NEVADA GOLD & CASINOS INC, 10-K/A, 1996-08-05

NEVADA GOLD & CASINOS INC
10-K/A, 1996-08-05
MINERAL ROYALTY TRADERS

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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K/A

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the fiscal year Ended
March 31, 1996 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)

Registrant's telephone number: (713) 621-2245

Securities registered pursuant to Section 12(b) of the Act: NONE

Securities registered pursuant to Section 12(g) of the Act:

Common Stock, Par Value $.04 Per Share
(Title of Class)

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. (1) Yes X No ___ (2) Yes X No ___

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information Form 10-K or
any amendment to this Form 10-K. _____

The aggregate market value of Common Stock held by non-affiliates of the
Registrant at March 31, 1996, based upon the last reported sales price of the
NASDAQ Bulletin Board, was $42,264,605.

Portions of the Registrant's definitive proxy statement for its annual meeting
of stockholders to be held in October 1996 (are incorporated in) Part III of
this Form 10-K.

At March 31,1996, 24,292,114 shares of common stock outstanding.

Documents incorporated by reference: NONE

<PAGE> 2
NEVADA GOLD & CASINOS, INC.
MARCH 31, 1996

PART I

ITEM 1. BUSINESS

GENERAL

Nevada Gold & Casinos, Inc. (the Company) was originally formed in
1977 under the name Pacific Gold & Uranium Corporation for the principal
purpose of operating and managing mining activities primarily in the western
United States. During 1993, in connection with the acquisition of a
controlling interest in the Company by affiliates of the Company's current
management, the Company's primary focus was redirected toward the development
of gaming and real estate properties in Colorado. The Company's current
business activities are described below:

Gaming and Real Estate Development

In 1990, the State of Colorado amended its constitution to permit
"limited stakes gaming" in the cities of Cripple Creek, Central City and Black
Hawk, each of which was considered an old mining town of historical
significance. As a result, property values in these communities have increased
substantially, particularly in the limited areas that have been zoned for
gaming. During the fall of 1993, the Company commenced negotiations to acquire
certain properties located in and around the City of Black Hawk (the "Colorado
Properties") by granting a 75 percent ownership interest in the Company to the
previous owners of these properties. The acquisition of the Colorado Properties
was accomplished in two stages. During 1994 and 1995, the Company acquired all
of Clay County Holding's 60 percent undivided interest in the Colorado
Properties. In exchange for its undivided interest, Clay County Holdings was
granted 9,500,000 and 804,303 shares of the authorized but unissued shares of
the Company on December 6, 1993 and August 1, 1994, respectively. This
transaction (the "Clay County Acquisition") gave Clay County Holdings a
controlling interest in the Company. The acquired undivided interest was
recorded by the Company based upon the fair market value of the interest as
determined by an independent third party appraisal. To complete the second
stage of this transaction, on August 1, 1994 the Company acquired the remaining
40 percent undivided interest in the Colorado Properties from an unrelated third
party. In exchange for its undivided interest, the seller was granted 5,809,000
shares of the Company's authorized but unissued common stock. This remaining
undivided interest was recorded by the Company based upon the fair market value
of the interest as determined by an independent third party appraisal. On
January 19, 1996, the Company issued an additional 150,000 shares of stock
associated with the Clay County Acquisition. This additional issuance was due
to an understatement in the original number of shares outstanding at the time
of the acquisition. The Colorado Properties include four lots which have been
zoned by the State of Colorado for gaming purposes. Options on adjacent gaming
lots were purchased during 1995 for cash. The options on these lots were
assigned, and exercised as a part of the operating agreement with a wholly
owned subsidiary of Caesars World Inc. The Company's management believes that
the acquired gaming lots which are located at the entrance of the Black
Hawk/Central City gaming area, are uniquely situated to take advantage of the
traffic flow coming into the area.

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NEVADA GOLD & CASINOS, INC.
MARCH 31, 1996

Gaming and Real Estate Development

well as provide for capital to increase the Company's participation in the
project. As a result of management's negotiations, an operating agreement was
signed, effective February 26, 1996, with a wholly owned subsidiary of Caesar
World Inc. ("Caesars") creating Caesars Black Hawk, LLC. ("Caesars Black Hawk"),
(a Colorado limited liability company). The Company will hold it's interest in
Caesars Black Hawk through a wholly owned subsidiary. The Company is required to
make an initial capital contribution of land, valued under the agreement at $4.9
million. The land to be transferred includes lots 5,6,7 and 8 of Block 51, and
adjoining land comprised of over three acres located in Black Hawk, Colorado, as
well as options to acquire the land referred to as the "Weaver Parcel" and the
"Woodall Parcel" were contributed and exercised in 1995. The land will be
transferred to Caesars subject to any encumbrances and Caesars will satisfy such
encumbrances up to $250,000 above which amount the capital account of the
Company will be adjusted. Additionally, the Company was given the right to make
an additional contribution of cash into the project amounting to $3 million
within 120 days of the execution and delivery of the agreement, or by July 5,
1996 in order to increase its ownership in Caesars Black Hawk as described
below. As of July 31, 1996 the Company has not made this contribution. However,
the Company has negotiated a short term verbal extension of this deadline. If
the deadline is not met, under the terms of the Caesars Black Hawk Operating
Agreement the Company could lose its contractual right to acquire additional
ownership in Caesars Black Hawk as described below. There can be no assurance
that further extensions will be obtained if necessary or that such additional
capital contribution will be made before the applicable dead line. Upon the
contribution of the Company's land as described above, the Company will own
approximately 13% of Caesars Black Hawk. If the Company makes the additional $3
million contribution, the Company will own approximately 22% of Caesars Black
Hawk. Additionally, if the Company makes the additional $3 million
contribution, the Company will have the right to purchase up to $6.4 million of
the remaining interest in Caesars Black Hawk by no later than September 30,
1996. If the Company is able to exercise this right, the Company's interest in
Caesars Black Hawk would increase to approximately 40 percent. The remaining
interest in Caesars Black Hawk is owned by Caesars. Under the terms of the
agreement, Caesars will prepare a Development Plan for the project and will
receive a development fee equal to two percent of the total capital budget for
the project. Such development fee is the liability of Caesars Black Hawk and
will be paid on a monthly basis over the term of the development period of the
project. The current budget for the project is $94 million and the anticipated
development fee to be paid to Caesars World Inc., is $1,880,000 over the 12
month development period. The management of the hotel/casino project will be
conducted pursuant to a Management Agreement with Caesars. Under the terms of
the Management Agreement, Caesars will manage the project over a thirty year
term, with the right to renew for two consecutive ten year terms. Caesars will
be paid a base management fee equal to 5 percent of gross revenues generated by
the project and an incentive management fee equal to 10 percent of the operating
profit of the project before interest, income taxes, depreciation and
amortization but excluding one-half of the base management fee, all as
determined in accordance with generally accepted accounting principles.
Generally, the agreement calls for Caesars to contribute up to $28 million in
equity and arrange for the debt financing of the project.

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NEVADA GOLD & CASINOS, INC.
MARCH 31, 1996

September 1, 1995, the Company acquired the remaining 60% interest in
Gold Mountain Development, LLC, making it a wholly owned subsidiary. The former
members received a portion of the land owned subject to the underlying mortgages
and a note in the amount of $150,000, which had a balance of $38,971 as of March
31, 1996. All intercompany balances, have been eliminated in preparing the
Company's financial statements as of March 31, 1996.

Mining Interests

The Company has had joint-venture agreements with such mining companies
as Hanna Mining, Noranda Exploration Inc., Southern Pacific Land Co., Santa Fe
Minerals, AMAX Exploration Inc., and Dexter Gold Mines Inc. among others. The
Company was party to an agreement with Cameco U.S., Inc. which, at its inception
on May 1, 1991, was with Noranda Exploration, Inc. The most recent agreement
with Cameco was terminated effective March 31, 1996. The agreement called for
monthly payments to the Company of $5,000.00 per month. The agreement also
provided for the Company to receive a production royalty, amounting to five
percent of all the net smelter returns for products shipped out of the mining
claims; however, there is no production from the claims, as of March 31, 1996.
Management is currently in negotiations with other prominent mining companies
to further extend the exploration of the mining property and believes that it
will be able to enter into a Lease Agreement which will be sufficient to recover
the Cost Basis of the mining interests.

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. The seller financed the entire purchase price of the acquisition through a
non-recourse note. The Company at the option of the holder, extended the note
through March 31, 1997, and accrued interest was paid in the form of the
company's stock.

Letter of Intent

As of March 2, 1996, the Company entered into a Letter of Intent with
Applied Voice Technologies to jointly develop voice activated gaming
technology.

FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS

Financial reporting of the Company's industry segments are disclosed
in the body of the financial statements.

BUSINESS RISK FACTORS

Need for Additional Capital

Revenues from the Company have not been sufficient to cover the
Company's operating expenses during the past several years. In addition, there
have been no revenues from the Company's gaming operations to date since these
are currently in the predevelopment stage. The Company received $50,000 as part
of a rental agreement, and $350,000 from the disposition of property in which
the company had a nominal cost basis. This cash settlement assisted in covering
the operating deficit experienced by the Company, but was not sufficient to
fully cover all expenses. Management does not expect significant increases in
revenues from any of its operations over the next year. The Company's
environmental commitments were funded partially by the completion of the debt
offering in process at the prior year end, amounting to $350,000. The form of
instruments evidencing this transaction are attached hereto. Additionally,
the Company borrowed $376,361 from a major shareholder for working capital. The
Company's mining interest generated $60,000 which was used in operations.

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NEVADA GOLD & CASINOS, INC.
MARCH 31, 1996

As a result of the operating losses of the Company, there was an
increase in the amount of trade accounts payable outstanding at year end. The
Company acquired furniture and computer equipment during the year amounting to
$108,000 which was financed through two capital leases.

The Company will continue to require substantial capital to fund the
continued acquisition and development of the real estate properties and to cover
the anticipated operating deficits and debt maturities during the next several
years. The most significant requirement for capital is associated with the
Company's opportunity to buy additional ownership interests in Caesars Black
Hawk, LLC. See "Gaming and Real Estate Development". There can be no assurance
that the additional capital contribution or purchase of additional ownership
interest from Caesars (which purchase right is contingent upon the contribution
of $3 million by the Company to Caesars Black Hawk) will be made before the
applicable dead line. To meet the capital requirements of the next year, the
Company has offered $8,500,000 in Convertible Secured Notes which are being sold
through it's investment bankers. The Company is also actively pursuing
alternative funding opportunities with the assistance of its investment bankers.
Management expects that sufficient capital will be raised through these fund
raising efforts to meet the capital contribution requirements of Caesars Black
Hawk and to fund the operating needs of the Company for the next 12 months.
However, there is no assurance that these efforts will be successful or that the
proceeds from these efforts will be sufficient to meet the Company's cash
requirements. The short term viability of the Company is dependent upon it's
ability to raise sufficient capital to meet it's cash requirements. The long
term viability of the Company is dependent upon successful completion and
operation of a casino hotel complex. The factors described above raise
substantial doubt about the Company's ability to continue as a going concern.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. If the Company is unable to continue
as a going concern, the values realized from the Company's assets may be less
than the carrying amounts reported in its financial statements. The accompanying
financial statements do not include any adjustments relating to the
recoverability and classification of asset carrying amounts or the amount and
classification of liabilities that might result should the Company be unable to
continue as a going concern.

In addition to funding it's operating deficit, the Company also
advanced money to BSH, Inc., the firm performing the remediation of the
Colorado property. The proceeds of the $350,000 debt offering were used for
this purpose.

Rescission Offer

In 1994, the Company conducted two private placements of common stock of
the Company at prices of $.50 and $.75, respectively and raised approximately
$588,600 and $645,000, respectively, as a result of these offerings. On July 24,
1996, the Company voluntarily offered a 30-day right of rescission to the
investors who bought shares in these offerings because of certain statements
that appeared in the offering materials related to these offerings. With respect
to both offerings, the offering materials stated that funds would be held in
escrow until a minimum offering amount was achieved. Escrow accounts were not,
in fact, established for either offering and the funds were released prior to
the date the respective minimums were achieved. Additionally, with respect to
the $.50 offering, the offering materials stated that subscriptions would be
returned to investors if the minimum offering of $500,000 was not reached by a
specified date. The minimum subscription was achieved by that date by inclusion
of several investors who acquired shares before the commencement of the
offering, but who were later provided copies of the offering materials. If those
investors are not included, the minimum was not achieved.

The Company's right of rescission offers the investors in these
transactions the right to sell their shares back to the Company at the offering
price of $.50 or $.75, as applicable, plus interest. At the date the rescission
offers were made, the Company's stock was trading at approximately $1.50 per
share. The Company believes it is unlikely the rescission offers will be
accepted because of the Company's recent market price. If the rescission offer
is accepted, the Company will be required to refund the amount invested, plus
interest, to any investor who accepts the offer. If any, such refunds will be
reflected as a reduction of stockholders' equity. If any investors accept this
offer, the Company will be obligated to pay up to approximately $1.2 million
plus interest to those investors. The Company believes that it has identified
financing sources for repayment to such investors, but no assurance can be given
that if significant numbers of these investors accept the rescission offer, such
an event would not have a material adverse impact on the Company.

Environmental Considerations

The casino hotel complex to be constructed by Caesars Black Hawk will
be located in an area that has been designated by the United States
Environmental Protection agency ("EPA") as a superfund site on the National
Priorities List as a result of contamination from historic mining activity in
the area. The EPA is entitled to proceed against owners and operators of
properties located within the superfund site for remediation and response
costs associated with their properties and with the entire site. Caesars
Black Hawk's casino hotel complex will be located within the drainage basin of
the North Clear Creek and therefore subject to potentially contaminated surface
and ground water from upstream mining-related sources. Soil and ground water
samples on the site indicate that several contaminants existed in
concentrations exceeding drinking water standards. The Company, through an
affiliate, was required to work closely with the EPA and the Colorado
Department of Health in connection with developing the casino hotel complex,
and an affiliate had agreed to perform environmental analyses and test and
remove any and all hazardous substances located on the gaming lots. The
Company paid a total of $330,459 to an affiliate to complete the remediation.
No further remedial activity has been required or is expected of Caesars Black
Hawk with respect to the gaming lots.

5
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NEVADA GOLD & CASINOS, INC.
MARCH 31, 1996

Governmental Regulations

The ownership and operation of gaming facilities in Colorado are
subject to extensive state and local regulations. No gaming may be conducted
in Colorado unless licenses are obtained from the Colorado Limited Gaming
Control Commission (the "Colorado Commission"). In addition, the State of
Colorado created the Division of Gaming (the "Colorado Division") within its
Department of Revenue to license, implement, regulate, and supervise the
conduct of limited stakes gaming. The Director ("Colorado Director") of the
Colorado Division under the supervision of the Colorado Commission, has been
granted broad powers to ensure compliance with the law and regulations. The
Colorado Commission, Colorado Division, Colorado Director, and the city
authorities in Black Hawk that have responsibility for regulation of gaming are
collectively referred to as the "Colorado Gaming Authorities."

