Attached files
file | filename |
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EX-32.1 - FLORIDA GAMING CORP | v193965_ex32-1.htm |
EX-31.2 - FLORIDA GAMING CORP | v193965_ex31-2.htm |
EX-31.1 - FLORIDA GAMING CORP | v193965_ex31-1.htm |
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
DC 20549
F O R M 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 June 30, 2010
OR
o
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
For the
transition period from ____________
to ____________
Commission
file number 0-9099
FLORIDA GAMING
CORPORATION
(Exact
name of registrant as specified in its charter)
Delaware
|
59-1670533
|
(State
or other Jurisdiction of
Incorporation
or Organization)
|
(IRS
Employer Identification No.)
|
3500
NW 37th
Avenue, Miami, Florida
|
33142-0000
|
(Address
of principal executive offices)
|
(Zip
code)
|
Registrant's
telephone number, including area code (305)
633-6400
Former
name, former address and former fiscal year, if changed since last
report N/A
Indicate
by check mark whether the Registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the Registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes x
No ¨
Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files). Yes o No x
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.
Large
accelerated filer ¨
|
Accelerated
filer ¨
|
|
Non-accelerated
filer ¨
|
Smaller
reporting company x
|
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). Yes ¨
No x
As
of August 16, 2010, there were 3,888,959 shares of the Registrant’s
common stock outstanding.
FLORIDA
GAMING
CORPORATION
INDEX
TO FORM 10-Q
PAGE NUMBER
|
||||
PART
I. FINANCIAL INFORMATION
|
2 | |||
Item
1. Financial Statements
|
||||
Balance
Sheets as of June 30, 2010 (unaudited) and December 31,
2009
|
2 | |||
Statements
of Operations (unaudited) for the Three and Six Months ended June 30, 2010
and 2009
|
4 | |||
Statements
of Cash Flows (unaudited) for the Three and Six Months ended June 30, 2010
and 2009
|
5 | |||
Notes
to Financial Statements (unaudited)
|
6 | |||
Item
2. Management’s Discussion and Analysis of Financial Condition and Results
of Operation
|
16 | |||
Item
3. Quantitative and Qualitative Disclosures about Market
Risk
|
27 | |||
Item
4. Controls and Procedures
|
27 | |||
PART
II. OTHER INFORMATION
|
28 | |||
SIGNATURES
|
34 | |||
Certification
of CEO (Exhibit 31.1)
|
||||
Certification
of CFO (Exhibit 31.2)
|
||||
Certification
of CEO & CFO (Exhibit 32.1)
|
1
PART
1. FINANCIAL INFORMATION
FLORIDA GAMING CORPORATION
CONSOLIDATED
BALANCE SHEETS
(Unaudited)
June
30,
2010
|
December
31,
2009
|
|||||||
CURRENT
ASSETS:
|
||||||||
Cash
and cash equivalents (Note 2)
|
$ | 741,319 | $ | 819,256 | ||||
Accounts
receivable, net
|
154,389 | 234,674 | ||||||
Inventory
(Note 2)
|
37,521 | 43,494 | ||||||
Total
current assets
|
$ | 933,229 | $ | 1,097,424 | ||||
PROPERTY
AND EQUIPMENT:
|
||||||||
Land
|
$ | 8,164,543 | $ | 8,164,543 | ||||
Buildings
and improvements
|
8,941,404 | 8,941,404 | ||||||
Furniture,
fixtures and equipment
|
1,835,766 | 1,782,111 | ||||||
$ | 18,941,713 | $ | 18,888,058 | |||||
Less
accumulated depreciation
|
(4,700,986
|
) | (4,480,410 | ) | ||||
$ | 14,240,727 | $ | 14,407,648 | |||||
REAL
ESTATE HELD FOR SALE (net)
|
234,000 | 234,000 | ||||||
OTHER
ASSETS
|
356,371 | 488,788 | ||||||
$ | 15,764,327 | $ | 16,227,860 |
2
FLORIDA
GAMING CORPORATION
CONSOLIDATED
BALANCE SHEETS
(unaudited)
June
30,
2010
|
December
31,
2009
|
|||||||
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
||||||||
CURRENT
LIABILITIES
|
||||||||
Accounts
payable and accrued expenses
|
$ | 8,902,044 | $ | 6,610,867 | ||||
Short-term
borrowing and current portion of long-term debt
|
7,347,922 | 6,412,746 | ||||||
Total
current liabilities
|
$ | 16,249,966 | $ | 13,023,613 | ||||
LONG-TERM
LIABILITIES
|
||||||||
Long-term
portion notes payable
|
2,752,605 | 3,002,813 | ||||||
STOCKHOLDERS’
EQUITY
|
||||||||
Class
A convertible preferred stock, convertible to common stock; $.10 par
value, 1,200,000 shares authorized; 27,756 shares issued and
outstanding at June 30, 2010 and December 31, 2009
|
2,776 | 2,776 | ||||||
Class
AA convertible preferred stock, convertible to common stock; $.10 par
value, 5,000 shares authorized; 5,000 shares issued and outstanding
at June 30, 2010 and December 31, 2009
|
500 | 500 | ||||||
Class
B convertible preferred stock; convertible to common stock, 50
shares Authorized; 45 shares issued and outstanding at June 30, 2010
and December 31, 2009
|
5 | 5 | ||||||
Class
F 8% cumulative convertible preferred stock, 2,500 shares authorized;
2,000 Shares issued and outstanding at June 30, 2010 and December 31,
2009
|
200 | 200 | ||||||
Common
stock, $.20 par value, authorized 7,500,000 shares, 3,888,959 issued
and outstanding at June 30, 2010 and December 31,
2009
|
777,792 | 777,792 | ||||||
Capital
in excess of par value
|
50,615,750 | 50,615,750 | ||||||
Accumulated
deficit
|
(54,635,267 | ) | (51,195,589 | ) | ||||
Total
stockholders’ equity (deficit)
|
(3,238,244 | ) | 201,434 | |||||
Total
liabilities and stockholders’ equity (deficit)
|
$ | 15,764,327 | $ | 16,227,860 |
The
accompanying notes are an integral part of these financial
statements.
3
FLORIDA
GAMING CORPORATION
SUMMARY
OF OPERATIONS
(UNAUDITED)
For
the Three Months Ended
|
For
the Six Months Ended
|
|||||||||||||||
June
30, 2010
|
June
30, 2009
|
June
30, 2010
|
June
30, 2009
|
|||||||||||||
PARI-MUTUEL
REVENUE
|
||||||||||||||||
Live
Jai-Alai Revenues, Net of State Taxes
|
$ | 598,376 | $ | 1,139,786 | $ | 1,483,504 | $ | 2,359,275 | ||||||||
Inter-Track
Commissions
|
598,637 | 751,320 | 1,257,054 | 1,544,625 | ||||||||||||
Pari-Mutuel
Revenue
|
$ | 1,197,013 | $ | 1,891,106 | $ | 2,740,558 | $ | 3,903,900 | ||||||||
OTHER
REVENUE
|
||||||||||||||||
Cardroom
Income
|
1,179,781 | 1,539,538 | 2,476,059 | 3,246,773 | ||||||||||||
Admissions
Income, net of taxes
|
2,023 | 8,089 | 8,704 | 11,932 | ||||||||||||
Programs,
Food, Beverage and Other
|
274,109 | 334,802 | 554,968 | 712,363 | ||||||||||||
Total
Operating Revenue
|
2,652,926 | $ | 3,773,535 | 5,780,289 | $ | 7,874,968 | ||||||||||
EXPENSES
|
||||||||||||||||
Operating
|
$ | 3,066,100 | $ | 3,748,321 | $ | 6,383,548 | $ | 7,861,054 | ||||||||
General
and Administrative
|
1,336,986 | 1,107,210 | 2,544,977 | 2,242,057 | ||||||||||||
Depreciation
and Amortization
|
115,967 | 137,655 | 233,607 | 278,077 | ||||||||||||
$ | 4,519,053 | $ | 4,993,186 | $ | 9,162,132 | $ | 10,381,188 | |||||||||
NET
LOSS FROM OPERATIONS
|
$ | (1,866,127 | ) | $ | (1,219,651 | ) | $ | (3,381,843 | ) | $ | (2,506,220 | ) | ||||
OTHER
INCOME
|
||||||||||||||||
Gain
on Sale of Right-of-Way
|
0 | 870,185 | 0 | 870,185 | ||||||||||||
Pari-Mutuel
Tax Credits
|
39,548 | 124,490 | 209,262 | 306,209 | ||||||||||||
Misc.Income
|
0 | 0 | 0 | 39,872 | ||||||||||||
Interest
Income
|
2,159 | 834 | 2,418 | 5,300 | ||||||||||||
41,707 | 995,509 | 211,680 | 1,221,566 | |||||||||||||
NET
LOSS
|
(1,824,420 | ) | (224,142 | ) | (3,170,163 | ) | (1,284,654 | ) | ||||||||
Dividends
on Preferred Stock
|
(134,758 | ) | (134,843 | ) | (269,515 | ) | (272,975 | ) | ||||||||
Net
Loss Contributable to Common Shareholders
|
$ | (1,959,178 | ) | $ | (358,985 | ) | $ | (3,439,678 | ) | $ | (1,557,629 | ) | ||||
Basic
Loss per Common Share
|
$ | (0.50 | ) | $ | (0.09 | ) 5 | $ | (0.88 | ) | $ | (0.41 | ) | ||||
Diluted
Loss per Common Share
|
$ | (0.50 | ) | $ | (0.09 | ) | $ | (0.88 | ) | $ | (0.41 | ) | ||||
Weighted
Avg Common Shares Outstanding
|
3,888,959 | 3,888,917 | 3,888,959 | 3,834,753 | ||||||||||||
Diluted
Avg Common Shares Outstanding
|
3,888,959 | 3,888,917 | 3,888,959 | 3,834,753 |
4
FLORIDA
GAMING CORPORATION
CONSOLIDATED
STATEMENTS OF CASH FLOWS
(Unaudited)
30-Jun
2010
|
30-Jun
2009
|
|||||||
Cash
flows from operating activities:
|
||||||||
Net
Loss
|
$ | (3,170,163 | ) | $ | (1,284,654 | ) | ||
Adjustments
to reconcile net loss to net cash used in operating
activities:
|
||||||||
Depreciation
and amortization
|
233,607 | 278,077 | ||||||
Gain
on sale of right of way
|
0 | (870,185 | ) | |||||
Decrease
in inventory
|
5,973 | 13,693 | ||||||
Decrease
(increase) in other assets
|
119,386 | (19,780 | ) | |||||
Decrease
(increase) in accounts receivable
|
80,285 | (54,374 | ) | |||||
Increase
in a/p and accrued expenses
|
2,021,661 | 947,651 | ||||||
Net
cash used in operating activities
|
(709,251 | ) | (989,572 | ) | ||||
Investing
Activities:
|
||||||||
Proceeds
from sale of right-of-way
|
0 | 1,185,345 | ||||||
Purchases
of property and equipment
|
(53,655 | ) | (466,295 | ) | ||||
Net
proceeds provided by (used in) investing activities
|
(53,655 | ) | 719,050 | |||||
Financing
Activities:
|
||||||||
Proceeds
from issuance of debt
|
735,000 | 0 | ||||||
Proceeds
from issuance of common stock
|
0 | 98,750 | ||||||
Repayment
of debt
|
(50,031 | ) | (139,929 | ) | ||||
Dividends
paid
|
0 | (43,289 | ) | |||||
Net
cash provided by (used in) financing activities
|
684,969 | (84,468 | ) | |||||
DECREASE
IN CASH
|
(77,937 | ) | (354,991 | ) | ||||
CASH
AND CASH EQUIVALENTS AT BEGINNING OF YEAR
|
819,256 | 1,512,719 | ||||||
CASH
AND CASH EQUIVALENTS AT JUNE 30, 2010 AND JUNE 30, 2009
|
$ | 741,319 | $ | 1,157,728 | ||||
Supplemental
disclosure of cash flow information:
|
||||||||
Cash
paid during the period for interest
|
$ | 119,792 | $ | 120,965 | ||||
Non-cash purchase of land | $ | 0 | $ | 3,013,586 |
5
Notes
to Financial Statements
(1) BASIS
OF PRESENTATION
The
financial statements of Florida Gaming Corporation (the "Company") have been
prepared without audit for filing with the United States Securities and Exchange
Commission (the “Commission”). The accompanying unaudited financial statements
have been prepared in accordance with the rules and regulations of the
Securities and Exchange Commission for interim financial information.
Accordingly, they do not include all the information and footnotes required by
generally accepted accounting principles for complete financial statements.
Therefore, it is suggested that the accompanying financial statements be read in
conjunction with the financial statements and notes thereto included in the
Company's latest annual report on Form 10-K.
Certain
information and notes have been condensed or omitted pursuant to the rules and
regulations of the Commission. The financial information presented herein, while
not necessarily indicative of results to be expected for the year, reflects all
adjustments of a normal recurring nature, which, in the opinion of the Company,
are necessary to a fair statement of the results for the periods
indicated.
(2) GOING
CONCERN
The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern. The attainment of sustainable profitability
and positive cash flow from operations is dependent on certain future events.
These conditions raise substantial doubt about the Company’s ability to continue
as a going concern. The financial statements do not include any adjustments that
might result from the outcome of this uncertainty.
The
Company is primarily involved in the jai-alai gaming industry along with
intertrack wagering on jai-alai, horse racing and dog racing. The industry as a
whole has declined significantly in last ten years. Due to this decline, the
Company has sought to increase revenues through investments in its licensed card
rooms as well as continued analysis of their ability to install slot machines in
its Miami facility. The ability of the Company to continue as a going concern is
dependent on the Company’s ability to further implement its business plan to
generate increased revenues and to raise additional funds. The consolidated
financial statements do not include any adjustments that might be necessary if
the Company is unable to continue as a going concern.
(3) SIGNIFICANT
ACCOUNTING POLICIES
Florida
Gaming Corporation (the Company) operates live Jai Alai games at frontons in Ft.
Pierce, and Miami, Florida through its Florida Gaming Centers, Inc. subsidiary
(Centers). The Company also conducts intertrack wagering (ITW) on jai alai,
horse racing and dog racing from its facilities. Poker is played at
the Miami and Ft. Pierce Jai-Alai, and dominoes are played at the Miami
Jai-Alai. In addition, the Company operates Tara
Club Estates, Inc. (“Tara”), a residential real estate
development located near Atlanta in Walton County,
Georgia. Approximately 46.2% of the Company's common stock is
controlled by the Company's Chairman and CEO either directly or beneficially
through his ownership of Freedom Holding, Inc.
Basis of
Presentation: These consolidated financial statements include the
accounts of the Company and its subsidiaries. Significant intercompany
transactions have been eliminated.
Estimates: The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Cash and Cash
Equivalents: The Company considers all highly liquid investments
purchased with an original maturity of three months or less to be cash
equivalents.
