UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
Quarterly report pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1934
For the quarter ended DECEMBER 31, 1998
Commission file number 0-8927
NEVADA GOLD & CASINOS, INC.
(Exact name of Registrant as specified in its charter)
NEVADA 88-0142032
(State or other jurisdiction (IRS Employer
of incorporation) Identification Number)
3040 POST OAK BLVD. SUITE 675, HOUSTON, TEXAS, 77056
(Address of principal executive offices)
(713) 621-2245
(Registrant's telephone number)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding twelve 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 ninety days.
Yes [ ] No [X]
As of January 31, 1999, there were 9,634,654 shares of common stock
outstanding.
<PAGE>
NEVADA GOLD & CASINOS, INC.
INDEX
PAGE NO.
--------
PART I
ITEM 1. FINANCIAL STATEMENTS
Balance Sheets as of December 31, 1998, and March 31, 1998 3
Statements of Operations for the Three Months Ended
December 31, 1998, and 1997 4
Statements of Operations for the Nine Months Ended
December 31, 1998, and 1997 5
Statements of Cash Flows for the Nine Months Ended
December 31, 1998, and 1997 6
Notes to Interim Financial Statements 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 10
PART II
OTHER INFORMATION
Items 1 through 6 13
2
<PAGE>
PART I
ITEM 1. FINANCIAL STATEMENTS
NEVADA GOLD & CASINOS, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31, March 31,
1998 1998
----------- -----------
(Unaudited) (Audited)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents ................................................................ $ 89,237 $ 154,367
Other assets ............................................................................. 277,409 83,211
----------- -----------
TOTAL CURRENT ASSETS ..................................................................... 366,646 237,578
----------- -----------
Investment in Isle of Capri Black Hawk ................................................... 212,514 599,828
Real estate and assets held for development .............................................. 2,045,128 2,201,809
Note Receivable from affiliate ........................................................... 837,101
Investment in Goldfield Resources ........................................................ 480,812 480,812
Investment in RCI ........................................................................ 73,500
Furniture, fixtures and equipment, net of accumulated depreciation
of $106,512 and $81,677 on December 31, and March 31,1998, respectively ................ 99,495 95,672
=========== ===========
TOTAL ASSETS ............................................................................. $ 4,115,196 $ 3,615,699
=========== ===========
LIABILITIES & STOCKHOLDERS EQUITY
CURRENT LIABILITIES
Accounts payable and accrued liabilities ................................................. $ 55,405 $ 56,248
Accrued interest payable ................................................................. 106,918 49,154
Short term notes payable ................................................................. 1,135,000 279,591
Current portion of long term debt ........................................................ 35,908 73,187
----------- -----------
TOTAL CURRENT LIABILITIES ................................................................ 1,333,231 458,180
----------- -----------
LONG TERM DEBT
Mortgages payable, net of current portion ................................................ 38,430 111,023
Notes payable, net of current portion .................................................... 514,442 521,718
----------- -----------
TOTAL LONG TERM DEBT ..................................................................... 552,872 632,741
----------- -----------
OTHER LIABILITIES
Deferred gain ............................................................................ 0 591,404
----------- -----------
TOTAL LIABILITIES ........................................................................ 1,886,103 1,682,325
----------- -----------
STOCKHOLDERS' EQUITY
Preferred stock, $10 par value, 500,000 shares authorized, 121,490 and 141,490
shares outstanding at December 31, and March 31, 1998, respectively .................... 1,214,900 1,414,900
Common stock, $.12 par value, 20,000,000 shares authorized, 9,628,251 and
8,822,464 shares outstanding at December 31, and March 31, 1998, respectively ......... 1,155,390 1,058,696
Additional paid in capital ............................................................... 8,529,764 7,095,896
Accumulated deficit prior to development stage (12/27/93) ................................ (2,296,077) (2,296,077)
Accumulated deficit during development stage ............................................. (6,374,884) (5,340,041)
----------- -----------
TOTAL STOCKHOLDERS' EQUITY ............................................................... 2,229,093 1,933,374
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ............................................... $ 4,115,196 $ 3,615,699
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
NEVADA GOLD & CASINOS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended
December 31
-----------------------------
1998 1997
----------- -----------
REVENUES
Royalty income ............................. $ 6,000 $ --
Gain on sale-part interest Isle of Capri
Black Hawk ............................... -- --
Other income ............................... 25,317 107,045
----------- -----------
TOTAL REVENUES ............................. 31,317 107,045
----------- -----------
EXPENSES
General & administrative ................... 106,061 115,286
Interest expense ........................... 54,587 28,288
Salaries ................................... 93,722 80,292
Legal & professional fees .................. 94,288 32,899
Other ...................................... 16,193 18,058
----------- -----------
