<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A-1
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 23, 1998
GLOBAL CASINOS, INC.
---------------------------
(Exact name of registrant as specified in its charter)
Utah 0-15415 87-0340206
- ----------------------- ----------------------- --------------------
(State or other (Commission File No.) (IRS Employer
jurisdiction of Identification No.)
incorporation or
organization)
5373 North Union Boulevard, Suite 100, Colorado Springs, Colorado 80918
- -----------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (719) 590-4900
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(Former name or former address, if changed since last report)
ITEM 2: DISPOSITION OF ASSETS
- --------------------------------
(a) On December 23, 1998, Global Casinos, Inc. (the "Company") completed
the disposition of two separate business operations.
Effective December 23, 1998, the Company completed the disposition of its
discontinued casino operations on the island of Aruba. The Company had
previously announced that the Casino Masquerade located in the Radisson Aruba
Carribean Hotel on the island of Aruba had been closed effective February 28,
1998 in order to undergo renovations. Due to protracted delays in completing
the renovations and other adverse business circumstances, the Company was able
to negotiate an early termination of the remaining term on its casino lease.
Under the terms of the Settlement Agreement with Dutchco N.V., an Aruban
limited liability company, and Aruba Carribean Hotel Limited Partnership, as
landlord, the Company agreed to terminate the lease in consideration of a cash
payment in the amount of $400,000 and the issuance to the Company of trade
credits having an aggregate face value of $600,000.
The trade credits can be used at the Aruba Carribean Hotel (the "Hotel")
for a six year period beginning January 1, 2000 and ending December 31, 2005,
usable at the rate of $100,000 per year. The Hotel credits can be used
against room rates as well as food and beverage charges, subject to certain
limitations.
In addition, as part of the settlement agreement, the 100,000 warrants to
purchase common stock of the Company, exercisable at $3.00 per share and
exercisable at the earlier of the effective declaration of the registration
statement, or April 1999, and expiring April 2004, were rescinded and
canceled.
With the consummation of the foregoing Settlement Agreement, all residual
interest in the Company in its discontinued operations in Aruba have ceased.
Miscellaneous items of personal property and gaming equipment have been moved
by the Company from Aruba to its Pelican Casino on the island of St. Maarten.
The Company continues to own as a wholly owned subsidiary Global
Entertainment Group, N.V. an Aruba corporation ("Global Entertainment"), which
operated the Aruba Casino, and the Company's consolidated balance sheet
continues to include the liabilities of Global Entertainment notwithstanding
the discontinued operation. The Company hopes to be able to dispose of its
interest in Global Entertainment, although there can be no assurance that it
will be successful in these efforts.
(b) In an unrelated transaction, on December 23, 1998, the Company sold
in a management buy-out 100% of the outstanding shares of Common Stock of its
wholly owned subsidiary, Destination Marketing Services, Inc. ("DMSI"). The
DMSI shares were purchased by William C. Martin, DMSI's President. In
consideration of the shares of DMSI, the Company will receive payments
totaling $20,900 over three years, and will be indemnified against certain
liabilities, including payroll taxes. The effective date of the transaction
was set at October 1, 1998 by agreement.
DMSI is engaged in placing special travel arrangements for groups and
other large parties. The Company acquired DMSI earlier during 1998. DMSI was
never a significant subsidiary of the Company within the meaning of Regulation
210.11.01(b) under the Securities Exchange Act of 1934, as amended.
The accompanying consolidated financial statement illustrate the effect of the
disposition of the subsidiary and lease settlement ("Pro Forma") on the
Company's financial position and results of operations. The consolidated
balance sheet as of September 30, 1998 is based upon the historical balance
sheets of the Company and assumes that the transactions described above took
place on that date. The consolidated statements of income for the year ended
June 30, 1998 and September 30, 1998 are based on the historical statements of
income of the Company for those periods. The pro forma consolidated
statements of income assume the disposition took place on July 1, 1997.
The pro forma consolidated financial statements may not be indicative of the
actual results of the disposition and settlement. In particular, the pro
forma consolidated financial statements are based upon management's current
estimate of the transactions as of the September 30, 1998 interim date. The
actual transactions, to be recorded as of December 31, 1998, will differ from
the current estimates.
