ý
|
Fee
paid previously with preliminary
materials.
|
o
|
Check
box if any part of the fee is offset as provided by Exchange Act
Rule
0-11(a)(2) and identify the filing for which the offsetting fee was
paid
previously. Identify the previous filing by registration statement
number,
or the Form or Schedule and the date of its
filing.
|
[____________]
[____,]
2007
|
By
Order of the Board of Directors,
Ernest
E. East
Senior
Vice President,
General
Counsel and Secretary
|
Page
|
|
SUMMARY
TERM SHEET
|
1
|
The
Parties to the Transaction
|
1
|
The
Unit Purchase Agreement
|
1
|
Reasons
for the Sale of our Ownership Interest
|
2
|
Recommendation
of the Board of Directors
|
3
|
The
Special Meeting
|
3
|
Stockholder
Support Agreement
|
3
|
Certain
United States Federal Income Tax Consequences
|
3
|
Pro
Forma Consolidated Balance Sheet and Statements of
Operations
|
4
|
QUESTIONS
AND ANSWERS ABOUT THE SPECIAL MEETING OF
|
|
STOCKHOLDERS
|
5
|
THE
SPECIAL MEETING
|
7
|
General;
Time, Place and Purpose of the Special Meeting
|
7
|
Solicitation
of Proxies
|
7
|
Voting,
Outstanding Shares and Quorum
|
7
|
Brokerage
Accounts
|
8
|
Attendance
at the Special Meeting
|
8
|
Revocability
of Proxies
|
8
|
CAUTIONARY
STATEMENT REGARDING FORWARD-LOOKING
|
|
STATEMENTS
|
9
|
SPECIAL
FACTORS
|
10
|
The
Parties to the Transaction
|
10
|
Background
of the Sale of our Ownership Interest
|
11
|
Reasons
for the Sale of our Ownership Interest
|
13
|
Effect
of the Sale of our Ownership Interest
|
14
|
Recommendation
of the Board of Directors
|
14
|
Use
of Proceeds
|
15
|
Stockholder
Support Agreement
|
15
|
Deposit
Amount
|
15
|
Interests
of Certain Persons
|
16
|
Regulatory
and Other Approvals
|
16
|
Dissenter’s
Rights of Appraisal
|
16
|
Certain
United States Federal Income Tax Consequences
|
16
|
Accounting
Treatment of the Transaction
|
16
|
THE
UNIT PURCHASE AGREEMENT
|
17
|
General
|
17
|
Ownership
of Interest to be Sold
|
17
|
Page
|
|
Purchase
Price
|
17
|
Representations
and Warranties
|
18
|
Pre-Closing
Covenants; Conduct of Business Prior to Closing
|
19
|
Tax
Matters
|
21
|
Indemnification
|
22
|
Conditions
to Closing
|
23
|
Termination
|
24
|
Termination
Fees and Expenses
|
25
|
PRO
FORMA CONSOLIDATED BALANCE SHEET AND STATEMENTS OF
|
|
OPERATIONS
|
27
|
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
|
|
MANAGEMENT
|
32
|
WHERE
YOU CAN FIND MORE INFORMATION AND INCORPORATION
|
|
BY
REFERENCE
|
34
|
STOCKHOLDERS
SHARING AN ADDRESS
|
34
|
STOCKHOLDER
PROPOSALS
|
35
|
OTHER
BUSINESS
|
35
|
APPENDIX
A
|
A-1
|
· |
The
Parties to the Transaction (See
page 10)
|
· |
The
Unit Purchase Agreement (See
page 17)
|
· |
Reasons
for the Sale of our
Ownership Interest (See
page 13)
|
·
|
Recommendation
of the Board of Directors (See
page14)
|
·
|
The
Special Meeting (See
page 7)
|
·
|
Stockholder
Support Agreement
(See
page 15)
|
·
|
Certain
United States Federal Income Tax Consequences(See
page 16)
|
·
|
Pro
Forma Consolidated Balance Sheet and Statement of Operations
(See
page 27)
|
A: |
The
special meeting will be held on Thursday, January 17, 2008
beginning at 10:00 a.m. Central Time, at the Sheraton Suites Houston,
2400 West Loop South, Houston, Texas 77027, or at a later date if the
meeting is adjourned.
|
A: |
The
board of directors is soliciting proxies from each of our stockholders.
Nevada Gold & Casinos will pay the expenses of preparing and
distributing this proxy statement and soliciting proxies, including
the
reasonable expenses incurred by brokers, dealers, banks and trustees
or
their nominees for forwarding solicitation materials to beneficial
owners.
|
A: |
Stockholders
of record as of the close of business on December 10, 2007, the record
date, are entitled to notice of and to vote at the special meeting.
Each
share of common stock is entitled to one
vote.
|
A: |
You
are being asked to vote upon a proposal to approve and adopt the
Unit
Purchase Agreement, dated as of November 13, 2007, by and among us,
Blackhawk Gold, Isle of Capri and Casino America. See “The Unit
Purchase Agreement” for a more detailed description of the proposed
transaction.
|
A: |
If
the Unit Purchase Agreement and the transactions contemplated thereby
are
approved and adopted by the holders of a majority of the outstanding
shares of our common stock, and the other conditions to closing of
the
transaction are satisfied or waived, we will sell our 43% ownership
interest in IC-BH to Casino America pursuant to the terms and conditions
set forth in the Unit Purchase Agreement as described in this proxy
statement.
|
A: |
If
the Unit Purchase Agreement is not approved or adopted by the holders
of a
majority of the outstanding shares of our common stock, we will not
be
able to consummate the transactions contemplated by the Unit Purchase
Agreement and under certain circumstances, we or Blackhawk Gold may
be
required to pay a termination fee of $700,000 to Casino America.