6
Property, Plant and
Equipment: Property, plant and equipment are stated at cost. Depreciation
is provided using the straight-line and accelerated methods over the estimated
useful life of the related assets as follows:
Buildings
|
39
years
|
|||
Land
and building improvements
|
15
years
|
|||
Furniture
and equipment
|
5-7
years
|
|||
Automobiles
|
5
years
|
June
30,
|
||||||||
2010
|
2009
|
|||||||
Land
|
$ | 8,164,543 | $ | 8,158,650 | ||||
Buildings
and improvements
|
8,941,404 | 8,885,639 | ||||||
Equipment
furniture and fixtures
|
1,696,201 | 1,691,618 | ||||||
Automobiles
|
85,910 | 85,910 | ||||||
Construction
in progress
|
48,865 | 24,007 | ||||||
Less
accumulated depreciation
|
(4,700,986 | ) | (4,241,734 | ) | ||||
$ | 14,240,727 | $ | 14,604,090 |
Depreciation Expense
totaled $220,576 and $240,909 during the six months ended June 30,
2010 and 2009, respectively.
Long-lived assets: The Company's investment in its residential and commercial property is carried at cost. The Company evaluates the carrying value of its real estate development and other long-lived assets, annually under Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 360, “Plant, Property, and Equipment” and ASC Topic 970 “Real Estate.”
Bad Debt Reserve: The
Company provides an allowance for doubtful accounts equal to estimated
uncollectible amounts. The Company's estimate is based on historical losses,
changes in volume and economic conditions impacting the current
receivables.
There was
no allowance for doubtful accounts recorded for the six months ending
June 30, 2010 and 2009.
Inventory: The
Company's inventory, consisting of food and beverage products and souvenirs, is
stated at the lower of cost or market using the First-In First-Out method to
assign cost. Inventory market values exceeded its cost at June 30,
2010.
Other comprehensive
income: The
Company follows the provisions of ASC Topic 220, “Comprehensive Income.” The
Company had no “other comprehensive income” during either year presented.
Accordingly, comprehensive income is equal to net income at June 30, 2010 and
June 30, 2009.
Pari-mutuel Wagering:
Revenue is derived from acceptance of wagers under a pari-mutuel wagering
system. The Company accepts wagers on both on-site and ITW events. On-site
wagers are accumulated in pools with a portion being returned to winning
bettors, a portion paid to the State of Florida, and a portion retained by the
Company. ITW wagers are also accepted and forwarded to the "host" facility after
retention of the Company's commissions. As of June 30,
2010, and June 30, 2009 the Company's unclaimed
winnings (outs) totaled $211,241 and $270,865,
respectively.
Revenue Recognition::
The Company recognizes revenue from gaming operations in accordance with ASC
Topic 605, “Revenue Recognition,” which requires revenues to be recognized when
realized or realizable and earned. Jai-Alai and inter track mutuel commissions
are recognized immediately upon completion of the event upon which the related
wagers are placed. In general, wagers are placed immediately prior to the event
and are made in cash or other good funds so collectability is not an issue.
Revenues derived from admission, program sales, food and beverage sales, card
room activities, and other revenues are recognized at the time of the
transaction. Revenues from the Company’s real estate operations are recognized
in accordance with ASC Topic 360-20, “Real Estate Sales”, which generally allows
the Company to record all profit on real estate sales at closing unless the down
payment is insufficient to accrue the revenue.
Income Taxes:
The Company utilizes the asset and liability approach to accounting for
income taxes. The objective of the asset and liability method is to establish
deferred tax assets and liabilities for temporary differences between the
financial reporting and the tax bases of the Company’s assets and liabilities at
enacted tax rates expected to be in effect when such amounts are realized or
settled. The effect on deferred tax assets and liabilities of a change in tax
rates is recognized in income in the period that includes the enactment
date.
7
The
Company follows ASC Topic 740, “Income Taxes” regarding accounting for income
tax uncertainties. ASC Topic 740 states that a tax position is recognized as a
benefit only if it is “more likely than not” that the tax position would be
sustained in a tax examination, with a tax examination being presumed to occur.
The amount recognized is the largest amount of tax benefit that is greater than
50% likely of being realized on examination. For tax positions not meeting the
“more likely than not” test, no tax benefit is recorded. The Company maintained
no net tax assets at June 30, 2010 and 2009.
It is the
Company’s policy to recognize interest and/or penalties related to income tax
matters in income tax expense.
The
Company files income tax returns in the U.S. federal jurisdiction. The Company
is no longer subject to U.S. federal income tax examinations by tax authorities
for all years prior to and including 2005.
Income or Loss Per Common
Share: Basic income (loss) per common share is determined by dividing
income (loss), less required dividends declared on preferred shares, and
dividends accumulating on cumulative preferred stock divided by the weighted
average number of shares of common stock outstanding. Diluted income (loss) per
common share is determined by dividing income (loss) by the weighted average
number of shares of common stock outstanding plus the weighted average number of
shares that would be issued upon exercise of dilutive stock options, assuming
proceeds are used to repurchase shares pursuant to the treasury stock method
plus the weighted average number of shares that would be issued if holders of
the Company's preferred stock converted those shares to common stock using the
“if converted” method. Diluted loss per common share is not presented when the
resulting calculation is antidilutive relative to basic loss per common
share.
The net
loss per common share for the quarters ended June 30, 2010 and June 30, 2009
were calculated based upon reducing net loss attributable to common stock
shareholders by dividends declared on preferred stock ($134,758 and $134,843
respectively) by the weighted average number of outstanding shares. The weighted
average number of shares outstanding used in the calculation of basic net loss
per common share for the quarters ended June 30, 2010 and June 30, 2009 was
3,888,959 and 3,888,917, respectively.
The net
loss per common share for the six months ended June 30, 2010 and June 30, 2009
were calculated based upon reducing net loss attributable to common stock
shareholders by dividends declared on preferred stock ($269,515 and $272,975
respectively) by the weighted average number of outstanding shares. The weighted
average number of shares outstanding used in the calculation of basic net loss
per common share for the quarters ended June 30, 2010 and June 30, 2009 was
3,888,959 and 3,834,753, respectively.
Weighted
average shares were not adjusted for common stock equivalence in the
determination of diluted earnings per share for the three or six months ended
June 30, 2010 and June 30, 2009 because the effect would be
antidilutive.
Advertising Costs:
Advertising costs are expensed as incurred.
Stock
Options: The fair value of options and warrants is
determined using the Black-Scholes option pricing model consistent with ASC
Topics 718 and 505-50. The Black-Scholes option pricing model uses
assumptions for inputs including the risk free rate of return, expected
forfeitures, expected volatility, expected term, and expected
dividends. The risk-free rate of return for the option or warrant
life is based on U.S. Treasury zero coupon issues with a remaining term equal to
the expected option term. Expected forfeitures are based on
environmental factors tied to the options and warrants as well as historical
behavior. Expected volatilities are based on historical volatility of
the Company’s stock. Expected terms are generally based on the
options contractual term unless environmental factors reflect that the option
holder would likely exercise their option sooner. There were no
options issued during the three or six months ended June 30,
2010.
During
the three and six months ended June 30, 2010, there were no options exercised,
compared to six months ended June 30, 2009, where 25,000
options were exercised by a director at $3.50 per share,
and 5,000 options were exercised by an officer at $2.25 per share. On
July 11, 2009 the company extended 362,500 options for one year, at $8.25 per
share. The Company recognized total stock based compensation expense of $231,257
during the year 2009.
Shares
|
Weighted-
Average
Exercise Price
|
|||||||
Outstanding,
beginning of year
|
985,625 | $ | 8.97 | |||||
Granted
|
-0- | |||||||
Exercised
|
-0- | |||||||
Forfeited
|
-0- | |||||||
Expired
|
(20,000 | ) | $ | 30.00 | ||||
Outstanding,
at June 30, 2010
|
965,625 | $ | 8.54 | |||||
Options
and warrants exercisable at June 30, 2010
|
965,625 |
8
On July
11, 2010, the Company extended 362,500 options for one year. These
options were due to expire July 11, 2010, with an exercise price of $8.25 per
share. The Company extended these options for one year, with an
expiration date of July 11, 2011, with an exercise price of $8.25 per
share. The Company has recorded the expense for these options
in the third quarter.
Real Estate
Development: The Company's Tara Subsidiary accounts for the cost of lots
sold by dividing the acquisition and development costs by the number of lots
developed.
Compensated Absences:
The Company has not accrued compensated absences for the six months ending June
30, 2010 and 2009 because the amounts cannot be reasonably
estimated.
Subsequent Events:
The Company adopted the provisions of SFAS No. 165, “Subsequent Events” (SFAS
165), during the year ended December 31, 2009. SFAS 165, as
incorporated into ASC Topic 855, establishes general standards of accounting for
and disclosure of events that occur after the balance sheet date and through the
date financial statements are issued. In accordance with ASC Topic
855, the Company evaluated and disclosed all events or transactions that
occurred after June 30, 2010 and through August 16, 2010, the date these
financial statements were issued.
Effect of Implementing
Recently Issued Accounting Standards:
In April
2009, the FASB issued Staff Position (“FSP”) SFAS 157-4, “Determining Fair Value
When the Volume and Level of Activity for the Asset or Liability Have
Significantly Decreased and Identifying Transactions That Are Not Orderly,” which was subsequently
incorporated into ASC Topic 820, “Fair Value Measurements and Disclosures.” This
ASC emphasizes that even if there has been a significant decrease in the volume
and level of activity, the objective of a fair value measurement remains the
same. Fair value is the price that would be received to sell an asset or paid to
transfer a liability in an orderly transaction (that is, not a forced
liquidation or distressed sale) between market participants. The ASC provides a
number of factors to consider when evaluating whether there has been a
significant decrease in the volume and level of activity for an asset or
liability in relation to normal market activity. In addition, when transactions
or quoted prices are not considered orderly, adjustments to those prices based
on the weight of available information may be needed to determine the
appropriate fair value. Topic 820 also requires increased disclosures and was
effective for interim and annual reporting periods ending after June 15, 2009.
The adoption of this statement did not have a material impact on the Company’s
financial statements.
In May
2009, the FASB issued SFAS No. 165 “Subsequent Events.” SFAS No. 165 established
general standards of accounting for disclosure of events that occur after the
balance sheet date but before financial statements are issued or are available
to be issued. The statement sets forth 1) the period after the balance sheet
date during which management of a reporting entity should evaluate events or
transactions that may occur for potential recognition or disclosure in the
financial statements 2) the circumstances under which an entity should recognize
events or transactions occurring after the balance sheet date in its financial
statements 3) the disclosures that an entity should make about events or
transactions that occurred after the balance sheet date. This statement was
effective for interim and annual financial periods ending after June 15, 2009.
The adoption of this statement did not have a material effect on the Company’s
financial statements.
In June
2009, the FASB issued SFAS No. 166 “Accounting for Transfers of Financial
Assets” an amendment of SFAS No. 140, which was subsequently incorporated into
ASC Topic 860. This statement removes the concept of a qualifying
special-purpose entity from SFAS No. 140 and removes the exception from applying
FASB Interpretation No. 46 (revised December 2003), “Consolidation of Variable
Interest Entities”, to qualifying special-purpose entities. SFAS No. 166 also
clarifies that the objective of SFAS No. 140 is to determine whether a
transferor and all of the entities included in the transferor’s financial
statements being presented have surrendered control over transferred financial
assets. This statement modifies the financial-components approach used in SFAS
No. 140 and limits the circumstances in which a financial asset, or portion of a
financial asset, should be derecognized when the transferor has not transferred
the entire original financial asset to an entity that is not consolidated with
the transferor in the financial statements being presented and/or when the
transferor has continuing involvement with the transferred financial asset.
Additionally, SFAS No. 166 defines the term participating interest to
establish specific conditions for reporting a transfer of a portion of a
financial asset as a sale. If the transfer does not meet those conditions, a
transferor should account for the transfer as a sale only if it transfers an
entire financial asset or a group of entire financial assets and surrenders
control over the entire transferred asset(s) in accordance with the conditions
addressed in SFAS No. 140, as amended by SFAS No. 166. The special provisions in
SFAS No. 140 and SFAS No. 65, “Accounting for Certain Mortgage Banking
Activities”, for
guaranteed mortgage securitizations are removed. SFAS No. 166 requires that a
transferor recognize and initially measure at fair value all assets obtained
(including a transferor’s beneficial interest) and liabilities incurred as a
result of a transfer of financial assets accounted for as a sale. Enhanced
disclosures are required to provide financial statement users with greater
transparency about transfers of financial assets and a transferor’s continuing
involvement with transferred financial assets. SFAS No. 166 is effective for
annual reporting periods that begin after November 15, 2009. The adoption of
this statement did not have a material effect on the Company’s financial
statements.
9
In June
2009, the FASB issued SFAS No. 167 “Amendments to FASB Interpretation No.
46(R)”, which was subsequently incorporated into ASC Topic 810. This statement
amends Interpretation 46(R) to require an enterprise to perform an analysis to
determine whether the enterprise’s variable interest or interests give it a
controlling financial interest in a variable interest entity. This analysis
identifies the primary beneficiary of a variable interest entity as the
enterprise that has both of the following characteristics: 1) the power to
direct the activities of a variable interest entity that most significantly
impact the entity’s economic performance 2) the obligation to absorb losses of
the entity that could potentially be significant to the variable interest entity
or the right to receive benefits from the entity that could potentially be
significant to the variable interest entity. Additionally, this statement amends
other technical points in Interpretation 46(R) and enhances disclosures that
will provide users of financial statements with more transparent information
about an enterprise’s involvement in a variable interest entity. SFAS No. 167 is
effective for annual reporting periods that begin after November 15, 2009. The
adoption of this statement did not have a material effect on the Company’s
financial statements.
On June
30, 2009, the FASB issued SFAS No. 168 “The FASB Accounting Standards
Codification (ASC) and the Hierarchy of Generally Accepted Accounting
Principles”. On its effective date, SFAS No. 168 became the source of
authoritative U.S. generally accepted accounting principles (GAAP) recognized by
the FASB to be applied by nongovernmental entities. Rules and interpretive
releases of the Securities and Exchange Commission (SEC) under authority of
federal securities laws are also sources of authoritative GAAP for SEC
registrants. SFAS No. 168 is effective for financial statements issued for
interim and annual periods ending after September 15, 2009 except for nonpublic
nongovernmental entities that have not followed the guidance included in AICPA
Technical Inquiry Service Section 5100. Despite the implementation of SFAS No.
168, the following standards issued by the FASB remained authoritative until
such time that each was integrated into the Codification: SFAS No. 164
“Accounting for Non-Profit Mergers and Acquisitions”, SFAS No. 166, SFAS No.
167, and SFAS No. 168. The adoption of SFAS No. 168 did not have a material
effect on the Company’s financial statements.
In August
2009, the FASB amended ASC Topic 820-10 “Fair Value Measurements and Disclosures
– Measuring Liabilities at Fair Value.” The amendment reduces ambiguity in
measuring the fair value of liabilities by providing that in circumstances in
which a quoted price in an active market for the identical liability is not
available, a reporting entity is required to measure fair value using either a
valuation technique that uses the quoted price of the identical liability when
traded as an asset, the quoted prices for similar liabilities or similar
liabilities when traded as assets, or another valuation technique that is
consistent with the principles of Topic 820 e.g. the income approach using the
present value technique. The amendment was effective for the first reporting
period following its release. The adoption of this amendment did not have a
material effect on the Company’s financial statements.
