x
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Annual
Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
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o
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Transition
Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
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Nevada
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88-0142032
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(State
or other jurisdiction of Incorporation or organization)
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(IRS
Employer Identification No.)
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50
Briar Hollow Lane, Suite 500W, Houston, Texas
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77027
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(Address
of principal executive offices)
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(Zip
Code)
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Title of each class
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Name of each exchange on which
registered
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Common
stock, $0.12 par value
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New
York Stock Exchange AMEX
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Page
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PART
I
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ITEM
1.
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BUSINESS
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1
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ITEM
1A.
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RISK
FACTORS
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6
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ITEM
1B.
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UNRESOLVED
STAFF COMMENTS
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8
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ITEM
2.
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PROPERTIES
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8
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ITEM
3.
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LEGAL
PROCEEDINGS
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8
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ITEM
4.
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REMOVED
AND RESERVED
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8
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PART
II
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||||
ITEM
5.
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MARKET
FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
PURCHASES OF EQUITY SECURITIES
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8
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ITEM
6.
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SELECTED
FINANCIAL DATA
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10
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ITEM
7.
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MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
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10
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ITEM
7A.
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QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
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18
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ITEM
8.
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FINANCIAL
STATEMENTS AND SUPPLEMENTARY DATA
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18
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ITEM
9.
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CHANGES
IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
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18
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ITEM
9A.
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CONTROLS
AND PROCEDURES
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19
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ITEM
9B.
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OTHER
INFORMATION
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20
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PART
III
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||||
ITEM
10.
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DIRECTORS,
EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
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20
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ITEM
11.
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EXECUTIVE
COMPENSATION
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20
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ITEM
12.
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SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS
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20
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ITEM
13.
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CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR
INDEPENDENCE
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20
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ITEM
14.
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PRINCIPAL
ACCOUNTANT FEES AND SERVICES
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20
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PART
IV
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||||
ITEM
15.
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EXHIBITS
AND FINANCIAL STATEMENT SCHEDULES
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20
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Item
1.
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Business
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-
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enhancing
the return from, and the value of, the gaming properties in which we own
interests;
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-
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acquiring
or developing additional gaming
properties; and
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-
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assisting
in finding financing, developing and/or managing of, or providing
consulting services to gaming
projects.
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Item
1A.
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Risk
Factors
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·
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increase
our vulnerability to general adverse economic and industry conditions or a
downturn in our business;
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·
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limit
our ability to fund future working capital, capital expenditures and other
general operating requirements;
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·
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place
us at a competitive disadvantage compared to our competitors that have
less debt or greater resources; and
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·
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limit
our ability to borrow additional
funds.
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Item
1B.
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Unresolved
Staff Comments
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Item
2.
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Properties
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Item
3.
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Legal
Proceedings
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Item
4.
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Removed
and Reserved
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Item 5.
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Market For Registrant’s Common
Equity, Related Stockholder
Matters and
Issuer Purchases of Equity
Securities
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Fiscal
Years Ended
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||||||||||||||||
April
30, 2010
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April
30, 2009
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|||||||||||||||
High
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Low
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High
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Low
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|||||||||||||
First
Quarter
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$ | 1.40 | $ | .80 | $ | 1.34 | $ | 1.02 | ||||||||
Second
Quarter
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1.27 | .97 | 1.29 | .53 | ||||||||||||
Third
Quarter
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1.08 | .83 | .89 | .38 | ||||||||||||
Fourth
Quarter
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1.10 | .74 | .84 | .66 |
Plan Category
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Number of
Securities
To be Issued Upon
Exercise of
Outstanding
Options, Warrants
and Rights
(A)
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Weighted Average
Exercise Price of
Outstanding
Options,
Warrants and
Rights
(B)
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Number of Securities
Remaining Available
for Future Issuance
Under Equity
Compensation Plans
(Excluding Securities
Reflected in Column
(A) (C)
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||||||||
Equity
Compensation Plans Approved by Security Holders
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1,456,000 | $ | 1.77 | 1,320,000 | |||||||
Equity
Compensation Plans Not Approved by Security Holders
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— | $ | — | — | |||||||
Total
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1,456,000 | $ | 1.77 | 1,320,000 |
Item
6.
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Selected
Financial Data
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Item 7.
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Management’s Discussion and
Analysis of Financial Condition and Results of
Operations
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Fiscal
Year Ended
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||||||||
April
30, 2010
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April
30, 2009
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|||||||
Food
and beverage
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$ | 1,120,638 | $ | 595,499 | ||||
Other
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13,601 | 5,994 | ||||||
Total
cost of complimentary services
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$ | 1,134,239 | $ | 601,493 |
Net Ownership Interest
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Capitalized Development Costs
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|||||||||||||||
Development Projects:
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April 30,
2010
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April 30,
2009
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April 30,
2010
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April 30,
2009
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||||||||||||
(Percent)
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||||||||||||||||
NG
Washington, LLC (1)
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100 | 100 | $ | - | $ | 617,071 | ||||||||||
Nevada
Gold Speedway, LLC (2)
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100 | - | 90,652 | - | ||||||||||||
NG
Washington II, LLC (3)
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100 | - | 1,273,731 | - | ||||||||||||
Other
(4)
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54,406 | 128,953 | ||||||||||||||
Total
investments– development projects
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$ | 1,418,789 | $ | 746,024 |
(1)
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Refundable
deposits and license costs incurred for three mini-casinos in Washington
State; acquisition closed May 12,
2009.
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(2)
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Deposit
and acquisition costs related to management and technical services
contract for development of Las Vegas Speedway casino and
hotel
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(3)
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Refundable
deposits and license costs incurred for seven additional mini-casinos in
Washington State
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(4)
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Development
costs incurred for other development
projects.
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Fiscal
Years Ended
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||||||||
April
30,
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April
30,
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|||||||
2010
|
2009
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|||||||
Revenues:
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||||||||
Casino
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$ | 18,822,900 | $ | 5,356,885 | ||||
Food
and beverage
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4,534,744 | 1,395,130 | ||||||
Other
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865,264 | 49,366 | ||||||
Management
fees
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620,968 | 493,382 | ||||||
Gross
revenues
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24,843,876 | 7,294,763 | ||||||
Less
promotional allowances
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(2,817,888 | ) | (1,426,511 | ) | ||||
Net
revenues
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22,025,988 | 5,868,252 | ||||||
Operating
expenses:
|
||||||||
Casino
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8,562,284 | 1,750,014 | ||||||
Food
and beverage
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2,851,635 | 614,779 | ||||||
Marketing
and administrative
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5,564,288 | 2,485,881 | ||||||
Facility
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1,070,933 | 362,009 | ||||||
Corporate
expense
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4,216,475 | 4,366,670 | ||||||
Legal
expenses
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241,468 | 403,694 | ||||||
Depreciation
and amortization
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1,344,323 | 627,618 | ||||||
Impairment
of assets
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4,347,183 | - | ||||||
Write-off
of project development cost
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50,486 | 1,215,383 | ||||||
Other
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476,395 | 145,018 | ||||||
Total
operating expenses
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28,725,470 | 11,971,066 | ||||||
Operating
loss
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(6,699,482 | ) | (6,102,814 | ) | ||||
Non-operating
income (expenses):
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||||||||
Loss
from unconsolidated affiliates
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- | (7,863 | ) | |||||
Gain
on sale of equity investees and assets
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16,511 | 403,388 | ||||||
Interest
income
|
192,708 | 975,490 | ||||||
Interest
expense
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(866,034 | ) | (1,307,296 | ) | ||||
Amortization
of loan issue costs
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(58,972 | ) | (128,266 | ) | ||||
Loss
on extinguishment of debt
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(128,834 | ) | - | |||||
Loss
before income tax benefit
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(7,544,103 | ) | (6,167,361 | ) | ||||
Income
tax (benefit) expense
|
||||||||
Current
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(1,546,698 | ) | (2,265,155 | ) | ||||
Deferred
and change in valuation allowance
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(1,248,623 | ) | 285,930 | |||||
Total
income tax benefit
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(2,795,321 | ) | (1,979,225 | ) | ||||
Net
loss
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$ | (4,748,782 | ) | $ | (4,188,136 | ) | ||
Per
share information:
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||||||||
Net
loss per common share - basic
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$ | (0.37 | ) | $ | (0.32 | ) | ||
Net
loss per common share - diluted
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$ | (0.37 | ) | $ | (0.32 | ) | ||
Basic
weighted average number of shares outstanding
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12,878,240 | 12,939,130 | ||||||
Diluted
weighted average number of shares outstanding
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12,878,240 | 12,939,130 |
Fiscal
Years Ended
|
||||||||
April
30,
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April
30,
|
|||||||
2010
|
2009
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|||||||
Cash
provided by (used in):
|
||||||||
Operating
activities
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$ | 985,493 | $ | (5,507,059 | ) | |||
Investing
activities
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$ | (11,318,508 | ) | $ | 27,507,309 | |||
Financing
activities
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$ | (345,793 | ) | $ | (9,562,019 | ) |
Fiscal
Year
|
||||||||||||||||||||||||||||
Estimated
Contractual Obligations:
|
Total
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2011
|
2012
|
2013
|
2014
|
2015
|
Thereafter
|
|||||||||||||||||||||
Long-term
debt (1)
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$ | 10,000,000 | $ | — | $ | — | $ | 4,000,000 | $ | 6,000,000 | $ | — | $ | — | ||||||||||||||
Estimated
interest payments (2)
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2,648,280 | 930,000 | 940,000 | 668,280 | 110,000 | — | — | |||||||||||||||||||||
Operating
lease commitments (3)
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9,431,986 | 715,986 | 416,000 | 400,000 | 400,000 | 400,000 | 7,100,000 | |||||||||||||||||||||
Total
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$ | 22,080,266 | $ | 1,645,986 | $ | 1,356,000 | $ | 5,068,280 | $ | 6,510,000 | $ | 400,000 | $ | 7,100,000 |
(1)
|
See
Note 6 to our Consolidated Financial Statements in this Annual
Report.
