Nevada Gold & Casinos (UWN) 10-Q 2015 Q3 Quarterly report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended January 31, 2015

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

For the transition period from_______________________ to ___________________________

Commission File Number1-15517

Nevada Gold & Casinos, Inc.

(Exact name of registrant as specified in its charter)

Nevada	88-0142032
(State or other jurisdiction of Incorporation or organization)	(I.R.S. Employer Identification No.)

133 E. Warm Springs Road
Suite 102
Las Vegas, Nevada	89119
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number including area code: (702) 685-1000

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 any shorter period that the registrant was required to file the reports), and (2) has been subject to those filing requirements for the past 90 days.x Yes¨ No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding twelve months (or for such shorter period that the registrant was required to submit and post such files).

x Yes¨ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer¨ Accelerated filer¨ Non-accelerated filer¨ Smaller Reporting Companyx

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.).   

¨ Yes  x No

The number of common shares, $0.12 par value per share, issued and outstanding, was 16,263,456 as of March 1, 2015.

TABLE OF CONTENTS

		Page
	PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements
	Consolidated Balance Sheets – January 31, 2015 (unaudited) and April 30, 2014	2
	Consolidated Statements of Operations – Three and nine months ended January 31, 2015 (unaudited) and January 31, 2014 (unaudited)	3
	Consolidated Statements of Cash Flows – Nine months ended January 31, 2015 (unaudited) and January 31, 2014 (unaudited)	4
	Notes to Consolidated Financial Statements (unaudited)	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	18
Item 4.	Controls and Procedures	19
	PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	19
Item 1A.	Risk Factors	19
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	19
Item 3.	Defaults Upon Senior Securities	19
Item 4.	Mine Safety Disclosures	19
Item 5.	Other Information	19
Item 6.	Exhibits	19

FORWARD-LOOKING STATEMENTS

Factors that May Affect Future Results

(Cautionary Statements Under the Private Securities Litigation Reform Act of 1995)

Certain information included in this Form 10-Q and other materials filed or to be filed by us with the Securities and Exchange Commission (as well as information included in oral statements or other written statements made or to be made by us or our representatives) contains or may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements can be identified by the fact that they do not relate strictly to historical or current facts. Statements that include the words “may,” “could,” “should,” “would,” “believe,” “expect,” “anticipate,” “estimate,” “intend,” “plan,” or other words or expressions of similar meaning, may identify forward-looking statements. We have based these forward-looking statements on our current expectations about future events. Forward-looking statements include statements that reflect management’s beliefs, plans, objectives, goals, expectations, anticipations, intentions with respect to the financial condition, results of operations, future performance and the business of us, including statements relating to our business strategy and our current and future development plans. These statements may also involve other factors which are detailed in the “Risk Factors” and other sections of our Annual Report on Form 10-K for the year ended April 30, 2014 and other filings with the Securities and Exchange Commission.

Although we believe that the assumptions underlying these forward-looking statements are reasonable, any or all of the forward-looking statements in this report and in any other public statements that are made may prove to be incorrect. This may occur as a result of inaccurate assumptions or as a consequence of known or unknown risks and uncertainties. Many factors discussed in this report will be important in determining our future performance. Consequently, actual results may differ materially from those that might be anticipated from forward-looking statements. In light of these and other uncertainties, you should not regard the inclusion of a forward-looking statement in this report or other public communications that we might make as a representation by us that our plans and objectives will be achieved, and you should not place undue reliance on such forward-looking statements.

We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Any further disclosures made on related subjects in our subsequent reports filed with the Securities and Exchange Commission should be consulted.

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Part I. Financial Information

Item 1. Financial Statements

Nevada Gold & Casinos, Inc.

Consolidated Balance Sheets

	January  31,			April 30,
	2015			2014
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	7,454,664		$	7,738,985
Restricted cash		1,533,842			1,388,995
Accounts receivable, net of allowances of $42,098 at January 31, 2015 and April 30, 2014		551,680			252,504
Prepaid expenses		876,473			829,228
Deferred tax asset, current portion		75,052			98,643
Notes receivable, current portion		379,093			332,973
Inventory and other current assets		370,799			344,686
Total current assets		11,241,603			10,986,014
Real estate held for sale		1,100,000			1,100,000
Notes receivable, net of current portion		1,413,626			1,730,246
Goodwill		16,103,583			16,103,583
Identifiable intangible assets, net of accumulated amortization of $6,531,323 and $5,619,009 at January 31, 2015 and April 30, 2014, respectively		4,841,853			5,754,167
Property and equipment, net of accumulated depreciation
of $4,275,183 and $3,632,349 at January 31, 2015 and
April 30, 2014, respectively		4,181,059			4,289,178
Deferred tax asset, net of current portion		3,787,430			4,356,972
Other assets		415,994			486,466
Total assets	$	43,085,148		$	44,806,626
					��
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued payroll	$	1,564,898		$	1,427,010
Other accrued liabilities		2,472,448			2,215,787
Long-term debt, current portion		-			1,625,000
Total current liabilities		4,037,346			5,267,797
Long-term debt, net of current portion		8,800,000			10,725,000
Other long-term  liabilities		556,358			486,870
Total liabilities		13,393,704			16,479,667
Stockholders' equity:
Common stock, $0.12 par value per share; 50,000,000
shares authorized; 17,031,293 and 16,980,676 shares issued and 16,248,456 and 16,197,839 shares outstanding at January 31, 2015, and April 30, 2014, respectively		2,043,764			2,037,689
Additional paid-in capital		24,712,783			24,578,117
Retained earnings		9,866,932			8,648,727
Treasury stock, 782,837 shares at January 31, 2015 and April 30, 2014, respectively, at cost		(6,932,035	)		(6,932,035	)
Accumulated other comprehensive loss		-			(5,539	)
Total stockholders' equity		29,691,444			28,326,959
Total liabilities and stockholders' equity	$	43,085,148		$	44,806,626

The accompanying notes are an integral part of these consolidated financial statements.

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Nevada Gold & Casinos, Inc.

Consolidated Statements of Operations

(unaudited)

