<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
Quarterly Report under Section 13 or 15(d) of the Securities Exchange Act
of 1934
For Quarter Ended: DECEMBER 31, 1996 Commission file number 1-12780
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BOARDWALK CASINO, INC.
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(Exact name of small business issuer as specified in its charter)
STATE OF NEVADA 88-0304201
------------------------ -----------------------------------
(State of incorporation) (I.R.S. Employer Identification No.)
3750 LAS VEGAS BOULEVARD SOUTH, LAS VEGAS, NEVADA 89109
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(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code (702) 735-2400
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Former name, former address and former fiscal year,
if changed since last report.
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
----- -----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as the close of the period covered by this report:
Class Outstanding at December 31, 1996
----------------------------- --------------------------------
Common Stock, $.001 par value 7,179,429
Transitional Small Business Disclosure Format
Yes No X
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BOARDWALK CASINO, INC.
BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1996 1996
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(UNAUDITED)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents........................... $ 4,794,365 $ 4,772,549
Receivables, net of allowance for doubtful
accounts of $17,105 and $17,105.................. 797,825 439,857
Inventory.......................................... 89,616 73,719
Prepaid expenses................................... 719,036 573,964
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Total current assets............................. 6,400,842 5,860,089
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PROPERTY AND EQUIPMENT, net of accumulated
depreciation of $6,435,069 and $5,705,685.......... 55,941,574 55,486,285
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OTHER ASSETS:
Deferred costs, net of accumulated amortization
of $333,255 and $239,436........................ 1,554,059 1,645,090
Other.............................................. 179,485 179,485
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Total other assets.............................. 1,733,544 1,824,575
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Total assets.................................... $64,075,960 $ 63,170,949
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----------- -----------
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable.................................... $ 1,165,175 $ 1,281,657
Construction accounts payable....................... 138,170 171,283
Accrued expenses.................................... 4,314,058 2,547,615
Current maturities of contracts and notes payable... 2,921,977 3,115,522
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Total current liabilities......................... 8,539,380 7,116,077
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LONG-TERM DEBT, less current portion................... 40,958,787 40,909,523
CONTRACTS AND NOTES PAYABLE, less current portion...... 3,057,203 3,400,234
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Total liabilities................................ 52,555,370 51,425,834
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COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Preferred stock, $.001 par value; 15,000,000 shares
authorized, none issued............................. - -
Common stock, $.001 par value; 50,000,000 shares
authorized; 7,179,429 issued and outstanding....... 7,179 7,179
Additional paid-in capital............................. 22,435,083 22,435,083
Accumulated deficit.................................... (10,921,672) (10,697,147)
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Total shareholders' equity....................... 11,520,590 11,745,115
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Total liabilities and shareholders' equity.......$ 64,075,960 $ 63,170,949
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</TABLE>
See notes to financial statements.
<PAGE>
BOARDWALK CASINO, INC.
STATEMENTS OF INCOME (UNAUDITED)
THREE MONTHS ENDED DECEMBER 31,
1996 1995
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REVENUES:
Casino................................ $ 5,080,980 $ 2,395,376
Rooms................................. 3,278,229 764,708
Food and beverage..................... 1,484,656 748,165
Other................................. 476,186 59,312
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Gross revenue....................... 10,320,051 3,967,561
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Less promotional allowances............... (513,845) (207,903)
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9,806,206 3,759,658
COSTS AND EXPENSES:
Casino................................ 3,006,687 1,805,309
Rooms................................. 1,205,274 450,145
Food and beverage..................... 1,519,699 827,421
Other................................. 76,416 24,039
Selling, general and administrative... 1,668,680 946,245
Depreciation and amortization......... 823,204 473,641
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8,299,960 4,526,800
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Income (loss) from operations.............. 1,506,246 (767,142)
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OTHER (INCOME) EXPENSE:
Interest income......................... (41,101) (223,923)
Interest expense........................ 1,964,157 2,109,301
Interest capitalized.................... (192,286) (397,020)
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1,730,770 1,488,358
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Income (loss) before income taxes........... (224,524) (2,255,500)
Income tax provision........................ - -
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Net income (loss) .......................... $ (224,524) $ (2,255,500)
------------ ------------
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EARNINGS (LOSS) PER SHARE................... $ ( .03) $ ( .37)
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WEIGHTED AVERAGE COMMON SHARES OUTSTANDING... 7,179,429 6,077,800
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See notes to financial statements.
<PAGE>
BOARDWALK CASINO, INC.
