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, 2000
-------------------
[] 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
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NORAM GAMING AND ENTERTAINMENT, INC.
------------------------------------
(Exact name of Small Business Issuer as specified in its charter)
Nevada 87-0485316
------------------------------- --------------------------
(State or other jurisdiction of (IRS Employer
incorporation ) Identification No.)
2315 NW 107th Ave.
Unit 1M22 Mail #83
Miami, Florida 33172
---------------------------------------- ----------------
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: (305) 402-2085
---------------
Five Canton Square
Toledo, Ohio 43624 (419) 255-1515
---------------------- --------------------------
(Former Address) (Former Telephone Number)
Indicate by a check mark whether the issuer (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 issuer 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 issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding as of September 30, 2000
------------------------------------- ------------------------------------
$.001 par value Class A Common Stock 20,137,671 shares
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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, 2000, are not necessarily indicative of the results
that can be expected for the year ending December 31, 2000.
2
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NORAM GAMING AND ENTERTAINMENT, INC. AND SUBSIDIARY
(A Development Stage Company)
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
September 30, December 31,
2000 1999
------------------ -----------------
ASSETS (Unaudited) (Audited)
CURRENT ASSETS
<S> <C> <C>
Cash $ 480 $ 429
Contract Receivable 0 22,429
Loan receivable - officer 3,886 0
Inventory 176,341 123,837
------------------ -----------------
TOTAL CURRENT ASSETS 180,707 146,695
PROPERTY AND EQUIPMENT 8,146 14,320
------------------ -----------------
$ 188,853 $ 161,015
================== =================
LIABILITIES & (DEFICIT)
CURRENT LIABILITIES
Accounts payable $ 67,083 $ 37,486
Bridge loans 215,000 259,000
Current portion of long-term debt 11,254 14,189
Demand loans payable - related parties 54,855 302,824
Accrued expenses 101,345 96,479
Accrued expenses - related parties 152,750 166,250
------------------ -----------------
TOTAL CURRENT LIABILITIES 602,287 876,228
LONG-TERM DEBT 48,387 55,974
------------------ -----------------
TOTAL LIABILITIES 650,674 932,202
STOCKHOLDERS' (DEFICIT)
Common Stock $.001 par value:
Authorized - 25,000,000 shares
Issued and outstanding 20,137,671 shares
(16,379,200 in 1999) 20,138 16,379
Additional paid-in capital 2,066,211 1,637,749
Deficit accumulated during the development stage (2,548,170) (2,425,315)
------------------ -----------------
TOTAL STOCKHOLDERS' (DEFICIT) (461,821) (771,187)
------------------ -----------------
$ 188,853 $ 161,015
================== =================
</TABLE>
See Notes to Consolidated Financial Statements.
3
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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)
2000 1999 2000 1999 to 9/30/00
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Net Sales $ 800 $ 23,704 $ 13,606 $ 233,358 $ 3,437,603
Cost of sales 0 29,123 7,981 66,915 971,838
------------- ------------- ------------- ------------- -------------
GROSS PROFIT 800 (5,419) 5,625 166,443 2,465,765
General and Administrative expenses 24,244 62,560 111,627 374,129 4,540,211
Depreciation and amortization 2,058 1,731 6,174 9,483 137,793
Interest expense 1,395 3,216 10,679 9,215 151,880
------------- ------------- ------------- ------------- -------------
27,697 67,507 128,480 392,827 4,829,884
------------- ------------- ------------- ------------- -------------
NET INCOME (LOSS) BEFORE OTHER (26,897) (72,926) (122,855) (226,384) (2,364,119)
Termination of facility lease 0 0 0 0 (154,604)
Joint venture loss 0 0 0 0 (152,515)
Gain on facility sale 0 0 0 182,422 182,422
Loss on equipment disposal 0 0 0 (19,216) (59,354)
------------- ------------- ------------- ------------- -------------
0 0 0 163,206 (184,051)
------------- ------------- ------------- ------------- -------------
NET INCOME (LOSS)
BEFORE INCOME TAXES (26,897) (72,926) (122,855) (63,178) (2,548,170)
INCOME TAX (BENEFIT) 0 0 0 0 0
------------- ------------- ------------- ------------- -------------
NET INCOME (LOSS) $ (26,897) $ (72,926) $ (122,855) $ (63,178) $ (2,548,170)
============= ============= ============= ============= =============
Basic and diluted
Net income (loss) per weighted
average share $ (.00) $ (.00) $ (.01) $ (.00)
============= ============= ============= =============
Weighted average number of common
shares used to compute net income
(loss) per weighted average share 20,137,671 16,372,200 17,929,226 16,251,506
============= ============= ============= =============
</TABLE>
See Notes to Consolidated Financial Statements.
