UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly report pursuant to Section 13 or 15 (d) of the Securities
Exchange Act of 1934
For the quarter ended SEPTEMBER 30, 1997
Commission file number 0-8927
NEVADA GOLD & CASINOS, INC.
(Exact name of registrant as specified in its charter)
NEVADA 88-0142032
(state or other Jurisdiction (IRS Employer
of incorporation) Identification Number)
3040 POST OAK BLVD. SUITE 675, HOUSTON, TEXAS 77056
(Address of principal executive offices) (Zip Code)
(713) 621-2245
Registrant's telephone number:
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.
Yes [X] No [ ]
As of September 30, 1997 there were 8,499,236 shares of common stock
outstanding.
NEVADA GOLD & CASINOS, INC.
INDEX
PART I
ITEM 1. FINANCIAL STATEMENTS PAGE NO.
Balance Sheets as of September 30 and March 31, 1997 ........ 3
Statements of Operations for the Three Months Ended
September 30, 1997 and 1996 ............................. 4
Statements of Operations for the Six Months Ended
September 30, 1997 and 1996 ............................. 5
Statements of Cash Flows for the Six Months Ended
September 30, 1997 and 1996 ............................ 6
Notes to Interim Financial Statements ....................... 7
ITEM 2
Management's Discussion and Analysis of Financial Condition
and Results of Operations .............................. 11
PART II
OTHER INFORMATION
Item 1 Through 6 ............................................. 14
2
NEVADA GOLD & CASINOS, INC.
BALANCE SHEETS
September 30, March 31,
1997 1997
----------- -----------
(Unaudited) (Audited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents ............................ $ 48,531 $ 78,245
Short term investments ............................... 17,608 17,408
Other assets ......................................... 65,500 65,000
----------- -----------
TOTAL CURRENT ASSETS ................................. 131,639 160,653
Investment in Isle of Capri Black Hawk ............... 1,521,564 --
Property and assets held for development ............. 2,165,269 4,203,418
Mining properties & claims ........................... 480,812 480,812
Furniture, fixtures and equipment, net ............... 92,993 111,140
----------- -----------
TOTAL ASSETS ......................................... $ 4,392,277 $ 4,956,023
=========== ===========
LIABILITIES & STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued liabilities ............. $ 46,176 $ 325,893
Short term notes payable ............................. 176,000 1,504,367
Current portion of long term debt .................... 70,371 112,492
----------- -----------
TOTAL CURRENT LIABILITIES ............................ 292,548 1,942,752
----------- -----------
LONG TERM DEBT
Mortgages payable, net of current portion ............ 147,912 176,632
Notes payable, net of current portion ................ 526,758 32,268
----------- -----------
TOTAL LONG TERM DEBT ................................. 674,670 208,900
----------- -----------
TOTAL LIABILITIES .................................... 967,218 2,151,652
----------- -----------
STOCKHOLDERS' EQUITY
Preferred stock, $10 par value, 500,000 shares
authorized, 141,290 and 90,100 shares outstanding
at September 30, and March 31, 1997, respectively 1,412,900 901,000
Common stock, $.12 par value, 10,000,000 shares
authorized, 8,499,236 and 8,349,046 shares
outstanding at September 30, and March 31, 1997,
respectively ..................................... 1,019,908 1,001,886
Additional paid in capital ........................... 6,176,502 5,956,959
Accumulated deficit prior to development
stage (12/27/93) ................................. (2,296,077) (2,296,077)
Accumulated deficit during development stage ......... (2,888,174) (2,759,397)
----------- -----------
TOTAL STOCKHOLDERS' EQUITY ........................... 3,425,059 2,804,371
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY ........................................... $ 4,392,277 $ 4,956,023
=========== ===========
The accompanying notes are an integral part of these financial statements.
3
NEVADA GOLD & CASINOS, INC.
STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended
September 30,
---------------------------
1997 1996
---------- -----------
REVENUES
Royalty income ............................... $ -- $ --
Other income ................................. 540,754 8,505
---------- -----------
TOTAL REVENUES ............................... 540,754 8,505
---------- -----------
EXPENSES
General & administrative ..................... 215,465 191,454
Interest expense ............................. 46,290 82,075
Salaries ..................................... 59,378 30,586
Legal & professional fees .................... 79,032 144,567
Other ........................................ 10,392 26,342
---------- -----------
TOTAL EXPENSES ............................... 410,557 475,024
----------- -----------
NET INCOME (LOSS) ............................ $ 130,197 $ (466,519)
========== ===========
PER SHARE INFORMATION
Weighted average number of common
shares and equivalent outstanding ........ 8,453,689 8,268,267
========== ===========
Net income (loss) per common share ........... $ .02 $ (.06)
========== ===========
The accompanying notes are an integral part of these financial statements
4
NEVADA GOLD & CASINOS, INC.
STATEMENTS OF OPERATIONS
(UNAUDITED)
Six Months Ended Cumulative Amounts
September 30, During Development
--------------------------
Stage (Since
1997 1996 12/27/93)
----------- ----------- -----------
REVENUES
Royalty income ...................... $ 15,000 $ 5,000 $ 219,000
Other income ........................ 541,119 24,600 1,037,289
----------- ----------- -----------
TOTAL REVENUES ...................... 556,119 29,600 1,256,289
----------- ----------- -----------
EXPENSES
General & administrative ............ 320,877 302,900 1,450,032
Interest expense .................... 112,228 115,823 599,249
Salaries ............................ 111,219 42,901 390,204
Legal & professional fees ........... 120,110 252,124 1,388,061
Other ............................... 20,463 46,406 316,917
----------- ----------- -----------
TOTAL EXPENSES ...................... 684,896 760,154 4,144,463
----------- ----------- -----------
NET LOSS ............................ $ (128,777) $ (730,554) $(2,888,174)
=========== =========== ===========
PER SHARE INFORMATION
Weighted average number of common
shares and equivalent outstanding 8,404,638 8,264,528 6,667,146
=========== =========== ===========
Net loss per common share ........... $ (.02) $ (.09) $ (.43)
=========== =========== ===========
The accompanying notes are an integral part of these financial statements.
5
NEVADA GOLD & CASINOS, INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
Six Months Ended Cumulative Amounts
September 30, During Development
----------------------
Stage (Since
1997 1996 12/27/93)
--------- --------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) .............................. $(128,777) $(264,035) $(2,888,174)
Adjustments to reconcile net loss to net
cash provided (used) by operating activities:
Depreciation ............................... 13,306 6,653 59,776
Consultant and investment banker
option expense ........................... 0 0 320,625
Changes in operating assets and liabilities:
Receivable ............................. (700) (1,814) 205,825
Accounts payable and accrued
liabilities .......................... (31,902) 153,208 1,035,138
--------- --------- -----------
NET CASH USED IN OPERATING ACTIVITIES ......... (148,073) (105,988) (1,266,810)
--------- --------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Property and assets held for development ... (45,532) (35,372) (1,318,046)
Purchase of furniture, fixtures and
equipment ................................. (6,827) 0 (35,865)
Disposition of property .................... 168,249 0 168,249
--------- --------- -----------
NET CASH PROVIDED (USED) BY INVESTING ACTIVITIES 115,890 (35,372) (1,185,662)
--------- --------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from debt ......................... 773,795 124,078 4,334,957
Common stock issued for cash, net of
offering costs ......................... 135,000 3,750 1,156,563
Fractional shares redeemed ................. 0 0 (36)
Payments on debt ........................... (906,326) (41,798) (3,318,268)
Salaries contributed by officers ........... 0 0 1,000
Prepaid stock subscription ................. 0 0 295,500
--------- --------- -----------
NET CASH PROVIDED BY FINANCING ACTIVITIES ...... 2,469 86,030 2,469,716
--------- --------- -----------
Net increase (decrease) in cash ................ (29,714) (55,330) 17,244
Beginning cash balance ......................... 78,245 76,371 6,287
--------- --------- -----------
Ending cash balance ............................ $ 48,531 $ 21,041 $ 23,531
========= ========= ===========
SUPPLEMENTAL INFORMATION:
Cash paid for interest ..................... $ 88,231 $ 6,760 $ 352,674
========= ========= ===========
Cash paid for taxes ........................ $ 0 $ 0 $ 0
========= ========= ===========
The accompanying notes are an integral part of these financial statements.
