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EX-32.2 - EXHIBIT 32.2 - NEVADA GOLD & CASINOS INCv419851_ex32-2.htm
EX-31.1 - EXHIBIT 31.1 - NEVADA GOLD & CASINOS INCv419851_ex31-1.htm
EX-32.1 - EXHIBIT 32.1 - NEVADA GOLD & CASINOS INCv419851_ex32-1.htm
EX-31.2 - EXHIBIT 31.2 - NEVADA GOLD & CASINOS INCv419851_ex31-2.htm

 

UNITED STATES

 

SECURITIES AND EXCHANGE COMMISSION

 

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

 

xQuarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

For the quarterly period ended July 31, 2015

 

¨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 1-15517

 

 

 

Nevada Gold & Casinos, Inc.

 

(Exact name of registrant as specified in its charter)

  

Nevada 88-0142032
(State or other jurisdiction of Incorporation or organization) (I.R.S. Employer Identification No.)

 

133 E. Warm Springs Road  
Suite 102  
Las Vegas, Nevada 89119
(Address of principal executive offices) (Zip Code)

 

Registrant’s telephone number including area code: (702) 685-1000

 

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 any shorter period that the registrant was required to file the reports), and (2) has been subject to those filing requirements for the past 90 days.      x Yes ¨ 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 twelve months (or for such shorter period that the registrant was required to submit and post such files).

x Yes ¨ No

 

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   x No

 

The number of common shares, $0.12 par value per share, issued and outstanding, was 16,446,307 as of September 1, 2015.

 

 

 

 

TABLE OF CONTENTS

 

    Page
     
  PART I. FINANCIAL INFORMATION  
     
Item 1. Financial Statements  
  Consolidated Balance Sheets – July 31, 2015 (unaudited) and April 30, 2015 2
  Consolidated Statements of Operations – Three months ended July 31, 2015 (unaudited) and July 31, 2014 (unaudited) 3
  Consolidated Statements of Cash Flows – Three months ended July 31, 2015 (unaudited) and July 31, 2014 (unaudited) 4
  Notes to Consolidated Financial Statements (unaudited) 5
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 14
Item 3. Quantitative and Qualitative Disclosures about Market Risk 18
Item 4. Controls and Procedures 18
     
  PART II. OTHER INFORMATION  
     
Item 1. Legal Proceedings 18
Item 1A. Risk Factors 18
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 18
Item 3. Defaults Upon Senior Securities 18
Item 4. Mine Safety Disclosures 18
Item 5. Other Information 19
Item 6. Exhibits 19

 

 

 

 

FORWARD-LOOKING STATEMENTS

 

Factors that May Affect Future Results

 

(Cautionary Statements Under the Private Securities Litigation Reform Act of 1995)

 

Certain information included in this Form 10-Q and other materials filed or to be filed by us with the Securities and Exchange Commission (as well as information included in oral statements or other written statements made or to be made by us or our representatives) contains or may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements can be identified by the fact that they do not relate strictly to historical or current facts. Statements that include the words “may,” “could,” “should,” “would,” “believe,” “expect,” “anticipate,” “estimate,” “intend,” “plan,” or other words or expressions of similar meaning, may identify forward-looking statements. We have based these forward-looking statements on our current expectations about future events. Forward-looking statements include statements that reflect management’s beliefs, plans, objectives, goals, expectations, anticipations, intentions with respect to the financial condition, results of operations, future performance and the business of us, including statements relating to our business strategy and our current and future development plans. These statements may also involve other factors which are detailed in the “Risk Factors” and other sections of our Annual Report on Form 10-K for the year ended April 30, 2015 and other filings with the Securities and Exchange Commission.

 

Although we believe that the assumptions underlying these forward-looking statements are reasonable, any or all of the forward-looking statements in this report and in any other public statements that are made may prove to be incorrect. This may occur as a result of inaccurate assumptions or as a consequence of known or unknown risks and uncertainties. Many factors discussed in this report will be important in determining our future performance. Consequently, actual results may differ materially from those that might be anticipated from forward-looking statements. In light of these and other uncertainties, you should not regard the inclusion of a forward-looking statement in this report or other public communications that we might make as a representation by us that our plans and objectives will be achieved, and you should not place undue reliance on such forward-looking statements.

 

We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Any further disclosures made on related subjects in our subsequent reports filed with the Securities and Exchange Commission should be consulted.

 

 1 

 

 

Part I. Financial Information

Item 1. Financial Statements

Nevada Gold & Casinos, Inc.

Consolidated Balance Sheets

 

   July  31,   April 30, 
   2015   2015 
   (unaudited)     
         
ASSETS          
Current assets:          
Cash and cash equivalents  $7,153,929   $8,541,670 
Restricted cash   1,535,092    1,724,439 
Accounts receivable, net of allowances   757,937    297,316 
Prepaid expenses   1,469,904    845,505 
Deferred tax asset, current portion   633,718    863,366 
Notes receivable, current portion   390,215    384,464 
Inventory and other current assets   345,953    377,625 
Total current assets   12,286,748    13,034,385 
           
Real estate held for sale   1,100,000    1,100,000 
Notes receivable, net of current portion   1,214,410    1,314,467 
Goodwill   16,028,625    16,103,583 
Identifiable intangible assets, net of accumulated amortization of $7,092,275 and $6,811,799 at July 31, 2015 and April 30, 2015, respectively   4,280,901    4,561,377 
Property and equipment, net of accumulated depreciation of $4,557,557 and $4,451,553 at July 31, 2015 and April 30, 2015, respectively   3,843,932    3,990,791 
Deferred tax asset, net of current portion   2,708,566    2,706,430 
Other assets   1,940,215    331,980 
Total assets  $43,403,397   $43,143,013 
           
LIABILITIES AND STOCKHOLDERS’ EQUITY          
Current liabilities:          
Accounts payable and accrued liabilities  $1,088,984   $1,222,139 
Accrued payroll and related   804,092    1,581,557 
Accrued player's club points and progressive jackpots   1,727,878    1,993,537 
Total current liabilities   3,620,954    4,797,233 
Long-term debt   8,148,946    7,350,000 
Other long-term  liabilities   542,907    570,717 
Total liabilities   12,312,807    12,717,950 
           
Stockholders' equity:          
Common stock, $0.12 par value per share; 50,000,000 shares authorized; 17,229,144 and 17,134,928 shares issued and 16,446,307 and 16,352,091 shares outstanding at July 31, 2015, and April 30, 2015, respectively   2,067,506    2,056,200 
Additional paid-in capital   25,041,319    24,845,094 
Retained earnings   10,913,800    10,455,804 
Treasury stock, 782,837 shares at July 31, 2015 and April 30, 2015, respectively, at cost   (6,932,035)   (6,932,035)
Total stockholders' equity   31,090,590    30,425,063 
Total liabilities and stockholders' equity  $43,403,397   $43,143,013 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

 2 

 

 

Nevada Gold & Casinos, Inc.

