<PAGE>
FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
EXCHANGE ACT
For the transition period from _________ to __________
Commission file number 0-15415
GLOBAL CASINOS, INC.
--------------------------------------
(Exact Name of Registrant as Specified in its Charter)
Utah 87-0340206
- ----------------- ----------------------
(State or other jurisdiction I.R.S. Employer
of incorporation or organization) Identification number
5373 N. Union Blvd., Suite 100 Colorado Springs, Colorado 80918
---------------------------------------------------------------------
(Address of Principal Offices) (Zip Code)
Registrant's telephone number, including area code: (719) 590-4900
Check whether the Issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the last 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 [ ]
As of May 24, 2000, 1,546,360 shares of Common Stock of the Registrant were
outstanding.
Transitional Small Business Disclosure Format (check one) Yes [ ] No
[ X ]
<PAGE>
<PAGE>
INDEX
PART 1. FINANCIAL INFORMATION:
Item 1. Financial Statements
Balance Sheets at March 31, 2000 (unaudited) and June 30, 1999
Statements of Operations for the Three Months Ended March 31, 2000
(unaudited) and March 31, 1999 (unaudited)
Statements of Operations for the Nine Months Ended March 31, 2000
(unaudited) and March 31, 1999 (unaudited)
Statements of Cash Flows for the Nine Months Ended March 31, 2000
(unaudited) and March 31, 1999 (unaudited)
Notes to Unaudited Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
PART II. OTHER INFORMATION
<PAGE>
<PAGE>
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
The consolidated financial statements included herein have been prepared by
Global Casinos, Inc. (the Company) without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission (SEC). Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
omitted pursuant to such SEC rules and regulations. In the opinion of
management of the Company the foregoing statements contain all adjustments
necessary to present fairly the financial position of the Company as of March
31, 2000, and its results of operations for the three and nine-month periods
ended March 31, 2000 and 1999 and its cash flows for the nine-month periods
ended March 31, 2000 and 1999. The Company's balance sheet as of June 30, 1999
included herein has been derived from the Company's audited financial
statements as of that date included in the Company's annual report on Form 10-
KSB. The results for these interim periods are not necessarily indicative of
the results for the entire year. The accompanying financial statements should
be read in conjunction with the financial statements and the notes thereto
filed as a part of the Company's annual report on Form 10-KSB.
<PAGE>
<PAGE>
GLOBAL CASINOS, INC
CONSOLIDATED BALANCE SHEETS
(In Thousands)
<TABLE>
<CAPTION>
March 31, June 30,
2000 1999
(unaudited)
------------- ------------
<S> <C> <C>
ASSETS
------
Current assets:
Cash $ 347 $ 505
Accounts receivable:
Trade, net of allowance for doubtful
accounts of $70 and $88 at March 31,
2000 and June 30, 1999 340 386
Related parties - 22
Inventory 369 260
Prepaid rent - 116
Current portion of notes receivable 81 156
Marketable trading securities 1,569 851
Other 88 67
------------- ------------
Total current assets 2,794 2,363
------------- ------------
Land, building and improvements and equipment:
Land 518 518
Building and improvements 4,079 4,072
Equipment 1,916 2,027
------------- ------------
6,513 6,617
Accumulated depreciation (1,890) (1,872)
------------- ------------
4,623 4,745
------------- ------------
Other assets:
Leasehold rights and interests and contract
rights, net of amortization of $1,045 and
$848 at March 31, 2000 and June 30, 1999 1,245 1,441
Goodwill, net of amortization of $385 and
$276 at March 31, 2000 and June 30, 1999 1,780 1,888
Hotel credits 507 493
Notes receivable, net of current portion,
including receivables in default 145 197
Other assets, net of amortization of $ - and
$26 at March 31, 2000 and June 30, 1999 151 25
Restricted cash - 140
Property rights held for sale 200 200
------------- ------------
4,028 4,384
------------- ------------
$ 11,445 $ 11,492
============= ============
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities:
