Annual Reports

  • 10-K (Jul 29, 2013)
  • 10-K (Jul 27, 2012)
  • 10-K (Jul 14, 2011)
  • 10-K (Jul 29, 2010)
  • 10-K (Jul 9, 2009)
  • 10-K (Jul 28, 2008)

 
Quarterly Reports

 
8-K

 
Other

Nevada Gold & Casinos 10-K 2009
Unassociated Document
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________

FORM 10-K

x
 
Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
   
for fiscal year ended April 30, 2009
   
or
o
 
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
   
for the transition period from               to              

Commission File No. 001-15517
Nevada Gold & Casinos, Inc.
(Exact Name of Registrant as Specified in Its Charter)

Nevada
 
88-0142032
(State or other jurisdiction of Incorporation or organization)
 
(IRS Employer Identification No.)
     
50 Briar Hollow Lane, Suite 500W, Houston, Texas
 
77027
(Address of principal executive offices)
 
(Zip Code)

Registrant’s telephone number, including area code: (713) 621-2245

Securities registered pursuant to Section 12(b) of the Act:

Title of each class
 
Name of each exchange on which registered
     
Common stock, $0.12 par value
 
New York Stock Exchange Alternext U.S.

Securities registered pursuant to Section 12(g) of the Act: None.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
o Yes x No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
o Yes x No

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
x Yes o 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 during the preceding twelve months (or for such shorter period that the registrant was required to submit and post such files).
x Yes o No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

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 definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):
Accelerated filer o
Non-accelerated filer o
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.
o Yes x No

As of June 22, 2009 the aggregate market value of the voting stock held by non-affiliates of the registrant based on the closing price per share of $1.30, as reported on the New York Stock Exchange, was $16,820,869.

As of June 30, 2009, the registrant had 12,939,130 shares of common stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE
Portions of the definitive Proxy Statement for the registrant’s 2009 Annual Meeting of Stockholders to be filed pursuant to Regulation 14A within 120 days after the registrant’s fiscal year end of April 30, 2009 are incorporated by reference into Part III of this report.

 
 

 

NEVADA GOLD & CASINOS, INC.
TABLE OF CONTENTS

     
Page
 
         
PART I
       
         
ITEM 1.
BUSINESS
    1  
ITEM 1A.
RISK FACTORS
    6  
ITEM 1B.
UNRESOLVED STAFF COMMENTS
    8  
ITEM 2.
PROPERTIES
    9  
ITEM 3.
LEGAL PROCEEDINGS
    9  
ITEM 4.
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
    9  
           
PART II
         
           
ITEM 5.
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
    10  
ITEM 6.
SELECTED FINANCIAL DATA
    11  
ITEM 7.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
    11  
ITEM 7A.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
    21  
ITEM 8.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
    21  
ITEM 9.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
    21  
ITEM 9A.
CONTROLS AND PROCEDURES
    21  
ITEM 9B.
OTHER INFORMATION
    22  
           
PART III
         
           
ITEM 10.
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
    22  
ITEM 11.
EXECUTIVE COMPENSATION
    23  
ITEM 12.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
    23  
ITEM 13.
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS AND DIRECTOR INDEPENDENCE
    23  
ITEM 14.
PRINCIPAL ACCOUNTANT FEES AND SERVICES
    23  
           
PART IV
         
           
ITEM 15.
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
    23  


 
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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-K and other materials filed or to be filed by the Company with the Securities and Exchange Commission (as well as information included in oral statements or other written statements made or to be made by the Company or its 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 the Company, including statements relating to our business strategy and our current and future development plans.
 
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, such as the competitive environment and government regulation, will be important in determining the Company’s 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 the Company’s subsequent reports filed with the Securities and Exchange Commission should be consulted.

 
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Part I
 
Item 1.  Business

Overview

Nevada Gold & Casinos, Inc., a Nevada corporation, was formed in 1977 and, since 1994 has been primarily a gaming company involved in financing, developing, owning and operating gaming projects.

Commercial Gaming Projects.

We own and operate the Colorado Grande Casino in Cripple Creek, Colorado.

From July 1997 through January 27, 2008, we held a 43% interest in Isle of Capri - Black Hawk, LLC ("IC-BH") which owned and operated two commercial casino properties in Black Hawk, Colorado - the Isle of Capri-Black Hawk Casino and Colorado Central Station Casino. On January 27, 2008, we sold our membership interest to our partner, Isle of Capri Casinos, Inc. (“Isle”).

From November 2005 through June 14, 2007, we held an equity investment in American Racing and Entertainment, L.L.C. (“American Racing”) which was formed to pursue racing and gaming opportunities in the State of New York. In addition, we had an agreement with American Racing to manage the two racing and gaming facilities owned by American Racing. In April 2007, we entered into a Letter Agreement for the sale of our interest in American Racing to two of our joint venture partners. The sale was completed on June 14, 2007. Our ownership percentage was initially 50% and was reduced over time to 15.67% at the date of the sale.

In November 2007 we signed a Purchase and Sale Agreement to acquire the Horizon Casino and Hotel in Vicksburg, Mississippi from Tropicana Entertainment. In December 2007, we submitted our application for approval by the Mississippi Gaming Commission to become a licensed gaming operator in Mississippi. In May 2008, Tropicana Entertainment filed a petition for bankruptcy reorganization and we were informed by the staff at the Mississippi Gaming Commission that it would not move on a recommendation on our application until the bankruptcy court approved the proposed sale. Talks related to the acquisition ended September 17, 2008.  Refundable deposits were collected in December, 2008, and unrecoverable costs were written off as of October 31, 2008.

In January 2009 we signed a letter of intent to purchase three mini-casinos in Washington State, the Crazy Moose-Pasco, Crazy Moose-Mountlake Terrace, and Coyote Bob-Kennewick.  On May 12, 2009, the sale closed.  See Note 19 of our Consolidated Financial Statements.

Native American Gaming Project.

As of May 2007, we owned a 40% interest in Buena Vista Development Company, LLC (“Buena Vista Development”) which is developing a casino for a Native American tribe in Amador County, California.  Effective November 25, 2008, through our wholly owned subsidiary, Nevada Gold BVR, L.L.C., we sold our 40% interest in Buena Vista Development, L.L.C (BVD) to B.V. Oro, L.L.C. (BVO), which is owned by our former partner and related parties for $16 million cash and a $4 million receivable from BVD which is due no later than two years after the opening of a gaming/entertainment facility to to be built by BVD for the Buena Vista Rancheria of Me-Wuk Indians.  This receivable bears interest at the rate of prime plus 1% and is guaranteed by BVO.  In addition we are entitled to a 5% carried interest in the Class B membership interest.
 
Management Agreements.
 
Effective November 2008, the Company has a management contract with Oceans Casino Cruises, Inc., owner of SunCruz Casinos. The contract extends to December 31, 2010.
 
We also have real-estate interests in Colorado which are currently offered for sale.

We report our operations in two segments - gaming projects and non-core assets. For a summary of financial information concerning these two segments, please refer to the information provided in Note 13 to our Consolidated Financial Statements.

Objective and Strategies

Our primary business objective is to increase long-term returns to shareholders through appreciation in the value of our common shares. To achieve this objective, we intend to grow our assets and our earnings by following three business strategies:

 
-
enhancing the return from, and the value of, the gaming properties in which we own interests;
 
-
acquiring or developing additional gaming properties;

 
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-
assisting in finding financing, developing and/or managing of, or providing consulting services to gaming projects.