TOTAL EXPENSES ............................. 364,851 274,823
----------- -----------
EQUITY IN EARNINGS (LOSS) OF ISLE
OF CAPRI-
BLACK HAWK ............................... (118,709) (590,000)
----------- -----------
NET INCOME (LOSS) .......................... $ (452,243) $ (757,778)
=========== ===========
PER SHARE INFORMATION
Net Income (Loss) .......................... $ (452,243) $ (757,778)
Preferred stock dividends
accumulated ................................ (36,747) (42,795)
----------- -----------
Income (Loss) available to common
stockholders ............................... $ (488,990) $ (800,573)
=========== ===========
Weighted average number of common
Shares outstanding ....................... 9,444,608 8,506,888
=========== ===========
Net income per common share ................ $ (.05) $ (.09)
=========== ===========
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
NEVADA GOLD & CASINOS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended
December 31 Cumulative Amounts
---------------------------- During Development
1998 1997 Stage (Since 12/27/93)
----------- ----------- ----------------------
<S> <C> <C> <C>
REVENUES
Royalty income ............................... $ 10,000 $ 15,000 $ 229,000
Gain on sale-part interest Isle of Capri
Black Hawk ................................. 147,851 -- 282,967
Other income ................................. 232,325 648,164 731,591
----------- ----------- -----------
TOTAL REVENUES ............................... 390,176 663,164 1,243,558
----------- ----------- -----------
EXPENSES
General & administrative ..................... 311,404 436,163 2,014,298
Interest expense ............................. 154,482 140,516 859,074
Salaries ..................................... 225,125 191,511 754,319
Legal & professional fees .................... 243,210 153,008 2,155,228
Other ........................................ 47,039 38,520 420,260
----------- ----------- -----------
TOTAL EXPENSES ............................... 981,260 959,718 6,203,179
----------- ----------- -----------
EQUITY IN EARNINGS (LOSS) OF ISLE OF CAPRI-
BLACK HAWK ................................. (443,761) (590,000) (1,415,265)
----------- ----------- -----------
NET INCOME (LOSS) ............................ $(1,034,845) $ (886,554) $(6,374,886)
=========== =========== ===========
PER SHARE INFORMATION
Net Income (Loss) ............................ $(1,034,845) $ (886,554) $(6,374,886)
Preferred stock dividends accumulated ........ (115,425) (96,707) (261,472)
----------- ----------- -----------
Income (Loss) available to common stockholders $(1,150,270) $ (983,261) $(6,636,358)
=========== =========== ===========
Weighted average number of common
Shares outstanding ......................... 9,444,608 8,438,845 7,067,042
=========== =========== ===========
Net income per common share .................. $ (.12) $ (.12) $ (.94)
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
NEVADA GOLD & CASINOS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended
December 31 Cumulative Amounts
---------------------------- During Development
1998 1997 Stage (Since 12/27/93)
----------- ----------- ----------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ....................................... $(1,034,845) $(886,554) $(6,374,886)
Adjustments to reconcile net loss to net cash
Provided (used) by operating activities:
Depreciation ................................. 24,835 18,697 97,706
Equity in net loss of Isle of Capri
Black Hawk ................................ 443,761 590,000 1,415,265
Consultant and investment banker
option expense ............................ 78,445 -- 852,515
Gain on sale-part interest Isle of
Capri Black Hawk .......................... (147,851) -- (282,967)
Other ..................................... -- -- 231
Changes in operating assets and liabilities:
Other ........................................ (811,382) (2,129) (616,417)
Accounts payable and accrued liabilities ..... 79,764 43,998 1,256,004
----------- --------- -----------
NET CASH USED IN OPERATING ACTIVITIES .......... (1,367,273) (235,988) (3,652,549)
----------- --------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Real estate and assets held for development .... (556,301) (46,532) (1,914,026)
Purchase of furniture, fixtures and equipment .. (3,659) (17,530) (52,318)
Proceeds from sale of part interest of Isle of
Capri Black Hawk ............................. -- -- 833,334
Proceeds on disposition of property ............ -- 195,557 8,866
----------- --------- -----------
NET CASH PROVIDED (USED) BY INVESTING ACTIVITIES (559,960) 131,495 (1,124,144)
----------- --------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from debt ........................... 1,451,667 879,894 6,217,325
Common stock issued for cash, net of
Offering costs ............................. 829,184 181,500 2,206,139
Fractional shares redeemed ................. -- -- (36)
Payments on debt ........................... (418,748) (951,765) (3,860,285)
Salaries contributed by officers ........... -- -- 1,000
Prepaid stock subscription ................. -- -- 295,500
----------- --------- -----------
NET CASH PROVIDED BY FINANCING ACTIVITIES ...... 1,862,103 109,629 4,859,643
----------- --------- -----------
Net increase (decrease) in cash ................ (65,130) 5,136 82,950
Beginning cash balance ......................... 154,367 78,245 6,287
----------- --------- -----------
Ending cash balance ............................ $ 89,237 $ 83,381 $ 89,237
=========== ========= ===========
SUPPLEMENTAL INFORMATION:
Cash paid for interest ....................... $ 95,163 $ 88,231 $ 508,663
=========== ========= ===========
Cash paid for taxes .......................... $ -- $ -- $ --
=========== ========= ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
6
<PAGE>
NEVADA GOLD & CASINOS, INC.