The laws, regulations and supervisory procedures of the Colorado
Gaming Authorities seek to maintain public confidence and trust that licensed
limited gaming is conducted honestly and competitively, that the rights of the
creditors of licensees are protected and that gaming is free from criminal and
corruptive elements. It is the stated policy of the Colorado Gaming
Authorities that public confidence and trust can be maintained only by strict
regulation of all persons, locations, practices, associations, activities
related to the operation of the licensed gaming establishments and the
manufacture and distribution of gaming devices and equipment.

The Colorado Commission is empowered to issue five types of gaming and
related licenses. The Caesars Black Hawk casino to be located in Black Hawk,
Colorado, requires a retail gaming license, which must be renewed each year,
and the Colorado Division has broad discretion to revoke, suspend, condition,
limit or restrict the licensee at any time. No person or entity can have an
ownership interest in more than three retail licenses, and the Company's
business opportunities will be limited accordingly. Caesars Black Hawk has not
yet obtained the required gaming license. There is no assurance that such
license will be obtained.

In addition to a retail gaming license for its casino, all of the
casino's employees must apply for and receive a support gaming license prior to
commencing employment. "Controlling Employees", which are defined as any
executive, employee or agent of a licensee having the power to exercise a
significant influence over decisions concerning any part of the operations of
any licensee, must obtain key licenses. At least 1 key license holder must be
on the premises of the casino at all times. The casino pays the cost of
obtaining and maintaining key licenses. All licenses are revocable,
non-transferable and valid only for the particular location initially
authorized.

Any person group or related persons that acquires beneficial ownership
of between 5 percent and 9 percent of the outstanding Common Stock of the
Company must be required to provide additional information to the Colorado
Commission and be found suitable. Any person or group of related person that
acquires beneficial ownership of 10 percent or more of the outstanding common
stock of the Company must apply to the Colorado Commission within 45 days after
acquiring such interests and submit to investigation for suitability by the
Colorado

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NEVADA GOLD & CASINOS, INC.
MARCH 31, 1996

Commission. Certain qualifying institutional investors, at the Colorado
Commission's discretion, may acquire up to 15 percent ownership before finding
if suitability is required if such investors provide certain information to the
Colorado Commission regarding investment intent and other matters. In order to
be found suitable, a stockholder must be a person of good moral character,
honesty, integrity, and in general terms, must be free from previous criminal
or unsavory conditions or similar acts. The Colorado Commission may require
substantial information in connection with a suitability investigation,
including personal background and financial information, source of funding
information and a sworn statement that such person or entity is not holding the
Common Stock for any other party and also may require fingerprints. Until a
finding of suitability occurs for a stockholder who is undergoing a suitability
investigation, the Company cannot pay dividends to such stockholder nor may the
stockholder exercise any voting rights with respect to the Common Stock. A
stockholder that is found to be unsuitable must transfer his common stock to a
suitable person within 60 days after the finding of unsuitability. Otherwise,
the Company may offer such person a lesser of the cash equivalent of such
person's investment in the common stock or the current market price of the
Common Stock as of the date of the finding of unsuitability, and the
stockholder will be required to sell his Common Stock to the Company.

The Colorado Commission has adopted comprehensive rules and
regulations that require the Company to maintain adequate books and records and
prescribe minimum operating, security and payoff procedures. Operating
procedures include limited hours and rules of play. Rules regarding gaming,
cheating and fraudulent practices have also been adopted, which the company is
obligated to police and enforce. Upon request, the Company must make copies of
all written gaming contracts and summaries of all oral gaming contracts to
which it is a party or intends to become a party. The Company must also
promptly inform the Colorado Commission of any change of its officers or
directors. Further, if any employee possessing support license changes
employment, is terminated or resigns, the Company must notify the Colorado
Director.

The sale of alcoholic beverages by the casino will be subject to
licensing, control, and regulation by the applicable state and local
authorities. All licenses are revocable and are not transferable. The
agencies involved have full power to limit, condition, suspend or revoke any
such license, and any such disciplinary action could (in revocation would) have
a material adverse effect on Caesars Black Hawk.

The State of Colorado has enacted an annual gross gaming revenue tax
(gross gaming revenue being defined generally as the total amount wagered minus
the total amount paid out in prize) of 2 percent of the $1 million of gross
gaming revenues, eight percent of the second $1 million, 15 percent of the
third $1 million and 18 percent of the amounts in excess of $3 million. The
Colorado Commission has also imposed an annual device fee of $100 per gaming
device. The Colorado Commission may revise the gaming tax rate and device fee
from time to time. The city of Black Hawk currently imposes an annual device
fee of $800. In addition, the City of Black Hawk imposes liquor licensing
fees, restaurant fees and parking impact fees. Caesars Black Hawk has, and in
the future, may be required to pay local parking and other municipal "impact"
fees based on square footage of its facilities. Significant increases in the
applicable taxes or fees, or the imposition of new taxes or fees, could have a
material adverse effect on

7
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NEVADA GOLD & CASINOS, INC.
MARCH 31, 1996

Caesars Black Hawk, and it is not unreasonable to expect that such taxes or
fees could be increased or new taxes or fees imposed.

The Company may not make a public offering of its securities without
notifying the Colorado Commission. The notification must occur within 10
business days after the initial filing of a registration statement with the
Securities and Exchange Commission ("SEC") or, if the offering will not be
registered with the SEC, 10 days prior to the public use or distribution of any
offering document. The notification must disclose, among other things, a
description of the securities to be offered, the proposed term of the offering,
its anticipated gross and net proceeds and the use of the proceeds. The
notification procedures apply to this Offering and to any subsequent offerings
by the Company, under certain circumstances.

There can be no assurance that the Company will be able to comply or
conduct business in accordance with applicable regulations. Furthermore, there
can be no assurance that additional state or federal statutes or regulations
will not be enacted at some future date which could have a material adverse
effect on the business operations of the Company.

New Industry

Limited stakes gaming did not commence in Colorado until October 1991,
accordingly, there is limited experience in Colorado from which to evaluate the
likelihood of success of the Company's or Caesars Black Hawk's gaming operation
in the state. Existing casino results to date may reflect the novelty of
limited gaming. There can be no assurance that Caesars Black Hawk will be able
to manage the casino on a profitable basis. However, the market continues to
grow and is currently over $380 million in annual adjusted gross proceeds.

Access to Black Hawk

The City of Black Hawk is located in a narrow valley in the foothills
of the Colorado Rocky Mountains and is served by winding mountain roads which
are generally 2 lanes and require extremely cautious driving, especially in bad
weather. Congestion on the roads leading into Black Hawk is not uncommon
during the peak summer season, holidays, and other times of the year and may
discourage potential customers from traveling to casinos located in the City of
Black Hawk.

Competition

The gaming and casino industry is subject to intense competition,
particularly in the state of Colorado. As the number of gaming establishments
in Colorado have increased over the past 2 years, average revenues for some of
the smaller casinos located in Colorado have declined significantly. Future
initiatives could expand limited gaming in Colorado to other locations. In
addition to competing with other casinos in Black Hawk, Caesars Black Hawk may
compete for customers with casinos in other gaming jurisdictions. While
Caesars Black Hawk believes its casino will have competitive advantages over the
other gaming establishments in the area as a primary result of its size and
location, the Company believes that national, regional, state, and

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NEVADA GOLD & CASINOS, INC.
MARCH 31, 1996

local competition for the gaming markets, in general, will be extremely intense
during the foreseeable future, as gaming activities expand in traditional
gambling legislation. Many of the Company's competitors have established
positions in more locations, have greater financial resources, have more
experience and expertise than the Company.

EMPLOYEES AND OTHER MATTERS

The Company maintains a staff of 5, and 2 of those individuals perform
services for the Corporation on a contractual basis with the Company.

As of April 29, 1994, the common stock of the Company was listed on
the "Bulletin Board" of NASDAQ under the symbol "NGCI."

ITEM 2. PROPERTIES

The Company's principal properties consist of undeveloped land located
in and around Black Hawk, Colorado. Certain properties are zoned for gaming,
while the other properties are intended for residential, commercial, and
recreational real estate development. The Company's mining properties are
located in the Goldfield Mining District, Nye and Esmeralda Counties, Nevada
and Nevada County, California.

The Company leases approximately 3,500 square feet of office space in
Houston, Texas. The monthly rental is currently $2,800. The Company believes
that its existing facilities are adequate to meet its current needs and to
accommodate anticipated growth.

ITEM 3. LEGAL PROCEEDINGS

None.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER'S MATTERS.

MARKET INFORMATION

The Company's Common Stock is traded on the NASDAQ "Bulletin Board",
under the symbol NGCI. There were approximately 3200 shareholders of record, as
of March 31, 1996. The following table sets forth the high and low sales
prices relating to the Company's common stock, with the last two fiscal years:

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NEVADA GOLD & CASINOS, INC.
MARCH 31, 1996

FISCAL YEARS ENDED

<TABLE>
<CAPTION>
MARCH 31, 1996 MARCH 31, 1995
HIGH BID LOW BID HIGH BID LOW BID
<S> <C> <C> <C> <C>
First Quarter 3 3/8 1 3/8 1 7/8 1
Second Quarter 3 1/4 2 1/2 2 1/8 1/2
Third Quarter 2 3/4 1 1/8 2 1/8 1 1/8
Fourth Quarter 2 3/8 1 1/4 1 13/16 1 1/2
</TABLE>
DIVIDENDS

There have never been any dividends declared by the Registrant. The
Registrant's losses do not currently indicate the ability to pay cash
dividends, and Registrant does not indicate the intention of paying cash
dividends in the foreseeable future.

ITEM 6. SELECTED FINANCIAL DATA

The Selected Financial Data set forth below should be read in
conjunction with the accompanying financial statements and notes, thereto, and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."

<TABLE>
<CAPTION>
1996 1995 1994 1993 1992
------------- ------------ ------------ ------------- -----------
<S> <C> <C> <C> <C> <C>
Revenues $ 468,113 $ 77,900 $ 60,152 $ 48,000 $ 44,004

Net loss (598,752) (434,364) (113,203) (32,465) 13,103

Net loss per share (.02) (.02) (.02) (.01) 0

Total assets 5,057,691 4,213,808 2,265,932 490,175 497,445

Long term debt 395,798 579,480 369,446 26,537 0
</TABLE>

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.

The following discussions of the Company's results of operations and
financial position should be read in conjunction with the financial statements
and notes pertaining thereto, appearing elsewhere in this Form 10-K.
Management is of the opinion that inflation and changing prices will have
little, if any, effect on the Company's financial position or results of
operations.

RESULTS OF OPERATIONS

COMPARISON OF FISCAL YEARS ENDED MARCH 31, 1996 AND 1995

Royalty income remained constant as compared to the prior year. The
royalty income represents the minimum amount payable under the Cameco Agreement.
The Company received $50,000 as part of a rental agreement, and a $350,000 gain
on the disposition of property in which the company had a nominal cost basis.
Due to the termination

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NEVADA GOLD & CASINOS, INC.
MARCH 31, 1996

of the Cameco agreement and the nonrecurring nature of the other income these
revenues are not expected to continue during 1997.

General and administrative expenses increased substantially during the
year ended March 31, 1996. Travel expenses increased during the year due to
management's travel in connection with the signing of the agreement with
Caesars, the pre-development activities of the Company in Colorado and the
raising of capital. The increase in the various components of travel expense
accounted for 32 percent of the total increase in general and administrative
expenses for the year.

Due to the substantial business activity in Colorado, the Company
leased office space in the Denver area. The additional office lease expense
accounted for 18 percent of the increase in total general and administrative
expense.

The Company also incurred a substantial increase in legal and
professional fees. The increase in legal fees is mostly attributable to the
indirect and general costs associated with the acquisition of capital during the
year, including the $8,500,000 convertible secured note offering which was in
its initial stages as of March 31, 1996, and for which substantial legal fees
had been incurred. Accounting expense increased substantially during the year
due to a change in auditors as well as the continued development of the system
of internal controls and financial reporting. The Company also incurred costs
pertaining to assistance in the preparation of various regulatory filings. The
increase in accounting expenses accounted for 56 percent of the total increase
in legal and professional expenses for the year ended March 31, 1996 as compared
to 1995.

The Company incurred higher salary expenses during the year due to an
additional staff person and modest pay increases to employees. Contract labor
included in the financial statements as salaries, increased during the year due
to the need for temporary help during various times of the year. Additionally,
the Company engaged the services of a consultant with experience in the casino
industry. Amounts paid to this consultant are included in contract labor.

As a result of the $350,000 debt offering outstanding during the
course of the year ended March 31, 1996, the Company had a substantial
percentage increase in interest expense. Additionally, the Company entered into
capital lease agreements for furniture and computer equipment which has been
recorded as a lease obligation, thus resulting in interest expense being
incurred in connection with the lease payments.

11
<PAGE> 12
NEVADA GOLD & CASINOS, INC.
MARCH 31, 1996

COMPARISON OF FISCAL YEARS ENDED MARCH 31, 1995 TO 1994

Royalty income in connection with the Cameco Agreement remained
relatively constant as compared with the previous year. The amounts of royalty
income during both 1995 and 1994 represent minimum royalty amounts paid under
the terms of the Cameco Agreement.

General and administrative expenses of the Company increased as
compared to the previous year due to substantial increases in several expense
categories. The Company utilized outside sources for the performance of some
office administrative functions during 1995 that were not used during 1994.
Management fees payable to Aaminex Capital Corporation, an affiliate, were
incurred for the entire year during 1995 as compared to only a portion of the
previous year. Additionally, the Company incurred additional expenses
pertaining to maintaining a larger office and additional personnel.

Legal and professional fees increased during 1995 because the Company
obtained the services of an outside consultant to assist in the development of
accounting systems and internal controls. Additionally, legal fees increased
significantly due to indirect costs associated with the Company's acquisition
and predevelopment activities.

LIQUIDITY AND CAPITAL RESOURCES

For the year's ended March 31, 1996, 1995 and 1994, revenues of the
Company did not cover it's operating expenses. During 1996, the Company
received $50,000 as part of a rental agreement, and a $350,000 on the
disposition of property in which the company had a nominal cost basis. This
cash assisted in reducing the operating deficit experienced by the Company, but
was not sufficient to fully cover all expenses. Additionally, there have been
no revenues from the Company's gaming interests to date, since the activities
are currently in the pre-development stage. Management does not expect
significant increases in revenues from any of its operations over the next
year. The Company's need for working capital was funded partially by the
completion of the debt offering in process at the prior year end, amounting to
$350,000. Additionally, the Company borrowed $376,361 from a major
shareholder. The Company's mining interest generated $60,000 which was used in
operations. As a result of the operating losses of the Company, there was an
increase in the amount of trade accounts payable of $202,698, outstanding at
year end. The Company acquired furniture and computer equipment during the year
amounting to $108,000 which was financed through a capital lease.

