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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB/A
/X/ QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the Quarterly period ended September 30, 1998
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM _______________ TO _________________.
COMMISSION FILE NO.: 0-25244
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TRANS WORLD GAMING CORP.
(Exact name of registrant 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)
Registrant's telephone number, including area code: (212) 563-3355
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Check whether the Registrant (1) has filed all reports required to be filed
by Section 13 or 15(d) of 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. YES / X / NO / /
Shares of the Registrant's Common Stock, par value $.001, outstanding as of
August 27, 1999: 3,364,286
Transitional Small Business Disclosure Format (check one: YES / / NO /X/)
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TRANS WORLD GAMING CORP. HEREBY AMENDS AND RESTATES IN ITS ENTIRETY THE FORM
10-QSB FOR THE FISCAL QUARTER ENDED SEPTEMBER 30, 1998. THIS AMENDMENT AND
RESTATEMENT IS THE RESULT OF A REVIEW BY OUR INDEPENDENT AUDITORS, ROTHSTEIN
KASS & CO. THE PURPOSE OF THE AMENDMENT IS TO MAKE CORRECTIONS AS DESCRIBED IN
NOTE 5. (ENTITLED "RESTATEMENT OF CERTAIN TRANSACTIONS AS OF SEPTEMBER 30,
1998") TO THE FINANCIAL STATEMENTS APPEARING IN THIS REPORT.
TRANS WORLD GAMING CORP.
FORM 10-QSB/A
FOR THE QUARTER ENDED SEPTEMBER 30, 1998
INDEX
PART 1 - FINANCIAL INFORMATION
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PAGE
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ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED BALANCE SHEET (AMENDED) AS OF SEPTEMBER 30, 1998 1
(UNAUDITED).
CONDENSED CONSOLIDATED STATEMENT OF EARNINGS (AMENDED) (UNAUDITED) 2
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (AMENDED) (UNAUDITED) 3
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (AMENDED). 4
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS 5
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS 11
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 12
</TABLE>
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FINANCIAL INFORMATION
ITEM 1. CONDENSED CONSOLIDATED STATEMENTS (AMENDED)
TRANS WORLD GAMING CORP.
CONDENSED CONSOLIDATED BALANCE SHEET (AMENDED)
SEPTEMBER 30, 1998
(IN THOUSANDS)
(UNAUDITED)
ASSETS
<TABLE>
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<S> <C>
CURRENT ASSETS
Cash and equivalents $ 1,778
Accounts/Notes receivable 1,120
Inventories 62
Other current assets 583
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Total current assets 3,543
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PROPERTY AND EQUIPMENT -net 3,850
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OTHER ASSETS
Investment at equity 75
Goodwill 17,262
Deferred costs and other assets 875
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Total other assets 18,212
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TOTAL ASSETS $ 25,605
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LIABILITIES AND STOCKHOLDERS EQUITY/(DEFICIT)
CURRENT LIABILITIES
Current portion of long term debt $ 1,070
Accounts payable and accrued expenses 3,264
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Total current liabilities 4,334
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LONG TERM DEBT, net of current portion 17,887
LONG TERM DEBT, other long term liabilities 5,800
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23,687
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STOCKHOLDERS EQUITY/(DEFICIT)
Capital stock 3
Additional paid-in-capital 8,896
Stock warrants outstanding 5,237
Accumulated deficit (16,552)
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Total stockholders equity/(deficit) (2,416)
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TOTAL LIABILITIES AND STOCKHOLDERS EQUITY/(DEFICIT) $ 25,605
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</TABLE>
SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS
1
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<TABLE>
<CAPTION>
TRANS WORLD GAMING CORP.
