-----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, UVzcv8zrrEEPnXCXY9fhbwuawIAcAtflWZitF96yC8hdsNGfCBDl5AQkYmJJ4T47 JJwtTdz3+mafhdjSrkDJ1g== 0000912057-97-004703.txt : 19970222 0000912057-97-004703.hdr.sgml : 19970222 ACCESSION NUMBER: 0000912057-97-004703 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970213 SROS: PSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: BOARDWALK CASINO INC CENTRAL INDEX KEY: 0000915281 STANDARD INDUSTRIAL CLASSIFICATION: HOTELS & MOTELS [7011] IRS NUMBER: 880304201 STATE OF INCORPORATION: NV FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 001-12780 FILM NUMBER: 97528576 BUSINESS ADDRESS: STREET 1: 3750 LAS VEGAS BLVD SOUTH CITY: LAS VEGAS STATE: NV ZIP: 89109 BUSINESS PHONE: 7027352400 MAIL ADDRESS: STREET 1: 3750 LAS VEGAS BLVD SOUTH CITY: LAS VEGAS STATE: NV ZIP: 89109 10QSB 1 10QSB SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-QSB Quarterly Report under Section 13 or 15(d) of the Securities Exchange Act of 1934 For Quarter Ended: DECEMBER 31, 1996 Commission file number 1-12780 ----------------- ------- BOARDWALK CASINO, INC. - ------------------------------------------------------------------------------- (Exact name of small business issuer as specified in its charter) STATE OF NEVADA 88-0304201 ------------------------ ----------------------------------- (State of incorporation) (I.R.S. Employer Identification No.) 3750 LAS VEGAS BOULEVARD SOUTH, LAS VEGAS, NEVADA 89109 - ------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Issuer's telephone number, including area code (702) 735-2400 - ------------------------------------------------------------------------------- Former name, former address and former fiscal year, if changed since last report. Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ----- ----- Indicate the number of shares outstanding of each of the issuer's classes of common stock, as the close of the period covered by this report: Class Outstanding at December 31, 1996 ----------------------------- -------------------------------- Common Stock, $.001 par value 7,179,429 Transitional Small Business Disclosure Format Yes No X ----- BOARDWALK CASINO, INC. BALANCE SHEETS ASSETS
DECEMBER 31, SEPTEMBER 30, 1996 1996 ------------ ------------- (UNAUDITED) CURRENT ASSETS: Cash and cash equivalents........................... $ 4,794,365 $ 4,772,549 Receivables, net of allowance for doubtful accounts of $17,105 and $17,105.................. 797,825 439,857 Inventory.......................................... 89,616 73,719 Prepaid expenses................................... 719,036 573,964 ----------- ----------- Total current assets............................. 6,400,842 5,860,089 ----------- ----------- PROPERTY AND EQUIPMENT, net of accumulated depreciation of $6,435,069 and $5,705,685.......... 55,941,574 55,486,285 ----------- ----------- OTHER ASSETS: Deferred costs, net of accumulated amortization of $333,255 and $239,436........................ 1,554,059 1,645,090 Other.............................................. 179,485 179,485 ----------- ----------- Total other assets.............................. 1,733,544 1,824,575 ----------- ----------- Total assets.................................... $64,075,960 $ 63,170,949 ----------- ----------- ----------- ----------- LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable.................................... $ 1,165,175 $ 1,281,657 Construction accounts payable....................... 138,170 171,283 Accrued expenses.................................... 4,314,058 2,547,615 Current maturities of contracts and notes payable... 2,921,977 3,115,522 ----------- ----------- Total current liabilities......................... 8,539,380 7,116,077 ----------- ----------- LONG-TERM DEBT, less current portion................... 40,958,787 40,909,523 CONTRACTS AND NOTES PAYABLE, less current portion...... 3,057,203 3,400,234 ----------- ----------- Total liabilities................................ 52,555,370 51,425,834 ----------- ----------- COMMITMENTS AND CONTINGENCIES SHAREHOLDERS' EQUITY: Preferred stock, $.001 par value; 15,000,000 shares authorized, none issued............................. - - Common stock, $.001 par value; 50,000,000 shares authorized; 7,179,429 issued and outstanding....... 7,179 7,179 Additional paid-in capital............................. 22,435,083 22,435,083 Accumulated deficit.................................... (10,921,672) (10,697,147) ----------- ----------- Total shareholders' equity....................... 11,520,590 11,745,115 ----------- ----------- Total liabilities and shareholders' equity.......$ 64,075,960 $ 63,170,949 ----------- ----------- ----------- -----------