In
addition, we would need to extend the maturity date of our existing
long-term debt or find other sources with which to help repay the
same
when it becomes due in September 30, 2008, and would have to find
other
sources to help finance the acquisition of the Vicksburg Facility.
No
assurance can be given that we would be able to extend the maturity
date
of our existing long-term debt or secure such other financing or
the terms
and conditions upon which we might be able to secure the
same.
|
A: |
We
expect to complete the sale of our ownership interest to Casino America
on
the second business day or as soon as practicable after all of the
conditions to closing of the transaction have been satisfied or waived.
See “The Unit Purchase Agreement” for a more complete description of the
conditions to completion of the
sale.
|
A: |
The
affirmative vote of the holders of a majority of the outstanding
shares of
our common stock is required to approve and adopt the Unit Purchase
Agreement and the transactions contemplated thereby. The board of
directors recommends that you vote “FOR”
the proposal to approve and adopt the Unit Purchase Agreement and
the
transactions contemplated thereby. Failure to vote either by proxy
or in
person at the meeting will have the same effect as a vote against
the
proposal.
|
A: |
After
carefully reading and considering the information contained in this
proxy
statement, we urge you to complete, date, sign and return the enclosed
proxy card as promptly as possible in order to ensure your representation
at the special meeting. A return envelope is enclosed for that purpose.
Holders of a majority of the outstanding shares of our common stock
are
entitled to vote and must be represented in person or by proxy at
the
special meeting to enable us to conduct business at the special meeting.
See “The Special Meeting” for further information regarding the voting
process.
|
A: |
Yes.
You can change your vote at any time before proxies are voted at
the
special meeting. Prior to the time proxies are voted, you may change
your
vote by submitting a written notice of revocation or a duly executed
proxy
bearing a later date to the following address: Investor Relations
of
Nevada Gold & Casinos at Nevada Gold & Casinos’ executive offices,
50 Briar Hollow Lane, Suite 500W, Houston, Texas 77027. Alternatively,
you
may attend the special meeting and vote in
person.
|
A: |
Shares
held in “street name” are held in the name of your bank or broker. If your
shares are held in a brokerage account in “street name,” they are not
included in the total number of shares owned by you on the enclosed
proxy
card. Your bank or broker will send you instructions on how to vote
those
shares.
|
A: |
When
shares are held in “street name,” a broker non-vote may occur when a bank
or brokerage firm does not vote on a proposal because it does not
have
discretionary voting power and has not received instructions from
the
beneficial owner of the shares. In this case your broker does not
have
discretionary authority; therefore, your failure to give your broker
or
nominee specific instructions will have the same effect as a vote
“AGAINST”
the proposal.
|
A: |
If
your shares are not held in “street name” and you sign and send in your
proxy, but do not include instructions on how to vote your properly
signed
proxy card, your shares will be voted “FOR”
the proposal to approve and adopt the Unit Purchase Agreement and
the
transactions contemplated thereby.
|
A: |
If
you have any questions about the proposal presented in this proxy
statement, you should contact: Nevada Gold & Casinos, Inc., 50 Briar
Hollow Lane, Suite 500W, Houston, Texas 77027, Attn: Ernest E. East,
General Counsel, (713) 621-2245.
|
· |
the
ability to satisfy the conditions to the closing of the proposed
sale of
our ownership interest in IC-BH to Casino America, including, among
others, our ability to obtain stockholder
approval;
|
· |
the
occurrence of any event, change or other circumstance that could
give rise
to the termination of the Unit Purchase
Agreement;
|
· |
the
failure of the proposed transaction contemplated by the Unit Purchase
Agreement to close for any other
reason;
|
· |
the
risk that our operations will be disrupted in the event the proposed
transaction does not close;
|
· |
the
risk that one or more third parties may seek to initiate litigation
challenging the proposed transaction;
|
· |
a
change in economic conditions;
|
· |
our
ability to comply with the covenants contained in the Unit Purchase
Agreement;
|
· |
the
risk that we will not be able to effectively implement our business
plan
for the use of the proceeds from the sale of our ownership interest
in
IC-BH which business plan contemplates the reinvestment of a significant
portion of the proceeds in other gaming ventures; and
|
· |
the
other risks and uncertainties discussed in this proxy statement,
our
annual report on Form 10-K for the fiscal year ended April 29, 2007,
as
amended, and other reports we file from time to time with the SEC.
|
(i) |
The
fact that Isle of Capri, as the majority owner of IC-BH, is the only
purchaser likely to pay a purchase price for our interest based upon
a pro
rata share of the enterprise value of IC-BH without imposing the
significant discount commonly applied to the purchase of minority
interests.
|
(ii) |
The
fact that the operating agreement of IC-BH gives to Isle of Capri
a right
of first refusal with respect to any sale of our ownership interest
to a
third party which adversely affects the marketability of our ownership
interest.
|
(iii) |
A
recently enacted ban (which is to take effect on January 1, 2008),
on
smoking in all Colorado casinos which our senior management believes
may
add uncertainty to the valuation of Colorado casinos.