	Three Months Ended						Nine Months Ended
	January 31,			January 31,			January 31,			January 31,
	2015			2014			2015			2014
Revenues:
Casino	$	13,821,745		$	12,810,554		$	42,400,880		$	41,239,008
Food and beverage		2,672,738			2,606,048			7,601,608			7,476,123
Other		432,329			432,150			1,334,215			1,295,549
Gross revenues		16,926,812			15,848,752			51,336,703			50,010,680
Less promotional allowances		(1,122,522	)		(1,087,885	)		(3,251,269	)		(3,194,646	)
Net revenues		15,804,290			14,760,867			48,085,434			46,816,034
Expenses:
Casino		7,477,300			7,379,668			24,020,673			24,286,561
Food and beverage		1,391,532			1,322,877			4,033,675			3,821,637
Marketing and administrative		4,256,343			4,017,777			12,507,381			12,419,561
Facility		509,723			489,927			1,526,237			1,460,408
Corporate expense		675,846			638,177			1,814,246			1,840,428
Other		73,767			62,053			217,639			187,101
Depreciation and amortization		553,910			565,030			1,643,565			1,692,254
Writedowns and other charges		24,613			7,412			41,700			72,888
Total operating expenses		14,963,034			14,482,921			45,805,116			45,780,838
Operating income		841,256			277,946			2,280,318			1,035,196
Non-operating income (expenses):
Interest income		29,066			33,241			90,583			101,727
Interest expense and amortization of loan issue costs		(146,530	)		(303,318	)		(514,297	)		(1,167,961	)
Loss on extinguishment of debt		-			(283,550	)					(283,550	)
Decrease in swap fair value		(35,383	)		-			(37,729	)		-
Write-off of marketable securities		-			-			(7,539	)		-
Income (loss) before income tax benefit (expense)		688,409			(275,681	)		1,811,336			(314,588	)
Income tax benefit (expense)		(240,301	)		72,643			(593,131	)		116,480
Net income (loss)	$	448,108		$	(203,038	)	$	1,218,205		$	(198,108	)
Per share information:
Net income (loss) per common share - basic	$	0.03		$	(0.01	)	$	0.08		$	(0.01	)
Net income (loss) per common share - diluted	$	0.03		$	(0.01	)	$	0.07		$	(0.01	)
Basic weighted average number of shares outstanding		16,225,562			16,136,485			16,212,916			16,115,311
Diluted weighted average number of shares outstanding		16,511,369			16,136,485			16,374,853			16,115,311

The accompanying notes are an integral part of these consolidated financial statements.

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Nevada Gold & Casinos, Inc.

Consolidated Statements of Cash Flows

(unaudited)

	Nine Months Ended
	January 31,			January 31,
	2015			2014
Cash flows from operating activities:
Net income (loss)	$	1,218,205		$	(198,108	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization		1,643,565			1,692,254
Change in deferred income taxes		593,133			(116,480	)
Amortization of deferred loan issuance costs		67,566			209,885
Stock-based compensation		84,851			40,860
Loss on sale/settlement of assets		41,700			15,929
Loss on extinguishment of debt		-			283,550
Write-off of marketable securities		7,539			-
Change in swap fair value		37,729			-
Impairment of capitalized development projects		-			56,959
Amortization of deferred rent		4,067			18,072
Change in deferred interest income		906			11,007
Changes in operating assets and liabilities:
Restricted cash		(144,847	)		(19,437	)
Receivables and other assets		(372,534	)		(86,302	)
Accounts payable and accrued liabilities		394,549			(979,263	)
Net cash provided by operating activities		3,576,429			928,926
Cash flows from investing activities:
Purchase of property and equipment		(627,674	)		(280,132	)
Collections on notes receivable		270,500			177,266
Proceeds from the sale of assets		1,125			5,574
Net cash used in investing activities		(356,049	)		(97,292	)
Cash flows from financing activities:
Repayment of credit facilities		(3,550,000	)		(15,710,000	)
Employee stock plan purchases		41,189			54,422
Repayment of capital lease		(10,590	)		-
Proceeds from credit facilities		-			14,250,000
Payment of deferred loan costs		-			(473,808	)
Cash proceeds from exercise of stock options		14,700			10,650
Net cash used in financing activities		(3,504,701	)		(1,868,736	)
Net decrease in cash and cash equivalents		(284,321	)		(1,037,102	)
Cash and cash equivalents at beginning of period		7,738,985			6,723,919
Cash and cash equivalents at end of period	$	7,454,664		$	5,686,817
Supplemental cash flow information:
Cash paid for interest	$	456,478		$	952,799
Non-cash investing and financing activities:
Acquisition of equipment via capital lease	$	38,282		$	-

The accompanying notes are an integral part of these consolidated financial statements.

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Nevada Gold & Casinos, Inc.

Notes to Consolidated Financial Statements

Note 1. Basis of Presentation

The interim financial information included herein is unaudited. However, the accompanying consolidated financial statements include all adjustments of a normal recurring nature which, in the opinion of management, are necessary to present fairly our Consolidated Balance Sheets at January 31, 2015 and April 30, 2014, Consolidated Statements of Operations for the three and nine months ended January 31, 2015 and January 31, 2014, and Consolidated Statements of Cash Flows for the nine months ended January 31, 2015 and January 31, 2014. Although we believe the disclosures in these financial statements are adequate to make the interim information presented not misleading, certain information relating to our organization and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been condensed or omitted in this Form 10-Q pursuant to Securities and Exchange Commission (“SEC”) rules and regulations. These financial statements should be read in conjunction with the audited consolidated financial statements for the year ended April 30, 2014 and the notes thereto included in our Annual Report on Form 10-K. The results of operations for the three and nine months ended January 31, 2015 are not necessarily indicative of the results expected for the full year.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period and disclosure of contingent liabilities. On an ongoing basis, we evaluate our estimates, including those related to bad debts, investments, intangible assets and goodwill, property, plant and equipment, income taxes, employment benefits and contingent liabilities. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ from those estimates.

Certain reclassifications at the consolidated statements of operations have been made to conform prior year period financial information to the current period presentation. The reclassifications did not impact income (loss) before income tax benefit (expense) or net income.

Note 2. Critical Accounting Policies

Revenue Recognition

We record revenues from casino operations and interest on notes receivable on the accrual basis as earned. The dates on which payments are collected may vary depending upon the term of the contracts or note receivable agreements. Interest income related to notes receivable is recorded when earned and its collectability is reasonably certain.

The retail value of food and beverage and other services furnished to guests without charge is included in gross revenue and deducted as promotional allowances. Net revenues do not include the retail amount of food, beverage and other items provided gratuitously to customers. We record the redemption of coupons and points for cash as a reduction of revenue as they are earned. These amounts are included in promotional allowances in the accompanying consolidated statements of operations. The estimated cost of providing such complimentary services included in casino expense in the accompanying consolidated statements of operations was as follows:

	Three Months Ended				Nine Months Ended
	January 31, 2015		January 31, 2014		January 31,  2015		January 31, 2014
Food and beverage	$	808,941	$	767,913	$	2,401,566	$	2,319,852
Other		39,228		42,055		107,720		106,545
Total cost of complimentary services	$	848,169	$	809,968	$	2,509,286	$	2,426,397

Fair Value

U.S. generally accepted accounting principles defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date and establishes a three-level valuation hierarchy for disclosure of fair value measurements. The valuation hierarchy categorizes assets and liabilities measured at fair value into one of three different levels depending on the observability of the inputs employed in the measurement. The three levels are as follows:

5

Level 1 – Observable inputs such as quoted prices in active markets at the measurement date for identical, unrestricted assets or liabilities.

Level 2 – Other inputs that are observable directly or indirectly such as quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability.

Level 3 – Unobservable inputs for which there is little or no market data and which we make our own assumptions about how market participants would price the assets and liabilities.

The following describes the valuation methodologies used by us to measure fair value:

Real estate held for sale is recorded at fair value less selling costs.

Goodwill and indefinite lived intangible assets are recorded at carrying value and tested for impairment annually, or more frequently, using projections of undiscounted future cash flows.

Interest rate swaps are adjusted on a recurring basis pursuant to accounting standards for fair value measurements. We categorize our interest rate swap as Level 2 for fair value measurement.