STATEMENT OF CASH FLOWS (UNAUDITED)
THREE MONTHS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
1996 1995
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)........................................ $ (224,524) $ (2,255,500)
----------- -----------
Adjustments to reconcile net income (loss) to net cash
provided (used) by operating activities:
Depreciation and amortization....................... 823,204 473,641
Amortization of original issue discount............. 49,194 541,851
Changes in operating assets and liabilities
(Increase) decrease in receivables........... (357,968) (427,253)
(Increase) decrease in inventory.............. (15,897) (2,500)
(Increase) decrease in prepaid expenses....... (145,072) (15,102)
Increase (decrease) in payables and accrued
expenses.................................... 1,616,847 (242,195)
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Net cash provided (used) by operating activities........ 1,745,784 (1,927,058)
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CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures....................... ....... (1,091,843) (5,136,718)
(Increase) decrease in restricted cash
equivalents.................................... - 2,681,921
(Increase) decrease in deferred costs............. (2,788) -
(Increase) decrease in other assets............... - (97,011)
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Net cash provided (used) by investing activities........ (1,094,631) (2,551,808)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments of notes and contracts payable.. (421,540) (66,378)
Proceeds from borrowings, net of issuance costs.... - 1,850,000
Principal payments of long-term debt............... - (18,370)
Principal payments of capital lease obligations.... (207,797) -
----------- -----------
Net cash provided (used) by financing activities........ (629,337) 1,765,252
----------- -----------
Net increase (decrease) in cash............................. 21,816 (2,713,614)
Cash and equivalents, beginning of period.................... 4,772,549 3,650,236
----------- -----------
Cash and equivalents, end of period.......................... $ 4,794,365 $ 936,622
----------- -----------
----------- -----------
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest................................... $ 155,874 $ 2,405,460
SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
Property and equipment acquisitions financed by
contracts payable................................. $ 92,832 $ 973,791
</TABLE>
See notes to financial statements.
<PAGE>
BOARDWALK CASINO, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
The Private Securities Litigation Reform Act of 1995 provides a "safe
harbor" for forward-looking statements. Certain information included in this
Form 10-QSB and other materials filed or to be filed by the Company with the
Securities and Exchange Commission (as well as information included in oral
statements or other written statements made or to be made by the Company)
contains statements that are forward-looking, such as statements relating to
plans for future expansion and other business development activities as well
as other capital spending, financing sources and the effects of regulation
(including gaming and tax regulation) and competition. Such forward-looking
information involves important risks and uncertainties that could
significantly affect anticipated results in the future and, accordingly, such
results may differ from those expressed in any forward-looking statements
made by or on behalf of the Company. These risks and uncertainties include,
but are not limited to, those relating to development and construction
activities, dependence on existing management, debt service (including
sensitivity to fluctuations in interest rates), domestic or global economic
conditions, changes in federal or state tax laws or the administration of
such laws and changes in gaming laws or regulations (including the
legalization of gaming in certain jurisdictions).
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
NATURE OF OPERATIONS
Boardwalk Casino, Inc. ("BCI") was formed in July 1993 for the purpose of
operating a casino and a hotel (the "Boardwalk Hotel and Casino") in Las
Vegas, Nevada.
The accompanying unaudited condensed financial statements have been
prepared by the Company pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations. Although management believes that
the disclosures are adequate to make the information presented not
misleading, it is suggested that these interim condensed financial statements
be read in conjunction with Company's most recent audited financial
statements and notes thereto included in the Company's 10-KSB for the fiscal
year ended September 30, 1996. In the opinion of management, all
adjustments (which include only normal recurring adjustments) necessary for a
fair presentation of the financial position, results of operations and cash
flows for the interim period presented have been made. Operating results for
the period ended December 31, 1996, are not necessarily indicative of the
results that may be expected for the fiscal year ending September 30, 1997.
<PAGE>
BOARDWALK CASINO, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED:
PROMOTIONAL ALLOWANCES
The retail value of hotel accommodations, food and beverage provided to
customers without charge is included in gross revenues and then deducted as
promotional allowances to arrive at net revenues. The estimated costs of
providing such promotional allowances have been classified as gaming expenses
through interdepartmental allocation.
RECLASSIFICATIONS
Certain amounts in the quarter ended December 31, 1995 financial
statements have been reclassified to conform with the quarter ended December
31, 1996.