See notes to financial statements. BOARDWALK CASINO, INC. STATEMENTS OF INCOME (UNAUDITED) THREE MONTHS ENDED DECEMBER 31, 1996 1995 ------------ ----------- REVENUES: Casino................................ $ 5,080,980 $ 2,395,376 Rooms................................. 3,278,229 764,708 Food and beverage..................... 1,484,656 748,165 Other................................. 476,186 59,312 ------------ ------------ Gross revenue....................... 10,320,051 3,967,561 ------------ ------------ Less promotional allowances............... (513,845) (207,903) ------------ ------------ 9,806,206 3,759,658 COSTS AND EXPENSES: Casino................................ 3,006,687 1,805,309 Rooms................................. 1,205,274 450,145 Food and beverage..................... 1,519,699 827,421 Other................................. 76,416 24,039 Selling, general and administrative... 1,668,680 946,245 Depreciation and amortization......... 823,204 473,641 ------------ ------------ 8,299,960 4,526,800 ------------ ------------ Income (loss) from operations.............. 1,506,246 (767,142) ------------ ------------ OTHER (INCOME) EXPENSE: Interest income......................... (41,101) (223,923) Interest expense........................ 1,964,157 2,109,301 Interest capitalized.................... (192,286) (397,020) ------------ ------------ 1,730,770 1,488,358 ------------ ------------ Income (loss) before income taxes........... (224,524) (2,255,500) Income tax provision........................ - - ------------ ------------ Net income (loss) .......................... $ (224,524) $ (2,255,500) ------------ ------------ ------------ ------------ EARNINGS (LOSS) PER SHARE................... $ ( .03) $ ( .37) ------------ ------------ ------------ ------------ WEIGHTED AVERAGE COMMON SHARES OUTSTANDING... 7,179,429 6,077,800 ------------ ------------ ------------ ------------ See notes to financial statements. BOARDWALK CASINO, INC. STATEMENT OF CASH FLOWS (UNAUDITED) THREE MONTHS ENDED DECEMBER 31,
1996 1995 ---------- ---------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss)........................................ $ (224,524) $ (2,255,500) ----------- ----------- Adjustments to reconcile net income (loss) to net cash provided (used) by operating activities: Depreciation and amortization....................... 823,204 473,641 Amortization of original issue discount............. 49,194 541,851 Changes in operating assets and liabilities (Increase) decrease in receivables........... (357,968) (427,253) (Increase) decrease in inventory.............. (15,897) (2,500) (Increase) decrease in prepaid expenses....... (145,072) (15,102) Increase (decrease) in payables and accrued expenses.................................... 1,616,847 (242,195) ----------- ----------- Net cash provided (used) by operating activities........ 1,745,784 (1,927,058) ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures....................... ....... (1,091,843) (5,136,718) (Increase) decrease in restricted cash equivalents.................................... - 2,681,921 (Increase) decrease in deferred costs............. (2,788) - (Increase) decrease in other assets............... - (97,011) ----------- ----------- Net cash provided (used) by investing activities........ (1,094,631) (2,551,808) ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES: Principal payments of notes and contracts payable.. (421,540) (66,378) Proceeds from borrowings, net of issuance costs.... - 1,850,000 Principal payments of long-term debt............... - (18,370) Principal payments of capital lease obligations.... (207,797) - ----------- ----------- Net cash provided (used) by financing activities........ (629,337) 1,765,252 ----------- ----------- Net increase (decrease) in cash............................. 21,816 (2,713,614) Cash and equivalents, beginning of period.................... 4,772,549 3,650,236 ----------- ----------- Cash and equivalents, end of period.......................... $ 4,794,365 $ 936,622 ----------- ----------- ----------- ----------- SUPPLEMENTAL CASH FLOW INFORMATION: Cash paid for interest................................... $ 155,874 $ 2,405,460 SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: Property and equipment acquisitions financed by contracts payable................................. $ 92,832 $ 973,791