6
NEVADA GOLD & CASINOS, INC.
SEPTEMBER 30, 1997
NOTES TO INTERIM FINANCIAL STATEMENTS
ITEM 1.
GENERAL BUSINESS
Nevada Gold & Casinos, Inc.'s (the "Company") principal business
historically was mineral exploration and development of properties indirectly,
principally through investments in partnerships and joint ventures. On December
27, 1993, control of the Company changed and the Company began to explore the
real estate development and gaming businesses in Colorado. The Company is
considered to be in the development stage since December 27, 1993. In January
1994, the Company changed its name from Pacific Gold Corporation to Nevada Gold
& Casinos, Inc. While the Company is maintaining its mining business, it is
anticipated that its growth will be in the real estate and gaming businesses.
GAMING DEVELOPMENT
In June 1997, through wholly-owned subsidiaries of each company, Nevada
Gold & Casinos, Inc. and Casino America, Inc. entered into a joint venture to
develop a new Isle of Capri casino in Colorado at Black Hawk, 30 miles west of
Denver. The joint venture plans to develop, own and operate the Isle of Capri
Black Hawk as a premier casino gaming facility. The casino will be one of the
first gaming facilities encountered by customers traveling from Denver to the
Black Hawk market and, upon completion, it will be one of the largest gaming
facilities in Colorado. It will feature 90,000 square feet on one level with
1,100 slot machines, 24 blackjack and poker games, a fine dining restaurant, a
delicatessen, a Las Vegas style buffet, and an event center. The facility also
will include 1,000 on-site parking spaces. The Isle of Capri Black Hawk will be
designed and constructed pursuant to a bonded "guaranteed maximum price"
design/build agreement, which also provides for the addition of a hotel at the
option of the venture for an agreed-upon increase to the guaranteed maximum
price.
The Company holds its interest in the Isle of Capri Black Hawk through a
wholly owned subsidiary, Black Hawk Gold, Ltd., a Colorado Corporation ("Black
Hawk Gold"). The Company, through Black Hawk Gold, made a capital contribution
valued under the joint venture agreement at $7.5 million. The contribution
consisted of land valued at $7.9 million, subject to a note payable with a
balance, including principal and interest, of approximately $400,000 that was
paid by the joint venture. The property included lots 5, 6, 7 and 8 of Block 51,
and adjoining land comprised of over three acres located in Black Hawk,
Colorado. Casino America, Inc. will manage the casino under a long-term
management agreement for a fee based upon the revenues generated by the project.
The development of the project is subject to a number of conditions, including
the receipt of all required regulatory approvals, particularly approval from the
Colorado Gaming Commission.
7
NEVADA GOLD & CASINOS, INC.
SEPTEMBER 30, 1997
NOTES TO INTERIM FINANCIAL STATEMENTS
In March 1996, Nevada Gold & Casinos, Inc. and Caesar's World Gaming
Corporation ("Caesar's"), a subsidiary of ITT Corporation, had announced joint
development plans for this project. Although all the necessary land was
assembled, designs were completed, and operating agreements were signed, no
further action was taken. In August 1997, Casino America purchased Caesar's
interest in this project.
Under the terms of the original agreement with Casino America, the
Company would have retained about 48% interest in the joint venture and Casino
America would have owned about 52%. In July 1997, the operating agreement with
Casino America was amended. The Company's ownership was decreased to 45% and
Casino America's ownership was increased to 55% to compensate Casino America for
providing a Completion Capital Commitment and the Managers Subordination
Agreement. Pursuant to the amended operating agreement, the Company received
from Casino America a $500,000 loan, $700,000 in cash for sale of part of its
ownership interest in the joint venture, and an additional commitment to fund up
to $800,000 toward the Company's future cash requirements. The Company's
ownership of the joint venture was reduced to approximately 41% upon receipt by
the Company of the initial $1,200,000 and its ownership will be reduced to
approximately 36% if all of the additional $800,000 commitment is used.
