-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, DgYfhD08B90BXoLeH1AIaIMmJcBDEuvrg5474JWKsoekxUGsCmZsbQYqASgipDRI wy5HfEyShR4jfWl/sxs7Ig== 0000912057-96-017837.txt : 19960816 0000912057-96-017837.hdr.sgml : 19960816 ACCESSION NUMBER: 0000912057-96-017837 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960814 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: TRANS WORLD GAMING CORP CENTRAL INDEX KEY: 0000914577 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-AUTO DEALERS & GASOLINE STATIONS [5500] IRS NUMBER: 133738518 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-25244 FILM NUMBER: 96613732 BUSINESS ADDRESS: STREET 1: ONE PENN PLAZA STREET 2: STE 4303 CITY: NEW YORK STATE: NY ZIP: 10119-0002 BUSINESS PHONE: 2128263355 MAIL ADDRESS: STREET 1: ONE PENN PLAZA STREET 2: STE 4303 CITY: NEW YORK STATE: NY ZIP: 10119-0002 10QSB 1 10QSB SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-QSB [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTER ENDED JUNE 30, 1996 [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM____________TO___________ COMMISSION FILE NUMBER 0-25244 TRANS WORLD GAMING CORP. (Exact name of registrant as specified in its charter) NEVADA 13-3738518 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) ONE PENN PLAZA, NEW YORK, NEW YORK 10119 (Address of principal executive offices) (Zip code) (212) 563-3355 (Issuer's telephone number including area code) Check 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 past 12 months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. YES X NO . ----- ----- Shares of the Registrant's Common Stock , par value $.001, outstanding as of June 30, 1996: 2,544,286 TRANS WORLD GAMING CORP. FORM 10-QSB INDEX PART I - FINANCIAL INFORMATION ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS PAGE CONDENSED CONSOLIDATED BALANCE SHEET AS OF JUNE 30, 1996 3 (UNAUDITED) AND DECEMBER 31, 1995 CONDENSED CONSOLIDATED STATEMENT OF EARNINGS (UNAUDITED) 4 FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 1996 AND 1995 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED) 5 FOR THE SIX MONTHS ENDED JUNE 30, 1996 AND 1995 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 6 ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION OR PLAN OF OPERATIONS 7 TO 9 PART II - OTHER INFORMATION ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 10 ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K 11 SIGNATURE 12 2 FINANCIAL INFORMATION ITEM 1. CONDENSED CONSOLIDATED STATEMENTS TRANS WORLD GAMING CORP. CONDENSED CONSOLIDATED BALANCE SHEET (in thousands) ASSETS June 30, December 31, 1996 1995 ----------- ------------ CURRENT ASSETS (unaudited) Cash $ 392 $ 216 Accounts/Notes Receivable 314 282 Inventories 134 43 Other current assets 77 56 ------- ------- Total current assets 917 597 ------- ------- PROPERTY AND EQUIPMENT, net 1,356 1,413 ------- ------- OTHER ASSETS Investment at equity 75 75 Deferred facility cost - net 10,118 10,425 Goodwill - net 658 676 Other deferred costs - net 36 40 Deferred income tax 283 320 ------- ------- Total other assets 11,170 11,536 ------- ------- TOTAL ASSETS $13,443 $13,546 ------- ------- LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT) CURRENT LIABILITIES Current portion of long-term debt $ 3,272 $ 3,913 Accounts payable and accrued expenses 629 334 ------- ------- Total current liabilities 3,901 4,247 ------- ------- LONG-TERM DEBT, net of current portion 1,677 1,178 ------- ------- STOCKHOLDERS' EQUITY Capital stock 3 3 Additional paid-in-capital 8,600 8,600 Accumulated deficit (738) (482) ------- ------- Total stockholders' equity 7,865 8,121 ------- ------- TOTAL LIABILITIES/STOCKHOLDERS' EQUITY $13,443 $13,546 ------- ------- See accompanying notes to the financial statements 3 TRANS WORLD GAMING CORP. CONDENSED CONSOLIDATED STATEMENT OF EARNINGS (In thousands except per share data) (Unaudited) Six Months Ended Three months ended June 30 June 30, ----------------- ------------------ 1996 1995 1996 1995 ----------------- ------------------ REVENUES $3,261 $2,978 $1,594 $1,470 COSTS AND EXPENSES Cost of revenue 1,594 1,358 760 708 Administrative 1,175 534 547 269 Depreciation and amortization 388 307 194 159 ------ ------ ------ ------ TOTAL COSTS AND EXPENSES 3,157 2,199 1,501 1,136 ------ ------ ------ ------ EARNINGS FROM OPERATIONS 104 779 93 334 Interest Expense 315 287 158 149 ------ ------ ------ ------ EARNINGS/(LOSS) BEFORE TAXES (211) 492 (65) 185 Provision for taxes 44 147 22 35 ------ ------ ------ ------ NET EARNINGS/(LOSS) $ (255) $ 345 $ (87) $ 150 ------ ------ ------ ------ Earnings/(Loss) per share $(0.10) $ 0.14 ($0.03) $ 0.06 ------ ------ ------ ------ Common shares used in computing earnings per share 2,544 2,544 2,544 2,544 See accompanying notes to the financial statements 4 TRANS WORLD GAMING CORP. Condensed Consolidated Statement of Cash Flows (In thousands) (Unaudited) Six Months Ended June 30 ------------------------ 1996 1995 ------ ----- Cash flows from operating activities $ 321 $230 Cash flows from investing activities (4) (378) Cash flows from financing activities Repayment of Debt (1016) (457) Proceeds from Short Term Notes 875 135 ----- ---- Net Cash used by financing activities (141) (322) Net increase/(decrease) in cash 176 (470) Cash - beginning of period 216 812 ----- ---- Cash - end of period $ 392 $342 ----- ---- See accompanying notes to the financial statements 5 TRANS WORLD GAMING CORP. NOTES TO CONDENSED FINANCIAL STATEMENTS 1. Unaudited Statements. The accompanying consolidated financial statements for the three and six months ended June 30, 1996 and June 30, 1995 are unaudited and reflect all adjustments of a normal and recurring nature to present fairly, and not misleading, the financial position and results of operation and cash flows for the interim periods. These unaudited statements have been prepared by the Company in accordance with generally accepted accounting principles, pursuant to the rules and regulations of the Securities and Exchange Commission. Pursuant to such rules and regulations, certain financial information and footnote disclosures normally included in such financial statements have been condensed or omitted. These financial statements should be read in conjunction with the financial statements and notes thereto, together with management's discussion and analysis of financial condition and results of operations, contained in the Company's Annual Report on Form 10K-SB/A for the year ended December 31, 1995. The results of operations for the six months ended June 30, 1996 are not necessarily indicative of the results for the entire year ending December 31, 1996. 2. Earnings/(loss) per share were calculated based on 2,544,286 shares of common stock outstanding for the three and six months ended June 30, 1996 and 1995 respectively. 3. In October 1995, the Financial Accounting Standards Board issued SFAS No. 123, "Accounting for Stock-Based Compensation", which encourages companies to recognize compensation expense in the income statement based on the fair value of the underlying common stock at the date the awards are granted. However, it will permit continued accounting under APB Option 25, "Accounting for Stock Issued to Employees". accompanied by disclosure of the pro forma effects on net income and earnings per share had the new accounting rules been applied. The statement is effective for calendar year 1996. The Company has not yet determined which method it will follow for measuring compensation cost attributed to stock options or the impact of the new standard on its consolidated financial statements. 6 Item 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS THREE MONTHS ENDED JUNE 30, 1996 AND 1995 REVENUES. Trans World Gaming Corp.'s ("TWG" or the "Company") revenues for the three months ended June 30, 1996 were $1,594,000, an increase of 8% over the revenues for the three months ended June 30, 1995. Video poker revenues for the second quarter totaled $955,000 representing a 10% increase over second quarter revenues in the prior fiscal year. Seven percent of the video poker revenue increase was due to the Toledo Palace video poker parlor located in DeRidder, LA which opened on October 19, 1995. Video poker revenues from the Company's other video poker parlor, the Gold Nugget located in Lafayette, LA, increased 4% to $896,000 in 1996 from the similar period in 1995. Revenues from fuel, food and beverage and convenience store operations at the Woodlands Truck Plaza located in DeRidder, LA in the second quarter of 1996 increased 6% to $677,000 over the revenues for the second quarter 1995. The Company believes that the revenues at the Gold Nugget will continue to be higher than the average video poker parlor at truck stops in Louisiana. Revenues at the Toledo Palace have increased steadily from an average daily revenue per device