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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 January 31, 1999
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)
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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: 38,740,632 shares of common
stock, $0.001 par value per share.
Transitional Small Business Disclosure Format: Yes [X] No [ ]
DOCUMENTS INCORPORATED BY REFERENCE:
None.
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<PAGE>
Colorado Casino Resorts, Inc.
CONSOLIDATED BALANCE SHEETS (Unaudited)
ASSETS
January 31, October 31,
1999 1998
---- ----
CURRENT ASSETS
Cash & cash equivalents $ 1,681,707 $ 1,573,519
Inventory 180,377 96,429
Advances to officers 125,443 125,443
Other 203,855 349,781
----------- -----------
TOTAL CURRENT ASSETS 2,191,382 2,145,172
----------- -----------
REAL ESTATE HELD FOR FUTURE DEVELOPMENT 3,250,000 3,250,000
----------- -----------
LAND, BUILDING AND EQUIPMENT - NET 40,595,493 40,459,018
----------- -----------
OTHER ASSETS
Debt issue cost 329,834 359,819
Debt extension cost 138,337 158,100
Deposits 69,412 63,108
----------- -----------
TOTAL OTHER ASSETS 537,583 581,027
----------- -----------
TOTAL ASSETS $46,574,458 $46,435,217
=========== ===========
[THIS SECTION INTENTIONALLY LEFT BLANK]
The accompanying notes are an integral part of these consolidated financial
statements
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<PAGE>
Colorado Casino Resorts, Inc.
CONSOLIDATED BALANCE SHEETS (Unaudited)
LIABILITIES & STOCKHOLDERS' EQUITY [DEFICIENCY]
January 31, October 31,
1999 1998
---- ----
CURRENT LIABILITIES
Revolving Credit Facility $14,518,064 $13,655,296
Accounts payable 1,024,504 349,320
Accrued expenses 1,161,596 1,303,328
Slot club liability 358,573 348,949
Incremental progressive slot liability 446,552 374,264
Current maturities - long term debt 10,819,963 10,819,963
Current maturities - long term debt,
related party 7,759,718 7,796,411
Convertible debenture, related party 4,500,000 4,500,000
Current maturities - capital lease obligations 1,040,803 629,787
Interest payable 1,540,923 1,252,825
Interest payable - related party 2,311,951 1,953,240
Interest payable - convertible debentures,
related party 822,339 909,261
Due to officers 30,000 30,000
Other current liabilities 100,711 99,711
----------- -----------
TOTAL CURRENT LIABILITIES 46,435,697 44,022,355
----------- -----------
LONG-TERM DEBT-LESS CURRENT PORTION 3,908,702 3,908,702
CAPITAL LEASE OBLIGATIONS-LESS CURRENT PORTION 250,900 667,437
----------- -----------
TOTAL LIABILITIES 50,595,299 48,598,494
----------- -----------
STOCKHOLDERS' EQUITY [DEFICIENCY]
Preferred convertible stock, Series One,
$10 par value 5,000,000 shares
authorized, None and None
issued and outstanding, respectively --- ---
Common stock, $0.001 par value, 100,000,000
shares authorized, 38,740,632 and 38,740,632
issued and outstanding, respectively 38,741 38,741
Paid-in capital 19,025,188 19,025,188
Deferred compensation (81,500) (81,500)
Accumulated deficit (23,003,270) (21,145,706)
----------- -----------
TOTAL STOCKHOLDERS' DEFICIENCY (4,020,841) (2,163,277)
----------- -----------
TOTAL LIABILITIES & STOCKHOLDERS' DEFICIENCY $46,574,458 $46,435,217
=========== ===========
The accompanying notes are an integral part of these consolidated financial
statements
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<PAGE>
Colorado Casino Resorts, Inc.
CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)
Quarter Ended Quarter Ended
January 31, January 31,
1999 1998
---- ----
REVENUES
Casino $ 4,748,764 $ 3,799,369
Rooms 501,013 375,271
Food and beverage 490,352 431,973
Other 124,489 132,443
----------- -----------
TOTAL REVENUES 5,864,618 4,739,056
----------- -----------
EXPENSES
Casino 2,065,270 1,811,185
Rooms 284,623 240,076
Food and beverage 704,235 628,189
Marketing 1,597,822 725,516
General and administrative 1,297,862 1,101,296
Depreciation and amortization 721,591 517,746
----------- -----------
TOTAL EXPENSES 6,671,403 5,024,008
----------- -----------
LOSS FROM OPERATIONS (806,785) (284,952)
Interest expense 1,057,741 1,172,686
----------- -----------
LOSS BEFORE INCOME TAX (1,864,526) (1,457,638)
INCOME TAXES --- ---
----------- -----------
NET LOSS $(1,864,526) $(1,457,638)
=========== ===========
NET LOSS PER COMMON SHARE $ (0.0482) $ (0.0377)
=========== ===========
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 38,667,715 38,666,000
=========== ===========
[THIS SECTION INTENTIONALLY LEFT BLANK]
The accompanying notes are an integral part of these consolidated financial
statements
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<PAGE>
Colorado Casino Resorts, Inc.
CONSOLIDATED STATEMENT OF CASHFLOWS (Unaudited)
Quarter Ended Quarter Ended
January 31, January 31,
1999 1998
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss $(1,864,526) $(1,457,638)
Noncash items
Depreciation and amortization 721,591 517,746
Amortization of debt issue costs 49,748 103,505
(Increase) decrease in:
Inventory (83,948) 23,919
Other current assets 145,926 178,052
Other assets (686,434) (571,495)
(Decrease) increase in:
Accounts payable 675,184 637,211
Incremental progressive slot liability 72,288 97,556
Slot club liability 9,624 12,114
Interest payable 559,887 427,551
Accrued other expenses (141,732) (446,343)
Other current liabilities 1,000 2,718
----------- -----------
Net cash used for operating activities (541,392) (475,104)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of land, building and equipment (136,475) (74,482)
Advances to officers --- 126,332
----------- -----------
Net cash provided (used) by investing
activities (136,475) 51,850
CASH FLOWS FROM FINANCING ACTIVITIES
Advances from officers --- 267,500
Borrowings, long-term debt 862,768 ---
Repayments, long-term debt (40,020) (140,983)
Repayments, long-term debt, related party (36,693) (321,741)
----------- -----------
Net cash provided (used) by financing
activities 786,055 (195,224)
INCREASE (DECREASE) IN CASH AND EQUIVALENTS 108,188 (618,478)
CASH AND EQUIVALENTS, BEGINNING 1,573,519 1,962,486
----------- -----------
CASH AND EQUIVALENTS, ENDING $ 1,681,707 $ 1,344,008
=========== ===========
[THIS SECTION INTENTIONALLY LEFT BLANK]
The accompanying notes are an integral part of these consolidated financial
statements
-5-
<PAGE>
COLORADO CASINO RESORTS, INC. & SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note A: Basis of Presentation
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 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 normal
recurring accruals) considered necessary for a fair presentation have been
included. Operating results for the three month period ended January 31, 1999
are not necessarily indicative of the results that may be expected for the year
ended October 31, 1999. The unaudited condensed consolidated financial
statements should be read in conjunction with the consolidated financial
statements and the footnotes thereto included in the Company's annual report on
Form 10-KSB for the year ended October 31, 1998.
Furthermore, the information set forth in the financial statements for the
fiscal quarter ended January 31, 1999 do not give effect to certain adjustments
to the Company's general ledger required to be made as of fiscal year ended
October 31, 1998. When made, these adjustment are expected to cause material
changes to the financial information included herein and the Company will amend
this quarterly report on Form 10-QSB to reflect such changes.
Note B: Summary of Significant Accounting Policies
The Company's accounting policies are outlined in the audited financial
statements included with the Company's most recent Form 10-KSB. There have been
no changes in accounting principles or practices in the current fiscal year.
