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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934]
For the quarterly period ended: September 30, 1995
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ___________ to ___________
Commission File Number: 0-11532
INLAND CASINO CORPORATION
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(Exact name of small business issuer as specified in its charter)
Utah 33-0618806
- ------------------------------------------ ------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4225 Executive Square, Suite 1650, La Jolla, California 92037
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(Address of principal executive offices)
Issuer's telephone number, including area code: (619) 546-9383
Not Applicable
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(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer (1) filed all reports required to be filed
by Section 13 or 15(d) of the Exchange Act during the past 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.
Yes X No
---- ----
State the number of shares outstanding of each of the issuer's classes
of common equity at October 30, 1995: 12,541,657 shares of common stock,
$.001 par value per share.
Transitional Small Business Disclosure Format (check one) Yes No X
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INLAND CASINO CORPORATION
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
Number
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<S> <C>
PART I. FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS (Unaudited):
Balance Sheets - September 30, 1995 and June 30, 1995 ..................... 3
Statements of Operations - Three months ended
September 30, 1995 and 1994 ............................................ 4
Statements of Cash Flows - Three months ended
September 30, 1995 and 1994 ............................................ 5
Notes to Interim Financial Statements ..................................... 6
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION ....................... 9
PART II. OTHER INFORMATION
ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K ................................................ 13
</TABLE>
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
INLAND CASINO CORPORATION
BALANCE SHEETS
SEPTEMBER 30, 1995 AND JUNE 30, 1995
<TABLE>
<CAPTION>
September 30, June 30,
1995 1995
------------ ----------
(Unaudited)
ASSETS
<S> <C> <C>
CURRENT ASSETS:
Cash $ 3,497,410 $1,423,826
Accounts receivable 48,598 37,404
Deposits and prepaid expenses 543,882 269,781
----------- ----------
Total current assets 4,089,890 1,731,011
Property and equipment, net 135,843 100,819
Management agreement acquisition costs, net 7,096,007 7,231,011
Deferred taxes and other 874,198 899,261
----------- ----------
Total assets $12,195,938 $9,962,102
=========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Advances of future management fees $ 2,629,333 $1,840,184
Notes payable 19,453 29,187
Accounts payable and accrued expenses 1,307,616 321,077
Income taxes payable 266,078
----------- ----------
Total current liabilities 4,222,480 2,190,448
----------- ----------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Common stock, $.001 par, 100,000,000 shares authorized,
12,541,657 and 12,541,793 shares outstanding 3,752,554 3,753,875
Retained earnings 4,220,904 4,017,779
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Total shareholders' equity 7,973,458 7,771,654
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Total liabilities and shareholders' equity $12,195,938 $9,962,102
=========== ==========
</TABLE>
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INLAND CASINO CORPORATION
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
(Unaudited)
<TABLE>
<CAPTION>
1995 1994
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<S> <C> <C>
Management fee - Barona Casino $ 2,652,294 $ 3,534,375
Costs and expenses:
General and administrative expenses 1,706,150 625,311
Amortization of management agreement acquisition costs 538,327 744,079
----------- -----------
2,244,477 1,369,390
----------- -----------
Operating profit 407,817 2,164,985
Other income and (expense):
Interest income 23,471
Interest expense (1,692) (1,498)
----------- -----------
(1,692) 21,973
----------- -----------
Income before income taxes 406,125 2,186,958
Income tax provision 203,000 824,471
----------- -----------
Net income $ 203,125 $ 1,362,487
=========== ===========
Earnings per share $ 0.02 $ 0.11
=========== ===========
Shares used in the computation of income per common
and common equivalent share 12,601,307 11,936,588
=========== ==========
</TABLE>
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INLAND CASINO CORPORATION
STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
(Unaudited)
<TABLE>
<CAPTION>
1995 1994
---------- -----------
<S> <C> <C>
