UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For
the fiscal year ended
or
COMMISSION
FILE NO:
(Exact name of registrant as specified in its charter)
(State of Incorporation) |
(I.R.S. Employer Identification Number) |
(Address of principal executive offices)
| Registrant’s telephone number, including area code: | |
| Securities registered pursuant to Section 12 (b) of the Act: | None |
| Securities registered pursuant to Section 12 (g) of the Act: |
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes
☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Yes
☐
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 ☐
Indicate
by check mark whether the Registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data
File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding
12 months (or for such shorter period that the registrant was required to submit and post such files).
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by references in Part III of this Form 10-K or any amendment to this Form 10-K. ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act:
Large
accelerated filer ☐ Accelerated filer ☐
If
securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant
included in the filing reflect the correction of an error to previously issued financial statements.
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes
☐ No
The
aggregate market value of the voting common equity held by non-affiliates of the Company based on the closing price of the stock on the
over-the-counter market at June 30, 2023 was $
The number of common shares issued and outstanding as of March 29, 2024:
TABLE OF CONTENTS
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FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, for which the Private Securities Litigation Reform Act of 1995 provides a safe harbor. These forward-looking statements include, but are not limited to, statements about our plans, objectives, representations and intentions and are not historical facts and typically are identified by use of terms such as “believes,” “expects,” “anticipates,” “estimates,” “plans,” “intends,” “objectives,” “goals,” “aims,” “projects,” “forecasts,” “possible,” “seeks,” “may,” “could,” “should,” “might,” “likely,” “enable,” or similar words or expressions, as well as statements containing phrases such as “in our view,” “there can be no assurance,” “although no assurance can be given,” or “there is no way to anticipate with certainty.” These statements include, among other things, statements regarding our ability to implement our business plan and business strategy, our ability to obtain financing to sustain the Company, our ability to finance any future development, construction or operations, our ability to attract key personnel, and our ability to operate profitably in the future. These forward-looking statements are based on current expectations and assumptions that are subject to substantial risks and uncertainties which could cause our actual results to differ materially from those reflected in the forward-looking statements. In evaluating these forward-looking statements, you should consider risks and uncertainties relating to various factors, including, but not limited to, financing, licensing, construction and development, competition, legal actions, federal, state, county and/or city government actions, the passage of statutes, rules and regulations, general financing conditions, and general economic conditions.
The Company’s actual results may differ significantly from results projected in the forward-looking statements. We undertake no obligation to revise or update forward-looking statements, except as required by law. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.
Throughout this Annual Report references to “we,” “our,” “us,” “Diamondhead Casino Corporation,” the “Company,” and similar terms refer to Diamondhead Casino Corporation and its wholly-owned subsidiaries, unless the context indicates otherwise.
Part I
ITEM 1. BUSINESS
The Company is a Delaware corporation which was incorporated on November 15, 1988, under the name “Europa Cruises Corporation.” In 1989, the Company became a publicly-held company. On November 22, 2002, the Company amended its Certificate of Incorporation to change its name to “Diamondhead Casino Corporation.” The Company currently has three subsidiaries: Mississippi Gaming Corporation, Casino World, Inc. and Europasky Corporation.
The Company has no current operations in any state. The Company has had no income or revenue from any operations since 2000. The Company currently has only one employee who serves in an executive officer capacity.
For the years ending December 31, 2023 and December 31, 2022, the Company’s limited resources were devoted to the preparation and filing of its periodic reports with the Securities and Exchange Commission and with its efforts to obtain financing and/or a joint venture partner.
Mississippi
The Company owns, through its wholly-owned subsidiary, Mississippi Gaming Corporation, an approximate 400-acre undeveloped property located at 7051 Interstate 10, Diamondhead, Mississippi 39525 (hereafter “the Diamondhead Property” or “the Property”). The Company’s intent was and is to construct a casino resort and other amenities on the Property unilaterally or in conjunction with one or more joint venture partners. However, the Company has been unable, to date, to obtain financing to move the project forward and/or enter into a joint venture partnership. There can be no assurance that the substantial funds required for the design and construction of the project can be obtained or that such funds can be obtained on acceptable terms. In addition, the Company will require additional financing in 2025 to sustain the Company. Due to its lack of any revenue stream and financial resources, the Company was forced to explore other alternatives, including a sale of part or all of the Property. The Company’s preference is to sell only part of the Property inasmuch as this would appear to be in the best interest of the stockholders of the Company. However, there can be no assurance the Company will be able to sell only part of the Property. The Company intends to continue to pursue a joint venture partnership and/or other financing while seeking a viable purchaser for part or all of the Property. Finally, there can be no assurance that if the requisite financing for the project were obtained and the project were constructed, that the project would be successful.
The Company has no current operations in Mississippi, no offices in Mississippi, and no employees in Mississippi.
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Property Zoning
The Diamondhead Property is located entirely within the City of Diamondhead which is in Hancock County, Mississippi. The City of Diamondhead incorporated in February of 2012. On October 15, 2012, the Mayor and City Council adopted a Zoning Ordinance in which the City of Diamondhead zoned the entire Property as “C-2-Interstate Commercial/Gaming/Resort.” Thus, the requisite zoning for a casino is in place.
Land-Based Gaming
All references in this section to Mississippi law are qualified in their entirety by reference to the actual text of the law.
On August 29, 2005, Hurricane Katrina struck the Gulf coast of the United States causing extensive damage to Louisiana and Mississippi, including Biloxi, Gulfport, and Bay St. Louis, Mississippi. Hurricane Katrina damaged or destroyed most of the casinos on the Gulf coast. Prior to Hurricane Katrina, Mississippi law required that casinos on the Gulf coast be built in, on, or above the water and be located a minimum of fifty percent below mean high tide.
On October 17, 2005, in response to the devastation caused by Hurricane Katrina, Mississippi passed new legislation that allows casinos located in certain statutorily-described areas, including St. Louis Bay, where the Diamondhead Property is located, to be constructed on land no more than 800 feet from the mean high-water line. Under Mississippi’s new legislation, the part of the structure in which licensed gaming activities are conducted must be located entirely in an area which is located no more than eight hundred (800) feet from the mean high-water line (as defined in Section 29-15-1 of the Mississippi Code) of the waters within the State of Mississippi, which lie adjacent to the State of Mississippi south of the three (3) most southern counties in the State of Mississippi, including the Mississippi Sound, St. Louis Bay, Biloxi Bay and Pascagoula Bay or, with regard to Harrison County only, no farther north than the southern boundary of the right-of-way for U.S. Highway 90, whichever is greater. In the case of a structure that is located in whole or part on shore, the part of the structure in which licensed gaming activities are conducted must lie adjacent to state waters south of the three (3) most southern counties in the State of Mississippi, including the Mississippi Sound, St. Louis Bay, Biloxi Bay and Pascagoula Bay. When the site upon which the structure is located consists of a parcel of real property, easements and rights-of-way for public streets and highways are not construed to interrupt the contiguous nature of the parcel, nor is the footage contained within the easements and rights-of-way counted in the calculation of the distances specified above.
The Company intends to take full advantage of this legislation and will construct its casino/hotel resort on land.
Annual In-Lieu Tidelands Assessment for Casino Constructed on Land
Since the Company intends to construct a casino on land in Mississippi, the Company will no longer require a tidelands lease from the Secretary of State. Under Mississippi’s prior law, which required that the Company’s casino be in, on, or above water and a minimum of fifty percent at or below mean high tide, the Company would have required a tidelands lease to lease water-bottoms owned by the State.
However, on or about October 17, 2005, when Mississippi passed new legislation permitting casinos to be built on land in certain locations, Mississippi also passed a companion law that requires any person possessing a license under the Mississippi Gaming Control Act, who operates a gaming establishment in any of the three most southern counties of the State (including Hancock County in which the Company’s Property is located), and who does not lease public trust tidelands from the State, to pay an annual in-lieu tidelands assessment to the Public Trust Tidelands Assessments Fund. For calendar year 2006, the annual in-lieu tidelands assessment was between $400,000 and $750,000, based on an escalating scale which is measured by the capital investment in the part of the structure in which the licensed gaming activities are conducted. For each calendar year thereafter, the Secretary of State is required to review and adjust the value of the capital investment and the annual in-lieu tidelands assessment due. Such review and adjustment shall be tied to the Consumer Price Index.
This annual in-lieu tidelands assessment will apply to any casino constructed on land on the Diamondhead Property, but does not apply at present and will not apply prior to construction.
Mississippi Gaming Site Approval
In the State of Mississippi, in addition to the required local casino zoning which is already in place, a proposed gaming site must obtain Gaming Site Approval. Only the Mississippi Gaming Commission has the authority to grant Gaming Site Approval. On or about May 29, 2014, Mississippi Gaming Corporation, a wholly-owned subsidiary of the Company, which holds title to the Diamondhead Property, applied for Gaming Site Approval for a fifty (50) acre site on the Diamondhead Property. In its Notice of Intent, Mississippi Gaming Corporation anticipated that the casino would contain approximately 1250 slot machines and approximately 40 table games and contain an estimated 80,000 square feet of gaming space. On August 21, 2014, the Mississippi Gaming Commission granted Gaming Site Approval to Mississippi Gaming Corporation for a fifty-acre site on the east side of the Diamondhead Property. There is no expiration date for Gaming Site Approval.
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In granting Mississippi Gaming Corporation Gaming Site Approval, the Mississippi Gaming Commission found, in pertinent part, as follows: 1) that in accordance with the Mississippi Gaming Control Act of 1990, codified as Miss. Code Ann. § 75-76-1 et seq., Miss. Code Ann. § 19-3-79, and Miss. Code Ann. §97-33-1, as amended, the citizens of Hancock County, Mississippi voted to authorize gaming in Hancock County, and thus gaming is legal at qualifying locations within Hancock County, Mississippi; 2) that the proposed gaming area is within 800 feet of the mean high water line of the Bay of St. Louis and is thus a legal gaming site under the Mississippi Control Act of 1990, as amended, and 13 Mississippi Administrative Code Part 2 Rule 2.2(a)(1) and (3); and 3) that the Proposed Site is properly zoned for gaming.
There is no expiration date attached to the Gaming Site Approval obtained from the Mississippi Gaming Commission in 2014. Once the Mississippi Gaming Commission grants a casino company Approval to Proceed with Development, the company then has three years within which to construct its casino and required facilities. Mississippi Gaming Corporation has not applied for Approval to Proceed with Development. Thus, this three year period of time has not yet even begun to run.
Additional Permits, Authorizations and Approvals Are Required
In addition to Gaming Site Approval, the development of the Diamondhead Property requires the Company to obtain additional permits, authorizations and approvals from various federal, state, county, and/or city agencies, boards and commissions, which may include, but not be limited to, the following: Mississippi Gaming Commission, Mississippi Department of Transportation, Mississippi Department of Environmental Quality, Mississippi Department of Marine Resources, Port and Harbor Commission, Levee Board, U.S. Army Corps of Engineers, U.S. Environmental Protection Agency, U.S. Fish and Wildlife Service, U.S. Coast Guard, Hancock County, and/or the City of Diamondhead. The regulatory environment relating to such permits, authorizations and approvals is uncertain and subject to constant change. There can be no assurance that all permits, authorizations and/or approvals can be obtained, or that if obtained, that they will be renewed. While there is no pending environmental litigation, the foregoing permits, authorizations and approvals remain subject to future litigation and the actions of environmental groups and various federal, state, county and/or local governments and agencies, including, but not limited to, the foregoing. The Company will be required to spend significant funds to pay the architects, surveyors, engineers, accountants, attorneys, consultants and other experts required to prepare and process the applications required for the permits, authorizations and approvals required. The amount ultimately required is unknown at this time, but the Company does not have any funds required for this purpose. There can be no assurance the Company will be able to obtain the funds required for this purpose or that it will be able to obtain the funds required on acceptable terms.
Uncertain Regulatory and Political Environment
The political environment in which the Company and/or its subsidiaries intend to operate is also uncertain, dynamic and subject to rapid change. Existing operators often propose and support legislation and/or litigation designed to make it difficult or impossible for competition to enter a market. This political and regulatory environment makes it impossible to predict the effects that the adoption of and changes in gaming laws, rules and regulations and/or competition will have on development of a gaming resort. Moreover, legislatures in states in which gaming is legal often consider wide-ranging legislation and regulations which could adversely affect operations and expected revenues. Likewise, the federal government often considers legislation which could adversely affect operations and expected revenues. Some states have legalized internet gaming and the trend to legalize internet gaming in the remaining states is strong. The long term effects of legalizing internet gaming on the casino industry in general and on the Company’s proposed casino operations are unknown.
Anti-Gaming Referenda
On at least three separate occasions since 1998, certain anti-gaming groups have proposed referenda that, if adopted, would have banned gaming in Mississippi and required that gaming entities cease operations within two years after the ban. All three of the proposed referenda were ruled illegal by Mississippi State trial courts. If such a referendum were to be approved by the voters, it would have a material adverse effect on the Company.
Mississippi Regulation
The Company has no current operations in Mississippi and does not operate any gaming facility in Mississippi. The Company intends to develop the Diamondhead property as a destination casino resort with supporting amenities.
Assuming it is successful in developing its resort, the Company and its subsidiaries and/or affiliates will be subject to federal, state, county, city and local, laws, rules, ordinances and regulations with respect to the operation of any gaming facility. The following is intended to serve as a partial description of the Mississippi regulatory environment in which the Company or its subsidiaries or joint venture partner(s) would seek approvals to construct and operate a gaming facility and is not intended to be a complete, precise, or up-to-date recitation of all applicable laws, rules, regulations or ordinances that might affect the Company’s operations or with which the Company would be required to comply. Additional or more restrictive laws, rules and regulations could be adopted at any time or gambling in Mississippi could be completely banned.
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The location of, ownership of, and operation of gaming facilities in Mississippi are subject to extensive state and local regulation, primarily through the licensing and control of the Mississippi Gaming Commission and the Mississippi State Tax Commission. The Company and/or its subsidiaries must register and be licensed under the Mississippi Gaming Control Act and its gaming operations will be subject to the regulatory control of the Mississippi Gaming Commission, the Mississippi State Tax Commission and various state, county and local regulatory agencies.
The Mississippi Gaming Control Act gives the Mississippi Gaming Commission (the “Commission”) extensive power to enforce the Act and adopt regulations in furtherance of the Act (the “Mississippi Regulations”). The laws, regulations and supervisory procedures of Mississippi and the Mississippi Gaming Commission seek to: (1) prevent unsavory or unsuitable persons from having any direct or indirect involvement with gaming at any time or in any capacity; (2) establish and maintain responsible accounting practices and procedures; (3) maintain effective control over the financial practices of licensees, including establishing minimum procedures for internal fiscal affairs and safeguarding of assets and revenues, providing reliable record keeping and making periodic reports to the Mississippi Gaming Commission; (4) prevent cheating and fraudulent practices; (5) provide a source of state and local revenues through taxation and licensing fees; and (6) ensure that gaming licensees, to the extent practicable, employ Mississippi residents. The regulations are subject to amendment and interpretation by the Commission. Changes in Mississippi law or the regulations or the Commission’s interpretation thereof may limit or otherwise materially affect the types of gaming that may be conducted and could have a material adverse effect on Mississippi gaming operations.
Approval Process
The Commission has divided the approval process into two separate phases: (1) gaming site approval; and (2) approval to proceed with development.
1. Gaming Site Approval
Mississippi Gaming Corporation, which holds title to the Diamondhead Property and is a wholly-owned subsidiary of the Company, obtained Gaming Site Approval on August 21, 2014. There is no expiration date on Gaming Site Approval. With respect to gaming site approval, approval constitutes only the Commission’s finding that the location complies with applicable gaming laws and regulations. Gaming site approval does not entitle the recipient to proceed with development, nor does it constitute a license to engage in gaming or a right to a gaming license. Gaming site approval is a revocable privilege and no holder acquires any vested right therein. The Mississippi Gaming Commission reserves the right to revoke any site approval should the circumstances change that would make the site illegal or unsuitable.
An application for gaming site approval in the three most southern counties must include evidence satisfactory to the Commission in support thereof including: (1) a survey indicating the specific location of the property; (2) the current use of any adjacent property as well as the location of the nearest residential area, church and school; (3) evidence that all applicable zoning ordinances allow gaming at the proposed site; and (4) a survey establishing the mean high water line, performed by a qualified surveyor for performance of tidal surveys.
Gaming establishments in the three most southern counties in the State of Mississippi, including Hancock County, are permitted to be permanent inland structures. No point in the gaming area may be more than eight hundred (800) feet from the nineteen (19) year mean high water line. Harrison County establishments south of Highway 90 may exceed the eight hundred (800) foot measurement up to the southern boundary of Highway 90. All public easements and rights-of-way for public streets and highways are excluded from the 800-foot measurement. Any point of reference used to determine the 800 foot distance from the mean high water line must be located on the applicant or licensee’s premises. The applicant or licensee must own and/or lease the land that is contiguous both to the parcel used to conduct gaming and the point of reference used to determine the mean high water line, and this land must be shown to be an integral part of the project. The Commission has final authority in reviewing and approving each site as it pertains to meeting the requirements of this regulation.
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2. Approval to Proceed with Development
With respect to obtaining the Commission’s approval to proceed with development, the following information, together with documentation to support this information, must be submitted to the Commission:
1) Architectural plans or renderings showing details of all proposed construction and renovation for the project, together with a footprint of the project and a description of the construction and type of parking facilities, as well as parking lot capacity. Commission approval requires that the project include a 500-car, or larger, parking facility in close proximity to the casino complex and infrastructure facilities shall include a 300-room, or larger, hotel of at least a three-diamond rating as defined by an acceptable travel publication to be determined by the Commission. In addition, infrastructure facilities must include a restaurant capable of seating at least 200 people and a fine dining facility capable of seating at least 75 people, and the casino floor must be at least 40,000 square feet. The project will also have or support an amenity that will be unique to the market and will encourage economic development and promote tourism. The Commission will have authority in determining the quality of the amenity and the ultimate approval of the amenity, and may, in its discretion, reduce the requirements above should it determine that there is a justification to do so in certain markets. The Commission will further determine, in its discretion, if the prerequisite hotel and dining facilities may be supplanted by an amenity of high value to the overall tourism market in that the amenity will likely encourage economic development and promote tourism. As used herein, infrastructure facilities are not such items as parking facilities, roads, sewage and water systems, or civic facilities normally provided by cities and/or counties.
The qualifying infrastructure must be owned or leased by; (i) the holder of the site approval, or (ii) an affiliated company of the holder of the site approval where both the affiliated company and the holder of the site approval have identical direct or indirect equity ownership. This regulation shall apply to any new applicant for a gaming license for a new gaming facility and to the acquisition or purchase of a licensee or gaming facility for which gaming operations have ceased prior to the time of acquisition or purchase. It does not apply to any licensee, who has been licensed by the Commission, or to any person which has received Approval to Proceed with Development from the Commission prior to December 31, 2013 (or to such licensee upon any licensing renewal after such date.)
Any change to the plan, or placement or design of the establishment, cruise vessel or vessel, shall be submitted in advance to the Executive Director for determination of whether such a change constitutes a material change. If the Executive Director determines that a material change has occurred, Commission approval is required for same.
2) Statements reflecting the total estimated cost of construction or renovation of the establishment, vessel, or cruise vessel and shore and dock facilities, distinguishing between known costs and projections, and separately identifying: facility design expense; land acquisition costs; site preparation costs; construction costs or renovation costs; equipment acquisition costs; costs of interim financing; organization, administrative and legal expenses; projected permanent financing costs; qualified infrastructure costs; and non-qualifying infrastructure costs.
3) A construction schedule for completion of the project, including an estimated date of project completion, indicating whether a performance bond will be required by the applicant to be furnished by the contractor.
4) Current financial statements, including, at a minimum, a balance sheet and profit and loss statement for the proposed licensee.
5) A detailed statement of the sources of funds for all construction and renovation proposed by the site development plans. Any funding, whether equity or debt, to be obtained, must be supported by firm written commitments satisfactory to the Commission. The applicant will have 120 days in which to close all financing and start construction or the approval is deemed void.
6) Evidence that the following agencies (if applicable) were notified of the development and/or do not oppose the site development: U.S. Corps of Engineers, U.S. Coast Guard, Mississippi Department of Transportation, Mississippi Department of Environmental Quality, Department of Marine Resources, Port and Harbor Commission, Levee Board, City and County government, and such other agencies as the Executive Director deems appropriate.
The application for a Gaming Operator’s License must be filed no later than ninety (90) days after the Commission grants approval to proceed with development. The gaming site approval will expire three (3) years from the date approval to proceed with development is granted unless the Commission grants an extension. Approval to proceed with development is not subject to sale, assignment or transfer.
Opening of a Casino
Before any gaming facility may open to the public, all infrastructure requirements must be fully operational. The development shall be completed in accordance with the approved plan and be ready for operation within the gaming site approval time period. Gaming site approval may be extended within the discretion of the Commission.
Application Information Required is Extensive and Must be Complete and Accurate
In addition to other information required by law and Commission regulations, an applicant must provide complete information regarding the proposed operation, including but not limited to, a certification that any establishment to be used by the proposed operation has been inspected and approved by all appropriate authorities; fingerprints for each individual applicant; the nature, source, and amount of any financing; the proposed uses of all available funds; the amount of funds available after opening for the actual operation of the establishment; and economic projections for the first three years of operation of the establishment. Each applicant must provide complete information regarding his or her background for the ten-year period preceding submission of the application.
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Every application to become a license holder must contain the following additional information: actual establishment blueprints, including a layout of each floor stating the projected use of each area; the number of miles from the nearest population center and a description of transportation facilities serving that population center, a description of the casino size and configuration of slot machines, video games of chance and table games; a description of the availability of fire protection and the adequacy of law enforcement at the establishment and emergency evacuation plans for hurricane and flooding disasters; a description of the arrangements for food and drink concessions, the names and addresses of the concessionaires and the terms of the concession contracts, if applicable; the type of slot machines and video games of chance to be used and the proposed distributors and manufacturers of this equipment; a description of the physical location, size and floor plan of the section of the establishment reserved for patrons under 21 years of age and plans for activities and staffing for this section; periods of time that the gaming areas will be in operation; a description of the proposed management of the facility, management personnel by function, and tip distribution policies; all known feasibility studies made available to the applicant which have been done on the type of gaming in the particular locale where the applicant intends to conduct gaming, and a description of procurement policies that emphasize the utilization of Mississippi employees, resources, and goods and services in the operation of the gaming establishment.
Timetable for Financing and Construction
License applicants must submit, simultaneously with submission of their completed application, a timetable for financing arrangements (including applications for approval of public offerings or private placements), and commencement and completion of construction activities, setting forth the date upon which gaming activities will commence. The timetable will be subject to approval by the Commission and monitored for compliance by the Executive Director. The Commission may grant extensions of time upon the recommendation of the Executive Director. License applicants must not advertise or promote the opening of their proposed casino nor the commencement of employee training for their proposed casino until the applicant is granted a license by the Mississippi Gaming Commission. Applicants may request a waiver of this regulation from the Executive Director, which waiver, if granted would be subject to revocation.
Unsuitable Locations
The Executive Director may recommend that an application for a license be denied if the Executive Director believes that the place or location for which the license is sought is unsuitable for the conduct of gaming operations. The Commission may deny an application for a state gaming license if it deems that the place or location for which the license is sought is unsuitable for the conduct of gaming operations. Without limiting the generality of the foregoing, the following locations may be deemed unsuitable: premises located within the immediate vicinity of residential areas, churches, schools and children’s public playgrounds; premises where gaming is contrary to any county or city ordinance, including, but not limited to, zoning ordinances restricting the permissible locations for gaming facilities, so long as such ordinances do not have the effect of absolutely excluding or prohibiting legal gaming; premises which fail to meet federal, state or local health and safety standards, and any other applicable laws or regulations; premises frequented by minors; premises lacking adequate supervision or surveillance; premises difficult to police or where adequate fire protection may be difficult; any other premises where the conduct of gaming would be inconsistent with the public policy of the State of Mississippi.
Building Standards
Any establishment to be constructed for gaming will be required to meet the Southern Standard Building Code. If the local county or city has a building code, then the local code will be the applicable standard. The Commission requires, as a condition of licensure, that gaming establishments meet strict hurricane emergency standards and procedures.
Objection by County or Municipality
Whenever the Commission receives a completed application for a gaming license proposing to operate a gaming establishment in a particular county or municipality, the Executive Director, within ten days after receipt of the application, must notify the board of supervisors of the county and, if applicable, the chief executive of the municipality in which the proposed operation will be located of the receipt of the application and specify the name of the applicant and the proposed location for the gaming establishment. The county or municipality in which the applicant proposes to operate may file a duly enacted resolution specifying any objections or endorsements with the Executive Director.
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Individual Licensing of Shareholders of Corporate Licensee
The Commission may request persons, affiliated entities and greater than 5% equity owners to submit an application for finding of suitability in which event the application must be submitted within thirty days of the request.
All Officers and Directors of a Corporation Must be Licensed
All officers and directors of a corporation which holds or applies for a state gaming license must be licensed individually and, if in the judgment of the Mississippi Gaming Commission the public interest will be served by requiring any or all of the corporation’s individual stockholders, lenders, holders of evidence of indebtedness, underwriters, key executives, agents, or employees to be licensed, the corporation shall require such persons to apply for a license. An officer or director shall apply for a license within thirty days after he becomes an officer or director. A person required to be licensed pursuant to a decision of the commission must apply for a license within thirty days after the executive director requests him to do so.
Licensing is a Privilege and Revocable
It is the declared policy of the State of Mississippi that all establishments where gambling games are conducted or operated must be licensed and controlled so as to better protect the public health, safety, morals, good order and welfare of its inhabitants. Any license, registration, finding of suitability, or approval by the Commission is deemed to be a revocable privilege and no person holding such a license, registration, finding of suitability, or approval is deemed to have any vested rights therein.
An application for a state gaming license or any other affirmative Commission action is seeking the granting of a privilege and the burden of proving his qualification to receive any license, registration, finding of suitability or approval, is at all times on the applicant. The applicant must document compliance with all applicable federal, state and local rules, regulations and permit requirements. An applicant must accept any risk of adverse publicity, embarrassment, criticism, or other action, or financial loss which may result from action with respect to an application and expressly waive any claim for damages as a result thereof. An application for a license, finding of suitability, or registrations constitutes a request to the Executive Director for a recommendation and to the Commission for a decision upon the applicant’s general suitability, character, integrity, and ability to participate or engage in, or be associated with, the gaming industry in the manner or position sought by the application, or the manner or position generally similar thereto.
Certain Commission Considerations for Licensing
The Commission will consider various factors when deciding whether to issue a license to conduct gaming in an establishment, including but not limited to, the following: revenue provided by a facility to the state and local communities through direct taxation on its operation and indirect revenues from tourism, ancillary businesses, creation of new industry and taxes on employees and patrons. It will consider whether the proposed establishment is: economically viable and properly financed, planned in a manner that provides for adequate security for all aspects of its operation and for people working, visiting, or traveling to the establishment; planned in a manner which promotes efficient and safe operation; is planned in a manner that provides efficient, safe, and enjoyable use by patrons of the establishment and parking facilities, concessions, the casino, access to cashier windows and rest rooms; compliance with state and federal laws regarding fire, health, construction, zoning, and other similar matters; whether the applicant will employ the persons necessary to operate the establishment in a manner consistent with the needs, safety, and interests of persons who will be in the establishment; the population of the area to be served by the establishment and the location of other establishments within and without the state. The Commission will consider the character and reputation of all persons identified with ownership and operation of the establishment and their capability to comply with rules of the Commission and the Mississippi Code; whether the proposed operation will maximize development; whether it is beneficial to Mississippi tourism, the number and quality of employment opportunities for Mississippians created and promoted by the proposed operation, and the amount and type of shore developments associated with the establishment.
A license which authorizes a holder to operate a gaming establishment is granted for no longer than three years from the date of issue and may be granted for a period of less than three years based within the discretion of the Commission.
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Gaming Licenses
Neither the Company nor any of its subsidiaries has a license to operate a casino in Mississippi or in any other jurisdiction. Gaming licenses require the periodic payment of fees and taxes and are not transferable except in accordance with applicable Mississippi law and regulations and with the prior approval of the Commission. Gaming licenses in Mississippi are issued for a maximum term of three years and must be renewed periodically thereafter. There can be no assurance that the Company or any of its subsidiaries will be licensed. There can be no assurance that if licensed, new licenses can be obtained at the end of any particular licensure period. Moreover, the Commission may, at any time, and for any cause it deems reasonable, revoke, suspend, condition or limit a license or approval to own shares of stock in a company that operates in Mississippi. The Mississippi Act also requires that a publicly traded company register under the Act. The Company and/or its subsidiaries will be required to periodically submit detailed financial, operating and other reports to the Commission and Mississippi State Tax Commission. A violation under a gaming license held by a subsidiary of a Company operating in Mississippi could be deemed a violation of all other licenses, if any, then held by the Company. Numerous transactions, including substantially all loans, leases, sales of securities and similar financing transactions entered into by any subsidiary of the Company operating a casino in Mississippi must be reported to or approved by the Commission. In addition, the Commission may, at its discretion, require additional information about the operations of the Company.
Deborah Vitale, President and Chief Executive Officer of the Company, though not currently licensed, previously held a gaming license in Colorado.
Finding of Suitability
The following persons must apply for a finding of suitability and must be found suitable by the Commission in order to be involved with a licensee: i) each person who serves as Chairman of the Board of Directors of any corporation, public or private, licensed or registered by the Commission; and ii) each person who has a vote on any issue before the Board of Directors of any corporation, public or private, licensed or registered by the Commission and who is also an employee of the corporation or any of its subsidiaries. In addition, the following persons shall apply for a finding of suitability: i) each person who serves as Chairman of the audit or compliance committee of any corporation, public or private, licensed or registered by the Commission, and ii) any executive, employee, or agent of a gaming licensee that the Commission determines as having the power to exercise a significant influence over decisions concerning any part of the operation of a gaming licensee. If the nature of the job changes from that for which the applicant is found suitable, he may be required to submit himself to a new determination of her or his suitability.
The Commission can require any employee to be found suitable if it finds that the public interest and policies set forth in the Act will be served thereby. The Commission is not restricted by job titles, but will consider the functions and responsibilities of the person, including but not limited to, persons acting in the capacity of a property level general manager, assistant general manager, or executive level personnel actively and directly engaged in the administration or supervision of the activities of a licensee. Any executive, employee or agent of a gaming licensee who is listed or should be listed in an annual employee report may be required to apply for a finding of suitability.
A finding of suitability is granted for a period of no longer than ten years from the date of issue. A finding of suitability may be granted for a period of less than ten years within the discretion of the Commission. A holder of a finding of suitability must file with the Investigations Division of the Commission by June 30th of each year, the “Investigations Division Annual Report,” providing all information requested on forms provided by the Commission and any other information requested by the Executive Director. A holder of a finding of suitability must immediately inform the Commission of any arrest or conviction.
The Commission has full and absolute power and authority, at any time, to deny any application or limit, condition, restrict, revoke, or suspend any license, registration, finding of suitability or approval, or fine any person licensed, registered, found suitable or approved, for any cause deemed reasonable by the commission. The Commission has the power, at any time, to investigate and require the finding of suitability of any record or beneficial stockholder of the Company. The Act requires that each person who, individually or in association with others, acquires, directly or indirectly, beneficial ownership of more than 5% of any class of voting securities of a publicly traded corporation registered with the Mississippi Gaming Commission, must notify the Mississippi Gaming Commission of this acquisition. The Act also requires that each person who, individually or in association with others acquires, directly or indirectly, beneficial ownership of more than 10% of any class of voting securities of a publicly traded corporation registered with the Commission must be found suitable by the Mississippi Gaming Commission and pay the costs and fees that the Commission incurs in conducting the investigation. Any person who fails or refuses to apply for a finding of suitability or a license within thirty days after being ordered to do so by the Commission may be found unsuitable. Any person found unsuitable and who holds, directly or indirectly, any beneficial ownership of the Company’s securities beyond such time as the Commission prescribes, may be guilty of a misdemeanor.
The Company may be required to disclose to the Commission upon request, the identities of holders of any debt or other securities. Under the Act, the Commission may, in its discretion, (1) require holders of debt securities of registered corporations to file applications; (2) investigate such holders; and (3) require the holders to be found suitable to own such securities.
The Mississippi regulations provide that a change in control of a Company may not occur without the prior approval of the Commission. Mississippi law prohibits the Company from making a public offering of its securities without the approval of the Commission if any part of the proceeds of the offering is to be used to finance the construction, acquisition or operation of gaming facilities in Mississippi or to retire or extend obligations incurred for one or more such purposes. The Commission has the authority to grant continuous approval of securities offerings subject to renewal every three years by certain issuers.
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Employees associated with gaming in Mississippi must obtain work permits that are subject to immediate suspension under certain circumstances. The Commission will refuse to issue a work permit to a person who has been convicted of a felony, committed certain misdemeanors or knowingly violated the Mississippi Gaming Control Act, and it may refuse to issue a work permit to a gaming employee for any other reasonable cause.
The Company believes there may be persons with prior felony convictions, who are affiliated with certain shareholders, who beneficially own in excess of 5% of a class of voting stock of the Company, who may be found unsuitable by the Mississippi Gaming Commission. Article X of the Company’s Articles of Incorporation, as amended, provides that the “Company may repurchase or redeem shares, at fair market value, held by any person or entity whose status as a shareholder, in the opinion of the Company’s Board of Directors, jeopardizes the approval, continued existence, or renewal by any gaming regulatory authority, of a contract to manage gaming operations, or any other tribal, federal or state license or franchise held by the Company or any of its subsidiaries.” However, there can be no assurance the Company would have sufficient funds to purchase shares held by such a person or entity. In the event the Company was unable to purchase such shares, its ability to obtain a license could be materially and adversely affected.
License Fees and Taxes
License fees and taxes are payable to the State of Mississippi and to the counties and cities in which the Mississippi Gaming Subsidiary’s respective operations will be conducted. The license fee payable to the State of Mississippi is based upon “gaming receipts,” which are generally defined as gross receipts less payouts to customers as winnings. The license fee equals 4% of all gross revenue which does not exceed the first $50,000 or less of gross revenue per calendar month;, plus 6% of all gross revenue which exceeds $50,000 per calendar month and does not exceed $134,000 per calendar month; and the next $84,000 of gross revenue per calendar month, plus 8% of all gross revenue which exceeds over $134,000 per calendar month. License fees paid in any taxable year are allowed as a credit against the Mississippi State Income tax liability of a licensee for that taxable year.
A licensee must pay an annual license fee of $5,000. In addition, each licensee must pay a license fee based on the number of games it operates. If it operates over 35 games, the fee is equal to $81,200 plus $100 for each game over 35 games. In addition to state gaming license fees or taxes, a municipality or county may impose a gross revenue fee upon a licensee based on all gaming receipts derived from the establishment equal to approximately 4%. An additional license tax may apply to gaming devices.
As there were no operations in 2023, the Company was not required to make any license or tax payments and does not owe any fees as of December 31, 2023.
Beer, Wine and Liquor Licensing
The sale of alcoholic beverages by casinos, including beer and wine, is subject to licensing, regulation and control by both the local jurisdiction and the Alcoholic Beverage Control Division (the “ABC”) of the Mississippi Department of Revenue. All licenses are revocable and non-transferable. The ABC has full power to limit, condition, suspend or revoke any license, and any disciplinary action could, and revocation would, have a material adverse impact upon the operations of an affected casino, its financial condition and its results of operations.
Extensive Non-Gaming Laws and Regulations
In addition to the foregoing, the Company and/or its subsidiaries will be subject to additional federal, state, county and city, safety, food, alcohol, health, employment, and other laws, rules, regulations and ordinances that apply to non-gaming businesses generally. In addition, Regulations adopted by the Financial Crimes Enforcement Network of the U.S. Treasury Department require currency transactions in excess of $10,000 occurring within a gaming day to be reported, including identification of the patron by name and social security number. Substantial penalties can be imposed for failure to comply with these and numerous other regulations. The foregoing is just one example of the pervasiveness of the non-gaming laws, rules, regulations and ordinances that would apply to a casino operator.
Competition
There is intense competition in the Mississippi market in which the Company intends to operate and in surrounding markets. The Company will compete directly with other existing gaming facilities located in Mississippi and in bordering states, including Louisiana. In addition, there may be additional casinos opening on the Gulf Coast of Mississippi or in Louisiana. The Company will also be competing directly and indirectly, with gaming facilities throughout the United States and throughout the world, as well as with Native American gaming operations which enjoy certain tax advantages. The Company expects competition to increase as new gaming operators enter these markets, existing competitors expand their operations, gaming activities expand in existing jurisdictions, gaming is legalized in new jurisdictions, and legalized gaming expands on the internet. Assuming it is successful in developing a destination casino resort, the Company will also be competing with other forms of gaming and entertainment, including but not limited to, bingo, online gambling, pull tab games, card parlors, sports-book operations, pari-mutuel betting, dog racing, lotteries, jai-alai, video lottery terminals, and video poker terminals.
