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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
/X/ QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended September 30, 1999
/ / TRANSITION REPORT UNDER TO SECTION 13 OR 15(d) OF THE EXCHANGE ACT
FOR THE TRANSITION PERIOD FROM __________________ TO _____________________.
COMMISSION FILE NO.: 0-25244
--------------------
TRANS WORLD GAMING CORP.
(Exact name of small business issuer as specified in its charter)
NEVADA 13-3738518
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
10119-0002
ONE PENN PLAZA, SUITE 1503 (Zip Code)
NEW YORK, NY
(Address of principal executive offices)
Issuer's telephone number, including area code: (212) 563-3355
--------------------
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 / /
Shares of the Registrant's Common Stock, par value $.001, outstanding
as of November 3, 1999: 3,364,000
Transitional Small Business Disclosure Format (check one); YES/ /
NO /X/
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<PAGE>
TRANS WORLD GAMING CORP. AND SUBSIDIARIES
FORM 10-QSB
FOR THE QUARTER ENDED SEPTEMBER 30, 1999
INDEX
PART I - FINANCIAL INFORMATION
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
CONDENSED CONSOLIDATED BALANCE SHEET AS OF SEPTEMBER 30, 1999 1
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS 2
FOR THE NINE AND THREE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE AND THREE 3
MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 4
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION 5
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS 9
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS 10
ITEM 3. DEFAULTS UPON SENIOR SECURITIES 10
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 10
ITEM 5. OTHER INFORMATION 10
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 10
ITEM 7. SIGNATURES 18
</TABLE>
<PAGE>
TRANS WORLD GAMING CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited)
September 30, 1999
(in thousands)
<TABLE>
<S> <C>
ASSETS
CURRENT ASSETS:
Cash $ 1,319
Accounts receivable, less allowance for doubtful accounts of $273 78
Prepaid expenses and other current assets 1,197
--------
2,594
--------
PROPERTY AND EQUIPMENT, LESS ACCUMULATED DEPRECIATION AND AMORTIZATION OF $973 3,901
--------
OTHER ASSETS:
Goodwill and other intangible assets, less accumulated
amortization of $3,543 10,858
Deposits and other assets 469
--------
11,327
--------
$ 17,822
========
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Short-term debt $ 1,000
Accounts payable 2,880
Accrued expenses and other current liabilities 2,132
--------
6,012
--------
LONG-TERM LIABILITIES:
Long-term debt, net of unamortized debt discount of $3,664 18,136
Other long-term liabilities 5,305
--------
23,441
--------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' DEFICIT:
Preferred stock, $.001 par value, 2,000 shares authorized,
none issued
Common stock $.001 par value, 50,000 shares authorized,
3,364 shares issued and outstanding 3
Additional paid-in capital 9,136
Stock warrants outstanding 5,237
Accumulated other comprehensive income 982
Accumulated deficit (26,989)
--------
TOTAL STOCKHOLDERS' DEFICIT (11,631)
--------
$ 17,822
========
</TABLE>
SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1
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TRANS WORLD GAMING CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE LOSS (Unaudited)
Periods Ended September 30, 1999 and 1998
(in thousands, except for per share data)
<TABLE>
<CAPTION>
Nine Months Ended September 30, Three Months Ended September 30,
1999 1998 1999 1998
-------- -------- ------- -------
<S> <C> <C> <C> <C>
REVENUES $ 12,602 $ 10,220 $ 3,013 $ 3,862
-------- -------- ------- -------
COSTS AND EXPENSES
Cost of revenues 6,680 6,979 2,183 2,773
Depreciation and amortization 2,297 1,841 720 921
Selling, general and administrative 3,749 2,709 385 1,091
Write-offs 75
-------- -------- ------- -------
12,801 11,529 3,288 4,785
-------- -------- ------- -------
LOSS FROM OPERATIONS (199) (1,309) (275) (923)
-------- -------- ------- -------
OTHER INCOME (EXPENSE):
Interest expense (2,759) (1,999) (942) (878)
Foreign exchange (loss) (137) 37
Other (3)
-------- -------- ------- -------
(2,899) (1,999) (905) (878)
-------- -------- ------- -------
LOSS BEFORE INCOME TAXES (BENEFIT) (3,098) (3,308) (1,180) (1,801)
INCOME TAXES (BENEFIT) 82 (19)
-------- -------- ------- -------
NET LOSS $ (3,098) $ (3,390) $(1,180) $(1,782)
======== ======== ======= =======
WEIGHTED AVERAGE OF
COMMON SHARES OUTSTANDING
Basic 3,364 3,044 3,364 3,044
======== ======== ======= =======
LOSS PER COMMON SHARE
Basic $ (0.92) $ (1.11) $ (0.35) $ (0.59)
======== ======== ======= =======
COMPREHENSIVE INCOME (LOSS)
NET LOSS $ (3,098) $ (3,390) $(1,180) $(1,782)
OTHER COMPREHENSIVE INCOME, foreign currency
translation adjustment 870 83
-------- -------- ------- -------
COMPREHENSIVE LOSS $ (2,228) $ (3,390) $(1,097) $(1,782)
======== ======== ======= =======
</TABLE>
SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
2
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TRANS WORLD GAMING CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Nine Months Ended September 30, 1999 and 1998
(in thousands)
<TABLE>
<CAPTION>
1999 1998
--------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES: $ 254 $ (1,675)
--------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions of 21st Century Resorts and Casino de Zaragoza (14,030)
Purchases of property and equipment (707)
--------- ----------
NET CASH USED IN INVESTING ACTIVITIES: (707) (14,030)
--------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from short-term debt 285
Payments of short-term debt (56)
Proceeds from long-term debt 17,000
NET CASH PROVIDED BY (USED IN) FINANCING: (56) 17,285
--------- ----------
EFFECT OF EXCHANGE RATE CHANGES ON CASH: (127)
--------- ----------
NET INCREASE (DECREASE) IN CASH: (636) 1,580
CASH:
Beginning of period 1,955 198
--------- ----------
End of period $ 1,319 $ 1,778
========= ==========
</TABLE>
SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
3
<PAGE>
TRANS WORLD GAMING CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(IN THOUSANDS)
1. Unaudited Statements.
The accompanying condensed consolidated financial statements of Trans
World Gaming Corp. (the "Company" or "TWG") as of September 30, 1999
and for the nine and three months ended September 30, 1999 and 1998 are
unaudited and reflect all adjustments of a normal and recurring nature
to present fairly the financial position, results of operation and cash
flows for the interim periods. These unaudited condensed, consolidated
financial statements have been prepared by the Company pursuant to the
instructions to Form 10-QSB. Pursuant to such instructions, certain
financial information and footnote disclosures normally included in
such financial statements have been condensed or omitted.