DECEMBER 31, 1998
NOTES TO INTERIM FINANCIAL STATEMENTS
BUSINESS
Nevada Gold & Casinos, Inc. ("Nevada Gold" or the "Company") was 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. On December 27, 1993, control of the Company changed and the Company's
primary focus was redirected toward the development of gaming and real estate
properties 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.
In April 1997, Nevada Gold and Isle of Capri Casinos, Inc. ("Isle of
Capri"), formerly Casino America, Inc., through wholly-owned subsidiaries,
BlackHawk Gold, Ltd. ("BlackHawk Gold"), and Casino America of Colorado, Inc.
("CAC"), respectively, formed the Isle of Capri Black Hawk, a limited liability
company. Isle of Capri Black Hawk was formed to construct and operate the Isle
of Capri Black Hawk Casino (the "Casino") in Black Hawk, Colorado. Isle of Capri
is operating the Casino under a management agreement for a fee based upon a
percentage of revenues.
Nevada Gold, through its wholly-owned subsidiary, Gold Mountain
Development, L.L.C. ("GMD") owns approximately 170 acres of real property in the
vicinity of Black Hawk, Colorado. The Company intends to develop a commercial
and residential real estate project on the property likely with a third party or
through additional financing.
Nevada Gold, through its wholly-owned subsidiary, Sunrise Land and
Minerals Corporation ("Sunrise") owns approximately 300 acres of land, including
all surface, mineral, water, air, and timber rights in Nevada County,
California. The property contains an inactive gold mining prospect. Nevada Gold
intends to evaluate the best use of Sunrise's land. In addition to potential
sales of sand, gravel, clay, and decorative rock from the property, real estate
development of the property may be an option.
In April 1998, Goldfield Resources, Inc. ("Goldfield"), was organized as a
wholly-owned subsidiary of Nevada Gold. Goldfield owns 149 patented mining
claims and 321 unpatented lode mining claims in southwestern Nevada. Goldfield
will not be directly involved in mining operations, but rather has secured
mining leases for its properties and retains royalty interests under the leases.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The interim financial statements have been prepared by Nevada Gold without
audit and, in the opinion of management, reflect all adjustments of a normal
recurring nature necessary for a fair statement of (a) the results of operations
for the three months ended December 31, 1998, and 1997; (b) the results of
operations for the nine months ended December 31, 1998, and 1997; (c) the
financial position as of December 31, 1998; and (d) the cash flows for the nine-
month period ended December 31, 1998, and 1997. Interim results are not
necessarily indicative of results for a full year.
The consolidated balance sheet presented as of December 31, 1998, has been
derived from the consolidated financial statements that have been audited by the
Company's independent public accountants. The consolidated financial statements
and notes are condensed as permitted by Form 10-QSB and do not
7
<PAGE>
NEVADA GOLD & CASINOS, INC.
DECEMBER 31, 1998
NOTES TO INTERIM FINANCIAL STATEMENTS
contain certain information included in the annual financial statements and
notes of the Company. The consolidated financial statements and notes included
should be read in conjunction with the financial statements and notes included
in the Company's Annual Report on Form 10-K.
CASH AND EQUIVALENTS. Interest-bearing deposits and other investments,
with original maturities of three months or less, are considered cash and cash
equivalents.