Substantially all of the $1,200,000 proceeds were paid directly to creditors of
the Company in full payment of the Company's outstanding obligations to such
creditors. The Company has the option to repurchase the sold portion of its
ownership interest in the project within 180 days after the date of each
funding. The loan bears interest at the higher of 14.5% or Casino America's
highest cost of funds plus two percentage points and is due on August 20, 2000.
In January 1997, the Company engaged Jefferies and Company, Inc., a
nationally known investment banking concern prominent in the gaming industry, as
its exclusive financial advisor in connection with the structuring and financing
of the casino project. In August 1997, first mortgage notes in the aggregate
amount of $75,000,000 were issued by Isle of Capri Black Hawk, L.L.C. and its
wholly owned subsidiary, Isle of Capri Black Hawk Capital Corp. (collectively
the "Issuers"). These notes mature on August 31, 2004 and bear interest at 13%
per annum. Interest on the notes is payable semi-annually on each February 28
and August 31, commencing February 28, 1998. Contingent interest is payable on
the notes, on each interest payment date, in an aggregate amount equal to 5% of
the Isle of Capri Black Hawk L.L.C.'s consolidated cash flow for the two fiscal
quarters ending during the January or July immediately preceding such interest
payment date. The notes are secured by a first lien on substantially all of the
existing and future assets of the Issuers and are without recourse to the
members of Isle of Capri Black Hawk, L.L.C. or their respective parent or
affiliate entities.
The Company conveyed property to the City of Black Hawk for the
realignment of Miners Mesa Road in exchange for a fifteen-foot strip of
adjoining gaming property which would increase the square footage available for
gaming and provide additional land to the joint venture.
8
NEVADA GOLD & CASINOS, INC.
SEPTEMBER 30, 1997
NOTES TO INTERIM FINANCIAL STATEMENTS
There have been no revenues from the Company's gaming joint venture to
date since these are currently in the development stage. Revenues have not been
sufficient to cover the Company's operating expenses during the past several
years. Management does not expect significant increases in revenues from any of
its operations over the next year. In July 1997, the Company signed an amended
Operating Agreement with Casino America, Inc. concerning the development of a
casino. Pursuant to this agreement, the Company exchanged part of its ownership
interest in the casino venture for cash, a loan, and a commitment of additional
funds for future cash requirements. The long-term viability of the Company is
dependent upon the successful completion and operation of a casino.
REAL ESTATE DEVELOPMENT
On September 9, 1994, Gold Mountain Development, LLC was formed. Per
negotiated agreement with the other three members, Nevada Gold & Casino, Inc.'s
ownership was 40%. On September 26, 1995, the Company acquired the remaining 60%
interest in Gold Mountain Development, LLC, making it a wholly-owned subsidiary.
Intercompany balances have been eliminated in preparing the Company's financial
statements as of September 30, and March 31, 1997.
On July 9, 1996, President Clinton signed legislation authorizing a
public-private land exchange with Gold Mountain Development, LLC that will make
possible the creation of a major new residential and recreational development
near the Black Hawk gaming area west of Denver, while also preserving 8,700
acres of pristine wilderness area throughout Colorado. Public law 104-158
authorizes the Bureau of Land Management to swap 133 separate tracts of federal
land comprised of over 300 acres. This project is designed to provide housing,
commercial infrastructure, retail and resort facilities for the fast growing
gaming area of Black Hawk and Central City.
As of March 31, 1995, the Company entered into an agreement to purchase
100% of the outstanding common stock of Sunrise Land and Minerals, Inc.
("Sunrise"). The seller financed the entire purchase price of the acquisition
through a non-recourse note. Effective August 23, 1996, the Company retired the
short-term non-recourse note associated with the Sunrise purchase, through the
issuance of 166,667 restricted shares of the Company's common stock.