Concentrations of Credit Risk

Financial instruments that potentially subject us to concentrations of credit risk are primarily notes receivable, cash and cash equivalents, accounts receivable and payable, and long term debt. Management performs periodic evaluations of the collectability of these notes and accounts receivable. Our cash deposits are held with large, well-known financial institutions, and, at times, such deposits may be in excess of the federally insured limit. The recorded value of cash, accounts receivable and payable, approximate fair value based on their short term nature; the recorded value of long term debt approximates fair value as interest rates approximate current market rates.

New Accounting Pronouncements and Legislation Issued

In April 2014, the Financial Accounting Standards Board (the “FASB”) issued amended accounting guidance that changes the criteria for reporting discontinued operations and expands the related disclosure requirements. This guidance is effective in the first quarter of our fiscal year 2016, and early adoption is permitted. The Company will adopt this guidance during the first quarter of fiscal year 2016 and does not expect the adoption to have a material impact on its financial position or results of operations.

In May 2014, the FASB issued a new accounting standard for revenue recognition. The new standard supersedes the existing accounting guidance for revenue recognition and amends certain accounting guidance for recognition of gains and losses on the transfer of non-financial assets. For public companies, the new guidance is effective for annual reporting periods (including interim periods within those periods) beginning after December 15, 2016, and early adoption is not permitted. Upon adoption, financial statement issuers may elect to apply the new standard either retrospectively to each prior reporting period presented, or using a modified retrospective approach by recognizing the cumulative effect of initial application and providing certain additional disclosures. The Company will adopt this guidance in the first quarter of fiscal year 2018. The Company is currently evaluating the impact this guidance will have on its financial position and results of operations, and has not yet determined which adoption method it will elect.

In June 2014, the FASB issued an update which requires that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. As such, the performance target should not be reflected in estimating the grant-date fair value of the award. The standard is effective for annual reporting periods beginning after December 15, 2015, with early adoption permitted. The Company is evaluating the potential impacts of the new standard on its existing stock-based compensation plans.

In August 2014, the FASB issued an update which provides guidance on determining when and how reporting entities must disclose going-concern uncertainties in their financial statements. The pronouncement is effective for annual periods ending after December 15, 2016, and interim periods thereafter, and early adoption is permitted. The impact of the adoption of this update is currently under evaluation.

In November 2014, the FASB issued an update which provides guidance on whether, and at what threshold, an acquired entity that is a business or nonprofit activity can apply pushdown accounting in its separate financial statements. The pronouncement was effective on November 18, 2014. The impact of the adoption did not have an effect on our consolidated financial statements.

6

A variety of proposed or otherwise potential accounting guidance is currently under study by standard-setting organizations and certain regulatory agencies. Due to the tentative and preliminary nature of such proposed accounting guidance, the Company has not yet determined the effect, if any, that the implementation of such proposed accounting guidance would have on its condensed consolidated financial statements.

Note 3. Restricted Cash

As of January 31, 2015 and April 30, 2014, we maintained $1,533,842 and $1,388,995, respectively, in restricted cash, which consists of player-supported jackpot funds for our Washington operations.

Note 4. Notes Receivable

As of January 31, 2015 and April 30, 2014, we had net notes receivable of $1,792,719 and $2,063,219, respectively.

G Investments, LLC

Upon completion of the sale of the Colorado Grande Casino on May 25, 2012, we recorded a $2,325,000 note receivable. This note bears interest at 6% per annum through the maturity date of June 1, 2017 and is secured with all of the assets of the Colorado Grande Casino, pledge of membership interest in G Investments, LLC (“GI”), and a personal guaranty by GI’s principal.

As of January 31, 2015, the remaining principal and interest payments are scheduled to be made as follows:

· Beginning June 1, 2014, thirty six monthly installments of principal and accrued interest of $40,000; and

· A final installment of $907,061 which is due on the maturity date of June 1, 2017.

GI has timely made previously required principal and interest payments. Since the inception of this note we have collected $885,000 which consists of $532,281 of principal plus $352,719 of interest.

Big City Capital, LLC

At January 31, 2015 and April 30, 2014, our balance sheet reflects net notes receivable of $0, net of a $3,200,000 valuation allowance, related to the development of gaming/entertainment projects from Big City Capital, LLC (“Big City Capital”).

BVD/BVO Receivable

At January 31, 2015 and April 30, 2014, our balance sheet reflects a net receivable of $0, net of a $4,575,000 valuation allowance, related to the development of gaming/entertainment projects from B. V. Oro, LLC (“BVO”).

Note 5. Long-Term Debt

Our long-term financing obligations are as follows:

	January 31,		April 30,
	2015		2014
$12.75 million reducing revolving credit agreement, LIBOR plus an Applicable Margin, increasing quarterly reductions beginning March 31, 2014 through September 30, 2018, and the remaining $4,250,000 principal due on the maturity date of December 10, 2018	$	8,800,000	$	12,350,000
Less: current portion		-		(1,625,000	)
Total long-term financing obligations	$	8,800,000	$	10,725,000

On December 18, 2013, the Company and certain of its subsidiaries entered into a new $12,750,000 Reducing Revolving Credit Agreement with Mutual of Omaha Bank (the “Credit Facility”). The Credit Facility and $1,170,000 of the Company’s cash were utilized to pay off all of the Company’s outstanding long term debt obligations. The Credit Facility matures on December 10, 2018, is secured by liens on substantially all of the real and personal property of the Company and its subsidiaries. The interest rate on the borrowing is based on LIBOR plus an Applicable Margin, which will be determined quarterly, based on the total leverage ratio for the trailing twelve month period. The initial Applicable Margin was 5.00% until July 1, 2014, when the first quarterly pricing change took effect. The interest rate on the borrowing as of January 31, 2015, is 4.157%. In addition, the Company is required to fix the interest rate on at least 50% of the borrowing through a swap agreement.

7

As of January 31, 2015, principal reductions due on the Credit Facility are as follows:

February 1, 2015 – January 31, 2016	$	-
February 1, 2016 – January 31, 2017	$	1,150,000
February 1, 2017 – January 31, 2018	$	1,900,000
February 1, 2018 – December 10, 2018	$	5,750,000

As of January 31, 2015, we prepaid $2,350,000 of principal reductions. Per the Credit Agreement, we have the right to re-borrow these prepaid funds.

The Credit Facility contains customary covenants for a facility of this nature, including, but not limited to, covenants requiring the preservation and maintenance of the Company’s assets and covenants restricting our ability to merge, transfer ownership, incur additional indebtedness, encumber assets and make certain investments.  The Credit Facility also contains covenants requiring the Company to maintain certain financial ratios commencing as of the fiscal quarter ending April 30, 2014, including a maximum total leverage ratio ranging from 3.00 to 1.00 through July 31, 2015, 2.50 to 1.00 from August 1, 2015 through January 31, 2017, and 2.00 to 1.00 from February 1, 2017 until maturity; and lease adjusted fixed charge coverage ratio of no less than 1.15 to 1.00. We are in compliance with the covenant requirements of the Credit Facility as of January 31, 2015.