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(2)
|
Estimated
interest payments are based on the outstanding balance of our debt as of
April 30, 2010.
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(3)
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See
Note 15 to our Consolidated Financial Statement in this Annual
Report.
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Item 7A.
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Quantitative and Qualitative
Disclosures About Market
Risk
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Item
8.
|
Financial
Statements and Supplementary Data
|
Item 9.
|
Changes in and Disagreements
with Accountants on Accounting and Financial
Disclosure
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Item 9A.
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Controls and
Procedures
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|
1.
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Pertain
to the maintenance of records that, in reasonable detail, accurately and
fairly reflect the transactions and dispositions of the assets of the
Company;
|
|
2.
|
provide
reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the Company
are being made only in accordance with authorizations of management and
directors of the Company; and
|
|
3.
|
provide
reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use, or disposition of the Company’s assets that
could have a material effect on the financial
statements.
|
Item
9B.
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Other
Information
|
Item
10.
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Directors,
Executive Officers and Corporate
Governance
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Item
11.
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Executive
Compensation
|
Item 12.
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Security Ownership of Certain
Beneficial Owners and Management and Related Stockholder
Matters
|
Item
13.
|
Certain
Relationships and Related Party Transactions and Director
Independence
|
Item 14.
|
Principal Accountant Fees and
Services
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Item 15.
|
Exhibits, Financial Statement
Schedules
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(a)
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3.
Exhibits
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EXHIBIT
NUMBER
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DESCRIPTION
|
|
3.1A
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Amended
and Restated Articles of Incorporation of Nevada Gold & Casinos, Inc.
(filed previously as Exhibit A to the Company's definitive proxy statement
filed on Schedule 14A on July 30, 2001)
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3.1B
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Certificate
of Amendment to the Articles of Incorporation of Nevada Gold &
Casinos, Inc. (filed previously as Exhibit 4.2 to the Company’s Form S-8
filed October 11, 2002)
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3.1C
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Certificate
of Amendment to the Articles of Incorporation of Nevada Gold &
Casinos, Inc. (filed previously as Exhibit 3.3 to the Company’s Form 10-Q
filed November 9, 2004)
|
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3.1D
|
Certificate
of Amendment to the Articles of Incorporation of Nevada Gold &
Casinos, Inc. (filed previously as Exhibit 3.1 to the Company’s Form 8-K
filed October 17, 2007)
|
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3.2
|
Amended
and Restated Bylaws of Nevada Gold & Casinos, Inc. (filed previously
as Exhibit 3.2 to the Company’s From 10-QSB filed August 14,
2002)
|
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3.3
|
Amended
and Restated Bylaws of Nevada Gold & Casinos, Inc., effective July 24,
2007 (filed previously as Exhibit 3.2 to the Company’s From 8-K filed July
27, 2007)
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4.1
|
Common
Stock Certificate of Nevada Gold & Casinos, Inc. (filed previously as
Exhibit 4.1 to the Company’s Form S-8/A, file no.
333-79867)
|
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4.2
|
Second
Amended and Restated Nevada Gold & Casinos, Inc. 1999 Stock Option
Plan (filed previously as Exhibit 4.6 to the Company’s Form S-8, file no.
333-126027)
|
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4.3
|
Nevada
Gold & Casinos, Inc.’s 2009 Equity Incentive Plan (filed previously as
Exhibit 10.1 to the Company’s Form S-8, file no.
333-158576)
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10.1
|
Stock
Purchase Agreement dated as of April 25, 2005 among Isle of Capri Black
Hawk, L.L.C., IC Holdings Colorado, Inc., Colorado Grande Enterprise,
Inc., and CGC Holdings, L.L.C. (filed previously as Exhibit 2.1 to the
Company’s Form 8-K filed April 29, 2005)
|
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10.2
|
Purchase
Agreement dated November 25, 2009 between Nevada Gold BVR, LLC and B.V.
Oro, LLC (filed previously as Exhibit 10.1 to the Company’s Form 8-K filed
December 12, 2009)
|
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10.3
|
Management
Agreement dated November 10, 2009 between Nevada Gold & Casinos, Inc.
and Oceans Casino Cruises, Inc. (filed previously as Exhibit 10.1 to the
Company’s Form 8-K filed November 12, 2009)
|
|
10.4
|
Settlement
Agreement and Release dated April 15, 2009 among Nevada Gold &
Casinos, Inc., American Heritage, Inc. and Frederick C. Gillmann (filed
previously as Exhibit 10.1 to the Company’s Form 8-K filed April 16,
2009)
|
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10.5
|
Asset
Purchase Agreement dated March 12, 2010 among Crazy Moose Casino, Inc.,
Crazy Moose Casino II, Inc., Coyote Bob’s, Inc. and Gullwing III, LLC, as
sellers, and NG Washington, LLC, as purchaser (filed previously as Exhibit
10.1 to the Company’s Form 8-K filed March 13, 2010)
|
|
10.6
(**)
|
Amended
and Restated Credit Facility dated January 19, 2006 (portions of this
exhibit have been omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment in
accordance with Rule 24b-2 under the Exchange Act) (filed previously as
Exhibit 10.15 to the Company's Form 8-K filed January 25,
2006)
|
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10.7 (**)
|
Form
of Guarantee of Credit Facility among Nevada Gold and Casinos, Inc., each
of Black Hawk Gold, LTD, Gold River, LLC, Nevada Gold BVR, LLC, and Nevada
Gold NY, Inc., and the Lender signing as a party thereto (portions of this
exhibit have been omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment in
accordance with Rule 24b-2 under the Exchange Act) (filed previously as
Exhibit 10.16 to the Company’s Form 10-Q filed March 3,
2006)
|
|
10.8 (**)
|
January
2006 Security Agreement dated January 19, 2006, by and between Nevada Gold
& Casinos, Inc., its wholly-owned subsidiary, Black Hawk Gold, Ltd.,
and the Lender listed as a party thereto (portions of this exhibit have
been omitted and filed separately with the Securities and Exchange
Commission pursuant to a request for confidential treatment in accordance
with Rule 24b-2 under the Exchange Act) (filed previously as Exhibit 10.17
to the Company’s Form 10-Q filed March 3, 2006)
|
|
Commercial
Pledge Agreement dated January 19, 2006, among Nevada Gold & Casinos,
Inc., Black Hawk Gold, LTD, and the Lender listed as a party thereto
(portions of this exhibit have been omitted and filed separately with the
Securities and Exchange Commission pursuant to a request for confidential
treatment in accordance with Rule 24b-2 under the Exchange Act) (filed
previously as Exhibit 10.18 to the Company’s Form 10-Q filed March 3,
2006)
|
||
10.10 (**)
|
Commercial
Pledge Agreement dated January 19, 2006, among Nevada Gold & Casinos,
Inc., Nevada Gold BVR, and the Lender listed as a party thereto (portions
of this exhibit have been omitted and filed separately with the Securities
and Exchange Commission pursuant to a request for confidential treatment
in accordance with Rule 24b-2 under the Exchange Act) (filed previously as
Exhibit 10.19 to the Company’s Form 10-Q filed March 3,
2006)
|
|
10.11 (**)
|
Commercial
Pledge Agreement dated January 19, 2006 among Nevada Gold & Casinos,
Inc., Gold River, LLC, and the Lender listed as a party thereto (portions
of this exhibit have been omitted and filed separately with the Securities
and Exchange Commission pursuant to a request for confidential treatment
in accordance with Rule 24b-2 under the Exchange Act) (filed previously as
Exhibit 10.20 to the Company’s Form 10-Q filed March 3, 2006)
|
|
10.12 (**)
|
Commercial
Pledge Agreement dated January 19, 2006, among Nevada Gold & Casinos,
Inc., Nevada Gold NY, Inc., and the Lender listed as a party thereto
(portions of this exhibit have been omitted and filed separately with the
Securities and Exchange Commission pursuant to a request for confidential
treatment in accordance with Rule 24b-2 under the Exchange Act) (filed
previously as Exhibit 10.21 to the Company’s Form 10-Q filed March 3,
2006)
|
|
10.13
|
Amendment
to the Amended and Restated Credit Facility dated January 19, 2006 among
Nevada Gold & Casinos, Inc., Black Hawk Gold, Ltd. and Louise H.
