UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
____________________________________
FORM 10-K/A
(Amendment No. 1)
| x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended April 30, 2006
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 0-26686
Nevada Gold & Casinos, Inc.
(Exact Name of Registrant as Specified in its Charter)
Nevada | 88-0142032 |
(State or Other Jurisdiction of | (I.R.S. Employer |
Incorporation or Organization) | Identification No.) |
3040 Post Oak Blvd., Suite 675 | |
Houston, Texas | 77056 |
(Address of Principal Executive Offices) | (Zip Code) |
(713) 621-2245 |
(Registrant’s Telephone Number, Including Area Code) |
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
| Common Stock - $0.12 par value |
Securities registered pursuant to Section 12(g) of the Act: NONE
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
o Yes x No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
o Yes x No
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.
x Yes o No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer o Accelerated filer x Non-accelerated filer o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.
o Yes x No
As of October 23, 2005 the aggregate market value of the voting stock held by non-affiliates of the registrant based on the closing price per share of $10.51, as reported on the American Stock Exchange, was $95,522,594.
As of July 7, 2006, the registrant had 12,970,330 shares of common stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the definitive Proxy Statement for the registrant’s 2006 Annual Meeting of Stockholders to be filed pursuant to Regulation 14A within 120 days after the registrant’s fiscal year end of April 30, 2006 are incorporated by reference into Part III of this report.
EXPLANATORY NOTE
This Amendment No. 1 to the Annual Report on Form 10-K for the fiscal year ended April 30, 2006, is filed to (a) correct the Cover Page of the original Form 10-K, (b) add a risk factor to the section "Risk Factors" in Item 1 of Part III, (c) add information that was inadvertently omitted from Item 9A of Part III and (d) include corrected consents of the independent auditors. This Amendment No. 1 reflects only the changes discussed above and does not amend, update, or change any other items or disclosures contained in the original Form 10-K.
Item 1. Business - Risk Factors
The following Risk Factor is added:
We have reported two material weaknesses in our internal control over financial reporting that, if not remedied, could adversely affect our ability to meet reporting obligations and provide timely and accurate financial statements.
As more fully described under Item 9A, Controls and Procedures, our management's review of our internal controls over financial reporting, using the framework defined by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO"), has indicated that certain internal control deficiencies existed as of April 30, 2006 which constitute "material weaknesses". The Public Company Accounting Oversight Board has defined a material weakness as a control deficiency, or combination of control deficiencies, that results in more than a remote likelihood that a material misstatement of the annual or interim statements will not be prevented or detected. Accordingly, a material weakness increases the risk that the financial information we report contains material errors.
Management has identified a material weakness related to the financial reporting process resulting in incomplete accounting disclosures for i) fixed assets, ii) debt maturities, iii) pro formas for a business acquisition, iv) earnings per share and v) related parties that, although not material on an individual basis, when considered in the aggregate were deemed to be a material weakness. Management also determined that in conjunction with the preparation for the April 30, 2006 consolidated financial statement audit, the final resolution of the allocation of the purchase price of the Colorado Grande Casino to deferred tax assets was not initially completed. We completed our assessment and the tax asset is properly recorded as of April 30, 2006. As a result of these material weaknesses, management concluded that, as of April 30, 2006, we did not maintain effective internal control over financial reporting.
We have and are implementing measures designed to remedy these material weaknesses. We believe these measures will address the identified material weaknesses. However, there can be no assurance that these measures will remedy the material weaknesses reported or that we will not have additional deficiencies in our internal controls in the future. For a further discussion regarding our internal control deficiencies and actions taken to remedy them, see Item 9A.
Undetected or uncorrected material weaknesses may cause us to fail to meet our reporting obligations or result in material misstatements in our financial statements and, under certain circumstances, create legal liability for us. Inferior internal controls could also cause investors to lose confidence in our reported financial information, which could have a negative effect on the trading price of our stock.
Section 9A Controls and Procedures is replaced in its entirety with the following:
| | (a) | Management’s Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures |
The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in its reports filed or submitted pursuant to the Securities Exchange Act of 1934, as amended (“Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that information required to be disclosed by the Company in its Exchange Act reports is accumulated and communicated to management, including the Company’s Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.
