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Reynolds Debbie Hotel & Casino Inc – ‘10QSB’ for 9/30/97

As of: Monday, 11/17/97 · For: 9/30/97 · Accession #: 790934-97-12 · File #: 0-18864

  As Of                Filer                Filing    For·On·As Docs:Size

11/17/97  Reynolds Debbie Hotel & Casi… Inc 10QSB       9/30/97    2:45K

Quarterly Report — Small Business — Form 10-QSB
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10QSB       Third Quarter 10-Qsb                                  16     85K 
 2: EX-27       Financial Data Schedule                                1      7K

10QSB — Third Quarter 10-Qsb
Document Table of Contents

Page	(sequential)	\|	(alphabetic)	Top
			Alternative Formats (Word, et al.) Changes in Securities Consolidated Financial Statements Defaults Upon Senior Securities Exhibits and Reports on Form 8-K Legal Proceedings Other Information Submission of Matters to a Vote of Security Holders
1	1st Page - Filing Submission
2	Item 1. Consolidated Financial Statements
14	Item 1. Legal Proceedings
"	Item 2. Changes in Securities
"	Item 3. Defaults Upon Senior Securities
15	Item 4. Submission of Matters to a Vote of Security Holders
"	Item 5. Other Information
"	Item 6. Exhibits and Reports on Form 8-K

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FORM 10-QSB                                                               

UNITED STATES   

SECURITIES & EXCHANGE COMMISSION    

Washington, D.C. 20549        

(Mark One)                                                                      

__X__     Quarterly Report Under Section 13 or 15 (d) of the Securities Exchange
Act of 1934                                               
      For the quarter ended September 30, 1997

                                                  or

______    Transition Report Pursuant to Section 13 or 15 (d) of the Securities  
Exchange Act of 1934                                      

              For the Transition period from ____________  to  _________

Commission File Number         0-18864                                          

   DEBBIE REYNOLDS HOTEL & CASINO,INC.
  (Exact Name of Registrant as specified in its charter)

       Nevada                                           88-0335924
(State or other jurisdiction of                            (I.R.S. Employer     
incorporation or organization)                             Identification No.)

    305 Convention Center Drive, Las Vegas, Nevada 89109
     (Address of principal executive offices - Zip Code)

    (702) 734-0711
      (Registrant's telephone number, including area code)

(Former name, Former address, or former fiscal year, if changed   
since last report)                                              

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 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.                                       

1.       YES  _X_____  NO                                                       

2.       YES   X_____  NO  ______                                               

       APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the Number of shares outstanding of each of the issuer's classes of    
common stock, as of the latest practicable date.                                

13,906,945 common shares were outstanding as of November 11, 1997.              

This filing consisting of 17 sequentially numbered pages.  The exhibit index is 
located at sequentially numbered page 16.                                       

  Page 1 of 17

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Form 10-QSB           

DEBBIE REYNOLDS HOTEL & CASINO, INC.      

Form 10-QSB for the Quarter ended September 30, 1997    

Table of Contents   

                                                            Page
PART I.       FINANCIAL INFORMATION                                             

Item 1. Consolidated Financial Statements                                       

Consolidated Balance Sheets:                                    
September 30, 1997 (unaudited) and December 31, 1996         3

Unaudited Consolidated Statement of Operations:                 
For the nine months ended September 30, 1997 and 1996        4

Unaudited Consolidated Statement of Operations:                 
For the three months ended September 30, 1997 and 1996       5

Unaudited Consolidated Statements of Cash Flows:                
For the nine months ended September 30, 1997 and 1996        6

Notes to Unaudited Consolidated Financial Statements            
September 30, 1997 and December 31, 1996                     7

Item 2.  Management's Discussion and Analysis or Plan of Operation   10         

PART II.      OTHER INFORMATION                                                 

Item 1.   Legal Proceedings                                      14     

Item 2.   Changes in Securities                                  15     

Item 3.   Defaults Upon Senior Securities                        15     

Item 4.   Submission of Matters to a Vote of Security Holders    16     

Item 5.   Other Information                                      16     

Item 6.   Exhibits and Reports on Form 8-K                       16     

SIGNATURES                                                           17         

Page 2 of 17        

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Part  I.      Item  1.       Financial Statements                               

DEBBIE REYNOLDS HOTEL & CASINO, INC.      

Consolidated Balance Sheets       

September 30, 1997 and December 31, 1996      

                                              September 30,   December 31,
                                              1997            1996
Assets                                    
Current assets: ................................   (Unaudited)                  
Cash and cash equivalents .................. $     11,000   $       --  
Restricted cash ............................        2,000          2,000
Accounts receivable ........................      904,000        985,000
Inventories and Other ......................      856,000        844,000
       Total current assets ................    1,773,000      1,831,000

Land and building ..............................    6,576,000      6,576,000    
Furniture and equipment ........................    3,826,000      4,010,000    
                                               10,402,000     10,586,000
Less accumulated depreciation ..................   (4,144,000)    (3,219,000)   
       Net property and equipment ..........    6,258,000      7,367,000
Other assets:                                                                   
Deposits and other .........................       91,000         94,000
       Total assets ........................ $  8,122,000   $  9,292,000

Liabilities and Shareholders' Equity (Deficiency)       
Current liabilities:                                                            
Bank overdraft ............................. $       --       $  103,000
Current maturities of long-term debt and                                
 Capital Lease obligations                      9,848,000      8,688,000
Accounts payable and accrued liabilities ...    5,538,000      5,381,000
 Due to affiliates .........................    1,931,000      1,447,000
 Timeshare deposits ........................        2,000          2,000
       Total current liabilities ...........   17,319,000     15,621,000

Commitments and contingencies                                                   
Shareholders' equity (deficiency):                                              
Preferred stock, $.0001 par value.  Authorized 50,000,000 shares,               
2,000,000 designated Series AA, 187,076 issued and outstanding              
($748,000 liquidation preference) ............          --              --  
Common stock, $.0001 par value.  Authorized                                     
25,000,000 shares, 13,906,945 and 12,615,417                                
shares issued and outstanding, respectively           1,000          1,000  
  Additional paid-in capital ...............   15,347,000     15,160,000
 Accumulated deficit ........................  (24,545,000)   (21,490,000)
     Total shareholders' equity (deficiency)   ( 9,197,000)    (6,329,000)
    Total liabilities and shareholders' equity $8,122,000   $  9,292,000

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      DEBBIE REYNOLDS HOTEL & CASINO, INC.

