U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: June 22, 2001
FULL HOUSE RESORTS, INC.
------------------------
(Name of Small Business Issuer in Its Charter)
Delaware 0-20630 13-3391527
------------------------------- ------------ -------------------
(State or Other Jurisdiction of (Commission (I.R.S. Employer
Incorporation or Organization) file number) Identification No.)
2300 West Sahara Avenue, Suite 450 - Box 23, Las Vegas, Nevada 89102
--------------------------------------------------------------------
(Address and zip code of principal executive offices)
(702) 221-7800
--------------------------------------------------
(Issuer's Telephone Number, Including Area Code)
Item 2. Acquisition or Disposition of Assets.
On March 30, 2001, Full House Resorts, Inc. ("Company") acquired GTECH
Corporation's 50% interest in three joint venture projects that had been jointly
owned by the two companies: Gaming Entertainment (Michigan), LLC, owner of a
Management Agreement with the Nottawaseppi Huron Band of Potawatomi Indians to
develop and manage a gaming facility near Battle Creek, Michigan; and, Gaming
Entertainment (California), LLC, owner of a Management Agreement with the Torres
Martinez Band of Desert Cahuilla Indians to develop and manage a gaming facility
near Palm Springs, California; Gaming Entertainment, LLC, owner of an agreement
continuing through August 2002, with the Coquille Indian Tribe, which conducts
gaming at The Mill Casino in Oregon. The purchase price was $1.8 million and was
funded through the Company's existing line of credit from Coast Community Bank.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Financial Statements of Gaming Entertainment (Michigan) LLC and
Gaming Entertainment (California) LLC for the years ended
December 31, 2000 and 1999 and for the Period from April 1, 1995
(Inception) to December 31, 2000, and of Gaming Entertainment LLC
for the years ended December 31, 2000 and 1999, together with the
Independent Auditors' Reports.
(b) Pro Forma Consolidated Balance Sheet as of December 31, 2000 and
Pro Forma Consolidated Statement of Operations for the year ended
December 31, 2000.
(c) Exhibits.
2.5 Assignment and Sale Agreement dated March 30, 2001 by and
among GTECH Corporation, Dreamport, Inc., GTECH Gaming
Subsidiary 2 Corporation, Full House Resorts, Inc., and Full
House Subsidiar, Inc. (Incorporated by reference to Exhibit
2.5 of the Company's Current Report on Form 8-K dated April
12, 2001).
23.1 Consent of Deloitte & Touche LLP.
23.2 Consent of Deloitte & Touche LLP.
23.3 Consent of Deloitte & Touche LLP.
-2-
GAMING ENTERTAINMENT (MICHIGAN) L.L.C.
(A Development Stage Joint Venture Company)
Financial Statements for the Years Ended December 31, 2000 and 1999 and for the
Period from April 1, 1995 (Inception) to December 31, 2000 and Independent
Auditors' Report
INDEPENDENT AUDITORS' REPORT
To the Management Committee and Members
of Gaming Entertainment (Michigan) L.L.C.:
We have audited the accompanying balance sheets of Gaming Entertainment
(Michigan) L.L.C. (A Development Stage Joint Venture Company) (the "Company") as
of December 31, 2000 and 1999, and the related statements of loss, members'
capital, and cash flows for the years ended December 31, 2000 and 1999, and for
the period from April 1, 1995 (Inception) to December 31, 2000. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of the Company as of December 31, 2000 and
1999, and the results of its operations and its cash flows for the years ended
December 31, 2000 and 1999, and for the period from April 1, 1995 (Inception) to
December 31, 2000, in conformity with accounting principles generally accepted
in the United States of America.
The Company is in the development stage as of December 31, 2000. As discussed in
Note 1 and Note 5 to the financial statements, successful completion of the
Company's gaming project and, ultimately, the attainment of profitable
operations is dependent upon future events, including obtaining the necessary
regulatory approvals and achieving a level of revenues adequate to recover the
Company's investment in the project and to support the Company's cost structure.
As discussed in Note 2 to the financial statements, in 1999, the Company changed
its method of accounting for start-up costs.
/s/ DELOITTE & TOUCHE, LLP
Miami, Florida
January 26, 2001
-3-
GAMING ENTERTAINMENT (MICHIGAN) L.L.C.
(A Development Stage Joint Venture Company)
BALANCE SHEETS
DECEMBER 31, 2000 AND 1999
------------------------------------------------------------------------------------------------
ASSETS 2000 1999
CURRENT ASSETS - Cash $ 12,372 $ 23,010
NOTES RECEIVABLE 752,291 240,000
PURCHASED GAMING RIGHTS 4,155,212 4,155,212
------------- --------------
TOTAL $ 4,919,875 $ 4,418,222
============= ==============
LIABILITIES AND MEMBERS' CAPITAL
CURRENT LIABILITIES:
Payable to members $ 2,125,686 $ 1,142,935
Accrued expenses 34,086 8,500
------------- --------------
Total current liabilities 2,159,772 1,151,435
NOTES PAYABLE TO MEMBERS 752,291 240,000
MEMBERS' CAPITAL 2,007,812 3,026,787
------------- --------------
TOTAL $ 4,919,875 $ 4,418,222
============= ==============
See notes to financial statements.
-4-
GAMING ENTERTAINMENT (MICHIGAN) L.L.C.
(A Development Stage Joint Venture Company)
STATEMENTS OF LOSS
YEARS ENDED DECEMBER 31, 2000 AND 1999 AND
PERIOD FROM APRIL 1, 1995 (INCEPTION) TO DECEMBER 31, 2000
----------------------------------------------------------------------------------------------------------
Cumulative
from Inception
to December 31,
2000 1999 2000
OPERATING COSTS AND EXPENSES-
General and administrative $ 1,019,338 $ 949,093 $ 2,174,272
------------- -------------- -------------
OPERATING LOSS (1,019,338) (949,093) (2,174,272)
OTHER INCOME - Interest income 363 423 1,872
------------- -------------- -------------
NET LOSS BEFORE CUMULATIVE EFFECT
OF CHANGE IN ACCOUNTING PRINCIPLE (1,018,975) (948,670) (2,172,400)
CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING FOR START-UP COSTS - 1,260,818 1,260,818
------------- -------------- -------------
NET LOSS $ (1,018,975) $ (2,209,488) $ (3,433,218)
============= ============== =============
See notes to financial statements.
