<PAGE>
<PAGE> 1
U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-QSB
(Mark One)
[x] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1998
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from _______________ to ____________
Commission file number 0-19049
American Gaming & Entertainment, Ltd.
_____________________________________
(Exact name of small business issuer as specified in its charter)
Delaware 74-2504501
________ __________
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
One Woodland Avenue, Paramus, New Jersey 07652
______________________________________________
(Address of principal executive offices)
(609) 822-8505
___________________________
(Issuer's telephone number)
______________________________________________________________
(Former name, former address and former fiscal year, if changed
since last report)
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 [
]
Number of shares outstanding of each of the issuer's classes of common equity,
as of the latest practicable date.
Class Outstanding at March 31, 1998
___________________________ _____________________________
Common Stock, $.01 par value 12,532,102 shares<PAGE>
<PAGE> 2
<TABLE>
AMERICAN GAMING & ENTERTAINMENT, LTD.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
March 31, December 31,
1998 1997
___________ ____________
<S> <C> <C>
ASSETS
Current Assets
Cash $ 325,000 $ 381,000
Restricted cash 638,000 630,000
Prepaid expenses 175,000 232,000
Other current assets 482,000 313,000
___________ ___________
Total current assets 1,620,000 1,556,000
Assets held for sale 421,000 431,000
Casino barge and improvements, subject to lease, net of
accumulated depreciation of $4,241,000 - 1998
and $3,907,000 - 1997 8,352,000 8,686,000
Furniture, fixtures and equipment, net of accumulated
depreciation of $73,000 - 1998 and $71,000 - 1997 12,000 14,000
Other non-current assets 398,000 465,000
__________ __________
$10,813,000 $11,152,000
=========== ===========
See Notes to Consolidated Financial Statements
</TABLE>
<PAGE>
<PAGE> 3
<TABLE>
AMERICAN GAMING & ENTERTAINMENT, LTD.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
March 31, December 31,
1998 1997
_____________ _____________
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Current Liabilities
Amounts due to related parties:
Accrued interest $ 18,173,000 $ 16,788,000
Dividends payable 2,103,000 1,953,000
Accrual for lease costs 2,701,000 2,701,000
Current portion of long term debt 40,510,000 40,510,000
_____________ ___________
63,487,000 61,952,000
Accounts payable 50,000 68,000
Accrued payroll and related expenses 5,000 12,000
Accrued expenses and other current liabilities 1,601,000 1,389,000
Current portion of estimated net liabilities for
subsidiaries in bankruptcy 1,323,000 1,162,000
_____________ ___________
Total current liabilities 66,466,000 67,912,000
Long term portion of estimated net liabilities for
subsidiaries in bankruptcy 3,168,000 3,329,000
_____________ ___________
69,634,000 67,912,000
============= ===========
Commitments and Contingencies
Stockholders' Deficiency
Preferred stock, 1,000,000 shares authorized:
Series A preferred stock, par value $.01 per share,
55,983 shares issued 1,000 1,000
Series C and D cumulative preferred stock, and Series E
preferred stock, par value $.01 per share, 4,000 shares
authorized and issued for each series 14,919,000 14,602,000
Common stock, par value $.01 per share; 50,000,000 shares
authorized, 12,556,137 shares issued (including 24,035
shares held in treasury) 126,000 126,000
Additional paid-in capital 42,821,000 43,288,000
Cost of shares held in treasury (25,000) (25,000)
Accumulated deficit (116,663,000) (114,752,000)
_____________ ___________
(58,821,000) (56,760,000)
_____________ ___________
$ 10,813,000 $ 11,152,000
============= ===========
See Notes to Consolidated Financial Statements
</TABLE> <PAGE>
<PAGE> 4
<TABLE>
