SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
DATE OF REPORT: OCTOBER 23, 1997
--------------------------------
AMERICAN BINGO & GAMING CORP.
-----------------------------
(Exact name of small business issuer as specified in its charter)
DELAWARE 1-13530 74-2723809
-------- ------- ----------
(State or other jurisdiction of Commission (I.R.S. Employer
incorporation or organization) File Number Identification No.)
515 CONGRESS AVENUE, SUITE 1200, AUSTIN, TEXAS 78701
----------------------------------------------- -----
(Address of principal executive offices)
(512) 472-2041
--------------
(Registrant's telephone number)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
- --------------------------------------------------
LUCKY 4 ACQUISITION
- ---------------------
On or about October 9, 1997, American Bingo & Gaming Corp. (the Company)
entered into contracts to acquire Lucky 4 Inc. (Lucky 4), Southern Sport II
(Southern), and V&A Amusement, LC (V&A), all South Carolina corporations
engaged in the video gaming machine business. These acquisitions were
retroactive to July 1, 1997.
These acquisitions will be consummated in stock-for-stock exchanges, with
American Bingo exchanging approximately 286,000 of its common shares for 100%
of all outstanding shares of Lucky 4, Southern and V&A. The Company believes
that the value of this consideration is approximately three to four times the
expected annual cash flows of these corporations. There is no cash
consideration involved in any of these acquisitions.
The Company will acquire all of the assets used in these businesses, including
equipment, machinery, real property, fixtures, leasehold interests, inventory,
prepaid expenses, contractual and leasehold rights and all other tangible and
intangible assets. The Company will likewise assume all liabilities related to
these assets. The Company will continue to use all acquired assets in the
gaming industry business.
The Company intends to account for these acquisitions as a pooling, assuming
that the transactions qualify; otherwise, these transactions will be accounted
for as purchases. If the transactions are treated as a purchase, the Company
will value this acquisition at the current fair market value of its issued
securities, less a discount for lack of marketability, pursuant to a
three-year Company lock-up on the sale of the securities.
The Lucky 4 acquisition involves consideration in excess of 10% of the
Company's total assets. The Southern and V&A acquisitions involve
consideration of less than 10% of the Company's total assets. As such,
attached are Lucky 4 financial statements and exhibits.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
- ----------------------------------------------
a) Annexed as Exhibit A are Lucky 4's audited financial statements for the
nine-month period ended September 22, 1997 and year ended December 31, 1996.
b) Annexed as Exhibit B are the Company's Pro-Forma condensed balance sheet
and statement of operating and explanatory notes, giving effect to the
combined accounts of the Company and Lucky 4 as required by the instructions
to Form 8-K.
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 hereunto duly authorized.
AMERICAN BINGO & GAMING CORP. (Registrant)
December 22, 1997 By: /s/ Greg Wilson
-----------------
Greg Wilson, Principal Executive Officer
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LUCKY 4
I N D E X
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Page No.
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REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT. . . . . . . . . . . . . . . . . . . . . . 2
LUCKY 4 FINANCIAL STATEMENTS:
- --------------------------------------------------------------------------------------------
Balance Sheets as of September 22, 1997 and December 31, 1996. . . . . . . . . . . . . . . . 3
Statements of Operations For the Nine-Month Period Ended September 22, 1997 and
Year Ended December 31, 1996 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Statements of Partner's Equity For the Nine-Month Period Ended September 22, 1997 and
Year Ended December 31, 1996. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Statements of Cash Flows For the Nine-Month Period Ended September 22, 1997 and
Year Ended December 31, 1996 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Notes to Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-8
AMERICAN BINGO & GAMING CORP. and LUCKY 4
UNAUDITED PRO-FORMA FINANCIAL STATEMENTS:
- --------------------------------------------------------------------------------------------
Introductory Paragraph . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Consolidated Balance Sheet as of September 30, 1997. . . . . . . . . . . . . . . . . . . . . 10
Consolidated Statements of Operations For the Nine-Month Period Ended September 30, 1997 and
Year Ended December 31, 1996 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11-12
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REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT
-------------------------------------------------
To the Board of Directors of
American Bingo and Gaming Corp.