Note C: Long Term Debt
During the three months ended January 31, 1999, the Company made total
repayments of $76,713, with $40,020 on long-term debt and capital leases and
$36,693 on long-term debt, related party. The Company borrowed $862,768 from its
revolving credit facility.
Note D: Income Taxes
The Company has an estimated deferred tax benefit of $727,000 for the three
months ended January 31, 1999 which has been offset in full by a valuation
allowance.
*****
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<PAGE>
COLORADO CASINO RESORTS, INC. & SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
PLANS FOR FUTURE OPERATIONS
RESULTS OF OPERATIONS
The Company has made several restatements and reclassifications to the Company's
1997 and 1996 fiscal year financial statements. The restatements relate
principally from: (i) the reclassification and accounting for the Company's slot
machines, other leased assets and its licensed software; (ii) interest and other
expenses related to the Company's convertible preferred stock, stock warrants,
convertible debentures, tokens and chips and computer player tracking system;
and (iii) the reclassification of certain one-time casino revenue to
extraordinary gain. The financial information contained herein for the fiscal
quarter ended January 31, 1998 has not been amended to reflect such restatement
and reclassifications. Furthermore, the information set forth in the financial
statements for the fiscal quarter ended January 31, 1999 do not give effect to
certain adjustments to the Company's general ledger required to be made as of
fiscal year ended October 31, 1998. When made, these adjustment are expected to
cause material changes to the financial information included herein and the
Company will amend this quarterly report on Form 10-QSB to reflect such changes.
The results described herein reflect the consolidated operations of the Company
and its wholly-owned operating subsidiaries, Double Eagle Resorts, Inc. and
Creeker's, Inc., for the fiscal quarter ended January 31, 1999 compared with the
same period in fiscal year 1998.
The Company reported total operating revenues for the fiscal quarter ended
January 31, 1999 of $5,864,618, an increase of $1,125,562, or 23.8%, from
revenues of $4,739,056 recorded for the same fiscal quarter in 1998. Total
operating expenses were $6,671,403 for the three months ended January 31, 1999,
increasing by $1,647,395, or 32.8% from $5,024,008 reported in 1998. Total
operating expenses as a percentage of total revenues increased to 113.8% from
106% reported in the comparable period of 1998, largely due, in part, to an
increase in marketing, general and administrative, and depreciation expenses.
There were no acquisitions nor any sale of stock of any significance during this
quarter.
Casino. Casino revenues accounted for approximately 81% of the total operating
revenues in first fiscal quarter 1999. For the three months ended January 31,
1999, casino revenues were $4,748,764, representing an increase of $949,395 from
the $3,799,369 reported during the same period in 1998. Management attributes
this increase to improved customer patronage resulting from the increased payout
percentages and aggressive marketing campaign deployed to advertise this fact.
Slot machine revenues generally consist of the total amount wagered (i.e., the
handle) less the amounts paid out to customers. During the same period in 1998,
the Company's slot machines have had a lower payout percentage than the slot
machines of its competitors in Cripple Creek. Management continues to monitor
the payout percentage of its gaming devices and may further adjust such
percentages in the future in order to maximize casino revenues.
Costs and expenses of casino operations were $2,065,270 for the fiscal quarter
ended January 31, 1999, an increase of $254,085, or 14.0%, from the $1,811,185
reported in 1998. The net increase in costs and expenses of casino operations is
attributable to higher payroll expenses. Casino costs and expenses as a
percentage of casino revenues decreased to 43.5% for the 1999 period compared to
47.7% from the comparable period in 1998, as a result of improved efficiencies.
