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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 June 30, 2000
[ ] 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)
51 Beech Road, Glen Rock, New Jersey 07452
__________________________________________
(Address of principal executive offices)
(201) 447-5360
_________________________
(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 June 30, 2000
____________________________ ____________________________
Common Stock, $.01 par value 12,561,750 shares
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AMERICAN GAMING & ENTERTAINMENT, LTD.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
June 30, December 31,
2000 1999
___________ ___________
ASSETS
Current Assets
Cash $ 214,000 $ 127,000
Prepaid expenses 82,000 58,000
Due from stockholder - 376,000
Other current assets - 7,000
___________ ___________
Total current assets 296,000 568,000
Furniture, fixtures and equipment, net
of accumulated depreciation of $4,000 -
2000 and $83,000 - 1999 4,000 5,000
___________ ___________
$ 300,000 $ 573,000
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 57,000 $ 47,000
Accrued payroll and related expenses 3,000 3,000
Accrued expenses and other current
liabilities 39,000 52,000
___________ ___________
Total current liabilities 99,000 102,000
___________ ___________
Commitments and Contingencies
Stockholders' Equity
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 17,769,000 17,136,000
Common stock, par value $.01 per share;
50,000,000 shares authorized, shares
issued: 12,561,750 - 2000 and
12,556,137 - 1999 (including 24,035
shares held in treasury in 1999) 126,000 126,000
Additional paid-in capital 42,050,000 42,707,000
Cost of shares held in treasury - (25,000)
Accumulated deficit (59,745,000) (59,474,000)
___________ ___________
201,000 471,000
___________ ___________
$ 300,000 $ 573,000
=========== ===========
See Notes to Consolidated Financial Statements
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<TABLE>
AMERICAN GAMING & ENTERTAINMENT, LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three months ended Six months ended
June 30, June 30,
____________________ ____________________
2000 1999 2000 1999
_________ _________ _________ __________
<S> <C> <C> <C> <C>
Revenues $ - $ - $ - $ -
_________ _________ _________ __________
Costs and expenses
Selling, general and administrative 137,000 149,000 274,000 592,000
Depreciation and amortization 1,000 189,000 1,000 524,000
Reversal of bad debt expense related to
lease expenses - (2,785,000) - (2,785,000)
Reversal of net liabilities for subsidiaries
in bankruptcy - (75,000) - (75,000)
_________ _________ _________ __________
Total costs and expenses 138,000 (2,522,000) 275,000 (1,744,000)
_________ _________ _________ __________
Operating income (loss) (138,000) 2,522,000 (275,000) 1,744,000
_________ _________ _________ __________
Other income (expense)
Interest income 3,000 15,000 4,000 34,000
Interest expense - (1,164,000) - (2,316,000)
Net gain on sale of assets - 40,000 - 88,000
_________ _________ _________ __________
Total other income (expense) 3,000 (1,109,000) 4,000 (2,194,000)
_________ _________ _________ __________
Net income (loss) (135,000) 1,413,000 (271,000) (450,000)
Dividends and accretion on preferred stock 317,000 317,000 633,000 633,000
Dividends and accretion on preferred stock - 150,000 - 300,000
_________ _________ _________ __________
Net income (loss) for common stockholders $(452,000) $ 946,000 $(904,000) $(1,383,000)
========== ========== ========== ===========
Income (loss) for common stockholders
per common share $ (0.04) $ 0.08 $ (0.07) $ (0.11)
========== ========== ========== ===========
Weighted average number of common
shares outstanding 12,561,750 12,532,102 12,547,849 12,532,102
========== ========== ========== ===========
See Notes to Consolidated Financial Statements
</TABLE>
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AMERICAN GAMING & ENTERTAINMENT, LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months ended June 30,
2000 1999
___________ ___________
Operating Activities
Net loss $ (271,000) $ (450,000)
Adjustments to reconcile net loss to net cash
provided by (used in)
Operating activities:
Depreciation and amortization 1,000 524,000
Accrued interest - 2,316,000
Interest income from restricted cash - (25,000)
Reversal of bad debt expense related to
lease expenses - (2,785,000)
Reversal of net liabilities for
subsidiaries in bankruptcy - (75,000)
Net gain on sale of assets - (88,000)
Changes in operating assets and liabilities
Due from stockholder 376,000 -
Restricted cash - charter payments - (1,290,000)
Deferred charter revenue - 1,290,000
Other current assets (17,000) (80,000)
Accounts payable, accrued expenses and
other current Liabilities (3,000) 174,000
___________ ___________
Net cash provided by (used in)
operating activities 86,000 (489,000)
___________ ___________
Investing Activities
Proceeds from asset dispositions - 423,000
___________ ___________
Net cash provided by investing
activities - 423,000
___________ ___________
Financing Activities
Proceeds from exercise of stock options 1,000 -
Proceeds from notes receivable and other
long-term assets - 300,000
___________ ___________
Net cash provided by financing
activities 1,000 300,000
___________ ___________
Increase in cash 87,000 234,000
Cash at beginning of year 127,000 123,000
___________ ___________
Cash at end of period $ 214,000 $ 357,000
=========== ===========
Supplemental Cash Flow Information
Non-cash investing activities:
During the six months ended June 30, 2000, the Company wrote off fully-
depreciated equipment amounting to approximately $80,000
See Notes to Consolidated Financial Statements
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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 June 30, 2000)
considered necessary for a fair presentation have been included.
