<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, 1999
[ ] 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, 1999
____________________________ _____________________________
Common Stock, $.01 par value 12,532,102 shares
<PAGE 2>
AMERICAN GAMING & ENTERTAINMENT, LTD.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
March 31, December 31,
1999 1998
__________ ___________
ASSETS
Current Assets
Cash $ 622,000 $ 123,000
Restricted cash - charter payments 4,965,000 4,320,000
Restricted cash - Rising Sun 1,134,000 1,119,000
Prepaid expenses 43,000 71,000
Other current assets 152,000 801,000
__________ __________
Total current assets 6,916,000 6,434,000
Casino barge and improvements,
subject to lease, net of accumulated
depreciation of $5,577,000 - 1999
and $5,243,000 - 1998 7,016,000 7,350,000
Furniture, fixtures and equipment,
net of accumulated depreciation of
$80,000 - 1999 and $79,000 - 1998 8,000 9,000
__________ __________
$13,940,000 $13,793,000
=========== ===========
See Notes to Consolidated Financial Statements
<PAGE 3>
AMERICAN GAMING & ENTERTAINMENT, LTD.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
March 31, December 31,
1999 1998
____________ ____________
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Current Liabilities
Amounts due to related parties:
Accrued interest $ 21,034,000 $ 19,882,000
Dividends payable 2,703,000 2,553,000
Accrual for lease costs 2,701,000 2,701,000
Current portion of long term debt 34,592,000 34,592,000
______________ ______________
61,030,000 59,728,000
Accounts payable 108,000 86,000
Accrued payroll and related expenses 2,000 3,000
Accrued expenses and other current
liabilities 2,433,000 2,241,000
Short term portion of estimated net
liabilities for subsidiaries in
bankruptcy 2,263,000 2,070,000
Deferred charter revenue 10,863,000 10,238,000
______________ ______________
Total current liabilities 76,719,000 74,366,000
______________ ______________
Long term portion of estimated net
liabilities for subsidiaries in
bankruptcy 1,447,000 1,640,000
______________ ______________
78,166,000 76,006,000
______________ ______________
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 16,186,000 15,869,000
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 40,954,000 41,421,000
Cost of shares held in treasury (25,000) (25,000)
Accumulated deficit (121,468,000) (119,605,000)
______________ ______________
(64,226,000) (62,213,000)
______________ ______________
$ 13,940,000 $ 13,793,000
============== ==============
See Notes to Consolidated Financial Statements
<PAGE 4>
AMERICAN GAMING & ENTERTAINMENT LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three months ended
March 31,
__________________________________
1999 1998
______________ ______________
Revenues $ - $ 189,000
______________ ______________
Costs and expenses
Selling, general and administrative 443,000 401,000
Depreciation and amortization 335,000 336,000
______________ ______________
Total costs and expenses 778,000 737,000
______________ ______________
Operating loss (778,000) (548,000)
______________ ______________
Other income (expense)
Interest income 19,000 22,000
Interest expense (1,152,000) (1,385,000)
Net gain on sale of property 48,000 -
______________ ______________
Total other income (expense) (1,085,000) (1,363,000)
______________ ______________
Net loss (1,863,000) (1,911,000)
Dividends and accretion on preferred stock 467,000 467,000
______________ ______________
Net loss for common stockholders $ (2,330,000) $ (2,378,000)
============== ==============
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
<PAGE 5>
AMERICAN GAMING & ENTERTAINMENT, LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months ended March 31,
1999 1998
______________ ______________
Operating Activities
Net loss $ (1,863,000) $ (1,911,000)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation and amortization 335,000 336,000
Accrued interest 1,152,000 1,385,000
Receivable from equity interest
in Rising Sun project - (189,000)
Interest income from restricted cash (15,000) (8,000)
Net gain on sale of property (48,000) -
Changes in operating assets and liabilities
Restricted cash - charter payments (645,000) -
Deferred charter revenue 645,000 -
Other current assets 2,000 57,000
Other non-current assets - 1,000
Accounts payable, accrued expenses and
other current Liabilities 213,000 187,000
______________ ______________
Net cash used in operating
activities (224,000) (142,000)
______________ ______________
Investing Activities
Proceeds from asset dispositions 423,000 -
______________ ______________
Net cash provided by
investing activities 423,000 -
______________ ______________
Financing Activities
Proceeds from notes receivable and
other long-term assets 300,000 86,000
______________ ______________
Net cash provided by
financing activities 300,000 86,000
______________ ______________
Increase (decrease) in cash 499,000 (56,000)
Cash at beginning of year 123,000 381,000
______________ ______________
Cash at end of period $ 622,000 $ 325,000
============== ==============
See Notes to Consolidated Financial Statements
<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,
1999) considered necessary for a fair presentation have been
included. Operating results for the three month period ended
March 31, 1999 may not be indicative of the results that may be
expected for the year ending December 31, 1999. 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, 1998.