The Company evaluated the refinancing transaction in accordance with the accounting standards for debt modifications and extinguishments and evaluated the refinancing transaction on a lender by lender basis. As a result of this evaluation, the Company concluded the refinancing was an extinguishment of debt and recognized a loss on debt extinguishment of $283,550 in the third quarter of fiscal year 2014, representing the write-off of unamortized debt issuance costs as of the date of the refinancing. In connection with the refinancing transaction in the third quarter of fiscal 2014, the Company paid $450,000 in fees and other costs which have been capitalized and included in other assets on the consolidated balance sheet.

In August 2014, we completed installation of computer hardware and related software. We financed the acquisition by signing a three year capital lease with the company we purchased the equipment from. We financed $38,282 which is scheduled to be repaid in 36 equal monthly installments. At the end of the lease period we have the option to acquire the equipment for a nominal amount. As of January 31, 2015, we have repaid $10,590. The remaining balance of the capital lease obligation is included in other current and long-term liabilities.

Note 6. Interest Rate Swap

We are required by the Credit Facility to have a secured interest rate swap for at least 50% of the remaining Credit Facility principal balance. The Company has an approved interest rate swap policy which establishes guidelines for the use and management of interest rate swaps to either reduce the cost or hedge existing or planned debt. The policy states that the Company shall not enter into swap transactions for speculative purposes. At the inception of any hedge agreement, as required by ASC 815, Derivatives and Hedging, the Company documented the hedging relationship and the risk management objective and strategy for the undertaking of all qualifying hedges.

On January 17, 2014, the Company entered into a swap transaction with Mutual of Omaha Bank (“MOOB”), which has a calculation period as of the tenth day of each month beginning with February 10, 2014 until the maturity date of the Credit Facility. As of January 31, 2015, the Company had one outstanding interest rate swap with MOOB with a notional amount of $5,575,000 at a swap rate of 1.52%, which as of January 31, 2015, effectively converts $5,575,000 of our floating-rate debt to a synthetic fixed rate of 5.52%. Under the terms of the swap agreement, the Company pays a fixed rate of 1.52% and receives variable rate based on one-month LIBOR as of the first day of each floating-rate calculation period. Under the International Swap Dealers Association, Inc. (“ISDA”) confirmation, the floating index as of January 31, 2015 is set at 0.16675%.

The Company will not designate the interest rate swap as a cash flow hedge and the interest rate swap will not qualify for hedge accounting under ASC Topic 815. Changes in our interest rate swap fair value will be recorded in our Consolidated Statements of Operations.

As required by ASC 815, on a quarterly basis, the Company will assess whether any changes to the hedge instrument, or underlying debt agreement, have occurred which would alter the original designation of the hedge instrument. Each quarter, the Company receives fair value statements from the counterparty, MOOB. The fair value of the interest rate swap is determined using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of the derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including forward interest rate curves. To comply with the provisions of ASC Topic 820, Fair Value Measurements and Disclosures, the Company incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. In adjusting the fair value of its derivative contracts for the effect of nonperformance risk, the Company has considered the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts and guarantees. As a result of our evaluation of our interest rate swap as of January 31, 2015, we recorded a $35,383 and $37,729 decrease, in our interest rate swap fair value for the three and nine months ended January 31, 2015, respectively. As of January 31, 2015, our interest rate swap fair value is a $96,081 liability which is included in other long-term liabilities on the consolidated balance sheet.

8

Note 7. Income Taxes 

For the three months ended January 31, 2015 and 2014, our effective income tax rates were a 34.6% expense and a 24.6% benefit, respectively. For the nine months ended January 31, 2015 and 2014, our overall income tax rates were a 32.6% expense and a 25.2% benefit, respectively. The higher effective tax rate for the nine month period ended January 31, 2014 was primarily due to prior year return to provision adjustments.

We have analyzed our filing position in each jurisdiction where we are required to file tax returns. We believe our income tax filing position and deductions will be sustained on audit and we do not anticipate any adjustments that will result in a material change to our financial position.

We filed income tax returns in the United States federal jurisdiction and in several state jurisdictions. No jurisdiction is currently examining our tax filings for any tax years.

Note 8. Equity Transactions and Stock Option Plans 

Information about our share-based plans

We have obligations under two employee stock plans: (1) the 2009 Equity Incentive Plan (the “2009 Plan”), and (2) the 2010 Employee Stock Purchase Plan, as amended (the “2010 Plan”).

The 2009 Plan

On April 14, 2009, our shareholders approved the 2009 Plan providing for the granting of awards to our directors, officers, employees and independent contractors. The number of common stock shares reserved for issuance under the 2009 Plan is 1,750,000 shares. The plan is administered by the Compensation Committee (the “Committee”) of the Board of Directors. The Committee has complete discretion under the plan regarding the vesting and service requirements, exercise price and other conditions. Under the 2009 Plan, the Committee is authorized to grant the following types of awards:

· Stock Options including Incentive Stock Options (“ISO”),

· Options not intended to qualify as ISOs,

· Stock Appreciation Rights, and

· Restricted Stock Grants.

To date, the Committee has only awarded stock options for stock-based compensation. Our practice has been to issue new or treasury shares upon the exercise of stock options. Stock option rights granted under the 2009 Plan generally have 5 or 10 year terms and vest in two or three equal annual installments, with some options grants providing for immediate vesting for a portion of the grant.

9

A summary of activity under our share-based payment plans for the nine months ended January 31, 2015 is presented below:

						Weighted
				Weighted		Average
				Average		Remaining		Aggregate
				Exercise		Contractual		Intrinsic
	Shares			Price		Term (Year)		Value
Outstanding at April 30, 2014		800,000		$	1.09
Granted		200,000		$	1.23
Exercised		(15,000	)
Forfeited or expired		-
Outstanding at January 31, 2015		985,000		$	1.12		7.01	$	161,200
Exercisable at January 31, 2015		785,000		$	1.09		6.35	$	161,200
Available for grant at January 31, 2015		675,000

The weighted-average grant-date fair value of options granted during the nine months ended January 31, 2015 was $1.23. There were 15,000 stock options exercised during the nine months ended January 31, 2015. As of January 31, 2015, there was a total of $185,403 of unamortized compensation cost related to stock options, which cost is expected to be recognized over a weighted-average of approximately 1.63 years.

Compensation cost for stock options granted will be based on the fair value of each award, measured by applying the Black-Scholes model on the date of grant and using the weighted-average assumptions of (i) expected volatility, (ii) expected term, (iii) expected dividend yield, (iv) risk-free interest rate and (v) forfeiture rate. Expected volatility is based on historical volatility of our stock. The expected term considers the contractual term of the option as well as historical exercise and forfeiture behavior. The risk-free interest rate is based on the rates in effect on the grant date for U.S. Treasury instruments with maturities matching the relevant expected term of the award.

The 2010 Plan

On October 11, 2010, our shareholders approved the 2010 Plan which permits all our eligible employees, including employees of certain of our subsidiaries, to purchase shares of our common stock through payroll deductions at a purchase price not to be less than 90% of the fair market value of the shares on each purchase date. The number of shares available for issuance under the 2010 Plan is a total of 500,000 shares.  On November 30, 2010, our Board of Directors amended the 2010 Plan, effective December 1, 2010, to allow its participants to contribute up to a maximum of twenty (20%) percent of their paid compensation. The 2010 Plan became available for employee participation on January 1, 2011, employee payroll deductions began in January of 2011, and shares are to be purchased at the end of each calendar quarter. As of January 31, 2015, approximately 390,700 shares were issued to 142 participants under the 2010 Plan.

