<PAGE 1>
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] Quarterly Report under Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the fiscal quarter ended November 30, 1997
Commission file number 0-17642
CREATIVE GAMING, INC.
(Name of small business issuer as specified in its charter)
New Jersey 22-2930106
(State or other jurisdiction of I.R.S. Employer
incorporation or organization) Identification No.)
1115 Inman Avenue, Edison, N.J. 08820
(Address of principal executive offices)
(908) 218-3794
(Issuer's telephone number)
Check whether the issuer: (1) filed all reports required to
be filed by Section 13 or 15(d) of the Exchange Act during the
past 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 March 5, 1998, 876,353 shares of the Common Stock
were outstanding.
<PAGE 2>
CREATIVE GAMING, INC. AND SUBSIDIARIES
Form 10-QSB Index
November 30, 1997
PART I
Page
Item 1. Financial Statements (Unaudited): Number
Consolidated Balance Sheet at November 30, 1997 3
Consolidated Statements of Operations for the
quarters ended November 30, 1997 and 1996 5
Consolidated Statements of Operations for the
six months ended November 30, 1997 and 1996 6
Consolidated Statements of Cash Flows for the six
months ended November 30, 1997 and 1996 7
Notes to Financial Statements 8
Item 2. Management's Discussion and Analysis
or Plan of Operations 13
PART II
Item 1. Legal Proceedings 15
Item 2. Changes in Securities 15
Item 3. Defaults Upon Senior Securities 15
Item 4. Submission of Matters to a Vote of Security
Holders 15
Item 5. Other Information 15
Item 6. Exhibits and Reports on Form 8-K 15
Signatures 19
<PAGE 3>
CREATIVE GAMING, INC. AND SUBSIDIARIES
Consolidated Balance Sheet
November 30, 1997
(Unaudited)
ASSETS
Current assets:
Cash $ 2,167
Accounts receivable - net of
allowance for doubtful accounts
of $4,792 19,133
Inventories 50,262
Prepaid expenses and other current assets 83,053
Total current assets 154,615
Property and equipment:
Land 2,410,452
Gaming vessel 763,773
Furniture and equipment, net 18,715
Net property and equipment 3,192,940
Other assets:
Receivable from officer 182,364
Deferred consulting expenses 177,705
Intangibles, net of accumulated amortization
of $641,287 148,120
-----------
Total other assets 508,189
-----------
$3,855,744
==========
See Notes to Consolidated Financial Statements.
<PAGE 4>
CREATIVE GAMING, INC. AND SUBSIDIARIES
Consolidated Balance Sheet
November 30, 1997
(Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt $ 1,001,157
Short-term loans 180,325
Accounts payable, accrued expenses and other
liabilities 927,528
Payable and accrued settlement expenses 344,556
Payable and accrued legal fees 608,485
Total current liabilities 3,062,051
Long-term liabilities:
Long-term debt, net of current maturities of
$1,001,157 -
Collateralized settlement payable 45,844
---------
Total long-term liabilities 45,844
---------
Commitments and contingencies
Stockholders' equity:
12% Convertible redeemable preferred stock
(100,000 shares authorized); Series C, par
value $1.00; issued and outstanding:
100,000 shares: 100,000
Common stock, no par value; authorized:
3,333,333 shares; issued and outstanding:
876,353 shares 19,443,368
Additional paid-in capital 3,198,592
Accumulated deficit (21,698,267)
Unearned consulting and other expenses
related to issued and/or escrowed
common stock (295,844)
-----------
Total stockholders' equity 747,849
-----------
$ 3,855,744
===========
See Notes to Consolidated Financial Statements.