Consolidated Statements of Operations

(unaudited)

  

   Three Months Ended 
   July 31,   July 31, 
   2015   2014 
Revenues:          
Casino  $14,098,696   $14,151,990 
Food and beverage   2,443,110    2,368,941 
Other   452,671    440,107 
Gross revenues   16,994,477    16,961,038 
Less promotional allowances   (1,051,703)   (1,052,424)
Net revenues   15,942,774    15,908,614 
Expenses:          
Casino   8,047,306    8,203,967 
Food and beverage   1,313,369    1,270,650 
Other   65,594    67,703 
Marketing and administrative   4,140,955    4,112,620 
Facility   493,154    483,666 
Corporate expense   749,467    586,447 
Depreciation and amortization   510,794    545,035 
Gain on sale of assets   (163,481)   (8,032)
Total operating expenses   15,157,158    15,262,056 
Operating income   785,616    646,558 
Non-operating income (expenses):          
Interest income   25,880    31,155 
Interest expense and amortization of loan issue costs   (119,593)   (167,763)
Interest rate swap expense   (17,612)   (21,200)
Change in swap fair value   11,217    18,308 
Income before income tax expense   685,508    507,058 
Income tax expense   (227,512)   (153,029)
Net income  $457,996   $354,029 
Per share information:          
Net income per common share - basic and diluted  $0.03   $0.02 
           
Basic weighted average number of shares outstanding   16,416,737    16,200,135 
           
Diluted weighted average number of shares outstanding   16,605,308    16,338,534 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

 3 

 

 

Nevada Gold & Casinos, Inc.

Consolidated Statements of Cash Flows

(unaudited)

 

   Three Months Ended 
   July 31,   July 31, 
   2015   2014 
Cash flows from operating activities:          
Net income  $457,996   $354,029 
Adjustments to reconcile net income to net cash provided by operating activities:          
Depreciation and amortization   510,794    545,035 
Change in deferred income taxes   227,512    153,031 
Amortization of deferred loan issuance costs   41,265    22,522 
Stock-based compensation   28,674    13,619 
Gain on sale of assets   (163,481)   (8,032)
Amortization of deferred rent   7,911    1,099 
Change in swap fair value   (11,217)   (18,308)
Other   868    (2)
Changes in operating assets and liabilities:          
Restricted cash   189,347    (128,537)
Receivables and other assets   (1,082,156)   (935,665)
Accounts payable and accrued liabilities   (1,176,279)   981,677 
Net cash provided by (used in) operating activities   (968,766)   980,468 
Cash flows from investing activities:          
Purchase of property and equipment   (116,212)   (140,785)
Collections on notes receivable   94,306    88,848 
Deposit paid for casino acquisition   (1,500,000)   - 
Proceeds from the sale of assets   300,000    9,000 
Net cash used in investing activities   (1,221,906)   (42,937)
Cash flows from financing activities:          
Repayment of credit facilities   (701,054)   (400,000)
Employee stock plan purchases   15,207    12,423 
Repayment of capital lease   (25,372)   - 
Proceeds from credit facilities   1,500,000    - 
Payment of loan costs   (149,500)   - 
Cash proceeds from exercise of stock options   163,650    - 
Net cash provided by (used in) financing activities   802,931    (387,577)
           
Net decrease in cash and cash equivalents   (1,387,741)   549,954 
Cash and cash equivalents at beginning of period   8,541,670    7,738,985 
Cash and cash equivalents at end of period  $7,153,929   $8,288,939 
           
Supplemental cash flow information:          
Cash paid for interest  $89,675   $165,841 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

 4 

 

 

Nevada Gold & Casinos, Inc.

 

Notes to Consolidated Financial Statements

 

Note 1.   Basis of Presentation

 

The interim financial information included herein is unaudited. However, the accompanying consolidated financial statements include all adjustments of a normal recurring nature which, in the opinion of management, are necessary to present fairly our Consolidated Balance Sheets at July 31, 2015 and April 30, 2015, Consolidated Statements of Operations for the three months ended July 31, 2015 and 2014, and Consolidated Statements of Cash Flows for the three months ended July 31, 2015 and 2014. Although we believe the disclosures in these financial statements are adequate to make the interim information presented not misleading, certain information relating to our organization and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been condensed or omitted in this Form 10-Q pursuant to Securities and Exchange Commission (“SEC”) rules and regulations. These financial statements should be read in conjunction with the audited consolidated financial statements for the year ended April 30, 2015 and the notes thereto included in our Annual Report on Form 10-K. The results of operations for the three months ended July 31, 2015 are not necessarily indicative of the results expected for the full year.

 

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period and disclosure of contingent liabilities. On an ongoing basis, we evaluate our estimates, including those related to bad debts, investments, intangible assets and goodwill, property, plant and equipment, income taxes, employment benefits and contingent liabilities. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ from those estimates.

 

Note 2.   Critical Accounting Policies

 

Revenue Recognition

 

We record revenues from casino operations and interest on notes receivable on the accrual basis as earned. The dates on which payments are collected may vary depending upon the term of the contracts or note receivable agreements. Interest income related to notes receivable is recorded when earned and its collectability is reasonably certain.