     Consolidated Statements of Operations

     Nine months ended September 30, 1997 and 1996

(Unaudited) 

                                             1997                 1996
                                             ------------   ------------
Revenue:                                                                        
Timeshare Sales ............................ $     66,000   $  1,501,000  
Rooms ......................................    1,132,000      1,780,000  
Showroom ...................................    1,391,000      1,211,000  
Museum .....................................      251,000        335,000  
Food & Beverage ............................      269,000        602,000  
Other ......................................      153,000        437,000  
       Total revenue .......................    3,262,000      5,866,000

Operating costs & expenses:                                                     
Timeshare ..................................       62,000        815,000  
Rooms ......................................      496,000        843,000  
Showroom ...................................    1,073,000      1,667,000  
Museum .....................................      184,000        238,000  
Food & Beverage ............................      401,000      1,121,000  
General and administrative, Facilities and                                
Other costs                                   2,150,000      2,946,000
Depreciation and amortization ..............      927,000      1,133,000  
     Total operating expenses ............    5,293,000      8,763,000

      Loss from operations ................   (2,031,000)    (2,897,000)

Other income (expense):                                                         
Interest expense ...........................   (1,024,000)    (1,162,000) 
      Total other income (expense) ........   (1,024,000)    (1,162,000)

Net loss ...................................... $ (3,055,000)  $ (4,059,000)    

Loss per weighted-average common and common share equivalents                   
outstanding:                                                            
   Net loss per share ....................... $       (.23)  $       (.33)

Weighted-average number of common shares and common share           
    equivalents outstanding ................   13,511,278     12,147,682

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  DEBBIE REYNOLDS HOTEL & CASINO, INC.

   Consolidated Statements of Operations

  Three months ended September 30, 1997 and 1996

(Unaudited) 

                                               1997                 1996
                                       ------------------   ------------------
Revenue:                                                                        
Timeshare Sales ............................ $       --     $    832,000
Rooms ......................................      246,000        434,000
Showroom ...................................      287,000        295,000
Museum .....................................       63,000         87,000
Food & Beverage ............................       54,000        125,000
Other ......................................       50,000         82,000
       Total revenue .......................      700,000      1,855,000

Operating costs & expenses:                                                     
Timeshare ..................................         --          311,000
Rooms ......................................      122,000        237,000
Showroom ...................................      197,000        287,000
Museum .....................................       44,000         66,000
Food & Beverage ............................       79,000        219,000
General and administrative, Facilities and                              
 Other costs                                      445,000      1,172,000
Depreciation and amortization ..............      309,000        378,000
       Total operating expenses ............    1,196,000      2,670,000

        Loss from operations ................     (496,000)      (815,000)

Other income (expense):                                                         
 Interest expense ...........................     (294,000)      (333,000)
        Total other income (expense) ........     (294,000)      (333,000)

Net loss ....................................... $   (790,000)  $ (1,148,000)   

Loss per weighted-average common and common share equivalents                   
outstanding:                                                            
   Net loss per share ....................... $       (.06)  $       (.09)

Weighted-average number of common shares and common share           
    equivalents outstanding ................   13,906,945     12,550,147

  Page 5 of 17

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  DEBBIE REYNOLDS HOTEL & CASINO, INC.

 Consolidated Statements of Cash Flows

 Nine months ended September 30, 1997 and 1996

(Unaudited)     

                                           1997                 1996
                                       ------------------   ------------------

Cash flows from operating activities:                                           
Net loss for the period .................... $(3,055,000)   $(4,059,000)
Adjustments to reconcile net income to net cash                         
provided by (used in)  operations .........   1,722,000      4,345,000
  Net cash used in operating activities      (1,333,000)       286,000

Cash flows from investing activities:                                           
Purchases of property and equipment ........     184,000       (445,000)
   Net cash used in investing activities         184,000       (445,000)

Cash flows from financing activities:                                           
Additional investments from shareholder ....        --          150,000 
Net increase In long-term debt .............   1,160,000        (52,000)
  Net cash provided by financing activities   1,160,000         98,000

Net increase (decrease) in cash ................      11,000        (61,000)    

Cash at beginning of period ....................        -0-         172,000     

Cash at end of period .......................... $    11,000    $   111,000     

Supplemental disclosures of cash flow information:                              
Interest paid on borrowings ................ $ 1,024,000    $ 1,091,000 

Supplemental disclosures of noncash investing and financing activities:         
During  1995,  the Company  issued  814,806  shares of common  stock with a fair
market value of  approximately  $1,233,000  for consulting and other services 
rendered.                                                                     
During 1995, the Company  completed the  construction  of its timeshare  units  
and  transferred  all unsold units with a cost of $557,000 into inventory.    
During 1995, the Company issued 696,120 shares of common stock through          
conversion of 348,060 shares of preferred stock.                              
During 1995, the Company issued 696,120 shares of common stock valued at        
$1,566,000 through conversion of debt.                                        
In May 1996, the Company issued 378,182 shares of common stock through          
conversion of 104,000 shares of preferred stock.                              
In May 1996, the Company issued 425,455 shares of common stock valued at        
$628,000 through conversion of debt.                                          
In April 1997, the Company issued 123,072 shares of common stock through        
conversion of 30,768 shares of preferred stock.                               
In April 1997, the Company issued 138,456 shares of common stock valued at      
$138,456 through conversion of debt.                                            

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DEBBIE REYNOLDS HOTEL & CASINO, INC.        