Operating results for the three and six month periods ended June
30, 2000 may not be indicative of the results that may be
expected for the year ending December 31, 2000. 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, 1999 (the "1999 10-K").
The accompanying consolidated 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. The Company has
had a history of insufficient liquidity and has been dependent
upon Shamrock Holdings Group, Inc. and certain related entities
(collectively, "Shamrock") for both working capital and project
related financing.
The Company's recurring losses 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
The Company had available cash of approximately $214,000 as of
June 30, 2000. Such amount is anticipated to be sufficient for
the Company's budgeted costs through January 31, 2001. The
Company's ability to continue in business is primarily dependent
upon its ability to obtain sufficient funds for its operations.
However, the Company has no current commitments or prospects for
additional funds. If the Company does not receive additional
funds prior to January 31, 2001, it would then need to pursue a
formal plan of reorganization or liquidation. A formal plan of
reorganization or liquidation would generally result in the sale
of the Company's assets to satisfy outstanding obligations. There
can be no assurance that if either action is required to be
pursued that all such obligations would be completely satisfied.
Further, in the event of either
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action, it is unlikely that the stockholders of the Company will
recover any of their investment in the Company.
The Company maintains its cash accounts at a bank located in New
Jersey. Total cash balances are insured by the Federal Deposit
Insurance Corporation ("FDIC") up to $100,000 per bank. The
Company had cash balances on deposit with the New Jersey bank at
June 30, 2000 that exceeded the balance insured by the FDIC in
the amount of approximately $114,000.
For a discussion of other specific factors affecting the
Company's liquidity and continuation of business, see the 1999
10-K.
NOTE 3: RELATED PARTY ISSUES
As of June 30, 2000, Shamrock owns 100% of the outstanding shares
of the Company's Series A Preferred Stock ("Series A Stock") and
approximately 47.3% of the outstanding shares of the Common
Stock, thereby owning approximately 52.6% of the total voting
power represented by the Company's outstanding voting securities.
Additionally, Shamrock owns all of the outstanding shares of the
Series C Cumulative Preferred Stock ("Series C Stock"), Series D
Cumulative Preferred Stock ("Series D Stock") and Series E
Preferred Stock ("Series E Stock").
Assuming that Shamrock converted as of June 30, 2000 that number
of shares of Series C Stock, Series D Stock and Series E Stock
convertible into the total number of the Company's presently
authorized but unissued shares of Common Stock (i.e. 284,589,870
shares), Shamrock would have owned as of that date approximately
97.8% of both the total outstanding shares of Common Stock and
the total voting power represented by the total outstanding
voting securities of the Company.
On July 21, 2000, Shamrock converted all outstanding shares of
the Series A Stock, Series C Stock, Series D Stock and Series E
Stock into 361,987,926 shares of Common Stock, or approximately
98.2% of both the total outstanding shares of Common Stock and
the total voting power represented by the total outstanding
voting securities of the Company, subject to a final order of the
U.S. Bankruptcy Court for the Northern District of New York (the
"Court"). The Court has set a hearing date on a motion to approve
the conversion of such preferred stock for August 17, 2000.
Pursuant to such motion, approval of such conversion would be
subject to the Indiana Gaming Commission (the "IGC") approving
the sale by the Company of its interest in a riverboat gaming and
entertainment complex in Rising Sun, Indiana (the "RSR
Interest").
NOTE 4: SUBSEQUENT EVENTS
On July 28, 2000, three individuals (the "Buyers") entered into
Stock Purchase Agreements with Shamrock, pursuant to which the
Buyers agreed to purchase all of Shamrock's equity interest in
the Company, subject to a final order of the Court. As part of
such agreements, the Company agreed to appoint a Board of
Directors of at least three members designated by the Buyers upon
the closing of such agreements and provided certain business and
financial information about the Company. The Court has set a
hearing date on a motion to approve the Stock Purchase
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Agreements for August 17, 2000. Pursuant to such motion, approval
of the Stock Purchase Agreements would be subject to the IGC
approving the sale by the Company of the RSR Interest.
For further information, reference is also made to the Company's
Current Report on Form 8-K dated July 28, 2000.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
Results of Operations: Comparison of the three month periods
ended June 30, 2000 and June 30, 1999
Costs and Expenses
Selling, general and administrative expenses were approximately
$137,000 for the three months ended June 30, 2000, representing a
decrease of approximately $12,000 or approximately 8% when
compared to the three months ended June 30, 1999. Such decrease
was primarily due to (i) decreases of approximately $16,000,
$14,000 and $8,000 in directors fees, salaries and
accounting/consulting fees, respectively and (ii) the payment of
$8,000 in the three months ended June 30, 1999 related to the
settlement of a lawsuit. These decreases were partially offset by
increases of approximately $25,000 and $13,000 in legal fees
(primarily associated with the transactions discussed in Notes 3
and 4 to the unaudited Consolidated Interim Financial Statements)
and directors and officers liability insurance, respectively.