|
(iv) |
The
fact that the sale price of $64,600,000 represented a multiple of
8.1
times our pro rata share of IC-BH’s trailing twelve month’s EBITDA through
September 30, 2007. Based on information presented to it by
management, the board of directors determined that this multiple
compared
favorably to the mean and median multiples paid during the 2004-2007
period in transactions involving gaming industry
facilities.
|
(v) |
The
experience of our management in negotiating other transactions in
the
gaming industry (including our proposed acquisition of the Vicksburg
Facility) which provided first hand knowledge of the current market
for
properties such as those operated by
IC-BH.
|
Partial
Payment of Outstanding Long-Term Debt
|
$ | 38,800,000 | ||
Project
Fund (including the Vicksburg Facility acquisition)
|
$ | 13,000,000 | ||
Pay-Off
of Promissory Note to Louise H. Rogers
|
$ | 2,000,000 | ||
Taxes | $ | 9,800,000 | ||
Transaction
Fees and Expenses
|
$ | 1,000,000 | ||
TOTAL:
|
$ | 64,600,000 |
· |
the
valid existence and good standing of each of Nevada Gold & Casinos and
Blackhawk Gold;
|
· |
the
power and authority of Nevada Gold & Casinos and Blackhawk Gold to
enter into the Unit Purchase Agreement and carry out the transactions
contemplated in the Unit Purchase
Agreement;
|
· |
the
approval by the board of directors of each of Nevada Gold & Casinos
and Blackhawk Gold of the Unit Purchase Agreement and deposit escrow
agreement;
|
· |
the
determination by the board of directors of each of Nevada Gold &
Casinos and Blackhawk Gold that the terms of the transactions contemplated
by the Unit Purchase Agreement are fair to and in the best interests
of
their respective stockholder(s);
|
· |
the
recommendation by the board of directors of each of Nevada Gold &
Casinos and Blackhawk Gold that their respective stockholder(s) approve
and adopt the Unit Purchase Agreement and the deposit escrow
agreement;
|
· |
the
required approval and adoption of the Unit Purchase Agreement by
the
holders of a majority of the outstanding shares of Nevada Gold &
Casinos’ common stock;
|
· |
the
approval and adoption of the Unit Purchase Agreement by the sole
stockholder of Blackhawk Gold;
|
· |
the
capital structure and ownership of Blackhawk
Gold;
|
· |
the
absence of undisclosed litigation;
|
· |
the
absence of violations or conflicts with or breaches of or defaults
under,
and consents or approvals required under, organizational documents,
contracts or applicable law (other than as may be required by the
Colorado
Limited Gaming Authority and pursuant to municipal, local and state
laws
such as those regulating liquor sales) as a result of entering into
the
Unit Purchase Agreement and the consummation of the transactions
contemplated thereby;
|
· |
the
absence of undisclosed broker’s or finder’s fees;
and
|
· |
the
execution of the stockholder support agreements by beneficial holders
of
at least 17% of the outstanding shares of common stock of Nevada
Gold
& Casinos.
|
· |
the
due organization, valid existence and good standing of each of Isle
of
Capri and Casino America;
|
· |
the
corporate power of each to enter into the Unit Purchase Agreement
and
carry out its obligations under the Unit Purchase
Agreement;
|
· |
the
absence of violations or conflicts with or breaches of or defaults
under,
and consents or approvals required under, organizational documents,
contracts or applicable law (other than as may be required by the
Colorado
Limited Gaming Authority and pursuant to municipal, local and state
laws
such as those regulating liquor sales) as a result of entering into
the
Unit Purchase Agreement and the consummation of the transactions
contemplated thereby;
|
· |
the
absence of Casino America and IC-BH having directly or indirectly
engaged
in any discussions with, or solicited or received any offer from,
any
person (other than Nevada Gold & Casinos, Blackhawk Gold and their
representatives) regarding a change in control transaction affecting
IC-BH
or Isle of Capri itself;
|
· |
the
absence of undisclosed litigation;
and
|
· |
the
absence of undisclosed broker’s or finder’s
fees.
|
· |
using
commercially reasonable efforts to cause the closing to occur, including
taking all commercially reasonable actions necessary to comply with
legal
requirements that may be imposed with respect to the closing and
to obtain
the necessary consents from, and filings with, governmental
authorities;
|
· |
cooperating
with each other to obtain any necessary consents from governmental
authorities and promptly provide drafts to each other, allow reasonably
adequate time for comment by the other party and agree promptly to
the
contents of notifications, filings, submissions, further documentation
and
evidence to be submitted to all relevant governmental
authorities;
|
· |
giving
written notice to the other party of any material adverse development
that
causes a breach of any such party’s representations and warranties
contained in the Unit Purchase Agreement; and
|
· |
consulting
with each other with respect to public announcements concerning the
transactions contemplated by the Unit Purchase
Agreement.
