UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
[X] Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended September 30, 1997
[ ] Transition Report pursuant to 13 or 15(d) of the Securities Exchange Act
of 1934
For the transition period from to
Commission File Number 33-55254-37
NORAM GAMING AND ENTERTAINMENT, INC.
(Exact name of Registrant as specified in its charter)
Nevada 87-0485316
(State or other jurisdiction of (IRS Employer
incorporation ) Identification No.)
THREE CANTON SQUARE
TOLEDO, OHIO 43624
- ---------------------------------------- ----------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (419) 255-1515
Indicate by a check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 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 [X] Yes [ ] No
Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of the latest practicable date.
Class Outstanding as of November 3, 1997
- ------------------------------------ --------------------------------------
$.001 par value Class A Common Stock 14,084,800 shares
1
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
BASIS OF PRESENTATION
General
The accompanying unaudited financial statements have been prepared in
accordance with the instructions to Form 10-QSB and, therefore, do not include
all information and footnotes necessary for a complete presentation of financial
position, results of operations, cash flows, and stockholders' deficit in
conformity with generally accepted accounting principles. In the opinion of
management, all adjustments considered necessary for a fair presentation of the
results of operations and financial position have been included and all such
adjustments are of a normal recurring nature. Operating results for the nine
months ended September 30, 1997, are not necessarily indicative of the results
that can be expected for the year ending December 31, 1997.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
LIQUIDITY AND CAPITAL RESOURCES
As of September 30, 1997, the Company had $46,341 cash in the bank. There
is no certainty that the Company can meet its current financial commitments.
The Company is a development stage company engaged in the operation of
international lottery projects, the sale of equipment and services to the North
American bingo market, and leasing of facilities to charities that conduct bingo
operations. The Company, during the quarter ended September 30, 1997, entered
into a joint venture agreement with Lymca, S.A. (A Venezuelan corporation) to
provide equipment and services for a lottery project in Venezuela. Subsequent to
September 30, 1997, the Company entered into an agreement with Sharp Image
Gaming International Corporation (a California corporation) whereby Sharp Image
will provide lottery terminals to the Venezuela lottery project at no initial
cost to the Company. The first of approximately 1,300 terminals are expected to
be installed in Venezuela during the fourth quarter of 1997.
Net loss was $39,618 for the three months ended September 30, 1997 compared
with $99,513 for the same period in 1996. All increases in revenues, cost of
sales, and expenses for 1997 can be attributed to growth in the market place and
improved management controls over existing operations.
Net revenue was $218,708 for the three months ended September 30, 1997
compared with $189,013 for the same period in 1996, for an increase of 16%. Cost
of sales for the three months
2
<PAGE>
ended September 30, 1997 was $44,384 compared to $34,220 for the same period in
1996, for an increase of 30%.
General and administrative expenses were $190,447 for the three months
ended September 30, 1997 compared to $165,603 for the same period in 1996, for
an increase of 15%. Depreciation and amortization expense was $7,803 for the
three months ended September 30, 1997 compared to $7,938 for the same period in
1996, for a decrease of 2%. Interest expense for the three months ended
September 30, 1997 was $5,212 compared to $6,161 for the same period in 1996,
for a decrease of 15%.
For the three months ended September 30, 1997 the Company had a net loss of
$15,439, and its subsidiary had net a loss of $24,179, for a consolidated net
loss of $39,618. For the three months ended September 30, 1996 the consolidated
net loss was $99,513 ($7,722 from the Company and $91,791 from the subsidiary).
At September 30, 1997 the Company's assets were $8,195, and the
subsidiary's assets were $187,684, for total consolidated assets of $195,879.
Liabilities at September 30, 1997 were $347,477 for the Company and $188,194 for
the subsidiary, for total consolidated liabilities of $535,671.
Net loss was $921,591 for the nine months ended September 30, 1997 compared
with $110,533 for the same period in 1996. Included in the net loss for the
three and nine months ended September 30, 1997 is a loss of $10,480 and
$861,375, respectively, recognized when the Company issued stock for consulting
services related to expanding its product lines.
Net revenue was $721,550 for the nine months ended September 30, 1997
compared with $632,131 for the same period in 1996, an increase of 14%. Cost of
sales for the nine months ended September 30, 1997 were $154,268 compared with
$143,089 for the same period in 1996, an increase of 8%.
General and administrative expenses were $509,043 for the nine months ended
September 30, 1997 compared with $477,752 for the same period in 1996, an
increase of 7%. Depreciation and amortization expense was $23,328 for the nine
months ended September 30, 1997 compared with $29,955 for the same period in
1996, a decrease of 22%. Interest expense for the nine months ended September
30, 1997 was $15,139 compared with $17,264 for the same period in 1996, a
decrease of 12%.
For the nine months ended September 30, 1997 the Company had a net loss of
$886,973 and its subsidiary had a net loss of $34,618, for a consolidated net
loss of $921,591.
3
<PAGE>
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
Page
99-1 Financial Statements as of September 30, 1997 F-1
27 Financial Data Schedule
(b) Reports on Form 8-K
None
4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
NORAM GAMING AND ENTERTAINMENT, INC.