Accounts payable, including $78 and $82 to
a related party at March 31, 2000 and
June 30, 1999 $ 831 $ 506
Accrued expenses:
Wages and taxes 240 570
Casino license fees - 1,169
Interest, including $61 and $14 to related
parties at March 31, 2000 and June 30,
1999 381 308
Other 567 265
Note payable 199 301
Current portion of long-term debt, including
debt in default and $1,078 and $439 to
related parties at March 31, 2000 and
June 30, 1999 2,527 1,712
Other 40 40
------------- ------------
Total current liabilities 4,785 4,871
------------- ------------
Long-term debt, less current portion 2,530 2,580
------------- ------------
Mandatory redeemable voting Class C preferred
stock, 487,172 issued and outstanding 585 585
------------- ------------
Commitments and contingencies - -
Stockholders' equity:
Preferred stock - convertible: 10,000,000
shares authorized Class A - $2 par value,
nonvoting, 96,500 shares issued and
outstanding at March 31, 2000 and June 30,
1999 193 193
Class B - $.01 par value, nonvoting,
257,795 and 296,329 shares issued and
outstanding at March 31, 2000 and June 30,
1999 3 3
Common stock - $.05 par value; 50,000,000
shares authorized; 1,546,360 shares issued
and outstanding at March 31, 2000 and
June 30, 1999 77 77
Additional paid-in capital 12,074 12,335
Accumulated deficit (8,802) (9,152)
------------- ------------
3,545 3,456
------------- ------------
$ 11,445 $ 11,492
============= ============
</TABLE>
See accompanying notes
<PAGE>
<PAGE>
GLOBAL CASINOS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31,
(Unaudited)
(In Thousands)
<TABLE>
<CAPTION>
2000 1999
------------- ------------
<S> <C> <C>
Revenues:
Casino $ 889 $ 1,607
Bingo 884 891
Food and beverage 173 34
Other 41 7
------------- ------------
1,987 2,539
------------- ------------
Expenses:
Cost of sales 604 488
Operating, general, and administrative 1,423 1,390
Depreciation and amortization 224 213
Other 26 -
------------- ------------
2,277 2,091
------------- ------------
Income (loss) from operations (290) 448
------------- ------------
Other income (expense):
Interest income 4 16
Interest expense, including $15 and $6 to
related parties at March 31, 2000 and 1999 (115) (95)
Realized gain on sale of marketable
securities 282 -
Unrealized net gain on marketable securities 1 3
------------- ------------
172 (76)
------------- ------------
Income (loss) before extraordinary item (118) 372
Extraordinary item - gain from restructuring
of debt - 12
------------- ------------
Net income (loss) (118) 384
Dividends on Class B and C preferred stock (63) (69)
------------- ------------
Net income (loss) available to common
stockholders $ (181) $ 315
============= ============
Earnings (loss) per common share - basic and
diluted:
Income (loss) from continuing operations $ (0.12) $ 0.19
Extraordinary item - 0.01
------------- ------------
Net income (loss) available to common
stockholders $ (0.12) $ 0.20
============= ============
Weighted average shares outstanding 1,546,360 1,504,461
============= ============
</TABLE>
See accompanying notes
<PAGE>
<PAGE>
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS ENDED MARCH 31
(Unaudited)
(In Thousands)
<TABLE>
<CAPTION>
2000 1999
------------- ------------
<S> <C> <C>
Revenues:
Casino $ 3,259 $ 4,192
Bingo 2,847 2,682
Food and beverage 239 89
Other 91 150
------------- ------------
6,436 7,113
------------- ------------
Expenses:
Cost of sales 1,693 1,451
Operating, general, and administrative 4,672 4,802
Depreciation and amortization 723 586
Other 26 -
------------- ------------
7,114 6,839
------------- ------------
Income (loss) from operations (678) 274
------------- ------------
Other income (expense):
Interest income 28 31
Interest expense, including $40 and $4 to
related parties at March 31, 2000 and 1999 (333) (331)
Gain on sale of subsidiaries 1,176 189
Realized gain on sale of marketable securities 417 -
Unrealized net gain/(loss) on marketable
securities (89) 54
------------- ------------
1,199 (57)
------------- ------------
Income before extraordinary item 521 217
Extraordinary item - gain from restructuring
of debt 55 77
------------- ------------
Net income 576 294
Dividends on Class B and C preferred stock (202) (196)