Net cash generated by (used in) operating activities:
Net income $ 203,125 $ 1,362,487
Adjustments to reconcile net income to net cash
provided by operating activities:
Amortization and depreciation 545,458 744,079
Deferred taxes 47,000 (220,000)
Changes in assets and liabilities:
Accounts receivable (11,194) (10,000)
Deposits and prepaid expenses (296,039) (29,483)
Accounts payable and accrued expenses 987,390 106,102
Income taxes payable 265,228 374,471
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Net cash generated by operating activities 1,740,968 2,327,656
---------- -----------
Cash used in investing activities:
Purchases of furniture and equipment (42,155)
Management agreement acquisition costs (403,323) (1,046,567)
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Net cash used in investing activities (445,478) (1,046,567)
---------- -----------
Cash flows used in financing activities:
Increase (decrease) in advances of
future management fees 789,149 (2,127,834)
Payment of loans from shareholders (445,665)
Payment of notes payable (9,734) (24,344)
Purchase and cancellation of common stock (1,321)
---------- -----------
Net cash provided by (used in) financing activities 778,094 (2,597,843)
---------- -----------
Increase (decrease) in cash 2,073,584 (1,316,754)
Cash, beginning of period 1,423,826 5,428,061
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Cash, end of period $3,497,410 $ 4,111,307
========== ===========
Supplemental Disclosures of Cash Flow Information:
Interest expense paid $ 1,692 $ 1,498
========== ===========
Interest income received $ - $ 23,471
========== ===========
Income taxes paid $ - $ 671,150
========== ===========
Income tax refund received $ 192,316 $ -
========== ===========
</TABLE>
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INLAND CASINO CORPORATION
NOTES TO INTERIM FINANCIAL STATEMENTS
SEPTEMBER 30 1995
1. PRESENTATION OF INTERIM FINANCIAL INFORMATION -
Basis of Presentation - The accompanying interim unaudited financial statements
have been prepared by Inland Casino Corporation, a Utah corporation (the
"Company" or "Inland Casino"), in conformity with generally accepted accounting
principles for interim financial information and with the rules and regulations
of the Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to such regulations. The interim unaudited financial statements
reflect all normal, recurring adjustments and disclosures which are, in the
opinion of management, necessary for a fair presentation. The results of
operations for the interim periods are not necessarily indicative of the
results of the full fiscal year. The interim financial statements should be
read in conjunction with the Company's Annual Report on Form 10-KSB, as
amended, for the fiscal year ended June 30, 1995.
Earnings per share - Earnings per common and common equivalent share are
computed using the weighted average number of shares outstanding for the three
month periods ended September 30, 1995 and 1994. Equivalent shares are those
issuable upon the assumed exercise of stock options reflected under the
treasury stock method using the average market price of the Company's shares
during the periods.
2. REORGANIZATION AND MERGER - Effective July 1, 1994, Inland Casino
Partners, a California general partnership ("ICP"), and its partners, Inland
Casino Corporation, a Nevada Corporation ("ICC I"), and Eagle Edge Partners
("EEP"), combined to form a new Delaware Corporation, Inland Casino Corporation
("ICC II"). Such transaction is hereinafter referred to as the "Roll-Up
Transaction".
On May 22, 1995 the merger of ICC II into and with Twin Creek Exploration Co.,
Inc. ("Twin Creek"), a Utah corporation, became effective (the"Merger"). To
effect the merger, the common stock of Twin Creek was reverse split 1 for 100
and the shareholders of ICC II received 11,930,406 shares, representing
approximately 95% of the shares outstanding after the merger. The surviving
company was renamed Inland Casino Corporation ("Inland Casino"), and the year
end was changed from September 30 to June 30. The transaction was accounted
for as a recapitalization using the carryover basis of the assets and
liabilities of ICC II. Accordingly, the financial statements reflect the
financial condition, results of operations and cash flows of ICC II, and its
predecessors, for periods prior to the merger date, and combined with Twin
Creek from that date forward.
3. BUSINESS AND BASIS OF ACCOUNTING - The Company manages, operates and
maintains certain gaming and food and beverage operations in California of the
Barona Group of Capitan Grande Band of Mission Indians (the "Barona Tribe") in
accordance with the terms and conditions of a certain Gaming Management
Agreement (the "Agreement") with the Barona Tribe, under a grant of authority
from the Barona Tribe's General Council.