Notes to Unaudited Financial Statements           

September 30, 1997 and December 31, 1996          

(1)    Basis of Presentation                                                    

(a)    Corporate Organization                                     

The  accompanying  consolidated  financial  statements  include the  accounts of
Debbie  Reynolds  Hotel & Casino,  Inc.,  formerly  Halter  Venture  Corporation
(Halter) and its wholly-owned  subsidiaries  Debbie Reynolds Management Company,
Inc.,  formerly Debbie Reynolds Hotel & Casino,  Inc. (DRMC) and Debbie Reynolds
Resorts, Inc. (DRRI) (collectively the Companies). The December 31, 1996 balance
sheet data was derived  from audited  financial  statements  of Debbie  Reynolds
Hotel & Casino, Inc., but does not include all disclosures required by generally
accepted  accounting  principles.  Users of financial  information  provided for
interim periods should refer to the annual  financial  information and footnotes
contained  in the  Annual  Report on Form  10-KSB  when  reviewing  the  interim
financial results presented herein.  All intercompany  accounts and transactions
have been eliminated in consolidation.                                          

In the opinion of  management,  the  accompanying  unaudited  interim  financial
statements are prepared in accordance  with the  instructions on Form 10-QSB and
contain  all  material   adjustments,   consisting  only  of  normal   recurring
adjustments,  necessary to present  fairly the financial  condition,  results of
operations  and cash flows of the Company  for the  respective  interim  periods
presented.  The  current  period  results  of  operations  are  not  necessarily
indicative of results which ultimately will be reported for the full year       
ending December 31, 1997.                                                       

(b)   Description of Business                                   

The Company's  operations  consist primarily of the hotel operations of DRMC and
the  timeshare   operations  of  Debbie  Reynolds  Resorts,   Inc.  ("DRRI"),  a
wholly-owned  subsidiary  of DRMC.  DRMC owns and operates  the Debbie  Reynolds
Hotel & Casino (the "Hotel"),  a gift shop, the Hollywood Motion Picture Museum,
a restaurant  and bar and a showroom  located on Convention  Center Drive in Las
Vegas, Nevada. The Company's operations,  through DRRI, also consist of the sale
of  timeshare  units in the Debbie  Reynolds  Hotel.  DRRI  obtained a permanent
timeshare  license  on  June  28,  1994.  The  Company  is  in  the  process  of
restructuring  its  timeshare  division and  currently  is not actively  selling
timeshare units. In addition,  DRMC and its management have pending applications
filed for a gaming license from the Nevada gaming  authorities;  however,  there
can be no assurance that such license will be granted. Due to the Company's poor
capital structure and acting on the advice of counsel, the Company requested the
Nevada  Gaming  Authorities  to place a hold on  processing  its pending  gaming
applications until its capital structure substantially improves.  Prior to March
31,  1996,  the Company  leased  space to a third party for the  operation  of a
casino.  The Company  served the operator with a termination  notice in February
1996  pursuant  to the terms of the lease  agreement,  because  the  Company was
losing  money  on a  monthly  basis.  The  Company  requested  Jackpot  to cease
operations as of June 30, 1996. On March 31, 1996 the operator  discontinued its
gaming  operations  on the  property,  removed all of its gaming  equipment  and
subsequently filed a lawsuit against DRHC. [See Item 1 - Legal Proceedings]     

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On October 30, 1996 the Company  entered into an Agreement for Purchase and Sale
with ILX Incorporated ("ILX") under which ILX would purchase the Debbie Reynolds
Hotel & Casino (the  "Hotel"),  including  all of the Hotel's  real and personal
property and the Hotel's timeshare  operations (the "ILX  Agreement").  ILX is a
publicly-held  corporation  based in Phoenix,  Arizona which  principally  owns,
operates and markets resort properties in Arizona,  Florida, Indiana and Mexico.
On May 15, 1997 ILX elected to cancel and terminate this Agreement.             

The Company's recurring losses from operations,  its working capital deficiency,
its shareholders equity deficiency, its significant debt service obligations and
its default with respect to various agreements raise substantial doubt about the
Company's ability to continue as a going concern.  The ability of the Company to
continue as a going  concern is  dependent  on its ability to obtain  additional
financing to finance its working  capital  deficit until such time as cash flows
from  operations are sufficient to finance the Company's  operations,  including
the Company's proposed casino operations.                                       

Due to the inability of the Company to generate sufficient funds to cover all of
its expenses it filed for relief under Chapter 11 of the Bankruptcy Code on July
3, 1997.  The Company will seek  reorganization  of its debts.  Also filing were
subsidiary  companies  Debbie  Reynolds  Management  Company and Debbie Reynolds
Resorts, Inc. In addition,  Miss Debbie Reynolds has resigned as Chairman of the
Board,  Director and an Officer of Debbie Reynolds Hotel & Casino,  Inc., Debbie
Reynolds  Management  Company and Debbie  Reynolds  Resorts,  Inc. In  addition,
Debbie Reynolds filed for relief under Chapter 11 of the Bankruptcy Code.       

