GAAP requires that certain debt obligations be shown as a current liability, notwithstanding the fact that the Company expects to repay the debt in blended monthly instalments over several years. For example, the balance sheet shows long-term demand loans of $28.2 million as a current liability, yet the amortization tables we received from the lenders show that the Company can expect to repay only $1.0 million to the lenders over the next twelve months. As a result of showing the entire liability as current, the Company had a net working capital deficiency at the end of June of $41.1 million, a reduction from $42.1 million as at December 31, 2006. The deficiency also includes a liability of $13.6 million due to related parties ($14.0 million as at December 31, 2006).

Due to the cyclical nature of the hospitality industry and the location of the Company’s properties, the Company does not produce positive cash flow until the second quarter of each year. The Company requires significant working capital resources prior to the return to positive cash flow, which shortfall is currently financed through cash reserves and available revolving demand loan facilities. During the peak business periods, being the second and third quarters, the Company will accumulate sufficient cash reserves to fund the shortfall through the fourth quarter of 2007 and into the first quarter of 2008. At June 30, 2007 the Company had available cash on hand of $2.0 million, down from $2.1 million at December 31, 2006, plus access to lines of credit totalling $1.75 million.