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 available
cash, 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 Note 2), uncertainties relating to the
bankruptcies of Shamrock, Bennett Funding and Bennett Management
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 the Bennett
Entities (see Note 1) and the Company's litigation described in
the Company's Annual Report on Form 10-KSB for the year ended
December 31, 1998, the business of the Company is unlikely to
continue to be the ownership of equity interests in casino
gaming
<PAGE 7>
ventures. Additionally, the Company's ability to continue in
business is dependent upon numerous factors, discussed below.
The Company had available cash of approximately $622,000 as of
March 31, 1999. The Company believes that such cash is
sufficient to fund the Company's operations, excluding the
Company's obligations to Shamrock and, if applicable, Bennett
Management, through the middle of 1999, based on the Company's
current level of operations and projected expenditures.
The Company does not anticipate receiving additional funds and
therefore will probably not have sufficient cash to operate
beyond such date. The Company would then need to pursue a formal
plan of reorganization or liquidation.
On March 10, 1999, Shamrock advised the Company that it should
consult Shamrock before utilizing the net proceeds of $415,000
from the sale on March 1, 1999 of a former railroad station in
Mobile, Alabama (the "GM&O Building") for working capital
purposes. If Shamrock demands that such funds should be utilized
to repay indebtedness due to Shamrock, the Company would need to
pursue a formal plan of reorganization or liquidation.
As of March 31, 1999, the Company had recorded as restricted
cash approximately $1,134,000 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 (the "Rising Sun Project"). The
Company has transferred legal title to the RSR Interest 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. Shamrock has orally notified the
Company that all net proceeds received by the Company from the
sale of the RSR Interest and the cash held by NBD attributable
to the RSR Interest should be paid to Shamrock to reduce the
Company's indebtedness to Shamrock. The amount of any such
payments will reduce the Company's indebtedness to Shamrock.
As of March 31, 1999, cash received from the charter of the Gold
Coast Barge in the amount of approximately $4,965,000 is also
recorded as restricted cash. The Company and the Bennett
Entities agreed on October 21, 1998 that any such payments
related to the charter or sale of the Gold Coast Barge disbursed
to the Company and the Bennett Entities, jointly, from the
bankruptcy cases of AMGAM Associates ("AMGAM") and American
Gaming and Resorts of Mississippi, Inc. ("AGRM"), each a wholly-
owned subsidiary of the Company, would be escrowed and disbursed
only upon the order of the United States Bankruptcy Court,
Northern District of New York. Shamrock has orally notified the
Company that all such payments should be paid to Shamrock to
reduce the Company's indebtedness to Shamrock. Any such cash not
disbursed to Shamrock will be disbursed to the creditors of
AMGAM and AGRM.
<PAGE 8>
The Company's ability to continue in business is also dependent
upon (i) 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, (ii)
consummating the liquidations of AMGAM and AGRM under Chapter 11
of the U.S. Bankruptcy Code (the "Code"), under plans acceptable
to the Company, resulting in a liquidation of the various trade
and debt obligations of those entities, and (iii) satisfactorily
resolving litigation filed against the Company (See Note 7 for
material developments in legal proceedings). However, there can
be no assurance the Company will be successful in those efforts.
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 reorganization or liquidation would generally result in
the sale of the Company's assets to satisfy outstanding
obligations. If either such action 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, 1998.
NOTE 3: SIGNIFICANT DEVELOPMENTS WITH RESPECT TO INVESTMENTS
Harolds Club Casino
Prior to 1997, 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. Such land leases were assigned by the
Company to Shamrock as of September 29, 1998. 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 1999 due under such leases or quarterly property
taxes due under such leases, collectively totaling approximately
$2,307,000. 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
1999 (the "Unpaid Harolds Obligations") as current liabilities
as of March 31, 1999. 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.