Under the supervision and with the participation of its management, including the Company’s Chief Executive Officer and Chief Financial Officer, the Company carried out an evaluation of the effectiveness of the design and operation of the Company’s disclosure controls and procedures pursuant to Exchange Act Rule 13a−15(e) and 15d−15(e) as of April 30, 2006. Based upon that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were not effective as of such date due to the material weaknesses described below in Management’s Report on Internal Control Over Financial Reporting (Item 9A(b)).
In light of these material weaknesses, in preparing its consolidated financial statements as of and for the fiscal year ended April 30, 2006, the Company performed additional analyses and other post−closing procedures to ensure that the Company’s consolidated financial statements included in its Annual Report on Form 10-K for the fiscal year ended April 30, 2006 have been prepared in accordance with U.S. generally accepted accounting principles.
| | (b) | Management’s Report on Internal Control Over Financial Reporting |
The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is identified in Exchange Act Rule 13a−15(f). The Company’s internal control system is a process designed to provide reasonable assurance to the Company’s management, Board of Directors and shareholders regarding the reliability of financial reporting and the preparation and fair presentation of financial statements for external reporting purposes in accordance with U.S. generally accepted accounting principles.
The Company’s internal control over financial reporting includes policies and procedures that: pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect transactions and disposition of assets; provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with the authorization of its management and directors; and 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 its financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Management assessed the effectiveness of the Company's internal control over financial reporting as of April 30, 2006. In making this assessment, the Company used the control criteria framework of the Committee of Sponsoring Organizations ("COSO") of the Treadway Commission published in its report entitled Internal Control - Integrated Framework. As a result of its assessment, management identified material weaknesses in the Company's internal control over financial reporting. Based on the material weaknesses identified as described below, management concluded that the Company's internal control over financial reporting was not effective as of April 30, 2006.
A material weakness is a control deficiency, or combination of control deficiencies, that results in more than a remote likelihood that a material misstatement of the annual or interim consolidated financial statements will not be prevented or detected. Material weaknesses have been identified in the Company’s assessment of internal control over financial reporting. The Company has identified and included within its assessment the following internal control deficiencies that are considered material weaknesses in the design and operating effectiveness of internal controls over financial reporting:
· The financial reporting process resulted in incomplete accounting disclosures for i) fixed assets, ii) debt maturities, iii) pro formas for a business acquisition, iv) earnings per share and v) related parties that, although not material on an individual basis, when considered in the aggregate were deemed to be a material weakness.
· In conjunction with the preparation for the April 30, 2006 consolidated financial statement audit, the final resolution of the allocation of the purchase price of the Colorado Grande Casino to deferred tax assets was not initially completed. The Company completed its assessment and the tax asset is properly recorded as of April 30, 2006.
These material weaknesses manifested themselves through an accounting adjustment which impacted the consolidated financial statements and disclosures as of April 30, 2006 as well as the failure of certain key financial reporting control activities to operate effectively resulting in certain other disclosure deficiencies and or omissions.
The independent registered public accounting firm that audited the Company’s consolidated financial statements has issued an audit report on management’s assessment of, and the effectiveness of, the Company’s internal control over financial reporting as of April 30, 2006. Their report appears in Item 9A(c).
| | (c) | Report of Independent Registered Public Accounting Firm |
Board of Directors and Shareholders
Nevada Gold & Casinos, Inc.
Houston, Texas
We have audited management’s assessment, included in the accompanying Management’s Annual Report on Internal Control Over Financial Reporting appearing under Item 9A, that Nevada Gold & Casinos, Inc. did not maintain effective internal control over financial reporting as of April 30, 2006, because of the effect of the material weaknesses identified in management’s assessment, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express an opinion on management’s assessment and an opinion on the effectiveness of the Company’s internal control over financial reporting based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, evaluating management’s assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America. A company’s internal control over financial reporting includes those policies and procedures that (1) 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 in the United States of America, and that receipts and expenditures of the company are being made only in accordance with authorization 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.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
A material weakness is a control deficiency, or combination of control deficiencies, that results in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected. Material weaknesses have been identified and are included in management’s assessment of internal control over financial reporting. Management has identified and included within their assessment the following internal control deficiencies that are considered material weaknesses in the design and operating effectiveness of internal controls over financial reporting:
· The financial reporting process resulted in incomplete accounting disclosures for i) fixed assets, ii) debt maturities, iii) pro formas for a business acquisition, iv) earnings per share and v) related parties that, although not material on an individual basis, when considered in the aggregate were deemed to be a material weakness.