|
· |
subject
to our board of directors’ fiduciary duty to our stockholders, recommend
approval of the matters submitted to our
stockholders;
|
· |
enter
into good faith negotiations with the other parties for at least
20 days
to attempt to revise the terms of the Unit Purchase Agreement in
the event
that our stockholders fail to approve the Unit Purchase Agreement
at the
stockholders meeting;
|
· |
take
all action necessary in accordance with applicable law and its
organizational documents to convene as promptly as practicable, but
in any
event no later than 35 days after the date on which this proxy statement
can be mailed to stockholders under applicable rules of the SEC,
a
stockholders meeting to obtain the required stockholder vote in favor
of
approving and adopting the Unit Purchase Agreement and the transactions
contemplated by the Unit Purchase
Agreement;
|
· |
prepare
and file with the SEC this proxy statement and use commercially reasonable
efforts to cause the proxy statement to be mailed to its stockholders
as
promptly as practicable after the date of the Unit Purchase Agreement;
|
· |
afford
Casino America the opportunity to review and comment on the proxy
statement prior to submission of such proxy statement to the SEC,
and
provide to Casino America copies of all correspondence between Nevada
Gold
& Casinos or Blackhawk Gold and the SEC relating to the proxy
statement and stockholders meeting;
and
|
· |
not
permit Blackhawk Gold’s units to become subject to any lien, claim or
encumbrance (other than those in effect as of the date of the Unit
Purchase Agreement).
|
· |
solicit,
encourage, initiate, engage in discussions or negotiate with any
person
(other than Casino America), or take any other action intended or
designed
to facilitate any inquiry or effort of any person (other than Casino
America), relating to any possible business combination with Nevada
Gold
& Casinos or Blackhawk Gold or any possible acquisition of Blackhawk
Gold, Blackhawk Gold’s units or Nevada Gold & Casinos or any material
portion of Blackhawk Gold’s or Nevada Gold & Casinos’ outstanding
capital stock or assets (with efforts by any such person, including
a firm
proposal to make such an acquisition, to be referred to as an “alternative
acquisition”);
|
· |
provide
information to any person (other than Casino America) relating to
a
possible alternative acquisition by any person (other than Casino
America);
|
· |
enter
into an agreement with any person (other than Casino America) providing
for a possible alternative acquisition;
or
|
· |
make
or authorize any statement, recommendation or solicitation in support
of
any possible alternative acquisition by any person (other than Casino
America).
|
· |
any
breach of or any inaccuracy in the representations and warranties
made by
Nevada Gold & Casinos or Blackhawk Gold in the Unit Purchase Agreement
(as more fully described under “Representations and Warranties”);
and
|
· |
any
breach of or failure by Nevada Gold & Casinos or Blackhawk to perform
any covenant or obligation set forth in the Unit Purchase Agreement.
|
· |
any
breach of or any inaccuracy in the representations and warranties
made by
Isle of Capri or Casino America in the Unit Purchase Agreement (as
more
fully described under “Representations and Warranties”);
|
· |
any
breach of or failure by Isle of Capri or Casino America to perform
any
covenant or obligation set forth in the Unit Purchase Agreement;
and
|
· |
any
failure on the part of IC-BH to file, or any inaccuracy in information
contained in, any state or federal income tax return or notification
of
IC-BH only to the extent that Blackhawk Gold would have been entitled
to
any tax distributions had such filing
occurred.
|
· |
Compliance
with Agreements and Covenants.
Casino America must have performed and complied with, in all material
respects, all of its covenants and obligations under the Unit Purchase
Agreement required to be performed and complied with on or prior
to the
closing date.
|
· |
Representations
and Warranties True.
Casino America’s representations and warranties must be accurate, true and
correct in all material respects on and as of the date of the Unit
Purchase Agreement, and must be accurate, true and correct in all
material
respects on and as of the closing date as though made by Casino America
on
and as of the closing date.
|
· |
Stockholder
Approval.
Nevada Gold & Casinos must have obtained the affirmative vote of the
holders of a majority of the outstanding shares of its common stock
entitled to vote at the special meeting of
stockholders.
|
· |
No
Court Order.
No court order or action or proceeding pending by any person is in
effect
which would enjoin, restrain or prohibit the Unit Purchase Agreement
or
the transactions contemplated thereby, or seek any material damages
or
payments from Blackhawk Gold as a result of the
consummation.
|
· |
Regulatory
Approvals.
Blackhawk Gold must have obtained all necessary approvals or consents
required to be obtained from the Colorado Limited Gaming Authority
with
respect to the purchase and sale of Blackhawk Gold’s
units.
|
· |
Compliance
with Agreements and Covenants.
Nevada Gold & Casinos and Blackhawk Gold must have performed and
complied with, in all material respects, all of its covenants and
obligations under the Unit Purchase Agreement required to be performed
and
complied with on or prior to the closing
date.
|
· |
Representations
and Warranties True.
The representations and warranties of Nevada Gold & Casinos and
Blackhawk Gold must be accurate, true and correct in all material
respects
on and as of the date of the Unit Purchase Agreement, and must
be
accurate, true and correct in all material respects on and as of
the
closing date as though made by Blackhawk Gold on and as of the
closing date.
|
· |
No
Court Order.
No
court order or action or proceeding pending by any person is in effect
which would enjoin, restrain or prohibit the Unit Purchase Agreement
or
the transactions contemplated thereby, or seek any material damages
or
payments from Casino America or IC-BH as a result of the
consummation.
|
· |
No
Material Adverse Change.
Since the date of the Unit Purchase Agreement, there must not have
occurred a material adverse change that could reasonably be expected
to
have an effect upon IC-BH (including its business, assets, operations,
results of operations or financial conditions), except for any event
directly attributable to or resulting from (a) changes in the industry
or
markets in which IC-BH operates that are not unique to IC-BH, in
each case
that do not have a disproportionate effect on IC-BH, (b) compliance
with the terms of the Unit Purchase Agreement, (c) changes in law
enacted
after the date of the Unit Purchase Agreement that do not have a
disproportionate effect on IC-BH and (d) the smoking ban to be effected
on
January 1, 2008 within the state of
Colorado.
|
· |
Regulatory
Approvals.