2. CONSTRUCTION OBLIGATIONS:
The Company is currently constructing a 2nd floor buffet, which is
expected to be completed by March 1997. A general contractor has been
engaged for the construction activities relating to the buffet. Of the
approximate $2,507,000 total estimated cost to complete the buffet, the
Company has expended approximately $454,600 as of December 31, 1996, leaving
an unexpended balance of approximately $2,052,400.
3. EARNING PER COMMON SHARE:
Earnings per share is based on the weighted average number of shares of
common stock outstanding during each period. Warrants and options to purchase
common stock which were issued in 1994 through 1996 were excluded from the
calculation of earnings (loss) per share, as their inclusion would have been
anti-dilutive (by reducing the loss per share).
4. OPERATING RESULTS, FINANCIAL CONDITION AND MANAGEMENT'S PLANS:
The Company had net losses of $224,524 and $2,255,500 in the first quarters
of 1997 and 1996, respectively, and has a working capital deficiency of
approximately $2,139,000 at December 31, 1996.
With the completion of the new hotel tower and expanded casino, restaurant,
buffet and meeting rooms opened and the presence of its neighbors (Monte Carlo -
June 21, 1996 and New York, New York, - January 3, 1997), management expects to
generate cash flows from operations to improve on its working capital position
in fiscal 1997.
<PAGE>
BOARDWALK CASINO, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
4. OPERATING RESULTS, FINANCIAL CONDITION AND MANAGEMENT'S PLANS, CONTINUED:
The Company's $40,000,000 debt financing of the BCI Notes has an annual
debt service requirement of $6,600,000. At December 31, 1996 the Company owes
$1,650,000 in interest on the $40,000,000 debt towards a $3,300,000 interest
payment due March 31, 1997.
The Company is currently constructing a 2nd floor buffet, which is expected
to be completed by March 1997. A general contractor has been engaged for the
construction activities relating to the buffet. Of the approximate $2,507,000
total estimated cost to complete the buffet, the Company has expended
approximately $454,600 as of December 31, 1996, leaving an unexpended balance of
approximately $2,052,400.
The Company has also arranged for up to $4,000,000 of available working
capital borrowings which has been made available by a director and a group of
other private investors who have provided other short-term financing to the
Company in the past. Such uncollateralized borrowings are available to the
Company on an as-needed basis through December 31, 1997 on terms substantially
similar to those which had been available to the Company during 1996.
Management believes that the combination of expected cash flows from
operations in 1997, and the available borrowing capacity are sufficient to meet
the Company's obligations as they become due during fiscal 1997. The
outstanding warrants to purchase common stock at December 31, 1996 also
represent a potential significant source of capital to the Company, although
management cannot control or accurately predict the timing of proceeds from the
exercise of warrants.
5. COMMITMENTS AND CONTINGENCIES:
The Company has pending certain legal actions and claims incurred in the
normal course of business and is actively pursuing the defense thereof. In the
opinion of management, these actions and claims are either without merit or are
covered by insurance and will not have a material adverse effect on the
Company's financial position, results of operation or cash flows.
GAMING TAX ASSESSMENT
In fiscal year 1996, based on the advice of legal counsel, the Company
accrued a total loss contingency of $500,000 related to a gaming tax assessment
from the Nevada Gaming Control Board ("NGCB"). The Company plans to appeal the
assessment; however, the likelihood of a successful outcome cannot be
determined.
<PAGE>
BOARDWALK CASINO, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
5. COMMITMENTS AND CONTINGENCIES, CONTINUED:
OFFICE SPACE LEASE
The Company leased office space and storage facilities for its corporate
offices from the majority shareholders for approximately $8,375 per month for
the previous year.
Effective October 1, 1996, the Company amended the lease and the monthly
rental increased to approximately $70,000 per month. The lease term is for two
years and allows the Company to use the facilities for any purpose. The Company
has options to extend the lease up to an additional 28 years. The lease
agreement provides the Company with the first right of refusal to purchase the
land and building at their fair value should the shareholders decide to sell
them. The lease agreement also entitles the Company to the rental income from
the existing lessees during the lease term. The existing lessees are on
short-term renewable leases with current rents totaling approximately $28,000
per month.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
RESULTS OF OPERATIONS
Income from operations has increased $2,273,388 or 296% to $1,506,246 for
the three months ended December 31, 1996 compared to an operating loss of
$767,142 for the three months ended December 31, 1995. The results of operations
for the first quarter ended December 31, 1996 reflects the positive impact of
increased revenues associated with opening of the hotel tower with an additional
451 rooms (during the second and third quarters of 1996), increased pedestrian
traffic resulting from an elimination of construction activities that blocked
access and the opening of a major resort next to the Company's property, the
availability of 550 additional parking spaces during the second quarter of 1996
from the second parking garage, the attraction of several significant patrons
to the race and sports books and the retaining of a professional sales
department, which has since opened several corporate accounts.