of $50 in the fourth quarter 1995 to an average of $66 during the second quarter 1996. Pending approval by the Louisiana authorities, which approval cannot be assured, the Company has submitted an application in July 1996 for the installation of eighteen (18) additional devices at the Toledo Palace to be added to the video parlor. Act 7 of the First Extraordinary Session of 1996, effective May 1, 1996, created the Louisiana Gaming Control Board (the "LGCB") with all regulatory authority, control and jurisdiction including investigation, licensing and enforcement pursuant to provisions of, among other things, the Video Draw Poker Devices Control Law. Further, Act 7 provided that all powers, duties, functions and responsibilities of, among other things, the Video Gaming Division of State Police be transferred to the LGCB. Act 7 also provided that the State Police, the former licensor, may only issue certain limited licenses and renewals which created a significant backlog of applications for additional devices and license renewals. The Company cannot therefore, predict when, if at all, the application will be approved. The Toledo Palace currently has fifteen devices installed and is licensed for up to fifty. COST OF REVENUE. Cost of Revenue as a percentage of revenues remained virtually unchanged at 48% in the second quarter 1996 from the similar period in 1995. ADMINISTRATIVE. Administrative expenses in the first quarter 1996 were $547,000 which is an increase of $278,000 over the second quarter 1995. This increase is comprised of the following expense items: commissions of approximately $20,000 and expenses of approximately $230,000 in connection with the Company's recently completed financings. INTEREST AND OTHER INCOME. Interest expense increased by 6% in the second quarter 1996 to $158,000 over the second quarter 1995. The increase is due primarily to a contractual increase in the interest due on the Chrysolith Note from 12% to 15% ($17,000) effective July 1995, plus interest incurred in connection with the 1996 bridge financings ($15,000). This was partially offset by a decrease in interest expense ($23,000) on the declining principal balance of the Prime Properties Note. 7 RESULTS OF OPERATIONS SIX MONTHS ENDED JUNE 30, 1996 AND 1995 REVENUES. The Company's revenues for the six months ended June 30, 1996 were $3,261,000 which is a 10% increase over the revenues for the six months ended June 30, 1995. Video poker revenues for the six months ended June 30, 1996 totaled $1,945,000 representing a 9% increase over six months revenues in the corresponding prior fiscal year. Seven percent of this video poker revenue increase was due to the Toledo Palace video poker parlor located in DeRidder, LA, which opened on October 19, 1995. Video poker revenues from the Company's other video poker parlor, the Gold Nugget located in Lafayette, LA, increased 2% to $1,820,000 in 1996 over the corresponding six months of 1995. Revenues from fuel, food and beverage and convenience store operations at the Woodlands Truck Plaza located in DeRidder, LA for the six months ended June 30, 1996 increased 11% to $1,315,000 over the revenues for the six months of 1995. COST OF REVENUE. Cost of Revenue as a percentage of revenues increased to 49% in the six months of 1996 from 46% in the first six months of 1995 with approximately one-third of the increase due to costs associated with the operation of the Toledo Palace, which opened in October 1995. Administrative. Administrative expenses for the first six months of 1996 were $1,175,000 which is an increase of $641,000 over the first six month of 1995. This increase is comprised of the following expense items: severance costs of $38,000 in connection with the resignation of the Company's Chief Executive Officer in March, 1996; financing, legal and accounting costs of approximately $175,000 in connection with an unsuccessful effort to complete a proposed underwritten secondary offering of securities in March 1996; consulting fees for exploring potential acquisitions of approximately $50,000; and fees of approximately $43,000 and expenses of approximately of $230,000 in connection with the Company's efforts to refinance the Chrysolith Note, the Monarch Note and the Woodlands Note. INTEREST AND OTHER INCOME. Interest expense increased by 10% to $28,000 in the first six months of 1996 to $315,000 over the first six months of 1995. YEAR-TO-DATE RESULTS. The Company's earnings before interest, taxes, depreciation and amortization ("EBITDA") was $0.11 per common share outstanding after absorbing significant financing and severance costs for the six months ended June 30, 1996 as compared to $0.19 per common share for the corresponding period in 1995. 