AMERICAN GAMING & ENTERTAINMENT LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three months ended March 31,
___________________________________
1998 1997
______________ ______________
<S> <C> <C>
Revenues $ 189,000 $ 1,000
______________ _____________
Costs and expenses
Selling, general and administrative 401,000 337,000
Depreciation and amortization 337,000 297,000
______________ _____________
Total costs and expenses 737,000 634,000
______________ _____________
Operating income (loss) (548,000) (633,000)
______________ _____________
Other income (expense)
Interest income 22,000 19,000
Interest expense (1,385,000) (1,363,000)
Net gain on sale of investments -- 2,000
______________ _____________
Total other income (expense) (1,363,000) (1,342,00)
______________ _____________
Net loss (1,911,000) (1,975,000)
Dividends and accretion on preferred stock 467,000 467,000
______________ _____________
Net loss for common stockholders $ (2,378,000) $ (2,442,000)
============== =============
Loss for common stockholders
per common share $ (0.19) $ (0.19)
============== =============
Weighted average number of common
shares outstanding 12,532,102 12,532,102
============== =============
See Notes to Consolidated Financial Statements
</TABLE>
<PAGE>
<PAGE> 5
<TABLE>
AMERICAN GAMING & ENTERTAINMENT LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three months ended March 21,
___________________________________________
1998 1997
_________________ _____________________
<S> <C> <C>
OPERATING ACTIVITIES
Net loss $ (1,911,000) $ (1,975,000)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization 336,000 297,000
Accrued interest 1,385,000 1,360,000
Receivable from equity interest in Rising Sun
project (189,000) --
Interest income from restricted cash (8,000) --
Changes in operating assets and liabilities
Other current assets 57,000 99,000
Other non-current assets 1,000 --
Accounts payable, accrued expenses and
other current liabilities 187,000 (34,000)
_______________ _______________
Net cash used in operating activities (142,000) (253,000)
_______________ _______________
Investing activities
Proceeds from asset dispositions -- 110,000
_______________ _______________
Net cash provided by investing activities 0 110,000
_______________ _______________
Financing Activities
Proceeds from notes payable and other long-term
obligations 86,000 56,000
Utilization of proceeds from charter of casino
barge -- 164,000
Principal payments on notes payable and other
long-term obligations -- (102,000)
_______________ _______________
Net cash provided by financing activities 86,000 118,000
_______________ _______________
Decrease in cash (56,000) (25,000)
Cash at beginning of year 381,000 265,000
_______________ _______________
Cash at end of period $ 325,000 240,000
=============== ===============
See Notes to Consolidated Financial Statements
/TABLE
<PAGE>
<PAGE> 6
AMERICAN GAMING & ENTERTAINMENT, LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1: BASIS OF PRESENTATION
The accompanying unaudited Consolidated Interim Financial Statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-QSB and
Article 10 of Regulation S-X. The unaudited Consolidated Interim Financial
Statements include the accounts of American Gaming & Entertainment, Ltd. and
its subsidiaries (collectively, the "Company"). The unaudited Consolidated
Interim Financial Statements do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of the Company, all adjustments
(including normal recurring accruals) and disclosures (including events
occurring subsequent to March 31, 1998) considered necessary for a fair
presentation have been included. Operating results for the three month period
ended March 31, 1998 may not be indicative of the results that may be expected
for the year ending December 31, 1998. For further information, reference is
also made to the Consolidated Financial Statements contained in the Company's
Annual Report on Form 10-KSB for the year ended December 31, 1997.