REAL ESTATE AND ASSETS HELD FOR DEVELOPMENT. Property held for development
consists of undeveloped land located in and around Black Hawk, Colorado, and
Nevada County, California. Nevada Gold 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.
FURNITURE, FIXTURES, AND EQUIPMENT. The Company depreciates furniture,
fixtures, and equipment over their estimated useful lives, ranging from two to
seven years, using the straight-line method. Expenditures for furniture,
fixtures, and equipment are capitalized at cost. Ordinary maintenance and
repairs are charged to expense, and replacements and betterments are
capitalized.
ISLE OF CAPRI BLACK HAWK
As stated above, the Isle of Capri Black Hawk was formed in April 1997.
The Isle of Capri Black Hawk is owned by Black Hawk Gold, a wholly-owned
subsidiary of Nevada Gold, and by CAC, a wholly-owned subsidiary of Isle of
Capri. The Isle of Capri Black Hawk commenced gaming operations on December 30,
1998. The principal purpose of the Isle of Capri Black Hawk is to operate the
casino entertainment complex in Black Hawk, Colorado. Nevada Gold's capital
contribution to the limited liability company was approximately 6.5 acres of
land, with a net value of $7.5 million. Nevada Gold owns a 43% interest in the
Isle of Capri Black Hawk.
In August of 1997, the Isle of Capri Black Hawk and Isle of Capri Capital
Corp., a wholly-owned subsidiary of the Isle of Capri Black Hawk that had no
operations, assets, or liabilities, issued $75,000,000 of 13% First Mortgage
Notes due 2004, with contingent interest, in order to finance the construction
and development of the Casino. In the event that CAC, a Member of Isle of Capri
Black Hawk, makes payments on the First Mortgage notes on behalf of Isle of
Capri Black Hawk pursuant to the Completion Capital Commitment of the $75
million Note Offer and Indenture by which the joint venture was funded, CAC may
elect to take all distributions to Isle of Capri Black Hawk members that would
be payable quarterly up to the aggregate amount of payments made under the
Completion Capital Commitment.
The rights and obligations of CAC and Black Hawk Gold are governed in part
by the Amended and Restated Operating Agreement of the Isle of Capri Black Hawk
(the "Agreement") dated as of July 1997. The Agreement provides that the Isle of
Capri Black Hawk will continue until December 31, 2096, or until a dissolution
occurs. Pursuant to the Agreement, Black Hawk Gold contributed land to the Isle
of Capri Black Hawk for a total value of $7.5 million and CAC contributed cash,
land purchase rights, and development costs to the Isle of Capri Black Hawk, for
a total value of $8 million.
Nevada Gold accounts for its ownership in the Isle of Capri Black Hawk
using the equity method of accounting. The Company's investment in the Isle of
Capri Black Hawk is stated at cost, adjusted for
8
<PAGE>
NEVADA GOLD & CASINOS, INC.
DECEMBER 31, 1998
NOTES TO INTERIM FINANCIAL STATEMENTS
its equity in the undistributed earnings or losses of the project. The following
is a summary of condensed financial information pertaining to the Isle of Capri
Black Hawk as of December 31, 1998:
(in
thousands)
Current assets ........................................ $ 4,301
Property and Equipment ................................ 84,155
Other assets .......................................... 15,586
---------
$ 104,042
=========
Current liabilities ................................... $ 16,412
Long-term debt ........................................ 76,092
Stockholders' Equity .................................. 11,538
---------
$ 104,042
=========
Interest income ....................................... $ 717
Interest expense ...................................... (2,152)
---------
Net loss .............................................. $ (1,435)
=========
9
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussions of Nevada Gold's results of operations and
financial position should be read in conjunction with the financial statements
and notes. Management believes that inflation and changing prices will have
little, if any, effect on the Company's financial position or results of
operations.
GENERAL
The Casino opened on December 30, 1998. No revenues have been generated as
of December 31, 1998, from Nevada Gold's interest in the Casino. Revenues for
the last nine months consist of royalty income from the mining lease of the
Goldfield property, gain on the sale of part interest in the Isle of Capri Black
Hawk, interest income, and a one-time gain from a land exchange.
The Company presently expects that future revenues, if any, will largely
be derived from Nevada Gold's 43% interest in the Casino. Nevada Gold's
ownership interest in Isle of Capri Black Hawk is a passive one, as Nevada Gold
will have no role in the operation of the Casino. To date, no distributions have
been declared. Since the Casino has just recently opened, the Company cannot
predict when or if distributions can or will be made. Although the Members
Agreement for the Isle of Capri Black Hawk provides that distributions of income
are to be made quarterly to members, the distributions may be made only if there
is cash in excess of reasonable cash reserves needed for operating expenses,
capital improvements, debt service, working capital, and bankroll.