Sports Betting
There are twenty-six operating casinos in Mississippi. These casinos are grouped into three regions: the Coastal Region, Northern Region and Central Region.
On August 1, 2018, Mississippi legalized single game sports betting. As of December 31, 2023, all twenty-six of the Mississippi casinos had sports wagering.
The Diamondhead Property is located in the Coastal Region. There are twelve casinos in the Coastal Region. Of these, five casinos have less than 40,000 square feet of gaming space; three casinos have between 50,000 and 60,000 square feet of gaming space, one casino has between 60,000 and 65,000 square feet of gaming space; and two casinos have between 80,000 and 85,000 square feet of gaming space. The largest casino floor has 117,500 square feet of gaming space. The Company expects to have a minimum of 100,000 square feet of gaming space inasmuch as it expects to have a sports-betting facility.
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The following chart identifies casinos which are located in Mississippi and with which the Company will compete. Except for distances, the information contained in the chart is derived from the Mississippi Gaming Commission’s Monthly Survey Information (Property Data) for the period December 1, 2023 to December 31, 2023.
| Approximate | ||||||||||||||||||||||||||||
| Distance to | ||||||||||||||||||||||||||||
| Gaming | Slot | Table | Poker | Hotel | Total | Diamondhead | ||||||||||||||||||||||
| REGION | Sq. Ft | Games | Games | Games | Rooms | Parking | (in miles) | |||||||||||||||||||||
| COASTAL REGION | ||||||||||||||||||||||||||||
| Beau Rivage Casino | 84,858 | 1,318 | 79 | 14 | 1,740 | 3,320 | 35 | |||||||||||||||||||||
| Boomtown Casino | 39,534 | 578 | 23 | 4 | 0 | 1,490 | 33 | |||||||||||||||||||||
| Golden Nugget | 56,033 | 832 | 47 | 0 | 706 | 1,345 | 35 | |||||||||||||||||||||
| Hard Rock Casino | 51,374 | 956 | 55 | 0 | 479 | 2,332 | 35 | |||||||||||||||||||||
| Harrah’s Gulf Coast | 37,208 | 636 | 28 | 6 | 499 | 2,705 | 35 | |||||||||||||||||||||
| IP Casino Resort Spa | 81,733 | 1,135 | 45 | 6 | 1,088 | 3,400 | 33 | |||||||||||||||||||||
| Palace Casino | 38,000 | 586 | 24 | 0 | 234 | 1,590 | 33 | |||||||||||||||||||||
| Treasure Bay Casino | 28,140 | 795 | 26 | 0 | 202 | 1,469 | 31 | |||||||||||||||||||||
| Island View Casino | 117,500 | 2,427 | 49 | 0 | 974 | 4,150 | 23 | |||||||||||||||||||||
| Hollywood Casino | 56,300 | 779 | 28 | 5 | 291 | 1,700 | 12 | |||||||||||||||||||||
| Silver Slipper Casino | 38,926 | 759 | 21 | 0 | 129 | 1,057 | 15 | |||||||||||||||||||||
| Scarlet Pearl | 60,445 | 826 | 36 | 0 | 300 | 2,333 | 33 | |||||||||||||||||||||
| Region Totals | 690,051 | 11,627 | 461 | 35 | 6,642 | 26,891 | ||||||||||||||||||||||
| NORTHERN REGION | ||||||||||||||||||||||||||||
| 1st Jackpot Casino Tunica | 46,535 | 706 | 9 | 0 | 0 | 1,699 | 377 | |||||||||||||||||||||
| Fitzgerald’s Casino Tunica | 38,457 | 872 | 12 | 0 | 506 | 1,795 | 379 | |||||||||||||||||||||
| Gold Strike Casino Resort | 50,000 | 1,107 | 58 | 0 | 1,109 | 2,412 | 373 | |||||||||||||||||||||
| Hollywood Casino- Tunica | 55,000 | 788 | 10 | 0 | 494 | 1,801 | 379 | |||||||||||||||||||||
| Horseshoe Casino and Hotel | 63,000 | 926 | 71 | 24 | 505 | 6,040 | 373 | |||||||||||||||||||||
| Isle of Capri-Lula | 59,335 | 516 | 7 | 0 | 146 | 1,500 | 345 | |||||||||||||||||||||
| Sam’s Town- Tunica | 44,020 | 591 | 7 | 0 | 354 | 4,308 | 378 | |||||||||||||||||||||
| Region Totals | 356,347 | 5,506 | 174 | 24 | 3,114 | 19,555 | ||||||||||||||||||||||
| CENTRAL REGION | ||||||||||||||||||||||||||||
| Ameristar Casino Hotel | 72,210 | 938 | 10 | 2 | 148 | 3,063 | 210 | |||||||||||||||||||||
| Harlow’s Casino Resort | 33,415 | 667 | 12 | 0 | 105 | 1,500 | 285 | |||||||||||||||||||||
| Bally’s Vicksburg | 32,608 | 458 | 7 | 0 | 89 | 1,063 | 212 | |||||||||||||||||||||
| Magnolia Bluffs Casino | 16,032 | 488 | 10 | 1 | 140 | 427 | 199 | |||||||||||||||||||||
| Riverwalk Casino | 25,000 | 583 | 11 | 0 | 76 | 748 | 211 | |||||||||||||||||||||
| Trop Casino Greenville | 22,822 | 451 | 0 | 0 | 0 | 734 | 287 | |||||||||||||||||||||
| Water View Casino & Hotel | 37,130 | 603 | 10 | 0 | 122 | 631 | 211 | |||||||||||||||||||||
| Region Totals | 239,217 | 4,188 | 60 | 3 | 680 | 8,166 | ||||||||||||||||||||||
| STATE TOTALS | 1,285,615 | 21,321 | 695 | 62 | 10,436 | 54,612 | ||||||||||||||||||||||
Louisiana Competition
The Company believes that its greatest competition will come from any existing and any new casinos that might be constructed in or around Diamondhead, Bay St. Louis, Gulfport and Biloxi, Mississippi due to their close proximity to the Diamondhead Property. While the Company’s primary competition is expected to come from the foregoing, the Company’s Diamondhead, Mississippi casino will also compete with casinos and other gaming located in the adjacent State of Louisiana. The following information is based, in large part, on the 2023 Louisiana Gaming Control Board 27th Annual Report to the Louisiana State Legislature for the fiscal year July 1, 2021 through June 30, 2022, which is the latest available report for Louisiana and the American Gaming Association’s State of the States 2023 report.
The Louisiana fiscal year ended June 30, 2022, with adjusted gross gaming revenue of $1,808,444,803, an increase of $188,222,255 from the previous year. Gaming revenue to the State was $764,951,279 for FY 2021-2022, an increase of $74,581,818 from the previous fiscal year.
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Land-Based Casinos
Louisiana has four land-based casinos. Three of the land-based casinos in Louisiana are Indian casinos, which are located in Marksville in central Louisiana and in Kinder and Charenton in southern Louisiana. These are not expected to represent significant competition because of their distance from the Diamondhead site. None of the three tribes are required to pay any fees directly to the state nor can they be required to provide the Louisiana Gaming Control Board with any financial figures, although the Chitimacha Tribe in Charenton provides information voluntarily. All of these tribes make contributions to the local governments in their respective locations. There is a fourth land-based casino in downtown New Orleans, Harrah’s Casino, which would compete with the Company’s Diamondhead Casino.
Harrah’s Casino New Orleans
Harrah’s Casino in New Orleans is approximately one hour by car from the Diamondhead site. Significant competition is expected to come from this land-based casino. Harrah’s generated gross gaming revenue of $228,270,627 in FY 2021-2022, an increase of $15,081,929 from the prior fiscal year. Harrah’s employs approximately 1,916 individuals. Harrah’s pays a 21.45 percent tax on gaming revenue or an annual tax of $60 million, whichever is greater. The casino must also remit rent and other payments to local authorities as established under its operating contract.
Riverboat Casinos
There are fifteen riverboat casinos authorized to operate in Louisiana. There are six riverboat casinos in the Shreveport-Bossier City area, which is about 360 miles from the Diamondhead Property; three in Lake Charles, which is approximately 246 miles from the Diamondhead Property; three in East Baton Rouge Parish, which is approximately 123 miles from the Diamondhead Property; and one each in Kenner, Harvey and Amelia, which are approximately 73, 71, and 139 miles, respectively, from the Diamondhead Property. These riverboat casinos employ 8,787 individuals and, in FY 2021-2022, contributed $388,815,633 in net revenue to the state. Adjusted gross revenue increased in Lake Charles, Baton Rouge, Shreveport/Bossier and New Orleans. Three of these riverboat casinos are moving onto land. Under a state law signed in 2018, Louisiana riverboat casinos can move out of water as long as they remain within 1,200 feet of their existing berths and demonstrate economic development.
In fiscal year 2021-2022, the riverboat casinos had adjusted gross gaming revenue of $1,620,224,847 an increase of $26,403,701 from the prior fiscal year and paid $125,507,395 in fees to the state. Louisiana riverboats pay a maximum effective gaming tax rate of 27.5 percent, comprised of a state gaming tax of 21.5 percent of revenue plus additional local taxes which vary according to location.
The Shreveport-Bossier City market had adjusted gross gaming revenue of $583,755,319 for FY 2021-2022, an increase of $26,403,701 over the prior fiscal year and paid $125,507,395 to the state. The Lake Charles market had adjusted gross gaming revenue of $684,272,954, an increase of $100,587,419 over the prior fiscal year and paid $147,118,685 to the state. The riverboat casinos in Kenner, Harvey and Amelia had adjusted gross gaming revenue of $271,084,593, an increase of $33,950,167 over the prior fiscal year and paid $58,283,187 to the state. The riverboat casinos in East Baton Rouge Parish had adjusted gross gaming revenue of $269,331,937, an increase of $27,278,669 over the prior fiscal year and paid $57,906,366 to the state.
Video Poker
As of June 30, 2022, there were approximately 1,433 video poker outlets and 12,143 video poker devices in the 31 parishes in Louisiana where video poker gaming had been approved in the local option election of November 5, 1996. These machines are authorized in bars, restaurants, hotels, off-track betting parlors and truck stops. Franchise fees to the state from video poker amounted to $250,575,185 for FY 2021-2022, an increase of $17,323,091from the prior fiscal year.
Racetrack Gaming
Slot machine gaming is authorized at four live racing facilities in Louisiana. These slot machines generated $329,876,353, in adjusted gross gaming revenue for fiscal year 2021-2022, an increase of $8,389,738 from the prior fiscal year and paid $50,042,243 to the state. There were approximately 1,247 individuals employed at the racing facilities. Racino revenue is taxed at an effective tax rate of about 36 percent. This consists of an 18 percent contribution to the Louisiana horse racing industry taken off the top, with the remaining revenue subject to a state tax of 18.5 percent and local taxes of 4 percent.
Sports Betting
On June 10, 2021, the Louisiana State Legislature approved legislation establishing a licensing framework for retail and online sports betting in the fifty-five of sixty-four Louisiana parishes that voted to authorize sports betting in a November 2020 election.
Fantasy Sports went live in July 2021. Louisiana levies a tax of 8% upon the net revenues of fantasy sports contests offered to consumers within the state. From July 2021 through June 2022, the Gross Fantasy Sports Contest Revenues were $20,089,294, net revenue was $2,176,486 and $174,119 was paid in tax.
Retail Sports Wagering went live in October 2021. From November of 2021 through June of 2022, there were $240,480,752 wagers written. The net proceeds were $22,941,014 and $2,383,517 was paid in tax. The win percentage was 9.5%.
Mobile sports wagering went live in January 2022. From January of 2022 through June of 2022, there were $899,637,922 wagers written. The net proceeds were $72,486,268 and $11,652,756 was paid in tax.
Louisiana levies a 10% tax upon the net gaming proceeds from sports wagering conducted onsite at a licensed sports wagering establishment. Any sports wagering conducted through mobile application or a website on the premises of a licensed sports wagering establishment is taxed at a 15% rate.
The cumulative effect of the above-described gaming activity could be seen as having a significant competitive effect on the Diamondhead project.
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ITEM 1A. RISK FACTORS
Smaller reporting companies are not required to provide the information required by this item.
ITEM 1B. UNRESOLVED STAFF COMMENTS
Not applicable.
ITEM 1C. CYBERSECURITY
Cybersecurity is critical to preserving our documents and records and enabling us to reach our ultimate goals. Inasmuch as we have no current operations, no customers, no contractors, no supply chains, no current revenue stream, and only one employee, we do not face the multitude of cybersecurity threats common to most companies and most industries. We believe a cybersecurity incident would have a minimum impact on our operations. However, common cybersecurity threats and risks make it imperative that we maintain adequate precautions with respect to cybersecurity and, to this extent, we have industry standard security controls in place to protect our systems and our data.
The President oversees processes for identifying and mitigating risks, including cybersecurity risks. The Company relies upon an outside third party security consultant for the security of its systems and relies upon third-party cybersecurity monitoring, alerting services, training, and use of secure cloud offerings to protect data. We have redundant systems to protect our current systems. Our outside consultant evaluates our security controls and provides overall information security strategy for the protection, detection and response capabilities used. The current consultant has extensive information technology and program management experience and evaluates our security with the ultimate goal of preventing cybersecurity incidents to the extent feasible.
In the event of an incident, the President would immediately notify our outside consultant to take those steps required for maximum recovery. The President would also apprise the Board of Directors of any cybersecurity incidents deemed to have a moderate or higher business impact, even if immaterial to us, and would timely notify the public of any material cybersecurity incident.
Notwithstanding our efforts, we may not be successful in preventing or mitigating a cybersecurity incident that could have a material adverse effect on us. Nor are we insured for damages that could result from such an incident.
ITEM 2. PROPERTIES
Diamondhead, Mississippi Property
The Company owns, through its wholly-owned subsidiary, Mississippi Gaming Corporation, an approximate 400-acre tract of unimproved land in Diamondhead, Mississippi. The property is located at 7051 Interstate 10, Diamondhead, Mississippi 39525 (hereafter “the Diamondhead Property” or “the Property”). The Property is located entirely within the City of Diamondhead and Hancock County. The Property is zoned “C-2-Interstate Commercial/Gaming/Resort.”
Liens on the Diamondhead Property
Liens
As of December 31, 2023, the Company had placed twenty-one liens on the Company’s Diamondhead, Mississippi Property (“the Property”). No additional liens have been filed as of the filing of this report. The liens were as follows:
In September of 2014, a first lien was placed on the Property pursuant to a Private Placement dated February 14, 2014, as amended, to secure certain obligations of the Company. The first lien is composed of an (i) Executives Lien and (ii) an Investors’ Lien. The liens are in pari passu.
On March 31, 2014, the Company issued $1 million of First Tranche Collateralized Convertible Senior Debentures. On December 31, 2014, the Company issued $850,000 of Second Tranche Collateralized Convertible Senior Debentures. On September 26, 2014, a first lien was placed on the Diamondhead Property in favor of the Investors to secure the principle due in the amount of $1,850,000 and interest due thereon (the “Investors Lien”). The Investors Lien is in pari passu with a first lien placed on the Property in favor of the President of the Company, the Vice President of the Company, and certain directors of the Company for past due wages, compensation, and expenses owed to them in the maximum aggregate amount of $2,000,000 (the “Executives Lien”). The CEO will serve as Lien Agent for the Executives Lien.
On December 16, 2016, the Company filed a second lien on the Property in the maximum amount of $250,000 to secure certain notes payable, including notes to related parties, totaling $137,500 in principle and accrued interest incurred.
On August 21, 2018, the Company filed a third lien on the Property in the maximum amount of $400,000 to secure notes issued to the Chairman of the Board and President of the Company arising in the third quarter of 2017 and during 2018, as more fully described in Note 8.
On January 26, 2021, the Company filed a fourth lien on the Property in the amount of $2,000,000 to secure a non-interest-bearing note payable in the amount of $2,000,000 issued to secure amounts owed to the President of the Company for accrued, but unpaid, salary, rent and other expenses.
On February 17, 2021, the Company filed a fifth lien in the amount of $658,750 on the Property to secure a non-interest-bearing note payable in the amount of $658,750, issued to secure amounts owed to nine directors, including the Company’s six current directors.
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In April 2021, the Company filed six liens on the Property to secure six non-interest-bearing notes payable to be issued to six lenders bringing total liens on the Property to eleven. The six notes issued total $252,500 in principle and call for the issuance of 250,000 shares of common stock. The notes are not convertible. As of the issuance date of these financial statements, no shares have been issued.
In June 2021, the Company filed a twelfth and thirteenth liens on the Property to secure two non-interest bearing notes issued in May of 2021 which total $50,000 in principle and call for the issuance of a total of 100,000 shares of common stock. The notes are not convertible. As of the issuance date of these financial statements, no shares have been issued.
In July 2021, the Company filed a fourteenth lien on the Property to secure a promissory note in the amount of $150,000 issued to the Chairman of the Board to secure the payment of taxes and interest that were paid by the Chairman in July 2020.
In July 2021, the Company filed a fifteenth lien on the Property to secure a promissory note in the amount of $100,000 issued to the Chairman of the Board to secure the payment of taxes and interest that were paid by the Chairman in May 2021.
In July 2021, the Company filed a sixteenth lien on the Property to secure a non-interest bearing note issued to the Chairman of the Board in May 2021 which totals $50,000 in principle and calls for the issuance of 100,000 shares of common stock. The note is not convertible. As of the issuance date of these condensed consolidated financial statements, no shares have been issued.
In July 2021, the Company filed a seventeenth lien on the Property to secure a non-interest bearing note issued to a lender, which totals $25,000 in principle and calls for the issuance of 50,000 shares of common stock. The note is not convertible. As of the issuance date of these financial statements, no shares have been issued.
In November 2021, the Company filed an eighteenth lien on the Property to secure a non-interest bearing note issued in November 2021 which totals $50,000 in principle and calls for the issuance of 100,000 shares of common stock. The note is not convertible. As of the issuance date of these condensed consolidated financial statements, no shares have been issued.
In March 2022, the Company filed a nineteenth and twentieth lien on the Property to secure two non-interest bearing notes issued in March of 2022 which total $80,000 in principle and call for the issuance of a total of 160,000 shares of common stock. The notes are not convertible. As of the issuance date of these financial statements, no shares have been issued.
In May 2022, the Company filed a twenty-first lien on the Property to secure a non-interest bearing note issued in April of 2022 which totals $50,000 in principle and calls for the issuance of a total of 100,000 shares of common stock. The note is not convertible. As of the issuance date of these condensed consolidated financial statements, no shares have been issued.
Residential Lot
In January 2010, the Company purchased a small, residential lot located on a canal southwest of the Property near the back entrance of the Property. The Company paid $65,000 for the lot. The purchase price was paid with 108,000 shares of common stock of the Company. The property, which comprises less than a quarter of an acre, was acquired to permit the Company to control the appearance and approach to the back entrance of its commercial Property. The residential lot is located at 3518 Diamondhead Drive South, Diamondhead, Mississippi 39525.
Office Location
The Company leases a furnished and equipped townhouse office from its President at 1013 Princess Street, in Alexandria, Virginia 22314, pursuant to a Landlord/Tenant Month to Month Lease. The terms of the lease, as adjusted for square footage and certain other applicable differences, were based on the terms of the last lease signed by the Company with an unrelated third party for unfurnished office space leased in Largo, Florida. The Company pays a base rent in the amount of $4,534 per month for approximately 2,473 square feet of commercial space, in addition to any and all expenses relating to the property, including property taxes, property insurance, telephone, electric, water and cable. The Company’s executive office and all of its active files are located in this office.
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ITEM 3. LEGAL PROCEEDINGS
CASE SETTLED
Cooperative Energy, a Mississippi Electric Cooperative v. Mississippi Gaming Corporation (In the Special Court of Eminent Domain, Hancock County, Mississippi (Case No. CC20-0221)
Cooperative Energy, a Mississippi Electric Cooperative v. Mississippi Gaming Corporation, et al (all lienholders of the Diamondhead Property. (In the Special Court of Eminent Domain, Hancock County, Mississippi (Case No. CC23-0153)
Since 1994, American Telephone and Telegraph Company (“AT&T”) has had an exclusive right of way easement along the northern portion of Mississippi Gaming Corporation’s (“MGC”) Diamondhead, Mississippi Property (“the Property”) to construct, operate, maintain, inspect, alter, replace and remove communications systems which they may require from time to time. Cooperative Energy, a Mississippi Electric Cooperative, also sought and has now obtained a permanent easement along the northern portion of the Property on which to construct, maintain and operate electric transmission lines together with an access road. On or about November 19, 2020, Cooperative Energy filed a Complaint with the Special Court of Eminent Domain, Hancock County, Mississippi seeking an Order authorizing the Cooperative to enter onto the Property for the purpose of examinations and surveys. The matters sought in the Complaint were quickly resolved by agreement of the parties. The Company’s understanding and MGC’s understanding was that the case would be dismissed, but the case was not dismissed. On or about May 24, 2023, Cooperative Energy filed a Complaint for Eminent Domain in the Special Court of Eminent Domain, Hancock County, Mississippi in which it named MGC and all persons and entities holding liens on the Diamondhead, Mississippi Property as defendants.
On or about February 19, 2023, the parties entered into an Indemnification Agreement to fully indemnify MGC and Diamondhead Casino Corporation and each of their respective directors, officers, employees, agents, attorneys, and affiliates, and hold each of them harmless and defend each of them against any and all claims, losses, damages, expenses and/or liabilities to which an Indemnified Party might become liable arising out of or relating to any activities conducted on or about the Property by Cooperative Energy and/or its respective directors, officers, employees, agents, attorneys, affiliates and/or representatives and/or any unrelated third parties, contractors and/or subcontractors performing any activities on the Property at the request of or for the benefit of Cooperative Energy.
On September 1, 2023, Cooperative Energy filed a Motion to Approve Settlement, an Amended Statement of Values and a Notice of Hearing for September 11, 2023. Cooperative Energy served all interested parties, including all persons or entities holding liens on the Diamondhead Property, as defendants in the case. On September 26, 2023, the Court entered an Order Granting Plaintiff Right of Immediate Title and Possession. On October 17, 2023, the Court entered an Order Approving Settlement in the amount of $1,000,000 and entered an Order Approving Disbursement of Funds to MGC. On October 20, 2023, MGC received $845,378 as part of the settlement amount. The parties are working on the wording of the two easements: a Cooperative Energy Right-Of-Way Easement and an Access Road Easement. Once the easements are finalized and signed, Cooperative Energy will pay MGC the remaining amount due of approximately $155,000,
The two easements are perpetual. The Right-Of-Way Easement is to construct, maintain, operate, add, and/or remove electric transmission lines, distribution lines, towers, wires, poles, appliances, equipment, anchors, frame structures, guys, counter-poise wire or other counter-poise conductors, and appurtenances thereto, all of which are collectively referred to as “Power Lines,” upon, over, under and across the land which is the subject of the easement. The Access Road Easement is for ingress and egress for use in the clearing, construction, maintenance and operation of transmission line facilities. Once MGC signs the easements, Cooperative Energy will pay the remainder of the settlement due MGC.
Cooperative Energy has informed MGC that it has obtained an agreement from AT&T concerning AT&T’s pre-existing exclusive right of way easement so that the Company will not be in breach of its agreement with AT&T.
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Edson R. Arneault, Kathleen Devlin and James Devlin, J. Steven Emerson, Emerson Partners, J. Steven Emerson Roth IRA, Steven Rothstein, and Barry Stark and Irene Stark v. Diamondhead Casino Corporation (In the United States District Court for the District of Delaware (C.A. No. 1:16-cv-00989-LPS)
On October 25, 2016, Edson R. Arneault, Kathleen Devlin and James Devlin, J. Steven Emerson, Emerson Partners, J. Steven Emerson Roth IRA, Steven Rothstein, and Barry Stark and Irene Stark filed a Complaint against the Company in the United States District Court for the District of Delaware for monies due and owing pursuant to certain Collateralized Convertible Senior Debentures issued on March 31, 2014 and December 31, 2014. A companion case was filed in the Superior Court of the State of Delaware by John Hawley, as servicing agent for Argonaut 2000 Partners, L.P. (John Hawley, as servicing agent for Argonaut 2000 Partners, L.P. v. Diamondhead Casino Corporation (Superior Court of the State of Delaware)(Case No. N19C-02-239 RRC) The eight plaintiffs in the two cases were seeking a total of $1.5 million in principle due, plus interest from January 1, 2015, together with costs and fees. On or about December 12, 2019, the parties entered into a Settlement Agreement and on January 13, 2020, the parties filed a Stipulation of Voluntary Dismissal with Prejudice in the case. The case was dismissed with the Court maintaining continuing jurisdiction over the Settlement Agreement.
In or about December 2022, the parties entered into an Amendment to Settlement Agreement. The Amendment provides, in pertinent part, as follows: that on or before March 31, 2023, the Plaintiffs would be paid the principal due under their debentures of $1.5 million, plus interest of four percent (4%) per annum on the principal due from January 1, 2015 through December 31, 2019, plus interest of six percent (6%) per annum on the principal due from January 1, 2020 through March 31, 2022, plus interest of eight percent (8%) per annum on the principle due from April 1, 2022 through the date of payment. In addition the Company agreed to pay legal costs and fees of $175,000 plus 50,000 shares of common stock. In the event payment was not made on or before March 31, 2023, a judgment would be entered in the case. Post judgment interest shall only apply to the $1.5 million principal due. Payment was not made on or before March 31, 2023. On July 5, 2023, the Plaintiffs filed a Motion to Reopen the Action, Vacate Dismissal, and Enter Judgment on Consent. The Company did not object to the Motion. On September 20, 2023, the Court entered an Order Granting Plaintiffs’ Motion to Reopen this Action, Vacate Dismissal, and Compel Enforcement of the Settlement Agreement and entered the Consent Judgment previously agreed to by the Company. The Company has accrued legal fees of $195,000 and $16,500 for accrued liability for stock and accrued additional interest of $112,500 for the years ended December 31, 2022 and 2023 respectively.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
Part II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Market Price
The Company’s common stock is traded on the Over the Counter Market. The market price of the Company’s common stock is highly volatile. A lack of liquidity in the stock, announcements by the Company, its competitors, the industry, or other casino-related, gaming-related, economy-related, or various other announcements, can lead to wide swings in the market price of the Common Stock.
As of December 31, 2023, there were 768 registered holders of record of the Common Stock of the Company.
Dividends on Common Stock
We have never paid any cash dividends on our Common Stock and do not anticipate paying any cash dividends on our Common Stock in the foreseeable future. We intend to retain future earnings, if any, to fund operations and promote our business strategy. Any future determination to pay cash dividends on our Common Stock will be at the discretion of our Board of Directors and will be dependent upon our financial condition, results of operations, if any, capital requirements and such other factors as the Board of Directors deems relevant.
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Equity Compensation Plans
Plan Stock Options
On December 19, 1988, the Company adopted a stock option plan (the “Plan”) for its officers and management personnel under which options could be granted to purchase up to 1,000,000 shares of the Company’s common stock. Accordingly, the Company reserved 1,000,000 shares for issuance under the Plan. The option price may not be less than 100% of the market value of the shares on the date of the grant. The options expire within ten years from the date of grant. At December 31, 2023, no options from this plan were issued or exercised.
Non-Plan Stock Options
The Company has, from time to time, awarded non-plan stock options to its Directors, Officers and key employees. On December 12, 2023, the Board of Directors voted to extend the outstanding options from December 31, 2023 to December 31, 2025. As a result of the modification to the options, the Company recorded an additional $546,400 in stock-based compensation expense for the year ended December 31, 2023.
The table below summarizes the status of all non-plan options currently outstanding issued to Company Directors, Officers, and former Officers and employees of the Company.
| Shares | Weighted Average Exercise Price | |||||||
| Outstanding as of January 1, 2022 | 4,555,000 | $ | 0.41 | |||||
| Granted | - | - | ||||||
| Exercised | - | - | ||||||
| Expired | - | - | ||||||
| Forfeited | - | - | ||||||
| Outstanding as of December 31, 2022 | 4,555,000 | $ | 0.41 | |||||
| Granted | - | - | ||||||
| Exercised | - | - | ||||||
| Forfeited | - | - | ||||||
| Outstanding as of December 31, 2023 | 4,555,000 | $ | 0.41 | |||||
| Exercisable as of December 31, 2022 | 4,555,000 | $ | 0.41 | |||||
| Exercisable as of December 31, 2023 | 4,555,000 | $ | 0.41 | |||||
Employee Stock Ownership Plan
The Company’s employee stock ownership plan (ESOP) is intended to be a qualified retirement plan and an employee stock ownership plan. All employees having one year of service are eligible to participate in the ESOP. The ESOP is funded by two 8% promissory notes issued by the Company. The shares of common stock are pledged to the Company as security for the loans. The promissory notes are payable from the proceeds of annual contributions made by the Company to the ESOP. In the event that the Company elects not to make a Plan contribution in any given year, the corresponding shares applicable to that year are released from the Trust to the Company in consideration of that years’ note payment. In January 2001, the Plan and accompanying promissory notes were amended to conform to the Company’s current employment structure, by extending the note repayment terms through 2044.
In 2011, the Company decided to temporarily suspend contributions to the Plan. Therefore the Trust was unable to make its annual loan payment to the company and a loan default occurred. In accordance with the Pledge Agreement between the Company and the Trust, the shares attached to the loan payments subsequent to the 2010 contribution reverted back to the Company as treasury shares. In 2023, 79,545 shares, with a market value of $16,704, reverted back to the Company. In 2022, 79,545 shares, with a market value of $30,227, reverted back to the Company treasury.
Recent Sales of Equity Securities
None.
Repurchase of Equity Securities
None.
ITEM 6. RESERVED
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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This section should be read together with the consolidated financial statements and related notes thereto, for the years ended December 31, 2023 and 2022, attached as Exhibit 99.1 to this report.
Liquidity, Capital Resources, and Financial Results
Overview
The Company’s intent was and is to construct a casino resort and other amenities on the Diamondhead, Mississippi Property, unilaterally, or in conjunction with one or more joint venture partners. However, the Company has been unable to date, to obtain financing to move the project forward and/or enter into a joint venture partnership. Due to its lack of financial resources, the Company has been forced to explore other alternatives, including a sale of part or all of the Property. The Company’s preference is to sell only part of the Property inasmuch as this would appear to be in the best interest of the stockholders of the Company. However, there can be no assurance the Company will be able to sell all or part of the Property. The Company intends to continue to pursue a joint venture partnership and/or other financing while seeking a viable purchaser for all or part of the Property.
Liquidity
The Company has incurred continued losses over the years and certain conditions raise substantial doubt about the Company’s ability to continue as a going concern. The Company has had no operations since it ended its gambling cruise ship operations in 2000. Since that time, the Company has concentrated its efforts on the development of its Diamondhead, Mississippi Property. The development of the Diamondhead Property is dependent on obtaining the necessary capital, through equity and/or debt financing, unilaterally, or in conjunction with one or more partners, to master plan, design, obtain permits for, construct, staff, open, and operate a casino resort. In the past, the Company has been able to sustain itself through various short term borrowings, however, as of as of December 31, 2023, the Company had cash of $426,124, while accounts payable and accrued expenses totaled $13,587,711 and the Company had an accumulated deficit of $46,862,802. Therefore, in order to sustain itself, it is imperative that the Company secure a source of funds to provide further working capital as the Company does not have sufficient cash on hand.
Management of the Company believes it will be difficult to secure suitable financing that would allow it to continue to pursue ultimate development of the Property. Therefore, on December 14, 2023, the Company entered into a non-exclusive, success-based agreement with an unrelated third party to seek a buyer for all or part of the Property or, alternatively, to seek a joint venture partner for the project.
The above conditions raise substantial doubt about the Company’s ability to continue as a going concern.
Financial Results and Analysis
As reflected in the accompanying consolidated financial statements, the Company recorded a net loss applicable to common shareholders of $1,511,427 for the year ending December 31, 2023 and a net loss applicable to common shareholders of $1,957,305 for the year ending December 31, 2022. The Company expects continued losses for the foreseeable future. General and administrative expenses incurred totaled $736,680 and $929,236 for the years ending December 31, 2023 and 2022, respectively. The table below depicts the major categories comprising those expenses:
| December 31, | December 31, | |||||||
| 2023 | 2022 | |||||||
| Payroll and Related Taxes | $ | 300,000 | $ | 300,000 | ||||
| Director Fees | 90,000 | 90,000 | ||||||
| Professional Services | 102,763 | 281,962 | ||||||
| Rents and Insurances | 88,098 | 85,145 | ||||||
| Fines and Penalties | 133,900 | 132,275 | ||||||
| All Other Expenses | 21,919 | 39,854 | ||||||
| Total General and Administrative Expenses | $ | 736,680 | $ | 929,236 | ||||
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The amount reported as payroll includes amounts not actually paid to employees, but accrued and payable to employees. The Company accrued salary payable to only one employee in 2023, the President and CEO of the Registrant, who also served as a Director, Chief Financial Officer, Treasurer and Secretary of the Registrant and held various positions in the Registrant’s subsidiaries.
Professional fees decreased in 2023 compared to 2022. In 2022, substantial legal fees of $175,000 were incurred as part of an amended settlement agreement in the case involving certain Debentures.
The Company recorded stock-based compensation expense of $546,400 and $11,480 for the years ended December 31, 2023 and 2022, respectively.
Other Income and Expense
Interest expense (amortization of debt discount is shown as part of interest expense) incurred totaled $815,879 and $855,019 for the years ended December 31, 2023 and 2022, respectively, a decrease of $39,140. The decrease in 2023 was primarily attributable to lower amortization of debt discount compared to 2022 as the Company issued fewer new notes in 2023 than in 2022 and had less notes outstanding.
In 2023, the Company recorded gain on the condemnation of land of $757,107.
Off-Balance Sheet Arrangements
Management Agreement
On June 19, 1993, two subsidiaries of the Company, Casino World Inc. and Mississippi Gaming Corporation, entered into a Management Agreement with Casinos Austria Maritime Corporation (CAMC). Subject to certain conditions, under the Management Agreement, CAMC would operate, on an exclusive basis, all of the Company’s proposed dockside gaming casinos in the State of Mississippi, including any operation fifty percent (50%) or more of which is owned by the Company or its affiliates. Unless terminated earlier pursuant to the provisions of the Agreement, the Agreement terminates five years from the first day of actual Mississippi gaming operations and provides for the payment of an annual operational term management fee of 1.2% of all gross gaming revenues between zero and $100,000,000; plus 0.75% of gross gaming revenue between $100,000,000 and $140,000,000; plus 0.5% of gross gaming revenue above $140,000,000; plus two percent of the net gaming revenue between zero and $25,000,000; plus three percent of the net gaming revenue above twenty-five million dollars $25,000,000. The Company believes this Agreement is no longer in effect. However, there can be no assurance that CAMC will not attempt to maintain otherwise which would lead to litigation.
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Brokerage Agreement
On December 14, 2023, the Company entered into an agreement with an unrelated commercial real estate brokerage firm to sell all or part of the Diamondhead, Mississippi Property or to find an equity investor for the project and/or financing for the project. The agreement became effective December 14, 2023 and terminates December 31, 2025, unless extended in writing by the parties. The agreement is a non-exclusive agreement and provides for a success-based fee only.
In the event of a sale of all or part of the Diamondhead Property to the person(s) or entity(ies) the broker brings to the deal, the Company will pay a fee equal to four percent (4%) of the gross sales price of property sold to the person(s) or entity(ies) the broker brings to the deal.
In the event of an equity investment by an equity investor(s) the broker brings to the deal, the Company will pay the broker a fee equal to: (i) four percent (4%) of the amount of the equity invested on the first $25 million invested, plus (ii) 2% of the amount of the equity invested in excess of $25 million. In the event the broker closes an equity financing, the broker shall have a right of first refusal to obtain debt financing for a period of two years commencing with the final date on which the Company receives the equity financing during the term of the agreement or post-termination of the agreement.
In the event the broker secures debt financing for the Company, the Company will pay the broker: (i) one percent (1%) of the amount of any debt financing obtained from the person(s) or entity(ies) the broker brings to the deal on the first $75 million received by the Company, plus (ii) one-half of one percent (.50%) of the amount of any debt financing obtained in excess of the first $75 million received from a person(s) or entity(ies) the broker brings to the deal.
All fees are contingent. Payment of any fee is contingent on the signing of a sales agreement, equity agreement, or loan agreement acceptable to the Company in its sole discretion and payment of the sales price, equity investment or debt financing by the person(s) or entity(ies) the broker brings to the deal and upon receipt of good funds. All fees will be paid at Closing out of monies paid by the person(s) or entity(ies) the broker brings to the deal. If funds are paid periodically, the fee due will be paid periodically upon receipt of said funds and in proportion to the funds received.