Current Commercial Casino Projects

The Colorado Grande Casino-Cripple Creek

On April 25, 2005, we acquired the Colorado Grande Casino located in Cripple Creek, Colorado, from IC-BH for $6.5 million. The Colorado Grande Casino is located at a primary intersection, near the center of the Cripple Creek market. The property currently consists of a casino with approximately 195 slot machines, no table games, a restaurant and 44 parking spaces. In 2005 we invested approximately $2.0 million to upgrade the facility and purchase new gaming equipment in order to maximize the earnings potential of the property.  In November 2008, Colorado passed Amendment 50 which effective July 2, 2009, increases bet limits from $5 to $100, permits craps, roulette, poker, blackjack, and other table games, allows 24 hour gaming, and lower gaming tax rates.  To take advantage of this and remain competitive in the market, we are investing an additional $600,000 in the property to provide blackjack, roulette, house-banked poker, and a food outlet on the casino floor.

Cripple Creek is 40 miles west of Colorado Springs, Colorado, which is 65 miles south of Denver, Colorado. We believe that the Cripple Creek market attracts customers primarily from Colorado Springs, Pueblo, Fort Carson and smaller areas south of Denver.

Previous Commercial Casino Projects

Isle of Capri Black Hawk, L.L.C

We owned 43% of IC-BH which owned two casinos in Black Hawk, Colorado. Isle (ISLE:NASDAQ) owned the remaining 57% of IC-BH. Isle operated the casinos under a management agreement with IC-BH for a management fee based upon a percentage of the revenues and operating profit of the casinos. IC-BH’s gaming properties were the Isle of Capri-Black Hawk Casino and the Colorado Central Station Casino-Black Hawk.

On January 27, 2008, we sold our interest in IC-BH to our partner, Isle, for $64.6 million. Our percentage of the financial results of IC-BH have been reflected as part of equity in earnings of unconsolidated subsidiaries through January 27, 2008.

American Racing and Entertainment, L.L.C.

On June 14, 2007, we sold our 15.67% membership interest in American Racing to our partners, Southern Tier Acquisition II LLC and Oneida Entertainment LLC. The Company received three payments totaling $4.3 million for its membership interest: $2.1 million cash was received upon closing, $1.1 million was received in June 2008 and $1.1 million was received in June 2009. The transaction also included the July 12, 2007 release of a certificate of deposit of approximately $1.1 million previously pledged by us on behalf of American Racing. The following is a background discussion of the project.

American Racing owns Tioga Downs, in Nichols, New York and Vernon Downs, located in Vernon, New York. We acquired a 50% interest in American Racing in November 2005. An additional member was added to American Racing in March, 2006 and our interest was reduced to 40%. During fiscal 2007, the Company elected to discontinue making additional capital contributions to American Racing due to a lack of liquidity to meet the cash call commitments. As a result, our ownership percentage in American Racing declined from 40% to 15.67% as of June 14, 2007.

We operated both facilities for which we earned management fees based on the revenues and cash flows of each facility. In connection with the sale, we terminated our Management Agreements with Tioga Downs and Vernon Downs and received approximately $110,000 in management fees due.

In addition, we were indemnified by the purchasers in connection with the guarantees of approximately $11 million of debt or any other obligations of American Racing. We were released from these guarantees on March 31, 2008 when the debt was refinanced.

Our percentage of the financial results of American Racing has been reflected as part of equity in earnings of unconsolidated subsidiaries through June 14, 2007.
  
Native American Casino Projects

Buena Vista Rancheria of Me-Wuk Indians; Ione, Amador County, California

On May 4, 2005, we, through our wholly owned subsidiary, Nevada Gold BVR, L.L.C., acquired a 20% interest in BVD in exchange for an approximately $14.8 million loan and an equity investment of approximately $200,000.   Our initial 20% ownership interest in BVD increased by five percentage points at the end of every six month period the loan remained outstanding, up to a maximum of an additional 20%, for a total of 40%.  At April 27, 2008, we owned a 40% interest in BVD.

 
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Effective November 25, 2008, through our wholly owned subsidiary, Nevada Gold BVR, L.L.C., we sold our 40% interest in BVD to BVO, which is owned by our former partner and related parties, for $16 million cash and a $4 million receivable from BVD which is due no later than two years after the opening of a gaming/entertainment facility to to be built by BVD for the Buena Vista Rancheria of Me-Wuk Indians.  This receivable bears interest at the rate of prime plus 1% and is guaranteed by BVO.  In addition we are entitled to a 5% carried interest in the Class B membership interest

We cannot predict the future performance of the casino. We expect the casino’s primary market to include Sacramento and Stockton, California. In this market, the casino will most directly compete with the Jackson Rancheria Casino located in Jackson, California, approximately 10 miles from the proposed Buena Vista Casino, the Cache Creek Casino located approximately 45 miles northwest of Sacramento, Thunder Valley Casino located a few miles northeast of Sacramento and the Shingle Springs Casinos located just east of Sacramento on Highway 50.

La Jolla Band of Luiseno Mission Indians; Pauma Valley, California

On March 23, 2007, we received a letter from the La Jolla Band of Luiseno Mission Indians (“Tribe”) stating that it wished to terminate its existing contractual relationship with the Company. Also, on July 2, 2007, the NIGC informed us and the Tribe that the agreements previously entered into with the Tribe required NIGC approval. We have attempted to negotiate a mutual settlement of the outstanding issues but the Tribe has renounced all of the agreements with the Company and we are no longer in active negotiations with the Tribe. No assurances can be given that we will be able to negotiate a mutually acceptable agreement with the Tribe. As a result, we have written-off the notes receivable, the related accrued interest and our equity investment in the La Jolla development project as of April 27, 2008. The following is a background discussion of the project.

In August 2004, we (through our wholly owned subsidiary, Gold River, L.L.C.) entered into a Development Agreement with the Tribe, a federally recognized Indian tribe, pursuant to which we agreed to assist the tribe in developing and constructing a multi-phase gaming facility. A Management Agreement with the Tribe was signed in June 2005 for the first phase pursuant to which we would provide management services for the gaming facility. The Development Agreement was found by the NIGC to require modification. As a result, both parties agreed to terminate the Development Agreement and, as of July 30, 2006, signed a Development Consulting Services Agreement, a Pre-Opening Consulting Services Agreement, and a Post-Opening Consulting Services Agreement, collectively referred to as “Transaction Documents.” On July 2, 2007, the NIGC informed us and the Tribe that based on the content of the Transaction Documents, the NIGC is required to approve these agreements.

The multi-phase project was planned to be developed on the La Jolla Indian Reservation in Pauma Valley, California. The first phase would include the construction of a casino with approximately 349 slot machines, 12 table games, dining facilities and parking. Subsequent phases may include an expanded casino, a hotel, RV-park, additional restaurants and other entertainment venues. We agreed to advance certain pre-development expenses of the first phase of the project up to $1.5 million. Under the Transaction Documents, we agreed to assist the Tribe in obtaining third party financing for the project.

We cannot predict when, if ever, the casino will open or what the ultimate outcome of our negotiation will be for a number of reasons, including additional regulatory processes and failure to obtain financing for the project.

The La Jolla Casino would be located in the heart of Pauma Valley, California which is approximately 28 miles east of Temecula, California and 65 miles north of San Diego, California. This southern California casino market has experienced significant growth with five major Native American casinos within 25 miles of the proposed La Jolla Casino. They include Harrah’s Rincon Casino, Casino Pauma, The Pala Casino, Valley View Casino, and Pechanga Resort & Casino. These casinos are larger, have established customers and are closer to the Temecula and San Diego markets than the proposed La Jolla casino and most gaming customers will have to drive by those casinos before they arrive at La Jolla. The greater San Diego region also includes the Cahuilla Creek Casino, Casino Morongo, San Manuel Indian Bingo & Casino, Barona, Viejas, Sycuan, and Golden Acorn casinos which are also competitors to the La Jolla casino.