CONDENSED CONSOLIDATED STATEMENT OF EARNINGS (AMENDED)
(IN THOUSANDS EXCEPT PER SHARE DATA)
(UNAUDITED)
Nine months ended Three months ended
September 30, 1998 September 30, 1998
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1998 1997 1998 1997
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<S> <C> <C> <C> <C>
REVENUES $10,220 $5,170 $3,862 $1,774
COSTS AND EXPENSES
Cost of revenue 8,090 3,216 3,245 1,109
Administrative 1,598 877 619 281
Depreciation and Amortization 1,841 283 921 101
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TOTAL COSTS AND EXPENSES 11,529 4,376 4,785 1,491
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EARNINGS/(LOSS) FROM OPERATIONS (1,309) 794 (923) 283
Interest expense 1,999 539 878 185
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EARNINGS/(LOSS) BEFORE TAXES (3,308) 255 (1,801) 98
Provision for tax 82 41 (19) 11
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NET EARNINGS/(LOSS) ($3,390) $214 ($1,782) $87
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----------------------- ------------------ ---------------------- ------------------
Earnings/(loss) per share - basic ($1.11) $0.07 ($0.59) $0.03
Weighted Average of Common
shares used in computing basic
earnings/(loss) per share 3,044 2,878 3,044 2,878
</TABLE>
SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS
2
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<TABLE>
<CAPTION>
TRANS WORLD GAMING CORP.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (AMENDED)
(IN THOUSANDS)
(UNAUDITED)
NINE MONTHS ENDED SEPTEMBER 30
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1998 1997
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<S> <C> <C>
Cash flows used by operating activities ($1,675) $545
Cash flows used by investing activities (14,030) (314)
Cash flows provided/(used) by financing activities 17,285 (483)
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Net increase/(decrease) in cash 1,580 (252)
Cash - beginning of period 198 489
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Cash - end of period $1,778 $237
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</TABLE>
SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS
3
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TRANS WORLD GAMING CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS (AMENDED)
1. Unaudited Statements.
The accompanying condensed consolidated financial statements (amended)
of Trans World Gaming Corp. (the "Company" or "TWG") as of September
30, 1998 and for the three and nine months ended September 30, 1998 and
September 30, 1997 are unaudited and reflect all adjustments of a
normal and recurring nature to present fairly the financial position
and results of operation and cash flows for the interim periods. These
unaudited statements have been prepared by the Company pursuant to the
rules and regulations of the Securities and Exchange Commission.
Pursuant to such rules and regulations, certain financial information
and footnote disclosures normally included in such financial statements
have been condensed or omitted.
These interim financial statements should be read in conjunction with
the audited, consolidated financial statements and notes thereto,
together with management's discussion and analysis or plan of
operations, contained in the Company's Annual Report on Form 10-KSB/A
for the year ended December 31, 1997. The results of operations for the
nine months ended September 30, 1998 are not necessarily indicative of
the results for the entire year ending December 31, 1998.
2. Basic earnings (loss) per share is computed by dividing net income
(loss) by the weighted average number of common shares outstanding
during the period. Diluted earnings per 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 per share has not been
presented for the quarters ended September 30, 1998 and 1997 since the
inclusion of common stock equivalents either did not have an effect on
basic earnings per share or would have been antidilutive.
3. During the nine months ended September 30, 1998, the Company incurred
$17 million in long term debt which was used to finance the acquisition
of 21st Century Resorts a.s. ("Resorts") in the Czech Republic, and to
retire short-term debt. The Company also acquired 90% of the shares of
Casino de Zaragoza ("CDZ"), in Spain and the Company's CDZ subsidiary
assumed $4.8 million of the long term debt of CDZ.
4. The Company is involved in a legal proceeding with Monarch Casinos in
Louisiana over an alleged breach of contract by TWG. In addition, the
Company has negotiated a settlement by and among TWG, National
Auto/Truckstops, Inc. ("National") and Prime Properties, Inc. ("Prime")
in Lafayette, Louisiana regarding a franchise dispute between National
and Prime.
5. Restatement of Certain Transactions as of September 30, 1998
a. PREVIOUSLY OVERSTATED DEBT AND UNDERSTATED SHAREHOLDERS' DEFICIT
Of the $17 million principal amount of notes and warrants issued
in the private placement offering in March 1998 ("Private
Placement"), the Company allocated approximately $4.7 million as
the estimated value of the warrants issued with the notes. This
amount is being amortized as additional interest expense and an
increase to notes payable over the lives of the notes using the
effective interest method until such notes are repaid or the
warrants are converted to equity.
b. RECORDINGS OF THE ACQUISITIONS OF RESORTS AND CDZ
The acquisitions of Resorts and CDZ were erroneously recorded in
the interim consolidated financial statements. Furthermore, the
amortization period of goodwill recorded in connection with these
acquisitions was changed from 15 to 7 years.
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c. BALANCE SHEET RECLASSIFICATIONS
Various balance sheet reclassifications were made to conform to
the presentation of the 1998 audited consolidated financial
statements.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
RESULTS OF OPERATION
THREE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
The Company's operations resulted in net loss of $1.8 million for the three
months ended September 30, 1998, representing a $1.9 million decrease from the
net income of $87,000 for the three months ended September 30, 1997. The
Company's earnings before interest, taxes, depreciation and amortization
("EBITDA") totaled $17,000 for the three months ended September 30, 1998 a
decrease of $356,000 from the three months ended September 30, 1997.