<PAGE 5>
CREATIVE GAMING, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(Unaudited)
Quarter Ended November 30,
1997 1996
Net sales $ 30,504 $ 119,022
Cost of goods sold 10,131 38,275
---------- ----------
Gross profit 20,373 80,747
---------- ----------
Selling expenses 10,143 21,554
General and administrative expenses 428,499 699,494
Gaming projects expenses 40,620 126,342
Warrant exercise expense - 250,000
Interest expense 32,996 27,120
--------- ----------
512,258 1,124,510
--------- ----------
Net loss from operations (491,885) (1,043,763)
Gain on disposal of assets 211,983
---------- ----------
Net loss $(491,885) $ (831,780)
========== ===========
Net loss per share $ (.49) $ (1.47)
=========== ===========
See Notes to Consolidated Financial Statements.
<PAGE 6>
CREATIVE GAMING, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(Unaudited)
Six Months Ended November 30,
1997 1996
Net sales $ 73,852 $ 246,196
Cost of goods sold 16,952 95,566
--------- ----------
Gross profit 56,900 150,630
--------- ----------
Selling expenses 16,123 55,623
General and administrative expenses 884,584 1,192,551
Gaming projects expenses 116,052 182,127
Warrant exercise expense 250,000
Interest expense 64,076 54,878
---------- -----------
1,080,835 1,735,179
---------- -----------
Net loss from operations (1,023,935) (1,584,549)
Gain on disposal of assets 211,983
----------- ------------
Net loss $1,023,935) $ (1,372,566)
=========== =============
Net loss per share $ (1.18) $ (2.68)
=========== =============
See Notes to Consolidated Financial Statements.
<PAGE 7>
CREATIVE GAMING, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Six Months Ended November 30,
1997 1996
Cash flows from operating activities:
Net loss $ (1,023,935) $(1,372,566)
-------------- ------------
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation and amortization 55,113 122,750
Amortization of deferred consulting expenses 143,392 -
Gaming projects expenses 116,052 182,127
Warrant & debt conversion expenses - 292,600
Gain on disposal of assets - (211,983)
Changes to operating assets and liabilities:
Accounts receivable 8,811 29,717
Inventories 5,906 (36,726)
Prepaid expenses and other current assets 76,425 (440,999)
Accounts payable and accrued expenses 153,006 (157,919)
Payable and accrued legal fees 198,967 119,494
--------- -----------
Total adjustments 757,672 (100,939)
---------- -----------
Net cash used in operating activities (266,263) (1,473,505)
---------- -----------
Cash flows from investing activities:
Increase in gaming projects (116,052) (195,744)
Purchases of property (16,962) (554,331)
--------- ----------
Net cash used in investing activities (145,334) (750,075)
--------- ----------
Cash flows from financing activities:
Proceeds from short-term borrowings 99,462 75,415
Repayment of short-term borrowings (29,282) (33,763)
Repayment of long-term debt - (46,956)
Proceeds from issuances of stock 209,400 1,800,000
--------- ----------
Net cash provided by financing activities 291,900 1,794,696
--------- ----------
Net increase (decrease) in cash (119,697) (428,884)
Cash at beginning of the period 121,864 541,610
--------- ----------
Cash at end of the period $ 2,167 $ 112,726
========= ==========
Supplemental disclosure of cash flow
information:
Cash paid during the period for interest $ 1,660 $ 56,052
======== ==========
Supplemental schedule of non-cash financing
activities:
Debt and other liabilities converted to
Common Stock $ 198,138 $ 511,684
========== ==========
See Notes to Consolidated Financial Statements.
<PAGE 8>
CREATIVE GAMING, INC. AND SUBSIDIARIES
Notes To Consolidated Financial Statements
November 30, 1997
(Unaudited)
Note 1 - Basis of Presentation
Creative Gaming, Inc. (the "Company") was formed in August
1988 to provide management and administrative services to its
wholly-owned subsidiaries. The consolidated unaudited financial
statements include the accounts of the Company and its operating
subsidiaries, collectively referred to herein as "CGI".
Significant intercompany accounts and transactions have been
eliminated in consolidation.