-5-
GAMING ENTERTAINMENT (MICHIGAN) L.L.C.
(A Development Stage Joint Venture Company)
STATEMENTS OF MEMBERS' CAPITAL
YEARS ENDED DECEMBER 31, 2000 AND 1999 AND
PERIOD FROM APRIL 1, 1995 (INCEPTION) TO DECEMBER 31, 2000
--------------------------------------------------------------------------------
FHS DGS GGS2 Total
INCEPTION, APRIL 1, 1995 $ - $ - $ - $ -
Capital contributions by members 264,714 132,357 132,356 529,427
Less capital contributions
receivable from members (12,500) (6,250) (6,250) (25,000)
Net loss (35,962) (17,981) (17,980) (71,923)
------------- ------------ ------------- -------------
BALANCE, DECEMBER 31, 1995 216,252 108,126 108,126 432,504
Capital contributions by members 4,372,446 108,616 108,617 4,589,679
Net loss (39,518) (19,759) (19,760) (79,037)
------------- ------------ ------------- -------------
BALANCE, DECEMBER 31, 1996 4,549,180 196,983 196,983 4,943,146
Capital contributions by members 173,462 86,731 86,731 346,924
Net loss (9,712) (4,856) (4,856) (19,424)
------------- ------------ ------------- -------------
BALANCE, DECEMBER 31, 1997 4,712,930 278,858 278,858 5,270,646
Net loss (17,185) (8,593) (8,593) (34,371)
------------- ------------ ------------- -------------
BALANCE, DECEMBER 31, 1998 4,695,745 270,265 270,265 5,236,275
Net loss (1,104,744) (552,372) (552,372) (2,209,488)
------------- ------------ ------------- -------------
BALANCE, DECEMBER 31, 1999 3,591,001 (282,107) (282,107) 3,026,787
Net loss (509,488) (254,744) (254,743) (1,018,975)
------------- ------------ ------------- -------------
BALANCE, DECEMBER 31, 2000 $ 3,081,513 $ (536,851) $ (536,580) $ 2,007,812
============= ============ ============= =============
See notes to financial statements.
-6-
GAMING ENTERTAINMENT (MICHIGAN) L.L.C.
(A Development Stage Joint Venture Company)
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2000 AND 1999 AND
PERIOD FROM APRIL 1, 1995 (INCEPTION) TO DECEMBER 31, 2000
--------------------------------------------------------------------------------
Cumulative
from Inception
to December 31,
2000 1999 2000
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (1,018,975) $ (2,209,488) $ (3,433,218)
Adjustments to reconcile net loss to net cash
used in operating activities:
Cumulative effect of change in accounting
for start-up costs - 1,260,818 1,260,818
Accrued expenses 25,586 (5,000) 34,086
------------- ------------- -------------
Net cash used in operating activities (993,389) (953,670) (2,138,314)
------------- ------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Advances of notes receivable (512,291) (190,870) (752,291)
Increase in payable to members 982,751 951,490 2,125,686
Advances from notes payable to members 512,291 190,870 752,291
Capital contribution - - 25,000
------------- ------------- -------------
Net cash provided by financing activities 982,751 951,490 2,150,686
------------- ------------- -------------
(DECREASE) INCREASE IN CASH (10,638) (2,180) 12,372
CASH, BEGINNING OF PERIOD 23,010 25,190 -
------------- ------------- -------------
CASH, END OF PERIOD $ 12,372 $ 23,010 $ 12,372
============= ============= =============
SUPPLEMENTAL SCHEDULE OF NONCASH
INVESTING AND FINANCING ACTIVITIES -
Capital contribution of gaming rights and
Development costs $ - $ - $ 5,416,030
============= ============= =============
See notes to financial statements.
-7-
GAMING ENTERTAINMENT (MICHIGAN) L.L.C.
(A Development Stage Joint Venture Company)
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2000 AND 1999 AND PERIOD FROM
APRIL 1, 1995 (INCEPTION) TO DECEMBER 31, 2000
--------------------------------------------------------------------------------
1. ORGANIZATION AND DEVELOPMENT STAGE ACTIVITIES
Full House Resorts, Inc. ("FHRI") and GTECH Corporation ("GTECH")
entered into a series of agreements to jointly pursue certain existing
and future gaming opportunities. Although the agreements were dated
December 29, 1995, the parties agreed to share equally in the equity
investment, financing responsibility, and revenues and expenses of
certain projects commencing April 1, 1995. Pursuant to the agreements,
four joint venture corporations equally owned by subsidiaries of FHRI
and GTECH have been formed.
Gaming Entertainment (Michigan) L.L.C. (the "Company"), one of these
joint ventures, was incorporated as a Delaware limited liability
company to conduct gaming development activities with the Nottawaseppi
Huron Band of Potawatomi (the "Tribe"). The Company is in the
development stage as of December 31, 2000 for financial reporting
purposes. The successful completion of the Company's gaming project
and, ultimately, the attainment of profitable operations is dependent
upon future events, including achieving a level of revenues adequate to
recover the Company's investment in the project and to support the
Company's cost structure.
In December 1998, the Michigan State Legislature approved the
Tribal-State Gaming Compacts that permit a casino to be opened by the
Tribe in Battle Creek, Michigan. Additional approvals are required from
the Bureau of Indian Affairs and various other state and federal
agencies prior to the commencement of gaming operations.
The members of the Company and their membership interest are as
follows:
. Full House Subsidiary, Inc. (a wholly owned subsidiary of FHRI)
("FHS") - 50% interest. Prior to January 30, 1998, a 25% interest
was held by Full House Joint Venture Subsidiary, Inc. (a wholly
owned subsidiary of FHRI ("FHJVS"). FHJVS was merged into FHS on
January 30, 1998.
. Dreamport - a GTECH company (a wholly owned subsidiary of GTECH)
("DGS") - 25% interest.
. GTECH Gaming Subsidiary 2 Corporation (a wholly owned subsidiary
of GTECH) ("GGS2") - 25% interest.