Revenues totaled $3.9 million for the three months ended September 30, 1998
compared to $1.8 million for the same period in 1997, an increase of $2.1
million. Approximately $2.4 million of the increase represents revenues from new
businesses acquired in the first and second quarters of 1998, as described
below. In Louisiana, revenues from retail operations at the Woodlands truck stop
in Louisiana decreased 27% from $617,000 for the three months ended September
30, 1997 to $492,000 for the three months ended September 30, 1998, primarily
due to lower than expected fuel sales. Also, video poker revenues at the Gold
Coin video poker parlor (the "Gold Coin") decreased 13%, from $994,000 to
$870,000, and revenues from the Toledo Palace increased 15% from $89,000 to
$102,000, for the respective quarters ended September 30, 1997 and 1998
respectively.
On March 31,1998, the Company acquired Resorts, a Czech Republic joint stock
company, (see - " Liquidity and Capital Resources") which operates two casinos
in the Czech Republic and has the right to build a third. Revenues from Resorts
for the three months ended September 30, 1998 totaled $1.6 million. On April 17,
1998, TWG acquired CDZ, a company incorporated in Zaragoza, Spain that holds an
exclusive gaming license in the Region of Aragon. Revenues from CDZ for the
three months ended September 30, 1998 were $.8 million. Neither Resorts nor CDZ
generated revenues for the Company in the comparable three month period in 1997.
Total costs and expenses increased from $1.5 million for the three months ended
September 30, 1997 to $4.8 million for the three months ended September 30,
1998, an increase of $3.3 million. Costs incurred in the operation of the
recently acquired casinos for the three months ended September 30, 1998 which
were not incurred over the same period in 1997 in the Czech Republic were $1.1
million and in Spain totaled $1.0 million. In Louisiana, video poker operations
recorded direct costs of $331,000 for the three months ended September 30, 1998,
which increased by 19% from the costs of $279,000 during the comparable 1997
quarter, due primarily to the costs associated with the increase in the number
of video poker devices at the Toledo Palace. Retail expenses at the Woodlands
truck stop decreased approximately $196,000, or 28%, from $696,000 for the three
months ended September 30, 1997 to $500,000 for the comparable quarter of 1998,
due primarily to a decrease in direct costs associated with decreased fuel
sales.
MATS expenses, consisting primarily of labor and travel-related costs, amounted
to $63,000 for the three months ended September 30, 1998 which is equal to the
costs incurred by MATS during the comparable quarter of 1997.
Administrative costs increased $338,000, to $619,000, for the three months ended
September 30, 1998 as compared to $281,000 in the comparable quarter in 1997.
Costs incurred in the three months ended September 30, 1998 to support the
Resorts and CDZ acquisitions totaled $221,000 consisting primarily of legal
($105,000) and travel and administrative support costs ($82,000).
Depreciation and amortization for the three month periods ended September 30,
1998 and September 30, 1997 were $921,000 and $101,000 respectively. The
increase was due primarily to the amortization of goodwill from the investments
in the Czech Republic, Spain, Bishkek, the amortization of deferred debt
issuance costs relating to the Private Placement. (See "Liquidity and Capital
Resources".)
5
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Interest expense increased by $693,000 from $185,000 for the three months ended
September 30,1997 to $878,000 for the comparable quarter in 1998. Interest
expense in connection with the Private Placement (see - "Liquidity and Capital
Resources") amounted to $678,000 for the quarter ended September 30, 1998
accounting for a majority of the increase over the comparable three month period
in 1997.
NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
The Company's operations resulted in net loss of $3.4 million for the nine
months ended September 30, 1998, representing a $3.6 million decrease from the
net income of $214,000 for the nine months ended September 30, 1997. The
Company's EBITDA totaled $450,000 for the nine months ended September 30, 1998,
a decrease of $586,000 compared to the nine months ended September 30, 1997.
Revenues totaled $10.2 million for the nine months ended September 30, 1998
compared to $5.2 million for the same period in 1997, an increase of $5.0
million. Approximately $5.7 million of the increase represents revenues from the
Resorts and CDZ acquisitions as described below. In Louisiana, revenues from
retail operations at the Woodlands truck stop decreased 27% from $2.0 million
for the nine months ended September 30, 1997 to $1.5 million for the nine months
ended September 30, 1998, primarily due to lower than expected fuel sales. Also,
video poker revenues at the Gold Coin decreased 6%, from $2.9 million to $2.7
million, and revenues from the Toledo Palace increased 62% from $209,000 to
$338,000, for the respective nine month periods ending September 30, 1997 and
1998.
