<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
AMENDMENT NO. 1
TO
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 1, 1997
GLOBAL CASINOS, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
UTAH 0-15415 87-0340206
- ---------------- -------- -------------------
(State or other (Commission (IRS Employer
jurisdiction of file number) Identification No.)
incorporation or
organization)
4465 Northpark Drive, Colorado Springs, Colorado 80907
--------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (303) 756-3777
-------------------------------------------------------------------
1777 S. Harrison St., Skydeck, Denver, Colorado 80210
--------------------------------------------------------------
(Former name or former address, if changed since last report)
<PAGE>
<PAGE>
ITEM 7: FINANCIAL STATEMENTS AND PRO FORMA FINANCIAL INFORMATION
(a) FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED
-------------------------------------------
Filed herewith are the Independent Auditors' Report, the
Balance Sheets as of December 31, 1996 (audited) and June 30, 1997
(unaudited), Statements of Income, Statements of Shareholders'
Equity, and Statements of Cash Flows of Alaska Bingo Supply, Inc.
for the years ended December 31, 1996 and 1995 and for the six
months ended June 30, 1997, together with the Notes to Financial
Statements.
(b) PRO FORMA COMBINED, CONDENSED FINANCIAL INFORMATION
Filed herewith are the unaudited Condensed Pro Forma
Consolidated Balance Sheet of Global Casinos, Inc. and Subsidiaries
at June 30, 1997 and the Combined Pro Forma Consolidated Statements
of Operations for the year ended June 30, 1997 of Global Casinos,
Inc. and Subsidiaries, together with Notes to Unaudited Condensed
Pro Forma Consolidated Financial Statements.
<PAGE>
<PAGE>
ALASKA BINGO SUPPLY, INC.
FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996 AND 1995
AND SIX MONTHS ENDED JUNE 30, 1997 AND 1996 (UNAUDITED)
<PAGE>
<PAGE>
ALASKA BINGO SUPPLY, INC.
YEARS ENDED DECEMBER 31, 1996 AND 1995
AND SIX MONTHS ENDED JUNE 30, 1997 AND 1996 (UNAUDITED)
INDEX TO FINANCIAL STATEMENTS
Page
Independent auditors' report 1
Financial statements:
Balance sheets 2
Statements of income 3
Statements of shareholder's equity 4
Statements of cash flows 5 - 6
Notes to financial statements 7 - 14
<PAGE>
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors
Alaska Bingo Supply, Inc.
We have audited the accompanying balance sheet of Alaska Bingo Supply, Inc. as
of December 31, 1996, and the related statements of income, shareholder's
equity and cash flows for each of the years in the two-year period ended
December 31, 1996. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Alaska Bingo Supply, Inc. as
of December 31, 1996, and the results of its operations and its cash flows for
each of the years in the two-year period ended December 31, 1996, in
conformity with generally accepted accounting principles.
Gelfond Hochstadt Pangburn & Co.
Denver, Colorado
September 12, 1997
<PAGE>
<PAGE>
<TABLE>
ALASKA BINGO SUPPLY, INC.
BALANCE SHEETS
<CAPTION>
June 30, December 31,
1997 1996
-------------- -------------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash $ 16,910 $ 33,510
Accounts receivable, less allowance for
doubtful accounts (1996, $13,000;
1997, $0) (Notes 2 and 8) 288,105 246,773
Due from affiliate, current portion (Note 3) 38,323 36,936
Inventories (Note 2) 210,060 238,109
Prepaid expenses and other 11,476 15,909
------------- ------------
Total current assets 564,874 571,237
------------- ------------
Property and equipment (Note 4):
Vehicles 101,087 101,087
Equipment and furniture:
Office and warehouse 64,777 59,222
Bingo halls 123,147 109,247
Leasehold improvements, bingo halls 157,023 42,610
------------- ------------
446,034 312,166
Less accumulated depreciation 190,974 173,744
------------- ------------
255,060 138,422
------------- ------------
Other assets:
Due from affiliate, net of current portion
(Note 3) 857,457 879,198
Deposits and other assets 3,796 2,089
------------- ------------
861,253 881,287
------------- ------------
$ 1,681,187 $ 1,590,946
============= ============
LIABILITIES AND SHAREHOLDER'S EQUITY
Current liabilities:
Notes payable:
Line of credit (Note 2) $ 105,000 $ 185,000
Current portion of term loan (Note 3) 38,323 36,936
Accounts payable and accrued expenses 22,296 33,934
State excise tax payable 37,922 35,107
Deposit, affiliate (Note 4) 40,000
------------- ------------
Total current liabilities 243,541 290,977
------------- ------------
Deferred rent (Note 4) 18,558 18,631
------------- ------------
Term loan, net of current portion (Note 3) 857,457 879,198
------------- ------------
Commitments and contingencies (Notes 4, 6 and 8)
Shareholder's equity:
Common stock, $2 par value, authorized 1,000
shares; issued and outstanding 500 shares 1,000 1,000
Capital in excess of par 387,685 387,685
Retained earnings 1,054,756 599,171
Advances to affiliates (Note 5) (881,810) (585,716)
------------- ------------
Total shareholder's equity 561,631 402,140
------------- ------------
$ 1,681,187 $ 1,590,946
============= ============
</TABLE>
See notes to financial statements.<PAGE>
<PAGE>
<TABLE>
ALASKA BINGO SUPPLY, INC.