I have audited the accompanying balance sheet of LUCKY 4, a partnership, as
of September 22, 1997, and the related statements of operations, partner's
equity, and cash flows for the nine months then ended. These financial
statements are the responsibility of the Company's management. My
responsibility is to express an opinion on these financial statements based on
my audit.
I conducted my audit in accordance with generally accepted auditing standards.
Those standards require that I plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. I believe that my audit provides a reasonable basis
for my opinion.
In my opinion, the financial statements referred to above present fairly, in
all material aspects, the financial position of Lucky 4, a Partnership, as of
September 22, 1997 and the results of its operations and its cash flows for
the nine months then ended in conformity with generally accepted accounting
principles.
/S/ WALTER C. WRIGHT, CPA
---------------------
WALTER C. WRIGHT, CPA
WALTER C. WRIGHT, CPA, PC
Augusta, Georgia
December 12, 1997
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LUCKY 4
BALANCE SHEETS
September 22, 1997 December 31, 1996
-------------------- ------------------
(Unaudited)
ASSETS
- ----------------------------------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 24,196 $ 1,972
-------------------- ------------------
Total current assets 24,196 1,972
Property and equipment at cost, net of
accumulated depreciation (Note 2) 36,521 26,498
Total assets $ 60,717 $ 28,470
==================== ==================
LIABILITIES AND PARTNER'S EQUITY
- ----------------------------------------
Current liabilities:
Accounts payable and accrued expenses $ 2,043 10,623
-------------------- ------------------
Total current liabilities 2,043 10,623
Note payable - net of current portion --- 5,000
Partner's equity 58,674 12,847
Total liabilities and partner's equity $ 60,717 $ 29,470
==================== ==================
<FN>
See notes to financial statements.
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LUCKY 4
STATEMENTS OF OPERATIONS
For the Nine-Month For the Year Ended
Period Ended December 31, 1996
--------------------
September 22, 1997 (Unaudited)
--------------------
<S> <C> <C>
Revenues $ 1,261,419 $ 693,496
Cost of Revenues (Note 3) 574,015 411,674
-------------------- --------------------
Gross Profit 687,404 281,822
General and Administrative Expenses 486,406 266,415
-------------------- --------------------
Operating Income 200,998 15,407
-------------------- --------------------
Other income (Expense):
- ------------------------------------
Miscellaneous Income 8,799 (2,635)
Interest income --- 75
Theft Loss / Penalties (2,452) --------
-------------------- --------------------
Net income $ 207,345 $ 12,847
==================== ====================
<FN>
See notes to financial statements.
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LUCKY 4
STATEMENTS OF PARTNER'S EQUITY
For the Nine-Month For the Year Ended
Period Ended December 31, 1996
--------------------
September 22, 1997 (Unaudited)
--------------------
<S> <C> <C>
Balance at beginning of period
As Previously Reported $ 12,847 $ 0
Adjustments to GAAP from Other
Comprehensive Basis of Accounting (14,050) ---
-------------------- --------------------
Balance at beginning of period,
As Restated (1,203) $ 0
Net income 207,345 12,847
Partner's distributions (147,468) $ 0
-------------------- --------------------
Balance at end of period $ 58,674 $ 12,847
==================== ====================
<FN>
See notes to financial statements.