Purchased Gaming Rights - During 1995, FHRI acquired 85% of the
development rights to current and future gaming projects with the
Tribe. Effective December 29, 1995, FHRI agreed, subject to the
approval of the Tribe, to assign to the Company the development rights.
The approval of the Tribe was obtained, and the development rights were
assigned by FHRI in November 1996. Also in November 1996, the Company
was assigned the remaining development rights with the Tribe
-8-
(15%) for future contingently payable fees based on the gaming projects
revenues. FHRI has agreed to make loans to the Company for its portion
of the financing of the project. GTECH has agreed to contribute cash
and has agreed to make loans to the Company for GTECH's portion of the
financing of the project. GTECH will also provide project management,
technology, and other expertise to analyze and develop/manage the
implementation of opportunities developed by the Company, the cost of
which will be shared equally, in those instances specified in the
Master Agreement, by FHRI and GTECH.
The members contributed the following to capital (recorded at the
predecessor cost to the members):
Cumulative
from
2000 1999 inception
Gaming development costs and rights $ - $ - $5,416,030
Cash capital contribution - - 25,000
------ ------ ----------
Total capital contributions $ - $ - $5,441,030
====== ====== ==========
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Allocation of Profits, Losses and Distributions - Profits, losses and
distributions are allocated among the members based upon their
proportionate interests in the Company.
Gaming Development Costs - Costs associated with gaming rights
activities for which the Company has signed agreements are capitalized
until the project begins operations and are amortized over the terms of
the respective agreements. If a project is unsuccessful and its value
is determined to be impaired, the related deferred costs are charged to
expense at the time of impairment. The Company reviews each project in
process and the costs capitalized on a quarterly basis for accounting
purposes to determine whether any impairment of the assets has
occurred. Management believes that it is probable that these assets
will be recovered through management revenues earned in the future.
Payable to Members - Payable to members arises from the allocation of
profits, losses and distributions and from the direct payment of
certain operating expenses of the Company by the members.
Income Taxes - The Company is organized as a limited liability company
and as such is not subject to federal income taxes. Taxable income or
loss from the Company's operations is recognized in the tax returns of
the members. Accordingly, income taxes have not been provided for in
the accompanying financial statements.
Use of 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 at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. The principal estimates made in preparing the
Company's financial statements are the capitalization of gaming rights
and the assessment of the recoverability of the assets. Actual results
could differ from those estimates.
Change in Accounting Policy - Effective January 1, 1999, the Company
adopted the American Institute of Certified Public Accountants'
Statement of Position (SOP) 98-5, Reporting on the Costs of Start-Up
Activities. SOP 98-5 provides guidance on the financial reporting of
start-up and organizational costs and requires the costs of start-up
activities to be expensed as incurred. As of January 1, 1999, the
Company expensed deferred start-up costs of $1,260,818 as a cumulative
effect of a change in accounting principle.
-9-
3. NOTES RECEIVABLE
The notes receivable at December 31, 2000 and 1999 consist of advances
made by the Company to the Tribe to begin preliminary planning for the
development of a gaming and entertainment facility in Battle Creek,
Michigan. The notes receivable will be paid from the Tribe's share of
net revenue, on a monthly basis, over the term of the management
agreement, upon commencement of the planned gaming and entertainment
operations and will bear interest at a rate to be agreed upon by the
Tribe and the Company.
4. NOTES PAYABLE TO MEMBERS
During 2000 and 1999, the Company received proceeds from the issuance
of notes payable to members. The notes proceeds are used for advances
to the Tribe, and the notes are secured by the notes receivable from
the Tribe. The notes payable will bear the same terms and conditions as
the notes receivable from the Tribe (see Note 3).
5. GAMING LEGISLATION
The Huron Potawatomi achieved final federal recognition as a tribe in
April 1996 and obtained a Gaming Compact from Michigan's governor early
in 1997 to operate an unlimited number of electronic gaming devices as
well as roulette, Keno, dice and banking card games. The Michigan
Legislature ratified the Compact by resolution in December 1999, along
with compacts for three other tribes. A suit was filed in 2000 by
"Taxpayers of Michigan Against Casinos" in Ingham County Circuit Court
challenging the constitutionality of the approval process of these
gaming compacts. On January 18, 2000, Judge Peter D. Houk issued a
ruling that the compacts must be approved by a legislative bill rather
than by resolution. The State of Michigan filed an appeal to the
Michigan Court of Appeals on February 4, 2000. The Company, as an
intervening defendant, joined in the appeal filing.
The Company and the Tribe have continued to move forward with their
casino development plans while working towards a favorable resolution
of the current litigation. The management agreements, along with the
required licensing applications, were submitted to the National Indian
Gaming Commission in December 2000. The parties have identified a
suitable parcel of land for the gaming enterprise, which is under
option, and have submitted a Fee to Trust application to the Bureau of
Indian Affairs.
On November 5, 1996, Michigan voters approved licenses for three gaming
facilities within the City of Detroit, approximately 100 miles from the
Battle Creek area. Two temporary facilities began operations in 2000,
and the third is expected to open in 2001. The Company does not believe
that operation of three gaming facilities in Detroit will have a
material adverse impact on the proposed Tribe casino.
6. SUBSEQUENT EVENT
On March 30, 2001, FHRI acquired GTECH's 50% interest in the Company.
The Tribe and FHRI continue to evaluate strategies to optimize the
Tribe's gaming enterprise opportunities.
* * * * *
-10-
GAMING ENTERTAINMENT (CALIFORNIA) L.L.C.
(A Development Stage Joint Venture Company)
Financial Statements for the Years Ended December 31, 2000 and 1999
and for the Period from April 1, 1995 (Inception) to December 31, 2000
and Independent Auditors' Report
INDEPENDENT AUDITORS' REPORT
To the Management Committee and Members
of Gaming Entertainment (California) L.L.C.:
We have audited the accompanying balance sheets of Gaming Entertainment
(California) L.L.C. (A Development Stage Joint Venture Company) (the "Company")
as of December 31, 2000 and 1999, and the related statements of loss, members'
capital, and cash flows for the years ended December 31, 2000 and 1999, and for
the period from April 1, 1995 (inception) to December 31, 2000. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of Gaming Entertainment (California) L.L.C. as
of December 31, 2000 and 1999, and the results of its operations and its cash
flows for the years ended December 31, 2000 and 1999, and for the period from
April 1, 1995 (inception) to December 31, 2000, in conformity with accounting
principles generally accepted in the United States of America.
