<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
AMENDMENT NO. 1 TO CURRENT REPORT ON FORM 8-K
Pursuant to Section 13 of 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 21, 1997
Concorde Gaming Corporation
- - - - - - - - - - - - - - - - - - - - - - - - - -
(exact name of registrant as specified in its charter)
Colorado 0-8698 84-0716683
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
(State of other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
3290 Lien Street
Rapid City, South Dakota 57702
- - - - - - - - - - - - - - - - - - - - - - - - - -
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (605) 341-7738
Not Applicable
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
(Former name or former address, if changed since last report)
<PAGE> 2
Item 2. Acquisition or Disposition of Assets.
(a) Effective July 21, 1997, Concorde Gaming Corporation (the
"Registrant") completed the acquisition of substantially all of the
assets related to North Star Casino Limited Liability Company's
("North Star") business of owning and operating the Golden Gates
Casino in Black Hawk, Colorado (the "Casino Assets"), pursuant to
the terms of an Asset Exchange Agreement (the "Agreement") dated
June 12, 1997 by and among the Registrant, North Star, Concorde
Gaming of South Dakota, Inc., Midwest Gaming, Inc.
and Concorde Cripple Creek, Inc.
The Agreement provided for the exchange of the Casino Assets for the
Registrant's assets used in its South Dakota video lottery route
business (the "Video Lottery Assets"). The transfer of the Video
Lottery Assets was completed on June 16, 1997. In addition to the
transfer of the Video Lottery Assets, the Registrant paid
approximately $825,000 in cash, assumed approximately $568,000 in
liabilities and issued 1,743,333 shares of the Registrant's common
stock.
The consideration received pursuant to the Agreement was determined
through arm's length negotiations.
(b) The Registrant intends to continue the use of the Casino Assets as
they are were used by North Star.
Item 7. Financial Statements and Exhibits.
(a) Financial Statements of Business Acquired
Please see Attachment A
(b) Pro Forma Financial Information
Please see Attachment B
(c) Exhibits
Press Release dated August 25, 1997
1
<PAGE> 3
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.
CONCORDE GAMING CORPORATION
Date: October 3, 1997 By: /s/ David L. Crabb
--------------------
David L. Crabb, Chief Financial Officer
<PAGE> 4
Attachment A
NORTH STAR CASINO
LIMITED LIABILITY COMPANY
BLACK HAWK, COLORADO
FINANCIAL STATEMENTS AND INDEPENDENT AUDITOR'S REPORT
SEPTEMBER 30, 1996 AND 1995
<PAGE> 5
NORTH STAR CASINO LIMITED LIABILITY COMPANY
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Independent Auditors' Report................................. A-1
Financial Statements:
Balance Sheets.......................................... A-2
Statements of Operations................................ A-4
Statement of Members' Equity (Deficit).................. A-5
Statements of Cash Flows................................ A-6
Notes to Financial Statements.................... A-7 - A-13
</TABLE>
<PAGE> 6
Ketel Thorstenson, LLP
Certified Public Accountants
810 Quincy Street
RO. Box 3140, Rapid City, South Dakota 57709
Telephone (605) 342-5630 e-mail: [email protected]
INDEPENDENT AUDITORS' REPORT
To the Owners
North Star Casino Limited Liability Company
Black Hawk, Colorado
We have audited the accompanying balance sheet of NORTH STAR CASINO
LIMITED LIABILITY COMPANY (the Company) as of September 30, 1996, and the
related statement of operations, members equity (deficit), and cash flows for
the year then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of NORTH STAR CASINO
LIMITED LIABILITY COMPANY as of September 30, 1996, and the results of its
operations and cash flows for the year then ended, in conformity with generally
accepted accounting principles.
The financial statements of NORTH STAR CASINO LIMITED LIABILITY COMPANY
for the year ended September 30, 1995, were audited by other auditors, whose
report dated November 30, 1995, expressed an unqualified opinion on those
statements.