12
<PAGE> 13
NEVADA GOLD & CASINOS, INC.
MARCH 31, 1996

To meet the capital requirements of the next year, the Company has
offered $8,500,000 in Convertible Secured Notes which are being sold through
it's investment bankers. The notes earn 10 percent interest on the first two
years, during which time the note holders have an option to convert their note
to the Company's common stock at a price of $2.25 or 85 percent of the average
closing price of the prior 20 consecutive trading days. A 12 percent interest
rate is earned for the remaining 3 years management expects that sufficient
capital will be raised through this offering to meet the capital contribution
requirements of Caesars Black Hawk and to fund the operating needs of the
Company for the next 12 months. However, there is no assurance that this
offering will be successful or that the proceeds from this offering will be
sufficient to meet the Company's cash requirements. The company is also seeking
additional funds from other sources, with the assistance of its investment
bankers. The short term viability of the Company is dependent upon its ability
to raise sufficient capital to meet it's cash requirements.

In addition to funding its operating deficit, the Company advanced
money to BSH, Inc., the firm performing the remediation of the Colorado
property. The proceeds of the $350,000 debt offering were used for this
purpose.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

The information required there under is included in this report as set forth in
the "Index to Financial Statements"

INDEX TO FINANCIAL STATEMENTS

Report of independent public accountants 14
Report of independent public accountants from prior years 15
Balance sheet 16
Statements of operations 17
Statements of stockholders' equity 18
Statements of cash flows 19
Notes to financial statements 20-29

<PAGE> 14
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Nevada Gold & Casinos, Inc.:

We have audited the accompanying balance sheets of Nevada Gold & Casinos, Inc.
(a Nevada corporation in the development stage) as of March 31, 1996, and 1995
and the related statements of operations, stockholders' equity and cash flows
for the years then ended and the related statements of operations and cash flows
for the period from the inception of the development stage (Inception --
December 27, 1993) to March 31, 1996. 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 audits. We did not audit the
financial statements of Nevada Gold & Casinos, Inc. for the period from
Inception through March 31, 1994. Such statements are included in the
cumulative inception to March 31, 1996 totals of the statements of operations
and cash flows and reflect total revenues and net loss of 10 percent and 10
percent, respectively, of the related cumulative totals. Those statements were
audited by other auditors whose reports have been furnished to us and our
opinion, insofar as it relates to amounts for the period from Inception to March
31, 1994, included in the cumulative totals, is based solely upon the report of
the other auditors.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits 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 audits and the report of other
auditors provide a reasonable basis for our opinion.

In our opinion, based on our audits and the report of other auditors, the
financial statements referred to above present fairly, in all material
respects, the financial position of Nevada Gold & Casinos, Inc. as of March 31,
1996, and 1995 and the results of its operations and its cash flows for the
years then ended and for the period from Inception to March 31, 1996, in
conformity with generally accepted accounting principles.

As discussed in Note 1 to the financial statements, revenues have not been
sufficient to cover the Company's operating expenses during the past several
years. In addition, there have been no revenues from the Company's gaming
operations to date since these activities are currently in the predevelopment
stage. Management does not expect significant increases in revenues from any
of its operations over the next year. The Company will require substantial
additional capital to fund the continued acquisition and development of gaming
and real estate properties and to cover the Company's anticipated operating
deficits and debt maturities over the next several years. The Company intends to
fund such capital requirements through a combination of debt and equity
offerings. However, there is no assurance that these offerings will be
successful or that proceeds from these offerings, if successful, will be
sufficient to meet all of the Company's future cash requirements. The short
term viability of the Company is dependent upon the Company's ability to raise
sufficient capital to meet its cash requirements. In addition, the Company has
signed an Operating Agreement with Caesars World Inc. ("Caesars") concerning the
development of a casino hotel complex. However, there is no assurance that the
development of a successful casino will be completed. The ownership and
operation of gaming facilities are subject to extensive state and local
regulations. There is no assurance that the Company will be able to comply or
conduct business in accordance with applicable regulations. The long term
viability of the Company is dependent upon successful completion and operation
of a casino hotel complex. The factors described above raise substantial doubt
about the Company's ability to continue as a going concern. The accompanying
financial statements have been prepared assuming that the Company will continue
as a going concern. If the Company is unable to continue as a going concern,
the values realized from the Company's assets may be less than the carrying
amounts reported in its financial statements. The accompanying financial
statements do not include any adjustments relating to the recoverability and
classification of asset carrying amounts or the amount and classification of
liabilities that might result should the Company be unable to continue as a
going concern.

ARTHUR ANDERSEN LLP
Houston, Texas
May 24, 1996 (except with respect to the matters
discussed in Notes 1 and 14, as to which the date
is July 31, 1996).

14
<PAGE> 15

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Nevada Gold & Casinos, Inc.:

We have audited the accompanying statements of operations, and cash flows of
Nevada Gold & Casinos, Inc. (a Nevada corporation in the development stage) for
the year ended March 31, 1994, and for the period from inception of the
development stage to March 31, 1994. 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 audits.

In our opinion, the financial statements referred to above present fairly, in
all material respects, Nevada Gold & Casinos, Inc's. The results of operations
and its cash flows for the year ended March 31, 1994, and for the period from
inception to December 31, 1994, in conformity with generally accepted accounting
principles.

HENSON & COMPANY
July 13, 1994 except for Note 5,
which is dated August 1, 1994
Pasadena, California

<PAGE> 16
NEVADA GOLD & CASINOS, INC.
BALANCE SHEETS
AS OF MARCH 31, 1996 AND 1995

<TABLE>
<CAPTION>
1996 1995
------------------- -------------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and equivalents $ 76,371 $ 89,180

Short term investments 109,789 100,000
Receivable from broker 125,000 240,433
------------------- -------------------
Total current assets 311,160 429,613

Property and assets held for development 3,602,084 2,757,369
Mining properties and claims 1,005,812 1,005,812
Furniture, fixtures and equipment, net 138,635 21,014
------------------- -------------------
TOTAL ASSETS $ 5,057,691 $ 4,213,808
=================== ===================

LIABILITIES & STOCKHOLDERS' EQUITY
Accounts payable and accrued liabilities $ 538,002 $ 167,154
Short term notes payable 1,606,481 724,248
Current portion of long term debt 106,313 67,854
------------------- -------------------

Total current liabilities 2,250,796 959,256
------------------- -------------------

LONG TERM DEBT

Mortgages payable 202,661 333,288
Notes payable 193,137 246,192
-------------------- -------------------

Total long term debt 395,798 579,480
-------------------- -------------------

TOTAL LIABILITIES 2,646,594 1,538,736
------------------- -------------------
STOCKHOLDERS' EQUITY
Common stock, $.04 par value, 30,000,000 shares authorized,
24,292,114 and 24,027,432 shares issued and outstanding at March 31,
1996 and 1995, respectively. 971,685 961,098
Additional paid in capital 4,881,808 4,557,618
Accumulated deficit prior to development stage(12/27/93) (2,296,077) (2,296,077)
Accumulated deficit during development stage (1,146,319) (547,567)
------------------- -------------------
Total stockholders' equity 2,411,097 2,675,072
------------------- -------------------

TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 5,057,691 $ 4,213,808
=================== ===================
</TABLE>

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

16
<PAGE> 17
NEVADA GOLD & CASINOS, INC.
STATEMENTS OF OPERATIONS
FOR YEARS ENDED MARCH 31, 1996, 1995 AND 1994
AND CUMULATIVE AMOUNTS DURING DEVELOPMENT STAGE (SINCE DECEMBER 27, 1993)

<TABLE>

CUMULATIVE AMOUNTS
DURING DEVELOPMENT
STAGE (SINCE
1996 1995 1994 12/27/93)
---------- ----------- --------- -----------
<S> <C> <C> <C> <C>
REVENUES
Royalty income $ 60,000 $ 55,000 $ 59,000 $ 174,000
Other income 408,113 22,900 1,152 432,165
----------- ----------- ---------- -----------
Total revenues 468,113 77,900 60,152 606,165

EXPENSES
General & administrative 394,557 220,954 49,418 664,929
Interest expense 129,593 6,826 12,384 148,803
Salaries 63,379 39,000 27,095 129,474
Legal & professional fees 397,131 159,094 58,850 615,075
Other expenses 82,205 86,390 25,608 194,203
----------- ----------- ---------- -----------
Total expenses 1,066,865 512,264 173,355 1,752,484
----------- ----------- ---------- -----------

NET LOSS $ (598,752) $ (434,364) $ (113,203) $(1,146,319)
========== =========== ========== ===========

PER SHARE INFORMATION

Weighted average number
of common shares and
equivalent outstanding 24,410,365 21,369,229 6,889,062 17,556,219
----------- ----------- ---------- -----------

Net loss per common share $ (.02) $ (.02) $ (.02) $ (.07)
========== =========== ========== ===========
</TABLE>

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

17
<PAGE> 18
NEVADA GOLD & CASINOS, INC.
STATEMENTS OF STOCKHOLDERS EQUITY
FOR THE YEARS ENDED MARCH 31, 1996, 1995 AND 1994

<TABLE>
<CAPTION>
STOCK COMMON STOCK ADDITIONAL ACCUMULATED TOTAL
SUBSCRIPTIONS SHARES AMOUNT PAID DEFICIT STOCKHOLDERS
IN CAPITAL EQUITY
---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance at 3/31/93 4,280,817 $171,233 $2,559,028 $(2,296,077) $ 434,184
---------------------------------------------------------------------------------------------
Stock issued for cash 400,000 16,000 84,000 100,000

Stock issued for property(Note 5) 9,500,000 380,000 703,000 1,083,000
December 27, 1993
Cash for stock subscriptions 295,500 295,500

Contribution of Salaries to
paid in capital by officers 1,000 1,000

Net Loss (113,203) (113,203)
---------------------------------------------------------------------------------------------
Balance at 3/31/94 295,500 14,180,817 567,233 3,347,028 (2,409,280) 1,800,481

Stock subscriptions outstanding (295,500) (295,500)

Stock issued for property(Note 5) 6,613,303 264,532 182,468 447,000
August 1, 1994
Stock issued for cash 1,170,000 46,800 46,800
March 31, 1994
Stock issued for cash 1,177,200 47,088 541,512 588,600
April 15, 1994
Stock issued for cash 886,112 35,445 486,610 522,055
August 15, 1994
Net Loss (434,364) (434,364)
----------------------------------------------------------------------------------------------
Balance at 3/31/95 24,027,432 961,098 4,557,618 (2,843,644) 2,675,072
Stock issued for cash 8,352 334 5,930 6,264
February 7, 1996
Stock issued associated
with debt offering 29,460 1,178 20,917 22,095
March 31, 1996
Stock issued for promotional
and employee benefits 12,454 498 13,189 13,687
February 8, 1996
Stock issued for accounting expense 22,416 897 24,834 25,731
February 8, 1996
Additional stock issued for 150,000 6,000 (6,000)
property(Note 5)
January 19, 1996
Investment banker's option expense 225,000 225,000

Interest Expense paid in stock
March 31, 1996 42,000 1,680 40,320 42,000
Net Loss (598,752) (598,752)
----------------------------------------------------------------------------------------------
Balance at March 31, 1996 24,292,114 $971,685 $4,881,808 $(3,442,396) $2,411,097
==============================================================================================
</TABLE>

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

18
<PAGE> 19
NEVADA GOLD & CASINOS, INC.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED MARCH 31, 1996, 1995 AND 1994
AND CUMULATIVE AMOUNTS DURING DEVELOPMENT STAGE (SINCE DECEMBER 27, 1993)

<TABLE>
<CAPTION>
CUMULATIVE AMOUNTS
DURING DEVELOPMENT
1996 1995 1994 STAGE SINCE 12/27/93
------------ ------------ ------------ ---------------------
<S> <C> <C> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES:

Net loss $ (598,752) $ (434,364) $ (113,203) $ (1,146,319)

Adjustments to reconcile net loss to net
cash provided (used) by operating
activities:
Depreciation 14,370 5,488 0 19,858
Changes in operating assets and
liabilities:
Receivable 230,644 (15,433) (1,067) 214,144
Accounts payable and accrued
liabilities 377,474 125,442 33,216 536,132
----------- ----------- ----------- -------------
NET CASH PROVIDED BY (USED) IN OPERATING 23,736 (318,867) (81,054) (376,185)
ACTIVITIES:

CASH FLOW FROM INVESTING ACTIVITIES:
Property and assets held for development (410,919) (572,841) (235,491) (1,219,251)
Purchase of Furniture, fixtures and
equipment (23,736) (5,302) 0 (29,038)
----------- ----------- ----------- -------------
NET CASH USED IN INVESTING ACTIVITIES (434,655) (578,143) (235,491) (1,248,289)

CASH FLOW FROM FINANCING ACTIVITIES:
Salaries contributed by officers 0 0 1,000 1,000
Common stock issued for cash, net of
offering costs 28,359 861,954 100,000 990,313
Proceeds from Debt 501,407 52,926 554,333
Payments on debt (131,656) (54,293) (39,717) (225,666)
Changes in short term debt 0 79,078 0 79,078
Prepaid Stock subscriptions 0 0 295,500 295,500
----------- ----------- ----------- -------------

NET CASH PROVIDED BY FINANCING
ACTIVITIES: 398,110 939,665 356,783 1,694,558
----------- ----------- ----------- -------------

NET INCREASE (DECREASE) IN CASH (12,809) 42,655 40,238 70,084

BEGINNING CASH BALANCE 89,180 46,525 6,287 141,992
----------- ----------- ----------- -------------

ENDING CASH BALANCE $ 76,371 $ 89,180 $ 46,525 $ 212,076
=========== =========== =========== =============

SUPPLEMENTAL CASH FLOW INFORMATION:
CASH PAID FOR INTEREST $ 84,149 $ 6,826 $ 12,384 $ 103,359
=========== =========== =========== =============

CASH PAID FOR TAXES $ 0 $ 0 $ 0 $ 0
----------- ----------- ----------- -------------
</TABLE>

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

19
<PAGE> 20
NEVADA GOLD & CASINOS, INC.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1996

1. 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 Company's growth will be in the real estate
and casino business.