The Company is in the development stage as of December 31, 2000. As discussed in
Note 1 and Note 3 to the financial statements, successful completion of the
Company's gaming project and, ultimately, the attainment of profitable
operations is dependent upon future events including obtaining the necessary
regulatory approvals and achieving a level of revenues adequate to recover the
Company's investment in the project and to support the Company's cost structure.
As discussed in Note 2 to the financial statements, in 1999 the Company changed
its method of accounting for start-up costs.
/s/ DELOITTE & TOUCHE LLP
Miami, Florida
January 26, 2001
-11-
GAMING ENTERTAINMENT (CALIFORNIA) L.L.C.
(A Development Stage Joint Venture Company)
BALANCE SHEETS
DECEMBER 31, 2000 AND 1999
--------------------------------------------------------------------------------
ASSETS 2000 1999
CURRENT ASSETS - Cash $ 11,609 $ 22,957
------------ -------------
TOTAL $ 11,609 $ 22,957
============ -============
LIABILITIES AND MEMBERS' CAPITAL
CURRENT LIABILITIES:
Payable to members $ 430,543 $ 292,193
Accrued expenses 8,500 8,500
------------ -------------
Total current liabilities 439,043 300,693
MEMBERS' CAPITAL (427,434) (277,736)
------------ -------------
TOTAL $ 11,609 $ 22,957
============ =============
See notes to financial statements.
-12-
GAMING ENTERTAINMENT (CALIFORNIA) L.L.C.
(A Development Stage Joint Venture Company)
STATEMENTS OF LOSS
YEARS ENDED DECEMBER 31, 2000 AND 1999 AND
PERIOD FROM APRIL 1, 1995 (INCEPTION) TO DECEMBER 31, 2000
-------------------------------------------------------------------------------------------------------------------
Cumulative
from Inception
to December 31,
2000 1999 2000
OPERATING COSTS AND EXPENSES-
General and administrative $ 150,049 $ 83,427 $ 454,223
------------- -------------- -------------
OPERATING LOSS (150,049) (83,427) (454,223)
OTHER INCOME - Interest income 351 494 1,789
------------- -------------- -------------
NET LOSS BEFORE CUMULATIVE EFFECT
OF CHANGE IN ACCOUNTING PRINCIPLE (149,698) (82,933) (452,434)
CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE - 240,765 240,765
------------- -------------- -------------
NET LOSS $ (149,698) $ (323,698) $ (693,199)
============= ============== =============
See notes to financial statements.
-13-
GAMING ENTERTAINMENT (CALIFORNIA) L.L.C.
(A Development Stage Joint Venture Company)
STATEMENTS OF MEMBERS' CAPITAL
YEARS ENDED DECEMBER 31, 2000 AND 1999 AND
PERIOD FROM APRIL 1, 1995 (INCEPTION) TO DECEMBER 31, 2000
-------------------------------------------------------------------------------------------------------------------
FHS DGS GGS2 Total
INCEPTION, APRIL 1, 1995 $ - $ - $ - $ -
Capital contributions by members 75,897 37,948 37,949 151,794
Less capital contributions
receivable from members (12,500) (6,250) (6,250) (25,000)
------------- ------------ ------------- -------------
BALANCE, DECEMBER 31, 1995 63,397 31,698 31,699 126,794
Capital contributions by members 51,670 25,835 25,834 103,339
Distributions to members (10,782) (5,391) (5,391) (21,564)
Net loss (32,679) (16,339) (16,340) (65,358)
------------- ------------ ------------- -------------
BALANCE, DECEMBER 31, 1996 71,606 35,803 35,802 143,211
Capital contributions by members 28,598 14,299 14,299 57,196
Net loss (36,922) (18,461) (18,460) (73,843)
------------- ------------ ------------- -------------
BALANCE, DECEMBER 31, 1997 63,282 31,641 31,641 126,564
Net loss (40,301) (20,151) (20,150) (80,602)
------------- ------------ ------------- -------------
BALANCE, DECEMBER 31, 1998 22,981 11,490 11,491 45,962
Net loss (171.940) (80,924) (80,925) (323,698)
------------- ------------ ------------- -------------
BALANCE, DECEMBER 31, 1999 (138,868) (69,434) (69,434) (277,736)
Net loss (74,849) (37,424) (37,425) (149,698)
------------- ------------ ------------- -------------
BALANCE, DECEMBER 31, 2000 $ (213,717) $ (106,858) $ (106,859) $ (427,434)
============= ============ ============= =============
See notes to financial statements.
-14-
GAMING ENTERTAINMENT (CALIFORNIA) L.L.C.
(A Development Stage Joint Venture Company)
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2000 AND 1999 AND
PERIOD FROM APRIL 1, 1995 (INCEPTION) TO DECEMBER 31, 2000
-------------------------------------------------------------------------------------------------------------------
Cumulative
from Inception
to December 31,
2000 1999 2000
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (149,698) $ (323,698) $ (693,199)
Adjustments to reconcile net loss to net cash
used in operating activities:
Cumulative effect of change in
accounting for start-up costs - 240,765 240,765
Accrued expenses - 1,000 8,500
Decrease in gaming development costs - - 21,564
------------- ------------- -------------
Net cash used in operating activities (149,698) (81,933) (422,370)
------------- ------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in payable to members 138,350 79,701 430,543
Capital contributed - - 25,000
Distributions to members - - (21,564)
------------- ------------- -------------
Net cash by financing activities 138,350 79,701 433,979
------------- ------------- -------------
(DECREASE) INCREASE IN CASH (11,348) (2,232) 11,609
CASH, BEGINNING OF PERIOD 22,957 25,189 -
------------- ------------- -------------
CASH, END OF PERIOD $ 11,609 $ 22,957 $ 11,609
============= ============= =============
SUPPLEMENTAL SCHEDULE OF NONCASH
INVESTING AND FINANCING ACTIVITIES -
Capital contribution of gaming
development costs $ - $ - $ 262,329
============= ============= =============
See notes to financial statements.
-15-
GAMING ENTERTAINMENT (CALIFORNIA) L.L.C.