These unaudited condensed, consolidated financial statements should be
read in conjunction with the audited, consolidated financial statements
and notes thereto, together with management's discussion and analysis
of financial condition and plan of operations, contained in the
Company's Annual Report on Form 10-KSB for the year ended December 31,
1998. The results of operations for the nine and three months ended
September 30, 1999 are not necessarily indicative of the results for
the entire year ending December 31, 1999.
Certain reclassifications of prior year balances have been made to
conform to the current year's classification of such balances.
2. Basic earnings or (loss) per common share is computed by dividing net
income (loss) by the weighted average number of common shares
outstanding during the period. Diluted earnings (loss) per common share
incorporates the dilutive effect of common stock equivalents on an
average basis during the period. The Company's common stock equivalents
currently include stock options and warrants. Dilutive earnings or
(loss) per common share has not been presented for the nine and three
months ended September 30, 1999 and 1998 since the inclusion of common
stock equivalents would have been antidilutive.
3. Segment information listed below reflects the two principal business
units of the Company during the three and nine month periods ended
September 30, 1999. Each segment is managed according to the products
or services that are provided to the respective customers and
information is reported on the basis of reporting to the Company's
chief operating decision-maker.
<TABLE>
<CAPTION>
GAMING TRUCKSTOP OTHER CONSOLIDATED
------ --------- ----- ------------
<S> <C> <C> <C> <C>
Three Months Ended
September 30 1999
Revenues $2,506 $ 84 $423 $ 3,013
Interest expense 746 144 52 942
Depreciation and amortization 696 6 18 720
Nine Months Ended
September 30 1999
Revenues $8,647 $3,030 $925 $12,602
Interest expense 2,179 432 148 2,759
Depreciation and amortization 2,087 145 65 2,297
</TABLE>
4. During the nine and three months ended September 30, 1999, the Company
operated principally in three geographic areas: the United States, the
Czech Republic and Spain. The following table presents information
about the Company by geographic area. There were no material amounts of
sales or transfers among geographic areas.
4
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<TABLE>
<CAPTION>
UNITED CZECH
STATES REPUBLIC SPAIN OTHER CONSOLIDATED
------ -------- ----- ----- ------------
Three Months Ended September 30, 1999
-------------------------------------
<S> <C> <C> <C> <C> <C>
Revenues $ 84 $2,095 $ 798 $ 36 $ 3,013
<CAPTION>
Nine Months Ended September 30, 1999
------------------------------------
Revenues $3,055 $6,433 $3,053 $ 61 $12,602
Long-lived Assets 10 9,497 4,880 372 14,759
</TABLE>
5. At the close of a special legislative session on April 19, 1996, a
local option bill was passed which required the residents of each
parish in the state of Louisiana to vote on the future of gambling in
their parish. On November 5, 1996, the residents in Lafayette and
Beauregard parishes in Louisiana, where the Company had video poker
operations, were among 35 Louisiana parishes that voted to eliminate
video poker (the "Voter Mandate"). As a result, the Company ceased its
video poker operations on July 1, 1999 in both of those parishes. These
were the only two facilities at which the Company had U.S. casino
operations. The Company, through its Chrysolith affiliate, has joined
with several other video poker operators in Louisiana in challenging
the vote in the courts. On January 30, 1998, the Louisiana Supreme
Court unanimously denied without comment a writ application filed by
Chrysolith, among others, alleging Election Code violations,
effectively ending the Election Code challenge to the Voter Mandate. In
May 1999, the 1st District Court in Baton Rouge decided that the 1996
election was illegal and the Voter Mandate should be overturned. In
June 1999, the Louisiana Court of Appeals reversed the 1st District
Court's decision. The State Supreme Court refused to hear the case and
upheld the decision of the appellate court. The U.S. Supreme Court will
decide early in 2000 whether or not to consider the case. The Company
cannot, as of the date hereof, predict the outcome of this litigation
or when a decision relating hereto will be rendered.
The Louisiana video poker operations included the Gold Coin casino in
Lafayette, and the Toledo Palace casino in DeRidder. Both casinos were
closed on July 1, 1999, and the video poker machines were sold for
$84,000. The Woodlands truck stop in DeRidder was closed on July 26,
1999, and was sold on October 4, 1999 for a net cash payment of
$71,000. In accordance with the Company's strategy to concentrate on
profitable businesses and minimize risk, the Company is in the process
of disposing of its interest in Chrysolith, L.L.C., which is expected
to be completed in the fourth quarter of 1999. Regardless of the
decision by the U.S. Supreme Court, the Company does not anticipate any
further business involvement in Louisiana.
6. On October 28, 1999, the Company borrowed $3 million in a private
placement from Value Partners, Ltd., a Texas limited partnership,
and three of the Company's outside directors. The loan was
documented on October 15, 1999 by means of a supplement to the trust
indentures with U.S. Trust Co. of Texas, N.A., as trustee, dated as
of March 31, 1998, as supplemented on October 29, 1998 (the
"Indentures"), to provide for the issuance of additional senior
notes thereunder. In conjunction with the sale of the senior notes,
the Company issued 9 year warrants for 1,250,730 shares of Company
common stock with the exercise price of $.01 per share. The proceeds
were immediately used to retire the $1 million loan from Value
Partners, Ltd., with accrued interest of $.25 million. The
short-term Value Partners, Ltd. loan carried an interest rate of
17%, while the interest rate on the new notes is 12%. The remaining
funds will be used to finance the Company's third casino in the
Czech Republic, scheduled to open in mid January 2000, and to
capitalize the Company's Spanish casino and for other general
corporate purposes.