Nevada Gold currently owns undeveloped real property recorded at
$2,045,128 held for development, co-development, or sale to third parties,
consisting of approximately 170 contiguous acres adjacent to Black Hawk,
Colorado and 300 acres of land located in Nevada County, California.
Nevada Gold also currently owns 149 patented mining claims and 321
unpatented lode mining claims situated in the Goldfield Mining District of
Esmeralda and Nye Counties, Nevada. These mining claims are recorded at a value
of $480,812.
At December 31, 1998, the Company had other assets in the amount of
$277,409, consisting of interest receivable, prepaid expenses for consulting
fees, and a note receivable on the land exchange. Nevada Gold also has a note
receivable from an affiliate, Clay County Holdings, Inc. ("CCH"), in the amount
of $837,101. CCH has an investment of $1,214,900 in Nevada Gold preferred stock
as of December 31, 1998.
As of December 31, 1998, Nevada Gold has an investment of $73,500 for an
approximate ownership interest of 30% in Restaurant Connections International,
Inc. ("RCI"). RCI currently owns and operates eighteen Pizza Hut restaurants and
one KFC restaurant that is being converted into a Pizza Hut, all of which are
located in Sao Paulo, Brazil. In January 1999, a subsidiary of the Company
borrowed $600,000 from a third party and loaned those funds to CCH to assist RCI
in making the purchase of the restaurant franchises.
10
<PAGE>
RESULTS OF OPERATIONS
Cash used in operating activities for the nine months ending December 31,
1998, amounted to $1,367,273, an increase of $1,131,285 over the cash used for
the same nine-month period in 1997. The increase related primarily to the
funding of further losses and loans to affiliates.
During the nine months ending December 31, 1998, cash used in investing
activities amounted to $559,960, which was primarily used to repurchase a 3%
interest in the Isle of Capri Black Hawk, bringing Nevada Gold's ownership
interest to 43%.
Nevada Gold has financed its operating and investing activities primarily
from proceeds from issuing equity and third party debt. During the nine months
ending December 31, 1998, the Company received $829,184 from the sale of common
stock and $1,451,667 from third-party financing.
Revenues for the three months ending December 31, 1998, were $31,317, as
compared to $107,045 for the three months ending December 31, 1997. The current
revenues are attributed to monthly lease payments on the Romarco Nevada lease
with Goldfield resources and interest income. Revenues for the nine months
ending December 31, 1998, were $390,176, as compared to $663,164 for the nine
months ending December 31, 1997. The 1997 nine-month figure includes a $543,400
gain recorded on the sale of part interest in the Isle of Capri Black Hawk. The
current nine-month period includes a $197,300 gain recorded on the land exchange
and a deferred gain in the amount of $147,851 recognized on the sale of part
interest in the Casino.
General and administrative expenses for the three months ending December
31,1998, were $106,061, as compared to $115,286 for the three months ending
December 31, 1997. General and administrative expenses for the nine months
ending December 31, 1998, were $311,404, as compared to $436,163 for the nine
months ending December 31, 1997. This decrease of $124,759 for the nine-month
period is attributable to a decrease in commissions, real property expense, and
land maintenance fees.
Interest expense for the three months ending December 31,1998, was
$54,587, as compared to $28,288 for the three months ending December 31, 1997.
Interest expense for the nine months ending December 31, 1998, was $154,482, as
compared to $140,516 for the nine months ending December 31, 1997. The current
nine-month period includes interest paid on the repurchase of the 3% interest in
the Isle of Capri Black Hawk.
Legal and professional fees for the three months ending December 31,1998,
were $94,288, as compared to $32,899 for the three months ending December 31,
1997. Legal and professional fees for the nine months ending December 31, 1998,
were $243,210, as compared to $153,008 for the nine months ending December 31,
1997. The increase for the nine-month period includes cash transactions totaling
$30,500 and non-cash transactions involving the amortization of the cost of
100,000 shares of common stock valued at $100,000 issued in December 1997 in
exchange for consulting services rendered over a thirty-six-month period, and
the issuance of 17,778 shares of stock in the Company valued at $40,000.