The principal focus of management during 1996, was the negotiation of
and signing of the agreement concerning the Black Hawk hotel/casino project.
Additionally, management spent a substantial portion of their time raising
capital necessary to fund the ongoing operations of the Company as well as
provide for capital to increase the Company's participation in the project. As
a result of management's negotiations, an operating agreement was signed,
effective February 26, 1996, with a wholly owned subsidiary of Caesar World Inc.
("Caesars") creating Caesars Black Hawk, LLC. ("Caesars Black Hawk"), (a
Colorado limited liability company). The Company will hold it's interest in
Caesars Black Hawk through a wholly owned subsidiary. The Company is required to
make an initial capital contribution of land, valued under the agreement at $4.9
million. The land to be transferred includes lots 5,6,7 and 8 of Block 51, and
adjoining land comprised of over three acres located in Black Hawk, Colorado, as
well as options to acquire the land referred to as the "Weaver Parcel" and the
"Woodall Parcel" were contributed and exercised in 1995. The land will be
transferred to Caesars subject to any encumbrances and Caesars will satisfy such
encumbrances up to $250,000 above which amount the capital account of the
Company will be adjusted. Additionally, the Company was given the right to make
an additional contribution of cash into the project amounting to $3 million
within 120 days of the execution and delivery of the agreement, or by July 5,
1996 in order to increase its ownership in Caesars Black Hawk as described
below. As of July 31, 1996 the Company has not made this contribution. However,
the Company has negotiated a short term verbal extension of this deadline. If
the deadline is not met, under the terms of the Caesars Black Hawk Operating
Agreement the Company could lose its contractual right to acquire additional
ownership in Caesars Black Hawk as described below. There can be no assurance
that further extensions will be obtained if necessary or that such additional
capital contribution will be made before the applicable deadline. Upon the
contribution of the Company's land as described above, the Company will own
approximately 13% of Caesars Black Hawk. If the Company makes the additional $3
million contribution, the Company will own approximately 22% of Caesars Black
Hawk. Additionally, if the Company makes the additional $3 million
contribution, the Company will have the right to purchase up to $6.4 million of
the remaining interest in Caesars Black Hawk by no later than September 30,
1996. If the Company is able to exercise this right, the Company's interest in
Caesars Black Hawk would increase to approximately 40 percent. The remaining
interest in Caesars Black Hawk is owned by Caesars. Under the terms of the
agreement, Caesars will prepare a Development Plan for the project and will
receive a development fee equal to two percent of the total capital budget for
the project. Such development fee is the liability of Caesars Black Hawk and
will be paid on a monthly basis over the term of the development period of the
project. The current budget for the project is $94 million and the anticipated
development fee to be paid to Caesars World Inc., is $1,880,000 over the 12
month development period. The management of the hotel/casino project will be
conducted pursuant to a Management Agreement with Caesars. Under the terms of
the Management Agreement, Caesars will manage the project over a thirty year
term, with the right to renew for two consecutive ten year terms. Caesars will
be paid a base management fee equal to 5 percent of gross revenues generated by
the project and an incentive management fee equal to 10 percent of the operating
profit of the project before interest, income taxes, depreciation and
amortization but excluding one-half of the base management fee, all as
determined in accordance with generally accepted accounting principles.
Generally, the agreement calls for Caesars to contribute up to $28 million in
equity and arrange for the debt financing of the project. As of March 2, 1996,
the Company entered into a Letter of Intent with Applied Voice Technologies to
jointly develop voice activated gaming technology.

There have been no revenues from the Company's gaming operations to
date since these are currently in the predevelopment stage. Revenues have not
been sufficient to cover the Company's operating expenses during the past
several years. In addition, there have been no revenues from the Company's
gaming operations to date since these activities are currently in the
predevelopment stage. Management does not expect significant increases in
revenues from any of its operations over the next year. The Company will require
substantial additional capital to fund the continued acquisition and development
of gaming and real estate properties and to cover the Company's anticipated
operating deficits and debt maturities over the next several years. The Company
intends to fund such capital requirements through a combination of debt and
equity offerings. However, there is no assurance that these offerings will be
successful or that proceeds from these offerings, if successful, will be
sufficient to meet all of the Company's future cash requirements. The short term
viability of the Company is dependent upon the Company's ability to raise
sufficient capital to meet its cash requirements. In addition, the Company has
signed an operating agreement with Caesars World Inc. ("Caesars") concerning the
development of a casino hotel complex. However, there is no assurance that the
development of a successful casino will be completed. The ownership and
operation of gaming facilities are subject to extensive state and local
regulations. There is no assurance that the Company will be able to comply or
conduct business in accordance with applicable regulations. The long term
viability of the Company is dependent upon successful completion and operation
of a casino hotel complex. The factors described above raise substantial doubt
about the Company's ability to continue as a going concern. The accompanying
financial statements have been prepared assuming that the Company will continue
as a going concern. If the Company is unable to continue as a going concern, the
values realized from the Company's assets may be less than the carrying amounts
reported in its financial statements. The accompanying financial statements do
not include any adjustments relating to the recoverability and classification of
asset carrying amounts or the amount and classification of liabilities that
might result should the Company be unable to continue as a going concern.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

CASH AND EQUIVALENTS. Interest bearing deposits and other
investments, with original maturities of three months or less, are considered
cash and cash equivalents.

MINING PROPERTIES AND CLAIMS. The Company capitalizes costs of
acquiring and developing mineral claims, until such time as the properties are
placed into production, at that time, costs will be amortized on a
units-of-production basis. Such costs include the costs to acquire and improve
the claims, including land related improvements, such as roads. The Company
carries these costs on its books at the lower of its basis in the claims, or
the net realizable value of the mineral reserves contained in the claims. Other
mining properties are recorded at their acquisition price. At March 31, 1996
and 1995, management believes the net realizable value of the mineral reserves
is in excess of the Company's cost in the claims.

PROPERTY HELD FOR DEVELOPMENT. Property held for development consists
of undeveloped land located in and around Black Hawk, Colorado. Certain
properties are zoned for gaming, and were conveyed to the project, while the
other properties are intended for residential, commercial, and recreational
real estate development. The Company has capitalized certain direct costs of
pre-development activities together with capitalized interest. Property held
for development is carried at the lower of cost or net realizable value.

IMPACT OF NEW ACCOUNTING STANDARDS. The Company adopted Statement of
Financial Accounting Standards No. 121, "Accounting for the Impairment of
long-lived Assets and for

20
<PAGE> 21

NEVADA GOLD & CASINOS, INC.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1996

Long-Lived Assets to be Disposed of" on April 1, 1996. The impact of this
adoption was not material to the Company's financial statements. The Company
will adopt SFAS No. 123, "Accounting for Stock-based Compensation," during
fiscal 1997 using the pro-forma disclosure method described in the
pronouncement. Accordingly, adoption of the statement will not affect the
Company's financial statements but will add to its footnote disclosures.

FURNITURE, FIXTURES AND EQUIPMENT. The Company depreciates furniture,
fixtures, and equipment over their estimated useful lives, ranging from 2 to 7
years, using the straight-line method. Expenditures for furniture, fixtures,
and equipment are capitalized at cost. When items are retired or otherwise
disposed of, income is charged or credited for the difference between net book
value and proceeds realized thereon. Ordinary maintenance and repairs are
charged to expense, and replacements and betterment's are capitalized.

LOSS PER SHARE DATA. Loss per share is based on the weighted average
number of common shares and common equivalent shares outstanding during each
year. Options are considered to be common stock equivalents and are a component
of weighted average shares outstanding, to the extent that such options are
dilutive as calculated using the treasury stock method.

RECLASSIFICATIONS. Certain prior-year balances have been reclassified
to conform to current year presentation.

CONSOLIDATION. These Financial Statements are consolidated for all
wholly owned subsidiaries as of March 31, 1996. All significant intercompany
transactions and balances have been eliminated in the financial statements.

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 date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.

3. SHORT TERM INVESTMENTS

On March 27, 1996, the Company purchased a certificate of deposit,
which bears interest at the rate of 4.60% per annum, and matures on September
28, 1996. The certificate of deposit is pledged as collateral on a loan of same
amount at the same financial institution. See Note 7.

4. RECEIVABLE FROM BROKER

At March 31, 1996, the Company, through its investment bankers, had
recorded a receivable from broker for a debt offering, in the amount of
$125,000. As of such date, the Company has recorded the amount subscribed,
together with the related indebtedness. See Note 7.

5. REAL ESTATE AND ASSETS HELD FOR DEVELOPMENT

21
<PAGE> 22
NEVADA GOLD & CASINOS, INC.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1996

for gaming. During the fall of 1993, the Company commenced negotiations to
acquire certain properties located in and around the City of Black Hawk (the
"Colorado Properties") by granting a 75 percent ownership interest in the
Company to the previous owners of these properties. The acquisition of the
Colorado Properties was accomplished in two stages. During 1994 and 1995, the
Company acquired all of Clay County Holding's 60 percent undivided interest in
the Colorado Properties. In exchange for its undivided interest, Clay County
Holdings was granted 9,500,000 and 804,303 shares of the authorized but
unissued shares of the Company on December 6, 1993 and August 1, 1994,
respectively. This transaction (the "Clay County Acquisition") gave Clay County
Holdings a controlling interest in the Company. The acquired undivided interest
was recorded by the Company based upon the fair market value of the interest as
determined by an independent third party appraisal. To complete the second
stage of this transaction, on August 1, 1994 the Company acquired the remaining
40 percent undivided interest in the Colorado Properties from an unrelated third
party. In exchange for its undivided interest, the seller was granted 5,809,000
shares of the Company's authorized but unissued common stock. This remaining
undivided interest was recorded by the Company based upon the fair market value
of the interest as determined by an independent third party appraisal. On
January 19, 1996, the Company issued an additional 150,000 shares of stock to
Clay County Holdings associated with the Clay County Acquisition. This
additional issuance was due to an understatement in the original number of
shares outstanding at the time of the acquisition. The Colorado Properties
include four lots which have been zoned by the State of Colorado for gaming
purposes. Options on adjacent gaming lots were purchased during 1995 for cash.
The options on these lots were assigned , and exercised as a part of the
operating agreement with Caesars World, Inc. The Company's management believes
that the acquired gaming lots which are located at the entrance of the Black
Hawk/Central City gaming area, are uniquely situated to take advantage of the
traffic flow coming into the area.

PRE-DEVELOPMENT COSTS. The Company has capitalized certain costs associated
with the pre-development activities related to the Hotel/Casino property in
Black Hawk, Colorado. The amounts included in pre-development costs are costs
that are directly attributable to the pre-development of such project.

6. MINING PROPERTIES AND CLAIMS

The Company has had joint-venture agreements with such mining companies as
Hanna Mining, Noranda Exploration Inc., Southern Pacific Land Co., Santa Fe
Minerals, AMAX Exploration Inc., and Dexter Gold Mines Inc. among others. The
Company was party to an agreement with Cameco U.S., Inc. which, at its inception
on May 1, 1991, was with Noranda Exploration, Inc. The most recent agreement
with Cameco was terminated effective March 31, 1996. The agreement called for
monthly payments to the Company of $5,000.00 per month. The agreement also
provided for the Company to receive a production royalty, amounting to five
percent of all the net smelter returns for products shipped out of the mining
claims; however, there is no production from the claims, as of March 31, 1996.

Management is currently in negotiations with other prominent mining
companies to further expand the exploration of the mining property, and believes
that it will be able to enter a lease agreement, which will be sufficient to
recover the cost basis of the mining interest.

22
<PAGE> 23
NEVADA GOLD & CASINOS, INC.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1996

PURCHASE OF SUNRISE LAND AND MINERALS, INC. 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. The seller financed the entire
purchase price of the acquisition through a non-recourse note. The Company at
the option of the holder, extended the note through March 31, 1997, and accrued
interest was paid in the form of the company's stock. See Note 7 concerning
details of the note payable.

7. SHORT TERM NOTES PAYABLE

The following notes will become due and payable on or before March 31, 1997:

<TABLE>
<CAPTION>
MARCH 31,1996 MARCH 31, 1995
------------- --------------
<S> <C> <C>
Note payable to Trust, dated 3/31/95, calling for interest of 8%,
principal & interest due at maturity 3/31/97. Note is secured by
pledge of 100% of stock in Sunrise Land & Minerals, Inc. $525,000 $525,000

Eight notes payable to individuals, in the amount of $25,000 each and
three notes in the amount of $50,000. Each note bears interest at a rate
of 12% per annum, and mature July 5, 1996. All notes are secured by
gaming lots owned by the Company. 350,000 0

Note payable to a bank, dated 3/28/95, calling for interest of 6.60%,
interest paid through 5/28/96, entire principal due at maturity of
9/28/96. Note is secured by certificate of deposit for $100,000 (see
footnote 3.) 100,000 100,000

Note payable to others, unsecured, consisting of two notes, bearing
interest at rates to 12%, maturing on demand or prior to April 1, 1996 0 32,967

Note payable, dated 9/26/95 calling for 21% interest on any portion not
paid by 11/24/95, principal and interest due demand 38,971 0

Note payable to individual, dated 3/31/95, calling for interest of 10%,
principal & interest is due on demand. Note is secured by furniture &
fixtures. 16,165 16,165

Note payable to individual, dated 12/5/95, calling for interest of 12%,
principle & interest is due 8/10/97, secured by patented mining claims 25,000 0
</TABLE>

23
<PAGE> 24
NEVADA GOLD & CASINOS, INC.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1996

7. SHORT TERM NOTES PAYABLE (CONTINUED)

<TABLE>
<S> <C> <C>
Note payable to corporation, dated 1/21/94, calling for interest of
8%, principal & interest due on demand, secured by patented mining
claim 24,821 0

Notes payable to affiliates consisting of Seven individual notes
bearing interest at 10%, all payable on demand.
526,524 50,117
---------- ---------
Total short-term notes payable $1,606,481 $ 724,249
========== =========
</TABLE>

8. LONG TERM DEBT

MORTGAGES PAYABLE. Mortgages payable are comprised of eleven mortgage notes,
all secured by real property, consisting of undeveloped land in the city of
Black Hawk, Colorado, or in an adjacent area in the county of Gilpin. The
mortgage terms are as follows:

<TABLE>
<CAPTION>
BALANCE AS OF

MARCH 31, 1996 MARCH 31, 1995
-------------- --------------
<S> <C> <C>
Note payable, interest at 8%, payable in monthly payments of $ 5,238 $ 22,593
$177, through December, 1998.

Note payable, interest at 8%, payable in monthly payments of 5,238 6,876
$177, through December, 1998.

Note payable, interest at 8%, payable in monthly payments of 22,968 24,821
$329, through December, 1998.

Note payable, interest at 8%, payable in monthly payments of 8,612 11,001
$284, through December, 1998.

Note payable, interest at 8%, payable in monthly payments of 52,907 66,682
$1,658, through February, 1999.

