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 fiscal quarter ended April 30, 1997
Commission File Number: 0-24846
COLORADO CASINO RESORTS, INC.
(Exact name of Registrant as specified in its Charter)
Texas 84-1303693
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
304 South 8th Street
Suite 201
Colorado Springs, CO 80905
(719) 635-7047
(Address, including zip code, and telephone number, including
area code, of Registrant's principal executive offices)
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE EXCHANGE ACT:
Common Stock, $0.001 Par Value
(Title of Class)
- --------------------------------------------------------------------------------
Check 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. Yes [X] No [ ]
Indicate the number of shares outstanding of each of the issuer's classes
of common stock as of the latest practicable date: 36,447,464 shares of common
stock, $0.001 par value per share.
DOCUMENTS INCORPORATED BY REFERENCE:
None.
<PAGE>
COLORADO CASINO RESORTS, INC. & SUBSIDIARIES
INDEX
Part I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets - (unaudited) for April 30, 1997 ......... 3
Consolidated Statement of Operations - (unaudited)
for April 30, 1997 and April 30, 1996 .............................. 5
Consolidated Statements of Cash Flows - (unaudited)
for April 30, 1997 and April 30, 1996 ............................. 6
Notes to Consolidated Financial Statements ........................... 7
Item 2. Management's Discussion and Analysis of Financial
Condition as well as Future Plans ............................... 8
Part II. Other Information
Item 1. Legal Proceedings .............................................. 12
Item 2. Changes in Securities .......................................... 12
Item 3. Defaults upon Senior Securities ................................ 12
Item 4. Submission of Matters to a Vote of Security Holders ............ 12
Item 5. Other Information .............................................. 12
Item 6. Exhibits and Reports ........................................... 12
Signatures ............................................................. 13
<PAGE>
<TABLE>
<CAPTION>
Colorado Casino Resorts, Inc.
CONSOLIDATED BALANCE SHEETS (Unaudited)
April 30, October 31,
1997 1996
---- ----
<S> <C> <C>
CURRENT ASSETS
Cash & cash equivalents $2,217,960 $2,828,994
Advances to officers --- 379,617
Inventory 254,060 251,662
Other 560,108 553,992
------- -------
TOTAL CURRENT ASSETS 3,032,128 4,014,265
--------- ---------
REAL ESTATE HELD FOR FUTURE DEVELOPMENT 4,504,970 4,504,970
PROPERTY, PLANT & EQUIPMENT
Land and improvements 7,821,644 7,071,644
Building 23,522,924 23,085,250
Furniture, fixtures & equipment 13,206,691 12,832,717
Accumulated depreciation & amortization (2,810,601) (1,520,102)
---------- ----------
TOTAL PROPERTY, PLANT & EQUIPMENT 41,740,658 41,469,509
---------- ----------
OTHER ASSETS 250,543 313,483
------- -------
TOTAL ASSETS 49,528,299 50,302,227
========== ==========
</TABLE>
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The accompanying notes are an integral part of these
consolidated financial statements
<PAGE>
<TABLE>
<CAPTION>
Colorado Casino Resorts, Inc.