CGI has been attempting to convert to an entity which will
offer offshore gaming vessels, other gaming facilities,
entertainment and development of real estate, but has been
handicapped in such efforts by the lack of sufficient financing.
CGI sells its current products, consisting of educational
videos, books, gaming related items and children's paper
products, through mail order and through retailers, brokers and
distributors.
The accompanying unaudited consolidated financial statements
have been prepared in accordance with generally accepted
accounting principles. In the opinion of management of the
Company, all material adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been
made. Results of operations for the quarter and six months ended
November 30, 1997 are not necessarily indicative of the results
which may be expected for any other interim period or for the
year as a whole. To facilitate comparison with the current
period, certain amounts in the prior period have been
reclassified.
A one-for-thirty reverse stock split of the Common Stock, no
par value (the "Common Stock"), became effective on October 31,
1997 after an Amendment to the Company's Certificate of
Incorporation was filed. Each outstanding share of the Common
Stock became one-thirtieth of a share of the new Common Stock.
The Amendment, which was authorized by the Board of Directors of
the Company on September 29, 1997, reduced the authorized shares
from 100,000,000 to 3,333,333. There was no change in the par
value of the shares. The number of shares and per share amounts
in this Report have been adjusted to reflect the reverse stock
split.
It is recommended that the unaudited financial statements and
notes thereto in this Report be read in conjunction with the
financial statements and notes thereto in the Company's Annual
Report on Form 10-KSB for the fiscal year ended May 31, 1997 (the
"Form 10-KSB"), which was previously filed.
CGI's accompanying consolidated financial statements have been
prepared on a going concern basis. During the past several years,
CGI has experienced substantial recurring losses from operations
and has a working capital deficit. CGI has been dependent, in
part, on proceeds from sales of debt and equity securities and
the exercise of warrants and options. While management believes
its ability to raise additional capital will provide sufficient
cash for CGI to meet its operating requirements for the year
ending May 31, 1998 ("fiscal 1998") and manage its
<PAGE 9>
working capital deficit, there can be no assurance that CGI will obtain
such financing and thus maintain its ability to continue as a
going concern.
Note 2 - Gaming Projects and Other Activities
CGI purchased, on November 13, 1996, a vessel for the purpose
of converting it into an offshore gaming vessel. CGI planned to
utilize the vessel for gaming cruises originating in New York.
CGI, subject to obtaining the necessary governmental approvals,
signed a Letter of Intent to negotiate a dockage agreement in the
New York metropolitan area where the vessel, when operational,
would be docked. CGI was in the initial stages of refurbishing
the vessel when the lack of financing caused a halt. The purchase
and refurbishing costs incurred through November 30, 1997 have
been capitalized.
CGI owns 756 acres, consisting of two parcels one of
approximately 719 acres and the other of approximately 37 acres,
in Christian County, Missouri, along the main highway between
Springfield, Missouri and Branson, Missouri (the "Christian
County Site"). Management was of the opinion that the Christian
County Site could be used for a time sharing facility, a
hotel/convention center and/or other activities. On February 4,
1998, a notice of foreclosure was issued against the Company by
a mortgage holder. The property will be sold at auction on March
5, 1998 in Christian County, Missouri.
CGI and the Eastern Shawnee Tribe of Oklahoma (the "Tribe)
entered into a management agreement to develop and operate a
Class A/Class III gaming facility near Seneca, Missouri (the
"Seneca Facility"). Because of a federal circuit court decision
invalidating the statutory right of the Secretary of the Interior
to dedicate land in trust for Native American Indian tribes under
the Indian Reorganization Act, which opinion was reversed on
October 15, 1996, and a then pending battle for control of the
Tribe, with one of the issues being the management agreement with
CGI, CGI had suspended any further action by it with respect to
the Seneca Facility. Depending on developments, the Company will
review whether it will attempt to proceed with the Seneca
Facility.
A decision to proceed would require the Company to seek
financing, as to which there can be no assurance that such
funding would be available. Consulting and other related gaming
costs of approximately $116,000 have been charged to operations
for the six months ended November 30, 1997.