Note payable, interest at 8.5%, payable in monthly payments 0 52,926
of $694, through May 6, 1999.

Note payable, interest at 8%, payable in monthly payments of 87,232 95,036
$1,262, through December, 2003.

Note payable, interest at 8%, payable in monthly payments of 13,106 14,164
$188, through December, 2003

Note payable, interest at 8.5%, payable in monthly payments 39,395 42,499
of $575, through December, 2003.
</TABLE>

24
<PAGE> 25
NEVADA GOLD & CASINOS, INC.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1996

8. LONG TERM DEBT (CONTINUED)

<TABLE>
<CAPTION>
Balance as of
--------------------------------------------------
March 31, 1996 March 31, 1995
----------------- --------------------
<S> <C> <C>
Note payable, interest at 8%, payable in semi-annual 9,742 10,553
payments of $822, through February, 2004.

Note payable, interest at 8%, payable in semi-annual
payments of $2,575, through March, 2004. 0 32,632
----------------- -----------------
Total mortgages payable 244,438 379,783

Current portion of mortgages payable (41,777) (46,495)
----------------- ------------------

Long term mortgages payable $ 202,661 $ 333,288
================== ==================
</TABLE>

OTHER LONG TERM NOTES PAYABLE & CAPITAL LEASES

<TABLE>
<S> <C> <C>
Capital Leases for acquisition of computers & furniture, principle &
interest payments in the amounts of $4,483 monthly, maturity 1998 & 2001
respectively. $ 102,370 $ 0

Note payable to individual dated 7/15/94, calling for interest of 8%,
principal & interest payments in amounts of $2,000, maturity 2/15/97. 30,303 42,551

Seven notes payable to individuals, in the amount of $25,000 each and
one note payable in the amount of $50,000. Each note bears interest at
a rate of 12 percent per annum, and mature July 5, 1996. All notes are
secured by gaming lots owned by the company. 225,000

Note payable associated with the Company's $8.5 million secured
convertible debt offering, calling for interest of 10%, for the first two
years, expiring 6/30/01, interest to be paid semi-annually. 125,000
----------------- ------------------

Total other long term notes payable 257,673 267,551

Current portion of other long term notes payable (64,536) (21,359)
----------------- ------------------

OTHER LONG TERM NOTE PAYABLE $ 193,137 $ 246,192
================= =================
</TABLE>

The aggregate principal maturities on long term debt for the years ending March
31, are as follows:

<TABLE>
<S> <C>
1997 $ 72,080
1998 45,608
1999 58,976
2000 22,344
Thereafter 200,733
----------------
Total $ 399,741
================
</TABLE>

9. LEASES

CAPITAL LEASES. - The company entered into two capital leases for 4
computers and office furniture. The leases expire from 1998 to 2001.

<PAGE> 26
NEVADA GOLD & CASINOS, INC.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1996

Future minimum lease payments for capital leases are as follows:

<TABLE>
<S> <C>
1997 $ 55,142
1998 55,142
1999 16,138
2000 16,138
Thereafter 16,107
------
Interest paid (56,297)

Net Present Value $102,370
========
</TABLE>

10. TAXES BASED ON INCOME

The Company adopted SFAS No. 109, "Accounting for Income Taxes",
effective April 1, 1993. Under SFAS No. 109, deferred tax liabilities are
determined based on the difference between financial statement and tax bases
of all assets and liabilities, measured by using the enacted statutory tax
rates. The principal difference between book and tax bases which gives
rise to a deferred tax liability consists of depreciation.

SFAS No. 109 also provides for the recording of a deferred tax asset for
net operating loss carryforwards. For the years ended March 31, 1996 and 1995,
the Company had net operating loss carry forwards amounting to $3,048,958 and
$2,426,855 respectively. The loss carryforwards expire through the year 2010.
The Company has recorded a deferred tax asset in each year amounting to
$1,570,229 and $1,357,481 as of March 31, 1996 and 1995, as a result of the
future tax benefit of the net operating loss carryforward, determined by
applying the enacted statutory rate of 34 percent to such carryforwards. Since
the ability of the Company to realize the deferred tax asset is not certain, a
valuation allowance has been recorded for both years in an amount equal to the
deferred tax asset.

<TABLE>
<CAPTION>
MARCH 31, MARCH 31,
1996 ACTIVITY 1995
--------------------------------------------------------
<S> <C> <C> <C>
Deferred tax assets:
Net operating loss carryforwards $1,570,229 $ 212,748 $1,357,481
Book verses tax depreciation (9,172) (9,172)
Valuation allowance for deferred tax assets (1,561,057) (203,576) (1,357,481)
--------------------------------------------------------

Net deferred tax asset -0- -0- -0-
=========================================================
</TABLE>

26
<PAGE> 27
NEVADA GOLD & CASINOS, INC.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1996

Reconciliation's between the statutory federal income tax (benefit) rate and
the Company's effective income tax (benefit) rate as a percentage of loss from
continuing operations were as follows:

<TABLE>
<CAPTION>
Year ended March 31,
--------------------------------------------
1996 1995
Percent Dollars Percent Dollars
------- -------- ------- --------
<S> <C> <C> <C> <C>
Tax benefit at statutory federal rate (34)% $(203,576) (34)% $(147,684)
Permanent Differences:
Stock Options Exercised 0 0 (122)% (530,722)
Expired NOL 0 0 7 32,346
Increase in valuation allowance related
to current year net operating loss 34% 203,576 149% 646,060
----- --------- ----- ---------
Effective income tax benefit 0% $ 0 0% $ 0
===== ========= ===== =========

</TABLE>

11. STOCK OPTIONS

On March 31, 1992, the Board of Directors authorized the issuance of stock
options to various individuals, for the purchase of the Company's common stock
at $0.04 per share, expiring March 31, 1995, all exercisable from March 31,
1992, through March 31, 1995. At March 31, 1995, all options that were granted
in lieu of cash, for services rendered, had been exercised.

The options were granted, in lieu of cash, for services rendered, as follows:

<TABLE>
<S> <C> <C>
Individual Service # of shares
---------- ---------------------- -----------
<S> <C> <C>
Paul Burkett Management 600,000
Roy Hackworth Assessment Work 150,000
Alan Macquoid Financial Consulting 50,000
Woody Clemons Gold Field Operation Supervision 50,000
Lynette Milan Office Secretary 25,000
Fred Holabird Geological Consulting 15,000
Art Nielson Mining Superintendent 15,000
Gary Ojala Geological Consulting 15,000
</TABLE>

Additionally, on September 17, 1993, options to purchase 250,000 shares of
the common stock of the Company, expiring September 17, 1996, were granted to
the Company's legal counsel, Jim Hurley. All such options were exercised during
the year ended March 31, 1995.

27
<PAGE> 28
NEVADA GOLD & CASINOS, INC.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1996

The options were granted during 1996, in lieu of cash, for services rendered,
as follows:

Options issued for Compensation

Individual Service # of shares
--------------------------------------------------------------
Directors Management 120,000
Advisory Directors Management 120,000
D.E. Frey & Company Investment Bankers 100,000
David K. Cantley Employee Compensation 10,002
Carolyn DeWitt Employee Compensation 3,500

In connection with the investment banking agreement signed in October
1993, the company issued stock options during the fiscal year ended March 31,
1995, the Company granted options to its investment bankers, providing for the
issuance of 200,000 shares of stock, at an option price of .50 per share. This
option was granted on April 1, 1994, and expires on April 1, 1999. The Company
also issued 100,000 stock options in association with the assistance of that
certain debt offering funded by the company's investment bankers to remediate
the gaming lots. The option price is $.75 per share, expiring on August 1,
1997.

Options were also granted in connection with the debt offering that
was in process at the year ended March 31, 1995 to the holders of notes
payable by the Company, as described in Note 7. Such options grant the holders
of the notes to a total of 35,000 shares, exercisable at $.75 per share based
upon the debt subscribed of $350,000 and an additional 14,000 options were
granted to the brokers. The unexercised options expired at March 31, 1996,
with 27,500 shares being exercised by note holders, and 1,960 shares being
exercised by brokers.

12. STOCK SUBSCRIPTIONS

At March 31, 1994, the Company collected $295,500 in cash, in the form
of subscriptions to buy restricted stock in the Company, at $.50 per share.
The offering was done through a private placement, offered to accredited
investors, and was completed during the year, ended March 31, 1995. The total
funds raised amounted to $588,600, as a result of this offering.

13. RELATED PARTY TRANSACTIONS

In the ordinary course of business, the Company has entered into
transactions with officers, directors and other related entities. The
majority of such transactions include loans made or received from the related
party. The following summarizes such transactions during the years ended
March 31, 1996 and 1995.

During the year ended March 31, 1996, Bingle Northwest, an affiliate
of the Company's President, lent the Company $7,034 for working capital. The
note payable to ADT Resources, a wholly owned subsidiary of Aaminex Capital
Corporation ("Aaminex"), remained unchanged as of March 31, 1996.

14. SUBSEQUENT EVENT

Rescission Offer

28
<PAGE> 29
NEVADA GOLD & CASINOS, INC.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1996

The Company shares office space and other office expenses with Aaminex.
The Company's President is also the President of Aaminex. Under the terms
of a management agreement, the Company is obligated to pay $8,333.33 per month
to Aaminex for the full-time services of Mr. Winn and for the payment of
various office expenses. Accrued management fees under the agreement totaled
$100,000 and $90,000 during the years ended March 31, 1996 and 1995.

In addition to the above the Company increased it's note payable to
Aaminex by $99,266.

The Company, through BSH, Inc., an affiliate of the President and
Treasurer was required to work closely with the EPA and the Colorado Department
of Health in connection with developing the casino hotel complex, and BSH, Inc.
agreed to perform environmental analyses and test and remove any and all
hazardous substances located on the gaming lots. The Company paid a total of
$330,459 to BSH, Inc. No further remedial activity has been required or is
expected of the Company.

On May 19, 1995, the Company transferred real estate to Gold Mountain
Development, LLC, an entity in which the Company had a forty percent interest.
Real estate, having a cost basis of $867,283, mortgages payable and certain
other assets were transferred to Gold Mountain Development, LLC. The Company
received a note receivable from Gold Mountain in the amount of $919,248 which
bears interest at the rate of fourteen percent per annum and matures on March
31, 1997. The Company was required to assume debt totaling $115,384. On
September 1, 1995, the Company acquired the remaining 60% interest in Gold
Mountain Development, LLC, making it a wholly owned subsidiary. The former
members received a portion of the land owned subject to the underlying
mortgages and a note in the amount of $150,000, which had a balance of $38,971
as of March 31, 1996. All intercompany balances, have been eliminated in
preparing the Company's financial statements as of March 31, 1996.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.

On June 7, 1995, the Company engaged the services of Arthur Andersen,
LLP, in Houston, Texas. This constituted a change in accountants. The
financial statements for the previous two years were reported on by Henson &
Company, an auditing firm in Pasadena, California. The predecessor auditors
were notified by the Company on June 7, 1995. Their report dated July 13,
1994, except for Note 12 which was dated August 1, 1994 expressed an
unqualified opinion on the financial condition on the two most recent years.
The decision to change accountants was recommended by the Board of Directors.
There were no disagreements with the former accountants.

29
<PAGE> 30
NEVADA GOLD & CASINOS, INC.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1996

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Pursuant to the by-laws of the Company, the Board of Directors has set the
number of Directors for the ensuing year at four, all of whom are proposed to
be elected at the Annual Meeting. In the event any nominee is unable to serve
as a Director at the time of the meeting, the persons named as proxies,
therein, will have discretionary authority to vote the proxies for the
election of such person or persons as may be nominated in substitution by the
present Board of Directors. Management knows of no current circumstances which
would render any nominee named, herein, unable to accept nomination or
election. Directors shall be elected by a plurality of the votes cast by the
holders of shares entitled to vote in the election of Directors, at a meeting
of stockholders at which a quorum is present.

Members of the Board of Directors are elected annually to serve until the next
annual meeting of stockholders and until their successors are elected and
qualified. Messrs. Winn, Burkett, Holabird, and Jayroe are presently members
of the Board of Directors. Each Standing Director has agreed to serve, if
elected.

H. THOMAS WINN, 56. Mr. Winn has been the Chairman, CEO, and President of
Nevada Gold & Casinos, Inc., since January, 1994. He is also been a Director
since 1994. As President of Aaminex Capital Corporation, he was responsible
for the merger of the Colorado property into Pacific Gold Corporation (now
Nevada Gold & Casinos, Inc.). Mr. Winn has served as Chairman of Aaminex
Capital Corporation since 1983. Aaminex Capital Corporation is a financial
consulting and venture capital firm, involved in real estate, mining, and
environmental activities. Mr. Winn has formed numerous investment limited
partnerships, and capital formation ventures, which range from the motion
pictures, to commercial real estate and mining projects.

PAUL J. BURKETT, 75. Mr. Burkett, Past-President of Pacific Gold Corporation,
was instrumental in the acquisition of the Colorado properties, and of Pacific
Gold Corporation, for seven years prior to the name change. He is now a
Director of Nevada Gold & Casinos, Inc. Mr. Burkett has been involved in the
mining industry for over 40 years. He has also served on the Board of
Directors of Aaminex Capital Corporation for 13 years. His business for the
past five years has concentrated on independent mining and real estate
ventures.

FRED N. HOLABIRD, 43. Mr. Holabird brings twenty years of experience in mining
and the management of public companies. He was responsible for the discovery
and production of two open-pit mines in Nevada, and has held key management
positions with two public companies over the past ten years, including
President of Columbus Mines, Inc. He has been instrumental in new developments
of mine reclamation and environmentally sensitive materials reuse techniques,
in addition to a strong background in metals exploration and production.

WILLIAM G. JAYROE, 40, Mr. Jayroe has nearly two decades of technology
development, sales and management expertise in the petrochemical field. He
began his career with a "Fortune 500" global oilfield service company and left
to begin his own company, Turbeco, Inc., which was acquired by Flotek
Industries, Inc., in late 1993. Mr. Jayroe is currently President and CEO of
Flotek Industries, Inc., (a public company), which is the parent corporation
of USA Petrovalve, Inc. and Turbeco, Inc.

COMMITTEES OF THE BOARD AND ATTENDANCE

The Board of Directors of the Company presently has the following standing
committees:

(A) THE AUDIT COMMITTEE, currently comprised of Messrs. Jayroe and
Holabird. The Audit Committee, which held one meeting during the Company's
last fiscal year, is authorized to nominate the Company's independent
auditors, and to review with the independent auditors the scope and results of
the audit engagement.
(B) COMPENSATION COMMITTEE, currently comprised of Messrs. Burkett
and Holabird. The Compensation Committee, which held one meeting during the
Company's last fiscal year, recommends compensation levels for Executive
Officers of the Company, and is authorized to consider, and make grants of
options pursuant to the Consultant and Employee Stock Option Plan, and the
Non-Qualified Stock Option Plan and to administer such plans.
(C) TECHNICAL COMMITTEE, currently comprised of Messrs. Burkett,
Holabird, and Winn. The Technical Committee which held one meeting during the
Company's last fiscal year , is responsible for mining, and real property
activities of the Company.