4
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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)
2000 1999 to 9/30/00
------------------ ----------------- ----------------
OPERATING ACTIVITIES
<S> <C> <C> <C>
Net income (loss) $ (122,855) $ (63,178) $ (2,548,170)
Adjustments to reconcile net income (loss) to cash
provided (used) by operating activities:
Net book value of terminated lease 0 0 154,604
Book value of disposed assets 0 42,502 82,640
Joint venture loss non-cash 0 0 152,515
Stock issued for services and expenses 0 17,325 1,206,865
Depreciation & amortization 6,174 9,483 151,029
Changes in assets and liabilities:
Inventory (52,504) 15,271 (176,341)
Accounts receivable (3,886) 29,246 (3,886)
Prepaid expenses 0 12,845 0
Accounts payable 65,396 (61,927) 67,083
Accrued expenses 95,819 30,502 358,070
------------------ ----------------- ----------------
NET CASH PROVIDED (USED) BY
OPERATING ACTIVITIES (11,856) 32,069 (555,591)
INVESTING ACTIVITIES
Purchase of property and equipment 0 0 (275,467)
Security deposits 0 11,102 0
Contract receivable 0 (50,000) (50,000)
Contract collections 22,429 16,930 50,000
Investment in joint venture 0 0 (152,515)
------------------ ----------------- ----------------
NET CASH PROVIDED (USED) BY
INVESTING ACTIVITIES 22,429 (21,968) (427,982)
FINANCING ACTIVITIES
Proceeds from sale of common stock 0 13,900 338,163
Loan proceeds 0 48,000 760,429
Loan repayments (10,522) (70,970) (114,539)
------------------ ----------------- ----------------
NET CASH PROVIDED (USED) BY
FINANCING ACTIVITIES (10,522) (9,070) 984,053
------------------ ----------------- ----------------
INCREASE IN CASH
AND CASH EQUIVALENTS 51 1,031 480
Cash and cash equivalents at beginning of period 429 15,721 0
------------------ ----------------- ----------------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 480 $ 16,752 $ 480
================== ================= ================
SUPPLEMENTAL INFORMATION Cash paid for:
Interest $ 4,898 $ 9,215 $ 47,462
================== ================= ================
</TABLE>
See Notes to Consolidated Financial Statements.
5
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NORAM GAMING AND ENTERTAINMENT, INC. AND SUBSIDIARY
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2000
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES
Basis of Presentation
The accompanying financial statements have been prepared in
accordance with generally accepted accounting principles ("GAAP")
for interim financial information. Accordingly, they do not
include all of the information and footnotes required by generally
accepted auditing principles for complete financial statements.
The unaudited financial statements should, therefore, be read in
conjunction with the financial statements and notes thereto in the
Report on Form 10KSB for the year ended December 31, 1999. In the
opinion of management, all adjustments (consisting of normal and
recurring adjustments) considered necessary for a fair
presentation, have been included. The results of operations for
the three and nine-month periods ended September 30, 2000 are not
necessarily indicative of the results that may be expected for the
entire fiscal year.
Accounting Methods
The Company recognizes income and expenses based on the accrual
method of accounting.
Dividend Policy
The Company has not yet adopted any policy regarding payment of
dividends.
