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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2003
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from
Commission File Number: 0-31737
WINDSOR WOODMONT BLACK HAWK RESORT CORP.
(Exact name of registrant as specified in its charter)
Colorado 75-2740870
(State of incorporation) (I.R.S. Employer Identification No.)
111 Richman St., Black Hawk, Colorado 80422
(Address of principal executive offices) (Zip Code)
(303)582-3600
(Registrant's telephone number, including area code)
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.
[X] Yes [ ] No
WINDSOR WOODMONT BLACK HAWK RESORT CORP.
FORM 10-Q
INDEX
Part I -- FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Balance Sheets, March 31, 2003 (unaudited) and December 31, 2002 2
Condensed Statements of Operations for the three months ended
March 31, 2003 and 2002 (unaudited) 3
Condensed Statement of Comprehensive Loss for the three months
ended March 31, 2003 and 2002 (unaudited) 4
Condensed Statements of Redeemable Preferred Stock and Stockholders'
Equity for the period from December 31, 1999 through March 31, 2003 (unaudited) 5
Condensed Statements of Cash Flows for the three months ended
March 31, 2003 and 2002 (unaudited) 6
Notes to Condensed Consolidated Financial Statements 7 - 11
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 12 - 15
Item 3. Qualitative and Qualitative Disclosures about Market Risk 15
Item 4. Controls and Procedures 15
Part II - OTHER INFORMATION
Item 1. Legal Proceedings 16 - 17
Item 2. Changes in Securities and Use of Proceeds 17
Item 3. Defaults Upon Senior Securities 17
Item 4. Submission of Matters to a Vote of Security Holders 17
Item 5. Other Information 17
Item 6. Exhibits and Reports on Form 8-K 17 - 18
2
WINDSOR WOODMONT BLACK HAWK RESORT CORP.
(DEBTOR-IN-POSSESSION AS OF NOVEMBER 7, 2002)
CONDENSED BALANCE SHEETS
March 31, 2003 December 31, 2002
------------- -------------
ASSETS
CURRENT ASSETS:
Cash $ 8,340,799 $ 8,020,958
Cash and cash equivalents, restricted 2,352,365 2,350,616
Accounts receivable 204,473 164,205
Inventories 291,715 330,804
Prepaid expenses 2,245,093 2,614,691
Other current assets 11,597 12,298
------------- -------------
Total current assets 13,446,042 13,493,572
Property and Equipment, net 117,725,178 119,742,091
OTHER ASSETS:
Base stock inventories/uniforms, net of accumulated amortization 119,684 142,191
Funds held in escrow and security deposits 345,986 288,845
Franchise Fees 40,000 40,000
Deferred financing costs, net 432,000 491,097
------------- -------------
TOTAL ASSETS $ 132,108,890 $ 134,197,796
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Post-Petition Liabilities
Trade accounts payable and accrued expenses $ 2,703,666 $ 1,645,144
Accounts payable - related parties 487,510 545,818
Accrued interest 874,068 332,389
Other current liabilities 128,752 42,888
------------- -------------
Total Post Petition Liabilities 4,193,996 2,566,239
------------- -------------
Pre-Petition Liabilities Subject to Compromise
Current portion of long-term debt 130,304,360 130,304,360
Trade accounts payable and accrued expenses 1,426,859 2,773,190
Accounts payable - related parties 1,944,740 1,900,191
Construction accounts payable 5,364,118 5,364,118
Accrued interest 9,584,859 9,584,859
Other current liabilities 1,642,276 1,642,276
------------- -------------
Total Pre-Petition Liabilities 150,267,212 151,568,994
------------- -------------
Total current liabilities 154,461,208 154,135,233
------------- -------------
NON CURRENT LIABILITIES
Long-term debt, less current portion -- --
Warrants issued on common stock 713,720 713,720
------------- -------------
Total non current liabilities 713,720 713,720
------------- -------------
REDEEMABLE PREFERRED STOCK
Series A - 11% dividend, $100 redemption value, 29,000 shares outstanding 2,900,000 2,900,000
Series B - 7% dividend, $100 redemption value, 30,000 shares outstanding 1,846,000 1,827,355
Accrued dividends on preferred stock 1,670,789 1,528,175
------------- -------------
Total redeemable preferred stock 6,416,789 6,255,530
------------- -------------
Commitments and contingencies
STOCKHOLDERS' DEFICIT
Common stock, $0.01 par value, 10,000,000 shares authorized,
1,000,000 shares outstanding 10,000 10,000
Additional paid in capital 12,241,250 12,241,250
Accumulated Deficit (41,734,077) (39,157,937)
------------- -------------
Total stockholders' deficit (29,482,827) (26,906,687)
------------- -------------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 132,108,890 $ 134,197,796
============= =============
SEE NOTES TO CONDENSED FINANCIAL STATEMENTS
2
WINDSOR WOODMONT BLACK HAWK RESORT CORP.
(DEBTOR-IN-POSSESSION AS OF NOVEMBER 7, 2002)
CONDENSED STATEMENTS OF OPERATIONS
For the Three Months Ended
March 31,
-----------------------------------
2003 2002
------------ ------------
OPERATING REVENUES:
Casino $ 12,964,834 $ 15,831,611
Food and beverage 1,630,323 1,656,898
Other 243,747 194,827
------------ ------------
14,838,904 17,683,336
Less: Promotional allowances (1,061,198) (742,681)
------------ ------------
Net operating revenues 13,777,706 16,940,655
------------ ------------
OPERATING EXPENSES:
Casino 8,045,221 9,311,949
Food and beverage 1,340,336 1,730,111
Other operating expenses 304,535 482,933
General and administrative 2,435,410 2,847,667
Management fees 477,637 581,696
Depreciation and amortization 2,086,441 2,060,245
------------ ------------
Total operating expenses 14,689,580 17,014,601
------------ ------------
Operating Income (Loss) (911,874) (73,946)
OTHER INCOME (EXPENSE):
Interest income 10,413 102,864
Interest expense (621,653) (4,818,593)
------------ ------------
Other expense, net (611,240) (4,715,729)
------------ ------------
Loss from continuing operations before
reorganization costs and preferred stock dividends (1,523,114) (4,789,675)
Reorganization costs 910,413 --
------------ ------------
Net loss before preferred stock dividends (2,433,527) (4,789,675)
Preferred stock dividends 142,613 138,399
------------ ------------
Net loss attributable to
common stock $ (2,576,140) $ (4,928,074)
============ ============
Loss per share
Basic $ (2.58) $ (4.93)
Diluted $ (2.58) $ (4.93)
Weighted Average Shares
Basic 1,000,000 1,000,000
Diluted 1,000,000 1,000,000
SEE NOTES TO CONDENSED FINANCIAL STATEMENTS
3
WINDSOR WOODMONT BLACK HAWK RESORT CORP.