The Company is currently constructing a 2nd floor buffet, which is expected
to be completed by March 1997. A general contractor has been engaged for the
construction activities relating to the buffet. Of the approximate $2,507,000
total estimated cost to complete the buffet, the Company has expended
approximately $454,600 as of December 31, 1996, leaving an unexpended balance of
approximately $2,052,400. The balance of the construction will be financed
using existing cash, operating cash flow and cash available from other sources
as more fully described in "Liquidity and Capital Resources."
THREE MONTHS ENDED DECEMBER 31, 1996 COMPARED TO THREE MONTHS ENDED
DECEMBER 31, 1995
The Company had income from operations of $1,506,246 in the first quarter
of 1997 compared to an operating loss of $767,142 in the first quarter of prior
year, an increase of $2,273,388.
The $2,273,388 increase in operating income was primarily due to a greater
increase in revenues than the associated increase in costs and expenses. The
first quarter net revenues were $9,806,206 compared to $3,759,658 for the same
period in fiscal 1996, an increase of 161% ($6,046,548). Total costs and
expenses increased 83% ($3,773,160) to $8,299,960 for the first quarter in
fiscal 1997, from $4,526,800 during the same period in fiscal 1996.
CASINO OPERATIONS
Gaming revenues increased 112% ($2,685,604) to $5,080,980 for the first
quarter in fiscal 1997, from $2,395,376 when compared to the same period in
fiscal 1996. The increase was due to: (i) increased race and sports book
activity that generated an additional $1,144,274 (139%) to $1,966,044 in
revenue for the current quarter from $821,770 for the first quarter last year,
(ii) increased slot machine revenue of $1,001,231 (80%) to $2,249,752 for the
current quarter from $1,248,521 for the first quarter last year
<PAGE>
and (iii) increased table game play generated an additional $540,099 (166%)
to $865,184 in revenue for the current quarter from $325,085 for the first
quarter last year.
Casino expenses increased $1,201,378 (67%) to $3,006,687 for first quarter
in fiscal 1997 from $1,805,309 for the same period of 1996. The increase in
casino expenses were due to: (i) additional gaming taxes of $311,856, (ii)
additional payroll expenses of $305,663 and (iii) additional race wire fees of
$522,697.
ROOM OPERATIONS
Gross room revenues increased $2,513,521 or 329%, to $3,278,229 for the
first quarter 1997 from $764,708 for the comparable quarter in fiscal 1996. This
reflects the positive impact of the opening of the hotel tower with an
additional 451 rooms (during the second and third quarters of 1996) and the
retaining of a professional sales department, which has since opened several
corporate accounts.
Room nights available increased 42,237 (228%) to 60,729 room nights
available for the current quarter from 18,492 for the same period of last year.
Room nights occupied increased 34,831 (319%) to 45,747 room nights occupied for
the first quarter of fiscal year 1997 from 10,916 for the same period of 1996.
The occupancy percentage increased to 75.3% for the first quarter of 1997
compared to 59.0% for the same period of fiscal 1996. The average room rate
increased $1.61 to $71.66 for the current period.
Promotional allowance for rooms increased $65,271 (579%) to $76,546 for
the current period compared to $11,275 for the same period of 1996. The
increase in promotional or complimentary rooms to qualified individuals was due
to the increase in available rooms from the completed hotel tower. Net room
revenues increased $2,448,250 or 325% to $3,201,683 for the first quarter of
fiscal 1997 from $753,433 for the same period of 1996.
Hotel expenses increased $755,129 or 168%, to $1,205,274 for first quarter
1997 from $450,145 for the same period of 1996. The increased expenses reflect
the expanded support services necessary to handle the 319% increase in occupied
room nights as follows; (i) personnel costs increased $464,368, (ii) Franchise
and Holiday Inn-Registered Trademark- promotional fees increased $162,646,
(iii) additional linen, laundry and room supplies totaled $70,006 and (iv)
additional credit card fees of $43,121.