There are no other off-balance sheet arrangements that have, or are reasonably likely to have, a current or future effect on our financial condition, changes in financial condition, revenues and expenses, results of operations, liquidity, capital expenditures or capital resources, that are material to our stockholders.
Related Party
In July, 2017, the Chairman of the Board paid $67,628 for all property taxes due, together with all interest due thereon, to Hancock County, Mississippi for an approximate 400-acre tract of land (“the Diamondhead Property”), owned by Mississippi Gaming Corporation, a wholly-owned subsidiary of the Company. In 2018, the Chairman advanced additional funds totaling $205,250 to the Company. In 2019, the Chairman advanced additional funds totaling $125,396 to the Company. In 2020, the Chairman advanced additional funds totaling $69,679 to the Company. The conditions of the notes under which the Chairman agreed to make the foregoing payments and advances are discussed in full detail in Note 7 and 8 of attached consolidated financial statements.
Of particular note to those conditions is item (v) which calls for the Chairman to be indemnified for any loss sustained on the sale of certain common stock sold to cover the property taxes paid. The Chairman has identified the common stock sold and has provided the Company with the documentation required to document the sale of said stock and to calculate the contingent future loss, if any, on said stock. Had the Company paid the note in full at December 31, 2021 in addition to the principal and interest due, the Company would not have been liable for any additional funds to indemnify the Chairman pursuant to the terms of the notes. On February 4, 2022, the Board of Directors entered into an agreement with the Chairman to issue 35,000 shares of common stock of the Company to the Chairman to repurchase the indemnification. This repurchase eliminates any risk to the Company arising from the indemnification which could have been material. During the years ended December 31, 2023 and 2022, the Company recorded stock-based compensation of $0 for the fair value for these shares, which have not yet been issued as of the issuance date of the attached consolidated financial statements.
There are no other off-balance sheet arrangements that have, or are reasonably likely to have, a current or future effect on our financial condition, changes in financial condition, revenues and expenses, results of operations, liquidity, capital expenditures or capital resources, that are material to our stockholders.
Critical Accounting Estimates
Impairment of Long-Lived Assets
The Company reviews long-lived assets whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. The recoverability of long-lived assets is measured by comparing the carrying amount of the assets to the estimated undiscounted future cash flows projected to be generated by the assets. If such assets are considered impaired, the impairment to be recognized is measured by the amount the carrying value exceeds the fair value of such assets determined by appraisal, discounted cash flow projections, or other means.
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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Disclosure under this item is not required for smaller reporting companies.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated financial statements for the years ended December 31, 2023 and 2022 are attached to this report as Exhibit 99.1.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
In connection with the preparation of this Annual Report on Form 10-K, our management, with the participation of the Chief Executive Officer/Chief Financial Officer, carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of December 31, 2023. Disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, are controls and other procedures that are designed to ensure that the information that we are required to disclose in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC Rules and Forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer/Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Based on the results of this evaluation, the Chief Executive Officer/Chief Financial Officer concluded that our disclosure controls and procedures were not effective at the reasonable assurance level as of December 31, 2023. See below for management’s report.
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Management’s Report on Internal Control Over Financial Reporting
The management, under the supervision of our Chief Executive Officer/Chief Financial Officer, is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with Generally Accepted Accounting Principles. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with existing policies or procedures may deteriorate.
The Chief Executive Officer/Chief Financial Officer conducted, under the supervision of our principal executive officer and principal financial officer, an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, commonly referred to as the “COSO” criteria. Based on this evaluation, the Chief Executive Officer/Chief Financial Officer concluded that material weaknesses over financial reporting existed as of December 31, 2023. Management identified the following two material weaknesses that have caused management to conclude that, as of December 31, 2023, our disclosure controls and procedures, and our internal control over financial reporting, were not effective at the reasonable assurance level:
| 1. | We do not have sufficient segregation of duties within accounting functions. | |
| 2. | We have not been timely in our financial reporting functions. Management has not developed and effectively communicated its accounting policies and procedures. This has resulted in inconsistent practices with regards to complex accounting transactions. |
The Company has designed and instituted policies and procedures to eliminate and/or mitigate the foregoing.
As a result of the material weaknesses identified above, our internal control over financial reporting was not effective as of December 31, 2023. The Company has initiated a plan to address the above weakness. While segregation of duties is very difficult in a small company with only one employee, the Company intends to utilize third-party consultants to ensure effective financial reporting and disclosures are met.
To address the material weakness identified, management performed additional analyses and other procedures to ensure that the consolidated financial statements included herein fairly present, in all material respects, our financial position, results of operations and cash flows for the periods presented. Accordingly, we believe that the financial statements included in this report fairly present, in all material respects, our financial condition, results of operations and cash flows for the periods presented.
This Annual Report does not include an attestation report of the Company’s independent registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s independent registered public accounting firm pursuant to rules of the Securities and Exchange Commission that permit the Company to provide only Management’s report in this annual report.
Changes in Internal Control Over Financial Reporting
No change in our internal control over financial reporting occurred during the fourth quarter of the year ending December 31, 2023 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
ITEM 9B. OTHER INFORMATION
None.
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
None.
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Part III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Officers of the Company are appointed annually by the Board of Directors to hold office until an officer’s successor has been duly appointed and qualified, unless an officer dies, resigns, is replaced, or is removed by the Board of Directors. Directors are elected to serve until the next Annual Meeting of Stockholders and until their successors are elected and qualified. A majority of directors constitutes a quorum of the Board of Directors for the transaction of business. The directors must be present at a meeting, in person or telephonically, to constitute a quorum. Any action required or permitted to be taken by the Board of Directors individually or collectively may be taken without a meeting if all members of the Board of Directors consent, in writing, to the action.
| Officers and Directors | Age | Position(s) | ||
| Deborah A. Vitale | 73 | Director, President, Secretary, Treasurer and Chief Financial Officer | ||
| Martin Blount | 61 | Director | ||
| Benjamin J. Harrell | 70 | Director, Vice-President | ||
| Gregory A. Harrison | 79 | Chairman of the Board of Diamondhead Casino Corporation, Vice-President | ||
| Robert S. Crow III | 68 | Director | ||
| Daniel G. Burstyn | 39 | Director |
Background of Current Executive Officer and Directors
Deborah A. Vitale has served as President, Chief Executive Officer and Treasurer of the Company since February 1998, as Chief Financial Officer of the Company since September 2011, and as Chairman of the Board of the Company from March 1995 through March 31, 2014. Ms. Vitale served as Secretary of the Company from November 1994 until July 2002, and as Interim Secretary from January 11, 2012 until appointed Secretary again on January 29, 2015. As President and CEO, Ms. Vitale was responsible for all phases of the day-to-day operations of four casino ships sailing out of three Florida ports into international waters and for the management and supervision of approximately 400 casino, marine and land-based employees. She has been a Director of the Company since December 1992. On February 14, 1997, Ms. Vitale was appointed Chairman of the Board of Directors of Casino World, Inc. and Chairman of the Board of Directors of Mississippi Gaming Corporation, each a subsidiary of the Company. On September 2, 1997, Ms. Vitale was appointed President of Casino World, Inc. and Mississippi Gaming Corporation. On March 31, 2014, Ms. Vitale stepped down as Chairman of the Board of the Company and as President and CEO of Casino World, Inc. On June 16, 2015, Ms. Vitale was again appointed Chairman of the Board and President of Casino World, Inc. Ms. Vitale is a trial attorney by background with over thirty-five years of experience handling complex civil litigation. Ms. Vitale is licensed to practice law in Washington, D.C., Maryland, and Virginia. The Board believes Ms. Vitale is qualified to serve as a Director due to her experience as President and Chief Executive Officer of the Company, her management experience in operating ship-based casinos, her knowledge of and participation in all aspects of the Diamondhead Project, and her extensive legal background and experience.
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Martin C. Blount has served as a Director of the Company since June 9, 2010. Since approximately 1986, Mr. Blount has been a stockbroker and a registered investment banking representative. Since approximately April of 2013, Mr. Blount has also served as a licensed structured settlement agent for various parties. Mr. Blount also represents professional athletes and is a certified Major League Baseball agent. Mr. Blount is a graduate of West Virginia Wesleyan College and holds a B.A. degree in Sociology. The Board believes Mr. Blount is qualified to serve as a director due to his prior experience as a Director of the Company and his experience in the securities and financial industry.
Benjamin J. Harrell has served as a Director of the Company since July 18, 2002. On June 16, 2015, Mr. Harrell was appointed a Vice President of the Company. Mr. Harrell was the founder and served as President and CEO of Pete Fountain Productions, Inc. from 1979 until it was acquired in 1999 by Production Group International, Inc. (“PGI”), a global event communications company, which was subsequently acquired by TBA Global Events, LLC in 2005. Mr. Harrell managed the acquiring company’s business in the New Orleans area. Mr. Harrell currently serves as Vice President of Support Services, MC&A, Inc., a corporate event and travel company which specializes in event solutions, corporate meetings, incentive programs and sporting events. He also served as Vice President of Pete Fountain Entertainment, LLC, which until March 2003 operated one of the largest jazz clubs in New Orleans. From 1975 to 2016, Mr. Harrell served as personal manager for the internationally noted jazz artist, Pete Fountain. Mr. Harrell handled all aspects of Mr. Fountain’s career, including promotion, concerts, personal appearances and commercial endorsements. From 1985 through 2003, Mr. Harrell served as President of Crescent Sound & Light, Inc, a professional sound, lighting, video and staging company for the convention and entertainment industry. Mr. Harrell served as a Director of the New Orleans Metropolitan Convention and Visitors Bureau from 1997 through 1999. On January 15, 2004, Mr. Harrell was elected to the Board of Directors of Mississippi Gaming Corporation, a wholly owned subsidiary of the Company. The Board believes Mr. Harrell is qualified to serve as a Director due to his prior experience as a Director of the Company and his extensive knowledge of, familiarity with, and active participation in all aspects of the Diamondhead Project, including Gaming Site Approval.
Gregory A. Harrison, Ph.D., P.E. has served as a Director of the Company since February 20, 1998. On June 16, 2015, Dr. Harrison was appointed Chairman of the Board of the Company. Dr. Harrison was appointed Vice-President of the Company on July 18, 2002. Mr. Harrison served as Secretary of the Company from July 25, 2002 until January 2012. Dr. Harrison is a consulting forensic engineer with over fifty years of diversified fire protection/safety/project engineering experience with NASA, DOD, NBS, NRC, ARAMCO, and Tenera, L.P. Dr. Harrison is a professional engineer licensed in six states and, effective August 27, 2004, became a Professional Engineer licensed to practice in the state of Mississippi. Dr. Harrison is an expert with respect to the concept of Highly Protective Risk (HPR), Factory Mutual Engineering standards of care and HPR insurance principles and is intimately familiar with Factory Mutual Global Insurance construction requirements. Dr. Harrison has qualified as an expert witness in various courts in fourteen states and the District of Columbia. Dr. Harrison received a B.S. degree in Fire Protection Engineering from the University of Maryland, an M.S. degree in Civil Engineering from the University of Maryland, an M.S. degree in Engineering Administration from George Washington University and a Ph.D. in Safety Engineering from Kennedy-Western University. Dr. Harrison has held a top secret security clearance with the U.S. Department of Energy, the U.S. Nuclear Regulatory Commission, and the Department of Defense. Dr. Harrison has served on the Board of Directors of Data Measurement Corporation and was an Advisory Board member of United Bank and First Patriot National Bank. The Board believes Mr. Harrison is qualified to serve as a Director due to his prior experience as a director on other Boards, due to his prior experience as a Director and Vice-President of the Company when it was an operating casino entity, and due to his background and experience in construction management, structural engineering, environmental engineering, fire protection and life safety.
Robert S. Crow, III has served as a Director of the Company since April 20, 2015. Mr. Crow is a licensed real estate agent with extensive experience in contract negotiations involving real estate and mortgage banking, having closed on approximately five hundred homes. Mr. Crow also has experience in land development, home renovations, and real estate marketing. Since approximately 1976, Mr. Crow’s sales have placed him in the top 1% of real estate agents in the United States. Since 1991, Mr. Crow has worked as an independent contractor for RE/MAX Realty Group located in Gaithersburg, Maryland. Mr. Crow has been involved in various City projects and several zoning related matters and has served on the Executive Committee of his neighborhood Citizen’s Association. Mr. Crow has been a shareholder of the Company for over fifteen years, is intimately familiar with the Company, its history, its former operations, and the history of the Diamondhead Property, which he has inspected. The Board believes Mr. Crow is qualified to serve as a Director due to his extensive experience in contract negotiations and real estate.
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Daniel G. Burstyn was appointed to the Board of Directors May 1, 2018. Mr. Burstyn is a technology-focused entrepreneur. Mr. Burstyn has developed his own proprietary applications as a programmer and develops web, mobile, and cryptocurrency and/or blockchain solutions for entrepreneurs and various corporations and other entities. From approximately October of 2010 to approximately July of 2012, Mr. Burstyn co-created an online aggregate shopping cart platform which was built, but never launched by Stashr, an entity he co-founded. From approximately October of 2012 to February of 2014, Mr. Burstyn founded and co-developed SpaceMatch, LLC, which sought to develop an online commercial real estate marketplace. From approximately March of 2014 to December of 2015, Mr. Burstyn acted as Chief Operating Officer of Neuromore, LLC, a signal-processing software company where he planned and directed global business strategy and the implementation of cloud-based SaaS revenue channels with biosensor manufacturers, research institutions and other customers. Since approximately October of 2016, Mr. Burstyn has co-owned and operated CliqFix, LLC, a business that develops web and mobile applications as well as cutting-edge cryptocurrency, cryptoasset, and blockchain solutions. Since January of 2018, Mr. Burstyn has owned and operated Live Rigs, LLC, a business that builds machines for the purpose of mining cryptocurrencies. Mr. Burstyn received a B.S. degree in commerce in 2010 from the University of Virginia, McIntire School of Commerce where he concentrated on marketing and finance.
Committees of the Board of Directors
The Securities and Exchange Commission has adopted rules to implement certain requirements of the Sarbanes-Oxley Act of 2002 pertaining to public company audit committees. One of the rules requires a company to disclose whether it has an “audit committee financial expert” serving on its audit committee. Based on its review of the criteria of an audit committee financial expert under the rule adopted by the SEC, the Board of Directors does not believe that any member of the Board of Directors would be described as an audit committee financial expert. At this time, the Board of Directors acts collectively as the Audit Committee and such efforts are coordinated by Director Martin Blount, who, by virtue of the fact that he is not an officer or employee of the Company, is considered an independent Director.
The Compensation Committee is composed of two Directors: Robert S. Crow II and Martin C. Blount. The Board of Directors has determined that all members of the Committee are independent Directors based on the general independence standards adopted by the Board.
The Compensation Committee has no written charter and convenes at regularly scheduled meetings of the Board of Directors. The Compensation Committee advises and makes recommendations to the Board of Directors as to the compensation to be paid to Executive Officers of the Company. In addition, the Compensation Committee advises and makes recommendations to the Board of Directors as to options to purchase common stock, if any, to be awarded.
The Nominating Committee is composed of two Directors: Martin C. Blount and Benjamin J. Harrell. The Board of Directors has determined that Mr. Blount is an independent Director based on the general independence standards adopted by the Board. Mr. Harrell does not meet the general independence standards as adopted by the Board of Directors and, therefore, serves in an ex-officio capacity.
The Committee considers and reviews, from time to time, the appropriate size and composition of the Board and anticipates future vacancies and needs of the Board. In evaluating possible nominees, the Board considers, among other things, the background, experience, education and knowledge of a candidate, his familiarity with the gaming industry and related industries, his experience with publicly-traded entities, and his integrity and judgment. The Board considers the potential contribution a candidate will bring to the backgrounds, experience, and skills of the existing Board of Directors. The Board also considers a candidate’s ability to devote sufficient time and effort to his duties as a Director. After evaluation and review of candidates who meet the Board’s criteria, the Committee considers its then-current needs and selects the nominees that best suit those needs.
The Board will consider candidates recommended by stockholders, provided the names of such nominees, accompanied by relevant biographical information, are properly submitted, in writing, to the Secretary of the Company. The nominees will be submitted to the Board of Directors and receive the same consideration as those nominees identified by members of the Board of Directors.
Code of Ethics
The Company adopted a Code of Ethics in 2004 that applies to the principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. A copy of the Code was attached as an exhibit in a prior year’s annual report. A copy of the Code of Ethics will be made available to any shareholder, free of charge, upon written request to the Company.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the Company’s directors and executive officers, and persons who own more than 10% of the Company’s outstanding Common Stock, to file with the Securities and Exchange Commission initial reports of ownership and reports of changes in ownership of Common Stock. These persons are required by SEC regulations to furnish the Company with copies of all such reports they file.
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ITEM 11. EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
The Company accrued salary payable to only one executive in 2023, the President and CEO, who also serves as a Director, Chief Financial Officer, Treasurer and Secretary of the Registrant and who held various positions in the Registrant’s subsidiaries. The Board of Directors monitors and approves compensation paid to executives of the Company.
Executive Compensation
The Board of Directors determined Ms. Vitale’s base salary to be $300,000 per annum. Ms. Vitale’s base salary reflects her contribution to the Company in a myriad of corporate roles and responsibilities. The Board recognized that Ms. Vitale manages the Company’s business without the benefit of any administrative staff normally associated with the management of a publicly traded company at significant savings to the Company. Since mid-November of 2009, the Company has, from time to time, been unable to pay Ms. Vitale the salary due her because of a lack of funds. At December 31, 2023, Ms. Vitale was entitled to cash compensation of $3,666,996 for services rendered from 2010 through 2023, which has accrued and is unpaid at December 31, 2023. In addition, on October 12, 2012, the Board of Directors approved a motion to pay interest at 9% per annum on the unpaid compensation due Ms. Vitale retroactive to the outstanding amounts due beginning in 2010 through the date of actual payment. The following table sets forth the amounts due Ms. Vitale for unpaid salary for each of the years 2010 through 2023 and the interest due thereon. None of the accrued salary or interest has been paid to Ms. Vitale to date.
| TOTAL | SALARY | SALARY | INTEREST | |||||||||||||
| YEAR | SALARY | PAID | ACCRUED | EARNED | ||||||||||||
| 2010 | $ | 300,000 | $ | 161,538 | $ | 138,462 | $ | 3,221 | ||||||||
| 2011 | 300,000 | 96,466 | 203,534 | 18,837 | ||||||||||||
| 2012 | 300,000 | None | 300,000 | 43,462 | ||||||||||||
| 2013 | 300,000 | None | 300,000 | 70,428 | ||||||||||||
| 2014 | 300,000 | 150,000 | 150,000 | 91,739 | ||||||||||||
| 2015 | 300,000 | 125,000 | 175,000 | 101,899 | ||||||||||||
| 2016 | 300,000 | None | 300,000 | 126,463 | ||||||||||||
| 2017 | 300,000 | None | 300,000 | 153,463 | ||||||||||||
| 2018 | 300,000 | None | 300,000 | 180,463 | ||||||||||||
| 2019 | 300,000 | None | 300,000 | 207,463 | ||||||||||||
| 2020 | 300,000 | None | 300,000 | 234,457 | ||||||||||||
| 2021 | 300,000 | None | 300,000 | 261,457 | ||||||||||||
| 2022 | 300,000 | None | 300,000 | 288,457 | ||||||||||||
| 2023 | 300,000 | None | 300,000 | 315,457 | ||||||||||||
| $ | 4,200,000 | $ | 533,004 | $ | 3,666,996 | $ | 2,097,266 | |||||||||
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The following table provides information concerning the accrual of salary and other compensation of the President and Chief Executive Officer. No salary was paid to any officer of the Company in 2023 or 2022.
SUMMARY COMPENSATION TABLE
| Name and Occupation | Year | (1) Salary | Bonus | Stock Awards | Option Awards | Non-Equity Incentive | Nonqualified Deferred Compensation Earnings | (2) All Other Compensation | Total | |||||||||||||||||||||||||
| Deborah A. Vitale | 2023 | $ | 300,000 | None | None | None | None | None | $ | 330,457 | $ | 630,457 | ||||||||||||||||||||||
| President | 2022 | $ | 300,000 | None | None | None | None | None | $ | 303,457 | $ | 603,457 | ||||||||||||||||||||||
| (1) | In 2023 and 2022, none of Ms. Vitale’s salary compensation was paid to her and, therefore, the $300,000 of salary compensation owing to her for 2023 and 2022 will be paid to her when Company finances permit. |
| (2) | In 2023, Ms. Vitale earned an annual Director’s fee of $15,000. In addition, in 2023, Ms. Vitale earned interest in the amount of $315,457 on the portion of her unpaid salary for the years 2010 through 2023. In 2022, Ms. Vitale earned an annual Director’s fee of $15,000. In addition, in 2022, Ms. Vitale earned interest in the amount of $288,457 on the portion of her unpaid salary for the years 2010 through 2022. |
The following tables provide a summary of the outstanding equity awards of the President at December 31, 2023.
SUMMARY OF OUTSANDING EQUITY AWARDS AT FISCAL YEAR END
Option Awards
| Equity | ||||||||||||||||||
| Incentive | ||||||||||||||||||
| Plan | ||||||||||||||||||
| Awards | ||||||||||||||||||
| Number of | Number of | Number of | ||||||||||||||||
| Securities | Securities | Securities | ||||||||||||||||
| Underlying | Underlying | Underlying | ||||||||||||||||
| Unexercised | Unexercised | Unexpired | Option | Option | ||||||||||||||
| Options | Options | Unexercised | Exercise | Expiration | ||||||||||||||
| Name | Exercisable | Unexercisable | Options | Price | Date | |||||||||||||
| Deborah A. Vitale | 2,000,000 | None | None | $ | 0.19 | 12/31/2025 | ||||||||||||
| 750,000 | None | None | $ | 0.30 | 12/31/2025 | |||||||||||||
| 75,000 | None | None | $ | 0.75 | 12/31/2025 | |||||||||||||
| 140,000 | None | None | $ | 0.46 | 12/31/2025 | |||||||||||||
Stock Awards
Name | Number of Shares or Units Of Stock That Have Not Vested | Market Value of Shares or Units Of Stock That Have Not Vested | Equity Incentive Plan Awards Number of Unearned Shares, Units or Other Rights That Have Not Vested | Incentive Plan Awards Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested | ||||||||||||
| Deborah A. Vitale | None | None | None | None | ||||||||||||
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| Option Awards | Stock Awards | |||||||||||||||
| Number of | Number of | |||||||||||||||
| Shares | Value | Shares | Value | |||||||||||||
| Acquired | Realized | Acquired | Realized | |||||||||||||
| On | On | On | On | |||||||||||||
| Name | Exercise | Exercise | Vesting | Vesting | ||||||||||||
| Deborah A. Vitale | None | None | None | None | ||||||||||||
The Company sponsors an employee stock ownership plan which is a tax deferred defined contribution pension plan formed in 1994. Ms. Vitale has been a plan participant since 1998. No contributions were made to Ms. Vitale’s participant account for the years ending December 31, 2023 or 2022.
At December 31, 2023, Ms. Vitale was 100% vested in 447,272 shares of common stock which were contributed to the plan on her behalf in past years.
Directors’ Compensation
Effective January 1, 2013, the directors of the Company are entitled to be compensated at a rate of $15,000 per annum. No director received directors’ fees in the years 2023 or 2022. Each Director is eligible for an annual payment in the amount of $15,000 as long as they remain a Director through December 31 of the applicable year, absent death or incapacitation. The annual payment to new directors will be prorated based upon months served in their initial year as a Director. Directors are reimbursed for certain approved expenses incurred in connection with Company business and for certain approved expenses incurred in connection with attendance at non-telephonic Board, committee, or other meetings. Directors are from time to time, awarded non-qualified options to purchase common stock of the Company.
The table below summarizes amounts accrued for Director Compensation for the year ended December 31, 2023 for all directors other than the President, who is also a Director of the Company and whose compensation is itemized above. The Company did not have funds with which to pay any of the Directors the compensation earned.
DIRECTOR COMPENSATION
Earned or Paid in Cash | Stock Awards | Option Awards | Non- Equity Incentive Plan Compensation | Deferred Compensation Earnings | All Other Compensation | Total | ||||||||||||||||||||||
| Gregory A. Harrison | $ | 15,000 | None | None | None | None | $ | 10,903 | (1) | $ | 25,903 | |||||||||||||||||
| Benjamin Harrell | $ | 15,000 | None | None | None | None | None | $ | 15,000 | |||||||||||||||||||
| Martin Blount | $ | 15,000 | None | None | None | None | None | $ | 15,000 | |||||||||||||||||||
| Robert Crow | $ | 15,000 | None | None | None | None | None | $ | 15,000 | |||||||||||||||||||
| Daniel Burstyn | $ | 15,000 | None | None | None | None | None | $ | 15,000 | |||||||||||||||||||
| (1) | Mr. Harrison earned $10,903 of interest in 2023 which accrued to his benefit for unpaid salary for the years 2010 and 2011. None of the above interest due was paid to Mr. Harrison in 2023. |
Other Compensation Arrangements
Gregory A. Harrison, the current Chairman of the Board of Directors and a Vice President of the Company, was a compensated employee of the Company until December 31, 2011. The Company owes Mr. Harrison unpaid salary of $121,140 for services rendered in years prior to 2012. On October 12, 2012, the Board of Directors approved a motion to pay interest at 9% per annum on the unpaid compensation due Mr. Harrison retroactive to the outstanding amounts due beginning in 2010 through the date of actual payment. Interest on the unpaid salary due to Mr. Harrison amounted to $10,903 in both 2023 and 2022. The total accrued interest through December 31, 2023 was $140,612. None of the interest due to Mr. Harrison has been paid to date.
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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The following table sets forth, as of March 29, 2024, to the Company’s knowledge, based on filings with the Securities & Exchange Commission by certain beneficial owners and/or information received by the Company, the beneficial ownership of the outstanding Voting Stock held by (i) each person or entity beneficially owning more than 5% of the shares of any class of Voting Stock, (ii) each director, nominee, and certain executive officers, individually, and (iii) all directors and executive officers as a group. The Common Stock and the Voting Preferred Stock vote as a single class and each share thereof is entitled to one vote per share.
| BENEFICIAL OWNER | AMOUNT OF BENEFICIAL OWNERSHIP | CLASS OF STOCK | PERCENT OF CLASS | PERCENT OF VOTING (1) | ||||||||||
| Europa Cruises Corporation Employee Stock Ownership Plan Trust Deborah A. Vitale, Trustee (2) 1013 Princess Street Alexandria, Virginia 22314 | 1,670,465 | Common | 4.28 | % | 4.10 | % | ||||||||
| Deborah A. Vitale (2)(3) Director, President, Secretary, Treasurer and Chief Financial Officer Chairman, President, Secretary and Treasurer of Casino World, Inc. Chairman, President, Secretary and Treasurer of Mississippi Gaming Corporation 1013 Princess Street Alexandria, Virginia 22314 | 5,849,797 | Common | 14.98 | % | 14.33 | % | ||||||||
| Gregory Harrison (4) Chairman and Vice President 16209 Kimberly Grove Gaithersburg, Maryland 20878 | 2,314,701 | Common | 5.93 | % | 5.67 | % | ||||||||
| Benjamin J. Harrell (5) Director and Vice President 162 Hesper Avenue Metairie, Louisiana 70005 | 835,025 | Common | 2.14 | % | 2.05 | % | ||||||||
| Martin Blount (6) Director 1320 Maryland Ave Washington, D.C. 20002 | 200,000 | Common | 0.51 | % | 0.49 | % | ||||||||
| Robert S. Crow III (7) Director 5910 Coral Sea Avenue Rockville, Maryland 20851 | 1,129,869 | Common | 2.89 | % | 2.77 | % | ||||||||
| Daniel G. Burstyn (8)(10) Director 2828 Lemmon Ave., Apt. 5103 Dallas, Texas 75204 | 40,000 | Common | 0.10 | % | 0.10 | % | ||||||||
| Serco International Financial Advisory and Management Services Limited (9) | 901,831 | Common | 2.31 | % | 2.21 | % | ||||||||
| 900,000 | Preferred S-NR | 100.00 | % | |||||||||||
| P.O. Box 52 A-1072 Vienna, Austria | 926,000 | Preferred S | 100.00 | % | ||||||||||
| Austroinvest International Limited (9) | 901,831 | Common | 2.31 | % | 2.21 | % | ||||||||
| 30, DeCastro Street, | 900,000 | Preferred S-NR | 100.00 | % | ||||||||||
| Road Town Tortola, British Virgin Islands | 926,000 | Preferred S | 100.00 | % | ||||||||||
| Serco America Corporation (9) | 901,831 | Common | 2.31 | % | 2.21 | % | ||||||||
| 4, George Street | 900,000 | Preferred S-NR | 100.00 | % | ||||||||||
| Mareva House P.O. Box N-3937 Nassau, Bahamas | 926,000 | Preferred S | 100.00 | % | ||||||||||
| Ernst G. Walter (9) | 901,831 | Common | 2.31 | % | 2.21 | % | ||||||||
| P.O. Box 15 | 900,000 | Preferred S-NR | 100.00 | % | ||||||||||
| 1072 Vienna, Austria | 926,000 | Preferred S | 100.00 | % | ||||||||||
| College Health and Investment Ltd. (10) College Health and Investment LP (8) Samuel I. Burstyn, General Partner 701 Brickell Avenue, 24th Fl Miami, FL 33131 | 2,565,982 | Common | 6.57 | % | 6.28 | % | ||||||||
| All Directors & Executive Officers (6 Persons) | Common | 26.75 | % | 25.10 | % | |||||||||
| (1) | Common Stock, Series S-NR Preferred Stock and Series S Preferred Stock have been combined for the purpose of calculating voting percentages. |
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| (2) | The Europa Cruises Corporation Employee Stock Ownership Plan (“ESOP”) was established on August 18, 1994. The Trustee of the ESOP is Deborah A. Vitale. As of December 31, 2023 a total of 2,295,450 ESOP shares had been released for allocation to participants in the ESOP and an additional 1,034,085 shares had been forfeited by the Trust. The participants in the ESOP are entitled to direct the Trustee as to the manner in which the Company’s allocated shares are voted. The remaining 1,670,465 unallocated shares are voted by the Trustee. The Trustee is required to vote the unallocated ESOP shares in the best interests of the ESOP beneficiaries. |
| (3) | Includes 1,670,465 unallocated common shares of the ESOP Trust; 767,001 shares of Common Stock owned directly by Ms. Vitale; options to purchase 2,965,000 shares of Common Stock; and 447,272 shares of Common Stock, which represent shares of Common Stock held in Ms. Vitale’s fully vested ESOP participant account. |
| (4) | Includes 1,347,759 shares of Common Stock owned directly by Mr. Harrison; options to purchase 450,000 shares of Common Stock; 15,275 shares of Common Stock held in Mr. Harrison’s fully vested ESOP participation account; 35,000 shares of common stock to be issued to Mr. Harrison pursuant to an agreement to cancel an indemnification agreement, 100,000 shares of Common Stock to be issued in connection with notes payable issued in 2021 and 200,000 shares of Common Stock to be issued in connection with notes payable issued in 2023. Pursuant to a Private Placement dated February 14, 2014, on March 31, 2014, Mr. Harrison purchased a Collateralized Convertible Senior Debenture convertible into 166,667 shares of Common Stock. The conditions required for conversion of this Debenture into Common Stock of the Company were never met. Assuming the conditions required for conversion are met in the future, Mr. Harrison’s Debenture would be converted into a total of 166,667 shares of Common Stock without any action on the part of Mr. Harrison, at which time his holdings, assuming no other changes occurred, would total 2,314,701. |
| (5) | Includes 400,025 shares of Common Stock owned directly by Mr. Harrell and options to purchase 435,000 shares of Common Stock. |
| (6) | Consists of options to purchase 200,000 shares of Common Stock. |
| (7) | Includes 1,029,869 shares of Common Stock owned directly by Mr. Crow and options to purchase 100,000 shares of Common Stock. |
| (8) | Consists of options to purchase 40,000 shares of Common Stock. Mr. Burstyn is the son of the General Partner of College Health & Investment LP, and College Health & Investment Ltd. See footnote 10 below. |
| (9) | Serco International Financial Advisory and Management Services Ltd., Austroinvest International Limited, and Serco America Corporation are affiliated entities. The Company is informed that Dr. Ernst Walter is the sole Director and President of each company. The total beneficial ownership of securities of the Company held by the foregoing includes: 901,831 shares of Common Stock owned by Serco International Financial Advisory and Management Services, Ltd.; 926,000 shares of Series S Preferred Stock owned by Austroinvest International Limited; and 900,000 shares of Series S-NR Preferred Stock owned by Serco America Corporation. |
| (10) | Includes 1,659,868 shares of Common Stock owned by College Health & Investment LP, 506,164 shares of Common Stock owned by College Health & Investment Ltd, 200,000 shares of Common Stock owned by Alana Burstyn, 199,950 shares of Common Stock owned by Sean Burstyn, c/o Burstyn. The foregoing persons and entities appear to share a common address, 701 Brickell Avenue, Miami, FL 33131. Samuel I. Burstyn is the General Partner of College Health & Investment LP, which the General Partner maintains, is also known as College Health & Investment, Ltd. Daniel G. Burstyn, a Director of the Company, is the son of Samuel I. Burstyn. Does not include 200,000 shares of Common Stock held by Shari Jakobowitz, Custodian FBO Ava Burstyn under the Florida Uniform Transfer Minor Act. |
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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS AND DIRECTOR INDEPENDENCE
Transactions with Related Persons
On August 18, 1994, the Company (f/k/a Europa Cruises Corporation), established the Europa Cruises Corporation Employee Stock Ownership Plan (the “ESOP”). The ESOP, which is a qualified retirement plan under the provisions of Section 401(a) of the Internal Revenue Code and an employee stock ownership plan within the meaning of Section 4975(e)(7) of the Internal Revenue Code, was established primarily to invest in stock of the Company. All employees as of December 31, 1994, and subsequent new employees having completed 1,000 hours of service, are eligible to participate in the ESOP. The Company also established a trust called the Europa Cruises Corporation Employee Stock Ownership Plan Trust Agreement, to serve as the funding vehicle for the ESOP. Deborah A. Vitale is the sole Trustee of the Trust.
As of December 31, 2023 a total of 2,295,450 shares of Common Stock had been released for allocation to participants in the ESOP. An additional 1,034,085 shares had been forfeited by the Trust. The Company made no contributions to the ESOP Plan for the years ended December 31, 2011 through December 31, 2023. The participants in the ESOP are entitled to direct the Trustee as to the manner in which the Company’s allocated shares are voted. The remaining 1,670,465 unallocated shares are voted by the Trustee. The Trustee is required to vote the unallocated ESOP shares in the best interests of the ESOP beneficiaries.
On August 21, 1994, the Company loaned $4,275,000 to the ESOP in exchange for a ten-year promissory note bearing interest at eight percent per annum. On August 24, 1994, the ESOP purchased 2,880,000 shares of the Company’s Common Stock with the proceeds of the loan. On August 25, 1994, the Company loaned an additional $3,180,000 to the ESOP in exchange for a ten year promissory note bearing interest at eight percent per annum. On August 26, 1994, the ESOP purchased an additional 2,120,000 shares of the Company’s Common Stock with the proceeds of the loan. The shares of Common Stock were pledged to the Company as security for the loans. The promissory notes will be repaid with the proceeds of annual contributions made by the Company to the ESOP. In April of 1995, the Company agreed to extend the maturity of the loans to twenty years. Effective for the Plan year beginning January 1, 2001, the Company amended the plan and related loans for the purpose of limiting excise tax liability for plan contributions in excess of IRS Code Section 415 limitations. To accomplish this, the Company agreed to extend the maturity of the loans to fifty years.
The Company leases a furnished and equipped townhouse office from its President at 1013 Princess Street, in Alexandria, Virginia 22314, pursuant to a Landlord/Tenant Month to Month Lease. The terms of the lease, as adjusted for square footage and certain other applicable differences, were based on the terms of the last lease signed by the Company with an unrelated third party for unfurnished office space leased in Largo, Florida. The lease calls for payment by the Company of a base rent in the amount of $4,534 per month, or $54,408 per year, for approximately 2,473 square feet of commercial space, in addition to any and all expenses relating to the property, including property taxes, property insurance, telephone, electric, water and cable. The Company’s office and all of its active files are located in this office.
In 2023, the President received $54,408 for base rent due for the year 2023. In 2022, the President received no payments for base rent and the entire base rent due, in the amount of $54,408, was accrued.
Rent expense associated with this lease amounted to base rent in the amount of $54,409 and associated rental costs of $33,689 for a total of $88,098 for the year ended December 31, 2023 and base rent in the amount of $54,408 and associated rental costs of $30,737 for a total $85,145 for the year ended December 31, 2022.
As of December 31, 2023 and 2022, the President is owed a total of $602,259 and $568,569, respectively, under the lease agreement.