Casino America must have obtained all necessary approvals or consents
required to be obtained from the Colorado Limited Gaming Authority
with
respect to the purchase and sale of Blackhawk Gold’s
units.
|
· |
(a) upon
the mutual agreement of Blackhawk Gold and Casino
America;
|
· |
(b) by
either Blackhawk Gold or Casino America
if:
|
(i) |
the
closing has not occurred on or before April 15, 2008 (the “outside date”),
provided that the outside date will be June 15, 2008 if the approval
or
consent of the Colorado Limited Gaming Control Commission is required
to
consummate the transactions contemplated by the Unit Purchase Agreement;
or
|
(ii) |
after
the thirtieth day following the date of the stockholders meeting
of Nevada
Gold & Casinos, if the required stockholder vote has not been
obtained;
|
· |
(c) by
Casino America upon written notice to Blackhawk Gold
if:
|
(i) |
(A)
the conditions precedent have become incapable of being fulfilled
(and
have not been waived by Casino America) and (B) there has been a
breach by
or inaccuracy of Nevada Gold & Casinos or Blackhawk Gold of any
representation, warranty, covenant or agreement in the Unit Purchase
Agreement, and the breach or inaccuracy has not been cured (if curable)
within 15 days following receipt by Nevada Gold & Casinos or Blackhawk
Gold from Casino America of notice of such breach or inaccuracy;
or
|
(ii) |
the
board of directors of Nevada Gold & Casinos or any of its committees
withdraws or modifies in a manner adverse to Casino America its approval
or recommendation of the Unit Purchase Agreement or fails to recommend
to
its stockholders that they give stockholder approval, or recommends
an
alternative acquisition proposal or the board of directors or any
of its
committees resolves to take any of the foregoing actions;
or
|
(iii) |
the
board of directors of Nevada Gold & Casinos fails to reaffirm publicly
and unconditionally its recommendation to Nevada Gold & Casinos’
stockholders that they give stockholder approval within 10 business
days
of Casino America’s written request to do so (which request may be made
following public disclosure of an alternative acquisition proposal),
and
the public reaffirmation must include the unconditional rejection
of such
alternative acquisition proposal;
|
· |
(d) by
Blackhawk Gold, upon written notice to Casino America,
if:
|
(i) |
the
conditions precedent (other than obtaining stockholder approval)
have
become incapable of being fulfilled (and have not been waived by
Blackhawk
Gold) or there has been a breach by or inaccuracy of Casino America
of any
representation, warranty or covenant in the Unit Purchase Agreement,
and
the breach or inaccuracy has not been cured (if curable) within 15
days
following receipt by Casino America from Blackhawk Gold of notice
of such
breach or inaccuracy; or
|
(ii) |
prior
to the date of stockholder approval (A) the board of directors of
Nevada
Gold & Casinos shall have recommended an alternative acquisition
approval, (B) on the same day as such notice, Nevada Gold & Casinos or
Blackhawk Gold enters into a definitive agreement for an alternative
acquisition proposal that is a superior proposal (as defined in the
Unit
Purchase Agreement), and (C) Nevada Gold & Casinos and Blackhawk Gold
have complied with each of its obligations set forth in the Unit
Purchase
Agreement in all respects; provided that Blackhawk Gold has no right
to
terminate the Unit Purchase Agreement pursuant to this paragraph
after
stockholder approval.
|
ASSETS
|
As
Reported
|
Pro
Forma
Adjustments
|
Pro
Forma
|
||||||||||
Current
assets:
|
|||||||||||||
Cash
and cash equivalents
|
$
|
1,584,571
|
$
|
3,618,969
|
(1)
|
|
$
|
5,203,540
|
|||||
Restricted
cash
|
-
|
13,000,000
|
(1)
|
|
13,000,000
|
||||||||
Accounts
receivable
|
83,502
|
-
|
83,502
|
||||||||||
Accounts
receivable - affilates
|
60,006
|
-
|
60,006
|
||||||||||
Prepaid
expenses
|
576,721
|
-
|
576,721
|
||||||||||
Notes
receivable - current portion
|
1,100,000
|
-
|
1,100,000
|
||||||||||
Notes
receivable - development projects, current portion
|
-
|
-
|
-
|
||||||||||
Other
current assets
|
48,468
|
-
|
48,468
|
||||||||||
Total
current assets
|
3,453,268
|
16,618,969
|
20,072,237
|
||||||||||
Investments
in unconsolidated affiliates
|
29,221,049
|
(26,787,777
|