Note 3 - Issuance of Short-term Debt
On July 15 and 23, 1997, the Company issued promissory notes to
two lenders, both of whom are related to a director of the
Company, for the principal amounts of $25,000 and $35,000,
respectively, both at an annual interest rate of 12%, due in one
year, and secured by liens on the vessel owned by the Company. As
additional consideration for these loans, the Company issued
1,666 and 2,333 shares of the Common Stock, respectively, to the
two lenders.
During October 1997, the Company issued a promissory note to a
lender, who is related to a director of the Company, for $15,500
at an annual interest rate of 12%, due in one year, and secured
by a lien on the vessel owned by CGI.
<PAGE 10>
Note 4 - Long-term Debt
On February 28, 1996, CGI, as part of its purchase of certain
property, was issued a 10% mortgage from the sellers in the
principal amount of $1,072,475, with payments of $50,000
(including interest) due every three months and a final payment
of principal and interest due at the end of two years. Effective
May 31, 1997, the payment terms of the mortgage were extended to
a payment due June 1, 1998 for full principal balance and accrued
interest. As part of the agreement to extend the due date of the
mortgage, CGI issued 3,333 shares of the Common Stock to the
sellers and placed a lien on adjacent property owned by CGI as
collateral for the mortgage. In addition, a fifth mortgage was
give to an investor as security on a debt owed by the Company.
On February 4, 1998, a notice of foreclosure was issued by the
fifth mortgage holder. The property will be sold at auction on
March 5, 1998 in Christian County, Missouri.
Note 5 - Preferred Stock
On September 29, 1997, the Company entered into an agreement
and an investor group purchased 100,000 shares of Series C 12%
Convertible Redeemable Preferred Stock, $1.00 par value (the
"Series C Preferred Stock"), of the Company for $100,000. The
Company also issued to the group Common Stock purchase warrants
expiring September 29, 1999 to purchase 1,000,000 shares of the
Common Stock at an exercise price of $.10 per share. The
agreement provides that each share of the Series C Preferred
Stock is convertible into 46.5 shares of the Common Stock or an
aggregate of 4,650,000 shares.
Note 6 - Common Stock
Per share amounts are based upon the weighted average Common
Stock shares outstanding of 876,353 and 564,027 for the quarter
and six months ended November 30, 1997, respectively, and 865,556
and 512,608 for the quarter and six months ended November 30,
1996 , respectively. Losses per share of Common Stock were
computed by dividing the corresponding loss for each period by
the weighted average number of shares of the Common Stock
outstanding for each period. Common stock equivalents are not
included because the effect would be anti-dilutive. Fully diluted
computations are not shown because all potentially dilutive
securities would have an anti-dilutive effect on per share
amounts.
On June 5, 1997, the Company issued to an investor 6,666 shares
of the Common Stock for gross proceeds of $30,000 and issued a
Common Stock purchase warrant expiring June 29, 2001 to purchase
6,666 shares of the Common Stock at an exercise price of $7.50
per share, commencing December 30, 1997.
On June 9, 1997 the Company entered into a consulting agreement
with an individual to perform financial and public relation
consulting services for a period of three months. The Company
issued 16,666 shares of the Common Stock to the individual for
these services.
On June 12, 1997, an investor exercised its warrant expiring
January 2, 2000 to purchase 3,333 shares of the Common Stock at
$4.92 per share after the Company lowered the exercise price to
$4.92 per share.
<PAGE 11>
On July 2, 1997, an individual exercised his warrant expiring
August 6, 1999 to purchase 33,333 shares of the Common Stock at
an exercise price of $1.89 per share after the Company lowered
the exercise price initially to $3.00 per share and subsequently
to $1.89 per share.