 

The retail value of food and beverage and other services furnished to guests without charge is included in gross revenue and deducted as promotional allowances. Net revenues do not include the retail amount of food, beverage and other items provided gratuitously to customers. We record the redemption of coupons and points for cash as a reduction of revenue as they are earned. These amounts are included in promotional allowances in the accompanying consolidated statements of operations. The estimated cost of providing such complimentary services included in casino expense in the accompanying consolidated statements of operations was as follows:

 

   Three Months Ended 
   July 31, 2015   July 31, 2014 
Food and beverage  $777,586   $781,267 
Other   669    38,084 
Total cost of complimentary services  $778,255   $819,351 

 

Fair Value

 

U.S. generally accepted accounting principles defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date and establishes a three-level valuation hierarchy for disclosure of fair value measurements. The valuation hierarchy categorizes assets and liabilities measured at fair value into one of three different levels depending on the observability of the inputs employed in the measurement. The three levels are as follows:

 

 5 

 

 

Level 1 – Observable inputs such as quoted prices in active markets at the measurement date for identical, unrestricted assets or liabilities.

 

Level 2 – Other inputs that are observable directly or indirectly such as quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability.

 

Level 3 – Unobservable inputs for which there is little or no market data and which we make our own assumptions about how market participants would price the assets and liabilities.

 

The following describes the valuation methodologies used by us to measure fair value:

 

Real estate held for sale is recorded at fair value less selling costs.

 

Goodwill and indefinite lived intangible assets are recorded at carrying value and tested for impairment annually, or more frequently, using projections of discounted future cash flows.

 

Interest rate swaps are adjusted on a recurring basis pursuant to accounting standards for fair value measurements. We categorize our interest rate swap as Level 2 for fair value measurement.

 

Concentrations of Credit Risk

 

Financial instruments that potentially subject us to concentrations of credit risk are primarily notes receivable, cash and cash equivalents, accounts receivable and payable, and long term debt. Management performs periodic evaluations of the collectability of these notes and accounts receivable. Our cash deposits are held with large, well-known financial institutions, and, at times, such deposits may be in excess of the federally insured limit. The recorded value of cash, accounts receivable and payable, approximate fair value based on their short term nature; the recorded value of long term debt approximates fair value as interest rates approximate current market rates.

 

New Accounting Pronouncements and Legislation Issued

 

In April 2014, the Financial Accounting Standards Board (the “FASB”) issued amended accounting guidance that changes the criteria for reporting discontinued operations and expands the related disclosure requirements. This guidance is effective in the first quarter of our fiscal year 2016. The Company adopted this guidance during the first quarter of fiscal year 2016 with no material impact on our financial position or results of operations. The Golden Nugget casino was not considered a significant component of the Company and therefore the sale of the Golden Nugget was not treated as discontinued operations.

 

In May 2014, the FASB issued a new accounting standard for revenue recognition. The new standard supersedes the existing accounting guidance for revenue recognition and amends certain accounting guidance for recognition of gains and losses on the transfer of non-financial assets. For public companies, the new guidance is effective for annual reporting periods (including interim periods within those periods) beginning after December 15, 2017, and early adoption is not permitted. Upon adoption, financial statement issuers may elect to apply the new standard either retrospectively to each prior reporting period presented, or using a modified retrospective approach by recognizing the cumulative effect of initial application and providing certain additional disclosures. The Company will adopt this guidance in the first quarter of fiscal year 2018. The Company is currently evaluating the impact this guidance will have on its financial position and results of operations, and has not yet determined which adoption method it will elect.

 

In April 2015, the FASB issued amended accounting guidance that changes the balance sheet presentation of debt issuance costs. Under the amended guidance, debt issuance costs will be presented on the balance sheet as a direct deduction from the related debt liability rather than as an asset. For public companies, the new guidance is effective for financial statements issued for fiscal years beginning after December 15, 2015 (including interim periods within those fiscal years), and is required to be applied on a retrospective basis. Early adoption is permitted. The Company expects to adopt this guidance in the first quarter of fiscal 2017. The adoption will have no effect on the Company's results of operations.

 

A variety of proposed or otherwise potential accounting guidance is currently under study by standard-setting organizations and certain regulatory agencies. Due to the tentative and preliminary nature of such proposed accounting guidance, the Company has not yet determined the effect, if any, that the implementation of such proposed accounting guidance would have on its condensed consolidated financial statements.

 

 6 

 

 

Note 3. Restricted Cash

 

As of July 31, 2015 and April 30, 2015, we maintained $1,535,092 and $1,724,439, respectively, in restricted cash, which consists of player-supported jackpot funds for our Washington operations.

 

Note 4.   Notes Receivable

 

As of July 31, 2015 and April 30, 2015, we had net notes receivable of $1,604,625 and $1,698,931, respectively.

 

G Investments, LLC

 

Upon completion of the sale of the Colorado Grande Casino on May 25, 2012, we recorded a $2,325,000 note receivable. This note bears interest at 6% per annum through the maturity date of June 1, 2017 and is secured with all of the assets of the Colorado Grande Casino, pledge of membership interest in G Investments, LLC (“GI”), and a personal guaranty by GI’s principal.

 

As of July 31, 2015, the remaining principal and interest payments are scheduled to be made as follows:

 

·Beginning August 1, 2015, twenty two monthly installments of principal and accrued interest of $40,000; and
·A final installment of $907,061 which is due on the maturity date of June 1, 2017.

 

GI has timely made required principal and interest payments.

 

Note 5. Goodwill and Intangible Assets

 

In connection with our acquisitions of the Washington mini-casinos on May 12, 2009, July 23, 2010 and July 18, 2011, as well as the South Dakota Gold slot route on January 27, 2012, we have goodwill and intangible assets of $20,309,526, net of amortization for intangible assets with finite lives. As a result of the sale of the Golden Nugget, Washington Gold’s goodwill was reduced by $74,958 during the current quarter.