KETEL THORSTENSON, LLP
Certified Public Accountants
August 14, 1997
Members American Institute of Certified Public Accountants and AICPA Division
of Firms for Quality Control
A-1
<PAGE> 7
NORTH STAR CASINO LIMITED LIABILITY COMPANY
BALANCE SHEETS
SEPTEMBER 30, 1996 AND 1995
ASSETS
<TABLE>
<CAPTION>
1996 1995
CURRENT ASSETS
<S> <C> <C>
Cash $ 285,535 $ 138,510
Receivables Less Allowance for Doubtful Accounts
of $40,747 and $117,037 at September 30, 1996
and 1995, Respectively 69,145 81,163
Inventories 20,632 9,113
Prepaid Expenses 27,394 38,867
Other Current Assets 14,675 4,000
Total Current Assets 417,381 271,653
PROPERTY AND EQUIPMENT, AT COST
Land 785,221 --
Leasehold Improvements 2,552,905 2,537,125
Furniture, Fixtures and Equipment 1,698,422 1,457,306
5,036,548 3,994,431
Accumulated Depreciation (1,725,450) (1,222,260)
Net Property and Equipment 3,311,098 2,772,171
OTHER INVESTMENTS (Note 6) -- 304,511
OTHER ASSETS
Pre-opening Costs, Net of Accumulated Amortization
of $207,397 and $153,293 at September 30,
1996 and 1995, Respectively 63,120 117,224
Parking Impact Fee, Net of Accumulated Amortization
of $106,090 and $78,414 at September 30,
1996 and 1995, Respectively 149,910 177,586
Capitalized Loan Costs, Net of Accumulated
Amortization of $36,000 and $34,000 at
September 30, 1996 and 1995, Respectively -- 2,000
TOTAL ASSETS $ 3,941,509 $ 3,645,145
</TABLE>
The accompanying notes are an integral part
of these statements.
A-2
<PAGE> 8
NORTH STAR CASINO LIMITED LIABILITY COMPANY
BALANCE SHEETS
SEPTEMBER 30, 1996 AND 1995
LIABILITIES AND MEMBERS' EQUITY (DEFICIT)
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
CURRENT LIABILITIES
Accounts Payable $ 49,516 $ 119,451
Accrued Expenses and Other Liabilities 397,445 381,417
Accrued Interest to Related Parties (Note 3) -- 464,056
Current Portion of Notes Payable (Note 2) 302,739 726,815
Total Current Liabilities 749,700 1,691,739
NOTES PAYABLE -- Less Current Portion (Note 2) 367,217 1,417,228
Subordinated Notes Payable to Members (Note 3) -- 2,462,500
COMMITMENTS AND CONTINGENCIES (Notes 2, 4, 5 and 6)
MEMBERS' EQUITY (DEFICIT) 2,824,592 (1,926,322)
TOTAL LIABILITIES AND MEMBERS' EQUITY (DEFICIT) $3,941,509 $ 3,645,145
</TABLE>
The accompanying notes are an integral part
of these statements.
A-3
<PAGE> 9
NORTH STAR CASINO LIMITED LIABILITY COMPANY
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED SEPTEMBER 30, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
REVENUES
Gaming $ 4,600,300 $ 4,892,553
Food and Beverage, Net of Cost of Sales 55,960 96,906
Other 29,944 19,930
4,686,204 5,009,389
COSTS AND EXPENSES
Casino operating Expenses:
Salaries and Payroll Burden 1,169,319 1,136,360
Promotions 931,766 1,096,191
Gaming Taxes and Device Fees 489,529 486,856
Rents (Note 4) 475,287 416,064
Marketing and Advertising 293,517 243,577
Transportation 145,005 307,354
Entertainment 59,366 60,184
3,563,789 3,746,586
Selling, General and Administrative:
Bad Debts and Collections 200,290 178,422
Cleaning and Supplies 167,397 132,093
Penalties 120,809 34,163
Utilities 103,687 107,096
Taxes and Fees 83,555 137,055
Repairs 74,213 29,934
Insurance 58,464 69,256
Professional Fees 31,122 35,469
Cash Short 30,990 4,219
Other 22,833 19,643
Bank Charges 10,098 7,177
Land Deposit (Note 5) -- 120,000
903,458 874,527
Depreciation and Amortization 586,970 542,401
5,054,217 5,163,514
OPERATING LOSS (368,013) (154,125)
OTHER EXPENSE
Interest Expense 307,918 427,281
NET LOSS $ (675,931) $ (581,406)
</TABLE>
The accompanying notes are an integral part
of these statements.
