Exhibit 99.3

Unaudited Pro Forma Combined Financial Information

 

 

The following Nevada Gold & Casinos, Inc. (the “Company”) unaudited pro forma combined balance sheet as of October 31, 2015, and unaudited pro forma combined statements of operations for the six months ended October 31, 2015 and the fiscal year ended April 30, 2015, give effect to the acquisition of Club Fortune Casino, located in Henderson, Nevada, on December 1, 2015. The Company is accounting for the acquisition of Club Fortune Casino in accordance with ASC 805 Business Combinations. The Company is currently in the process of determining the fair value of the assets and liabilities acquired in the acquisition of Club Fortune Casino in order to complete its purchase price allocation. The Company is also currently completing the working capital adjustment of the estimated working capital amount paid at the acquisition date.

 

The presentation of the unaudited pro forma financial information is prepared in conformity with Article 11 of Regulation S-X. The unaudited pro forma combined balance sheet is presented as if the transaction had occurred on October 31, 2015 and the pro forma combined statements of operations for the six months ended October 31, 2015 and the unaudited pro forma combined statements of operations for the fiscal year ended April 31, 2015 are presented as if the transaction had occurred on May 1, 2015 and May 1, 2014, respectively. The unaudited pro forma financial information is based on the historical financial statements of the Company and of Club Fortune Casino and pro forma adjustments resulting from the acquisition of Club Fortune that are described in the Notes herein. The pro forma adjustments are based on currently available information and the actual adjustments may differ from the pro forma adjustments. The unaudited pro forma balance sheet and the unaudited pro forma statements of operations were derived using the preliminary fair value of the assets and liabilities acquired in the Club Fortune Casino acquisition. These fair values are subject to change as the Company completes the fair value determination process.

 

The unaudited pro forma combined financial statements should be read in conjunction with the historical consolidated financial statements and the related notes thereto included in the Nevada Gold & Casinos, Inc. 2015 Annual Report on Form 10-K for the fiscal year ended April 30, 2015 and the Quarterly Report on Form 10-Q for the six months ended October 31, 2015.

 

The unaudited pro forma information is presented for illustrative purposes only and may not be indicative of the results that would have been obtained had the acquisition of assets actually occurred on the dates assumed nor is it necessary indicative of Nevada Gold & Casinos, Inc.’s future consolidated results of operations or financial position.

 

 

 

Nevada Gold & Casinos, Inc.
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
AS OF OCTOBER 31, 2015
		Nevada Gold & Casinos, Inc.				Club Fortune Casino				Adjustments					Pro Forma
Assets
Current assets
Cash and cash equivalents		$	8,513,482			$	1,489,945			($	1,357,179	)	I		$	8,646,248
Restricted cash			1,441,007				-				-					1,441,007
Accounts receivable, net			639,219				360,606				(356,446	)	A			643,379
Prepaid expenses			1,109,355				457,957				(428,198	)	A			1,139,114
Deferred tax asset, current portion			267,594				-				-					267,594
Notes receivable, current portion			301,221				-				-					301,221
Inventory and other current assets			330,264				87,635				(11,416	)	A			406,483
Total current assets			12,602,142				2,396,143				-2,153,239					12,845,046
Real estate held for sale			1,100,000				-				-					1,100,000
Notes receivable, net of current portion			1,107,670				-				-					1,107,670
Goodwill			16,028,625				-				2,831,434		A			18,860,059
Intangible assets			4,077,359				-				1,592,600		A,C			5,669,959
Property and equipment, net			3,794,401				14,207,914				(2,257,344	)	A			15,744,971
Deferred tax asset, net of current portion			2,773,568				-				-					2,773,568
Other assets			1,925,690				-				7,778		D			1,933,468
Total assets		$	43,409,455			$	16,604,057			$	21,229				$	60,034,741
Liabilities and Stockholders' Equity
Currrent liabilities
Accounts payable and accrued liabilities		$	1,172,598			$	390,269				(209,761	)	A		$	1,353,106
Accrued payroll and related			1,613,286				273,465				(198,229	)	A			1,688,522
Accrued player's club points and progressive jackpots			1,530,605				408,021				(5,800	)	A			1,932,826
Current portion of capital lease			-				48,175				96,844		A			145,019
Current portion of long-term debt			-				410,961				(170,961	)	A,B			240,000
Total current liabilities			4,316,489				1,530,891				(487,907	)				5,359,473
Long-term debt, net of current portion			6,740,000				5,386,984				8,373,016		A,B			20,500,000
Other long-term liabilities			556,993				-				-					556,993
Total liabilities			11,613,482				6,917,875				7,885,109					26,416,466
Stockholder's equity
Common stock			2,076,933				1				142,856		A,B			2,219,790
Additional paid-in capital			25,119,286				1,595,970				463,554		A,B			27,178,810
Retained earnings			11,531,789				8,090,211				(8,470,290	)	A,C			11,151,710
Treasury stock			(6,932,035	)			-				-					(6,932,035	)
Total stockholder's equity			31,795,973				9,686,182				(7,863,880	)				33,618,275
Total liabilites and stockholders'equity		$	43,409,455			$	16,604,057			$	21,229				$	60,034,741