5
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
RESULTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
The Company's revenues totaled $3.013 million for the three months ended
September 30, 1999, compared to $3.862 million for the same period in 1998, a
decrease of $849,000. The results for the quarter show a net loss of $1.18
million, improved from a net loss of $1.782 million during the third quarter of
1998.
The decline in revenues for the three month period ended September 30, 1999 was
primarily the result of the closing of the Company's video poker operations in
Louisiana as of July 1, 1999, in accordance with the Voter Mandate discussed
above in Item 1. From July 1 to September 30, 1998, the Louisiana operations
generated revenues of $1.464 million. The decrease in revenue was partially
offset by increased revenue in the Czech Republic at the 21st Century Resorts
casinos ("Resorts"). Revenues from Resorts were $2.1 million during the three
month period ended September 30, 1999, showing growth of $.6 million from the
same period of 1998. Marketing programs which include increased advertising,
special promotions, and busing, have resulted in a 31% increase in guests and a
40% increase in drop, from $6.8 million to $9.5 million, over the third quarter
of 1998. Revenues from the Company's Spanish casino operations, Casino de
Zaragoza ("CDZ"), were $.8 million for the three months ended September 30,
1999, unchanged from the three months ended September 30, 1998. A Spanish
marketing program similar to that implemented in the Czech Republic will begin
during the last quarter of 1999. The program is designed to increase both
attendance and drop per head, as it has in the Czech Republic.
Costs of revenues decreased $.6 million from $2.8 million in the third quarter
of 1998 to $2.2 million in 1999. This decrease is primarily the result of the
closing of the Louisiana operations, $.7 million.
Total operating results showed a loss of $275,000 for the three months ended
September 30, 1999, an improvement of $648,000 from the previous year's loss of
$923,000. The Company's earnings before interest, taxes, depreciation and
amortization ("EBITDA") improved by $484,000 from the three months ended
September 30, 1998, totaling $482,000 or 16% as a percentage of total revenue
for the three months ended September 30, 1999, compared to a negligible
percentage of total revenues for the three months ended September 30, 1998.
Selling, general and administrative expenses decreased by $706,000 for the three
months ended September 30, 1999 when compared to the same quarter last year due
to stabilization of the Company's operational structure. The savings have been
accomplished through less reliance on expensive expatriate personnel, a more
stable workforce, and better financial controls, among other factors.
Interest expense increased by $64,000 to $942,000 for the three months ended
September 30, 1999. This increase is primarily the result of short-term
borrowing.
NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
The Company's revenues totaled $12.602 million for the nine months ended
September 30, 1999, compared to $10.220 million for the same period in 1998, an
increase of $2.382 million or 23%. The net loss for the same period improved
from a loss of $3.4 million in 1998 to a loss of $3.1 million in 1999.
The improvement in the Company's revenue was due to revenue growth of $3.8
million at Resorts and CDZ, offset by the reduction in Louisiana revenue of $1.4
million, from $4.5 million for the first nine months of 1998 to $3.1 million for
the same period in 1999. Louisiana revenue declined as a result of the closing
of all Louisiana operations in July 1999. The Company closed its video poker
operations in accordance with the Louisiana Voter Mandate as discussed above.
The Woodlands truck stop, which generated revenues of $1.5 million in the nine
month period ended September 30,1998, was also closed in July 1999. Revenues had
fallen significantly following the closing of the video poker operation, making
the truckstop unprofitable; nevertheless, the Company's international operations
generated more revenue, $9.6 million for the nine months ended September 30,
1999, an increase of 67% over the same period of 1998.
6
<PAGE>
Revenues from Resorts for the nine months ended September 30, 1999 totaled $6.4
million, an increase of $3.8 million when compared to the same nine-month period
last year. Because the Company acquired Resorts on March 31, 1998, the period
ended September 30, 1998 included only six months of revenues. Revenues from
April 1 to September 30, 1999 were $1.4 million higher in 1999 than in the same
period in 1998. The growth was achieved through effective management and
marketing programs aimed at increasing both attendance and drop per person.
CDZ revenues were $3.1 million for the first nine months of 1999, an increase of
$1 million over the same period last year. The prior year included revenues from
the purchase date of April 17 through September 30, 1998 only. Revenues for that
same period of 1999, April 17 through September 30, were $2.0 million, unchanged
from last year. Revenues are expected to improve with the implementation of the
marketing program and operational restructuring that will take place in the
fourth quarter of 1999.
Cost of revenues of $6.7 million for the nine months ended September 30, 1999 is
$.3 million lower than the same period last year. The prior year included
approximately two quarters of costs for Resorts and CDZ, and three quarters of
costs for the Louisiana operations. The same period of 1999 includes three
quarters of costs for the European operations, but only two quarters of
Louisiana costs, due to the shut-down of video gaming effective July 1, 1999,
and the subsequent closing of the Woodlands truck stop on July 26, 1999. Cost of
revenues for the Louisiana operations were $2.5 million in the first nine months
of 1998, as compared to $1.6 million for the same period of 1999. The decrease
in costs in the European operations reflects start-up costs in 1998 and the
on-going effort to control operating costs. The gross margin for Resorts was 40%
for the first nine months of 1998, as compared to 53% year-to-date in 1999. The
improvement is in part due to the maturation of the Rozvadov casino, which
opened early in 1998.
Total operating results improved $1.1 million from a loss of $1.3 million in the
first nine months of 1998 to a net loss of $.2 million in 1999. EBITDA improved
$1.5 million from the nine months ended September 30,1998 to $2.0 million for
the same period of 1999.
Selling, general and administrative expenses increased by $1 million when
compared to the same period last year. Most of the increase was the result of
increased professional fees related to the new international business units as
well as the closing of operations in Louisiana. Other factors included more
extensive marketing efforts in the Czech Republic, and additional staffing at
the corporate operations level.
Interest expense increased by $760,000 to $2.759 million for the nine months
ended September 30, 1999. This increase is attributed primarily to the $17
million of debt incurred in the March 1998 private placement.
LIQUIDITY AND CAPITAL RESOURCES
The Company's working capital, defined as current assets minus current
liabilities, improved by $193,000 from the first quarter of this year, to a
deficit of $3.418 at September 30, 1999. The Company's working capital deficit
was $3.279 million at December 31, 1998.