11
<PAGE>
Net loss for the three months ending December 31, 1998, was $452,243, as
compared to a net loss of $757,778 for the three months ending December 31,
1997. Net loss for the nine months ending December 31, 1998, was $1,034,845, as
compared to a net loss of $886,554 for the nine months ending December 31, 1997.
LIQUIDITY AND CAPITAL RESOURCES
Nevada Gold has financed its operations to date primarily through equity
securities and debt financing. For the three months ending December 31, 1998,
Nevada Gold received proceeds of $487,874 from issuing 179,848 shares of common
stock and $35,000 in debt financing to cover its operating deficit. For the nine
months ending December 31, 1998, the Company received proceeds from issuing
equity in the amount of $829,184 and $1,451,667 from debt financing. The current
outstanding short-term indebtedness bears an annual interest rate of 12%,
$100,000 of which matures in May of 1999 and $1,600,000 of which matures in
August of 1999. Of this amount, $600,000 was incurred in January 1999, and
therefore is not included in the December 31, 1998, Balance Sheet.
As of December 31, 1998, the Company has a cash balance of $89,237. Nevada
Gold will need to raise additional working capital to fund operations and pay
its debt for the 1999 calendar year. This financing may be raised through equity
or debt offerings, joint ventures or other collaborative relationships, and/or
loans. To date, the Company has no commitment for any additional financing, and
the Company cannot assure that any future financing will be available on
acceptable terms.
Nevada Gold's current cash flow forecasts indicate that there will be
negative cash flows from operations for the balance of the current fiscal year.
The long-term viability of the Company is dependent on successful operation of
the casino complex, real estate development, and the ability to raise additional
debt and equity. 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.
YEAR 2000 COMPLIANCE ISSUES
The year 2000 poses certain issues for business computing as a result of
computer programs being written using two digits rather than four to define the
applicable year. Any of the Company's computer programs that have time-sensitive
software may recognize a date using "00" as the year 1900 rather than the year
2000. This could lead to incorrect calculations, functions, or system failure.
The problem exists for many kinds of software, including software for
mainframes, PCs, and embedded systems. The year 2000 is also a leap year.
Nevada Gold has initiated formal communications with its business venture,
Isle of Capri, to assess its year 2000 evaluations. Nevada Gold has been
informed by Isle of Capri that it has conducted its year 2000 investigations and
is currently correcting any known or potential problems or has planned to
correct any known or potential problems in the near future. Nevada Gold cannot
guarantee that the systems of other companies on which its systems may rely will
be timely converted and would not have an adverse effect on Nevada Gold's
systems. Preliminary discussions with banking institutions, software providers,
and vendors have led the Company to believe that no material problems will
occur. Nevada Gold
12
<PAGE>
continues to pursue this issue with other companies whose systems, if not
compliant, might affect its operations.
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Not applicable
ITEM 2. CHANGES IN SECURITIES
The following stock issuances occurred between October 1 and December 31,
1998. Each issuance was exempt from registration pursuant to Section 4(2) and/or
Regulation D under the Act as a transaction by an issuer not involving any
public offering. No underwriter was utilized in the offering and no commissions
were paid.
Nevada Gold issued 179,848 shares of common stock to eight investors for
an aggregate purchase price of approximately $487,874.
Nevada Gold issued a total of 21,301 shares of common stock to one person
and one entity for consulting and legal fees, with those shares having an
aggregate value of $48,616.
Nevada Gold issued 218,529 shares of common stock to eight individuals as
note conversions in the amount of $382,645.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable
ITEM 5. OTHER INFORMATION
Not applicable
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) INDEX TO EXHIBITS
*3.1 - Articles of Incorporation
*3.2 - Amendment to Articles of Incorporation
*3.3 - Bylaws
*4.1 - Deed of Trust
13
<PAGE>
*4.2 - Master Secured Note
*4.3 - Note Participation Agreement
*10.1 - Operating Agreement Caesars Black Hawk, L.L.C.
*10.2 - Operating Agreement of ICB, L.L.C.
*10.3 - Amended and Restated Operating Agreement of
Isle of Capri-Black Hawk, L.L.C.
*10.4 - Members Agreement
*10.5 - License Agreement
27 - Financial Data Schedule
*Exhibits were previously filed and are incorporated by reference.
(B) REPORTS ON FORM 8-K
None
14
<PAGE>
SIGNATURES:
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
NEVADA GOLD & CASINOS, INC.
By: /s/ H. THOMAS WINN
President and Chief Financial Officer
DATE: February 15, 1999
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