The accompanying consolidated pro forma financial statements should be read in
connection with the historical financial statements of Global Casinos, Inc.
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ITEM 7: FINANCIAL STATEMENTS AND EXHIBITS
- -------------------------------------------
(a) Financial Statements
Not applicable
(b) Pro Forma Financial Information
Included herewith are the pro forma Balance Sheet and pro forma
Statements of Operations of the Company giving effect to the discontinuation
and disposition of the Masquerade Casino on the island of Aruba and the
disposition of DMSI.
(c) Exhibits
Item Title
- ---- -----
*1.0 Settlement Agreement and Mutual Release of Claims
*2.0 Stock Purchase Agreement
- ----------------------
* Previously filed
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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: March 21, 2000 By: /s/ Stephen G. Calandrella
-------------------- -----------------------------
Stephen G. Calandrella, President
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GLOBAL CASINOS, INC. and SUBSIDIARIES
CONSOLIDATED PRO FORMA BALANCE SHEET
SEPTEMBER 30, 1998
(unaudited)
<TABLE>
<CAPTION>
As Assets As
Reported Sold Adjusted
---------- ---------- ----------
<S> <C> <C> <C>
ASSETS
- ------
Current assets:
Cash $ 497,283 $ 377,942 A $ 875,225
Restricted Cash 140,450 140,450
Accounts receivable:
Trade, net of
allowance for doubtful
accounts of $22,384 467,303 (47,069) B 420,234
Related parties 5,741 5,741
Inventory 254,325 254,325
Prepaid rent 192,800 192,800
Current portion of
notes receivable 60,623 8,875 B 69,498
Marketable securities 6,255 6,255
Other 92,172 (42,218) B 49,954
-------- --------- ----------
Total current assets 1,716,952 297,530 2,014,482
--------- --------- ----------
Land, buildings and
equipment:
Land 526,550 526,550
Buildings 4,126,970 4,126,970
Equipment 1,986,893 (27,357) B 1,959,536
--------- --------- ----------
6,640,413 (27,357) 6,613,056
Accumulated
depreciation (1,456,422) 6,036 B (1,450,386)
----------- --------- -----------
5,183,991 (21,321) 5,162,670
----------- --------- -----------
Other assets:
Leasehold rights and
interests and
contract rights,
net of amortization
of $1,199,095 2,593,479 (888,199) A 1,705,280
Goodwill, net of
amortization
of $140,292 2,024,212 2,024,212
Hotel credits 477,769 A 477,769
Notes receivable,
net of current
portion, including
receivables
in default 274,698 12,025 B 286,723
Other assets, net of
amortization
of $27,385 23,287 23,287
--------- --------- ----------
4,915,676 (398,405) 4,517,271
--------- --------- ----------
$11,816,619 $ (122,196) $11,694,423
=========== ============= ===========
</TABLE>
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<PAGE>
GLOBAL CASINOS, INC. and SUBSIDIARIES
CONSOLIDATED PRO FORMA BALANCE SHEET
SEPTEMBER 30, 1998
(unaudited) (continued)
<TABLE>
<CAPTION>
As Assets As
Reported Sold Adjusted
---------- ----------- -----------
<S> <C> <C> <C>
LIABILITIES AND
STOCKHOLDERS EQUITY
- -------------------
Current liabilities:
Accounts payable $ 641,308 $ (22,058) A $ 619,250
Accrued expenses 1,515,816 (68,527) B 1,447,289
Accrued interest,
including $54,539
to related parties 342,611 342,611
Note Payable 216,843 216,843
Current Portion of
long-term debt,
including debt in
default and
$238,350 to related
parties 2,318,298 (272,625) A,B 2,045,673
Mandatory redeemable
convertible
Class A preferred
stock, in default 27,500 27,500
Other 40,000 40,000
--------- --------- ----------
Total current
liabilities 5,102,376 (363,210) 4,739,166
--------- --------- ----------
Long-term debt, less
current portion 2,891,005 2,891,005
Other 12,056 12,056
2,903,061 - 2,903,061
--------- --------- ---------
Commitments and contingencies:
Stockholders' equity:
Preferred stock -
convertible, nonvoting;