Four Directors Meetings were held during the last fiscal year. Each Director
attended at least 75% of meetings, either in person or by telephone conference
calls.

The Company does not have a Directors Nominating Committee, such function
being reserved to the entire Board of Directors.

The Board of Directors unanimously recommends a vote for election of each of
the nominees listed above.

30
<PAGE> 31
NEVADA GOLD & CASINOS, INC.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1996

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
(Continued)

EXECUTIVE OFFICERS

The executive officers of the Company are as follows:

NAME AGE CAPACITY
------------------------------------------------------------

H. Thomas Winn (1) 56 President

David K. McCaleb 33 Secretary

Paul J. Burkett (1) 75 Vice President in Charge of Mining
- -------------------------------------------------------------------------------

(1) Biographical information, with respect to this Officer, was previously
described in Item 1.

David McCaleb (age 33). Mr. McCaleb has been with the Company since 1993, and
has served as Secretary and Treasurer of the Company since 1994. For the prior
two years, he operated McCaleb & Associates, a Houston-based accounting and
consulting firm. Previously, Mr. McCaleb spent five years in the banking
industry. He received a Bachelor of Science degree in Finance from the
University of Houston, 1991. Mr. Winn is the father-in-law of Mr. McCaleb.
There is no other family relationship between any present Executive Officers,
Directors and Director Nominees.

REPORTS

The Company is subject to the reporting requirements of the Securities Exchange
Act of 1934, as amended ("Exchange Act") and has established a compliance
program with respect to the reporting obligations of the Company's officers,
directors, and holders of 10% or more of the Company's equity securities,
(collectively hereinafter referred to as "Reporting Persons") under the Exchange
Act. As a primary result of the Company's failure to have a compliance program
in place, certain Reporting Persons of the Company's equity securities have not
filed the appropriate Forms 3, 4, and 5 on a timely basis. To date, the required
Reporting Persons have filed the appropriate Form 5s, which include transactions
and/or events that otherwise should have been reported on previous Forms 3 and
4. The Reporting Persons who did not make such filings on a timely basis for the
period ending March 31, 1996, and the number of such filings include the
following:

NUMBER OF NUMBER OF
REPORTING PERSONS TRANSACTIONS LATE FILINGS
----------------- ------------ ------------
Winstock Mining Corporation (US) 7 7

Clay County Holdings, Inc. 4 4

Aaminex Capital Corporation 19 19

Paul J. Burkett 11 11

William G. Jayroe 2 2

H. Thomas Winn 1 1

Fred N. Holabird 1 1

David K. McCaleb 1 1

31
<PAGE> 32
NEVADA GOLD & CASINOS, INC.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1996

ITEM 11. EXECUTIVE COMPENSATION

Executive Officer and other Officers of the Company who received total annual
salary and bonus for the fiscal year, ended March 31, 1996, in excess of
$100,000:

<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE

LONG - TERM
ANNUAL COMPENSATION COMPENSATION
------------------------------ ---------------------------------------
NAME AND PRINCIPAL FISCAL OTHER ANNUAL ALL OTHER
POSITION YEAR SALARY BONUS COMPENSATION(1) OPTIONS COMPENSATION
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
H. Thomas Winn, 1995 - - - 30,000 -
President 1994 - - - - -
1993 - - - - -
</TABLE>

(1) Mr. Winn did not receive perquisites or other personal benefits,
securities, or property, valued in excess of 10% of the total of the reported
annual salary and bonus.

The Company does not have any pension plans.

(2) COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
See "Committee of the Board and Attendance" in Item 10 for a discussion
of the Compensation Committee.

<PAGE> 33
NEVADA GOLD & CASINOS, INC.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1996

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT

The following table sets forth certain information, as of March 31, 1996 with
respect to beneficial ownership of the outstanding common stock by (i) those
stockholders known to the Company (whose address is shown), that are the
beneficial owners of 5% or more of the Company's outstanding voting stock (ii)
each Director of the Company, (iii) all named Executive Officers, and (iv) all
Directors and Officers, as a group.

The outstanding voting securities of the Company (entitled to one vote per
share) is 24,292,114 shares of common stock (as of the record date), in which
stock, the entire voting power of the Company is lodged. The record date for
the determination of shareholders entitled to notice of, and to vote at, this
meeting is March 31, 1996.
Pursuant to the bylaws of the corporation, cumulative voting is not allowed.

Name and
Address of Number of Shares Percent
Beneficial Owner Beneficially Owned of Class
- ------------------------------------------ ------------------ --------
Winstock Mining Corporation (US) 5,128,711 21.1 %
1506 - 2008 Fullerton Avenue
North Vancouver, British Columbia V7P 3G7

H. Thomas Winn (1) 2,548,634 10.5 %
3040 Post Oak Blvd., Suite 675
Houston, Texas 77056

David K. McCaleb(2) 9,538,987 39.3 %
3040 Post Oak Blvd., Suite 675
Houston, Texas 77056

Paul J. Burkett 807,562 .034 %
P.O. Box 761
Goldfield, Nevada 89013

Fred N. Holabird 45,000 .002 %
14040 Perlite Drive
Reno, Nevada 89511

William G. Jayroe 60,000 .003 %
7030 Empire Central Drive
Houston, Texas 77040

Cynthia C. Thompson (3) 4,120,000 17.3 %
3040 Post Oak Blvd., Suite 600
Houston, Texas 77056

All Directors and Officers
as a group (5 persons) 13,000,183 53.5%
---------- ----------
- -------------------------------------------------------------------------------

(1) All of the shares listed are controlled directly or indirectly through
Aaminex Capital Corporation, of which H. Thomas Winn is President. Two million
of these shares are the subject of an agreement to exercise a portion of the
options held by Ms. Thompson, as agent, upon the occurrence of certain
contingencies. As long as the option remains contingent and unexercised, Mr.
Winn exercises no voting or investment power, with respect to the shares
subject to the options. The shares listed are the same shares owned by
Winstock Mining Corporation (U.S.). The information in this table shall not be
construed as a statement that Mr. Winn is the beneficial owner of the
securities covered by the statement for purposes of Section 13(d) or 13(g) of
the Securities Act of 1933.

(2) All shares listed are owned by Clay County Holdings, Inc., except for 500
shares owned personally by Mr. McCaleb. Mr. McCaleb is president of Clay
County Holdings, Inc.

(3) Based on information provided to the Company, Ms. Thompson as agent for a
group of accredited investors, holds an option agreement with Winstock Mining
Corporation (U.S.) , in the Company's common stock in the amount of 4,800,000
shares of common stock. 680,000 shares of common stock, have been exercised
according to the agreement. Continuance and exercise of the options are
subject to payment and other contingencies. As long as the option remains
contingent and unexercised, Ms. Thompson exercises no voting or investment
power, with respect to the shares subject to the options. The shares listed in
item (ii) above are the same shares beneficially owned by Winstock Mining
Corporation (U.S.). [The information contained in this table should not be
construed as a statement that Ms. Thompson is the beneficial owner of the
securities covered by the option for purposes of Section 13(d) or 13(g) of the
Securities Act of 1933.]

33
<PAGE> 34
NEVADA GOLD & CASINOS, INC.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1996

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

In the ordinary course of business, the Company has entered into
transactions with officers, directors and other related entities. The majority
of such transactions include loans made or received from the related party.
The following summarizes such transactions during the years ended March 31,
1996 and 1995.

During the year ended March 31, 1996, Bingle Northwest, an affiliate of
the President, lent the Company $7,034 for working capital. The note payable
to ADT Resources, a wholly owned subsidiary of Aaminex Capital Corporation
("Aaminex"), remained unchanged as of March 31, 1996.

The Company shares office space and other office expenses with Aaminex .
The Company's President is also the President of Aaminex. Under the terms of a
management agreement, the Company is obligated to pay $8,333.33 per month to
Aaminex for the full-time services of Mr. Winn and for the payment of various
office expenses. Accrued management fees under the agreement totaled $100,000
and $90,000 during the years ended March 31, 1996 and 1995.

In addition to the above the Company increased it's note payable to
Aaminex by $99,266.

The Company, through BSH, Inc., an affiliate of the President and
Treasurer was required to work closely with the EPA and the Colorado
Department of Health in connection with developing the casino hotel complex,
and BSH, Inc. agreed to perform environmental analyses and test and remove any
and all hazardous substances located on the gaming lots. The Company paid a
total of $330,459 to BSH, Inc. No further remedial activity has been required
or is expected of the Company.

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS
ON FORM 8-K

(a) FINANCIAL STATEMENTS AND SCHEDULES

Reference

8 Report of independent public accountants

9 Balance sheets

10 Statements of operations

12 Statements of stockholders' equity

13 Statements of cash flows

14 Notes to financial statements

<PAGE> 35
NO NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1996

(b) NO REPORTS ON FORM 8-K

*3.1 - Articles of Incorporation

*3.1a - Amendment to Articles of Incorporation

*3.2 - By-laws

*10.1 - Operating Agreement Caesars Black Hawk, LLC.

10.2 - Deed of Trust

10.3 - Master Secured Note

10.4 - Note Participation Agreement

*21 - Subsidiaries of the Registrant

*27 - Financial Data Schedule

- ------------
* Previously filed

35
<PAGE> 36
SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, hereunto duly authorized

NEVADA GOLD & CASINOS, INC.

By: /s/ H. Thomas Winn July 2, 1996
----------------------------
H. Thomas Winn, President

Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed by the following person on behalf of the Registrant
and in the capacity and on the date indicated.

<TABLE>
<CAPTION>
NAME & POSITION DATE
<S> <C>

/s/ H. Thomas Winn
-----------------------------
H.Thomas Winn, President July 2, 1996

/s/ Paul J. Burkett
-----------------------------
Paul J. Burkett, Director July 2, 1996
Vice President - Mining

/s/ Fred N. Holabird July 2, 1996
-----------------------------
Fred N. Holabird, Director

/s/ William G. Jayroe July 2, 1996
-----------------------------
William G. Jayroe, Director

/s/ David K. McCaleb July 2, 1996
----------------------------
David K. McCaleb, Treasurer
</TABLE>

36
<PAGE> 37
INDEX TO EXHIBITS

*3.1 - Articles of Incorporation

*3.1a - Amendment to Articles of Incorporation

*3.2 - By-laws

*10.1 - Operating Agreement Caesars Black Hawk, LLC.

10.2 - Deed of Trust

10.3 - Master Secured Note

10.4 - Note Participation Agreement

*21 - Subsidiaries of the Registrant

*27 - Financial Data Schedule

- ------------
* Previously filed

<PAGE> 1

EXHIBIT "C"

No.

================================================================================

DEED OF TRUST

================================================================================

FROM

NEVADA GOLD & CASINOS, INC.

THE PUBLIC TRUSTEE
FOR THE USE OF

,TRUSTEE

================================================================================

STATE OF COLORADO,

Gilpin County

I hereby certify that this instrument was filed
for record in my office at o'clock,
__ M.
________________, 19__, and is duly

recorded in book ____________ , page ___

Film No. _______________, Reception No. ______

Clerk and Recorder

By:
Deputy

================================================================================

<PAGE> 2
DEED OF TRUST

THIS DEED OF TRUST is made this _____ day of May, 1995 between Nevada Gold &
Casinos, Inc., a Nevada corporation (Borrower), whose address is 3040 Post Oak
Boulevard, Suite 675, Houston, Texas 77056, and the Public Trustee of the
County in which the Property (see paragraph 1) is situated (Trustee); for the
benefit of River Oaks Trust Company, Trustee (Lender), whose address is 2001
Kirby, Houston, Texas 77019 (having been appointed Trustee pursuant to that
certain Note Participation Agreement ("Participation Agreement") effective of
even date herewith, to serve in such capacity on behalf of numerous individual
lenders, all as controlled by the terms of the Participation Agreement.).

Borrower and Lender covenant and agree as follows:

1. Property in Trust. Borrower, in consideration of the indebtedness herein
recited and the trust herein created, hereby grants and conveys to
Trustee in trust, with power of sale, the following described property
(the "Property") located in Gilpin County, State of Colorado;

Lots 5, 6, 7 and 8, Block 5 1, City of Black Hawk, Gilpin
County, Colorado.

2. Note: Other Obligations Secured. This Deed of Trust is given to
secure to Lender:

A. The repayment of the indebtedness evidenced by Borrower's note
(Note) of even date herewith, in the principal sum of up to Three
Hundred Fifty Thousand ($350,000.00) U.S. Dollars, with interest on
the unpaid principal balance from the date of advancement, until
paid, at the rate of twelve (12%) percent per annum, with principal
and interest payable at ________________ or such other place as the
Lender may designate, on or before May ___, 1996, as set forth in the
Note and also documented by that certain Loan Agreement of even date
herewith between Borrower and Lender, and that Certain Note
Participation Agreement of even date herewith between Borrower,
Lender and numerous other parties by way of addendum thereto;

Borrower is to pay to Lender a default rate of interest of eighteen
percent (18%) per annum or the maximum legal rate, whichever is less,
if the principal and accrued interest is not paid when due.
Borrower has the right to prepay the principal amount outstanding
under the Note plus accrued and unpaid interest on the amount prepaid,
in whole or in part, at any time without penalty;

B. The Payment of all other sums, with interest thereon at eighteen
percent (18%) per annum, disbursed by Lender in accordance with this
Deed of Trust to protect the security of this Deed of Trust; and

<PAGE> 3

C. The performance of the covenants and agreements of Borrower herein
contained.

3. Title. Borrower covenants that Borrower owns and has the right to grant
and convey the Property, and warrants title to the same, subject to
general real estate taxes for the current year, easements of record or in
existence, and recorded declarations, restrictions, reservations and
covenants, if any, as of this date.

4. Payment of Principal and Interest. Borrower shall promptly pay when due
the principal of and interest on the indebtedness evidenced by the Note,
and late charges as provided in the Note and shall perform all of
Borrower's other covenants contained in the Note.

5. Application of Payments. All payments received by Lender under the terms
hereof shall be applied by Lender first to amounts disbursed by Lender
pursuant to paragraph 9 (Protection of Lender's Security), and the
balance in accordance with the terms and conditions of the Note.