(DEBTOR-IN-POSSESSION AS OF NOVEMBER 7, 2002)
CONDENSED STATEMENTS OF COMPREHENSIVE LOSS
For the Three Months Ended
March 31,
---------------------------------
2003 2002
----------- -----------
Net loss before preferred stock dividends $(2,433,527) $(4,789,675)
Unrealized gain (loss) on securities held
for sale -- (60,093)
----------- -----------
Comprehensive loss $(2,433,527) $(4,849,768)
=========== ===========
SEE NOTES TO CONDENSED FINANCIAL STATEMENTS
4
WINDSOR WOODMONT BLACK HAWK RESORT CORP.
(DEBTOR-IN-POSSESSION AS OF NOVEMBER 7, 2002)
CONDENSED STATEMENTS OF REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS' DEFICIT
Redeemable
Preferred Stock Common Stock
---------------------------- --------------------------
Shares Amount Shares Amount
------- ----------- --------- -------
Balance at December 31, 1999 1,000 $ 10
Issuance of common stock 999,000 9,990
11% Series A preferred stock 29,000 $ 2,900,000 -- --
7% Series B preferred stock 30,000 3,000,000 -- --
Warrants for common stock attached to
Series B preferred stock -- (1,315,330) -- --
Preferred stock dividends -- 417,322 -- --
------- ----------- --------- -------
Balance at December 31, 2000 59,000 5,001,992 1,000,000 10,000
Amortization of value of warrants attached to
Series B preferred stock -- 69,967 -- --
Preferred stock dividends -- 551,254 -- --
------- ----------- --------- -------
Balance at December 31, 2001 59,000 5,623,213 1,000,000 10,000
Amortization of value of warrants attached to
Series B preferred stock -- 72,718 -- --
Preferred stock dividends -- 559,599 -- --
------- ----------- --------- -------
Balance at December 31, 2002 59,000 6,255,530 1,000,000 10,000
Amortization of value of warrants attached to
Series B preferred stock -- 18,646 -- --
Preferred stock dividends -- 142,613 -- --
------- ----------- --------- -------
Balance at March 31, 2003 59,000 $ 6,416,789 1,000,000 $10,000
======= =========== ========= =======
Additional Other Total
Paid In Accumulated Comprehensive Stockholders'
Capital Deficit Income Deficit
----------- ------------ --------- ------------
Balance at December 31, 1999 $ 990 $ (4,981,041) $ -- $ (4,980,041)
Issuance of common stock 12,240,260 -- -- 12,250,250
Preferred stock dividends -- (417,322) -- (417,322)
Net loss -- (5,354,482) -- (5,354,482)
Unrealized gain on investments available for sale -- -- 286,686 286,686
----------- ------------ --------- ------------
Balance at December 31, 2000 12,241,250 (10,752,845) 286,686 1,785,091
Preferred stock dividends -- (551,254) -- (551,254)
Net loss -- (7,905,033) -- (7,905,033)
Unrealized gain on investments available for sale -- -- (226,593) (226,593)
----------- ------------ --------- ------------
Balance at December 31, 2001 12,241,250 (19,209,132) 60,093 (6,897,789)
Preferred stock dividends -- (559,599) -- (559,599)
Net loss -- (19,389,206) -- (19,389,206)
Unrealized gain on investments available for sale -- -- (60,093) (60,093)
----------- ------------ --------- ------------
Balance at December 31, 2002 12,241,250 (39,157,937) -- (26,906,687)
Preferred stock dividends -- (142,613) -- (142,613)
Net loss -- (2,433,527) -- (2,433,527)
Unrealized gain on investments available for sale -- -- -- --
----------- ------------ --------- ------------
Balance at March 31, 2003 $12,241,250 $(41,734,077) $ -- $(29,482,827)
=========== ============ ========= ============
SEE NOTES TO CONDENSED FINANCIAL STATEMENTS
5
WINDSOR WOODMONT BLACK HAWK RESORT CORP.
(DEBTOR-IN-POSSESSION AS OF NOVEMBER 7, 2002)
CONDENSED STATEMENTS OF CASH FLOWS
For the Three Months Ended
March 31,
---------------------------------
2003 2002
----------- -----------
Cash flows used in operating activities
Net Loss $(2,433,527) $(4,789,675)
Adjustments to reconcile net loss
to net cash provided by operating activities:
Depreciation and amortization expense 2,086,441 2,060,245
Amortization of deferred financing costs 59,097 414,005
Amortization of debt discount -- 85,960
Amortization of preferred stock discount 18,645 17,904
Changes in working capital:
Accounts receivable (40,268) (1,578)
Inventory 39,089 (36,125)
Prepaid expenses 369,598 (339,495)
Other current assets 701 (18,592)
Trade accounts payable (287,809) 2,212,066
Accounts payable related parties (13,759) (2,929,069)
Accrued interest 541,679 (3,156,997)
Other current liabilities 85,864 975,152
----------- -----------
Net cash provided (used) in operating activities 425,751 (5,506,199)
----------- -----------
Cash flows from investing activities:
Decrease (increase) in funds held in escrow (57,141) (2,599)
Increase in property and equipment (47,020) (1,720,470)
Decrease (increase) in cash - restricted, cost (1,749) 2,678,813
Decrease (increase) in investments, cost -- 6,420,143
(Decrease) increase in construction accounts payable -- (1,027,529)
----------- -----------
Net cash provided (used) in investment activities (105,910) 6,348,358
----------- -----------
Cash flows from financing activities:
Deferred offering costs incurred -- (150,000)
Payment of notes payable -- (693,332)
----------- -----------
Net cash (used) provided by financing activities -- (843,332)
----------- -----------
Net change in cash and cash equivalents 319,841 (1,173)
Cash and cash equivalents, beginning of period 8,020,958 9,667,138
----------- -----------
Cash and cash equivalents, end of period $ 8,340,799 $ 9,665,965
=========== ===========
Non Cash Items:
Construction in progress due to retainage $ -- $ 208,122
Supplemental Cash Flow Information:
Interest Paid $ -- $ 7,455,952
SEE NOTES TO CONDENSED FINANCIAL STATEMENTS
6
WINDSOR WOODMONT BLACK HAWK RESORT CORP.