Rogers dated July 30, 2007 (filed previously as Exhibit 10.1 to the
Company’s Form 8-K filed July 30, 2007)
|
|
10.14
|
Amendment
to the Amended and Restated Credit Facility dated January 19, 2006 between
Nevada Gold & Casinos, Inc. and Louise H. Rogers dated October 12,
2007 (filed previously as Exhibit 10.1 to the Company’s Form 8-K filed
October 15, 2007)
|
|
10.15
|
Amendment
to the Amended and Restated Credit Facility dated January 19, 2006 between
Nevada Gold & Casinos, Inc. and Louise H. Rogers dated December 20,
2007 (filed previously as Exhibit 10.1 to the Company’s Form 8-K filed
December 21, 2007)
|
|
10.16
|
Agreement
Regarding Use of Proceeds of IC-BH Sale and Regarding Remaining Amount Due
Under the Amended and Restated Credit Facility among Nevada Gold &
Casinos, Inc., Black Hawk Gold, Ltd. and Louise H. Rogers dated November
13, 2007 (filed previously as Exhibit 10.1 to the Company’s Form 8-K filed
November 13, 2007)
|
|
10.17
|
Amendment
to the January 2006 Security Agreement among Nevada Gold & Casinos,
Inc., Black Hawk Gold, Ltd. and Louise H. Rogers dated November 13, 2007
(filed previously as Exhibit 10.2 to the Company’s Form 8-K filed November
13, 2007)
|
|
10.18
|
Agreement
Regarding Use of Proceeds from RCI/CCH Notes Receivable between Nevada
Gold & Casinos, Inc. and Louise H. Rogers dated November 13, 2007
(filed previously as Exhibit 10.3 to the Company’s Form 8-K filed November
13, 2007)
|
|
10.19
|
Promissory
Note issued by Nevada Gold & Casinos, Inc. to Louise H. Rogers dated
November 13, 2007 (filed previously as Exhibit 10.4 to the Company’s Form
8-K filed November 13, 2007)
|
|
10.20
|
Agreement
Regarding Loans effective March 1, 2009 between Nevada Gold & Casinos,
Inc. and Louise H. Rogers (filed previously as Exhibit 10.1 to the
Company’s Form 8-K filed June 17, 2009)
|
|
10.21
|
Amended
and Restated Security Agreement effective March 1, 2009 between Nevada
Gold & Casinos, Inc. and Louise H. Rogers (filed previously as Exhibit
10.2 to the Company’s Form 8-K filed June 17, 2009)
|
|
10.22
|
Schedule
of Collateral, Notes, Security Interests and Ownership Interests effective
March 1, 2009 between Nevada Gold & Casinos, Inc. and Louise H. Rogers
(filed previously as Exhibit 10.3 to the Company’s Form 8-K filed June 17,
2009)
|
|
10.23
|
Promissory
Note issued by Nevada Gold & Casinos, Inc. to Louise H. Rogers
effective March 1, 2009 (filed previously as Exhibit 10.4 to the Company’s
Form 8-K filed June 17, 2009)
|
|
July
2009 Amended and Restated Security Agreement among Nevada Gold &
Casinos, Inc., Gold Mountain Development, LLC, CGC Holdings, LLC, Colorado
Grande Enterprises, Inc., Nevada Gold BVR, LLC and Louise H. Rogers dated
July 7, 2009 (filed previously as Exhibit 10.1 to the Company’s Form 8-K
filed July 7, 2009)
|
||
10.25
|
Schedule
of Collateral, Notes, Security Interests and Ownership Interests dated
July 7, 2009 among Nevada Gold & Casinos, Inc., Gold Mountain
Development, LLC, CGC Holdings, LLC, Colorado Grande Enterprises, Inc.,
Nevada Gold BVR, LLC and Louise H. Rogers dated July 7, 2009 (filed
previously as Exhibit 10.2 to the Company’s Form 8-K filed July 7,
2009)
|
|
10.26
|
Collateral
Assignment of Notes, Contractual Rights, Security Interests, and Ownership
Interests dated July 7, 2009 among Nevada Gold & Casinos, Inc., Gold
Mountain Development, LLC, CGC Holdings, LLC, Colorado Grande Enterprises,
Inc., Nevada Gold BVR, LLC and Louise H. Rogers dated July 7, 2009 (filed
previously as Exhibit 10.3 to the Company’s Form 8-K filed July 7,
2009)
|
|
10.27
|
Promissory
Note issued by Nevada Gold & Casinos, Inc. to the senior lender dated
July 7, 2009 between Nevada Gold & Casinos, Inc. and Louise H. Rogers
dated July 7, 2009 (filed previously as Exhibit 10.4 to the Company’s Form
8-K filed July 7, 2009)
|
|
10.28
|
Loan
Guaranty Agreement dated July 7, 2009 among Nevada Gold & Casinos,
Inc., Gold Mountain Development, LLC, CGC Holdings, LLC, Colorado Grande
Enterprises, Inc., NG Washington, LLC, Nevada Gold BVR, LLC and Louise H.
Rogers dated July 7, 2009 (filed previously as Exhibit 10.5 to the
Company’s Form 8-K filed July 7, 2009)
|
|
10.29
(+)
|
Form
of Indemnification Agreement between Nevada Gold & Casinos, Inc. and
each officer and director (filed previously as Exhibit 10.5 to the
Company’s Form 10-QSB, filed February 14, 2002)
|
|
10.30A
(+)
|
Employment
Agreement dated November 27, 2006 by and between Robert B. Sturges and
Nevada Gold & Casinos, Inc. (filed previously as Exhibit 10.27 to the
Company’s Form 10-Q filed December 15, 2006)
|
|
10.30B (+)
|
Amendment
to the Employment Agreement dated August 30, 2007 by and between Robert B.
Sturges and Nevada Gold & Casinos, Inc. (filed previously as Exhibit
99.1 to the Company’s Form 8-K filed August 31, 2007)
|
|
10.30C (+)
|
Amendment
to the Employment Agreement dated October 30, 2007 by and between Robert
B. Sturges and Nevada Gold & Casinos, Inc. (filed previously as
Exhibit 99.1 to the Company’s Form 8-K filed October 30,
2007)
|
|
10.30D (+)
|
Second
Amendment to the Employment Agreement dated January 23, 2009 by and
between Robert B. Sturges and Nevada Gold & Casinos, Inc. (filed
previously as Exhibit 10.1 to the Company’s Form 8-K filed January 24,
2009)
|
|
10.31A (+)
|
Employment
Agreement dated October 24, 2006 by and between James J. Kohn and Nevada
Gold & Casinos, Inc. (filed previously as Exhibit 10.28 to the
Company’s Form 10-Q filed March 9, 2007)
|
|
10.31B(+)
|
First
Amendment to the Employment Agreement dated April 14, 2009 by and between
James J. Kohn and Nevada Gold & Casinos, Inc. (filed previously as
Exhibit 10.24B to the Company’s Form 10-Q filed September 9,
2009)
|
|
10.32A (+)
|
Employment
Agreement dated December 29, 2006 by and between Ernest E. East and Nevada
Gold & Casinos, Inc. (filed previously as Exhibit 10.28 to the
Company’s Form 10-Q filed March 9, 2007)
|
10.32B
(+)
|
First
Amendment to the Employment Agreement dated April 14, 2009 by and between
Ernest E. East and Nevada Gold & Casinos, Inc. (filed previously as
Exhibit 10.25B to the Company’s Form 10-Q filed September 9,
2009)
|
|
10.32C
(+)
|
Second
Amendment to Employment Agreement between Nevada Gold & Casinos, Inc.