On March 31,1998, the Company acquired Resorts and the two operating casinos
owned by Resorts in the Czech Republic which generated revenues for the nine
months ended September 30, 1998 totaling $3.6 million. On April 17, 1998, TWG
acquired CDZ, which generated revenues for the nine months ended September 30,
1998 of $2.1 million. Neither Resorts nor CDZ generated revenues for the Company
in the comparable nine month period in 1997.
Total costs and expenses increased from $4.4 million for the nine months ended
September 30, 1997 to $11.5 million for the nine months ended September 30,
1998, an increase of $7.1 million. For the nine months ended September 30, 1998,
costs incurred in the operation of the recently acquired casinos for the nine
months ended September 30, 1998 in the Czech Republic were $2.3 million, and in
Spain, costs totaled $2.6 million. Those costs were not incurred in the
comparable 1997 period. In Louisiana, video poker operations in Louisiana
recorded direct costs of $950,000 for the nine months ended September 30, 1998,
an increase of 14% from the $834,000 of costs incurred during the comparable
1997 period, due primarily to the costs associated with the increase in the
number of video poker devices at the Toledo Palace. Retail expenses at the
Woodlands truck stop decreased approximately $496,000, or 24%, from $2.1 million
for the nine months ended September 30, 1997 to $1.6 million for the comparable
1998 period, due primarily to direct costs associated with decreased fuel sales.
MATS expenses, consisting primarily of labor and travel-related costs, amounted
to $174,000 for the nine months ended September 30, 1998, an increase of $76,000
over the comparable period in 1997. Since MATS was acquired in April 1997, the
nine months ended September 30, 1997 represents only six months of actual costs.
Administrative costs increased $721,000, to $1.6 million for the nine months
ended September 30, 1998 as compared to $877,000 for the comparable period in
1997. Costs incurred to support the new business acquisitions totaled $576,000
for the nine months ended September 30, 1998, consisting primarily of legal
($239,000), audit ($44,000), advertising ($33,000), consulting fees ($30,000)
and travel and administrative support costs ($193,000).
Depreciation and amortization for the nine month periods ending September 30,
1997 and September 30, 1998 were $283,000 and $1.8 million respectively. The
increase was due primarily to the amortization of goodwill from the investments
in the Czech Republic, Spain, and Bishkek, the amortization of deferred debt
issuance costs relating to the Private Placement (see "Liquidity and Capital
Resources"). In addition, in January 1998, the President of Azerbaijan ordered
the closing of all of the casinos in Azerbaijan which included the Boxer Casino
for which the Company had a management contract. The shutdown resulted in a
write-off of the balance of the investment of $539,000 in the quarter ended June
30, 1998. Management cannot predict when, or whether, the Boxer Casino will
reopen for business.
Interest expense increased by $1.5 million from $539,000 for the nine months
ended September 30,1997 to $2.0 million for the comparable period in 1998.
Interest expense in connection with the Private Placement amounted to $1.5
million
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for the nine months ended September 30, 1998 accounting for the increase over
the comparable nine month period in 1997.
LIQUIDITY AND CAPITAL RESOURCES
The Company's working capital, defined as current assets minus current
liabilities, decreased $.1 million to a deficit of $791,000 for the nine months
ended September 30, 1998 from a working capital deficit at December 31, 1997, of
$0.9 million. As described below, the Company used the proceeds of certain short
term and long term financings to acquire Resorts, a Czech Republic joint stock
company (see - the Form 10KSB/A for the year ended December 31, 1997, Item 1.
"Description of Business") and to repay interest-bearing debt. The net proceeds
of the financings, offset by the investments and debt repayments, resulted in an
increase of $1.6 million in cash and equivalents to a balance of $1.8 million at
September 30, 1998.
On October 29, 1997, the Company and Value Partners, Ltd., a Texas limited
partnership, ("Value Partners") executed a loan which was amended on December
19, 1997, under which TWG had the ability to borrow up to $2,538,000 (the "First
Amended Loan Agreement"). As of September 30, 1998, the Company had borrowed
$1,538,000 under this loan, including the Bishkek Note described below, of which
$1,288,000 was repaid on March 31, 1998 from the proceeds of the Private
Placement (as described below) (see - the Form 10KSB/A for the year ended
December 31, 1997, Item 6. "Management's Discussion and Analysis or Plan of
Operations - Liquidity and Capital Resources").
On March 19, 1998, the Company and Value Partners executed a Lender's Waiver and
Option Agreement (the "Waiver") under which the Company borrowed $250,000 (the
"Bishkek Note") to fund the Bishkek Casino transaction. The Bishkek Casino is
located in Kyrgyz, a former member of the Soviet Union. The Company will repay
the principal and accrued interest in nine equal monthly installments starting
June 1, 1998 from available cash flow, excluding cash flow from the European
casinos. The Company has repaid $111,108 in principal payments through September
30, 1998. As of September 30, 1998 and as of the date hereof, the Company was
and is current on its payments under the Bishkek Note.