CONSOLIDATED BALANCE SHEETS (Unaudited)
(CONTINUED)
April 30, October 31,
1997 1996
---- ----
LIABILITIES & STOCKHOLDER'S EQUITY
<S> <C> <C>
CURRENT LIABILITIES
Accounts payable ......................... $ 1,313,082 $ 649,895
Accrued interest payable ................. 1,496,844 1,142,000
Accrued other expenses ................... 656,648 1,253,026
Progressive jackpot liabilities .......... 2,081,987 1,995,388
Advances from officers ................... 134,053 --
Current portion, long-term debt .......... 6,337,140 6,015,931
Current portion, long-term debt,
related party .......................... -- 7,676,209
Current portion, capital lease obligations 1,535,656 1,535,656
------------ ------------
TOTAL CURRENT LIABILITIES ............. 13,555,410 20,268,105
------------ ------------
CONVERTIBLE DEBENTURES ................... 650,000 2,500,000
------- ---------
CONVERTIBLE DEBENTURES, RELATED PARTY .... 5,358,364 5,199,739
------------ ------------
LONG-TERM DEBT ........................... 10,280,737 8,238,993
------------ ------------
LONG-TERM DEBT, RELATED PARTY ............ 8,088,334 412,125
------------ ------------
OBLIGATION UNDER CAPITAL LEASE ........... 5,059,652 5,785,285
------------ ------------
TOTAL LIABILITIES ..................... 42,992,497 42,404,247
------------ ------------
STOCKHOLDERS' EQUITY
Preferred convertible stock, Series One,
$10 par value, 5,000,000 shares
authorized, 250,000 issued and outstanding 2,500,000 2,500,000
Common stock, $0.001 par value,
100,000,000 shares authorized,
36,447,464 and 34,537,711 issued and
outstanding, respectively................. 36,447 34,537
Paid-in capital .......................... 12,411,180 10,467,270
Retained earnings (accumulated deficit) .. (8,411,825) (5,103,827)
------------ ------------
TOTAL STOCKHOLDERS' EQUITY ............ 6,535,802 7,897,980
------------ ------------
TOTAL LIABILITIES & STOCKHOLDERS' ..... 49,528,299 50,302,227
EQUITY .............................. ========== ==========
</TABLE>
[This section intentionally left blank]
The accompanying notes are an integral part of these
consolidated financial statements
<PAGE>
<TABLE>
<CAPTION>
Colorado Casino Resorts, Inc.
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
Six Months Six Months
Ended Ended
April 30, April 30,
1997 1996
---- ----
<S> <C> <C>
OPERATING REVENUE
Casino ............................. $ 7,872,728 $ 2,711,722
Hotel & gift shop .................. 962,835 --
Restaurant & bars .................. 749,221 315,891
Other .............................. -- --
------------ ------------
TOTAL OPERATING REVENUE ......... 9,584,784 3,027,613
------------ ------------
OPERATING EXPENSES
Casino ............................. 3,799,218 1,161,547
Hotel & gift shop .................. 659,276 --
Restaurant & bars .................. 1,168,308 399,589
Marketing/General and administrative 3,358,573 862,963
Depreciation and amortization ...... 1,290,535 237,222
------------ ------------
TOTAL OPERATING EXPENSE ......... 10,275,910 2,661,321
------------ ------------
INCOME (LOSS) FROM OPERATIONS ...... (691,126) 366,292
------------ ------------
NONOPERATING INCOME (EXPENSE)
Interest expense ................... 2,616,663 623,188
------------ ------------
LOSS BEFORE INCOME TAXES ........... (3,307,789) (256,896)
------------ ------------
INCOME TAXES ....................... -- --
------------ ------------
NET LOSS ........................... $ (3,307,789) $ (256,896)
============ ============
NET LOSS PER SHARE ................. $ (0.0932) $ (0.0083)
============ ============
WEIGHTED AVERAGE NUMBER
OF SHARES OUTSTANDING ........ 35,492,588 31,023,572
============ ============
</TABLE>
[This section intentionally left blank]
The accompanying notes are an integral part of these
consolidated financial statements
<PAGE>
<TABLE>
<CAPTION>
Colorado Casino Resorts, Inc.
CONSOLIDATED STATEMENT OF CASHFLOWS
(Unaudited)
Six Months Six Months
Ended Ended
April 30, April 30,
1997 1996
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss ................................ $ (3,307,961) $ (256,896)
Noncash items
Depreciation and amortization ..... 1,290,535 237,222
Amortization of debt issue costs .. 219,500 130,125
Interest income added to
restricted cash ................ -- (2,427)
Interest converted to debt ........ -- 186,313
(Increase) decrease in:
Inventory ......................... (2,398) 3,159
Other current assets .............. (6,116) (89,692)
Other assets ...................... (156,560) (35,746)
(Decrease) increase in:
Accounts payable .................. 663,187 (27,552)
Accrued other expenses ............ (154,935) 624,032
-------- -------
Net cash provided (used) by
operating activities........... (1,454,748) 768,538
---------- -------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of land, building and equipment (1,561,648) (1,088,438)
Construction in process ................. -- (10,126,710)
Cash and investments, restricted ........ -- (5,092,811)
--------- ----------
Net cash provided (used) by
investing activities........... (1,561,648) (16,307,959)
---------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Advances from officers .................. 513,670 --
Repayments, note payable ................ -- (500,000)
Borrowings, convertible debentures,
of issue costs net .................... -- 4,050,000
Borrowings, long-term debt & capital
lease obligations ..................... 2,617,345 12,325,000
Issuance of common stock ................ -- 1,125,000
Issuance of preferred stock ............. -- 3,150,000
Repayments, long-term debt & capital
lease obligations...................... (725,653) (134,900)
-------- --------
Net cash provided (used) by
financing activities........... 2,405,362 20,015,100
--------- ----------
INCREASE (DECREASE) IN CASH AND
EQUIVALENTS.............................. (611,034) 4,475,679
-------- ---------
CASH AND EQUIVALENTS, BEGINNING ......... 2,828,994 1,375,145
--------- ---------
CASH AND EQUIVALENTS, ENDING ............ 2,217,960 5,850,824
========= =========
</TABLE>
[This section intentionally left blank]
The accompanying notes are an integral part of these
consolidated financial statements
<PAGE>
COLORADO CASINO RESORTS, INC. & SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note A: Summary of Significant Accounting Policies
------------------------------------------
The Company's accounting policies are outlined in the audited financial
statements included with the Company's most recent 10KSB. There have been no
changes in accounting principles or practices in the current fiscal year.