 

The change in the carrying amount of goodwill and other intangible assets for the three months ended July 31, 2015 is as follows:

 

   Total   Goodwill   Other
intangible
 assets, net
 
Balance as of April 30, 2015  $20,664,960   $16,103,583   $4,561,377 
Current year amortization   (280,476)   -    (280,476)
Sale of Golden Nugget   (74,958)   (74,958)   - 
Balance as of July 31, 2015  $20,309,526   $16,028,625   $4,280,901 

 

Goodwill and net other intangible assets by segment as of July 31, 2015 are as follows:

 

   Total   Goodwill   Other
intangible
 assets, net
 
Washington Gold  $17,434,200   $14,092,154   $3,342,046 
South Dakota Gold   2,486,471    1,936,471    550,000 
Corporate   388,855    -    388,855 
Balance as of July 31, 2015  $20,309,526   $16,028,625   $4,280,901 

 

Intangible assets are generally amortized on a straight line basis over the useful lives of the assets.  State gaming registration and trade names are not amortizable. A summary of intangible assets and accumulated amortization as of July 31, 2015 are as follows:

 

   Gross
Carrying
Amount
   Accumulated
Amortization
   Net 
Customer relationships  $7,853,321   $(5,823,275)  $2,030,046 
Non-compete agreements   1,269,000    (1,269,000)   - 
State gaming registration   388,855    -    388,855 
Trade names   1,862,000    -    1,862,000 
Total  $11,373,176   $(7,092,275)  $4,280,901 

 

 7 

 

 

The useful lives of acquired intangibles related to customer relationships is 7.0 years. The estimated future annual amortization of intangible assets, which excludes trade names and state gaming registration, is as follows:

 

Period  Amount 
August 2015-July 2016  $1,034,036 
August 2016-July 2017   700,331 
August 2017-July 2018   217,067 
August 2018-July 2019   78,612 
Total  $2,030,046 

 

Note 6.   Other Assets 

 

Other assets consisted of the following:

   July 31, 2015   April 30, 2014 
Deferred loan issue cost, net  $369,558   $261,323 
Club Fortune deposit   1,500,000    - 
Other   70,657    70,657 
Other assets  $1,940,215   $331,980 

 

Debt issuance costs incurred in connection with the issuance of long-term debt are capitalized and amortized using the effective interest rate method over the expected terms of the related debt agreements and are included in other assets on our consolidated balance sheets.

 

On May 22, 2015, the Company announced that, through a subsidiary, it had entered into a definitive agreement with Gaming Ventures of Las Vegas, Inc. to acquire the assets of the Club Fortune Casino in Henderson, Nevada for a purchase price of $14.2 million in cash and approximately 1.2 million shares of the Company’s common stock. The closing is subject to regulatory and financing requirements and is expected to close in the third quarter of the Company’s fiscal year ended April 30, 2016. During the quarter ended July 31, 2015, the Company capitalized $149,500 in deferred loan issue costs incurred for loan commitment fees from Mutual of Omaha bank to finance the planned acquisition through an expansion of the Company’s existing credit facility. The Club Fortune Casino includes a 35,000 square foot building and 8 acres of land. The casino floor has approximately 25,000 square feet of gaming space, over 500 slot machines and 7 table games including a poker room. The facility also has a restaurant, two bars, an entertainment lounge, snack bar and gift shop. In May of 2015, the Company paid a $1.5 million deposit towards the acquisition.

 

Note 7.   Long-Term Debt  

 

Our long-term financing obligations are as follows:

 

   July 31,   April 30, 
   2015   2015 
$12.75 million reducing revolving credit agreement, LIBOR plus an Applicable Margin, increasing quarterly reductions beginning March 31, 2014 through September 30, 2018, and the remaining $4,250,000 principal due on the maturity date of December 10, 2018  $8,148,946   $7,350,000 
Less: current portion   -    - 
Total long-term financing obligations  $8,148,946   $7,350,000 

 

On December 18, 2013, the Company and certain of its subsidiaries entered into a new $12,750,000 Reducing Revolving Credit Agreement with Mutual of Omaha Bank (the “Credit Facility”).  The Credit Facility matures on December 10, 2018, and is secured by liens on substantially all of the real and personal property of the Company and its subsidiaries. The interest rate on the borrowing is based on LIBOR plus an Applicable Margin, which will be determined quarterly, based on the total leverage ratio for the trailing twelve month period. The interest rate on the balance as of July 31, 2015, is 3.188%. In addition, the Company is required to fix the interest rate on at least 50% of the borrowing through a swap agreement.

 

As of July 31, 2015, principal reductions due on the Credit Facility are as follows:

 

August 1, 2015 – July 31, 2016  $- 
August 1, 2016 – July 31, 2017  $1,448,946 
August 1, 2017 – July 31, 2018  $1,950,000 
August 1, 2018 – December 10, 2018  $4,750,000 

 

 8 

 

 

During the current quarter, the $276,054 net proceeds from the sale of the Golden Nugget permanently reduced the Credit Facility where the funds were paid directly to Mutual of Omaha Bank and the maximum borrowing was reduced by $276,054. In May of 2015, the Company paid a $1.5 million deposit towards the planned acquisition of Club Fortune by drawing on the Credit Facility for the full amount. As of July 31, 2015, we have paid $1,875,000 more than the scheduled principal reductions. Per the Credit Agreement, we have the right to re-borrow these prepaid funds.

 

The Credit Facility contains customary covenants for a facility of this nature, including, but not limited to, covenants requiring the preservation and maintenance of the Company’s assets and covenants restricting our ability to merge, transfer ownership, incur additional indebtedness, encumber assets and make certain investments.  The Credit Facility also contains covenants requiring the Company to maintain certain financial ratios including a maximum total leverage ratio ranging from 3.00 to 1.00 through July 31, 2015, 2.50 to 1.00 from August 1, 2015 through January 31, 2017, and 2.00 to 1.00 from February 1, 2017 until maturity; and lease adjusted fixed charge coverage ratio of no less than 1.15 to 1.00. We are in compliance with the covenant requirements of the Credit Facility as of July 31, 2015.

 

In connection with the refinancing transaction in the third quarter of fiscal 2014, the Company paid $450,000 in fees and other costs which have been capitalized and included in other assets on the consolidated balance sheet. During the quarter ended July 31, 2015, the Company capitalized $149,500 in deferred loan issue costs incurred for loan commitment fees from Mutual of Omaha bank to finance the planned acquisition through an expansion of the Company’s existing credit facility. Fees for the planned refinancing will be amortized beginning at the commencement of the loan and acquisition, currently expected during our third quarter of fiscal 2016.

 

In August 2014, we completed installation of computer hardware and related software. We financed the acquisition by signing a three year capital lease with the company we purchased the equipment from. We financed $38,282 which was scheduled to be repaid in 36 equal monthly installments. As of July 31, 2015, we have repaid the remaining balance of the capital lease obligation.

 

Note 8.   Interest Rate Swap

 

We are required by the Credit Facility to have a secured interest rate swap for at least 50% of the remaining Credit Facility principal balance. The Company has an approved interest rate swap policy which establishes guidelines for the use and management of interest rate swaps to either reduce the cost or hedge existing or planned debt. The policy states that the Company shall not enter into swap transactions for speculative purposes. At the inception of any hedge agreement, as required by ASC 815, Derivatives and Hedging, the Company documented the hedging relationship and the risk management objective and strategy for the undertaking of all qualifying hedges.