(DEBTOR-IN-POSSESSION AS OF NOVEMBER 7, 2002)
NOTES TO CONDENSED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION AND ORGANIZATION
BASIS OF PRESENTATION:
Windsor Woodmont Black Hawk Resort Corp., a Colorado corporation (the
"Company" or "Resort Corp.") was incorporated on January 9, 1998. Windsor
Woodmont, LLC (the "LLC") was formed as a limited liability company, under the
laws of the State of Colorado, on July 17, 1997. These companies were formed for
the purpose of developing an integrated limited stakes gaming casino,
entertainment and parking facility in Black Hawk, Colorado (the "Project"),
which opened December 20, 2001. Prior to December 20, 2001, the Company and the
LLC were development stage enterprises.
The Company was a wholly owned shell company subsidiary of the LLC with no
significant assets, liabilities or operating activity. In connection with the
Private Placement and other financing transactions described in Note 3, the LLC
contributed all of its assets and liabilities to the Company in exchange for
stock of the Company and the contribution has been accounted for as a
recapitalization of entities under common control whereby the assets and
liabilities are recorded at the historical cost basis of the LLC. The Company
completed the development of the Project, and operates the Project under a
management agreement with Hyatt Gaming Management, Inc. ("Hyatt Gaming") (see
note 6). The LLC's ownership in the Company was subsequently reduced through the
refinancing of the LLC's debt by conversion into the Company's common stock and
the issuance of additional common stock for cash.
BANKRUPTCY PROCEEDINGS:
On November 7, 2002 (the "Petition Date"), we filed a voluntary petition
for relief under Chapter 11 of the United States Bankruptcy Code (the
"Bankruptcy Code"), in the United States Bankruptcy Court for the District of
Colorado (the "Bankruptcy Court") as Case No. 02-28089-ABC (the "Chapter 11
Case") in order to facilitate the restructuring of the Company's debt, trade
liabilities and other obligations. The Company is currently operating as a
debtor-in-possession under the supervision of the Bankruptcy Court. The
bankruptcy petition was filed in order to preserve cash and to give the Company
the opportunity to restructure its obligations.
The financial statements contained herein have been prepared in accordance
with accounting principles generally accepted in the United States of America
applicable to a going concern, and do not purport to reflect or to provide for
all of the possible consequences of the ongoing Chapter 11 Case. Specifically,
the financial statements do not present the amount which will ultimately be paid
to settle liabilities and contingencies which may be required in the Chapter 11
Case or the effect of any changes which may be made in connection with the
Company's capitalization or operations resulting from a plan of reorganization.
The Debtor has not filed a plan of reorganization as of this date, but expects
to file one in the near term. The plan, when filed, is subject to acceptance by
the Company's compromised creditors and stockholders and approval by the
Bankruptcy Court.
Because of the ongoing nature of the Chapter 11 Case, the outcome of which
is not presently determinable, the financial statements contained herein are
subject to material uncertainties and may not be indicative of the results of
the Company's future operations or financial position. No assurance can be given
that the Company will be successful in reorganizing its affairs within the
Chapter 11 Case.
As a result of the items discussed above, there is substantial doubt about
the Company's ability to continue as a going concern. The ability of the Company
to continue as a going concern is dependent upon, but not limited to,
formulation, approval, and confirmation of a plan of reorganization, adequate
sources of capital, customer and employee retention, the ability to provide a
high quality gaming experience and the ability to sustain positive results of
operations and cash flows sufficient to continue to operate. The financial
statements do not include any adjustments to the recorded amounts or
classification of assets or liabilities or reflect any amounts that may
ultimately be paid to settle liabilities and contingencies which may be required
in the Chapter 11 reorganization or the effect of any changes which may be made
in connection with the Company's capitalization or operations resulting from a
plan of reorganization.
ACCOUNTING UNDER BANKRUPTCY:
The financial statements have been prepared in accordance with AICPA
Statement of Position 90-7 Financial
7
WINDSOR WOODMONT BLACK HAWK RESORT CORP.
(DEBTOR-IN-POSSESSION AS OF NOVEMBER 7, 2002)
NOTES TO CONDENSED FINANCIAL STATEMENTS
Reporting by Entities in Reorganization under the Bankruptcy Code (SOP 90-7).
Pursuant to SOP 90-7, an objective of financial statements issued by an entity
in Chapter 11 is to reflect its financial evolution during the proceeding. For
that purpose, the financial statements for periods including and subsequent to
filing the Chapter 11 Case should distinguish transactions and events that are
directly associated with the reorganization from the ongoing operations of the
business. Expenses and other items not directly related to ongoing operations
are reflected separately in the statement of operations as reorganization
expenses (see note 4).
The filing of the Chapter 11 Case Debtor (i) automatically stayed actions
by creditors and other parties in interest to recover any claim that arose prior
to the commencement of the Chapter 11 Case, and (ii) served to accelerate, for
purposes of allowance, all pre-petition liabilities of the Company, whether or
not those liabilities were liquidated or contingent as of the Petition Date.
ACCOUNTING POLICIES:
The financial information at March 31, 2003, and for the three months
ended March 31, 2003 and 2002 is unaudited. The financial statements have been
prepared in accordance with accounting principles generally accepted in the
United States of America for interim financial information and with the
instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do
not include all of the information and footnotes required by accounting
principles generally accepted in the United States of America for complete
financial statements. In the opinion of management, all adjustments, consisting
of normal recurring adjustments, considered necessary for a fair presentation
have been included. The results of operations for the three months ended March
31, 2003 are not necessarily indicative of the results that will be achieved for
the entire year.
These financial statements should be read in conjunction with the Annual
Report on Form 10-K for the fiscal year ended December 31, 2002.
Basic loss per share is computed by dividing net loss applicable to common
stock by the weighted average common shares outstanding during the period.
Diluted loss per share is based on the weighted average number of common shares
outstanding during the respective periods, plus the common equivalent shares, if
dilutive, that would result from the exercise of stock options. Stock options
and warrants convertible into 768,720 and 863,720 shares of common stock at
March 31, 2003 and December 31, 2002, respectively, were excluded from the
diluted loss per share calculation because their effects would have been
anti-dilutive.
The Company has reviewed all recently issued accounting pronouncements and
does not believe that any of the pronouncements will have a material impact on
its financial statements.