Other Casino Projects

Route 66 Casino; Albuquerque, New Mexico

We owned a 51% interest in Route 66 which we accounted for using the equity method. We received no cash distributions from the Route 66 Casinos venture. Our portion of the earnings of the Route 66 Casinos venture was estimated and recorded based on available financial information. In April 2008, we signed a settlement agreement with American Heritage, Inc. and Fred Gillman, the principal of American Heritage, Inc. (“The Gillmann Group”). Per the agreement, The Gillmann Group paid us $1 million on May 1, 2008, $1.3 million on June 2, 2008 and is obligated to pay us $2.3 million by April 15, 2010.  The agreement also provides collateral that can be attached if full payment is not timely received.  See Note 17 to the accompanying Consolidated Financial Statements for a discussion of our accounting for the settlement agreement and our former investment in this joint venture.
 
Management Contracts
 
Oceans Casino Cruises, Inc.
 
On November 10, 2008, the Company signed a contract to manage the SunCruz Casinos for Oceans Casino Cruises, Inc. The contract extends to December 31, 2010. The Company will receive a base fee of $1.0 million annually plus an incentive fee based on a minimum threshold to be established annually.

 
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Regulation and Licensing

Colorado

The ownership and operation of gaming facilities in Colorado are subject to extensive state and local regulations. No gaming may be conducted in Colorado unless licenses are obtained from the Colorado Limited Gaming Control Commission (the “Gaming Commission”). In addition, the State of Colorado created the Division of Gaming (the “CDG”) within its Department of Revenue to license, implement, regulate, and supervise the conduct of limited stakes gaming. The Director of the CDG (“CDG Director”), under the supervision of the Gaming Commission, has been granted broad powers to ensure compliance with the laws and regulations. The Gaming Commission, CDG and CDG Director that have responsibility for regulation of gaming are collectively referred to as the “Colorado Gaming Authorities.”

The laws, regulations, and supervisory procedures of the Colorado Gaming Authorities seek to maintain public confidence and trust that licensed limited gaming is conducted honestly and competitively, that the rights of the creditors of licensees are protected, and that gaming is free from criminal and corruptive elements. The Colorado Gaming Authorities’ stated policy is that public confidence and trust can be maintained only by strict regulation of all persons, locations, practices, associations, and activities related to the operation of the licensed gaming establishments and the manufacture and distribution of gaming devices and equipment.

The Gaming Commission is empowered to issue five types of gaming and related licenses. To operate our Colorado casino we are required to maintain a retail gaming license, which must be renewed each year, and the Colorado Commission has broad discretion to revoke, suspend, condition, limit, or restrict the licensee at any time. Under Colorado gaming regulations, no person or entity can have an ownership interest in more than three retail licenses, and our business opportunities will be limited accordingly. The Colorado Casinos’ licenses are renewable annually, subject to continued compliance with gaming regulations. The failure or inability of the Colorado Grande-Cripple Creek (the "Colorado Casino"), or the failure or inability of others associated with the Colorado Casino to maintain necessary gaming licenses or approvals would have a material adverse effect on our operations.

The Colorado Casino must meet specified architectural requirements, fire safety standards and standards for access for disabled persons. It also must not exceed specified gaming square footage limits as a total of each floor and the full building may operate only between 8:00 a.m. and 2:00 a.m., and may permit only individuals 21 or older to gamble in the casino. It may permit slot machines, blackjack and poker, with a maximum single bet of $5.00.  Effective July 2, 2009, the maximum bet limit has been increased to $100, casinos may operate 24 hours daily and additional types of table games are permitted, such as craps and roulette.  No Colorado Casino may provide credit to its gaming patrons.

The Colorado Constitution permits a gaming tax of up to 20% on adjusted gross gaming proceeds, and authorizes the Gaming Commission to change the rate annually. The current gaming tax rate is 0.25% on adjusted gross gaming proceeds of up to and including $2 million, 2% over $2 million up to and including $5 million, 9% over $5 million up to and including $8 million, 11% over $8 million up to and including $10 million, 16% over $10 million up to and including $13 million and 20% on adjusted gross proceeds in excess of $13 million.

Colorado law requires that every officer, director or stockholder holding either a 5% or greater interest or controlling interest of a publicly traded corporation, or owners of an applicant or licensee, shall be a person of good moral character and submit to a full background investigation conducted by the Gaming Commission. The Gaming Commission may require any person having an interest in a license or a licensee to undergo a full background investigation and pay the cost of investigation in the same manner as an applicant. Persons found unsuitable by the Gaming Commission may be required to immediately terminate any interest in, association or agreement with, or relationship to, a licensee. A finding of unsuitability with respect to any officer, director, employee, associate, lender or beneficial owner of a licensee or applicant may also jeopardize the licensee’s license or applicant’s license application. Licenses may be conditioned upon termination of any relationship with unsuitable persons.

The rules impose certain additional restrictions and reporting and filing requirements on publicly traded entities holding gaming licenses in Colorado. A licensee or affiliated company or any controlling person of a licensee or affiliated company, which commences a public offering of voting securities, must notify the Gaming Commission with regard to a public offering to be registered with the Securities and Exchange Commission ("SEC"), no later than ten business days after the initial filing of a registration statement with the SEC, or, with regard to any other type of public offering, no later than ten business days prior to the public use or distribution of any offering document, if: 1) the licensee, affiliated company or a controlling person thereof, intending to issue the voting securities is not a publicly traded corporation; or 2) if the licensee, affiliated company or controlling person thereof, intending to issue the voting securities is a publicly traded corporation, and if the proceeds of the offering, in whole or in part, are intended to be used: a) to pay for construction of gaming facilities in Colorado to be owned and operated by the licensee; b) to acquire any direct or indirect interest in gaming facilities in Colorado; c) to finance the operation by the licensee of gaming facilities in Colorado; or d) to retire or extend obligations incurred for one or more of the purposes set forth in subsections a, b, or c above.

 
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We may not issue any voting securities except in accordance with the provisions of the Colorado Limited Gaming Act and the regulations promulgated thereunder. The issuance of any voting securities in violation will be void and the voting securities will be deemed not to be issued and outstanding. No voting securities may be transferred, except in accordance with the provisions of the Colorado Limited Gaming Act and the regulations promulgated thereunder. Any transfer in violation of these provisions will be void. If the Colorado Limited Gaming Control Commission at any time determines that a holder of our voting securities is unsuitable to hold the securities, then we may, within sixty (60) days after the finding of unsuitability, purchase the voting securities of the unsuitable person at the lesser of (a) the cash equivalent of such person’s investment, or (b) the current market price as of the date of the finding of unsuitability, unless such voting securities are transferred to a suitable person within sixty (60) days after the finding of unsuitability. Until our voting securities are owned by persons found by the Commission to be suitable to own them, (a) we are not permitted to pay any dividends or interest with regard to the voting securities, (b) the holder of such voting securities will not be entitled to vote and the voting securities will not for any purposes be included in the voting securities entitled to vote, and (c) we may not pay any remuneration in any form to the holder of the voting securities, except in exchange for the voting securities.

New York

As of June 14, 2007, we are no longer engaged in business activities in the State of New York.

Native American Gaming

Although it may seek new agreements, the Company does not currently operate gaming facilities on behalf of any Native American tribe nor is it receiving compensation pursuant to any consulting, financing or advisory agreement.  Reference is made to “Native American Casino Projects” above.

The terms and conditions of management contracts and the operation of all gaming, including casinos, on Native American land in the United States are subject to the Indian Gaming Regulatory Act of 1988 (“IGRA”), which is administered by the NIGC, and if provided for in a tribal-state compact, the gaming regulatory agencies of state governments. IGRA is subject to interpretation by both the NIGC and courts, as well as future legislative actions.