 

 

 

 

 

Nevada Gold & Casinos, Inc.
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
SIX MONTHS ENDED OCTOBER 31, 2015
		Nevada Gold & Casinos, Inc.				Club Fortune Casino				Adjustments					Pro Forma
Revenue
Casino		28,360,893				6,652,483				-					35,013,376
Food and beverage			4,922,187				1,579,574				-					6,501,761
Other			907,884				315,104				-					1,222,988
Gross revenues			34,190,964				8,547,161				-					42,738,125
Less promotional allowances			(2,113,975	)			(1,180,537	)			-					(3,294,512	)
Net revenues			32,076,989				7,366,624				-					39,443,613
Expenses
Casino			16,048,910				2,451,057				-					18,499,967
Food and beverage			2,608,717				1,008,272				-					3,616,989
Other			128,660				59,419				-					188,079
Marketing and administrative			8,183,095				2,729,193				380,079		C			11,292,367
Facility			985,221				302,798				-					1,288,019
Corporate			1,488,462				-				-					1,488,462
Depreciation and amortization			999,503				430,100				324,712		E			1,754,315
Loss (gain) on sale of assets			(161,430	)			179,716				-					18,286
Total operating expenses			30,281,138				7,160,555				704,791					38,146,484
Operating income			1,795,851				206,069				(704,791	)				1,297,129
Non-operating income (expense)
Interest income			50,630				-				-					50,630
Interest expense and amortization of loan issue costs			(213,620	)			(97,276	)			(230,127	)	F			(541,023	)
Interest rate swap expense			(30,326	)			-				(124,487	)	F			(154,813	)
Change in swap fair value			2,084				-				-					2,084
Income before income tax expense			1,604,619				108,793				(1,059,405	)				654,007
Income tax expense			(528,634	)			-				306,272		G			(222,362	)
Net income			1,075,985				108,793				(753,133	)				431,645
Per share information:
Net income per common share - basic and diluted		$	0.07												$	0.02
Weighted average common shares outstanding
Basic			16,453,307								1,190,476					17,643,783
Diluted			16,651,156								1,190,476					17,841,632

 

 

 

 