On  September  30, 1997 the Company  entered into a Deal Point  Memorandum  with
David A.  Siegel,  ("Siegel"),  individually,  Owner and  President  of Westgate
Resorts,  one  of  the  largest  timeshare  developers  in the  world  and  T.D.
Entertainment,  ("TD"),  TD shall  acquire  the rights to  utilize  the name and
likeness of Debbie Reynolds and also shall acquire the rights from the Hollywood
Motion  Picture and  Television  Museum of  California  to operate the Hollywood
Museum as it currently operates at the property. Todd Fisher and Debbie Reynolds
are the majority owners of TD. Pursuant to the Deal Point Memorandum Siegel will
arrange a loan of $15,650,000 to be secured by a first mortgage on the Company's
property and invest $3,000,000 of equity into the Company.  The $18,650,000 will
be used,  through  a plan of  reorganization,  to  satisfy  debt,  renovate  the
existing  property,  provide working capital and recapitalize the Company.  As a
condition  precedent to arranging the mortgage and investing the equity into the
Company,  Siegel is requesting and TD has agreed to enter into a lease agreement
with the Company which provides that Debbie Reynolds name and likeness  continue
to be utilized,  that Debbie Reynolds  provides  showroom  services and that the
Hollywood  Museum remain on property for the duration of the lease. The TD lease
will include the casino, showroom,  museum, giftshop and bar. The obligations of
the  Company,  Siegel  and  TD to  consummate  this  transaction  was  expressly
conditioned upon the execution of a binding letter of intent. The Binding letter
of intent was entered into on November 13, 1997.  The Company plans to formulate
a plan of reorganization and submit the plan to the federal bankruptcy court for
approval.                                                                       

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On November 13, 1997 the Company  entered  into a Binding  Letter of Intent with
Central Florida Investment,  Inc., ("CFI"), an affiliate of David A. Siegel, and
T.D.  Entertainment,  ("TD"),  an affiliate  of Todd Fisher and Debbie  Reynolds
under which CFI will cause to be made a loan of  $15,650,000  to be secured by a
first deed of trust on the  Company's  property and invest  $3,000,000 of equity
into the Company.  In consideration  for the loan and the equity  investment the
Company has agreed to issue CFI 85% of the Company's  common stock and a warrant
to purchase  8,000,000  shares of common stock with an excercise  price  ranging
from $.75 to $1.00 per share.  The  shares  will be newly  issued  shares of the
Company's common stock. TD has agreed to lease from the Company certain areas to
include  the  space  where  the  casino,  showroom,  museum,  giftshop,  bar and
executive offices are located.  The term of the lease will be for a period of 10
years and have a monthly  payment of  $50,000.  This  transaction  is subject to
Bankruptcy Court approval.  The Company  anticipates that the closing will occur
late in the first quarter of 1998.                                              

Debbie  Reynolds  and  Raymax  Productions,   LTD,  ("Raymax"),   a  corporation
wholly-owned  by Ms.  Reynolds,  terminated  their  services  agreement with the
Company in November 1996 due to the Company's  default under the agreement.  Ms.
Reynolds has agreed to render showroom and other services on an "at will" basis,
terminable at anytime. In addition, in November 1996 Ms. Reynolds terminated her
License  Agreement  with the Company with respect to her  Hollywood  memorabilia
collection  and her name and likeness due to the  Company's  defaults  under the
agreements.  Also,  Hollywood Motion Picture and Television Museum, a non-profit
organization, has terminated its License Agreement with the Company with respect
to its Hollywood memorabilia collection due to the Company's defaults, effective
January 1997.                                                                   

The Company's  principal  executive offices are located at 305 Convention Center
Drive, Las Vegas, Nevada 89109 and its telephone number is (702) 734-0711.      

(2)   Capital Stock Transactions                                              

See (Item 2)  Management's  Discussion  and Analysis,  (2) Liquidity and Capital
Resources,   for  additional   discussions   of  the  Company's   capital  stock
transactions.                                                                   

(3)   Contingencies                                                           

The Company is involved in various claims and legal  actions.  In the opinion of
management,  the ultimate  disposition  of these matters has been  evaluated and
those  claims  considered  probable  and  estimable  have  been  accrued.  As of
September 30, 1997 the Company has accrued $890,000 for these claims.           

See Part II (Other  Information),  Item 1 (Legal Proceedings) for lawsuits filed
against the Company.                                                            

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Form 10-QSB     

PART  I.        ITEM  2.       MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF  
OPERATIONS        

(1)    Overview                                                                 

The  accompanying  consolidated  financial  statements  include the  accounts of
Debbie  Reynolds  Hotel & Casino,  Inc. (the Company),  formerly  Halter Venture
Corporation (Halter) and its present wholly-owned subsidiaries,  Debbie Reynolds
Management  Company,  Inc., formerly Debbie Reynolds Hotel & Casino, Inc. (DRMC)
and its wholly-owned  subsidiary,  Debbie Reynolds  Resorts,  Inc.  (DRRI).  The
accompanying consolidated financial statements reflect the historical operations
of DRMC and DRRI.                                                               

(2)   Liquidity and Capital Resources                                         

In February  1995,  the Company  obtained a $525,000  loan from Bennett  Funding
International, LTD., ("Bennett"), the proceeds of which were principally used in
the  construction  of the museum and for general  corporate  purposes.  The loan
bears interest at 13% and was due March 22, 1997 and is in default.  The loan is
secured by the Company's real and personal property.                            

In May 1995, the Company obtained a $340,000 loan from Bennett,  the proceeds of
which were  principally  used for  general  corporate  purposes.  The loan bears
interest  at 13% and was due  March  22,  1997  and is in  default.  The loan is
secured by the Company's real and personal property.                            