8 LIQUIDITY AND CAPITAL RESOURCES The level of cash increased by $176,000 for the six months ended June 30, 1996 due primarily to the proceeds of financings recently completed. As of June 30, 1996, the Company's outstanding indebtedness included a principal amount of $2,075,000 under the Chrysolith Note and $75,000 under the Monarch Note both due in its entirety on June 30, 1996. Additional indebtedness included a note payable to Prime Properties in the principal amount of $1,610,000 (after applying the quarterly payment of June 22, 1996 of $292,000), with principal and interest at 10% per annum payable quarterly through December 21, 1997, which was incurred in connection with the Gold Nugget transaction. With respect to the Woodlands Plaza transaction, the Company's remaining indebtedness is $435,000 payable on December 30, 1996 with interest payable monthly at 10% (the "Note"). Also, the balance due as of June 30, 1996 for the Bridge financings was $220,000 and trade payables amounted to approximately $300,000. In March, 1996 the Company retained C.P. Baker & Co., LTD. ("Baker") for a period of one year as placement agent to arrange bridge and convertible debt financings. From March 25, 1996 through June 5, 1996, the Company completed bridge financings (the "Bridge") in the form of unsecured loans in the aggregate principal amount of $375,000, bearing interest at the rate of 10% per annum payable at maturity. The Company agreed to repay the principal amount in twenty weekly installments starting April 1, 1996 with the balance due at maturity. The net proceeds of the Bridge, approximately $315,000, were used to pay the scheduled principal and interest payment to Prime Properties of $292,000 on March 21, 1996. In connection with the Bridge, the Company issued to the lenders warrants to purchase 499,875 shares of the Company's common stock at an exercise price of $.01 per share. As compensation to the placement agent, the Company paid a cash commission of 15% of the aggregate Bridge proceeds or $56,250. All these warrants carry demand registration rights commencing in July 1996. In June 1996, the Company privately offered to selected accredited investors a minimum of 7 units and a maximum of 12 units, each unit (the "Unit") consisted of one $500,000 principal amount 12% secured convertible senior bonds due June 30, 1999 (the "Bond(s)") and a warrant to purchase 100,000 shares of common stock, par value $.001 per share of the Company (the "Common Stock") at an exercise price of $1.00 per share (the "Warrant(s)"). The Warrants are exercisable at any time until June 30, 2001. The Bonds are convertible at the option of the holder thereof at a conversion price of $5.00 per share of TWG common stock. The Company may at its option, redeem the bonds, in whole but not in part, at 100% of principal amount together with interest accrued thereon through the date fixed for redemption, within six months following a public offering by the Company of common stock that raises not less than $6,000,000 in gross proceeds. Holders of the Bonds, Warrants and Shares of common stock issued upon conversion of the Bonds and exercise of the Warrants are entitled to have their shares registered as part of the next registered public offering of the common stock of the Company as permitted under the rules of the Securities Exchange Commision. If no public offering of common stock has occurred by December 31, 1997, then upon written request of the holders of Warrants issued in connection with the Bonds and exercisable for not less than 700,000 shares of common stock, the Company will be obligated to file and use its reasonable efforts to cause to be declared effective a registration statement or post-effective amendment as permitted under the Securities Act of 1933. Interest on the Bonds is payable by the Company semi-annually with the first payment due on December 15, 1996. The Company 9 and Baker have agreed to extend the offering through August 31, 1996. As compensation to Baker, the Company paid a cash commission of 10% and a non-accountable expense allowance of 3% of the gross proceeds raised in this