Rooms. Room revenues accounted for approximately 8.5% of total operating
revenues in the 1999 period. During this period, room revenues were $501,013,
representing an increase of $125,742, or 33.5%, from the $375,271 reported in
the 1998 period. The increase in such revenues during the first quarter 1999 is
primarily attributable to better focused marketing programs and incentive
packages directed at the Company's rated players. Costs and expenses of hotel
operations increased $44,547, or 18.6%, to $284,623, from $240,076 recorded in
1998. Costs and expenses as a percentage of room revenues decreased to 56.8% in
the three months ended January 31, 1999 as compared to 64.0% during the
comparable period in 1998.
Food and Beverage. Food and beverage revenues accounted for approximately 8.4%
of total revenues in the 1999 period. During this period, food and beverage
revenues were $490,352, representing an increase of $58,379, or 13.5%, from the
$431,973 reported in the 1998 period. Costs and expenses of food and beverage
were $704,235 for the 1999 period, up $76,046, or 12.1%, from $628,189 recorded
in the 1998 period. Costs and expenses as a percentage of food and beverage
revenues decreased to 143.6% in the 1999 period from 145.4% in the 1998 period,
reflecting the cost savings derived from the buffet format.
-7-
<PAGE>
Other. Other consists of revenues generated from the Company's gift shop and
parking lot operations. During the first fiscal quarter 1999, other revenues
were $124,489, down 7,954, or 6.0%, from $132,443 reported in the 1998 period.
This decrease is mainly attributable to the reduced number of vehicles during
the winter months compared to the same period in fiscal year 1998. Refunded
parking fees are recognized as a marketing expense. The $5.00 fee collected from
the customer to park in the Company's parking lots is refunded from its casino
once the customer has demonstrated patronage.
Marketing. Marketing expenses were $1,597,822 for the fiscal quarter ended
January 31, 1999, up significantly by $872,306, or 120.2% from the $725,516
reported in the 1998 period. The increase in marketing expense reflects the
Company's aggressive deployment of its marketing campaign, which includes
comprehensive advertising, direct mail programs, generous slot club point
awards, and cash disbursements made to patrons upon the redemption of bus
coupons. During the quarter, the Company participated in a city-wide bussing
program whereby riders are given coupon books which include a coupon redeemable
for $5.00 cash from the Company's casinos - in order to provide incentive for
customer patronage. The Company redeemed over $460,000 in such coupons.
Marketing expenses as a percentage of total revenues increased to 27.2% for the
three months ended January 31, 1999 compared to 15.3% reported in 1998.
General and Administrative. General and administrative expenses were $1,297,862
for the three months ended January 31, 1999, up $196,566, or 17.8% from the
$1,101,296 reported in the 1998 period. General and administrative expenses as a
percentage of total revenues decreased to 22.1% for the fiscal quarter ended
January 31, 1999 from 23.2% for the comparable period in 1998.
Depreciation and Amortization. Depreciation and amortization increased to
$721,591 for the fiscal quarter ended January 31, 1999, compared to $517,746
reported in 1998.
Loss from Operations. As a result of the factors discussed above, the Company
recognized a loss from operations of $806,785 for the fiscal quarter ended
January 31, 1999 as compared to a loss from operations of $284,952 recorded in
the 1998 period.
Interest Expense. Interest expense was $1,057,741 for the three months ended
January 31, 1999, a decrease of $114,945, or 9.8%, from the $1,172,686 reported
for the comparable period in 1998. The decrease in interest expense is primarily
attributable to the replacement of debt with higher level of interest rate with
the Foothill Revolving Credit Facility. See "Liquidity and Capital Resources"
below.
Net Loss. The net loss for the Company was $1,864,526 for the fiscal quarter
ended January 31, 1999, an increase of $406,888, or 27.9% from the net loss of
$1,457,638 reported in the 1998 period.
LIQUIDITY AND CAPITAL RESOURCES
The Company has financed its operations and capital expenditures with
principally borrowings from private investors, the sale of equity securities in
private transactions, and bank borrowings.