------------- ------------
Net income available to common stockholders $ 374 $ 98
============= ============
Earnings per common share - basic and diluted:
Income from continuing operations $ 0.20 $ 0.01
Extraordinary item 0.04 0.05
------------- ------------
Net income available to common stockholders $ 0.24 $ 0.06
============= ============
Weighted average shares outstanding 1,546,360 1,510,560
============= ============
</TABLE>
See accompanying notes
<PAGE>
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED MARCH 31
(Unaudited)
(In Thousands)
<TABLE>
<CAPTION>
2000 1999
------------- ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net cash provided by operating activities $ 334 $ 460
------------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of equipment (214) (376)
Collections on note receivable 48 45
Issuance of note receivable - 400
Purchases of marketable trading securities (1,176) (201)
Sales of marketable trading securities 786 -
------------- ------------
Net cash used in investing activities (556) (132)
------------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments of long-term debt (102) (174)
Issuances of long-term debt 1,177 255
Principal payments of notes payable (572) (72)
Borrowings against notes payable - 150
Payment of mandatory redeemable preferred stock - (3)
Redemption of Class B preferred stock (261) (357)
Payment of dividends on Class B preferred stock (179) (178)
------------- ------------
Net cash provide bu (used in) financing
activities 63 (379)
------------- ------------
Net decrease in cash (159) (51)
Cash at beginning of year 506 723
------------- ------------
Cash at end of year $ 347 $ 672
============= ============
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest $ 145 $ 233
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING
AND FINANCING ACTIVITIES:
Mandatory redeemable preferred stock
converted to common stock $ - $ 4
Fixed assets acquired through debt $ 376 $ -
Dividends accrued on Class B and Class C
preferred stock $ 31 $ 10
Debt converted into common stock $ 124
Debt converted into Class B preferred stock $ 150
Debt converted into Class C preferred stock
including $365 to related party $ 585
Class A preferred stock converted into common $ 25
</TABLE>
See accompanying notes
<PAGE>
<PAGE>
GLOBAL CASINOS, INC. & SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2000
(Unaudited)
1. ORGANIZATION and SIGNIFICANT ACCOUNTING POLICIES
The Consolidated Financial Statements for the three months and nine
months ended March 31, 2000 and 1999 have been prepared in accordance
with the accounting policies described in the Company's annual report on
Form 10-KSB. Management believes the statements include all adjustments
of a normal recurring nature necessary to present fairly the results of
operations for the interim periods.
At March 31, 2000, and for the three months and nine months ended march
31, 2000 and 1999, the consolidated financial statements of the Company
include the accounts of the following wholly-owned subsidiaries. All
significant intercompany accounts and transactions have been eliminated
in consolidation.
CASINOS USA, INC. ("Casinos USA"), a Colorado corporation, which owns and
operates the Bull Durham Saloon and Casino ("Bull Durham"), located in
the limited stakes gaming district of Black Hawk, Colorado.
GLOBAL CENTRAL, INC., a Colorado corporation, which owns and operates the
Tollgate Saloon & Casino ("Tollgate), located in the limited stakes
gaming district of Central City, Colorado.
GLOBAL ALASKA INDUSTRIES ("Global Alaska"), which operates Alaska Bingo
Supply, Inc. ("ABS") located in Anchorage, Alaska.
GLOBAL PELICAN N.V. ("Pelican"), a St. Maarten Limited Liability company
located on the island of St. Maarten in the Dutch Netherlands Antilles.
The Company disposed of its investment in Pelican in December 1999.
WOODBINE CORPORATION ("Woodbine"), a South Dakota corporation, which
operated Lillie's Casino in Deadwood, South Dakota through June 30, 1995.
BPJ HOLDINGS N.V. ("BPJ"), a Curacao limited liability company, which
operated the Casino Masquerade on the Caribbean resort island of Aruba
through February 1998. The Company disposed of its investment in BPJ in
December 1998.