STATEMENTS OF INCOME
<CAPTION>
Six months ended
Year ended Year ended June 30,
December 31, December 31, -----------------------------
1996 1995 1997 1996
------------- ------------- ------------- -------------
(Unaudited)
<S> <C> <C> <C> <C>
Net sales, bingo supplies:
Related parties (Note 4) $ 619,155 $ 515,221 $ 302,841 $ 328,231
Other 1,729,091 1,789,928 932,374 780,169
------------- ------------- ------------- -------------
2,348,246 2,305,149 1,235,215 1,108,400
Cost of sales 1,287,634 1,194,471 641,647 603,043
------------- ------------- ------------- -------------
Gross profit, bingo supplies 1,060,612 1,110,678 593,568 505,357
------------- ------------- ------------- -------------
Rent income, related parties
(Note 4) 583,046 161,037 310,510 328,350
------------- ------------- ------------- -------------
Operating expenses:
Warehouse and delivery 193,718 178,594 80,209 84,449
Rent:
Office, related party (Note 4) 59,520 43,840 29,760 29,760
Bingo halls (Note 4) 441,387 98,590 160,311 248,095
General and
administrative (Note 6) 517,046 654,633 167,115 254,877
------------- ------------- ------------- -------------
1,211,671 975,657 437,395 617,181
------------- ------------- ------------- -------------
Income from operations 431,987 296,058 466,683 216,526
------------- ------------- ------------- -------------
Other income (expense):
Interest income:
Related party (Note 3) 89,807 20,741 41,225 45,033
Other 335 1,393 24 194
Interest expense (113,507) (36,570) (45,340) (62,544)
Loss on closing of bingo
hall (Note 7) (56,281)
------------- ------------- ------------- -------------
(79,646) (14,436) (4,091) (17,317)
------------- ------------- ------------- -------------
Net income $ 352,341 $ 281,622 $ 462,592 $ 199,209
============= ============= ============= =============
See notes to financial statements.
/TABLE
<PAGE>
<PAGE>
<TABLE>
ALASKA BINGO SUPPLY, INC.
STATEMENTS OF SHAREHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1996 AND 1995 AND
SIX MONTHS ENDED JUNE 30, 1997 (UNAUDITED)
<CAPTION>
Advances
Common Capital in Retained from (to)
stock excess of par earnings affiliates Total
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Balances, January 1, 1995 $ 1,000 $ 325,000 $ (34,792) $ (182,414) $ 108,794
Contribution of property
(Note 4) 62,685 62,685
Advances to affiliates (108,519) (108,519)
Payments received from
affiliates 277,933 277,933
Net income for the year
ended December 31, 1995 281,622 281,622
------------- ------------- ------------- ------------- -------------
Balances, December 31, 1995 1,000 387,685 246,830 (13,000) 622,515
Advances to affiliates (945,871) (945,871)
Payments received from
affiliates 373,155 373,155
Net income for the year
ended December 31, 1996 352,341 352,341
------------- ------------- ------------- ------------- -------------
Balances, December 31, 1996 1,000 387,685 599,171 (585,716) 402,140
Advances to affiliates
(unaudited) (296,094) (296,094)
Distribution to shareholder
(unaudited) (7,007) (7,007)
Net income for the
six months ended
June 30, 1997 (unaudited) 462,592 462,592
------------- ------------- ------------- ------------- -------------
Balances, June 30,
1997 (unaudited) $ 1,000 $ 387,685 $ 1,054,756 $ (881,810) $ 561,631
============ ============= ============= ============= =============
=============
See notes to financial statements.