On October 28, 1999, the Company received $3 million through the private
placement of its debt securities and warrants. These funds will finance the
completion of the Company's third casino in the Czech Republic, and have already
been used to retire $1 million (plus accrued interest) in short-term debt. This
loan marks the next phase of the Company's plan to aggressively streamline costs
and pursue potentially lucrative gaming opportunities around the world.
The Company believes, although there can be no assurance, that existing cash (as
of October 28, 1999) and anticipated cash flows from current operations will be
sufficient to satisfy its on-going operations for the next twelve months.
However, the Company will require additional debt and/or equity financing in
order to consummate certain planned expansion and acquisitions as described
under "Plan of Operations," below.
PLAN OF OPERATIONS
On April 1, 1998, the Company issued a press release announcing the acquisition
of Resorts. In connection with the announcement, TWG stated that a third casino
in Snojmo, Czech Republic, is planned to open in mid January 2000 assuming that
all required permissions and approvals are received. The casino will be located
in the duty-free area of the
7
<PAGE>
Czech-Austrian border crossing one hour north of Vienna. The Company has
received funding of approximately $1.8 million to equip the Snojmo facility as
part of the private placement of its debt securities and warrants on
October 28, 1999.
On April 17, 1998, the Company issued a press release announcing the acquisition
of 90% of the Casino de Zaragoza. TWG acquired 90% of the outstanding stock of
CDZ for approximately $780,000. At the time of the acquisition, CDZ had
outstanding debt totaling approximately $4.8 million. The Company anticipates
that permission will be granted by the appropriate Spanish government
authorities that will enable TWG to move to a more favorable location. On
November 2, 1999, the Company recapitalized CDZ, in the amount of 250 million
pesetas, approximately $1.6 million. With the recapitalization accomplished, the
Company will focus on further improvements to every aspect of the CDZ operation.
If the Company decides to lease, build and equip a facility in a new location,
it is anticipated that it may require financing of approximately $4.0 million.
TWG management will continue to develop marketing and operational strategies
designed to increase attendance and revenues at its existing locations in the
Czech Republic and Spain. On the basis of professional market research the
Company has developed the trademarked name AMERICAN CHANCE CASINOS, with an Old
West theme. Special promotional events based on a theme related to the "New
Millenium" concept are planned for December and January in both the Czech
Republic and Spain. The recruitment of high-quality employees, a commitment to
employee training and development, and the creation of a dynamic management team
are steps that have been taken to further enhance the organizational strength of
the Company. To maintain the Company's financial improvements, the finance area
has been re-organized and a Company-wide, comprehensive audit program has been
implemented, overseen by the Corporate Controller.
The Company has acquired land near the German border near Ceska Kubice, at
Folmava, Czech Republic, and is planning to build a casino to replace its
existing facility in Ceska Kubice. Management believes that the new location
would be more accessible to its main target market in Germany and will result in
improved attendance and play. TWG also plans to transfer excess slot machines
from Ceska Kubice and Rozvadov to its new location in Znojmo, thereby minimizing
investment. Pre-opening advertisements are planned for both Znojmo and CDZ and
gala grand openings are scheduled for each location. If financing were not
available for the build-out of a new casino in Folmava, it would not have a
material adverse effect on the future profitability of the Company.
In November 1996, residents in 35 parishes in Louisiana, including the two
parishes in which the Company's video poker parlors were located, voted to
discontinue video poker effective after June 30, 1999. The Company ceased its
casino operations in Louisiana effective July 1, 1999, and the Woodlands truck
stop was sold on October 4, 1999. Through its affiliate, Chrysolith, L.L.C., the
Company is currently involved in litigation to overturn the Voter Mandate. See
Part II, Item 1 - "Legal Proceedings." No assurances can be given that such
litigation will be successful.
New management is aggressively reorganizing the Company as full-service provider
of casino management expertise, thus increasing access to the opportunities such
as acquisitions, joint ventures, and management contracts that the Company
continues to seek outside of the United States. There can be no assurance that
management will be successful in identifying such opportunities, financing such
acquisitions or investments or implementing such transactions.
YEAR 2000 CONVERSION
The Company does not believe that the Year 2000 conversion as it relates to
computer applications that perform data intensive calculations beyond December
31, 1999 will have a material adverse effect on the Company's operations.
The Company uses non-customized, "off-the-shelf" accounting software programs,
subscribes to a payroll processing service and maintains banking relationships
with a major banking institution, all of which have indicated that the Year 2000
conversion issue as it relates to the Company has been resolved or that they are
Year 2000 compliant with minor adjustments in process.
8
<PAGE>
NOTE ON FORWARD-LOOKING INFORMATION
This Form 10-QSB contains certain forward-looking statements. For this purpose,
any statements contained in this Form 10-QSB that are not statements of
historical fact may be deemed to be forward-looking statements. Without limiting
the foregoing, words such as "may," "will," "expect," "believe," "anticipates,"
"estimates," or "continue" or comparable terminology or the negative thereof are
intended to identify certain forward-looking statements. These statements by
their nature involve substantial risks and uncertainties, both known and
unknown, and actual results may differ materially from any future results
expressed or implied by such forward-looking statements. The Company undertakes
no obligation to publicly update or revise any forward-looking statements
whether as a result of new information, future events or otherwise.
9
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On or about November 6, 1997, the Company was sued for breach of contract by
Monarch Casinos, Inc. of Louisiana and Michael A. Edwards in the 15th Judicial
District Court, Lafayette Parish, Louisiana, Case No. 97-5037B. Mr. Edwards
claimed compensation charges of approximately $2.2 million and punitive charges
of $11.1 million and alleged that the Company breached a management contract
dated September 21, 1994. The lawsuit was settled for a cash payment of $100,000
on May 15, 1999. The final order of dismissal with full prejudice which
terminated the litigation and disposed of all claims in the lawsuit was issued
by the United States District Court of Louisiana on May 24, 1999.