Depreciation and amortization costs primarily related to a casino
barge that was sold in August 1999 were approximately $189,000
for the three months ended June 30, 1999. The Company recorded no
material depreciation or amortization costs for the three months
ended June 30, 2000.
For the three months ended June 30, 1999, the Company recorded a
reversal of bad debt expense related to lease expenses of
approximately $2,785,000 related to a casino property in Reno,
Nevada that was sold in July 1999 and a reversal of net
liabilities for subsidiaries in bankruptcy of approximately
$75,000. No such amounts were recorded for the three months ended
June 30, 2000.
Interest income for the three months ended June 30, 2000 was
approximately $3,000, related to funds deposited in a money
market account. Interest income for the three months ended June
30, 1999 was approximately $15,000, primarily related to funds
held in escrow in connection with the RSR Interest. In November
1999, the Company agreed to transfer to Shamrock all payments,
distributions, dividends and proceeds of any type to which the
Company is entitled pursuant to or in connection with the RSR
Interest. Accordingly, no such interest income was recorded for
the three months ended June 30, 2000.
Interest expense for the three months ended June 30, 1999 was
approximately $1,164,000 on debt owed to Shamrock. In November
1999, Shamrock agreed to release the Company from all debts
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and liabilities. Accordingly, no interest expense was recorded
for the three months ended June 30, 2000.
For the three months ended June 30, 1999, the Company recorded a
net gain on sale of assets of $40,000 as the result of the
settlement of a lawsuit brought by the Company against the
purchaser of one of the Company's keno systems. The associated
account receivable had been written off in 1996.
Results of Operations: Comparison of the six month periods ended
June 30, 2000 and June 30, 1999
Costs and Expenses
Selling, general and administrative expenses were approximately
$274,000 for the six months ended June 30, 2000, representing a
decrease of approximately $318,000 or approximately 54% when
compared to the six months ended June 30, 1999. Such decrease was
primarily due to decreases of approximately $31,000 and $40,000
in legal fees and directors fees, respectively, expenses of
approximately $174,000 for the six months ended June 30, 1999
related to a casino property in Reno, Nevada that was sold in
July 1999 and a $35,000 judgment against the Company for unpaid
insurance premiums recorded in the six months ended June 30,
1999.
Depreciation and amortization costs primarily related to a casino
barge that was sold in August 1999 were approximately $524,000
for the six months ended June 30, 1999. The Company recorded no
material depreciation or amortization costs for the six months
ended June 30, 2000.
For the six months ended June 30, 1999, the Company recorded a
reversal of bad debt expense related to lease expenses of
approximately $2,785,000 related to a casino property in Reno,
Nevada that was sold in July 1999 and a reversal of net
liabilities for subsidiaries in bankruptcy of approximately
$75,000. No such amounts were recorded for the six months ended
June 30, 2000.
Interest income for the six months ended June 30, 2000 was
approximately $4,000, related to funds deposited in a money
market account. Interest income for the six months ended June 30,
1999 was approximately $34,000, primarily related to funds held
in escrow in connection the RSR Interest. In November 1999, the
Company agreed to transfer to Shamrock all payments,
distributions, dividends and proceeds of any type to which the
Company is entitled pursuant to or in connection with the RSR
Interest. Accordingly, no such interest income was recorded for
the six months ended June 30, 2000.
Interest expense for the six months ended June 30, 1999 was
approximately $2,316,000 on debt owed to Shamrock. In November
1999, Shamrock agreed to release the Company from all debts and
liabilities. Accordingly, no interest expense was recorded for
the six months ended June 30, 2000.
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For the six months ended June 30, 1999, the Company recorded a
net gain on sale of assets of $40,000 as the result of the
settlement of a lawsuit brought by the Company against the
purchaser of one of the Company's keno systems. The associated
account receivable had been written off in 1996. Additionally,
the Company recorded a net gain of approximately $48,000 for the
six months ended June 30, 1999 related to the sale of a building
in Mobile, Alabama.
Changes in Financial Condition, Liquidity and Capital Resources
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, specifically, the uncertainties related to the
Company's ability to obtain sufficient funds for its operations.
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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. The following report was filed by
the Company during the second quarter of 2000:
(1) Form 8-K dated May 10, 2000 with respect to the
transfer of substantially all of the assets of the Company to
Shamrock Holdings Group, Inc. and the restatement of the
Company's Certificate of Incorporation.
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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: 8/14/000 By: J. DOUGLAS WELLINGTON
____________________ ____________________________
J. Douglas Wellington
President and Chief Executive
Officer, and Principal
Accounting Officer
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EXHIBIT INDEX
EXHIBIT
NO. DESCRIPTION PAGE NO.
________ ___________ ________
11 Computation of Earnings Per Share 13
27 Financial Data Schedule 14