Note 9. Computation of Earnings Per Share

The following is presented as a reconciliation of the numerators and denominators of basic and diluted earnings per share computations:

	Three Months Ended					Nine Months Ended
	January 31,		January 31,			January 31,		January 31,
	2015		2014			2015		2014
Numerator:
Basic and Diluted:
Net income available to common shareholders	$	448,108	$	(203,038	)	$	1,218,205	$	(198,108	)
Denominator:
Basic weighted average number of common shares outstanding		16,225,562		16,136,485			16,212,916		16,115,311
Dilutive effect of common stock options and warrants		285,807		-			161,937		-
Diluted weighted average number of common shares outstanding		16,511,369		16,136,485			16,374,853		16,115,311
Net income (loss) per common share - basic	$	0.03	$	(0.01	)	$	0.08	$	(0.01	)
Net income (loss) per common share - diluted	$	0.03	$	(0.01	)	$	0.07	$	(0.01	)

For the nine months ended January 31, 2015 and January 31, 2014, potential dilutive common shares issuable under options of 440,000 and 694,000, respectively, were not included in the calculation of diluted earnings per share as they were anti-dilutive.

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Note 10. Segment Reporting 

We have three business segments (i) Washington Gold, (ii) South Dakota Gold, and (iii) Corporate. For the three and nine month periods ended January 31, 2015 and January 31, 2014, the Washington Gold segment consists of the Washington mini-casinos, the South Dakota Gold segment consists of our slot route operation in South Dakota, the Corporate column includes the vacant land in Colorado and its taxes and maintenance expenses.

Summarized financial information for our reportable segments is shown in the following table. The Corporate column includes corporate-related items, results of insignificant operations, and segment loss and income and expenses not allocated to other reportable segments.

	As of and for the Three Months Ended  January 31, 2015
	Washington Gold		South Dakota Gold			Corporate			Total
Net revenue	$	14,356,584	$	1,446,706		$	1,000		$	15,804,290
Casino and food and beverage expense		7,530,353		1,338,479			-			8,868,832
Marketing and administrative expense		4,189,728		66,615			-			4,256,343
Facility and other expenses		550,773		56,368			676,808			1,283,949
Depreciation and amortization		369,544		181,270			3,096			553,910
Segment operating income (loss)		1,716,186		(196,026	)		(678,904	)		841,256
Segment assets		10,477,077		812,547			18,944,536			30,234,160
Additions to property and equipment		70,667		16,896			-			87,563

	As of and for the Three Months Ended January 31, 2014
	Washington Gold		South Dakota Gold			Corporate			Total
Net revenue	$	13,265,970	$	1,492,819		$	2,078		$	14,760,867
Casino and food and beverage expense		7,281,343		1,421,202			-			8,702,545
Marketing and administrative expense		3,936,401		81,376			-			4,017,777
Facility and other expenses		520,021		30,883			639,253			1,190,157
Depreciation and amortization		392,807		170,345			1,878			565,030
Segment operating income (loss)		1,135,398		(210,987	)		(646,465	)		277,946
Segment assets		12,341,375		2,041,298			17,771,357			32,154,030
Additions to property and equipment		37,283		6,480			14,022			57,785

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	As of and for the Nine Months Ended January 31, 2015
	Washington Gold		South Dakota Gold		Corporate			Total
Net revenue	$	41,417,439	$	6,665,147	$	2,848		$	48,085,434
Casino and food and beverage expense		22,253,862		5,800,486		-			28,054,348
Marketing and administrative expense		12,299,455		207,926		-			12,507,381
Facility and other expenses		1,659,950		117,490		1,822,382			3,599,822
Depreciation and amortization		1,109,336		526,161		8,068			1,643,565
Segment operating income (loss)		4,094,836		13,084		(1,827,602	)		2,280,318
Segment assets		10,477,077		812,547		18,944,536			30,234,160
Additions to property and equipment		354,169		268,169		43,618			665,956

	As of and for the Nine Months Ended January 31, 2014
	Washington Gold		South Dakota Gold		Corporate			Total
Net revenue	$	39,533,582	$	7,275,382	$	7,070		$	46,816,034
Casino and food and beverage expense		21,850,051		6,258,147		-			28,108,198
Marketing and administrative expense		12,184,758		234,803		-			12,419,561
Facility and other expenses		1,540,676		94,699		1,909,521			3,544,896
Depreciation and amortization		1,177,552		510,516		4,186			1,692,254
Segment operating income (loss)		2,780,545		177,217		(1,922,566	)		1,035,196
Segment assets		12,341,375		2,041,298		17,771,357			32,154,030
Additions to property and equipment		152,632		66,290		14,022			232,944

Reconciliation of reportable segment assets to our consolidated totals is as follows:

	January 31, 2015
Total assets for reportable segments	$	30,234,160
Cash and restricted cash not allocated to segments		8,988,506
Deferred tax asset		3,862,482
Total assets	$	43,085,148

Note 11. Commitments and Contingencies 

As a result of acquiring facilities in Washington and South Dakota and our commitment to lease office space for our corporate headquarters in Las Vegas, Nevada, as of January 31, 2015, we have future annual minimum lease payments as follows:

Period	Corporate Office Lease Payment		Washington Gold Lease Payment		South Dakota Gold		Total Lease Payment
February 2015-January 2016	$	51,335	$	2,997,966	$	55,200	$	3,104,501
February 2016-January 2017		47,554		2,591,010		55,200		2,693,764
February 2017-January 2018		-		1,769,153		-		1,769,153
February 2018-January 2019		-		1,729,830		-		1,729,830
February 2019-January 2020		-		1,300,896		-		1,300,896
Thereafter		-		2,627,260		-		2,627,260
	$	98,889	$	13,016,115	$	110,400	$	13,225,404

We continue to pursue additional development opportunities that may require, individually and in the aggregate, significant commitments of capital, extensions of credit, up-front payments to third parties and guarantees by us of third-party debt.

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We indemnified our officers and directors for certain events or occurrences while the director or officer is or was serving at our request in such capacity. The maximum potential amount of future payments we could be required to make under these indemnification obligations is unlimited; however, we have a Directors and Officers Liability Insurance policy that limits our exposure and enables us to recover a portion of any future amounts paid, provided that such insurance policy provides coverage.

Note 12. Goodwill and Intangible Assets

In connection with our acquisitions of the of the Washington mini-casinos on May 12, 2009, July 23, 2010 and July 18, 2011, as well as the South Dakota Gold slot route on January 27, 2012, we have goodwill and intangible assets of $20,945,436, net of amortization for intangible assets with finite lives.

The change in the carrying amount of goodwill and other intangible assets for the nine months ended January 31, 2015 is as follows:

	Total			Goodwill		Other intangible assets, net
Balance as of April 30, 2014	$	21,857,750		$	16,103,583	$	5,754,167
Current year amortization		(912,314	)		-		(912,314	)
Balance as of January 31, 2015	$	20,945,436		$	16,103,583	$	4,841,853

Intangible assets are generally amortized on a straight line basis over the useful lives of the assets. 