The Company reports revenues and expenses from these services using the accrual
method of accounting. All of the Company's fee revenue is currently generated
from a single Indian gaming operation located in California.
6
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INLAND CASINO CORPORATION
NOTES TO INTERIM FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1995
4. MANAGEMENT AGREEMENT - In February 1991, the Company entered into the
Agreement with the Barona Tribe to manage, operate and maintain cardroom
operations. In February 1992, the Agreement was expanded to include food and
beverage operations and other gaming activities, including bingo and electronic
gaming. The Agreement, which expires in February 1999, establishes the
Company's rights, obligations and duties. Under the Agreement, the Company has
a contingent liability for all obligations of the Barona Casino. The Agreement
has not been approved by the necessary regulatory agencies. The Indian Gaming
Regulatory Act ("IGRA") requires that the Agreement be approved by the
National Indian Gaming Commission (the "NIGC") and the assignment of the
Agreement (e.g., from ICP to ICC II in connection with the Roll-Up Transaction
and from ICC II to the Company in connection with the Merger) also must be
approved by the NIGC. If the Agreement were to be nullified or terminated
early, the Company could recognize a loss for, more than likely, the total
amount of the net management acquisition costs. In addition, the Company may
be required to fulfill any outstanding financial commitments to the Barona
Casino. If this were to occur, the Company would not be profitable, and the
financial commitments may exceed its resources.
In February 1993, the NIGC was formed and was assigned authority over all
Indian gaming activities and contracts. IGRA prescribes, among other things,
that management contracts shall generally have a term of five years and pay
management fees of 30%, except that the term may be extended to seven years and
the management fee increased to 40% under certain circumstances.
The management fees are based upon a percentage of profits or the excess of
revenue over expenses generated from the gaming operations as defined in the
Agreement. The Agreement calls for a minimum monthly advance distribution to
the Tribe of $30,000. Advances are recoverable from future distributions, if
any, exceeding the minimum advance. At the expiration of the Agreement, any
outstanding advance for payment of guaranteed minimums will be forgiven by the
Company.
While management and the Tribe believe that the Agreement meets all
requirements of IGRA, the NIGC, which has been established by the IGRA, may
require a change in the term, the management fee percentage or calculation or
nullify the Agreement which could have a material adverse effect on the
Company.
5. MANAGEMENT AGREEMENT ACQUISITION COSTS - The Agreement requires, and any
similar agreements it may enter into in the future with the Barona Tribe would
most likely require, the Company to fund the construction of facility
improvements, furniture and equipment, the establishment of initial working
capital and the losses, if any, of the Barona Casino operations.
Because the Barona Tribe will not allow its land to be encumbered, and has not
assumed any financial liability for costs associated with developing the Barona
Casino, as a condition of its Agreement, the Company assumed all liability for
these obligations. The Company has capitalized those costs incurred as
management agreement acquisition costs, since (i) the Company has the ultimate
responsibility for the costs incurred, and (ii) management believes that these
costs are fully recoverable over the life of the Agreement, through payment of
management fees. However, given the nature of the asset, if the recoverability
is determined to be not probable, the Company will expense the unamortized
portion.
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INLAND CASINO CORPORATION
NOTES TO INTERIM FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1995
On an ongoing basis, management reviews the valuation and recoverability of the
unamortized management agreement acquisition costs. As part of this review,
the Company estimates the discounted present value of the future projected net
income generated by the Barona Casino and the resulting management fee review
to determine whether impairment has occurred.
Amortization of the management agreement acquisition costs is calculated as the
greater of the amortization using (i) the straight-line method over the
remaining term of the Agreement or (ii) an accelerated method, whichever is
greater. The accelerated amortization is equal to the excess of management
fees earned over 30% of Casino operating income. Under the terms of the
Agreement, title to the Barona Casino facilities, furniture and equipment rests
solely with the Barona Tribe, unless the Barona Tribe agrees otherwise.