See notes to financial statements. BOARDWALK CASINO, INC. NOTES TO FINANCIAL STATEMENTS (UNAUDITED) The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for forward-looking statements. Certain information included in this Form 10-QSB and other materials filed or to be filed by the Company with the Securities and Exchange Commission (as well as information included in oral statements or other written statements made or to be made by the Company) contains statements that are forward-looking, such as statements relating to plans for future expansion and other business development activities as well as other capital spending, financing sources and the effects of regulation (including gaming and tax regulation) and competition. Such forward-looking information involves important risks and uncertainties that could significantly affect anticipated results in the future and, accordingly, such results may differ from those expressed in any forward-looking statements made by or on behalf of the Company. These risks and uncertainties include, but are not limited to, those relating to development and construction activities, dependence on existing management, debt service (including sensitivity to fluctuations in interest rates), domestic or global economic conditions, changes in federal or state tax laws or the administration of such laws and changes in gaming laws or regulations (including the legalization of gaming in certain jurisdictions). 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: NATURE OF OPERATIONS Boardwalk Casino, Inc. ("BCI") was formed in July 1993 for the purpose of operating a casino and a hotel (the "Boardwalk Hotel and Casino") in Las Vegas, Nevada. The accompanying unaudited condensed financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. Although management believes that the disclosures are adequate to make the information presented not misleading, it is suggested that these interim condensed financial statements be read in conjunction with Company's most recent audited financial statements and notes thereto included in the Company's 10-KSB for the fiscal year ended September 30, 1996. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary for a fair presentation of the financial position, results of operations and cash flows for the interim period presented have been made. Operating results for the period ended December 31, 1996, are not necessarily indicative of the results that may be expected for the fiscal year ending September 30, 1997. BOARDWALK CASINO, INC. NOTES TO FINANCIAL STATEMENTS (UNAUDITED) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED: PROMOTIONAL ALLOWANCES The retail value of hotel accommodations, food and beverage provided to customers without charge is included in gross revenues and then deducted as promotional allowances to arrive at net revenues. The estimated costs of providing such promotional allowances have been classified as gaming expenses through interdepartmental allocation. RECLASSIFICATIONS Certain amounts in the quarter ended December 31, 1995 financial statements have been reclassified to conform with the quarter ended December 31, 1996. 2. CONSTRUCTION OBLIGATIONS: The Company is currently constructing a 2nd floor buffet, which is expected to be completed by March 1997. A general contractor has been engaged for the construction activities relating to the buffet. Of the approximate $2,507,000 total estimated cost to complete the buffet, the Company has expended approximately $454,600 as of December 31, 1996, leaving an unexpended balance of approximately $2,052,400. 3. EARNING PER COMMON SHARE: Earnings per share is based on the weighted average number of shares of common stock outstanding during each period. Warrants and options to purchase common stock which were issued in 1994 through 1996 were excluded from the calculation of earnings (loss) per share, as their inclusion would have been anti-dilutive (by reducing the loss per share). 