9
NEVADA GOLD & CASINOS, INC.
SEPTEMBER 30, 1997
NOTES TO INTERIM FINANCIAL STATEMENTS
MINING INTERESTS
The Company had a joint venture agreement with Cameco U.S., Inc.
("Cameco") which was terminated effective March 31, 1996. Effective November 1,
1996, the Company entered into a lease with Sagebrush Exploration, Inc.,
("Sagebrush") permitting Sagebrush to explore, develop, and mine the properties
in the Goldfield Mining District located in Nye and Esmeralda Counties, Nevada.
Under the terms of this agreement, the Company was to receive advance minimum
royalty payments, production royalty and 100,000 shares of the capital stock
from Sagebrush's parent company, Coromandel Resources, Ltd., ("Coromandel").
Sagebrush agreed to incur expenditures for exploration and development of the
property and any and all taxes and maintenance fees. Sagebrush has been in
default of this lease since July 1997. Management is currently negotiating with
a potential new lessee.
REVERSE COMMON STOCK SPLIT
On August 23, 1996, the Company's Board of Directors approved and
declared a three-for-one reverse stock split of the Company's authorized, issued
and outstanding shares of common stock, par value $.04 per share. Holders of the
Common Stock were not entitled to cumulative voting. The stock split was
accompanied by an increase in the par value of the common stock from $.04 per
share to $.12 per share. All references in the consolidated financial statements
referring to shares, share prices, per share amounts and stock plans have been
adjusted retroactively for the three-for-one reverse stock split.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments considered
necessary for fair presentation have been included. Certain prior year balances
have been reclassified to conform to current year presentation.
These financial statements are consolidated for all wholly-owned
subsidiaries. All significant intercompany transactions and balances have been
eliminated in the financial statements.
10
NEVADA GOLD & CASINOS, INC.
SEPTEMBER 30, 1997
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
RESULTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 1997 COMPARED WITH THREE MONTHS ENDED SEPTEMBER
30, 1996
Revenues increased $532,249 for the three months ended September 30,
1997 compared to the same period in the prior year. The current year included a
gain of $543,418 for the sale of part of the Company's interest in the Isle of
Capri Black Hawk joint venture.
General and administrative expenses increased $24,011 for the three
months ended September 30, 1997 compared to the same period in the prior year,
including an increase of $55,700 in commission expense, partially offset by
decreases in contract labor and travel. The current quarter included fees in the
amount of $79,700 related to the casino project and the acquisition of
financing. The same period last year included $24,000 related to the acquisition
of financing.
Interest expense decreased $35,784 for the three months ended September
30, 1997 as compared to the same period last year. The prior year included
$30,000 interest on commercial paper in the amount of $2,000,000.
Salaries increased $28,792 for the three months ended September 30, 1997
as compared to the same period last year, due to the hiring of additional
personnel to handle accounting, legal and other functions previously outsourced
by the Company.
Legal and professional fees decreased $65,535 including decreases of
$45,908 in accounting expense and $21,040 in consulting fees. The prior year
included consulting fees associated with the acquisition of capital and audit
and accounting fees associated with the Company's annual audit.
Other expenses decreased $15,950, including a decrease of $12,942 in
printing expense. The prior year included expenses for SEC filings.
SIX MONTHS ENDED SEPTEMBER 30, 1997 COMPARED WITH SIX MONTHS ENDED SEPTEMBER 30,
1996
Revenues increased $526,519 for the six months ended September 30, 1997
compared to the same period in the prior year. The current year included a gain
of $543,418 for the sale of part of the Company's interest in the Isle of Capri
Black Hawk joint venture.
13
NEVADA GOLD & CASINOS, INC.
SEPTEMBER 30, 1997
General and administrative expenses increased $17,977 for the six months
ended September 30, 1997 compared to the same period in the prior year,
including an increase of $55,700 in commission expense, partially offset by a
decrease of $22,765 in contract labor. The current year included fees in the
amount of $79,700 related to the casino project and the acquisition of
financing. The same period last year included $24,000 related to the acquisition
of financing.