and Ernest E. East dated June 8, 2010 (filed previously as Exhibit 10.1 to
the Company’s Form 8-K filed June 8, 2010)
|
|
10.33
|
Asset
Purchase Agreement dated April 14, 2010 between NG Washington II, LLC, as
buyer, and Grant Thornton, Ltd, as receiver for Big Nevada, Inc., Gameco,
Inc., Gaming Consultants, Inc., Gaming Management, Inc., Golden Nugget
Tukwila, Inc., Hollydrift Gaming, Inc., Little Nevada, Inc., Mill Creek
Gaming, Inc., Royal Casino Holdings, Inc., and Silver Dollar Mill Creek,
Inc. (filed previously as Exhibit 10.1 to the Company’s Form 8-K/A filed
April 23, 2010)
|
|
10.34
|
Amendment
to the Asset Purchase Agreement dated April 14, 2010 between NG Washington
II, LLC, as buyer, and Grant Thornton, Ltd, in its capacity as
court-appointed receiver for Big Nevada, Inc., Gameco, Inc., Gaming
Consultants, Inc., Gaming Management, Inc., Golden Nugget Tukwila, Inc.,
Hollydrift Gaming, Inc., Little Nevada, Inc., Mill Creek Gaming, Inc.,
Royal Casino Holdings, Inc. and Silver Dollar Mill Creek, Inc. (filed
previously as Exhibit 10.1 to the Company’s Form 8-K filed July 28,
2010)
|
|
10.35
|
Credit
Agreement dated July 23, 2010 between NG Washington II Holdings, LLC, as
Borrower, and Fortress Credit Corp., as agent for the lenders (filed
previously as Exhibit 10.1 to the Company’s Form 8-K filed July 28,
2010)
|
|
10.36
|
Membership
Interest Pledge Agreement dated July 23, 2010 between Nevada Gold &
Casinos, Inc., as grantor, and Fortress Credit Corp., as agent for the
lenders (filed previously as Exhibit 10.1 to the Company’s Form 8-K filed
July 28, 2010)
|
|
10.37
|
Pledge
and Security Agreement dated July 23, 2010 among NG Washington II
Holdings, LLC and NG Washington II, LLC, as grantors, and Fortress Credit
Corp., as agent for the lenders (filed previously as Exhibit 10.1 to the
Company’s Form 8-K filed July 28, 2010)
|
|
10.38
|
Promissory
Note dated July 23, 2010 issued by NG Washington II Holdings, LLC to
Fortress Credit Funding II LP (filed previously as Exhibit 10.1 to the
Company’s Form 8-K filed July 28, 2010)
|
|
10.39
|
Promissory
Note dated July 23, 2010 issued by NG Washington II Holdings, LLC to
Fortress Credit Opportunities I LP (filed previously as Exhibit 10.1 to
the Company’s Form 8-K filed July 28, 2010)
|
|
10.40
|
Guaranty
dated July 23, 2010 among NG Washington, LLC and NG Washington II, LLC, as
guarantors, and Fortress Credit Corp., as agent for the lenders (filed
previously as Exhibit 10.1 to the Company’s Form 8-K filed July 28,
2010)
|
|
23.1(*)
|
Consent
of Independent Registered Public Accounting Firm
|
|
31.1(*)
|
Chief
Executive Officer Certification Pursuant to Section 13a-14 of the
Securities Exchange Act.
|
|
31.2(*)
|
Chief
Financial Officer Certification Pursuant to Section 13a-14 of the
Securities Exchange Act.
|
|
32.1(*)
|
Certification
Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.
|
|
32.2(*)
|
Certification
Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.
|
+
|
Management
contract or compensatory plan, or arrangement.
|
*
|
Filed
herewith.
|
**
|
Portions
of these exhibits have been omitted pursuant to a request for confidential
treatment.
|
Nevada
Gold & Casinos, Inc.
|
||
By:
|
/s/ James J. Kohn
|
|
James
J. Kohn
|
||
Chief
Financial Officer
|
||
Date:
July 27, 2010
|
Signature
|
Title
|
Date
|
||
/s /WILLIAM J
SHERLOCK
|
||||
William
J. Sherlock
|
Chairman
of the Board of Directors
|
July
27, 2010
|
||
/s/ WILLIAM G. JAYROE
|
||||
William
G. Jayroe
|
Director
|
July
27, 2010
|
||
/s/ FRANK
CATANIA
|
||||
Frank
Catania
|
Director
|
July
27, 2010
|
||
/s/ FRANCIS M. RICCI
|
||||
Francis
M. Ricci
|
Director
|
July
27, 2010
|
||
/s/ WAYNE H. WHITE
|
||||
Wayne
H. White
|
Director
|
July
27, 2010
|
||
/s/ ROBERT B.
STURGES
|
Director
and Chief Executive Officer
|
|||
Robert
B. Sturges
|
(principal
executive officer)
|
July
27, 2010
|
||
/s/ JAMES J.
KOHN
|
EVP
and Chief Financial Officer (principal
|
July
27, 2010
|
||
James
J. Kohn
|
financial
officer and principal accounting officer)
|
Page
|
||
Report
of Independent Registered Public Accounting Firm
|
28
|
|
Consolidated
Balance Sheets as of April 30, 2010 and April 30,
2009
|
29
|
|
Consolidated
Statements of Operations for fiscal years ended April 30, 2010 and April
30, 2009
|
30
|
|
Consolidated
Statements of Stockholders’ Equity for fiscal years ended April 30, 2010
and April 30, 2009
|
31
|
|
Consolidated
Statements of Cash Flows for fiscal years ended April 30, 2010
and April 30, 2009
|
32
|
|
Notes
to Consolidated Financial Statements
|
33
|
/s/ Pannell Kerr Forster of Texas,
P.C.
|
|
Houston,
Texas
|
|
July
29, 2010
|
April
30,
|
April
30,
|
|||||||
2010
|
2009
|
|||||||
ASSETS
|
||||||||
Current
assets:
|
||||||||
Cash
and cash equivalents
|
$ | 3,155,736 | $ | 13,834,544 | ||||
Restricted
cash
|
5,266,938 | 6,000,000 | ||||||
Accounts
receivable
|
66,822 | 12,342 | ||||||
Prepaid
expenses
|
475,262 | 235,847 | ||||||
Income
tax receivable
|
1,750,374 | 1,872,369 | ||||||
Notes
receivable, current portion
|
- | 1,100,000 | ||||||
Other
current assets
|
155,796 | 46,444 | ||||||
Total
current assets
|
10,870,928 | 23,101,546 | ||||||
Investments
in development projects
|
1,418,789 | 746,024 | ||||||
Investments
in development projects held for sale
|
3,437,932 | 3,437,932 | ||||||
Notes
receivable - development projects, net of allowances
|
1,700,000 | 1,700,000 | ||||||
Goodwill
|
10,243,362 | 5,462,918 | ||||||
Identifiable
intangible assets , net of accumulated amortization of $729,000 and $0 at
April 30, 2010 and April 30, 2009, respectively
|
5,101,800 | - | ||||||
Property
and equipment, net of accumulated depreciation of $2,978,679 and
$2,408,595 at April 30, 2010 and April 30, 2009,
respectively
|
3,473,051 | 1,091,549 | ||||||
Deferred
tax asset
|
1,848,419 | 599,797 | ||||||
BVO
receivable
|
4,000,000 | 4,000,000 | ||||||
Other
assets, net of allowances
|
376,938 | 1,915,220 | ||||||
Total
assets
|
$ | 42,471,219 | $ | 42,054,986 | ||||
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
||||||||
Current
liabilities:
|
||||||||
Accounts
payable and accrued liabilities
|
$ | 1,060,017 | $ | 846,062 | ||||
Accrued
interest payable
|
70,000 | — | ||||||
Other
accrued liabilities
|
687,819 | 197,833 | ||||||
Total
current liabilities
|
1,817,836 | 1,043,895 | ||||||
Long-term
debt, net of current portion
|
10,000,000 | 6,000,000 | ||||||
Other
liabilities
|
30,944 | 44,487 | ||||||
Total