6. COMMITMENTS AND CONTINGENCIES - LITIGATION - Indian Gaming is the subject
of numerous lawsuits in various court jurisdictions at both federal and state
levels. These court cases are attempting to define the permissible gaming
activities on Indian reservations, the states' right or limitations on control
of gaming, the rights of the tribes to compel the states to negotiate compacts
with the tribes, and numerous other issues. The Barona Tribe is not a party to
these cases nor is the Barona Reservation within the jurisdiction of certain
courts in which many of these cases will be decided; therefore, the impact, if
any, on the operations of the Barona Casino cannot be determined at this time.
The impact of decisions in various cases, however, could have a significant
impact on the operations of Barona Casino and the Company when decided.
Specifically, current cases are addressing the legality of electronic gaming
equipment and certain card games in California and whether the State of
California should be required to permit the operation of video gaming
equipment. Various courts have ruled in different cases, or in different
hearings on the same case, both in the states' favor and in the tribes' favor
on the same or similar issues. There are appeals remaining in a number of
cases and other cases may arise. Until the courts make definitive rulings, the
legality of the gaming activities will not be known.
On June 30, 1994, the U.S. Attorney of the Southern District of California
announced a verbal understanding with three San Diego Indian tribes, including
the Barona Tribe, that would allow the Barona Casino to continue to operate
without expansion of gaming activities until one or more of the following
occurs:
o A compact with the State of California is negotiated or the Secretary of
the Interior expressly authorized gaming, such as certain card or
electronic/video gaming, which have not been previously addressed,
o Entry of final judgments and exhaustion of all appellate remedies in
certain cited suits pending before federal courts,
o Enactment of federal legislation that authorizes the operation of the
electronic/video games at issue without a tribal-state compact,
o Amendment of the NIGC's regulations to include the electronic/video games
within the definition gaming or permissible technologic aids thereto
which are not subject to State compact, or
o Material breach of the understanding by the Barona Tribe.
8
<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
OVERVIEW
Since its formation, the Company has devoted substantially all of its efforts
to providing operational and consulting services for the Barona Tribe at the
Barona Casino, including providing assistance to the Barona Tribe in the
development and expansion of the "Big Top" facility at the Barona Casino. To
date, payments under the Agreement have been Inland Casino's only source of
revenue. Pursuant to the Agreement, as amended, Inland Casino earns fees based
upon a percentage of the "net profits" generated by the Barona Casino. As used
in this Report, solely with respect to the Agreement, the term "net profits" is
not intended to mean net profits as defined by generally accepted accounting
principles or by the Indian Gaming Regulatory Act. Generally, the Agreement
defines "net profit" as the total amount of moneys remaining from monthly gross
receipts after payment of the operating expenses for such month which amount
shall be calculated on a cash basis.
Inland Casino provides executive personnel, at its expense, to operate the
activities, and Inland Casino enters into agreements such as leases or
construction for the Barona Casino. As part of its contractual obligations,
Inland Casino has provided significant financing for the construction and
expansion of the Barona Casino. The financing costs are recognized as an asset
in the financial statements of the Company, designated as Management agreement
acquisition costs, and are expensed over the term of the Agreement. The
recovery of this financing is achieved through the fees paid pursuant to the
Agreement to Inland Casino. Such construction financing obligations are
incurred upon the recommendation of Inland Casino, and subject to acceptance by
the Barona Tribe. In the event the Company finances further expansion at the
Barona Casino, Inland Casino anticipates financing such costs on like terms.
Inland Casino plans to explore the possibility of contracting with other
casinos. The particulars of each such agreement may differ significantly as to
the type and level of services provided, the need for expansion of the
facilities and the responsibilities for financing any such construction. In
addition, the compensation, term and other rights or obligations under these
contracts also may differ significantly from the Agreement with the Barona
Tribe.
Inland Casino's corporate activities, besides the duties under the Agreement
and collateral contracts, include arranging financing to support casino
construction projects, the development of other contract opportunities,
proactive tracking of Indian Gaming legislative and litigation matters, and the
operation and administration of the activities of Inland Casino itself.
RESULTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 1995 COMPARED WITH THE THREE MONTHS ENDED
SEPTEMBER 30, 1994.
REVENUE. Management fee income decreased 25.0% from $3,534,375 for the three
months ended September 30, 1994 to $2,652,294 for the three months ended
September 30, 1995, because of reduced profit margins at the Barona Casino,
resulting primarily from increases in payroll, marketing and administrative
costs. The increase in payroll and administrative costs at the Barona Casino
was the result of management's decision to increase staff levels to provide
additional administrative support and improved service to customers, and
increases in marketing costs resulted from the implementation of new promotions
and advertising programs.
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OPERATING EXPENSES. General and administrative expenses increased 172.8% from
$625,311 for the three months ended September 30, 1994 to $1,706,150 for the
three months ended September 30, 1995 primarily as the result of increased
payroll, marketing and administrative costs of Inland Casino. Salaries and
benefits increased 112.1%, as the number of employees of Inland Casino
increased from 7 to 20, including key employees with backgrounds in law,
finance, accounting, and investor relations, hired to perform the duties
required of a public company. Key employees with backgrounds in operations,
security and marketing also were added to (i) assist with enhancement of
operations, as well as the development and expansion of the Barona Casino, and
(ii) provide a staff to market the Company's gaming management and consulting
services to others.
Other administrative costs increased as a result of increases in sponsorships,
charitable contributions and marketing costs. Professional fees, including
legal and accounting expense, increased as the Company became public in May of
1995, and therefore became subject to new compliance and reporting
requirements. Facilities costs also increased as a result of the Company
entering into a lease for its current offices in January 1995. Amortization of
management agreement acquisition costs decreased 27.7% from $744,079 for the
three months ended September 30, 1994 to $538,327 for the three months ended
September 30, 1995. Amortization of the management agreement acquisition costs
is calculated as the greater of the amortization using the straight-line method
over the remaining term of the Agreement or an accelerated method, whichever is
greater. The accelerated amortization is equal to the excess of management
fees earned over 30% of Casino operating income. Since the Company did not
earn a management fee of over 30% of Casino operating income during the three
months ended September 30, 1995, the straight-line method was used, compared
to use of the accelerated method for the three months ended September 30, 1994.
For the three months ended September 30, 1994 interest income was $23,471,
compared to none for the three months ended September 30, 1995. Commencing in
Fiscal 1996, it was determined that as long as the Company had outstanding
advances of future management fees due the Barona Casino, interest earned on
excess cash balances should be paid to the Barona Casino.
The provision for income taxes decreased $621,471, or 75.4%, from $824,471 for
the three months ended September 30, 1994, to $203,000 for the three months
ended September 30, 1995, as a result of the decrease in income before income
taxes of $1,780,833, or 81.4%, with respect to the comparable period in the
prior fiscal year.
LIQUIDITY AND CAPITAL RESOURCES.
As noted above, Inland Casino's principal source of revenue is fees or
advances of fees from the Agreement to operate the Barona Casino. Over the
course of the period from the start of Fiscal 1993 through Fiscal 1995, in
addition to general and administrative and other miscellaneous expenses, the
Company's most significant expense item has been the funding of construction
costs related to an expansion of the facilities at the Barona Casino. Net
cash provided by operations from management fees during the same period has
been insufficient by itself to fund construction. In addition to fees earned
under the Agreement, the Company also has received advances against future
fees from the Barona Tribe and received capital contributions from its
shareholders.
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During the first quarter of Fiscal 1996, Inland Casino's cash position
increased $2,073,584 from the June 30, 1995 balance of $1,423,826, to
$3,497,410 at September 30, 1995. The increase was principally due to net cash
generated from operating activities of $1,740,968, and an increase in advances
of future management fees of $789,149, partially reduced by cash invested in
management agreement acquisition costs of $403,323, purchases of furniture and
equipment of $42,155, payment of notes payable of $9,734 and the redemption of
common stock of $1,321.
Accounts payable and accrued expenses increased 307.3% or $986,539 from June
30, 1995 to September 30, 1995, primarily due to the increase in deferred
management fees.