Inventory
Inventory consists of equipment for resale and is valued at the
lower of cost (first-in, first-out basis) or market.
Cash and Cash Equivalents
For financial statement purposes, the Company considers all highly
liquid investments with an original maturity of three months or
less when purchased to be cash equivalents.
Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of
assets, liabilities, revenues, and expenses during the reporting
period. Estimates also affect the disclosure of contingent assets
and liabilities at the date of the financial statements. Actual
results could differ from these estimates.
NOTE 2. GOING CONCERN
The financial statements are presented on the basis that the
Company is a going concern, which contemplates the realization of
assets and the satisfaction of liabilities in the normal course of
business over a reasonable length of time. At September 30, 2000,
the Company had a deficit in working capital of $421,580, a loss
from operations for 2000 of $122,855 and an accumulated deficit of
$2,548,170.
Management feels that expanding its operations to the Internet and
a combination of debt financing and sale of common stock will
provide sufficient working capital to allow the Company to
continue as a going concern. The Company also feels that the
installation of slot machines in the El Salvador International
Airport will soon provide working capital.
6
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Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
LIQUIDITY AND CAPITAL RESOURCES
As of September 30, 2000, the Company had $480 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 gaming
industry.
Effective April 1, 2000, the Company's subsidiary ceased
operations.
Net loss was $26,897 for the three months ended September 30, 2000
compared with net loss of $72,926 for the same period in 1999. The Company was
able to reduce its general and administrative expenses substantially in 2000
compared to 1999.
Net revenue was $800 for the three months ended September 30, 2000
compared with $23,704 for the same period in 1999 for a decrease of 97%. The
decrease in revenues is attributed to the decision by the Company to discontinue
the bingo operations and concentrate on other areas in the gaming industry. Cost
of sales for the three months ended September 30, 2000 were $0 compared to
$29,123 for the same period in 1999 for a decrease of 100%.
General and administrative expenses were $24,244 for the three
months ended September 30, 2000 compared to $62,560 for the same period in 1999
for a decrease of 61%. Depreciation and amortization expense was $2,058 for the
three months ended September 30, 2000 compared to $1,731 for the same period in
1999 for an increase of 19%. Interest expense for the three months ended
September 30, 2000 was $1,395 compared to $3,216 for the same period in 1999 for
a decrease of 57%.
Net loss was $122,855 for the nine months ended September 30, 2000
compared with net loss of $63,178 for the same period in 1999. The Company was
able to reduce its general and administrative expenses substantially in 2000
compared to 1999. In 1999, the Company sold a facility which reduced the loss
for the nine months.
Net revenue was $13,606 for the nine months ended September 30,
2000 compared with $233,358 for the same period in 1999 for a decrease of 94%.
The decrease in revenues is attributed to the decision by the Company to
discontinue the bingo operations and concentrate on other areas in the gaming
industry. Cost of sales for the nine months ended September 30, 2000 were $7,981
compared to $66,915 for the same period in 1999 for a decrease of 88%.
General and administrative expenses were $111,627 for the nine
months ended September 30, 2000 compared to $374,129 for the same period in 1999
for a decrease of 70%. Depreciation and amortization expense was $6,174 for the
nine months ended September 30, 2000 compared to $9,483 for the same period in
1999 for a decrease of 35%. Interest expense for the nine months ended September
30, 2000 was $10,679 compared to $9,215 for the same period in 1999 for an
increase of 16%.
During the nine months ended September 30, 2000, the President's
son, who is not an officer or director, agreed to assume liabilities of $432,222
in exchange for 3,758,471 shares of the Company's common stock. The son intends
to use the stock to retire his obligations to the previous creditors.