· In conjunction with the preparation for the April 30, 2006 consolidated financial statement audit, the final resolution of the allocation of the purchase price of the Colorado Grande Casino to deferred tax assets was not initially completed. Management completed its assessment and the tax asset is properly recorded as of April 30, 2006.
These material weaknesses manifested themselves through an accounting adjustment which impacted the consolidated financial statements and disclosures as of April 30, 2006 as well as the failure of certain key financial reporting control activities to operate effectively resulting in certain other disclosure deficiencies and or omissions.
These material weaknesses were considered in determining the nature, timing, and extent of audit tests applied in our audit of the consolidated financial statements as of and for the year ended April 30, 2006, of the Company and this report does not affect our report dated July 25, 2006 on such financial statements.
In our opinion, management’s assessment that Nevada Gold & Casinos, Inc. did not maintain effective internal control over financial reporting as of April 30, 2006 is fairly stated, in all material respects, based on criteria established in Internal Control—Integrated Framework issued by COSO. Also, in our opinion, because of the effect of the material weaknesses described above on the achievement of the objectives of the control criteria, Nevada Gold & Casinos, Inc. has not maintained effective internal control over financial reporting as of April 30, 2006, based on criteria established in Internal Control—Integrated Framework issued by COSO.
We do not express an opinion or any other form of assurance on management’s statement referring to the effectiveness of the processes instituted to remediate the material weaknesses.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements as of and for the year ended April 30, 2006 and our report dated July 25, 2006 expressed an unqualified opinion on those consolidated financial statements.
/s/ Pannell Kerr Forster of Texas, P.C.
Houston, Texas
July 25, 2006
(d) Changes to Internal Control Over Financial Reporting
There were no changes in the Company’s internal control over financial reporting, as such term is defined in Rules 13a−15(f) and 15d−15(f) under the Exchange Act, during the three months ended April 30, 2006 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
The Company has taken, or plans to take, various corrective actions to remediate the material weaknesses noted in Management’s Report on Internal Control Over Financial Reporting (Item 9A(b)). By their nature, such actions require a period of time to become fully effective. The remedial actions associated with these material weaknesses are as follows:
| | - | performance of a more in−depth and comprehensive review of the earnings per share computation as it relates to fully dilutive shares, |
| | - | the Company will engage outside advisors to assist in evaluating and recording the tax implications of all transactions involving, but not limited to, purchase accounting, |
| | | consideration will be given to hiring a financial reporting manager to provide an additional level of review and ensure that the Company is in compliance with all financial statement disclosure requirements. |
The Company believes that the actions described above, when fully implemented and tested, will be effective in remediation of the material weaknesses identified in Management’s Report on Internal Control Over Financial Reporting (Item 9A(b)). The Company has assigned the highest priority to the short and long−term correction of the internal control deficiencies that have been identified and has initiated the steps necessary to analyze and monitor its control environment and to address any weaknesses and deficiencies. In addition to the weakness mentioned above, the Company has identified other, less significant, deficiencies that it does not consider to be ��material weaknesses” but which it nonetheless believes should be remedied. These significant deficiencies have been disclosed to the Company’s Audit Committee and to its independent auditors. Management has discussed its remedial action plans with the Audit Committee and will continue to provide periodic updates to the Audit Committee on progress made.
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act of 1934, the registrant has duly caused this Amendment No. 1 to Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized.
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| | NEVADA GOLD & CASINOS, INC. |
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| | By: | /s/ H. Thomas Winn |
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| | H. Thomas Winn, Chairman of the Board and Chief Executive Officer |
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| | Date: August 9, 2006 |
EXHIBIT INDEX
| | | | | |
Exhibit | | |
Number | | Description |
| | | |
| | | | | |
| | 23 | .1 | | Consent of Pannell Kerr Forster of Texas, P.C. |
| | | | | |
| | 23 | .2 | | Consent of Ernst & Young LLP |
| | | | | |
| | 31 | .1 | | Chief Executive Officer Certification Pursuant to Section 13a-14 of the Securities Exchange Act. |
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| | 31 | .2 | | Chief Financial Officer Certification Pursuant to Section 13a-14 of the Securities Exchange Act. |
| | | | | |
| | 32 | .1 | | Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
| | | | | |
| | 32 | .2 | | Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