Interest expense decreased $3,595 for the six months ended September 30,
1997 as compared to the same period last year. The current year reflected an
increase in interest expense for short-term notes payable. The prior year
included $30,000 interest on commercial paper in the amount of $2,000,000.
Salaries increased $68,317 for the six months ended September 30, 1997
as compared to the same period last year, due to the hiring of additional
personnel to handle accounting, legal, and other functions previously outsourced
by the Company.
Legal and professional fees decreased $132,014, including decreases of
$51,444 in accounting expense, $47,432 in consulting fees and $33,324 for legal
and professional fees. The prior year included consulting and legal fees
associated with the acquisition of capital and audit and accounting fees
associated with the Company's annual audit.
Other expenses decreased $25,943, including a decrease of $17,370 in
printing expense. The prior year included expenses for SEC filings.
LIQUIDITY AND CAPITAL RESOURCES
Revenues from the Company have not been sufficient to cover the
Company's operating expenses during the past two years. In addition, there have
been no revenues from the Company's gaming joint venture to date since these are
currently in the development stage. Management does not expect significant
increases in revenues from any of its operations over the next year.
During the six months ended September 30, 1997, the Company received
proceeds from short-term debt of $773,795 to cover its operating deficit and for
scheduled payments on its long-term debt. Additional funds were obtained through
private sales of restricted Company Stock to "accredited" investors, as such
term is defined under Securities and Exchange Commission Regulation D.
12
NEVADA GOLD & CASINOS, INC.
SEPTEMBER 30, 1997
Pursuant to an amended operating agreement with Casino America, the
Company received from Casino America a $500,000 loan, $700,000 in cash for sale
of part of its ownership interest in the joint venture, and an additional
commitment to fund up to $800,000 toward the Company's future cash requirements.
The Company's ownership of the joint venture was reduced to approximately 41%
upon receipt by the Company of the initial $1,200,000 and its ownership will be
reduced to approximately 36% if all of the additional $800,000 commitment is
used. Substantially all of the $1,200,000 proceeds were paid directly to
creditors of the Company in full payment of the Company's outstanding
obligations to such creditors. The Company has the option to repurchase the sold
portion of its ownership interest in the project within 180 days after the date
of each funding. The loan bears interest at the higher of 14.5% or Casino
America's highest cost of funds plus two percentage points and is due on August
20, 2000.
During the year ended March 31, 1996, the Company offered $8,500,000 in
Convertible Secured Notes. As of August 23, 1996, the company withdrew this debt
offering. Funds in escrow were returned in compliance with the terms of the
offering.
On July 5, 1996, the Company issued $2,030,000 in discounted commercial
paper with a 31-day term for which it received proceeds of $2,000,000. The
commercial paper was paid in full at maturity.
In January 1997, the Company engaged Jefferies and Company, Inc., a
nationally known investment banking concern prominent in the gaming industry, as
its exclusive financial advisor in connection with the structuring and financing
of the casino project. In August 1997, first mortgage notes in the aggregate
amount of $75,000,000 were issued by the Isle of Capri Black Hawk, L.L.C. and
its wholly-owned subsidiary, Isle of Capri Black Hawk Capital Corp.
(collectively the "Issuers"). These notes mature on August 31, 2004 and bear
interest at 13% per annum. Interest on the notes is payable semi-annually on
each February 28 and August 31, commencing February 28, 1998. Contingent
interest is payable on the notes, on each interest payment date, in an aggregate
amount equal to 5% of the Isle of Capri Black Hawk, L.L.C.'s consolidated cash
flow for the two fiscal quarters ending during the January or July immediately
preceding such interest payment date. The notes are secured by a first lien on
substantially all of the existing and future assets of the Issuers and are
without recourse to the members of the Isle of Capri Black Hawk, L.L.C. or their
respective parent or affiliate entities.