A-4
<PAGE> 10
NORTH STAR CASINO LIMITED LIABILITY COMPANY
STATEMENT OF MEMBERS' EQUITY (DEFICIT)
FOR THE YEARS ENDED SEPTEMBER 30, 1996 AND 1995
<TABLE>
<CAPTION>
MEMBERS'
EQUITY (DEFICIT)
<S> <C>
BALANCE - - September 30, 1994 $(1,344,916)
Net Loss ( 581,406)
BALANCE - - September 30, 1995 (1,926,322)
Transfer of Shareholder Notes Payable and
Related Accrued Interest (Note 3) 2,985,042
Member Contributions 2,441,803
Net Loss (675,931)
BALANCE - - September 30, 1996 $ 2,824,592
</TABLE>
The accompanying notes are an integral part
of these statements.
A-5
<PAGE> 11
NORTH STAR CASINO LIMITED LIABILITY COMPANY
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED SEPTEMBER 30, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss $(675,931) $(581,406)
Adjustments to Reconcile Net Loss to Net Cash
Flows Provided by Operating Activities:
Depreciation and Amortization 586,970 542,401
Loss on Disposal - 2,206
Noncash Interest Expense 58,486 3,323
Write-Off of Deposit - 120,000
Change in Assets and Liabilities:
Receivables 12,018 (41,492)
Inventories (11,519) (2,729)
Prepaid Expenses 11,473 (16,846)
Other Current Assets (10,675) 13,238
Accounts Payable (69,935) 38,420
Accrued Expenses and Other Liabilities 16,028 313,652
Net Cash Flows From (Used in) Operating Activities (83,085) 390,767
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of Property and Equipment (382,753) (49,508)
Purchase of Investments - (304,511)
Other Assets and Note Receivable - (1,000)
Net Cash Flows (Used in) Investing Activities (382,753) (355,019)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds From Long-Term Borrowings 80,474 712,500
Principal Payments on Long-Term Debt (1,909,414) (786,027)
Member Contributions 2,441,803 -
Net Cash Flows From (Used in) Financing Activities 612,863 (73,527)
NET INCREASE (DECREASE) IN CASH 147,025 (37,779)
CASH -- Beginning of Period 138,510 176,289
CASH -- End of Period $285,535 $138,510
SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION
Cash Paid for Interest $258,602 $203,476
SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING
AND FINANCING ACTIVITIES
Transfer of Member Notes Payable to
Members' Equity (Note 3) 2,462,500
Transfer of Accrued Interest on Members'
Notes Payable to Members' Equity (Note 3) 522,542
Acquisition of Land through Issuance of
Note Payable (Notes 2 and 6) 354,853
</TABLE>
The accompanying notes are an integral part of these statements.
A-6
<PAGE> 12
NORTH STAR CASINO LIMITED LIABILITY COMPANY
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1996 AND 1995
NOTE 1 Summary of Significant Accounting Policies and Nature of Operations
Nature of Operations
North Star Casino Limited Liability Company, a Colorado Limited
Liability Company (the Company) is engaged in the business of owning,
operating and managing the Golden Gates Casino, an entertainment-oriented
gaming casino located in Black Hawk, Colorado. The Company commenced gaming
operations upon completion of the casino on November 21, 1992. The
Company's activities prior to the commencement of gaming related primarily
to construction of the Casino and other pre-opening operations.
Substantially all costs incurred during the pre-opening period were
capitalized.
The Company's Articles of Organization provide for the Company to
exist for a period of 25 years (through February 2017) with options to
extend the period for up to 25 additional years. Under the Articles of
Organization, each member's liability with respect to the Company is
limited to their cumulative capital contributions.
Significant Accounting Policies
Cash:
Cash consists of demand deposits and cash on hand used in casino
operations.