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The President of the Company is owed deferred salary in the principal amount of $3,666,996 and the Vice President and current Chairman of the Board of the Company is owed deferred salary in the principal amount of $121,140 as of December 31, 2023. On October 12, 2012, the Board of Directors approved a motion to pay these individuals interest of 9% per annum on their deferred compensation retroactive to amounts due beginning in 2010 through the date of actual payment. Accrued interest on deferred salary for both individuals through December 31, 2023 and 2022 amounted to $2,237,878 and $1,911,518, respectively.
Loans and Advances from the Chairman of the Board of Directors
The Chairman of the Board of the Company is the Holder of a Tranche I Debenture issued by the Company in 2014 in the principle amount of $50,000. The Chairman is one of the secured parties under a Land Deed of Trust recorded on September 26, 2014 in Hancock County, Mississippi, to secure Tranche I and Tranche II Debentures issued by the Company in 2014. Under paragraph 5 of the Land Deed of Trust, a secured party who advances sums for taxes due on the Property is secured by the same Land Deed of Trust, but only at that interest rate specified in the note representing the primary indebtedness, namely 4% per annum.
In 2016, the Company received cash advances totaling $47,500 from seven lenders which included $25,000 from two current Directors of the Company. The proceeds from the cash advances were earmarked for the payment of accounting and auditing fees and other expenses required to file the Company’s Form 10-Q. On August 25, 2016, the Company issued a Note to the foregoing lenders which matured four years from the date of issuance and bears interest at 8% per annum, with a full year of interest accruing in any year in which the advance remains unpaid. Accrued interest due on the above notes amounted to $16,000 and $14,000 at December 31, 2023 and 2022, respectively. These amounts are included in current liabilities on the consolidated balance sheets as of December 31, 2023 and 2022. This note is secured by a second lien on the Diamondhead Property.
In August 2016, the Chairman of the Board of Directors of the Company also loaned the Company $90,000. On August 25, 2016, the Company issued a Note to the Chairman. The Note bears interest at 14% per annum effective August 1, 2016 and matured four years from the date of issuance. This note is also secured by the second lien on the Diamondhead Property. The proceeds of the loan were used for the payment of Mississippi property taxes and auditing, accounting and other corporate expenses. Accrued interest due on the above note amounted to $93,482 and $80,882 at December 31, 2023 and 2022, respectively.
In July 2017, at the request of the Company, the current Chairman of the Board of Directors, who is also a Vice President of the Company (“the Chairman”), paid all property taxes due, together with all interest due thereon, to Hancock County, Mississippi on the approximate 400-acre tract of land, owned by Mississippi Gaming Corporation, a wholly-owned subsidiary of the Company. The total amount advanced was $67,628.
The Chairman is one of the secured parties under that Land Deed of Trust recorded on September 26, 2014 in Hancock County, Mississippi, to secure Tranche I and Tranche II Debentures issued by the Company in 2014. Under paragraph 5 of the Land Deed of Trust, a secured party who advances sums for taxes due on the Property is secured by the same Land Deed of Trust, but only at that interest rate specified in the note representing the primary indebtedness, namely 4% per annum.
The Chairman advanced the $67,628 on condition that: (i) the advance constitute a lien with interest at 4% per annum under that Land Deed of Trust recorded September 26, 2014; (ii) he be paid additional interest of 11% per annum on the amount advanced and owing and that the full 11% interest per annum is payable during any calendar year in which all or part of the amount advanced and owing or interest due thereon remains unpaid; (iii) this additional interest obligation be treated as a separate and secured debt of the Company, to be evidenced by a separate note and is secured with a separate and third lien to be placed on the Property (hereafter “the Third Lien”); (iv) the entire obligation will be treated as an advance to be paid out of any subsequent incoming financing obtained by the Company or any amounts recovered by the Company from a defendant in that collection action brought by the Company in the Circuit Court of Montgomery County, Maryland; and (v) he be indemnified for any losses sustained on the sale of that common stock sold to cover the payment of real estate property taxes and any credit card fees associated with payment. The Chairman identified the common stock to be sold and provided the Company with the documentation required to document the sale of said stock and to calculate the future loss, if any, on said stock. The fair value measurement of the derivative indemnification liability at December 31, 2023 and 2022 was developed using Level 1 inputs, which was valued at $0. On February 4, 2022, the Board of Directors entered into an agreement with the Chairman to issue 35,000 shares of common stock of the Company to the Chairman to repurchase the indemnification. On September 30, 2018, Mississippi Gaming Corporation issued a secured promissory note, due one year from the date of issue, to the Chairman for an amount up to $100,000 to cover the principle and interest due with respect to this note. On August 21, 2018, Mississippi Gaming Corporation placed a third lien on the Property to secure this obligation for $100,000. Accrued interest on the note amounted to $69,527 and $59,360 at December 31, 2023 and 2022, respectively.
| 31 |
In March 2018, the Board of Directors voted to increase up to an additional $200,000 the amount secured by the third lien in favor of the Chairman of the Board, for amounts advanced by the Chairman on behalf of the Company, on the following terms and conditions, namely, that (is) the advance constitutes a lien on the Property with interest at 15% per annum; (ii) that the full interest of 15% per annum is payable during any calendar year in which all or part of the amount advanced is due and owing or interest due thereon remains unpaid; (iii) that this debt be evidenced by a separate promissory note and is to be included in and secured with a third lien that is to be placed on the Diamondhead Property to secure previous advances made to the Company (hereafter “the Third Lien”); (iv) that he be indemnified for any losses sustained on the sale of his common stock in an unrelated publicly-traded company to be sold to cover this advance based on a sales price of approximately $2.80 per share with a cap on the maximum loss per share to be at a sales price of $10.00 per share; and (v) that the Chairman’s previous indemnification approved by the Board of Directors on July 24, 2017 with respect to any loss on the sale of the same stock also be capped at a maximum of $10.00 per share. The Chairman provided the Company with the documentation required to document the sale of said stock and to calculate the loss, if any, on said stock. On February 4, 2022, the Board of Directors entered into an agreement with the Chairman to issue 35,000 shares of common stock of the Company to the Chairman to repurchase the indemnification.
On September 30, 2018, Mississippi Gaming Corporation issued a secured promissory note, due one year from the date of issue to the Chairman, for an amount up to $200,000 to cover the principle and interest due with respect to this note. On August 21, 2018, Mississippi Gaming Corporation placed a third lien on the Diamondhead Property to secure this obligation for $200,000.
In November 2018, the Board of Directors voted to increase up to an additional $100,000 of advances from the Chairman and in March of 2019, the Board of Directors voted to increase the limit of the advances to $200,000. The terms of this advance are identical to the terms as approved above in March 2018.
In July 2020, the Chairman of the Board of Directors of the Company paid a total of $67,076 for property taxes due for the year 2019 on the Company’s approximate 400-acre Diamondhead, Mississippi Property, plus $1,573 in related fees. In July 2021, a fourteenth lien was placed on the Property to secure a promissory note in the amount of $150,000 issued to the Chairman to secure the payment of these taxes and fees and interest due thereon.
In May 2021, the Chairman of the Board of the Company paid a total of $62,610 for property taxes due for the year 2020 on the Company’s approximate 400-acre Diamondhead, Mississippi Property plus $1,468 in related fees. The Company placed a fifteenth lien on the Property in July 2021 to secure a promissory note in the amount of $100,000 issued to the Chairman of the Board of the Company to secure the payment of these taxes and interest due thereon. On May 30, 2021, the Chairman of the Board of Directors of the Company loaned the Company $50,000. On May 30, 2021, the Company issued a note to the Chairman in the principle amount of $50,000. The note is non-interest bearing, matures one year from the date of issuance and calls for the issuance of 100,000 shares of common stock. In July 2021, the Company placed a sixteenth lien on the Property to secure this note. The note is not convertible. As of the issuance date of these financial statements, no shares have been issued. The Company recorded a fair value of the stock of $33,500, which was determined by the fair value of the Company’s common stock at the date of the loan. The fair value of the stock was recorded as a debt discount, which will be amortized to interest expense over the life of the note. Debt discount was fully amortized during 2022.
On February 17, 2023, the Board of Directors agreed to issue a non-interest bearing promissory note to the Chairman in the principle amount of $25,000 together with 50,000 shares of common stock of the Company. The note was issued in return for the Chairman advancing funds to pay off accounts payable on behalf of the Company. The note is not convertible. As of the issuance date of these financial statements, no shares have been issued. The Company recorded a fair value of the stock of $17,500, which was determined by the fair value of the Company’s common stock at the date of the loan. The fair value of the stock was recorded as a debt discount, which will be amortized to interest expense over the life of the note. During the year ended December 31, 2023, $17,096 of debt discount was amortized to interest expense to related parties. On November 1, 2023, as previously agreed, the Company paid the Chairman the $25,000 advanced from the proceeds of the eminent domain settlement.
On July 28, 2023, the Board of Directors agreed to issue a non-interest bearing promissory note to the Chairman in the principle amount of $75,000 together with 150,000 shares of common stock of the Company. The note was issued in return for the Chairman advancing funds to pay off property taxes due for the year 2022 on the Diamondhead, Mississippi Property and fees due to the Company’s outside auditor for review of Form 10-Q for the period ending June 30, 2023 The note is not convertible. As of the issuance date of these financial statements, no shares have been issued. The Company recorded a fair value of the stock of $52,500, which was determined by the fair value of the Company’s common stock at the date of the loan. The fair value of the stock was recorded as a debt discount, which will be amortized to interest expense over the life of the note. During the year ended December 31, 2023, $22,644 of debt discount was amortized to interest expense to related parties. On November 1, 2023, as previously agreed, the Company paid the Chairman the $74,520 advanced from the proceeds of the eminent domain settlement.
As of December 31, 2023, the Chairman had advanced a total of $467,953, net of repayment of $16,250, under both the March 2018 and March 2019 arrangements and was owed accrued interest in the amount of $349,415 and $279,754 at December 31, 2023 and 2022, respectively.
| 32 |
Loans and Advances from the President
On July 24, 2017, the President of the Company, who is a Director of the Company, agreed to advance the Company up to $20,000 for the payment of expenses. In March of 2018, the Board of Directors voted to increase to up to $100,000 the amount to be secured by a third lien in favor of the President of the Company for amounts advanced by the President under this note, on the following terms and conditions, namely, that (i) she be paid interest of 15% per annum on the amount advanced and owing and that the full 15% interest per annum is payable during any calendar year in which all or part of the amount advanced and owing or interest due thereon remains unpaid; (ii) the obligation in the maximum principal amount of $100,000 with interest due thereon be treated as a secured debt of the Company, to be evidenced by a separate note and to be secured with a separate lien to be placed on the Diamondhead Property (“the Third Lien”) together with the Chairman’s Third Lien, as well as a first lien to be placed on the residential lot owned by the Company; (iii) that the Third Lien on the Diamondhead Property also include the two loans ($25,000 and $15,000) and interest due thereon and credit facilities in the maximum amount of $15,000; and (iv) that the foregoing will be treated as advances to be paid out of any subsequent incoming financing obtained by the Company or any amounts recovered by the Company from a defendant in that collection action brought by the Company in the Circuit Court of Montgomery County, Maryland.
As of December 31, 2023, the President had advanced a total of $5,007, net of repayments of $68,562, under this agreement. The President previously agreed to secure a $25,000 loan and interest due thereon and to secure and guarantee a $15,000 loan and interest due thereon due non-related parties discussed above. The President is also personally liable for certain bank-issued credit cards used by the Company to pay expenses incurred by the Company in the approximate amount of $18,000. On September 30, 2018, Mississippi Gaming Corporation issued a secured promissory note, due one year from date of issue, to the President for an amount up to $100,000 to cover the principle and interest due with respect to this note. On August 21, 2018, Mississippi gaming Corporation placed a third lien on the Diamondhead Property to secure this obligation for $100,000. Accrued interest due on this note amounted to $23,763 and $41,409 at December 31, 2023 and 2022, respectively.
The third lien placed on the Diamondhead Property, which secures the above three promissory notes, totals up to $400,000 and is payable to the Chairman of the Board ($300,000) and President ($100,000) of the Company.
In January 2021, a fourth lien in the amount of $2,000,000 was placed on the Diamondhead Property to secure a non-interest-bearing note payable in the amount of $2,000,000, issued in November 2020 to secure amounts owed to the President of the Company for accrued, but unpaid, salary, rent and other expenses.
In February 2021, a fifth lien in the amount of $658,750 was placed on the Diamondhead Property to secure a non-interest-bearing note payable in the amount of $658,750, issued in November 2020 to secure amounts owed to nine directors, including the Company’s six current directors.
The principal balance of the notes payable due to the officers and directors discussed above was $669,279, net of debt discount of $33,241 and $720,651, net of debt discount of $0, as of December 31, 2023 and 2022, respectively.
The Company’s policies and procedures require the Board of Directors to approve any related-party transaction that involves an Officer or Director of the Company or any of its subsidiaries.
Director Independence
The Company has no written independence standards it follows in making a determination as to Director independence. However, in evaluating the independence of its members, the Company’s management determined that Mr. Blount, Mr. Crow and Mr. Burstyn are independent directors by virtue of the fact that they are not officers or employees of the Company.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
The table below depicts the fees billed to Diamondhead Casino Corporation by the Company’s independent auditors in each of the last two years:
| Description of Services | 2023 | 2022 | ||||||
| Audit Fees | $ | 85,000 | $ | 68,425 | ||||
| Audit-Related Fees | - | - | ||||||
| Tax Fees | - | - | ||||||
| All Other Fees | - | - | ||||||
| Total Fees Paid | $ | 85,000 | $ | 68,425 | ||||
The Board of Directors, acting collectively as the audit committee, assures that the Company complies with SEC rules to maintain auditor independence as set forth in Rule 2-01(c)(7)(i) of Regulation S-X. The services above were approved, in advance, by the Board of Directors.
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
Subsidiaries of the Registrant:
Mississippi Gaming Corporation (Delaware)
Casino World, Inc. (Delaware)
Europasky Corporation (Delaware)
Attached to this report is the certification of the Chief Executive Officer/Chief Financial Officer of the Company pursuant to Rule 13A–14 of the Securities and Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act.
Attached to this report is the certification of the Chief Executive Officer/Chief Financial Officer of the Company as required by 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
| 33 |
| Other Exhibits |
| 101.INS | Inline XBRL Instance Document | |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document | |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document |
| 34 |
Index to Exhibits
| (a) | Previously filed as an Exhibit to Form 10 –Amendment 1 as filed on May 27, 2015 and incorporated by reference. |
| (b) | Previously filed as an exhibit to the Company’s Annual Report on Form 10-K for the year ended December 31, 2009 and incorporated by reference. |
| (c) | Previously filed as an exhibit to the Company’s Annual Report on Form 10-K for the year ended December 31, 2010 and incorporated by reference. |
| (d) | Previously filed as an exhibit to the Company’s Current Report on Form 8-K filed April 4, 2014 and incorporated by reference. |
| (e) | Previously filed as an Exhibit to Form 10 as filed on March 31, 2015 and incorporated by reference. |
| (f) | Previously filed as an exhibit to the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 and incorporated by reference. |
ITEM 16. FORM 10-K SUMMARY
Not applicable.
| 35 |
SIGNATURES
Pursuant to the requirements of Section 13 or 15 of the Securities Exchange Act of 1934, the Registrant has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| Diamondhead Casino Corporation | ||
| (Registrant) | ||
| Date: March 29, 2024 | By: | /s/ Deborah A. Vitale |
| Deborah A. Vitale | ||
| President and Chief Executive Officer | ||
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
| Signature | Title | Date | ||
| /s/ Gregory A. Harrison | Chairman of the Board of Directors | March 29, 2024 | ||
| Gregory A. Harrison | ||||
| /s/ Deborah A. Vitale | Director | March 29, 2024 | ||
| Deborah A. Vitale | ||||
| /s/ Benjamin J. Harrell | Director | March 29, 2024 | ||
| Benjamin J. Harrell | ||||
| /s/ Martin C. Blount | Director | March 29, 2024 | ||
| Martin C. Blount | ||||
| /s/ Robert S. Crow III | Director | March 29, 2024 | ||
| Robert S. Crow III | ||||
| /s/ Daniel G. Burstyn | Director | March 29, 2024 | ||
| Daniel G. Burstyn |
| 36 |
Exhibit 31.1
CERTIFICATIONS
I, Deborah A. Vitale, certify that:
1. I have reviewed this annual report on Form 10-K of Diamondhead Casino Corporation;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the consolidated financial statements, and other financial information included in this report, fairly present, in all material respects, the consolidated financial condition, results of operations and cash flows of the issuer as of, and for, the periods presented in this report;
4. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the issuer and we have:
(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;
(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with generally accepted accounting principles;
(c) evaluated the effectiveness of the issuer’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) disclosed in this report any change in the issuer’s internal control over financial reporting that occurred during the issuer’s most recent fiscal quarter (the issuer’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the issuer’s internal control over financial reporting; and
5. I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the issuer’s auditors and the audit committee of the issuer’s board of directors (or persons performing the equivalent function):
(a) all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the issuer’s ability to record, process, summarize and report financial information; and
(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the issuer’s internal control over financial reporting.
| Date: March 29, 2024 | |
| /s/ Deborah A. Vitale | |
| Deborah A. Vitale | |
| Chief Executive Officer |
Exhibit 31.2
CERTIFICATIONS
I, Deborah A. Vitale, certify that:
1. I have reviewed this annual report on Form 10-K of Diamondhead Casino Corporation;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the consolidated financial statements, and other financial information included in this report, fairly present, in all material respects, the consolidated financial condition, results of operations and cash flows of the issuer as of, and for, the periods presented in this report;
4. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the issuer and we have:
(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;
(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with generally accepted accounting principles;
(c) evaluated the effectiveness of the issuer’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) disclosed in this report any change in the issuer’s internal control over financial reporting that occurred during the issuer’s most recent fiscal quarter (the issuer’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the issuer’s internal control over financial reporting; and
5. I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the issuer’s auditors and the audit committee of the issuer’s board of directors (or persons performing the equivalent function):
(a) all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the issuer’s ability to record, process, summarize and report financial information; and
(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the issuer’s internal control over financial reporting.
| Date: March 29, 2024 | |
| /s/ Deborah A. Vitale | |
| Deborah A. Vitale | |
| Chief Financial Officer |
Exhibit 32.1
CERTIFICATION
In connection with the Annual Report of Diamondhead Casino Corporation (the “Company”) on Form 10-K for the year ending December 31, 2023, as filed with the Securities and Exchange Commission on the date hereof (the “Report”) I, Deborah A. Vitale, Chief Executive Officer of the Company, certify to the best of my knowledge, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 that:
| (1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and | |
| (2) | The information contained in the Report fairly presents, in all material respects, the consolidated financial condition and results of operations of the Company. |
| DATE: March 29, 2024 | /s/ Deborah A. Vitale | |
| By: | Deborah A. Vitale | |
| President and Chief Executive Officer |
Exhibit 32.2
CERTIFICATION
In connection with the Annual Report of Diamondhead Casino Corporation (the “Company”) on Form 10-K for the year ending December 31, 2023, as filed with the Securities and Exchange Commission on the date hereof (the “Report”) I, Deborah A. Vitale, Chief Financial Officer of the Company, certify to the best of my knowledge, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 that:
| (3) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and | |
| (4) | The information contained in the Report fairly presents, in all material respects, the consolidated financial condition and results of operations of the Company. |
| DATE: March 29, 2024 | /s/ Deborah A. Vitale | |
| By: | Deborah A. Vitale | |
| President and Chief Executive Officer |
Exhibit 99.1
DIAMONDHEAD CASINO CORPORATION
AND SUBSIDIARIES
CONTENTS
| F-1 |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and Board of Directors of
Diamondhead Casino Corporation
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Diamondhead Casino Corporation and Subsidiaries (the “Company”) as of December 31, 2023 and 2022, the related consolidated statements of operations, stockholders’ deficit and cash flows for each of the two years in the period ended December 31, 2023, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for the two years in the period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.
Explanatory Paragraph – Going Concern
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As more fully described in Note 2, the Company has a significant working capital deficiency, has incurred significant losses and needs to raise additional funds to meet its obligations and sustain its operations. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Impairment Assessment on Land
Description of the Matter
As discussed in Note 3 to the financial statements, the Company has land held for development which is carried at cost of $5,233,204 at December 31, 2023. The Company reviews long-lived assets whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. Recoverability of long-lived assets is measured by comparing the carrying amount of the assets to the undiscounted future cash flows projected to be generated by the assets. If such assets are considered impaired, the impairment to be recognized is measured by the amount the carrying value exceeds the fair value of such assets determined by appraisal, discounted cash flow projections, or other means. The Company determined that no impairment existed as of December 31, 2023.
We identified the evaluation of the impairment analysis of land as a critical audit matter.
How We Addressed the Matter in Our Audit
The following are the primary procedures we performed to address this critical audit matter. With the assistance of valuation specialists employed by us, our audit procedures included, among others, understanding of and evaluating the methodology used by the Company, assessing the reasonableness of the methodology of the underlying analysis, evaluating the significant assumptions and data inputs utilized in the Company’s analysis.
/s/
We have served as the Company’s auditor since 2004.
March 29, 2024
| F-2 |
DIAMONDHEAD CASINO CORPORATION
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
| December 31, | ||||||||
| 2023 | 2022 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash | $ | $ | ||||||
| Total current assets | ||||||||
| Land (Note 3) | ||||||||
| Other receivable | ||||||||
| Other assets | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued expenses due related parties (Note 4) | $ | $ | ||||||
| Accounts payable and accrued expenses - others (Note 4) | ||||||||
| Convertible notes and line of credit payable (Note 5) | ||||||||
| Debenture payable (Note 6) | ||||||||
| Convertible debenture payable (Note 6) | ||||||||
| Short term notes and interest bearing advance (Note 7) | ||||||||
| Notes
payable due related parties (net of unamortized debt discount of $ |
||||||||
| Notes
payable due others (net of unamortized debt discount of $ |
||||||||
| Total current liabilities | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies (Notes 3 and 15) | ||||||||
| Stockholders’ deficit: | ||||||||
| Preferred
stock, $ par value; shares authorized , outstanding at December 31, 2023 and 2022 (aggregate liquidation preference
of $ |
||||||||
| Common stock, $ par value; shares authorized , issued: at December 31, 2023 and 2022, outstanding: at December 31, 2023 and 2022 | ||||||||
| Additional paid-in capital | ||||||||
| Unearned ESOP shares | ( |
) | ( |
) | ||||
| Accumulated deficit | ( |
) | ( |
) | ||||
| Treasury stock, at cost, and shares at December 31, 2023 and 2022, respectively | ( |
) | ( |
) | ||||
| Total stockholders’ deficit | ( |
) | ( |
) | ||||
| Total liabilities and stockholders’ deficit | $ | $ | ||||||
See the accompanying notes to these consolidated financial statements.
| F-3 |
DIAMONDHEAD CASINO CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31,
| Year Ended | ||||||||
| December 31, | ||||||||
| 2023 | 2022 | |||||||
| COSTS AND EXPENSES | ||||||||
| Administrative and general | $ | $ | ||||||
Stock-based compensation |
||||||||
| Other | ||||||||
| Total costs and expenses | ||||||||
| OTHER (INCOME) EXPENSE | ||||||||
| Interest expense: | ||||||||
| Related parties | ||||||||
| Other | ||||||||
| Gain on the condemnation of land | ( |
) | ||||||
| Total other (income) expense | ||||||||
| NET LOSS | ( |
) | ( |
) | ||||
| PREFERRED STOCK DIVIDENDS | ( |
) | ( |
) | ||||
| NET LOSS APPLICABLE TO COMMON STOCKHOLDERS | $ | ( |
) | $ | ( |
) | ||
| Weighted average common shares outstanding - basic and diluted | ||||||||
| Net loss per common share - basic and diluted | $ | ) | $ | ) | ||||
See the accompanying notes to these consolidated financial statements.
| F-4 |
DIAMONDHEAD CASINO CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIENCY
| Additional | Total | |||||||||||||||||||||||||||||||||||||||||||
| Preferred Stock | Common Stock | Paid-in | Unearned ESOP | Accumulated | Treasury Stock | Stockholders’ | ||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Shares | Amount | Deficit | Shares | Amount | Deficit | ||||||||||||||||||||||||||||||||||
| Balances at December 31, 2021 | $ | $ | $ | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | |||||||||||||||||||||||||||||
| Shares acquired from ESOP | - | ( |
) | ( |
) | ( |
) | |||||||||||||||||||||||||||||||||||||
| Common stock to be issued in connection with notes payable - related parties | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||
| Stock compensation | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||
| Dividends | - | - | - | ( |
) | - | ( |
) | ||||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | ( |
) | - | ( |
) | ||||||||||||||||||||||||||||||||||||
| Balances at December 31, 2022 | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||||||
| Shares acquired from ESOP | - | ( |
) | ( |
) | ( |
) | |||||||||||||||||||||||||||||||||||||
| Common stock to be issued in connection with notes payable - related parties | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||
| Common stock to be issued in connection with notes payable - others | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||
Stock-based compensation |
- |
- |
- |
- |
||||||||||||||||||||||||||||||||||||||||
| Dividends | - | - | - | ( |
) | - | ( |
) | ||||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | ( |
) | - | ( |
) | ||||||||||||||||||||||||||||||||||||
| Balances at December 31, 2023 | $ | $ | $ | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | |||||||||||||||||||||||||||||
See the accompanying notes to these consolidated financial statements.
| F-5 |
DIAMONDHEAD CASINO CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31,
| Year Ending | ||||||||
| December 31, | ||||||||
| 2023 | 2022 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | ( |
) | $ | ( |
) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Amortization | ||||||||
| Stock-based compensation | ||||||||
| Gain on the condemnation of land | ( |
) | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts payable and accrued expenses - related parties | ||||||||
| Accounts payable and accrued expenses - other | ||||||||
| Net cash used in operating activities | ( |
) | ( |
) | ||||
| Cash flows from investing activities: | ||||||||
| Land easement, net of other receivable | ||||||||
| Net cash provided by investing activities | ||||||||
| Cash flows from financing activities: | ||||||||
| Proceeds from note payable - others | ||||||||
| Proceeds from non-interest bearing advances from related parties | ||||||||
| Repayments of non-interest bearing note payable - others | ( |
) | ||||||
Repayments of interest bearing note payable - others |
( |
) | ||||||
| Repayments of notes payable issued to related parties | ( |
) | ( |
) | ||||
| Net cash (used in) provided by financing activities | ( |
) | ||||||
| Net increase (decrease) in cash | ( |
) | ||||||
| Cash at beginning of year | ||||||||
| Cash at end of year | $ | $ | ||||||
| - | ||||||||
| Supplemental disclosure of cash flow information: | ||||||||
| Cash paid for interest | $ | $ | ||||||
| Supplemental disclosure of non-cash financing activities: | ||||||||
| Common stock to be issued in connection with notes payable - related parties | $ | $ | ||||||
| Common stock to be issued in connection with notes payable - others | $ | $ | ||||||
| Unpaid preferred stock dividends in accounts payable and accrued expenses | $ | $ | ||||||
See the accompanying notes to these consolidated financial statements.
| F-6 |
DIAMONDHEAD CASINO CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Organization and Business
Diamondhead Casino Corporation and its Subsidiaries (the “Company”) own a total of approximately 400 acres of unimproved land in Diamondhead, Mississippi (“the Property”). Active subsidiaries of the Company include Mississippi Gaming Corporation, which owns the approximate 400-acre site and Casino World, Inc.
The Company’s intent was to construct a casino resort and other amenities on the Property unilaterally or, in conjunction with one or more joint venture partners. However, the Company has been unable to date, to obtain financing to move the project forward and/or enter into a joint venture partnership. Due to its lack of financial resources and certain law suits filed against it, the Company has been forced to explore other alternatives, including a sale of part or all of the Property. The Company’s preference is to sell only part of the Property inasmuch as this would appear to be in the best interest of the stockholders of the Company. However, there can be no assurance the Company will be able to sell only part of the Property. The Company intends to continue to pursue a joint venture partnership and/or other financing while seeking a viable purchaser for part or all of the Property. Thus, on March 25, 2019, Mississippi Gaming Corporation entered into a brokerage agreement with an unrelated third party to seek a buyer for all or part of the Property or, alternatively, to seek a joint venture partner for the project. The brokerage agreement has expired, but the Company continues to work with the broker on the same terms under the contract.
Note 2. Liquidity and Going Concern
These
consolidated financial statements have been prepared on the basis that the Company is a going concern, which contemplates the realization
of assets and the satisfaction of liabilities in the normal course of business. The Company has incurred losses over the past several
years, has no operations, generates no operating revenues, and as reflected in the accompanying consolidated financial statements, incurred
a net loss applicable to common stockholders of $
The Company has had no operations since it ended its gambling cruise ship operations in 2000. Since that time, the Company has concentrated its efforts on the development of its Diamondhead, Mississippi property. That development is dependent upon the Company obtaining the necessary capital, through either equity and/or debt financing, unilaterally or in conjunction with one or more partners, to master plan, design, obtain permits for, construct, open, and operate a casino resort.
In the past, in order to raise capital to
continue to pay on-going costs and expenses, the Company has borrowed funds, through Private Placements of convertible instruments
as well as through other secured notes which are more fully described in Notes 5 through 10 to these consolidated financial
statements. The Company is in default with respect to payment of both principal and interest under the terms of most of these
instruments. In addition, at December 31, 2023, the Company had $
The above conditions raise substantial doubt as to the Company’s ability to continue as a going concern within one year after the date of that the consolidated financial statements are issued.
Note 3. Summary of Significant Accounting Policies
Principles of Consolidation
The consolidated financial statements include the accounts of Diamondhead Casino Corporation and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.
Estimates
The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
| F-7 |
Land
Land held for development is carried at cost. Costs directly related to site development, such as licensing, permitting, engineering, and other costs, are capitalized.
Land development costs, which have been capitalized, consist of the following at December 31, 2023 and 2022:
| December, 31 | ||||||||
| 2023 | 2022 | |||||||
| Land | $ | $ | ||||||
| Licenses | ||||||||
| Engineering and costs associated with permitting | ||||||||
| $ | $ | |||||||
Cooperative Energy, a Mississippi Electric Cooperative sought a permanent easement along the northern portion of the Property on which to construct, maintain and operate electric transmission lines together with an access road. On or about November 19, 2020, Cooperative Energy filed a Complaint with the Special Court of Eminent Domain, Hancock County, Mississippi seeking an Order authorizing the Cooperative to enter onto the Property for the purpose of examinations and surveys. The matters sought in the Complaint were quickly resolved by agreement of the parties. The Company’s understanding and MGC’s understanding was that the case would be dismissed, but the case was not dismissed. On or about May 24, 2023, Cooperative Energy filed a Complaint for Eminent Domain in the Special Court of Eminent Domain, Hancock County, Mississippi in which it named MGC and all persons and entities holding liens on the Diamondhead, Mississippi Property as defendants.
On October 17, 2023, the Court
entered an Order Approving Settlement in the amount of $
Management
determined that the easement arrangement was outside the scope of ASC 842. Further, the Company determined that the easement reduced
the value of the property by $
Fair Value Measurements
The Company follows the provisions of ASC Topic 820 “Fair Value Measurements” for financial assets and liabilities. This standard defines fair value, provides guidance for measuring fair value and requires certain disclosures. The standard utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels:
Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: Input other than quoted prices that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.
Level 3: Unobservable input that reflects management’s own assumptions.
Financial instruments included in current assets and liabilities are reported at carrying value in the consolidated balance sheets, which approximate fair value due to their short term nature.
Long-Lived Assets
The Company reviews long-lived assets whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. Recoverability of long-lived assets is measured by comparing the carrying amount of the assets to the estimated undiscounted future cash flows projected to be generated by the assets. If such assets are considered impaired, the impairment to be recognized is measured by the amount the carrying value exceeds the fair value of such assets determined by appraisal, discounted cash flow projections, or other means. No impairment existed as of December 31, 2023.
Employee Stock Ownership Plan
The Company has an Employee Stock Ownership Plan (ESOP) covering substantially all employees with one or more years of service, financed by employer loans. The Company also established a trust called the Europa Cruises Corporation Employee Stock Ownership Plan Trust Agreement, to serve as the funding vehicle for the ESOP. The President and Chief Executive Officer is the sole Trustee of the Trust. Compensation expense was measured at the current market price of shares committed for release and such shares constitute outstanding shares for earnings per share computations.
| F-8 |
As the loans are repaid, shares are released from the ESOP and allocated to qualified employees based upon the proportion of payments made during the year to the remaining amount of payments due on the loans through maturity. Dividends, if any, are treated as follows:
(1) stock dividends on shares allocated to participant accounts shall be credited to the participant account when paid; and (2) cash dividends on shares allocated to participant accounts shall, at the discretion of the Administrator, be credited to the participants’ Other Investment Account or be used to reduce the indebtedness to the Company, in which case, shares bearing an equal value to the cash dividend would be allocated to participant accounts. The Company has not paid any dividends on its common stock.
For the years 2011 through 2023, the Company elected to temporarily suspend contributions to the Plan, in accordance with the loan pledge agreement between the Company and the ESOP Trust. For each year in which there was no contribution to the Plan, the Plan returned the shares, which would have been allocated to employees annually, to treasury. The Company has not filed the annual Form 550 reports pertaining to the ESOP since the year ended December 31, 2015.
Income Taxes
Under the asset and liability method of ASC Topic 740, “Accounting for Income Taxes,” deferred tax liabilities and assets are recognized for future tax consequences attributable to differences between the financial statement carrying amounts and the tax basis of assets and liabilities. A valuation allowance is recorded to reflect the uncertainty of realization of deferred tax assets.
The Company follows the provisions of Financial Accounting Standard Board (“FASB”) No. 48 (FIN 48), “Accounting for Uncertainty in Income Taxes.” The standard addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the consolidated financial statements. Under this standard, an entity may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities based on the technical merits of the position. The tax benefits recognized in the consolidated financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. The standard also provides guidance on derecognition, classification, interest and penalties on income taxes, and accounting in interim periods and requires increased disclosures. The Company does not have a liability for unrecognized tax benefits.
The
Company’s policy is to record interest and penalties on uncertain tax provisions as income tax expense. As of December 31, 2023
and 2022, the Company has
Basic loss per share is computed by dividing net loss available to common stockholders by the weighted average number of common shares outstanding. Basic weight average shares includes and of shares not yet issued as of December 31, 2023 and 2022. Diluted earnings per share is calculated by using the weighted average number of common shares outstanding, plus other potentially dilutive securities. Potentially dilutive securities are excluded from the computation of diluted loss per shares since their effect would be antidilutive. Common shares outstanding consist of issued shares, including allocated and committed shares held by the ESOP trust, less shares held in treasury. The dilutive securities below do not include potentially convertible Debentures, since the requirements for possible conversion had not yet been met and may never be met.
| Description | December 31, 2023 | December 31, 2022 | ||||||
| Convertible Preferred Stock | ||||||||
| Options to Purchase Common Shares | ||||||||
| Total | ||||||||
| F-9 |
The Company follows the provisions of ASC Topic 718 “Compensation — Stock Compensation” which requires the measurement and recognition of compensation expense for all share-based payment awards either modified or granted to employees and directors based upon estimated fair values.
On November 9, 2020, the Board of Directors voted to award options to purchase common stock to its six current directors, including three officers of the Company, at a strike price of $ per share with an expiration date of , as follows: Martin Blount: ; Daniel Burstyn: ; Robert Crow: ; Benjamin Harrell: ; Gregory Harrison: and Deborah Vitale: . All options are vested.
On December 12, 2023, the Board of Directors voted to extend these outstanding options from December 31, 2023 to December 31, 2025.
On February 4, 2022, the Board of Directors entered into an agreement with the Chairman to issue shares of common stock of the Company to the Chairman to repurchase the indemnification. This repurchase eliminates any risk to the Company arising from the indemnification which could have been material. During the years ended December 31, 2023 and 2022, the Company record stock-based compensation of $ for the fair value for these shares, which have not yet been issued as of the issuance date of the consolidated financial statements.
Option valuation models require the input of highly subjective assumptions, including the expected stock price volatility. The Company uses projected volatility rates, which are based upon historical volatility rates, trended into future years. Because the Company’s employee stock options have characteristics significantly different from those of traded options, and because changes in the subjective input assumptions can materially affect the fair value estimate, in management’s opinion, the existing models do not necessarily provide a reliable single measure of the fair value of the Company’s options.
Reclassification
Certain reclassifications have been made to the Company’s consolidated financial statements for the year ended December 31, 2023 to conform to the current period’s consolidated financial statement presentation. A reclassification of $ from administrative and general expenses to stock-based compensation expense was recorded. The reclassification did not have any effects on the Company’s consolidated financial statements.