/TABLE
<PAGE>
<PAGE>
<TABLE>
ALASKA BINGO SUPPLY, INC.
STATEMENTS OF CASH FLOWS
<CAPTION>
Six months ended
Year ended Year ended June 30,
December 31, December 31, -----------------------------
1996 1995 1997 1996
------------- ------------- ------------- -------------
(Unaudited)
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net income $ 352,341 $ 281,622 $ 462,592 $ 199,209
------------- ------------- ------------- -------------
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 55,843 20,354 17,230 29,617
Loss on closing of bingo hall 56,281
Provision for losses on
accounts receivable 64,000 38,000 17,000 43,969
Deferred rent 4,119 1,772 (73) 3,544
Decrease (increase) in assets:
Accounts receivable (81,701) (129,703) (58,332) (59,333)
Inventories 49,748 (61,868) 28,049 66,796
Prepaid expenses (2,787) (7,040) 4,433 (1,857)
Other assets 2,205 (2,494) (1,707) (500)
Increase (decrease) in liabilities:
Accounts payable and accrued expenses (3,123) (13,871) (11,638) (647)
State excise tax payable 4,091 2,162 2,815 8,412
------------- ------------- ------------- -------------
Total adjustments 148,676 (152,688) (2,223) 90,001
------------- ------------- ------------- -------------
Net cash provided by operating
activities 501,017 128,934 460,369 289,210
------------- ------------- ------------- -------------
Cash flows from investing activities:
Payment for bingo hall
equipment and furniture (1,294) (67,916) (133,868) (10,535)
Capital expenditures (7,826) (46,848) (6,000)
------------- ------------- ------------- -------------
Net cash used in investing activities (9,120) (114,764) (133,868) (16,535)
------------- ------------- ------------- -------------
Cash flows from financing activities:
Bank overdraft 12,114
Net borrowings (repayments)
under line of credit agreement 105,000 (195,000) (80,000) (5,000)
Advances to affiliates (945,871) (108,519) (296,094) (384,618)
Payments received from affiliates 373,155 277,933 40,000 95,500
Principal payments on long-term debt (14,523) (8,340) (14,523)
Distribution to shareholder (7,007)
------------- ------------- ------------- -------------
Net cash used in financing activities (482,239) (33,926) (343,101) (296,527)
------------- ------------- ------------- -------------
Net increase (decrease) in cash 9,658 (19,756) (16,600) (23,852)
Cash, beginning 23,852 43,608 33,510 23,852
------------- ------------- ------------- -------------
Cash, ending $ 33,510 $ 23,852 $ 16,910 $ 0
============= ============= ============= =============
See notes to financial statements.
/TABLE
<PAGE>
<PAGE>
<TABLE>
ALASKA BINGO SUPPLY, INC.
STATEMENTS OF CASH FLOWS (Continued)
<CAPTION>
Six months ended
Year ended Year ended June 30,
December 31, December 31, -----------------------------
1996 1995 1997 1996
------------- ------------- ------------- -------------
(Unaudited)
<C> <C> <C> <C> <C>
Supplemental disclosure of
cash flow information:
Cash paid for interest $ 23,700 $ 15,829 $ 4,115 $ 17,511
============= ============= ============= =============
Supplemental disclosure of noncash
investing and financing activities:
Contribution of property $ 62,685
=============
Term loan (Note 3):
Proceeds from the term loan
which were advanced directly
to an affiliate $ 950,000
=============
Payments on term loan made
by affiliate on behalf of
the Company:
Principal $ 27,899 $ 5,967 $ 20,354 $ 13,340
Interest 89,807 20,741 41,225 45,033
------------- ------------- ------------- -------------
Total $ 117,706 $ 26,708 $ 61,579 $ 58,373
============= ============= ============= =============
Bingo hall (Note 7):
Note given for purchase of
furniture and equipment $ 224,775
=============
Property relinquished $ 258,193
Note payable canceled (201,912)
-------------
Loss on closing $ 56,281
=============
See Notes to Financial Statements.
/TABLE
<PAGE>
ALASKA BINGO SUPPLY, INC.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996 AND 1995 AND
SIX MONTHS ENDED JUNE 30, 1997 AND 1996 (UNAUDITED)
1. BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
BUSINESS OF THE COMPANY:
Alaska Bingo Supply, Inc. (the "Company") is primarily engaged in the
distribution of a full line of bingo and bingo-related products,
including disposable bingo paper, pulltab tickets, and related
equipment and supplies. The Company's products are sold in Alaska
to non-profit organizations and municipalities which use such
products for fund-raising purposes. The Company also receives rent
income from the leasing of space to two operators of bingo halls.
