FILED PURSUANT TO RULE 424(b)(3) Colorado Gaming & Entertainment Co. Supplement No. 1 Dated December 11, 1996 to Prospectus Dated October 22, 1996 On November 7, 1996, the Company issued the press release attached hereto as Annex A and incorporated herein by this reference. ANNEX A FOR IMMEDIATE RELEASE: Thursday, November 7, 1996 CONTACT: Stephen J. Szapor, Jr., President/CEO Madeleine Franco Robert J. Stephens, Vice President/Treasurer Eric Simonsen Colorado Gaming & Entertainment Co. Jordan Richard Assoc. 303-863-2400 801-595-8611 COLORADO GAMING & ENTERTAINMENT ANNOUNCES THIRD QUARTER RESULTS DENVER, COLO. Stephen J. Szapor, Jr., president and chief executive officer of Colorado Gaming & Entertainment Co. (NASDAQ BB: CGME), announced today results for the three months ended September 30, 1996, the company's first full quarter of operations since completion of its reorganization on June 7, 1996. For the most recent three-month period, the company posted net income of $232,000 or $0.05 per share on net revenue of $14.6 million (up 18 percent) compared to a net loss of $8.7 million on net revenue of $12.4 million posted by the company's predecessor, Hemmeter Enterprises, Inc. (a private company) for the third quarter of 1995. The prior year's results included losses attributable to Hemmeter's interest in a riverboat project in New Orleans, as well as higher interest charges from the predecessors company's debt structure, and accordingly are not comparable. Increases in revenue and profits were attributed primarily to initial results of the Silver Hawk Casino, which opened on June 26, 1996, in time for the historically busy summer season. Additionally, Szapor indicated that additional parking capacity since June at the company's Bullwhackers Black Hawk facility has given the property a competitive edge. Szapor also noted that continued reductions in corporate expenses from downsizing in connection with the reorganization contributed to favorable year-to-year comparisons. According to Szapor, the company's casino operating profit increased approximately $1.2 million, or 34 percent, to $4.8 million for the most recent three-month period. At the same time, corporate expenses were down approximately $568,000 or 37 percent from the prior year to $955,000 despite a charge in the most recent quarter for certain compensation expenses relating to implementation of the company's new cash bonus and stock incentive plans. "We are pleased with this quarter's results, which attest to the effectiveness of our new business plan," said Szapor. "We continue to explore opportunities to expand our business beyond one jurisdiction; however, clearly our emphasis is on increasing revenue and earnings at our core Colorado properties by creating an exceptional gaming experience for our customers and a rewarding work environment for our employees," he said. Szapor noted that the company recently began construction on a child care and entertainment center, adjacent to its operations in Black Hawk. The facility, scheduled to open during the second quarter of 1997, will be operated by New Horizon Kids Quest (Minneapolis), with Colorado Gaming & Entertainment receiving a percentage of gross revenue. Colorado Gaming & Entertainment Co. currently owns and operates three limited stakes casinos in Colorado located in the adjacent towns of Black Hawk and Central City. The casinos, operating under the names Bullwhackers and Silver Hawk, offer combined gaming space of approximately 25,000 square feet, with 1,250 gaming devices and 23 gaming tables. While all operations are currently located within Colorado, the company continues to explore potential gaming opportunities outside the state. COLORADO GAMING AND ENTERTAINMENT SELECTED CONSOLIDATED RESULTS FOR THE QUARTERS AND NINE MONTHS ENDED SEPTEMBER 30 (numbers in thousands, except per share amounts) (Unaudited) Three months ended Nine months ended September 30, September 30, 1996(a) 1995 1996(a) 1995 Net revenue $ 14,625 $ 12,440 $37,852 $36,107 Casino expenses 9,780 8,828 26,015 26,019 Casino operating profit 4,845 3,612 11,837 10,088 Pre-opening (Silver Hawk) (26) - 362 - Corporate expenses 955 1,523 2,004 5,726 EBITDA 3,916 2,089 9,471 4,362 Income (loss) from operations 1,997 469 2,984 (5,185) Extraordinary gain from reorganization - - 164,358 - Net income (loss) 232 (8,685) 164,427 (36,284) Net income per share(b) $0.05 N/A N/A N/A Weighted average common or common equivalent shares outstanding(b) 5,138,888 N/A N/A N/A (a) Due to the Reorganization