Goodwill and net other intangible assets by segment as of January 31, 2015 are as follows:

	Total		Goodwill		Other intangible assets, net
Washington Gold	$	17,991,538	$	14,167,112	$	3,824,426
South Dakota Gold		2,565,043		1,936,471		628,572
Corporate		388,855		-		388,855
Balance as of January 31, 2015	$	20,945,436	$	16,103,583	$	4,841,853

A summary of intangible assets and accumulated amortization as of January 31, 2015 are as follows. State gaming registration and trade names are not amortizable:

	Gross Carrying Amount		Accumulated Amortization			Net
Customer relationships	$	7,853,321	$	(5,262,323	)	$	2,590,998
Non-compete agreements		1,269,000		(1,269,000	)		-
State gaming registration		388,855		-			388,855
Trade names		1,862,000		-			1,862,000
Total	$	11,373,176	$	(6,531,323	)	$	4,841,853

The weighted average useful lives of acquired intangibles related to customer relationships and non-compete agreements are 7.0 years and 3.0 years, respectively.  The weighted average useful life of amortizable intangible assets in total is 5.5 years. The estimated future annual amortization of intangible assets, which excludes trade names and state gaming registration, is as follows:

Period	Amount
February 2015-January 2016	$	1,121,903
February 2016-January 2017		823,290
February 2017-January 2018		458,699
February 2018-January 2019		187,106
Total	$	2,590,998

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Note 13. Stock Offering and Warrants

On November 7, 2011, we closed on the sale of 2,625,652 shares of our common stock at a price of $1.65 per share to certain investors through a registered direct offering for the total proceeds of approximately $4,300,000, net of offering costs of approximately $444,000. In addition, for each share of our common stock purchased by an investor, we issued to such investor a warrant to purchase 0.75 shares of our common stock. The warrants have an exercise price of $2.18 per share and are exercisable for five years from the initial exercise date, which date is six months from the date of their issuance. The warrants expire on May 7, 2017. The proceeds of the offering were used to assist us in the $5,100,000 acquisition of South Dakota Gold.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis (“MD&A”) should be read in conjunction with our Consolidated Financial Statements and Notes thereto included in Item 1 of this Quarterly Report and with Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our Annual Report for the year ended April 30, 2014, filed on Form 10-K with the SEC on July 29, 2014.

Critical Accounting Policies

Our discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements. We prepare these financial statements in conformity with GAAP. As such, we are required to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the periods presented. We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances, the results of which form the basis for making judgments. On an on-going basis, we evaluate our estimates; however, actual results may differ from these estimates under different assumptions or conditions. There have been no material changes or developments in our evaluation of the accounting estimates and the underlying assumptions or methodologies that we believe to be Critical Accounting Policies and Estimates as disclosed in our Annual Report for the year ended April 30, 2014, filed on Form 10-K with the SEC on July 29, 2014.

Executive Overview

We were formed in 1977 and, since 1994, have primarily been a gaming company involved in financing, developing, owning and operating gaming properties. Our gaming facility operations are located in the United States of America (“U.S.”), specifically in the states of Washington and South Dakota. Our business strategy will continue to focus on owning and operating gaming establishments. If we are successful, our future revenues, costs and profitability can be expected to increase. However, there is no guarantee that we will be successful in implementing our business strategy in the future and, as such, no guarantee that our future revenues, costs and profitability will increase.

COMPARISON OF THE THREE MONTHS ENDED JANUARY 31, 2015 AND JANUARY 31, 2014

Net revenues. Net revenues increased year over year for all revenue reporting categories at $15,804,290 versus $14,760,867, for the three month period ended January 31, 2015, compared to the same period ended January 31, 2014. Washington revenues were up $1,090,614, or 8.2%, due to increased drop and a relatively normal hold percentage as compared to prior year’s slightly below average hold percentage. South Dakota revenues decreased $46,112, or 3.1%, due to fewer units in operation and lower handle. Casino revenue increased $1,011,191, making up 96.9% of the increase.

Total operating expenses.Total operating expenses increased 3.3%, to $14,963,034 from $14,482,921, for the three month period ended January 31, 2015, compared to the same period ended January 31, 2014. Casino expenses increased $97,632, or 1.3%, when compared to the same period last year primarily due to payroll and gaming taxes. Food and beverage expenses increased $68,655, or 5.2%, when compared to the same period last year primarily due to increased wages and cost of goods sold. Marketing and administrative expenses increased $238,566, or 5.9%, year over year primarily due to payroll and related costs. Facilities, corporate, depreciation and amortization and, other expenses remained relatively flat when compared to the same period last year.

Interest income (expense) and interest rate swap. Interest expense and amortization of loan issue costs decreased $156,788, or 51.7%, for the three month period ended January 31, 2015, compared to the three month period ended January 31, 2014. The decrease resulted from the reduction of outstanding debt since January 31, 2014, and the refinancing of all remaining debt in December 2013 (see Note 5 of our Consolidated Financial Statements). Interest income decreased $4,175 for the three month period ended January 31, 2015, compared to the three month period ended January 31, 2014, which was related to interest earned on notes receivables based on note terms. We recorded a $35,383 decrease of the fair value of the interest rate swap we were required to enter into as a result of refinancing our debt in December 2013, whereas we did not have any swaps during the three months ended January 31, 2014.

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Income Taxes. For the three months ended January 31, 2015 and January 31, 2014, our effective income tax rates were a 34.6% expense and a 24.6% expense, respectively, compared to the federal statutory rate of 34%. The higher effective tax rate for the three month period ended January 31, 2014 was primarily due to prior year return to provision adjustments.

Net income. Net income was $448,108 compared to a $203,038 loss for the three month periods ended January 31, 2015 and January 31, 2014, respectively. The increase is primarily a result of the $1,043,427 increase in net revenues and a $156,788 decrease in interest expense and amortization of loan issue costs offset by $480,113 increase in operating expenses and $312,944 increase in income tax expense. Also, the prior year’s quarterly net income was reduced by the $283,550 loss on extinguishment of debt.

COMPARISON OF THE NINE MONTHS ENDED JANUARY 31, 2015 AND JANUARY 31, 2014

Net revenues. Net revenues increased $1,269,400, or 2.7%, for the nine month period ended January 31, 2015 compared to the nine month period ended January 31, 2014. Revenues in Washington increased $1,883,856 primarily due to increased drop while revenues in South Dakota decreased $610,233 due to fewer gaming units and a decrease in win per unit. Casino revenues increased $1,161,872, or 2.8%. Food and beverage revenues increased $125,485, or 1.7%, primarily due to increased patron counts at our Washington properties which resulted in additional cash sales of $74,941 and additional complementary sales of $50,544.

Total operating expenses.Total operating expenses increased $24,278, or 0.1%, for the nine month period ended January 31, 2015, compared to the nine month period ended January 31, 2014. Casino expenses decreased $265,888, or 1.1%, when compared to the same period last year primarily due to reduced commissions in South Dakota due to the lower revenues as a result of the reduced number of gaming devices. Food and beverage expenses increased $212,038, or 5.5%, when compared to the same period last year primarily due to increased cost of goods sold. Marketing and administrative, facilities, corporate, depreciation and amortization and, other expenses remained relatively flat when compared to the same period last year.

