<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
(Amendment No. One)
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): February 1, 1999
North American Gaming and Entertainment Corporation
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(Exact name of registrant as specified in its charter)
Delaware 0-5474 75-2571032
- --------------------- ---------- -------------------
(State of incorporation) (Commission File No.) (IRS Employer
Identification No.)
13150 Coit Road, Suite 125, Dallas, Texas 75240
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(Address of principal execute offices, including zip code)
(972) 671-1133
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(Registrant's telephone number, including area code)
1
<PAGE>
Item 7. Financial Statements and Exhibits
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(b) The unaudited pro forma balance sheet as of December 31, 1998 and the
unaudited pro forma statement of operations for the year ended
December 31, 1998 included with this report reflect the pro forma
effect of the Settlement Agreement as though it had occurred on
December 31, 1998 for purposes of the unaudited pro forma balance
sheet and as of January 1, 1998 for purposes of the pro forma
statement of operations.
(c) Exhibits - The following exhibits are filed herewith:
10.1 Release and Settlement Agreement dated February 2, 1999 by and
among the parties referenced therein, together with various
Exhibits thereto (but exclusive of various Schedules thereto).*
10.2 Settlement Agreement dated February 2, 1999 by and among the
parties referenced therein.*
- --------------------
*Previously filed.
SIGNATURES
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Pursuant to the requirements of the Securities Exchange Act of 1934,
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
April 13, 1999
NORTH AMERICAN GAMING AND
ENTERTAINMENT CORPORATION
By: /s/ E.H. Hawes
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E.H. Hawes II, President
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<PAGE>
UNAUDITED PRO FORMA FINANCIAL INFORMATION
The unaudited pro forma financial information as of December 31, 1998 and for
the year then ended is set forth on the following pages. The pro forma
financial information has been prepared utilizing the historical consolidated
financial statements of North American Gaming and Entertainment Corporation and
Subsidiaries. The pro forma consolidated financial information gives pro forma
effect to the transfer of certain equity ownerships (the "Transfer") as if the
Transfer had occurred on December 31, 1998 for balance sheet purposes and as of
January 1, 1998 for purposes of the pro forma statement of operations. The pro
forma information has been prepared utilizing estimates and assumptions as set
forth below and in the notes thereto. The pro forma financial information is
presented for informational purposes and is not necessarily indicative of the
future financial position or results of operations of the Company that would
have actually occurred had the Transfer been consummated on such date or as of
the period described above. The pro forma adjustments are described in the
accompanying notes and are based upon available information and certain
assumptions that the Company believes are reasonable.
The preliminary allocations reflected in the pro forma financial information
have been based on preliminary estimates of the respective fair value of common
stock and liabilities, which may differ from the actual allocations. These pro
forma adjustments represent the Company's preliminary determination of the
Transfer adjustments and are based upon available information and certain
assumptions that the Company believes to be reasonable. Consequently, the
amounts in the pro forma financial information are subject to change, and the
final amounts may differ substantially.