The accompanying unaudited Consolidated Interim Financial Statements have been
prepared on a going concern basis, which contemplates continuity of
operations, realization of assets and liquidation of liabilities in the
ordinary course of business. As further described in Note 2, the Company has
sustained recurring operating losses since its inception. The Company has also
had a history of insufficient liquidity and has been dependent upon its
largest stockholder, Shamrock Holdings Group, Inc. ("Shamrock"), and certain
related entities (The Bennett Funding Group, Inc. ("Bennett Funding") and
Bennett Management and Development Corp. ("Bennett Management"), collectively
with Shamrock, the "Bennett Entities") for both working capital and project
related financing. As a result, the Company's recurring losses, negative
working capital, stockholders' deficiency, defaults under its debt agreements,
uncertainties relating to the ability to consummate the liquidation of certain
of its subsidiaries (see Notes 2 and 3) and uncertainties relating to the
bankruptcy of, and securities fraud charges by the federal government against,
Bennett Funding and Bennett Management raise substantial doubt about the
ability of the Company to continue as a going concern. Management's plans
concerning these matters are discussed in Note 2. The accompanying unaudited
Consolidated Interim Financial Statements do not include any additional
adjustments that might result from the outcome of these uncertainties.
NOTE 2: LIQUIDITY AND CONTINUATION OF BUSINESS
Given the Company's present financial and liquidity position, the legal
problems described above relating to certain Bennett Entities (see Note 1) and
the Company's other litigation described below (see Note 6), the business of
the Company is unlikely to continue to be the ownership of equity interests in
casino gaming ventures. Additionally, the Company's ability to continue in
business is dependent upon its ability to (i) obtain sufficient funds for its
operations through the<PAGE>
<PAGE> 7
charter of the Gold Coast Barge, sales of assets, or otherwise, (ii) obtain
Shamrock's and, if necessary, Bennett Management's agreement to modify,
terminate or restructure on terms acceptable to the Company all obligations
due from the Company to Shamrock and, if applicable, Bennett Management, (iii)
consummate the liquidations under Chapter 11 of the Code of AMGAM Associates
("AMGAM") and American Gaming and Resorts of Mississippi, Inc. ("AGRM"), each
a wholly-owned subsidiary of the Company, under plans acceptable to the
Company, resulting in a liquidation of the various trade and debt obligations
of those entities, and (iv) satisfactorily resolve the litigation filed
against the Company (see Note 6). However, there can be no assurance the
Company will be successful in obtaining Shamrock's and, if necessary, Bennett
Management's agreement to modify, terminate or restructure on terms acceptable
to the Company all obligations due from the Company to Shamrock and possibly
Bennett Management, consummating the liquidations of AMGAM and AGRM under
Chapter 11 of the Code under plans acceptable to the Company or satisfactorily
resolving the litigation filed against the Company. If the Company is
unsuccessful in these efforts, the Company would then need to pursue a formal
plan of reorganization or liquidation of the Company. Either such action would
generally result in the sale of the Company's assets to satisfy outstanding
obligations. If either reorganization or liquidation is necessary, all of the
Company's obligations would probably not be completely satisfied and the
stockholders of the Company would probably not recover any of their investment
in the Company.
For a discussion of specific factors affecting the Company's liquidity and
continuation of business, see the Company's Annual Report on Form 10-KSB for
the year ended December 31, 1997.
The Company had available cash of approximately $325,000 as of March 31, 1998
and its only current significant source of cash receipts is payments of
$25,000 per month under a note issued to the Company in connection with the
sale of its keno operations. The Company believes that such cash and
anticipated cash receipts, collectively, are sufficient to fund the Company's
operations, excluding the Company's obligations to Shamrock and, if
applicable, Bennett Management, through the middle of 1998, based on the
Company's current level of operations and projected expenditures. If the
Company is unable to generate additional cash through the charter of the Gold
Coast Barge, sales of assets, or otherwise, the Company expects that it will
not have sufficient cash to operate beyond such date. The Company would then
need to pursue a formal plan of reorganization or liquidation which would
generally result in the sale of the Company's assets to be applied to
outstanding obligations. If either reorganization or liquidation is necessary,
all of the Company's obligations would probably not be completely satisfied
and stockholders of the Company would probably not recover any of their
investment in the Company. If an amendment to an agreement (the "Charter
Agreement"), with President Mississippi Charter Corporation ("PMCC") whereby
PMCC is leasing from the Company the Gold Coast Casino barge and related
leasehold improvements (collectively, the "Gold Coast Barge") which
incorporates the terms of a term sheet entered into between the Company, PMCC,
Shamrock and the committees for unsecured creditors in the bankruptcy
proceedings of AMGAM and AGRM (collectively, the "Committees") is approved by
the United States Bankruptcy Court, Southern District of Mississippi (the
"Bankruptcy Court") and a revision to a previously executed term sheet (the
"Original Term Sheet"; as proposed to be revised, the "Term <PAGE>
<PAGE> 8
Sheet") is executed, and pursuant thereto and to an agreement with Shamrock
(the "Escrow Allocation Agreement") the Company receives (a) approximately
$188,000 in a lump sum payment and (b) approximately $32,000 per month
retroactive to December 1, 1997, the Company believes that such cash and
anticipated cash receipts, collectively with the cash and anticipated cash
referred to above, are sufficient to fund the Company's operations, excluding
the Company's obligations to Shamrock and, if applicable, Bennett Management,
through the end of 1998, based on the Company's current level of operations
and projected expenditures.