Nevada Gold & Casinos, Inc.
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
TWELVE MONTHS ENDED APRIL 30, 2015
		Nevada Gold & Casinos, Inc.				Club Fortune Casino				Adjustments					Pro Forma
Revenue
Casino		56,710,812				13,322,511				-					70,033,323
Food and beverage			10,225,484				3,072,659				-					13,298,143
Other			1,782,013				458,441				-					2,240,454
Gross revenues			68,718,309				16,853,611				-					85,571,920
Less promotional allowances			(4,368,756	)			(2,182,863	)			-					(6,551,619	)
Net revenues			64,349,553				14,670,748				-					79,020,301
Expenses
Casino			31,795,905				4,861,723									36,657,628
Food and beverage			5,386,699				1,979,406									7,366,105
Other			275,181				131,819				-					407,000
Marketing and administrative			16,888,629				5,386,836				380,079		C			22,655,544
Facility			2,059,730				550,182				-					2,609,912
Corporate			2,443,805				-				-					2,443,805
Depreciation and amortization			2,168,003				1,292,611				217,013		E			3,677,627
Write downs and other charges			32,694				21,279				-					53,973
Total operating expenses			61,050,646				14,223,856				597,092					75,871,594
Operating income			3,298,907				446,892				(597,092	)				3,148,707
Non-operating income (expense)
Interest income			117,639				-				-					117,639
Interest expense and amortization of loan issue costs			(705,511	)			(181,434	)			(247,018	)	F			(1,133,963	)
Interest rate swap expense			(10,600	)			-				(229,401	)	F			(240,001	)
Change in swap fair value			(7,539	)			-				-					(7,539	)
Income before income tax expense			2,692,896				265,458				(1,073,511	)				1,884,843
Income tax expense			(885,819	)			-				244,972		G			(640,847	)
Net income			1,807,077				265,458				(828,539	)				1,243,996
Per share information:
Net income per common share - basic and diluted		$	0.11												$	0.07
Weighted average common shares outstanding
Basic			16,228,396								1,190,476					17,418,872
Diluted			16,345,795								1,190,476					17,536,271

 

 

 

  

NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION

 

On November 30, 2015 Nevada Gold & Casinos, Inc. completed the acquisition of the Club Fortune Casino in Henderson, Nevada pursuant to an Asset Purchase Agreement dated May 22, 2015 between Gaming Ventures of Las Vegas, Inc., as Seller and Nevada Gold & Casinos LV, LLC, a wholly owned subsidiary of the Company, as Buyer.

 

The purchase price for the acquisition, exclusive of working capital, is $14,159,623 and 1,190,476 shares of restricted common stock of the Company for a total purchase price of $16,362,004.

 

The acquisition was financed pursuant to an Amended & Restated expansion of the Company’s existing Credit Agreement with Mutual of Omaha Bank. Under the Amended and Restated Credit Agreement dated November 30, 2015 (the “Amended Credit Facility”) the aggregate lending commitment is $23,000,000 and the maturity date has been extended to November 30, 2020.

 

The Amended Credit Facility 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 initial Applicable Margin is 4.5%.

 

The Amended 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.

 

To record the Club Fortune purchase transaction, including working capital, based on the company’s initial allocation of the purchase price:

 

Cash and cash equivalents		$	1,216,824
Accounts receivable, net			4,160
Prepaid expenses			29,759
Inventory and other current assets			76,219
Goodwill			2,831,434
Intangible assets			1,580,000
Property and equipment, net			11,950,570
Accounts payable and accrued liabilities			(180,508	)
Accrued payroll and related			(75,236	)
Accrued player's club points and progressive jackpots			(402,221	)
Capital lease			(145,019	)
Total consideration		$	16,885,982

 

 

 

 

Pro Forma Adjustments for the Unaudited Pro Forma Combined Balance Sheet as of October 31, 2015 and the Unaudited Pro Forma Statements of Operations for the Six Months Ended October 31, 2015 and the Twelve Months Ended April 31, 2015

 

A.

To record the Club Fortune purchase transaction, including working capital, based on the company’s initial allocation of the purchase price:

 