10,000,000 shares
authorized
Class A - $2 par value;
109,000 shares
issued and
outstanding 218,000 218,000
Class B - $.01 par
value, 329,178
shares issued and
outstanding 3,176 3,176
Common Stock -
$.05 par value;
50,000,000 shares
authorized;
1,506,741 shares
issued and
outstanding 75,226 75,226
Additional paid-in
capital 12,439,582 12,439,582
Accumulated deficit (8,924,802) 241,014 A,B (8,683,788)
---------- --------- -----------
3,811,182 241,014 4,052,196
---------- --------- -----------
$11,816,619 $ (122,196) $11,694,423
=========== ========== ===========
</TABLE>
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<PAGE>
GLOBAL CASINOS, INC. and SUBSIDIARIES
CONSOLIDATED PRO FORMA STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1998
(unaudited)
<TABLE>
<CAPTION>
As Operations As
Reported Sold Adjusted
----------- ------------ ----------
<S> <C> <C> <C>
Revenues:
Casino $1,304,686 $1,304,686
Bingo 815,146 815,146
Food and beverage 27,450 27,450
Other 117,356 107,748 9,608
---------- ---------- ----------
2,264,638 107,748 2,156,890
---------- ---------- ----------
Expenses:
Cost of sales 436,928 436,928
Operating, general
and administrative 1,836,056 317,463 1,518,593
Depreciation and
amortization 180,646 1,673 178,973
---------- ---------- ----------
2,453,630 319,136 2,134,494
---------- ---------- ----------
Income/(Loss) from
operations (188,992) (211,388) 22,396
Other income (expense):
Interest income 7,449 7,449
Interest expense,
including $12,445
to related parties at
September 30, 1998 (116,026) (9,570) (106,456)
---------- ---------- ----------
(108,577) (9,750) (99,007)
---------- ---------- ----------
Net loss (297,569) (220,958) (76,611)
Dividends on
Class B preferred
stock (65,215) (65,215)
---------- ---------- ----------
Net loss available
to common
stockholders $ (362,784) $ (220,958) $ (141,826)
============ =========== ===========
Earnings (loss)
per share - basic
and diluted $ (0.24) $ (0.10)
============= =============
Weighted average
shares outstanding 1,504,461 1,504,461
=========== ===========
</TABLE>
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<PAGE>
GLOBAL CASINOS, INC. and SUBSIDIARIES
EXPLANATORY NOTES TO PRO FORMA ADJUSTMENTS
SEPTEMBER 30, 1998
A On December 23, 1998, the Company received $400,000 as partial settlement
of the Amended and Restated Aruba Caribbean Resort and Casino Lease
Agreement, dated April 22, 1998. The settlement, dated November 17,
1998, is comprised of a $400,000 cash payment and a total of $600,000
room, food, and beverage credits eligible for use commencing January 1,
2000 and ending December 31, 2005.
The present value of the hotel credits was determined using the face
value of $600,000 and a long term discount rate of 6% as indicative as an
appropriate factor in determining the net present value of $477,769 for
this long-term asset. Management has not implemented a disposition
strategy for this asset. If the credits are marketed through a travel
agent or broker, appropriate valuation adjustments will be made to
properly state this asset at its fair value.
The gain on the settlement of this lease obligation was determined as
follows:
Note Payable to Dutchco canceled $ 250,000
Accounts Payable settlement 22,058
Unamortized Leasehold/Contract Rights (888,199)
----------
Total Net Assets $(616,141)
Cash Received 377,942
Hotel Credits 477,769
----------
Total Gain on Settlement $ 239,570
==========
B On December 23, the Company sold 100% of its stock in Destination
Marketing Services in a management buy-out. In consideration of the
sale, the Company received a $20,900 promissory note bearing interest at
10% with principal and interest payments of $800 per month commencing
July 1, 1999. The net assets sold totaled $(19,455) and resulted in a
gain on disposition of the subsidiary of $1,444.