At January 31, 1999, the Company had cash and cash equivalents totaling
$1,681,707 and $481,936 of additional liquidity under the Foothill Credit
Facility, which is described below. Net cash used by operating activities was
$541,392 for the three-months ended January 31, 1999. Cash used by investing
activities totaled $136,475 for the quarter ended January 31, 1999, primarily
for the purchase of gaming devices. Net cash provided by financing activities
was $786,055, which included $862,768 of net borrowings during the three months
ended January 31, 1999.
The Company had $46,435,697 of liabilities due within one year, but only
$2,191,382 in current assets at January 31, 1999, resulting in a negative
current ratio of 0.04:1.0. The Company's substantial indebtedness could have
important consequences to the Company, including to: (i) make it more difficult
for the Company to satisfy its obligations to its creditors; (ii) increase the
Company's vulnerability to general adverse economic and industry conditions;
(iii) limit the Company's ability to fund future working capital, capital
expenditures and other general corporate requirements; (iv) limit the Company's
flexibility in planning for, or reacting to, changes in the Company's business;
(v) limit the ability of the Company to carry out its growth strategy, which
includes the construction of a parking garage and conference center adjacent to
the Double Eagle Casino, and the acquisition and development of additional
casinos. The report of the Company's independent public auditors for the fiscal
year ended October 31, 1998 contained an explanatory paragraph which states that
the Company's current working capital deficiency and net losses raise
substantial doubt about the Company's ability to continue as a going concern.
-8-
<PAGE>
The Company is in payment default on several of its debt obligations. Among
others, at January 31, 1999, the Company was in default under its credit
facility with Foothill Corporation for not maintaining EBITDA (Earnings Before
Interest, Taxes, Depreciation and Amortization, as defined) of at least four
million ($4,000,000), measured on a rolling twelve-month basis. The Foothill
Credit Facility bears interest at the greater of 8% or the prime rate plus 2%
(9.75% at January 31, 1999), and is secured by a first mortgage lien on The
Double Eagle (including the adjacent parking lot) and a lien on the equipment
and other personal property of Double Eagle Resorts, Inc. As of April 14, 1999,
the interest rate was increased to the prime rate plus 3%. The Company has
guaranteed Double Eagle's obligations under the Foothill Credit Facility, which
guarantee is secured by a pledge of the Company's equity interest in The Double
Eagle. Management will seek to negotiate payment plans or otherwise reach a
satisfactory resolution with each of its creditors with whom the Company has
defaulted in its obligations. No assurance can be given that the Company will be
successful in restructuring its various debt obligations.
If the Company is unsuccessful in raising additional financing or unsuccessful
in satisfactorily renegotiating its debt obligations with its current lenders,
the Company is not expected to have sufficient cash to fund operations for the
next twelve months and would be required to take some or all of the following
actions in order to conserve its cash resources: (i) postpone the implementation
of its growth strategy, including the construction of the parking garage and
conference center; (ii) implement significant cost controls; (iii) reduce or
otherwise discontinue operations; (iv) sell one or more of its assets; or (v)
engage in a merger or other form of corporate reorganization. If such actions
are inadequate to generate sufficient cash to meet its debt obligations and
support its operations, the Company would be required to seek protection under
applicable bankruptcy laws.
YEAR 2000 COMPLIANCE
The inability of computers, software and other equipment utilizing
microprocessors to recognize and properly process data fields containing a
two-digit year is commonly referred to as the Year 2000 compliance issue. As the
Year 2000 approaches, such systems may be unable to accurately process certain
date-based information.
The Company is in the process of identifying and modifying all significant
hardware and software applications that will require modification to ensure Year
2000 compliance. Relying primarily on internal resources, the Company has
completed a preliminary audit of its significant hardware and software
applications. This audit revealed that the player tracking software that the
Company licenses from IGT and certain personal computers used in the Company's
casino operations may not presently be Year 2000 compliant. The Company has been
advised by IGT and personal computer manufacturer that such systems will be Year
2000 compliant by August 1999. The estimated cost to address the Company's Year
2000 issues is not expected to have a material impact on the Company's business,
operations or financial condition. If the modification of the Company's hardware
and software compliance is not timely completed or is not fully effective, the
Year 2000 problem may have a serious negative impact on the operations of the
Company.