F-1
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NORTH AMERICAN GAMING AND ENTERTAINMENT
CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA BALANCE SHEET
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December 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Unaudited
Historical Pro Forma
December 31, Pro Forma December 31,
ASSETS 1998 Adjustments 1998
----------- ---------------------------- -----------
Debit Credit
----------- ------------
<S> <C> <C> <C> <C>
Current Assets:
Cash $ 183,205 $ - $ 183,205 (a) $ -
Restricted cash 97,904 - 97,904 (a) -
Accounts receivable, net 270,525 - 20,326 (a) 177,505
- 72,694 (b)
Inventories 123,090 - 21,575 (a) 66,138
- 35,377 (b)
Prepaid expenses and
other current assets 116,975 - 31,140 (a) 85,835
----------- ----------- ------------ -----------
Total Current Assets 791,699 - 462,221 329,478
----------- ----------- ------------ -----------
Property and Equipment, net 945,127 - 206,728 (a) 568,982
- 169,417 (b)
----------- ----------- ------------ -----------
Deposits 100,893 - 23,342 (a) 52,261
- 25,290 (b)
Long-term deferred
tax asset 378,000 - 262,000 (e) 116,000
Revenue interest rights 90,176 - 90,176 (a) -
Trade name and
intangibles, net 125,608 - - 125,608
Goodwill 643,098 - - 643,098
Casino and truck stop
under construction 1,604,923 - 1,604,923 (a) -
Assets of business trans-
ferred under contractual
agreement 675,488 - 675,488 (a) -
Investment in OM
Operating L.L.C. - 324,195 (b) 285,288 (a) (63,216)
63,216 (d) 165,339 (c)
Investment in River Port
Truck Stop L.L.C. - 12,225 (a) 6,113 (d) 6,112
Investment in the Gold
Rush Truck Stop - 116,217 (a) 58,109 (d) 58,108
----------- ----------- ----------- -----------
3,618,186 515,853 3,196,068 937,971
----------- ----------- ---------- -----------
Total Assets $ 5,355,012 $ 515,853 $4,034,434 $ 1,836,431
=========== =========== ========== ===========
</TABLE>
F-2
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See noes to unaudited pro forma consolidated financial information.
<PAGE>
NORTH AMERICAN GAMING AND ENTERTAINMENT
CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA BALANCE SHEET (CONTINUED)
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December 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Unaudited
Historical Pro Forma
December 31, Pro Forma December 31,
1998 Adjustments 1998
----------- ---------------------------------- ------------
Debit Credit
--------------- ------------
<S> <C> <C> <C> <C>
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities:
Accounts payable and
accrued liabilities $ 1,114,966 $ 529,609 (a) $ 21,417 (b) $ 725,735
14,104 (c) 259,999 (e)
126,934 (d) -
Notes payable - current 2,357,498 1,610,072 (a) - 548,053
19,701 (c) -
179,672 (d) -
Preferred stock dividends
payable 780,000 78,000 (c) - 446,928
255,072 (d) -
----------- ----------- ------------ ------------
Total Current Liabilities 4,252,464 2,813,164 281,416 1,720,716
Liabilities of business
transferred under
contractual agreement 770,215 770,215 (a) - -
Notes Payable - long-term 1,446,749 201,757 (a) - 755,760
69,847 (c) -
419,385 (d) -
----------- ----------- ------------ ------------
Total Liabilities 6,469,428 4,274,368 281,416 2,476,476
----------- ----------- ------------ ------------
Stockholders' Deficit:
Common stock 417,886 25,530 (c) - 336,210
56,146 (d) -
Additional paid-in
capital 466,959 51,060 (c) - 303,606
112,293 (d) -
Accumulated deficit (1,999,261) 521,999 (e) 92,903 (c) (1,279,861)
- 1,148,496 (d)
----------- ----------- ------------ ------------
(1,114,416) 767,028 1,241,399 (640,045)
----------- ----------- ------------ ------------
Total Liabilities and
Stockholders' Deficit $ 5,355,012 $ 5,041,396 $ 1,522,815 $ 1,836,431
=========== =========== ============ ============
</TABLE>
F-3
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See notes to unaudited pro forma consolidated financial statements.