In
January 2010, the FASB amended ASC Topic 820 “Improving Disclosures about Fair
Value Measurements.” This amendment provides more robust disclosures about (1)
the different classes of assets and liabilities measured at fair value, (2) the
valuation techniques and inputs used, (3) the activity in Level 3 fair value
measurements, and (4) the transfers between Levels 1, 2, and 3. This amendment
was effective for reporting periods beginning after December 15, 2009 with the
exception of disclosures about purchases, sales, issuances, and settlements
relating to Level 3 measurements, which are effective after December 15, 2010.
The adoption of this amendment did not have a material effect on the Company’s
financial statements.
In
February 2010, the FASB amended ASC Topic 855 “Subsequent Events.” This
amendment allows entities which are either 1) SEC filers or 2) conduit bond
obligors for conduit debt securities that are publicly traded to evaluate
subsequent events through the date that their financial statements are issued;
unlike other entities which must evaluate subsequent events through the date
their financial statements are available to be issued. The adoption of this
amendment did not have a material effect on the Company’s financial
statements.
In
July 2010, the FASB issued Accounting Standards Update No. 2010-20,
Receivables (Topic 310): “Disclosures about the Credit Quality of Financing
Receivables and the Allowance for Credit Losses” (“ASC 2010-20”). The amendments
in this update require additional disclosure about the credit quality of
financing receivables, such as aging information and credit quality indicators.
Both new and existing disclosures must be disaggregated by portfolio segment or
class. The disaggregation of information is based on how allowances for credit
losses are developed and how credit exposure is managed. The amendments in this
Update affect all entities with financing receivables, excluding short-term
trade accounts receivable or receivables measured at fair value or lower of cost
or fair value.ASC 2010-20 is effective for interim periods and fiscal years
ending after December 15, 2010. The Company has determined that
the adoption of this standard will not have a material effect on its
consolidated financial statements.
10
(4) REAL
ESTATE HELD FOR SALE
As of
June 30, 2010, the Company's subsidiary, Tara Club Estates, Inc. held six (6)
residential lots at it’s residential real estate development (“Tara”), which are
situated in Loganville, Walton County, Georgia with an aggregate carrying
value of $234,000. The Company carries a valuation reserve in the
amount of $68,569. A provision of $63,500 was made to the reserve
during the fourth quarter 2009 due to the decrease in real estate values in the
area where the property is located. The Company has completed
its development activities at Tara. Accordingly, any future costs
incurred related to these properties will be expensed.
Valuation Reserve
Analysis
6/30/2010
|
6/30/2009
|
|||||||
Balance
at the beginning of the year
|
$ | 68,569 | $ | 5,069 | ||||
Provision
charged to operations
|
-0- | -0- | ||||||
Charge
offs to the reserve
|
-0- | -0- | ||||||
Ending
Balance
|
$ | 68,569 | 5,069 |
The
Company had no real estate sales during the six months ended June 30, 2010 and
June 30, 2009.
(5) TAXES
At
December 31, 2009, the Company had tax net operating loss (NOL) carryforwards of
approximately $20,042,000 available to offset future taxable
income. These NOL carryforwards expire fifteen years from the year in
which the losses were incurred or at various intervals through fiscal
2023.
Effective
July 1, 1998, tax relief legislation was enacted by the State of Florida
stipulating that jai alai permit holders incurring state taxes on handle and
admissions in an amount exceeding its operating earnings (before deduction of
certain expenses such as depreciation and interest) for the prior year are
entitled to credit such excess amounts against pari-mutuel taxes due and
payable. Tax credits are used to satisfy the Company's obligation to pay taxes
incurred on handle and admission. Tax credits used, depreciation expense and
interest expense are all excluded from the statutory calculation of operating
earnings or loss in the determination of the amounts of future tax
credits.
The
Company’s Tampa Jai-Alai Permit (the fronton closed in 1998) retain such tax
credits carried forward totaling $1,362,265. The Company’s Ft. Pierce
facility has not incurred statutory operating losses and therefore has not
earned any state tax credits.
For
the years 2001 through 2009, Miami had unused credits totaling $2,352,201 and
Summer Jai-Alai had $1,220,208 unused credits available for
recovery.
(6) PREFERRED
STOCK
CLASS A PREFERRED
STOCK
The
Company's Class A preferred stock provides annual dividends, at the rate of $.90
per share payable in cash, property or common stock, which are cumulative and
have priority over dividends on the common stock. The Class A preferred is
redeemable at the option to the Company at $10.60 per share. In the event of
dissolution, the holders of Class A preferred shall be entitled to receive
$10.00 per share, plus accrued dividends, prior to any distribution to holders
of common stock. The Company has declared and accrued the required
dividends.
CLASS AA PREFERRED
STOCK
On June
15, 2007 the Company authorized and issued 5,000 shares of its Series AA 7%
cumulative convertible preferred stock to Prides Capital for $1,000 cash per
share for an aggregate of $5,000,000. Each share is convertible into
40 shares of the Company’s $.20 par value common stock. The
stated value per share is $1,000 (as adjusted for stock splits, combinations or
splits). The Company has declared and accrued the required
dividends.
CLASS B PREFERRED
STOCK
The
Company's Series B convertible preferred stock provides annual cumulative
dividends at the rate of 8% to 10% of the consideration paid for the stock. Such
dividends are payable in shares of the Company's common stock. The consideration
received by the Company upon the initial issuance of each share of the Series B
stock was $1,000. Holders of Series B shares may convert all or any of such
Series B shares to the Company's common stock using a ratio based on the
consideration paid for the stock and 80% of the market value of the common
stock. Upon liquidation, the holders of Series B preferred shares shall be
entitled to be paid $1,000 per share plus 8% to 10% accrued dividends before any
distribution to holders of common stock. The Company has declared and
accrued the required dividends.
11
CLASS F PREFERRED
STOCK
The
Company is also authorized to issue up to 2,500 shares of Series F 8% Cumulative
Convertible Preferred Stock (the “Series F Preferred Stock”), which provides
annual dividends at the rate of 8% of the shares' stated value. The stated value
per share equals $1,000 (as adjusted for any stock dividends, combination or
split). At the discretion of the Company's Board of Directors, such dividends
may be paid in shares of the Series F Preferred Stock. Holders of Series F
Preferred Stock may convert all or any of such shares to the Company's common
stock at any time. Each share of Series F Preferred Stock shall be converted
into 148.3345 shares of common stock (the “Conversion Stock”). The number of
shares of Conversion Stock into which each share of Series F Preferred Stock
shall be converted shall be proportionately adjusted for any increase or
decrease in the number of shares of common stock or Series F Preferred Stock.
Upon liquidation, the holders of Series F Preferred Shares shall be entitled to
be paid $1,000 per share plus accrued dividends before any distribution to
holders of common stock. The Company has declared and accrued the
required dividends.
The Class
A Preferred Stock, the Series AA Preferred Stock, the Series B
Preferred Stock, and the Series F Preferred Stock are all equal in rank with
respect to the payment of dividends and with respect to the distribution of
assets upon liquidation of the Company.
(7) COMMITMENTS
AND CONTINGENCIES
Miami Dade County. On January 6, 2009,
the Company agreed to acquire a total of 10.982 acres of property from
Miami-Dade County and sell .492 acres and a right-of-way to the county to be
used by the Miami-Dade Metro Rail, an overhead light rail system. The
total purchase price of the 10.982 acres was $16,742,145. The Company agreed to
exchange the .492 acres and easement valued at $1,014,300, plus
cash of $1,572,785, and a 15-year, 7 ¼% fixed rate interest note in the amount
of $14,155,060 for the 10.982 acres of land. The Company also
received air-rights from Miami-Dade County over N.W. 37th Avenue
which separates the two parcels. The phase two purchase of the
approximately 8.7 remaining acres for $13,393,716 was to close no later than 60
days after the United States Corps of Engineers releases the property
free and clear of environmental contamination or July 1, 2010, whichever is
later. Miami-Dade County and the Company mutually agreed to amend the
Settlement Agreement so that the Final Closing shall occur not later than 60
days from such release and compliance or October 28, 2011, whichever
is later. Prior to the second closing, a resolution will be presented
to the Board of Miami-Dade County Commissioners (Board) to close part of N.W.
37th
Avenue. If the Board votes to close the road and the
County decides to expand N.W. 36th Avenue
within 36 months of the vote, the Company shall pay the cost of design, land
acquisition and construction for said N.W. 36th Avenue
road expansion as well as any required utility relocations with the total paid
by the Company not to exceed $5,700,000. Upon conclusion of
these actions Miami Jai-Alai’s casino footprint will effectively grow from the
present 8.9 acres to approximately 20 acres, thereby accommodating any potential
future build-out. This will also allow Miami Jai-Alai to virtually enclose its
casino area and provide a controlled, safe and well illuminated
facility.
Registration Rights:
The Company has committed upon certain terms and conditions, to use its best
efforts to register for resale, certain shares held by other parties, allowing
those shares to be publicly traded. The Company intends to use reasonable
efforts to comply with these commitments.
Leases: The Company leased totalizator
equipment from Scientific Games Corp. at each fronton under leases
which expired October 31, 2008, but are subsequently being leased on a month-
to- month basis. The leases required minimum annual rental at the Miami and Ft.
Pierce locations. Transmission of the Miami Jai-Alai signal requires the use of
a satellite uplink simulcasting service which requires a fee of $500 per
performance. Total totalizator rental expense and other equipment rental under
operating leases for the years ended December 31, 2009 and 2008 was
approximately $386,000 and $388,000, respectively.
The
Company leased parking facilities adjacent to the Miami fronton. Lease payments
totaled $34,000 in 2009, with the lease concluding with the purchase of the
underlying property.
Litigation Costs:
Legal fees for settlement costs and fees associated with various lawsuits
incurred in the normal course of the Company's business activities are included
in General & Administrative expenses in the accompanying Statements of
Operations.
Collective Bargaining
Agreement: The Company is a party to a collective bargaining agreement
with the International Jai Alai Players Association U.A.W. Local 8868, AFL-CIO.
The agreement allows the Company to negotiate individual contracts with players
and provides for minimum salaries and bonuses based on pari-mutuel handle,
certain cesta allowances and retirement benefits. The agreement continues from
year to year unless timely notice of termination is given by either party to the
agreement.
12
Concentration of
Deposits: The Company maintains significant cash balances with financial
institutions in excess of the insurance provided by the Federal Deposit
Insurance Corporation (FDIC).
Letter of
Credits: The Company has letters of credit in favor of its
bonding company totaling $300,000. These letters of credit are
secured by cash on deposit on an equal amount.
Dependence
on One Vendor: The Company
depends on Scientific Games Corp. (Scientific), a leading supplier of
pari-mutuel wagering systems, to provide the computer systems that accumulate
wagers, record sales, calculate payoffs and display wagering data accurately and
in a secure manner. If Scientific failed to properly maintain
their computer systems and software it could affect the security of wagering and
the Company’s ability to serve its customers. In addition, the Company is
currently past due on monthly payments required by its contract with Scientific
which could result in the termination of Scientific’s services to the
Company.
Summer Jai Alai: In conjunction with the
acquisition of WJA’s Frontons, the Company acquired WJA’s 21% interest in the
Summer Jai-Alai, Partnership (the “Partnership”), a Florida general partnership
formed in 1980 with three other pari-mutuel permit holders for the purpose of
conducting pari-mutuel jai-alai operations at the Miami fronton during the six
months between May 1 to October 31 (“Summer Jai-Alai
Operations”). The Company’s partners were Hollywood Greyhound,
Flagler Greyhound and Biscayne Kennel Club or their successors. The
Company’s interest in the Partnership was accounted for under the equity method
and had a carrying value of $92,491 at June 30, 2010 and 2009.
Pursuant
to the settlement of certain partnership disputes, since the 1998 season the
Company operated the Partnership at its own risk and for its own benefit under
annual agreements which required fixed payments to each of the
partners. The agreement authorizing the Company’s use of the Summer
Jai-Alai permit (the “Permit”) between June 30, 2002 and June 30, 2004 required
a fee of $345,000 payable monthly in 12 equal installments. The
Company agreed to hold its partners harmless for any and all losses or
liabilities incurred through June 30, 2004. After June 30, 2004, the
permit agreement terminated and the previous partnership agreement became the
controlling document for the operation of the Partnership by the
parties. The Partnership had a loss of $202,227 for its 2004 summer
season. The Company entered into a dispute to recover $98,608 from
its partners for their allocable shares of the loss after June 30,
2004.
The
Company also took the position in the dispute with its partners that effective
October 31, 2004 the Partnership terminated and subsequent to December 31, 2004
the Company has operated the Summer Jai-Alai Operations for its own benefit as a
division of the Company. In this connection the Company assumed
certain operating payables and receivables of the Partnership which resulted in
the Company carrying a receivable from the Partnership of $255,509 at December
31, 2006. During 2007, a settlement was reached between the Company
and its partners. The Company forgave its $255,509 receivable from
the Partnership and its $98,608 receivable from its partners. The
settlement provides the Partnership will continue as a going concern with the
Company a 21% owner, West Flagler Associates LTD a 52% owner, and BKCLP 2 LTD a
27% owner. The Partnership owns the Permit and under a Permit Use
Agreement (the “PUA”) between the Company and the Partnership, the Company has
the exclusive right to conduct gaming operations under the Permit. The Company
derives all revenue, and is responsible for all expenses, from such gaming
operations. In addition, the Company must assure that the holder of
the Permit remains authorized to conduct all activities that Florida law
authorizes under the Permit, based on the law in effect at any particular
time. The Company may terminate the PUA if the requirement to keep it
valid imposes a material burden on the Company. West Flagler and
BKCLP may terminate the PUA if they jointly elect to do so. If the
PUA is terminated (and, thus the Permit’s use reverts to the Partnership) the
Partnership does not have the right to conduct activities at the Company’s
fronton. The Company, West Flagler and BKCLP entered into an Amended
and Restated Partnership Agreement for the Summer Jai-Alai Partnership and
except for the following put/call rights, all actions of the Partnership require
unanimous approval of the three Partners. The Partnership contains
mandatory put/call rights which take effect if (1) the PUA is terminated by the
Company, (2) the PUA is terminated by West Flagler and BKCLP, or (3) any two
partners deliver to the third partner a notice of election to trigger the
put/call. Under the put/call rights, the party(ies) triggering the
put/call must offer to sell to the other partner(s) its interest at a stated
price. The other partners may either buy the interest at that price,
or sell their interests to the triggering partner at that price. Each
partner must give the other partners 45 days advance notice of a “Change of
Control” – which is a change of ownership of more that 40% of the partner’s
equity and, in the case of the Company, a sale by its Chairman and his
affiliates of more than 50% of their stock in the Company.
In
accordance with the settlement, all revenues and expenses of the Summer Jai-Alai
Operations are included in operating income and expenses of the Company in the
accompanying Statements of Operations.
(8)
ACQUISITION OF WJA ASSETS
Florida
Gaming Corporation (“FGC” or the “Company”), was incorporated in the state of
Delaware in 1976 as Lexicon Corporation (“Lexicon”). In 1993, Lexicon sold
699,480 shares of common stock to Freedom Financial Corporation ("Freedom") and
a new board of directors was elected, and present management assumed control of
Lexicon. The acquisition of the Ft. Pierce Fronton (“Ft. Pierce”) was
consummated in February, 1994 following receipt of the approval from the Florida
Department of Business Regulation on that date. Following the purchase of
Ft. Pierce the Company, changed its’ name to Florida Gaming Corporation on
March 17, 1994. On January 1, 1997, the Company purchased the Jai-Alai
Facilities at Ocala, Tampa, and Miami, Florida. The Company
also entered into the real estate development business in 1997. The Company’s
stock is traded on the over-the-counter bulletin board under the stock symbol
“FGMG”. The Company’s principal place of business and executive offices are
located at 3500 N.W. 37th Avenue, Miami, FL 33142.