6. Prior Mortgages and Deeds of Trust; Charges; Liens. Borrower shall
perform all of Borrower's obligations under any prior deed of trust and
any other prior liens. Borrower shall pay all taxes, assessments and
other charges, fines and impositions attributable to the Property which
may have or attain a priority over this Deed of Trust, and leasehold
payments or ground rents, if any, by Borrower making payment when due,
directly to the payee thereof. Despite the foregoing, Borrower shall not
be required to make payments otherwise required by this paragraph if
Borrower, after notice to Lender, shall in good faith contest such
obligation by, or defend enforcement of such obligation in, legal
proceedings which operate to prevent the enforcement of the obligation or
forfeiture of the Property or any party thereof.

7. Property Insurance. Borrower shall keep the improvements now existing or
hereafter erected on the Property insured against loss by fire or hazards
included within the term "extended coverage" in an amount at least equal
to the lesser of (1) the insurable value of the Property or (2) an amount
sufficient to pay the sums secured by this Deed of Trust as well as any
prior encumbrances on the Property. All of the foregoing shall be known
as "Property Insurance".

The insurance carrier providing the insurance shall be qualified to write
Property Insurance in Colorado and shall be chosen by Borrower subject to
Lender's right to reject the chosen carrier for reasonable cause. All
insurance policies and renewals thereof shall include a standard mortgage
clause in favor of Lender, and shall provide that the insurance carrier
shall notify Lender at least ten (10) days before cancellation,
termination or any material change of coverage. Insurance
policies shall be furnished to Lender at or before closing. Lender shall
have the right to hold the policies and renewals thereof.

In the event of loss, Borrower shall give prompt notice to the insurance
carrier and Lender. Lender may make proof of loss if not made promptly
by Borrower.

3
<PAGE> 4

Insurance proceeds shall be applied to restoration or repair of the
Property damaged, provided such restoration or repair is economically
feasible and the security of this Deed of Trust is not thereby impaired.
If such restoration or repair is not economically feasible or if the
security of this Deed of Trust would be impaired, the insurance proceeds
shall be applied to the sums secured by this Deed of Trust, with the
excess, if any, paid to Borrower. If the Property is abandoned by
Borrower, or if Borrower fails to respond to Lender within 30 days
from the date notice is given in accordance with paragraph 16 (Notice) by
Lender to Borrower that the insurance carrier offers to settle a claim
for insurance benefits, Lender is authorized to collect and apply the
insurance proceeds, at Lender's option, either to restoration or repair
of the Property or to the sums secured by this Deed of Trust.

Notwithstanding anything herein to the contrary, if under paragraph 19
(Acceleration; Foreclosure; Other Remedies) the Property is acquired by
Lender, all right, title and interest of Borrower in and to any insurance
policies and in and to the proceeds thereof resulting from damage to the
Property prior to the sale or acquisition shall pass to Lender to the
extent of the sums secured by this Deed of Trust immediately prior to
such sale or acquisition.

All of the rights of Borrower and Lender hereunder with respect to
insurance carriers, insurance policies and insurance proceeds are subject
to the rights of any holder of a prior deed of trust with respect to said
insurance carriers, policies and proceeds.

8. Preservation and Maintenance of Property. Borrower shall keep the
Property in good repair and shall not commit waste or permit impairment
or deterioration of the Property and shall comply with the Provisions of
any lease if this Deed of Trust is on a leasehold. Borrower shall
perform all of Borrower's obligations under any declarations, covenants,
bylaws, rules or other documents governing the use, ownership or
occupancy of the Property.

9. Protection of Lender's Security. If Borrower fails to perform the
covenants and agreements contained in this Deed of Trust, or if a default
occurs in a prior lien, or if any action or proceeding is commenced which
materially affects Lender's interest in the Property, then Lender, at
Lender's option, with notice to Borrower if required by law, may make
such appearances, disburse such sums and take such action as is necessary
to protect Lender's interest, including, but not limited to, disbursement
of reasonable attorneys' fees and entry upon the Property to make
repairs. Borrower hereby assigns to Lender any right Borrower may have
by reason of any prior encumbrance on the Property or by law or otherwise
to cure any default under said prior encumbrance.

Any amounts disbursed by Lender pursuant to this paragraph 9, with
interest thereon, shall become additional indebtedness of Borrower
secured by this Deed of Trust. Such amounts shall be payable upon notice
from Lender to Borrower requesting payment thereof, and Lender may
bring suit to collect any amounts so disbursed plus default interest.
Nothing contained in this paragraph 9 shall require Lender to incur any
expense or take any action hereunder.

<PAGE> 5

10. Inspection. Lender may make or cause to be made reasonable entries upon
and inspection of the Property, provided that Lender shall give Borrower
notice prior to any such inspection specifying reasonable cause therefor
related to Lender's interest in the Property.

11. Condemnation. The proceeds of any award or claim for damages, direct or
consequential, in connection with any condemnation or other taking of the
Property, or part thereof, or for conveyance in lieu of condemnation, are
hereby assigned and shall be paid to Lender. However, all of the
rights of Borrower and Lender hereunder with respect to such proceeds are
subject to the rights of any holder of a prior deed of trust.

If the Property is abandoned by Borrower, or if, after notice by Lender
to Borrower that the condemnor offers to make an award or settle a claim
for damages, Borrower fails to respond to Lender within 30 days
after the date such notice is given, Lender is authorized to collect and
apply the proceeds, at Lender's option, either to restoration or repair
of the Property or the sums secured by this Deed of Trust.

12. Borrower Not Released. Extension of the time for payment or modification
of amortization of the sums secured by this Deed of Trust granted by
Lender to any successor in interest of Borrower shall not operate to
release, in any manner, the liability of the original Borrower, nor
Borrower's successors in interest, from the original terms of this Deed
of Trust. Lender shall not be required to commence proceedings against
such successor or refuse to extend time for payment or otherwise modify
amortization of the sums secured by this Deed of Trust by reason of any
demand made by the original Borrower nor Borrower's successors in
interest.

13. Forbearance by Lender Not a Waiver. Any forbearance by Lender in
exercising any right or remedy hereunder, or otherwise afforded by law,
shall not be a waiver or preclude the exercise of any such right or
remedy.

14. Remedies Cumulative. Each remedy provided in the Note and this Deed of
Trust is distinct from and cumulative to all other rights or remedies
under the Note and this Deed of Trust or afforded by law or equity, and
may be exercised concurrently, independently or successively.

15. Successors and Assigns Bound, Joint and Several Liability, Captions.
The covenants and agreements herein contained shall bind, and the rights
hereunder shall inure to the respective successors and assigns of Lender
and Borrower, subject to the provisions of paragraph 24 (Transfer of
the Property; Assumption). All covenants and agreements of Borrower
shall be joint and several. The captions and headings of the paragraphs
in this Deed of Trust are for convenience only and are not to be used to
interpret or define the provisions hereof.

<PAGE> 6

16. Notice. Except for any notice required by law to be given in another
manner, (a) any notice to Borrower provided for in this Deed of Trust
shall be in writing and shall be given and be effective upon (1) delivery
to Borrower or (2) mailing such notice by certified mail, return receipt
requested, addressed to Borrower at Borrower's address stated herein or
at such other address as Borrower may designate by notice to Lender as
provided herein, and (b) any notice to Lender shall be in writing and
shall be given and be effective upon (1) delivery to Lender or (2)
mailing such notice by certified mail, return receipt requested, to
Lender's address stated herein or to such other address as Lender may
designate by notice to Borrower as provided herein. Any notice provided
for in this Deed of Trust shall be deemed to have been given to Borrower
or Lender when given in any manner designated herein.

17. Governing Law: Severability. The Note and this Deed of Trust shall be
governed by the law of Colorado. In the event that any provision or
clause of this Deed of Trust or the Note conflicts with the law, such
conflict shall not affect other provisions of this Deed of trust
or the Note which can be given effect without the conflicting provisions,
and to this end the provisions of the Deed of Trust and Note are declared
to be severable.

18. Borrower's Copy. Borrower acknowledges receipt of a copy of the Note
and of this Deed of Trust.

19. Acceleration: Foreclosure, Other Remedies. Except as provided in
paragraph 24 (Transfer of the Property; Assumption), upon Borrower's
breach of any covenant or agreement of Borrower in this Deed of Trust, or
upon any default in a prior lien upon the Property, at Lender's option,
all of the sums secured by this Deed of Trust shall be immediately due
and payable (Acceleration). To exercise this option, Lender may
invoke the power of sale and any other remedies permitted by law, Lender
shall be entitled to collect all reasonable costs and expenses incurred
in pursuing the remedies provided in this Deed of Trust, including, but
not limited to, reasonable attorneys' fees.

If Lender invokes the power of sale, Lender shall give written notice to
Trustee of such election. Trustee shall give such notice to Borrower of
Borrower's rights as is provided by law. Trustee shall record a copy of
such notice as required by law. Trustee shall advertise the time and
place of the sale of the Property, for not less than four weeks in a
newspaper of general circulation in each county in which the
Property is situated, and shall mail copies of such notice of such sale
to Borrower and other persons as prescribed by law. After the lapse of
such time as may be required by law, Trustee, without demand on Borrower,
shall sell the Property at public auction to the highest bidder for cash
at the time and place (which may be on the Property or any part thereof
as permitted by law) in one or more parcels as Trustee may think best and
in such order as Trustee may determine. Lender or Lender's designee may
purchase the Property at any sale. It shall not be obligatory upon the
purchaser at any such sale to see to the application of the purchase
money.

Trustee shall apply the proceeds of the sale in the following order: (a)
to all reasonable costs and expenses of the sale, including, but not
limited to, reasonable Trustee's and attorneys' fees and costs of
title evidence; (b) to all sums secured by this Deed of Trust; and (c)
the excess, if any, to the person or persons legally entitled thereto.

6
<PAGE> 7

20. Borrower's Right to Cure Default. Whenever foreclosure is commenced for
nonpayment of any sums due hereunder, the owners of the Property or
parties liable hereon shall be entitled to cure said defaults by paying
all delinquent principal and interest payments due as of the date of
cure, costs, expenses, late charges, attorneys' fees and other fees all
in the manner provided by law, or in the Note. Upon such payment, this
Deed of Trust and the obligations secured hereby shall remain in full
force and effect as though no Acceleration had occurred, and the
foreclosure proceedings shall be discontinued.

21. Assignment of Rents; Appointment of Receiver; Lender in Possession. As
additional security hereunder, Borrower hereby assigns to Lender the
rents of the Property; however, Borrower shall, prior to Acceleration
under paragraph 19 (Acceleration; Foreclosure; Other Remedies) or
abandonment of the Property, have the right to collect and retain such
rents as they become due and payable.

Lender or the holder of the Trustee's certificate of purchase shall be
entitled to a receiver for the Property after Acceleration under
paragraph 19 (Acceleration; Foreclosure; Other Remedies), and shall also
be so entitled during the time covered by foreclosure proceedings and the
period of redemption, if any and shall be entitled thereto as a matter of
right without regard to the solvency or insolvency of Borrower or of
the then owner of the Property, and without regard to the value thereof.
Such receiver may be appointed by any Court of competent jurisdiction
upon ex parte application and without notice -- notice being hereby
expressly waived.

Upon Acceleration under paragraph 19 (Acceleration; Foreclosure; Other
Remedies) or abandonment of the Property, Lender, in person, by agent or
by judicially appointed receiver, shall be entitled to enter upon, take
possession of and manage the Property and to collect the rents of the
Property including those past due. All rents collected by Lender
or the receiver shall be applied, first, to payment of the costs of
preservation and management of the Property, second, to payments due upon
prior liens, and then to the sums secured by this Deed of Trust. Lender
and the receiver shall be liable to account only for those rents actually
received.

22. Release. Upon payment of all sums secured by this Deed of Trust, Lender
shall cause Trustee to release this Deed of Trust and shall produce for
Trustee the Note. Borrower shall pay all costs of recordation and shall
pay the statutory Trustee's fees. If Lender shall not produce the Note
as aforesaid, then Lender, upon notice, in accordance with paragraph
16 (Notice) from Borrower to Lender, shall obtain at Lender's expense,
and file, any lost instrument bond required by Trustee or pay the cost
thereof to effect the release of this Deed of Trust.

23. Waiver of Exemptions. Borrower hereby waives all right of homestead and
any other exemption in the Property under state or federal law presently
existing or hereafter enacted.

7
<PAGE> 8

24. Transfer of the Property; Assumption. (a) The following events shall be
referred to herein as a "Transfer". A transfer or conveyance of title
(or any portion thereof, legal or equitable) of the Property
(or any part thereof or interest therein), the execution of a contract or
agreement creating a right to title (or any portion thereof, legal or
equitable) in the Property (or any part thereof or interest therein), or
an agreement granting a possessory right in the Property (or any portion
thereof), in excess of three (3) years. Not to be included as a Transfer
is the creation of a lien or encumbrance subordinate to this Deed of
Trust. Upon a transfer, all sums secured by this Deed of Trust, at
Lender's option, shall become immediately due and payable
("Acceleration").

(b) Upon such acceleration, Lender shall give Borrower notice of
acceleration in accordance with paragraph 16 (Notice). The notice shall
inform Borrower of the right to assert in the foreclosure proceeding the
nonexistence of a default or any other defense of Borrower to
Acceleration and sale. Such notice shall also provide a period of not
less than 10 days from the date the notice is given within which Borrower
may pay the sums declared due. If Borrower fails to pay such sums prior
to the expiration of such period, Lender may, without further notice
or demand on Borrower, invoke any remedies permitted by paragraph 19
(Acceleration; Foreclosure; Other Remedies). Lender shall give notice of
such Acceleration, within thirty (30) days after notice of any Transfer
is given to Lender by Borrower or Transferee in accordance with paragraph
16 (Notice). If Lender shall not give notice of such Acceleration within
such thirty (30) days, then lender will have no further right to such
Acceleration.

(c) If a Transfer occurs and should Lender not exercise Lender's option
pursuant to this paragraph 24 to Accelerate, Transferee shall be deemed
to have assumed all of the obligations of Borrower under this Deed of
Trust including all sums secured hereby whether or not the instrument
evidencing such conveyance, contract or grant expressly so provides.
This covenant shall run with the Property and remain in full force and
effect until said sums are paid in full.

(d) Should Lender not elect to Accelerate upon the occurrence of such
Transfer then, subject to (b) above, the mere fact of a lapse of time or
the acceptance of payment subsequent to any of such events, whether
or not Lender had actual or constructive notice of such Transfer, shall
not be deemed a waiver of Lender's right to make such election nor shall
Lender be estopped therefrom by virtue thereof. The issuance on behalf
of the Lender of a routine statement showing the status of the loan,
whether or not Lender had actual or constructive notice of such Transfer,
shall not be a waiver or estoppel of Lender's said rights.

NEVADA GOLD & CASINOS, INC.