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LUCKY 4
STATEMENTS OF CASH FLOWS
For the Nine-Month For the Year Ended
Period Ended December 31, 1996
--------------------
September 22, 1997 (Unaudited)
--------------------
<S> <C> <C>
Cash flows from operating activities:
- -----------------------------------------------------
Net income (loss) $ 207,345 $ 12,847
-------------------- --------------------
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation 1,791 4,561
Changes in accounts payable/other liabilities (25,968) 15,624
Net cash provided by operating activities 183,168 33,032
-------------------- --------------------
Cash flows from investing activities:
- -----------------------------------------------------
Capital expenditures (8,476) (31,060)
Proceeds from sale of assets --- ---
Net cash used in investing activities (8,476) (31,060)
-------------------- --------------------
Cash flows from financing activities:
- -----------------------------------------------------
Payments on long-term debt (5,000) ---
Proceeds from long-term debt financing --- ---
Partner distributions (147,468) ---
Net cash used for financing activities: (152,468) ---
-------------------- --------------------
Net increase (decrease) in cash and cash equivalents 22,224 1,972
Cash and cash equivalents, beginning 1,972 ---
--------------------
Cash and cash equivalents, ending $ 24,196 $ 1,972
==================== ====================
Supplemental Disclosures of Cash Flow Information:
- -----------------------------------------------------
Cash payments for:
Interest --- ---
Income taxes --- ---
<FN>
See notes to financial statements.
</TABLE>
LUCKY 4
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 22, 1997 AND DECEMBER 31, 1996
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This summary of significant policies of Lucky 4, A Partnership, is presented
to assist in understanding the partnership's financial statements. The
financial statements and notes are representations of the Partnership's
management who is responsible for their integrity and objectivity. These
accounting policies conform to generally accepted accounting principles and
have been consistently applied in the preparation of the financial statements.
A. Nature of Operations
The Partnership leases video gaming machines and operates several video
gaming machine locations in Aiken and Edgefield counties, South Carolina,
under the names Lucky 4, Double 7's and Wild Cherry.
B. Cash and Cash Equivalents
The Partnership considers all highly liquid debt instruments purchased
with a maturity of three months or less to be cash equivalents. The
Partnership places it's cash investments with high quality financial
institutions.
C. Use of Estimates
The preparation of financial statements in conformity with generally
accepted principles requires management to make estimates and assumptions that
affect certain reported amounts and disclosures. Accordingly, actual results
could differ from those estimates.
D. Property and Equipment
Leasehold improvements, furniture and equipment are carried at cost.
Major additions are capitalized and depreciated. Maintenance and repairs
which do not improve or extend the life of the respective assets are expensed.
Gains and losses from the sale of fixed assets are included in income.
The cost of equipment, furniture and fixtures is depreciated over the
estimated useful lives of the assets of between five and seven years, listing
using the straight-line method. Leasehold improvements are depreciated over
forty years using the straight-line method.
E. Partnership revenue
Partnership revenue is the net win from gaming activities which is the
difference between gaming wins and prize payouts. A percentage of the net win
is paid to a provider of gaming machines and is recorded as an expense.
F. Income Taxes
No provision for income taxes is made since the Partnership is not a
taxable entity under federal or state income tax provisions. However, the
individual partners are taxed on their proportionate share of the partnership
income.
LUCKY 4
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 22, 1997 AND DECEMBER 31, 1996
NOTE 2 - PROPERTY AND ACCUMULATED DEPRECIATION
Property held and accumulated depreciation at September 22, 1997, are
summarized below:
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September 22, 1997 December 31, 1996
-------------------- -------------------
(Unaudited)
<S> <C> <C>
Leasehold Improvements $ 27,708 $ 27,107
Furniture / Fixtures 3,953 3,952
Equipment 7,875 ---
-------------------- -------------------
Total $ 39,536 $ 31,059
less Accumulated Depreciation (3,015) (4,561)
Net Property and Equipment $ 36,521 $ 26,498
==================== ===================
<FN>
Depreciation expense for the nine months ended September 22, 1997, totaled
$1,791.
Depreciation expense for the year ended December 31, 1996, totaled $ 4,561.
</TABLE>
NOTE 3 - RELATED PARTY TRANSACTIONS
The Partnership makes use of participating gaming machines whereby the
supplier of the machines, Palmetto Games, has a "handshake" agreement to
provide the machines to the Partnership for a percentage of the Partnership's
revenue. The participating fee paid during period ending September 22, 1997,
was $ 574,015. Palmetto Games has also agreed to provide reimbursement for
some general and administrative expenses. Payments to the Partnership during
period ending September 22, 1997, totaled $ 141,397.