Inventories:
Inventories, consisting primarily of beverage supplies, are stated at
the lower of first-in, first-out (FIFO) cost or market.
A-7
<PAGE> 13
NORTH STAR CASINO LIMITED LIABILITY COMPANY
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1996 AND 1995
NOTE 1 -- Summary of Significant Accounting Policies and Nature of
Operations (Continued)
Property and Equipment:
Acquisitions of property and equipment are recorded at cost.
Depreciation of leasehold improvements, property and equipment is
calculated using the straight-line method over the following estimated
useful lives:
Leasehold Improvements 10 Years
Furniture, Fixtures and Equipment 3-7 Years
Pre-Opening Costs:
Pre-opening costs related to establishing a gaming operation and
providing benefits to future periods were capitalized and are amortized
using the straight-line method over five years.
Parking Impact Fee:
In fiscal year 1993, the Company was assessed a parking impact fee of
$256,000 by the City of Black Hawk related to its building permit
application for the casino. Amortization of the parking impact fee is
calculated using the straight-line method over the lease term of the Casino
of 111 months.
Significant Accounting Policies (Continued)
Amortization of Loan Costs:
Amortization of loan costs is calculated using the interest method
over the life of the note payable to the bank.
Income Taxes:
The Company is a limited liability company formed under the laws of
the state of Colorado and, as such, is classified as a partnership for
federal income tax purposes. Accordingly, no provision for
A-8
<PAGE> 14
NORTH STAR CASINO LIMITED LIABILITY COMPANY
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1996 AND 1995
NOTE 1 -- Summary of Significant Accounting Policies and Nature of
Operations (Continued)
federal or state income taxes has been recorded at September 30, 1996
or 1995 because any taxable income or loss is included on the individual
income tax returns of the members.
Casino Revenues:
In accordance with industry practice, the Company recognizes as
gaming revenue the net win from gaming activities, which is the difference
between gaming wins and losses.
Promotional Allowances:
The estimated cost of food and beverages provided on a complimentary
basis to customers and other promotional allowances extended free to
customers are charged to casino operating expense. The retail value of such
promotions are not recorded as revenues.
Reclassifications:
Certain reclassifications have been made to the 1995 financial
statements to conform to the 1996 presentation.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the dates of the
financial statements and the reported amounts of operating revenues and
expenses during the reporting periods. Actual results could differ from
those estimates.
A-9
<PAGE> 15
NORTH STAR CASINO LIMITED LIABILITY COMPANY
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1996 AND 1995
NOTE 2 -- Notes Payable
Notes payable consist of the following at September 30:
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
Note payable to vendor, due in monthly installments of
$8,833 including interest at 2% over the prime rate,
due August 1997,
secured by equipment $194,333 $212,000
Note payable due in monthly installments
of $5,067 including interest at 9.75%, due
April 2005, secured by land (Note 7) 354,853 --
Note payable to vendor, due in monthly installments of
$3,017 including interest at 13%, due February 1997,
secured by
equipment 19,806 48,715
Note payable to vendor, due in monthly
installments of $1,686 including interest at
12%, due September 1997, secured by equipment 20,490 35,849
Note payable due in monthly installments of
$329 including interest at 9.25%, due June
2001, secured by land 40,000
Note payable to vendor, due in monthly installments of
$7,519 including interest at an effective rate of 42%,
due February
1997, secured by equipment 40,474 --
</TABLE>
A-10
<PAGE> 16
NORTH STAR CASINO LIMITED LIABILITY COMPANY
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1996 AND 1995
NOTE 2 -- Notes Payable (Continued)
Other notes repaid during the year ended
September 30, 1996. - 1,847,479
669,956 2,144,043
Less Current Maturities 302,739 726,815
$367,217 $1,417,228
At September 30, 1996, the prime rate was 8.5 percent.
In addition to the above, the Company has guaranteed up to $50,000 of
a note payable of an unrelated third party in connection with the
construction of a parking facility for the casino.