and implementation of fresh start accounting per SOP 90-7, financial statements for the new Reorganized Company (period starting June 7, 1996) are not comparable to those of the Predecessor Company. See Notes to Consolidated Financial Statements for additional information. (b) The net income per common share and the weighted average shares outstanding for the predecessor company have not been presented because, due to the reorganization and implementation of fresh start reporting, they are not comparable to subsequent periods. Colorado Gaming & Entertainment Co. Consolidated Balance Sheets (In thousands, except shares amounts) Reorganized Predecessor Company (a) Company September 30, 1996 December 31, 1995 (unaudited) ASSETS Cash $ 4,815 $ 3,623 Inventories 92 85 Accounts receivable, net 201 226 Prepaid expenses 405 638 Total current assets 5,513 4,572 Property, equipment and leasehold improvements, net 42,374 32,127 Restricted funds in escrow (Note 2) 259 - Excess reorganization value, net (Note 1) 18,511 - Other assets, net 814 981 Total assets $ 67,471 37,680 LIABILITIES AND STOCKHOLDERS EQUITY Current portion of notes payable 1,990 - Accounts payable 821 404 Accrued interest 1,907 - Accrued expenses 3,372 3,953 Total current liabilities 8,090 4,357 Senior secured notes payable (Note 3) 50,000 - Other notes payable, net of current portion (Note 3) 4,953 - Liabilities subject to compromise - 186,460 Total non-current liabilities 54,953 186,460 Total liabilities 63,043 190,817 Common stock, $.01 par value, 20 million and 50 million shares authorized, respectively, 5,138,888 and 11,786,235 issued and outstanding (Note 4) 51 118 Warrants issued - 7,000 Additional paid-in capital 14,896 2,162 Accumulated deficit (10,519) (162,417) Total stockholders' equity (deficit) 4,428 (153,137) Total liabilities and stockholders' equity (deficit) $ 67,471 $ 37,680 (a) Due to the Reorganization and implementation of fresh start accounting pursuant to SOP 90-7, financial statements for the Reorganized Company (periods starting June 7, 1996) are not comparable to those of the Predecessor Company. See Notes to Consolidated Financial Statements for additional information. Colorado Gaming & Entertainment Co. Consolidated Statements of Operations (In thousands, except per data share) Reorganized Company (a) Predecessor Company Unaudited Three June 7, Three January Nine Months 1996 Months 1,1996 Months Ended Through Ended Through Ended September September September June September 30, 1996 30, 1996 30, 1995 6, 1996 30, 1995 Revenue: Casino $13,973 $17,073 $11,718 $19,126 $ 34,101 Food and beverage 999 1,215 1,083 1,288 2,887 Other 40 47 80 32 235 Gross revenue 15,012 18,335 12,881 20,446 37,223 Less: Promotional allowances (387) (465) (441) (464) (1,116) Net revenue 14,625 17,870 12,440 19,982 36,107 Operating Expenses: Casino 3,678 4,269 3,244 5,544 9,762 Gaming taxes 2,548 3,308 2,431 3,614 6,993 Food and beverage 928 1,128 790 1,299 2,340 General and administrative: Casino 723 917 792 1,249 2,594 Corporate 955 1,102 1,523 902 5,726 Marketing 1,903 2,338 1,571 2,349 4,330 Depreciation and 1,813 2,209 1,178 1,882 3,529 amortization Pre-opening (26) 315 - 47 - Reorganization items 106 106 442 2,290 700 Impairment of assets and other expenses - - - - 5,318 Total operating expenses 12,628 15,692 11,971 19,176 41,292 Income (loss) from operations 1,997 2,178 469 806 (5,185) Interest expense (1,743) (2,146) (6,076) (579) (16,052) Interest income 49 59 43 66 333 Loss on disposition of assets (71) (71) (51) (244) (124) Equity in loss of GPRI - - (3,070) - (15,256) Income (loss) before income tax expense and extraordinary items 232 20 (8,685) 49 (36,284) Income tax expense (Note 5) - - - - - Net income (loss) before extraordinary gain 232 20 (8,685) 49 (36,284) Extraordinary gain from reorganization items - - - 164,358 - Net income (loss) 232 20 (8,685) 164,407 (36,284) Net income per common share (b) 0.05 0.00 N/A N/A N/A (a) Due to the Reorganization and implementation of fresh start accounting pursuant to SOP 90-7, financial statements for the Reorganized Company (periods starting June 7, 1996) are not comparable to those of the Predecessor Company. See Notes to the Financial Statements for additional information. (b) The weighted average number of common shares outstanding and net income per common share for the Predecessor Company have not been presented because, due to the Reorganization and implementation of fresh start accounting, they are not comparable to subsequent periods.