(A Development Stage Joint Venture Company)
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2000 AND 1999 AND
PERIOD FROM APRIL 1, 1995 (INCEPTION) TO DECEMBER 31, 2000
--------------------------------------------------------------------------------
1. ORGANIZATION AND DEVELOPMENT STAGE ACTIVITIES
Full House Resorts, Inc. ("FHRI") and GTECH Corporation ("GTECH")
entered into a series of agreements to jointly pursue certain existing
and future gaming opportunities. Although the agreements were dated
December 29, 1995, the parties agreed to share equally in the equity
investment, financing responsibility, and revenues and expenses of
certain projects commencing April 1, 1995. Pursuant to the agreements,
four joint venture corporations equally owned by subsidiaries of FHRI
and GTECH have been formed.
Gaming Entertainment (California) L.L.C. (the "Company"), one of these
joint ventures, was incorporated as a Delaware limited liability
company to conduct gaming development activities with the Torres
Martinez Desert Cahuilla Indians (the "Tribe"). The Company is in the
development stage as of December 31, 2000. The successful completion of
the Company's gaming project and, ultimately, the attainment of
profitable operations is dependent upon future events, including
obtaining the necessary regulatory approvals and achieving a level of
revenues adequate to recover the Company's investment in the project
and to support the Company's cost structure.
The members of the Company and their membership interest are as
follows:
. Full House Subsidiary, Inc. (a wholly owned subsidiary of FHRI)
("FHS") - 50% interest. Prior to January 30, 1998, a 25% interest
was held by Full House Joint Venture Subsidiary, Inc. (a wholly
owned subsidiary of FHRI ("FHJVS"). FHJVS was merged into FHS on
January 30, 1998.
. Dreamport - a GTECH company (a wholly owned subsidiary of GTECH)
("DGS") - 25% interest.
. GTECH Gaming Subsidiary 2 Corporation (a wholly owned subsidiary
of GTECH) ("GGS2") - 25% interest.
On April 21, 1995, FHRI entered into a Gaming and Development Agreement
with the Tribe. Effective December 29, 1995, the financing obligation
and the gaming agreement (which had no recorded book value) were
contributed to capital by FHS and FHJVS. During 1997, the Company
entered into a new Class III Gaming Management Agreement with the Tribe
whereby the Company is required to provide financing for the
development of a gaming facility, and to provide management and
operating services in exchange for a management fee equal to 30% of net
revenues, as defined in the agreement for a period of seven years from
commencement of gaming operations. The Company has recorded the gaming
agreement at zero, the predecessor cost basis to FHRI. FHRI has agreed
to make loans to the Company for its portion of the financing of the
project.
-16-
GTECH agreed to contribute cash and has agreed to make loans to the
Company for GTECH's portion of the financing of the project. GTECH will
also provide project management, technology, and other expertise to
analyze and develop/manage the implementation of opportunities
developed by the Company, the cost of which will be shared equally, in
those instances specified in the Master Agreement, by FHRI and GTECH.
In addition, the members contributed to capital the following (recorded
at the predecessor cost to the members):
Cumulative from
2000 1999 Inception
Gaming development costs $ - $ - $ 262,329
Cash contributed - - 25,000
----------- ------------ ------------
Total capital contributions $ - $ - $ 287,329
----------- ------------ ------------
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Allocation of Profits, Losses and Distributions - Profits, losses and
distributions will be allocated among the members based upon their
proportionate interests in the Company.
Payable to members arises from the allocation of profits, losses and
distributions and from the direct payment of certain operating expenses
of the Company by the members.
Income Taxes - The Company is organized as a limited liability company
and as such is not subject to federal income taxes. Taxable income or
loss from the Company's operations is recognized in the tax returns of
the members. Accordingly, income taxes have not been provided for in
the accompanying financial statements.
Use of Estimates - The preparation of financial statements in
conformity with accounting principles generally accepted in the United
States of America 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. The principal estimates made in
preparing the Company's financial statements are the capitalization of
gaming development costs and the assessment of the recoverability of
the assets. Actual results could differ from those estimates.
Change in Accounting Policies - Effective January 1, 1999, the Company
adopted the American Institute of Certified Public Accountants'
Statement of Position ("SOP") 98-5, Reporting on the Costs of Start-Up
Activities. SOP 98-5 provides guidance on the financial reporting of
start-up and organizational costs and requires the costs of start-up
activities be expensed as incurred. As of January 1, 1999, the Company
expensed deferred start-up costs of $240,765 as a cumulative effect of
a change in accounting principle.
3. GAMING LEGISLATION
In November 1998, the "Tribal Government Gaming and Economic Self-
Sufficiency Act of 1998" (the "Act") was passed by the voters of
California in the general election. The Act guarantees any federally
recognized tribe within the state, that has land eligible for gaming,
the right to operate limited forms of Class III gaming under specified
terms. However, the Act's constitutionality is pending before the
California Supreme Court. The ultimate outcome of this action or its
effect on the future development of gaming operations by the Tribe
cannot presently be determined.
-17-
4. SUBSEQUENT EVENT
On March 30, 2001, FHRI acquired GTECH's 50% interest in the Company.
The Tribe and FHRI continue to evaluate strategies to optimize the
Tribe's gaming enterprise opportunities.
* * * * *
-18-
GAMING ENTERTAINMENT L.L.C.
(A Joint Venture Company)
Financial Statements for the Years Ended December 31, 2000 and 1999
and Independent Auditors' Report
INDEPENDENT AUDITORS' REPORT
To the Management Committee and Members
of Gaming Entertainment L.L.C.:
We have audited the accompanying balance sheets of Gaming Entertainment L.L.C.
(a Joint Venture Company) (the "Company") as of December 31, 2000 and 1999, and
the related statements of income, members' capital and cash flows for the years
then ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of the Company as of December 31, 2000 and
1999, and the results of its operations and its cash flows for the years then
ended, in conformity with accounting principles generally accepted in the United
States of America.
As discussed in Note 2 to the financial statements, in 1999 the Company changed
its method of accounting for start-up costs.
/s/ DELOITTE & TOUCHE LLP
Miami, Florida
January 26, 2001
-19-
GAMING ENTERTAINMENT L.L.C.