IGRA establishes three classes of tribal gaming-Class I, Class II and Class III. Class I gaming includes all traditional or social games solely for prizes of minimal value played by a tribe in connection with celebrations or ceremonies. Class II gaming includes games such as bingo, pull-tabs, punchboards, instant bingo and non-banked card games (those that are not played against the house), such as poker. Class III gaming is other forms of gaming, including banked table games such as blackjack, craps and roulette, and gaming machines such as slots, video poker, lotteries and pari-mutuel wagering.

Class I gaming on Indian lands is within the exclusive jurisdiction of Indian tribes and is not subject to federal regulation under IGRA. Class II gaming is permitted on Indian lands if the state in which the Indian lands lie permits that gaming, for any purpose by any person, organization or entity and if certain other requirements are met. IGRA prohibits all forms of Class III gaming unless the tribe has entered into a written agreement with the state that specifically authorizes the types of Class III gaming the tribe may offer (a “tribal-state compact”). These compacts often provide for, among other things, the manner and extent to which the state will conduct background investigations and certify the suitability of the manager, its officers, directors, and key employees to conduct gaming on Native American lands.

The Buena Vista Tribe has entered into an amended tribal-state compact with the State of California which will allow it to operate up to 2,000 Class III slot machines and 80 table games, in accordance with provisions contained in the compact.

Native American tribes are sovereign with their own governmental systems, which have primary regulatory authority over gaming on land within the tribes’ jurisdiction. Therefore, persons engaged in gaming activities, including us, are subject to the provisions of tribal ordinances and regulations on gaming. These ordinances are subject to review by the NIGC under certain standards established by IGRA. The NIGC may determine that some or all of the ordinances require amendment, and that additional requirements, including additional licensing requirements, may be imposed on us.

IGRA requires NIGC approval of management contracts for Class II and Class III gaming, as well as the review of all agreements collateral to the management contracts. The NIGC will not approve a management contract if anyone with a direct or indirect financial interest in, or having management responsibility for, a management contract (i) is an elected member of the Indian tribal government that owns the facility purchasing or leasing the games, (ii) has been or is convicted of a felony gaming offense, (iii) has knowingly and willfully provided materially false information to the NIGC or the tribe, (iv) has refused to respond to questions from the NIGC, or (v) is a person whose prior history, reputation and associations pose a threat to the public interest or to effective gaming regulation and control, or create or enhance the chance of unsuitable activities in gaming or the business and financial arrangements incidental thereto. In addition, the NIGC will not approve a management contract if (a) the management company or any of its agents have attempted to unduly influence any decision or process of tribal government relating to gaming, (b) the management company has materially breached the terms of the management contract or the tribe's gaming ordinance, or (c) a trustee, exercising common skill and diligence, would not approve such management contract.

 
5

 

A management contract can be approved only after NIGC determines that the contract provides, among other things, for (i) adequate accounting procedures and verifiable financial reports, which must be furnished to the tribe, (ii) tribal access to the daily operations of the gaming enterprise, including the right to verify daily gross revenues and income, (iii) minimum guaranteed payments to the tribe, which must have priority over the retirement of development and construction costs, and (iv) a ceiling on the repayment of such development and construction costs, and (v) a contract term not exceeding five years and a management fee not exceeding 30% of profits; provided that the NIGC may approve up to a seven year term and a management fee not to exceed 40% of profits if NIGC is satisfied that the capital investment required and income projections for the gaming operation require the additional term and fee.

In the past few years, the NIGC’s office of general counsel has issued a number of opinions concluding that contracts with non-managers violated IGRA’s requirements that a tribe must have the "sole proprietary interest" in its gaming operations. Generally, these opinions have been rendered where the non-manager received a percentage of the casino's revenues as compensation for the contractor’s services, and where the general counsel’s office determined that the compensation was disproportionately large in comparison to the value of the services provided or the risks assumed by the contractor. Where a contractor’s compensation is based on a percentage of a tribal casino’s revenues, tribes or the contractors commonly submit these non-management contracts to the NIGC for a determination that the contracts are not management contracts and do not grant any "proprietary interest" in the tribe's gaming operations. 

General Gaming Regulations in Other Jurisdictions> 

If we become involved in gaming operations in any other jurisdictions, such gaming operations will subject us and certain of our officers, directors, key employees, stockholders and other affiliates to strict legal and regulatory requirements, including mandatory licensing and approval requirements, suitability requirements, and ongoing regulatory oversight with respect to such gaming operations. There can be no assurance that we will obtain all of the necessary licenses, approvals and findings of suitability or that our officers, directors, key employees, other affiliates and certain other stockholders will satisfy the suitability requirements in one or more jurisdictions, or that such licenses, approvals and findings of suitability, if obtained, will not be revoked, limited, suspended or not renewed in the future.

Failure by the Company to obtain, or the loss or suspension of, any necessary licenses, approval or findings of suitability would prevent us from conducting gaming operations in such jurisdiction and possibly in other jurisdictions.

Other Assets

Gold Mountain Development. Through our wholly-owned subsidiary, Gold Mountain Development, L.L.C., we own approximately 270 acres of real property in the vicinity of Black Hawk, Colorado. In November 2004, the Central City Business Improvement District completed the construction of a new 8.4 mile four-lane road connecting Interstate 70 to Central City, Colorado. The new road is adjacent to a portion of our 270 acres.  The 270 acres is for sale and has been listed with a broker.

NG Washington, LLC.  Through our wholly-owned subsidiary, NG Washington LLC, we have signed a Purchase and Sale Agreement in January 2009, to acquire three mini casinos in Washington State. We have escrowed $0.5 million as a deposit and spent additional funds for licensing  and other matters pertaining to the acquisition.  On May 12, 2009, the sale closed.  See Note 19 of our Consolidated Financial Statements.

Employees

As of April 30, 2009, we employed 81 people.

Available Information

We make available on our website (www.nevadagold.com) under “Investor Relations - SEC Filings,” free of charge, our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports, as soon as reasonably practicable after we electronically file such material with the Securities and Exchange Commission.

Item 1A.  Risk Factors

The following is a description of what we consider our key challenges and risks:

Financing future acquisitions may be difficult.

The principal challenge facing the Company is the necessity to obtain financing in order to expand gaming operations, generate cash flow, and service debt obligations. There can be no assurance that such financing will be obtained.

 
6

 

If our key personnel leave us, our business could be adversely affected.

Our success is largely dependent upon the efforts and skills of our key executive officers. The loss of the services of any key executive officer could have a material adverse effect on us. There can be no assurance that we would be able to attract and hire suitable replacements in the event of any such loss of services. We currently have employment agreements with our Chief Executive Officer, Senior Vice President/General Counsel/Chief Compliance Officer, and our Executive Vice President/Chief Financial Officer.

Indebtedness could adversely affect our financial health.

Effective March 1, 2008, our $55 million revolving credit facility was replaced by a $15.6 million interest only promissory note which matures on June 30, 2013.

As of April 30, 2009, we had $6.0 million of indebtedness outstanding. Although we have substantially reduced our debt, our indebtedness could have important consequences and significant effects on our business and future operations. For example, it could:

 
·
increase our vulnerability to general adverse economic and industry conditions or a downturn in our business;
 
 
·
limit our ability to fund future working capital, capital expenditures and other general operating requirements;
 
 
·
place us at a competitive disadvantage compared to our competitors that have less debt or greater resources; and
 
 
·
limit our ability to borrow additional funds.
 
The occurrence of any one of these events or conditions could have a material adverse effect on our business, financial condition, results of operations, prospects, ability to service or otherwise satisfy our obligations.
 
We will require cash to service our indebtedness and fund our gaming operations. Our ability to generate cash depends on many factors beyond our control.
 