DATED: November 13, 1997 /S/ George C. Zilba
------------------------- -------------------
George C. Zilba, President and Director
5
<PAGE>
NORAM GAMING AND ENTERTAINMENT, INC. AND SUBSIDIARY
(A Development Stage Company)
CONSOLIDATED BALANCE SHEET
(Unaudited)
<TABLE>
<CAPTION>
September 30,
1997
----------------------
ASSETS
CURRENT ASSETS
<S> <C>
Cash $ 46,341
Prepaid expenses 14,483
Receivable - related party 5,000
Inventory 16,732
----------------------
TOTAL CURRENT ASSETS 82,556
PROPERTY AND EQUIPMENT 101,371
OTHER ASSETS
Security deposits 11,952
----------------------
$ 195,879
======================
LIABILITIES & (DEFICIT)
CURRENT LIABILITIES
Accounts payable $ 33,058
Bridge loans 215,000
Current portion of long-term debt 4,394
Accrued expenses 47,410
Accrued expenses - related parties 186,829
----------------------
TOTAL CURRENT LIABILITIES 486,691
LONG-TERM DEBT 48,980
----------------------
TOTAL LIABILITIES 535,671
STOCKHOLDERS' (DEFICIT) Common Stock $.001 par value:
Authorized - 25,000,000 shares
Issued and outstanding 13,964,800 shares 13,965
Additional paid-in capital 1,035,613
Deficit accumulated during the development stage (1,389,370)
----------------------
TOTAL STOCKHOLDERS' DEFICIT (339,792)
----------------------
$ 195,879
======================
</TABLE>
F - 1
<PAGE>
NORAM GAMING AND ENTERTAINMENT, INC. AND SUBSIDIARY
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
3/14/90
Three months ended Nine months ended (Date of
September 30, September 30, inception)
1997 1996 1997 1996 to 9/30/97
------------- ------------- ------------- ------------- -----------------
<S> <C> <C> <C> <C> <C>
Net Sales $ 218,708 $ 189,013 $ 721,550 $ 632,131 $ 2,328,766
Cost of sales 44,384 34,220 154,268 143,089 646,675
------------- ------------- ------------- ------------- -----------------
GROSS PROFIT 174,324 154,793 567,282 489,042 1,682,091
General and Administrative expenses 190,447 165,603 589,031 477,752 1,978,305
Depreciation and amortization 7,803 7,938 23,328 29,955 87,070
Interest expense 5,212 6,161 15,139 17,264 70,107
------------- ------------- ------------- ------------- -----------------
203,462 179,702 627,498 524,971 2,135,482
------------- ------------- ------------- ------------- -----------------
NET INCOME (LOSS) BEFORE OTHER (29,138) (24,909) (60,216) (35,929) (453,391)
Stock issued for consulting services (10,480) 0 (861,375) 0 (861,375)
Terminations of facility lease 0 (74,604) 0 (74,604) (74,604)
------------- ------------- ------------- ------------- -----------------
NET (LOSS)
BEFORE INCOME TAXES (39,618) (99,513) (921,591) (110,533) (1,389,370)
INCOME TAX 0 0 0 0 0
------------- ------------- ------------- ------------- -----------------
NET (LOSS) $ (39,618) $ (99,513) $ (921,591) $ (110,533) $ (1,389,370)
============= ============= ============= ============= =================
Net (loss) per weighted
average share $ (.00) $ (.01) $ (.07) $ (.01)
============= ============= ============= =============
Weighted average number of common
shares used to compute net (loss)
per weighted average share 13,947,577 12,608,261 13,609,321 12,536,350
============= ============= ============= =============
</TABLE>
F - 2
<PAGE>
NORAM GAMING AND ENTERTAINMENT, INC. AND SUBSIDIARY
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
(Unaudited)
<TABLE>
<CAPTION>
Deficit
Accumulated
Common Stock Additional Stock During
Par Value $.001 Paid-in Subscription Development
Shares Amount Capital Receivable Stage
------------- ------------- ----------------- ----------------- ------------------
<S> <C> <C> <C> <C> <C>
Balances at 3/14/90 (Date of inception) 0 $ 0 $ 0 $ 0 $ 0
Issuance of common stock (restricted)
at $.001 per share at 3/14/90 1,000,000 1,000 (1,000)
Net income for period 0
------------- ------------- ----------------- ----------------- ------------------
Balances at 12/31/90 1,000,000 1,000 0 (1,000) 0
Cash received for stock subscription 1,000
Net loss for year (1,000)
------------- ------------- ----------------- ----------------- ------------------
Balances at 12/31/91 1,000,000 1,000 0 0 (1,000)
Net income for year 0
------------- ------------- ----------------- ----------------- ------------------
Balances at 12/31/92 1,000,000 1,000 0 0 (1,000)
Net income for year 0
------------- ------------- ----------------- ----------------- ------------------
Balances at 12/31/93 1,000,000 1,000 0 0 (1,000)
