before income taxes (1,133) (1,133) (567) (567)
Provision for income taxes -- -- -- --
------------- ------------- ------------- -------------
Loss from continuing operations (1,133) (1,133) (567) (567)
Discontinued operations,
net of income taxes
Income (Loss) from
discontinued operations -- (282,154) -- (54,330)
------------- ------------- ------------- -------------
Net Loss (1,133) (283,287) (567) (54,897)
Other comprehensive income -- -- -- --
------------- ------------- ------------- -------------
Comprehensive Income $ (1,133) $ (283,287) $ (567) $ (54,897)
============= ============= ============= =============
Loss per weighted-average
share of common stock
outstanding, calculated
on Net Loss
From continuing operations nil nil nil nil
From discontinued operations nil nil nil nil
------------- ------------- ------------- -------------
Total loss per share nil nil nil nil
============= ============= ============= =============
Weighted-average number of shares
of common stock outstanding 103,293,947 97,971,086 103,293,947 102,722,467
============= ============= ============= =============
The accompanying notes are an integral part of these financial statements.
The financial information presented herein has been prepared by management
without audit by independent certified public accountants.
4
North American Resorts, Inc.
Statements of Cash Flows
Six months ended June 30, 1999 and 1998
(Unaudited)
Six months Six months
ended ended
June 30, June 30,
1999 1998
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Cash Flows from Operating Activities
Net loss $ (1,133) $ (283,287)
Adjustments to reconcile net loss to
net cash used in operating activities
Depreciation and amortization 1,133 9,899
Consulting fees and other expenses
paid with common stock -- 77,000
Change in net assets and liabilities
of discontinued operations -- 176,489
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Net cash used in operating activities -- (19,899)
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Cash Flows from Investing Activities -- --
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Cash Flows from Financing Activities
Increase (Decrease) in cash overdraft -- (3,101)
Proceeds from sale of common stock -- 23,000
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Net cash provided by financing activities -- 19,899
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Increase (Decrease) in Cash -- --
Cash at beginning of period -- --
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Cash at end of period $ -- $ --
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Supplemental disclosure of interest
and income taxes paid
Interest paid for the period $ -- $ 565
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Income taxes for the period $ -- $ --
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The accompanying notes are an integral part of these financial statements.
The financial information presented herein has been prepared by management
without audit by independent certified public accountants.
5
North American Resorts, Inc.
Notes to Financial Statements
Note A - Organization and Description of Business
North American Resorts, Inc. (Company ) was initially incorporated as Gemini
Ventures, Inc. on November 1, 1985 under the laws of the State of Colorado. The
Company changed its corporate name to Solomon Trading Company, Limited in July
1989; The Voyageur, Inc. in November 1994; The Voyageur First, Inc. in December
1994 and North American Resorts, Inc. in March 1995, respectively.
From 1995 through 1998, the Company was in the business of selling vacations in
Florida and the sale of time share memberships to the Ocean Landings and Cypress
Island Preserve facilities in Florida which were controlled by the Company and
the operation of Cypress Island Preserve as a tourist destination. During the
fourth quarter of 1998, the Company liquidated its holdings in these ventures
and discontinued all operations.
With the disposition of all operations, the Company became fully dependent upon
the support of its controlling shareholders for the maintenance of its corporate
status and to provide all working capital support for the Company's behalf. The
controlling shareholders intend to continue the funding of necessary expenses to
sustain the corporate entity.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect certain reported amounts and disclosures. Accordingly, actual results
could differ from those estimates.
Note B - Summary of Significant Accounting Policies
1. Cash and cash equivalents
-------------------------
The Company considers all cash on hand and in banks, including accounts in
book overdraft positions, certificates of deposit and other highly-liquid
investments with maturities of three months or less, when purchased, to be
cash and cash equivalents.
Cash overdraft positions may occur from time to time due to the timing of
making bank deposits and releasing checks, in accordance with the Company's
cash management policies.