These bingo halls are managed by an affiliate of the Company.
UNAUDITED FINANCIAL STATEMENTS:
The balance sheet as of June 30, 1997, the statements of income and cash
flows for the six months ended June 30, 1997 and 1996, and the
statement of shareholder's equity for the six months ended June 30,
1997 have been prepared by the Company without audit. In the
opinion of management, all adjustments (which include normal
recurring adjustments) necessary to present fairly the financial
position, results of operations and cash flows for all such periods
have been made. The results of operations for the six months ended
June 30, 1997 are not necessarily indicative of the operating
results for the full year.
INVENTORIES:
Inventories, consisting of bingo supplies, are stated at the lower of
cost or market. Cost is determined by the average-cost method.
PROPERTY, EQUIPMENT, AND DEPRECIATION:
Property and equipment are stated at cost. Depreciation is provided
generally by use of accelerated methods over the estimated useful
lives of five to seven years for vehicles, furniture and equipment
and over the shorter of the estimated useful lives or the lease term
of five to seven years for leasehold improvements.
REVENUE RECOGNITION:
Sales of bingo related products are recognized as products are shipped.
Rental revenue is recognized as it is due according to the lease
agreements.
INCOME TAXES:
The Company has elected S corporation status for federal income tax
purposes. Instead of paying corporate income taxes, the shareholder
is taxed individually on the Company's taxable income. Therefore,
no provision or liability for federal income taxes has been included
in these financial statements.
In connection with the sale of the Company (Note 10), the S corporation
status will be terminated and the Company will become a C
corporation. As a C corporation, income taxes will be provided for
the tax effects of transactions reported in the financial statements
subsequent to July 31, 1997 and a deferred income tax liability or
asset will be recognized for temporary differences between the
Company's financial statements and tax returns as of August 1, 1997.
ADVERTISING COSTS:
Advertising costs are expensed as incurred. Total advertising expenses
during 1996 and 1995 were approximately $11,500 and $12,100,
respectively. Total advertising expenses during the six months
ended June 30, 1997 and 1996, were approximately $6,665 and $7,140,
respectively (unaudited).
USE OF ESTIMATES:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amount of assets and
liabilities and disclosure of continent assets and liabilities at
the date of the financial statements and the reported amounts of
revenues and expenses during the reporting periods. Actual results
could differ from those estimates.
2. LINE OF CREDIT:
Through July 10, 1997, the Company had a $250,000 line of credit with a
bank. Interest was at 1.5% above the bank's base rate and was due
monthly. The weighted average interest rate for the years ended
December 31, 1996 and 1995 was 9.8% and 10.3%, respectively, and
9.9% and 9.8% for the six months ended June 30, 1997 and 1996,
respectively (unaudited). Advances were based on 75% of qualifying
accounts receivable and 50% of qualifying inventories. The line was
collateralized by accounts receivable and inventories and was
guarantied by the Company's shareholder and his wife. In connection
with the sale of the Company, the $105,000 outstanding balance on
the line of credit was repaid on July 10, 1997 and the agreement was
terminated.
3. DUE FROM RELATED PARTY AND TERM LOAN:
In 1995, the Company obtained a $950,000 term loan from a bank. The loan
bears interest at 1.0% above the bank's base rate and is due in
monthly principal and interest installments of $10,144 through
October 2005, at which time the remaining principal is due. The
weighted average interest rate for the years ended December 31, 1996
and 1995, was 9.3% and 9.7%, respectively, and 9.4% and 9.3% for the
six months ended June 30, 1997 and 1996, respectively (unaudited).
The loan proceeds were advanced directly to an entity owned by the
shareholder of the Company under the same interest and payment terms
as the Company's loan with the bank. Since the inception of the
loan, the affiliate has made the monthly payments directly to the
bank on behalf of the Company. The Company has recorded interest
expense related to the term loan and an equal amount of interest
income from the affiliate. The loan is collateralized by real
property of the affiliate and is guaranteed by the affiliate and the
Company's shareholder and his wife.