On March 31, 1998, the Company, with the assistance of Libra Investments, Inc.,
Los Angeles, California ("Libra") acting as placement agent, borrowed $17.0
million from fourteen sophisticated, accredited investors (the "Investors") in
the Private Placement. The loan is represented by 12% Senior Secured Notes (the
"Notes") issued pursuant to an indenture by and among TWG, TWG International
U.S. Corporation ("TWGI"), TWG Finance Corp. ("TFC") (both wholly-owned
subsidiaries of TWG) and U.S. Trust Company of Texas, N.A. acting as indenture
trustee. The Notes require mandatory prepayments based upon excess cash flow
generated by TWGI from the operation of the Czech casinos acquired in the
Resorts acquisition and bear interest at the rate of 12% per annum. (See - the
Form 8-K and Form 8-K/A filed with the Securities and Exchange Commission on
April 14, 1998 and June 15, 1998, respectively.) The proceeds of the Notes were
used for the net acquisition costs of, and improvements to, Resorts totaling
$12.6 million, to repay the First Amended Loan Agreement in the amount of $1.3
million, for costs and expenses of $1.4 million relating to the Private
Placement and working capital of $1.7 million. The initial interest payment
under the terms of the Note was paid on September 17, 1998. As of September 30,
1998 and as of the date hereof, the Company was and is current on its payments
under the Note.
On May 19, 1998, the Company and Value Partners executed a Loan Agreement (the
"Loan Agreement") under which the Company borrowed $1,000,000 at 12% interest
per annum to fund the purchase of the stock of CDZ (see - "Plan of Operations"),
which was payable in full on September 15, 1998. The Company is currently
negotiating with Value Partners to extend the maturity of the loan to June 30,
1999 at the rate of 17% per annum. There can be no assurance that the terms of
Loan Agreement can be renegotiated at terms favorable to the Company, if at all.
Value Partners has the option to declare the unpaid principal and accrued
interest immediately due and payable which would have a material adverse effect
on the Company's financial condition and results of operation.
The Company is currently attempting to raise approximately $4 million from
private investors (the "Capital Raise") in order to recapitalize CDZ, provide
working capital to cover the projected operating losses and to repay the Loan
Agreement to Value Partners described in the paragraph above.
The Company believes, although there can be no assurance, that assuming the
Capital Raise is successful, existing cash and anticipated cash flows from
current operations will be sufficient to satisfy its on-going operational,
liquidity and
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capital requirements 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
The Company intends to continue operating the Gold Coin and the Toledo Palace as
they are presently being operated; however, the Company has made available for
sale its Woodlands property, where the Toledo Palace is located.
On December 22, 1994, the Company acquired from Chrysolith LLC, a Louisiana
limited liability company of which the Company owns 49% ("Chrysolith"), and
Prime, a Louisiana corporation, which leased the 76 Plaza, a truckstop in which
the Gold Coin is located from National, certain rights including an 18 year
sub-leasehold interest (the "Sub-Lease"), subject to the terms of an Over-lease
on the 76 Plaza between Prime, as lessee and National, as lessor. If the
Over-Lease had been terminated, the Company could have lost all of its rights
under the Sub-lease and Prime would have lost its establishment license for
video poker in the State of Louisiana. The Company acquired from Prime the right
to a 50% interest in the profits of the Gold Coin under the terms of an
agreement under which the Company agreed to pay a total of $6.0 million for such
profit interest (the "Prime Agreement"). The Company's obligation under the
Prime Agreement was evidenced by a note, the final installment of which was paid
in full on December 23, 1997. On November 10, 1997, the Company was advised that
on October 16, 1997, National had placed Prime on notice that its rights to
occupy the 76 Plaza would terminate on January 23, 1998, due to an alleged
breach of the Over-Lease by Prime. The Company believed that the default by
Prime was due, in part, to the failure of Prime to pay certain sums due to
National pursuant to the Over-Lease. Consequently, on December 23, 1997, the
Company filed a Petition for Concursus in the 15th Judicial District Court,
Lafayette Parish, Louisiana, Case No. 976174-D, and paid the final payment of
$292,000 under the Prime Note into the registry of the court, protesting that
such sum was actually due and owing based on the alleged breach of the
Over-Lease by Prime. On or about December 30, 1997, the Company received notice
from Prime that Prime (which was not aware of the Petition for Concursus)
considered the Company in default of the Sub-lease for the Gold Coin premises
and demanded that the Company pay to Prime an amount equal to approximately
$299,513 on or before January 7, 1998 to cure this alleged default. Upon receipt
of this correspondence, the Company contacted Prime's legal counsel and notified
him of the Company's prior filing. On or about January 19, 1998, Prime filed in
United States District Court, Western District of Louisiana, Case No.