 

On January 17, 2014, the Company entered into a swap transaction with Mutual of Omaha Bank (“MOOB”), which has a calculation period as of the tenth day of each month through the maturity date of the Credit Facility. As of July 31, 2015, the Company had one outstanding interest rate swap with MOOB with a notional amount of $5,150,000 at a swap rate of 1.52%, which as of July 31, 2015, effectively converts $5,150,000 of our floating-rate debt to a synthetic fixed rate of 4.52%. Under the terms of the swap agreement, the Company pays a fixed rate of 1.52% and receives variable rate based on one-month LIBOR as of the first day of each floating-rate calculation period. Under the International Swap Dealers Association, Inc. (“ISDA”) confirmation, the floating index as of July 31, 2015 is set at 0.18670%.

 

The Company did not designate the interest rate swap as a cash flow hedge and the interest rate swap did not qualify for hedge accounting under ASC Topic 815. Changes in our interest rate swap fair value are recorded in our Consolidated Statements of Operations.

 

As required by ASC 815, on a quarterly basis, the Company assesses whether any changes to the hedge instrument, or underlying debt agreement, have occurred which would alter the original designation of the hedge instrument. Each quarter, the Company receives fair value statements from the counterparty, MOOB. The fair value of the interest rate swap is determined using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of the derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including forward interest rate curves. To comply with the provisions of ASC Topic 820, Fair Value Measurements and Disclosures, the Company incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. As a result of our evaluation of our interest rate swap as of July 31, 2015, we recorded an $11,217 increase in our interest rate swap fair value for the three months ended July 31, 2015. As of July 31, 2015, our interest rate swap fair value is a $57,734 liability which is included in other long-term liabilities on the consolidated balance sheet.

 

 9 

 

 

Note 9.  Equity Transactions and Stock Option Plans 

 

We have obligations under two employee stock plans: (1) the 2009 Equity Incentive Plan (the “2009 Plan”), and (2) the 2010 Employee Stock Purchase Plan, as amended (the “2010 Plan”).

 

The 2009 Plan

 

On April 14, 2009, our shareholders approved the 2009 Plan providing for the granting of awards to our directors, officers, employees and independent contractors. The number of common stock shares reserved for issuance under the 2009 Plan is 1,750,000 shares. The plan is administered by the Compensation Committee (the “Committee”) of the Board of Directors. The Committee has complete discretion under the plan regarding the vesting and service requirements, exercise price and other conditions. Under the 2009 Plan, the Committee is authorized to grant the following types of awards:

 

·Stock Options including Incentive Stock Options (“ISO”),
·Options not intended to qualify as ISOs,
·Stock Appreciation Rights, and
·Restricted Stock Grants.

 

To date, the Committee has only awarded stock options for stock-based compensation. Our practice has been to issue new or treasury shares upon the exercise of stock options. Stock option rights granted under the 2009 Plan generally have 5 or 10 year terms and vest in two or three equal annual installments, with some options grants providing for immediate vesting for a portion of the grant.

 

A summary of activity under our share-based payment plans for the three months ended July 31, 2015 is presented below:

  

                Weighted        
          Weighted     Average        
          Average     Remaining     Aggregate  
          Exercise     Contractual     Intrinsic  
    Shares     Price     Term (Year)     Value  
Outstanding at April 30, 2015     895,000     $ 1.08                  
Granted     -                          
Exercised     (85,000 )   $ 1.40                  
Forfeited or expired     -                          
Outstanding at July 31, 2015     810,000     $ 1.09       6.89     $ 425,500  
                                 
Exercisable at July 31, 2015     660,000     $ 1.06       6.37     $ 367,000  
                                 
Available for grant at July 31, 2015     685,000                          

  

There were 85,000 stock options exercised during the three months ended July 31, 2015. As of July 31, 2015, there was a total of $128,054 of unamortized compensation cost related to stock options, which is expected to be recognized over a weighted-average of approximately 1.13 years.

 

Compensation cost for stock options granted will be based on the fair value of each award, measured by applying the Black-Scholes model on the date of grant and using the weighted-average assumptions of (i) expected volatility, (ii) expected term, (iii) expected dividend yield, (iv) risk-free interest rate and (v) forfeiture rate. Expected volatility is based on historical volatility of our stock. The expected term considers the contractual term of the option as well as historical exercise and forfeiture behavior. The risk-free interest rate is based on the rates in effect on the grant date for U.S. Treasury instruments with maturities matching the relevant expected term of the award.

 

The 2010 Plan

 

On October 11, 2010, our shareholders approved the 2010 Plan which permits all our eligible employees, including employees of certain of our subsidiaries, to purchase shares of our common stock through payroll deductions at a purchase price not to be less than 90% of the fair market value of the shares on each purchase date. The number of shares available for issuance under the 2010 Plan is a total of 500,000 shares.  On November 30, 2010, our Board of Directors amended the 2010 Plan, effective December 1, 2010, to allow its participants to contribute up to a maximum of twenty (20%) percent of their paid compensation. The 2010 Plan became available for employee participation on January 1, 2011, employee payroll deductions began in January of 2011, and shares are to be purchased at the end of each calendar quarter. As of July 31, 2015, approximately 405,106 shares were issued under the 2010 Plan.

 

 10 

 

 

 

Note 10. Stock Offering and Warrants

 

On November 7, 2011, we closed on the sale of 2,625,652 shares of our common stock at a price of $1.65 per share to certain investors through a registered direct offering for the total proceeds of approximately $4,300,000, net of offering costs of approximately $444,000. In addition, for each share of our common stock purchased by an investor, we issued to such investor a warrant to purchase 0.75 shares of our common stock. The warrants have an exercise price of $2.18 per share and are exercisable for five years from the initial exercise date, which date is six months from the date of their issuance. The warrants expire on May 7, 2017. The proceeds of the offering were used to assist us in the $5,100,000 acquisition of South Dakota Gold.