(A Joint Venture Company)
BALANCE SHEETS
DECEMBER 31, 2000 AND 1999
--------------------------------------------------------------------------------
ASSETS 2000 1999
CURRENT ASSETS
Cash $ - $ 200,022
Accounts receivable 177,596 175,124
Due from members 105,488 -
Other current assets - 3,379
------------- --------------
TOTAL $ 283,084 $ 378,525
============= ==============
LIABILITIES AND MEMBERS' CAPITAL
CURRENT LIABILITIES:
Payable to members $ - $ 175,023
Accrued expenses 98,444 16,500
------------- --------------
Total current liabilities 98,444 191,523
MEMBERS' CAPITAL 184,640 187,002
------------- --------------
TOTAL $ 283,084 $ 378,525
============= ==============
See notes to financial statements.
-20-
GAMING ENTERTAINMENT L.L.C.
(A Joint Venture Company)
STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 2000 AND 1999
--------------------------------------------------------------------------------
2000 1999
OPERATING REVENUES AND INCOME:
Participation fees $ 2,302,146 $ 2,297,181
OPERATING COSTS AND EXPENSES:
General and administrative 32,124 52,455
------------- -------------
OPERATING INCOME 2,270,022 2,244,726
OTHER INCOME:
Interest income 9,350 4,653
------------- -------------
NET INCOME BEFORE CUMULATIVE
EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE 2,279,372 2,249,379
CUMULATIVE EFFECT OF
CHANGE IN ACCOUNTING
FOR START-UP COSTS - 137,351
------------- -------------
NET INCOME $ 2,279,372 $ 2,112,028
============= =============
See notes to financial statements.
-21-
GAMING ENTERTAINMENT L.L.C.
(A Joint Venture Company)
STATEMENTS OF MEMBERS' CAPITAL
YEARS ENDED DECEMBER 31, 2000 AND 1999
--------------------------------------------------------------------------------
FHS DGS GGS2 Total
BALANCE, JANUARY 1, 1999 $ 166,825 $ 83,413 $ 83,412 $ 333,650
Distribution to members (1,129,338) (564,669) (564,669) (2,258,676)
Net income 1,056,014 528,007 528,007 2,112,028
------------- ------------ ------------- -------------
BALANCE, DECEMBER 31, 1999 93,501 46,751 46,750 187,002
Distribution to members (1,140,867) (570,434) (570,433) (2,281,734)
Net income 1,139,686 569,843 569,843 2,279,372
------------- ------------ ------------- -------------
BALANCE, DECEMBER 31, 2000 $ 92,320 $ 46,160 $ 46,160 $ 184,640
============= ============ ============= =============
See notes to financial statements.
-22-
GAMING ENTERTAINMENT L.L.C.
(A Joint Venture Company)
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2000 AND 1999
--------------------------------------------------------------------------------
2000 1999
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 2,279,372 $ 2,112,028
Adjustments to reconcile net loss to net
cash provided by operating activities:
Cumulative effect of change in
accounting for start-up costs - 137,351
Changes in operating assets and liabilities:
Accounts receivable (2,472) (6,325)
Other current assets 3,379 6,621
Accrued expenses 81,944 9,000
------------ ------------
Net cash provided by operating activities 2,362,223 2,258,675
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Decrease in payable to members (280,511) (34,451)
Distributions to members (2,281,734) (2,258,676)
------------ ------------
Net cash used in financing activities (2,562,245) (2,293,127)
------------ ------------
NET DECREASE IN CASH (200,022) (34,452)
CASH, BEGINNING OF PERIOD 200,022 234,474
------------ ------------
CASH, END OF PERIOD $ -0- $ 200,022
============ ============
See notes to financial statements.
-23-
GAMING ENTERTAINMENT L.L.C.
(A Joint Venture Company)
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2000 AND 1999
--------------------------------------------------------------------------------
1. ORGANIZATION
Full House Resorts, Inc. ("FHRI") and GTECH Corporation ("GTECH")
entered into a series of agreements to jointly pursue certain existing
and future gaming opportunities. Although the agreements were dated
December 29, 1995, the parties agreed to share equally in the equity
investment, financing responsibility, and in revenues and expenses of
certain projects commencing April 1, 1995. Pursuant to the agreements,
four joint venture corporations equally owned by subsidiaries of FHRI
and GTECH have been formed.
Gaming Entertainment L.L.C. (the "Company"), one of these joint
ventures, was incorporated as a Delaware limited liability company to
conduct gaming activities with the Coquille Indian Tribe in North Bend,
Oregon (the "Tribe").
The members of the Company and their membership interest are as
follows:
. Full House Subsidiary, Inc. (a wholly owned subsidiary of FHRI)
("FHS") - 50% interest. Prior to January 30, 1998, a 25% interest
was held by Full House Joint Venture Subsidiary, Inc. (a wholly
owned subsidiary of FHRI ("FHJVS"). FHJVS was merged into FHS on
January 30, 1998.
. Dreamport - a GTECH company (a wholly owned subsidiary of GTECH)
("DGS") - 25% interest.
. GTECH Gaming Subsidiary 2 Corporation (a wholly owned subsidiary
of GTECH) ("GGS2") - 25% interest.
The members contributed gaming development costs to capital, recorded
at the predecessor cost to the members. In addition, in 1997 the
members contributed $25,000 in cash.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Participation Fees - Participation fees represent revenues earned by
the Company from the Mill Resort Casino (the "Casino") based upon a
percentage of gross gaming revenues as defined in the agreements
between the Company and the Casino. Participation fees are recorded as
earned.
Accounts Receivable - Accounts receivable represents participation fees
earned but not received at December 31, 2000 and 1999.
Allocation of Profits, Losses and Distributions - Profits, losses and
distributions are allocated among the members based upon their
proportionate interests in the Company.
-24-
Due from Members - Receivables from members represent distributions
paid in excess of earned distributions at December 31, 2000 and 1999.
Payable to Members - Payable to members represents unpaid distributions
to members at December 31, 2000 and 1999.
Income Taxes - The Company is organized as a limited liability company
and as such is not subject to federal income taxes. Taxable income or
loss from the Company's operations is recognized in the tax returns of
the members. Accordingly, income taxes have not been provided for in
the accompanying financial statements.