DESTINATION MARKETING SERVICES ("DMS"), a Colorado corporation, which
acquired the net assets of a Colorado travel services company in January
1998. The Company disposed of its investment in DMS in October 1998.
2. TOLLGATE SALOON & CASINO
In August 1999, the Company entered into a lease and option agreement
(the "lease agreement") to lease the Tollgate Saloon & Casino in Central
City, Colorado. The Company paid a $30,000 deposit upon inception of the
lease agreement, of which $10,000 is nonrefundable. The term of the
lease is 24 months with monthly rent of $6,000. The Company has the
option to purchase the casino and associated real estate and equipment at
any time prior to the expiration of the lease agreement at a purchase
price of $1,400,000.
The Company entered into an agreement with a third party who had
previously operated the casino to lease additional gaming equipment under
terms that grant the Company the ability to purchase the equipment at the
end of the 24-month term for $35,000. The equipment lease requires
monthly rents of $1,700.
3. EARNINGS PER SHARE
Basic income or loss per share represents the net income or loss
available to common stockholders divided by the weighted average number
of common shares outstanding during the year. Diluted income/(loss) per
share reflects the potential dilution that could occur if securities or
other contracts to issue common stock were exercised or converted into
common stock or resulted in the issuance of common stock that then shared
in the income/(losses) of the entity.
The Company's operating history of losses has resulted in an average
market price per common share that is substantially lower than the
conversion prices on the existing convertible preferred stock, stock
options, stock warrants, and convertible promissory notes of $1.00 to
$5.00 per share. As a result of this situation, any issuance of
additional common stock could result in a reduction of total common
shares outstanding which would have the effect of increasing the income
per share on a diluted basis.
Convertible preferred stock, stock options, stock warrants and
convertible promissory notes are not considered in the calculation for
the years ended June 30, 1999 and the three months and nine months ended
March 31, 2000 as the impact of the potential common shares would be to
either increase the income per share or decrease the loss per share.
Therefore, diluted income or loss per share is equivalent to basic loss
per share.
4. DISPOSITION OF SUBSIDIARIES
On December 30, 1999, Global Casinos, Inc (Global) sold all of the issued
and outstanding shares of capital stock of its wholly-owned subsidiary,
Global Pelican, N.V., a St. Maarten Limited Liability Company, to
Arufinance, N.V., an Aruba Corporation, (Arufinance) pursuant to a Stock
Purchase Agreement dated as of December 30, 1999 (the Agreement) among
Global and Arufinance.
Arufinance acquired all of the capital stock issued and outstanding of
Global Pelican, N.V. from Global for a negotiated purchase price of
$1,000. Arufinance acquired all of the remaining assets and liabilities
of Global Pelican, N.V. as part of the stock purchase, effective with the
closing date of December 30, 1999. Global recognized a gain of
$1,135,000 in connection with the disposition.
As part of the stock sale transaction, Global retained accounts
receivables in the form of outstanding and uncollected markers totaling
$69,200, transferred by Global Pelican to Global, and the related
allowance for doubtful accounts of $69,200. Global also agreed to assume
and pay an outstanding accounts payable account to vendor, Aristocrat, in
the amount of $41,888 for certain gaming devices located in the Global
Pelican casino. This account payable was to be paid by the 30th of
January, 2000. This debt was restructured with the approval of
Aristocrat within the agreed time frame.
On December 31, 1998, Global agreed to sell all of the outstanding shares
of BPJ to an unaffiliated third party. Global recognized a gain of
$183,856 in connection with the disposition.
On October 1, 1998, Global also agreed to sell all of the outstanding
shares to Destination Marketing Services, an insignificant subsidiary of
the Company, recognizing a gain of $5,394 in connection with the
disposition.
5. SEGMENT INFORMATION
The Company operates in three significant lines of business: the casino
gaming industry, the distribution of bingo products, and the leasing of
bingo halls. Each reportable segment is a strategic business unit that
offers different products and services. The bingo-related segments are
managed together to realize synergies in employment and marketing
strategies.
The accounting policies of the segments are the same as those described
in the summary of significant accounting policies. The Company evaluates
the performance of each segment based on profit or loss from operations.