In August  1995,  the  Company  obtained a  $2,865,000  loan from  Bennett,  the
proceeds of which were principally used to pay off existing debt and for general
corporate  purposes,  which includes the $340,000 advanced to the Company in May
of 1995 and $525,000  advanced in February of 1995.  The loan bears  interest at
14% and is due August 23, 1999.  The loan is secured by the  Company's  real and
personal property.  Ms. Reynolds has personally  guaranteed this loan. This loan
is in default.                                                                  

Commencing in December 1995, the Company obtained additional financing through a
Regulation D offering under the Securities Act of 1933 (the "Act").  The Company
sold 200,000 units,  consisting of 200,000 shares of the Company's  common stock
and 200,000  warrants to purchase one share of common stock at $1.00,  totalling
net  proceeds of  approximately  $182,000.  The  offering of shares was directed
solely to persons who met the definition of  "Accredited  Investor" set forth in
rule 501(A) of  Regulation D  promulgated  under the Act. The Company  offered a
maximum of 3,000,000 Units,  (the "Unit"),  each unit consisting of one share of
Common  Stock and one warrant to purchase one share of common stock at $1.00 per
share. As of December 31, 1995 the Company sold $50,000 pursuant to the offering
and in the first quarter 1996 $150,000 was sold.                                

In May 1996,  the  Company  offered all holders of the  Company's  units  issued
pursuant to the Company's private placement  memorandum dated March 25, 1994 the
opportunity to convert the Series AA Preferred Stock and Debentures constituting
part of the units into  restricted  shares of the Company's  common stock.  Each
Series  AA  Preferred  Stock  and  Debenture  converted  into  one  share of the
Company's  common  stock at the reduced  conversion  prices of $1.10.  The total
dollar  amount  converted  from Series AA  Preferred  Stock and  Debentures  was
$884,000 which  converted into 803,636 shares of the Company's  common stock. As
additional  consideration,  the Company  reduced the  conversion  price for each
Series AA Preferred Stock and Debenture issued pursuant to the Private Placement
Memorandum dated November 17, 1994 to $2.25. As additional  consideration to the
Company,  the unit holders  waived the past due  interest and dividend  payments
owed.                                                                           

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In August  1996,  the Company  obtained a $500,000  loan from Gregory  Orman,  a
non-affiliated party, the proceeds of which were principally used to reduce past
due tax  obligations,  and reduce  accounts  payable  and enabled the Company to
engage its auditors.  The loan bears interest at 12% and has $550,000  principal
balance  which was due November 1, 1996 and is in default.  This loan is secured
with a  fourth  mortgage  on the  Company's  property  and with  certain  of the
Company's  receivables.  In connection  with the  financing the Company  granted
Orman  warrants to acquire  260,000  shares of the Company's  common stock at an
exercise  price of $.70 per share.  On October 18, 1996,  Orman agreed to extend
the maturity  date to February 1, 1997. In  consideration  for the extension the
Company reduced Orman's exercise price on the warrants to acquire 260,000 shares
of the Company's  common stock from $.70 per share to $.22 per share.  This loan
is  personally  guaranteed  by Ms.  Reynolds  and Todd  Fisher.  This loan is in
default.                                                                        

In February 1997, the Company  obtained a $1,100,000 loan from Galt Capital,  an
affiliate of Gregory Orman, a  non-affiliated  party, the proceeds of which were
principally used to pay-off the TPM/Source  second mortgage that was in default,
reduce past due tax obligations,  reduce accounts payable.  The balance was used
to fund  the  Company's  operations.  The  loan  bears  interest  at 12% and had
$1,100,000  principal  balance due June 5, 1997 and is in default.  This loan is
secured  pursuant to an  assignment of TPM Holding,  Inc.  second Deed of Trust,
Loan  Agreement  and  Promissory  Note dated  December  1994 and is secured by a
$573,000  first  deed of trust  placed  against  real  property  owned by Selden
Enterprises,  ("Selden"),  an  affiliate of Ms.  Reynolds  and Todd  Fisher.  In
addition,  Debbie Reynolds and Todd Fisher have personally guaranteed this loan.
The  Company  will  issue  Selden   500,000   shares  of  its  common  stock  as
consideration  for allowing the deed of trust to be placed on its real property.
The Company will also issue Ms.  Reynolds  500,000 shares of its common stock in
consideration  of her personal  guarantee  and in  recognition  of numerous past
uncompensated  guarantees  provided  by Ms.  Reynolds  as well as Ms.  Reynolds'
continued efforts on behalf of the Company. In connection with the financing the
Company has issued a warrant to Galt Capital to purchase approximately 2% of the
Company's outstanding common stock, as calculated pursuant to the agreement,  at
an exercise  price of $.22 per share,  the  estimated  fair market  value at the
time, the warrant expires February 5, 2000. This loan is in default.            

In April 1997, the Company offered all remaining  holders of the Company's units
issued pursuant to the Company's private placement memorandum dated November 17,
1994 the  opportunity  to convert the Series AA Preferred  Stock and  Debentures
constituting  part of the units into restricted  shares of the Company's  common
stock. Each Series AA Preferred Stock and Debenture  converted into one share of
the Company's common stock at the reduced  conversion prices of $1.00. The total
dollar  amount  converted  from Series AA  Preferred  Stock and  Debentures  was
$261,528 which  converted into 261,528 shares of the Company's  common stock. As
additional  consideration  to the Company,  the unit holders waived the past due
interest and dividend payments owed.                                            

 Page 11 of 17

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As of September 1997, the Company is in default under the following obligations:
the  Bennett  Management  &  Development  ("BMD")  mortgage is in default due to
non-payment  of interest and the holder has the right to accelerate the mortgage
immediately and make demand on the entire outstanding principal balance; the BMD
mortgage  had a  balance  of  approximately  $2,115,000  plus  accrued  interest
outstanding  at September  30, 1997;  the Bennett  Funding  International,  Ltd.
("BFI") mortgage is in default due to non-payment of interest and the holder has
the right to accelerate the mortgage  immediately  and make demand on the entire
outstanding  principal  balance;  the BFI  mortgage  had a principal  balance of
approximately  $2,865,000  plus accrued  interest  outstanding  at September 30,
1997; the Gregory Orman  ("Orman")  mortgage is in default due to non-payment of
interest and the note has matured and the holder has the right to accelerate the
mortgage  immediately  and  make  demand  on the  entire  outstanding  principal
balance;  the Orman mortgage had a principal  balance of approximately  $550,000
plus  accrued  interest  outstanding  at September  30,  1997;  the Galt Capital
("Galt")  mortgage is in default due to non-payment of interest and the note has
matured and the holder has the right to accelerate the mortgage  immediately and
make demand on the entire outstanding principal balance; the Galt mortgage had a
principal balance of approximately  $1,100,000 plus accrued interest outstanding
at  September  30,  1997;  and  the  Company  is in  default  on  its  unsecured
subordinated  debentures  due  to  non-payment  of  monthly  interest,  and  the
debentures  have matured,  the holders have the right to accelerate  immediately
and make demand on the entire outstanding principal balance.                    