Interest income (expense) and interest rate swap.Interest expense and amortization of loan issue costs decreased $653,664, or 56.0%, for the nine month period ended January 31, 2015, compared to the nine month period ended January 31, 2014. The decrease resulted from the reduction of outstanding debt since October 31, 2013, and the refinancing of all remaining debt in December 2013 (see Note 5 of our Consolidated Financial Statements). Interest income decreased $11,144 for the nine month period ended January 31, 2015, compared to the nine month period ended January 31, 2014, which was related to interest earned on notes receivables based on note terms. We recorded a $37,729 decrease of the fair value of the interest rate swap we were required to enter into as a result of refinancing our debt in December 2013, whereas we did not have any swaps during the three months ended January 31, 2014.

Income Taxes. For the nine months ended January 31, 2015 and January 31, 2014, our effective income tax rates were a 32.6% expense and a 25.2% benefit, respectively, compared to the federal statutory rate of 34%. The higher effective tax rate for the nine month period ended January 31, 2014 was primarily due to prior year return to provision adjustments.

Net income.Net income was $1,218,205 compared to a $198,108 loss for the nine month periods ended January 31, 2015 and January 31, 2014, respectively. The increase is primarily a result of the $1,161,872 increase casino revenue and the $653,664 reduction of interest expense and amortization of loan issue costs, offset by a $709,611 increase in income tax expense. Also, the prior year net income was reduced by the $283,550 loss on extinguishment of debt.

Non-GAAP Financial Measures

The term “adjusted EBITDA” is used by us in presentations, quarterly earnings calls, and other instances as appropriate. Adjusted EBITDA is defined as net income before interest, income taxes, depreciation and amortization, non-cash goodwill and other long-lived asset impairment charges, write-offs of project development costs, litigation charges, non-cash stock grants, non-cash employee stock purchase plan discounts, exclusion of net income or loss from assets held for sale, and net losses/gains from asset dispositions. Adjusted EBITDA excludes the impact of slot and table games hold percentages compared to the prior year. Adjusted EBITDA is presented because it is a required component of financial ratios reported by us to our lenders, and it is also frequently used by securities analysts, investors, and other interested parties, in addition to and not in lieu of GAAP results, to compare to the performance of other companies that also publicize this information.

Adjusted EBITDA is not a measurement of financial performance under GAAP and should not be considered as an alternative to net income as an indicator of our operating performance or any other measure of performance derived in accordance with GAAP.

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The following table shows adjusted EBITDA by segment for the three months ended January 31, 2015 and January 31, 2014:

	For the three months ended January 31, 2015
	Washington Gold			South Dakota Gold			Corporate - Other			Total
Revenues:
Gross revenues	$	15,474,225		$	1,451,587		$	1,000		$	16,926,812
Less promotional allowances		(1,117,642	)		(4,880	)		-			(1,122,522	)
Net revenues		14,356,583			1,446,707			1,000			15,804,290
Expenses:		12,268,951			1,436,881			633,015			14,338,847
Adjusted EBITDA	$	2,087,632		$	9,826		$	(632,015	)	$	1,465,443

	For the three months ended January 31, 2014
	Washington Gold			South Dakota Gold			Corporate - Other			Total
Revenues:
Gross revenues	$	14,348,330		$	1,498,344		$	2,078		$	15,848,752
Less promotional allowances		(1,082,360	)		(5,525	)		-			(1,087,885	)
Net revenues		13,265,970			1,492,819			2,078			14,760,867
Expenses:		11,734,945			1,532,650			623,970			13,891,565
Adjusted EBITDA	$	1,531,025		$	(39,831	)	$	(621,892	)	$	869,302

The following table shows adjusted EBITDA by segment for the nine months ended January 31, 2015 and January 31, 2014:

	For the nine months ended January 31, 2015
	Washington Gold			South Dakota Gold			Corporate - Other			Total
Revenues:
Gross revenues	$	44,653,327		$	6,680,528		$	2,848		$	51,336,703
Less promotional allowances		(3,235,889	)		(15,380	)		-			(3,251,269	)
Net revenues		41,417,438			6,665,148			2,848			48,085,434
Expenses:		36,209,169			6,084,760			1,732,918			44,026,847
Adjusted EBITDA	$	5,208,269		$	580,388		$	(1,730,070	)	$	4,058,587

	For the nine months ended January 31, 2014
	Washington Gold			South Dakota Gold			Corporate - Other			Total
Revenues:
Gross revenues	$	42,707,443		$	7,296,167		$	7,070		$	50,010,680
Less promotional allowances		(3,173,861	)		(20,785	)		-			(3,194,646	)
Net revenues		39,533,582			7,275,382			7,070			46,816,034
Expenses:		35,562,574			6,582,489			1,806,260			43,951,323
Adjusted EBITDA	$	3,971,008		$	692,893		$	(1,799,190	)	$	2,864,711

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The following table reconciles adjusted EBITDA to net income for the three months ended January 31, 2015 and January 31, 2014:

Adjusted EBITDA reconciliation to net income:

	For the three months ended
	January 31, 2015		January 31, 2014
Net income (loss)	$	448,108	$	(203,038	)
Add:
Net interest expense and change in swap fair value		152,847		270,077
Income tax expense (benefit)		240,301		(72,643	)
Depreciation and amortization		553,910		565,030
Loss on extinguishment of debt		-		283,550
Stock options amortization and employee stock purchases		43,794		15,282
Loss on sale of assets		24,613		7,412
Deferred rent amortization		1,870		3,632
Adjusted  EBITDA	$	1,465,443	$	869,302

The following table reconciles adjusted EBITDA to net income for the nine months ended January 31, 2015 and January 31, 2014:

Adjusted EBITDA reconciliation to net income:

	For the nine months ended
	January 31, 2015		January 31, 2014
Net income (loss)	$	1,218,205	$	(198,108	)
Add:
Net interest expense and change in swap fair value		461,443		1,066,234
Income tax expense (benefit)		593,131		(116,480	)
Depreciation and amortization		1,643,565		1,692,254
Stock options amortization and employee stock purchases		88,937		46,301
Loss on sale of assets		41,700		15,929
Impairments/Write offs		-		56,959
Loss on extinguishment of debt		-		283,550
Deferred rent amortization		4,067		18,072
Write off of marketable securities		7,539		-
Adjusted  EBITDA	$	4,058,587	$	2,864,711

Liquidity and Capital Resources

Historical Cash Flows

The following table sets forth our consolidated net cash provided by (used in) operating, investing and financing activities for the nine month periods ended January 31, 2015 and January 31, 2014:

	Nine Months Ended
	January 31,			January 31,
	2015			2014
Net cash provided by (used in):
Operating activities	$	3,576,429		$	928,926
Investing activities	$	(356,049	)	$	(97,292	)
Financing activities	$	(3,504,701	)	$	(1,868,736	)

Operating activities.Net cash provided by operating activities during the nine month period ended January 31, 2015 increased by $2,647,503 over the comparable period in the prior fiscal year. This increase mainly resulted from a $1,269,400 increase in revenues and a $496,321 decrease in cash paid for interest, as well as an decrease in working capital.

Investing activities. Net cash used in investing activities during the nine month period ended January 31, 2015 increased by $258,757 over the comparable period in the prior fiscal year due to the $347,542 increase in purchases of property and equipment offset by a $93,234 increase of proceeds collected from notes receivable.