CV98-0076L-0, a Complaint for Damages and Violation of the Petroleum Marketing
Practices Act against National alleging breaches by National in the franchise
agreement between Prime and National and seeking to enjoin National from
terminating the Over-Lease. On or about January 21, 1998, Prime filed a
Voluntary Petition in Bankruptcy under Chapter 11 of the U.S. Bankruptcy Code in
the U.S. Bankruptcy Court for the Western District of Louisiana, Case No.
98BK-50087, listing National as the holder of an unsecured claim of $925,000
(the "National Claim"). (See the Form 10KSB/A for the year ended December 31,
1997, Item 6, "Management's Discussion and Analysis or Plan of Operations -
Important Factors to Consider".)
As noted above, the Sub-lease for the Gold Coin is subject to the terms and
conditions of the Over-Lease between Prime and National. Although National is
aware of the Company's use of the Gold Coin facilities, National has not yet
granted its written consent to the Sub-lease, as required by the Over-Lease. The
Over-Lease expires September 30, 1999, subject to the right of Prime to extend
the term for up to five successive three-year periods. Prime is not
contractually obligated to the Company to exercise its right to extend the
Over-Lease at the end of its term or any renewal term. In addition, National has
the right to terminate the Over-Lease under certain circumstances, including if
Prime defaults, under the terms of the Over-Lease, or if Prime does not renew a
franchise relationship between National and Prime. The termination of the
Over-Lease upon the expiration of its terms (or any renewal term), or as a
result of a breach by Prime or otherwise, will result in the termination of the
Company's sub-lease for the Gold Coin gaming facility premises, and any such
termination would have a materially adverse effect on the U.S. operations of the
Company.
On March 20, 1998, National filed various motions, as permitted under section
362(d) of the Bankruptcy Code, to lift the automatic stay to permit certain
actions by Prime. On April 13, 1998 the United States Bankruptcy Court granted
National's motions and dismissed Prime's bankruptcy case. Following that
decision, on April 17, 1998, National filed a "Motion for Expedited Hearing on
Motion to Return Possession of Premises to National Auto" in the United States
District Court, Western District of Louisiana, Case No. 98-0076.
On May 22, 1998, the owners of Prime sold their interests to Mr. Lee Young, the
51% member of Chrysolith, LLC. At the same time, National and Prime (under the
new ownership) executed an Amended and Restated Lease Agreement
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which expires on December 31, 1999 (the "Lease"). Under the terms of the Lease,
National has the right to terminate the Lease under certain circumstances,
including default or non-renewal of the franchise by Prime. The termination of
the Lease upon the expiration of its term, or as a result of a breach by Prime
or otherwise, if prior to June 30, 1999 will result in the termination of the
Company's Device Placement and Operating Agreement for the Gold Coin gaming
facility premises, and any such termination would have a materially adverse
effect on the U.S. operations of the Company.
On May 22, 1998, the Company negotiated settlements by and among its
wholly-owned subsidiary, Trans World Gaming of Louisiana, Inc. ("TWGLa"),
Chrysolith, Prime and National (the "May 22, 1998 Settlement"). The terms of the
May 22, 1998 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 National Claim against Prime would be satisfied by
liquidating the assets of Prime, the payment to National of the funds in the
registry of the court (Petition for Concursus file number 976174-D), the payment
to National of available cash in Prime relating to the sale of Prime's truckstop
inventory (the "Prime Assets") and 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 which was paid in full on September 22, 1998 (the "National Promissory
Note"); (iii) to the extent that the Prime Assets are insufficient to satisfy
the National Claim, TWGLa will 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 will be 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 will be paid to the
former owners of Prime; (v) all of the litigation among the parties was
dismissed (see - Part II , Item 1, "Legal Proceedings"); and (vi) all parties
agreed to mutually acceptable releases of all claims and liabilities against the
other.
On April 1, 1998, the Company issued a press release announcing the acquisition
of Resorts. In connection with the announcement, TWG stated that it planned to
open a third casino in Znojmo, Czech Republic by the third quarter of 1999
assuming that all required permissions and approvals are received prior to
December 31, 1998. The Company will require financing of approximately $10.0
million to build and equip the Znojmo facility. The Company believes, although
there can be no assurance, that financing should be available at terms favorable
to the Company and TWGI.