13
On
September 4, 1998, the Company sold the Tampa Jai-Alai property. The sale did
not include the Company's gaming permit which remains available for future use
in Hillsborough County, Florida. On July 31, 2000, the Company sold the Ocala
Jai-Alai. In March, 2006, the Company sold approximately 79 acres of
investment real estate located adjacent to its' Jai-alai facility in Fort
Pierce, Florida.
(9)
NOTES
Isle of
Capri Casinos, Inc. On October 29,2004,
the Company borrowed $5 million from Isle of Capri Casinos, Inc.
(“Isle”), a Delaware corporation, pursuant to a Secured Promissory Note
(the "Note") which matured on December 31, 2008. On December 31,
2008, the Company paid $2,000,000 on the original note and issued a
new note and mortgage for $3,000,000 to Isle. The new Note for
$3,000,000 was due December 31, 2009, bears interest at the rate of
ten percent (10%) per annum, and is secured by a first mortgage on
the Ft. Pierce Jai-Alai facility which is located on 37 acres owned by the
Company. The Company failed to make the payment on the Note and the Company
is currently in default. The default interest accrues at
18%. On March 1, 2010 the Company and Centers were served with a
complaint by Isle (“See Item 1. Legal Proceedings” and Form 8-K dated March 1,
2010). On March 19, 2010 the Company and Centers were served
with a second complaint by Isle seeking foreclosure on the mortgage granted to
Isle on the property located in Ft. Pierce, FL, and all buildings, structures,
and fixtures and improvements thereon (See Item 1. Legal Proceedings and
Form 8-K dated March 19, 2010)
Nurmi
Properties, LLC. Florida Gaming
Corporation, a Delaware corporation, and its wholly-owned subsidiary Florida
Gaming Centers, Inc., a Florida corporation (collectively, the “Company”),
borrowed Five Hundred Thousand Dollars ($500,000) from Nurmi Properties, LLC, a
Delaware limited liability company, and Robinette Investments, LLC, a Florida
limited liability company (collectively, the “Lenders”) pursuant to a Promissory
Note and a Mortgage and Security Agreement (the “Original Note and
Mortgage”). On February 4, 2010, the Company borrowed an additional
One Hundred Fifty Thousand Dollars ($150,000) from the Lenders pursuant to a
Note and Mortgage Modification (the “First Modification”) among the Company and
the Lenders. Under the First Modification, the Original Note and
Mortgage were modified such that the total amount due to the Lenders under the
Original Note and Mortgage became $650,000 rather than $500,000. On March 8,
2010, the Company borrowed an additional One Hundred Fifty Thousand Dollars
($150,000) from the Lenders pursuant to a Note and Mortgage Modification (the
“Second Modification”) among the Company and the Lenders. Under the
Second Modification, the Original Note and Mortgage were modified such that the
total amount due to the Lenders under the Original Note and Mortgage became
$800,000 rather than $650,000. On March 25, 2010, the Company borrowed an
additional Thirty Five Thousand Dollars ($35,000) from the Lenders pursuant to a
Note and Mortgage Modification (the “Third Modification”) among the Company and
the Lenders, dated March 23, 2010. Under the Third Modification, the Original
Note and Mortgage were modified such that the total amount due to the Lenders
under the Original Note and Mortgage became $835,000 rather than $800,000. On
April 16th, 2010,
the Company borrowed an additional Seventy-Five Thousand Dollars ($75,000) from
the Lenders pursuant to a Note and Mortgage Modification (the “Fourth
Modification”) among the Company and the Lenders. Under the Fourth
Modification, the Original Note and Mortgage became $910,000 rather than
$835,000. On June 2, 2010, the Company borrowed an additional Seventy
Five Thousand Dollars ($75,000) from the Lenders pursuant to a Note and Mortgage
Modification (the “Fifth Modification”), among the Company and the
Lenders. Under the Fifth Modification (“the Fifth Modification”) the
Original Note and Mortgage became $985,000 rather than $910,000. (See Form 8-K
filed June 8, 2010).
H2C
Note. On February 4, 2010, the Company borrowed
Ninety Thousand Dollars ($90,000) from H2C, Inc. (“H2C”) pursuant to a
Promissory Note between the Company and H2C dated February 4, 2010 (the “H2C
Note”). The original outstanding principal amount, plus accrued but
unpaid interest thereon, was payable in ten equal monthly installments
commencing March 1, 2010. On April 28, 2010, Florida Gaming
Corporation (the “Company”) entered into a Promissory Note and Mortgage
(collectively, the “Agreements”) with H2C, Inc. (the “Lender”) pursuant to which
the Lender advanced to the Registrant two hundred fifty thousand dollars
($250,000) (the “Advance”). $82,156 of the Advance was used to pay to
the Lender all outstanding principal and accrued interest due to the Lender
pursuant to a Promissory Note of the Company dated February 4,
2010. Under the Agreements, the outstanding principal amount of the
Advance bears interest at an annual rate of ten percent (10%).
Accrued interest is payable to the Lender in monthly installments of
$2,083, with a balloon payment of the outstanding principal amount of the
Advance and all accrued but unpaid interest due on December 31,
2010. The Company’s obligations under the Note are secured by a first
mortgage in the Lender’s favor with respect to 18 acres of unimproved real
property in St. Lucie County in the state of Florida. If any amount due
under the Note is not paid when due, the Lender is entitled to a late fee of ten
percent of the delinquent amount. For further information refer to 8-K filed May
4, 2010.
14
On July
1, 2010, the Company entered into a Promissory Note and
Mortgage pursuant to which the Lender advanced to the Registrant
fifty thousand dollars ($50,000) (the “Advance”). Under the
Agreements, the outstanding principal amount of the Advance bears interest at an
annual rate of ten percent (10%). Accrued interest is payable to the
Lender in five monthly installments of $416.66, with a balloon payment of the
outstanding principal amount of the Advance and all accrued but unpaid interest
due on December 31, 2010. The Company’s obligations under the Note
are secured by a first mortgage (the “Mortgage”) in the Lender’s favor with
respect to with respect to 18 acres of unimproved real property in St.
Lucie County in the state of Florida. No prepayments are permitted
under the Note. For further information refer to Form 8-K filed July
8, 2010.
CIB Bank/Freedom/Holding
Note
On October 31, 2005 Freedom Financial
Corporation (“Freedom”) purchased Florida Gaming’s note with First
Bank (formerly CIB) for $2,400,000. At the same date, Florida Gaming
renegotiated the terms of this note with Freedom. Under the new terms, the note
had a fixed interest rate of 8.0% per annum and was secured by various
mortgages, rents, and receivables. The note matured on October 31, 2008 and was
refinanced under a new note with Freedom Holding Inc.
(“Holding”). On November 1, 2008, Florida Gaming Centers, Inc.
(“FGC”), a wholly-owned subsidiary of the Company, borrowed One Million Three
Hundred Twenty-Two Thousand Five Hundred and Seventy-Four Dollars ($1,322,574)
(the “Principal Amount”) from Holding, which was evidenced by FGC’s Promissory
Note in favor of Holding dated November 1, 2008 (the “Original
Note”). Holding
is controlled by the Company’s CEO/Chairman and the President
maintains ownership in Holding. The Note was accounted for as a
debt refinance. The Holding note is unsecured, bears interest at
10.0% per annum, and had an initial maturity date of May 1, 2009. The note was
refinanced on May 1, 2009, again on September 1, 2009 and March 1, 2010 with
maturity extended until September 1, 2010 (See Item 10. Related Party
Transactions).
West Flagler/Calder
Note
On
January 20, 2005, the Miami-Dade Board of County Commissioners called a
countywide special election to be held by Miami-Dade County on March 8, 2005,
(the “Special Election”) for the purpose of submitting to the qualified electors
of Miami-Dade County the question of whether to authorize slot machines in
certain existing, licensed pari-mutuel facilities. Florida Gaming agreed to
enter into certain agreements with Miami-Dade County, which mandated a
prepayment of $1,333,333 by Florida Gaming to Miami-Dade. Florida Gaming paid
$500,000 of this prepayment in 2005 and signed a note payable to Calder Race
Course, Inc. and West Flagler Associated, LTD, who paid the remaining $833,333
on Florida Gaming’s behalf. Payment of neither the note’s principal nor interest
was due until the authorization by the qualified electors of Miami-Dade County
of the operation of slot machines at Miami Jai-Alai (the “Event”). The Event
failed to occur on March 8, 2005 but did occur in a subsequent election on
January 29, 2008. Florida Gaming made its first payment on the note within ten
days following the Event. The note bears interest at the prime lending rate plus
4% and is due in thirty-six installments of $23,145 plus all interest
accrued. The Company failed to make payments on the note after July
1, 2009 and on December 23, 2009, Centers was served with a summons
and complaint from West Flagler Associated, Ltd. and Calder Race Course,
Inc.(See Item 1. Legal Proceedings).
James W. Stuckert and
Solomon O. Howell Notes
On August
14, 2009, Florida Gaming Corporation (the “Registrant”) entered into a
Memorandum of Agreement (the “Agreement”) with Solomon O. Howell (“Howell”) and
James W. Stuckert (“Stuckert,” and collectively with Howell, the “Lenders”)
pursuant to which the Lenders may advance cash (each an “Advance”, and
collectively the “Advances”) to the Company up to a maximum aggregate amount of
one million dollars ($1,000,000). The advances to the Company were
$1,000,000 evidenced by eight separate notes with a maturity date of December
31, 2009. On October 7, 2009, the Registrant and the Lenders amended
the Agreement to require the Company to issue to each of the Lenders
warrants to acquire up to 20,000 shares of the Registrant’s common stock at a
price of $6.00 per share. Such warrants expire on October 7,
2012. The Company incurred $39,451 of cost related to the issuance of
the warrants. These costs were amortized into expense over
the remaining term of the related Notes from October 7, 2009 through December
31, 2009. The Notes also included a convertible feature allowing the
lenders, at their option to convert outstanding principal and any accrued but
unpaid interest into the Company’s $0.20 par value common stock. The
value of this conversion feature to the Company was $138,204, this
value was initially recorded as a discount on notes payable and then amortized
over the life of the Notes, which ended December 31, 2009. The Company is
currently in default on this Note. As of the date of this
filing, Mr. Stuckert and Mr. Howell have not informed the Company of
any default.
Miami Dade
County
On April
6, 2009, the Company completed Phase 1 of its two-phase acquisition of the
10.982 acres of property from the County. Phase 1 included the closing of the
purchase of approximately 2.283 acres from the County for $3,348,429, including
a down payment of $334,843 and a County financed note payable of $3,013,586 for
15 years with final payment due April 1, 2024, with a fixed interest rate of
7.25%. The Note is secured by the purchased property pursuant to a mortgage and
security agreement between the Company and the County. The Company also received
air-rights over N.W. 37th Avenue,
a street separating the two properties. Closing of Phase 2 of the transaction
for the remaining approximately 8.7 acres was scheduled to take place prior to
July 1, 2010. Miami Dade County and the Company agreed to amend
the Settlement Agreement so that the Final Closing shall occur no later than 60
days from the date the US Corps of Engineers clears the property free and clear
of environmental contamination or October 28, 2011, whichever is
later.
15
Lawsuit
settlement
On
February 22, 2009 the Company executed a note payable to a party in settlement
of a lawsuit. The $200,000 note is unsecured and bears interest at
7.0%. Payments of interest is paid monthly with all
remaining unpaid principal and interest due February 1, 2011.
Hamilton State
Bank
The
Company had a mortgage note payable on one of the 6 lots at Tara Club Estates in
Georgia. The note matured on November 17, 2009. The
Company failed to repay the note at this time and the lender has refused to
extend the note. The $38,368 note plus interest is currently in
default.
(10) RETIREMENT
PLAN
The
Company provides defined contribution retirement plans under Internal Revenue
Code Section 401(k). The plans, which cover employees included in its current
Collective Bargaining Agreement and certain non-union employees, provide for the
deferral of salary and employer matching.
(11) RELATED
PARTY TRANSACTIONS
Management
fees. In lieu of
salaries for the Chairman/CEO, the Company accrues management fees to Freedom
Financial Corporation (“Freedom”) of $780,000 per year. Freedom is
controlled by the Company’s Chairman/CEO and the Company’s President also
maintains ownership in Freedom. The Company accrued management fees
of $780,000 during the year ended December 31, 2009 and the Company has accrued
management fees of $390,000 for the six months ended June 30, 2010.
CIB
Bank/Freedom Note
On
October 31, 2005 Freedom purchased Centers First Bank (formerly CIB) loan
for $2,400,000. First Bank assigned, without recourse, the note
representing the loan as well as the mortgages, rents, and receivables securing
the loan to Freedom, but retained the right to elect between receiving a
$250,000 deferred fee or exercising warrants to purchase 102,115 shares of the
Registrant's common stock in connection with the loan. First Bank exercised all
warrants in 2006. Effective October 31, 2005, Freedom and Centers entered into
an Amended and Restated Loan Agreement and a Third Amended and Restated
Note in the principal amount of $2,400,000 with an 8% fixed rate of interest. On
October 31, 2008, Centers note payable to Freedom matured and was subsequently
refinanced with a $1,322,574 note payable issued November 1, 2008 to Freedom
Holding, Inc. ("Holding"). Holding is controlled by the Company’s
CEO/Chairman and the President maintains ownership in Holding. The
Holding note is unsecured and bears interest at a fixed rate of 10%, with all
principal and interest originally due May 1, 2009. The Note has
subsequently been renewed through September 1, 2010 (refer to 8-K filed March 5,
2010). As an inducement to refinance the note, the Company
issued Holding a warrant to purchase 20,000 shares of the Company's $0.20 par
value common stock at a price per share of $8.25. The warrant is exercisable at
any time from November 1, 2008 through November 1, 2011.
As of
June 30, 2010 Freedom has a receivable due from the Company of
$388,226.
This Form
10-Q may contain 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, as amended. Such statements are identified by
words such as “anticipate,” “believe,” “estimate,” “expect,” “intend,”
“predict,” “project,” and similar expressions. When the Company makes
forward-looking statements, it is basing them on management’s beliefs and
assumptions, using information currently available. These forward-looking
statements are subject to risks, uncertainties and assumptions, including but
not limited to, risks, uncertainties and assumptions related to the
following:
·
|
changes in legislation; |
·
|
federal
and state regulations;
|
·
|
general
economic conditions;
|
·
|
competitive
factors and pricing pressures;
|
·
|
dependence
on the services of key personnel;
|
·
|
interest
rates;
|
·
|
risks
associated with acquisitions;
|
·
|
uncertainties
associated with possible
hurricanes;
|
·
|
and
uncertainties related to the State of Florida negotiations with the
American Indian tribes who operate
casinos.
|
16
If one or
more of these or other risks or uncertainties materialize, or if the underlying
assumptions prove to be incorrect, actual results may vary materially from those
anticipated. Any forward-looking statements in this Form 10-Q or the documents
incorporated herein by reference reflect management’s current views with respect
to future events and are subject to these and other risks, uncertainties and
assumptions relating to the Company’s operations, results of operations, growth
strategy and liquidity. The factors specifically consider the factors identified
in the Company’s Form 10-K including under the caption “Risk Factors”
should be considered.