<PAGE>
NORTH AMERICAN GAMING AND ENTERTAINMENT
CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
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Year Ended December 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Unaudited
Historical Pro Forma
December 31, Pro Forma December 31,
1998 Adjustments 1998
------------ ---------------------------------- ------------
Debit Credit
----------- ------------
<S> <C> <C> <C> <C>
REVENUES:
Video poker $ 15,704,231 $15,704,231 (f) $ - $ -
Truck stop and
convenience store 8,679,063 4,790,323 (f) - 3,888,740
Cruise 966,442 - - 966,442
------------ ----------- ------------ ------------
25,349,736 20,494,554 - 4,855,182
------------ ----------- ------------ ------------
COSTS AND EXPENSES:
Video poker:
Cost of revenue 8,871,204 - 8,871,204 (f) -
Depreciation and
Amortization 219,909 - 219,909 (f) -
------------ ----------- ------------ ------------
9,091,113 - 9,091,113 -
------------ ----------- ------------ ------------
Truck Stop and Convenience
Store:
Cost of revenue 7,065,399 - 3,728,215 (f) 3,337,184
Depreciation and
amortization 64,896 - 21,017 (f) 43,879
------------ ----------- ------------ ------------
7,130,295 - 3,749,232 3,381,063
------------ ----------- ------------ ------------
Cruise:
Cost of revenue 417,610 - - 417,610
Depreciation and
amortization 332,950 - - 332,950
------------ ----------- ------------ ------------
750,560 - - 750,560
------------ ----------- ------------ ------------
Gross profit 8,377,768 20,494,554 12,840,345 723,559
General and administrative 7,789,585 - 6,108,282 (f) 1,604,220
77,083 (g)
------------ ----------- ------------ ------------
Operating income 588,183 20,494,554 19,025,710 (880,661)
Income for equity
investments - 48,091 (k) 136,692 (j) 434,994
- 346,393 (l)
Interest expense (307,187) - 159,983 (i) (147,204)
Other income (expense) (494,767) - 200,000 (h) 214,691
- 509,458 (f)
------------ ----------- ------------ ------------
(801,954) 48,091 1,352,526 502,481
------------ ----------- ------------ ------------
Net income before taxes (213,771) 20,542,645 20,378,236 (378,180)
Provision for income taxes 39,979 - 36,679 (m) 3,300
------------ ----------- ------------ ------------
Net loss $ (253,750) $20,542,645 $ 20,414,915 $ (381,480)
============ =========== ============ ============
Basic Loss Per Share $(.01) $ (.02)
============ ============
Basic Weighted Average
Shares Outstanding 31,980,331 23,812,699
============ ============
</TABLE>
F-4
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See notes to unaudited pro forma consolidated financial information.
<PAGE>
NORTH AMERICAN GAMING AND ENTERTAINMENT
CORPORATION AND SUBSIDIARY
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED
FINANCIAL INFORMATION
================================================================================
The unaudited pro forma consolidated financial information should be read in
conjunction with the Company's historical consolidated financial statements
appearing in the Company's annual report on Form 10-KSB.
On February 2, 1999, North American Gaming and Entertainment Corporation and
Subsidiaries (the "Company"), restructured its operating agreements related to
OM Operating LLC ("OMLLC"), River Port Truck Stop LLC ("RPLLC") and the Gold
Rush Truck Stop ("Gold Rush"), effective March 31, 1999. The restructure
transfers certain ownership interests and control in the Company's gaming
operations in redemption of 8,167,632 shares of the Company's common stock and
the cancellation of $442,488 (including accrued interest) of subordinated debt
and $333,072 of accrued dividends on Class A preferred stock.
In April 1998, as part of an initial restructure, the Company contributed to
OMLLC its right to a 20% gross income allocation in OMLLC in exchange for 99% of
the ownership interest in OMLLC, and simultaneously assigned 50% of the
ownership interests in OMLLC to Don Williams ("Williams") in exchange for a
$4,000,000 nonrecourse note (the "Note") payable by Williams to the Company.
Immediately thereafter Williams owned 51% and the Company owned 49% of the
ownership interests in OMLLC, the Company no longer has the 20% gross income
allocation and Williams owed the Company $4,000,000 pursuant to the Note. The
Note was payable solely from cash flow distributions made by OMLLC to Williams
from video poker casinos, truck stops, and route operations operated by the
Company and OMLLC and is secured by his 51% ownership interest and all cash flow
distributions made to him with respect to the existing video poker casinos,
truck stops and route operations.
The March 31, 1999 restructure will cancel the Note and the Company's
contribution of the 20% gross income allocation. In addition, Williams agreed
to cancel his subordinated debenture in the amount of $103,651 (including
accrued interest), have redeemed an aggregate of 2,553,000 shares of common
stock of the Company owned by Williams and entities related to Williams, cancel
$78,000 of accrued dividends on Class A Preferred Stock, contribute .1% interest
in RPLLC to the Company, and pay the Company cash ranging from $150,000 to
$300,000. The restructure terminates the Company's 20% gross income allocation
in OMLLC and causes it to contribute operating assets and liabilities of two
truck stops and three restaurants to OMLLC.