4. OPERATING RESULTS, FINANCIAL CONDITION AND MANAGEMENT'S PLANS: The Company had net losses of $224,524 and $2,255,500 in the first quarters of 1997 and 1996, respectively, and has a working capital deficiency of approximately $2,139,000 at December 31, 1996. With the completion of the new hotel tower and expanded casino, restaurant, buffet and meeting rooms opened and the presence of its neighbors (Monte Carlo - June 21, 1996 and New York, New York, - January 3, 1997), management expects to generate cash flows from operations to improve on its working capital position in fiscal 1997. BOARDWALK CASINO, INC. NOTES TO FINANCIAL STATEMENTS (UNAUDITED) 4. OPERATING RESULTS, FINANCIAL CONDITION AND MANAGEMENT'S PLANS, CONTINUED: The Company's $40,000,000 debt financing of the BCI Notes has an annual debt service requirement of $6,600,000. At December 31, 1996 the Company owes $1,650,000 in interest on the $40,000,000 debt towards a $3,300,000 interest payment due March 31, 1997. The Company is currently constructing a 2nd floor buffet, which is expected to be completed by March 1997. A general contractor has been engaged for the construction activities relating to the buffet. Of the approximate $2,507,000 total estimated cost to complete the buffet, the Company has expended approximately $454,600 as of December 31, 1996, leaving an unexpended balance of approximately $2,052,400. The Company has also arranged for up to $4,000,000 of available working capital borrowings which has been made available by a director and a group of other private investors who have provided other short-term financing to the Company in the past. Such uncollateralized borrowings are available to the Company on an as-needed basis through December 31, 1997 on terms substantially similar to those which had been available to the Company during 1996. Management believes that the combination of expected cash flows from operations in 1997, and the available borrowing capacity are sufficient to meet the Company's obligations as they become due during fiscal 1997. The outstanding warrants to purchase common stock at December 31, 1996 also represent a potential significant source of capital to the Company, although management cannot control or accurately predict the timing of proceeds from the exercise of warrants. 5. COMMITMENTS AND CONTINGENCIES: The Company has pending certain legal actions and claims incurred in the normal course of business and is actively pursuing the defense thereof. In the opinion of management, these actions and claims are either without merit or are covered by insurance and will not have a material adverse effect on the Company's financial position, results of operation or cash flows. GAMING TAX ASSESSMENT In fiscal year 1996, based on the advice of legal counsel, the Company accrued a total loss contingency of $500,000 related to a gaming tax assessment from the Nevada Gaming Control Board ("NGCB"). The Company plans to appeal the assessment; however, the likelihood of a successful outcome cannot be determined. BOARDWALK CASINO, INC. NOTES TO FINANCIAL STATEMENTS (UNAUDITED) 5. COMMITMENTS AND CONTINGENCIES, CONTINUED: OFFICE SPACE LEASE The Company leased office space and storage facilities for its corporate offices from the majority shareholders for approximately $8,375 per month for the previous year. Effective October 1, 1996, the Company amended the lease and the monthly rental increased to approximately $70,000 per month. The lease term is for two years and allows the Company to use the facilities for any purpose. The Company has options to extend the lease up to an additional 28 years. The lease agreement provides the Company with the first right of refusal to purchase the land and building at their fair value should the shareholders decide to sell them. The lease agreement also entitles the Company to the rental income from the existing lessees during the lease term. The existing lessees are on short-term renewable leases with current rents totaling approximately $28,000 per month. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION RESULTS OF OPERATIONS Income from operations has increased $2,273,388 or 296% to $1,506,246 for the three months ended December 31, 1996 compared to an operating loss of $767,142 for the three months ended December 31, 1995. The results of operations for the first quarter ended December 31, 1996 reflects the positive impact of increased revenues associated with opening of the hotel tower with an additional 451 rooms (during the second and third quarters of 1996), increased pedestrian traffic resulting from an elimination of construction activities that blocked access and the opening of a major resort next to the Company's property, the availability of 550 additional parking spaces during the second quarter of 1996 from the second