On January 25, 1997 (prior to the Company's acquisition of 90% of CDZ), the
directors of CDZ filed an application in Court of First Instance number 11 of
Zaragoza to declare CDZ in temporary receivership. Temporary receivership was
granted on June 23, 1997. On April 17, 1998 (the date of the Company's
acquisition of 90% of CDZ), CDZ signed a composition with creditors, most
notably the DGA, the Spanish Social Security Authorities and the City Council of
Alfajarin ("Spanish Taxing Authorities"), which set the terms of payment to the
Spanish Taxing Authorities and other creditors for debts existing as of January
25, 1997. The composition with the Spanish Taxing Authorities and other
creditors resulted in a debt reduction of approximately $1.7 million. This
reduction was accounted for as a reduction of goodwill.
In addition, in 1998, DGA granted the Company a deferral of approximately $1.0
million in taxes on all of 1997 and some of 1998 gaming winnings. Furthermore,
in April 1998, the Company reached an understanding with the Spanish Social
Security Authorities to defer approximately $1.4 million related to all debts
generated in 1997 and the first quarter of 1998.
On May 22, 1998, the Company negotiated settlements by and among Trans World
Gaming of Louisiana ("TWGLa)", Chrysolith, L.L.C. ("Chrysolith"), Prime
Properties, Inc. ("Prime") and National Auto Truckstops, Inc. ("National") (the
"Settlement"). The terms of the Settlement were as follows: (i) TWGLa and the
former owners of Prime agreed that TWGLa would make a final settlement payment
to said former owners of $450,000, subject to certain deductions, noted below,
(the "Settlement Payment"), (ii) the claim of National against Prime would be
satisfied by: (a) liquidating the assets of Prime, (b) paying to National the
funds previously placed in the registry of the court, and (c) paying to National
available cash in Prime relating to the sale of Prime's truckstop inventory to
National (the "Prime Assets") and (d) delivering a promissory note from Prime
(guaranteed by TWGLa and TWG) in the principal amount of $239,597 bearing
interest at the rate of 10% per annum payable in four equal monthly installments
beginning on June 22, 1998 (the "National Promissory Note"); (iii) to the extent
that the Prime Assets proved insufficient to satisfy the National Claim, TWGLa
would reduce the Settlement Payment by the amount of such deficiency and remit
such amount to National; (iv) the remaining funds of the Settlement Payment
first were used to pay trade creditors and to reimburse TWGLa for payments made
under the National Promissory Note and any funds remaining after such payments
and reimbursements were paid to the former owners of Prime; (v) all of the
litigation among the parties was dismissed; and (vi) all parties agreed to
mutually acceptable releases of all claims and liabilities against the others.
The final payment to the former owners of Prime of $34,580 was made on September
15, 1999.
The Company currently is involved as a plaintiff, through its Chrysolith
affiliate, in litigation challenging the Louisiana Voter Mandate. (See Part I,
Item 1, number 5, Notes to Condensed Consolidated Financial Statements).
The Company is not currently involved in any other material legal proceeding nor
was it involved in any other material litigation during the nine months ended
September 30, 1999.
10
<PAGE>
ITEM 2. CHANGES IN SECURITIES
(a) - (d) None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
The Company has, from time to time, been in technical default of certain amended
indentures issued in connection with the Resorts acquisition (the "Amended
Indentures"). The Company has relied upon the forbearance and waivers from a
majority in interest of the holders of the senior notes issued pursuant to such
Amended Indentures. Value Partners, Ltd., a Texas limited partnership ("Value
Partners") represents a majority in interest of the holders of the senior notes.
The Company has borrowed other amounts from Value Partners from time to time
(some of which have been in technical default for which forbearance or waivers
have been granted) and may seek to borrow additional funds, or obtain equity
investments, from Value Partners in the future. On October 28, 1999, the Company
borrowed $3.0 million under the terms of the Amended Indentures, as supplemented
as of October 15, 1999. (See Part I, Item 1, no, 6, Notes to Condensed
Consolidated Financial Statements.)
During the nine and three months ended September 30, 1999, the Company was in
technical default of, and had not timely paid a $1.0 million loan from Value
Partners, which was due on September 15, 1998 (the "Value Partners Loan"). On
July 30, 1999, the Company received a waiver of such default and a waiver of the
cross defaults from Value Partners. The waivers cover actions or omissions by
the Company which may constitute a default or an event of default under the debt
instruments through and including January 1, 2000 (except for payment defaults
under certain debt instruments). Value Partners also granted an extension of the
Value Partners Loan until January 1, 2000 with the understanding that the
Company and Value Partners would work in good faith to renegotiate the loan
terms prior to August 31, 1999. A default by the Company on this loan (or any
loan) would result in a default on all of the Company's debt instruments and
would have a material adverse effect on the Company's financial condition. On
October 28, 1999, the Company repaid the Value Partners Loan in full. See Part
I, Item 1, no. 6, Notes to Condensed Consolidated Financial Statements.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SHAREHOLDERS
None.
ITEM 5. OTHER INFORMATION.
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 10-QSB
a. Exhibits
<TABLE>
<CAPTION>
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Item No. Item Method of Filing
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<S> <C> <C>
3.2 Articles of Incorporation Incorporated by reference to Exhibit 3.1
contained in the registration statement on
Form SB-2 (File No. 33-85446-A).
4.1 By-laws Incorporated by reference to Exhibit 3.2
contained in the registration statement on
Form SB-2 (File No. 33-85446-A).
4.2 Specimen Common Stock Certificate Incorporated by reference to Exhibit 4.1
contained in the registration statement on
Form SB-2 (File No. 33-85446-A).
4.3 Specimen Redeemable Common Stock Purchase Incorporated by reference to Exhibit 4.2
Warrant contained in the registration statement on
Form SB-2 (File No. 33-85446-A).
4.4 Form of Warrant Agreement Incorporated by reference to Exhibit 4.3
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11
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<CAPTION>
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Item No. Item Method of Filing
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<S> <C> <C>
contained in the registration statement on
Form SB-2 (File No. 33-85446-A).
4.5 Confidential Private Placement Memorandum Incorporated by reference to Exhibit 4.4
dated June 17, 1996 contained in Form 10-KSB for the fiscal
year ended December 31, 1996. (File No.