 

Note 11.   Computation of Earnings Per Share

 

The following is presented as a reconciliation of the numerators and denominators of basic and diluted earnings per share computations:

 

   Three Months Ended 
   July 31,   July 31, 
   2015   2014 
Numerator:          
Basic and Diluted:          
Net income available to common shareholders  $457,996   $354,029 
           
Denominator:          
Basic weighted average number of common shares outstanding   16,416,737    16,200,135 
Dilutive effect of common stock options and warrants   188,571    138,399 
           
Diluted weighted average number of common shares outstanding   16,605,308    16,338,534 
           
Net income per common share - basic  $0.03   $0.02 
Net income per common share - diluted  $0.03   $0.02 

 

Note 12.   Commitments and Contingencies  

 

As a result of acquiring facilities in Washington and South Dakota and our commitment to lease office space for our corporate headquarters in Las Vegas, Nevada, as of July 31, 2015, we have future annual minimum lease payments as follows:

 

Period  Corporate Office   Washington Gold   South Dakota
Gold
   Total 
                 
August 2015-July 2016  $51,631   $2,709,399   $55,200   $2,816,230 
August 2016-July 2017   21,616    2,079,928    27,600    2,129,144 
August 2017-July 2018   -    2,019,201    -    2,019,201 
August 2018-July 2019   -    1,891,799    -    1,891,799 
August 2019-July 2020   -    1,496,873    -    1,496,873 
Thereafter   -    2,614,341    -    2,614,341 
   $73,247   $12,811,541   $82,800   $12,967,588 

 

We continue to pursue additional development opportunities that may require, individually and in the aggregate, significant commitments of capital, extensions of credit, up-front payments to third parties and guarantees by us of third-party debt.

 

We indemnified our officers and directors for certain events or occurrences while the director or officer is or was serving at our request in such capacity. The maximum potential amount of future payments we could be required to make under these indemnification obligations is unlimited; however, we have a Directors and Officers Liability Insurance policy that limits our exposure and enables us to recover a portion of any future amounts paid, provided that such insurance policy provides coverage.

 

Note 13. Income Taxes 

 

For the three months ended July 31, 2015 and 2014, our effective income tax rates were 33% and 30%, respectively. The lower effective tax rate for the three month period ended July 31, 2014 was primarily due to an increased income tax benefit related to income tax credits as a percentage of the lower pre-tax income.

 

We filed income tax returns in the United States federal jurisdiction and in several state jurisdictions. No jurisdiction is currently examining our tax filings for any tax years.

 

 13 

 

 

Note 14.   Segment Reporting  

 

We have three business segments (i) Washington Gold, (ii) South Dakota Gold, and (iii) Corporate. For the three month period ended July 31, 2015, the Washington Gold segment consists of the Washington mini-casinos, the South Dakota Gold segment consists of our slot route operation in South Dakota, the Corporate column includes the vacant land in Colorado and its taxes and maintenance expenses.

 

Summarized financial information for our reportable segments is shown in the following table. The Corporate column includes corporate-related items, results of insignificant operations, and segment loss and income and expenses not allocated to other reportable segments.

 

   As of and for the Three Months Ended  July 31, 2015 
   Washington
Gold
   South Dakota
Gold
   Corporate   Total 
Net revenue  $13,763,744   $2,179,030   $-   $15,942,774 
Casino and food and beverage expense   7,449,584    1,911,091    -    9,360,675 
Marketing and administrative expense   4,066,833    74,122    -    4,140,955 
Facility and other expenses   522,757    35,991    749,467    1,308,215 
Depreciation and amortization   356,178    151,520    3,096    510,794 
Operating income (loss)   1,534,758    3,421    (752,563)   785,616 
Assets   19,899,834    1,583,623    21,919,940    43,403,397 
Additions to property and equipment   96,397    19,815    -    116,212 

 

   As of and for the Three Months Ended July 31, 2014 
   Washington
Gold
   South Dakota
Gold
   Corporate   Total 
Net revenue  $13,342,038   $2,565,344   $1,232   $15,908,614 
Casino and food and beverage expense   7,276,749    2,197,868    -    9,474,617 
Marketing and administrative expense   4,034,802    77,818    -    4,112,620 
Facility and other expenses   515,669    24,218    589,897    1,129,784 
Depreciation and amortization   370,682    172,666    1,687    545,035 
Operating income (loss)   1,144,136    92,774    (590,352)   646,558 
Assets   15,810,755    1,990,413    27,962,738    45,763,906 
Additions to property and equipment   126,453    14,332    -    140,785 

 

Item 2.   Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

The following discussion and analysis (“MD&A”) should be read in conjunction with our Consolidated Financial Statements and Notes thereto included in Item 1 of this Quarterly Report and with Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our Annual Report for the year ended April 30, 2015, filed on Form 10-K with the SEC on July 27, 2015.

 

Critical Accounting Policies

 

Our discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements. We prepare these financial statements in conformity with GAAP. As such, we are required to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the periods presented. We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances, the results of which form the basis for making judgments. On an on-going basis, we evaluate our estimates; however, actual results may differ from these estimates under different assumptions or conditions. There have been no material changes or developments in our evaluation of the accounting estimates and the underlying assumptions or methodologies that we believe to be Critical Accounting Policies and Estimates as disclosed in our Annual Report for the year ended April 30, 2015, filed on Form 10-K with the SEC on July 27, 2015.

 

 14 

 

 

Executive Overview

 

We were formed in 1977 and, since 1994, have primarily been a gaming company involved in financing, developing, owning and operating gaming properties. Our gaming facility operations are located in the United States of America (“U.S.”), specifically in the states of Washington and South Dakota. Our business strategy will continue to focus on owning and operating gaming establishments. If we are successful, our future revenues, costs and profitability can be expected to increase. However, there is no guarantee that we will be successful in implementing our business strategy in the future and, as such, no guarantee that our future revenues, costs and profitability will increase.

 

COMPARISON OF THE THREE MONTHS ENDED JULY 31, 2015 AND JULY 31, 2014

 

Net revenues. Net revenues were $15.9 million for both the three month period ended July 31, 2015, and the same period ended July 31, 2014. Washington revenues were up $0.4 million, or 3%, due to an 8% increase table drop offset by a 1% decrease in hold percentage. Our Washington table play increase was helped by the closure of a competitor. While table games revenue was above the prior year quarter, poker revenue continues to lag behind prior periods. South Dakota revenues decreased $0.4 million, or 3%, due to lower handle as a result of fewer units in operation and a slightly lower hold percentage. Our primary market of tourists has been flat compared to prior year. Overall, total company casino revenue decreased by $0.1 million but was offset by $0.1 million increase in food and beverage revenue.