FOOD AND BEVERAGE OPERATIONS
Gross food and beverage revenues increased $736,491 or 98%, to $1,484,656
for the first quarter 1997 from $748,165 for the comparable quarter in fiscal
1996. The increase in gross food and beverage revenues was attributable to the
following: (i) an additional 73,000 (365%) guests staying in the hotel totaling
92,997 guests for the first quarter of fiscal 1997 compared to 19,997 for the
same period of fiscal 1996, (ii) increased
<PAGE>
pedestrian traffic and (iii) the average check per cover charge for the
restaurant increased by 15%.
Promotional allowance for food and beverage increased $240,671 (122%) to
$437,299 for the current period compared to $196,628 for the same period of
1996. Net food and beverage revenues increased $495,820 or 90% to $1,047,357
for the first quarter of fiscal 1997 from $551,537 for the same period of 1996.
Food and beverage expenses increased $692,278, or 84%, to $1,519,699 for
first quarter 1997 from $827,421 for the same period of fiscal 1996. This is
the direct result of increased cost of sales and additional wages and benefits
resulting from the increased seating capacity and additional beverage outlet.
OTHER REVENUES AND EXPENSES
Other revenues increased $416,874, or 703%, to $476,186 for the first
quarter 1997 from $59,312 for the same period of fiscal 1996. The increase of
other revenues consists principally of the following: (i) increased rents from
retail space of $211,276, (ii) additional fees of $134,472 from increased guest
telephone usage, in-room movies and commissions on phones and (iii) increased
revenues from arcade games, guest laundry services and ATM rebates.
Other expenses increased $52,377, or 218%, to $76,416 for the first quarter
1997 from $24,039 for the same period of fiscal 1996. The increase of other
expenses is principally due to costs associated with increased revenues from
telephone calls by guests, movies and vending revenues.
SELLING, GENERAL AND ADMINISTRATIVE
Selling, general and administrative expenses increased $722,435, or 76%, to
$1,668,680 for first quarter 1997 from $946,245 for the same period of fiscal
1996. The increase was due primarily to (i) a master lease on the adjacent
building housing the administrative staff which increased rents by $184,875,
(ii) executive, administrative, security, count teams and porters were increased
at a cost of $141,834, (iii) advertising costs increased $94,044, (iv)
utilities expense increased $81,563, (v) legal and professional fees increased
by 64,672 (vi) general insurance increased $42,382 and (vii) the remaining
increase was from entertainment, complimentaries for administrative purposes,
promotions and facility repairs and supplies.
DEPRECIATION AND AMORTIZATION
Depreciation and amortization totaled $823,204 in the first quarter in
fiscal 1997, reflecting a $349,563 (74%) increase over the first quarter in
fiscal 1996 amount of
<PAGE>
$473,641 due to the depreciable costs of the hotel tower with furnishings,
parking garages, improvements to facilities and additional casino equipment.
OTHER INCOME AND EXPENSES
Interest income decreased $182,822 to $41,101 in the first quarter of
fiscal 1997 compared to $223,923 for the first quarter of 1996. Interest income
relates to the Company's investments in marketable securities, principally U.S.
treasury securities and short-term corporate commercial paper. Management
expects interest income to continue to decrease in 1997 as funds are used to pay
for the remaining portion of phase three of the Expansion.
Interest expense decreased to $1,964,157 in the first quarter of fiscal
1997 from $2,109,301 in the first quarter of fiscal 1996. Approximately
$192,286 of interest was capitalized in the first quarter of fiscal year 1997
in connection with the Expansion, compared to $397,020 for the same period of
1996. The expenditures of the second floor gave rise to the interest
capitalized in the current quarter and the hotel tower, second parking garage
and 2nd floor of the casino gave rise to the capitalized interest for the
first quarter of fiscal 1996. The hotel tower and 2nd parking garage were
completed in the second quarter of 1996.
INCOME TAX PROVISION
No income tax benefit was recorded. Because the Company is a new taxpayer,
it cannot carryback such loss to offset taxable income in prior years and
therefore has a net operating loss carryforward.
LIQUIDITY AND CAPITAL RESOURCES
The Company had unrestricted cash assets of $4,794,365 (7.5% of total
assets) at December 31, 1996 compared to $4,772,549 (7.6% of total assets) at
September 30, 1996. The ratio of current assets to current liabilities was .75
to 1 at December 31, 1996 and .82 to 1 September 30, 1996.
With the completion of the new hotel tower and expanded casino, restaurant,
buffet and meeting rooms opened and the presence of its neighbors (Monte Carlo -
June 21, 1996 and New York, New York, - January 3, 1997), management expects to
generate cash flows from operations to improve on its working capital position
in fiscal 1997.