Effective December 31, 1996, the Board of Directors and the holders of
the Company's common stock having at least a majority of the voting power of the
shares, approved and authorized the issuance of 500,000 shares of Preferred
Stock, $10 par value per share. The Company issued 141,290 shares of 12%
cumulative preferred stock, $10 par value, which are callable by the Company.
These shares were issued in exchange for short-term notes payable to Clay County
Holdings, Inc., an affiliate of the Secretary of the Company, and accrued
management fees due to Aaminex Capital Corp.("Aaminex"), an affiliate of the
President of the Company.
ITEM 3
Not applicable
13
NEVADA GOLD & CASINOS, INC.
SEPTEMBER 30, 1997
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In October 1997, the Company became aware of a lawsuit filed in August
1997 under Case Number H-97-2955 in the United District Court for the
Southern District of Texas, Houston, Texas by James R. Cleveland,
Plaintiff, against the Company and twenty-three (23) other Defendants,
including all of the Directors and two Officers of the Company. Mr.
Cleveland, an inmate in a Texas county jail, proceeding under a
pauper's affidavit, alleges that the Defendants conspired to defraud
and deceive him for the purpose of securing an investment of funds in
the Company. Mr. Cleveland has requested actual damages of $5 million
and punitive damages of $15 million. Management believes there is no
factual basis for Mr. Cleveland's allegations and the Company and
counsel are of the opinion that all Defendants will ultimately prevail
in the lawsuit.
ITEM 2. CHANGES IN SECURITIES.
Not applicable
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
Not applicable
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
By unanimous consent dated August 14, 1997, the Board of Directors of
the Company and the Company as the sole stockholder of Blackhawk Gold,
approved and authorized the conveyance of the Blackhawk Gold Parcel to
the Isle of Capri Black Hawk, L.L.C. The Board of Directors determined
that stockholder approval and/or ratification of this transaction was
not required under the applicable provisions of the Nevada Revised
Statutes. At the request of Jefferies and Company, Inc., the
underwriters for the Isle of Capri Black Hawk, L.L.C.'s note offering,
Winstock Mining Corporation, Clay County Holdings, Aaminex Capital
Corporation, Paul J. Burkett, William J. Jayroe and Hubert T. Wen,
holders of a majority of the outstanding common shares of the Company
(collectively the "Majority Stockholders"), entered into a written
agreement to approve and ratify, and did approve and ratify, the
conveyance of the Blackhawk Gold Parcel to the Isle of Capri Black
Hawk L.L.C. The Majority Shareholders legally and beneficially owned
an aggregate of 5,142,415 shares of the common stock of the Company,
representing a majority of the outstanding shares of the Company
authorized to vote.
ITEM 5. OTHER INFORMATION.
Not applicable
14
NEVADA GOLD & CASINOS, INC.
SEPTEMBER 30, 1997
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(A) INDEX TO EXHIBITS
*3.1 - Articles of Incorporation
*3.2 - Amendment to Articles of Incorporation
*3.3 - By-laws
*4.1 - Deed of Trust
*4.2 - Master Secured Note
*4.3 - Note Participation Agreement
*10.1 - Operating Agreement Caesars Black Hawk, LLC.
*10.2 - Operating Agreement of ICB L.L.C.
10.3 - Amended and Restated Operating Agreement of Isle of Capri
Black Hawk L.L.C.
10.4 - Members Agreement
10.5 - License Agreement
27 - Financial Data Schedule
*Exhibits were previously filed and are incorporated by reference.
(B) Reports on Form 8-K
8K filed 6/30/97
Item 4 Changes in Registrant's Certifying Accountant
Item 5 Other Events
8K/A filed 7/22/97
Item 4 Changes in Registrant's Certifying Accountant
Item 5 Other Events
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NEVADA GOLD & CASINOS, INC.
SEPTEMBER 30, 1997
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has fully caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
NEVADA GOLD & CASINOS, INC.
(Registrant)
By:/S/ ELIZABETH A. WOODS
Elizabeth A. Woods
Treasurer and Chief
Financial Officer
DATE: November 14, 1997
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