Following is a tabulation of business segment information for the nine
months ended March 31, 2000 and 1999 (in thousands):
<TABLE>
<CAPTION>
Bingo Bingo Hall
Casino Products Leasing Other Total
------ -------- --------- ----- -----
<S> <C> <C> <C> <C> <C>
2000
----
Revenue $3,589 $2,334 $513 $6,436
Interest revenue 2 $ 26 28
Interest expense 188 19 126 333
Depreciation and
amortization 353 336 34 723
Realized and
unrealized gains 328 328
Extraordinary items 55 55
Net income (loss) 457 111 135 (329) 374
Identifiable assets 6,108 1,045 4,292 11,445
Capital expenditures 214 214
1999
----
Revenue $4,431 $2,169 $513 $7,113
Interest revenue 2 $ 29 31
Interest expense 152 28 151 331
Depreciation and
amortization 374 151 61 586
Realized and
unrealized gains 54 54
Net income (loss) 424 182 91 (599) 98
Identifiable assets 4,878 864 6,077 11,819
Capital expenditures 361 14 1 376
</TABLE>
The following table sets forth financial information for the Company's
foreign and domestic operations for the nine months ended March 31, 2000
and 1999 (in thousands):
<TABLE>
<CAPTION>
Foreign** Domestic Total
------- -------- -----
<S> <C> <C> <C>
2000
----
Revenue $ - $ 6,436 $ 6,436
Net income (loss) 1,176 (802) 374
Identifiable assets 11,445 11,445
1999
----
Revenue $ 2,341 $ 4,772 $ 7,113
Net income (loss) 43 141 98
Identifiable assets 550 11,269 11,819
</TABLE>
- -----------------
** Foreign includes the operations of Aruba and St. Maarten for the nine
months ended March 31, 1999.
<PAGE>
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Certain statements in this Management's Discussion and Analysis of Financial
Condition and Results of Operations which are not historical facts are
forward-looking statements such as statements relating to future operating
results, existing and expected competition, financing and refinancing sources
and availability and plans for future development or expansion activities and
capital expenditures. Such forward-looking statements involve a number of
risks and uncertainties that may significantly affect the Company's liquidity
and results in the future and, accordingly, actual results may differ
materially from those expressed in any forward-looking statements. Such risks
and uncertainties include, but are not limited to, those related to effects of
competition, leverage and debt service financing and refinancing efforts,
general economic conditions, changes in gaming laws or regulations (including
the legalization of gaming in various jurisdictions) and risks related to
development and construction activities. The following discussion and
analysis should be read in conjunction with the consolidated financial
statements and notes thereto appearing elsewhere in this report.
Overview
Global Casinos, Inc. and its wholly-owned subsidiaries operate in the domestic
and international gaming industry. The Company is organized as a holding
company for the purpose of acquiring and operating casinos, gaming properties
and other related interests. At March 31, 2000, the Company's consolidated
financial statements consisted mainly of the following: the corporate office
in Colorado Springs, Colorado; the Bull Durham Saloon & Casino in Black Hawk,
Colorado; the Tollgate Saloon & Casino in Central City, Colorado; and Alaska
Bingo Supply ("ABS") in Anchorage, Alaska. The Pelican Casino was sold
effective December 30, 1999, see Note 4.
The operations of the Company are seasonal. The Bull Durham and Tollgate
casinos experience a significant increase in tourists from May through
September. ABS's operations are strongly influenced by the amount of daylight
and snow received. Consequently, its operations are the strongest from
September through April when people do not tend to be outdoors.
Bull Durham Saloon & Casino
The Bull Durham is located approximately one hour from Denver, Colorado in the
town of Black Hawk. In November 1998, the casino completed its expansion
project that increased the gaming space approximately 2,500 square feet to a
total of 7,200 square feet. The casino now operates with 159 slot machines
and three black jack tables. The Bull Durham employs an average of 37 full-
time employees.
Tollgate Saloon & Casino
The Tollgate is located approximately one mile from Bull Durham in the
historic mining town of Central City. In August 1999, the Company entered
into a lease and option agreement to lease the Tollgate for a term of 24
months with the option to purchase the casino and associated real estate and
equipment at any time prior to the expiration of the lease agreement at a
purchase price of $1,400,000. The Tollgate consists of 19,233 square feet on
three levels in a restored historic commercial building. The casino operates
with four black jack tables, 121 slot machines, and employs approximately 16
full-time employees.