On April 17, 1998, the Company issued a press release announcing the acquisition
of 90% of the outstanding stock of CDZ for approximately $780,000 and CDZ
assumed outstanding debt obligations of approximately $4.8 million. TWG
currently is attempting to raise approximately $4.0 million to repay the Loan
Agreement, fund the remaining purchase price, recapitalize CDZ and provide
working capital to cover the projected operating losses. (See - "Liquidity and
Capital Resources".) The Company anticipates that permission will be granted by
the appropriate Spanish government authorities that will enable TWG to move CDZ
to a more favorable location. If the Company decides to lease, build and equip a
facility in the new location, it is anticipated that it may require financing of
approximately $5.0 million. The Company expects, although there can be no
assurance, that financing will be available at terms favorable to TWG.
In the event that financing is not available for the casino in Znojmo, the
acquisition and recapitalization of CDZ and the new casino in Zaragoza, it would
have a material adverse effect on the future profitability of TWG.
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, where the Company had video poker operations, were among 35 Louisiana
parishes that voted to eliminate video poker (the "Voter Mandate"). 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.
Management of the Company continues to seek other opportunities both within and
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. The failure to so do may have a
material adverse effect upon the Company's financial condition and results of
operation.
9
<PAGE>
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. The Company's contingency
plan is to acquire new accounting software, change payroll service companies and
change banking institutions in advance of the Year 2000 if the current suppliers
do not demonstrate Y2K compliance.
NOTE ON FORWARD-LOOKING INFORMATION
This Form 10-QSB/A contains certain forward-looking statements. For this
purpose, any statements contained in this Form 10-QSB/A 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.
10
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
BREACH OF MANAGEMENT CONTRACT. 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. This litigation was filed pro se, but Mr. Edwards has since
engaged counsel. Mr. Edwards claims compensation charges of approximately $2.2
million and punitive charges of $11.1 million and has alleged that the Company
breached a management contract dated September 21, 1994. On May 6, 1998, Mr.
Edwards filed a First Supplemental and Amending Petition for Breach of Contract
and for Declaratory Relief against the Company. The Company has hired local
litigation counsel and believes that these claims are wholly without merit and
intends to defend this action vigorously.
PRIME/NATIONAL OVER-LEASE. The May 22, 1998 Settlement (see - "Management's
Discussion and Analysis or Plan of Operations Plan of Operations") provided that
the existing lawsuits between the parties were resolved as follows:
1. Prime Properties, Inc. vs. National Auto/Truckstops, Inc. No.
98-0076 in the United States District Court for the Western
District of Louisiana was dismissed with prejudice, each party
to bear its own cost.
2. Trans World Gaming of Louisiana, Inc. vs. Prime Properties and
National Auto/Truckstops, Inc. No. 97-6174 in the Fifteenth
Judicial Court for the Parish of Lafayette, was dismissed
pursuant to a consent judgment following the release to
National of the funds deposited in the Registry of the Court.
3. In Re: Prime Properties, Inc., d/b/a Lafayette 76 Auto/Truck
Plaza, No. 98-50087 in the United States Bankruptcy Court for
the Western District of Louisiana, was dismissed with
prejudice.
(See the Form 10-QSB/A for the quarter ended March 31, 1998, Item 2.
"Management's Discussion and Analysis or Plan of Operations - Plan of
Operations").
VOTER MANDATE. The Company, through Chrysolith, has joined with two other video
poker operators in the State of Louisiana in challenging the Voter Mandate
(which prohibits gaming in approximately 35 parishes after September 30, 1999)
in the courts. On January 30, 1998, the Louisiana Supreme Court unanimously
denied without comment a writ application filed by Chrysolith and the other
operators which alleged, among other things, violations of the Louisiana
election code. The writ denial effectively ended the election code challenge to
the video poker referenda. The suit will proceed to federal court on a charge of
federal civil rights violations under Title 42 of the United States Code Section
1983. The Company cannot, as of the date, hereof predict the outcome of this
litigation or when a decision relating hereto will be rendered.
The Company is not currently involved in any other material legal proceeding.
11
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 10-QSB/A
a. Exhibits
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
Item No Item Method of Filing
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
3.1 Articles of Incorporation Incorporated by reference to Exhibit 3.1
contained in the registration statement on
Form SB-2 (File No. 33-85446-A).
3.2 By-laws Incorporated by reference to Exhibit 3.2
contained in the registration statement on
Form SB-2 (File No. 33-85446-A).
4.1 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).
4.2 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).