The maturities of the notes payable for the years ending September 30
are as follows:
<TABLE>
<S> <C>
1997 $302,739
1998 31,100
1999 33,882
2000 37,336
2001 79,434
Thereafter 185,465
$669,956
</TABLE>
NOTE 3 -- Subordinated Notes Payable to Members
At September 30, 1995, the Company had notes payable to certain of
its owners totaling $2,462,500. Effective January 1, 1996, the members
waived repayment of notes and related accrued interest of $522,542.
Accordingly, the Company transferred these balances to members' equity.
Interest expense on these notes was $58,486 and $218,360 for the years
ended September 30, 1996 and 1995, respectively.
A-11
<PAGE> 17
NORTH STAR CASINO LIMITED LIABILITY COMPANY
NOTES TO FINANCIAL STATEMENTS (CONCLUDED)
SEPTEMBER 30, 1996 AND 1995
NOTE 4 -- Leases
The Company leases the land upon which the casino was constructed
under a noncancelable operating lease expiring February 28, 1997. Base rent
for this lease is $15,000 per month through February 2002, the end of the
lease term. Contingent rentals are paid at a rate of 4 percent of adjusted
gross revenues from gaming operations. The Company incurred base rent
expense of $180,000 for each of the years ended September 30, 1996 and 1995
and contingent rent expense of $159,607 and $178,454 for the years ended
September 30, 1996 and 1995, respectively. The base rents are to be
adjusted based on the Consumer Price Index.
The Company also leases land adjacent to the casino for use as a
parking facility. The land is owned 50 percent by the Company and 50
percent by a third-party lessor. There is no written agreement governing
the lease payments and currently the lease payments are approximately
$9,300 per month. During the years ending September 30, 1996 and 1995, rent
expense under this lease totaled $77,683 and $-O-, respectively.
Future minimum rental payments total $180,000 for each of the years
ending September 30, 1997 through September 30, 2001.
NOTE 5 -- Commitments and Contingencies
The Company is subject to the licensing and regulatory requirements
of the Colorado Limited Gaming Control Commission (the Commission), which
performs its day-to-day activities through the Division of Gaming (the
Division).
The Commission has established a graduated tax on casino revenues.
Casino revenues are taxed at a 2 percent rate on the first $2,000,000 of
revenue, 8 percent on revenues from $2,000,001 to $4,000,000, 15 percent on
revenues from $4,000,001 to $5,000,000 and 18 percent on revenues greater
than $5,000,000. Gaming taxes totaled $308,000 and $343,000 during the
years ending September 30, 1996 and 1995, respectively.
A-12
<PAGE> 18
NORTH STAR CASINO LIMITED LIABILITY COMPANY
NOTES TO FINANCIAL STATEMENTS (CONCLUDED)
SEPTEMBER 30, 1996 AND 1995
NOTE 5 -- Commitments and Contingencies (Continued)
In addition, the Company is required to pay annual state and local
fees per device of $75 and $750, respectively. Device fees are subject to
change by the Commission and the local government. Device fees totaled
$182,000 and $144,000 during the years ending September 30, 1996 and 1995,
respectively.
On February 22, 1994, the Company entered into an agreement to
purchase land across the street from the casino from a third party (the
Owner). The purchase price was to be $420,000, $120,000 of which was paid
to the owner as a nonrefundable deposit. The title to the land was disputed
and a Colorado court determined the Owner did not have title to the land.
Accordingly, the Company forfeited the $120,000 nonrefundable deposit. This
loss is included in the "Selling, General and Administrative" line item in
the statement of operations for the year ended September 30, 1995.
NOTE 6 -- Other Investments
At September 30, 1995, the Company had invested $304,511 in a parking
facility next to the casino. The Company had a verbal commitment from the
property owner to transfer a one-half interest in the property to the
Company in exchange for the capital contributed plus the assumption of
one-half of the contract for deed on the property. This transaction was
subsequently completed and during the year ended September 30, 1996, the
other investment amount was reclassified as land in the accompanying
balance sheet. In addition, one-half of the amount owed on the total
contract for deed has been recorded in the accompanying financial
statements. Should the other party on the contract for deed fail to fulfill
their obligations, the Company would be required to make the entire monthly
payments. At September 30, 1996, the balance on the contract for deed
totaled approximately $710,000.