Our ability to fund our gaming operations will depend on our ability to generate cash flow from our gaming operations and borrow or refinance a minimum of $6.0 million by June 30, 2013. Our ability to generate sufficient cash flow to satisfy our debt obligations will depend on our future operating performance that is subject to many economic, competitive, regulatory and business factors that are beyond our control. If we are unable to generate sufficient cash flow to service our debt obligations, we will need to refinance or restructure our debt, sell assets, reduce or delay capital investments or seek to raise additional capital. These measures may not be available to us or, if available, they may not be sufficient to enable us to satisfy our obligations and may restrict our ability to pay operating expenses. If our cash flow is insufficient and we are unable to implement one or more of these alternatives, we may not be able to service our debt obligations or fund our gaming operations.
 
We face significant competition from other gaming operations that could have a material adverse effect on our future operations.

There is intense competition among companies in the gaming industry, many of which have significantly greater resources than we do. We compete with numerous casinos of varying quality and size in market areas where our properties are located. The gaming business is characterized by competitors that vary considerably by their size, quality of facilities, number of operations, brand identities, marketing and growth strategies, financial strength and capabilities, level of amenities, management talent and geographic diversity. In most markets, we compete directly with other casino facilities in the immediate and surrounding market areas. If our competitors operate more successfully, if competitors' properties are enhanced or expanded, or if additional casinos are established in and around locations in which we conduct business, we may lose market share. The expansion of casino gaming in or near any geographic area from which we attract or expect to attract a significant number of our customers could have a significant adverse effect on our business, financial condition and results of operations.

We are subject to extensive governmental gaming regulation that could adversely affect us. We could be prevented from  pursuing future development projects due to changes in the laws, regulations and ordinances (including tribal or local laws) that apply to gaming facilities or the inability of us or our key personnel, significant shareholders or joint venture partners to obtain or retain gaming regulatory licenses.

The gaming industry is highly regulated and we must maintain our licenses in order to continue our operations. Each of our gaming operations is subject to extensive regulation under the laws, rules and regulations of the jurisdiction where located. These laws, rules and regulations generally concern the responsibility, financial stability and character of the owners, managers, and persons with financial interests in the gaming operations. Certain jurisdictions empower their regulators to investigate participation by licensees in gaming outside their jurisdiction and require access to and periodic reports concerning the gaming activities. Violations of laws in one jurisdiction could result in disciplinary action in other jurisdictions. Regulatory authorities have broad powers with respect to the licensing of casino operations and may revoke, suspend, condition or limit our gaming or other licenses, impose substantial fines and take other actions, any one of which could have a significant adverse effect on our business, financial condition and results of operations.

 
7

 

The rapidly changing political and regulatory environment governing the gaming industry (including gaming operations which are conducted on Indian land) makes it impossible for us to accurately predict the effects that an adoption of or changes in the gaming laws, regulations and ordinances will have on us.  However, the failure of us, or any of our key personnel, significant shareholders or joint venture partners, to obtain or retain required gaming regulatory licenses could prevent us from expanding into new markets, prohibit us from generating revenues in certain jurisdictions, and subject us to sanctions and fines.

Our business is subject to various federal, state and local laws and regulations in addition to gaming regulations. These laws and regulations include, but are not limited to, restrictions and conditions concerning alcoholic beverages, environmental matters, employees, currency transactions, taxation, zoning and building codes, and marketing and advertising. Such laws and regulations could change or could be interpreted differently in the future, or new laws and regulations could be enacted. Material changes, new laws or regulations, or material differences in interpretations by courts or governmental authorities could adversely affect our results of operations and financial condition.

We cannot ensure that we will be able to comply with or conduct business in accordance with applicable regulations.

We could fail to monetize recorded assets.

The Company has a receivable that is projected to be collected within fiscal year 2010. This asset pertains to a settlement agreement. If the Company is not able to collect or monetize this asset timely then the lack of such collection may have a negative impact on the Company’s projected cash flow. The occurrence of monetizing our recorded assets could have a material adverse effect on our business, financial condition, results of operations, prospects, ability to service or otherwise satisfy our obligations.

There are significant risks in the development and management of commercial and Native American Casinos that could adversely affect our financial results.

The development and management of casinos require the satisfaction of various conditions, many of which are beyond our control. The failure to satisfy any of such conditions may significantly delay the completion of a project or prevent a project's completion altogether.

The opening of any facility will be contingent upon, among other things, the receipt of all regulatory licenses, permits, approvals and authorizations, the completion of construction and the hiring and training of sufficient personnel. The scope of the approvals to construct and open a casino is extensive, and the failure to obtain such approvals could prevent or delay the completion of construction or opening of all or part of such casino.

No assurance can be given that development activities will begin or will be completed, or that the budget for such a project will not be exceeded, or that we will have the continuing support of the community.

In addition, the regulatory approvals necessary for the construction and operation of casinos are often challenged in litigation brought by government entities, citizens groups and other organizations and individuals. Such litigation can significantly delay the construction and opening of casinos.

Major construction projects entail significant risks, including shortages of materials or skilled labor, unforeseen engineering, environmental and/or geological problems, work stoppages, weather interference, and unanticipated cost increases. Delays or difficulties in obtaining any of the requisite licenses, permits, allocations and authorizations from regulatory authorities could increase the total cost, delay or prevent the construction or opening of any casino development. In addition, once developed, no assurances can be given that we will be able to manage the casino on a profitable basis or to attract a sufficient number of guests, gaming customers and other visitors to make the operation profitable.

With each project, we are subject to the risk that our investment may be lost if the project cannot obtain adequate financing to complete development and open the casino successfully. In some cases, we may be forced to provide more financing than originally planned in order to complete development, increasing the risk to us.

Item 1B.  Unresolved Staff Comments

None.

 
8

 

Item 2.    Properties
 
Colorado Grande Casino-Cripple Creek. We lease (through our wholly-owned subsidiary, Colorado Grande Enterprises, Inc.) a portion of a building in Cripple Creek, Colorado, and an adjacent parking lot, for use in connection with the Colorado Grande Casino facilities. We lease this property at an annual rent of the greater of $144,000 or 5% of Colorado Grande-Cripple Creek’s adjusted gross gaming revenues, as defined, with an annual cap of $400,000. On July 7, 2005, we exercised the option to extend the lease to January 2021. On April 1, 2008 we negotiated an extension of the lease to January 2033 at a flat annual rent of $400,000 from February 2021 through January 2033. In addition, we own an additional parcel of land adjacent to the Colorado Grande, which is used for parking.

Gold Mountain Development. Through our wholly-owned subsidiary, Gold Mountain Development, L.L.C., we own approximately 270 acres of real property in the vicinity of Black Hawk, Colorado. In November 2004, the Central City Business Improvement District completed the construction of a new 8.4 mile four-lane road connecting Interstate 70 to Central City, Colorado. The new road is adjacent to a portion of our 270 acres. The 270 acres is for sale and has been listed with a broker.

Office Lease. We currently lease approximately 6,110 square feet of office space in Houston, Texas. We moved into the office space on November 15, 2007. The lease expires March 31, 2011. The total monthly rental for this office space is currently $8,700.

Item 3.  Legal Proceedings

None

Item 4.  Submission of Matters to a Vote of Security Holders

During the fourth quarter of our fiscal year ended April 30, 2009, the Company held a special meeting of shareholders for the purpose of approving the 2009 Equity Incentive Plan (the “Plan”).  At the meeting held on April 14, 2009 in Houston, Texas, the shareholders approved the Plan.

 
9

 

Part II

Item 5.  Market For Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities>

Market Information

Our common stock is traded on the New York Exchange Alternext U.S. under the symbol UWN. The following table sets forth the high and low sales prices per share of the common stock for the last two fiscal years.