Alaska Bingo Supply
ABS is primarily engaged in the distribution of a full line of bingo related
products. ABS products are sold in Alaska to non-profit organizations and
municipalities that use the products for fund-raising purposes. Charitable
bingo is currently the sole form of legalized gaming in Alaska. ABS also
receives rent income from the leasing of space to two bingo hall operators.
ABS employs seven full-time employees.
Results of Operations - Nine Months Ended March 31, 2000 Compared to the Nine
Months ended March 31, 1999
The Company recognized net income of $576,000 for the nine months ended March
31, 2000, an increase of $304,000 compared to net income of $217,000 for the
same period in 1999. Net income available to common stockholders was $374,000
for the nine months ended March 31, 2000, compared to net income of $98,000
for the same period in 1999.
The results of operations for the nine months ended March 31, 2000 were
comprised of Bull Durham, Tollgate, Pelican Casino (through the December 30,
1999 sale date), and Alaska Bingo Supply. The period in 1999 was comprised of
Bull Durham, Pelican Casino, Alaska Bingo Supply, Destination Marketing, and
Casino Masquerade.
During the second quarter of 1998, the Company sold its investments in BPJ
Holdings ("BPJ") and Destination Marketing. Destination Marketing was not a
material subsidiary of the Company. The Company, through BPJ, had operated
Casino Masquerade through February 1998, at which time the hotel in which it
was located was closed for major repairs and renovations. The Company did not
earn any revenue from Casino Masquerade during the period ended December 31,
1998.
Revenues
The Company's revenues are generated from casino operations, sales of bingo
products, rental income from the leasing of bingo halls, and miscellaneous
income that is comprised of food and beverage sales at the casinos. Revenues
for the nine months ended March 31, 2000 were $6,436,000 compared to
$7,113,000 for the 1999 period, a decrease of $677,00 or 10%.
Bull Durham's revenues decreased $83,000 to $1,962,000 for the nine months
ended March 31, 2000 compared to $2,045,000 for the same period in 1999. The
decrease is largely due to increased competition experienced by Bull Durham
from larger, better capitalized casinos. Tollgate's revenues for the nine
months ended March 31, 2000 were $591,000.
Alaska Bingo's revenues increased $150,000 to $2,847,000 for the nine months
ended March 31, 2000 compared to $2,697,000 for the period in 1999. Of the
increase, approximately 65% came from the increase in pull tab sales.
Expenses
Cost of sales increased $242,000 to $1,693,000 for the nine months ended March
31, 2000 compared to $1,451,000 for the same period in 1999. Approximately
85% of sales costs are incurred by Alaska Bingo. Alaska Bingo's gross profit
averaged approximately 52% for both of the nine month periods ended March 31,
2000 and 1999.
Operating, general, and administrative expenses decreased $130,000 to
$4,672,000 for the nine months ended March 31, 2000 compared to $4,802,000 for
the same period in 1999. The decrease is primarily due to costs incurred by
Casino Masquerade, Global Pelican and Destination Marketing during the nine
months ended March 31, 1999, which totaled $334,616. These cost reductions
were offset by $965,000 in operating costs incurred by Tollgate in its first
nine months of operations.
Depreciation and amortization costs increased $137,000 to $723,000 for the
nine months ended March 31, 2000 compared to $586,000 for 1999. The increase
is due largely to the addition of gaming equipment at the Tollgate casino and
increased amortization expense recognized by Alaska Bingo due to increased
cost of bingo hall lease renewals.
Other income, net of expenses, increased $1,142,000 to $1,199,000 for the nine
months ended March 31, 2000 from a loss of $57,000 for the same period in
1999. Gain on sale of subsidiaries for the Pelican Casino as of December 30,
1999 contributed $948,000 in other income for the 2000 period, compared to
$189,000 in 1999 for sales of the Casino Masquerade and Destination Marketing
Services subsidiaries. In. Net realized gains in the sale of marketable
trading securities exceeded unrealized losses by $274,000 for the nine months
ended March 31, 2000 compared to March 31, 1999.