NOTE 7 -- Subsequent Events
Effective June 12, 1997, the Company entered into an asset exchange
agreement with Concorde Gaming Corporation (Concorde) whereby the Company
exchanged all of its casino assets (including substantially all property
and equipment) for certain video lottery and gaming assets of Concorde. As
additional consideration, the Company will receive cash of $870,000,
1,743,333 shares of Concorde's common stock, and Concorde assumed certain
notes payable for asset financing.
A-13
<PAGE> 19
Attachment B
CONCORDE GAMING CORPORATION
PRO FORMA CONDENSED FINANCIAL INFORMATION
INTRODUCTION
The following unaudited pro forma condensed consolidated financial statements
have been prepared to illustrate the effect of the transfer of the Video
Lottery Assets to North Star and the acquisition of the Casino Assets from
North Star, and include an Unaudited Pro Forma Condensed Consolidated Balance
Sheet as of June 30, 1997, and Unaudited Pro Forma Consolidated Statements of
Operations for the year ended September 30, 1996, and for the nine months ended
June 30, 1997. The proforma condensed consolidated balance sheets are based on
the historical consolidated financial statements of the Registrant and the
estimated fair market value of the assets acquired from North Star. The pro
forma statements of operations are based on the historical consolidated
financial statements of the Registrant and the historical financial statements
of North Star. The pro forma statements of operations include the adjustments
described in the accompanying notes to the pro forma condensed consolidated
financial statements. The pro forma statements of operations also include the
pro forma adjustments reported by the Registrant on Form 8-K/A dated February
13, 1997 in connection with the Registrant's closing of the settlement
agreement with the Three Affiliated Tribes in regards to the Management
Agreement for the 4 Bears Casino.
The pro forma condensed consolidated financial statements are not necessarily
indicative of the results that actually would have occurred if the transfer of
the assets to and from North Star occurred on the dates indicated, nor are they
necessarily indicative of future results. The pro forma condensed consolidated
financial statements should be read in conjunction with the audited
consolidated financial statements of the Company filed with the Securities and
Exchange Commission in its Annual Report on Form 10-KSB for the fiscal year
ended September 30, 1996.
<PAGE> 20
Concorde Gaming Corporation
Pro Forma Condensed Consolidated Balance Sheet
June 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
Pro Forma
Assets Historical Adjustments Pro Forma
-------------- -------------------- ----------------
<S> <C> <C> <C>
Current assets:
Cash $ 3,854,491 (a) $ (673,962) $ 3,180,529
Other current assets 55,536 (a) 105,318 160,854
-------------- ----------------
Total current assets 3,910,027 3,341,383
-------------- ----------------
Investments and long-term receivables 1,843,935 (a) (1,550,333) 293,602
-------------- ----------------
Property and equipment, net 404,907 (a) 2,254,995 2,659,902
-------------- ----------------
Intangibles 351,634 (a) 664,335 1,015,969
-------------- ----------------
$ 6,510,503 $ 7,310,856
============== ================
Liabilities and Stockholder's Equity
Current liabilities:
Current maturities of long-term debt $ 538,903 (a) 26,948 $ 565,851
Accounts payable 60,229 60,229
Accrued expenses 64,648 (a) 159,868 224,516
Income tax payable 312,890 312,890
-------------- ----------------
Total current liabilities 976,670 1,163,486
-------------- ----------------
Long-term debt, less current maturities 16,925 (a) 404,337 421,262
-------------- ----------------
Deferred income taxes 46,600 46,600
-------------- ----------------
Stockholders' equity 5,470,308 (a) 209,200 5,679,508
-------------- ----------------
$ 6,510,503 $ 7,310,856
============== ================
</TABLE>
B-1
<PAGE> 21
Concorde Gaming Corporation
Pro Forma Condensed Consolidated Statement of Operations
Nine Months Ended June 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
Concorde North Star Pro Forma
Historical Historical Adjustments Pro Forma
---------------------------------- -------------------- -----------------
<S> <C> <C> <C> <C>
Revenues:
Video lottery $ 5,632,308 $ 0 (b) $ (5,422,281) $ 210,027
Casino 0 2,550,213 2,550,213
Management agreement 208,371 0 (c) (208,371) 0