Recently Adopted Accounting Pronouncements
In November 2019, the FASB issued ASU 2019-10, Financial Instruments—Credit Losses (Topic 326), Derivative and Hedging (Topic 815, and Leases (Topic 841). This new guidance is effective for annual reporting periods beginning after December 15, 2019, including interim periods within those annual reporting periods. This pronouncement was amended under ASU 2019-10 to allow an extension on the adoption date to entities that qualify as a small reporting company. The Company has elected this extension and the effective date for the Company to adopt this standard will be for fiscal years beginning after December 15, 2022. Accordingly, the Company has adopted this standard as of January 1, 2023 and it did not have an effect on its consolidated financial statements.
Recently Issued Accounting Pronouncements Not Yet Adopted
On March 27, 2023, the FASB issued ASU 2023-01, which amends certain provisions of ASC 842 that apply to arrangements between related parties under common control. Specifically, the ASU:
| ● | Offers private companies, as well as not-for-profit entities that are not conduit bond obligors, a practical expedient that gives them the option of using the written terms and conditions of a common-control arrangement when determining whether a lease exists and the subsequent accounting for the lease, including the lease’s classification. | |
| ● | Amends the accounting for leasehold improvements in common-control arrangements for all entities. |
The ASU is effective for fiscal years beginning after December 15, 2023. The Company has not completed its assessment of the standard, but does not expect the adoption to have a material impact on the Company’s unaudited condensed consolidated financial position, results of operations, or cash flows.
No other recent accounting pronouncements were issued by FASB that are believed by management to have a material impact on the Company’s present or future financial statements.
Note 4. Accounts Payable and Accrued Expenses
The table below outlines the elements included in accounts payable and accrued expenses at December 31, 2023 and 2022:
| December 31, | December 31, | |||||||
| 2023 | 2022 | |||||||
| Related parties: | ||||||||
| Accrued payroll due officers | $ | $ | ||||||
| Accrued interest due officers and directors | ||||||||
| Accrued director fees | ||||||||
| Base rents due to the President | ||||||||
| Associated rental costs | ||||||||
| Other | ||||||||
| Total related parties | $ | $ | ||||||
| Non-related parties: | ||||||||
| Accrued interest | $ | $ | ||||||
| Accrued dividends | ||||||||
| Accrued fines and penalties | ||||||||
| Other | ||||||||
| Total non-related parties | $ | $ | ||||||
| F-10 |
Note 5. Convertible Notes and Line of Credit
Line of Credit
In
2008, the Company entered into an agreement with an unrelated third party for an unsecured Line of Credit up to a maximum of $
Convertible Notes
Pursuant
to a Private Placement Memorandum dated March 1, 2010, the Company offered Units consisting of a
Pursuant
to an additional Private Placement Memorandum dated October 25, 2010, the Company offered Units consisting of a
The
Convertible Notes issued pursuant to the two Private Placements discussed above total $
The table below summarizes the Company’s debt arising from the above-described sources as of December 31, 2023 and 2022:
December 31, 2023 |
December 31, 2022 |
|||||||
| Private placements - March 1, 2010* | $ | $ | ||||||
| Private placements - October 25, 2010 | ||||||||
| $ | $ | |||||||
| * |
Note 6. Convertible Debentures
Pursuant
to a Private Placement Memorandum dated February 14, 2014 (the “Private Placement”), the Company offered up to a maximum
of $
| (a) | $ | |
| (b) | $ | |
| (c) | $ |
| F-11 |
The conversion rights on each issued Debenture carry an Anti-Dilution Provision. If the Company issues any shares of Common Stock or other securities after March 31, 2014 at a price per security that is less than the conversion price of a Debenture, then the Debenture shall have a new conversion price equal to the price per security that is less than the Conversion Price of the Debenture. The foregoing provision shall not apply to the following:
| (a) | The issuance of any of the other Debentures in the Offering or the issuance of shares of Common Stock upon conversion of any of the Debentures in the Offering; | |
| (b) | The issuance of any shares of Common Stock if such issuance relates to an agreement, arrangement or grant to issue shares of Common Stock entered into by the Company prior to the Issue Date of the First Tranche Debentures in the Offering, including but not limited to, for example, previously issued convertible promissory notes, previously issued warrants, previously issued options to purchase Common Stock, or common stock vested or to be issued pursuant to a pre-existing Employee Stock Ownership Plan. |
The Anti-Dilution Provisions with respect to a Debenture terminate the earlier of (a) the date (if ever) the Company receives an “Approval to Proceed” from the Mississippi Gaming Commission to develop a casino/hotel on the Property, (b) the date on which the Debenture is converted in full, (c) the date on which the Debenture is paid in full, or (d) the Final Maturity Date of the Debenture (as defined in the Debenture).
Since the issuance of the Debentures, there have been no events that would trigger the above anti-dilution provisions.
When
originally issued, in the event the Company failed to meet the conditions for conversion of the Debentures, the First Tranche Convertible
Debentures, which total $
Total
accrued interest due on all outstanding Debentures amounted to $
Note 7. Short Term Notes and Interest-Bearing Advance
Promissory Notes
On
June 9, 2017, the Company entered into a Promissory Note with an unrelated lender in exchange for proceeds in the amount of $
Bank Credit Facility
Wells
Fargo Bank provided an unsecured credit facility of up to $
| F-12 |
Interest Bearing Advances
In
2016, the Company received cash advances totaling $
On
February 2, 2017, the Company borrowed $
from an unrelated third party. The Note carries an annual interest rate of approximately %
and is past due. The Company is in default and as such, the lender may increase the interest rate due by an amount of up to
Of
the amounts discussed above, $
Note 8. Current Notes Payable Due Related Parties
In
2016, the Company received cash advances totaling $
In
the third quarter of 2016, the Chairman of the Board of Directors of the Company loaned the Company $
In
July 2017, at the request of the Company, the current Chairman of the Board of Directors, who is also a Vice President of the Company
(“the Chairman”), paid all property taxes due, together with all interest due thereon to Hancock County, Mississippi on an
approximate
The
Chairman is one of the secured parties under that Land Deed of Trust recorded on September 26, 2014 in Hancock County, Mississippi, to
secure Tranche I and Tranche II Debentures issued by the Company in 2014. Under paragraph 5 of the Land Deed of Trust, a secured party
who advances sums for taxes due on the Property is secured by the same Land Deed of Trust, but only at that interest rate specified in
the note representing the primary indebtedness, namely
The
Chairman advanced the $
| F-13 |
In
March of 2018, the Board of Directors voted to increase up to an additional $
On
September 30, 2018, Mississippi Gaming Corporation issued a secured promissory note, due one year from the date of issue to the Chairman,
for an amount up to $
In
November of 2018, the Board of Directors voted to increase up to an additional $
In
July 2020, the Chairman of the Board of the Company paid a total of $
In
May 2021, the Chairman of the Board of the Company paid a total of $
On
May 30, 2021, the Chairman of the Board of the Company loaned the Company $
On
February 17, 2023, the Board of Directors agreed to issue a non-interest bearing promissory note to the Chairman in the principal amount
of $
On
July 28, 2023, the Board of Directors agreed to issue a non-interest bearing promissory note to the Chairman in the principal amount
of $
As
of December 31, 2023, the Chairman had advanced a total of $
On
July 24, 2017, the President of the Company, who is a Director of the Company, agreed to advance the Company up to $
| F-14 |
As
of December 31, 2023, the President had advanced a total of $
The
third lien placed on the Diamondhead Property, which secures the above three promissory notes, totals up to $
The
principal balance of the notes payable due to the officers and directors discussed above was $
Note 9. Notes Payable Due Others
In
October 2017, the Company entered into a settlement with a holder of $
In December 2020, the Company entered into three promissory notes with unrelated lenders in exchange for an aggregate principal amount of $. The Company received proceeds of $, resulting in an original issue discount of $. This original issue discount was recorded as a debt discount, which will be amortized to interest expense over the life of the notes.
In January and February 2021, the Company entered into two additional promissory notes with unrelated lenders in exchange for a principal amount of $ and $, respectively. The Company received total proceeds of $, resulting in an original issue discount of $. This original issue discount was recorded as a debt discount, which will be amortized to interest expense over the life of the notes. The notes are non-interest bearing and matured in January and February 2022, respectively, one year after the notes’ issuances. These notes are currently in default.
In April and May 2021, the Company entered into three additional promissory notes with unrelated lenders in exchange for a principal amount of $, $ and $, respectively. The Company received total proceeds of $ for the notes, resulting in an original issue discount of $. This original issue discount was recorded as a debt discount, which will be amortized to interest expense over the life of the notes. The notes are non-interest bearing and matured in April and May 2022, respectively, one year after the notes’ issuances. These notes are currently in default.
In July 2021, the Company entered into an additional promissory note with an unrelated lender in exchange for a principal amount of $. The Company received proceeds of $ for the note. The note is non-interest bearing and matured in July 2022, one year after the note’s issuance. This note is currently in default.
In November 2021, the Company entered into an additional promissory note with an unrelated lender in exchange for a principal amount of $. The Company received proceeds of $. The note is non-interest bearing and matured in November 2022, one year after the note’s issuance. This note is currently in default.
In
March 2022, unrelated third parties paid a total of $
In April 2022, the Company entered into an additional promissory note with an unrelated lender in exchange for a principal amount of $. The Company received proceeds of $ for the note. The note is non-interest bearing and matures in April 2023, one year after the note’s issuance. The note is currently in default.
From
April 2021 to June 2022, thirteen liens were placed on the Property to secure these notes.
On July 25, 2023 and August 8, 2023, the Company entered into two additional promissory notes with unrelated lenders in exchange for a principal amount of $ each. The Company received total proceeds of $ for the notes. These notes are non-interest bearing and mature in after the notes’ issuance. In exchange for the loans, the Company also agreed to issue shares of common stock of the Company to each lender and agreed to pay each lender the principal due on each note out of the proceeds expected to be received from the settlement of an eminent domain proceeding. The notes are not convertible. As of the issuance date of these financial statements, no shares have been issued. The Company recorded a fair value of the stock of $, which was determined by the fair value of the Company’s common stock at the date of the loan. The fair value of the stock was recorded as a debt discount, which will be amortized to interest expense over the life of the note. During the year ended December 31, 2023, $ of debt discount was amortized to interest expense to others. On November 1, 2023, as previously agreed, the Company paid the two lenders $ each out of the proceeds of the eminent domain settlement.
During
the years ended December 31, 2023 and 2022, $
| F-15 |
Note 10. Long Term Notes and Interest-Bearing Advance
Promissory Notes
On
June 9, 2017, the Company entered into a Promissory Note with an unrelated lender in exchange for proceeds in the amount of $
Note 11. Related Party Transactions
As
of December 31, 2023, the President of the Company is owed deferred salary in the amount of $
The Company has a month-to-month lease with the President and then-Chairman of the Board of Directors of the Company, for office space
owned by the President in Alexandria, Virginia. The lease calls for monthly base rent in the amount of $
Directors
of the Company are entitled to a director’s fee of $
On February 4, 2022, the Board of Directors entered into an agreement with Mr. Harrison, the Chairman of the Board of Directors, to issue shares of common stock of the Company to Mr. Harrison to repurchase the indemnifications the Company had previously agreed to pay Mr. Harrison for losses, if any, suffered on certain stock he had sold in prior years in an unrelated company to raise funds to pay property taxes due on the Diamondhead, Mississippi Property and to lend additional funds to the Company. This repurchase eliminates any risk to the Company arising from the indemnification which could have been material. During the year ended December 31, 2022, the Company recorded stock-based compensation of $ for the fair value of these shares, which have not yet been issued as of the issuance date of these consolidated financial statements.
On
February 17, 2023, the Board of Directors agreed to issue a non-interest bearing promissory note to the Chairman in the principal amount
of $
On
July 28, 2023, the Board of Directors agreed to issue a non-interest bearing promissory note to the Chairman in the principal amount
of $
See Notes 4, 5, 7, 8 and 15 for other related party transactions.
Note 12. Stockholders’ Deficit
At December 31, 2023 and 2022, the Company had a stock option plan and non-plan options, which are described below.
Non-Plan Stock Options
On
January 3, 2018, the Board of Directors voted to , the
expiration date for a total of currently outstanding options previously issued
to the Chairman, the President, the Vice President and two former employees of the Company. The Company recorded stock-based compensation
expense of $ for
the year ended December 31, 2018. No share-based awards were issued or amended in 2019. On November 6, 2020,
On November 9, 2020, the Board of Directors voted to award options to purchase common stock to its six current directors, including three officers of the Company, at a strike price of $ per share with an expiration date of , as follows: Martin Blount: ; Daniel Burstyn: ; Robert Crow: ; Benjamin Harrell: ; Gregory Harrison: and Deborah Vitale: . All options are vested.
| F-16 |
Stock Option Plan
On December 19, 1988, the Company adopted a stock option plan (the “Plan”) for its officers and management personnel under which options could be granted to purchase up to shares of the Company’s common stock. Accordingly, the Company reserved shares for issuance under the Plan. The exercise price may not be less than % of the market value of the shares on the date of the grant. The options expire within from the date of grant. At December 31, 2023, options from this plan were issued or exercised.
Summary of Stock Options
| Shares | Weighted Average Exercise Price |
|||||||
| Outstanding as of January 1, 2022 | $ | |||||||
| Granted | ||||||||
| Exercised | ||||||||
| Expired | ||||||||
| Forfeited | ||||||||
| Outstanding as of December 31, 2022 | $ | |||||||
| Granted | ||||||||
| Exercised | ||||||||
| Forfeited | ||||||||
| Outstanding as of December 31, 2023 | $ | |||||||
| Exercisable as of December 31, 2022 | $ | |||||||
| Exercisable as of December 31, 2023 | $ | |||||||
| December 31, 2023 | ||||||||||||||||||||||
| Options Outstanding | Options Exercisable | |||||||||||||||||||||
| Range of Exercise Prices | Number Outstanding at 12/31/23 | Weighted-Average Remaining Contractual Life (Yrs.) | Weighted Average Exercise Price | Number Exercisable at 12/31/23 | Weighted Average Exercise Price | |||||||||||||||||
| $ | $ | $ | ||||||||||||||||||||
| December 31, 2022 | ||||||||||||||||||||||
| Options Outstanding | Options Exercisable | |||||||||||||||||||||
| Range of Exercise Prices | Number Outstanding at 12/31/22 | Weighted-Average Remaining Contractual Life (Yrs.) | Weighted Average Exercise Price | Number Exercisable at 12/31/22 | Weighted Average Exercise Price | |||||||||||||||||
| $ | $ | $ | ||||||||||||||||||||
| F-17 |
Preferred Stock
Series S Preferred Stock
The Company has shares outstanding of $ par value Series S Voting, Non-Convertible Preferred Stock which was issued to Austroinvest International, Inc. The Company is required to pay quarterly cumulative dividends of three percent per annum on these shares.
Series S-NR Preferred Stock
The
Company has shares outstanding of its $ par value Series S-NR Voting, Non-Convertible, Non-Redeemable, Preferred Stock, which
was issued to Serco International Limited. The Company is required to pay quarterly, non-cumulative dividends of three percent per annum
on these shares. Upon involuntary liquidation of the Company, the liquidation preference of each share is $
Series S-PIK Preferred Stock
The
Company has one million units outs, each unit consisting of one share of the Company’s $ par value common stock and two shares
of the Company’s Series S-PIK Junior, cumulative, convertible, non-redeemable, non-voting $ par value preferred stock.
Payment of Preferred Dividends
The Company did not pay any dividends due on its preferred stock in 2023 or 2022. However, payment of all cumulative and non-cumulative preferred stock dividends, outstanding at any time, is required before the Company can issue any dividends on its common stock.
| F-18 |
Note 13. Employee Stock Ownership Plan
The Company’s employee stock ownership plan (ESOP) is intended to be a qualified retirement plan and an employee stock ownership plan. All employees having one year of service are eligible to participate in the ESOP. The ESOP is funded by two 8% promissory notes issued by the Company. The shares of common stock are pledged to the Company as security for the loans. The promissory notes are payable from the proceeds of annual contributions made by the Company to the ESOP. In the event that the Company elects not to make a Plan contribution in any given year, the corresponding shares applicable to that year are released from the Trust to the Company in consideration of that years’ note payment. In January 2001, the Plan and accompanying promissory notes were amended to conform to the Company’s current employment structure, by extending the note repayment terms through 2044.
Assuming a Plan contribution is made, shares are allocated to the participants’ accounts in relation to repayments of the loans from the Company. At December 31, 2023, there were a total of shares with a fair market value of $.
In
2011, the Company decided to temporarily suspend contributions to the Plan. Therefore, the Trust was unable to make its annual loan payment
to the company and a loan default occurred. In accordance with the Pledge Agreement between the Company and the Trust, the shares attached
to the loan payments subsequent to the 2010 contribution reverted back to the Company as treasury shares. In 2023 and 2022, shares,
with a market value of $
Note 14. Income Taxes
At
December 31, 2023, the Company had net operating loss carryforwards for income taxes of approximately $
Note 15. Commitments and Contingencies
Liens
As of December 31, 2023, the Company had placed twenty-one liens on the Company’s Diamondhead, Mississippi Property (“the Property”). No additional liens have been filed as of the filing of this report. The liens were as follows:
In September of 2014, a first lien was placed on the Property pursuant to a Private Placement dated February 14, 2014, as amended, to secure certain obligations of the Company. The first lien is composed of an (i) Executives Lien and (ii) an Investors’ Lien. The liens are in pari passu.
On
March 31, 2014, the Company issued $
On
December 16, 2016, the Company filed a second lien on the Property in the maximum amount of $
On
August 21, 2018, the Company filed a third lien on the Property in the maximum amount of $
On
January 26, 2021, the Company filed a fourth lien on the Property in the amount of $
On
February 17, 2021, the Company filed a fifth lien in the amount of $
In
April 2021, the Company filed six liens on the Property to secure six non-interest-bearing notes payable to be issued to six lenders
bringing total liens on the Property to eleven. The six notes issued total $
In
June 2021, the Company filed a twelfth and thirteenth on the Property to secure two non-interest bearing notes issued in May of 2021
which total $
| F-19 |
In
July 2021, the Company filed a fourteenth lien on the Property to secure a promissory note in the amount of $
In
July 2021, the Company filed a fifteenth lien on the Property to secure a promissory note in the amount of $
In
July 2021, the Company filed a sixteenth lien on the Property to secure a non-interest bearing note issued to the Chairman of the Board
in May 2021 which totals $
In
July 2021, the Company filed a seventeenth lien on the Property to secure a non-interest bearing note issued to a lender, which totals
$
In
November 2021, the Company filed an eighteenth lien on the Property to secure a non-interest bearing note issued in November 2021 which
totals $
In
March 2022, the Company filed a nineteenth and twentieth lien on the Property to secure two non-interest bearing notes issued in March
of 2022 which total $
In
May 2022, the Company filed a twenty-first lien on the Property to secure a non-interest bearing note issued in April of 2022 which totals
$
Other
The
Company is currently delinquent in filing those documents and forms required to be filed in connection with its Employee Stock Ownership
Plan (“ESOP”) for the year ended December 31, 2023, 2022, 2021, 2020, 2019, 2018, 2017, 2016 and 2015. The Company did not
have the funds to pay professionals to prepare, audit and file these documents and forms when due. Although these required filings normally
do not result in any tax due to an agency of the government, the Company could be subject to significant penalties for failure to file
these forms when due. Penalties are assessed by the Department of Labor on a per diem basis from the original due dates for the required
informational filings until the filings are actually made. The Company has accrued $
| F-20 |
The Company and its subsidiaries file their federal tax return on a consolidated basis. The Company has not filed its consolidated federal tax returns for the years ended December 31, 2023, 2022, 2021, 2020, 2019, 2018, 2017 and 2016.
The
Company believes no tax will be due with these federal returns. The Company has not filed its annual reports together with its franchise
tax due with the state of Delaware for 2023, 2022, 2020, 2019 and 2018. Mississippi Gaming Corporation, a wholly owned subsidiary of
the Company, has not filed its annual reports, together with its franchise tax due, with the state of Delaware for 2023, 2022, 2021,
2020, 2019 and 2018. Casino World, Inc., a wholly owned subsidiary of the Company, has not filed its annual reports, together with its
franchise tax due, with the state of Delaware for 2023, 2022, 2021, 2020, 2019, 2018, 2017 and 2016. Mississippi Gaming Corporation has
not filed its corporate income and franchise tax returns, together with the tax due, with the state of Mississippi for 2023, 2022, 2021,
2020, 2019, or 2018. Casino World, Inc. has not filed its corporate income and franchise tax returns, together with the tax due, with
the state of Mississippi for 2023, 2022, 2021, 2020, 2019, 2018, 2017 and 2016. As of December 31, 2023, the accrued franchise taxes
for Delaware and Mississippi totaled $
The Company has made provision for the expected taxes due on these state filings in their consolidated financial statements for the years ending December 31, 2023 and 2022.
Management Agreement
On June 19, 1993, two subsidiaries of the Company, Casino World Inc. and Mississippi Gaming Corporation, entered into a Management Agreement with Casinos Austria Maritime Corporation (CAMC). Subject to certain conditions, under the Management Agreement, CAMC would operate, on an exclusive basis, all of the Company’s proposed dockside gaming casinos in the State of Mississippi, including any operation fifty percent (50%) or more of which is owned by the Company or its affiliates.
Letter of Intent with an Unrelated Third Party
On March 31, 2023, the Company entered into a Letter of Intent with an unrelated third party. The Agreement provided for purchases of Common Stock of Diamondhead Casino Corporation and purchases of Common Stock of its wholly-owned subsidiary, Mississippi Gaming Corporation. As of the issuance date of these financial statements, no payment has been made by the third party investor, no transactions pursuant to the Letter of Intent have occurred and no shares of common stock have been issued. The Company does not expect the Agreement to be honored.
Note 15. Pending and Threatened Litigation
CASE SETTLED
Cooperative Energy, a Mississippi Electric Cooperative v. Mississippi Gaming Corporation (In the Special Court of Eminent Domain, Hancock County, Mississippi (Case No. CC20-0221)
Cooperative Energy, a Mississippi Electric Cooperative v. Mississippi Gaming Corporation, et al (all lienholders of the Diamondhead Property. (In the Special Court of Eminent Domain, Hancock County, Mississippi (Case No. CC23-0153)
Since 1994, American Telephone and Telegraph Company (“AT&T”) has had an exclusive right of way easement along the northern portion of Mississippi Gaming Corporation’s (“MGC”) Diamondhead, Mississippi Property (“the Property”) to construct, operate, maintain, inspect, alter, replace and remove communications systems which they may require from time to time. Cooperative Energy, a Mississippi Electric Cooperative, also sought and has now obtained a permanent easement along the northern portion of the Property on which to construct, maintain and operate electric transmission lines together with an access road. On or about November 19, 2020, Cooperative Energy filed a Complaint with the Special Court of Eminent Domain, Hancock County, Mississippi seeking an Order authorizing the Cooperative to enter onto the Property for the purpose of examinations and surveys. The matters sought in the Complaint were quickly resolved by agreement of the parties. The Company’s understanding and MGC’s understanding was that the case would be dismissed, but the case was not dismissed. On or about May 24, 2023, Cooperative Energy filed a Complaint for Eminent Domain in the Special Court of Eminent Domain, Hancock County, Mississippi in which it named MGC and all persons and entities holding liens on the Diamondhead, Mississippi Property as defendants.
On or about February 19, 2023, the parties entered into an Indemnification Agreement to fully indemnify MGC and Diamondhead Casino Corporation and each of their respective directors, officers, employees, agents, attorneys, and affiliates, and hold each of them harmless and defend each of them against any and all claims, losses, damages, expenses and/or liabilities to which an Indemnified Party might become liable arising out of or relating to any activities conducted on or about the Property by Cooperative Energy and/or its respective directors, officers, employees, agents, attorneys, affiliates and/or representatives and/or any unrelated third parties, contractors and/or subcontractors performing any activities on the Property at the request of or for the benefit of Cooperative Energy.
On
September 1, 2023, Cooperative Energy filed a Motion to Approve Settlement, an Amended Statement of Values and a Notice of Hearing for
September 11, 2023. Cooperative Energy served all interested parties, including all persons or entities holding liens on the Diamondhead
Property, as defendants in the case. On September 26, 2023, the Court entered an Order Granting Plaintiff Right of Immediate Title and
Possession. On October 17, 2023, the Court entered an Order Approving Settlement in the amount of $
The two easements are perpetual. The Right-Of-Way Easement is to construct, maintain, operate, add, and/or remove electric transmission lines, distribution lines, towers, wires, poles, appliances, equipment, anchors, frame structures, guys, counter-poise wire or other counter-poise conductors, and appurtenances thereto, all of which are collectively referred to as “Power Lines,” upon, over, under and across the land which is the subject of the easement. The Access Road Easement is for ingress and egress for use in the clearing, construction, maintenance and operation of transmission line facilities. Once MGC signs the easements, Cooperative Energy will pay the remainder of the settlement due MGC.
Cooperative Energy has informed MGC that it has obtained an agreement from AT&T concerning AT&T’s pre-existing exclusive right of way easement so that the Company will not be in breach of its agreement with AT&T.
Edson R. Arneault, Kathleen Devlin and James Devlin, J. Steven Emerson, Emerson Partners, J. Steven Emerson Roth IRA, Steven Rothstein, and Barry Stark and Irene Stark v. Diamondhead Casino Corporation (In the United States District Court for the District of Delaware (C.A. No. 1:16-cv-00989-LPS)
On
October 25, 2016, Edson R. Arneault, Kathleen Devlin and James Devlin, J. Steven Emerson, Emerson Partners, J. Steven Emerson Roth IRA,
Steven Rothstein, and Barry Stark and Irene Stark filed a Complaint against the Company in the United States District Court for the District
of Delaware for monies due and owing pursuant to certain Collateralized Convertible Senior Debentures issued on March 31, 2014 and December
31, 2014. A companion case was filed in the Superior Court of the State of Delaware by John Hawley, as servicing agent for Argonaut 2000
Partners, L.P. (John Hawley, as servicing agent for Argonaut 2000 Partners, L.P. v. Diamondhead Casino Corporation (Superior Court of
the State of Delaware)(Case No. N19C-02-239 RRC) The eight plaintiffs in the two cases were seeking a total of $
In
or about December 2022, the parties entered into an Amendment to Settlement Agreement. The Amendment provides, in pertinent part, as
follows: that on or before March 31, 2023, the Plaintiffs would be paid the principal due under their debentures of $
| F-21 |
Consolidated Balance Sheets (Parenthetical) - USD ($) |
Dec. 31, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Defined Benefit Plan Disclosure [Line Items] | ||
| Preferred stock par value | $ 0.01 | $ 0.01 |
| Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
| Preferred stock, shares outstanding | 2,086,000 | 2,086,000 |
| Preferred stock liquidation preference value | $ 2,519,080 | $ 2,519,080 |
| Common stock par value | $ 0.001 | $ 0.001 |
| Common stock, shares authorized | 50,000,000 | 50,000,000 |
| Common stock, shares issued | 39,052,472 | 39,052,472 |
| Common stock, shares outstanding | 36,297,576 | 36,297,576 |
| Treasury stock, shares | 1,084,431 | 1,004,886 |
| Related Party [Member] | ||
| Defined Benefit Plan Disclosure [Line Items] | ||
| Notes payable, unamortized discount | $ 33,241 | $ 0 |
| Others [Member] | ||
| Defined Benefit Plan Disclosure [Line Items] | ||
| Notes payable, unamortized discount | $ 15,761 | $ 24,937 |
Consolidated Statements of Operations - USD ($) |
12 Months Ended | |
|---|---|---|
Dec. 31, 2023 |
Dec. 31, 2022 |
|
| COSTS AND EXPENSES | ||
| Administrative and general | $ 736,680 | $ 917,756 |
| Stock-based compensation | 546,400 | 11,480 |
| Other | 67,975 | 71,450 |
| Total costs and expenses | 1,351,055 | 1,000,686 |
| Interest expense: | ||
| Related parties | 438,393 | 415,330 |
| Other | 377,486 | 439,689 |
| Gain on the condemnation of land | (757,107) | |
| Total other (income) expense | 58,772 | 855,019 |
| NET LOSS | (1,409,827) | (1,855,705) |
| PREFERRED STOCK DIVIDENDS | (101,600) | (101,600) |
| NET LOSS APPLICABLE TO COMMON STOCKHOLDERS | $ (1,511,427) | $ (1,957,305) |
| Weighted average common shares outstanding - basic | 37,437,576 | 36,297,576 |
| Weighted average common shares outstanding - diluted | 37,437,576 | 36,297,576 |
| Net loss per common share - basic | $ (0.040) | $ (0.054) |
| Net loss per common share - diluted | $ (0.040) | $ (0.054) |
Organization and Business |
12 Months Ended |
|---|---|
Dec. 31, 2023 | |
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
| Organization and Business | Note 1. Organization and Business
Diamondhead Casino Corporation and its Subsidiaries (the “Company”) own a total of approximately 400 acres of unimproved land in Diamondhead, Mississippi (“the Property”). Active subsidiaries of the Company include Mississippi Gaming Corporation, which owns the approximate 400-acre site and Casino World, Inc.
The Company’s intent was to construct a casino resort and other amenities on the Property unilaterally or, in conjunction with one or more joint venture partners. However, the Company has been unable to date, to obtain financing to move the project forward and/or enter into a joint venture partnership. Due to its lack of financial resources and certain law suits filed against it, the Company has been forced to explore other alternatives, including a sale of part or all of the Property. The Company’s preference is to sell only part of the Property inasmuch as this would appear to be in the best interest of the stockholders of the Company. However, there can be no assurance the Company will be able to sell only part of the Property. The Company intends to continue to pursue a joint venture partnership and/or other financing while seeking a viable purchaser for part or all of the Property. Thus, on March 25, 2019, Mississippi Gaming Corporation entered into a brokerage agreement with an unrelated third party to seek a buyer for all or part of the Property or, alternatively, to seek a joint venture partner for the project. The brokerage agreement has expired, but the Company continues to work with the broker on the same terms under the contract.
|
Liquidity and Going Concern |
12 Months Ended |
|---|---|
Dec. 31, 2023 | |
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
| Liquidity and Going Concern | Note 2. Liquidity and Going Concern
These consolidated financial statements have been prepared on the basis that the Company is a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has incurred losses over the past several years, has no operations, generates no operating revenues, and as reflected in the accompanying consolidated financial statements, incurred a net loss applicable to common stockholders of $1,511,427 for the year ended December 31, 2023. In addition, the Company had an accumulated deficit of $46,862,802 at December 31, 2023. Due to its lack of financial resources, the Company has been forced to explore other alternatives, including a sale of part or all of the Property.
The Company has had no operations since it ended its gambling cruise ship operations in 2000. Since that time, the Company has concentrated its efforts on the development of its Diamondhead, Mississippi property. That development is dependent upon the Company obtaining the necessary capital, through either equity and/or debt financing, unilaterally or in conjunction with one or more partners, to master plan, design, obtain permits for, construct, open, and operate a casino resort.
In the past, in order to raise capital to continue to pay on-going costs and expenses, the Company has borrowed funds, through Private Placements of convertible instruments as well as through other secured notes which are more fully described in Notes 5 through 10 to these consolidated financial statements. The Company is in default with respect to payment of both principal and interest under the terms of most of these instruments. In addition, at December 31, 2023, the Company had $13,587,711 of accounts payable and accrued expenses and $426,124 in cash on hand.
The above conditions raise substantial doubt as to the Company’s ability to continue as a going concern within one year after the date of that the consolidated financial statements are issued.
|
Summary of Significant Accounting Policies |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Summary of Significant Accounting Policies | Note 3. Summary of Significant Accounting Policies
Principles of Consolidation
The consolidated financial statements include the accounts of Diamondhead Casino Corporation and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.
Estimates
The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Land
Land held for development is carried at cost. Costs directly related to site development, such as licensing, permitting, engineering, and other costs, are capitalized.
Land development costs, which have been capitalized, consist of the following at December 31, 2023 and 2022:
Cooperative Energy, a Mississippi Electric Cooperative sought a permanent easement along the northern portion of the Property on which to construct, maintain and operate electric transmission lines together with an access road. On or about November 19, 2020, Cooperative Energy filed a Complaint with the Special Court of Eminent Domain, Hancock County, Mississippi seeking an Order authorizing the Cooperative to enter onto the Property for the purpose of examinations and surveys. The matters sought in the Complaint were quickly resolved by agreement of the parties. The Company’s understanding and MGC’s understanding was that the case would be dismissed, but the case was not dismissed. On or about May 24, 2023, Cooperative Energy filed a Complaint for Eminent Domain in the Special Court of Eminent Domain, Hancock County, Mississippi in which it named MGC and all persons and entities holding liens on the Diamondhead, Mississippi Property as defendants.
On October 17, 2023, the Court entered an Order Approving Settlement in the amount of $1 million and entered an Order Approving Disbursement of Funds to MGC. On October 20, 2023, MGC received $845,378 as part of the settlement amount. Cooperative shall pay the balance amount to MGC, equaling the total settlement payment of $1 million and ownership of the easement across MGC’s condemned property shall be vested in Cooperative. As such, the Company recorded a receivable of $154,622 on the consolidated balance sheet as of December 31, 2023.
Management determined that the easement arrangement was outside the scope of ASC 842. Further, the Company determined that the easement reduced the value of the property by $242,893. The remaining $757,107 of the $1 million easement was recorded as a gain on the condemnation of land in the consolidated statements of operations.
Fair Value Measurements
The Company follows the provisions of ASC Topic 820 “Fair Value Measurements” for financial assets and liabilities. This standard defines fair value, provides guidance for measuring fair value and requires certain disclosures. The standard utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels:
Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: Input other than quoted prices that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.
Level 3: Unobservable input that reflects management’s own assumptions.
Financial instruments included in current assets and liabilities are reported at carrying value in the consolidated balance sheets, which approximate fair value due to their short term nature.
Long-Lived Assets
The Company reviews long-lived assets whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. Recoverability of long-lived assets is measured by comparing the carrying amount of the assets to the estimated undiscounted future cash flows projected to be generated by the assets. If such assets are considered impaired, the impairment to be recognized is measured by the amount the carrying value exceeds the fair value of such assets determined by appraisal, discounted cash flow projections, or other means. No impairment existed as of December 31, 2023.
Employee Stock Ownership Plan
The Company has an Employee Stock Ownership Plan (ESOP) covering substantially all employees with one or more years of service, financed by employer loans. The Company also established a trust called the Europa Cruises Corporation Employee Stock Ownership Plan Trust Agreement, to serve as the funding vehicle for the ESOP. The President and Chief Executive Officer is the sole Trustee of the Trust. Compensation expense was measured at the current market price of shares committed for release and such shares constitute outstanding shares for earnings per share computations.
As the loans are repaid, shares are released from the ESOP and allocated to qualified employees based upon the proportion of payments made during the year to the remaining amount of payments due on the loans through maturity. Dividends, if any, are treated as follows:
(1) stock dividends on shares allocated to participant accounts shall be credited to the participant account when paid; and (2) cash dividends on shares allocated to participant accounts shall, at the discretion of the Administrator, be credited to the participants’ Other Investment Account or be used to reduce the indebtedness to the Company, in which case, shares bearing an equal value to the cash dividend would be allocated to participant accounts. The Company has not paid any dividends on its common stock.
For the years 2011 through 2023, the Company elected to temporarily suspend contributions to the Plan, in accordance with the loan pledge agreement between the Company and the ESOP Trust. For each year in which there was no contribution to the Plan, the Plan returned the shares, which would have been allocated to employees annually, to treasury. The Company has not filed the annual Form 550 reports pertaining to the ESOP since the year ended December 31, 2015.
Income Taxes
Under the asset and liability method of ASC Topic 740, “Accounting for Income Taxes,” deferred tax liabilities and assets are recognized for future tax consequences attributable to differences between the financial statement carrying amounts and the tax basis of assets and liabilities. A valuation allowance is recorded to reflect the uncertainty of realization of deferred tax assets.
The Company follows the provisions of Financial Accounting Standard Board (“FASB”) No. 48 (FIN 48), “Accounting for Uncertainty in Income Taxes.” The standard addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the consolidated financial statements. Under this standard, an entity may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities based on the technical merits of the position. The tax benefits recognized in the consolidated financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. The standard also provides guidance on derecognition, classification, interest and penalties on income taxes, and accounting in interim periods and requires increased disclosures. The Company does not have a liability for unrecognized tax benefits.
The Company’s policy is to record interest and penalties on uncertain tax provisions as income tax expense. As of December 31, 2023 and 2022, the Company has no accrued interest or penalties related to uncertain tax positions.
Basic loss per share is computed by dividing net loss available to common stockholders by the weighted average number of common shares outstanding. Basic weight average shares includes and of shares not yet issued as of December 31, 2023 and 2022. Diluted earnings per share is calculated by using the weighted average number of common shares outstanding, plus other potentially dilutive securities. Potentially dilutive securities are excluded from the computation of diluted loss per shares since their effect would be antidilutive. Common shares outstanding consist of issued shares, including allocated and committed shares held by the ESOP trust, less shares held in treasury. The dilutive securities below do not include potentially convertible Debentures, since the requirements for possible conversion had not yet been met and may never be met.