) |
(2)
|
|
2,433,272
|
|||||||
Investments
in unconsolidated affiliates held for sale
|
347,653
|
-
|
347,653
|
||||||||||
Investments
in development projects
|
398,202
|
-
|
398,202
|
||||||||||
Investments
in development projects held for sale
|
3,437,931
|
-
|
3,437,931
|
||||||||||
Notes
receivable
|
1,100,000
|
-
|
1,100,000
|
||||||||||
Notes
receivable - affiliates
|
3,521,066
|
-
|
3,521,066
|
||||||||||
Notes
receivable - development projects, net of current portion
|
19,370,641
|
-
|
19,370,641
|
||||||||||
Goodwill
|
5,462,918
|
-
|
5,462,918
|
||||||||||
Property
and equipment, net of accumulated depreciation of $1,683,244
at October
28, 2007
|
1,777,957
|
-
|
1,777,957
|
||||||||||
Deferred
tax asset
|
-
|
-
|
-
|
||||||||||
Other
assets
|
5,889,636
|
-
|
5,889,636
|
||||||||||
Total
assets
|
$
|
73,980,321
|
$
|
(10,168,808
|
)
|
$
|
63,811,513
|
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
|
||||||||||||
Current
liabilities:
|
|||||||||||||
Accounts
payable and accrued liabilities
|
$
|
1,644,452
|
$
|
-
|
$
|
1,644,452
|
|||||||
Accrued
interest payable
|
670,056
|
-
|
670,056
|
||||||||||
Other
accrued liabilities
|
145,464
|
-
|
145,464
|
||||||||||
Long-term
debt, current portion
|
54,544,141
|
(54,350,000
|
)
|
194,141
|
|||||||||
Total
current liabilities
|
57,004,113
|
(54,350,000
|
)
|
2,654,113
|
|||||||||
Long-term
debt, net of current portion and discount
|
17,714
|
15,550,000
|
(3)
|
15,567,714
|
|||||||||
Deferred
income
|
159,688
|
-
|
159,688
|
||||||||||
Other
liabilities
|
792,551
|
-
|
792,551
|
||||||||||
Total
liabilities
|
57,974,066
|
(38,800,000
|
)
|
(4)
|
|
19,174,066
|
|||||||
|
|||||||||||||
Commitments
and contingencies
|
-
|
-
|
-
|
||||||||||
Minority
interest
|
-
|
-
|
-
|
||||||||||
Stockholders'
equity:
|
|||||||||||||
Common
stock, $0.12 par value per share; 25,000,000 shares authorized;
13,935,330
issued and 12,939,130 shares outstanding at October
28,
2007
|
1,672,240
|
-
|
1,672,240
|
||||||||||
Additional
paid-in capital
|
18,909,071
|
-
|
18,909,071
|
||||||||||
Retained
earnings
|
5,632,434
|
28,631,192
|
(5)
|
|
34,263,626
|
||||||||
Treasury
stock, 996,200 shares at October 28, 2007, at cost
|
(10,216,950
|
)
|
-
|
(10,216,950
|
)
|
||||||||
Accumulated
other comprehensive income (loss)
|
9,460
|
-
|
9,460
|
||||||||||
Total
stockholders' equity
|
16,006,255
|
28,631,192
|
44,637,447
|
||||||||||
Total
liabilities and stockholders' equity
|
$
|
73,980,321
|
$
|
(10,168,808
|
)
|
$
|
63,811,513
|
(1)
|
Represents
the portion of the purchase price proceeds not required for the
payment of long-term debt, income taxes and the payment of a deposit
on
the acquisition of the Vicksburg Facility. Pursuant to an agreement
entered into with our principal creditor, restricted cash may only
be used
for acquisitions.
|
(2)
|
Represents
the book value of our interest in IC-BH which is being
sold.
|
(3)
|
Reclass
of debt for change of maturity date from September 30, 2008
to June 30,
2010.
|
(4)
|
Repayment
of our credit facility to release our lender’s lien on collateral
pertaining to our interest in IC-BH.
|
(5)
|
Represents
the net after tax gain on the sale of our ownership interest in
IC-BH.
|
As
Reported
|
Pro
Forma
Adjustments
|
Pro
Forma
|
|||||||||
Revenues:
|
|
||||||||||
Casino
|
$
|
6,253,491
|
$
|
-
|
$
|
6,253,491
|
|||||
Food
and beverage
|
1,295,157
|
-
|
1,295,157
|
||||||||
Other
|
153,305
|
-
|
153,305
|
||||||||
Credit
enhancement fee
|
5,920,125
|
-
|
5,920,125
|
||||||||
Gross
revenues
|
13,622,078
|
-
|
13,622,078
|
||||||||
Less
promotional allowances
|
(1,294,458
|
)
|
-
|
(1,294,458
|
)
|
||||||
Net
revenues
|
12,327,620
|
-
|
12,327,620
|
||||||||
Operating
expenses:
|
|||||||||||
Casino
|
1,655,837
|
-
|
1,655,837
|
||||||||
Food
and beverage
|
721,360
|
-
|
721,360
|
||||||||
Marketing
and administrative
|
3,094,554
|
-
|
3,094,554
|
||||||||
Facility
|
323,906
|
-
|
323,906
|
||||||||
Corporate
expense
|
7,203,198
|
-
|
7,203,198
|
||||||||
Legal
expenses
|
1,489,967
|
-
|
1,489,967
|
||||||||
Depreciation
and amortization
|
918,609
|
-
|
918,609
|
||||||||
Write-off
of notes receivable related to Native American gaming projects and
other
notes receivable
|
3,235,297
|
-
|
3,235,297
|
||||||||
Impairment
of equity investment
|
125,000
|
-