On October 30, 1996 the Company  entered into an Agreement for Purchase and Sale
with ILX Incorporated ("ILX") under which ILX would purchase the Debbie Reynolds
Hotel & Casino (the  "Hotel"),  including  all of the Hotel's  real and personal
property and the Hotel's timeshare  operations (the "ILX  Agreement").  ILX is a
publicly-held  corporation  based in Phoenix,  Arizona which  principally  owns,
operates and markets resort properties in Arizona,  Florida, Indiana and Mexico.
On May 15, 1997 ILX elected to cancel and terminate this Agreement.             

The Company's recurring losses from operations,  its working capital deficiency,
its shareholders equity deficiency, its significant debt service obligations and
its default with respect to various agreements raise substantial doubt about the
Company's ability to continue as a going concern.  The ability of the Company to
continue as a going  concern is  dependent  on its ability to obtain  additional
financing to finance its working  capital  deficit until such time as cash flows
from  operations are sufficient to finance the Company's  operations,  including
the Company's proposed casino operations.                                       

On July 3, 1997 the Company filed for relief under Chapter 11 of the  Bankruptcy
Code, due to the inability of the Company to generate  sufficient funds to cover
its  expenses and  obliagations.  The Company  will seek  reorganization  of its
debts. Also filing were subsidiary  companies Debbie Reynolds Management Company
and Debbie Reynolds Resorts, Inc. In addition, Miss Debbie Reynolds has resigned
as Chairman of the Board,  Director  and an Officer of Debbie  Reynolds  Hotel &
Casino,  Inc., Debbie Reynolds  Management  Company and Debbie Reynolds Resorts,
Inc.  Debbie  Reynolds also filed for relief under Cahpter 11 of the  Bankruptcy
Code.                                                                           

On  September  30, 1997 the Company  entered into a Deal Point  Memorandum  with
David A.  Siegel,  ("Siegel"),  individually,  Owner and  President  of Westgate
Resorts,  one  of  the  largest  timeshare  developers  in the  world  and  T.D.
Entertainment,  ("TD"),  TD shall  acquire  the rights to  utilize  the name and
likeness of Debbie Reynolds and also shall acquire the rights from the Hollywood
Motion  Picture and  Television  Museum of  California  to operate the Hollywood
Museum as it currently operates at the property. Todd Fisher and Debbie Reynolds
are the majority owners of TD. Pursuant to the Deal Point Memorandum Siegel will
arrange a loan of $15,650,000 to be secured by a first mortgage on the Company's
property and invest $3,000,000 of equity into the Company.  The $18,650,000 will
be used,  through  a plan of  reorganization,  to  satisfy  debt,  renovate  the
existing  property,  provide working capital and recapitalize the Company.  As a
condition  precedent to arranging the mortgage and investing the equity into the
Company,  Siegel is requesting and TD has agreed to enter into a lease agreement
with the Company which provides that Debbie Reynolds name and likeness  continue
to be utilized,  that Debbie Reynolds  provides  showroom  services and that the
Hollywood  Museum remain on property for the duration of the lease. The TD lease
will include the casino, showroom,  museum, giftshop and bar. The obligations of
the  Company,  Siegel  and  TD  to  consummate  this  transaction  is  expressly
conditioned upon the execution of a binding letter of intent. The Binding letter
of intent was entered into on November 13, 1997.  The Company plans to formulate
a plan of reorganization and submit the plan to the federal bankruptcy court for
approval.                                                                       

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On November 13, 1997 the Company  entered  into a Binding  Letter of Intent with
Central Florida Investment,  Inc., ("CFI"), an affiliate of David A. Siegel, and
T.D.  Entertainment,  ("TD"),  an affiliate  of Todd Fisher and Debbie  Reynolds
under which CFI will cause to be made a loan of  $15,650,000  to be secured by a
first deed of trust on the  Company's  property and invest  $3,000,000 of equity
into the Company.  In consideration  for the loan and the equity  investment the
Company has agreed to issue CFI 85% of the Company's  common stock and a warrant
to purchase  8,000,000  shares of common stock with an excercise  price  ranging
from $.75 to $1.00 per share.  The  shares  will be newly  issued  shares of the
Company's common stock. TD has agreed to lease from the Company certain areas to
include  the  space  where  the  casino,  showroom,  museum,  giftshop,  bar and
executive offices are located.  The term of the lease will be for a period of 10
years and have a monthly  payment of  $50,000.  This  transaction  is subject to
Bankruptcy Court approval.  The Company  anticipates that the closing will occur
late in the first quarter of 1998.                                              

The Company had a working  capital  deficiency of  $15,546,000  at September 30,
1997,  compared with a working capital deficiency of $10,059,000 at December 31,
1996, an increase of $5,487,000.  This increase is  attributable  to the Company
continuing to incur  substantial  operating  losses during the nine months ended
September 30, 1997 and maturing long-term debt.                                 