2. Income taxes
------------
The Company uses the asset and liability method of accounting for income
taxes. At June 30, 1999 and 1998, respectively, the deferred tax asset and
deferred tax liability accounts, as recorded when material to the financial
statements, are entirely the result of temporary differences. Temporary
differences represent differences in the recognition of assets and
liabilities for tax and financial reporting purposes, primarily accumulated
depreciation and amortization, allowance for doubtful accounts and vacation
accruals.
The Company has net operating loss carryforwards for income tax purposes of
approximately $900,000. If these carryforwards are not utilized, they will
begin to expire in 2010.
Due to the provisions of Internal Revenue Code Section 338, the Company will
have no net operating loss carryforwards available to offset financial
statement or tax return taxable income in future periods as a result of a
1999 change in control involving 50 percentage points or more of the issued
and outstanding securities of the Company.
6
North American Resorts, Inc.
Notes to Financial Statements - Continued
Note B - Summary of Significant Accounting Policies - Continued
3. Earnings (loss) per share
-------------------------
Basic earnings (loss) per share is computed by dividing the net income (loss)
by the weighted-average number of shares of common stock and common stock
equivalents (primarily outstanding options and warrants). Common stock
equivalents represent the dilutive effect of the assumed exercise of the
outstanding stock options and warrants, using the treasury stock method. The
calculation of fully diluted earnings (loss) per share assumes the dilutive
effect of the exercise of outstanding options and warrants at either the
beginning of the respective period presented or the date of issuance,
whichever is later. As of June 30, 1999 and 1998, the Company has no
outstanding warrants and options issued and outstanding. Further, the
Company's convertible preferred stock is considered to be anti-dilutive due
to the Company's net operating loss position at June 30, 1999 and 1998,
respectively.
Note C - Discontinued Operations
During the fourth quarter of 1998, the Company discontinued all operations
related to its selling vacations in Florida and the sale of time share
memberships to the Ocean Landings and Cypress Island Preserve facilities in
Florida which were controlled by the Company and the operation of Cypress Island
Preserve as a tourist destination.
The results of the Company's operations for the respective periods presented are
reported as a component of discontinued operations in the statements of
operations. Additionally, the respective gain or loss incurred on the sale of
the Company's operations are also presented separately as a component of
discontinued operations.
Summarized results of operations for the disposed operations for the years ended
December 31, 1999 and 1998, respectively, are as follows:
1999 1998
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Net sales $ - $ 648,457
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Operating income (loss) $ - $(455,974)
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Loss from discontinued operations $ - $(455,974)
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Note D - Preferred Stock
The Company has 482,815 shares of preferred stock issued and outstanding at
December 31, 1999. The preferred shares are convertible into common shares at
the rate of 10 common shares for each share of preferred. There shares could be
converted to 4,828,150 common shares that would be subject to be sold pursuant
to Rule 144.
7
North American Resorts, Inc.
Notes to Financial Statements - Continued
Note E - Common Stock Transactions
In April 1998 and April 2000, respectively, the Company amended its Articles of
Incorporation to allow for the issuance of up to 150,000,000 and 300,000,0000
shares of $0.001 par value common stock, respectively. The effect of these
amendments are reflected in the accompanying financial statements as of the
first day of the first period presented.
During February 1998, the Company sold 20,000,000 shares of restricted,
unregistered common stock to two unrelated individuals for a total of $23,000
cash. The transaction was valued at $100,000 in the accompanying financial
statements based on the discounted quoted market price of the Company's common
stock on the date of the transaction. The differential between the "fair value"
of the stock sold and the cash proceeds was charged to consulting fees.
During 1997, the Company issued an aggregate of 10,200,000 of common stock
pursuant to a Registration Statement on Form S-8 for a combination of cash and
professional services valued at approximately $352,000 using the quoted market
value of the Company's common stock on the date of each respective transaction.