<PAGE>
MATURITIES ON THE TERM LOAN AT DECEMBER 31, 1996 ARE AS FOLLOWS:
<TABLE>
<S> <C> <C>
1997 $ 36,936
1998 40,181
1999 44,168
2000 48,552
2001 53,370
Thereafter 692,927
---------
$ 916,134
=========
</TABLE>
In connection with the sale of the Company (Note 10), the loan is
currently being refinanced by the Company, the affiliate and the
bank. The intent of the refinancing is for the affiliate to replace
the Company as the borrower in exchange for cancellation of the
affiliate's obligation to the Company (unaudited).
4. LEASES AND RENTAL OPERATIONS:
BINGO HALLS:
In October 1995, the Company's sole shareholder contributed furniture and
bingo equipment and assigned his interests in two operating leases
to the Company. The Company recorded the contribution at the
historical cost of the furniture and equipment to the shareholder,
net of accumulated depreciation.
The leases assigned to the Company are for premises in two separate
buildings that have been configured and maintained for use as bingo
halls. The lessors are unrelated third parties. One leases expires
in August 2001, however, the Company has the option to extend the
lease for two additional three year periods and the lease payments
are subject to increases based on the Anchorage consumer price
index. The other lease expires in July 1999, and the Company has
the option to extend the lease for one additional five year period.
Monthly rent payments increase from $13,400 to $14,500 over the
remaining term of the lease and rental expense is being recognized
on a straight-line basis.
The Company subleases both premises, on a month-to-month basis, to two
charitable groups that operate bingo and pull-tab games at the
locations. The bingo and pull-tab operations of these charitable
groups are managed by an affiliate controlled by the wife of the
Company's shareholder. Under the sublease arrangements, the Company
also leases furniture and bingo equipment to these groups for use in
the bingo halls.
The charitable groups, through the direction of the affiliated management
agent, purchase bingo supplies from the Company. These sales have
been separately stated, as "net sales, bingo supplies, related
parties" on the accompanying statements of income.
In 1997, the Company received a $40,000 security deposit from one of the
subleases. The Company has not required the other sublessee to
provide a security deposit.
OFFICE AND WAREHOUSE FACILITIES:
The Company leases its office and warehouse facilities and access to a
computer system from the wife of the Company's shareholder. The
lease arrangements were on a month-to-basis through July 1997. In
connection with the sale of the Company (Note 10), a noncancellable
operating lease was entered into in August 1997. The new lease
expires in July 2004, the Company has options to extend the lease
for two additional one year periods and lease payments are subject
to increases based on the Anchorage consumer price index.
Future minimum lease payments are as follows:
<TABLE>
<CAPTION>
Office and Bingo
Warehouse Halls Total
---------- ------------ -----------
<S> <C> <C> <C> <C>
1997 (remaining 6 months) $ 29,800 $ 186,200 $ 216,000
1998 59,500 385,500 445,000
1999 59,500 316,800 376,300
2000 59,500 214,900 274,400
2001 59,500 143,300 202,800
Thereafter 153,800 153,800
---------- ------------ -----------
$ 421,600$ 1,246,700$ 1,668,300
============ ===========
</TABLE>
5. ADVANCES TO AFFILIATES:
Advances to affiliates represent non-interest bearing advances made to
entities that are controlled by the sole shareholder of the Company.
In connection with the sale of the Company (Note 10), the advances
were distributed to the sole shareholder on July 31, 1997.
6. OTHER RELATED PARTY TRANSACTIONS:
Entities controlled by the sole shareholder and his wife incur certain
general and administrative expenses (primarily health and workers
compensation insurance expenses) on behalf of the Company. The
Company reimburses the affiliates for these expenses. During 1996
and 1995, total reimbursable expenses were approximately $15,000 and
$20,000, respectively. For the six months ended June 30, 1997 and
1996, total reimbursable expenses were approximately $8,000 and
$7,000, respectively (unaudited).
7. LOSS ON CLOSING OF BINGO HALL:
In September 1995, the Company acquired bingo equipment and furniture
from an unrelated third party. The purchase price consisted of
$50,000 in cash and a $300,000 non-interest bearing note payable in
monthly installments of $5,000 and collateralized by the equipment
and furniture acquired. The Company discounted the note payable to
approximately $225,000 based upon an imputed rate of interest of
12%. The Company recorded bingo equipment and furniture of
approximately $25,000 and goodwill of $250,000, which was being
amortized on the straight-line method over 15 years. The Company
entered into a month-to-month lease to rent space from the third
party for the operation of a bingo hall. The Company subleased this
space and the bingo equipment and furniture to a charitable group
that operated bingo and pull-tab games at the location. The bingo
and pull-tab operations of the charitable group was managed by an
affiliate controlled by the wife of the Company's shareholder. The
charitable group, through the direction of the affiliated management
agent, purchased bingo supplies from the Company. These sales are
included in related party sales on the accompanying statements of
income.