Other 40,698 28,515 (b) (15,024) 54,189
---------------- --------------- -----------------
5,881,377 2,578,728 2,814,429
---------------- --------------- -----------------
Costs and expenses:
Video lottery state share 2,803,014 0 (b) (2,698,004) 105,010
Video lottery location share 1,864,857 0 (b) (1,864,857) 0
Compensation expense 689,253 990,514 (b) (226,069) 1,423,607
(c) (30,091)
Business development costs 117,226 0 117,226
Depreciation and amortization 431,300 70,855 (b) (349,611) 259,697
(c) (28,896)
(d) 136,049
Operating expenses 578,129 1,409,266 (b) (269,646) 1,597,366
(c) (44,512)
(e) (75,871)
---------------- --------------- -----------------
Total costs and expenses 6,483,779 2,470,635 3,502,906
---------------- --------------- -----------------
Operating (loss) (602,402) 108,093 (688,477)
---------------- --------------- -----------------
Other income (expense):
Interest income 94,706 11,821 (b) (2,392) 103,963
(c) (172)
Gain on termination of
management agreement 2,819,750 0 (c) (2,819,750) 0
Other 76,076 (113,553) (b) (39,402) (77,228)
(c) (349)
Interest expense and financing costs (259,775) (12,260) (b) 61,849 (283,355)
(c) 9,893
(f) (83,062)
---------------- --------------- -----------------
2,730,757 (113,992) (256,620)
---------------- --------------- -----------------
Income before income taxes 2,128,355 (5,899) (945,097)
Federal and state income taxes 741,700 0 (b) (5,800) (321,300)
(c) (953,600)
(g) (103,600)
================ =============== =================
Net income $ 1,386,655 $ (5,899) $ (623,797)
================ =============== =================
Net income per common and
common equivalent share 0.06 (0.03)
================ =================
Weighted average number of common and
common equivalent shares outstanding 22,096,947 22,096,947
================ =================
</TABLE>
B-2
<PAGE> 22
Concorde Gaming Corporation
Pro Forma Condensed Consolidated Statement of Operations
Fiscal Year Ended September 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
Concorde North Star Pro Forma
Historical Historical Adjustments Pro Forma
---------------------------------- -------------------- -----------------
<S> <C> <C> <C> <C>
Revenues:
Video lottery $ 8,985,467 $ 0 (b) $ (8,818,352) $ 167,115
Casino 0 4,600,300 4,600,300
Management agreement 2,064,649 0 (c) (2,064,649) 0
Other 192,470 85,904 (b) (144,676) 133,698
----------------- --------------- -----------------
11,242,586 4,686,204 4,901,113
----------------- --------------- -----------------
Costs and expenses:
Video lottery state share 4,471,432 0 (b) (4,387,875) 83,557
Video lottery location share 2,891,852 0 (b) (2,891,852) 0
Compensation expense 981,536 1,169,319 (b) (403,474) 1,658,411
(c) (88,970)
Business development costs 74,786 0 74,786
Depreciation and amortization 636,331 586,970 (b) (535,086) 307,767
(c) (69,350)
(d) (311,098)
Operating expenses 1,234,633 3,177,119 (b) (581,675) 3,505,195
(c) (288,638)
(e) (36,244)
----------------- --------------- -----------------
Total costs and expenses 10,290,570 4,933,408 5,629,716
----------------- --------------- -----------------
Operating income 952,016 (247,204) (728,603)
----------------- --------------- -----------------
Other income (expense):
Interest income 683,444 0 (b) 68,831 105,800
(c) (646,475)
Other 55,253 (120,809) (b) 4,905 (60,651)
Interest expense and financing costs (794,054) (307,918) (b) 115,429 (829,287)
(c) 157,256
----------------- --------------- -----------------
(55,357) (428,727) (784,138)
----------------- --------------- -----------------
Income before income taxes 896,659 (675,931) (1,512,741)
Federal and state income taxes 339,000 (b) 9,800 (514,300)
(c) (613,300)
(g) (249,800)
================= =============== =================
Net income $ 557,659 $ (675,931) $ (998,441)
================= =============== =================
Net income per common and
common equivalent share 0.03 (0.05)
================= =================
Weighted average number of common and
common equivalent shares outstanding 22,175,415 22,175,415
================= =================
</TABLE>
B-3
<PAGE> 23
Concorde Gaming Corporation
Notes of Pro Forma Condensed Consolidated Financial Statements
(Unaudited)
(a) To reflect the July 21, 1997 acquisition of the Casino Assets and the
cancellation of the $1.6 million promissory note recorded to reflect
the book value of the Video Lottery Assets transferred June 16, 1997 in
conjunction with the Asset Exchange Agreement.