The Company follows the provisions of ASC Topic 718 “Compensation — Stock Compensation” which requires the measurement and recognition of compensation expense for all share-based payment awards either modified or granted to employees and directors based upon estimated fair values.
On November 9, 2020, the Board of Directors voted to award options to purchase common stock to its six current directors, including three officers of the Company, at a strike price of $ per share with an expiration date of , as follows: Martin Blount: ; Daniel Burstyn: ; Robert Crow: ; Benjamin Harrell: ; Gregory Harrison: and Deborah Vitale: . All options are vested.
On December 12, 2023, the Board of Directors voted to extend these outstanding options from December 31, 2023 to December 31, 2025.
On February 4, 2022, the Board of Directors entered into an agreement with the Chairman to issue shares of common stock of the Company to the Chairman to repurchase the indemnification. This repurchase eliminates any risk to the Company arising from the indemnification which could have been material. During the years ended December 31, 2023 and 2022, the Company record stock-based compensation of $ for the fair value for these shares, which have not yet been issued as of the issuance date of the consolidated financial statements.
Option valuation models require the input of highly subjective assumptions, including the expected stock price volatility. The Company uses projected volatility rates, which are based upon historical volatility rates, trended into future years. Because the Company’s employee stock options have characteristics significantly different from those of traded options, and because changes in the subjective input assumptions can materially affect the fair value estimate, in management’s opinion, the existing models do not necessarily provide a reliable single measure of the fair value of the Company’s options.
Reclassification
Certain reclassifications have been made to the Company’s consolidated financial statements for the year ended December 31, 2023 to conform to the current period’s consolidated financial statement presentation. A reclassification of $ from administrative and general expenses to stock-based compensation expense was recorded. The reclassification did not have any effects on the Company’s consolidated financial statements.
Recently Adopted Accounting Pronouncements
In November 2019, the FASB issued ASU 2019-10, Financial Instruments—Credit Losses (Topic 326), Derivative and Hedging (Topic 815, and Leases (Topic 841). This new guidance is effective for annual reporting periods beginning after December 15, 2019, including interim periods within those annual reporting periods. This pronouncement was amended under ASU 2019-10 to allow an extension on the adoption date to entities that qualify as a small reporting company. The Company has elected this extension and the effective date for the Company to adopt this standard will be for fiscal years beginning after December 15, 2022. Accordingly, the Company has adopted this standard as of January 1, 2023 and it did not have an effect on its consolidated financial statements.
Recently Issued Accounting Pronouncements Not Yet Adopted
On March 27, 2023, the FASB issued ASU 2023-01, which amends certain provisions of ASC 842 that apply to arrangements between related parties under common control. Specifically, the ASU:
The ASU is effective for fiscal years beginning after December 15, 2023. The Company has not completed its assessment of the standard, but does not expect the adoption to have a material impact on the Company’s unaudited condensed consolidated financial position, results of operations, or cash flows.
No other recent accounting pronouncements were issued by FASB that are believed by management to have a material impact on the Company’s present or future financial statements.
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| Accounts Payable and Accrued Expenses | Note 4. Accounts Payable and Accrued Expenses
The table below outlines the elements included in accounts payable and accrued expenses at December 31, 2023 and 2022:
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Convertible Notes and Line of Credit |
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| Convertible Notes and Line of Credit | Note 5. Convertible Notes and Line of Credit
Line of Credit
In 2008, the Company entered into an agreement with an unrelated third party for an unsecured Line of Credit up to a maximum of $1,000,000. The Line of Credit carries an interest rate on amounts borrowed of 9% per annum. All funds originally advanced under the facility were due and payable by November 1, 2012. As an inducement to provide the facility, the lender was awarded an immediate option to purchase shares of common stock of the Company at $ per share. In addition, the lender received an option to purchase a maximum of additional shares of common stock of the Company at $ per share. The options expire following repayment in full by the Company of the amount borrowed. The Company is in default under the repayment terms of the agreement. At December 31, 2023 and 2022, the unpaid principal and accrued interest due on the obligation totaled $2,302,929 and $2,213,422, respectively.
Convertible Notes
Pursuant to a Private Placement Memorandum dated March 1, 2010, the Company offered Units consisting of a two year unsecured, convertible promissory note in the principal amount of $25,000 with interest at 12% per annum. The Promissory Notes were convertible into shares of common stock of the Company upon issuance and for a period of five years at the option of the investor. The conversion rights have expired.
Pursuant to an additional Private Placement Memorandum dated October 25, 2010, the Company offered Units consisting of a two year unsecured, convertible promissory note in the principal amount of $25,000. The Promissory Notes bear interest at 9% per annum and were convertible into shares of common stock of the Company upon issuance and for a period of five years at the option of the investor. The conversion rights have expired.
The Convertible Notes issued pursuant to the two Private Placements discussed above total $962,500 in principal and became due and payable beginning in March 2012 and extending to various dates through June 2013. As of the date of the filing of this report, all of the aforementioned debt obligations remain unpaid and in default under the repayment terms of the notes. In November 2020, the Superior Court of the State of Delaware awarded Judgments in favor of certain holders of these Promissory Notes who filed suit against the Company. As a result, the Company must carry an aggregate of $486,796 (total principal and interest) as debt owed to these noteholders. As of December 31, 2023 and 2022, all Notes issued had a total outstanding principal of $962,500 and accrued interest, including the additional interest awarded pursuant to the Court Judgments of $1,145,957 and $1,043,547, respectively.
The table below summarizes the Company’s debt arising from the above-described sources as of December 31, 2023 and 2022:
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Convertible Debentures |
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| Debt Disclosure [Abstract] | |||||||||||||||||||||||||
| Convertible Debentures | Note 6. Convertible Debentures
Pursuant to a Private Placement Memorandum dated February 14, 2014 (the “Private Placement”), the Company offered up to a maximum of $3,000,000 of Collateralized Convertible Senior Debentures to accredited or institutional investors. The Offering was conducted contingent on the deposit into Escrow of the purchase price for all of the Debentures offered in the principal amount of $3,000,000. The Debentures, once issued, originally bore interest at 4% per annum after 180 days, matured six years from the date of issuance, and were secured by a lien on the Company’s Mississippi property. The interest rate on these debentures was raised pursuant to a settlement agreement. The debentures were offered in three tranches as follows:
The conversion rights on each issued Debenture carry an Anti-Dilution Provision. If the Company issues any shares of Common Stock or other securities after March 31, 2014 at a price per security that is less than the conversion price of a Debenture, then the Debenture shall have a new conversion price equal to the price per security that is less than the Conversion Price of the Debenture. The foregoing provision shall not apply to the following:
The Anti-Dilution Provisions with respect to a Debenture terminate the earlier of (a) the date (if ever) the Company receives an “Approval to Proceed” from the Mississippi Gaming Commission to develop a casino/hotel on the Property, (b) the date on which the Debenture is converted in full, (c) the date on which the Debenture is paid in full, or (d) the Final Maturity Date of the Debenture (as defined in the Debenture).
Since the issuance of the Debentures, there have been no events that would trigger the above anti-dilution provisions.
When originally issued, in the event the Company failed to meet the conditions for conversion of the Debentures, the First Tranche Convertible Debentures, which total $950,000, would have been due on March 31, 2020 and the Second Tranche Convertible Debentures, which total $850,000, would have been due December 31, 2020. The sole remaining non-convertible Debenture in the amount of $50,000 would have been due March 31, 2020. However, the Company is in default with respect to interest payments due under the Debenture agreements in the amount of $427,081 and as a result, the Debentures payable are reported as current liabilities.
Total accrued interest due on all outstanding Debentures amounted to $750,719 and $617,733 at December 31, 2023 and 2022, respectively.
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Short Term Notes and Interest-Bearing Advance |
12 Months Ended |
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Dec. 31, 2023 | |
| Debt Disclosure [Abstract] | |
| Short Term Notes and Interest-Bearing Advance | Note 7. Short Term Notes and Interest-Bearing Advance
Promissory Notes
On June 9, 2017, the Company entered into a Promissory Note with an unrelated lender in exchange for proceeds in the amount of $15,000. Interest on the note is 12.5% per annum and payable March 1 of each year the note remains outstanding. Payment in full of the Note was due June 9, 2019. On July 20, 2023, the Noteholder agreed to extend the maturity date of the note to June 9, 2025. Mississippi Gaming Corporation, a wholly owned subsidiary of the Company, guaranteed the Note. In addition, the President of the Company agreed to personally guarantee the Note and to personally secure the Note with an assignment of proceeds due to her under the first lien on the Diamondhead property. The interest payments since March 1, 2018 have been due. In the fourth quarter of 2023, the Company fully repaid the principal amount of $15,000 and settled the accrued interest due on this obligation, which amounted to $14,165.
Bank Credit Facility
Wells Fargo Bank provided an unsecured credit facility of up to $15,000 to the Company. The facility required a variable monthly payment of amounts borrowed plus interest, which is applied at 11.24% on direct charges and 24.99% on any cash advanced through the facility. At December 31, 2023 and 2022, a principal balance of $18,004 remained outstanding on the facility. The lending bank has since cancelled privileges under the facility for non-payment.
Interest Bearing Advances
In 2016, the Company received cash advances totaling $47,500 from seven lenders which included $22,500 from third parties (see Note 8 for related party advances). The proceeds from the cash advances were earmarked for the payment of accounting and auditing fees and other expenses required to file the Company’s Form 10-Q. On August 25, 2016, the Company issued a Note to the foregoing lenders, which matures four years from the date of issuance and bears interest at 8% per annum, with a full year of interest accruing in any year in which the advance remains unpaid. Accrued interest due on the above notes amounted to $16,400 and $14,200 at December 31, 2023 and 2022, respectively.
On February 2, 2017, the Company borrowed $ from an unrelated third party. The Note carries an annual interest rate of approximately % and is past due. The Company is in default and as such, the lender may increase the interest rate due by an amount of up to 3% per annum in excess of the rate then otherwise applicable. The Company does not have the funds to repay the advance. The President of the Company has agreed to personally secure the note with an assignment of proceeds due to her under the first lien on the Property. In November 2023, the company made a payment of $ against the interest accrued. Accrued interest on this obligation amounted to $ and $ at December 31, 2023 and 2022, respectively.
Of the amounts discussed above, $65,504 in short-term notes and advances are in default under the original agreed to terms.
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Current Notes Payable Due Related Parties |
12 Months Ended |
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Dec. 31, 2023 | |
| Current Notes Payable Due Related Parties | |
| Current Notes Payable Due Related Parties | Note 8. Current Notes Payable Due Related Parties
In 2016, the Company received cash advances totaling $47,500 from seven lenders which included $25,000 from three Current Directors of the Company (see Note 7). The proceeds from the cash advances were earmarked for the payment of accounting and auditing fees and other expenses required to file the Company’s Form 10-Q. On August 25, 2016, the Company issued a Note to the foregoing lenders, which matures four years from the date of issuance and bears interest at 8% per annum, with a full year of interest accruing in any year in which the advance remains unpaid. Accrued interest due on the above notes amounted to $16,000 and $14,000 at December 31, 2023 and 2022, respectively. These amounts are included in current liabilities on the consolidated balance sheets as of December 31, 2023 and 2022. This note is secured by a second lien on the Diamondhead Property.
In the third quarter of 2016, the Chairman of the Board of Directors of the Company loaned the Company $90,000. On August 25, 2016, the Company issued a Note to the Chairman of the Board. The Note bears interest at 14% per annum effective August 1, 2016 and matures four years from the date of issuance. The proceeds of the loan were used for the payment of Mississippi property taxes and auditing, accounting and other corporate expenses. Accrued interest due on the above note amounted to $93,482 and $80,882 at December 31, 2023 and 2022, respectively.
In July 2017, at the request of the Company, the current Chairman of the Board of Directors, who is also a Vice President of the Company (“the Chairman”), paid all property taxes due, together with all interest due thereon to Hancock County, Mississippi on an approximate 400-acre tract of land, owned by Mississippi Gaming Corporation, a wholly owned subsidiary of the Company. The total amount advanced was $67,628.
The Chairman is one of the secured parties under that Land Deed of Trust recorded on September 26, 2014 in Hancock County, Mississippi, to secure Tranche I and Tranche II Debentures issued by the Company in 2014. Under paragraph 5 of the Land Deed of Trust, a secured party who advances sums for taxes due on the Property is secured by the same Land Deed of Trust, but only at that interest rate specified in the note representing the primary indebtedness, namely 4% per annum.
The Chairman advanced the $67,628 on condition that: (i) the advance constitute a lien with interest at 4% per annum under that Land Deed of Trust recorded September 26, 2014; (ii) he be paid additional interest of 11% per annum on the amount advanced and owing and that the full 11% interest per annum is payable during any calendar year in which all or part of the amount advanced and owing or interest due thereon remains unpaid; (iii) this additional interest obligation be treated as a separate and secured debt of the Company, to be evidenced by a separate note and is secured with a separate and third lien to be placed on the Property (hereafter “the Third Lien”); (iv) the entire obligation will be treated as an advance to be paid out of any subsequent incoming financing obtained by the Company or any amounts recovered by the Company from a defendant in that collection action brought by the Company in the Circuit Court of Montgomery County, Maryland; and (v) he be indemnified for any losses sustained on the sale of that common stock sold to cover the payment of real estate property taxes and any credit card fees associated with payment (“the indemnification”). The Chairman identified the common stock sold and provided the Company with the documentation required to document the sale of said stock and to calculate the loss, if any, on said stock. The fair value measurement of the derivative indemnification liability at December 31, 2021 was developed using Level 1 inputs, which was valued at $0. On February 4, 2022, the Board of Directors entered into an agreement with the Chairman to issue shares of common stock of the Company to the Chairman to repurchase the indemnification. See Note 10. On September 30, 2018, Mississippi Gaming Corporation issued a secured promissory note, due one year from the date of issue, to the Chairman for an amount up to $100,000 to cover the principal and interest due with respect to this note. On August 21, 2018, Mississippi Gaming Corporation placed a third lien on the Property to secure this obligation for $100,000. Accrued interest on the note amounted to $69,527 and $59,360 at December 31, 2023 and 2022, respectively.
In March of 2018, the Board of Directors voted to increase up to an additional $200,000 the amount secured by the third lien in favor of the Chairman of the Board, for amounts advanced by the Chairman on behalf of the Company, on the following terms and conditions, namely, that (i) the advance constitutes a lien on the Property with interest at 15% per annum; (ii) that the full interest of 15% per annum is payable during any calendar year in which all or part of the amount advanced is due and owing or interest due thereon remains unpaid; (iii) that this debt be evidenced by a separate promissory note and is to be included in and secured with a third lien that is to be placed on the Diamondhead Property to secure previous advances made to the Company (hereafter “the Third Lien”); (iv) that he be indemnified for any losses sustained on the sale of his common stock in an unrelated publicly-traded company to be sold to cover this advance based on a sales price of approximately $2.80 per share with a cap on the maximum loss per share to be at a sales price of $10.00 per share; and (v) that the Chairman’s previous indemnification approved by the Board of Directors on July 24, 2017 with respect to any loss on the sale of the same stock also be capped at a maximum of $10.00 per share. The Chairman will provide the Company with the documentation required to document the sale of said stock and to calculate the loss, if any, on said stock. On February 4, 2022, the Board of Directors entered into an agreement with the Chairman to issue shares of common stock of the Company to the Chairman to repurchase the indemnifications. See Note 11.
On September 30, 2018, Mississippi Gaming Corporation issued a secured promissory note, due one year from the date of issue to the Chairman, for an amount up to $200,000 to cover the principal and interest due with respect to this note. On August 21, 2018, Mississippi Gaming Corporation placed a third lien on the Diamondhead Property to secure this obligation for $200,000.
In November of 2018, the Board of Directors voted to increase up to an additional $100,000 of advances from the Chairman and in March of 2019, the Board of Directors voted to increase the limit of the advances to $200,000. The terms of this advance are identical to the terms as approved above in March 2018.
In July 2020, the Chairman of the Board of the Company paid a total of $67,076 for property taxes due for the year 2019 on the Company’s 400-acre Diamondhead, Mississippi Property plus $1,573 in related fees. The Company placed a fourteenth lien on the Property in July 2021 to secure a promissory note in the amount of $150,000 issued to the Chairman of the Board of the Company to secure the payment of these taxes and interest due thereon.
In May 2021, the Chairman of the Board of the Company paid a total of $62,610 for property taxes due for the year 2020 on the Company’s 400-acre Diamondhead, Mississippi Property plus $1,468 in related fees. The Company placed a fifteenth lien on the Property in July 2021 to secure a promissory note in the amount of $100,000 issued to the Chairman of the Board of the Company to secure the payment of these taxes and interest due thereon.
On May 30, 2021, the Chairman of the Board of the Company loaned the Company $50,000. The note is non-interest bearing and matures one year from the date of issuance. The Company placed a sixteenth lien on the Property in July 2021 to secure this non-interest bearing note which totals $50,000 in principal and calls for the issuance of shares of common stock. The note is not convertible. As of the issuance date of these financial statements, no shares have been issued. The Company recorded a fair value of the stock of $33,500, which was determined by the fair value of the Company’s common stock at the date of the loan. The fair value of the stock was recorded as a debt discount, which will be amortized to interest expense over the life of the note. Debt discount was fully amortized during 2022.
On February 17, 2023, the Board of Directors agreed to issue a non-interest bearing promissory note to the Chairman in the principal amount of $25,000 together with shares of common stock of the Company. The note was issued in connection with the Chairman advancing funds to pay off accounts payable on behalf of the Company. The note is not convertible. As of the issuance date of these financial statements, no shares have been issued. The Company recorded a fair value of the stock of $17,500, which was determined by the fair value of the Company’s common stock at the date of the loan. The fair value of the stock was recorded as a debt discount, which will be amortized to interest expense over the life of the note. During the year ended December 31, 2023, $17,096 of debt discount was amortized to interest expense to related parties. On November 1, 2023, as previously agreed, the Company paid the Chairman the $25,000 advanced out of the proceeds of the eminent domain settlement.
On July 28, 2023, the Board of Directors agreed to issue a non-interest bearing promissory note to the Chairman in the principal amount of $75,000 together with shares of common stock of the Company. The note was issued in connection with the Chairman advancing funds to pay off property taxes due for the year 2022 on the Diamondhead, Mississippi Property and fees due to Company’s outside auditor for review of Form 10Q for the period ending June 30, 2023, on behalf of the Company. The note is not convertible. As of the issuance date of these financial statements, no shares have been issued. The Company recorded a fair value of the stock of $52,500, which was determined by the fair value of the Company’s common stock at the date of the loan. The fair value of the stock was recorded as a debt discount, which will be amortized to interest expense over the life of the note. During the year ended December 31, 2023, $22,644 of debt discount was amortized to interest expense to related parties. On November 1, 2023, as previously agreed, the Company paid the Chairman the $74,520 advanced out of the proceeds of the eminent domain settlement.
As of December 31, 2023, the Chairman had advanced a total of $467,953, net of repayment of $16,250, under both the March 2018 and March 2019 arrangements and was owed accrued interest in the amount of $349,415 and $279,754 at December 31, 2023 and 2022, respectively.
On July 24, 2017, the President of the Company, who is a Director of the Company, agreed to advance the Company up to $20,000 for the payment of expenses. In March of 2018, the Board of Directors voted to increase to up to $100,000 the amount to be secured by a third lien in favor of the President of the Company for amounts advanced by the President under this note, on the following terms and conditions, namely, that (i) she be paid interest of 15% per annum on the amount advanced and owing and that the full 15% interest per annum is payable during any calendar year in which all or part of the amount advanced and owing or interest due thereon remains unpaid; (ii) the obligation in the maximum principal amount of $100,000 with interest due thereon be treated as a secured debt of the Company, to be evidenced by a separate note and to be secured with a separate lien to be placed on the Diamondhead Property (“the Third Lien”) together with the Chairman’s Third Lien, as well as a first lien to be placed on the residential lot owned by the Company; (iii) that the Third Lien on the Diamondhead Property also include the two loans ($25,000 and $15,000) and interest due thereon and credit facilities in the maximum amount of $15,000; and (iv) that the foregoing will be treated as advances to be paid out of any subsequent incoming financing obtained by the Company or any amounts recovered by the Company from a defendant in that collection action brought by the Company in the Circuit Court of Montgomery County, Maryland.
As of December 31, 2023, the President had advanced a total of $5,007, net of repayments of $68,562, under this agreement. The President previously agreed to secure a $25,000 loan and interest due thereon and to secure and guarantee a $15,000 loan and interest due thereon due non-related parties discussed above. The President is also personally liable for certain bank-issued credit cards used by the Company to pay expenses incurred by the Company in the approximate amount of $18,000. On September 30, 2018, Mississippi Gaming Corporation issued a secured promissory note, due one year from date of issue, to the President for an amount up to $100,000 to cover the principal and interest due with respect to this note. On August 21, 2018, Mississippi gaming Corporation placed a third lien on the Diamondhead Property to secure this obligation for $100,000. Accrued interest due on this note amounted to $23,763 and $41,409 at December 31, 2023 and 2022, respectively.
The third lien placed on the Diamondhead Property, which secures the above three promissory notes, totals up to $400,000 and is payable to the Chairman of the Board ($300,000) and President ($100,000) of the Company.
The principal balance of the notes payable due to the officers and directors discussed above was $669,279, net of debt discount of $33,241 and $720,651, net of debt discount of $0, as of December 31, 2023 and 2022, respectively.
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Notes Payable Due Others |
12 Months Ended |
|---|---|
Dec. 31, 2023 | |
| Notes Payable Due Others | |
| Notes Payable Due Others | Note 9. Notes Payable Due Others
In October 2017, the Company entered into a settlement with a holder of $150,000 of convertible notes as described in Note 5 above. As part of the settlement, the Company agreed to pay legal fees in the amount of $50,000 and issued a four year note at 0% interest to satisfy this obligation. The note is currently in default.
In December 2020, the Company entered into three promissory notes with unrelated lenders in exchange for an aggregate principal amount of $. The Company received proceeds of $, resulting in an original issue discount of $. This original issue discount was recorded as a debt discount, which will be amortized to interest expense over the life of the notes.
In January and February 2021, the Company entered into two additional promissory notes with unrelated lenders in exchange for a principal amount of $ and $, respectively. The Company received total proceeds of $, resulting in an original issue discount of $. This original issue discount was recorded as a debt discount, which will be amortized to interest expense over the life of the notes. The notes are non-interest bearing and matured in January and February 2022, respectively, one year after the notes’ issuances. These notes are currently in default.
In April and May 2021, the Company entered into three additional promissory notes with unrelated lenders in exchange for a principal amount of $, $ and $, respectively. The Company received total proceeds of $ for the notes, resulting in an original issue discount of $. This original issue discount was recorded as a debt discount, which will be amortized to interest expense over the life of the notes. The notes are non-interest bearing and matured in April and May 2022, respectively, one year after the notes’ issuances. These notes are currently in default.
In July 2021, the Company entered into an additional promissory note with an unrelated lender in exchange for a principal amount of $. The Company received proceeds of $ for the note. The note is non-interest bearing and matured in July 2022, one year after the note’s issuance. This note is currently in default.
In November 2021, the Company entered into an additional promissory note with an unrelated lender in exchange for a principal amount of $. The Company received proceeds of $. The note is non-interest bearing and matured in November 2022, one year after the note’s issuance. This note is currently in default.
In March 2022, unrelated third parties paid a total of $60,436 for property taxes due for the year 2021 on the Company’s Mississippi Property and loaned the Company an additional $19,564 for a total of $80,000. In return for the $80,000, the Company issued two non-interest bearing secured promissory notes for $40,000 each, due and payable in one year and, in addition, agreed to issue shares of common stock for each $40,000 loaned, for a total repayment due of $80,000 plus shares of common stock. The note is currently in default.
In April 2022, the Company entered into an additional promissory note with an unrelated lender in exchange for a principal amount of $. The Company received proceeds of $ for the note. The note is non-interest bearing and matures in April 2023, one year after the note’s issuance. The note is currently in default.
From April 2021 to June 2022, thirteen liens were placed on the Property to secure these notes. There is a call for the issuance of a total of shares of common stock in connection with the notes and liens, however, no shares have been issued to date. In December 2020, the Company recorded a fair value of the stock of $22,050, which was determined by the fair value of the Company’s common stock at the date of each loan issuance. In 2021, the Company recorded a fair value of the stock pertaining to the 2021 notes of $102,000. In 2022, the Company recorded a fair value of the stock pertaining to the 2022 notes of $98,000. The fair value of the stock was recorded as a debt discount, which has been fully amortized to interest expense as of September 30, 2023.
On July 25, 2023 and August 8, 2023, the Company entered into two additional promissory notes with unrelated lenders in exchange for a principal amount of $ each. The Company received total proceeds of $ for the notes. These notes are non-interest bearing and mature in after the notes’ issuance. In exchange for the loans, the Company also agreed to issue shares of common stock of the Company to each lender and agreed to pay each lender the principal due on each note out of the proceeds expected to be received from the settlement of an eminent domain proceeding. The notes are not convertible. As of the issuance date of these financial statements, no shares have been issued. The Company recorded a fair value of the stock of $, which was determined by the fair value of the Company’s common stock at the date of the loan. The fair value of the stock was recorded as a debt discount, which will be amortized to interest expense over the life of the note. During the year ended December 31, 2023, $ of debt discount was amortized to interest expense to others. On November 1, 2023, as previously agreed, the Company paid the two lenders $ each out of the proceeds of the eminent domain settlement.
During the years ended December 31, 2023 and 2022, $36,376 and $141,663 of the debt discount was amortized to interest expense to others. As of December 31, 2023 and 2022, total notes payable due others, net of unamortized discount, was $541,739 and $532,563, respectively.
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Long Term Notes and Interest-Bearing Advance |
12 Months Ended |
|---|---|
Dec. 31, 2023 | |
| Debt Disclosure [Abstract] | |
| Long Term Notes and Interest-Bearing Advance | Note 10. Long Term Notes and Interest-Bearing Advance
Promissory Notes
On June 9, 2017, the Company entered into a Promissory Note with an unrelated lender in exchange for proceeds in the amount of $15,000. Interest on the note is 12.5% per annum and payable March 1 of each year the note remains outstanding. Payment in full of the Note was due June 9, 2019. On July 20, 2023, the Noteholder agreed to extend the maturity date of the note to June 9, 2025. Mississippi Gaming Corporation, a wholly owned subsidiary of the Company, guaranteed the Note. In addition, the President of the Company agreed to personally guarantee the Note and to personally secure the Note with an assignment of proceeds due to her under the first lien on the Diamondhead property. The interest payments since March 1, 2018 have not been made. On November 28, 2023, the Company fully repaid $15,000 along with the accrued interest due on this obligation and no further amount was outstanding.
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Related Party Transactions |
12 Months Ended |
|---|---|
Dec. 31, 2023 | |
| Related Party Transactions [Abstract] | |
| Related Party Transactions | Note 11. Related Party Transactions
As of December 31, 2023, the President of the Company is owed deferred salary in the amount of $3,666,996 and the Vice President and the current Chairman of the Board of Directors of the Company is owed deferred salary in the amount of $121,140. The Board of directors agreed to pay interest at 9% per annum on the foregoing amounts owed. Interest expense under this agreement amounted to $326,360 and $288,547 during the years ended December 31, 2023 and 2022, respectively. Total interest accrued under this agreement totaled $2,237,878 and $1,781,809 as of December 31, 2023 and 2022, respectively.
The Company has a month-to-month lease with the President and then-Chairman of the Board of Directors of the Company, for office space owned by the President in Alexandria, Virginia. The lease calls for monthly base rent in the amount of $4,534 and payment of associated costs of insurance, real estate taxes, utilities and other expenses. Rent expense associated with this lease amounted to base rent in the amount of $54,408 and associated rental costs of $33,689 for a total of $88,097 for the year ended December 31, 2023 and base rent in the amount of $54,408 and associated rental costs of $30,737 for a total of $85,145 for the year ended December 31, 2022. At December 31, 2023 and 2022, amounts owing for base rent and associated rental costs totaled $602,252 and $568,569, respectively.
Directors of the Company are entitled to a director’s fee of $15,000 per year for their services. The Company has been unable to pay directors’ fees to date. A total of $928,750 and $838,750 was due and owing to the Company’s current and former directors as of December 31, 2023 and 2022, respectively. Directors have previously been compensated and may, in the future, be compensated for their services with cash, common stock, or options to purchase common stock of the Company.
On February 4, 2022, the Board of Directors entered into an agreement with Mr. Harrison, the Chairman of the Board of Directors, to issue shares of common stock of the Company to Mr. Harrison to repurchase the indemnifications the Company had previously agreed to pay Mr. Harrison for losses, if any, suffered on certain stock he had sold in prior years in an unrelated company to raise funds to pay property taxes due on the Diamondhead, Mississippi Property and to lend additional funds to the Company. This repurchase eliminates any risk to the Company arising from the indemnification which could have been material. During the year ended December 31, 2022, the Company recorded stock-based compensation of $ for the fair value of these shares, which have not yet been issued as of the issuance date of these consolidated financial statements.
On February 17, 2023, the Board of Directors agreed to issue a non-interest bearing promissory note to the Chairman in the principal amount of $25,000 together with shares of common stock of the Company. The note was issued in connection with the Chairman advancing funds to pay off accounts payable on behalf of the Company.
On July 28, 2023, the Board of Directors agreed to issue a non-interest bearing promissory note to the Chairman in the principal amount of $75,000 together with shares of common stock of the Company. The note was issued in connection with the Chairman advancing funds to pay property taxes on the Diamondhead Property for the year 2022 and to pay fees due to the Company’s outside auditor for review of the Form 10-Q for the period ending June 30, 2023. In exchange for the $25,000 and $75,000 loans, the Company also agreed to pay the principal due of out of the proceeds expected to be received from the settlement of an eminent domain proceeding. On November 1, 2023, as previously agreed, the Company paid the Chairman $74,520 advanced out of the proceeds of the eminent domain settlement and remaining balance against note is $480 as of December 31, 2023.
See Notes 4, 5, 7, 8 and 15 for other related party transactions.
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Stockholders’ Deficit |
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| Stockholders’ Deficit | Note 12. Stockholders’ Deficit
At December 31, 2023 and 2022, the Company had a stock option plan and non-plan options, which are described below.
Non-Plan Stock Options
On January 3, 2018, the Board of Directors voted to , the expiration date for a total of currently outstanding options previously issued to the Chairman, the President, the Vice President and two former employees of the Company. The Company recorded stock-based compensation expense of $ for the year ended December 31, 2018. No share-based awards were issued or amended in 2019. On November 6, 2020, the Board of Directors voted to extend 2,965,000 of these outstanding options from December 31, 2020 to December 31, 2023. In December 2023, the Board of Directors voted to extend the expiration date of all options to December 31, 2025. As a result of the modification to the options, the Company recorded an additional $546,400 in stock based compensation expense for the year ended December 31, 2023. Accordingly, 150,000 of these 3,115,000 options expired at December 31, 2020.
On November 9, 2020, the Board of Directors voted to award options to purchase common stock to its six current directors, including three officers of the Company, at a strike price of $ per share with an expiration date of , as follows: Martin Blount: ; Daniel Burstyn: ; Robert Crow: ; Benjamin Harrell: ; Gregory Harrison: and Deborah Vitale: . All options are vested.
Stock Option Plan
On December 19, 1988, the Company adopted a stock option plan (the “Plan”) for its officers and management personnel under which options could be granted to purchase up to shares of the Company’s common stock. Accordingly, the Company reserved shares for issuance under the Plan. The exercise price may not be less than % of the market value of the shares on the date of the grant. The options expire within from the date of grant. At December 31, 2023, options from this plan were issued or exercised.
Summary of Stock Options
Preferred Stock
Series S Preferred Stock
The Company has shares outstanding of $ par value Series S Voting, Non-Convertible Preferred Stock which was issued to Austroinvest International, Inc. The Company is required to pay quarterly cumulative dividends of three percent per annum on these shares.
These shares may be redeemed at the option of the Company at $1.08 per share plus $.0108 per share for each quarter that such shares are outstanding for a total of $2.18 per share at December 31, 2023. The shares also have a $1.08 per share preference in involuntary liquidation of the Company. At December 31, 2023 and 2022, outstanding Series S preferred stock totaled shares. Cumulative dividends in arrears at December 31, 2023 and 2022 amounted to and $375,000 and $345,000, respectively.
Series S-NR Preferred Stock
The Company has shares outstanding of its $ par value Series S-NR Voting, Non-Convertible, Non-Redeemable, Preferred Stock, which was issued to Serco International Limited. The Company is required to pay quarterly, non-cumulative dividends of three percent per annum on these shares. Upon involuntary liquidation of the Company, the liquidation preference of each share is $1.11. At December 31, 2023 and 2022, outstanding Series S-NR preferred stock totaled shares. Non-cumulative dividends in arrears at December 31, 2023 and 2022 amounted to $375,000 and $345,000, respectively.
Series S-PIK Preferred Stock
The Company has one million units outs, each unit consisting of one share of the Company’s $ par value common stock and two shares of the Company’s Series S-PIK Junior, cumulative, convertible, non-redeemable, non-voting $ par value preferred stock. Each share of Series S-PIK preferred stock is convertible into one share of the Company’s common voting stock at any time after February 15, 1995. shares were converted during 2023 or 2022. The Series S-PIK preferred stock ranks junior to the Series S and Series S-NR preferred shares as to the distribution of assets upon liquidation, dissolution, or winding up of the Company. Upon liquidation of the Company, the S-PIK preferred stock will have a liquidation preference of $2.00 per share. A cumulative quarterly dividend of $0.04 per share is payable on Series S-PIK preferred stock. At December 31, 2023 and 2022, outstanding Series S-PIK preferred stock totaled shares. Cumulative dividends in arrears at December 31, 2023 and 2022 amounted to $520,000 and $478,400, respectively.
Payment of Preferred Dividends
The Company did not pay any dividends due on its preferred stock in 2023 or 2022. However, payment of all cumulative and non-cumulative preferred stock dividends, outstanding at any time, is required before the Company can issue any dividends on its common stock.
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Employee Stock Ownership Plan |
12 Months Ended |
|---|---|
Dec. 31, 2023 | |
| Retirement Benefits [Abstract] | |
| Employee Stock Ownership Plan | Note 13. Employee Stock Ownership Plan
The Company’s employee stock ownership plan (ESOP) is intended to be a qualified retirement plan and an employee stock ownership plan. All employees having one year of service are eligible to participate in the ESOP. The ESOP is funded by two 8% promissory notes issued by the Company. The shares of common stock are pledged to the Company as security for the loans. The promissory notes are payable from the proceeds of annual contributions made by the Company to the ESOP. In the event that the Company elects not to make a Plan contribution in any given year, the corresponding shares applicable to that year are released from the Trust to the Company in consideration of that years’ note payment. In January 2001, the Plan and accompanying promissory notes were amended to conform to the Company’s current employment structure, by extending the note repayment terms through 2044.
Assuming a Plan contribution is made, shares are allocated to the participants’ accounts in relation to repayments of the loans from the Company. At December 31, 2023, there were a total of shares with a fair market value of $.
In 2011, the Company decided to temporarily suspend contributions to the Plan. Therefore, the Trust was unable to make its annual loan payment to the company and a loan default occurred. In accordance with the Pledge Agreement between the Company and the Trust, the shares attached to the loan payments subsequent to the 2010 contribution reverted back to the Company as treasury shares. In 2023 and 2022, shares, with a market value of $16,704 and $30,227, respectively, reverted back to the Company as treasury shares.
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Income Taxes |
12 Months Ended |
|---|---|
Dec. 31, 2023 | |
| Income Tax Disclosure [Abstract] | |
| Income Taxes | Note 14. Income Taxes
At December 31, 2023, the Company had net operating loss carryforwards for income taxes of approximately $5.6 million, which expire during various periods through 2041. Realization of deferred income taxes as of December 31, 2023 and 2022 is not considered likely. Therefore, by applying a federal statutory rate of 21% to the carryforward amounts, a valuation allowance of approximately $1.3 and $1.7 million, has been established for each year for the entire amount of deferred tax assets relative to the net operating loss at December 31, 2023 and 2022, respectively, resulting in an effective tax rate of 0% and no deferred tax asset recognition. The valuation allowance decreased by approximately $416,000 in 2023 and $215,000 in 2022. The net operating losses before 2017 will expire during various periods through 2037. The net operating losses after 2017 can be carried forward indefinitely but can offset only % of the income in the tax year.
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Commitments and Contingencies |
12 Months Ended |
|---|---|
Dec. 31, 2023 | |
| Commitments and Contingencies Disclosure [Abstract] | |
| Commitments and Contingencies | Note 15. Commitments and Contingencies
Liens
As of December 31, 2023, the Company had placed twenty-one liens on the Company’s Diamondhead, Mississippi Property (“the Property”). No additional liens have been filed as of the filing of this report. The liens were as follows:
In September of 2014, a first lien was placed on the Property pursuant to a Private Placement dated February 14, 2014, as amended, to secure certain obligations of the Company. The first lien is composed of an (i) Executives Lien and (ii) an Investors’ Lien. The liens are in pari passu.