In July 1996, due to poor operating performance of the bingo operations,
the Company, terminated its lease and sublease of the bingo hall and
relinquished the bingo equipment and furniture in satisfaction of
the remaining amount due on the note payable of approximately
$201,000. The Company wrote off the equipment and furniture and
remaining balance of the goodwill. This transaction resulted in a
loss on the closing of the bingo hall of $56,281.
8. CONCENTRATION OF CREDIT RISK AND MAJOR CUSTOMERS:
The Company grants credit, generally without collateral, to its
customers. At December 31, 1996, receivables from entities
controlled by an unrelated third party accounted for approximately
22% of accounts receivable. No other customers accounted for 10% or
more of accounts receivables. At June 30, 1997, receivables from
entities controlled by an unrelated third party accounted for
approximately 12% of accounts receivable, and receivables from the
two bingo halls managed by an affiliated entity accounted for
approximately 15% of accounts receivable (unaudited). During 1996
and 1995, sales to entities controlled by an unrelated third party
accounted for approximately 19% and 25%, respectively, of total
bingo supply sales. Except for sales to bingo halls managed by an
affiliated entity, no other customers accounted for more than 10% of
bingo supply sales. During the six months ended June 30, 1997 and
1996, sales to entities controlled by an unrelated third party
accounted for approximately 19% and 21%, respectively, of total
bingo supply sales (unaudited). The Company's bad debt expense was
approximately $64,000 and $38,000 during 1996 and 1995,
respectively. The Company's bad debt expense was approximately
$17,000 and $44,000, during the six months ended June 30, 1997 and
1996, respectively (unaudited).
During 1996 and 1995, and for the six months ended June 30, 1997 and 1996
(unaudited), approximately 42% to 48% of the Company's bingo supply
purchases were from a third party supplier. Management believes
that other suppliers could provide similar products on comparable
terms. A change in suppliers, however, could cause delays and
possible loss of sales which would affect operating results
adversely.
9. DEFINED CONTRIBUTION PLAN:
Through May 1997, the Company maintained a defined contribution
retirement plan in which all employees fulfilling minimum age
requirements and one year of service could participate. Employees
could contribute a portion of their earnings to the plan and the
Company, at its election, could match employee contributions. No
Company contributions were made during 1995, 1996 and the six month
period ended June 30, 1997 (unaudited).
10. SALE OF THE COMPANY:
Effective July 31, 1997, the sole shareholder of the Company sold all of
his outstanding common stock in the Company to Global Alaska
Industries, Inc., a wholly-owned subsidiary of Global Casinos, Inc.
Prior to and in connection with the sale, the outstanding balance on
the line of credit was paid in full ($105,000 at date of payment); the
Company distributed the advances from affiliate ($887,301 at date of
distribution), due from affiliate ($892,973 at date of distribution),
and certain vehicles ($60,683 at date of distribution) to the sole
shareholder; and the sole shareholder will assume the term loan
($892,973 at date of assumption) upon approval of the bank.
11. FAIR VALUE OF FINANCIAL INSTRUMENTS:
The estimated fair value of the Company's notes payable and other
financial instruments approximates the carrying values, primarily
because of the short maturities of these instruments.
<PAGE>
<PAGE>
GLOBAL CASINOS, Inc. and subsidiaries
unaudited condensed pro forma
consolidated Financial Statements
as of and for the Year ended June 30, 1997
<PAGE>
<PAGE>
GLOBAL CASINOS, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED PRO FORMA
CONSOLIDATED FINANCIAL STATEMENTS
AS OF AND FOR THE YEAR ENDED JUNE 30, 1997
On August 1, 1997, Global Casinos, Inc (the "Company") through a newly formed
wholly owned subsidiary, acquired all of the outstanding shares of stock of
Alaska Bingo Supply, Inc. ("ABSI") in a transaction accounted for as a
purchase. The accompanying unaudited condensed pro forma consolidated balance
sheet gives effect to the acquisition as if the purchase had been consummated
on June 30, 1997. The accompanying unaudited condensed pro forma consolidated
statement of operations for the year ended June 30, 1997, gives effect to the
acquisition as if the purchase had been consummated on July 1, 1996.