Concurrent with the restructure, the Company entered into an agreement with 10
former Class A Preferred Stockholders ("former stockholders") whereby the
Company agreed to transfer 50% of its interest in all gaming operations
(including OMLLC, RPLLC, and the Gold Rush) to the former stockholders. In
consideration, the former stockholders have agreed to cancel their subordinated
debentures in the amount of $338,837 (including accrued interest), have redeemed
an aggregate of 5,614,632 shares of common stock and cancel $255,072 of accrued
dividends on Class A Preferred Stock.
F-5
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<PAGE>
NORTH AMERICAN GAMING AND ENTERTAINMENT
CORPORATION AND SUBSIDIARY
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED
FINANCIAL INFORMATION (CONTINUED)
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The ownership in OMLLC, RPLLC and Gold Rush prior to and after the transaction
are as follows:
<TABLE>
<CAPTION>
Prior to the Former
Restructure Company Stockholders Williams Total
- ---------------- ------------ -------------- ------------- -------------
<S> <C> <C> <C> <C>
OMLLC 49.0% - 51.0% 100.0%
RPLLC 49.9% - 50.1% 100.0%
Gold Rush 100.0% - - 100.0%
<CAPTION>
After the Former
Restructure Company Stockholders Williams Total
- ---------------- ------------ -------------- ------------- -------------
<S> <C> <C> <C> <C>
OMLLC 24.5% 24.5% 51.0% 100.0%
RPLLC 25.0% 25.0% 50.0% 100.0%
Gold Rush 50.0% 50.0% - 100.0%
</TABLE>
The unaudited pro forma adjustments are as follows:
a. Adjustment to convert the consolidated assets and liabilities of OMLLC,
RPLLC and Gold Rush to the equity method.
b. To reflect the contribution of certain operating assets and liabilities of
the Company's truck stop and restaurant locations to OMLLC as part of the
restructure.
c. To reflect the transfer of a 51% interest in OMLLC to Don Williams for
2,553,000 shares of the Company's common stock with a fair market value of
$.03 per share, and the cancellation of subordinated debt of $103,652
(including accrued interest) and accrued dividends of $78,000.
d. To reflect the transfer of a 24.5% interest in OMLLC, 25% interest in RPLLC
and a 50% interest in Gold Rush to the former Class A Preferred
Stockholders for 5,614,632 shares of the Company's common stock with a fair
value of $.03 per share and the cancellation of subordinated debt of
$338,837 (including accrued interest), cancellation of accrued dividends of
$255,072 and the assumption of $387,154 of notes payable.
e. To record the tax effect of the transfers at December 31, 1998.
f. To eliminate the gaming and truck stop and convenience store operating
income, except for Gold Rush truck stop operating income.
F-6
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<PAGE>
NORTH AMERICAN GAMING AND ENTERTAINMENT
CORPORATION AND SUBSIDIARY
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED
FINANCIAL INFORMATION (CONTINUED)
================================================================================
g. To adjust salaries to reflect the amendment to the employment contract with
Williams, adjusting his salary to $100,000 per year.
h. To record rent expense under the new six month Gold Rush lease at $33,333
per month.
i. To adjust interest expense for the transferred OMLLC, RPLLC and Gold Rush
debt and the cancelled subordinated debt.
j. To record, on the equity method, the Company's 24.5% interest in the
operations of OMLLC
k. To record, on the equity method, the Company's 25% interest in the
operations of RPLLC.
l. To record, on the equity method, the Company's 50% interest in the
operations of Gold Rush
m. To provide taxes for adjustments (f) through (l).
3. Adjustments (f) through (l) record the effect of the transfer as if it
occurred on January 1, 1998. The resulting balance sheet effect of these
adjustments is not presented as the unaudited pro forma balance sheet is as
if the transfer occurred on December 31, 1998.
F-7
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