Although the Company has communicated with its external service providers and
vendors to ensure that the providers and vendors are taking the appropriate
action to address Year 2000 issues and has not received any notice from such
persons that their operations will not be Year 2000 compliant, there can be no
assurance that the systems of third parties on which the Company's systems rely
will be timely converted.
FORWARD-LOOKING STATEMENTS
In connection with the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995 (the "Reform Act"), the Company is hereby
providing cautionary statements identifying important factors that could cause
the Company's actual results to differ materially from those projected in
forward-looking statements (as such term is defined in the Reform Act) made by
or on behalf of the Company herein or orally, whether in presentations, in
response to questions or otherwise. Any statements that express, or involve
discussions as to, expectations, beliefs, plans, objectives, assumptions or
future events or performance (often, but not always, through the use of words or
phrases such as "intends," "plans," "will result," "are expected to," "will
continue," "is anticipated," "estimated," "projection" and "outlook") are not
historical facts and may be forward-looking and, accordingly, such statements
involve estimates, assumptions, and uncertainties which could cause actual
results to differ materially from those expressed in the forward-looking
statements. Such uncertainties include the risk factors set forth in the
Company's Annual Report on Form 10-KSB for the fiscal year ended October 31,
1998. They also include the following conditions or uncertainties: (i) risk
associated with real estate ownership, operations and development, including
environmental liabilities, worker's strikes, construction delays, obtaining
building permits and necessary zoning changes; (ii) illiquidity of real estate
holdings; (iii) imposition of new regulatory requirements affecting the Company;
(iv) the delay or failure to properly manage growth; (v) effect of uninsured
loss; and (vi) breakdown of water, sewage or other municipal services in Cripple
Creek and other conditions beyond the control of the Company. The
-9-
<PAGE>
Company cautions that actual results or outcomes could differ materially from
those expressed in any forward-looking statements made by or on behalf of the
Company. Any forward-looking statement speaks only as of the date on which such
statement is made, and the Company undertakes no obligation to update any
forward-looking statement or statements to reflect events or circumstances after
the date on which such statement is made or to reflect the occurrence of
unanticipated events. New factors emerge from time to time, and it is not
possible for management to predict all of such factors. Further, management
cannot assess the impact of each such factor on the business or the extent to
which any factor, or combination of factors, may cause actual results to differ
materially from those contained in any forward-looking statements.
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 January 31, 1999 are not necessarily
indicative of the results that may be expected for the year ending October 31,
1999. 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, 1998.
*****
-10-
<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 28th day of April,
1999.
COLORADO CASINO RESORTS, INC.
April 28, 1999 By: /s/ Michael S. Smith
------------------------------
Michael S. Smith
Interim President and Chief Executive Officer,
Secretary and General Counsel, Director
April 28, 1999 /s/ Farid E. Tannous
------------------------------
Farid E. Tannous
Treasurer and Chief Financial Officer
(Principal Financial Officer)
-11-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated balance sheet and the consolidated statement of operations, and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-mos
<FISCAL-YEAR-END> Oct-31-1998
<PERIOD-END> Jan-31-1999
<CASH> 1,681,707
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 180,377
<CURRENT-ASSETS> 2,191,382
<PP&E> 40,595,493
<DEPRECIATION> 0
<TOTAL-ASSETS> 46,574,458
<CURRENT-LIABILITIES> 46,435,697
<BONDS> 3,908,702
0
0
<COMMON> 38,741
<OTHER-SE> (4,059,582)
<TOTAL-LIABILITY-AND-EQUITY> 46,574,458
<SALES> 4,748,764
<TOTAL-REVENUES> 5,864,618
<CGS> 0
<TOTAL-COSTS> 6,671,403
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,057,741
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,864,526)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,864,526)
<EPS-PRIMARY> (.05)
<EPS-DILUTED> 0
</TABLE>