offering. Through July 24, 1996 the Company had issued Bonds and received gross proceeds of $4.8 million, of which $4.0 million was closed on July 2, 1996. The net proceeds to the Company from the private placement of the Bonds, after deducting commissions, non-accountable expenses, and offering expenses of $120,000 were approximately $4.1 million. The proceeds were used to retire the Chrysolith and Monarch Notes ($2.1 million), to repay the outstanding balance of the Bridge ($220,000), pay the scheduled quarterly payments of June 21, 1996 on the Prime Note ($292,000), to retire the Woodlands Note ($435,000) to pay or trade payables ($300,000) and general corporate purposes ($700,000). The Company believes, although there can be no assurance, that existing cash and anticipated cash flow from current operations will be sufficient to satisfy its liquidity and capital requirements for the next twelve months. 10 PART II - OTHER INFORMATION Item 1. LEGAL PROCEEDINGS On July 16, 1996, the Company paid the outstanding indebtedness on the Woodlands property of $435,017.77 and is also in the process of preparing a Motion for Dismissal with Prejudice to have the mortgage canceled and the legal action brought by Sam Jones dismissed. Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS On May 28, 1996, the Company held its annual meeting of shareholders for the following purposes, all of which were approved by the requisite shareholder vote: 1. The election of two new directors: Broker For Against Abstentions Non-Vote ----- ------- ----------- -------- Stanley Kohlenberg 1,904,925 163,750 - 0 - - 0 - Dominick Valenzano 1,914,925 153,750 - 0 - - 0 - 2. Amending the Company's 1993 Incentive Stock Option Plan (i) to provide for an automatic grant of options to purchase 1,000 shares of Common Stock to non-employee directors on a quarterly basis, and (ii) to provide that the Compensation Committee of the Board be comprised of only two non-employee directors rather than three. Broker For Against Abstentions Non-Vote ----- ------- ----------- -------- 1,831,925 127,450 109,300 - 0 - Item 5. OTHER INFORMATION On July 10, 1996 the Company announced the appointment of Mr. Roy Student and Mr. Richard Taft to the Company's Board of Directors, increasing the Board membership to five with three independent members. Mr. Student will serve on the Audit Committee and Mr. Taft on the Compensation Committee along with Mr. Andrew Tottenham who will serve on both committees. Item 6. EXHIBITS AND REPORT ON FORM 8-K (a) Exhibits Exhibit No. Item No. Description ----------- -------- ------------ 10 10.1 Management Agreement as Amended on July 15, 1996 between the Company and Lee J. Young relating to the Gold Nugget. (b) Reports on Form 8-K None 11 Signature: TRANS WORLD GAMING CORP. Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. TRANS WORLD GAMING CORP. August 8, 1995 /s/ Dominick J. Valenzano ------------------------- Dominick J. Valenzano Chief Financial Officer & Treasurer 12 EX-10 2 EXHIBIT 10 CONSULTING AGREEMENT BETWEEN CHRYSOLITH, L.L.C. AND LEE YOUNG 1. ENGAGEMENT...............................................................1 2. TERM.....................................................................1 3. COMPENSATION.............................................................1 4. DUTIES...................................................................1 5. CONSULTANT'S INDEPENDENCE................................................2 6. REPORTING................................................................2 7. EXTENT OF SERVICES.......................................................2 8. ETHICAL CONDUCT..........................................................2 9. WORKING FACILITIES.......................................................2 10. DISCLOSURE OF INFORMATION...............................................2 11. EXPENSES................................................................2 12. UNAVAILABILITY..........................................................3 13. DISABILITY..............................................................3 14. TERMINATION WITH CAUSE..................................................3 15. DEATH DURING ENGAGEMENT.................................................3 16. ARBITRATION.............................................................3 17. NOTICES.................................................................4 18. WAIVER OF BREACH........................................................4 