C The pro forma adjustments to the consolidated statements of income to
reflect the closing of the Casino Masquerade and related lease
termination settlement and the sale of Designation Marketing Services,
Inc. subsidiary stock sale assuming it was recorded at the beginning of
the year ended June 30, 1998. The condensed statement of income for
these entities for the fiscal year ended June 30, 1998 are as follows:
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<TABLE>
<CAPTION>
Casino Destination
Masquerade Marketing Total
----------- ----------- --------
<S> <C> <C> <C>
Revenues:
Casino $ 2,736,407 $ $ 2,736,407
Food and Beverage 33,589 33,589
Other 8,199 45,928 54,127
----------- --------- ---------
2,778,195 45,928 2,824,123
----------- --------- ---------
Expenses:
Cost of sales 106,638 106,638
Operating, general
and administrative 2,511,041 135,848 2,646,889
Depreciation and
amortization 143,906 4,363 148,269
Impairment of gaming
facility 503,416 503,416
---------- ---------- ----------
3,265,001 140,211 3,405,212
---------- ---------- ----------
Income/(Loss) from
operations (486,806) (94,283) (581,089)
Other income/(expense):
Interest income
Interest expense (2,667) (2,667)
Loss on disposal of
equipment (330,000) (330,000)
----------- --------- ---------
(330,000) (2,667) (332,667)
Income/(loss) before
minority interest (816,806) (96,950) (913,756)
Minority interest income
of subsidiary - - -
---------- ---------- ----------
Net income/(loss) (816,806) (96,950) (913,756)
Dividends on Class B
preferred stock - - -
---------- ---------- ----------
Net income/(loss)
available to
common stockholders $ (816,806) $ (96,950) $ (913,756)
============ ============ ===========
</TABLE>
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<PAGE>
GLOBAL CASINOS, INC.
PROFORMA CONSOLIDATED STATEMENT OF INCOME
(unaudited)
For the Year Ended June 30, 1998
<TABLE>
<CAPTION>
Consolidated Adjustments ProForma
------------ ----------- ----------
<S> <C> <C> <C>
Revenues:
Casino $ 8,077,148 $ (2,736,407) $ 5,340,741
Bingo 2,955,346 - 2,955,346
Food and beverage 187,174 (33,589) 153,585
Other 115,725 (54,127) 61,598
---------- ---------- ----------
11,335,393 (2,824,123) 8,511,270
---------- ---------- ---------
Expenses:
Cost of sales 1,730,047 (106,638) 1,623,411
Operating, general, and
administrative 8,919,236 (2,646,889) 6,272,347
Depreciation and
amortization 1,053,533 (148,269) 905,264
Loss on transfer of
interest in
gaming facility 220,835 - 220,835
Impairment of
gaming facility 746,552 (503,416) 243,136
12,670,205 (3,405,212) 9,264,993
---------- ---------- ----------
Income/(loss) from
operations (1,334,812) 581,089 (753,723)
---------- ---------- ----------
Other income (expense):
Interest income 34,756 34,756
Interest expense,
including $30,214
to related parties
for the year (637,094) 2,667 (634,427)
Loss on disposition
of equipment (349,763) 330,000 (19,763)
Other income 22,821 - 22,821
---------- ---------- ----------
(929,280) 332,667 (596,613)
---------- ---------- ----------
Income/(loss) before
minority interest (2,264,092) 913,756 (1,350,336)
Minority interest income
of subsidiary (24,607) - (24,607)
---------- ---------- ----------
Net income/(loss) (2,288,699) 913,756 (1,374,943)
Dividends on Class B
preferred stock (64,989) - (64,989)
---------- ---------- ----------
Net income/(loss) available to
common stockholders $ (2,353,688) $ 913,756 $(1,439,932)
============ ============ ============
Income/(loss) per common share -
basic and diluted:
Net income/(loss) available to
common stockholders $ (1.61) $ (0.99)
============ ============
Weighted average
shares outstanding 1,460,371 1,460,371
============ ============
</TABLE>
See Notes to Pro Forma Consolidated Financial Statements (Unaudited)