If the Bankruptcy Court does not approve an amendment to the Charter Agreement
incorporating the terms of the Charter Term Sheet and the Company does not, by
some means, (i) receive its portion of the PMCC Payments due from PMCC under
the Charter Agreement or (ii) agree with PMCC, with the concurrence of the
Committees and Shamrock, on a mutually acceptable amended charter agreement,
the Company would not be able to meet its obligations as they come due. In
either such case, the Company would then need to pursue a formal plan of
reorganization or liquidation which would generally result in the sale of the
Company's assets to be applied to outstanding obligations. If either
reorganization or liquidation is necessary, all of the Company's obligations
would probably not be completely satisfied and stockholders of the Company
would probably not recover any of their investment in the Company.
As of March 31, 1998, the Company had recorded as "Restricted Cash" in the
accompanying unaudited Consolidated Interim Financial Statements approximately
$638,000 attributable to profit distributions and interest thereon received by
the Company relating to the Company's 24.5% beneficial equity interest (the
"RSR Interest") in RSR, LLC, a limited liability company formed by the Company
and a group of non-affiliated individuals, representing the equivalent of a
4.9% equity interest in a riverboat gaming and entertainment complex in the
City of Rising Sun, Indiana on the Ohio River. Legal title to the RSR Interest
has been transferred by the Company to NBD Bank, N.A., as trustee ("NBD"). NBD
is holding the distributions received in respect of the RSR Interest in trust
until such time as NBD sells or otherwise disposes of the RSR Interest in
accordance with the provisions of a trust agreement entered into between the
Company and NBD.
NOTE 3: SIGNIFICANT DEVELOPMENTS WITH RESPECT TO INVESTMENTS
Harolds Club Casino
Prior to 1996, Shamrock assumed responsibility for all carrying costs of the
Harolds Club property in Reno, Nevada including, but not limited to, lease
payments under certain land leases held by the Company related to the Harolds
Club, taxes, insurance and utilities. However, such land leases have not been
transferred to Shamrock and therefore the Company is obligated to make all
lease payments. Even if the Company transfers to Shamrock all of the Company's
rights, title and interest in such leases, the Company could still be
ultimately obligated under such leases, pursuant to certain guaranties of
lease executed by the Company. The Company has been informed by Shamrock and
the lessors under such leases that Shamrock has not made any lease payments
from April 1996 through March 1998 due under such leases or quarterly property
taxes <PAGE>
<PAGE> 9
due under such leases, collectively totaling approximately $1,545,000. The
lessors have, among other rights, the right to terminate the respective leases
and hold the Company responsible for all obligations under such leases through
the end of the respective lease terms. The Company has recorded the unpaid
lease payments and property taxes from April 1996 through March 1998 (the
"Unpaid Harolds Obligations") as current liabilities as of March 31, 1998. The
Company has also recorded the amounts of the Unpaid Harolds Obligations as a
receivable due from Shamrock, but, as a result of the Company's determination
that there is a substantial likelihood that such amounts will be
uncollectible, the Company has fully reserved for such amounts at the same
time such amounts have been recorded as a receivable.