On July 29, 1997 CGI issued 3,333 shares of the Common Stock
each to two individuals for services rendered and issued to each
individual a common stock purchase warrant expiring August 5,
2000 to purchase 3,333 shares of the Common Stock at an exercise
price of $7.50 per share.
During the quarter ended August 31, 1997, the Company issued
420 shares of the Common Stock for various services rendered. The
stock was valued at the value of the services rendered.
Note 7 - Subsequent Events
During November 1997 three additional persons, Arthur L.
Malone, Jr., David F. Brannan and Gene A. Hochevar, were named to
the Board of Directors, Arthur L. Malone, Jr. was appointed
Chairmen of the Board on January 2, 1998. Upon instruction from
the new Chairman of the Board, the Company's property, books
and records were removed from the New Jersey office. On January
28, 1998, all three newly appointed Board members resigned. The
property, books and records were subsequently returned.
Effective December 2, 1997, upon mutual agreement, the
Company's gaming consultant terminated the cash compensation
portion of his consulting agreement.
The Company has received inquires on the possible sale of the
vessel. Any such sale would be subject to a due diligence being
performed by the prospective purchaser. While discussions are
continuing, no agreement has been entered into as of the filing
date of this report.
On December 10, 1997, Walter J. Krzanowski resigned,
effective November 30, 1997, as the Treasurer, Chief Financial
Officer and Chief Accounting Officer of the Company. He
continues to serve as a consultant to the Company. No replacement
has as yet been named.
On December 12, 1997, the "Series C Preferred Stock" holders
agreed to accept shares of the Common Stock in lieu of dividends
due on the "Series C Preferred Stock". Dividends are payable
quarterly at an annual rate of 12% and are convertible into
shares of the Common Stock at a rate of 46.5 shares of the Common
Stock or an aggregate of 138,600 shares.
On December 3, 1997, a contract of sale on the "Christian
County Site" was entered into by the Company. The closing,
scheduled for December 29, 1997 and rescheduled for March 3,
1998, has been postponed . In view of the scheduled foreclosure
(see the third succeeding paragraph), there can be no assurance
that even the remaining parcel can be sold.
CGI, by mutual agreement with the landlord, terminated its
office lease on December 31, 1997. The lease was due to expire
on March 31, 1998.
<PAGE 12>
On January 20 1998, a creditor obtained a default judgment
against CGI, Peter J. Jegou and Carol Jegou who were guarantors
of the Company's debt, for $61,316 . The Company is negotiating
a settlement with the creditor.
On February 4, 1998, a notice of foreclosure was issued
against the Company by a mortgage holder. The property will be
sold at auction on March 5, 1998 in Christian County, Missouri.
<PAGE 13>
CREATIVE GAMING, INC. AND SUBSIDIARIES
Item 2.
Management's Discussion and Analysis or Plan of Operations
RESULTS OF OPERATIONS
The following discussion relates to operations.
SALES
Sales for the quarter and six months ended November 30, 1997
decreased by $88,518 or 74% and $ 172,344 or 70%, respectively,
as compared with sales for the corresponding prior year periods.
The decreases were principally due to lower sales volume with a
major customer and to a shift from marketing videos and other
products to emphasis on gaming projects which have not as yet
produced revenues.
GROSS PROFIT
Gross profit for the quarter and six months ended November 30,
1997 decreased by $60,374 or 75% and $93,730 or 62%,
respectively, as compared with gross profit for the corresponding
prior year periods. Gross profit margins for the quarter and six
months ended November 30, 1997 were 67% and 77%, respectively, as
compared with 68% and 61%, respectively, for the corresponding
prior year periods. The changes were principally due to the
decreases in sales during the periods which resulted in changes
in customer and product mix with higher gross margins.
SELLING EXPENSES
Selling expenses for the quarter and six months ended November
30, 1997 decreased by $11,411 or 53% and $39,500 or 71%,
respectively, as compared with these expenses in the
corresponding prior year periods. The decreases were principally
due to a shift in expenses from marketing videos and other
products to emphasis on potential gaming projects which have not
as yet produced revenues.
GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses for the quarter and six
months ended November 30, 1997 decreased by $270,995 or 39% and
$307,967 or 26% as compared with these expenses in the
corresponding prior year periods. The decreases were principally
due to litigation costs incurred during the prior periods.
<PAGE 14>
GAMING PROJECTS EXPENSES
Gaming projects expenses increased for the quarter and six
months ended November 30, 1997 by $85,722 or 68% and $66,075 or
36%, respectively, as compared with this expense in the
corresponding prior year periods. The increases were principally
due to the expenses incurred for the offshore gaming vessel
project during the current periods.
WARRANT EXERCISE EXPENSES
Warrant exercise expense of $250,000 for the quarter and six
months ended November 30, 1996 were due to the issuances of the
Common Stock during the periods to reflect the excess of the then
current market values of the Common Stock over the transaction
prices when issued.
INTEREST EXPENSE
Interest expense for the quarter and six months ended November
30, 1997 increased by $5,876 or 22% and $9,198 or 17%,
respectively, as compared with interest expense for the
corresponding prior year periods. The increases were principally
due to interest on a larger amount of short-term loans
outstanding during the current periods.
NAFTA
The North American Free Trade Act does not have a significant
effect on the consolidated operations.
INFLATION
Inflation does not have an impact on the consolidated
operations.
LIQUIDITY AND CAPITAL RESOURCES
CGI's cash position was $2,167 as of November 30, 1997 as
compared with $121,864 as of May 31, 1997 or a decrease of
$119,697. Cash flows from operating activities during the six
months ended November 30, 1997 used cash of $266,263 due to the
net loss of $1,023,935 adjusted for depreciation and amortization
of $198,505 and gaming projects expenses of $116,052 and offset
by a decrease in current liabilities of $351,973 and an increase
in current assets of $91,142.
During the six months ended November 30, 1997, CGI expended
$116,052 for gaming projects and $29,282 for the conversion of a
vessel into an offshore gaming vessel or an aggregate of $145,334
in net cash used in investing activities.
The net cash provided by financing activities during the six
months ended November 30, 1997 was $291,900, consisting of net
short-term borrowings of $82,500 and proceeds of $209,400 from
issuances of stock. These proceeds funded operational
requirements, gaming project costs and vessel refurbishing costs.
Operating liabilities of $198,138 were converted to shares of the
Common Stock during the six months ended November 30, 1997.
<PAGE 15>
Management believes that, as a result of the cash flow from
operations and the proceeds of $296,400 received through February
20, 1998 in recent offerings of equity and debt financing and
potential sales of equity through private placements and
exercises of outstanding Common Stock purchase warrants, it will
raise sufficient funds to meet its cash requirements for at least
the balance of fiscal 1998 based on its current level of
commitments. There can be no assurance that the Company will be
able to raise this additional financing. Should one of the
proposed gaming projects require funds for implementation,
management believes, based on its discussions with persons in the
investment banking community, that any funds required for such a
project can be obtained. There can be no assurance that the
market price of the Common Stock will be conducive to the
exercise of Common Stock purchase warrants and stock options, nor
that funds can be obtained to finance a specific project if
required will be available and, if available, on acceptable
terms. See the sections "Gaming Vessel Project" and "Other
Gaming Projects" in Item 1 to the Form 10-KSB.
As of November 30, 1997 and the date of the filing of this
report, there were no commitments for material capital
expenditures other than those related to the Christian County
Site (see the section "Branson Project" in Item 1 and the
section "Liquidity and Capital Resources" in Item 6 to the Form
10-KSB). However, the Company currently estimates that it will
require approximately $25,000,000 to make the gaming vessel
project operational (see Note 2 to Unaudited Consolidated
Financial Statements).
PART II
Item 1. Legal Proceedings.