References
to “we”, “us”, “our”, “the registrant”, “Florida Gaming ” and “the Company” in
this quarterly report on Form 10Q shall mean or refer to Florida
Gaming Corporation, unless the context in which those words are used would
indicate a different meaning.
Florida
Gaming Corporation (the "Company") currently owns and operates two jai-alai and
inter-track pari-mutuel wagering facilities (each, a "Fronton," and
collectively, the "Frontons") located in Miami and Central Coastal Florida (“Ft.
Pierce”). The Company's business consists primarily of its operations
at the Frontons, which include, among other things, live jai-alai games, poker,
dominoes, inter-track pari-mutuel wagering ("ITW") on jai-alai, thoroughbred
racing, harness racing, and dog racing, and the sale of food and alcoholic
beverages. Poker is played at the Miami Jai-Alai
and Ft. Pierce Jai-Alai, and dominoes are played at the Miami
Jai-Alai Card Room. The Company also owns a third
gaming permit which was previously operated by the Company at the Tampa Jai-Alai
Fronton in Hillsborough County (Tampa) Florida.
The term
"pari-mutuel wagering," which refers to the betting by members of the public
against each other, as used in this report includes wagering on both live
Jai-Alai performances and ITW.
The
Company's Ft. Pierce location provides audio, video and Inter-Track Wagering
(“ITW”) on live inter-track and interstate telecasting of horse racing, dog
racing and jai-alai from the State of Florida as well as the rest of the
country. The Miami location receives limited ITW telecasts, but telecasts its
jai-alai performances via satellite to approximately sixty-two (62) other gaming
facilities in Florida, Connecticut, Rhode Island, and to approximately 25
locations in Mexico, Central America, and Austria. ITW provides about
50% of the Company's revenue as well as providing additional entertainment for
customers.
Critical Accounting
Estimates
The
Company's Condensed Consolidated Financial Statements have been prepared in
accordance with accounting principles generally accepted in the United States of
America. The preparation of these financial statements requires the Company to
make estimates and judgments, and select from a range of possible estimates and
assumptions, that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amount of revenues and expenses during the reported
period.
On an
on-going basis, the Company evaluates its estimates, including those related to
allowances for doubtful accounts, accounts receivable, inventory allowances,
asset lives, the recoverability of other long-lived assets, including property
and equipment, goodwill and other intangible assets, the realization of deferred
income tax assets, remediation, litigation, income tax and other contingencies.
The Company bases its estimates and judgments, to varying degrees, on historical
experience, advice of external specialists and various other factors it believes
to be prudent under the circumstances. Actual results may differ from previously
estimated amounts and such estimates, assumptions and judgments are regularly
subject to revision.
The
policies and estimates discussed below are considered by management to be
critical to an understanding of the Company's financial statements because their
application requires the most significant judgments from management in
estimating matters for financial reporting that are inherently
uncertain.
The
Company presents accounts receivable, net of allowances for doubtful accounts,
to ensure accounts receivable are not overstated due to uncollectibility. The
allowances are calculated based on detailed review of certain individual
customer accounts, historical rates and an assessment of the overall economic
conditions as well as the aging of the accounts receivable. In the event that
the receivables become uncollectible after exhausting all available means of
collection, the company will be forced to record additional adjustments to
receivables to reflect the amounts at net realizable value. The effect of this
entry would be a charge to income, thereby reducing its net profit. Although the
company considers the likelihood of this occurrence to be remote, based on past
history and the current status of it’s accounts, there is a possibility of this
occurrence.
17
The
Company provides an allowance for doubtful accounts equal to estimated
uncollectible amounts. The Company's estimate is based on a review of the
current status of receivables. The Company had no allowance for doubtful
accounts for the six months ended June 30, 2010 and June 30, 2009.
In
connection with losses incurred from natural disasters, insurance proceeds are
collected on existing business interruption and property and casualty insurance
policies. When losses are sustained in one period and the amounts to be
recovered are collected in a subsequent period, management uses estimates to
determine the amounts that it believes will be collected. So far the
Company’s estimates have proved to be reasonable. The Company
evaluates the carrying value of its real estate development and other long-lived
assets, annually under Financial Accounting Standards Board (FASB) Accounting
Standards Codification (ASC) Topic 360, “Plant, Property, and Equipment” and ASC
Topic 970 “Real Estate.”
In
accordance with ASC Topic 970, the Company periodically provides for losses on
its property held for sale. Generally, when events or changes in circumstances
indicate that the carrying amount of long-lived assets, including property and
equipment and intangible assets, may not be recoverable, the Company undertakes
an evaluation of the assets or asset group. If this evaluation indicates that
the carrying amount of the asset or asset group is not recoverable, the amount
of the impairment would typically be calculated by using appraised values of the
property. All relevant factors are considered in determining whether an
impairment exists. The Company reviews for impairment annually and has found
this to be very effective. There has been no additional provision for
losses for the six months ending June 30, 2010.
Revenue
is derived from acceptance of wagers under a pari-mutuel wagering system. The
Company accepts wagers on both on-site and ITW events. On-site wagers are
accumulated in pools with a portion being returned to winning bettors, a portion
paid to the State of Florida, and a portion retained by the Company. ITW wagers
are also accepted and forwarded to the "host" facility after retention of the
Company's commissions. The Company recognizes revenue from gaming operations in
accordance with ASC Topic 605 which requires revenues to be recognized when
realized or realizable and earned. Revenues derived from gaming operations
including: mutuel, admission, program, food and beverage, card room, and other
revenues are collected shortly before the earning events take place. The
Company recognizes revenues from the Company's real estate operations in
accordance with ASC Topic 360-20, and sales are generally recognized when
consummated , which is upon the closing of the sale, unless the down payment is
insufficient to accrue the revenue.
The
Company's policy for unclaimed winning tickets follows the requirements as set
forth by the State of Florida. Abandoned tickets are winning tickets that remain
uncashed for a period of one year. The value of the abandoned tickets escheat to
the state. These funds are deposited into the State School Fund for support and
maintenance of Florida's public schools. During the first six months
of 2010, unclaimed winnings totaled $211,241.
Competition
The
gaming industry is highly competitive. Many gaming companies have substantially
greater financial resources and larger management staffs than the Company.
Because of the growing popularity and profitability of gaming activities,
competition is significantly increasing. The Company competes for customers with
other forms of legal wagering, including video poker gaming in non-casino
facilities, charitable gaming, pari-mutuel wagering, state lotteries, Indian
casinos, and cruise ships.
Further
expansion of gaming opportunities not related to the pari-mutuel industry could
also significantly and adversely affect the Company's business. In particular,
the expansion of casino gaming in Miami-Dade and Broward
Counties which is near the geographic areas from which the Company
attracts or expects to attract a significant number of its customers could have
a material adverse effect on the Company's business. The Company expects that it
will experience significant competition as the emerging casino industry matures.
The Company is now competing with Calder Casino, a slot facility in Florida
adjacent to Calder Race Course, which opened on January 22, 2010 with
approximately 1,200 slot machines. Additionally, a poker room operation opened
at Calder Casino on October 23, 2009 and Flagler Dog Track reopened in
October 2009 as Magic City Casino with 700 Las Vegas-style slot
machines.
The
Company also faces competition from gaming companies that operate on-line and
Internet-based gaming services. These services allow patrons to wager from home
on a wide variety of sporting events. Unlike most on-line and Internet-based
gaming, companies, the Company may require significant and ongoing capital
expenditures for both its continued operation and expansion. The Company also
could face increased costs in operating business compared to these gaming
companies. The Company cannot offer the same number of gaming options as on-line
and Internet-based gaming companies. In addition, many on-line and Internet
gaming companies are based off-shore and avoid regulation under state and
federal laws. These companies may divert wagering dollars from legitimate
wagering venues. Competition in the gaming industry is likely to increase due to
limited opportunities for growth in new markets. The Company's inability to
compete successfully with these competitors could have a material, adverse
affect on its business.
18
Jai-Alai
Industry
The
jai-alai industry live handle (money wagered) generally has declined in the last
several years, due to increased gaming competition such as casino gaming in
Broward and Miami-Dade County, Indian Casino Gaming, gambling
cruise ships, and the State of Florida lottery. Also, competition in the
sports/entertainment area has increased significantly due to more professional
sports teams in the Company's market areas. There can be no assurance that the
jai-alai industry will improve significantly, if at all, in the future. Because
the Company's jai-alai business is tied directly to many, if not all, of the
factors which influence the jai-alai industry as a whole, a players strike or
the enactment of unfavorable legislation could have an adverse impact on the
Company's operations.
All
Florida permit-holders are authorized to engage in Inter-Track Wagering
(“ITW”) year-round, subject to certain restrictions, all of which are
not discussed herein. ITW is permitted on thoroughbred racing, harness racing,
dog racing, and jai-alai. ITW is permitted at a pari-mutuel facility so long as
at least one facility in Florida is providing live pari-mutuel performances on
any such day that ITW is offered.
Pursuant
to the statute and subject to certain restrictions, Florida jai-alai frontons
and dog racing tracks may receive broadcasts of dog races or jai-alai games
conducted at tracks or frontons located outside of Florida ("out-of-state host
facilities"). Among the restrictions applicable to such broadcasts, however, are
the following: (1) that the receipt of out-of-state broadcasts by the Florida
fronton or dog racing track (the "Florida guest facility") only be permitted
during the Florida guest facility's operational meeting, (2) in order for the
Florida guest facility to receive such broadcasts, the out-of-state host
facility must hold the same type of class of pari-mutuel permit as the Florida
guest facility, i.e., horse to horse, jai-alai to jai-alai, etc., (3) the guest
facilities may not accept wagers on out-of-state races or games that exceed 20%
of the total races or games on which wagers are accepted live. All wagering
placed on out-of-state ITW broadcasts is included in the amount taxed pursuant
to the Pari-Mutuel Law.
Each of
the Frontons, as a guest facility when it participates in ITW, is entitled by
statute to a minimum of 7% of the total contributions to the pari-mutuel pool
when the ITW broadcast is by a host horse racing facility. Each of the Frontons
is eligible by statute to receive a minimum of 5% of the total contributions to
the pari-mutuel pool when the ITW broadcast is by facilities other than horse
racing facilities (greyhound and jai-alai). In addition, each of the Frontons is
authorized to receive admissions and program revenue when conducting
ITW.
Card Room & Dominoes Development
A new
Florida pari-mutuel statute was enacted July 1, 2007 allowing card rooms at
licensed pari-mutuel facilities to add the game of dominoes, increase the
maximum wager on poker, and permit year round operation of card rooms. Card
rooms are regulated by the Florida Division of Pari-Mutuel Wagering
(“DPMW)”. Permitted games are limited to non-banked poker games and
dominoes. On June 5, 2007, the St. Lucie County commission approved a
card room at the Company’s Ft. Pierce Jai-Alai
facility. The Ft. Pierce card room opened April 28, 2008 and the new
rules also applied to the Ft. Pierce facility.
There
have been some positive changes in the new legislation:
1.
|
Card
rooms may operate on any day for a cumulative amount of 12
hours;
|
2.
|
“Authorized
games” means a game or series of games of poker or
dominoes;
|
3.
|
“Tournament”
means a series of games that have more than one betting round involving
one or more tables and where the winners or others receive a prize or cash
award;
|
4.
|
Card
room operators may award giveaways, jackpots, and prizes to a player who
holds certain combinations of cards specified by the card room
operator;
|
5.
|
Card
rooms maximum bet may not exceed $5 in value. There may not be
more than three raises in any round of
betting;
|
6.
|
Card
rooms may conduct games of Texas Hold-Em’s with a betting limit if the
required player buy-in is not more than
$100.
|
Florida
state taxes are 10% of revenue and 4% of the revenues are paid to the jai-alai
players. The Company is encouraged with the recent changes to the card room
rules and the addition of dominoes and believes these changes should
improve the overall profitability of the card room operations.
Development of Slot
Machines
On
January 29, 2008, residents of Miami-Dade County passed a referendum that
would allow Miami Jai-Alai, Calder Race Course, and Flagler Dog Track, to
install up to 2,000 slot machines. The other two facilities in
Dade County have recently opened and the Company is now competing with Calder
Casino, a slot facility in Florida adjacent to Calder Race Course, which opened
on January 22, 2010 with approximately 1,200 slot machines. Additionally, a
poker room operation opened at Calder Casino on October 23, 2009 and
Flagler Dog Track reopened in October 2009 as Magic City Casino with 700 Las
Vegas-style slot machines.
19
In April,
2010, the Florida legislature subsequently enacted legislation which provided
for a reduction in the tax rate for racetracks operating slot facilities in
Miami-Dade and Broward Counties from 50% to 35% as well as a reduction in the
annual license fee from $3 million to $2 million over a two-year period and
removes wagering limits for poker. Under SB 622, the Seminole tribe would gain
the exclusive right to have blackjack and other table games at three Broward
County casinos and two others in Imokalee and Tampa. All seven tribal casinos
also would be able to keep operating Las Vegas-style slot machines. On
April 15, 2010, the Florida Senate passed SB 622 and on April 19,
2010, the House of Representatives passed SB 622. On April 28, 2010 the
Governor of Florida signed SB 622, which became effective on
July 1, 2010. In accordance with SB 622 legislation, the annual license fee
was reduced to $2.5 million on July 1, 2010 and then $2.0 million on July 1,
2011. Miami Jai-Alai will be able to operate up to 2,000 machines,
have ATM machines at the facility, and hours of operation during the week will
be 18 hrs a day and 24 hours a day on weekends.
RESULTS OF OPERATIONS --
SECOND QUARTER AND SIX MONTHS ENDED JUNE 30, 2010 COMPARED WITH SECOND QUARTER
AND SIX MONTHS ENDED JUNE
30, 2009
During
the quarter ended June 30, 2010, Miami only operated live jai-alai
one month, April, compared to operating three months of live Jai-Alai
during the quarter ended June 30, 2009. Ft. Pierce normally
operates live jai-alai during the first quarter, but did not start
live jai-alai until May 7th,
2010, and will continue live jai-alai through August 28,
2010. By comparison, Ft. Pierce did not conduct live jai-alai during
the three months ended June 30, 2009. Ft.
Pierce conducted a full schedule of Inter-Track Wagering (“ITW”) for
the quarters ending June 30, 2010 and June 30,
2009. Miami offers limited ITW product due to blackouts imposed
because of its close proximity to other South Florida pari-mutuels. Ft.
Pierce and Miami operate a card room, with the Miami location also
offering dominoes in its’ card room.
Handle Analysis for the
Quarter Ended June 30, 2010 compared to the Quarter ended June 30,
2009
Total
handle (amount of money wagered) for the three months ended June 30, 2010 was
$10,743,640 of which $3,876,330 was from live jai-alai wagering and $6,867,310
was from inter-track wagering. This compared to the total handle
(amount of money wagered) of $16,334,434 for the three months ended
June 30, 2009, of which $7,136,875 was from live jai-alai wagering and
$9,197,559 was from inter-track wagering. The $5,590,794 decrease is
due to a decrease of $3,260,545 of live jai-alai and a decrease of $2,330,249 in
ITW. Handle decreased due to the increased competition, the overall economy, and
the scheduling of live jai-alai at Miami and Ft. Pierce.