4.3 Form of Warrant Agreement Incorporated by reference to Exhibit 4.3
contained in the registration statement on
Form SB-2 (File No. 33-85446-A).
4.4 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)
4.5 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)
4.6 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)
4.7 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)
4.8 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)
4.9 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)
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
12
<PAGE>
<TABLE>
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
4.10 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)
4.11 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)
4.12 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)
4.13 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)
4.14 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.
4.15 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)
4.16 Indenture dated March 31, 1998 between TWG Incorporated by reference to Exhibit
International U.S. Corporation and U.S. 4(III) contained in the Form 8-K filed on
Trust Company of Texas, N.A. April 14, 1998 (File No. 0-25244)
4.17 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
4.18 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)
4.19 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 Holders 4(VIII) contained in the Form 8-K filed on
April 14, 1998 (File No. 0-25244)
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
13
<PAGE>
<TABLE>
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
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 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).
10.2 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).
10.3 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).
10.4 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).
10.5 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.
10.6 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).
10.7 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.
10.8 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
Inc., Monarch, Lula Miller, Inc., Charles Form SB-2 (File No. 33-85446-A).
A. Jones III and Kelly McCoy Jones.
Memorandum of Agreement dated March 18, Incorporated by reference to Exhibit 10.9
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.)
10.10 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).
10.11 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).
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
14
<PAGE>
<TABLE>
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
10.12 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).
10.13 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).
10.14 Form of 41/2% Bridge Note Incorporated by reference to Exhibit 10.14
contained in the registration statement on
Form SB-2 (File No. 33-85446-A).
10.15 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).
10.16 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).
10.17 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).
10.18 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).
10.19 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).
10.20 Agreement and General Release dated as of Incorporated by reference to Exhibit 10.20
March 6, 1996 between the Company and R. K. contained in the Form 10-KSB for the
Merkey. fiscal year ended December 31, 1995 (File
No. 0-25244).
10.21 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).
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
15
<PAGE>
<TABLE>
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
10.22 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).
10.23 Consulting Agreement dated January 1, 1997 Incorporated by reference to Exhibit 10.23
between the Company and Stanley contains in Form 10-KSB for the fiscal year
Kohlenberg ended December 31, 1996 (File No. 0-25244).
10.24 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).
10.25 Employment Agreement date February 1, 1997 Incorporated by reference to Exhibit 10.25
between the Company and Christopher Moore contains in Form 10-KSB for the fiscal
year ended December 31, 1996 (File No.
0-25244).
10.26 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).
10.27 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).
10.28 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).
10.29 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)
10.30 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)
10.31 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
March 31, 1998. (File No. 0-5244)
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
16
<PAGE>
<TABLE>
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
10.32 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
10.33 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)
10.34 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)
10.35 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)
10.36 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)
10.37 $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)
10.38 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)
10.39 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)
10.40 $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)
10.41 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)
27.1 Financial Data Schedule Filed herewith
</TABLE>
17
<PAGE>
b. Reports on Form 8-K
The Company filed the following report on Form 8-K during the
quarter ended September 30, 1998.
On September 3, 1998 the Company filed a Current Report on Form 8-K
reporting the resignation of Mr. Richard R. Taft from the Company's
Board of Directors.
18
<PAGE>
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.
TRANS WORLD GAMING CORP.
Date: September 7, 1999 By: /s/ RAMI S. RAMADAN
---------------------
Rami S. Ramadan
Chief Executive Officer
19
<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 PAGE F-3 AND F-4
OF THE COMPANY'S 10KSB/A FOR THE YEAR ENDED DECEMBER 31, 1998.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> SEP-30-1998
<PERIOD-END> SEP-30-1998
<CASH> 1,778
<SECURITIES> 0
<RECEIVABLES> 1,120
<ALLOWANCES> 0
<INVENTORY> 62
<CURRENT-ASSETS> 3,543
<PP&E> 3,850
<DEPRECIATION> 0
<TOTAL-ASSETS> 25,605
<CURRENT-LIABILITIES> 4,334
<BONDS> 23,687
0
0
<COMMON> 3
<OTHER-SE> (2,419)
<TOTAL-LIABILITY-AND-EQUITY> 25,605
<SALES> 0
<TOTAL-REVENUES> 10,220
<CGS> 0
<TOTAL-COSTS> 8,090
<OTHER-EXPENSES> 3,439
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,999
<INCOME-PRETAX> (3,308)
<INCOME-TAX> 82
<INCOME-CONTINUING> (3,390)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,390)
<EPS-BASIC> (1.11)
<EPS-DILUTED> (1.11)
</TABLE>