On April 14, 1997, a former director of the Company
offered to sell shares of the Company to a purchaser as part of
an exercise of an option, the proceeds from which were paid to
the Company. The Company issued the shares and was advised that
the former director was to provide these shares to the
purchaser. The shares were never delivered to the purchaser, thus
the purchaser brought suit against the Company and the former
director for the return of the proceeds. The Company believes
the suit should not have been brought against the Company and
that the Company will prevail in this matter.
Item 2. Changes in Securities.
A one-for-thirty reverse stock split of the Common Stock, no
par value (the "Common Stock"), became effective on October 31,
1997 after an Amendment to the Company's Certificate of
Incorporation was filed. Each outstanding share of the Common
Stock became one-thirtieth of a share of the new common stock.
The Amendment, which was authorized by the Board of Directors of
the Company on September 29, 1997, reduced the authorized shares
from 100,000,000 to 3,333,333. There was no change in the par
value of the shares. The number of shares and per share amounts
in this Report have been adjusted to reflect the reverse stock
split.
On September 29, 1997, the Company authorized the creation of
100,000 shares of Series C 12% Convertible Redeemable Preferred
Stock, $1.00 par value (the "Series C Preferred Stock"),. The
Company also authorized Common Stock purchase warrants expiring
September 29, 1999, to purchase an aggregate of 1,000,000 shares
of the Common Stock at an exercise price of $.10
<PAGE 16>
per share. Each share of the Series C Preferred Stock is convertible
into 46.5 shares of the Common Stock or an aggregate of 4,650,000 shares.
Item 3. Defaults Upon Senior Securities.
None
Item 4. Submission of Matters to a Vote of Security Holders.
None
Item 5. Other Information.
During November 1997 three additional persons were named
to the Board of Directors, one of which was appointed Chairmen
of the Board on January 2, 1998. On January 28, 1998, all
three newly appointed Board members resigned (see exhibits 10
& 11).
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
The following exhibits marked with a footnote reference were
filed with a periodic report filed by the Company pursuant to
Section 13 of the Securities Exchange Act of 1934, as amended, or
a registration statement effective under the Securities Act of
1933, as amended (the "Securities Act"), and are incorporated
herein by this reference. If no footnote reference is made, the
exhibit is filed with this Report.
Number Exhibit
1(a) Copy of Management Agreement dated as of October 20, 1995
between Eastern Shawnee Tribe of Oklahoma (the "Tribe")
and Creative Gaming International, Inc. ("CGII"). (1)
1(b) Copy of Option Agreement dated as of November 8, 1995
between the Tribe and CGI. (1)
1(c) Copy of Letter dated December 13, 1995 extending the
option terms of Exhibit 1(b) hereto. (1)
1(d) Copy of Loan Agreement relating to Exhibit 1(a) hereto.
(2)
2(a) Copy of Agreement dated February 28, 1996 between Cook
Hollow Company as Seller, and CGII and the Company as
Buyer. (3)
2(a)(1) Copy of Promissory Note dated February 28, 1996 from CGII
to Cook Hollow Company is Exhibit B to Exhibit 2(a)
hereto. (3)
2(a)(2) Copy of Future Advance Obligation Wraparound Deed of
Trust dated as of February 28, 1996 between CGII, Gary A.
Powell, as Trustee, and Cook Hollow Company is Exhibit C
to Exhibit 2(a) hereto. (3)
<PAGE 17>
2(a)(3) Copy of Wraparound Mortgage Agreement effective February
28, 1996 between CGII as Borrower, and Cook Hollow
Company, as Lender, is Exhibit D to Exhibit 2(a) hereto.