 
Fiscal Years Ended
 
 
April 30, 2009
 
April 27, 2008
 
 
High
 
Low
 
High
 
Low
 
                 
First Quarter
  $ 1.34     $ 1.02     $ 2.79     $ 1.88  
Second Quarter
    1.29       .53       2.05       1.09  
Third Quarter
    .89       .38       1.69       1.09  
Fourth Quarter
    .84       .66       1.59       1.08  

Holders of Common Stock

As of May 20, 2009, we had approximately 4,751 shareholders of record.

Dividends

We have not paid any dividends during the last three fiscal years and our current policy is to retain earnings to provide for the growth of the Company. Consequently, no cash dividends are expected to be paid on our common stock in the foreseeable future.

Equity Compensation Plan

The following table gives information about our shares of common stock that may be issued upon the exercise of options, warrants, and rights under all of our existing equity compensation plans as of April 30, 2009 including the 1999 Stock Option Plan and the 2009 Equity Incentive Plan, as well as shares of our common stock that may be issued under individual compensation arrangements that were not approved by our stockholders (such grants, the “Non-Plan Grants”).

 
 
 
 
 
 
 
Plan Category
 
Number of
Securities
To be Issued Upon
Exercise of
Outstanding
Options, Warrants
and Rights
(A)
 
Weighted Average
Exercise Price of
Outstanding
Options,
Warrants and
Rights
(B)
 
Number of Securities
Remaining Available
for Future Issuance
Under Equity
Compensation Plans
(Excluding Securities
Reflected in Column
(A) (C)
             
Equity Compensation Plans Approved by Security Holders
 
1,136,000
 
$
2.54
 
1,725,000
Equity Compensation Plans Not Approved by Security Holders
 
 
$
 
Total
 
1,136,000
 
$
2.54
 
1,725,000

Recent Sales of Unregistered Securities
 
Not applicable.

Issuer Purchases of Equity Securities

We previously approved the repurchase of up to 200,000 shares of our common stock in the open market in September 2002 and June 2003. In fiscal year 2005, we announced an increase of 500,000 shares to our stock buyback program. In fiscal year 2006, we announced another increase of 900,000 shares to our stock buyback program. Under this program, we repurchased 54,200 and 942,000 shares of our common stock for an average price of $8.03 and $10.38 per share during fiscal years ended April 29, 2007 and April 30, 2006, respectively. During the years ended April 30, 2009 and April 27, 2008, we made no repurchases of our common stock.

 
10

 

Stock Performance Graph

The following graph sets forth the cumulative total stockholder return (assuming reinvestment of dividends) to the Company’s stockholders during the five-year period ended April 30, 2009, as well as an overall stock market index (NYSE Arca Major Market Index) and the Company’s peer group index (Dow Jones US Gambling Index):


ASSUMES $100 INVESTED ON MAR. 31, 2005
ASSUMES DIVIDEND REINVESTMENT
FISCAL YEAR ENDING APRIL 30, 2009

Item 6.  Selected Financial Data

       Not required for smaller reporting companies.

Item 7.  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 contained in Item 8 herein. Management is of the opinion that inflation and changing prices, including foreign exchange fluctuations, will have little, if any, effect on our consolidated financial position or results of our operations.

Critical Accounting Policies and Estimates

Our critical accounting policies and estimates involve the use of complicated processes, assumptions, estimates and/or judgments in the preparation of our consolidated financial statements. An accounting estimate is an approximation made by management of a financial statement element, item or account in the consolidated financial statements. Accounting estimates in our historical consolidated financial statements measure the effects of past business transactions or events, or the present status of an asset or liability. The accounting estimates described below require us to make assumptions about matters that are uncertain at the time the estimate is made. Additionally, different estimates that we could have used or changes in an accounting estimate that are reasonably likely to occur could have a material impact on the presentation of our consolidated financial condition or results of operations. 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. These estimates may change as new events occur, as more experience is acquired, as additional information is obtained and as our operating environment changes. Our significant accounting policies are discussed in Note 3 to our Consolidated Financial Statements included in Item 8 of this report. We have discussed the development and selection of our critical accounting policies and related disclosures with the Audit Committee of the Board of Directors and have identified the following critical accounting policies for the current fiscal year.

Principles of Consolidation

We consolidate entities when we have the ability to control the operating and financial decisions and policies of that entity and record the portion we do not own as minority interest. The determination of our ability to control or exert significant influence over an entity involves the use of judgment. We apply the equity method of accounting where we can exert significant influence over, but do not control, the policies and decisions of an entity. We use the cost method of accounting where we are unable to exert significant influence over the entity.

 
11

 
 
Change in Fiscal Year

On April 28, 2008, we changed our fiscal year to end on April 30th rather than the last Sunday in April.  We previously ended our fiscal year on the last Sunday in April due to our previous relationship with IC-BH and Isle which used this year end.  As a result, fiscal year 2009 began on April 28, 2008 and will end April 30, 2009.  We believe this fiscal year creates more comparability to other companies in the casino industry.  Fiscal year 2008 commenced on April 29, 2007 and ended on April 27, 2008.  There are no factors, seasonal or otherwise, that would impact the comparability of information or trends

Equity Method of Accounting

Our previous investments in IC-BH, American Racing, RCI, Buena Vista Development and Route 66  Sunrise were accounted for using the equity method of accounting because the investment gave us the ability to exercise significant influence, but not control, over the investees. Significant influence is generally deemed to exist where we have an ownership interest in the investee of between 20% and 50%, although other factors such as the degree of ultimate control, representation on the investee's Board of Directors or similar oversight body are considered in determining whether the equity method of accounting is appropriate. We recorded our equity in the income or losses of our investees using the same reporting periods as presented, except we reported our equity in income or losses one month in arrears for RCI and American Racing (which had a calendar fiscal year), and one month in arrears for Buena Vista Development and Sunrise (which had a fiscal year end of March 31).   Deferred tax assets or liabilities are recorded for allocated earnings or losses of our equity investments that were not currently reportable or deductible for federal income tax purposes.

We utilized the equity method of accounting for our 51% interest in Route 66 Casinos because the operating activities of the joint venture were controlled by the minority venturer. We were involved in legal proceedings with the minority venturer in Route 66 Casinos in which the minority venturer asserted that the operating agreement governing the venture was void and unenforceable. We assessed whether this circumstance indicated utilization of the cost method of accounting for this investment was appropriate and concluded that the equity method best reflected the underlying nature of our investment. The operating agreement provided that all material decisions of the joint venture were made by the members, including us, on a unanimous basis. We believed the operating agreement to be binding and enforceable on the venture and our joint venture partner and, therefore, we concluded that we had significant influence over the affairs of the venture.

Capitalized Development Costs

We capitalize certain third party legal, professional, and other miscellaneous fees directly related to the procurement, evaluation and establishment of contracts for development projects. Development costs are recorded on the cost basis and are amortized over the estimated economic term of the contract. We review each project on a quarterly basis to assess whether any changes to our estimates are appropriate. If accumulated costs of a specific project exceed the net realizable value of such project or the project is abandoned, the costs are charged to earnings.

We amortize capitalized development costs of Oceans Casino Cruises, Inc. (“SunCruz”), over the contractual two-year term of the management contract. Each month we recognize as expense a percentage of our capitalized development costs determined by dividing actual accrued costs incurred with the procurement of the contract divided over the life of the contract. We believe this method is appropriate because it provides income and expenses over the term of the contract. We receive a monthly management fee from SunCruz as well as reimbursement for any reasonable expenses incurred.

Goodwill and Other Intangibles

In connection with our acquisition of the Colorado Grande casino on April 25, 2005, we have goodwill with an indefinite useful life of $5.5 million. Statement of Financial Accounting Standards ("SFAS") No. 142 “Goodwill and Other Intangible Assets” (“SFAS No. 142”), requires that goodwill and intangible assets with indefinite useful lives be tested for impairment annually, or more frequently if an event occurs or circumstances change that may reduce the fair value of our goodwill below its carrying value. We completed an impairment test as required under SFAS No. 142 in the fourth quarter of fiscal year 2009 and determined that the goodwill was not impaired. For properties with goodwill with indefinite lives, this test requires the comparison of the implied fair value of each property to its carrying value. The implied fair value includes estimates of future cash flows that are based on reasonable and supportable assumptions and represent our best estimates of the cash flows expected to result from the use of the assets and their eventual disposition. Changes in estimates or application of alternative assumptions and definitions could produce significantly different results.