On March 31, 2014, the Company issued $1 million of First Tranche Collateralized Convertible Senior Debentures. On December 31, 2014, the Company issued $850,000 of Second Tranche Collateralized Convertible Senior Debentures. On September 26, 2014, a first lien was placed on the Diamondhead Property in favor of the Investors to secure the principle due in the amount of $1,850,000 and interest due thereon (the “Investors Lien”). The Investors Lien is in pari passu with a first lien placed on the Property in favor of the President of the Company, the Vice President of the Company, and certain directors of the Company for past due wages, compensation, and expenses owed to them in the maximum aggregate amount of $2,000,000 (the “Executives Lien”). The CEO will serve as Lien Agent for the Executives Lien.
On December 16, 2016, the Company filed a second lien on the Property in the maximum amount of $250,000 to secure certain notes payable, including notes to related parties, totaling $137,500 in principle and accrued interest incurred.
On August 21, 2018, the Company filed a third lien on the Property in the maximum amount of $400,000 to secure notes issued to the Chairman of the Board and President of the Company arising in the third quarter of 2017 and during 2018, as more fully described in Note 8.
On January 26, 2021, the Company filed a fourth lien on the Property in the amount of $2,000,000 to secure a non-interest-bearing note payable in the amount of $2,000,000 issued to secure amounts owed to the President of the Company for accrued, but unpaid, salary, rent and other expenses.
On February 17, 2021, the Company filed a fifth lien in the amount of $658,750 on the Property to secure a non-interest-bearing note payable in the amount of $658,750, issued to secure amounts owed to nine directors, including the Company’s six current directors.
In April 2021, the Company filed six liens on the Property to secure six non-interest-bearing notes payable to be issued to six lenders bringing total liens on the Property to eleven. The six notes issued total $252,500 in principle and call for the issuance of shares of common stock. The notes are not convertible. As of the issuance date of these financial statements, no shares have been issued.
In June 2021, the Company filed a twelfth and thirteenth on the Property to secure two non-interest bearing notes issued in May of 2021 which total $50,000 in principle and call for the issuance of a total of shares of common stock. The notes are not convertible. As of the issuance date of these financial statements, no shares have been issued.
In July 2021, the Company filed a fourteenth lien on the Property to secure a promissory note in the amount of $150,000 issued to the Chairman of the Board to secure the payment of taxes and interest that were paid by the Chairman in July 2020.
In July 2021, the Company filed a fifteenth lien on the Property to secure a promissory note in the amount of $100,000 issued to the Chairman of the Board to secure the payment of taxes and interest that were paid by the Chairman in May 2021.
In July 2021, the Company filed a sixteenth lien on the Property to secure a non-interest bearing note issued to the Chairman of the Board in May 2021 which totals $50,000 in principle and calls for the issuance of shares of common stock. The note is not convertible. As of the issuance date of these condensed consolidated financial statements, no shares have been issued.
In July 2021, the Company filed a seventeenth lien on the Property to secure a non-interest bearing note issued to a lender, which totals $25,000 in principle and calls for the issuance of shares of common stock. The note is not convertible. As of the issuance date of these financial statements, no shares have been issued.
In November 2021, the Company filed an eighteenth lien on the Property to secure a non-interest bearing note issued in November 2021 which totals $50,000 in principle and calls for the issuance of shares of common stock. The note is not convertible. As of the issuance date of these condensed consolidated financial statements, no shares have been issued.
In March 2022, the Company filed a nineteenth and twentieth lien on the Property to secure two non-interest bearing notes issued in March of 2022 which total $80,000 in principle and call for the issuance of a total of shares of common stock. The notes are not convertible. As of the issuance date of these condensed consolidated financial statements, no shares have been issued.
In May 2022, the Company filed a twenty-first lien on the Property to secure a non-interest bearing note issued in April of 2022 which totals $50,000 in principle and calls for the issuance of a total of shares of common stock. The note is not convertible. As of the issuance date of these condensed consolidated financial statements, no shares have been issued.
Other
The Company is currently delinquent in filing those documents and forms required to be filed in connection with its Employee Stock Ownership Plan (“ESOP”) for the year ended December 31, 2023, 2022, 2021, 2020, 2019, 2018, 2017, 2016 and 2015. The Company did not have the funds to pay professionals to prepare, audit and file these documents and forms when due. Although these required filings normally do not result in any tax due to an agency of the government, the Company could be subject to significant penalties for failure to file these forms when due. Penalties are assessed by the Department of Labor on a per diem basis from the original due dates for the required informational filings until the filings are actually made. The Company has accrued $578,775 and $429,750 on the current delinquent filings as of December 31, 2023 and 2022, respectively. The Company intends to bring its ESOP-required filings current and when current, will attempt to enroll in a voluntary compliance program with the Department of Labor with respect to any penalties or fines incurred. However, there can be no assurance the Company will be able to enroll in any such program or obtain a reduction of the fines and penalties that may be due.
The Company and its subsidiaries file their federal tax return on a consolidated basis. The Company has not filed its consolidated federal tax returns for the years ended December 31, 2023, 2022, 2021, 2020, 2019, 2018, 2017 and 2016.
The Company believes no tax will be due with these federal returns. The Company has not filed its annual reports together with its franchise tax due with the state of Delaware for 2023, 2022, 2020, 2019 and 2018. Mississippi Gaming Corporation, a wholly owned subsidiary of the Company, has not filed its annual reports, together with its franchise tax due, with the state of Delaware for 2023, 2022, 2021, 2020, 2019 and 2018. Casino World, Inc., a wholly owned subsidiary of the Company, has not filed its annual reports, together with its franchise tax due, with the state of Delaware for 2023, 2022, 2021, 2020, 2019, 2018, 2017 and 2016. Mississippi Gaming Corporation has not filed its corporate income and franchise tax returns, together with the tax due, with the state of Mississippi for 2023, 2022, 2021, 2020, 2019, or 2018. Casino World, Inc. has not filed its corporate income and franchise tax returns, together with the tax due, with the state of Mississippi for 2023, 2022, 2021, 2020, 2019, 2018, 2017 and 2016. As of December 31, 2023, the accrued franchise taxes for Delaware and Mississippi totaled $17,400.
The Company has made provision for the expected taxes due on these state filings in their consolidated financial statements for the years ending December 31, 2023 and 2022.
Management Agreement
On June 19, 1993, two subsidiaries of the Company, Casino World Inc. and Mississippi Gaming Corporation, entered into a Management Agreement with Casinos Austria Maritime Corporation (CAMC). Subject to certain conditions, under the Management Agreement, CAMC would operate, on an exclusive basis, all of the Company’s proposed dockside gaming casinos in the State of Mississippi, including any operation fifty percent (50%) or more of which is owned by the Company or its affiliates.
Unless terminated earlier pursuant to the provisions of the Agreement, the Agreement terminates five years from the first day of actual Mississippi gaming operations and provides for the payment of an annual operational term management fee of 1.2% of all gross gaming revenues between zero and $100,000,000; plus 0.75% of gross gaming revenue between $100,000,000 and $140,000,000; plus 0.5% of gross gaming revenue above $140,000,000; plus two percent of the net gaming revenue between zero and $25,000,000; plus three percent of the net gaming revenue above twenty-five million dollars $25,000,000. The Company believes this Agreement is no longer in effect. However, there can be no assurance that CAMC will not attempt to maintain otherwise which would lead to litigation.
Letter of Intent with an Unrelated Third Party
On March 31, 2023, the Company entered into a Letter of Intent with an unrelated third party. The Agreement provided for purchases of Common Stock of Diamondhead Casino Corporation and purchases of Common Stock of its wholly-owned subsidiary, Mississippi Gaming Corporation. As of the issuance date of these financial statements, no payment has been made by the third party investor, no transactions pursuant to the Letter of Intent have occurred and no shares of common stock have been issued. The Company does not expect the Agreement to be honored.
|
Pending and Threatened Litigation |
12 Months Ended |
|---|---|
Dec. 31, 2023 | |
| Pending And Threatened Litigation | |
| Pending and Threatened Litigation | Note 15. Pending and Threatened Litigation
CASE SETTLED
Cooperative Energy, a Mississippi Electric Cooperative v. Mississippi Gaming Corporation (In the Special Court of Eminent Domain, Hancock County, Mississippi (Case No. CC20-0221)
Cooperative Energy, a Mississippi Electric Cooperative v. Mississippi Gaming Corporation, et al (all lienholders of the Diamondhead Property. (In the Special Court of Eminent Domain, Hancock County, Mississippi (Case No. CC23-0153)
Since 1994, American Telephone and Telegraph Company (“AT&T”) has had an exclusive right of way easement along the northern portion of Mississippi Gaming Corporation’s (“MGC”) Diamondhead, Mississippi Property (“the Property”) to construct, operate, maintain, inspect, alter, replace and remove communications systems which they may require from time to time. Cooperative Energy, a Mississippi Electric Cooperative, also sought and has now obtained a permanent easement along the northern portion of the Property on which to construct, maintain and operate electric transmission lines together with an access road. On or about November 19, 2020, Cooperative Energy filed a Complaint with the Special Court of Eminent Domain, Hancock County, Mississippi seeking an Order authorizing the Cooperative to enter onto the Property for the purpose of examinations and surveys. The matters sought in the Complaint were quickly resolved by agreement of the parties. The Company’s understanding and MGC’s understanding was that the case would be dismissed, but the case was not dismissed. On or about May 24, 2023, Cooperative Energy filed a Complaint for Eminent Domain in the Special Court of Eminent Domain, Hancock County, Mississippi in which it named MGC and all persons and entities holding liens on the Diamondhead, Mississippi Property as defendants.
On or about February 19, 2023, the parties entered into an Indemnification Agreement to fully indemnify MGC and Diamondhead Casino Corporation and each of their respective directors, officers, employees, agents, attorneys, and affiliates, and hold each of them harmless and defend each of them against any and all claims, losses, damages, expenses and/or liabilities to which an Indemnified Party might become liable arising out of or relating to any activities conducted on or about the Property by Cooperative Energy and/or its respective directors, officers, employees, agents, attorneys, affiliates and/or representatives and/or any unrelated third parties, contractors and/or subcontractors performing any activities on the Property at the request of or for the benefit of Cooperative Energy.
On September 1, 2023, Cooperative Energy filed a Motion to Approve Settlement, an Amended Statement of Values and a Notice of Hearing for September 11, 2023. Cooperative Energy served all interested parties, including all persons or entities holding liens on the Diamondhead Property, as defendants in the case. On September 26, 2023, the Court entered an Order Granting Plaintiff Right of Immediate Title and Possession. On October 17, 2023, the Court entered an Order Approving Settlement in the amount of $1,000,000 and entered an Order Approving Disbursement of Funds to MGC. On October 20, 2023, MGC received $845,378 as part of the settlement amount. The parties are working on the wording of the two easements: a Cooperative Energy Right-Of-Way Easement and an Access Road Easement. Once the easements are finalized ans signed, Cooperative Energy will pay MGC the remaining amount due of approximately $155,000,
The two easements are perpetual. The Right-Of-Way Easement is to construct, maintain, operate, add, and/or remove electric transmission lines, distribution lines, towers, wires, poles, appliances, equipment, anchors, frame structures, guys, counter-poise wire or other counter-poise conductors, and appurtenances thereto, all of which are collectively referred to as “Power Lines,” upon, over, under and across the land which is the subject of the easement. The Access Road Easement is for ingress and egress for use in the clearing, construction, maintenance and operation of transmission line facilities. Once MGC signs the easements, Cooperative Energy will pay the remainder of the settlement due MGC.
Cooperative Energy has informed MGC that it has obtained an agreement from AT&T concerning AT&T’s pre-existing exclusive right of way easement so that the Company will not be in breach of its agreement with AT&T.
Edson R. Arneault, Kathleen Devlin and James Devlin, J. Steven Emerson, Emerson Partners, J. Steven Emerson Roth IRA, Steven Rothstein, and Barry Stark and Irene Stark v. Diamondhead Casino Corporation (In the United States District Court for the District of Delaware (C.A. No. 1:16-cv-00989-LPS)
On October 25, 2016, Edson R. Arneault, Kathleen Devlin and James Devlin, J. Steven Emerson, Emerson Partners, J. Steven Emerson Roth IRA, Steven Rothstein, and Barry Stark and Irene Stark filed a Complaint against the Company in the United States District Court for the District of Delaware for monies due and owing pursuant to certain Collateralized Convertible Senior Debentures issued on March 31, 2014 and December 31, 2014. A companion case was filed in the Superior Court of the State of Delaware by John Hawley, as servicing agent for Argonaut 2000 Partners, L.P. (John Hawley, as servicing agent for Argonaut 2000 Partners, L.P. v. Diamondhead Casino Corporation (Superior Court of the State of Delaware)(Case No. N19C-02-239 RRC) The eight plaintiffs in the two cases were seeking a total of $1.5 million in principle due, plus interest from January 1, 2015, together with costs and fees. On or about December 12, 2019, the parties entered into a Settlement Agreement and on January 13, 2020, the parties filed a Stipulation of Voluntary Dismissal with Prejudice in the case. The case was dismissed with the Court maintaining continuing jurisdiction over the Settlement Agreement.
In or about December 2022, the parties entered into an Amendment to Settlement Agreement. The Amendment provides, in pertinent part, as follows: that on or before March 31, 2023, the Plaintiffs would be paid the principal due under their debentures of $1.5 million, plus interest of four percent (4%) per annum on the principal due from January 1, 2015 through December 31, 2019, plus interest of six percent (6%) per annum on the principal due from January 1, 2020 through March 31, 2022, plus interest of eight percent (8%) per annum on the principle due from April 1, 2022 through the date of payment. In addition the Company agreed to pay legal costs and fees of $175,000 plus shares of common stock. In the event payment was not made on or before March 31, 2023, a judgment would be entered in the case. Post judgment interest shall only apply to the $1.5 million principle due. Payment was not made on or before March 31, 2023. On July 5, 2023, the Plaintiffs filed a Motion to Reopen the Action, Vacate Dismissal, and Enter Judgment on Consent. The Company did not object to the Motion. On September 20, 2023, the Court entered an Order Granting Plaintiffs’ Motion to Reopen this Action, Vacate Dismissal, and Compel Enforcement of the Settlement Agreement and entered the Consent Judgment previously agreed to by the Company. The Company has accrued legal fees of $195,000 and $16,500 for accrued liability for stock and accrued additional interest of $112,500 for the years ended December 31, 2022 and 2023 respectively. |
Summary of Significant Accounting Policies (Policies) |
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Dec. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Principles of Consolidation | Principles of Consolidation
The consolidated financial statements include the accounts of Diamondhead Casino Corporation and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.
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| Estimates | Estimates
The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
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| Land | Land
Land held for development is carried at cost. Costs directly related to site development, such as licensing, permitting, engineering, and other costs, are capitalized.
Land development costs, which have been capitalized, consist of the following at December 31, 2023 and 2022:
Cooperative Energy, a Mississippi Electric Cooperative sought a permanent easement along the northern portion of the Property on which to construct, maintain and operate electric transmission lines together with an access road. On or about November 19, 2020, Cooperative Energy filed a Complaint with the Special Court of Eminent Domain, Hancock County, Mississippi seeking an Order authorizing the Cooperative to enter onto the Property for the purpose of examinations and surveys. The matters sought in the Complaint were quickly resolved by agreement of the parties. The Company’s understanding and MGC’s understanding was that the case would be dismissed, but the case was not dismissed. On or about May 24, 2023, Cooperative Energy filed a Complaint for Eminent Domain in the Special Court of Eminent Domain, Hancock County, Mississippi in which it named MGC and all persons and entities holding liens on the Diamondhead, Mississippi Property as defendants.
On October 17, 2023, the Court entered an Order Approving Settlement in the amount of $1 million and entered an Order Approving Disbursement of Funds to MGC. On October 20, 2023, MGC received $845,378 as part of the settlement amount. Cooperative shall pay the balance amount to MGC, equaling the total settlement payment of $1 million and ownership of the easement across MGC’s condemned property shall be vested in Cooperative. As such, the Company recorded a receivable of $154,622 on the consolidated balance sheet as of December 31, 2023.
Management determined that the easement arrangement was outside the scope of ASC 842. Further, the Company determined that the easement reduced the value of the property by $242,893. The remaining $757,107 of the $1 million easement was recorded as a gain on the condemnation of land in the consolidated statements of operations.
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| Fair Value Measurements | Fair Value Measurements
The Company follows the provisions of ASC Topic 820 “Fair Value Measurements” for financial assets and liabilities. This standard defines fair value, provides guidance for measuring fair value and requires certain disclosures. The standard utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels:
Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: Input other than quoted prices that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.
Level 3: Unobservable input that reflects management’s own assumptions.
Financial instruments included in current assets and liabilities are reported at carrying value in the consolidated balance sheets, which approximate fair value due to their short term nature.
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| Long-Lived Assets | Long-Lived Assets
The Company reviews long-lived assets whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. Recoverability of long-lived assets is measured by comparing the carrying amount of the assets to the estimated undiscounted future cash flows projected to be generated by the assets. If such assets are considered impaired, the impairment to be recognized is measured by the amount the carrying value exceeds the fair value of such assets determined by appraisal, discounted cash flow projections, or other means. No impairment existed as of December 31, 2023.
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| Employee Stock Ownership Plan | Employee Stock Ownership Plan
The Company has an Employee Stock Ownership Plan (ESOP) covering substantially all employees with one or more years of service, financed by employer loans. The Company also established a trust called the Europa Cruises Corporation Employee Stock Ownership Plan Trust Agreement, to serve as the funding vehicle for the ESOP. The President and Chief Executive Officer is the sole Trustee of the Trust. Compensation expense was measured at the current market price of shares committed for release and such shares constitute outstanding shares for earnings per share computations.
As the loans are repaid, shares are released from the ESOP and allocated to qualified employees based upon the proportion of payments made during the year to the remaining amount of payments due on the loans through maturity. Dividends, if any, are treated as follows:
(1) stock dividends on shares allocated to participant accounts shall be credited to the participant account when paid; and (2) cash dividends on shares allocated to participant accounts shall, at the discretion of the Administrator, be credited to the participants’ Other Investment Account or be used to reduce the indebtedness to the Company, in which case, shares bearing an equal value to the cash dividend would be allocated to participant accounts. The Company has not paid any dividends on its common stock.
For the years 2011 through 2023, the Company elected to temporarily suspend contributions to the Plan, in accordance with the loan pledge agreement between the Company and the ESOP Trust. For each year in which there was no contribution to the Plan, the Plan returned the shares, which would have been allocated to employees annually, to treasury. The Company has not filed the annual Form 550 reports pertaining to the ESOP since the year ended December 31, 2015.
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| Income Taxes | Income Taxes
Under the asset and liability method of ASC Topic 740, “Accounting for Income Taxes,” deferred tax liabilities and assets are recognized for future tax consequences attributable to differences between the financial statement carrying amounts and the tax basis of assets and liabilities. A valuation allowance is recorded to reflect the uncertainty of realization of deferred tax assets.
The Company follows the provisions of Financial Accounting Standard Board (“FASB”) No. 48 (FIN 48), “Accounting for Uncertainty in Income Taxes.” The standard addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the consolidated financial statements. Under this standard, an entity may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities based on the technical merits of the position. The tax benefits recognized in the consolidated financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. The standard also provides guidance on derecognition, classification, interest and penalties on income taxes, and accounting in interim periods and requires increased disclosures. The Company does not have a liability for unrecognized tax benefits.
The Company’s policy is to record interest and penalties on uncertain tax provisions as income tax expense. As of December 31, 2023 and 2022, the Company has no accrued interest or penalties related to uncertain tax positions.
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| Net Loss per Common Share |
Basic loss per share is computed by dividing net loss available to common stockholders by the weighted average number of common shares outstanding. Basic weight average shares includes and of shares not yet issued as of December 31, 2023 and 2022. Diluted earnings per share is calculated by using the weighted average number of common shares outstanding, plus other potentially dilutive securities. Potentially dilutive securities are excluded from the computation of diluted loss per shares since their effect would be antidilutive. Common shares outstanding consist of issued shares, including allocated and committed shares held by the ESOP trust, less shares held in treasury. The dilutive securities below do not include potentially convertible Debentures, since the requirements for possible conversion had not yet been met and may never be met.
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| Stock Based Compensation |
The Company follows the provisions of ASC Topic 718 “Compensation — Stock Compensation” which requires the measurement and recognition of compensation expense for all share-based payment awards either modified or granted to employees and directors based upon estimated fair values.
On November 9, 2020, the Board of Directors voted to award options to purchase common stock to its six current directors, including three officers of the Company, at a strike price of $ per share with an expiration date of , as follows: Martin Blount: ; Daniel Burstyn: ; Robert Crow: ; Benjamin Harrell: ; Gregory Harrison: and Deborah Vitale: . All options are vested.
On December 12, 2023, the Board of Directors voted to extend these outstanding options from December 31, 2023 to December 31, 2025.
On February 4, 2022, the Board of Directors entered into an agreement with the Chairman to issue shares of common stock of the Company to the Chairman to repurchase the indemnification. This repurchase eliminates any risk to the Company arising from the indemnification which could have been material. During the years ended December 31, 2023 and 2022, the Company record stock-based compensation of $ for the fair value for these shares, which have not yet been issued as of the issuance date of the consolidated financial statements.
Option valuation models require the input of highly subjective assumptions, including the expected stock price volatility. The Company uses projected volatility rates, which are based upon historical volatility rates, trended into future years. Because the Company’s employee stock options have characteristics significantly different from those of traded options, and because changes in the subjective input assumptions can materially affect the fair value estimate, in management’s opinion, the existing models do not necessarily provide a reliable single measure of the fair value of the Company’s options.
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| Reclassification | Reclassification
Certain reclassifications have been made to the Company’s consolidated financial statements for the year ended December 31, 2023 to conform to the current period’s consolidated financial statement presentation. A reclassification of $ from administrative and general expenses to stock-based compensation expense was recorded. The reclassification did not have any effects on the Company’s consolidated financial statements.
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| Recently Adopted Accounting Pronouncements | Recently Adopted Accounting Pronouncements
In November 2019, the FASB issued ASU 2019-10, Financial Instruments—Credit Losses (Topic 326), Derivative and Hedging (Topic 815, and Leases (Topic 841). This new guidance is effective for annual reporting periods beginning after December 15, 2019, including interim periods within those annual reporting periods. This pronouncement was amended under ASU 2019-10 to allow an extension on the adoption date to entities that qualify as a small reporting company. The Company has elected this extension and the effective date for the Company to adopt this standard will be for fiscal years beginning after December 15, 2022. Accordingly, the Company has adopted this standard as of January 1, 2023 and it did not have an effect on its consolidated financial statements.
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| Recently Issued Accounting Pronouncements Not Yet Adopted | Recently Issued Accounting Pronouncements Not Yet Adopted
On March 27, 2023, the FASB issued ASU 2023-01, which amends certain provisions of ASC 842 that apply to arrangements between related parties under common control. Specifically, the ASU:
The ASU is effective for fiscal years beginning after December 15, 2023. The Company has not completed its assessment of the standard, but does not expect the adoption to have a material impact on the Company’s unaudited condensed consolidated financial position, results of operations, or cash flows.
No other recent accounting pronouncements were issued by FASB that are believed by management to have a material impact on the Company’s present or future financial statements. |
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Summary of Significant Accounting Policies (Tables) |
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Dec. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Land Development Cost Capitalized | Land development costs, which have been capitalized, consist of the following at December 31, 2023 and 2022:
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| Schedule of Components of Potential Dilutive Securities |
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Accounts Payable and Accrued Expenses (Tables) |
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| Schedule of Accounts Payable and Accrued Expenses | The table below outlines the elements included in accounts payable and accrued expenses at December 31, 2023 and 2022:
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Convertible Notes and Line of Credit (Tables) |
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| Schedule of Convertible Notes Payable | The table below summarizes the Company’s debt arising from the above-described sources as of December 31, 2023 and 2022:
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Stockholders’ Deficit (Tables) |
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| Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Fixed Plan and Non-plan Options |
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| Schedule of Stock Options Outstanding and Exercisable |
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Liquidity and Going Concern (Details Narrative) - USD ($) |
12 Months Ended | |
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Dec. 31, 2023 |
Dec. 31, 2022 |
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| Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
| Net income (loss) available to common stockholders, basic | $ 1,511,427 | $ 1,957,305 |
| Accumulated deficit | 46,862,802 | 45,351,375 |
| Accounts payable and accrued expenses | 13,587,711 | |
| Cash on hand | $ 426,124 | $ 55,885 |
Schedule of Land Development Cost Capitalized (Details) - USD ($) |
Dec. 31, 2023 |
Dec. 31, 2022 |
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| Product Information [Line Items] | ||
| Land development costs | $ 5,233,204 | $ 5,476,097 |
| Land [Member] | ||
| Product Information [Line Items] | ||
| Land development costs | 4,691,430 | 4,934,323 |
| Licenses [Member] | ||
| Product Information [Line Items] | ||
| Land development costs | 77,000 | 77,000 |
| Engineering and Costs Associated with Permitting [Member] | ||
| Product Information [Line Items] | ||
| Land development costs | $ 464,774 | $ 464,774 |
Schedule of Components of Potential Dilutive Securities (Details) - shares |
12 Months Ended | |
|---|---|---|
Dec. 31, 2023 |
Dec. 31, 2022 |
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| Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
| Total | 4,815,000 | 4,815,000 |
| Convertible Preferred Stock [Member] | ||
| Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
| Total | 260,000 | 260,000 |
| Options to Purchase Common Shares [Member] | ||
| Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
| Total | 4,555,000 | 4,555,000 |
Schedule of Accounts Payable and Accrued Expenses (Details) - USD ($) |
Dec. 31, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Defined Benefit Plan Disclosure [Line Items] | ||
| Accrued payroll due officers | $ 3,869,711 | $ 3,569,711 |
| Accrued interest due officers and directors | 2,897,159 | 2,467,844 |
| Accrued director fees | 928,750 | 838,750 |
| Other | 17,308 | 17,308 |
| Associated rental costs | 198,983 | 165,295 |
| Accrued interest | 3,115,463 | 2,841,520 |
| Accrued dividends | 1,270,000 | 1,168,400 |
| Accrued fines and penalties | 578,775 | 444,875 |
| Other | 308,286 | 463,743 |
| Total non-related parties | 5,272,524 | 4,918,538 |
| President [Member] | ||
| Defined Benefit Plan Disclosure [Line Items] | ||
| Other | 403,276 | 403,274 |
| Related Party [Member] | ||
| Defined Benefit Plan Disclosure [Line Items] | ||
| Total related parties | $ 8,315,187 | $ 7,462,182 |
Schedule of Convertible Notes Payable (Details) - Convertible Promissory Note [Member] - USD ($) |
Dec. 31, 2023 |
Dec. 31, 2022 |
||
|---|---|---|---|---|
| March 1, 2010 Private Placement [Member] | ||||
| Short-Term Debt [Line Items] | ||||
| Convertible notes payable | [1] | $ 475,000 | $ 475,000 | |
| October 25, 2010 Private Placement [Member] | ||||
| Short-Term Debt [Line Items] | ||||
| Convertible notes payable | 487,500 | 487,500 | ||
| Private Placement [Member] | ||||
| Short-Term Debt [Line Items] | ||||
| Convertible notes payable | $ 962,500 | $ 962,500 | ||
| ||||
Schedule of Convertible Notes Payable (Details) (Parenthetical) - USD ($) |
Dec. 31, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Short-Term Debt [Line Items] | ||
| Due to a related party | $ 17,308 | $ 17,308 |
| March 1, 2010 Private Placement [Member] | Convertible Promissory Note [Member] | ||
| Short-Term Debt [Line Items] | ||
| Due to a related party | $ 75,000 | $ 75,000 |
Convertible Debentures (Details Narrative) - USD ($) |
12 Months Ended | ||
|---|---|---|---|
Dec. 31, 2023 |
Dec. 31, 2022 |
Sep. 26, 2014 |
|
| Debt Instrument [Line Items] | |||
| Debt interest rate | 4.00% | ||
| Convertible debenture payable | $ 1,800,000 | $ 1,800,000 | |
| February 14, 2014 Private Placement [Member] | Convertible Debt Securities [Member] | Tranche 1 [Member] | |||
| Debt Instrument [Line Items] | |||
| Collateralized convertible senior debentures | $ 1,000,000 | ||
| Conversion of debenture into shares of common stock | 3,333,333 | ||
| Debt instrument, convertible, conversion price | $ 0.30 | ||
| Convertible debenture payable | $ 950,000 | ||
| February 14, 2014 Private Placement [Member] | Convertible Debt Securities [Member] | Tranche 2 [Member] | |||
| Debt Instrument [Line Items] | |||
| Collateralized convertible senior debentures | $ 1,000,000 | ||
| Conversion of debenture into shares of common stock | 2,222,222 | ||
| Debt instrument, convertible, conversion price | $ 0.45 | ||
| Convertible debenture payable | $ 850,000 | ||
| February 14, 2014 Private Placement [Member] | Convertible Debt Securities [Member] | Tranche 3 [Member] | |||
| Debt Instrument [Line Items] | |||
| Collateralized convertible senior debentures | $ 1,000,000 | ||
| Debt instrument, convertible, conversion price | $ 0.75 | ||
| February 14, 2014 Private Placement [Member] | Convertible Debt Securities [Member] | Tranche 3 [Member] | Minimum [Member] | |||
| Debt Instrument [Line Items] | |||
| Conversion of debenture into shares of common stock | 1,818,182 | ||
| Debt instrument, convertible, conversion price | $ 0.55 | ||
| February 14, 2014 Private Placement [Member] | Convertible Debt Securities [Member] | Tranche 3 [Member] | Maximum [Member] | |||
| Debt Instrument [Line Items] | |||
| Conversion of debenture into shares of common stock | 1,333,333 | ||
| February 14, 2014 Private Placement [Member] | Non Convertible Senior Debentures [Member] | |||
| Debt Instrument [Line Items] | |||
| Convertible debenture payable | $ 50,000 | ||
| February 14, 2014 Private Placement [Member] | Convertable Senior Debentures [Member] | |||
| Debt Instrument [Line Items] | |||
| Maximum offering amount | 3,000,000 | ||
| Debt principal amount | $ 3,000,000 | ||
| February 14, 2014 Private Placement [Member] | Convertible Senior Debentures [Member] | |||
| Debt Instrument [Line Items] | |||
| Debt interest rate | 4.00% | ||
| Debt instrument, maturity date, description | matured six years from the date of issuance | ||
| Convertible Debentures [Member] | |||
| Debt Instrument [Line Items] | |||
| Due under debenture agreements | $ 427,081 | ||
| Accrued interest due | $ 750,719 | $ 617,733 |
Short Term Notes and Interest-Bearing Advance (Details Narrative) - USD ($) |
1 Months Ended | 3 Months Ended | 12 Months Ended | |||||||
|---|---|---|---|---|---|---|---|---|---|---|
Jun. 09, 2017 |
Feb. 02, 2017 |
Aug. 25, 2016 |
Nov. 30, 2023 |
Dec. 31, 2023 |
Dec. 31, 2023 |
Dec. 31, 2016 |
Nov. 28, 2023 |
Dec. 31, 2022 |
Sep. 26, 2014 |
|
| Short-Term Debt [Line Items] | ||||||||||
| Debt interest rate | 4.00% | |||||||||
| Short term notes and interest bearing advance | $ 65,504 | |||||||||
| Unrelated Third Party [Member] | ||||||||||
| Short-Term Debt [Line Items] | ||||||||||