19. ASSIGNMENT..............................................................4 20. AMENDMENT...............................................................4 21. BINDING ON SUCCESSORS AND ASSIGNS.......................................4 22. GOVERNING LAW...........................................................4 23. ENTIRE AGREEMENT........................................................4 CONSULTING AGREEMENT Chrysolith, L.L.C. (THE COMPANY), a Louisiana limited liability company, represented by its manager whose signature is authorized by TransWorld Gaming Corporation as evidenced by the countersignature of its President, Stanley Kohlenberg, and Lee J. Young (CONSULTANT) agree as follows: 1. ENGAGEMENT. The Company engages Consultant and the Consultant accepts engagement upon the terms and conditions of this Agreement. 2. TERM. The term of this Agreement begins on January 1, 1997. Consultant's engagement shall continue until December 31, 2001; provided however, that in the event the Company's video gaming license is terminated during the term of this agreement as a result of revision in State or Local gaming laws, this Agreement shall terminate on the last day the Company operates its video draw poker parlor. 3. COMPENSATION. The Company shall pay Consultant a basic fee of $8,333.33 each month during the Agreement's term. 4. DUTIES. Consultant shall serve as the Company's principal advisor on the Louisiana gaming industry, identify and engage personnel, identify and engage bookkeepers, identify and engage attorneys, supervise and direct the activities of all consultants, and perform all other duties appropriate to advancing the Company's affairs. The Company may extend or curtail from time to time Consultant's precise services. Consultant shall determine his times of availability to the Company, but shall devote such time as required to successfully complete the engagement. 5. CONSULTANT'S INDEPENDENCE. (a) The Company recognizes that Consultant may perform services for others or for his personal benefit concurrently with his performance under this Agreement. (b) The Company shall direct and control the assignment of tasks to Consultant, subject to Consultant's right to perform services at his own premises and during such hours as he may select. 1 (c) Consultant shall exercise his own professional judgement in the performance of his services. (d) Consultant shall use his best efforts to advance the Company's goals. 6. REPORTING. Consultant shall make periodic reports on the Company's operations and progress to its members. 7. EXTENT OF SERVICES. Consultant shall devote a reasonable portion of his vocational time, attention, and energies to the Company's business. Consultant shall have the right to delegate a portion of his duties to an assistant of his own choosing and make a concomitant reduction of his time devoted to the Company's affairs. Should Consultant take this step, the Company shall pay the assistant as directed by Consultant, reducing Consultant's compensation in the same amount. 8. ETHICAL CONDUCT. Consultant represents that no prior contract prohibits his execution of this Agreement or impedes the performance of the duties herein undertaken. Consultant agrees that he will not offer or employ in the course of his services to the Company confidential information wrongfully obtained from others. 9. WORKING FACILITIES. The Company shall provide Consultant with an office, stenographic assistance, and such other facilities and services ordinarily required for a person in his position and appropriate for the performance of his duties. In addition, the Company shall provide Consultant with a vehicle of his choice for his use during the term of this Agreement. The Company shall also pay for Consultant's hospitalization and medical expense or premiums to the extent it provides such benefits to any other consultant or employee. 10. DISCLOSURE OF INFORMATION. Consultant shall preserve all trade secrets of the Company. 11. EXPENSES. Consultant may incur reasonable expenses for promoting the Company's business, including expenses for travel and similar items. The Company will reimburse Consultant for all such expenses authorized by the Company upon Consultant's periodic presentation of an itemized account of these expenditures. 