On October 8, 1998, the New York Bankruptcy Court authorized the
sale by Shamrock of the Harolds Club. Shamrock has advised the
Company that such sale is scheduled to close by July
<PAGE 9>
1999. The leases discussed above shall terminate at closing, and
the Company shall be released from all obligations under such
leases, except for environmental conditions resulting from the
Company's intentional or negligent conduct. Additionally,
lawsuits filed against the Company by the five lessors of the
Harolds Club property and cross-claims filed against the Company
by co-defendants will be dismissed upon closing.
Mobile, Alabama
Prior to 1997, the Company acquired the GM&O Building for
$1,006,000 in cash and subsequently recognized writedowns in the
value of such investment to reflect its fair market value.
On March 1, 1999, the Company sold the GM&O Building in Mobile,
Alabama to the City of Mobile for approximately $423,000. The
Company intends to use the net sales proceeds of approximately
$415,000 for working capital purposes. As discussed above,
Shamrock has advised the Company that it should consult Shamrock
before utilizing the net proceeds from the sale of the GM&O
Building for working capital purposes (See Note 2).
Keno
Prior to 1997 the Company entered into an assignment and
transfer agreement with American Heartland Corporation ("AHC")
and Big Red Keno, Ltd., a licensed keno operator in Omaha,
Nebraska, pursuant to which the Company transferred and assigned
to AHC all of the Company's right, title and interest to all of
the assets utilized by the Company in the conduct of its keno
gaming activities in exchange for $500,000 in cash and a
promissory note to the Company in the principal amount of
approximately $1,112,000 (the "Keno Note"). On September 22,
1998, AHC asserted set offs against the Keno Note aggregating
approximately $198,000. On January 8, 1999, the Company agreed
to the payment of $300,000 from AHC in full satisfaction of the
Keno Note. The Company recorded a writedown in the value of the
Keno Note in the amount of $165,000 for the year ended December
31, 1998, reflecting such settlement.
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
the Vessels, 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, 1999 and December 31, 1998, the Company
had accrued for financial statement purposes outstanding amounts
due Shamrock of approximately $61,030,000 and $59,728,000,
respectively, including accrued interest of approximately
$21,034,000 and $19,882,000, respectively.
<PAGE 10>
Such amounts due Shamrock also include approximately $2,701,000
due under the SCS Lease and accrued dividends of approximately
$2,703,000 and $2,553,000 at March 31, 1999 and December 31,
1998, 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 balance of accrued long-term debt due Shamrock at March 31,
1999 and December 31, 1998 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) $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 (iv) $31,101,000, at
the end of each period, related to project financing for the
Gold Shore Casino.
The accrued outstanding amount due Shamrock at March 31, 1999
represents approximately 78% of the Company's liabilities in the
accompanying unaudited Consolidated Interim Financial Statements
as of such date and is substantially in excess of the Company's
estimates of the fair value of the Company's assets.
The Company has entered into an agreement under which amounts
received by Shamrock will reduce the Company's indebtedness to
Shamrock. 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 Richard C. Breeden, the bankruptcy trustee of
Bennett Funding and Bennett Management (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, 1999
into 789,244,587 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,
1999 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),
<PAGE 11>
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, 1999 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. Neither AMGAM nor AGRM had any
business operations for the three months ended March 31, 1999 or
March 31, 1998.
NOTE 7: RECENT ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards ("SFAS") No. 133,
"Accounting for Derivative Instruments and Hedging Activities."
This statement, which establishes accounting and reporting
standards for derivatives and hedging activities, is effective
for fiscal years beginning after June 15, 1999. Upon the
adoption of SFAS No. 133, all derivatives are required to be
recognized in the statement of financial position as either
assets or liabilities and measured at fair value. The Company is
currently evaluating the impact the adoption of SFAS No. 133
will have on its financial position and results of operations.
NOTE 8: SUBSEQUENT EVENTS
On May 13, 1999, the Company paid $8,000, collectively, to two
stockholders of the Company, who were bondholders and
stockholders of AGRM prior to the merger of AGRM into the
Company, to settle a lawsuit filed in 1996 in the Circuit Court
of Harrison County, Mississippi, Second Judicial District (Civil
Action No. A2402-96-00210), alleging federal and state
securities fraud.
<PAGE 12>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
Results of Operations: Comparison of the three month periods
ended March 31, 1999 and March 31, 1998
Revenues
For the three months ended March 31, 1998, the Company recorded
revenues of approximately $189,000 attributable to the RSR
Interest. The Company has not received any financial statement
information relating to the RSR Interest for the three months
ended March 31, 1999 and therefore has not recorded any revenues
attributable to the RSR Interest for the three months ended
March 31, 1999. Cash received from the Rising Sun Project is
recorded as "Restricted Cash" in the accompanying unaudited
Consolidated Balance Sheets (see Note 2).