|
125,000
|
||||||||
Write-off
of project development cost
|
495,982
|
-
|
495,982
|
||||||||
Other
|
85,296
|
-
|
85,296
|
||||||||
Total
operating expenses
|
19,349,006
|
-
|
19,349,006
|
||||||||
Operating
loss
|
(7,021,386
|
)
|
-
|
(7,021,386
|
)
|
||||||
Non-operating
income (expenses):
|
|||||||||||
Earnings
(loss) from unconsolidated affiliates
|
(3,405,539
|
)
|
(3,728,960)
|
(1)
|
(7,134,499
|
)
|
|||||
Gain
on sale of unconsolidated affiliate
|
-
|
42,403,635
|
(2)
|
42,403,635
|
|||||||
Gain
on sale of marketable securities and assets
|
42,226
|
-
|
42,226
|
||||||||
Gain
on termination of development contract
|
245,499
|
-
|
245,499
|
||||||||
Gain
on termination of development and loan agreement
|
10,801,076
|
-
|
10,801,076
|
||||||||
Interest
income (expense), net
|
(3,553,052
|
)
|
3,837,137
|
(3)
|
284,085
|
||||||
Minority
interest
|
(4,301,050
|
)
|
-
|
(4,301,050
|
)
|
||||||
Income
(loss) before income tax expense
|
(7,192,226
|
)
|
42,511,812
|
35,319,586
|
|||||||
Income
tax expense
|
|||||||||||
Current
|
170,347
|
12,194,364
|
(4)
|
12,364,711
|
|||||||
Deferred
|
1,592,827
|
-
|
1,592,827
|
||||||||
Total
income tax expense
|
1,763,174
|
12,194,364
|
13,957,538
|
||||||||
Net
income (loss)
|
$
|
(8,955,400
|
)
|
$
|
30,317,448
|
$
|
21,362,048
|
||||
Per
share information:
|
|||||||||||
Net
income (loss) per common share - basic
|
$
|
(0.69
|
)
|
$
|
2.34
|
$
|
1.65
|
||||
Net
income (loss) per common share - diluted
|
$
|
(0.69
|
)
|
$
|
2.34
|
$
|
1.65
|
||||
Basic
weighted average number of shares outstanding
|
12,937,222
|
-
|
12,937,222
|
||||||||
Diluted
weighted average number of shares outstanding
|
12,937,222
|
-
|
12,937,222
|
||||||||
As
Reported
|
Pro
Forma
Adjustments
|
Pro
Forma
|
|||||||||||
Revenues:
|
|
||||||||||||
Casino
|
$
|
3,695,073
|
-
|
$
|
3,695,073
|
||||||||
Food
and beverage
|
829,011
|
-
|
829,011
|
||||||||||
Other
|
69,306
|
-
|
69,306
|
||||||||||
Management
fees
|
40,174
|
-
|
40,174
|
||||||||||
Gross
revenues
|
4,633,564
|
-
|
4,633,564
|
||||||||||
Less
promotional allowances
|
(789,540
|
)
|
-
|
(789,540
|
)
|
||||||||
Net
revenues
|
3,844,024
|
-
|
3,844,024
|
||||||||||
Operating
expenses:
|
|||||||||||||
Casino
|
960,185
|
-
|
960,185
|
||||||||||
Food
and beverage
|
405,363
|
-
|
405,363
|
||||||||||
Marketing
and administrative
|
1,500,068
|
-
|
1,500,068
|
||||||||||
Facility
|
183,621
|
-
|
183,621
|
||||||||||
Corporate
expense
|
2,749,728
|
-
|
2,749,728
|
||||||||||
Legal
expenses
|
439,061
|
-
|
439,061
|
||||||||||
Depreciation
and amortization
|
404,380
|
-
|
404,380
|
||||||||||
Impairment
of equity investment
|
100,000
|
-
|
100,000
|
||||||||||
Other
|
24,323
|
-
|
24,323
|
||||||||||
Total
operating expenses
|
6,766,729
|
-
|
6,766,729
|
||||||||||
Operating
income (loss)
|
(2,922,705
|
)
|
-
|
(2,922,705
|
)
|
||||||||
Non-operating
income (expenses):
|
|||||||||||||
Earnings
(loss) from unconsolidated affiliates
|
3,143,468
|
(3,942,876
|
)
|
(1)
|
|
(799,408
|
)
|
||||||
Gain
on sale of unconsolidated affiliate
|
1,296,423
|
39,003,099
|
(2)
|
40,299,522
|
|||||||||
Gain
on sale of assets
|
18,986
|
||||||||||||
Gain
on settlement of development project
|
14,500
|
-
|
14,500
|
||||||||||
Interest
income (expense), net
|
(1,574,410
|
)
|
1,647,940
|
(3)
|
73,530
|
||||||||
Income
(loss) before income tax expense
|
(23,738
|
)
|
36,708,163
|
36,684,425
|
|||||||||
Income
tax expense
|
|||||||||||||
Current
|
37,916
|
8,076,971
|
(4)
|
8,114,887
|
|||||||||
Deferred
and change in valuation allowance
|
-
|
-
|
|||||||||||
Total
income tax expense
|
37,916
|
8,076,971
|
8,114,887
|
||||||||||
Net
income (loss)
|
$
|
(61,654
|
)
|
28,631,192
|
28,569,538
|
||||||||
Per
share information:
|
|||||||||||||
Net
income (loss) per common share - basic
|
$
|
(0.00
|
)
|
2.21
|
$
|
2.21
|
|||||||
Net
income (loss) per common share - diluted
|
$
|
(0.00
|
)
|
2.21
|
$
|
2.21
|
|||||||
Basic
weighted average number of shares outstanding
|
12,939,130
|
-
|
12,939,130
|
||||||||||
Diluted
weighted average number of shares outstanding
|
12,939,130
|
-
|
12,939,130
|
(1) |
Eliminates
the equity in income attributable to our interest in IC-BH for the
period.
|
(2) |
Reflects
the pre-tax book gain recognized upon the sale of our ownership interest
in IC-BH.