 
12

 

Asset and Investment Impairments

We apply the provisions of SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets," and Accounting Principles Board Opinion (“APB”) No. 18, "The Equity Method of Accounting for Investments in Common Stock," to account for asset and investment impairments. Under these standards, we evaluate an asset or investment for impairment when events or circumstances indicate that its carrying value may not be recovered. These events include market declines that are believed to be other than temporary, changes in the manner in which we intend to use a long-lived asset, decisions to sell an asset or investment and adverse changes in the legal or business environment such as adverse actions by regulators. When an event occurs, we evaluate the recoverability of our carrying value based on either (i) the long-lived asset’s ability to generate future cash flows on an undiscounted basis or (ii) the fair value of our investment in unconsolidated affiliates. If an impairment is indicated or if we decide to exit or sell a long-lived asset or group of assets, we adjust the carrying value of these assets downward, if necessary, to their estimated fair value, less costs to sell. Our fair value estimates are generally based on market data obtained through the sales process or an analysis of expected discounted cash flows. The magnitude of any impairments are impacted by a number of factors, including the nature of the assets to be sold and our established time frame for completing the sales, among other factors. We also reclassify the asset or assets as either held-for-sale or as discontinued operations, depending on, among other criteria, whether we will have any continuing involvement in the cash flows of those assets after they are sold. Based upon this policy, we reduced our investment in Horizon Casino Vicksburg by $1.2 million as of April 30, 2009, and in fiscal year 2008, we reduced our investment in Sunrise Land & Minerals Corporation (“Sunrise”) by $100,000, reduced a note receivable and related accrued interest from Big City Capital by $2.3 million and wrote-off $1.9 million of notes receivable, related accrued interest and our equity investment in the La Jolla gaming development project as of April 27, 2008.

Allowance for Doubtful Accounts 

We establish provisions for losses on accounts and notes receivable if we determine that we will not collect all or part of the outstanding balance. We regularly review collectibility and establish or adjust our allowance as necessary using the specific identification method. We make advances to Indian tribes and other third parties under executed promissory notes for project costs related to the development of gaming and entertainment properties. Due diligence is conducted by our management with the assistance of legal counsel prior to entering into arrangements with Indian tribes and other third parties to provide financing in connection with their efforts to secure and develop the properties. Repayment terms are largely dependent upon the operating performance of each opportunity for which the funds have been loaned. Interest income is not accrued until it is reasonably assured that the project will be completed and that there will be sufficient profits from the facility to cover the interest to be earned under the respective note. If projected cash flows are not sufficient to recover amounts due, the note is evaluated in accordance with SFAS No. 114, “Accounting by Creditors for Impairment of a Loan,” to determine the appropriate discount to be recorded on the note for it to be considered a performing loan. If the note is performing, interest is recorded using the effective interest method based on the value of the discounted note balance. See Note 6 to our Consolidated Financial Statements.

We review on a quarterly basis each of our notes receivable to evaluate whether the collection of such note receivable is still probable. In our analysis, we review the economic feasibility and the current financial, legislative and development status of the project. If our analysis indicates that the project is no longer economically feasible then the note receivable would be written down to its estimated fair value.

Revenue Recognition

We record revenues from management fees, interest on notes receivable and royalties 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 collectibility 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. The Company records the redemption of coupons and points for cash as a reduction of revenue. These amounts are included in promotional allowances in the accompanying consolidated statements of operations. The estimated cost of providing such complimentary services that is included in casino expense in the accompanying consolidated statements of operations was as follows:

   
Fiscal Year Ended
 
   
April 30, 2009
   
April 27, 2008
 
Food and beverage
  $ 595,499     $ 652,705  
Other
    5,994       8,616  
Total cost of complimentary services
  $ 601,493     $ 661,321  

Accrued Jackpot Liability

      We accrue jackpot liability as games are played under a matching concept of coin-in.

 
13

 

Income Taxes

Income taxes are accounted for in accordance with the provisions of SFAS No. 109, “Accounting for Income Taxes.” SFAS No. 109 requires the use of an asset and liability approach for financial accounting and reporting for income taxes. Under this approach, deferred tax assets and liabilities are recognized based on anticipated future tax consequences, using currently enacted tax laws, attributable to differences between financial statement carrying amounts of assets and liabilities and their respective tax basis. We record current income taxes based on our current taxable income, and we provide for deferred income taxes to reflect estimated future tax payments and receipts. We account for tax credits under the flow-through method, which reduces the provision for income taxes in the year the tax credits first become available. Deferred tax assets are reduced by a valuation allowance when, based on our estimates, it is more likely than not that a portion of those assets will not be realized in a future period. The estimates utilized in recognition of deferred tax assets are subject to revision, either up or down, in future periods based on new facts or circumstances.

Accrued Litigation Liability

We assess our exposure to loss contingencies including legal matters. If the potential loss is justified to be probable and estimable, we will provide for the exposure. If the actual loss from a contingency differs from management’s estimate, operating results could be impacted. As of April 30, 2009, we did not record any accrued litigation liability.

Restatement

As discussed in Item 9A, the Company did not maintain effective control over financial reporting as it relates to its tax provision as of April 27, 2008. To mitigate the material weakness, management has engaged a tax expert to assist in preparation and review of the Company’s tax provision during 2009. As a result of the new control in place, management identified an error in prior year tax provision; accordingly, the following items in the previously reported consolidated financial statements are restated.

Consolidated Statement of Operations:
 
   
Year ended April 27, 2008
 
   
Originally
           
 
 
Reported
   
Adjustment
 
As Restated
 
                 
Deferred tax benefit
  $ (1,885,726 )   $ 1,000,000     $ (885,726 )
Net income
    23,707,802       (1,000,000 )     22,707,802  
Earnings per share - basic
    1.83       (0.08 )     1.75  
Earnings per share - diluted
    1.83       (0.08 )     1.75  
 
Consolidating Balance Sheet:
 
   
April 27, 2008
 
   
Originally
             
   
Reported
   
Adjustment
   
As Restated
 
                   
Deferred tax assets
  $ 1,885,726     $ (1,000,000 )   $ 885,726  
Retained earnings
    29,401,890       (1,000,000 )     28,401,890  
 
All footnotes, where applicable, have been adjusted to confirm to this restatement.

Executive Overview

We were formed in 1977 and since 1994, have primarily been a gaming company involved in financing, developing, owning and operating gaming projects. Our gaming facility operations are located in the United States of America (“U.S.”), specifically in the states of Colorado and Florida. On April 25, 2005, we acquired the Colorado Grande Casino from IC-BH.  Our business strategy will continue to focus on gaming projects but with a greater emphasis on owning and operating gaming establishments. If we are successful, both our future revenues and costs and our profitability can be expected to increase. Our net revenues were $5.9 million, and $6.7 million for fiscal years 2009 and 2008, respectively.
 