Total
Pari-Mutuel Revenues for the Quarter ended June 30, 2010 compared to
Quarter ended June 30, 2009
Pari-mutuel revenues (net of
state pari-mutuel taxes) for the quarter ended June 30, 2010 were $1,197,013
compared to pari-mutuel revenues of $1,891,107 the same period in 2009, a 37%
decrease. Revenues for the quarter ended June 30, 2010 ($1,197,013) consisted of
$598,376 from live Jai-Alai wagering and $598,637 from Inter-Track
Wagering. Pari-mutuel
revenues (net of state pari-mutuel taxes) for the quarter
ended June 30, 2009 ($1,891,106) consisted of $1,139,786 from live Jai-Alai
wagering and $751,320 from Inter-Track Wagering.
Card Room Revenue for the
quarter ended June 30, 2010 compared to the quarter ended June 30,
2009
Card room Revenue for the
three months ended June 30, 2010 was $1,179,781 compared
to $1,539,538 for the three months ended June 30, 2009 a $359,757
decrease. Card room operating expenses totaled
$534,276 for the quarter ending June 30, 2010, compared to $671,590 or the
quarter ending June 30, 2009.
Admissions for
the quarter ended June 30, 2010 compared to the quarter
ended June 30, 2009
Admissions income, net of
state taxes, for the quarter ended June 30, 2010 was $2,023 compared to $8,089
for the same period in 2009. Ft. Pierce does not charge admission at their
facility.
Food, beverage and other
income for the quarter ended June 30, 2010 compared to the quarter ended June
30, 2009
Food,
beverage and other income for the quarters ended June 30, 2010 and
June 30, 2009 were $274,109 and $334,802, respectively.
The
decrease of $60,693 is primarily due to decreased concession and bar revenues
sales due to fewer patrons at the facilities.
Real Estate Revenue for the
quarter ended June 30, 2010 compared to the quarter ended
June 30, 2009
There
were no real estate sales for the quarters ended June 30, 2010 and June 30,
2009.
Total Operating Revenues for
the quarter ended June 30, 2010 compared to the quarter ended June 30,
2009
Total Operating Revenues for
the quarter ended June 30, 20010 were $2,652,926 compared to $3,773,535 for the
same period in 2009, a decrease of $1,120,609. All areas of revenue declined
during the quarter ended June 30, 2010.
20
Operating Expenses
for the quarter ended June 30, 2010 compared to the quarter ended June 30,
2009
The
Company's operating expenses for the three months ended June 30, 2010 were
$3,066,100 compared to $3,748,321 for the same period in 2009. The
components of the Company’s operating expenses and their comparison
to the second quarter last year are as follow: Player costs,
salaries, benefits, and support staff, represent a significant portion of
operational expenses. Player costs for the quarter ending
June 30, 2010 and June 30, 2009, were $596,845 and $761,054
respectively. Rental and service costs for totalizator wagering
equipment and satellite receiving/television equipment also represent a
significant portion of operating expenses. These expenses totaled
$242,621 for the quarter ended June 30, 2010, compared to $316,797 for quarter
ended June 30, 2009. The components of the 2010 wagering equipment
and expenses were $68,561 in ITW tote, interface, and telephone charges; $39,423
in totalizator equipment rental; $44,150 in satellite charges and
$90,488 in camera/television rental. The components of the 2009 wagering
equipment and expenses were $85,479 in ITW tote, interface, and telephone
charges; $62,631 in totalizator equipment rental; $52,000 in satellite charges
and $116,687 in camera/television rental. Utilities expense totaled $118,741 and
$146,878 respectively, for the quarter ended June 30, 2010 and June 30, 2009.
Operating expenses (including payroll costs) for the cardroom, bar,
program, souvenir, parking, and concessions costs were $775,826 and
$941,522 for the quarters ended June 30, 2010 and June 30,
2009, respectively. Operating payrolls for mutuels, maintenance,
admissions, office, security and contract labor costs totaled $623,059 and
$699,196 for the quarters ended June 30, 2010 and June 30, 2009,
respectively. Of the $623,059, $166,159 was
mutuels payroll, $148,642 was maintenance payroll, $4,687 was admissions
payroll, $44,900 was office payroll, and $258,671 was security
payroll. Maintenance and cleaning expenses for the
quarter ended June 30, 2010, totaled $63,269 compared to $72,749 for
the same period in 2009. Advertising expense for the
quarter ended June 30, 2010, totaled $47,144 compared to $73,377 for the quarter
ended June 30, 2009, a $26,233 decrease.
General And Administrative
Expenses for the quarter ended June 30, 2010 compared to the quarter ended June
30, 2009
The
Company's general and administrative expenses for the quarters ended
June 30, 2010 and June 30, 2009 were $1,336,986 and $1,107,210, respectively, an
increase of $279,776. Significant categories of the Company’s general and
administrative expenses for the second quarter of 2010 compared to
the second quarter of 2009 are as follows: Executive
salaries and director fees for the quarter ended June 30, 2010 were $161,571
compared to $163,781 for the quarter ended June 30, 2009 (see
consulting fees). Professional fees were $182,741 for the quarter ending June
30, 2010 compared to $155,156 for the same period in 2009. Consulting fees were
$195,000 for the quarters ended June 30, 2010 and June 30,
2009. Consulting fees consist of management fees
paid to Freedom Financial Corporation in lieu of a salary to the Chairman/CEO.
Travel and entertainment expense decreased from $90,318 for the
second quarter of 2009, to $80,002 for the second quarter of
2010. Interest expense saw an increase of $216,718 for the quarter
ended June 30, 2010. Interest expense continues to increase due to
default interest rates being charged on outstanding notes,
Handle Analysis for the Six
Months Ended June 30, 2010 compared to the Six Months ended June 30,
2009
Total
handle (amount of money wagered) for the six months ended June 30, 2010 was
$24,397,176 of which $9,903,647 was from live jai-alai wagering and $14,493,529
was from inter-track wagering. Total handle (amount of
money wagered) for the six months ended June 30, 2009 was $33,642,088 of which
$14,998,290 was from live jai-alai wagering and $18,643,798 was from inter-track
wagering.Total handle decreased $9,244,912 or 27% for the six months ended June
30, 2010.
Total Pari-Mutuel Revenues
for the Six Months ended June 30, 2010 compared to the Six
months ended June 30, 2009
Pari-mutuel revenues (net of
state pari-mutuel taxes) for the six months ended June 30, 2010 were $2,740,558
compared to $3,903,900 for the same period in 2009. Revenues
($2,740,558) for the six months ended June 30, 2010 consisted of $1,483,504 from
live Jai-Alai wagering and $1,257,054 from Inter-Track Wagering.
Revenues ($3,903,900) for the six months ended June 30, 2009 consisted of
$2,359,275 from live Jai-Alai wagering and $1,544,625 from ITW.
Card Room Revenue for the
six months ended June 30, 2010 compared to the six months ended June
30, 2009
Card room Revenue for the six
months ended June 30, 2010 was $2,476,059 compared to $3,246,773 for the six
months ended June 30, 2009 a $770,714 decrease. Ft. Pierce had card
room revenue of $1,822,296 during the six months ended June 30, 2010, compared
to $2,226,532 for the same period in 2009. Miami had card room
revenue of $653,763 for the six months ended June 30, 2010, compared to $1,020,
241 for the same period in 2009. Card room operating costs
totaled $1,101,243 for the period ending June 30, 2010, with Ft. Pierce having
expense of $763,912 and Miami having card room expense of
$337,331. This compares to card room operating costs of $1,382,381
for the same period in 2009.
Admissions for
the six months ended June 30, 2010 compared to the six
months ended June 30, 2009
Admissions income, net of
state taxes, for the six months ended June 30, 2010 was $8,704 compared to
$11,932 for the six months ended June 30, 2009. Ft. Pierce does not charge
admission.
Food, beverage and other
income for the six months ended June 30, 2010 and June 30,
2009
Food,
beverage and other income for the six months ended June 30, 2010 and
June 30, 2009 were $554,968 and $712,363 respectively, a $157,395
decrease. All areas of revenue decreased for the six months ended
June 30, 2010.
21
Real Estate Revenue for the
six months ended June 30, 2010 compared to six
months ended June 30, 2009
There
were no real estate sales for the six months ended June 30, 2010 and June 30,
2009.
Total Operating Revenues for
the six months ended June 30, 2010 compared to six months ended June
30, 2009
Total Operating Revenues for
the six months ended June 30, 2010 was $5,780,289 compared to $7,874,968 for the
same period in 2009, a decrease of
$2,094,679. Pari-Mutuel Revenue decreased
$1,163,342 for the six months ended June 30, 2010, and other revenue decreased
$931,337.
Operating Expenses
for the six months ended June 30, 2010 compared to the six months ended June 30,
2009
The
Company's operating expenses for the six months ended June 30, 2010 were
$6,383,548 compared to $7,861,054 for the same period in 2009, a decrease
of $1,477,506. The components of the Company’s
operating expenses and their comparison to the six months ended June 30,
2010 are as follow: Player costs, salaries, benefits, and
support staff, represent a significant portion operational
expenses. Player costs for the six months ending June 30, 2010 and
June 30, 2009, were $1,266,738 and $1,651,399 respectively. Rental
and service costs for totalizator wagering equipment and satellite
receiving/television equipment also represent a significant portion of operating
expenses. These expenses totaled $546,913 for the six months ended
June 30, 2010, compared to $624,852 for quarter ended June 30,
2009. The components of the 2010 wagering equipment and
expenses were $144,985 in ITW tote, interface, and telephone charges;
$100,795 in totalizator equipment rental; $95,650 in satellite
charges and $205,483 in camera/television rental. The components of the 2009
wagering equipment and expenses were $166,494 in ITW tote, interface,
and telephone charges; $125,359 in totalizator equipment rental;
$103,500 in satellite charges and $229,499 in camera/television
rental. Utilities expense totaled $202,684 and $278,081 respectively, for the
six months ended June 30, 2010 and June 30, 2009. Operating expenses (including
payroll costs) for the cardroom, bar, program, souvenir,
parking and concessions costs were $1,590,422 and $1,964,846 for the
six months ended June 30, 2010 and June 30,
2009, respectively, a $374,424 increase. Operating payrolls for
admissions, mutuels, office, maintenance and security and contract labor costs
totaled $1,268,995 and $1,459,003 for the six month periods ended June 30, 2010
and June 30, 2009, respectively. Of the $1,268,995, $357,801
was mutuels payroll, $300,287 was maintenance payroll, $12,414 was admissions
payroll, $86,393 was office payroll, and $512,101 was security payroll. This
Compares to the six months ended June 30, 2009, of
$1,459,003, $441,358 was mutuels payroll, $344,780 was maintenance
payroll, $19,293 was admissions payroll, $106,671 was office payroll, and
$546,900 was security payroll. Maintenance expense for the six months ended June
30, 2010, totaled $123,678 compared to $151,440 for the same period
in 2009. Advertising expense for the six months ended June
30, 2010, totaled $97,919 compared to $129,903 for the six months
ended June 30, 2009.
General And Administrative
Expenses for the six months ended June 30, 2010 compared to the six
months ended June 30, 2009
The
Company's general and administrative expenses for the six months
ended June 30, 2010 and June 30, 2009, were $2,544,977
and $2,242,057 respectively, a $302,920
increase. Executive salaries and director fees for the six
months ended June 30, 2010 were $324,145 compared to $324,567 or the six months
ended June 30, 2009 (see consulting fees). Professional fees
decreased from $401,450 for the six months 2009 to $290,217 for
the six months ended June 30, 2010. Consulting fees were $390,000 for
the six months ended June 30, 2010 and June 30,
2009. Consulting fees consist of management fees
paid to Freedom Financial Corporation in lieu of a salary to the
Chairman/CEO. Travel and entertainment expense decreased from
$189,328 for the period ended June 30, 2009 to $136,970 for the same period in
2010, a $52,358 decrease. Interest expense increased due to the default
interest rate being charged on the delinquent notes, and additional short term
borrowings.
Real Estate Cost of
Sales
The Company
had no real estate cost of sales during the quarters ended or six
months ended June 30, 2010 and June 30, 2009.
Other
Income
The
Company had other income of $41,707 for the quarter ended June 30, 2010,
compared to $995,509 for the quarter ended June 30, 2009. Other
income for the quarter ended June 30, 2010, consisted of $39,548 in pari-mutuel
tax credits, and interest income of $2,159. Other income for
the quarter ended June 30, 2009, consisted of $870,185 on the gain
for the compensation of the right-of-way by Miami-Dade
County, $124,490 in pari-mutuel tax credits, and interest income of
$834.
The
Company had other income of $211,680 for the six months ended June 30, 2010,
compared to other income of $1,221,566 for the six months ended June 30,
2009. Other income for the six months ended June 30, 2010, included
$209,262 in pari-mutuel credits, and $2,418 in interest income. This
compares to the six months ended June 30, 2009, where other income included a
$870,185 gain from the compensation of the right-of-way by Miami-Dade County,
$306,209 in pari-mutuel credits, $39,872 refund from the City of Miami Fire
Rescue, and $5,300 in interest income. The gain of $870,185 is a
result of Florida Gaming completing Phase 1 of its two-phase
acquisition of the 10.982 acres of property from Miami-Dade County
(“County”). As part of this transaction, the County purchased the
right-of-way for the use of .492 acres from the Company for
$1,014,300. The Company recorded a gain of $870,185 on the
sale of the right-of-way by the
County.
22
Tax Loss
Carryforwards
At
December 31, 2009, the Company had tax net operating loss (NOL) carryforwards of
approximately $20,042,000 available to offset future taxable
income. These NOL carryforwards expire fifteen years from the year in
which the losses were incurred or at various intervals through fiscal
2023.
Summary of
Operations
Due to a
number of factors affecting consumers, the volatility in the stock
market, high unemployment levels, all of which have resulted in
reduced levels of consumer spending, the outlook for the gaming industry remains
highly unpredictable. All areas of revenue saw a decrease during the quarter and
six months ended June 30, 2010.
The
Company had net loss of $1,824,420 or ($.50) per common share for the
three months ended June 30, 2010, compared to net loss
of $224,142 or ($.09) per common share for the quarter
ended June 30, 2009. All areas of revenue decreased during the second quarter
2010.
The
Company had net loss of $3,170,163 or ($.88) per common share for the six
months ended June 30, 2010, compared to net loss
of $1,284,654 or ($.41) per common share for the quarter
ended June 30, 2009. Pari-mutuel revenue, card room, food, beverage
and other revenue all decreased during the six months ended June 30,
2010.
LIQUIDITY
AND CAPITAL RESOURCES
The
Company’s cash and cash equivalents at June 30, 2010 was $741,319. At
June 30, 2010, the Company had a negative working capital of
$15,316,737. At December 31, 2009, the Company had negative
working capital of $11,926,189. This is an increase in negative
working capital of $3,390,548 during the six months ended June 30, 2010. During
the six months ended June 30, 2010, the Company has seen an increase
in current liabilities of $935,176, and an increase of $2,291,177 in accounts
payable and accrued expenses. The Company borrowed $735,000 in short
term debt during the first six months ended June 30, 2010.