Costs and Expenses
Selling, general and administrative expenses were approximately
$443,000 for the three months ended March 31, 1999, representing
an increase of approximately $42,000 or approximately 10% when
compared to the three months ended March 31, 1998. Such increase
is primarily due to an increase of approximately $51,000 in
legal fees relating to litigation in the bankruptcy proceedings
of AGMAM and AGRM and a $35,000 judgment against the Company for
unpaid insurance premiums, partially offset by a decrease of
approximately $32,000 in insurance expense.
Depreciation and amortization costs were approximately $335,000
for the three months ended March 31, 1999, representing a
decrease of approximately $1,000 or less than 1% when compared
to the three months ended March 31, 1998.
Net interest expense for the three months ended March 31, 1999
was approximately $1,133,000, a decrease of approximately
$230,000 or approximately 17% compared to the three months ended
March 31, 1998. Interest expense decreased approximately
$233,000 while interest income decreased approximately $3,000
during the three months ended March 31, 1999 compared to the
three months ended March 31, 1998. Interest expense for the
three months ended March 31, 1998 includes interest on debt of
approximately $5,917,000 that was reclassified as deferred
charter revenue as of December 31, 1998.
The Company recorded a net gain of approximately $48,000 for the
three months ended March 31, 1999 related to the sale of the
GM&O Building. 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, 1999, the Company had no committed financing
arrangements and a working capital deficiency of approximately
$69,804,000. For a discussion of liquidity and capital
resources, see Note 2 to the unaudited Consolidated Interim
Financial Statements.
<PAGE 13>
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, and
(v) the legal problems described above relating to certain
Bennett Entities (see Note 1 to the unaudited Consolidated
Interim Financial Statements).
<PAGE 14>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
For a discussion of legal proceedings, see Note 8 to the
unaudited Consolidated Interim Financial Statements.
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, 1999, 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, 1999, 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, 1999, dividends totaling approximately
$1,250,000 which were due and payable on the outstanding shares
of its Series C Preferred Stock from January 1, 1995 through
March 31, 1999. The Company has accrued, but has not declared or
paid as of March 31, 1999, dividends totaling approximately
$1,150,000 which were due and payable on the outstanding shares
of its Series D Preferred Stock from January 1, 1995 through
March 31, 1999. 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 5. OTHER INFORMATION
Effective April 23, 1999, Mr. Paul Patrizio resigned as a member
of the Board of Directors for personal reasons.
<PAGE 15>
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 16>
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: 5/24/99 By: J. DOUGLAS WELLINGTON
______________________ ________________________
J. Douglas Wellington
President and Chief
Executive Officer, and
Principal Accounting
Officer
<PAGE 17>
EXHIBIT INDEX
EXHIBIT
NO. DESCRIPTION PAGE NO.
_______ ___________ ________
11 Computation of Earnings Per Share 18
27 Financial Data Schedule 19
<PAGE>
EXHIBIT 11
AMERICAN GAMING & ENTERTAINMENT, LTD.
COMPUTATION OF EARNINGS (LOSS) PER SHARE
Three Months Ended
March 31,
1999 1998
____ ____
Weighted average number
of shares for computation 12,532,102 12,532,102
========== ==========
Net loss $(1,863,000) $(1,911,000)
Dividends and accretion
on preferred stock 467,000 467,000
_______ _______
Net loss for common
stockholders $(2,330,000) $(2,378,000)
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
UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS OF AMERICAN GAMING &
ENTERTAINMENT, LTD. FOR THE THREE MONTH PERIOD ENDED MARCH 31, 1999 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 622,000
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 6,916,000
<PP&E> 12,681,000
<DEPRECIATION> 5,657,000
<TOTAL-ASSETS> 13,940,000
<CURRENT-LIABILITIES> 76,720,000
<BONDS> 0
0
16,687,000
<COMMON> 126,000
<OTHER-SE> (80,539,000)
<TOTAL-LIABILITY-AND-EQUITY> 13,940,000
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 778,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,152,000
<INCOME-PRETAX> (1,863,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,863,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,330,000)
<EPS-BASIC> (0.19)
<EPS-DILUTED> (0.19)
</TABLE>