7
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PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Press Releases
27 Financial Data Schedule
(b) Reports on Form 8-K
None
SIGNATURES
Pursuant to the requirements of the Securities and 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 7, 2000 /s/ Julius Csurgo
------------------------ -------------------------------------------
Julius Csurgo, CEO, President, and Director
8
<PAGE>
Exhibits - Press Releases
Monday October 2, 1:30 pm Eastern Time
Press Release
NorAm Gaming & Entertainment Appoints Senator Ronald Silver to
Advisory Board
MIAMI--(BUSINESS WIRE)--Oct. 2, 2000--NorAm Gaming and Entertainment Co.,
(OTCBB:NORE - news), announced today the appointment of Florida State Senator,
Ron Silver to the Company's newly formed Board of Advisors.
Senator Silver's legislative career began with his election to the Florida House
of Representatives in 1978, where he served continuously until his election to
the Florida Senate in 1992. Senator Silver was re-elected unopposed to the
Florida Senate in 1998. Both as a member of the Florida House of Representatives
and the Florida Senate, Senator Silver has compiled a record of distinguished
service to the people of Florida.
During his tenure in the Florida Legislature, Senator Silver has been the
recipient of many awards and has held numerous positions of esteem in both the
House of Representatives and the Senate. Since 1994, he served as Senate
Democratic Leader, Chairman of the Senate Criminal Justice Committee, Chairman
of the Budget-Subcommittee on Health and Human Services, Vice Chair of
Governmental Oversight and Productivity, Criminal Justice, Judiciary and Joint
Committee on Legislative Auditing.
The Honors bestowed upon Senator Silver include: The Governor's Peace at Home
Award; Legislator of the Year, 1999, by the Governor's Domestic Violence Task
Force; The Florida Coalition on Aging, Advocacy Award; Outstanding Senate Member
Award by The Academy of Florida Trial Lawyers; and the 1996 Legislative Award by
the Florida Sheriff's Association.
NorAm, CEO, Julius C. Csurgo, made the following comments regarding Senator
Silver's appointment to the Advisory Board; "Senator Silver brings to NorAm a
tremendous amount of political and governmental knowledge that will help the
Company deal with issues it will face in the jurisdictions the Company will
operate in the gaming sectors. As NorAm's new CEO the addition of Senator Silver
and his experience will be well drawn upon by me as we move NorAm ahead. Ron is
truly a man of many talents and experience and I, along with the rest of the
management team at NorAm, look forward to a long and productive relationship
with him."
Source: NorAm Gaming and Entertainment Co.
Contact:
Joyce Research Group: 561/361-9277
or
NorAm Gaming and Entertainment Co.
Julius C. Csurgo, 305/402-2085
9
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Wednesday September 20, 2:04 pm Eastern Time
Press Release
SOURCE: NorAm Gaming and Entertainment Inc.
NorAm Gaming & Entertainment Inc. Announces Corporate and
Operations Update
MIAMI, Sept. 20 /PRNewswire/ -- As a result of the recent major changes in NorAm
Gaming and Entertainment's (OTC Bulletin Board: NORE - news) Management and
Board of Directors, NorAm is providing this update to its Shareholders and
potential investors as a means of providing a more in-depth analysis of its
current projects, revenue potential and funding options.
NorAm's Chairman, George Zilba, made the following statement regarding the
overall direction of the company: "The last few months have marked a definitive
shift towards taking the Company in a positive direction of revenue generation
and profitability. We will continue to restructure our Management Team, with the
objective of building the Company around top talented people in all areas of
business that will bring value to NorAm and its Shareholders."
NorAm's new CEO, Julius Csurgo, referenced the current projects as follows: "I
am extremely excited about the prospects for NorAm and the projects we are
working on -- the potential they present should benefit the company greatly.
"The El Salvador contract is expected to close the first week in October. We are
presently finishing a private placement for capital to purchase the 200 machines
required for the Airport slot machine contract. These machines are expected to
be fully operational by the end of October and conservatively should be
generating about $30.00 US per day/per machine. We expect to generate around
$50,000.00 per month, after operational expenses.
"The Grande Resorts acquisition is now in the last aspects of the Company's due
diligence, with most legal documents being prepared to close this transaction by
October 15. This acquisition will result in a significant income stream
generating approximately $1.2 million of net revenue per year to the Company.