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Financing activities.Net cash used in financing activities during the nine month period ended January 31, 2015 increased $1,635,965 over the comparable period in the prior fiscal year. The increase mainly resulted from paying down additional debt.

Future Sources and Uses of Cash

We expect that our future liquidity and capital requirements will be affected by:

-capital requirements related to future acquisitions;

- cash flow from operations;

- new management contracts;

- working capital requirements;

- obtaining debt financing; and

- debt service requirements.

On January 31, 2015, outstanding indebtedness was $8,800,000. Our next principal reduction is due June 30, 2016.

As of January 31, 2015, principal payments on the Credit Facility are as follows:

February 1, 2015 – January 31, 2016	$	-
February 1, 2016 – January 31, 2017	$	1,150,000
February 1, 2017 – January 31, 2018	$	1,900,000
February 1, 2018 – December 10, 2018 (date of maturity)	$	5,750,000

On January 31, 2015, excluding restricted cash of $1,533,842, we had cash and cash equivalents of $7,454,664. The restricted cash consists of funds for player supported jackpots.

Our Consolidated Financial Statements have been prepared assuming that we will have adequate availability of cash resources to satisfy our liabilities in the normal course of business. We have made arrangements to ensure that we have sufficient working capital to fund our obligations as they come due. We believe that funds from operations will provide sufficient working capital for us to meet our obligations as they come due; however, there can be no assurance that we will be successful. Should cash resources not be sufficient to meet our current obligations as they come due, repay or refinance our long-term debt, and acquire operations that generate positive cash flow, we would be required to curtail our activities and maintain, or grow, at a pace that cash resources could support.

Liquidity

The current ratio is an indication of a company’s market liquidity and ability to meet creditor’s demands. Acceptable current ratios vary from industry to industry and are generally between 1.25 and 3.0 for healthy businesses. If a company’s current ratio is in this range, then it generally indicates good short-term financial strength. If current liabilities exceed current assets (the current ratio is below 1), then the company may have problems meeting its short-term obligations. The table below shows that, as of January 31, 2015, we have a 2.8 ratio, which is sufficient to service debt and maintain operations.

	Current Ratio as of
	January 31, 2015
Current Assets	$	11,241,603
Current Liabilities	$	4,037,346
Current Ratio		2.8

Off-Balance Sheet Arrangements

None.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Not required for smaller reporting companies.

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Item 4. Controls and Procedures

Disclosure controls and procedures.We maintain disclosure controls and procedures that are designed to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit to the SEC under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified by the SEC’s rules and forms, and that information is accumulated and communicated to our management, including our President and Chief Financial Officer (“CFO”), as appropriate to allow timely decisions regarding required disclosure.

In accordance with Rules 13a-15 and 15d-15 of the Exchange Act, we carried out an evaluation, under the supervision and with the participation of management, including our President and CFO, of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. As a result of our evaluation, they concluded that our disclosure controls and procedures were effective as of January 31, 2015.

Changes in internal controls over financial reporting. There have not been any changes in our control over financial reporting during the three months ended January 31, 2015 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Part II. Other Information

Item 1. Legal Proceedings

We are not currently involved in any material legal proceedings.

Item 1A. Risk Factors

There have been no material changes in our risk factors as previously disclosed in our Annual Report on Form 10-K for the fiscal year ended April 30, 2014, filed with the SEC on July 29, 2014.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

Item 6. Exhibits

See the Index to Exhibits following the signature page hereto for a list of the exhibits filed pursuant to Item 601 of Regulation S-K

INDEX TO EXHIBITS

EXHIBIT NUMBER	DESCRIPTION
10.1	First Amendment to Asset Purchase Agreement between Colorado Grande Enterprises, Inc., as seller, and G Investments, LLC, as purchaser (filed previously as Exhibits 10.1 to the Company’s Form 8-K filed May 29, 2012).
10.2	Third Amended and Restated Promissory Note dated May 25, 2012 issued by Nevada Gold & Casinos, Inc. to Louise H. Rogers, as her separate property (filed previously as Exhibits 10.1 to the Company’s Form 8-K filed June 1, 2012).
10.3	May 2012 Amended and Restated Security Agreement dated May 25, 2012 between Nevada Gold & Casinos, Inc. and Louise H. Rogers, as her separate property (filed previously as Exhibits 10.2 to the Company’s Form 8-K filed June 1, 2012).

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10.4	Credit Agreement dated June 27, 2012 by and among Wells Fargo Gaming Capital, LLC, as administrative agent, the Lenders that are parties thereto, Nevada Gold & Casinos, Inc., as parent, and A.G. Trucano, Son & Grandsons, Inc., as borrower (filed previously as Exhibits 10.1 to the Company’s Form 8-K filed July 3, 2012).
10.5	Guaranty and Security Agreement dated June 27, 2012 among Nevada Gold & Casinos, Inc., certain Grantors listed on the signature page and Wells Fargo Gaming Capital, LLC, in capacity as administrative agent (filed previously as Exhibits 10.2 to the Company’s Form 8-K filed July 3, 2012).
10.6	Intercompany Subordination Agreement dated June 27, 2012 by and among certain Obligors listed on the signature page in favor of Wells Fargo Gaming Capital, LLC, in capacity as administrative agent (filed previously as Exhibits 10.3 to the Company’s Form 8-K filed July 3, 2012).
10.7	Amendment Number Two to Credit Agreement dated October 7, 2011 by and among Wells Fargo Gaming Capital, LLC, in capacity as administrative agent and lender, Nevada Gold & Casinos, Inc., as parent, and NG Washington, LLC, NG Washington II, LLC and NG Washington III, LLC, as borrowers (filed previously as Exhibits 10.4 to the Company’s Form 8-K filed July 3, 2012).
10.8	Intercreditor Agreement and Subordination dated June 27, 2012 by and between Wells Fargo Gaming Capital, LLC, as administrative agent, and Michael J. Trucano, as sellers’ representative (filed previously as Exhibits 10.5 to the Company’s Form 8-K filed July 3, 2012).
10.9	Credit Agreement dated December 10, 2013 by and among Mutual of Omaha Bank, as the Lender, Nevada Gold & Casinos, Inc., as parent, and Restricted Subsidiaries, as borrower (filed previously as Exhibits 10.9 to the Company’s Form 10-Q filed December 23, 2013).
31.1(*)	Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2(*)	Certification of Principal Financial and Accounting Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1(*)	Certification of Principal Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2(*)	Certification Principal Financial and Accounting Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS(†)	XBRL Instance Document
101.SCH(†)	XBRL Taxonomy Schema
101.CAL(†)	XBRL Taxonomy Calculation Linkbase
101.DEF(†)	XBRL Taxonomy Definition Linkbase
101.LAB(†)	XBRL Taxonomy Label Linkbase
101.PRE(†)	XBRL Taxonomy Presentation Linkbase

_________________

* Filed herewith.

In accordance with SEC Release 33-8238, Exhibits 32.1 and 32.2 are being furnished and not filed.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: March 17, 2015

Nevada Gold & Casinos, Inc.
By:	/s/ James D. Meier
	James D. Meier
.	Chief Financial Officer
	(Principal Financial Officer)

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