The management agreement acquisition costs, totaling $11,880,000 at September
30, 1995, had been financed principally by advances from EEP, which totaled
$4,578,201, from working capital, from advances of future management fees from
the Barona Casino, and from capital contributions by shareholders. At September
30, 1995, outstanding advances of future fees from the Barona Casino were
$2,629,333. Advances from the Barona Tribe are repaid by Inland Casino through
the reduction in payment of future fees earned. Advances do not bear interest
and are due on demand. At some point in the future, if the Agreement is not
approved by the necessary regulatory bodies, Inland Casino will be obligated to
repay such advances to the Barona Casino even if it is not entitled to any
future fees under the Agreement. Likewise, if the Agreement is approved but
with a fee that is lower than presently provided for in the Agreement, Inland
Casino's ability to repay such advances or to fund future expansion could be
adversely affected. Although management believes that it will have the
resources sufficient to make repayment of the advances, there can be no
assurance that Inland Casino will have the resources to repay any outstanding
advances, in the future, if the Agreement is not approved.
It is management's intention to fund future improvements in the Barona Casino
first from working capital and through advances of future fees, whenever
possible, before seeking outside debt or equity financing. However, outside
sources of financing may be required or sought at any time. On October 28,
1995, the Company negotiated an equipment and leasehold improvement facility
with a bank which allows for total credit of $2 million. The credit agreement
expires on October 28, 1998, and will be secured by bank deposits of the
Company of $1,000,000. This agreement contains various covenants including
restrictive covenants which require, among other things, the maintenance of
certain financial ratios, a limitation on the incurrence of future indebtedness
and a prohibition on declaring or making any cash dividends. As of November
13, 1995, the Company had no outstanding borrowings under this credit facility.
The above-mentioned covenants are not expected to affect the ability of the
Company to draw upon this facility or to meet its obligations. Under the terms
of this agreement, amounts drawn on the line will convert monthly into notes
payable over 36 months with interest at prime plus 2%. In connection with this
credit financing, the bank will receive immediately exercisable warrants to
purchase 40,000 shares of the Company's common stock, subject to certain
anti-dilution provisions at an initial exercise price of $5.00. The warrant
expires on October 10, 2000.
The Company is seeking to raise additional capital by the sale of common stock,
through a private placement offering to accredited investors, as that term is
defined by the Securities and Exchange Commission. Such additional capital
raised from the offering, if any, will be used for working capital purposes;
the Company's future cash flow requirements or operations are not dependent on
this offering. Management believes additional financing will be obtainable,
but management has no present assurance that such financing can be obtained,
when required, with terms acceptable to management and the Barona Tribe.
11
<PAGE> 12
Inland Casino has announced plans to spend approximately $17.5 million to
expand and improve the existing facilities at the Barona Casino, which
expansion is subject to the approval of the Barona Tribe. The expansion will
not increase the number of gaming devices, but is expected to expand off-track
betting and other non-gaming activities, as permitted under the verbal
agreement with the U.S. Attorney for the Southern District of California and
the compact with the State of California concerning off-track betting.
The Barona Casino and all of the related facilities are capital improvements
upon land which belongs to the Barona Tribe. As such, Inland Casino has no
ownership whatsoever in any of the improvements to such land. All of these
improvements belong to the Barona Tribe.
SEASONALITY.
The Barona Casino is located approximately 30 miles east of downtown San Diego,
California where the population is relatively stable throughout the year,
although it peaks to some extent due to tourism during the summer months and to
a lesser extent during the winter months. On the basis of its experience to
date, management of Inland Casino anticipates that the Barona Casino's business
may peak in summer and, to some extent, in winter, and may decline somewhat in
early spring and late fall. However, at this time, management cannot
accurately predict the continued effect of seasonality on its business.
INFLATION.
To date, inflation has not had a material impact on Inland Casino's financial
condition or its results of operations.
ADDITIONAL FACTORS THAT MAY AFFECT FUTURE RESULTS.