parking garage, the attraction of several significant patrons to the race and sports books and the retaining of a professional sales department, which has since opened several corporate accounts. The Company is currently constructing a 2nd floor buffet, which is expected to be completed by March 1997. A general contractor has been engaged for the construction activities relating to the buffet. Of the approximate $2,507,000 total estimated cost to complete the buffet, the Company has expended approximately $454,600 as of December 31, 1996, leaving an unexpended balance of approximately $2,052,400. The balance of the construction will be financed using existing cash, operating cash flow and cash available from other sources as more fully described in "Liquidity and Capital Resources." THREE MONTHS ENDED DECEMBER 31, 1996 COMPARED TO THREE MONTHS ENDED DECEMBER 31, 1995 The Company had income from operations of $1,506,246 in the first quarter of 1997 compared to an operating loss of $767,142 in the first quarter of prior year, an increase of $2,273,388. The $2,273,388 increase in operating income was primarily due to a greater increase in revenues than the associated increase in costs and expenses. The first quarter net revenues were $9,806,206 compared to $3,759,658 for the same period in fiscal 1996, an increase of 161% ($6,046,548). Total costs and expenses increased 83% ($3,773,160) to $8,299,960 for the first quarter in fiscal 1997, from $4,526,800 during the same period in fiscal 1996. CASINO OPERATIONS Gaming revenues increased 112% ($2,685,604) to $5,080,980 for the first quarter in fiscal 1997, from $2,395,376 when compared to the same period in fiscal 1996. The increase was due to: (i) increased race and sports book activity that generated an additional $1,144,274 (139%) to $1,966,044 in revenue for the current quarter from $821,770 for the first quarter last year, (ii) increased slot machine revenue of $1,001,231 (80%) to $2,249,752 for the current quarter from $1,248,521 for the first quarter last year and (iii) increased table game play generated an additional $540,099 (166%) to $865,184 in revenue for the current quarter from $325,085 for the first quarter last year. Casino expenses increased $1,201,378 (67%) to $3,006,687 for first quarter in fiscal 1997 from $1,805,309 for the same period of 1996. The increase in casino expenses were due to: (i) additional gaming taxes of $311,856, (ii) additional payroll expenses of $305,663 and (iii) additional race wire fees of $522,697. ROOM OPERATIONS Gross room revenues increased $2,513,521 or 329%, to $3,278,229 for the first quarter 1997 from $764,708 for the comparable quarter in fiscal 1996. This reflects the positive impact of the opening of the hotel tower with an additional 451 rooms (during the second and third quarters of 1996) and the retaining of a professional sales department, which has since opened several corporate accounts. Room nights available increased 42,237 (228%) to 60,729 room nights available for the current quarter from 18,492 for the same period of last year. Room nights occupied increased 34,831 (319%) to 45,747 room nights occupied for the first quarter of fiscal year 1997 from 10,916 for the same period of 1996. The occupancy percentage increased to 75.3% for the first quarter of 1997 compared to 59.0% for the same period of fiscal 1996. The average room rate increased $1.61 to $71.66 for the current period. Promotional allowance for rooms increased $65,271 (579%) to $76,546 for the current period compared to $11,275 for the same period of 1996. The increase in promotional or complimentary rooms to qualified individuals was due to the increase in available rooms from the completed hotel tower. Net room revenues increased $2,448,250 or 325% to $3,201,683 for the first quarter of fiscal 1997 from $753,433 for the same period of 1996. Hotel expenses increased $755,129 or 168%, to $1,205,274 for first quarter 1997 from $450,145 for the same period of 1996. The increased expenses reflect the expanded support services necessary to handle the 319% increase in occupied room nights as follows; (i) personnel costs increased $464,368, (ii) Franchise and Holiday Inn-Registered Trademark- promotional fees increased $162,646, (iii) additional linen, laundry and room supplies totaled $70,006 and (iv) additional credit card fees of $43,121. FOOD AND BEVERAGE OPERATIONS Gross food and beverage revenues increased $736,491 or 98%, to $1,484,656 