The unaudited pro forma consolidated financial statements should be read in
conjunction with the historical financial statements of ABSI contained
elsewhere herein as well as those of the Company contained in the Company's
Annual Report on Form 10-KSB. The unaudited pro forma financial statements do
not purport to be indicative of the financial position or results of
operations that actually would have occurred had the acquisition occurred on
June 30, 1997 or July 1, 1996, respectively, or to project the Company's
financial position or results of operations for any future period.
<PAGE>
<PAGE>
<TABLE>
GLOBAL CASINOS, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED PRO FORMA CONSOLIDATED BALANCE SHEET
<CAPTION>
Historical
-----------------------------------
Global Casinos Alaska
Inc. and Bingo Pro Forma Pro Forma
Subsidiaries Supply, Inc. Adjustments Consolidated
---------------- ------------- --------------- ---------------
<S> <C> <C> <C> <C>
ASSETS
Current assets: $ 1,048,371 $ 16,910 $ 425,000 (A) $ 985,281
Cash (105,000) (B)
(400,000) (C)
Accounts receivable 73,909 288,105 362,014
Inventories 210,060 210,060
Prepaid and other expenses 138,792 11,476 150,268
Current portion of notes receivable 57,645 38,323 95,968
------------- ------------- ------------- -------------
Total current assets 1,318,717 564,874 (80,000) 1,803,591
Land, building, and equipment, net 5,369,311 255,060 (60,600) (B) 5,563,771
Other assets 60,486 3,796 64,282
Leasehold, contract rights and
goodwill, net 2,050,976 3,898,969 (C) 5,949,945
Notes receivables, net of current portion 369,059 857,457 1,226,516
4,400,000 (C)
Investment in Alaska Bingo Supply, Inc. (4,400,000) (D)
------------- ------------- ------------- -------------
Total assets $ 9,168,549 $ 1,681,187 $ 3,758,369 $ 14,608,105
============= ============= ============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Line of credit $ $ 105,000 $ (105,000) (B) $
Accounts payable & accrued expenses 1,432,074 100,218 1,532,292
Current portion of long-term debt 610,950 38,323 416,000 (A) 1,065,273
------------- ------------- ------------- -------------
Total current liabilities 2,043,024 243,541 311,000 2,597,565
Long-term debt, less current portion 4,052,900 857,457 4,000,000 (C) 8,910,357
Deferred rent 18,558 18,558
Minority interest 36,367 36,367
9,000 (A)
(60,600) (B)
Stockholders' equity 3,036,258 561,631 (501,031) (D) 3,045,258
------------- ------------- ------------- -------------
Total liabilities and stockholders'
equity $ 9,168,549 $ 1,681,187 $ 3,758,369 $ 14,608,105
============= ============= ============= =============
/TABLE
<PAGE>
<PAGE>
<TABLE>
GLOBAL CASINOS, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JUNE 30, 1997
<CAPTION>
Historical
-----------------------------------
Global Casinos Alaska
Inc. and Bingo Pro Forma Pro Forma
Subsidiaries Supply, Inc. Adjustments Consolidated
---------------- ------------- --------------- ---------------
<S> <C> <C> <C> <C>
Revenues:
Casino operations $ 9,234,097 $ $ $ 9,234,097
Bingo distribution operations 2,475,061 2,475,061
------------- ------------- ------------- -------------
9,234,097 2,475,061 11,709,158
Cost of bingo distribution sales 1,326,238 1,326,238
------------- ------------- ------------- -------------
Gross profit 9,234,097 1,148,823 10,382,920
------------- ------------- ------------- -------------
Rental income 565,206 565,206
------------- ------------- ------------- -------------
Operating expenses 9,568,008 1,031,885 294,600 (E) 10,894,493
------------- ------------- ------------- -------------
Operating income (loss) (333,911) 682,144 (294,600) 53,633
------------- ------------- ------------- -------------
Other income (expenses):
Interest income 46,743 86,164 132,907
Interest expense (317,564) (96,303) (362,800) (E) (776,667)
Other losses (388,921) (56,281) (445,202)
------------- ------------- ------------- -------------
(659,742) (66,420) (362,800) (1,088,962)
------------- ------------- ------------- -------------
Income (loss) before minority interest
and extraordinary item (993,653) 615,724 (657,400) (1,035,329)
Minority interest (171,819) (171,819)
------------- ------------- ------------- -------------
Income (loss) before extraordinary item (1,165,472) 615,724 (657,400) (1,207,148)
Extraordinary gain from debt
restructuring 1,551,488 1,551,488
------------- ------------- ------------- -------------
Net income $ 386,016 $ 615,724 $ (657,400) $ 344,340
============= ============= ============= =============
Net income (loss) per share:
Before extraordinary item $ (0.86) $ (0.89)
============= =============
Extraordinary item $ 1.15 $ 1.15
============= =============
Net income $ 0.29 $ 0.25
============= =============
Weighted average number of
shares outstanding 1,350,418 1,350,418
============= =============
</TABLE>
<PAGE>
<PAGE>
GLOBAL CASINOS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED PRO FORMA
CONSOLIDATED STATEMENT OF OPERATIONS
AS OF AND FOR THE YEAR ENDED JUNE 30, 1997
The purchase method of accounting conforms the accounting policies followed by
the consolidated entities.