2. GOING CONCERN CONSIDERATIONS
The Company is currently operating under the jurisdiction of Chapter 11 of
the Code and the Bankruptcy Court, and the continuation of the Company as a
going concern is contingent upon, among other things, its ability to restructure
successfully, including refinancing its debts, and the ability of the Company to
general sufficient cash to fund future operations. There can be no assurance in
this regard.
The Company intends to utilize the Chapter 11 process to reorganize its
financial and operational affairs with the goal of preserving and enhancing the
assets of the Company for the benefit of creditors and shareholders. The Company
expects the business to operate as usual, our valued employees to be retained,
and for our post-bankruptcy obligations to be satisfied.
The Company's objective is to achieve the highest possible recoveries for
all creditors and shareholders, consistent with the Company's ability to pay and
to continue the operation of the Company's business. However, there can be no
assurance that the Company will be able to attain these objectives or to achieve
a successful reorganization. Further, there can be no assurance that the
liabilities of the Company will not be found to exceed the fair value of their
assets. This could result in claims being paid at less than 100% of their face
value and the equity of the Company's shareholders being diluted or cancelled.
8
WINDSOR WOODMONT BLACK HAWK RESORT CORP.
(DEBTOR-IN-POSSESSION AS OF NOVEMBER 7, 2002)
NOTES TO CONDENSED FINANCIAL STATEMENTS
Under the Code, the rights of, and ultimate payments to pre-Petition Date
creditors and shareholders may be substantially altered from their contractual
terms. At this time, it is not possible to predict the outcome of the Chapter 11
Case, in general, or the effect of the Chapter 11 Case on the business of the
Company or on the interests of creditors and shareholders.
The Company anticipates that substantially all liabilities of the Company
as of the Petition Date will be resolved under one or more plans of
reorganizations to be proposed and voted on in the Chapter 11 Case in accordance
with the provisions of the Code. Although the Company intends to file and seek
confirmation of such a plan or plans, there can be no assurance as to when the
Company will file such a plan or plans, or that such plan or plans will be
confirmed by the Bankruptcy Court and consummated.
The accompanying financial statements have been prepared assuming the
Company will continue as a going concern basis, which contemplates the
realization of assets and the satisfaction of liabilities in the normal course
of business. However, as a result of the filing of the Chapter 11 Case, such
realization of assets and liquidation of liabilities are subject to a
significant number of uncertainties.
3. NOTES PAYABLE
Notes payable consisted of the following at March 31, 2003 and December
31, 2002:
Principal Balance
----------------------------------
March 31, December 31,
2003 2002
------------ ------------
13% First Mortgage Notes, due March 15, 2005 $100,000,000 $100,000,000
15.5% Second Mortgage Notes, due March 15, 2010 9,840,233 9,840,233
FF&E Note, interest at prime + 6.75% (11% at March 31, 2003) 17,680,006 17,680,006
Black Hawk Business Improvement Bonds, $975,000 at 6% interest,
due December 1, 2005 + $2,025,000 at 6.75% interest,
due December 1, 2011 2,784,121 2,784,121
------------ ------------
$130,304,360 $130,304,360
Less current maturities 130,304,360 130,304.360
------------ ------------
Long-term debt $ -- $ --
============ ============
All of the Company's long-term debt became immediately due and payable as
a result of the commencement of the Chapter 11 Case, accordingly, long-term debt
balances have been reclassified to current maturities.
Substantially all of the Company's assets are pledged as collateral for
long-term debt. On October 15, 2002, the Company failed to make the interest
payments initially due on September 15, 2002, that it had elected to defer until
October 15, 2002 on the First Mortgage Notes and Second Mortgage Notes. The
Company's failure to pay the interest constituted an "Event of Default" under
the applicable agreements. On November 7, 2002, the Company filed a voluntary
petition for relief under Chapter 11 of the Code. As a result of the failure to
make required interest payments, and the filing of the bankruptcy petition, the
Company was not in compliance with all of its debt covenants.
4. REORGANIZATION EXPENSES
Reorganization related expenses of $910,413 were incurred during the three
months ended March 31, 2003. These include costs incurred for legal, financial
advisor services received in connection with our debt restructuring efforts,
travel related expenses and other costs directly related to our debt
restructuring efforts.
5. COMMITMENTS AND CONTINGENCIES
Gaming Regulation Licensing
The Company's ability to conduct gaming operations in the State of
Colorado is subject to the licensability and qualifications of the Company and
its common stockholders. The Colorado Gaming Commission approved the issuance
9
WINDSOR WOODMONT BLACK HAWK RESORT CORP.
(DEBTOR-IN-POSSESSION AS OF NOVEMBER 7, 2002)
NOTES TO CONDENSED FINANCIAL STATEMENTS
of the appropriate and necessary gaming licenses for operation of the Casino to
us and Hyatt Gaming on September 20, 2001. The licenses were physically issued
to us immediately prior to opening of our casino on December 20, 2001.
Additionally, upon receipt of a gaming license, such licensing and
qualifications are reviewed periodically by the gaming authorities in Colorado
and there are no guarantees such licenses will be renewed.
Legal Proceedings
The Company is involved in certain legal proceedings, claims and
litigation, including those described below. The results of legal proceedings
cannot be predicted with certainty. Management does not believe that the Company
has potential liability related to any current legal proceedings and claims that
would have material adverse effect on the Company's financial condition,
liquidity or results of operations.
For a complete list of Legal Proceedings see Item 1, Part II.
Environmental Issues
The Project is located in a 400-square mile area that has been designated
by the United States Environmental Protection Agency ("EPA") as the Clear
Creek/Central City National Priorities List Superfund Site under the
Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"),
as a result of hazardous substance contamination caused by historical mining
activity in Black Hawk. This is a broad national priorities list site, within
which the EPA has identified several priority areas of contamination from
historical mining activities, including draining mines and mine dumps, for
active investigation and/or remediation. To date, the EPA has not identified the
Project site as being within a priority area nor has it identified contamination
from the Project site to require remediation.
The Company has been informed that the Superfund Division of the Colorado
Department of Public Health and the Environment ("CDPHE"), working with the EPA,
has sampled surface water in or near North Clear Creek near where a portion of
the Project site called Silver Gulch discharges surface water into North Clear
Creek. The Company has been informed that based on the results of those samples,
the EPA and the Colorado Superfund Division have expressed preliminary concern
that soil and rock associated with historic mining operations in Silver Gulch
may be a source of contamination to North Clear Creek. Subsequent to these
initial concerns the Company placed an impervious cap over mine tailings in
Silver Gulch and continues to perform surface water monitoring.