12. UNAVAILABILITY. Consultant shall be entitled to a period during the calendar year in which he will be unavailable to consult with or otherwise perform services for the 2 Company. This period shall extend for eight (8) weeks, during which time he shall receive full compensation. Consultant shall co-ordinate this unavailability period with the managing partners. Unavailability time not claimed or fully utilized during any year shall accrue and carry forward to the following year or years. Consultant may, with the consent of the Company's managing partners, make himself unavailable for longer periods of time; but his compensation shall be reduced in such event in proportion to the ratio that the number of working days bears to the number of days actually worked. Consultant will make himself available for service to the Company on weekends and during the evenings as required. 13. DISABILITY. The Company shall reduce in half Consultant's compensation payable thereafter if he cannot perform his services by reason of illness or other incapacity for a period of more than thirty (30) consecutive days. The Company shall reinstate Consultant's basic compensation upon his return to full engagement and discharge of his full duties. 14. TERMINATION WITH CAUSE. The Company may terminate Consultant in the event of (a) continued insubordination, (b) habitual intemperance, (c) persistent inattention to business, (d) commission of a crime involving moral turpitude, and (e) disability continuing for more than one hundred twenty (120) days during the calendar year. 15. DEATH DURING ENGAGEMENT. Should Consultant die during the term of engagement, the Company shall pay to his widow, if any, the basic compensation otherwise payable to Consultant for a period of three (3) months. No portion of this widow's benefit shall inure to the benefit of Consultant's estate or any heir or survivor other than his widow. 16. ARBITRATION. Any controversy or claim between the parties arising out of, or relating to this Agreement, or the breach thereof shall be settled by arbitration in the City of Lake Charles, Louisiana in accordance with the rules then obtaining of the American Arbitration Association, and judgement upon the award rendered may be entered and enforced in any court having jurisdiction thereof. 17. NOTICES. Any notice required or desired to be given under this Agreement shall be deemed given if in writing sent by certified mail to Post Office Box 1418, Lake Charles in the case of Consultant, or to its principal office in case of the Company. 18. WAIVER OF BREACH. The waiver by the Company of a breach of any provision of this Agreement by Consultant shall not operate or be construed as a waiver of any subsequent breach by Consultant. No waiver shall be valid unless in writing and signed by an authorized officer of the Company. 3 19. ASSIGNMENT. Consultant acknowledges that the services to be rendered by him are unique and personal. Accordingly, Consultant may not assign any of his rights or delegate any of his duties or obligations under this Agreement. 20. AMENDMENT. No modification, amendment, addition to, or termination of this Agreement, nor waiver of any of its provisions, shall be valid or enforceable unless in writing and signed by both parties. 21. BINDING ON SUCCESSORS AND ASSIGNS. The agreement shall be binding on the parties, their distributees, legal representatives or successors. 22. GOVERNING LAW. This agreement shall be governed by the laws of the State of Louisiana. 23. ENTIRE AGREEMENT. This Agreement contains the entire understanding of the parties. It supercedes all prior negotiations or understandings between the parties. In witness whereof the parties have executed the Agreement of the 15th day of July, 1996. CHRYSOLITH, L.L.C. BY: /s/ Lee J. Young ----------------------------------- Lee J. Young, Manager /s/ Lee J. Young ----------------------------------- LEE J. YOUNG, CONSULTANT TRANSWORLD GAMING CORPORATION BY: /s/ Stanley Kohlenberg ----------------------------------- Stanley Kohlenberg, President 4 EX-27 3 EXHIBIT 27 (FDS)
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED BALANCE SHEETS AND CONSOLIDATED STATEMENT OF EARNINGS FOUND ON PAGE 3 AND 4 OF THE COMPANY'S FORM 10QSB/A FOR THE YEAR TO DATE, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 6-MOS DEC-31-1996 JAN-01-1996 JUN-30-1996 392 0 314 0 134 77 1562 206 13443 3901 1677 0 0 3 7862 13443 1316 3261 1064 1594 1563 0 315 (211) 44 (255) 0 0 0 (255) (0.10) (0.10)
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