The Company's $40,000,000 debt financing of the BCI Notes has an annual
debt service requirement of $6,600,000. At December 31, 1996 the Company owes
$1,650,000
<PAGE>
in interest on the $40,000,000 debt towards a $3,300,000 interest payment due
March 31, 1997.
The Company is currently constructing a 2nd floor buffet, which is expected
to be completed by April 1997. A general contractor has been engaged for the
construction activities relating to the buffet. Of the approximate $2,507,000
total estimated cost to complete the buffet, the Company has expended
approximately $454,600 as of December 31, 1996, leaving an unexpended balance of
approximately $2,052,400.
The Company has also arranged for up to $4,000,000 of available working
capital borrowings which has been made available by a director and a group of
other private investors who have provided other short-term financing to the
Company in the past. Such uncollateralized borrowings are available to the
Company on an as-needed basis through December 31, 1997 on terms substantially
similar to those which had been available to the Company during 1996.
Management believes that the combination of expected cash flows from
operations in 1997, and the available borrowing capacity are sufficient to meet
the Company's obligations as they become due during fiscal 1997. The
outstanding warrants to purchase common stock at December 31, 1996 also
represent a potential significant source of capital to the Company, although
management cannot control or accurately predict the timing of proceeds from the
exercise of warrants.
<PAGE>
BOARDWALK CASINO, INC.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings - None
Item 2. Changes in Securities - None
Item 3. Defaults Upon Senior Securities - None
Item 4. Submission of Matters to a Vote of Security Holders
(a) A special meeting of shareholders held December 19, 1996.
(b) One matter was voted upon at the special meeting as follows:
Proposal 1: To approve the amendment to the articles of incorporation
increasing the authorized common stock, $.001 par value,
from 15,000,000 shares to 50,000,000 shares.
For: 6,661,246
Against 89,464
Abstain 39,612
Not Voted 389,107
Item 5. Other Information
(a) On December 5, 1996, the Board of Directors has named Jeffrey P.
Jacobs as a Director. Mr. Jacobs, through Diversified Opportunities Group
Ltd., a company controlled by Jacobs Entertainment Ltd., previously
invested $9,000,000 in Boardwalk in a combination of convertible debt and
common stock. Mr. Jacobs' application for a gaming license is pending
before the Nevada State Gaming Commission, however, he has received the
appropriate waiver required to accept this board position. In a separate
transaction, Diversified Opportunities purchased 317,589 shares of
Boardwalk from the Chairman and CEO, Norbert Jansen, bringing their total
holdings to 1,071,429 shares.
(b) On January 20, 1997, the Board of Directors has elected Avis P.
Jansen as Chairperson of the Board of Directors. Ms. Jansen replaces her
husband, and Boardwalk founder, Norbert Jansen. Mr. Jansen succumbed to
cancer on January 6, 1997.
Pursuant to the loss of Mr. Jansen, the Company announced the
formation of an "Executive Search Committee" whose primary function will be
to fill the Chief Executive Officer position.
Item 6. Exhibits and Reports on Form 8-K - None
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BOARDWALK CASINO, INC.
-------------------------------
Registrant
Date 02/12/97 Forrest Woodward, II
------------------------------
President and
Chief Operating Officer
Date 02/12/97 Louis J. Sposato
------------------------------
Chief Financial Officer
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-END> DEC-31-1996
<CASH> 4,794,365
<SECURITIES> 0
<RECEIVABLES> 814,930
<ALLOWANCES> (17,105)
<INVENTORY> 89,616
<CURRENT-ASSETS> 6,400,842
<PP&E> 62,376,643
<DEPRECIATION> (6,435,069)
<TOTAL-ASSETS> 64,075,960
<CURRENT-LIABILITIES> 8,539,380
<BONDS> 44,015,990
0
0
<COMMON> 7,179
<OTHER-SE> 11,513,411
<TOTAL-LIABILITY-AND-EQUITY> 64,075,960
<SALES> 1,047,357
<TOTAL-REVENUES> 9,806,206
<CGS> 586,520
<TOTAL-COSTS> 8,299,960
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,771,871<F1>
<INCOME-PRETAX> (224,524)
<INCOME-TAX> 0
<INCOME-CONTINUING> (224,524)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (224,524)
<EPS-PRIMARY> (.03)
<EPS-DILUTED> (.03)
<FN>
<F1>Net of interest capitalized of $192,286
</FN>
</TABLE>