NOTE 4: AMOUNTS DUE TO RELATED PARTIES AND LONG-TERM DEBT
The Company is delinquent in the payment of (i) interest due under the
Company's various loan agreements with Shamrock and (ii) rent which was due
under an operating lease between the Company and Bennett Management (the "SCS
Lease") with respect to a riverboat vessel and supporting barge, which SCS
Lease Shamrock orally represented to the Company that Bennett Management,
prior to its bankruptcy filing, assigned to Shamrock. The Company has
therefore classified all indebtedness due to Shamrock as current liabilities
in the accompanying unaudited Consolidated Interim Financial Statements. At
March 31, 1998 and December 31, 1997, the Company had outstanding amounts due
Shamrock of approximately $63,487,000 and $61,952,000, respectively, including
accrued interest of approximately $18,173,000 and $16,788,000, respectively.
Such amounts due Shamrock also include approximately $2,701,000 due under the
SCS Lease and accrued dividends of approximately $2,103,000 and $1,953,000 at
March 31, 1998 and December 31, 1997, respectively, on the Company's Series C
Cumulative Preferred Stock ("Series C Preferred Stock") and Series D
Cumulative Preferred Stock ("Series D Preferred Stock"). The outstanding
amount due Shamrock at March 31, 1998 represents approximately 91.2% of the
Company's liabilities as of such date and is substantially in excess of the
Company's estimates of the fair value of the Company's assets.
The balance of long-term debt at March 31, 1998 and December 31, 1997 is
comprised of approximately (i) $1,066,000, at the end of each period, related
to a working capital line of credit, (ii) $2,041,000, at the end of each
period, related to a term loan to assist the Company in financing pertaining
to a casino in Biloxi, Mississippi which the Company owned, managed and
operated in prior years (the "Gold Shore Casino"), (iii) $5,917,000, at the
end of each period, of PMCC/Bennett Debt, (iv) $384,000, at the end of each
period, related to the Company's utilization of slot machine sales proceeds,
which slot machines were beneficially owned by Bennett Management and which
slot machine proceeds Shamrock orally represented to the Company that Bennett
Management, prior to its bankruptcy filing, assigned to Shamrock and (v)
$31,101,000, at the end of each period, related to project financing for the
Gold Shore Casino.
The Company has entered into an agreement with Shamrock pursuant to which
Shamrock will receive 60% of any charter payments for the Gold Coast Barge and
67.5% of any net proceeds received from the sale of the Gold Coast Barge,
which amounts will reduce the Company's indebtedness to Shamrock (see Note 2).
<PAGE>
<PAGE> 10
The Company has also agreed to repay indebtedness to Shamrock of $125,000 from
the sale in 1997 of certain securities, which amount has not yet been paid to
Shamrock.