Issuance of common stock (restricted)
for subsidiary at $.001 per share* 10,000,000 10,000 27,063
Net income for year 9,537
Balances at 12/31/94 11,000,000 11,000 27,063 0 8,537
Sale of common stock (Regulation S)
at $.10 per share at 8/30/95 1,500,000 1,500 148,500
Net loss for year (347,339)
Balances at 12/31/95 12,500,000 12,500 175,563 0 (338,802)
Issuance of common stock (restricted)
at $.001 per share for services at
7/9/96 140,000 140
Net loss for period (128,977)
------------- ------------- ----------------- ----------------- ------------------
Balances at 12/31/96 12,640,000 12,640 175,563 0 (467,779)
Issuance of common stock for services at:
$.50 per share 1/27/97 460,000 460 229,540
$.6875 per share 3/19/97 478,500 478 328,490
$1.0625 per share 4/11/97 50,000 50 53,075
$.8125 per share 4/22/97 285,000 285 231,277
$.7187 per share 5/1/97 6,300 6 4,522
$.484 per share 5/22/97 3,000 3 1,449
$.36 per share 6/18/97 3,500 4 1,256
$.28 per share 7/9/97 7,500 8 2,092
$.21 per share 8/8/97 20,000 20 4,180
$.38 per share 9/5/97 11,000 11 4,169
Net loss for period (921,591)
------------- ------------- ----------------- ----------------- ------------------
Balances at 9/30/97 13,964,800 $ 13,965 $ 1,035,613 $ 0 $ (1,389,370)
============= ============= ================= ================= ==================
</TABLE>
* Transaction actually occurred July 10, 1995 but is reflected earlier under
the pooling-of-interests method of accounting.
F - 3
<PAGE>
NORAM GAMING AND ENTERTAINMENT, INC. AND SUBSIDIARY
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
3/14/90
Nine months ended (Date of
September 30, inception)
1997 1996 to 9/30/97
------------------ ----------------- ----------------
OPERATING ACTIVITIES
<S> <C> <C> <C>
Net (loss) $ (921,591) $ (110,533) $ (1,389,370)
Adjustments to reconcile net (loss) to cash
provided (used) by operating activities:
Net book value of abandoned asset 0 69,605 69,605
Stock issued for expenses 861,375 120 861,515
Depreciation & amortization 23,328 29,955 100,306
Changes in assets and liabilities:
Inventory 4,823 (9,522) (16,732)
Prepaid expenses (3,726) (3,759) (14,483)
Accounts payable 5,312 (34,551) 33,058
Accrued expenses (3,537) 82,176 229,239
------------------ ----------------- ----------------
NET CASH PROVIDED (USED) BY
OPERATING ACTIVITIES (34,016) 23,491 (126,862)
INVESTING ACTIVITIES
Purchase of property and equipment (4,225) (8,520) (235,329)
Security deposits (5,400) 0 (11,952)
------------------ ----------------- ----------------
NET CASH USED BY
INVESTING ACTIVITIES (9,625) (8,520) (247,281)
FINANCING ACTIVITIES
Proceeds from sale of common stock 0 0 188,063
Loan proceeds 44,000 5,000 259,000
Loan repayments (3,096) (2,802) (26,579)
------------------ ----------------- ----------------
NET CASH PROVIDED BY
FINANCING ACTIVITIES 40,904 2,198 420,484
------------------ ----------------- ----------------
DECREASE IN CASH
AND CASH EQUIVALENTS (2,737) 17,169 46,341
Cash and cash equivalents at beginning of year 49,078 25,517 0
------------------ ----------------- ----------------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 46,341 $ 42,686 $ 46,341
================== ================= ================
SUPPLEMENTAL INFORMATION Cash paid for:
Interest $ 623 $ 4,464 $ 32,104
================== ================= ================
</TABLE>
During 1995, the Company's subsidiary financed a van in the amount of $17,143
and in 1994 financed an automobile in the amount of $18,810.
F - 4
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
Noram Gaming and Entertainment, Inc. and Subsidiary September 30, 1997
financial statements and is qualified in its entirety by reference to
such financial statements
</LEGEND>
<CIK> 0000894555
<NAME> Noram Gaming & Entertainment Inc.
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 46,341
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 16,732
<CURRENT-ASSETS> 82,556
<PP&E> 196,282
<DEPRECIATION> (94,911)
<TOTAL-ASSETS> 195,879
<CURRENT-LIABILITIES> 486,691
<BONDS> 0
0
0
<COMMON> 13,965
<OTHER-SE> (353,757)
<TOTAL-LIABILITY-AND-EQUITY> 195,879
<SALES> 721,550
<TOTAL-REVENUES> 721,550
<CGS> 154,268
<TOTAL-COSTS> 154,268
<OTHER-EXPENSES> 532,371
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 15,139
<INCOME-PRETAX> (921,591)
<INCOME-TAX> 0
<INCOME-CONTINUING> 19,772
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (921,591)
<EPS-PRIMARY> (.07)
<EPS-DILUTED> (.07)
</TABLE>