During
the six months ended June 30, 2010, net cash used in Company's
operating activities was $709,251 compared to net cash used in operating
activities of $989,572 during the six months ended June 30, 2009. The
Company had an increase in accounts payable and accrued expenses of $2,241,177
during the first six months ended June 30, 2010, compared to an
increase of $947,651 during the same period in 2009. During 2010,
some of the expenses accrued, include management fee expenses of
$390,000, dividends of $269,515, accrued professional fees of
$188,346, accrued property taxes of $141,782 and accrued interest of $608,441.
The Company has experienced increased interest expense due to increased
borrowing and the default interest rate being charged on certain
loans. The Company's continuing operating expenses
consist principally of office expenses, general and administrative expenses, and
costs associated with live Jai-Alai, ITW operations and cardroom
operations.
During
the six months ended June 30, 2010, cash used in investing activities was
$53,655 in purchases of property and equipment compared to cash provided
by investing activities of $719,050 for the six months ended June 30,
2009. During 2009, Miami Dade County purchased .492 acres from
the Company for $1,185,345. The .492 acres sold to the County will be
used by the Miami-Dade Metro Rail, an overhead light rail system.
During the six months ended June 30,
2010, cash provided by financing activities was $684,969 compared to cash used
in financing of $84,468 during the same period in 2009. During the
six months ended June 30, 2010, the Company borrowed $250,000 from
H2C, Inc. and an additional $485,000 from Nurmi Properties, LLC. This compares
to the six months ended June 30, 2009, during which the Company received
$98,750 from 30,000 stock options that were exercised, dividends paid of
$43,289, and repaid debt of $139,929.
23
The
Company leased totalizator equipment from Scientific Games Corp. at
each fronton under leases which expired October 31, 2008, but subsequently being
leased on a month- to- month basis. The leases required minimum annual rental at
the Miami and Ft. Pierce locations. Transmission of the Miami Jai-Alai signal
requires the use of a satellite uplink simulcasting service which requires a fee
of $500 per performance. Total totalizator rental expense and other equipment
rental under operating leases for the six months ended June 30, 2010 and 2009
was approximately $100,795 and $125,359, respectively.
The
Company also leased parking facilities adjacent to the Miami fronton. This lease
was dated February 17, 2003, and lease payments totaled $34,000 in 2009, with
the lease concluding with the purchase of the Miami-Dade County
property.
At
December 31, 2009, the Company had two notes mature, Isle of Capri Casinos, Inc. (“Isle”) for
$3,000,000 plus interest, and the Stuckert/Howell Note of $1,000,000
plus interest. The Company failed to pay these amounts on December
31, 2009 at maturity (For
more information reference Form 8-K dated December 31, 2009). On March 1, 2010
the Company was served with a complaint by Isle (See Item 1. Legal
Proceedings) . At June 30, 2010, the Company owed Isle
$3,000,000 principal plus interest.
At June
30, 2010, the Company owed $1,000,000 principal plus interest on the
Stuckert/Howell note. As of the date of this filing, Mr. Stuckert and
Mr. Howell have not informed the Company of any
default.
At June
30, 2010 the Company owed West Flagler/Calder $416,666 principal balance plus
interest. The Company failed to make the required payments to West
Flagler/ Calder since July 2009, and on December 23, 2009, Centers was served
with a summons and complaint (See Item 1. Legal Proceedings).
At June
30, 2010, the Company owed $2,887,920 on a note to Miami-Dade
County.
The Company borrowed
$500,000 from Nurmi Properties, LLC on December 11, 2009, and
additional borrowings from Nurmi total $335,000 through March 31, 2010 (See Form
8-K’s dated December 11, 2009, and February 4, 2010). On April 16, 2010 the
Company borrowed an additional $75,000 from Nurmi Properties, LLC (See Form 8-K
dated April 16, 2010), for a total of $910,000. On June
2, 2010, the Company borrowed an additional Seventy Five Thousand Dollars
($75,000) from the Lenders pursuant to a Note and Mortgage Modification (the
“Fifth Modification”), among the Company and the Lenders. The
Original Note and Mortgage became $985,000 rather than $910,000. (See Form 8-K
dated June 2, 2010).
On
February 4, 2010, the Company borrowed $90,000 from H2C (refer to Form 8-K dated
February 4, 2010). On April 28, 2010, the Company entered
into a Promissory Note and Mortgage with H2C, Inc. pursuant to which
the Lender advanced to the Registrant two hundred fifty thousand dollars
($250,000). $82,156 of the Advance was used to pay to the Lender all
outstanding principal and accrued interest due to the Lender pursuant to a
Promissory Note of the Registrant dated February 4, 2010 (See Form 8-K dated
April 28, 2010).
On July
1, 2010, the Company entered into a Promissory Note and
Mortgage pursuant to which the Lender advanced to the Registrant
fifty thousand dollars ($50,000) (the “Advance”). Under the
Agreements, the outstanding principal amount of the Advance bears interest at an
annual rate of ten percent (10%). Accrued interest is payable to the
Lender in five monthly installments of $416.66, with a balloon payment of the
outstanding principal amount of the Advance and all accrued but unpaid interest
due on December 31, 2010. The Company’s obligations under the Note
are secured by a first mortgage (the “Mortgage”) in the Lender’s favor with
respect to with respect to 18 acres of unimproved real property in St.
Lucie County in the state of Florida. No prepayments are permitted
under the Note. For further information refer to Form 8-K filed July
8, 2010.
The Company had a note with Freedom Holding that was
scheduled to mature on March 1, 2010. The Company extended their
$1,322,574 note with Freedom Holding through September 1,
2010.
The
Company intends to refinance its debts or sell the Fort Pierce Jai-Alai
Property and Tampa Jai-Alai permit. The proceeds received from the
sale of Ft. Pierce would be used to pay past-due obligations and to initiate
efforts to install slot machines at the Miami Jai-Alai
Fronton. There is no assurance that the Company will be
successful in any of these efforts.
24
Segment
Information
The
Company follows ASC Topic 280, “Segment Reporting.” Topic 280 requires companies
to report information about the revenues derived from the enterprise’s segments,
about the geographical divisions in which the enterprise earns revenues and
holds assets, and about major customers.
The
Company has defined its segments into two main areas: Florida Gaming Centers
(Centers) and Tara Club Estates (Tara). These segments are organized under the
supervision of the Florida Gaming executive management team and are evaluated
based on the following information presented: Revenues from gaming operations,
revenues from lot sales and operating profit contribution to the total
corporation. All inter-segment transactions are eliminated to arrive at the
total corporation revenue and operating profit. Income and expense items below
operating profit are not allocated to the segments and are not
disclosed.
The
Florida Gaming Centers segment operates the Corporation’s jai-alai centers in
Miami and Fort Pierce, Florida. Centers also operates the Company’s inter-track
wagering operation in Florida. Tara Club Estates is a real estate development in
Loganville, Georgia. Tara develops residential building lots for sales to
builders and individuals. As permitted under Topic 280, certain information not
routinely used in the management of these segments, information not allocated
back to the segments or information that is impractical to report is not shown.
Items not disclosed are as follows: Interest Income and Expense, Amortization
Expense, Income Tax Expense or Benefit, Extraordinary Items, Significant
non-cash items and Long-lived assets.
During
the six months ended June 30, 2010, Centers’ gaming operations
comprised 100% of the Company’s revenues. Neither Centers nor Tara
has any customers that individually represent a significant portion of their
business.
June 30,
2010
(Dollar
Amount In Thousands)
|
Assets
|
Revenues
|
Profit
(Loss)
|
|||||||||||||||||||||
Florida
Gaming Centers
|
98 | % | $ | 15,501 | 100 | % | $ | 5,780 | 100 | % | $ | (3,159 | ) | |||||||||||
Tara
Club Estates
|
2 | % | 263 | - | -0- | (11 | ) | |||||||||||||||||
Consolidated
Total
|
100 | % | $ | 15,764 | 100 | % | $ | 5,780 | 100 | % | $ | (3,170 | ) |
June
30, 2009
(Dollar
Amount In Thousands)
|
Assets
|
Revenues
|
Profit
(Loss)
|
|||||||||||||||||||||
Florida
Gaming Centers
|
98 | % | $ | 16,660 | 100 | % | $ | 7,875 | 100 | % | $ | (1,269 | ) | |||||||||||
Tara
Club Estates
|
2 | % | 333 | - | -0- | (16 | ) | |||||||||||||||||
Consolidated
Total
|
100 | % | $ | 16,993 | 100 | % | $ | 7,875 | 100 | % | $ | (1,285 | ) | |||||||||||
Fair Value
Measurement
|
ASC Topic
820 requires disclosures concerning fair value measurements and establishes a
three-level valuation hierarchy. The valuation hierarchy is based upon the
transparency of inputs to the valuation of an asset or liability as of the
measurement date. The three levels are defined as follows:
Level 1 —
inputs to the valuation methodology are quoted prices (unadjusted) for
identical assets or liabilities in active markets.
Level 2 —
inputs to the valuation methodology include quoted prices for similar assets and
liabilities in active markets, and inputs that are observable for the asset or
liability, either directly or indirectly, for substantially the full term of the
financial instrument.
Level 3 —
inputs to the valuation methodology are unobservable and significant to the fair
value measurement.
ASC Topic
820 requires disclosure of assets and liabilities measured at fair value on a
nonrecurring basis. The following table presents the financial assets
carried by the Company at fair value as of June 30, 2010 and
2009 and by Topic 820 valuation hierarchy (as described above).
25
Assets
measured at fair value on a nonrecurring basis as of June 30,
2010
Total
carrying value in balance sheet
|
Quoted
market prices in an active market (Level 1)
|
Internal
models with significant observable market parameters (Level
2)
|
Internal
models with significant unobservable market parameters (Level
3)
|
Total
Gains (Losses)
|
||||||||||||||||
Real
Estate Held For Sale
|
$ | 234,000 | -0- | $ | 234,000 | -0- | $ | (68,569 | ) | |||||||||||
Total
assets at fair value
|
$ | 234,000 | -0- | $ | 234,000 | -0- | $ | (68,569 | ) |
Assets
measured at fair value on a nonrecurring basis as of June
30, 2009
Total
carrying value in balance sheet
|
Quoted
market prices in an active market (Level 1)
|
Internal
models with significant observable market parameters (Level
2)
|
Internal
models with significant unobservable market parameters (Level
3)
|
Total
Gains (Losses)
|
||||||||||||||||
Real
Estate Held For Sale
|
$ | 297,500 | -0- | $ | 297,500 | -0- | $ | (5,069 | ) | |||||||||||
Total
assets at fair value
|
$ | 297,500 | -0- | $ | 297,500 | -0- | $ | (5,069 | ) |
In
accordance with the provisions of ASC Topic 360-10-05 the Company periodically
evaluates and adjusts its real estate held for sale for
impairment. The Company maintained a reserve for loss of $68,569 on
its real estate held for sale as of June 30, 2010. A
provision of $63,500 was made to the reserve in the fourth quarter 2009 due to
the decrease in real estate values in the area where the property is
located.
ASC Topic
820 also requires disclosure of assets and liabilities measured at fair value on
a recurring basis. The Company measured no assets or liabilities at
fair value on a recurring basis as of June
30, 2010.
26
ITEM
3. QUANTITATIVE AND QUALITATIVE
DISCLOSURE ABOUT MARKET RISK
Under SEC
regulations, the information called for by this item is not required because the
Company is a smaller reporting Company.
ITEM
4. CONTROLS AND
PROCEDURES
As
of June 30, 2010, an evaluation was carried out under the supervision
and with the participation of our management, including our Chief Executive
Officer and Chief Financial Officer, of the effectiveness of the design and
operation of our disclosure controls and procedures (as defined in Rules
13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the "Exchange
Act")). Based upon that evaluation, the Chief Executive Officer and the Chief
Financial Officer concluded that the design and operation of these disclosure
controls and procedures were effective to ensure that information required to be
disclosed by us in the reports that we file or submit under the Exchange Act is
recorded, processed, summarized and reported within the time periods specified
in applicable rules and forms.
(a) Management’s quarterly report on
internal control over financial reporting. Management is
responsible for establishing and maintaining adequate internal control over
financial reporting as defined in Rules 13a-15(f) and 15d-15f under the Exchange
Act. Our internal control system is designed to provide reasonable assurance to
our management and board of directors regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. Our internal control
over financial reporting includes those policies and procedures
that:
*
|
Pertain
to the maintenance of records that, in reasonable detail, accurately and
fairly reflect the transactions and dispositions of the assets of the
company;
|
*
|
Provide
reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the company
are being made only in accordance with authorizations of management and
directors of the company; and
|
*
|
Provide
reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use or disposition of the company's assets that
could have a material effect on the financial statements. Because of its
inherent limitations, internal control over financial reporting may not
prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may
become inadequate because of changes in conditions, or that the degree of
compliance with the policies or procedures may
deteriorate.
|
Management assessed the effectiveness
of our internal control over financial reporting as of June 30, 2010.
In making this assessment, management used the criteria set forth by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO) in
Internal Control - Integrated Framework. Based on management's assessment and
those criteria, management believes that, as of June 30, 2010, the
Company maintained effective internal control over financial
reporting.
(b)
Changes in internal controls. The Company made no changes to its internal
control over financial reporting during the most recent fiscal
quarter.
27
Item
1. Legal
Proceedings.
Isle
of Capri
On March
1, 2010, the Company and its subsidiary, Florida Gaming Centers, Inc.
(“Centers”), were served with a complaint (the “Complaint”) by Isle of Capri
Casinos, Inc. (“Isle”). Centers comprises 100% of Registrant’s operations. The
Complaint filed in the 15th Circuit
Court of Palm Beach County, FL on February 18, 2010, alleges: (1) that
Registrant breached its duties under an Amended and Restated Secured Promissory
Note (the “Note”) made to Isle; (2) that Centers breached its guaranty under the
Note; (3) that the Company and Centers breached their duties under a Simulcast
Wagering Agreement with Isle; and, (4) that the Company and Centers were
unjustly enriched through Isle’s broadcasts of horse racing events. Under the
Complaint, Isle is demanding (1) foreclosure of a security interest Isle holds
in all of the shares of outstanding stock of Centers, and (2) damages of
$358,823.32 plus interest, costs and such further relief as the court deems
proper.
As
reported in the Company’s Form 8-K filed on January 7, 2010, the Company is
indebted to Isle in the principal amount of Three Million Dollars ($3,000,000)
pursuant to the Note and related instruments, dated December 31, 2008
(collectively, the “Isle Documents”). The Isle Documents include a Pledge
Agreement under which Registrant granted to Isle a security interest in all of
the outstanding shares of capital stock of Centers. The Isle Documents were
filed as Exhibit 10.1 on the Registrant’s Form 10-K dated March 31, 2009, which
is incorporated herein. Under the Isle Documents, the Registrant was required to
pay to Isle the $3,000,000 principal amount, plus any accrued but unpaid
interest, on December 31, 2009. The Company did not make the required December
31, 2009 payment to Isle. That failure constituted an Event of Default under the
Isle Documents. Under the Isle Documents, after an Event of Default the
outstanding principal and interest accrues interest at an annual default rate of
18%, payable on demand. On December 23, 2009, Isle’s counsel made the requisite
demand for payment under the Note.