Note B: Deposits, Purchase Options
--------------------------
The Company has exercised its option to purchase the parking lot behind
Creeker's for $750,000 in April 1997.
Note C: Long Term Debt & Capital Lease Obligations
------------------------------------------
During the six months ended April 30, 1997, the Company borrowed an
aggregate of $2,617,345 and made repayments of $725,653.
The maturity of related-party notes, with an aggregate total of $7,676,000,
was extended for a two-year period.
Note D: Advances to/from Officers
-------------------------
During the six months ended April 30, 1997, the officers advanced a total
of $513,670 to the Company, $379,617 of which was used to repay the outstanding
receivable as of October 31, 1996 with the balance of $134,053 remaining as a
payable to the officers at April 30, 1997.
Note E: Stockholders' Equity
--------------------
The Company issued 1,780,992 shares of common stock on the partial
conversion of $1,700,000 in convertible debentures.
The Company has outstanding stock options to directors to purchase 240,000
shares of common stock at $1.00 per share and outstanding stock options to
officers and key employees to purchase 817,500 shares of common stock at $2.00
per share.
Note F: Income Taxes
------------
The Company has an estimated deferred tax benefit of $1,200,000 for the six
months ended April 30, 1997 which has been offset in full by a valuation
allowance due to the availability of a net operating loss carryforwards at April
30, 1997.
<PAGE>
COLORADO CASINO RESORTS, INC. & SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND PLANS FOR FUTURE OPERATIONS
OVERVIEW AND PLAN OF OPERATION
Colorado Casino Resorts, Inc., ("CCRI" and/or the "Company") is in the
business of developing and operating casino and hotel resort properties. Through
its wholly owned subsidiaries, Creeker's Inc. and Double Eagle Resorts, Inc.,
CCRI is the owner of Creeker's Casino ("Creeker's") and the Double Eagle Hotel &
Casino (the "Double Eagle"), both located in Cripple Creek, Colorado.
During the quarter, CCRI reported a significant increase in total revenues
compared to the same period one year ago, primarily as a result of six months of
operations of the Double Eagle Hotel & Casino. The Company reported net
operating revenues of $9,584,784, an increase of $6,557,171, or 217% from the
$3,027,613 reported during the same period in 1996. Although the Company
recorded a loss from operations of $(691,126) compared to an income of $366,292
in 1996, EBITDA (earnings before interest taxes depreciation and amortization)
totaled $599,409, slightly lower than the $603,514 reported during the same
period last year.
The Company reported a net loss of $(3,307,789), or $(0.0932) per share,
for the six months ended April 30, 1997 compared to a net loss of $(256,896), or
$(0.0083) per share, reported last year. Although the Company's business is not
considered to be seasonal, the highest levels of business activity in Colorado
occur during the tourist season (i.e., from May through October). Its base level
(i.e., November through April May) is fairly is normally very predictable,
constant although adverse weather conditions during this period could on the
weekends have a significant impact on business. During the first six months of
operations during fiscal 1997, snow and poor weather conditions contributed to
an overall reduction in gaming revenues in Cripple Creek which also had an
adverse effect on the Company's revenues.