The Project site could be among properties suspected of being a source of
contamination. If investigation or remediation of the Project site were
required, the Company could incur substantial expense.
6. SUBSEQUENT EVENTS
On December 13, 2002, we filed a motion for court approval of the
rejection of the Hyatt Management Agreement. The rejection of the Hyatt
Management Agreement will eliminate the payment of the Hyatt Management fee,
thereby reducing operating costs and increasing net revenue. On April 10, 2003,
we entered into a settlement agreement with Hyatt where they will not contest
the rejection of the Hyatt Management Agreement (the "Hyatt Settlement and
Release Agreement"). On April 25, 2003, the Bankruptcy Court entered an order
approving the Hyatt Settlement and Release Agreement. The order approving the
Hyatt Settlement and Release Agreement will be entered as a final order on the
Rejection Date. The Rejection Date is currently set for May 6, 2003.; however,
we entered into a stipulation with Hyatt to extend the Rejection Date to be on
the fourth business date after we provide written notice to Hyatt, but in any
event will not be later than May 19, 2003. We entered into this stipulation with
Hyatt to provide additional time for the orderly transition for the management
of operations. On May 7, 2003, we provided written notice to Hyatt electing May
14, 2003 (a date which is four business days after the date of the notice) as
the Rejection Date. On May 14, 2003, we assumed management of the casino and the
casino name was changed to the Mountain High Casino.
Under the terms of the Hyatt Settlement and Release Agreement, the Hyatt
Management Agreement will be deemed rejected and Hyatt shall hold an allowed
pre-petition unsecured claim in the Bankruptcy Case in the amount of
$18,318,368. This claim includes the following: (i) rejection damage claim in
the amount of $ 5,000,000, (ii) Second Mortgage Note claim in the amount of $
10,877,791, including accrued interest, (iii) pre-casino opening expenses claim
in the amount of $ 1,532,921, and (iv) post opening expenses claim in the amount
of $ 907,657. Windsor Woodmont
10
WINDSOR WOODMONT BLACK HAWK RESORT CORP.
(DEBTOR-IN-POSSESSION AS OF NOVEMBER 7, 2002)
NOTES TO CONDENSED FINANCIAL STATEMENTS
agrees to commence making interest only payments at a rate of 6% one month after
the effective date of the reorganization plan. The interest only payments will
continue until Windsor Woodmont generates excess cash flow (as defined in the
Hyatt Settlement and Release Agreement) to pay the pre-petition unsecured claim
until paid in full. We agree to restrict dividends to our equity holders until
Hyatt's pre-petition unsecured claim is paid in full. Hyatt agrees to support a
plan of reorganization in the Chapter 11 Case and agrees to waive any claim or
interest in and to any funds it possesses from the operation of the Casino.
Under the Hyatt Settlement and Release Agreement, Hyatt agrees to fully
cooperate in the transition of the Casino to us.
11
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
FORWARD-LOOKING STATEMENTS
Statements made in this Form 10-Q ("Quarterly Report") that are not
historical or current facts are forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. In addition, we may from time to time make written or oral
forward-looking statements. Written forward-looking statements may appear in
documents filed with the Securities and Exchange Commission (the "Commission"),
in press releases and in reports to shareholders. In addition, we may from time
to time make written or oral forward-looking statements. Written forward-looking
statements may appear in documents filed with the Securities and Exchange
Commission (the "Commission"), in press releases and in reports to shareholders.
The forward-looking statements included in this Quarterly Report are based on
current expectations that involve a number of risks and uncertainties. These
forward-looking statements are based on the following assumptions: a plan of
reorganization submitted by us will be approved by the Bankruptcy Court,
competitive and market conditions affecting the Casino will not change
materially or adversely, that we will retain key management personnel, that our
forecasts will accurately anticipate market demand and that there will be no
further material adverse change in our operations or business. Assumptions
relating to the foregoing involve judgments with respect to, among other things,
future economic, competitive and market conditions and future business
decisions, all of which are difficult or impossible to predict accurately and
many of which are beyond our control. Although management believes that the
assumptions underlying the forward-looking statements are reasonable, any of the
assumptions could prove inaccurate and, therefore, there can be no assurance
that the results contemplated in forward-looking information will be realized.
We undertake no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise.
In addition, our business and operations are subject to substantial risks,
which increase the uncertainty inherent in such forward-looking statements. In
light of the significant uncertainties inherent in the forward-looking
information included herein, the inclusion of such information should not be
regarded as a representation by us or any other person that our objectives or
plans will be achieved. The Private Securities Litigation Reform Act of 1995
contains a safe harbor for forward-looking statements on which we rely in making
such disclosures. In connection with this safe harbor we are hereby identifying
important factors that could cause actual results to differ materially from
those contained in any forward-looking statements made by or on our behalf. Any
such statement is qualified by reference to the cautionary statements included
in this Quarterly Report.
OVERVIEW
As a result of our inability to meet the financial projections set forth
by Hyatt resulting from below projection revenues and earnings performance, on
November 7, 2002, we filed a voluntary petition for reorganization under Chapter
11 of the Code.
Under Chapter 11, we are operating our business as a debtor-in-possession.
Under the Code, actions to collect pre-petition indebtedness or enforce
pre-petition contractual obligations, as well as most other pending actions
against us or property of our estate, are stayed. On April 10, 2003, we entered
into the Hyatt Settlement and Release Agreement with Hyatt Gaming whereby Hyatt
Gaming will hold certain allowed pre-petition unsecured claims in the Chapter 11
Case and the Hyatt Management Agreement will be deemed rejected. On April 25,
2003, the Bankruptcy Court entered an order approving the Hyatt Settlement and
Release Agreement. The order approving the Hyatt Settlement and Release
Agreement will be entered as a final order on the Rejection Date. The Rejection
Date is currently set for May 6, 2003.; however, we entered into a stipulation
with Hyatt to extend the Rejection Date to be on the fourth business date after
we provide written notice to Hyatt, but in any event will not be later than May
19, 2003. We entered into this stipulation with Hyatt to provide additional time
for the orderly transition for the management of operations. We provided written
notice to Hyatt on May 7, 2003 electing May 14, 2003 (a date which is four
business days after the date of the notice) as the Rejection Date. On May 14,
2003, we assumed management of the casino and the casino's name was changed to
the Mountain High Casino. We have added a new management team which includes a
new General Manager, Assistant General Manager, Director of Casino Operations
and Director of Food & Beverage. Each new member of the Mountain High Casino
management team has significant experience in the Black Hawk gaming market and
our General Manager and Assistant General Manager have casino turnaround
experience in the Black Hawk gaming market.