NOTE 5: OTHER RELATED PARTY ISSUES
Shamrock, of which the Trustee is the sole stockholder, owns (i) 4,423,454
shares of Common Stock, and (ii) all of the Company's outstanding Series A
Preferred Stock, convertible into, and voting as, 1,399,565 shares of Common
Stock. Additionally, the Trustee owns (i) an additional 1,500,000 shares of
Common Stock and (ii) all of the Company's outstanding Series C Preferred
Stock, Series D Preferred Stock and Series E Preferred Stock, convertible as
of March 31, 1998 into 1,273,084,587 shares of Common Stock. The Company does
not have a sufficient number of authorized shares of Common Stock to enable
the conversion of all of the Series C Preferred Stock, the Series D Preferred
Stock and the Series E Preferred Stock. On April 1, 1996 the Board of
Directors voted to request the stockholders of the Company to approve an
amendment to the Company's Restated Certificate of Incorporation increasing
the number of authorized shares of Common Stock to 500,000,000 shares no later
than the next annual meeting of the Company's stockholders. The Board of
Directors has not set a date for such annual meeting. Assuming the Trustee
converted as of March 31, 1998 that number of shares of the Series C Preferred
Stock, Series D Preferred Stock and Series E Preferred Stock convertible into
the total number of the Company's presently authorized but unissued shares of
Common Stock (i.e. 37,467,898 shares), the Trustee, on behalf of the estates
of certain Bennett Entities and Shamrock, would own approximately 86.8% of the
total outstanding shares of Common Stock and approximately 87.1% of the total
voting power represented by the total outstanding voting securities of the
Company. Assuming the Company's stockholders approve an amendment to the
Company's Restated Certificate of Incorporation increasing the number of
authorized shares of Common Stock to 500,000,000 shares and the Trustee
converted as of March 31, 1998 that number of shares of the Series C Preferred
Stock, the Series D Preferred Stock and the Series E Preferred Stock
convertible into the total number of the Company's authorized but unissued
shares of Common Stock immediately after giving effect to such amendment (i.e.
resulting in a total of 487,467,898 shares of Common Stock being issued to the
Trustee as of such date), the Trustee, on behalf of the estates of certain
Bennett Entities and Shamrock, would own approximately 98.7% of both the total
outstanding shares of Common Stock and the total voting power represented by
the total outstanding voting securities of the Company.
NOTE 6: DECONSOLIDATION OF AMGAM AND AGRM
As a result of the bankruptcy proceedings under Chapter 11 of the Code with
respect to AMGAM and AGRM, and the expected liquidation of these subsidiaries
in the near future, the Company's control of these entities is likely to be
temporary. In accordance with generally accepted accounting principles, the
Company has elected to deconsolidate AMGAM and AGRM and present the results of
operations for AMGAM and AGRM on the equity basis of accounting as a single
line item in the accompanying unaudited Consolidated Interim Statements of
Operations for financial reporting purposes. A combined unaudited condensed
balance sheet of these entities as of March 31, 1998 and December 31, 1997 is
as follows:
<PAGE>
<PAGE> 11
March 31, December 31,
1998 1997
Assets
Current Assets and Other $3,783,000 $3,767,000
Property and Equipment, Net 41,000 41,000
__________ __________
Total Assets $3,824,000 $3,808,000
========== ==========
Liabilities and Stockholders' Deficiency
Current Liabilities $28,538,000 $27,862,000
Amounts Due to Parent 12,147,000 12,147,000
Stockholders' Deficiency (36,861,000) (36,201,000)
Total Liabilities and ___________ __________
Stockholders' Deficiency $ 3,824,000 $ 3,808,000
============ ============
NOTE 7: RECENT ACCOUNTING PRONOUNCEMENTS
In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive Income."
This statement establishes standards for reporting and disclosure of
comprehensive income. Reclassification of financial information for earlier
periods presented for comparative periods is required under SFAS No. 130. The
Company adopted SFAS No. 130 effective January 1, 1998. This statement only
requires additional disclosures in the Company's consolidated financial
statements and its adoption did not have any impact on the Company's
consolidated financial position or results of operations. Currently the
Company has no components of other comprehensive income.
In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information." This statement establishes standards for
the reporting of information about operating segments and requires the
reporting of selected information about operating segments in interim
financial statements. Reclassification of segment information for earlier
periods presented for comparative periods is required under SFAS No. 131. The
Company adopted SFAS No. 131 effective January 1, 1998 although presentation
for interim periods in the initial year of adoption is not required. Adoption
of this statement is not expected to result in any changes to the Company's
presentation of financial information for the year ending December 31, 1998.<PAGE>
<PAGE> 12
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
Results of Operations: Comparison of the three month periods ended March 31,
1998 and March 31, 1997
Revenues
For the three months ended March 31, 1998, the Company recorded revenues of
approximately $189,000 attributable to the RSR Interest. Although the Rising
Sun Project opened for business in 1996, no financial statement information
for the three months ended March 31, 1997 was available nor were any cash
distributions made until the second quarter of 1997. Revenues from other
sources for the three months ended March 31, 1997 amounted to approximately
$1,000. Cash received from the Rising Sun Project is recoreded as "Restricted
Cash" in the accompanying unaudited Consolidated Balance Sheets (see Note 2).