|
(3) |
Eliminates
interest paid on the $38,800,000 of long-term debt which is to
be paid
down at the closing of the sale, and we added estimated interest
earned on the investment of the balance of the sale proceeds (at
an
assumed interest rate of 4% a
year).
|
(4) |
Reflects
federal and state income taxes due in respect of the gain recognized
upon
the sale of our ownership interest (at a projected income tax rate
of 34%
(federal) plus 3% (state)).
|
SHARES
BENEFICIALLY OWNED AS OF DECEMBER 10, 2007
|
|||
BENEFICIAL
OWNER
|
NUMBER
OF SHARES
|
PERCENT
OF CLASS
|
|
Robert
B. Sturges
|
156,666
|
(1)
|
1.2%
|
John
Arnesen
|
101,000
|
(2)
|
*
|
James
J. Kohn
|
36,000
|
(3)
|
*
|
Ernest
E. East
|
40,000
|
(4)
|
*
|
Donald
A. Brennan
|
88,834
|
(5)
|
*
|
Joseph
A. Juliano
|
92,900
|
(6)
|
*
|
Francis
M. Ricci
|
16,000
|
(7)
|
*
|
Wayne
H. White
|
30,000
|
(8)
|
*
|
John
Gallaway
|
5,000
|
*
|
|
H.
Thomas Winn
|
730,747
|
(9)
|
5.6%
|
William
G. Jayroe
|
202,454
|
(10)
|
1.6%
|
William
J. Sherlock
|
29,000
|
(11)
|
*
|
Nelson
Obus
|
1,285,600
|
(12)
|
9.9%
|
Louise
H. Rogers
|
941,288
|
7.3%
|
|
Kennedy
Capital Management, LLC
|
672,850
|
5.2%
|
|
All
current directors and executive officers as a group (12
persons)
|
1,528,601
|
(13)
|
11.8%
|
(1)
|
Includes
options to purchase 136,666 shares of common stock held by Mr.
Sturges.
|
(2)
|
Includes
options to purchase 100,000 shares of common stock.
|
(3)
|
Includes
options to purchase 36,000 shares of common stock.
|
(4)
|
Includes
options to purchase 40,000 shares of common stock.
|
(5)
|
Includes
options to purchase 83,334 shares of common stock.
|
(6)
|
Includes
options to purchase 70,000 shares of common stock.
|
(7)
|
Includes
options to purchase 13,000 shares of common stock.
|
(8)
|
Includes
options to purchase 30,000 shares of common stock.
|
(9)
|
Includes
(a) options to purchase 225,000 shares of common stock held by Mr.
Winn,
(b) 286,574 shares of common stock owned by Aaminex Capital Corporation
and (c) 30,933 shares of common stock owned by The H. Thomas Winn
Foundation. Mr. Winn is the president of The H. Thomas Winn Foundation
and
Aaminex Capital Corporation.
|
(10)
|
Includes
(a) options to purchase 70,000 shares of common stock held by Mr.
Jayroe
and (b) 14,000 shares of common stock owned by The Jayroe Foundation.
Mr.
Jayroe is the president of The Jayroe Foundation.
|
(11)
|
Includes
options to purchase 25,000 shares of common stock held by Mr.
Sherlock.
|
Includes:
(i) 307,300 shares of common stock held by Wynnefield Partners Small
Cap
Value, L.P. (“WPSCV”), (ii) 443,800 shares of common stock held by
Wynnefield Partners Small Cap Value, L.P. I (“WPSCVI”), (iii) 485,300
shares of common stock held by Wynnefield Small Cap Value Offshore
Fund,
Ltd. (“WSCVOF”), (iv) 40,000 shares of common stock held by Channel
Partnership II, L.P. (“CPII”), and (v) 9,200 shares of common stock held
by Profit Sharing and Money Purchase Plans, Inc. (the “Plan”).
Wynnefield Capital Management, LLC (“WCM”), a New York limited liability
company, is the general partner of WPSCV and WPSCVI, private investment
companies organized as limited partnerships under the laws of the
State of
Delaware. Wynnefield Capital, Inc. (“WCI”) is the sole investment manager
of WSCVOF. Nelson Obus and Joshua Landes are the managing members
of WCM
and the principal executive officers of WCI, the investment manager
of
WSCVOF, a private investment company organized under the laws of
the
Cayman Islands. Mr. Obus is also the general partner of CPII, a private
investment company organized as a limited partnership under the laws
of
the State of New York. The Plan is an employee profit sharing plan
organized under the laws of the State of Delaware. Mr. Obus has the
power
to direct the vote and the disposition of the Shares held by the
Plan. Mr.
Obus and Mr. Landes are citizens of the united States of America. The
mailing address of Mr. Obus is 450 Seventh Avenue, Suite 509,
New York, New York 10123.
|
(13)
|
Includes
options to purchase 829,000 shares of common
stock.
|
§ |
Financial
Statements of Nevada Gold & Casinos and IC-BH reported in Item 15 of
the Annual Report on Form 10-K for the fiscal year ended April 29,
2007
(electronically filed as an exhibit to this proxy
statement);
|
§ |
Financial
Statements of Nevada Gold & Casinos and IC-BH reported in Item 1 of
the Quarterly Report on Form 10-Q for the quarter ended October
28, 2007
(electronically filed as an exhibit to this proxy statement); and
|
§ |
Exhibits
filed to the Current Report on Form 8-K, filed on November 14,
2007.
|