liabilities
|
11,848,780 | 7,088,382 | ||||||
Commitments
and contingencies
|
— | — | ||||||
Stockholders'
equity:
|
||||||||
Common
stock, $0.12 par value per share; 50,000,000 shares authorized; 13,935,330
shares issued and 12,764,130 and 12,939,130 shares outstanding at April
30, 2010, and April 30, 2009, respectively
|
1,672,240 | 1,672,240 | ||||||
Additional
paid-in capital
|
19,859,966 | 19,297,560 | ||||||
Retained
earnings
|
19,464,972 | 24,213,754 | ||||||
Treasury
stock, 1,171,200 and 996,200 shares at April 30, 2010 and April
30, 2009, respectively, at cost
|
(10,369,200 | ) | (10,216,950 | ) | ||||
Accumulated
other comprehensive loss
|
(5,539 | ) | — | |||||
Total
stockholders' equity
|
30,622,439 | 34,966,604 | ||||||
Total
liabilities and stockholders' equity
|
$ | 42,471,219 | $ | 42,054,986 |
Fiscal Years Ended
|
||||||||
April 30,
|
April 30,
|
|||||||
2010
|
2009
|
|||||||
Revenues:
|
||||||||
Casino
|
$ | 18,822,900 | $ | 5,356,885 | ||||
Food
and beverage
|
4,534,744 | 1,395,130 | ||||||
Other
|
865,264 | 49,366 | ||||||
Management
fees
|
620,968 | 493,382 | ||||||
Gross
revenues
|
24,843,876 | 7,294,763 | ||||||
Less
promotional allowances
|
(2,817,888 | ) | (1,426,511 | ) | ||||
Net
revenues
|
22,025,988 | 5,868,252 | ||||||
Operating
expenses:
|
||||||||
Casino
|
8,562,284 | 1,750,014 | ||||||
Food
and beverage
|
2,851,635 | 614,779 | ||||||
Marketing
and administrative
|
5,564,288 | 2,485,881 | ||||||
Facility
|
1,070,933 | 362,009 | ||||||
Corporate
expense
|
4,216,475 | 4,366,670 | ||||||
Legal
expenses
|
241,468 | 403,694 | ||||||
Depreciation
and amortization
|
1,344,323 | 627,618 | ||||||
Impairment
of assets
|
4,347,183 | - | ||||||
Write-off
of project development cost
|
50,486 | 1,215,383 | ||||||
Other
|
476,395 | 145,018 | ||||||
Total
operating expenses
|
28,725,470 | 11,971,066 | ||||||
Operating
loss
|
(6,699,482 | ) | (6,102,814 | ) | ||||
Non-operating
income (expenses):
|
||||||||
Loss
from unconsolidated affiliates
|
- | (7,863 | ) | |||||
Gain
on sale of equity investees
|
16,511 | 403,388 | ||||||
Interest
income
|
192,708 | 975,490 | ||||||
Interest
expense
|
(866,034 | ) | (1,307,296 | ) | ||||
Amortization
of loan issue costs
|
(58,972 | ) | (128,266 | ) | ||||
Loss
on extinguishment of debt
|
(128,834 | ) | - | |||||
Loss
before income tax expense (benefit)
|
(7,544,103 | ) | (6,167,361 | ) | ||||
Income
tax benefit
|
||||||||
Current
|
(1,546,698 | ) | (2,265,155 | ) | ||||
Deferred
and change in valuation allowance
|
(1,248,623 | ) | 285,930 | |||||
Total
income tax benefit
|
(2,795,321 | ) | (1,979,225 | ) | ||||
Net
loss
|
$ | (4,748,782 | ) | $ | (4,188,136 | ) | ||
Per
share information:
|
||||||||
Net
loss per common share - basic
|
$ | (0.37 | ) | $ | (0.32 | ) | ||
Net
loss per common share - diluted
|
$ | (0.37 | ) | $ | (0.32 | ) | ||
Basic
weighted average number of shares outstanding
|
12,878,240 | 12,939,130 | ||||||
Diluted
weighted average number of shares outstanding
|
12,878,240 | 12,939,130 |
Accumulated
|
||||||||||||||||||||||||||||
Additional
|
Other
|
Total
|
||||||||||||||||||||||||||
Common Stock
|
Paid-in
|
Retained
|
Treasury
|
Comprehensive
|
Stockholders'
|
|||||||||||||||||||||||
Shares
|
Amount
|
Capital
|
Earnings
|
Stock
|
Income
|
Equity
|
||||||||||||||||||||||
Balance
at April 27, 2008
|
13,935,330 | $ | 1,672,240 | $ | 19,092,706 | $ | 28,401,890 | $ | (10,216,950 | ) | $ | 9,460 | $ | 38,959,346 | ||||||||||||||
Comprehensive
income:
|
- | |||||||||||||||||||||||||||
Net
loss
|
— | — | — | (4,188,136 | ) | — | — | (4,188,136 | ) | |||||||||||||||||||
Unrealized
loss on securities available for sale, net of tax benefit
|
— | — | — | — | — | (9,460 | ) | (9,460 | ) | |||||||||||||||||||
Comprehensive
loss
|
(4,197,596 | ) | ||||||||||||||||||||||||||
Stock
based compensation
|
— | — | 204,854 | — | — | — | 204,854 | |||||||||||||||||||||
Balance
at April 30, 2009
|
13,935,330 | $ | 1,672,240 | $ | 19,297,560 | $ | 24,213,754 | $ | (10,216,950 | ) | $ | - | $ | 34,966,604 | ||||||||||||||
Net
loss
|
— | — | — | (4,748,782 | ) | — | — | (4,748,782 | ) | |||||||||||||||||||
Unrealized
loss on securities available for sale, net of tax benefit
|
— | — | — | — | — | (5,539 | ) | (5,539 | ) | |||||||||||||||||||
Comprehensive
loss
|
— | (4,754,321 | ) | |||||||||||||||||||||||||
Stock
repurchased at cost
|
— | — | (152,250 | ) | — | (152,250 | ) | |||||||||||||||||||||
Stock
based compensation
|
— | — | 562,406 | — | — | — | 562,406 | |||||||||||||||||||||
Balance
at April 30, 2010
|
13,935,330 | $ | 1,672,240 | $ | 19,859,966 | $ | 19,464,972 | $ | (10,369,200 | ) | $ | (5,539 | ) | $ | 30,622,439 |
Fiscal Years Ended
|
||||||||
April 30,
|
April 30,
|
|||||||
2010
|
2009
|
|||||||
Cash
flows from operating activities:
|
||||||||
Net
loss
|
$ | (4,748,782 | ) | $ | (4,188,136 | ) | ||
Adjustments
to reconcile net loss to net cash provided by (used in) operating
activities:
|
||||||||
Depreciation
and amortization
|
1,344,323 | 627,618 | ||||||
Stock
based compensation
|
562,406 | 204,854 | ||||||
Write-off
of project development costs
|
50,486 | 1,215,383 | ||||||
Impairment
of assets
|
4,347,183 | — | ||||||
Amortization
of deferred loan issuance costs
|
58,972 | 128,266 | ||||||
Gain
on sale of equity investments, net
|
(16,511 | ) | (403,388 | ) | ||||
Distributions
from unconsolidated affiliates
|
- | 3,917 | ||||||
Loss
from unconsolidated affiliates
|
- | 7,863 | ||||||
Loss
on extinguishment of debt
|
128,834 | — | ||||||
Deferred
income tax expense (benefit)
|
(1,248,623 | ) | 285,930 | |||||
Changes
in operating assets and liabilities:
|
||||||||
Receivables
and other assets
|
(307,536 | ) | 1,043,587 | |||||
Accounts
payable and accrued liabilities
|
814,741 | (4,432,953 | ) | |||||
Net
cash provided by (used in) operating activities
|
985,493 | (5,507,059 | ) | |||||
Cash
flows from investing activities:
|
||||||||
Purchases
of real estate and assets held for development
|
(1,384,855 | ) | (803,499 | ) | ||||
Equity
investment in unconsolidated affiliates
|
- | (25,000 | ) | |||||
Purchase
of property and equipment
|
(11,766,715 | ) | (379,296 | ) | ||||
Net
proceeds from sale of equity investments, marketable securities and assets
securities and assets
|
- | 16,000,000 | ||||||
Collections
of notes receivable
|
- | 4,601,104 | ||||||
Collections
of notes receivable - affiliates
|
1,100,000 | 1,100,000 | ||||||
Release