12
The following discussion should be read in conjunction with, and is
qualified in its entirety by, the condensed consolidated financial statements of
Windsor Woodmont Black Hawk Resort Corp., including the respective notes thereto
and other financial information included elsewhere in this report.
The following discussion should also be read in conjunction with the
Annual Report on Form 10-K for the fiscal year ended December 31, 2002.
RESULTS OF OPERATIONS
The following table sets forth certain summarized operating data for the periods
indicated.
Quarter Ended March 31,
--------------------------------
2003 2002 Increase (Decrease)
----------- ----------- -------------------------
Net Revenues 13,777,706 16,940,655 (3,162,949) -18.7%
Total Operating Expenses 14,689,580 17,014,601 (2,325,021) -13.7%
----------- ----------- ---------- ------
Operating Income (Loss) (911,874) (73,946) (837,928)
Add: Depreciation and Amortization 2,086,441 2,060,245 26,196 1.3%
----------- ----------- ---------- ------
EBITDA(1) 1,174,567 1,986,299 (811,732) -40.9%
=========== =========== ========== ======
EBITDA Margin (1)(2) 8.5% 11.7% -3.2%
=========== =========== ==========
(1) EBITDA consists of earnings before interest, income taxes, depreciation
and amortization. EBITDA is presented solely as a supplemental disclosure
because management believes that it is a widely used measure of operating
performance in the gaming industry. EBITDA and EBITDA Margin are not
determined in accordance with generally accepted accounting principles.
EBITDA should not be construed as an alternative to operating income, as
an indicator of the Company's operating performance, as an alternative to
cash flows from operating activities, or as a measure of liquidity. The
Company's definition of EBITDA may not be identical to other companies'.
The above table reconciles EBITDA to operating income included in the
financial statements presented in Item 1, Part 1.
(2) EBITDA margin is EBITDA as a percentage of net revenues.
Three Months Ended March 31, 2003 Compared to Three Months Ended March 31, 2002:
Total revenue for the quarter ended March 31, 2003 was $14,838,904,
$13,777,706 net of promotional allowances. This included $12,964,834 in casino
revenue, $1,630,323 in food and beverage revenue, and $243,747 of other revenue.
This compares to total revenue for the quarter ended March 31, 2002 of
$17,683,336, $16,940,655 net of promotional allowances. This included
$15,831,611 in casino revenue, $1,656,898 in food and beverage revenue, and
$194,827 of other revenue.
Casino operating expenses for the quarter ended March 31, 2003 totaled
$8,045,221, including $2,726,457 in state and local gaming taxes and device
fees. This compares to casino operating expenses for the quarter ended March 31,
2002 totaling $9,311,949, including $3,383,967 in state and local gaming taxes
and device fees. The decrease is primarily due to reduced payroll and benefit
costs and to reduced gaming taxes, offset partially by increased cost of coupon
redemptions. The gaming taxes were reduced due to reduced gaming revenue. Other
casino operating expenses consist principally of salaries, wages and benefits,
marketing costs, and other operating expenses of the casino.
Food and beverage expenses for the quarter ended March 31, 2003 totaled
$1,340,336, including $800,005 in cost of goods sold. This compares to Food and
beverage expenses for the quarter ended March 31, 2002 totaling $1,730,111,
including $983,925 in cost of goods sold. The decrease is primarily due to
reduced payroll and benefit costs and reduced cost of goods sold. Other food and
beverage expenses consist principally of salaries, wages and benefits, and other
operating expenses of the food and beverage operations.
13
Other operating expenses for the quarter ended March 31, 2003 totaled
$304,535 versus $482,933 for the quarter ended March 31, 2002, and consists of
salaries, wages and benefits, contract entertainment expense, and other
operating expenses. The decrease is primarily due to reduced payroll and benefit
costs.
General and administrative expenses for the quarter ended March 31, 2003
totaled $2,435,410 versus $2,847,667 for the quarter ended March 31, 2002, and
consists of salaries, wages and benefits, utilities, insurance, property taxes,
contract services, maintenance and repairs, cleaning supplies, and other
operating expenses. The net reduction is due to decreases in payroll and benefit
costs and in contract services costs, partially offset by increases in property
taxes.
Depreciation and amortization expense for the quarter ended March 31, 2003
totaled $2,086,441 versus $2,060,245 for the quarter ended March 31, 2002. These
expenses relate to property and equipment in service and vary with the addition
or replacement of new items of property and equipment.
Interest expense for the quarter ended March 31, 2003 totaled $621,653,
including $59,097 in amortization of debt issuance costs. This compares to
interest expense for the quarter ended March 31, 2002, which totaled $4,818,593,
including $414,005 in amortization of debt issuance costs. The reduction in
interest expense is a result of interest not being accrued on the First and
Second Mortgage Notes payable during the course of our bankruptcy proceedings,
and the write-off at December 31, 2002 of unamortized debt discount and deferred
financing costs related to the First and Second Mortgage Notes.
Reorganization expenses for the quarter ended March 31, 2003 totaled
$910,413. This includes costs incurred for legal, financial advisor services
received in connection with our debt restructuring efforts, travel related
expenses and other costs directly related to our debt restructuring efforts.
There were no similar costs during the quarter ended March 31, 2002.
Future operating results will be subject to significant business,
economic, regulatory and competitive uncertainties and contingencies, many of
which are beyond our control. While we believe that our casino will be able to
attract a sufficient number of patrons and achieve the level of activity and
revenues necessary to permit us to meet our payment obligations, we cannot
assure you that we will achieve these results.
LIQUIDITY AND CAPITAL RESOURCES
The Chapter 11 Case may have a material adverse effect on relationships
with suppliers or vendors. While we have not experienced any significant
disruption in our relationships with our suppliers or vendors, we may have
difficulty maintaining existing or creating new relationships with suppliers or
vendors as a result of the Chapter 11 Case. Suppliers and vendors could stop
providing supplies or services or provide such supplies or services only on
"cash on delivery," "cash on order," or other terms that could have an adverse
impact on our short-term cash flows.