Creeker's Casino
Creeker's revenues were slightly down during the first six months of the
fiscal year, primarily due to the disruptions caused by the remodeling of the
casino during the first quarter. Additional reduction in revenues resulted from
disruptions due to construction activities near the entrance of the casino.
Creeker's is continuing to capture market share of the town's revenues through
aggressive marketing and promotion.
Double Eagle Hotel & Casino
The Double Eagle continues to garner the interest of visitors and gaming
patrons alike as it draws attention as a unique property in the Colorado gaming
market. The Double Eagle is the most prominent structure in Cripple Creek and
offers quality amenities found in signature properties in Las Vegas.
During the second quarter, the Company hired a Vice President of
Operations/General Manager, as well as a Director of Marketing. Management
believes the addition of these experienced casino executives from the Nevada
<PAGE>
gaming market will significantly improve the Double Eagle's operations and
revenue generating capability. Furthermore, the Company will continue to seek
and employ highly qualified personnel in key management positions as it
continues to strive to enhance its image and operations.
The Double Eagle is committed to a high growth strategy by continuously
improving its overall image and effectiveness through new and innovative
marketing programs. A large part of the strategy for the Double Eagle is to
build the customer base through the use of the Winners Circle slot club. The
Double Eagle is also continuing its marketing to the surrounding five-state area
on the eastern slope (Kansas, Nebraska, Oklahoma, Texas, and New Mexico).
Overnight bus trips from Denver continue to be a viable market for the Double
Eagle. Management expects to expand these types of promotions over the next
twelve months to increase mid-week attendance. Special day trip packages are
also being scheduled with groups while offering return- trip incentives.
During the second quarter, the Double Eagle became a corporate sponsor of
the Pikes Peak International Raceway in Colorado Springs. This sponsorship
provides the Company exclusive use of a sky box suite for all racing events,
which will be used in its marketing and promotion efforts. The Company will
continue its commitment of providing a high level of customer service to its
preferred patrons by extending them invitations to all special events.
The Company is continuing on an aggressive expansion strategy which will
make the Double Eagle the only destination resort in Cripple Creek. The first
planned project, slated to commence in mid-September, is the addition of a
150-seat meeting and conference center within the center section of the
building. This facility, which will include state-of-the-art audio and visual
equipment as well as bar and kitchen facilities, will be used to accommodate
conferences and conventions. In addition, the Company is currently planning the
addition of a amusement arcade to be introduced this summer.
The Company continues to make significant capital investments in technology
in order to optimize the movement and management of information throughout the
Company's properties. Extensive consideration is being placed on the design and
implementation of the communication infrastructure, data collection and analysis
processes and automation. Management believes these improvements will further
enhance the decision making process and revenue generating capability of the
Company.
COMPANY REVENUE
The Company reported net operating revenues for the six months ended April
30, 1997 of $9,584,784, an increase of $6,557,171 or 217% from the $3,027,613
reported during the same period in 1996. Casino revenues of $7,872,728, which
constituted over 82% of total revenues, were up by $5,161,006, or 190%, compared
to the same six-month period one year ago. Hotel and gift shop revenues totaled
$962,835 while restaurant and bar revenues amounted to $749,221, an increase of
$433,330, or 137% from the $315,891 recorded during the same period in 1996.
For the quarter ended April 30, 1997, total revenues amounted to
$5,196,963, an increase of $809,142, or 18%, compared to the previous quarter.
Casino revenues increased by $557,984 from $3,657,372 to $4,215,356,
representing a 15% increase. Hotel and gift shop revenues increased 36%, up
$147,023 from $407,906 while restaurant and bar revenues improved by over 32%,
up $105,565 to $426,678 during this quarter.
<PAGE>
Acquisitions
There were no acquisitions of any significance during this quarter.
Sale of Stock
During the quarter, $1,700,000 of non-related party debenture principal was
converted into 1,780,992 shares of common stock.
Results of Operations
For the six months ended April 30, 1997, the Company's results of
operations included the activities of the newly-opened Double Eagle Hotel &
Casino and Creeker's Casino. The Company reported net operating revenues for the
six months ended April 30, 1997 of $9,584,784, with the new operations of the
Double Eagle contributing more than 75% of the total revenues. Revenues
generated during the second quarter improved by more than 18% compared to the
previous quarter, up $809,152 from $4,387,821.