 

Total operating expenses. Total operating expenses decreased $0.1 million to $15.2 million from $15.3 million for the three month period ended July 31, 2015, compared to the same period ended July 31, 2014. Casino expenses decreased $0.2 million, or 2%, when compared to the same period last year primarily due to lower revenue driven commissions and gaming taxes in South Dakota. Corporate expenses increased $0.2 million, or 28%, when compared to the same period last year due to acquisition related expenses of $0.2 million. A $0.2 million gain was recorded on the sale of the Golden Nugget during the quarter. Marketing and administration, facilities, food and beverage, depreciation and amortization and other expenses remained relatively steady when compared to the same period last year.

 

Non-operating income (expense). Net interest expense decreased $39,393, or 28%, for the three month period ended July 31, 2015, compared to the three month period ended July 31, 2014. The decrease resulted primarily from the $3.8 million reduction of outstanding debt since July 31, 2014.

 

Income Taxes. For the three months ended July 31, 2015, our effective income tax rate was 33% compared to 30% in the prior year’s quarter ended July 31, 2014, and the federal statutory rate of 34%. The lower effective tax rate for the three month period ended July 31, 2014 was primarily due to an increased income tax benefit related to income tax credits as a percentage of the lower pre-tax income.

 

Net income. Net income was $457,996 compared to $354,029 for the three month periods ended July 31, 2015 and July 31, 2014, respectively. The increase is primarily the result of the gain on the sale of the Golden Nugget in Washington. The Golden Nugget had been operating at a $0.3 million annual operating loss in the prior year.

 

Non-GAAP Financial Measures

 

The term “adjusted EBITDA” is used by us in presentations, quarterly earnings calls, and other instances as appropriate. Adjusted EBITDA is defined as net income before interest, income taxes, depreciation and amortization, non-cash goodwill and other long-lived asset impairment charges, write-offs of project development costs, acquisition costs, litigation charges, non-cash stock grants, non-cash employee stock purchase plan discounts, exclusion of net income or loss from assets held for sale, and net losses/gains from asset dispositions. Adjusted EBITDA excludes the impact of slot and table games hold percentages compared to the prior year. Adjusted EBITDA is presented because it is a required component of financial ratios reported by us to our lenders, and it is also frequently used by securities analysts, investors, and other interested parties, in addition to and not in lieu of GAAP results, to compare to the performance of other companies that also publicize this information.

 

Adjusted EBITDA is not a measurement of financial performance under GAAP and should not be considered as an alternative to net income as an indicator of our operating performance or any other measure of performance derived in accordance with GAAP.

 

 15 

 

 

The following table shows adjusted EBITDA by segment for the three months ended July 31, 2015 and July 31, 2014:

 

   For the three months ended July 31, 2015 
   Washington Gold   South Dakota
Gold
   Corporate -
Other
   Total 
Revenues:                    
Gross revenues  $14,810,002   $2,184,475   $-   $16,994,477 
Less promotional allowances   (1,046,258)   (5,445)   -    (1,051,703)
Net revenues   13,763,744    2,179,030    -    15,942,774 
                     
Expenses:   12,031,265    2,021,203    539,151    14,591,619 
Adjusted EBITDA  $1,732,479   $157,827   $(539,151)  $1,351,155 

 

   For the three months ended July 31, 2014 
   Washington Gold   South Dakota
Gold
   Corporate -
Other
   Total 
Revenues:                    
Gross revenues  $14,375,412   $2,584,394   $1,232   $16,961,038 
Less promotional allowances   (1,033,374)   (19,050)   -    (1,052,424)
Net revenues   13,342,038    2,565,344    1,232    15,908,614 
                     
Expenses:   11,826,122    2,307,937    575,033    14,709,092 
Adjusted EBITDA  $1,515,916   $257,407   $(573,801)  $1,199,522 

 

Adjusted EBITDA reconciliation to net income:

 

   For the three months ended 
   July 31, 2015   July 31, 2014 
         
Net income  $457,996   $354,029 
Adjustments:          
Net interest expense and change in swap fair value   100,108    139,500 
Income tax expense   227,512    153,029 
Depreciation and amortization   510,794    545,035 
Acquisition expenses   180,120    - 
Stock options amortization and employee stock purchases   30,195    14,862 
Gain on sale of assets   (163,481)   (8,032)
Deferred rent amortization   7,911    1,099 
Adjusted  EBITDA  $1,351,155   $1,199,522 

 

 16 

 

 

Liquidity and Capital Resources

 

Historical Cash Flows

 

The following table sets forth our consolidated net cash provided by (used in) operating, investing and financing activities for the three month periods ended July 31, 2015 and July 31, 2014:

 

   Three Months Ended 
   July 31,   July 31, 
   2015   2014 
Net cash provided by (used in):          
Operating activities  $(968,766)  $980,468 
Investing activities  $(1,221,906)  $(42,937)
Financing activities  $802,931   $(387,577)

 

Operating activities. Net cash provided by operating activities during the three month period ended July 31, 2015, decreased by $1,949,234 over the comparable period in the prior fiscal year. This decrease mainly resulted from the $0.8 million decrease in payroll and related liability and the $0.7 million increase in South Dakota operation’s prepaid and receivables as a result of the payment of annual device fees.

 

Investing activities. Net cash used in investing activities during the three month period ended July 31, 2015 increased by $1,178,969 over the comparable period in the prior fiscal year primarily due to the $1.5 million deposit paid toward the Club Fortune Casino acquisition, offset by the $0.3 million proceeds from the asset sale of the Golden Nugget casino.

 

Financing activities. Net cash provided by financing activities during the three month period ended July 31, 2015 increased $1,190,508 over the comparable period in the prior fiscal year. The increase mainly resulted from borrowing the $1.5 million Club Fortune deposit, offset by the $0.3 million payment on our Credit Facility from the Golden Nugget proceeds.

 

Future Sources and Uses of Cash

 

We expect that our future liquidity and capital requirements will be affected by:

 

- capital requirements related to future acquisitions;

- cash flow from operations;

- working capital requirements;

- obtaining debt financing; and

- debt service requirements.