The adequacy of our capital resources is limited and we have limited
access to additional financing. In addition to the cash requirements necessary
to fund ongoing operations, we currently are incurring and anticipate that we
will incur significant professional fees and other restructuring costs in
connection with the Chapter 11 Case and the restructuring of our operations.
However, as a result of the uncertainty surrounding our current circumstances,
it is difficult to predict our actual liquidity needs at this time. Although,
based on current and anticipated levels of operations, and efforts to increase
the number of gaming patrons and customers to the Casino, we believe that our
cash flow from operations will be adequate to meet our anticipated cash
requirements during the pendency of the Chapter 11 Case, ultimately such amounts
may not be sufficient to fund operations until such time as we are able to
propose a plan of reorganization that will receive the requisite acceptance by
creditors and equity holders and be confirmed by the Bankruptcy Court. In the
event that cash flows are insufficient to meet future cash requirements, we may
be required to reduce planned capital expenditures or seek additional financing.
We can provide no assurance that reductions in planned capital expenditures
would be sufficient to cover shortfalls or that additional financing would be
available or, if available, offered on acceptable terms. As a result of the
Chapter 11 Case and the circumstances leading to the filing thereof, our access
to additional financing is, and for the foreseeable future will likely continue
to be limited. As the foregoing indicates, our long-term liquidity requirements
and the adequacy of our capital resources are difficult to predict at this time,
and ultimately cannot be determined until a plan of reorganization has been
developed and is confirmed by the Bankruptcy Court in the Chapter 11 Case.
14
After we confirm a plan of reorganization, we estimate that cash flow from
operations will be sufficient to sustain our operations during the next fiscal
year. We cannot assure you that any financing, if necessary to meet liquidity
requirements, will be available to us in the future, or that, if available, any
such financing will be on favorable terms. We cannot assure you that our
reasonably foreseeable liquidity needs are or will be accurate or that new
business developments or other unforeseen events will not occur, resulting in
the need to raise additional funds. We expect that the adequacy of our operating
cash flow will depend, among other things, upon our ability to reorganize, the
general state of the economy, both local and national, our ability to manage the
Casino, the continued development of the Black Hawk market as a gaming
destination, the intensity of the competition, the efficiency of operations,
depth of customer demand, and the effectiveness of our marketing and promotional
efforts.
Item 3. Qualitative and Qualitative Disclosures about Market Risk
Not Applicable.
Item 4. Controls and Procedures
The Company's Chief Executive Officer and Chief Financial Officer have
evaluated the effectiveness of the Company's disclosure controls and procedures
(as defined in Rules 13a-14 and 15d-14 of the Securities Exchange Act of 1934,
as amended, as of a date within 90 days prior to the filing date of this Annual
Report (the "Evaluation Date"). Based on this evaluation, such officers have
concluded that, as of the Evaluation Date, our disclosure controls and
procedures are effective in timely alerting them to material information
required to be included in the Company's periodic SEC filings. Since the
Evaluation Date, there have not been any significant changes in the internal
controls of the Company, or in other factors that could significantly affect
these controls subsequent to the Evaluation Date.
15
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
The Company is involved in certain legal proceedings, claims and
litigation, including those described below. The results of legal proceedings
cannot be predicted with certainty. Management does not believe that the Company
has potential liability related to any current legal proceedings and claims that
would have material adverse effect on the Company's financial condition,
liquidity or results of operations.
Paul, Hastings, Janofsky & Walker claim for legal fees. Paul, Hastings,
Janofsky & Walker (Paul Hastings) is the Los Angeles and New York based law firm
which acted as issuer's counsel for the Company in securing financing for the
Company's casino project in Black Hawk, Colorado. The approximately $110 million
in financing closed in March, 2000. The Company paid Paul Hastings a total of
$800,000 in legal fees and costs in conjunction with providing services as
issuer's counsel, including $700,000 disbursed to Paul Hastings from the closing
of the financing in March, 2000. After March, 2000, Paul Hastings submitted
additional billing statements to the Company, made several threatening
communications to the Company, and ultimately filed litigation against the
Company in California state courts in Los Angeles County in June, 2001. Paul
Hastings claimed that it was owed an additional approximately $470,000 in fees
for legal services, approximately one-half of which is allegedly based upon
services rendered on an hourly fee basis, and the other half of which
constitutes "bonus" which Paul Hastings alleges is due as a result of the
closing of the financing. The Company believed that it overpaid Paul Hastings
for the services rendered. The matter was scheduled for trial in October, 2002
in Los Angeles, but was settled at a mediation in Denver in May, 2002. The
Company agreed to pay Paul Hastings an additional $150,000, $50,000 of which was
paid in May, 2002 with the balance of $100,000 due in December, 2002. The
$100,000 payment has not been made and Paul Hastings will be treated as an
unsecured creditor in the Chapter 11 proceeding.
First Place LLC filed a lawsuit against the Company generally asserting
that it has an ownership interest in a small sliver of property upon which the
Company has built and is operating the Black Hawk Casino by Hyatt. The property
which First Place contends it has an ownership in consists of approximately
6,000 square feet. The Company timely referred the issue to its title insurance
company, First American Title. The Company has a $33.5 million owner's title
insurance policy with First American. First American has advised the Company
that the claim will be covered by the Company's title insurance and the title
insurance company has been and is vigorously defending the claim. After a trial
in June, 2002, the trial court determined that First Place does have an
ownership interest in a strip of property containing approximately 3,000 square
feet which the Company believed it owned. Certain post trial motions had been
granted and were pending final determination by the Court at the time of the
Chapter 11 filing. The Company and First American engaged in efforts with First
Place to remove this case from the bankruptcy proceeding, however, those efforts
have proved unsuccessful to date. We do not anticipate that there will be any
financial exposure to the Company with respect to this claim, however, similarly
situate claimants have raised issues in the past with other property owners in
the Black Hawk area which have had the effect of temporarily clouding title and
have resulted in property owner's and/or title insurance company's entering into
financial settlements with the claimant in order to eliminate the alleged
"clouds" on title. The Company fully expects that this claim will be resolved by
and at the expense of First American Title.