Costs and Expenses
Selling, general and administrative expenses were approximately $401,000 for
the three months ended March 31, 1998, representing an increase of
approximately $64,000 or approximately 19% when compared to the three months
ended March 31, 1997. However, selling, general and administrative expenses
for the three months ended March 31, 1997 included the reversal of a
previously recorded consulting expense in the amount of approximately $195,000
due to a consulting firm advising the Company that such firm was not seeking
payment of such unpaid amount. Exclusive of such reversal, selling, general
and administrative expenses decreased approximately $131,000 for the three
months ended March 31, 1998 as compared to the three months ended March 31,
1997. Such decrease was primarily due to decreases in compensation, legal
expenses and expenses related to the selling of real estate in Alabama.
Depreciation and amortization costs were approximately $336,000 for the three
months ended March 31, 1998, representing an increase of approximately $39,000
or approximately 13% when compared to the three months ended March 31, 1997.
The furniture, fixtures and equipment on the Gold Coast Barge were being
depreciated over a useful life of 15 years for the three months ended March
31, 1997; the Company reevaluated the useful life of such assets in the fourth
quarter of 1997 and determined that such assets have a useful life of 10
years. Accordingly, for the three months ended March 31, 1998, the Company
depreciated such assets based on a remaining useful life of six and a half
years.
Net interest expense for the three months ended March 31, 1998 was
approximately $1,363,000, an increase of approximately $19,000 or
approximately 1% compared to the three months ended March 31, 1997. Interest
expense increased approximately $22,000 while interest income increased
approximately $3,000 during the three months ended March 31, 1998 compared to
the three months ended March 31, 1997.
<PAGE>
<PAGE> 13
The Company recorded a net gain of approximately $2,000 for the three months
ended March 31, 1997 related to the sale of certain furniture, fixtures and
equipment. No such gain was recorded for the three months ended March 31,
1998.
Changes in Financial Condition, Liquidity and Capital Resources
As of March 31, 1998, the Company had no committed financing arrangements and
a working capital deficiency of approximately $64,846,000. For a discussion of
liquidity and capital resources, see Note 2 to the unaudited Consolidated
Interim Financial Statements.
Risk Factors; Forward Looking Statements
Management's Discussion and Analysis contains forward-looking statements
regarding the Company's future plans, objectives and expected performance.
These statements are based on assumptions that the Company believes are
reasonable, but are subject to a wide range of risks and uncertainties, and a
number of factors could cause the Company's actual results to differ
materially from those expressed in the forward-looking statements. These
factors include, among others, the uncertainties related to (i) the Company's
ability to obtain sufficient funds for its operations, through the charter of
the Gold Coast Barge, sales of assets, or otherwise, (ii) obtaining Shamrock's
and, if necessary, Bennett Management's agreement to modify, terminate or
restructure on terms acceptable to the Company all obligations due from the
Company to Shamrock and, if applicable, Bennett Management, (iii) consummating
the liquidations under Chapter 11 of the Code of AMGAM and AGRM under plans
acceptable to the Company, resulting in a liquidation of the various trade and
debt obligations of those entities, (iv) satisfactorily resolving the legal
proceedings filed against the Company (see Note 6 to the unaudited
Consolidated Interim Financial Statements), and (v) the legal problems
described above relating to certain Bennett Entities (see Notes 1 and 2 to the
unaudited Consolidated Interim Financial Statements).