for the first quarter 1997 from $748,165 for the comparable quarter in fiscal 1996. The increase in gross food and beverage revenues was attributable to the following: (i) an additional 73,000 (365%) guests staying in the hotel totaling 92,997 guests for the first quarter of fiscal 1997 compared to 19,997 for the same period of fiscal 1996, (ii) increased pedestrian traffic and (iii) the average check per cover charge for the restaurant increased by 15%. Promotional allowance for food and beverage increased $240,671 (122%) to $437,299 for the current period compared to $196,628 for the same period of 1996. Net food and beverage revenues increased $495,820 or 90% to $1,047,357 for the first quarter of fiscal 1997 from $551,537 for the same period of 1996. Food and beverage expenses increased $692,278, or 84%, to $1,519,699 for first quarter 1997 from $827,421 for the same period of fiscal 1996. This is the direct result of increased cost of sales and additional wages and benefits resulting from the increased seating capacity and additional beverage outlet. OTHER REVENUES AND EXPENSES Other revenues increased $416,874, or 703%, to $476,186 for the first quarter 1997 from $59,312 for the same period of fiscal 1996. The increase of other revenues consists principally of the following: (i) increased rents from retail space of $211,276, (ii) additional fees of $134,472 from increased guest telephone usage, in-room movies and commissions on phones and (iii) increased revenues from arcade games, guest laundry services and ATM rebates. Other expenses increased $52,377, or 218%, to $76,416 for the first quarter 1997 from $24,039 for the same period of fiscal 1996. The increase of other expenses is principally due to costs associated with increased revenues from telephone calls by guests, movies and vending revenues. SELLING, GENERAL AND ADMINISTRATIVE Selling, general and administrative expenses increased $722,435, or 76%, to $1,668,680 for first quarter 1997 from $946,245 for the same period of fiscal 1996. The increase was due primarily to (i) a master lease on the adjacent building housing the administrative staff which increased rents by $184,875, (ii) executive, administrative, security, count teams and porters were increased at a cost of $141,834, (iii) advertising costs increased $94,044, (iv) utilities expense increased $81,563, (v) legal and professional fees increased by 64,672 (vi) general insurance increased $42,382 and (vii) the remaining increase was from entertainment, complimentaries for administrative purposes, promotions and facility repairs and supplies. DEPRECIATION AND AMORTIZATION Depreciation and amortization totaled $823,204 in the first quarter in fiscal 1997, reflecting a $349,563 (74%) increase over the first quarter in fiscal 1996 amount of $473,641 due to the depreciable costs of the hotel tower with furnishings, parking garages, improvements to facilities and additional casino equipment. OTHER INCOME AND EXPENSES Interest income decreased $182,822 to $41,101 in the first quarter of fiscal 1997 compared to $223,923 for the first quarter of 1996. Interest income relates to the Company's investments in marketable securities, principally U.S. treasury securities and short-term corporate commercial paper. Management expects interest income to continue to decrease in 1997 as funds are used to pay for the remaining portion of phase three of the Expansion. Interest expense decreased to $1,964,157 in the first quarter of fiscal 1997 from $2,109,301 in the first quarter of fiscal 1996. Approximately $192,286 of interest was capitalized in the first quarter of fiscal year 1997 in connection with the Expansion, compared to $397,020 for the same period of 1996. The expenditures of the second floor gave rise to the interest capitalized in the current quarter and the hotel tower, second parking garage and 2nd floor of the casino gave rise to the capitalized interest for the first quarter of fiscal 1996. The hotel tower and 2nd parking garage were completed in the second quarter of 1996. INCOME TAX PROVISION No income tax benefit was recorded. Because the Company is a new taxpayer, it cannot carryback such loss to offset taxable income in prior years and therefore has a net operating loss carryforward. LIQUIDITY AND CAPITAL RESOURCES The Company had unrestricted cash assets of $4,794,365 (7.5% of total assets) at December 31, 1996 compared to $4,772,549 (7.6% of total assets) at September 30, 