of restricted cash
|
733,062 | 7,014,000 | ||||||
Net
cash provided by (used in) investing activities
|
(11,318,508 | ) | 27,507,309 | |||||
Cash
flows from financing activities:
|
||||||||
Repayment
on term loans
|
- | (9,550,000 | ) | |||||
Proceeds
from short term loans
|
150,000 | — | ||||||
Repayment
on short term loans
|
(150,000 | ) | — | |||||
Acquistion
of treasury stock at cost
|
(152,250 | ) | — | |||||
Deferred
loan issuance costs
|
(180,000 | ) | — | |||||
Payments
on capital lease
|
(13,543 | ) | (12,019 | ) | ||||
Net
cash used in financing activities
|
(345,793 | ) | (9,562,019 | ) | ||||
Net
increase (decrease) in cash and cash equivalents
|
(10,678,808 | ) | 12,438,231 | |||||
Cash
and cash equivalents at beginning of period
|
13,834,544 | 1,396,313 | ||||||
Cash
and cash equivalents at end of period
|
$ | 3,155,736 | $ | 13,834,544 | ||||
Supplemental
cash flow information:
|
||||||||
Cash
paid for interest
|
$ | 810,000 | $ | 1,416,164 | ||||
Income
tax payments
|
$ | - | $ | 3,638,421 | ||||
Non-cash
investing and financing activities:
|
||||||||
Equity
investment conversion to accounts receivable
|
$ | - | $ | 1,035,000 | ||||
Non-cash
purchase of property and equipment
|
$ | 4,000,000 | $ | — | ||||
Unrealized
loss on marketable securities
|
$ | (5,539 | ) | $ | (9,460 | ) |
Estimated
|
||||||||||||
April 30,
|
April 30,
|
Service Life
|
||||||||||
2010
|
2009
|
in Years
|
||||||||||
Leasehold
improvements
|
$ | 872,754 | $ | 333,431 |
7-25
|
|||||||
Gaming
equipment
|
2,130,607 | 1,995,809 |
3-5
|
|||||||||
Furniture
and office equipment
|
1,704,469 | 916,646 |
3-7
|
|||||||||
Building
and improvements
|
1,612,250 | - |
15-30
|
|||||||||
Land
|
129,750 | 42,000 | ||||||||||
Construction
in Progress
|
1,900 | 212,258 | ||||||||||
6,451,730 | 3,500,144 | |||||||||||
Less
accumulated depreciation
|
(2,978,679 | ) | (2,408,595 | ) | ||||||||
Property
and equipment, net
|
$ | 3,473,051 | $ | 1,091,549 |
Total
|
Goodwill
|
Other
Intangibles
|
||||||||||
Net
balance as of April 30, 2009
|
$ | 5,463 | $ | 5,463 | $ | 0 | ||||||
Acquired
during the year
|
13,361 | 7,530 | 5,831 | |||||||||
Impairment
|
(2,750 | ) | (2,750 | ) | 0 | |||||||
Accumulated
amortization
|
(729 | ) | - | (729 | ) | |||||||
Balance
as of April 30, 2010
|
$ | 15,345 | $ | 10,243 | $ |
5,102
|
As of April 30, 2010
|
||||||||
Gross
Carrying
Amount
|
Accumulated
Amortization
|
|||||||
Customer
relationships
|
$ | 2,951 | $ | (404 | ) | |||
Non-compete
agreements
|
1,018 | (325 | ) | |||||
Trade
names
|
1,862 | 0 | ||||||
Total
|
$ | 5,831 | $ | (729 | ) |
2011
|
$ | 761 | ||
2012
|
$ | 761 | ||
2013
|
$ | 421 | ||
2014
|
$ | 421 | ||
2015
|
$ | 421 | ||
Thereafter
|
$ | 455 |
Fiscal Year
Ended
|
Fiscal Year
Ended
|
|||||||
April 30, 2010
|
April 30, 2009
|
|||||||
Food
and beverage
|
$ | 1,120,638 | $ | 595,499 | ||||
Other
|
13,601 | 5,994 | ||||||
Total
cost of complimentary services
|
$ | 1,134,239 | $ | 601,493 |
Net Ownership Interest
|
Capitalized Development Costs
|
|||||||||||||||
Development Projects:
|
April 30,
2010
|
April 30,
2009
|
April 30,
2010
|
April 30,
2009
|
||||||||||||
(Percent)
|
||||||||||||||||
NG
Washington, LLC (1)
|
100 | 100 | $ | - | $ | 617,071 | ||||||||||
Nevada
Gold Speedway, LLC (2)
|
100 | - | 90,652 | - | ||||||||||||
NG
Washington II, LLC (3)
|
100 | - | 1,273,731 | - | ||||||||||||
Other
(4)
|
54,406 | 128,953 | ||||||||||||||
Total
investments– development projects
|
$ | 1,418,789 | $ | 746,024 |
(1)
|
Refundable
deposits and license costs incurred for three mini casinos in Washington
State; acquisition closed May 12,
2009.
|
(2)
|
Deposit
and acquisition costs related to management and technical services
contract for development of Speedway casino and
hotel
|
(3)
|
Refundable
deposits and license costs incurred for the acquisition of seven
additional mini-casinos in Washington State (see Note
17).
|
(4)
|
Development
cost incurred for other development
projects.
|
April 30,
|
April 30,
|
|||||||
2010
|
2009
|
|||||||
$6.0
million Promissory Note, 10%, through June 30, 2010 and 11% until maturity
at June 30, 2013
|
$ | 6,000,000 | $ | 6,000,000 | ||||
$4.0
million Promissory Note, 7%, maturing May 12, 2012
|
4,000,000 | |||||||
Total
|
10,000,000 | 6,000,000 | ||||||
Less:
current maturities
|
- | - | ||||||
Long-term
debt, less current maturities
|
$ | 10,000,000 | $ | 6,000,000 |
Fiscal Year Ending
|
||||
2011
|
$ | - | ||
2012
|
- | |||
2013
|
4,000,000 | |||
2014
|
6,000,000 | |||
2015
|
- | |||
$ | 10,000,000 |
(000’s)
|
||||
Current
assets and payroll liabilities
|
$ | (11 | ) | |
Property
and equipment
|
2,400 | |||
Customer
Relationships
|
2,951 | |||
Trade
names
|
1,862 | |||
Noncompete
|
1,018 | |||
Goodwill
|
7,530 | |||
Purchase
price
|
$ | 15,750 |
April 30, 2010
|
April 30, 2009
|
|||||||
Deferred
tax assets:
|
||||||||
Net
operating loss carryforwards
|
$ | 47,705 | $ | 39,746 | ||||
Fixed
assets
|
432,235 | 583,401 | ||||||
Stock
options
|
482,477 | 304,927 | ||||||
Impairment
of note receivable and goodwill
|
1,140,633 | 552,917 | ||||||
Other
|
52,545 | - | ||||||
Total
deferred tax assets
|
2,155,595 | 1,480,991 | ||||||
Deferred
tax liabilities:
|
||||||||
Amortization
of intangibles
|
(307,176 | ) | (164,709 | ) | ||||
Revenue
not recognized for tax reporting and other
|
- | (716,485 | ) | |||||
Total
deferred tax liabilities
|
(307,176 | ) | (881,194 | ) | ||||
Net
deferred tax assets before valuation allowance
|
1,848,419 | 599,797 | ||||||
Valuation
allowance
|
- | - | ||||||
Net
deferred tax assets
|
$ | 1,848,419 | $ | 599,797 |
Years Ended
|
||||||||||||||||
April 30, 2010
|
April 30, 2009
|
|||||||||||||||
Percent
|
Dollars
|
Percent
|
Dollars
|
|||||||||||||
Income
tax benefit at statutory federal rate
|
(34.0 | ) | $ | (2,564,995 | ) | (34.0 | ) | $ | (2,096,903 | ) | ||||||
State
taxes
|
(0.1 | ) | (7,959 | ) | (0.8 | ) | (49,038 | ) | ||||||||
Permanent
differences:
|
||||||||||||||||
Filed
return to financial statement provision (permanent true-up of book balance
to return)
|
(3.0 | ) | (222,367 | ) | — | — | ||||||||||
Change
in valuation allowance and other
|
- | - | 2.7 | 166,716 | ||||||||||||
Effective
income tax rate
|
(37.1 | ) | $ | (2,795,321 | ) | (32.1 | ) | $ | (1,979,225 | ) |
|
·
|
Stock
Options including Incentive Stock Options
(“ISO”)
|
|
·
|
Options
not intended to qualify as ISO’s
|
|
·
|
Stock
Appreciation Rights
|
|
·
|
Restricted
Stock Grants.