<PAGE>
<PAGE> 14
PART II. OTHER INFORMATION
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
For a discussion of defaults with respect to the Company's indebtedness due to
Shamrock, see Notes 2 and 4 to the unaudited Consolidated Interim Financial
Statements.
The Company has accrued and declared, but has not paid as of March 31, 1998,
dividends totaling approximately $152,000 which were due and payable on the
outstanding shares of its Series C Preferred Stock as of December 31, 1994.
The Company has accrued and declared, but has not paid as of March 31, 1998,
dividends totaling approximately $152,000 which were due and payable on the
outstanding shares of its Series D Preferred Stock as of December 31, 1994.
Additionally, the Company has accrued, but has not declared or paid as of
March 31, 1998, dividends totaling approximately $950,000 which were due and
payable on the outstanding shares of its Series C Preferred Stock from January
1, 1995 through March 31, 1998. The Company has accrued, but has not declared
or paid as of March 31, 1998, dividends totaling approximately $850,000 which
were due and payable on the outstanding shares of its Series D Preferred Stock
from January 1, 1995 through March 31, 1998. Although such dividends do not
constitute actual liabilities of the Company until declared, the Company has
accrued for such dividends because, under the terms of the Series C Preferred
Stock and the Series D Preferred Stock, dividends are cumulative whether or
not declared and the Company is prohibited from paying dividends on,
purchasing or redeeming any of its Series A Preferred Stock or Common Stock so
long as any such cumulated dividends are unpaid. The Company is prohibited
under the General Corporation Law of Delaware from declaring such dividends
unless the Company has (i) capital surplus or (ii) net profits in the fiscal
year in which such dividends are declared and/or the preceding fiscal year.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit Number Description
11 Computation of Earnings Per Share.
27 Financial Data Schedule
(b) Reports on Form 8-K. None.<PAGE>
<PAGE> 15
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Company has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
American Gaming & Entertainment, Ltd.
Date: 5/8/98 By: /s/ J. Douglas Wellington
______________ ___________________________
J. Douglas Wellington
President and Chief Executive Officer,
and Principal Accounting Officer
<PAGE>
<PAGE> 16
EXHIBIT INDEX
EXHIBIT
NO. DESCRIPTION PAGE NO.
_______ ___________ ________
11 Computation of Earnings Per Share. 17
27 Financial Data Schedule 18
<PAGE>
EXHIBIT 11
AMERICAN GAMING & ENTERTAINMENT, LTD.
COMPUTATION OF EARNINGS (LOSS) PER SHARE
Three Months Ended
March 31,
1998 1997
____ ____
Weighted average number
of shares for computation 12,532,102 12,532,102
========== ==========
Net loss $(1,911,000) $(1,975,000)
Dividends and accretion
on preferred stock 467,000 467,000
__________ __________
Net loss for common
stockholders $(2,378,000) $(2,442,000)
========== ==========
Loss for common stockholders
per common share $(0.19) $(0.19)
===== ====
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
UNUNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS OF AMERICAN GAMING &
ENTERTAINMENT, LTD FOR THE THREE MONTH PERION ENDED MARCH 31, 1998 AND IS
QUALIFIED IN ITSW ENTIRETY BY REFFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 325,000
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,620,000
<PP&E> 12,677,000
<DEPRECIATION> 4,314,000
<TOTAL-ASSETS> 10,813,000
<CURRENT-LIABILITIES> 66,466,000
<BONDS> 0
0
14,920,000
<COMMON> 126,000
<OTHER-SE> (73,876,000)
<TOTAL-LIABILITY-AND-EQUITY> 10,813,000
<SALES> 0
<TOTAL-REVENUES> 189,000
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 737,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,385,000
<INCOME-PRETAX> (1,911,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,911,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,378,000)
<EPS-PRIMARY> (0.19)
<EPS-DILUTED> (0.19)
</TABLE>