(3)   Revenues                                                                

Revenues for the quarter ended  September 30, 1997 totaled  $700,000 as compared
to $1,855,000  for the quarter  ended  September  30, 1996,  representing  a 62%
decrease for 1997. This decrease is attributable, in large part, to the decrease
in rooms revenue of $188,000 as compared to the quarter ended September 30, 1996
and the  decrease  in  timeshare  revenue of $832,000 as compared to the quarter
ended  September  30,  1996.  The  decrease in rooms  revenue is  attributed  to
increased competition in the Las Vegas market. The decrease in timeshare revenue
is attributed to the Company  restructuring its timeshare division and currently
not selling timeshare units.                                                    

The loss from  operations  for the quarter  ended  September  30,  1997  totaled
$496,000 as compared to a $815,000 loss from  operations  for the second quarter
ended 1996.  Included  in the loss from  operations  was  $25,000  loss from the
restaurant  operations.  The net loss for the quarter  ended  September 30, 1997
totaled  $790,000 as compared to $1,148,000 for the quarter ended  September 30,
1996.                                                                           

Revenues for the nine months ended  September  30, 1997  totaled  $3,262,000  as
compared  to  $5,866,000   for  the  nine  months  ended   September  30,  1996,
representing  a 44% decrease for 1997.  This  decrease is  attributed,  in large
part, to the decrease of $1,435,000 in timeshare sales for the nine months ended
September 30, 1997 as compared to the nine months ended September 30, 1996. This
decrease in revenue is also  attributable  to the  decrease in rooms  revenue of
$648,000 as compared to the nine months ended  September 30, 1996.  The decrease
in room revenue is attributed to increased competition in the Las Vegas market. 

Page 13 of 17       

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PART I. MANAGEMENT DISCUSSION AND ANALYSIS, CONTINUED                           

The loss from  operations  for the nine months ended  September 30, 1997 totaled
$2,031,000  as compared to  $2,897,000  for the nine months ended  September 30,
1996. The Company decreased  showroom operating expenses by $594,000 as compared
to the nine months ended September 30, 1996. The restaurant  operation generated
$132,000 in  operating  losses for the nine months ended  September  30, 1997 as
compared to $519,000 in operating losses for the nine months ended September 30,
1996. General  administrative,  facility and other costs were $2,150,000 for the
nine months  ended  September  30, 1997 as compared to  $2,946,000  for the nine
months   ended   September   30,  1996.   The   $796,000   decrease  in  General
administrative,  facility  and other  costs  can be  attributed  to  managements
restructuring of staffing and operations. The net loss for the nine months ended
September 30, 1997 totaled  $3,055,000  as compared to  $4,059,000  for the nine
months ended September 30, 1996.                                                

(4)   Interest Expense                                                        

Interest  expense  decreased from $1,162,000 for the nine months ended September
30, 1996 to $1,024,000 for nine months ended September 30, 1997.                

Part  II.         Other Information                                             

Item  1.      Legal Proceedings                                                 

In January 1994,  Edward Stambro,  an unaffiliated  individual,  filed a lawsuit
against one of the Company's  subsidiaries  and others in the District  Court of
Clark  County,  Nevada,  alleging  breach of brokers  agreement.  The  Company's
subsidiary  filed an answer to the allegations on February 28, 1994.  Management
and legal counsel for the Company are of the opinion that the plaintiff's  claim
is without merit and the Company will prevail in defending the suit.            

On April 28, 1995,  Ronald D.  Nitzberg and Ron Nitzberg  Associates,  Inc.,  an
unaffiliated corporation,  filed a lawsuit against the Company and others in the
District Court of Clark County, Nevada, alleging breach of contract, slander and
other claims,  relating to his employment with the Company.  The plaintiffs seek
damages in the amount of  approximately  $245,000 and an  unspecified  amount of
money  damages.  The Company  has filed a  counterclaim  against  the  plaintiff
alleging  breach of fiduciary duty and breach of contract asking for declaratory
relief from consulting and stock agreements.                                    

On April 14,  1995,  Edward S. Coleman  filed a lawsuit  against the Company and
others  in the  District  Court of Clark  County,  Nevada,  alleging  breach  of
covenant of good faith and fair dealing based on certain services. The plaintiff
seeks unspecified money damages in excess of $10,000.                           

On January 26, 1995, American Interval  Marketing,  Inc., filed a lawsuit in the
District Court of Clark County, Nevada, against the Company and others, alleging
breach of contract and reasonable value of services. The plaintiff seeks damages
of approximately $45,000.                                                       

Page 14 of 17       

Form 10-QSB                   

PART  II.           Other Information, Continued                                

On July 14, 1995,  Grand  Nevada  Hotel  Corp.,  filed a lawsuit in the District
Court of Clark County, Nevada, against the Company,  alleging breach of contract
and breach of implied duty of good faith.  The plaintiff seeks damages in excess
of $10,000.                                                                     

On July 27, 1995, Norman Eugene Watson,  filed a lawsuit against the Company and
others  in the  District  Court of Clark  County,  Nevada,  alleging  breach  of
contract,  fraud and  misrepresentation  and other claims.  The plaintiff  seeks
damages in excess of $10,000.                                                   

On August 10, 1995,  Fiduciary  Trust Company  International,  as Trustee of the
Taylor-Made  Ltd.  Defined Benefit Pension Plan, filed a lawsuit in the District
Court of Clark County, Nevada,  against the Company and others,  alleging breach
of contract and unjust  enrichment.  The  plaintiff  seeks  damages in excess of
$10,000. The Company is negotiating a settlement with respect to this lawsuit.  

On  September  1, 1995,  Young  Electric  Sign  Company,  filed a lawsuit in the
District Court of Clark County, Nevada, against the Company and others, alleging
breach of contract. The plaintiff is seeking damages in excess of $10,000.      