 

On May 22, 2015, the Company announced that, through a subsidiary, it had entered into a definitive agreement with Gaming Ventures of Las Vegas, Inc. to acquire the assets of the Club Fortune Casino in Henderson, Nevada for a purchase price of $14.2 million in cash and approximately 1.2 million shares of the Company’s common stock. The closing is subject to regulatory and financing requirements and is expected to close in the third quarter of the Company’s fiscal year ended April 30, 2016. The Company has a commitment from Mutual of Omaha bank to finance the acquisition with an expansion of the Company’s existing credit facility. The Club Fortune Casino includes a 35,000 square foot building and 8 acres of land. The casino floor has approximately 25,000 square feet of gaming space, over 500 slot machines and 7 table games including a poker room. The facility also has a restaurant, two bars, an entertainment lounge, snack bar and gift shop. In May of 2015, the Company paid a $1.5 million deposit towards the acquisition, financed through the current Mutual of Omaha credit agreement.

 

On June 29, 2015, the company sold its Golden Nugget casino in Tukwila, Washington for $0.3 million in cash. A gain on the sale of assets of $0.2 million was recorded in the first quarter of fiscal year ending April 30, 2016. Net Proceeds from the sale were used to further reduce the Company’s debt. The Golden Nugget generated a $0.3 million operating loss for the year ended April 30, 2015.

 

On July 31, 2015, outstanding indebtedness was $8,148,946. Our next principal reduction is due September 30, 2016. As of July 31, 2015, principal payments on the Credit Facility are as follows:

 

August 1, 2015 – July 31, 2016  $- 
August 1, 2016 – July 31, 2017  $1,448,946 
August 1, 2017 – July 31, 2018  $1,950,000 
August 1, 2018 – December 10, 2018 (date of maturity)  $4,750,000 

 

On July 31, 2015, excluding restricted cash of $1,535,092, we had cash and cash equivalents of $7,153,929. The restricted cash consists of funds for player supported jackpots.

 

Our Consolidated Financial Statements have been prepared assuming that we will have adequate availability of cash resources to satisfy our liabilities in the normal course of business. We have made arrangements to ensure that we have sufficient working capital to fund our obligations as they come due. We believe that funds from operations will provide sufficient working capital for us to meet our obligations as they come due; however, there can be no assurance that we will be successful. Should cash resources not be sufficient to meet our current obligations as they come due, repay or refinance our long-term debt, and acquire operations that generate positive cash flow, we would be required to curtail our activities and maintain, or grow, at a pace that cash resources could support.

 

 17 

 

 

Liquidity

 

The current ratio is an indication of a company’s market liquidity and ability to meet creditor’s demands. Acceptable current ratios vary from industry to industry and are generally between 1.25 and 3.0 for healthy businesses. If a company’s current ratio is in this range, then it generally indicates good short-term financial strength. If current liabilities exceed current assets (the current ratio is below 1), then the company may have problems meeting its short-term obligations. As of July 31, 2015, we have a 3.4 ratio, which is sufficient to service debt and maintain operations.

 

Off-Balance Sheet Arrangements

 

None.

 

Item 3.   Quantitative and Qualitative Disclosures about Market Risk

 

Not required for smaller reporting companies.

 

Item 4.   Controls and Procedures

 

Disclosure controls and procedures. We maintain disclosure controls and procedures that are designed to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit to the SEC under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified by the SEC’s rules and forms, and that information is accumulated and communicated to our management, including our President and Chief Financial Officer (“CFO”), as appropriate to allow timely decisions regarding required disclosure.

 

In accordance with Rules 13a-15 and 15d-15 of the Exchange Act, we carried out an evaluation, under the supervision and with the participation of management, including our President and CFO, of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. As a result of our evaluation, they concluded that our disclosure controls and procedures were effective as of July 31, 2015.

 

Changes in internal controls over financial reporting. There have not been any changes in our control over financial reporting during the three months ended July 31, 2015 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

Part II. Other Information

 

Item 1.   Legal Proceedings

 

We are not currently involved in any material legal proceedings.

 

Item 1A. Risk Factors

 

There have been no material changes in our risk factors as previously disclosed in our Annual Report on Form 10-K for the fiscal year ended April 30, 2015, filed with the SEC on July 27, 2015.

 

Item 2.   Unregistered Sales of Equity Securities and Use of Proceeds

 

None.

 

Item 3.   Defaults Upon Senior Securities

 

None.

 

Item 4.   Mine Safety Disclosures

 

Not applicable.

 

 18 

 

 

Item 5.   Other Information

 

None.

 

Item 6.   Exhibits

 

See the Index to Exhibits following the signature page hereto for a list of the exhibits filed pursuant to Item 601 of Regulation S-K

 

INDEX TO EXHIBITS

 

EXHIBIT

NUMBER

  DESCRIPTION
10.1   First Amendment to Asset Purchase Agreement between Colorado Grande Enterprises, Inc., as seller, and G Investments, LLC, as purchaser (filed previously as Exhibits 10.1 to the Company’s Form 8-K filed May 29, 2012).
     
10.2   Credit Agreement dated December 10, 2013 by and among Mutual of Omaha Bank, as the Lender, Nevada Gold & Casinos, Inc., as parent, and Restricted Subsidiaries, as borrower (filed previously as Exhibits 10.9 to the Company’s Form 10-Q filed December 23, 2013).
     
31.1(*)   Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
     
31.2(*)   Certification of Principal Financial and Accounting Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
     
32.1(*)   Certification of Principal Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
     
32.2(*)   Certification Principal Financial and Accounting Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
     
101.INS(†)   XBRL Instance Document
     
101.SCH(†)   XBRL Taxonomy Schema
     
101.CAL(†)   XBRL Taxonomy Calculation Linkbase
     
101.DEF(†)   XBRL Taxonomy Definition Linkbase
     
101.LAB(†)   XBRL Taxonomy Label Linkbase
     
101.PRE(†)   XBRL Taxonomy Presentation Linkbase

 

 

* Filed herewith.

In accordance with SEC Release 33-8238, Exhibits 32.1 and 32.2 are being furnished and not filed.

 

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SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

Date: September 14, 2015

 

  Nevada Gold & Casinos, Inc.
     
  By: /s/ James D. Meier
  James D. Meier
 

Chief Financial Officer

(Principal Financial Officer)

 

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