1996. The ratio of current assets to current liabilities was .75 to 1 at December 31, 1996 and .82 to 1 September 30, 1996. With the completion of the new hotel tower and expanded casino, restaurant, buffet and meeting rooms opened and the presence of its neighbors (Monte Carlo - June 21, 1996 and New York, New York, - January 3, 1997), management expects to generate cash flows from operations to improve on its working capital position in fiscal 1997. The Company's $40,000,000 debt financing of the BCI Notes has an annual debt service requirement of $6,600,000. At December 31, 1996 the Company owes $1,650,000 in interest on the $40,000,000 debt towards a $3,300,000 interest payment due March 31, 1997. The Company is currently constructing a 2nd floor buffet, which is expected to be completed by April 1997. A general contractor has been engaged for the construction activities relating to the buffet. Of the approximate $2,507,000 total estimated cost to complete the buffet, the Company has expended approximately $454,600 as of December 31, 1996, leaving an unexpended balance of approximately $2,052,400. The Company has also arranged for up to $4,000,000 of available working capital borrowings which has been made available by a director and a group of other private investors who have provided other short-term financing to the Company in the past. Such uncollateralized borrowings are available to the Company on an as-needed basis through December 31, 1997 on terms substantially similar to those which had been available to the Company during 1996. Management believes that the combination of expected cash flows from operations in 1997, and the available borrowing capacity are sufficient to meet the Company's obligations as they become due during fiscal 1997. The outstanding warrants to purchase common stock at December 31, 1996 also represent a potential significant source of capital to the Company, although management cannot control or accurately predict the timing of proceeds from the exercise of warrants. BOARDWALK CASINO, INC. PART II - OTHER INFORMATION Item 1. Legal Proceedings - None Item 2. Changes in Securities - None Item 3. Defaults Upon Senior Securities - None Item 4. Submission of Matters to a Vote of Security Holders (a) A special meeting of shareholders held December 19, 1996. (b) One matter was voted upon at the special meeting as follows: Proposal 1: To approve the amendment to the articles of incorporation increasing the authorized common stock, $.001 par value, from 15,000,000 shares to 50,000,000 shares. For: 6,661,246 Against 89,464 Abstain 39,612 Not Voted 389,107 Item 5. Other Information (a) On December 5, 1996, the Board of Directors has named Jeffrey P. Jacobs as a Director. Mr. Jacobs, through Diversified Opportunities Group Ltd., a company controlled by Jacobs Entertainment Ltd., previously invested $9,000,000 in Boardwalk in a combination of convertible debt and common stock. Mr. Jacobs' application for a gaming license is pending before the Nevada State Gaming Commission, however, he has received the appropriate waiver required to accept this board position. In a separate transaction, Diversified Opportunities purchased 317,589 shares of Boardwalk from the Chairman and CEO, Norbert Jansen, bringing their total holdings to 1,071,429 shares. (b) On January 20, 1997, the Board of Directors has elected Avis P. Jansen as Chairperson of the Board of Directors. Ms. Jansen replaces her husband, and Boardwalk founder, Norbert Jansen. Mr. Jansen succumbed to cancer on January 6, 1997. Pursuant to the loss of Mr. Jansen, the Company announced the formation of an "Executive Search Committee" whose primary function will be to fill the Chief Executive Officer position. Item 6. Exhibits and Reports on Form 8-K - None SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. BOARDWALK CASINO, INC. ------------------------------- Registrant Date 02/12/97 Forrest Woodward, II ------------------------------ President and Chief Operating Officer Date 02/12/97 Louis J. Sposato ------------------------------ Chief Financial Officer EX-27 2 EXHIBIT 27
5 3-MOS SEP-30-1996 DEC-31-1996 4,794,365 0 814,930 (17,105) 89,616 6,400,842 62,376,643 (6,435,069) 64,075,960 8,539,380 44,015,990 0 0 7,179 11,513,411 64,075,960 1,047,357 9,806,206 586,520 8,299,960 0 0 1,771,871 (224,524) 0 (224,524) 0 0 0 (224,524) (.03) (.03) Net of interest capitalized of $192,286
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