On August 1, 1997, Global Casinos, Inc. (the "Company") through a newly formed
wholly owned subsidiary, acquired all the outstanding shares of stock of
Alaska Bingo supply, Inc. ("ABSI") in a transaction accounted for as a
purchase. Consideration for the purchase consisted of a cash down payment of
$400,000 and a $4,000,000 8% installment note payable. The funds for the down
payment were derived from a private placement of short term notes totaling
$425,000, of which $75,000 was from an affiliate.
The historical condensed financial information for the Company is derived from
the Company's financial statements as of and for the year ended contained in
the Company's Annual Report on Form 10-KSB. The historical condensed balance
sheet for ABSI is derived from ABSI's balance sheet as of June 30, 1997. The
historical condensed statement of operations for ABSI is derived from ABSI's
statement of income for the year ended December 31, 1996, adjusted by adding
ABSI's results of operations for six months ended June 30, 1997, and deducting
the results of operations for the six months ended June 30, 1996. The ABSI
financial statements are contained elsewhere herein.
Entry (A):
Reflects the issuance of $425,000 of notes payable (including $75,000 to an
affiliate) required for the cash down payment. The notes are due in equal
monthly installments from January 1998 through April 1998. Interest on
$200,000 of the notes is at 24% and interest on the remaining $225,000
(including the affiliate note) is at 12%. Additionally, the holder of the
$150,000 12% note was issued warrants to purchase 15,000 shares of the
Company's common stock at an exercise price of $3 per share. The warrants
expire June 2000. Approximately $9,000 of the total note proceeds has been
allocated to warrants and has been accounted for as additional paid in
capital.
Entry (B):
Reflects the payment of the ABSI line of credit in full ($105,000 at June 30,
1997) and the distribution of certain vehicles (net book value of $60,600 at
June 30, 1997) to the shareholder of ABSI immediately prior to the acquisition
transaction.
Entry (C):
Reflects the reduction in cash of $400,000 and incurrence of a $4,000,000, 8%
note payable to effect the acquisition. The note payable is due in monthly
installments of $62,500 beginning November 1997 through November 2004. The
note holder has the option of converting $2,500,000 of the principal amount of
the note into common stock of the Company at the conversion price of $10.00
per share.
Entry (D):
Under purchase accounting, ABSI's assets and liabilities are required to be
adjusted to reflect their fair values, resulting in recognition of goodwill
related to ABSI's bingo distribution operations and leasehold interest in
ABSI's rental operations. The adjusted amounts have been based on management
appraisals and computational techniques designed to approximate their fair
values. The following adjustments have been made:
<TABLE>
<S> <C>
Net assets as reported by ABSI, net of entry (B) $ 501,031
Goodwill 2,144,433
Leasehold interest 1,754,536
$ 4,400,000
============
</TABLE>
Entry (E):
For purposes of presenting the pro forma condensed consolidated statement of
operations, the following adjustments (which are expected to be recurring)
have been made:
<TABLE>
<S> <C>
Interest on the $425,000 notes payable $ 51,200
Interest on the $4,000,000 note payable 311,600
------------
Total interest expense 362,800
------------
Amortization of goodwill, straight line over 18 years 119,100
Amortization of leasehold interest, straight line over
10 year lease term 175,500
------------
Total amortization expense 294,600
------------
Total adjustments $ 657,400
============
</TABLE>
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
GLOBAL CASINOS, INC.
Date: 10/14/97 By: /s/ Stephen G. Calandrella
----------------------- ---------------------------------
Stephen G. Calandrella, President