|
Average
|
Remaining
|
Aggregate
|
||||||||||||||
Exercise
|
Contractual
|
Intrinsic
|
||||||||||||||
Shares
|
Price
|
Term (Year)
|
Value
|
|||||||||||||
Outstanding
at April 27, 2008
|
1,334,000 | $ | 3.93 | |||||||||||||
Granted
|
30,000 | 0.78 | ||||||||||||||
Exercised
|
- | |||||||||||||||
Forfeited
or expired
|
(228,000) | 10.45 | ||||||||||||||
Outstanding
at April 30, 2009
|
1,136,000 | $ | 2.54 | 3.86 | $ | - | ||||||||||
Exercisable
at April 30, 2009
|
765,992 | $ | 2.96 | 4.15 | $ | - | ||||||||||
Outstanding
at April 30, 2009
|
1,136,000 | $ | 2.54 | |||||||||||||
Granted
|
430,000 | 1.25 | ||||||||||||||
Exercised
|
- | |||||||||||||||
Forfeited
or expired
|
(110,000) | 7.70 | ||||||||||||||
Outstanding
at April 30, 2010
|
1,456,000 | $ | 1.77 | 4.93 | $ | - | ||||||||||
Exercisable
at April 30, 2010
|
1,326,000 | $ | 1.76 | 5.04 | $ | - |
Year Ended
|
Year Ended
|
|||||||
April 30, 2010
|
April 30, 2009
|
|||||||
Expected
volatility
|
143.5 | % | 127.8 | % | ||||
Expected
term (years)
|
4.00 | 2.50 | ||||||
Expected
dividend yield
|
- | - | ||||||
Risk-free
interest rate
|
1.63 | % | 1.40 | % |
Fiscal Year Ended
|
||||||||
April 30,
2010
|
April 30,
2009
|
|||||||
Numerator:
|
||||||||
Basic:
|
||||||||
Net
loss available to common stockholders
|
$ | (4,748,782 | ) | $ | (4,188,136 | ) | ||
Diluted:
|
||||||||
Net
loss available to common stockholders
|
$ | (4,748,782 | ) | $ | (4,188,136 | ) | ||
Denominator:
|
||||||||
Basic
weighted average number of common shares
|
||||||||
outstanding
|
12,878,240 | 12,939,130 | ||||||
Diluted
weighted average number of common shares
|
||||||||
outstanding
|
12,878,240 | 12,939,130 | ||||||
Loss
per share:
|
||||||||
Net
loss per common share – basic
|
$ | (.37 | ) | $ | (.32 | ) | ||
Net
loss per common share - diluted
|
$ | (.37 | ) | $ | (.32 | ) |
April 30,
2010
|
April 30,
2009
|
|||||||
Accrued
interest receivable
|
$ | 234,438 | $ | 167,731 | ||||
American
Heritage Receivable, net of allowance
|
- | 1,597,183 | ||||||
Deferred
loan issue cost, net
|
142,500 | 150,306 | ||||||
Other
assets
|
$ | 376,938 | $ | 1,915,220 |
As of and for the Fiscal Year Ended
April 30, 2010
|
||||||||||||
Gaming
|
Non-Core
|
Totals
|
||||||||||
Gross
revenues
|
$ | 24,843,876 | $ | — | $ | 24,843,876 | ||||||
Segment
loss (pre tax)
|
(7,534,145 | ) | (9,958 | ) | (7,544,103 | ) | ||||||
Segment
assets
|
26,867,321 | 3,582,431 | 30,449,752 | |||||||||
Depreciation
and amortization
|
1,340,114 | 4,209 | 1,344,323 | |||||||||
Additions
to property and equipment
|
15,766,715 | — | 15,766,715 | |||||||||
Interest
expense
|
866,034 | — | 866,034 | |||||||||
Interest
income
|
192,708 | — | 192,708 | |||||||||
Income
tax benefit
|
(2,791,631 | ) | (3,690 | ) | (2,795,321 | ) |
As of and for the Fiscal Year Ended
April 30, 2009
|
||||||||||||
Gaming
|
Non-Core
|
Totals
|
||||||||||
Gross
revenues
|
$ | 7,294,763 | $ | — | $ | 7,294,763 | ||||||
Segment
loss
|
(6,150,243 | ) | (17,118 | ) | (6,167,361 | ) | ||||||
Segment
assets
|
16,153,018 | 3,595,258 | 19,748,276 | |||||||||
Depreciation
and amortization
|
622,290 | 5,328 | 627,618 | |||||||||
Additions
to property and equipment
|
379,296 | — | 379,296 | |||||||||
Interest
expense
|
1,307,296 | — | 1,307,296 | |||||||||
Interest
income
|
975,490 | — | 975,490 | |||||||||
Income
tax benefit
|
(1,973,731 | ) | (5,494 | ) | (1,979,225 | ) | ||||||
Loss
from Buena Vista Development, L.L.C.
|
(7,863 | ) | — | (7,863 | ) |
Reconciliation
of reportable segment assets to our consolidated totals is as
follows:
|
||||||||
April
30,
|
April
30,
|
|||||||
2010
|
2009
|
|||||||
Total
assets for reportable segments
|
$ | 30,449,752 | $ | 19,748,276 | ||||
Cash
not allocated to segments
|
8,422,674 | 19,834,544 | ||||||
Other
assets not allocated to segments
|
3,598,793 | 2,472,166 | ||||||
Total
assets
|
$ | 42,471,219 | $ | 42,054,986 |
Fiscal Years
|
Corporate Office
Lease Payment
|
Washington Casino
Lease Payment
|
Colorado Grande
Building Lease
Payment
|
Total
Lease Payment
|
||||||||||||
|
|
|
||||||||||||||
2011
|
$ | 95,261 | $ | 220,725 | $ | 400,000 | $ | 715,986 | ||||||||
2012
|
-- | 16,000 | 400,000 | 416,000 | ||||||||||||
2013
|
-- | -- | 400,000 | 400,000 | ||||||||||||
2014
|
-- | -- | 400,000 | 400,000 | ||||||||||||
2015
|
-- | -- | 400,000 | 400,000 | ||||||||||||
Thereafter
|
-- | -- | 7,100,000 | 7,100,000 | ||||||||||||
$ | 95,261 | $ | 236,725 | $ | 9,100,000 | $ | 9,431,986 |
1. | The AHI Parties agreed to pay $1.0 million to the Company on May 1, 2008; | |
|
2.
|
The
AHI Parties agreed to pay $1.3 million to the Company on May 31,
2008;
|
|
3.
|
The
AHI Parties agreed to pay $2.3 million to the Company no later than April
15, 2010.
|
Net
loss
|
Diluted
|
|||||||||||||||||||
Loss
from
|
applicable
to
|
loss
per
|
||||||||||||||||||
unconsolidated
|
Loss
before
|
to
common
|
per
common
|
|||||||||||||||||
Net
revenues
|
affiliates
|
tax
benefit
|
stockholders
|
share
(b)
|
||||||||||||||||
Consolidated
Statements of Operations:
|
(in thousands, except per share amounts) | |||||||||||||||||||
Fiscal
Year ended April 30, 2010
|
||||||||||||||||||||
Quarter
ended July 31, 2009
|
$ | 5,057 | $ | - | $ | (1,040 | ) | $ | (701 | ) | $ | (0.05 | ) | |||||||
Quarter
ended October 31, 2009
|
5,740 | - | (708 | ) | (444 | ) | (0.03 | ) | ||||||||||||
Quarter
ended January 31, 2010
|
5,206 | - | (877 | ) | (546 | ) | (0.04 | ) | ||||||||||||
Quarter
ended April 30, 2010
|
6,023 | - | (4,919 | )(a) | (3,058 | ) | (0.24 | ) | ||||||||||||
Fiscal
Year ended April 30, 2009
|
||||||||||||||||||||
Quarter
ended July 31, 2008
|
$ | 1,620 | $ | (4 | ) | $ | (1,331 | ) | $ | (826 | ) | $ | (0.06 | ) | ||||||
Quarter
ended October 31, 2008
|
1,498 | (4 | ) | (2,377 | )(c) | (1,621 | ) | (0.13 | ) | |||||||||||
Quarter
ended January 31, 2009
|
1,370 | - | (707 | ) | (467 | ) | (0.04 | ) | ||||||||||||
Quarter
ended April 30, 2009
|
1,380 | - | (1,752 | ) | (1,274 | ) | (0.09 | ) |
Nevada Gold
As reported in
Form 10-K
|
Acquired
Silver
Dollar
Casinos
at
April
30, 2010
(Unaudited)
|
Pro-forma
Adjustments
|
Pro-forma
Balance Sheet
|
|||||||||||||
ASSETS
|
||||||||||||||||
Current
assets:
|
||||||||||||||||
Cash
and cash equivalents
|
$ | 3,155,736 | $ | 1,954,204 | $ | 5,109,940 | ||||||||||
Restricted
cash
|
5,266,938 | - | (5,000,000 | ) | 266,938 | |||||||||||
Accounts
receivable
|
66,822 | - | 66,822 | |||||||||||||
Prepaid
expenses
|
475,262 | (1,480 | ) | 473,782 | ||||||||||||
Income
tax receivable
|
1,750,374 | - | 1,750,374 | |||||||||||||
Other
current assets
|
155,796 | 161,568 | 70,000 | 387,364 | ||||||||||||
Total
current assets
|
10,870,928 | 2,114,292 | (4,930,000 | ) | 8,055,220 | |||||||||||
Investments
in development projects
|
1,418,789 | (1,273,649 | ) | 145,140 | ||||||||||||
Investments
in development projects held for sale
|
3,437,932 | 3,437,932 | ||||||||||||||
Notes
receivable - development projects, net of current portion
|
1,700,000 | 1,700,000 | ||||||||||||||
Goodwill