(3)
2(a)(4) Copy of Indemnity Agreement effective February 28, 1996
among CGII and the Company, as Indemnitors and Cook
Hollow Company, as Indemnitee, is Exhibit E to Exhibit
2(a) hereto. (3)
2(a)(5) Copy of Standstill Agreement effective June 22, 1997
between Cook Hollow Company, as Seller, and CGII, as
buyer. (4)
3(a) Copy of 10% Promissory Note due July 16, 1998. (8)
3(b) Copy of 10% Promissory Note due July 23, 1998. (8)
4 Copy of Consulting Agreement effective June 9, 1997
between Arthur Malone, Jr. and the Company. (6)
5 The Company's Common Stock purchase warrant expiring June
29, 2001 and the Common Stock purchase warrants expiring
August 5, 2000 are substantially identical to the form of
Common Stock purchase warrant expiring April 29, 1998
filed as Exhibit 10(d)(1) to the Company's Annual Report
on Form 10-KSB for the fiscal year ended May 31, 1996
except as to the name of the holder, the expiration date
and the exercise price and, accordingly, pursuant to
instruction 2 to Item 601 of Regulation S-K under the
Securities Act are not individually filed.
6(a) Copy of Purchase and Sale Agreement dated as of October
___, 1996 by and among Jerry Ward Cars, Inc., Edward
Lockel, Jim's Truck and Equipment, Inc. and Creative
Gaming International, Inc. (5)
6(b) Copy of Sale Agreement dated March 7, 1997 between CGII
and CGI Vessel, Inc. (4)
7 Copy of 12% Cumulative Convertible Redeemable Preferred
Stock, Series C, Purchase Agreement between the Company
and a group of investors dated September 29, 1997. (7)
8 Copy of Amendment to Certificate of Incorporation filed
on October 24, 1997. (8)
9 Copy of Certificate of Designations and Preferences of
the Series C Preferred Stock filed on October 24, 1997.
(7)
10 Copy of press release dated January 28, 1998 regarding
resignation of directors.
11 Copy of press release dated February 2, 1998 regarding
return of company property and the retention of an
investor relations firm to assist in the Company's
overall corporate communications.
_______________________
(1) Filed as an exhibit to the Company's Quarterly Report on
Form 10-QSB for the quarter ended November 30, 1995 and
incorporated herein by this reference.
(2) Filed as an exhibit to the Company's Annual Report on
Form 10-KSB for the fiscal year ended May 31, 1996 and
incorporated herein by this reference.
<PAGE 18>
(3) Filed as an exhibit to the Company's Quarterly Report on
Form 10-QSB for the quarter ended February 29, 1996 and
incorporated herein by this reference.
(4) Filed as an exhibit to the Company's Annual Report on
Form 10-KSB for the fiscal year ended May 31, 1997 and
incorporated herein by this reference.
(5) Filed as an exhibit to the Company's Quarterly Report on
Form 10-QSB for the quarter ended February 28, 1997 and
incorporated herein by this reference.
(6) Filed as an exhibit to the Company's Registration
Statement on Form S-8 filed on June 23, 1997 and
incorporated herein by this reference.
(7) Filed as an exhibit to a Schedule 13D filed by Arthur L.
Malone, Jr. on October 9, 1997 and incorporated herein by
this reference.
(8) Filed as an exhibit to the Company's Quarterly Report on
Form 10-QSB for the quarter ended August 31, 1997 and
incorporated herein by this reference.
(b) Reports on Form 8-K
None
<PAGE 19>
SIGNATURES
In accordance with the requirements of the Exchange Act, the
registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Dated: March 5, 1998
CREATIVE GAMING, INC.
By: /s/ PETER J. JEGOU
--------------------
Peter J. Jegou
President and Chief Executive Officer
By: /s/ KENNETH OLSEN
-------------------
Kenneth Olsen
Acting Chief Accounting Officer
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<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAY-31-1998
<PERIOD-START> JUN-01-1997
<PERIOD-END> NOV-30-1997
<CASH> 2,167
<SECURITIES> 0
<RECEIVABLES> 19,133
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<CURRENT-ASSETS> 154,615
<PP&E> 3,192,940
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0
0
<COMMON> 19,433,368
<OTHER-SE> (18,795,519)
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