0-25244)
4.6 Supplement No. 1 dated January 14, 1997 to Incorporated by reference to Exhibit 4.5
Confidential Private Placement Memorandum contained in Form 10-KSB for the fiscal
dated June 17, 1996 year ended December 31, 1996. (File No.
0-25244)
4.7 Indenture dated as of November 1, 1996 Incorporated by reference to Exhibit 4.6
between the Company and Trans World Gaming contained in Form 10-KSB for the fiscal
of Louisiana, Inc., as Issuer, and U.S. year ended December 31, 1996. (File No.
Trust Company of Texas, N.A., as Trustee 0-25244)
4.8 Form of 12% Secured Convertible Senior Bond Incorporated by reference to Exhibit 4.7
due June 30, 1999 contained in Form 10-KSB for the fiscal
year ended December 31, 1996. (File No.
0-25244)
4.9 Form of Warrant to Purchase Common Stock Incorporated by reference to Exhibit 4.8
Dated July 1, 1996 contained in Form 10-KSB for the fiscal
year ended December 31, 1996. (File No.
0-25244)
4.10 Form of Warrant for Purchase of Shares of Incorporated by reference to Exhibit 4.9
Common Stock dated January 1, 1997 contained in Form 10-KSB for the fiscal
year ended December 31, 1996. (File No.
0-25244)
4.11 Form of Non-Negotiable Promissory Note Incorporated by reference to Exhibit 4.10
dated January 1, 1997 contained in Form 10-KSB for the fiscal
year ended December 31, 1996. (File No.
0-25244)
4.12 First Amended Senior Secured Promissory Incorporated by reference to Exhibit 4.11
Note dated December 19, 1997 contained in Form 10-KSB for the fiscal
year ended December 31, 1997 filed on
March 30, 1998. (File No. 0-25244)
4.13 Form of Warrant for Purchase of Shares of Incorporated by reference to Exhibit 4.12
Common Stock dated January 15, 1998 contained in Form 10-KSB for the fiscal
year ended December 31, 1997 filed on
March 30, 1998. (File No. 0-25244)
4.14 Lenders Waiver and Option Agreement dated Incorporated by reference to Exhibit 4.13
March 9, 1998 contained in Form 10-KSB for the fiscal
year ended December 31, 1997 filed on
March 30, 1998. (File No. 0-25244)
4.15 Indenture dated March 31, 1998 among the Incorporated by reference to Exhibit 4(I)
Company, TWG International U.S. contained in the Form 8-K filed on April
Corporation, TWG Finance Corp. and U.S. 14, 1998 (File No. 0-25244)
Trust Company of Texas, N.A.
4.16 Series C Warrant to Purchase Common Stock Incorporated by reference to Exhibit 4(II)
dated March 31, 1998 contained in the Form 8-K filed on April
14, 1998 (File No. 0-25244)
4.17 Indenture dated March 31, 1998 between Incorporated by reference to Exhibit 4(III)
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12
<PAGE>
<CAPTION>
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Item No. Item Method of Filing
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<S> <C> <C>
TWG International U.S. Corporation and contained in the Form 8-K filed on April 14,
U.S. Trust Company of Texas, N.A. 1998 (File No. 0-25244)
4.18 Consent to Amend Indenture, Bonds and Incorporated by reference to Exhibit 4(IV)
Warrants dated March 25, 1998 by and contained in the Form 8-K filed on April
between the Company, Trans World Gaming of 14, 1998 (File No. 0-25244)
Louisiana, Inc., U.S. Trust Company of
Texas, N.A., and certain individuals
4.19 First Amended Indenture dated March 31, Incorporated by reference to Exhibit 4(V)
1998 among the Company, TWGLa and U.S. contained in the Form 8-K filed on April
Trust Company of Texas, N.A. 14, 1998 (File No. 0-25244)
4.20 Series A Warrant to Purchase Common Stock Incorporated by reference to Exhibit 4(VI)
dated March 31, 1998 contained in the Form 8-K filed on April
14, 1998 (File No. 0-25244)
4.21 Series B Warrant to Purchase Common Stock Incorporated by reference to Exhibit
dated March 31, 1998 4(VII) contained in the Form 8-K filed
on April 14, 1998 (File No. 0-25244)
4.22 Agreement to Amend Warrants dated March 31, Incorporated by reference to Exhibit
1998 among the Company and the named 4(VIII) contained in the Form 8-K filed
Holders on April 14, 1998 (File No. 0-25244)
4.23 Series D Warrant to Purchase Common Stock Incorporated by reference to Exhibit 4(IX)
dated March 31, 1998 contained in the Form 8-K filed on April
14, 1998 (File No. 0-25244)
10.1 Lender's Waiver dated July 30, 1999 Incorporated by reference to Exhibit 4.23
in the Form 10-QSB filed August 20, 1999
(File No. 0-25244)
10.2 Agreement for Exchange of Shares dated July Incorporated by reference to Exhibit 10.1
12, 1994,between the Company and the contained in the registration statement on
shareholders of Lee Young Enterprises, Inc. Form SB-2 (File No. 33-85446-A).
10.3 Asset Purchase Agreement dated as of Incorporated by reference to Exhibit 10.2
September 21,1994, between the Company and contained in the registration statement on
Prime Properties, Inc. Form SB-2 (File No. 33-85446-A).
10.4 Agreement of Sale dated as of September 21, Incorporated by reference to Exhibit 10.3
1994,between the Company and Prime contained in the registration statement on
Properties, Inc. Form SB-2 (File No. 33-85446-A).
10.5 Form of Lease between Prime Properties, Incorporated by reference to Exhibit 10.4
Inc. and the Company. contained in the registration statement on
Form SB-2 (File No. 33-85446-A).
10.6 Agreement dated September 21, 1994, among Incorporated by reference to Exhibit 10.5
Chrysolith, LLC, Prime Properties, Inc., contained in the registration statement on
Monarch Casinos, Inc. of Louisiana, Form SB-2 (File No. 33-85446-A).
("Monarch") and the Company.
10.7 Asset Purchase Agreement dated September Incorporated by reference to Exhibit 10.6
21, 1994, between Chrysolith L.L.C. and contained in the registration statement on
Monarch Form SB-2 (File No. 33-85446-A).