Due to Confidentiality Agreements signed by the parties, NorAm cannot reveal
specific details concerning the transaction; however, we can say that the
acquisition will bring a significant interest in 6 operating casinos in the
region and should provide the Company a solid base to build from."
Mr. Csurgo outlined the restructuring of the Company into these distinct
operating divisions along with specific management for each division: "The
Company's interests will be comprised of Gaming, Internet Projects and Real
Estate acquisition. The Real Estate division will focus predominantly in resort
areas with an eye on casino facilities or obtain management contracts, with a
view toward re-branding the facilities under its Grande Resorts theme."
The Company is presently in negotiations to purchase Online Casino and Sports
Book operations to launch its Internet Division. NorAm also intends to build and
establish a growing network of online affiliates where possible.
With regard to the Internet project already announced, Mr. Csurgo said,
"Previous announcements concerning our Internet Charity site are still intended
to be completed and will move forward along with our other Internet products
Projects. As part of our restructuring efforts and our intention to develop a
full line of Internet products, we are in the process of bringing experienced
technical people on staff to deal with the Company's entire Online Gaming
activities."
Mr. Zilba reiterated the Company's Bingo strategy in his statement that "bingo
remains an integral part of our Gaming Division and is intended to grow as we
implement our expansion program. The growth potential for Bingo in Central and
South American Markets is already very large and we are presently looking to
acquire two operations within the region."
10
<PAGE>
VLT's (Video Lottery Terminals) also represent a major growth potential for the
Company. With the placement of 200 machines in El Salvador, 650 machines for the
Grande Resorts and negotiations pending for the installation of 900 additional
units over the next 6 months, the Company will be well positioned to generate
significant VLT revenues starting in 2001.
The Company is also actively raising capital for investment and has met with
several accredited investors in an attempt to raise US $5,000,000.00; to finance
growth plans over the next 6 months.
Regarding this effort Mr. Csurgo added, "NorAm will be working closely with
Equity Capital Management, Inc. to raise capital for mergers, acquisitions and
operating expenses. As a managing partner of ECM, I am convinced that ECM's
talented people and contacts can assist NorAm immeasurably in the accomplishment
of their goals. The need for capital is present in virtually every commercial
enterprise and NorAm is no exception. Our choices to acquire capital will
require us to take on Debt or offer a position in Equity. It is our plan to be
extremely cautious and prudent in making that decision. We will take on Debt
where possible and resort to Equity only when necessary. The Company will always
look for the best terms and conditions to acquire funding as it continues to
expand."
11
<PAGE>
Wednesday September 13, 10:28 am Eastern Time
Press Release
SOURCE: NorAm Gaming and Entertainment
NorAm Gaming & Entertainment To Move Head Office To Miami, Florida
TOLEDO, Ohio, Sept. 13 /PRNewswire/ -- NorAm Gaming and Entertainment (OTC
Bullet Board: NORE) announced today that the Company has leased space in the
Miami Free Zone, in Miami, Florida. The Company will move all the day-to- day
operations there in the near future.
The new address for NorAm will be 2315 NW 107th Ave., Unit 1M22, Mail #83,
Miami, FL 33172. Company management can be reached at 305-402-2085 or toll free
at 877-324-4435. Or e-mail them at [email protected].
The Company's decision to move the headquarters reflects its new direction and
concentration on gaming opportunities in Central and South America. Miami's
proximity to these markets makes it easier for the Company's management and
advisors to react to opportunities and operations within the region.
As of September 1, 2000, NorAm has closed its Las Vegas showroom and will be
moving all of the showroom equipment to the Miami address. According to both,
CEO, Julius Csurgo and Board Chairman, George C. Zilba, "This move is another
step forward for NorAm. It not only places us in an area where we are accessible
to our customers but our customers are very accessible to us."
NorAm intends to also showcase the wares of other vendors of gaming equipment
and supplies that can help the Company in its effort to become a full spectrum
gaming company in Latin America. Potential customers will be able to view and
discuss all of NorAm's products and services in one central location.
12