Use of Estimates - The preparation of financial statements in
conformity with accounting principles generally accepted in the United
States of America 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. Actual results could differ from
those estimates.
Changes in Accounting Policies - Effective January 1, 1999, the Company
adopted the American Institute of Certified Public Accountants'
Statement of Position ("SOP") 98-5, Reporting on the Costs of Start-Up
Activities. SOP 98-5 provides guidance on the financial reporting of
start-up and organizational costs and requires the costs of start-up
activities to be expensed as incurred. As of January 1, 1999, the
Company expensed deferred start-up costs of $137,351 as a cumulative
effect of a change in accounting principle.
3. SUBSEQUENT EVENT
On March 30, 2001, FHRI acquired GTECH's 50% interest in the Company.
The Tribe and FHRI continue to evaluate strategies to optimize the
Tribe's gaming enterprise.
* * * * *
-25-
FULL HOUSE RESORTS, INC.
PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
The accompanying pro forma consolidated financial statements present pro forma
information for the Company and Gaming Entertainment (Michigan) LLC ("GEM"),
Gaming Entertainment (California) LLC ("GEC"), and Gaming Entertainment LLC
("GEO") (collectively, the "Acquired Entities"), giving effect to the
acquisition using the purchase method of accounting. The pro forma consolidated
financial statements of the Company are based on the historical consolidated
financial statements of the Company and the Acquired Entities as of and for the
year ended December 31, 2000.
The accompanying pro forma consolidated balance sheet as of December 31, 2000
has been presented as if the Acquisition occurred on December 31, 2000. The
accompanying pro forma consolidated statement of operations for the year ended
December 31, 2000 has been presented as if the Acquisition occurred on January
1, 2000.
The pro forma adjustments are based on currently available information and upon
certain assumptions that management of the company believes are reasonable under
the circumstances. The allocation of the purchase price is preliminary. The
final determination and allocation of the purchase price may differ from the
amounts assumed in the pro forma financial statements.
The accompanying pro forma consolidated financial statements are provided for
informational purposes only and are not necessarily indicative of the results
that will be achieved for future periods. The accompanying pro forma
consolidated financial statements do not purport to represent what the Company's
result of operations would actually have been if the Acquisition in fact had
occurred at January 1, 2000. The accompanying pro forma consolidated financial
statements and the related notes thereto should be read in conjunction with the
Company's consolidated financial statements and the consolidated financial
statements of the Acquired Entities.
-26-
FULL HOUSE RESORTS, INC.
PRO FORMA CONSOLIDATED BALANCE SHEET
FOR THE YEAR ENDED DECEMBER 31, 2000
------------------------------------------------------------------------------------------------------------------
FHRI GEM GEC GEO
ASSETS Historical Historical Historical Historical
CURRENT ASSETS:
Cash and cash equivalents $ 455,143 $ 12,372 $ 11,609 $ 0
Accounts receivable 0 0 0 177,596
Prepaid expenses 92,804 0 0 0
LLC Member receivable 0 0 0 105,488
------------ ------------- ------------ -------------
Total current assets 547,947 12,372 11,609 283,084
INVESTMENT IN JOINT VENTURES 3,192,634 0 0 0
GOODWILL - net 379,713 0 0 0
PROPERTY AND EQUIPMENT - net 47,202 0 0 0
GAMING CONTRACT RIGHTS 0 4,155,212 0 0
NOTE RECEIVABLE, net of current portion 1,667,269 752,291 0 0
LAND HELD FOR DEVELOPMENT 4,621,670 0 0 0
DEFERRED TAX ASSET 294,900 0 0 0
DEPOSITS OTHER ASSETS 2,701,344 0 0 0
------------ ------------- ------------ -------------
TOTAL $ 13,452,679 $ 4,919,875 $ 11,609 $ 283,084
============ ============= ============ =============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Accounts payable $ 18,106 $ 34,086 $ 8,500 $ 98,444
LLC Member payable 27,831 2,125,686 430,543 0
Accrued expenses 182,024 0 0 0
------------ ------------- ------------ -------------
Total current liabilities 227,961 2,159,772 439,043 98,444
------------ ------------- ------------ -------------
LONG-TERM DEBT, net of current portion 3,150,000 752,291 0 0
------------ ------------- ------------ -------------
STOCKHOLDERS' EQUITY (DEFICIT):
Preferred stock 70 0 0 0
Common stock 1,034 0 0 0
Members' capital 0 2,007,812 (427,434) 184,640
Additional paid in capital 17,429,889 0 0 0
Accumulated deficit (7,356,275) 0 0 0
------------ ------------- ------------ -------------
Total stockholders' equity (deficit) 10,074,718 2,007,812 (427,434) 184,460
------------ ------------- ------------ -------------
TOTAL $ 13,452,679 $ 4,919,875 $ 11,609 $ 283,084
============ ============= ============ =============
-27-
FULL HOUSE RESORTS, INC.
PRO FORMA CONSOLIDATED BALANCE SHEET
FOR THE YEAR ENDED DECEMBER 31, 2000 continued
------------------------------------------------------------------------------------------------------------------
ADJUSTMENTS
COMBINED AND COMPANY
ASSETS TOTAL ELIMINATIONS PRO FORMA
CURRENT ASSETS:
Cash and cash equivalents $ 479,124 $ 38,664 (a) $ 517,788
Accounts receivable 177,596 (177,596) (a) 0
Prepaid expenses 92,804 0 92,804
LLC Member receivable 105,488 (105,488) (a) 0
------------ ------------ -------------
Total current assets 855,012 (244,420) 610,592
INVESTMENT IN JOINT VENTURES 3,192,634 (2,954,564) (b) 238,070
GOODWILL - net 379,713 0 379,713
PROPERTY AND EQUIPMENT - net 47,202 0 47,202
GAMING CONTRACT RIGHTS 4,155,212 1,423,854 (c) 5,579,066
NOTE RECEIVABLE, net of current portion 2,419,560 (1,667,269) (d) 752,291
LAND HELD FOR DEVELOPMENT 4,621,670 0 4,621,670
DEFERRED TAX ASSET 294,900 0 294,900
DEPOSITS OTHER ASSETS 2,701,344 0 2,701,344
------------ ------------ -------------
TOTAL $ 18,667,247 $ (3,442,399) $ 15,224,848
============ ============ =============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 159,136 $ (141,030) (a) $ 18,106
LLC Member payable 2,584,060 (2,584,060) (d) 0
Accrued expenses 182,024 0 182,024
------------ ------------ -------------
Total current liabilities 2,925,220 (2,725,090) 200,130
------------ ------------ -------------
LONG-TERM DEBT, net of current portion 3,902,291 1,047,709 (e) 4,950,000
------------ ------------ -------------
STOCKHOLDERS' EQUITY:
Preferred stock 70 0 70
Common stock 1,034 0 1,034
Members' capital 1,765,018 (1,765,018) (f) 0
Additional paid in capital 17,429,889 0 17,429,889
Accumulated deficit (7,356,275) 0 (7,356,275)
------------ ------------ -------------
Total stockholders' equity 11,839,736 (1,765,018) 10,074,718
------------ ------------ -------------
TOTAL $ 18,667,247 $ (3,442,399) $ 15,224,848
============ ============ =============
-28-
FULL HOUSE RESORTS, INC.