NOTE 4 - SUBSEQUENT EVENTS
On September 22, 1997, the Partnership undertook a Code Sec 351 tax-free
transfer of partnership interests to a corporation resulting in the
termination of the Partnership for tax purposes. In late September, 1997,
Lucky 4, Inc., the surviving Corporation was acquired in a stock-for-stock
transaction by American Bingo and Gaming Corp. (ABG) a public company engaged
in the charitable bingo and gaming business. ABG exchanged 236,000 of its
shares for 100% of Lucky 4, Inc. The market value of ABG shares at this time
was approximately $ 1.6 million. There was no cash or other consideration in
this transaction.
AMERICAN BINGO & GAMING CORP. AND LUCKY 4, INC.
UNAUDITED PRO-FORMA CONSOLIDATED FINANCIAL STATEMENTS
INTRODUCTORY PARAGRAPH
In September of 1997 American Bingo & Gaming Corp. ("ABG") agreed to
acquire Lucky 4, Inc., a gaming business in South Carolina. In October of 1997
this acquisition was closed in a stock-for-stock transaction. ABG's
acquisition of Lucky 4 was accounted for as a pooling of interests.
The pro-forma unaudited consolidated balance sheet at September 22, 1997
gives effect to the acquisition of Lucky 4 as if it had occurred on that date.
The pro-forma unaudited statements of operations for the nine-month period
ended September 22, 1997 and the year ended December 31, 1996 reflect the
combined results of operations as if the acquisition had occurred on January
1, 1996, the year in which Lucky 4 was formed.
The unaudited pro-forma consolidated financial information is not
necessarily indicative of the results of operations that would have been
reported had such events occurred on the dates specified, nor is it
necessarily indicative of the future results of the consolidated entities. The
unaudited consolidated pro forma financial statements should be read in
conjunction with the historical financial statements of the Company.
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AMERICAN BINGO & GAMING CORP. AND LUCKY 4, INC.
UNAUDITED PRO-FORMA CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 1997
- Historical - Pro-Forma
ASSETS American Bingo Lucky 4, Inc. Adjustments Consolidated
- ----------------------------------------------- ---------------- -------------- ----------- --------------
<S> <C> <C> <C> <C>
Current assets:
Cash and cash equivalents $ 1,745,708 $ 24,196 $ 1,769,904
Accounts receivable 329,544 --- 329,544
Notes receivable - current portion 407,109 --- 407,109
Other current assets 368,752 ------- 368,752
---------------- -------------- --------------
Total current assets 2,851,113 24,196 2,875,309
Property and equipment-at cost, net of
accumulated depreciation 3,583,409 36,521 3,619,930
Other assets:
Notes receivable - long term portion 624,184 --- 624,184
Intangible assets, net of accum. amortization 2,452,892 --- 2,452,892
Licenses - net 578,534 --- 578,534
Other - net 173,463 --- 173,463
---------------- -------------- --------------
Total other assets 3,829,073 --- 3,829,073
Total Assets $ 10,263,595 $ 60,717 $ 10,324,312
================ ============== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
- -----------------------------------------------
Current liabilities:
Accounts payable and accrued expenses $ 172,992 $ 2,043 $ 175,035
Notes payable - current portion 442,210 --- 442,210
Lease obligations 182,054 --- 182,054
---------------- -------------- --------------
Total current liabilities 797,256 2,043 799,299
Long-term liabilities:
Notes payable - net of current portion 705,098 --- 705,098
Obligations under capital leases 754,232 --- 754,232
---------------- -------------- --------------
Total long-term liabilities 1,459,330 --- 1,459,330
Commitments and contingency --- --- ---
Owners' equity:
Preferred stock - $.01 par value, authorized 20 --- $ 20
1,000,000 shares, issued 2,000 shares
Common stock - $.001 par value 5,868 --- 5,868
Authorized - 20,000,000 shares
Issued and outstanding - 5,867,888 shares
Additional paid-in capital 13,351,649 --- 13,351,649
Retained earnings (accumulated deficit) (5,350,529) 58,674 (5,291,855)
---------------- -------------- --------------
Total owners' equity 8,007,008 58,674 8,065,682
Total liabilities and owners' equity $ 10,263,595 $ 60,717 $ 10,324,312
================ ============== ==============
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AMERICAN BINGO & GAMING CORP. AND LUCKY 4, INC.