| Debt interest rate | 12.50% | |||||||||
| Accrued interest | $ 6,644 | $ 6,644 | $ 18,493 | |||||||
| Short term notes and interest bearing advance | $ 25,000 | |||||||||
| Repayments of Debt | $ 15,000 | |||||||||
| Seven Lenders [Member] | ||||||||||
| Short-Term Debt [Line Items] | ||||||||||
| Debt interest rate | 8.00% | |||||||||
| Accrued interest | 16,000 | 16,000 | 14,000 | |||||||
| Cash received advances | $ 47,500 | |||||||||
| Debt matures term | 4 years | |||||||||
| Third Parties [Member] | ||||||||||
| Short-Term Debt [Line Items] | ||||||||||
| Cash received advances | $ 22,500 | |||||||||
| Seven Lenders and Third Parties [Member] | ||||||||||
| Short-Term Debt [Line Items] | ||||||||||
| Debt interest rate | 8.00% | |||||||||
| Accrued interest | 16,400 | 16,400 | 14,200 | |||||||
| Debt matures term | 4 years | |||||||||
| Lender [Member] | ||||||||||
| Short-Term Debt [Line Items] | ||||||||||
| Increase in interest rate per annum | 3.00% | |||||||||
| Promissory Note [Member] | ||||||||||
| Short-Term Debt [Line Items] | ||||||||||
| Proceeds from Notes Payable | $ 15,000 | |||||||||
| Debt interest rate | 12.50% | |||||||||
| Debt Instrument, Maturity Date | Jun. 09, 2019 | |||||||||
| Repayments of Short-Term Debt | 15,000 | |||||||||
| Accrued interest | 14,165 | 14,165 | $ 15,000 | |||||||
| Bank Credit Facility [Member] | ||||||||||
| Short-Term Debt [Line Items] | ||||||||||
| Line of credit facility, maximum borrowing capacity | 15,000 | 15,000 | ||||||||
| Line of credit | $ 18,004 | $ 18,004 | $ 18,004 | |||||||
| Bank Credit Facility [Member] | Direct Charges [Member] | ||||||||||
| Short-Term Debt [Line Items] | ||||||||||
| Line of credit commitment fee percent rate | 11.24% | |||||||||
| Bank Credit Facility [Member] | Cash Advanced Through The Facility [Member] | ||||||||||
| Short-Term Debt [Line Items] | ||||||||||
| Line of credit commitment fee percent rate | 24.99% | |||||||||
Current Notes Payable Due Related Parties (Details Narrative) |
1 Months Ended | 3 Months Ended | 12 Months Ended | |||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
Nov. 01, 2023
USD ($)
|
Jul. 28, 2023
USD ($)
shares
|
Feb. 17, 2023
USD ($)
shares
|
Feb. 04, 2022
shares
|
May 30, 2021
USD ($)
shares
|
Sep. 30, 2018
USD ($)
|
Aug. 21, 2018
USD ($)
|
Jul. 24, 2017
USD ($)
|
Aug. 25, 2016 |
Mar. 31, 2022
USD ($)
shares
|
May 31, 2021
USD ($)
a
|
Jul. 31, 2020
USD ($)
a
|
Mar. 31, 2019
USD ($)
|
Nov. 30, 2018
USD ($)
|
Mar. 31, 2018
USD ($)
|
Jul. 31, 2017
USD ($)
a
|
Sep. 30, 2016
USD ($)
|
Dec. 31, 2023
USD ($)
|
Dec. 31, 2022
USD ($)
|
Dec. 31, 2016
USD ($)
|
Dec. 31, 2021
USD ($)
|
Sep. 26, 2014 |
|
| Debt instrument interest rate stated percentage | 4.00% | |||||||||||||||||||||
| Proceeds from related parties | $ 97,020 | |||||||||||||||||||||
| Fair value of the stock | 98,000 | |||||||||||||||||||||
| Proceeds from eminent domain settlement | $ 25,000 | |||||||||||||||||||||
| Eminent domain settlement | $ 74,520 | |||||||||||||||||||||
| Repayment of related party debt | 118,132 | 15,104 | ||||||||||||||||||||
| Board of Directors Chairman [Member] | ||||||||||||||||||||||
| Area of land, owned | a | 400 | 400 | ||||||||||||||||||||
| Proceeds from repayments of secured debt | $ 200,000 | $ 100,000 | ||||||||||||||||||||
| Issuance of shares | shares | 150,000 | 50,000 | 100,000 | |||||||||||||||||||
| Debt instrument face amount | $ 75,000 | $ 25,000 | $ 50,000 | |||||||||||||||||||
| Taxes payable | $ 62,610 | $ 67,076 | ||||||||||||||||||||
| Property related fees | 1,468 | 1,573 | ||||||||||||||||||||
| Debt instrument periodic payment principal | 50,000 | |||||||||||||||||||||
| Fair value of the stock | $ 33,500 | |||||||||||||||||||||
| Fair value of the stock | $ 17,500 | |||||||||||||||||||||
| Debt discount amortized interest expense | 17,096 | |||||||||||||||||||||
| Board of Directors Chairman [Member] | July 28, 2023 [Member] | ||||||||||||||||||||||
| Issuance of shares | shares | 150,000 | |||||||||||||||||||||
| Debt instrument face amount | $ 75,000 | |||||||||||||||||||||
| Fair value of the stock | $ 52,500 | |||||||||||||||||||||
| Debt discount amortized interest expense | 22,644 | |||||||||||||||||||||
| Board of Directors Chairman [Member] | July, 2021 [Member] | ||||||||||||||||||||||
| Proceeds from secured debt | $ 100,000 | $ 150,000 | ||||||||||||||||||||
| Board of Directors Chairman [Member] | March 2018 and March 2019 [Member] | ||||||||||||||||||||||
| Accrued interest | 349,415 | 279,754 | ||||||||||||||||||||
| Debt instrument face amount | 467,953 | |||||||||||||||||||||
| Repayment of related party debt | $ 16,250 | |||||||||||||||||||||
| President [Member] | ||||||||||||||||||||||
| Debt instrument interest rate stated percentage | 9.00% | |||||||||||||||||||||
| Accrued interest | $ 23,763 | 41,409 | ||||||||||||||||||||
| Secured obligation | $ 100,000 | |||||||||||||||||||||
| Repayments of debt | 68,562 | |||||||||||||||||||||
| Other accrued liabilities current and noncurrent | 18,000 | |||||||||||||||||||||
| President [Member] | Loan One [Member] | ||||||||||||||||||||||
| Line of credit | $ 25,000 | 25,000 | ||||||||||||||||||||
| President [Member] | Loan Two [Member] | ||||||||||||||||||||||
| Line of credit | 15,000 | 15,000 | ||||||||||||||||||||
| President [Member] | Two Loans [Member] | ||||||||||||||||||||||
| Line of credit facility maximum borrowing capacity | 15,000 | |||||||||||||||||||||
| Related Party [Member] | ||||||||||||||||||||||
| Debt discount | 33,241 | 0 | ||||||||||||||||||||
| Maximum [Member] | Board of Directors [Member] | ||||||||||||||||||||||
| Proceeds from repayments of secured debt | $ 100,000 | |||||||||||||||||||||
| Proceeds from repayment of related party debt | $ 20,000 | |||||||||||||||||||||
| Related party transaction terms and manner of settlement | interest of 15% per annum on the amount advanced and owing and that the full 15% interest per annum is payable during any calendar year in which all or part of the amount advanced and owing or interest due thereon remains unpaid; (ii) the obligation in the maximum principal amount of $100,000 with interest due thereon be treated as a secured debt of the Company, to be evidenced by a separate note and to be secured with a separate lien to be placed on the Diamondhead Property (“the Third Lien”) together with the Chairman’s Third Lien, as well as a first lien to be placed on the residential lot owned by the Company; (iii) that the Third Lien on the Diamondhead Property also include the two loans ($25,000 and $15,000) and interest due thereon and credit facilities in the maximum amount of $15,000; and (iv) that the foregoing will be treated as advances to be paid out of any subsequent incoming financing obtained by the Company or any amounts recovered by the Company from a defendant in that collection action brought by the Company in the Circuit Court of Montgomery County, Maryland. | |||||||||||||||||||||
| Maximum [Member] | President [Member] | ||||||||||||||||||||||
| Proceeds from repayments of secured debt | $ 100,000 | |||||||||||||||||||||
| Fair Value, Inputs, Level 1 [Member] | ||||||||||||||||||||||
| Derivative fair value of derivative net | $ 0 | |||||||||||||||||||||
| Payable During any Calendar Year [Member] | ||||||||||||||||||||||
| Debt instrument interest rate stated percentage | 11.00% | |||||||||||||||||||||
| Mississippi Gaming Corporation [Member] | Board of Directors Chairman [Member] | ||||||||||||||||||||||
| Issuance of shares | shares | 35,000 | |||||||||||||||||||||
| Mississippi Gaming Corporation [Member] | Maximum [Member] | Board of Directors Chairman [Member] | ||||||||||||||||||||||
| Debt instrument face amount | 200,000 | |||||||||||||||||||||
| Diamondhead Casino Corporation [Member] | Board of Directors Chairman [Member] | ||||||||||||||||||||||
| Secured obligation | 200,000 | |||||||||||||||||||||
| Mississippi Property [Member] | ||||||||||||||||||||||
| Issuance of shares | shares | 160,000 | |||||||||||||||||||||
| Debt instrument face amount | $ 80,000 | |||||||||||||||||||||
| Taxes payable | 60,436 | |||||||||||||||||||||
| Repayment of related party debt | $ 80,000 | |||||||||||||||||||||
| Diamond Head Property [Member] | ||||||||||||||||||||||
| Proceeds from repayments of secured debt | 400,000 | |||||||||||||||||||||
| Seven Lenders [Member] | ||||||||||||||||||||||
| Cash received from advances | $ 47,500 | |||||||||||||||||||||
| Debt matures term | 4 years | |||||||||||||||||||||
| Debt instrument interest rate stated percentage | 8.00% | |||||||||||||||||||||
| Accrued interest | 16,000 | 14,000 | ||||||||||||||||||||
| Three Current Directors [Member] | ||||||||||||||||||||||
| Cash received from advances | $ 25,000 | |||||||||||||||||||||
| Board of Directors Chairman [Member] | ||||||||||||||||||||||
| Debt matures term | 4 years | |||||||||||||||||||||
| Debt instrument interest rate stated percentage | 14.00% | |||||||||||||||||||||
| Accrued interest | 93,482 | 80,882 | ||||||||||||||||||||
| Proceeds from related parties | $ 90,000 | |||||||||||||||||||||
| Proceeds from repayments of secured debt | $ 200,000 | |||||||||||||||||||||
| Terms on advances from chairman description | (i) the advance constitutes a lien on the Property with interest at 15% per annum; (ii) that the full interest of 15% per annum is payable during any calendar year in which all or part of the amount advanced is due and owing or interest due thereon remains unpaid; (iii) that this debt be evidenced by a separate promissory note and is to be included in and secured with a third lien that is to be placed on the Diamondhead Property to secure previous advances made to the Company (hereafter “the Third Lien”); (iv) that he be indemnified for any losses sustained on the sale of his common stock in an unrelated publicly-traded company to be sold to cover this advance based on a sales price of approximately $2.80 per share with a cap on the maximum loss per share to be at a sales price of $10.00 per share; and (v) that the Chairman’s previous indemnification approved by the Board of Directors on July 24, 2017 with respect to any loss on the sale of the same stock also be capped at a maximum of $10.00 per share. | |||||||||||||||||||||
| Issuance of shares | shares | 35,000 | |||||||||||||||||||||
| Board of Directors Chairman [Member] | Maximum [Member] | ||||||||||||||||||||||
| Proceeds from repayments of secured debt | $ 100,000 | |||||||||||||||||||||
| Board of Directors Chairman [Member] | Mississippi Gaming Corporation [Member] | ||||||||||||||||||||||
| Accrued interest | 69,527 | 59,360 | ||||||||||||||||||||
| Increase decrease in property and other taxes payable | $ 67,628 | |||||||||||||||||||||
| Shares issued | shares | 35,000 | |||||||||||||||||||||
| Secured obligation | $ 100,000 | |||||||||||||||||||||
| Board of Directors Chairman [Member] | Mississippi Property [Member] | ||||||||||||||||||||||
| Area of land, owned | a | 400 | |||||||||||||||||||||
| Notes payable | $ 67,628 | |||||||||||||||||||||
| Board of Directors Chairman [Member] | Diamond Head Property [Member] | ||||||||||||||||||||||
| Proceeds from repayments of secured debt | 300,000 | |||||||||||||||||||||
| President [Member] | Related Party [Member] | ||||||||||||||||||||||
| Due from officers or stockholders | 5,007 | |||||||||||||||||||||
| President [Member] | Diamond Head Property [Member] | ||||||||||||||||||||||
| Proceeds from repayments of secured debt | 100,000 | |||||||||||||||||||||
| Officers and Directors [Member] | ||||||||||||||||||||||
| Debt instrument face amount | 669,279 | 720,651 | ||||||||||||||||||||
| Debt discount | $ 33,241 | $ 0 | ||||||||||||||||||||
Notes Payable Due Others (Details Narrative) - USD ($) |
1 Months Ended | 2 Months Ended | 12 Months Ended | 15 Months Ended | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Nov. 01, 2023 |
Aug. 08, 2023 |
Apr. 30, 2022 |
Mar. 31, 2022 |
Nov. 30, 2021 |
Jul. 31, 2021 |
Dec. 31, 2020 |
Oct. 31, 2017 |
May 31, 2021 |
Feb. 28, 2021 |
Dec. 31, 2023 |
Dec. 31, 2022 |
Jun. 30, 2022 |
Dec. 31, 2021 |
Jan. 31, 2021 |
Sep. 26, 2014 |
|
| Debt Instrument [Line Items] | ||||||||||||||||
| Debt instrument interest rate stated percentage | 4.00% | |||||||||||||||
| Proceeds from non-interest bearing advances from others | $ 40,000 | $ 130,000 | ||||||||||||||
| Repayment of related party debt | 118,132 | 15,104 | ||||||||||||||
| Proceeds of eminent domain settlement | $ 25,000 | |||||||||||||||
| Thirteen Liens [Member] | ||||||||||||||||
| Debt Instrument [Line Items] | ||||||||||||||||
| Debt instrument unamortized discount | 98,000 | $ 102,000 | ||||||||||||||
| Issuance of shares | 760,000 | |||||||||||||||
| Debt instrument, call feature | There is a call for the issuance of a total of 760,000 shares of common stock in connection with the notes and liens, however, no shares have been issued to date. | |||||||||||||||
| Liabilities fair value adjustment | $ 22,050 | |||||||||||||||
| Mississippi Property [Member] | ||||||||||||||||
| Debt Instrument [Line Items] | ||||||||||||||||
| Principal amount | $ 80,000 | |||||||||||||||
| Taxes payable current and noncurrent | 60,436 | |||||||||||||||
| Additional loan amount | $ 19,564 | |||||||||||||||
| Issuance of shares | 160,000 | |||||||||||||||
| Repayment of related party debt | $ 80,000 | |||||||||||||||
| Unrelated Lenders [Member] | ||||||||||||||||
| Debt Instrument [Line Items] | ||||||||||||||||
| Fair value of stock | 27,200 | |||||||||||||||
| Amortization of debt discount | 11,439 | |||||||||||||||
| Proceeds of eminent domain settlement | $ 20,000 | |||||||||||||||
| Others [Member] | ||||||||||||||||
| Debt Instrument [Line Items] | ||||||||||||||||
| Amortization of debt discount | 36,376 | 141,663 | ||||||||||||||
| Notes payable, current | $ 541,739 | $ 532,563 | ||||||||||||||
| Convertible Promissory Note [Member] | ||||||||||||||||
| Debt Instrument [Line Items] | ||||||||||||||||
| Legal fees | $ 50,000 | |||||||||||||||
| Debt instrument term | four year | |||||||||||||||
| Debt instrument interest rate stated percentage | 0.00% | |||||||||||||||
| Secured Promissory Notes [Member] | Mississippi Property [Member] | ||||||||||||||||
| Debt Instrument [Line Items] | ||||||||||||||||
| Principal amount | $ 40,000 | |||||||||||||||
| Issuance of shares | 80,000 | |||||||||||||||
| Number of stock issued, value | $ 40,000 | |||||||||||||||
| Convertible Promissory Note [Member] | ||||||||||||||||
| Debt Instrument [Line Items] | ||||||||||||||||
| Principal amount | $ 150,000 | |||||||||||||||
| Three Promissory Notes [Member] | Unrelated Lenders [Member] | ||||||||||||||||
| Debt Instrument [Line Items] | ||||||||||||||||
| Principal amount | 126,250 | |||||||||||||||
| Proceeds from non-interest bearing advances from others | 100,000 | $ 100,000 | ||||||||||||||
| Debt instrument unamortized discount | $ 26,250 | 20,000 | ||||||||||||||
| Maturity date description | The notes are non-interest bearing and matured in December 2021, one year after the notes’ issuances. These notes are currently in default. | |||||||||||||||
| Promissory Note One [Member] | Unrelated Lenders [Member] | ||||||||||||||||
| Debt Instrument [Line Items] | ||||||||||||||||
| Principal amount | $ 50,000 | $ 50,000 | $ 25,000 | 70,000 | $ 25,000 | |||||||||||
| Proceeds from non-interest bearing advances from others | $ 50,000 | $ 50,000 | $ 25,000 | |||||||||||||
| Promissory Notes Two [Member] | Unrelated Lenders [Member] | ||||||||||||||||
| Debt Instrument [Line Items] | ||||||||||||||||
| Principal amount | 25,000 | $ 31,250 | ||||||||||||||
| Two Additional Promissory Notes [Member] | Unrelated Lenders [Member] | ||||||||||||||||
| Debt Instrument [Line Items] | ||||||||||||||||
| Principal amount | $ 20,000 | |||||||||||||||
| Proceeds from non-interest bearing advances from others | $ 40,000 | 50,000 | ||||||||||||||
| Debt instrument unamortized discount | $ 6,250 | |||||||||||||||
| Issuance of shares | 40,000 | |||||||||||||||
| Debt term | 1 year | |||||||||||||||
| Promissory Notes Three [Member] | Unrelated Lenders [Member] | ||||||||||||||||
| Debt Instrument [Line Items] | ||||||||||||||||
| Principal amount | $ 25,000 | |||||||||||||||
Long Term Notes and Interest-Bearing Advance (Details Narrative) - USD ($) |
Jun. 09, 2017 |
Dec. 31, 2023 |
Nov. 28, 2023 |
Sep. 26, 2014 |
|---|---|---|---|---|
| Short-Term Debt [Line Items] | ||||
| Interest rate | 4.00% | |||
| Promissory Note [Member] | ||||
| Short-Term Debt [Line Items] | ||||
| Proceeds from notes payable | $ 15,000 | |||
| Interest rate | 12.50% | |||
| Maturity date | Jun. 09, 2019 | |||
| Accrued interest | $ 14,165 | $ 15,000 |
Related Party Transactions (Details Narrative) - USD ($) |
12 Months Ended | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
Nov. 01, 2023 |
Jul. 28, 2023 |
Feb. 17, 2023 |
Feb. 04, 2022 |
Feb. 04, 2022 |
May 30, 2021 |
Dec. 31, 2023 |
Dec. 31, 2022 |
Oct. 31, 2017 |
Aug. 25, 2016 |
Sep. 26, 2014 |
|
| Related Party Transaction [Line Items] | |||||||||||
| Interest rate | 4.00% | ||||||||||
| Monthly base rent | $ 4,534 | ||||||||||
| Rent expense | 54,408 | $ 54,408 | |||||||||
| Associated rental costs | 33,689 | 30,737 | |||||||||
| Operating lease expense | 88,097 | 85,145 | |||||||||
| Stock based compensation fair value shares issued | 11,480 | 11,480 | |||||||||
| Eminent domain settlement | $ 74,520 | ||||||||||
| Remaining balance debt | 480 | ||||||||||
| Convertible Promissory Note [Member] | |||||||||||
| Related Party Transaction [Line Items] | |||||||||||
| Interest rate | 0.00% | ||||||||||
| Director [Member] | |||||||||||
| Related Party Transaction [Line Items] | |||||||||||
| Directors fees | 15,000 | ||||||||||
| Current And Former Directors [Member] | |||||||||||
| Related Party Transaction [Line Items] | |||||||||||
| Accrued directors fees | 928,750 | 838,750 | |||||||||
| Mr. Harrison [Member] | |||||||||||
| Related Party Transaction [Line Items] | |||||||||||
| Number of shares issued | 35,000 | ||||||||||
| Board of Directors Chairman [Member] | |||||||||||
| Related Party Transaction [Line Items] | |||||||||||
| Interest rate | 14.00% | ||||||||||
| Interest payable | 93,482 | 80,882 | |||||||||
| Number of shares issued | 35,000 | ||||||||||
| Board of Directors Chairman [Member] | Convertible Promissory Note [Member] | |||||||||||
| Related Party Transaction [Line Items] | |||||||||||
| Number of shares issued | 50,000 | ||||||||||
| Debt instrument face amount | $ 25,000 | ||||||||||
| President [Member] | |||||||||||
| Related Party Transaction [Line Items] | |||||||||||
| Deferred salary | $ 3,666,996 | ||||||||||
| Interest rate | 9.00% | ||||||||||
| Interest payable | $ 23,763 | 41,409 | |||||||||
| Rental costs | 602,252 | 568,569 | |||||||||
| Vice President and Current Chairman of Board of Directors [Member] | |||||||||||
| Related Party Transaction [Line Items] | |||||||||||
| Deferred salary | 121,140 | ||||||||||
| Management [Member] | |||||||||||
| Related Party Transaction [Line Items] | |||||||||||
| Interest expense | 326,360 | 288,547 | |||||||||
| Interest payable | $ 2,237,878 | $ 1,781,809 | |||||||||
| Board of Directors Chairman [Member] | |||||||||||
| Related Party Transaction [Line Items] | |||||||||||
| Number of shares issued | 150,000 | 50,000 | 100,000 | ||||||||
| Debt instrument face amount | $ 75,000 | $ 25,000 | $ 50,000 | ||||||||
| Board of Directors Chairman [Member] | Minimum [Member] | |||||||||||
| Related Party Transaction [Line Items] | |||||||||||
| Payments for loans | 25,000 | ||||||||||
| Board of Directors Chairman [Member] | Maximum [Member] | |||||||||||
| Related Party Transaction [Line Items] | |||||||||||
| Payments for loans | $ 75,000 | ||||||||||
Schedule of Fixed Plan and Non-plan Options (Details) - $ / shares |
12 Months Ended | |
|---|---|---|
Dec. 31, 2023 |
Dec. 31, 2022 |
|
| Equity [Abstract] | ||
| Options, Outstanding, Beginning Balance | 4,555,000 | 4,555,000 |
| Options, Outstanding, Weighted Average Exercise Price, Beginning Balance | $ 0.41 | $ 0.41 |
| Options, Granted | ||
| Options, Granted, Weighted Average Exercise Price | ||
| Options, Exercised | ||
| Options, Exercised, Weighted Average Exercise Price | ||
| Options, Expired | ||
| Options, Forfeited, Weighted Average Exercise Price | ||
| Options, Forfeited | ||
| Options, Forfeited, Weighted Average Exercise Price | ||
| Options, Outstanding, Ending Balance | 4,555,000 | 4,555,000 |
| Options, Outstanding, Weighted Average Exercise Price, Ending Balance | $ 0.41 | $ 0.41 |
| Options, Exercisable, Ending Balance | 4,555,000 | 4,555,000 |
| Options, Exercisable, Weighted Average Exercise Price, Ending Balance | $ 0.41 | $ 0.41 |
Schedule of Stock Options Outstanding and Exercisable (Details) - $ / shares |
12 Months Ended | |
|---|---|---|
Dec. 31, 2023 |
Dec. 31, 2022 |
|
| Share-Based Payment Arrangement, Option, Exercise Price Range [Line Items] | ||
| Options Outstanding, Number Outstanding | 4,555,000 | 4,555,000 |
| Number of Exercisable Options | 4,555,000 | 4,555,000 |
| Exercise Price Range One [Member] | ||
| Share-Based Payment Arrangement, Option, Exercise Price Range [Line Items] | ||
| Range of Exercise Prices | $ 0.19 | $ 0.19 |
| Options Outstanding, Number Outstanding | 2,000,000 | 2,000,000 |
| Options Outstanding, Weighted Average Remaining Contractual Life (Yrs) | 2 years | 2 years |
| Outstanding Options, Weighted Average Exercise Price | $ 0.19 | $ 0.19 |
| Number of Exercisable Options | 2,000,000 | 2,000,000 |
| Exercisable Options, Weighted Average Exercise Price | $ 0.19 | $ 0.19 |
| Exercise Price Range Two [Member] | ||
| Share-Based Payment Arrangement, Option, Exercise Price Range [Line Items] | ||
| Range of Exercise Prices | $ 0.30 | $ 0.30 |
| Options Outstanding, Number Outstanding | 750,000 | 750,000 |
| Options Outstanding, Weighted Average Remaining Contractual Life (Yrs) | 2 years | 2 years |
| Outstanding Options, Weighted Average Exercise Price | $ 0.30 | $ 0.30 |
| Number of Exercisable Options | 750,000 | 750,000 |
| Exercisable Options, Weighted Average Exercise Price | $ 0.30 | $ 0.30 |
| Exercise Price Range Three [Member] | ||
| Share-Based Payment Arrangement, Option, Exercise Price Range [Line Items] | ||
| Range of Exercise Prices | $ 0.75 | $ 0.75 |
| Options Outstanding, Number Outstanding | 215,000 | 215,000 |
| Options Outstanding, Weighted Average Remaining Contractual Life (Yrs) | 2 years | 2 years |
| Outstanding Options, Weighted Average Exercise Price | $ 0.75 | $ 0.75 |
| Number of Exercisable Options | 215,000 | 215,000 |
| Exercisable Options, Weighted Average Exercise Price | $ 0.75 | $ 0.75 |
| Exercise Price Range Four [Member] | ||
| Share-Based Payment Arrangement, Option, Exercise Price Range [Line Items] | ||
| Range of Exercise Prices | $ 1.75 | $ 1.75 |
| Options Outstanding, Number Outstanding | 300,000 | 300,000 |
| Options Outstanding, Weighted Average Remaining Contractual Life (Yrs) | 2 years | 2 years |
| Outstanding Options, Weighted Average Exercise Price | $ 1.75 | $ 1.75 |
| Number of Exercisable Options | 300,000 | 300,000 |
| Exercisable Options, Weighted Average Exercise Price | $ 1.75 | $ 1.75 |
| Exercise Price Range Five [Member] | ||
| Share-Based Payment Arrangement, Option, Exercise Price Range [Line Items] | ||
| Range of Exercise Prices | $ 0.46 | $ 0.46 |
| Options Outstanding, Number Outstanding | 1,290,000 | 1,290,000 |
| Options Outstanding, Weighted Average Remaining Contractual Life (Yrs) | 2 years | 2 years |
| Outstanding Options, Weighted Average Exercise Price | $ 0.46 | $ 0.46 |
| Number of Exercisable Options | 1,290,000 | 1,290,000 |
| Exercisable Options, Weighted Average Exercise Price | $ 0.46 | $ 0.46 |
Stockholders’ Deficit (Details Narrative) - USD ($) |
12 Months Ended | |||||||
|---|---|---|---|---|---|---|---|---|
Nov. 09, 2020 |
Nov. 06, 2020 |
Jan. 03, 2018 |
Dec. 19, 1988 |
Dec. 31, 2023 |
Dec. 31, 2022 |
Dec. 31, 2018 |
Dec. 31, 2021 |
|
| Class of Stock [Line Items] | ||||||||
| Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Outstanding, Number | 4,555,000 | 4,555,000 | 4,555,000 | |||||
| Share-Based Payment Arrangement, Noncash Expense | $ 546,400 | $ 11,480 | $ 21,570 | |||||
| Number of options previously granted to purchase of common stock | ||||||||
| Exercise price of option granted | ||||||||
| Exercises in Period | ||||||||
| Preferred stock, shares outstanding | 2,086,000 | 2,086,000 | ||||||
| Preferred stock, par value | $ 0.01 | $ 0.01 | ||||||
| Series S Preferred Stock [Member] | ||||||||
| Class of Stock [Line Items] | ||||||||
| Preferred stock, shares outstanding | 926,000 | 926,000 | ||||||
| Preferred stock, par value | $ 0.01 | |||||||
| Preferred stock, redemption terms | These shares may be redeemed at the option of the Company at $1.08 per share plus $.0108 per share for each quarter that such shares are outstanding for a total of $2.18 per share at December 31, 2023 | |||||||
| Preferred stock, liquidation preference per share | $ 1.08 | |||||||
| Cumulative dividends | $ 375,000 | $ 345,000 | ||||||
| Series S-NR Preferred Stock [Member] | ||||||||
| Class of Stock [Line Items] | ||||||||
| Preferred stock, shares outstanding | 900,000 | 900,000 | ||||||
| Preferred stock, par value | $ 0.01 | |||||||
| Preferred stock, liquidation preference per share | $ 1.11 | |||||||
| Non-cumulative dividends in arrears | $ 375,000 | $ 345,000 | ||||||
| Series S-PIK Preferred Stock [Member] | ||||||||
| Class of Stock [Line Items] | ||||||||
| Preferred stock, shares outstanding | 260,000 | 260,000 | ||||||
| Preferred stock, par value | $ 0.001 | |||||||
| Preferred stock, liquidation preference per share | $ 2.00 | |||||||
| Cumulative dividends | $ 520,000 | $ 478,400 | ||||||
| Convertible preferred stock, terms of conversion | Each share of Series S-PIK preferred stock is convertible into one share of the Company’s common voting stock at any time after February 15, 1995 | |||||||
| Conversion of stock shares converted | 0 | 0 | ||||||
| Preferred stock, dividend rate, per-dollar-amount | $ 0.04 | |||||||
| Series SPIK Junior Preferred Stock [Member] | ||||||||
| Class of Stock [Line Items] | ||||||||
| Preferred stock, par value | $ 0.01 | |||||||
| Stock Option Plan [Member] | ||||||||
| Class of Stock [Line Items] | ||||||||
| Share based compensation, Number of shares authorized | 1,000,000 | |||||||
| Common stock reserved for future issuance | 1,000,000 | |||||||
| Expiration Period | 10 years | |||||||
| Stock Option Plan [Member] | Minimum [Member] | ||||||||
| Class of Stock [Line Items] | ||||||||
| Exercise price percentage | 100.00% | |||||||
| Director [Member] | ||||||||
| Class of Stock [Line Items] | ||||||||
| Lessee, Operating Lease, Option to Extend | the Board of Directors voted to extend 2,965,000 of these outstanding options from December 31, 2020 to December 31, 2023. In December 2023, the Board of Directors voted to extend the expiration date of all options to December 31, 2025. As a result of the modification to the options, the Company recorded an additional $546,400 in stock based compensation expense for the year ended December 31, 2023. Accordingly, 150,000 of these 3,115,000 options expired at December 31, 2020 | |||||||
| Six Current Directors And Three Officers [Member] | Share-Based Payment Arrangement, Option [Member] | ||||||||
| Class of Stock [Line Items] | ||||||||
| Number of options previously granted to purchase of common stock | 1,290,000 | |||||||
| Exercise price of option granted | $ 0.46 | |||||||
| Expiration date | Dec. 31, 2023 | |||||||
| Martin Blount [Member] | Share-Based Payment Arrangement, Option [Member] | ||||||||
| Class of Stock [Line Items] | ||||||||
| Number of options previously granted to purchase of common stock | 200,000 | |||||||
| Daniel Burstyn [Member] | Share-Based Payment Arrangement, Option [Member] | ||||||||
| Class of Stock [Line Items] | ||||||||
| Number of options previously granted to purchase of common stock | 40,000 | |||||||
| Robert Crow [Member] | Share-Based Payment Arrangement, Option [Member] | ||||||||
| Class of Stock [Line Items] | ||||||||
| Number of options previously granted to purchase of common stock | 100,000 | |||||||
| Benjamin Harrell [Member] | Share-Based Payment Arrangement, Option [Member] | ||||||||
| Class of Stock [Line Items] | ||||||||
| Number of options previously granted to purchase of common stock | 360,000 | |||||||
| Gregory Harrison [Member] | Share-Based Payment Arrangement, Option [Member] | ||||||||
| Class of Stock [Line Items] | ||||||||
| Number of options previously granted to purchase of common stock | 450,000 | |||||||
| Deborah Vitale [Member] | Share-Based Payment Arrangement, Option [Member] | ||||||||
| Class of Stock [Line Items] | ||||||||
| Number of options previously granted to purchase of common stock | 140,000 | |||||||
| Board of Directors Chairman [Member] | ||||||||
| Class of Stock [Line Items] | ||||||||
| Share-Based Compensation Arrangement by Share-Based Payment Award, Non-Option Equity Instruments, Other, Description | extend from March 13, 2018 to December 31, 2020 | |||||||
| Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Outstanding, Number | 3,115,000 | |||||||
Employee Stock Ownership Plan (Details Narrative) - USD ($) |
12 Months Ended | |
|---|---|---|
Dec. 31, 2023 |
Dec. 31, 2022 |
|
| Retirement Benefits [Abstract] | ||
| Fair market value, shares | 1,670,465 | |
| Fair market value | $ 350,464 | |
| Shares repurchased during period, shares | 79,545 | 79,545 |
| Shares repurchased during period, value | $ 16,704 | $ 30,227 |
Income Taxes (Details Narrative) - USD ($) |
12 Months Ended | |
|---|---|---|
Dec. 31, 2023 |
Dec. 31, 2022 |
|
| Income Tax Disclosure [Abstract] | ||
| Operating Loss Carryforwards | $ 5,600,000 | |
| Net operating loss carry forwards expiration date descrption | expire during various periods through 2041 | |
| Tax Credit Carryforward, Description | federal statutory rate of 21% to the carryforward amounts | |
| Deferred Tax Assets, Valuation Allowance | $ 1,300,000 | $ 1,700,000 |
| Effective Income Tax Rate Reconciliation, Percent | 0.00% | |
| Valuation Allowance, Deferred Tax Asset, Increase (Decrease), Amount | $ 215,000 | |
| Effective Income Tax Rate Reconciliation, Tax Expense (Benefit), Share-Based Payment Arrangement, Percent | 80.00% | |
Commitments and Contingencies (Details Narrative) - USD ($) |
1 Months Ended | 12 Months Ended | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jul. 28, 2023 |
Feb. 17, 2023 |
May 30, 2021 |
Sep. 26, 2014 |
May 31, 2022 |
Mar. 31, 2022 |
Nov. 30, 2021 |
Jul. 31, 2021 |
Jun. 30, 2021 |
Apr. 30, 2021 |
Dec. 31, 2023 |
Dec. 31, 2022 |
Feb. 17, 2021 |
Jan. 26, 2021 |
Aug. 21, 2018 |
Dec. 16, 2016 |
Dec. 31, 2014 |
Mar. 31, 2014 |
|
| Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items] | ||||||||||||||||||
| Other accrued liabilities, current | $ 308,286 | $ 463,743 | ||||||||||||||||
| Accrued franchise taxes | 17,400 | |||||||||||||||||
| Employee Stock Ownership Plan [Member] | ||||||||||||||||||
| Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items] | ||||||||||||||||||
| Other accrued liabilities, current | $ 578,775 | $ 429,750 | ||||||||||||||||
| Mississippi Property [Member] | ||||||||||||||||||
| Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items] | ||||||||||||||||||
| Debt instrument face amount | $ 80,000 | |||||||||||||||||
| Issuance of shares | 160,000 | |||||||||||||||||
| Diamond Head Property [Member] | Second Lien [Member] | ||||||||||||||||||
| Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items] | ||||||||||||||||||
| Debt instrument face amount | $ 137,500 | |||||||||||||||||
| Amount owed | $ 250,000 | |||||||||||||||||
| Diamond Head Property [Member] | Third Lien [Member] | ||||||||||||||||||
| Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items] | ||||||||||||||||||
| Amount owed | $ 400,000 | |||||||||||||||||
| Diamond Head Property [Member] | Fourth Lien [Member] | ||||||||||||||||||
| Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items] | ||||||||||||||||||
| Debt instrument face amount | $ 2,000,000 | |||||||||||||||||
| Property to secure non interest notes | $ 2,000,000 | |||||||||||||||||
| Diamond Head Property [Member] | Fifth Lien [Member] | ||||||||||||||||||
| Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items] | ||||||||||||||||||
| Debt instrument face amount | $ 658,750 | |||||||||||||||||
| Property to secure non interest notes | $ 658,750 | |||||||||||||||||
| Diamond Head Property [Member] | Six Lien [Member] | Lender [Member] | ||||||||||||||||||
| Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items] | ||||||||||||||||||
| Debt instrument face amount | $ 252,500 | |||||||||||||||||
| Issuance of shares | 250,000 | |||||||||||||||||
| Diamond Head Property [Member] | Twelfth and Thirteenth Lien [Member] | ||||||||||||||||||
| Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items] | ||||||||||||||||||
| Debt instrument face amount | $ 50,000 | |||||||||||||||||
| Issuance of shares | 100,000 | |||||||||||||||||
| Diamond Head Property [Member] | Sixteenth Lien [Member] | ||||||||||||||||||
| Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items] | ||||||||||||||||||
| Debt instrument face amount | $ 50,000 | |||||||||||||||||
| Issuance of shares | 100,000 | |||||||||||||||||
| Diamond Head Property [Member] | Seventeenth Lien [Member] | ||||||||||||||||||
| Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items] | ||||||||||||||||||
| Debt instrument face amount | $ 25,000 | |||||||||||||||||
| Issuance of shares | 50,000 | |||||||||||||||||
| Diamond Head Property [Member] | Eighteenth Lien [Member] | ||||||||||||||||||
| Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items] | ||||||||||||||||||
| Debt instrument face amount | $ 50,000 | |||||||||||||||||
| Issuance of shares | 100,000 | |||||||||||||||||
| Diamond Head Property [Member] | Nineteenth and Twentieth Lien [Member] | ||||||||||||||||||
| Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items] | ||||||||||||||||||
| Debt instrument face amount | $ 80,000 | |||||||||||||||||
| Issuance of shares | 160,000 | |||||||||||||||||
| Diamond Head Property [Member] | Twenty-first Lien [Member] | ||||||||||||||||||
| Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items] | ||||||||||||||||||
| Debt instrument face amount | $ 50,000 | |||||||||||||||||
| Issuance of shares | 100,000 | |||||||||||||||||
| Board of Directors Chairman [Member] | ||||||||||||||||||
| Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items] | ||||||||||||||||||
| Debt instrument face amount | $ 75,000 | $ 25,000 | $ 50,000 | |||||||||||||||
| Issuance of shares | 150,000 | 50,000 | 100,000 | |||||||||||||||
| Board of Directors Chairman [Member] | Diamond Head Property [Member] | Fourteenth Lien [Member] | ||||||||||||||||||
| Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items] | ||||||||||||||||||
| Notes payable | $ 150,000 | |||||||||||||||||
| Board of Directors Chairman [Member] | Diamond Head Property [Member] | Fifteenth Lien [Member] | ||||||||||||||||||
| Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items] | ||||||||||||||||||
| Notes payable | $ 100,000 | |||||||||||||||||
| Casinos Austria Maritime Corporation [Member] | ||||||||||||||||||
| Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items] | ||||||||||||||||||
| Other commitments description | Unless terminated earlier pursuant to the provisions of the Agreement, the Agreement terminates five years from the first day of actual Mississippi gaming operations and provides for the payment of an annual operational term management fee of 1.2% of all gross gaming revenues between zero and $100,000,000; plus 0.75% of gross gaming revenue between $100,000,000 and $140,000,000; plus 0.5% of gross gaming revenue above $140,000,000; plus two percent of the net gaming revenue between zero and $25,000,000; plus three percent of the net gaming revenue above twenty-five million dollars $25,000,000. The Company believes this Agreement is no longer in effect. However, there can be no assurance that CAMC will not attempt to maintain otherwise which would lead to litigation | |||||||||||||||||
| Collateralized Convertible Senior Debentures [Member] | Investors Lien [Member] | Mississippi Property [Member] | ||||||||||||||||||
| Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items] | ||||||||||||||||||
| Secure principal and interest amount due | $ 1,850,000 | |||||||||||||||||
| Collateralized Convertible Senior Debentures [Member] | Executives Lien [Member] | Mississippi Property [Member] | ||||||||||||||||||
| Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items] | ||||||||||||||||||
| Amount owed | $ 2,000,000 | |||||||||||||||||
| Collateralized Convertible Senior Debentures [Member] | Tranche 1 [Member] | Investors Lien [Member] | ||||||||||||||||||
| Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items] | ||||||||||||||||||
| Debt instrument face amount | $ 850,000 | $ 1,000,000 | ||||||||||||||||
Pending and Threatened Litigation (Details Narrative) - USD ($) |
12 Months Ended | 27 Months Ended | 60 Months Ended | |||||
|---|---|---|---|---|---|---|---|---|
Oct. 20, 2023 |
Oct. 17, 2023 |
Mar. 31, 2023 |
Mar. 31, 2023 |
Mar. 31, 2022 |
Dec. 31, 2019 |
Dec. 31, 2023 |
Dec. 31, 2022 |
|
| Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||||||||
| Principal due | $ 1,000,000 | $ 1,500,000 | $ 1,500,000 | |||||
| Litigation Settlement, Amount Awarded to Other Party | $ 845,378 | |||||||
| Remaining balance of debt | $ 155,000 | |||||||
| Settlement Ageemet [Member] | ||||||||
| Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||||||||
| Principal due | $ 1,500,000 | |||||||
| Interest rate | 8.00% | 6.00% | 4.00% | |||||
| Legal costs and fees | $ 175,000 | |||||||
| Number of shares issued as legal fees | 50,000 | |||||||
| Accrued legal fees | $ 195,000 | $ 195,000 | ||||||
| Accrued liabilities for stock | 16,500 | 16,500 | ||||||
| Accrued additional interest | $ 112,500 | $ 112,500 |