(b) To reflect the reduction in revenues, expenses and net income from the
transfer of the Video Lottery Assets.
(c) To reflect the reduction in revenues, expenses and net income from the
termination of the Management Agreement.
(d) Represents adjustments to depreciation and amortization based on the
fair market value recorded in connection with the acquistion of the
Casino Assets.
(e) Represents the decrease in the rent expenses for the casino and parking
lot that was negotiated with, and was directly attributable to the
acquisition of the Casino Assets.
(f) Represents the adjustments to interest expense in conjunction with
North Star's acquisition of land.
(g) Represents the income tax effect of the adjustments for the periods
shown.
B-4
<PAGE> 24
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
20 Press Release dated August 25, 1997
<PAGE> 1
Exhibit 20.
FOR IMMEDIATE RELEASE
CONTACT: JERRY BAUM, PRESIDENT AND CEO
OR
DAVID L. CRABB, CFO
AT
(605) 341-7738
AUGUST 25, 1997
(Rapid City, SD) Concorde Gaming Corporation (OTC:CGAM) today
announced the results of its third quarter and nine months ended June 30, 1997.
Net income for the third quarter of 1997 was ($53,613), or $0.00 per share,
compared to $146,585, or $0.01 per share, for the same period last year. Net
income for the nine month period was $1,386,655, or $0.06 per share, compared
to $302,742, or $0.01 per share, for the same period in fiscal 1996.
Revenues decreased 35.5% to $1,810,168 for the third quarter, compared to
$2,807,586 for the comparable period in fiscal 1996. The Company recorded
revenues of $5,881,377 for the nine months ended June 30, 1997, compared to
$8,410,711 for the same period in fiscal 1996. The decrease in revenues for the
three and nine month periods is attributable to the absence of revenues from
the 4 Bears Casino & Lodge and the transfer of the video lottery assets to
North Star.
Jerry Baum, President and Chief Executive Officer, said, "The
Company is in a transition period since the settlement with the Three
Affiliated Tribes and the sale of substantially all of our video lottery
operations to North Star Casino L.L.C. While these steps will have a negative
impact on revenues, they have put the Company in a strong cash position and
enable it to aggressively pursue some exciting new opportunities in the gaming
industry. We are in active negotiations and hope to be able to finalize one of
these projects by the end of August."
The Company also announced the completion of its acquisition of the
Golden Gates Casino in Black Hawk, Colorado. On July 21, 1997, the Colorado
Gaming Commission issued the Company its retail gaming license for the Casino,
allowing it to takeover the Casino operations from North Star. Since then, the
Company has also acquired certain real property adjacent to the Casino.
"The acquisition of the real property next to the Golden Gates
Casino was the last phase of our transaction with North Star," Mr. Baum stated.
"Now we can proceed with redesigning the Casino, which we believe will
substantially increase the number of visitors to it."
The Golden Gates Casino has been operating in Black Hawk since 1992
and has a bar, restaurant, 214 slot machines and 4 blackjack tables. Under
Colorado law, Black Hawk is one of only three mining towns authorized to have
limited-stakes gaming.
Concorde Gaming Corporation is a gaming development and management
company with interests in video poker in Louisiana and limited stakes gaming in
Colorado.