		Club Fortune Casino				Purchase Price Allocation				Adjustment
Cash and cash equivalents		$	1,489,945			$	1,216,824			$	(273,121	)
Accounts receivable, net			360,606				4,160				(356,446	)
Prepaid expenses			457,957				29,759				(428,198	)
Inventory and other current assets			87,635				76,219				(11,416	)
Goodwill			-				2,831,434				2,831,434
Intangible assets			-				1,580,000				1,580,000
Property and equipment, net			14,207,914				11,950,570				(2,257,344	)
Total assets		$	16,604,057			$	17,688,966			$	1,084,909
Accounts payable and accrued liabilities		$	390,269			$	180,508			$	(209,761	)
Accrued payroll and related			273,465				75,236				(198,229	)
Accrued player's club points and progressive jackpots			408,021				402,221				(5,800	)
Current portion of capital lease			48,175				145,019				96,844
Current portion of long-term debt			410,961				-				(410,961	)
Long-term debt, net of current portion			5,386,984				-				(5,386,984	)
Total liabilities		$	6,917,875			$	802,984			$	(6,114,891	)
Common stock		$	1				-			$	(1	)
Additional paid-in capital			1,595,970				-				(1,595,970	)
Retained earnings			8,090,211				-				(8,090,211	)
Total stockholder's equity		$	9,686,182				-			$	(9,686,182	)

 

B.

The purchase price was $16,362,004 plus working capital of $523,978. The acquisition was paid with $14,683,601 in cash funded by borrowing an additional $14 million, and issuing 1,190,476 shares of common stock, $0.12 par value per share, of the Company at $1.85 to the sellers for the remaining $2,202,381. The adjustment for consideration paid for Club Fortune Casino is as follows:

 

Cash		$	683,601
Current portion of long-term debt			240,000
Long-term debt, net of current portion			13,760,000
Common stock			142,857
Additional paid-in capital			2,059,524
		$	16,885,982

 

 

C.

To record additional purchase transaction costs of $380,079 for professional fees expensed to Marketing and Administrative expense and $12,600 for licensing costs capitalized to Intangible Assets.

 

D.

To record $7,778 of additional loan costs and related amortization.

E.

To record $324,712 and $217,013 of depreciation and amortization adjustments for the six and twelve month periods, respectively, on the acquired assets:

 

		Estimated fair value				Estimated useful life
Land		$	2,100,000			n/a
Land improvements			200,000			15 years
Equipment			3,850,570			1 - 10 years
Building			5,800,000			39 years
Total property and equipment			11,950,570
Customer relationships			820,000			7 years
Tradename			650,000			7 years
Non-compete agreement			110,000			3 years
Goodwill			2,531,434			n/a
Total intangible assets			4,411,434
Purchase price, excluding working capital		$	16,362,004

 

 

		Six months ended October 31, 2015				Twelve months ended April 30, 2015
Estimated depreciation and amortization expense		$	754,812			$	1,509,624
Historical depreciation and amortization expense			(430,100	)			(1,292,611	)
Pro forma adjustments to depreciation expense		$	324,712			$	217,013

 

F.

To record the net increase to interest expense resulting from interest on the amended loan agreement and swap agreement to finance the acquisition of Club Fortune (with a combined interest rate of 5.62%) and the amortization of $385,199 of new debt issuance costs (as follows).

 

		Six Months Ended October 31, 2015				Twelve Months Ended April 30, 2015
Elimination of interest expense and amortization of debt issuance costs – Club Fortune debt		$	(220,100	)		$	(655,394	)
Interest expense on amended loan agreement			442,695				883,167
Amortization of new debt issuance costs			7,532				19,245
Pro forma adjustments to interest expense		$	230,127			$	247,018
			Six Months Ended October 31, 2015				Twelve Months Ended April 30, 2015
Historical interest rate swap expense		$	(30,326	)		$	(79,524	)
Estimated interest rate swap expense			154,813				308,925
Pro forma adjustments to interest rate swap expense		$	124,487			$	229,401

 

 

 

G.

To record the pro forma federal income tax expense at 34%.

H.

To eliminate Club Fortune expenses that are not related to normal operations:

 

		Six Months Ended October 31, 2015				Twelve Months Ended April 30, 2015
Seller's debt costs		$	97,276			$	181,434

 

I.

The adjustments to cash are as follows:

 

Working capital adjustment (Note A)		$	(273,121	)
Acquisition (Note B)			(683,601	)
Transaction costs (Note C)			(392,679	)
Loan costs (Note D)			(7,778	)
Pro forma adjustments to cash		$	(1,357,179	)