During the six months, the Company increased charges in labor, marketing
and related general and administrative expenses associated with the continued
enhancement of Double Eagle operations. Total operating expenses increased by
286%, up $7,614,589 to $10,275,910 compared to the same period last year due
primarily to increased direct and indirect labor and depreciation and
amortization expenses related to the additional capital equipment purchased for
the Double Eagle. Additional cost of marketing and promotion costs also
increased marketing/general & administrative expenses during the same period.
Although the Company reported a loss from operations of $(691,126), EBITDA
amounted to $599,409. Interest expense of $2,616,663 further reduced earnings to
a second quarter net loss of $(1,854,290) and a six month net loss of
$(3,307,789).
Restaurant and bar revenues improved by 137%, up $433,330 to $749,221 in
the six months. Food and beverage costs and expenses rose by 192%, up $768,719
to $1,168,308, with restaurant and bar operations at the Double Eagle accounting
for 69% of the increase compared to the same period last year.
General and administrative expenses increased 219%, up $2,495,610 to
$3,358,573 for the six months. Approximately $1,284,000, or 51% of the increase
was directly attributable to the new operations at the Double Eagle, with
marketing and promotional expenses of $758,526 constituting another 31% of the
total increase. The balance of the increase was associated with additional labor
and overhead costs at the Double Eagle and corporate offices.
Depreciation and amortization expense increased 441%, up $1,053,313 to
$1,290,535 for the past six months, with over 90% of the increase related to
capital equipment purchased for the Double Eagle. Interest expense increased by
$1,993,475, or 320% from the same six-month period last year. This increase was
attributable to the additional debt incurred in connection with the Double Eagle
project.
<PAGE>
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-QSB and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all adjustments
(consisting of normally recurring accruals) considered necessary for a fair
presentation have been included.
Operating results for the quarter ending April 30, 1997 are not necessarily
indicative of the results that may be expected for the year ending October 31,
1997. For further information, refer to the consolidated statements and
footnotes included in the Registrant's annual report on Form 10-KSB for the year
ending October 31, 1996.
<PAGE>
COLORADO CASINO RESORTS, INC. & SUBSIDIARIES
OTHER INFORMATION
PART II. Other Information
Item 1. Legal Proceedings
The Company is party to various lawsuits relating to routine matters
incidental to its business. Management does not believe that the outcome of
any such litigation, in aggregate, will have a material adverse effect on
the Company.
Item 2. Changes in Securities - None.
Item 3. Defaults Upon Senior Securities - None.
Item 4. Submission of Matters to Vote of Security Holders - None.
Item 5. Other Information - None.
Item 6. Exhibits and Reports - None.
<PAGE>
COLORADO CASINO RESORTS, INC. & SUBSIDIARIES
Signatures
Pursuant to the requirements of Section 13 or 15(d) of the Securities Act
of 1934, as amended, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized this 12th day of June,
1997.
COLORADO CASINO RESORTS, INC.
June 12, 1997 By: /s/ Rudy S. Saenz
------------------------------
Rudy S. Saenz
President and Chief Executive Officer,
Director (Principal Executive Officer)
June 12, 1997 /s/ Farid E. Tannous
------------------------------
Farid E. Tannous
Treasurer and Chief Financial Officer
(Principal Financial Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<CURRENCY> U.S.
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-START> NOV-01-1996
<PERIOD-END> APR-30-1997
<EXCHANGE-RATE> 1
<CASH> 2,217,960
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 254,060
<CURRENT-ASSETS> 3,032,128
<PP&E> 41,740,658
<DEPRECIATION> (2,810,601)
<TOTAL-ASSETS> 49,528,299
<CURRENT-LIABILITIES> 13,555,410
<BONDS> 0
0
2,500,000
<COMMON> 36,447
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 49,528,299
<SALES> 9,584,784
<TOTAL-REVENUES> 9,584,784
<CGS> 3,376,081
<TOTAL-COSTS> 10,275,910
<OTHER-EXPENSES> 0
<LOSS-PROVISION> (691,126)
<INTEREST-EXPENSE> 2,616,663
<INCOME-PRETAX> (3,307,789)
<INCOME-TAX> 0
<INCOME-CONTINUING> (3,307,789)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,307,789)
<EPS-PRIMARY> (0.09)
<EPS-DILUTED> (0.09)
</TABLE>