On April 11, 1996  Jackpot  Enterprises,  Inc.,  filed a lawsuit in the District
Court of Clark County, Nevada,  against the Company and others,  alleging breach
of contract,  specific  judgment,  unjust  enrichment  and breach of the implied
covenant of good faith and fair  dealing.  The  plaintiff is seeking  damages in
excess of $10,000.                                                              

On April 21, 1997 Maxim  Financial  Profit Sharing Plan,  filed a lawsuit in the
United  States  District  Court,  District of Colorado,  against the Company and
others,  alleging breach of contract,  intentional fraud,  Securities Violations
and Recission. The plaintiff is seeking damages in excess of $75,000.           

In addition to the above mentioned  lawsuits,  their are numerous other lawsuits
filed  against the Company by certain of its  vendors and other  creditors.  The
Company  believes that these  lawsuits may be satisfied  through  payment of the
indebtedness to the extent the Company's cash flow permits.                     

Except as otherwise set forth above,  the Company is unable to predict,  at this
time, the likelihood of the Company  prevailing in the above lawsuits.  However,
the Company has recorded a provision  for  estimated  losses from  litigation of
$890,000.                                                                       

Item 2.       Changes in Securities                                             

None                                                

Item 3.       Defaults Upon Senior Securities                                   

The  Company is in default in respect to the  payment of  interest on its 8-3/4%
senior  subordinated  convertible  debentures  due in October  1996 and November
1998.  The total  amount of the  default  as of June 30,  1997 is  approximately
$472,000.                                                                       

As of September 1997, the Company is in default under the following obligations:
the  Bennett  Management  &  Development  ("BMD")  mortgage is in default due to
non-payment  of interest and the holder has the right to accelerate the mortgage
immediately and make demand on the entire                                       

Page 15 of 17       

10QSB 15th Page of 16 TOC 1st Previous Next ↓Bottom Just 15th
Form 10-QSB                   

outstanding  principal balance;  the BMD mortgage had a balance of approximately
$2,115,000 plus accrued interest  outstanding at September 30, 1997; the Bennett
Funding International, Ltd. ("BFI") mortgage is in default due to non-payment of
interest and the holder has the right to accelerate the mortgage immediately and
make demand on the entire outstanding  principal balance; the BFI mortgage had a
principal balance of approximately  $2,865,000 plus accrued interest outstanding
at September 30, 1997; the Gregory Orman ("Orman") mortgage is in default due to
non-payment of interest and the note has matured and the holder has the right to
accelerate the mortgage  immediately  and make demand on the entire  outstanding
principal  balance;  the Orman mortgage had a principal balance of approximately
$550,000  plus accrued  interest  outstanding  at September  30, 1997;  the Galt
Capital  ("Galt")  mortgage is in default due to non-payment of interest and the
note has  matured  and the  holder  has the  right to  accelerate  the  mortgage
immediately and make demand on the entire  outstanding  principal  balance;  the
Galt mortgage had a principal  balance of approximately  $1,100,000 plus accrued
interest  outstanding  at September  30,  1997.  (See Part I - Item 2 Management
Discussion and Analysis (2) liquidity and Capital  resources for a more complete
details of the Galt Capital mortgage).                                          

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                                      

None                                    

(b)   Reports on Form 8-K                           

During the quarter ended  September 30, 1997 the Registrant  filed the following
reports on Form 8-K:                                                            

Current report on Form 8-K dated July 7, 1997, reporting Item 5 - Other Events. 

Current  report on Form 8-K dated  September 30, 1997,  reporting Item 5 - Other
Events.                                                                         

Page 16 of 17 

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Form 10-QSB 

SIGNATURES

Pursuant to the  requirements of Section 13 or 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.                           

DEBBIE REYNOLDS HOTEL & CASINO, INC.

By:       /S/  Todd Fisher        
  Todd Fisher, Chief Executive Officer

Date:   November 14, 1997                                                       

By:       /S/  Todd Fisher        
  Todd Fisher, Chief Financial Officer

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Dates Referenced Herein and Documents Incorporated by Reference

		Referenced-On Page
This ‘10QSB’ Filing	Date	First	Last	Other Filings

	2/5/00	11
	8/23/99	10
	12/31/97	7
	11/19/97
Filed on:	11/17/97			8-K
	11/14/97	16
	11/13/97	8	13
	11/11/97	1
For Period End:	9/30/97	1	15
	7/7/97	15		8-K
	7/3/97	8	12	8-K
	6/30/97	14		10QSB
	6/5/97	11
	5/15/97	8	12
	4/21/97	14
	3/22/97	10
	2/1/97	11
	12/31/96	3	13	10KSB
	11/1/96	11
	10/30/96	8	12
	10/18/96	11		8-K
	9/30/96	2	14	10QSB
	6/30/96	7		10QSB
	4/11/96	14
	3/31/96	7		10QSB
	12/31/95	10		10KSB, NT 10-K
	9/1/95	14		8-K
	8/10/95	14
	7/27/95	14
	7/14/95	14
	4/28/95	14
	4/14/95	14
	1/26/95	14
	11/17/94	10	11
	6/28/94	7
	3/25/94	10
	2/28/94	14
				List all Filings

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Filing Submission 0000790934-97-000012 – Alternative Formats (Word / Rich Text, HTML, Plain Text, et al.)

Reynolds Debbie Hotel & Casino Inc – ‘10QSB’ for 9/30/97

As of: Monday, 11/17/97 · For: 9/30/97 · Accession #: 790934-97-12 · File #: 0-18864

Previous ‘10QSB’: ‘10QSB’ on 9/9/97 for 6/30/97 · Latest ‘10QSB’: This Filing

Quarterly Report — Small Business — Form 10-QSBFiling Table of Contents

10QSB — Third Quarter 10-QsbDocument Table of Contents

Dates Referenced Herein and Documents Incorporated by Reference

Quarterly Report — Small Business — Form 10-QSB
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10QSB — Third Quarter 10-Qsb
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