10.8 Lease (with option) dated May 10, 1994 Incorporated by reference to Exhibit 10.7
among Lula Miller, Inc., Charles A. Jones contained in the registration statement on
III and Kelly McCoy Jones, as Lessor, and Form SB-2 (File No. 33-85446-A).
Monarch, as Lessee.
10.9 Offer to Purchase dated October 4, 1994, Incorporated by reference to Exhibit 10.8
among Trans World Gaming of Louisiana, contained in the registration statement on
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13
<PAGE>
<CAPTION>
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Item No. Item Method of Filing
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<S> <C> <C>
Inc., Monarch, Lula Miller, Inc., Charles Form SB-2 (File No. 33-85446-A).
A. Jones III and Kelly McCoy Jones.
10.10 Memorandum of Agreement dated March 18, Incorporated by reference to Exhibit 10.9
1994, between the Company and Yves Gouhier contained in the registration statement on
and Camille Costard to acquire shares of Form SB-2 (File No. 33-85446-A).
Casino Cherbourg S.A., as amended (English
translation, except amendment is in French.)
10.11 Shareholder Agreement dated April 7, 1994, Incorporated by reference to Exhibit 10.10
between the Company and Michael A. Edwards, contained in the registration statement on
as the shareholders of Monarch Form SB-2 (File No. 33-85446-A).
10.12 Employment Agreement dated March 6, 1996 Incorporated by reference to Exhibit 10.11
between the Company and Stanley Kohlenberg contained in the Form 10-KSB for the
fiscal year ended December 31, 1995 (File
No. 0-25244).
10.13 Employment Agreement between the Company Incorporated by reference to Exhibit 10.12
and Dominick J. Valenzano contained in the registration statement on
Form SB-2 (File No. 33-85446-A).
10.14 1993 Incentive Stock Option Plan Incorporated by reference to Exhibit 10.13
contained in the registration statement on
Form SB-2 (File No. 33-85446-A).
10.15 Form of 4 1/2% Bridge Note Incorporated by reference to Exhibit 10.14
contained in the registration statement on
Form SB-2 (File No. 33-85446-A).
10.16 Form of 10% Secured Bridge Incorporated by reference to Exhibit 10.15
contained in the registration statement on
Form SB-2 (File No. 33-85446-A).
10.17 Collateral Mortgage relating to the Incorporated by reference to Exhibit 10.16
Woodlands Travel Plaza. contained in the registration statement on
Form SB-2 (File No. 33-85446-A).
10.18 Operating Agreement dated as of December Incorporated by reference to Exhibit 10.17
22, 1994 Gold Coin. contained between the Company and
Chrysolith relating to the in the Form
10-KSB for the fiscal year ended December
31, 1994 (File No. 0-25244).
10.19 Note in principal amount $75,000 payable by Incorporated by reference to Exhibit 10.18
Monarch (and assumed by the Company). contained in the Form 10-KSB for the
fiscal year ended December 31, 1994 (File
No. 0-25244).
10.20 Lease Agreement dated May 1, 1993 between Incorporated by reference to Exhibit 10.19
National Auto/Truck Stops, Inc. and Prime contained in the Form 10-KSB for the
Properties with respect to the 76 Plaza fiscal year ended December 31, 1995 (File
No. 0-25244).
10.21 Agreement and General Release dated as of Incorporated by reference to Exhibit 10.20
March 6, 1996 between the Company and R. contained in the Form 10-KSB for the fiscal
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14
<PAGE>
<CAPTION>
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Item No. Item Method of Filing
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<S> <C> <C>
K. Merkey. year ended December 31, 1995 (File No. 0-
25244).
10.22 Forbearance Agreement dated January 19, Incorporated by reference to Exhibit 10.21
1996 between the Company and Chrysolith contained in the Form 10-KSB for the
fiscal year ended December 31, 1995 (File
No. 0-25244).
10.23 Letter Agreement dated January 30, 1996 Incorporated by reference to Exhibit 10.22
between the Company and Chrysolith contained in the Form 10-KSB for the
regarding forbearance payments fiscal year ended December 31, 1995 (File
No. 0-25244).
10.24 Consulting Agreement dated January 1, 1997 Incorporated by reference to Exhibit 10.23
between the Company and Stanley Kohlenberg contains in Form 10-KSB for the fiscalyear
ended December 31, 1996 (File No. 0-25244).
10.25 Employment Agreement dated December 26, Incorporated by reference to Exhibit 10.24
1996 between the Company and Andrew contains in Form 10-KSB for the fiscal
Tottenham year ended December 31, 1996 (File No.
0-25244).
10.26 Employment Agreement date February 1, 1997 Incorporated by reference to Exhibit 10.25
between the Company and Christopher contains in Form 10-KSB for the fiscal
Moore year ended December 31, 1996 (File No.
0-25244).
10.27 Cancellation Agreement dated as of October Incorporated by reference to Exhibit 10.26
3, 1996 between the Company and Mid-City contained in the Form 10-KSB for the
Associates fiscal year ended December 31, 1996 (File
No. 0-25244).
10.28 Agreement of Lease dated as of October 2, Incorporated by reference to Exhibit 10.27
1996 between the Company and Mid-City contained in the Form 10-KSB for the
Associates fiscal year ended December 31, 1996 (File
No. 0-25244).
10.29 Stock Purchase Agreement dated as of Incorporated by reference to Exhibit 10.28
January 1, 1997 among the Company, Andrew contained in the Form 10-KSB for the
Tottenham and Robin Tottenham fiscal year ended December 31, 1996 (File
No. 0-25244).