UNAUDITED PRO-FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE-MONTH PERIOD ENDED SEPTEMBER 30, 1997
- Historical - Pro-Forma
American Bingo Lucky 4, Inc. Adjustments Consolidated
--------------- -------------- ------------ -------------
<S> <C> <C> <C> <C>
Revenues:
- --------------------------------------
Rental $ 1,950,205 --- $ 1,950,205
Gaming, concession and other 3,853,000 $ 1,261,419 5,114,419
--------------- -------------- -------------
Total Revenues 5,803,205 1,261,419 7,064,624
Costs and expenses:
- --------------------------------------
Rent and supplies 1,380,382 --- 1,380,382
General and administrative expenses 1,373,215 486,406 1,859,621
Depreciation and amortization 309,979 1,791 311,770
Other operating costs 1,185,741 572,224 1,757,965
--------------- -------------- -------------
Total Costs and Expenses 4,249,317 1,060,421 5,309,738
Operating income 1,553,888 200,998 1,754,886
Other income (expense):
- --------------------------------------
Interest / Other income 124,537 6,347 130,884
--------------- -------------- -------------
Total other income (expense) 124,537 6,347 130,884
Income before taxes 1,678,425 207,345 1,885,770
Provision for income taxes 19,587 --- 64,115 (a) 83,702
--------------- -------------- ------------ -------------
Net Income $ 1,658,838 $ 207,345 (64,115) $ 1,802,068
=============== ============== ============ =============
Net income per share - primary $ .33 $ .33
=============== =============
Net income per share - fully diluted $ .30 $ .31
=============== =============
Weighted average shares outstanding 5,103,534 5,389,534
Weighted average shares outstanding- 5,448,905 5,734,905
assuming full dilution
<FN>
(a) Includes $64,115 for pro-forma taxes on Lucky 4 net income for first nine months of 1997 at
statutory rates.
</TABLE>
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AMERICAN BINGO & GAMING CORP. AND LUCKY 4, INC.
UNAUDITED PRO-FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
- Historical - Pro-Forma
American Bingo Lucky 4, Inc. Adjustments Consolidated
---------------- --------------- ------------ --------------
<S> <C> <C> <C> <C>
Revenues:
- -------------------------------
Rental $ 2,062,737 --- $ 2,062,737
Gaming, concession and other 2,846,219 693,496 3,539,715
---------------- --------------- --------------
Total Revenues 4,908,956 693,496 5,602,452
Costs and expenses:
- -------------------------------
Rent and supplies 903,225 --- 903,225
General and administrative 1,530,849 266,415 1,797,264
Depreciation and amortization 487,073 4,561 491,634
Other operating costs 1,401,715 407,113 1,808,828
---------------- --------------- --------------
Total Costs and Expenses 4,322,862 678,089 5,000,951
Operating income 586,094 15,407 601,501
Other income (expense):
- -------------------------------
Interest / Other expense (25,931) (2,635) (28,566)
Interest / Other income 428,142 75 428,217
---------------- --------------- --------------
Total other income 402,211 (2,560) 399,651
Income before taxes 988,305 12,847 1,001,152
Provision for income taxes --- --- 1,927 (a) 1,927
---------------- --------------- ------------ --------------
Net Income $ 988,305 $ 12,847 (1,927) $ 999,225
================ =============== ============ ==============
Net income (loss) per share $ .20 $ .19
================ ==============
Weighted average number
of shares outstanding 4,967,706 5,253,706
<FN>
(a) Includes $1,927 for pro-forma taxes on Lucky 4 net income for 1996 at statutory rates.
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