On March
19, 2010, the Florida Gaming Corporation (the “Company”), a Delaware
corporation, and Florida Gaming Centers, Inc., a Florida corporation 100% of the
stock of which is owned by the Company, were served with a complaint (the
"Complaint") by Isle of Capri Casinos, Inc. ("Isle"). The Complaint seeks to
foreclose on a mortgage granted to Isle in connection with a Note and related
instruments dated December 31, 2008. As reported in the Company's Current Report
on Form 8-K filed on January 7, 2010, the Company is indebted to Isle in the
principal amount of Three Million Dollars ($3,000,000) pursuant to the Note and
related instruments dated December 31, 2008. Under the Note and the related
instruments, the Company was required to pay to Isle the $3,000,000 principal
amount, plus any accrued but unpaid interest, on December 31, 2009. The Company
did not make the required December 31, 2009 payment to Isle. The mortgage
granted to Isle in connection with the Note affects Center's real property
located at 1750 S. King's Highway, Ft. Pierce, Florida, and all buildings,
structures, fixtures and improvements located thereon. The Company has engaged
counsel to respond to the Complaint and intends to vigorously defend itself
against Isle’s lawsuit.
West
Flagler Associated LTD and Calder Race Course
On
December 23, 2009, Florida Gaming Centers, Inc. (“Centers”) was served with a
summons and complaint (the “Complaint”) from West Flagler Associated, Ltd. and
Calder Race Course, Inc. (“Plaintiffs”). The Complaint filed in the 11th Circuit
Court in and for Miami-Dade County, Florida on December 21, 2009 alleges that
Centers executed a Promissory Note on January 31, 2005 in favor of the
Plaintiffs and that Centers has breached the terms of the Promissory Note by
failing to make the payments required there under, which Plaintiffs allege were
to commence in February 2008. Plaintiffs allege that Centers made monthly
payments under the Promissory Note in the amount of $23,148.14 per month from
February 2008 to July 2009 but have failed to make payments thereafter.
Plaintiffs allege that the entire debt is now due and owing and allege to be
owed the principal amount of $416,666.48 plus interest since July 1, 2009, the
date of the alleged last payment made under the Promissory Note. Plaintiffs also
seek default interest and late penalties of undisclosed amounts. Centers filed
an answer and affirmative defenses to the Complaint on March 2, 2010 and intends
to vigorously defend the Complaint.
28
Other
Suits
The
Company is a defendant in certain other suits which are deemed to be routine
litigation in the ordinary course of business. The Company believes that the
ultimate resolution of the suits will not have a material adverse impact on the
Company's financial position or its results of operations.
b
Item
1a. Risk
Factors.
Not
required for smaller reporting companies.
None
Item
3. Defaults
upon Senior Securities.
As of
June 30, 2010, the Company had accrued but not paid dividends on their four
classes of Preferred Stock:
The
Company owes the following amounts on their Preferred Stock:
Preferred
A:
|
$ | 39,431 | ||
Preferred
AA:
|
$ | 612,500 | ||
Preferred
B:
|
$ | 52,877 | ||
Preferred
F:
|
$ | 220,000 |
Item
4. Submission of Matters to a
Vote of Security Holders.
None.
Item
5. Other
Information.
None
29
Item 15. Exhibits List and Reports on Form
8-K
3.1
|
Registrant’s
Third Amended and Restated Certificate of Incorporation filed with the
Delaware Secretary of State on March 28, 2005, filed as reference 3.1 to
the Registrant’s 2004 10-KSB, is incorporated herein by reference as
Exhibit 3.1.
|
3.2
|
Registrant’s
By-Laws as amended to date filed as Exhibit 3.5 to Registrant’s Form
10-KSB for the fiscal year ended December 31, 1998 are incorporated herein
by reference as Exhibit 3.2.
|
4.1
|
Registrant’s
Amended and Restated Master Stock Option Plan filed as Exhibit 99.1 to the
Second Post-Effective Amendment of Registrants Registration Statement
Form S-8 dated August 23, 2006, is incorporated herein by reference
as Exhibit 4.1.
|
4.2
|
Stock
Option Agreement entered into by and between Registrant and Freedom
Financial Corporation dated April 28, 2006 and is filed as Exhibit
4.1 to Registrants Current Report on Form 8-K dated April 28, 2006, is
incorporated herein by reference as Exhibit 4.2.
|
4.5
|
Stock
Subscription Agreement entered into between the Registrant and Prides
Capital Fund I.L.P. dated June 15, 2007 and is filed as Exhibit 4.5
to Registrant Current Report on Form 8-K dated June 15, 2007 and is
incorporated herein by reference as Exhibit 4.5.
|
4.6
|
Stockholders
Agreement entered into between the Registrant and Prides Capital Fund
I.L.P. dated June 15, 2007 and is filed as Exhibit 4.6 to Registrant
Current Report on Form 8-K dated June 15, 2007 and is incorporated herein
by reference as Exhibit 4.6.
|
4.7
|
Warrant
Agreement entered into between the Registrant and Prides Capital Fund
I.L.P. dated June 15, 2007 and is filed as Exhibit 4.7 to Registrant
Current Report on Form 8-K dated June 15, 2007 and is incorporated herein
by reference as Exhibit 4.7.
|
30
10.0
|
Note
Restructuring Agreement, Mortgage and Security Agreement, Amended and
Restated Pledge Agreement, Amended and Restated Secured Promissory
Note, and certain other related instruments and agreements
dated December 31, 2008, between the Registrant and Isle of Capri,
filed as Exhibit 10.1 on Form 8-K dated January 8, 2009, and is
incorporated herein by reference as Exhibit 10.1.
|
10.1
|
Settlement
Agreement as to Parcel No. 155 and Parcel No. 155TCE, dated February 3,
2009, by and between the Registrant and the County, filed as Exhibit 10.1
on Form 8-K dated April 6, 2009, and is incorporated herein by reference
as Exhibit 10.1.
|
10.2
|
Promissory
Note, entered into by the Registrant, the County and City National Bank of
Florida on April 2, 2009, filed as Exhibit 10.2 on Form 8-K dated April 6,
2009 and is incorporated herein by reference as Exhibit
10.2.
|
10.3
|
Mortgage
and Security Agreement, entered into by the Registrant, the County and
City National Bank of Florida on April 6, 2009, filed as Exhibit 10.3 on
Form 8-K dated April 6, 2009 and is incorporated herein by reference as
Exhibit 10.3.
|
10.4
|
Letter
Agreement dated October 29, 2004 entered into by and among Registrant,
Florida Gaming Centers, Inc., and Isle of Capri Casinos, Inc. filed as
Exhibit 10.48 to Registrant’s Current Report on Form 8-K dated November 4,
2004 and is incorporated herein by reference as Exhibit
10.4.
|
10.7
|
Agreement
dated January 31,2005 between Florida Gaming Centers, Inc., d/b/a Miami
Jai-Alai, the Summer Jai-Alai partnership and Miami Dade County regarding
slot machine in pari-mutuel facilities was filed as reference 10.7 to the
Registrant’s 2004 10-KSB and is incorporated herein by reference as
Exhibit 10.7.
|
10.8
|
Registrant’s
Third Amended and Restated Note between Florida Gaming Centers, Inc. and
Freedom Financial Corp, dated October 31, 2005, was filed as reference
10.8 to Registrant’s 2005 10KSB, herein incorporated by reference as
Exhibit 10.8.
|
10.9
|
Registrant’s
Amended and Restated Loan Agreement between Florida Gaming Centers, Inc.
City National Bank of Florida, and Freedom Financial Corp, dated October
31, 2005, was filed as reference 10.9 to Registrant’s 2005 10-KSB, herein
incorporated by reference as Exhibit 10.9.
|
10.10
|
Registrant’s
Guaranty Agreement between Florida Gaming Corporation and Freedom
Financial Corporation, dated October 31, 2005, was filed as Exhibit 10.10
to Registrant’s 2005 10-KSB, is incorporated herein by reference as
Exhibit 10.10.
|
10.11
|
Registrant’s
Guaranty Agreement between W, Bennett Collett and Freedom Financial
Corporation, dated October 31, 2005, was filed as reference 10.11 to
Registrant’s 2005 10-KSB, is incorporated herein by reference as Exhibit
10.11.
|
10.13
|
Promissory
Note entered into between the Registrant and Freedom Holding, Inc. dated
November 1, 2008, was filed as Exhibit 10.13 to the Registrant's 10-Q
dated November 14, 2008, and is incorporated herein by reference as
Exhibit 10.13.
|
10.14
|
Promissory
Note entered into between the Registrant and Nurmi Properties, dated
December 11, 2009, was filed as Exhibit 10.14 to an 8-k filed December 17,
2009 and is incorporated herein by reference as Exhibit
10.14.
|
10.15
|
Mortgage
and Security Agreement entered into between the Registrant and Nurmi
Properties, dated December 11, 2009, was filed as Exhibit 10.15 to an 8-K
filed December 17, 2009 and is incorporated herein by reference
as Exhibit 10.15.
|
10.16
|
Security
Agreement entered into between the Registrant and Nurmi Properties, dated
December 11, 2009, was filed as Exhibit 10.16 to an 8-k filed December 17,
2009 and is incorporated herein by reference as Exhibit
10.16.
|
10.17
|
Assignment
of Rents and Leases between the Registrant and Nurmi Properties, dated
December 11, 2009, was filed as Exhibit 10.17 to an 8-k filed December 17,
2009 and is incorporated herein by reference as Exhibit
10.17.
|
31
10.18
|
Warrant
Agreement entered into between the Registrant and Nurmi Properties, dated
December 11, 2009, was filed as Exhibit 10.18 to an 8-k filed December 17,
2009 and is incorporated herein by reference as Exhibit
10.18.
|
10.19
|
Note
and Mortgage Modification between the Registrant and Nurmi Properties,
dated February 4, 2010, was filed as Exhibit 10.19 to an 8-k
filed February 10, 2010 and is incorporated herein by reference
as Exhibit 10.19.
|
10.20
|
Note
between the Registrant and H2C, dated February 4, 2010, was
filed as Exhibit 10.20 to an 8-k filed February 10, 2010 and is
incorporated herein by reference as Exhibit 10.20.
|
10.21
|
Note
and Mortgage Modification between the Registrant and Nurmi Properties,
dated March 10, 2010, was filed as
Exhibit 10.21 to a 10-k filed March 31, 2010, and is incorporated
herein by reference as Exhibit 10.21.
|
10.22
|
Note
and Mortgage Modification between the Registrant and Nurmi
Properties, dated March 25, 2010, was filed as
Exhibit 10.22 to a 10-k filed March 31, 2010, and is incorporated herein
by reference as Exhibit 10.22.
|
10.23
|
Note
and Mortgage Modification between the Registrant and Nurmi
Properties, dated April 16, 2010, was filed as
Exhibit 10.23 to an 8-k filed April 22, 2010, and is incorporated herein
by reference as Exhibit 10.23.
|
10.24
|
Note
between the Registrant and H2C, dated April
28, 2010, was filed as Exhibit 10.24 to an 8-k
filed on May 4, 2010, and is incorporated herein by reference
as exhibit 10.24.
|
10.25
|
Mortgage
between the Registrant and H2C, dated April 28, 2010, was filed
as Exhibit 10.25 to an 8-k filed May 4, 2010 and
is
incorporated herein by reference as exhibit 10.25.
|
10.30
|
Note
and Mortgage Modification between the Registrant and Nurmi Properties,
dated June 2, 2010, and is incorporated herein by reference as Exhibit
10.30.
|
10.31
|
Promissory
Note entered into between the Registrant and H2C, dated July 1,
2010, was filed as Exhibit 10.31 to a 8-k filed July 8, 2010 and is
incorporated herein by reference as Exhibit 10.31.
|
10.32
|
Mortgage
entered into between the Registrant and H2C, dated July 1, 2010, was filed
as Exhibit 10.32 to an 8-k filed July 8, 2010 and is
incorporated herein by reference as Exhibit 10.32.
|
10.49
|
Shareholders
Support and Release of Lien Agreement dated October 29, 2004 entered into
among Registrant, Isle of Capri Casinos, Inc., Freedom Financial
Corporation, Freedom Holding, Inc., Collett Capital Corporation, and W.
Bennett Collett, individually, filed as Exhibit 10.49 on Form 8-K dated
November 4, 2004, is incorporated herein by reference as Exhibit
10.49.
|
10.50
|
Shareholders
Support Agreement dated October 29, 2004 entered into between Isle of
Capri Casinos, Inc. and Roland and Dorothy Howell filed as Exhibit
10.50 on Form 8-K dated November 4, 2004 is incorporated herein by
reference as Exhibit 10.50.
|
14.0
|
Registrant’s
Code of Ethics adopted by the Board of Directors on May 16, 2003, filed as
Exhibit 14 to Registrant’s 2004 10-KSB is incorporated by reference
as Exhibit 14.0
|
21.0
|
List
of Registrant’s Subsidiaries as of December 31, 2004, filed as Exhibit 21
to Registrant’s 2004 10-ksb is incorporated by reference as Exhibit
21.0.
|
31.1
|
Certification
by Registrant’s Chief Executive Officer pursuant to Rule 302 as adopted
pursuant to Section 902 of the Sarbanes-Oxley Act of 2002 is attached
hereto.
|
31.2
|
Certification
by Registrant’s Chief Financial Officer pursuant to Rule 302 as adopted
pursuant to Section 902 of the Sarbanes-Oxley Act of 2002 is attached
hereto.
|
32
32.1
|
Certification
by Registrant’s Chief Executive Officer pursuant to18 USC 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 is attached
hereto.
|
32.2
|
Certification
by Registrant’s Chief Financial Officer pursuant to18 USC 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 is attached
hereto.
|
99.1
|
Secured
Promissory Note dated October 29, 2004 in the face amount of $5,000,000
executed by Registrant in favor of Isle of Capri Casinos, Inc. was
filed as Exhibit 99.1 to Registrant's 8-K dated November 4, 2004, and is
incorporated herein by reference as Exhibit 99.1.
|
99.3
|
Promissory
Note dated January 31,2 005 in the face amount of $833,333 executed by
Florida Gaming Centers, Inc. to Calder Race Course, Inc. and West
Flagler Associated, LTD., was filed as Exhibit 99.3 to Registrant's 10-KSB
dated March 31, 2005, and is incorporated herein by reference as Exhibit
99.3.
|
(b) Form
8-K Reports
Registrant
filed a report on Form 8-K dated April 16, 2010, reporting the transaction with
Nurmi Properties, LLC
Registrant
filed a report on Form 8-K dated April 28, 2010, reporting the transaction
with H2C, Inc.
Registrant
filed a report on Form 8-K dated June 2, 2010, reporting the
transaction with Nurmi Properties, LLC
Registrant
filed a report on Form 8-K dated July 1, 2010, reporting the
transaction with H2C, Inc.
33
FLORIDA
GAMING CORPORATION
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.
FLORIDA
GAMING CORPORATION
(Registrant)
|
|||
Date: August
16, 2010
|
By:
|
/s/ W.B. Collett | |
W.B. Collett | |||
Chairman of the Board and Chief Executive Officer |
Date: August
16, 2010
|
By:
|
/s/ Kimberly Tharp | |
Kimberly Tharp | |||
Chief Financial Officer | |||
34