Gaming on Indian land is extensively regulated by federal, state, and tribal
governments, and the present regulatory environment is extremely uncertain
because of certain pending litigation and legislation. Adverse findings for
any of the Indian tribes in any of the pending actions could have a material
adverse effect on the operations of Inland Casino, as would criminal and civil
enforcement actions taken by federal agencies which could be commenced before
the outcome of such litigation is known.
Further, if the Agreement is terminated or fails to receive approval from the
National Indian Gaming Commission (the "NIGC"), or if the assignments of the
Agreement from Inland Casino Partners ("ICP") to Inland Casino Corporation, a
Delaware corporation ("ICC II"), and from ICC II to Inland Casino, fail to
receive approval from the NIGC, any such event would have a material adverse
effect on the business and financial condition of the Company.
In any event, any material reduction in the management fee payable to Inland
Casino, whether as a result of a modification to the Agreement or weakness in
the operations of the Barona Casino could have a material adverse effect on the
business and financial condition of Inland Casino if Inland Casino could not
either reduce expenses or increase revenues from other sources.
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PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
--------
EXHIBIT INDEX
Exhibit No.
----------
Material Contracts Relating to Management Compensation
Plans or Arrangements
10. Inland Casino Corporation 1995 Stock Option Plan,
previously filed as Appendix A to the Company's
Proxy Statement dated October 30, 1995 which was
filed via EDGAR with the U.S. Securities and
Exchange Commission (the "SEC") on October 30, 1995,
which is incorporated herein by reference.
Other Exhibits
27. Financial Data Schedule
(b) Reports on Form 8-K
During the fourth quarter of the Company's fiscal year ended June 30, 1995
("Fiscal 1995"), the Company filed with the SEC a Current Report on Form 8-K
dated May 22, 1995, which was amended by an Amended and Restated Current Report
on Form 8-K dated May 31, 1995, which also was filed in the fourth quarter of
Fiscal 1995 (collectively, the "Fiscal 1995 4th Quarter Reports"), disclosing
the Merger, a change in the Company's certified public accountants, the
resignation of certain directors and a change in the Company's fiscal year.
During the Company's first quarter ended September 30, 1995, the quarter for
which this Report is filed, the Company filed a Current Report on Form 8-K/A,
Amendment No. 2, dated August 3, 1995, further amending the Fiscal 1995 4th
Quarter Reports as follows: (i) amending and restating Item 2 of such Report
(captioned Acquisition or Disposition of Assets) to include a description of
the Merger and (ii) including the following financial statements: (a) the
audited balance sheet of Inland Casino - Delaware as of December 31, 1992,
December 31, 1993 and June 30, 1994, and the related combined statements of
operations, shareholders' equity (deficit) and statements of cash flows for the
years ended December 31, 1992 and 1993 and the six months in the fiscal period
ended June 30, 1994; and (b) an unaudited pro forma balance sheet as of May 31,
1995, and related statement of operations, shareholders' equity and statements
of cash flows for the eleven months then ended relating to the Merger.
13
<PAGE> 14
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
INLAND CASINO CORPORATION,
(Registrant)
Date: November 14, 1995
/s/ Duane M. Eberlein
---------------------------
Duane M. Eberlein
Vice President,
Chief Financial Officer
(Principal Financial and
and Accounting Officer)
14
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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-END> SEP-30-1995
<CASH> 3,497,410
<SECURITIES> 0
<RECEIVABLES> 48,598
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 4,089,890
<PP&E> 143,865
<DEPRECIATION> 8,022
<TOTAL-ASSETS> 12,195,938
<CURRENT-LIABILITIES> 4,222,480
<BONDS> 0
<COMMON> 3,752,554
0
0
<OTHER-SE> 4,220,904
<TOTAL-LIABILITY-AND-EQUITY> 12,195,938
<SALES> 2,652,294
<TOTAL-REVENUES> 2,652,294
<CGS> 0
<TOTAL-COSTS> 2,244,477
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,692
<INCOME-PRETAX> 406,125
<INCOME-TAX> 203,000
<INCOME-CONTINUING> 203,125
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 203,125
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