The Colorado Limited Gaming Control Commission (the Commission) approved
the issuance of the appropriate and necessary gaming licenses for operation of
the Black Hawk Casino by Hyatt to the Company and Hyatt Gaming Management, Inc.
on September 20, 2001. The licenses were physically issued to the Company and
Hyatt immediately prior to opening of the casino on December 20, 2001. In the
meantime, in October 2001, GF Gaming, a gaming company operating a casino in
Central City, Colorado, filed an appeal with the Commission challenging the
issuance of the licenses to the Company and Hyatt, ostensibly on the grounds
that the Commission had failed to consider whether the casino facility met the
historic architectural intent of the Colorado gaming laws. The Company and Hyatt
requested that the appeal be dismissed for several reasons, including that GF
Gaming lacked standing and that the Commission lacked jurisdiction over
architectural compliance issues (those issues being within the exclusive
province of the municipalities in which limited gaming is permitted). In
December, 2001, the Commission dismissed the appeal based upon lack of standing
and lack of jurisdiction. In February, 2002, GF Gaming filed a notice of appeal
continuing its challenge with the Colorado Court of Appeals. All parties have
filed all required briefs with the Court of Appeals, but a decision by the Court
of Appeals has been stayed by the Chapter 11 filing. Recently, all parties to
this case have filed a stipulated motion with the bankruptcy court to lift the
automatic stay on this proceeding and to allow its final adjudication by the
state court system. The bankruptcy court has not ruled on the stipulated motion.
16
PCL Construction Services, Inc. acted as the general contractor for the
Company in the construction of the Black Hawk Casino by Hyatt project. The
Substantial Completion Date for the project was originally to have been October
29, 2001 and was subsequently amended by Change Order to November 15, 2001. In
fact, construction of the casino was not at a point where the casino could open
for business until December 20, 2001 and certain components of the project were
not completed until early 2002. PCL and its subcontractors claim to be owed an
aggregate of approximately $7,200,000 on the project, have recorded mechanic's
liens and filed mechanic's lien foreclosure and breach of contract litigation
against the Company. The Company has filed litigation against PCL for PCL's
misrepresentations and contractual breaches concerning completion of the
project. This litigation was not at issue with all parties as of the date of the
Chapter 11 filing and has been stayed. The Company anticipates that this claim
will likely be resolved by a settlement agreement with PCL in the Chapter 11
proceeding. The Company and PCL have been engaged in extensive settlement
discussions since late January, 2003 and, as of April 4, 2003, PCL and the
Company have conceptually agreed on the basic business terms of a settlement
agreement. The agreement must be memorialized and executed by the parties,
following which it must be submitted to the bankruptcy court for review and,
hopefully, approval.
Paul Steelman was the project architect for the Black Hawk Casino by Hyatt
project. Paul Steelman claims that it is owed an additional approximately
$200,000 for architectural work performed at the project. The Company believes
that it does not owe Paul Steelman the $200,000 and further believes that Paul
Steelman owes the Company approximately $2,000,000 for Paul Steelman's failure
to properly prepare and complete architectural plans and specifications for the
project in a timely fashion. Prior to the Chapter 11 filing, the Company and
Steelman had entered into a Dispute Resolution Agreement providing for
mediation, to be followed by binding arbitration, if necessary. The dispute
resolution process contemplated by this Agreement has been stayed. The Company
and Steelman have verbally agreed to file a stipulated motion lifting the stay
from this dispute and allowing its determination by Dispute Resolution
Agreement; such a motion has been drafted and is awaiting execution and filing
with the bankruptcy court.
Item 2. Changes in Securities and Use of Proceeds
Not Applicable.
Item 3. Defaults Upon Senior Securities
Not Applicable.
Item 4. Submission of Matters to a Vote of Security Holders
Not Applicable.
Item 5. Other Information
In connection with the termination of Hyatt Gaming Management, Inc.'s
management of the Casino, the Company will re-brand the Casino from the Black
Hawk Casino by Hyatt to the Mountain High Casino. A new management team has been
assembled including a new General Manager, Assistant General Manager, Director
of Casino Operations and Director of Food & Beverage. Each new member of the
Mountain High Casino management team brings with them extensive Black Hawk
gaming market experience, and in the case of our new General Manager and
Assistant General Manager, Black Hawk casino turnaround experience.
Item 6. Exhibits and Reports on Form 8-K
1. Exhibits
99.1. Certification Pursuant to 18 U.S.C. 1350 as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
2. Form 8-K
Form 8-K filed on February 26, 2003, disclosing in accordance with
Regulation FD a letter sent to the holders of its common stock regarding
the status of its Chapter 11 Bankruptcy proceeding.
17
Form 8-K filed on April 10, 2003, reporting that the Company had agreed to
a settlement with Hyatt Gaming Management, Inc. in which Hyatt Gaming
Management, Inc. will end its management of the Black Hawk Casino by Hyatt
for certain financial considerations, subject to approval by the United
States Bankruptcy Court in Denver, Colorado.
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.
Date: May 15, 2003
WINDSOR WOODMONT BLACK HAWK RESORT CORP.
/s/ Jerry L. Dauderman
----------------------
Jerry L. Dauderman,
Chairman and Chief Executive Officer
18
CERTIFICATION PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Jerry Dauderman, certify that:
I have reviewed this quarterly report on Form 10-Q of Windsor Woodmont
Black Hawk Resort Corp.;
1. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period discovered by this
quarterly report;
2. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
3. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a. designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this quarterly report is being prepared;
b. evaluated the effectiveness of the registrant's disclosure
control and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date") and;
c. presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our evaluation
as of the Evaluation Date;
4. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):
a. all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls, and
b. any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's internal
controls; and
5. The registrant's certifying officers and I have indicated in this quarterly
report whether or not there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
Date: May 15, 2003 /s/ Jerry Dauderman
--------------------------------------------
Jerry Dauderman, Chief Executive Officer and
Chairman of the Board of Directors
CERTIFICATION PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Michael Armstrong, certify that:
I have reviewed this quarterly report on Form 10-Q of Windsor
Woodmont Black Hawk Resort Corp.:
1. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period discovered
by this quarterly report;
2. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;
3. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
have:
a. designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this quarterly report is being prepared;
b. evaluated the effectiveness of the registrant's disclosure
control and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date") and;
c. presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our evaluation
as of the Evaluation Date;
4. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
a. all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls, and
b. any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's internal
controls; and
5. The registrant's certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.
Date: May 15, 2003 /s/ Michael Armstrong
--------------------------------------------
Michael Armstrong, Executive Vice President, Chief
Financial Officer, Treasurer and Secretary
EXHIBIT INDEX
No. Description
- --- -----------
99.1. Certification Pursuant to 18 U.S.C. 1350 as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002.