The Company recognized an extraordinary item of $55,000 for the nine months
ended March 31, 2000 related to gains from debt restructuring and
extinguishments compared to a gain of $77,000 for the same period in 1999.
Included in the gain was $20,566 recognized in July 1999, when Global Casinos
paid a total of $52,858 in cash and assumed a note of $54,163 to retire the
unsecured debt of Casinos USA.
Liquidity and Capital Resources
The Company's primary source of cash is internally generated through
operations. Historically, cash generated from operations has not been
sufficient to satisfy working capital requirements and capital expenditures.
Consequently, the Company has depended on funding through debt and equity
financing to address these shortfalls. The Company has also relied, from
time to time, upon loans from affiliates to meet immediate cash demands.
There can be no assurance that these affiliates or other related parties will
continue to provide funds to the Company in the future as there is no legal
obligation to provide such loans.
The Company continues to address debt currently in default by conversion of
debt to equity, restructuring of amounts due and payment terms, etc. There
can be no assurances, however, that the Company will be able to continue to
renegotiate its debt in default. Should the Company be unsuccessful in these
endeavors, it would have a significant impact on the operations of the
Company. Additionally, the Company is in the process of renewing its license
with the Colorado Gaming Commission. Should the Company be unsuccessful in
obtaining this renewal, it would have a material adverse impact on the
operations of the Company.
The working capital deficiency decreased by $517,000 to $(1,991,000) at March
31, 2000 from $(2,508,000) at June 30, 1999. Current assets increased to
$2,794,000 at March 31, 2000 from $2,363,000 at June 30, 1999, an increase of
431,000 or 18%. Current liabilities decreased to $4,785,000 at March 31, 2000
from $4,871,000 at June 30, 1999, a decrease of $86,000 or 2%. The decrease
in the working capital deficit was due mainly to the reduction of both
equipment and casino license fees liabilities associated with the Pelican
Casino sold on December 30, 1999, net of increases in equipment acquired for
the operations of the Tollgate Casino. Additionally, the Company's working
capital deficit was positively impacted by an increase in the Company's
marketable trading securities of $718,000.
In August 1999, the Company entered into a lease and option agreement (the
"lease agreement") to lease the Tollgate Saloon & Casino in Central City,
Colorado. The Company paid a $30,000 deposit upon inception of the lease
agreement, of which $10,000 is nonrefundable. The term of the lease is 24
months with monthly rent of $6,000. The Company has the option to purchase
the casino and associated real estate and equipment at any time prior to the
expiration of the lease agreement at a purchase price of $1,400,000. In
addition, the Company entered into an agreement with a third party who had
previously operated the casino to lease additional gaming equipment under
terms that grant the Company the ability to purchase the equipment at the end
of the 24-month term for $35,000. The equipment lease requires monthly rents
of $1,700. The Company continues to monitor the operations of the Tollgate,
as no operating profits have been generated since the casino was opened.
Management believes that the upcoming summer months, where revenues typically
increase, will have positive impact on the operating results of the Tollgate.
There can be no assurances, however, that the Tollgate will be profitable in
the near term. The operations of the Tollgate have been funded primarily
through advances made from the Bull Durham and from advances made by related
parties. There can be no assurances, however, that the funds necessary to
continue the operations of the Tollgate will continue to be made by the Bull
Durham and by related parties.
During the nine months ended March 31, 2000, related parties made working
capital loans to the Company in the amount of $1,173,000. The loans accrue
interest at 8% and 9%. The Company paid $103,000 toward the principal of the
outstanding working capital loans. At March 31, 2000, the Company owed
$1,078,000 to the related parties. The Company incurred $374,000 in debt to
acquire equipment predominantly for the operations of Tollgate. The debt is
secured by the equipment, and bears interest at average rates of 12% over two
years.
Net cash provided by operating activities decreased $126,000 to $334,000 for
the nine months ended march 31, 2000 compared to $460,000 for the same period
in 1999. The decrease is due largely to working capital costs incurred in the
first nine months of Tollgate Casino operations.
Investing activities used $556,000 in net cash during the nine months ended
March 31, 2000, compared to $132,000 used in investing activities in 1999.