10.30 Employment Agreement dated April 15, 1997 Incorporated by reference to Exhibit 10.29
between Company and James Hardman contained in Form 10-KSB for the fiscal
year ended December 31, 1997 filed on
March 30, 1998. (File No. 0-25244)
10.31 Stock Purchase Agreement dated as of Incorporated by reference to Exhibit 10.30
January 20, 1998 between the Company and contained in Form 10-KSB for the fiscal
21st Century Resorts year ended December 31, 1997 filed on
March 31, 1998. (File No. 0-25244)
10.32 Form of the Subscription Agreement for the Incorporated by reference to Exhibit 10.31
Private Placement contained in Form 10-KSB for the fiscal
year ended December 31, 1997 filed on
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15
<PAGE>
<CAPTION>
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Item No. Item Method of Filing
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<S> <C> <C>
March 31, 1998. (File No. 0-5244)
10.33 Escrow Agreement dated March 17, 1998 among Incorporated by reference to Exhibit 10.32
the Company, TWG Finance Corp., TWG contained in Form 10-KSB for the fiscal
International U.S. Corporation as Issuer year ended December 31, 1997 filed on
and U.S. Trust Company of Texas, N.A., as March 30, 1998. (File No. 0-25244)
Trustee
10.34 Consulting Agreement between Chrysolith, Incorporated by reference to Exhibit 10
L.L.C. and Lee Young dated January 1, 1997 contained in the Form 10-QSB for the
quarter ended June 30, 1996 filed on
August 14, 1996 (File No. 0-25244)
10.35 Purchase Agreement dated as of April 15, Incorporated by reference to Exhibit 10.34
1997 among the Company, James R. Hardman, contained in the Form 10-Q for the quarter
Jr. and Multiple Application Tracking System ended March 31, 1997, filed on May 9, 1997
(File No. 0-25244)
10.36 License Agreement dated as of April 15, Incorporated by reference to Exhibit 10.35
1997 between the Company and James R. contained in the Form 10-Q for the quarter
Hardman, Jr. ended March 31, 1997, filed on May 9, 1997
(File No. 0-25244)
10.37 Loan Agreement dated June 11, 1997 between Incorporated by reference to Exhibit 10.36
the Company and Value Partners contained in the Form 8-K filed on June
17, 1997 (File No. 0-25244)
10.38 $350,000 Senior Promissory Note dated June Incorporated by reference to Exhibit 10.37
11, 1997 contained in the Form 8-K filed on June
17, 1997 (File No. 0-25244)
10.39 Joint Activity Agreement dated March 31, Incorporated by reference to Exhibit 10.38
1997 between Mr. Mahmud Avdiyev and contained in the Form 8-K filed on June
Tottenham & Co., d/b/a ART marketing Ltd. 17, 1997 (File No. 0-25244)
10.40 Loan Agreement dated October 27, 1997, Incorporated by reference to Exhibit 10.39
between Value Partners, and the Company contained in the Form 10-QSB for the
quarter ended September 30, 1997, filed on
November 12, 1997 (File No. 0-25244)
10.41 $262,500 Senior Promissory Note dated Incorporated by reference to Exhibit 10.40
October 27, 1997 contained in the Form 10-QSB for the
quarter ended September 30, 1997, filed on
November 12, 1997 (File No. 0-25244)
10.42 Warrant to Purchase Common Stock dated Incorporated by reference to Exhibit 10.41
November 27, 1997 contained in the Form 10-QSB for the
quarter ended September 30, 1997, filed on
November 12, 1997 (File No. 0-25244)
10.43 Employment Agreement between the Company Incorporated by reference to Exhibit 10.42
and Rami S. Ramadan dated July 12, 1999 contained in the Form 8-K filed on July
13, 1999 (File No. 0-25244)
10.44 Severance Agreement between the Company and Incorporated by reference to Exhibit 10.43
Stanley Kohlenberg dated May 23, 1999 contained in the Form 8-K filed on July
13, 1999 (File No. 0-25244)
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16
<PAGE>
<CAPTION>
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Item No. Item Method of Filing
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<S> <C> <C>
10.46 Severance Agreement among the Company, Incorporated by reference to Exhibit 10.44
Trans World Gaming of Louisiana, TWG contained in the Form 8-K filed on July
International U.S. Corporation and TWG 13, 1999 (File No. 0-25244)
Finance Corp. and Dominick J. Valenzano
dated July 12, 1999
27.1 Form of Lease Agreement between London Incorporated by reference to Exhibit 10.46
Investments s.r.o. and the Company contained in the Form 10-KSB filed on
August 3, 1999 (File No. 0-25244).
Financial Data Schedule Filed herewith
</TABLE>
b. Reports on Form 8-K
During the quarter ended September 30, 1999, the Company filed
one Periodic Report on Form 8-K, as described below.
On July 12, 1999, the Company filed a Form 8-K to describe the
appointment of Rami S. Ramadan as Chief Executive Officer and
Chief Financial Officer of the Company, and the resignation of:
(i) Mr. Stanley Kohlenberg as Chief Executive Officer, and (ii)
Mr. Dominick Valenzano as Chief Financial Officer, and to file,
as exhibits thereto, Mr. Ramadan's employment agreement and
Messrs. Kohlenberg's and Valenzano's severance agreements.
17
<PAGE>
ITEM 7. SIGNATURES
In accordance with the requirements of Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
TRANS WORLD GAMING CORP.
Date: November 4, 1999 By: /s/ Rami S. Ramadan
------------------------
Chief Executive Officer
18
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AND STATEMENT OF OPERATIONS FOUND ON PAGES F-3 AND
F-4 OF THE COMPANY'S 10KSB\A FOR THE YEAR ENDED DECEMBER 31, 1998 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 1,319
<SECURITIES> 0
<RECEIVABLES> 78
<ALLOWANCES> 0
<INVENTORY> 30
<CURRENT-ASSETS> 2,594
<PP&E> 4,874
<DEPRECIATION> 973
<TOTAL-ASSETS> 17,822
<CURRENT-LIABILITIES> 6,012
<BONDS> 23,441
0
0
<COMMON> 3
<OTHER-SE> (11,634)
<TOTAL-LIABILITY-AND-EQUITY> 17,822
<SALES> 0
<TOTAL-REVENUES> 12,602
<CGS> 0
<TOTAL-COSTS> 12,801
<OTHER-EXPENSES> 3
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,759
<INCOME-PRETAX> (2,961)
<INCOME-TAX> 0
<INCOME-CONTINUING> (2,961)
<DISCONTINUED> 0
<EXTRAORDINARY> 137
<CHANGES> 0
<NET-INCOME> (3,098)
<EPS-BASIC> (.92)
<EPS-DILUTED> (.92)
</TABLE>