The Company received total cash proceeds of approximately $171,000 in these
transactions. The differential between the "fair value" of the services and the
cash received was charged to operations as consulting fees.
During 1997, the Company issued an aggregate 550,000 shares of unregistered,
restricted common stock to various parties involved in assisting the Company
with proposed acquisitions which did not consummate. These transactions were
valued at approximately $55,000, which approximates the "fair value" of the
common stock issued based on the discounted value of the quoted market price of
the Company's common stock on the respective transaction date. These amounts
were charged to operations as consulting fees.
During 1997, the Company sold 16,000,000 shares of restricted, unregistered
common stock to two unrelated individuals for a total of $90,000 cash. The
transaction was valued at $160,000 in the accompanying financial statements
based on the discounted quoted market price of the Company's common stock on the
date of the transaction. The differential between the "fair value" of the stock
sold and the cash proceeds was charged to consulting fees.
8
Part I - Item 2
Management's Discussion and Analysis of Financial Condition and Results of
Operations
(1) Caution Regarding Forward-Looking Information
This quarterly report contains certain forward-looking statements and
information relating to the Company that are based on the beliefs of the Company
or management as well as assumptions made by and information currently available
to the Company or management. When used in this document, the words
"anticipate," "believe," "estimate," "expect" and "intend" and similar
expressions, as they relate to the Company or its management, are intended to
identify forward-looking statements. Such statements reflect the current view of
the Company regarding future events and are subject to certain risks,
uncertainties and assumptions, including the risks and uncertainties noted.
Should one or more of these risks or uncertainties materialize, or should
underlying assumptions prove incorrect, actual results may vary materially from
those described herein as anticipated, believed, estimated, expected or
intended. In each instance, forward-looking information should be considered in
light of the accompanying meaningful cautionary statements herein.
(2) General comments
North American Resorts, Inc. (Company ) was initially incorporated as Gemini
Ventures, Inc. on November 1, 1985 under the laws of the State of Colorado. The
Company changed its corporate name to Solomon Trading Company, Limited in July
1989; The Voyageur, Inc. in November 1994; The Voyageur First, Inc. in December
1994 and North American Resorts, Inc. in March 1995, respectively.
From 1995 through 1998, the Company was in the business of selling vacations in
Florida and the sale of time share memberships to the Ocean Landings and Cypress
Island Preserve facilities in Florida which were controlled by the Company and
the operation of Cypress Island Preserve as a tourist destination. During the
fourth quarter of 1998, the Company liquidated its holdings in these ventures
and discontinued all operations.
With the disposition of all operations, the Company became fully dependent upon
the support of its controlling shareholders for the maintenance of its corporate
status and to provide all working capital support for the Company's behalf. The
controlling shareholders intend to continue the funding of necessary expenses to
sustain the corporate entity.
(3) Results of Operations, Liquidity and Capital Resources
As of the date of this filing, the Company has no operations, assets or
liabilities. Accordingly, the Company is dependent upon management and/or
significant shareholders to provide sufficient working capital to preserve the
integrity of the corporate entity at this time. It is the intent of management
and significant shareholders to provide sufficient working capital necessary to
support and preserve the integrity of the corporate entity.
The Company is currently seeking a suitable merger or acquisition candidate.
9
Part II - Other Information
Item 1 - Legal Proceedings
None
Item 2 - Changes in Securities
None
Item 3 - Defaults on Senior Securities
None
Item 4 - Submission of Matters to a Vote of Security Holders
The Company has held no regularly scheduled, called or special meetings
of shareholders during the reporting period.
Item 5 - Other Information
None
Item 6 - Exhibits and Reports on Form 8-K
Exhibit 27 - Financial Data Schedule
Reports on Form 8-K - None
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SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
North American Resorts, Inc.
April 27 , 2000 /s/ Gregory Johnson.
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Gregory Johnson
President and Director
10