Purchases of equipment decreased $162,000, purchases of marketable trading
securities increased $975,000 and sales of marketable trading securities
increased by $786,000 for the nine months ended March 31, 2000 compared to
1999.
The Company will from time to time invest in selected marketable securities as
a short-term investment strategy to generate profits. Generally, these
investments are limited to equity stocks that present a value or growth
opportunity for the portfolio. Purchases are made with the intention that the
securities purchased will be held for 12 months or less, and are monitored
closely to minimize the inherent risks of market fluctuations. During the
nine months ended March 31, 2000, the Company recognized realized gains and
unrealized losses on marketable trading securities in the amount of $417,000
and ($89,000), respectively.
Cash flows from financing activities increased $442,000 to $63,000 for the
nine months ended March 31. 2000 compared to ($379,000) in 1999. The increase
is primarily due to the Company borrowing $1,177,000 during the nine months
ended March 31, 2000. Of this amount, $1,173,000 was borrowed from related
parties. Should these related parties be unwilling to continue to advance
funds to the Company, primarily for working capital purposes, the Company
would experience a significant negative impact to its operations.
On July 7, 1999, the Company's common stock was de-listed from the NASDAQ
exchange due to concerns relating to whether the listing of the Company's
common stock on the NASDAQ was in the best interest of the public. The de-
listing of the Company's common stock could have a material adverse impact on
the Company's ability to raise additional equity offerings.
The Company continues its efforts to formulate plans and strategies to address
the Company's financial condition and increase profitability. Management will
continue to address debt currently in default by negotiating with creditors to
convert debt to equity, extend maturity dates of debt, and accept reduced
payment terms. The Company will also continue to explore acquisition
opportunities, and improve operating efficiencies at its existing properties.
Management believes that these plans will result in increased liquidity and
future profitability, however, there is no assurance that Management's actions
will result in increased liquidity or future profitability.
Year 2000 Issue
The Company recognizes the need to ensure its operations will not be adversely
impacted by Year 2000 software failures. The Company has addressed this risk
with no adverse impact on the reliability of the operational systems. The
total cost of compliance and its effect on the Company's future results of
operations was determined to be insignificant in amount.
<PAGE>
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
None, except as previously disclosed.
Item 2(a). Changes in Securities
None, except as previously disclosed.
Item 3. Defaults Upon Senior Securities
None, except as previously disclosed.
Item 4. Submission of Matters to a Vote of Security Holders
None, except as previously disclosed.
Item 5. Other Information
None, except as previously disclosed.
Item 6(a). Exhibits
None, except as previously disclosed.
Item 6(b). Reports on Form 8-K
Acquisition or Disposition of Assets
<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Quarterly Report to
be signed on its behalf by the undersigned, thereunto duly authorized.
GLOBAL CASINOS, INC.
Date: May 26, 2000 By: /s/ Stephen G. Calandrella
------------------ ------------------------------
Stephen G. Calandrella, President
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEETS AND CONSOLIDATED STATEMENT OF OPERATIONS FOUND ON
PAGES 4 AND 5 OF THE COMPANY'S 10-QSB FOR THE NINE MONTHS ENDED MARCH 31, 2000
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-2000
<PERIOD-END> MAR-31-2000
<CASH> 347
<SECURITIES> 1,569
<RECEIVABLES> 410
<ALLOWANCES> 70
<INVENTORY> 369
<CURRENT-ASSETS> 2,794
<PP&E> 6,513
<DEPRECIATION> 1,890
<TOTAL-ASSETS> 11,445
<CURRENT-LIABILITIES> 4,785
<BONDS> 0
0
196
<COMMON> 77
<OTHER-SE> 12,074
<TOTAL-LIABILITY-AND-EQUITY> 11,445
<SALES> 6,436
<TOTAL-REVENUES> 6,436
<CGS> 1,693
<TOTAL-COSTS> 7,114
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 333
<INCOME-PRETAX> 576
<INCOME-TAX> 0
<INCOME-CONTINUING> 521
<DISCONTINUED> 0
<EXTRAORDINARY> 55
<CHANGES> 0
<NET-INCOME> 374
<EPS-BASIC> 0.20
<EPS-DILUTED> 0.20
</TABLE>