|
10,243,362 | - | 3,993,643 | 14,237,005 | ||||||||||||
Identifiable
intangible assets, net of accumulated amortization of $729,000 at April
30, 2010
|
5,101,800 | 3,382,851 | 8,484,651 | |||||||||||||
Property
and equipment, net of accumulated depreciation of $2,978,679 at April 30,
2010
|
3,473,051 | 1,888,863 | 5,361,914 | |||||||||||||
Deferred
tax asset
|
1,848,419 | - | - | 1,848,419 | ||||||||||||
BVO
receivable
|
4,000,000 | - | - | 4,000,000 | ||||||||||||
Other
assets, net of allowances
|
376,938 | - | - | 376,938 | ||||||||||||
Total
assets
|
$ | 42,471,219 | $ | 4,003,155 | 1,172,845 | $ | 47,647,219 | |||||||||
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
||||||||||||||||
Current
liabilities:
|
||||||||||||||||
Accounts
payable and accrued liabilities
|
$ | 1,060,017 | $ | 106,000 | $ | - | $ | 1,166,017 | ||||||||
Accrued
interest payable
|
70,000 | - | - | 70,000 | ||||||||||||
Other
accrued liabilities
|
687,819 | - | - | 687,819 | ||||||||||||
Total
current liabilities
|
1,817,836 | 106,000 | - | 1,923,836 | ||||||||||||
Long-term
debt, net of current portion and discount
|
10,000,000 | - | 5,070,000 | 15,070,000 | ||||||||||||
Other
liabilities
|
30,944 | - | - | 30,944 | ||||||||||||
Total
liabilities
|
11,848,780 | 106,000 | 5,070,000 | 17,024,780 | ||||||||||||
Commitments
and contingencies
|
-- | -- | ||||||||||||||
Stockholders'
equity:
|
||||||||||||||||
Common
stock, $0.12 par value per share; 50,000,000 shares authorized; 13,935,330
shares issued and 12,764,130 shares outstanding at April 30,
2010
|
1,672,240 | - | - | 1,672,240 | ||||||||||||
Additional
paid-in capital
|
19,859,966 | - | - | 19,859,966 | ||||||||||||
Retained
earnings
|
19,464,972 | 3,897,155 | (3,897,155 | ) | 19,464,972 | |||||||||||
Treasury
stock, 1,171,200 shares at April 30, 2010, at cost
|
(10,369,200 | ) | (10,369,200 | ) | ||||||||||||
Accumulated
other comprehensive loss
|
(5,539 | ) | - | (5,539 | ) | |||||||||||
Total
stockholders' equity
|
30,622,439 | 3,897,155 | (3,897,155 | ) | 30,622,439 | |||||||||||
Total
liabilities and stockholders' equity
|
$ | 42,471,219 | $ | 4,003,155 | $ | 1,172,845 | $ | 47,647,219 |
Nevada Gold
As reported in
Form 10-K
|
Operating
results of
the acquired
Silver Dollar
Casinos
for the twelve
months ended
April 30, 2010
(unaudited)
|
Pro-forma
Adjustments
|
Pro-forma Stmt
of Operations
|
|||||||||||||
Revenues:
|
||||||||||||||||
Casino
|
$ | 18,822,900 | $ | 26,396,282 | $ | - | $ | 45,219,182 | ||||||||
Food
and beverage
|
4,534,744 | 7,163,821 | - | 11,698,565 | ||||||||||||
Other
|
865,264 | 1,378,624 | - | 2,243,888 | ||||||||||||
Management
fees
|
620,968 | - | - | 620,968 | ||||||||||||
Gross
revenues
|
24,843,876 | 34,938,727 | - | 59,782,603 | ||||||||||||
Less
promotional allowances
|
(2,817,888 | ) | (3,905,435 | ) | - | (6,723,323 | ) | |||||||||
Net
revenues
|
22,025,988 | 31,033,292 | - | 53,059,280 | ||||||||||||
Operating
expenses:
|
||||||||||||||||
Casino
|
8,562,284 | 16,566,625 | - | 25,128,909 | ||||||||||||
Food
and beverage
|
2,851,635 | 5,713,201 | - | 8,564,836 | ||||||||||||
Marketing
and administrative
|
5,564,288 | 601,663 | - | 6,165,951 | ||||||||||||
Facility
|
1,070,933 | 3,088,285 | - | 4,159,218 | ||||||||||||
Corporate
expense
|
4,216,475 | 2,323,592 | - | 6,540,067 | ||||||||||||
Legal
expenses
|
241,468 | 1,850 | - | 243,318 | ||||||||||||
Depreciation
and amortization
|
1,344,323 | 640,816 | 296,304 | 2,281,443 | ||||||||||||
Impairment
of assets
|
4,347,183 | - | - | 4,347,183 | ||||||||||||
Write-off
of project development cost
|
50,486 | - | - | 50,486 | ||||||||||||
Other
|
476,395 | 503,030 | - | 979,425 | ||||||||||||
Total
operating expenses
|
28,725,470 | 29,439,062 | 296,304 | 58,460,836 | ||||||||||||
Operating
income (loss)
|
(6,699,482 | ) | 1,594,230 | (296,304 | ) | (5,401,556 | ) | |||||||||
Non-operating
income (expenses):
|
||||||||||||||||
Gain
(loss) on sale of equity investees and assets
|
16,511 | (5,173 | ) | - | 11,338 | |||||||||||
Interest
income
|
192,708 | - | (10,721 | ) | 181,987 | |||||||||||
Interest
expense
|
(866,034 | ) | - | (557,700 | ) | (1,423,734 | ) | |||||||||
Amortization
of loan issue costs
|
(58,972 | ) | - | - | (58,972 | ) | ||||||||||
Loss
on extinguishment of debt
|
(128,834 | ) | - | - | (128,834 | ) | ||||||||||
Income
(loss) before income tax expense (benefit)
|
(7,544,103 | ) | 1,589,057 | (864,725 | ) | (6,819,771 | ) | |||||||||
Income
tax expense (benefit)
|
||||||||||||||||
Current
|
(1,546,698 | ) | 37,400 | 246,273 | (1,263,025 | ) | ||||||||||
Deferred
and change in valuation allowance
|
(1,248,623 | ) | - | - | (1,248,623 | ) | ||||||||||
Total
income tax expense (benefit)
|
(2,795,321 | ) | 37,400 | 246,273 | (2,511,648 | ) | ||||||||||
Net
income (loss)
|
$ | (4,748,782 | ) | $ | 1,551,657 | $ | (1,110,998 | ) | $ | (4,308,123 | ) | |||||
Per
share information:
|
||||||||||||||||
Net
income (loss) per common share - basic
|
$ | (0.37 | ) | $ | 0.12 | $ | (0.09 | ) | $ | (0.33 | ) | |||||
Net
income (loss) per common share - diluted
|
$ | (0.37 | ) | $ | 0.12 | $ | (0.09 | ) | $ | (0.33 | ) | |||||
Basic
weighted average number of shares outstanding
|
12,878,240 | 12,878,240 | 12,878,240 | 12,878,240 | ||||||||||||
Diluted
weighted average number of shares outstanding
|
12,878,240 | 12,878,240 | 12,878,240 | 12,878,240 |
Restricted
cash
|
5,000,000 |
Remaining
cash to be paid for acquisition
|
|||||||
Long-term
debt, net of current portion
|
5,070,000 |
New
credit agreement
|
|||||||
Investments
in development projects
|
1,273,649 |
Reclass
|
|||||||
Memorabilia
inventory
|
70,000 |
Hollywood
Casino memorabilia
|
|||||||
Customer
relationships
|
2,074,131 |
Used
same % as NGWA acquisition
|
|||||||
Trade
names
|
1,308,720 |
Used
same % as NGWA acquisition
|
|||||||
Retained
earnings
|
3,897,155 |
Eliminate
remaining Retained Earnings of
|
|||||||
Goodwill
|
3,993,643 |
Silver
Dollar Casinos
|
Debit
|
Credit
|
|||||||
Reduce interest income for the use of cash to
purchase casinos for one year at 0.18%
|
||||||||
Interest
income
|
10,800 | |||||||
Cash
|
10,800 | |||||||
To account for interest expense on $5,070,000
long-term debt at 11.0%
|
||||||||
Interest
expense
|
557,700 | |||||||
Cash
|
557,700 | |||||||
To amortize Customer Relationship intangible asset
over 7 years
|
||||||||
Amortization
of intangible assets expense
|
296,304 | |||||||
Accumulated
amortization of intangible assets
|
296,304 | |||||||
To account for interest on $1 million deposit made
to acquire casinos for 16 days at 0.18%
|
||||||||
Cash
|
79 | |||||||
Interest
income
|
79 | |||||||
To account for Federal income tax at 34% of
pro-forma pre-tax operating adjustments
|
||||||||
Income
tax receivable
|
294,007 | |||||||
Income
tax expense-current
|
294,007 | |||||||
To account for Federal income tax at 34% of
pre-tax operating results of acquired casinos
|
||||||||
Income
tax expense-current
|
540,279 | |||||||
Income
tax receivable
|
540,279 |