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2000
------------------------------------------------------------------------------------------------------------------
FHRI GEM GEC GEO
Historical Historical Historical Historical
OPERATING REVENUES:
Management fees $ 0 $ 0 $ 0 $ 2,302,146
Joint ventures 3,923,329 0 0 0
------------ ------------- ------------ -------------
Total operating revenues 3,923,329 0 0 2,302,146
------------ ------------- ------------ -------------
OPERATING COSTS AND EXPENSES:
Joint venture pre-opening costs 584,337 0 0 0
General and administrative 1,845,704 1,019,338 150,049 32,124
Depreciation and amortization 531,043 0 0 0
------------ ------------- ------------ -------------
Total operating costs and expenses 2,961,084 1,019,338 150,049 32,124
------------ ------------- ------------ -------------
INCOME / (LOSS) FROM OPERATIONS 962,245 (1,019,338) (150,049) 2,270,022
------------ ------------- ------------ -------------
OTHER INCOME (EXPENSE):
Interest expense and debt issue costs (328,379) 0 0 0
Interest income 11,616 363 351 9,350
------------ ------------- ------------ -------------
Total other income (expense) (316,763) 363 351 9,350
------------ ------------- ------------ -------------
INCOME / (LOSS) BEFORE TAXES 645,482 (1,018,975) (149,698) 2,279,372
PROVISION FOR TAXES 490,393 0 0 0
------------ ------------- ------------ -------------
NET INCOME / (LOSS) $ 155,089 $ (1,108,975) $ (149,698) $ 2,279,372
============ ============= ============ =============
Less, undeclared dividends on
cumulative preferred stock (210,000)
------------
Net income / (loss) applicable
to common shares $ (54,911)
============
Income / (loss) per common share $ (0.01)
============
Weighted average number of
common shares outstanding 10,340,380
============
-29-
FULL HOUSE RESORTS, INC.
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2000 continued
------------------------------------------------------------------------------------------------------------------
ADJUSTMENTS
COMBINED AND COMPANY
TOTAL ELIMINATIONS PRO FORMA
OPERATING REVENUES:
Management fees $ 2,302,146 $ 0 2,302,146
Joint ventures 3,923,329 (1,139,686) (g) 2,783,643
------------ ------------ -------------
Total operating revenues 6,225,475 (1,139,686) 5,085,789
------------ ------------ -------------
OPERATING COSTS AND EXPENSES:
Joint venture pre-opening costs 584,337 584,694 (g) 1,169,031
General and administrative 3,047,215 (1,185,449) (g) 1,861,766
Depreciation and amortization 531,043 211,450 (h) 742,493
------------ ------------ -------------
Total operating costs and expenses 4,162,595 (389,305) 3,773,290
------------ ------------ -------------
INCOME / (LOSS) FROM OPERATIONS 2,062,880 (750,381) 1,312,499
------------ ------------ -------------
OTHER INCOME (EXPENSE):
Interest expense and debt issue costs (328,379) (148,406) (i) (476,785)
Interest income 21,680 (5,032) (g) 16,648
------------ ------------- -------------
Total other income (expense) (306,699) (153,438) (460,137)
------------ ------------ -------------
INCOME / (LOSS) BEFORE TAXES 1,756,181 (903,819) 852,362
PROVISION FOR TAXES 490,393 142,232 (j) 632,625
------------ ------------ -------------
NET INCOME / (LOSS) $ 1,265,788 $ (1,046,051) $ 219,737
============ ============ =============
Less, undeclared dividends on
cumulative preferred stock (210,000)
-------------
Net income / (loss) applicable
to common shares $ 9,737
=============
Income / (loss) per common share $ 0.00
=============
Weighted average number of
common shares outstanding 10,340,380
=============
-30-
FULL HOUSE RESORTS, INC.
NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
The pro forma adjustments contained in the pro forma consolidated financial
statements reflect the following adjustments and eliminations:
(a) The elimination of cash, receivables and payables not acquired in the
transaction.
(b) The elimination of the investment in the entities acquired.
(c) To record the allocation of the excess purchase price over the fair
value of the net assets acquired to intangible gaming contract rights.
(d) The elimination of inter-company balances of $1,667,269 and $2,584,060.
(e) The elimination of inter-company note payable balance of $752,291 and
recording the $1,800,000 credit facility draw to effect the purchase.
(f) The elimination of the LLCs' historical equity.
(g) To eliminate the equity method income/loss recorded by FHRI.
(h) To record the amortization of the gaming contract rights acquired. The
rights are amortized over the life of the contract, which is generally 7
years.
(i) To record interest expense on the assumed average balance outstanding of
$1,519,000 under the credit facility at an average interest rate of
9.77%.
(j) The adjustment to the tax provision to reflect the C corporation status
of the incremental LLC income.
-31-
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
FULL HOUSE RESORTS, INC.
Date: June 22, 2001 /s/ Michael P. Shaunnessy
---------------------------------------
Michael P. Shaunnessy, Executive Vice
President and Chief Financial Officer
-32-
Exhibit Index
Ex# Exhibit Description
23.1 Consent of Deloitte & Touche LLP
23.2 Consent of Deloitte & Touche LLP
23.3 Consent of Deloitte & Touche LLP