By: H. Thomas Winn, President

STATE OF TEXAS

HARRIS COUNTY

<PAGE> 1
EXHIBIT 10.3

MASTER SECURED NOTE

Houston, Texas
$350,000.00
May 12,1995

FOR VALUE RECEIVED, the undersigned, NEVADA GOLD & CASINOS, INC., a Nevada
corporation with corporate headquarters in Houston, Texas ("Nevada Gold"),
promises to pay to the order of River Oaks Trust Company, Trustee ("Trustee"),
as agent for those certain lenders described in that certain Note Participation
Agreement among Nevada Gold, Trustee, and such lenders, dated of even date
herewith (the "Participation Agreement") at 2001 Kirby Drive, Houston, Texas
77019 or at such other place in the United States of America as the holder of
this Note may from time to time designate in writing to Nevada Gold), the sum
of THREE HUNDRED FIFTY THOUSAND DOLLARS or so much of such sum as has actually
been advanced hereunder on or before May 17, 1996, and to pay interest on
unpaid balances of principal from time to time outstanding and evidenced hereby
at the rate of twelve percent (12%) per annum, payable at the maturity hereof.

This is the Nevada Gold Master Secured Note described in the Participation
Agreement and is secured by a Deed of Trust of even date herewith from Nevada
Gold to Trustee securing payment of indebtedness from time to time evidenced
hereby (the "Deed of Trust"). Reference is made to such instruments for a
description of the collateral and security afforded thereby and rights and
remedies of the holder of this Note in respect thereof as well as for a
description of certain events upon the occurrence of which the holder hereof
may elect to accelerate the maturity of the indebtedness evidenced hereby.

This Note evidences revolving credit indebtedness under which funds may be
advanced as loans from time to time by Trustee to Nevada Gold hereunder and the
amounts of each advance and the date thereof shall be posted on the "Grid"
annexed hereto. The date of the first advance will be the date hereof; the
date of each subsequent advance will be the date the applicable funds are
received into escrow by River Oaks Trust Company. All payments made with
respect to the indebtedness evidenced hereby shall be posted on the Grid which
shall show the date of receipt of each such payment. Additional Grids may be
annexed hereto if necessary to maintain a complete and accurate record of
advances and payments. The conditions under which Nevada Gold shall be
entitled from time to time to receive loan advances from Trustee to be
evidenced by this Note are stated in that certain Loan Agreement of even date
herewith between Nevada Gold and Trustee (the "Loan Agreement").

If any payment becomes due with respect to the indebtedness evidenced hereby on
any Saturday or Sunday or any legal or bank holiday in the State of Texas, such
payment shall be due on the next succeeding banking day and interest shall
accrue to such day.

All parties, (makers, sureties, guarantors and all others now or hereafter
liable for payment of the indebtedness evidenced by this Note) severally waive
demand, presentment, notice of dishonor, protest,

-1-
<PAGE> 2

notice of protest, and diligence in collecting this Promissory Note and
diligence in bringing and prosecuting suit against any party bound hereby, and
agree that no extension, renewal or partial payment, or release or substitution
of collateral before or after maturity, with or without notice, shall release
or discharge the obligation of any party.

It is the intention of Nevada Gold and Trustee to conform strictly to
applicable usury laws. It is therefore agreed that: (i) in the event that the
maturity hereof is accelerated by reason of an election by Trustee or any
successor to Trustee or if the same is prepaid prior to maturity, and the
interest received for the actual period of the existence of the loan exceeds
the maximum rate permitted under Texas or federal law, Trustee shall refund to
Nevada Gold the amount of the excess or shall credit the amount of the excess
against amounts owing under this Note and shall not be subject to any of the
penalties provided by law for contracting for, charging, or receiving interest
in excess of such maximum allowable rate, (ii) the aggregate of all interest
and other charges constituting interest under applicable law and contracted
for, chargeable or receivable under this Note or otherwise in connection with
the loan transaction underlying this Note, shall not for the actual period of
the existence of the loan exceed the maximum amount of interest, nor produce a
rate in excess of the maximum contract rate of interest, that Trustee may
charge Nevada Gold under applicable law and in regard to which Nevada Gold may
not successfully assert the claim or defense of usury, and (iii) determination
of the rate of interest on the loan evidenced hereby shall be made by
amortizing, prorating, allocating, and spreading, in equal parts during the
period of the full stated term of the loan, all interest at any time contracted
for, charged or received from Nevada Gold in connection with the loan.

Prepayments of principal together with accrued and unpaid interest on the
principal amount prepaid may be made at any time and from time to time without
premium or penalty.

If any installment of interest or principal due hereon shall not be paid as and
when the same shall be due and payable or upon the occurrence of any Event of
Default specified in the Participation Agreement, Loan Agreement or the Deed of
Trust, as defined therein, the holder of this Note may, upon forty-five (45)
days prior written notice to Nevada Gold declare all then unpaid principal and
accrued interest evidenced by this Note to be immediately due and payable and
exercise any and all rights and remedies at law or in equity or otherwise for
collection thereof. After maturity (whether by extension, acceleration or
otherwise) the indebtedness evidenced by this Note shall bear interest at the
lessor of eighteen percent (18%) per annum or the highest rate permitted by
Texas law. If this Note is placed with any attorney(s) for collection in
consequence of any default(s) of Nevada Gold, Nevada Gold shall pay the
reasonable attorneys' fees of such attorney(s) and all other lawful costs of
collection.

NEVADA GOLD & CASINOS, INC.

H. Thomas Winn, President

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<PAGE> 1
EXHIBIT 10.4

NOTE PARTICIPATION AGREEMENT

THIS NOTE PARTICIPATION AGREEMENT (this "Agreement") is entered into
effective as of May 12, 1995, between NEVADA GOLD & CASINOS, INC. ("Borrower");
RIVER OAKS TRUST COMPANY, a Texas trust company ("Trustee") and numerous
parties participating in the Note described below, by execution of Addenda
hereto in the form of the Addendum Agreement attached hereto as Exhibit "A"
(the "Participants").

W I T N E S S E T H:

WHEREAS, Borrower and Trustee on behalf of the Participants, have entered
into a Loan Agreement, dated effective as of the date hereof, pursuant to which
the Participants, through the Trustee, will loan up to an aggregate principal
amount of Three Hundred Fifty Thousand and No/100 Dollars ($350,000.00) to
Borrower (the "Loans"), upon and subject to the terms and conditions stated in
the Loan Agreement;

WHEREAS, the Loans are made pursuant to the Loan Agreement and the
documents referred to in the Loan Agreement as the Loan Documents
(collectively, the "Loan Documents");

WHEREAS, each Participant has agreed, subject to the terms and conditions
hereinafter set forth, to acquire a participation in the Loans through the
Trustee; and

WHEREAS, the parties wish to enter into this Agreement to describe their
rights and obligations with respect to such participation arrangement.

NOW, THEREFORE, in consideration of the premises and for other valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
parties agree as follows:

1. Subject to the terms and conditions of this Agreement, each
participant hereby acquires through the Trustee a participation in the Loans
and any collateral now or at any time hereafter securing the Loans (the
"Participation") equal to the dollar amount indicated in the Addendum to the
Note Participation Agreement executed by the participant in the form of Exhibit
"A" attached hereto (the "Participant's Addendum") and, with respect to the
Collateral (as defined in the Loan Agreement) a percentage interest in the
Collateral equal at any given time to the ratio (x) the Participant's principal
plus interest accrued thereon from the date of the Participant's Addendum bears
to (y) the total amount advanced to Borrower hereunder plus accrued interest.
The Participation shall bear interest at the rates of interest borne by the
Loans. The Participation shall be evidenced by this Agreement and the Addenda
hereto which shall be part of this Agreement.

2. Upon receipt by Trustee of notice from the Borrower of a Request
for Advance under any of the Loans in substantially the form of Exhibit "B"
attached hereto, Trustee agrees that within twenty-four (24) hours after
receipt of such notice, if such notice is given by 12:00 p.m., it will
advance to Borrower by deposit into a designated account the amount of such
advance that is available in Nevada Gold & Casinos, Inc., Escrow Account
#7309-5085, Trust Account #5079 at River Oaks Trust Company assuming the
conditions precedent set forth in this Agreement have been met. Each
Participant's share of the Participation will be additionally evidenced by a
Participation Certificate in the form of Exhibit "C" attached hereto.

<PAGE> 2

3. Trustee shall remit to each Participant at his or her address as
indicated on each Participant's Addendum in immediately available funds, each
Participant's pro rata share of each payment received by Trustee with respect
to the Loans and interest thereon (whether pursuant to the Loan Documents, or
by voluntary payment, exercise of setoff, banker's lien, counterclaim,
cross-action, realization on or with respect to collateral, or otherwise) on or
before the business day following the date on which such payment is received by
Trustee. Provided, however, that if Trustee is not obligated to, and does not
forward such payment to each Participant until the business day following the
date of receipt of such payment by Borrower, Trustee shall pay to each
Participant, each Participant's pro rata share of the interest earned from the
investment of such payment, if any.

4. (a) If an Event of Default as defined in the Loan Agreement has
occurred and is continuing, Trustee shall have sole control with respect to
determining the manner in which to exercise rights and remedies under the Loan
Documents or rights at law, including the Remedies and Actions but shall
promptly proceed to do so on behalf of the Participants. The terms
"Remedies and Actions" shall mean the right to collect or enforce any or all
of the Loan Documents.

(b) The Participants shall have no rights to participate in the
enforcement of the Remedies and Actions or any other actions with respect to
the Loans, for so long as Trustee or any successor Trustee is engaged in those
efforts on the Participants' behalf. Trustee will be deemed to have ceased
such activities upon notice by Trustee that it has ceased such activities or
upon the failure of Trustee to confirm in writing, that it is engaged in such
activities within fifteen (15) days of written request from a Participant for
such confirmation. If Trustee so ceases such activities, the Participants will
be jointly and severally entitled to enforce all their rights as secured
parties under the Deed of Trust and the Loan Documents, and to exercise
directly all rights Trustee was entitled to exercise on their behalf under the
Deed of Trust and the Loan Documents.

5. The Trustee shall be liable to the Participant only for its own
gross negligence or willful misconduct. Notwithstanding anything to the
contrary, Trustee shall not be responsible in any manner to any of the
Participants for (a) the effectiveness, enforceability, genuineness, validity,
or due execution of any of the Loan Documents, (b) any representation,
warranty, document, certificate, report, or statement made in any Loan
Document, or furnished under or in connection with any of the Loan Documents,
(c) the collectibility of the Loans, (d) the validity, enforceability, or
sufficiency of, or title to, any collateral now or hereafter securing the
Loans, or (e) the existence, priority, or perfection of any lien or security
interest granted or purported to be granted under the Loan Documents.

6. Borrower, Trustee and the Participants agree that the terms and
provisions of the Participation Agreement shall remain in full force and
effect and shall apply to the Loan Agreement as the same may be amended and to
any additional indebtedness of the Borrower that may be issued thereunder.

7. Each Participant hereby represents and warrants to Trustee and
Borrower that it is acquiring the Participation for its own account and not
with a view to distribution and acknowledges that its acquisition of the
Participation constitutes a loan by Participant to the Borrower and does not
constitute an "investment" in the Borrower as that term is commonly understood.

8. Each Participant hereby represents and warrants that it has
independently reviewed the Loan Agreement and the other Loan Documents, and
that there shall be no recourse on, or any liability

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<PAGE> 3

incurred by, Trustee for any misstatement (whether material or immaterial) or
omission (whether negligent or otherwise) of the Borrower contained in any of
the Loan Documents and that each Participant has conducted, to the extent it
deemed necessary, an independent investigation of the Borrower; including, but
not limited to, an investigation relating to the credit worthiness of the
Borrower and the risk involved to Participant in the loan of its funds to the
Borrower, and has not relied upon Trustee for any such investigation or
assessment of risk.

10. Trustee makes no representation or warranty and shall have no
responsibility or liability as to (a) the collectibility of the Loans; (b) the
validity, priority, value or adequacy of any collateral; or (c) the financial
condition of the Borrower or any guarantor, endorser or surety.

11. No Participant shall have any interest in (a) any present or
future guaranties by or for the account of the Borrower which are not
contemplated in the Loan Agreement, or (b) any property now or hereafter taken
as collateral for any extension of credit not contemplated in the Loan
Agreement; provided, however, if payments in respect of such guaranties or such
property or proceeds thereof shall be applied in reduction of the Loan, then
each Participant shall be entitled to share pro rata in such application.

12. Except as expressly provided herein to the contrary, should any
Participant ever receive (whether pursuant to the Loan Documents, or by
voluntary payment, exercise of setoff, banker's lien, counterclaim,
cross-action, realization on or with respect to collateral, or otherwise) any
sums applied or to be applied to the obligations of the Borrower under the Loan
Documents, any such sum shall be immediately remitted to Trustee for
disbursement pursuant to Section 3 hereof.

13. Trustee shall provide upon written request by any Participant such
information as is then in Trustee's possession with respect to the current
status of principal and interest payments under the Loan Documents and with
respect to the current status of accrual of interest under the Loan Documents.

14. None of the provisions of this Agreement shall inure to the
benefit of the Borrower or any person other than the Participants;
consequently, the Borrower and any persons other than the Participants shall
not be entitled to rely upon or raise as a defense, in any manner whatsoever,
the failure of Trustee to comply with the provisions of this Agreement.

17. Whenever this Agreement requires or permits any consent, approval,
notice, request, or demand from one party to another, the consent, approval,
notice, request, or demand must be in writing or may be given by telephone and
confirmed in writing and shall be deemed to have been given when personally
delivered, delivered by telecopy, or, if mailed, when enclosed in an envelope
addressed to the party to be notified at the address stated below (or at such
other address as may have been designated by written notice), properly stamped,
sealed, and duly deposited in the United States mail, registered or certified
mail. The address of each party for purposes hereof is as follows:

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<PAGE> 4

River Oaks Trust Company
2001 Kirby Drive
Houston, Texas 77019
Attention:__________________
Telephone: (713) 831-5500
Telecopy: (713) 831-5746

Nevada Gold & Casinos, Inc.
3040 Post Oak Boulevard, Suite 675
Houston, Texas 77056
Attention: H. Thomas Winn, President
Telephone: (713) 621-2245
Telecopy: (713) 621-6919

18. This Agreement shall be binding upon and inure to the benefit of
the Trustee and the Participants and their respective successors and assigns.

19. This Agreement shall be governed by and construed in accordance
with the laws of the State of Texas, and is performable in Harris County,
Texas.

20. This Agreement supersedes and replaces any prior oral or written
agreement between the parties hereto with respect to the within subject matter,
and any such prior oral or written agreement shall be of no further force or
effect.

EXECUTED as of the date first above written.

RIVER OAKS TRUST COMPANY

By:_________________________________

Its:________________________________

NEVADA GOLD & CASINOS, INC.

By:_________________________________
H. Thomas Winn, President

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