We held investments in various unconsolidated affiliates which were accounted for using the equity method of accounting. Our principal equity method investees were gaming facilities.. As of April 30, 2009, we have no unconsolidated affiliates. Our net ownership interest, investments in and our earnings from  unconsolidated affiliates are as follows (see Note 5 to our Consolidated Financial Statements):

 
14

 
 
                           
Earnings (Loss)
 
   
Net Ownership Interest
   
Investment
   
Fiscal Years Ended
 
Unconsolidated affiliates:
 
April 30,
2009
   
April 27,
2008
   
April 30,
2009
   
April 27,
2008
   
April 30,
2009
   
April 27,
2008
 
   
(Percent)
                         
Isle of Capri - Black Hawk, L.L.C. (1)
    -       -     $ -     $ -     $ -     $ 4,860,613  
American Racing and Entertainment, L.L.C. (2)
    -       -       -       -       -       (840,368 )
Buena Vista Development Company, L.L.C. (3)
    -       40       -       154,969       (7,863 )     (16,200 )
Sunrise Land and Mineral Corporation (4)
    -       -       -       -       -       51,401  
Restaurant Connections International, Inc. (5)
    -       34       - -       -       -       -  
Total investments in unconsolidated affiliates
                  $ -     $ 154,969                  
                                                 
Total earnings (loss) from unconsolidated affiliates
                                  $ (7,863 )   $ 4,055,446  

 
(1)
Separate financial statements for this entity are included herein. On January 27, 2008, we sold our ownership interest in IC-BH to the ISLE.
 
(2)
On June 14, 2007, we sold our ownership interest to two of our partners.
 
(3)
Effective November 25, 2008, we sold our interest for $16 million cash and a $4 million receivable to our partner and related parties.
 
(4)
This asset was sold as of January 8, 2008 to our partner.
 
(5)
Investment in RCI was reduced to zero in fiscal year 2000. This asset was held for sale as of April 27, 2008. We increased our ownership from 34% to 56% effective May 16, 2008.  This asset was sold July 31, 2008.
 
We also hold investments in various development projects that we consolidate. Our net ownership interest and capitalized development costs in development projects are as follows (see Note 5 to the Consolidated Financial Statements):

   
Net Ownership Interest
   
Capitalized Development Costs
 
Development Projects:
 
April 30,
2009
   
April 27,
2008
   
April 30,
2009
   
April 27,
2008
 
   
(Percent)
             
Gold Mountain Development, L.L.C. (1)
    100       100     $ 3,437,932     $ 3,437,932  
NG Washington, LLC (2)
    100       -       617,071       -  
Nevada Gold Vicksburg, LLC (3)
    100       100       -       2,191,899  
Other (4)
                    128,953       215,663  
Total investments– development projects
                  $ 4,183,956     $ 5,845,494  

 
(1)
Acquisition and development costs incurred for 270 acres of real property in the vicinity of Black Hawk, Colorado.
 
(2)
Refundable deposits and license costs incurred for three mini-casinos in Washington State.
 
(3)
Deposit and acquisition costs related to acquisition of Horizon Casino/Hotel in Vicksburg, Mississippi.
 
(4)
Development costs incurred for other development projects.

 
15

 

Consolidated Results of Operations

The following table sets forth our consolidated results of operations for the fiscal years ended April 30, 2009  and April 27, 2008:

   
Fiscal Years Ended
 
   
April 30,
   
April 27,
 
   
2009
   
2008
 
         
(Restated)
 
Revenues:
           
Casino
  $ 5,356,885     $ 6,636,652  
Food and beverage
    1,395,130       1,414,423  
Other
    49,366       101,203  
Management fees
    493,382       40,174  
Gross revenues
    7,294,763       8,192,452  
Less promotional allowances
    (1,426,511 )     (1,459,539 )
Net revenues
    5,868,252       6,732,913  
Operating expenses:
               
Casino
    1,750,014       1,935,791  
Food and beverage
    614,779       674,961  
Marketing and administrative
    2,485,881       2,900,887  
Facility
    362,009       377,608  
Corporate expense
    4,366,670       5,001,190  
Legal expenses
    403,694       871,428  
Depreciation and amortization
    627,618       743,783  
Write-off of notes receviable related to gaming projects
    -       4,026,893  
Impairment of equity investment
    -       308,350  
Write-off of project development cost
    1,215,383       -  
Other
    145,018       67,439  
Total operating expenses
    11,971,066       16,908,330  
Operating loss
    (6,102,814 )     (10,175,417 )
Non-operating income (expenses):
               
Earnings (loss) from unconsolidated affiliates
    (7,863 )     4,055,446  
Gain on sale of equity investees and assets
    403,388       40,715,552  
Interest income
    975,490       2,007,898  
Interest expense
    (1,307,296 )     (3,864,552 )
Amortization of loan issue costs
    (128,266 )     (764,329 )
Loss on extinguishment of debt
    -       (203,160 )
Income (loss) before income tax expense (benefit)
    (6,167,361 )     31,771,438  
Income tax expense (benefit)
               
Current
    (2,265,155 )     9,949,362  
Deferred and change in valuation allowance
    285,930       (885,726 )
Total income tax expense (benefit)
    (1,979,225 )     9,063,636  
                 
Net income (loss)
  $ (4,188,136 )   $ 22,707,802  
                 
Per share information:
               
Net income (loss) per common share - basic
  $ (0.32 )   $ 1.75  
Net income (loss) per common share - diluted
  $ (0.32 )   $ 1.75  
                 
Basic weighted average number of shares outstanding
    12,939,130       12,939,130  
Diluted weighted average number of shares outstanding
    12,939,130       12,945,151  
 
 
16

 

Comparison of Fiscal Years Ended April 30, 2009 and April 27, 2008

Net revenues>. Net revenues for fiscal year 2009 decreased 12.8%, or $ .9 million, to $5.9 million compared to fiscal year 2008. Net casino revenues from Colorado decreased $1.3 million due to Colorado implementing a smoking ban effective January 1, 2008, the addition of a new casino in our market as of June, 2008, and the general economic downturn.  In November, 2008, a bet limit initiative which allows $100 gaming limits, craps, roulette and 24 hour gaming was passed by Colorado voters followed by Cripple Creek voters on December 16, 2008.  The approval of the bet limit initiative by local voters required the Colorado regulatory agencies to write rules and regulations pertaining to the changes.  As a result, implementation of the bet limit initiative did not occur until July 2, 2009.  The reduction in Colorado was offset by an increase in management fees of $.5 million compared to the prior year.

Total operating expenses. >Total operating expenses for fiscal year 2009 decreased 29.2%, or $5.0 million, to $12.0 million compared to fiscal year 2008.  Operating expenses, excluding write-offs and impairments, decreased $1.8 million due to our continued efforts to reduce staffing and expenses.  Operating expenses at our Colorado Grande Casino decreased $0.7 million, or 11.5%, due to our continued efforts to reduce staffing, marketing, and other expenses due to reduced revenues caused by the January 1, 2008 enactment of a smoking ban in casinos, the introduction of a new casino in our market, and the general economic downturn.. We experienced a $.6 million decrease or 12.7% less corporate expense primarily due to a $.4 million decrease of  payroll expenses and a $.2 million decrease in rent expense from the moving of the Corporate office.  Legal expenses for fiscal year 2009 decreased 53.7%, or $0.5 million, to $0.4 million compared to fiscal year 2008. The decrease is primarily due to hiring an in-house general counsel in an effort to prepare legal documents internally and a reduction in litigation activity.  Write-off of notes receivable related to gaming projects of $4.0 million and impairment of equity investment of $0.3 million both decreased to $0 compared to fiscal year 2008.  Write off of project development costs increased 100%, or $1.2 million compared to 2008.  Our only write off in 2009 was the project development costs related to the purchase of the Horizon Casino in Vicksburg, Mississippi.





 
17

 

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 fiscal years 2009 and 2008:

   
Fiscal Years Ended
 
   
April 30,
2009
   
April 27, 
2008
 
         
(Restated)
 
Cash provided by (used in):
           
Operating activities
  $ (5,507,059 )   $ (12,559,597 )
Investing activities
  $ 27,507,309     $ 52,914,899  
Financing activities
  $ (9,562,019 )   $ (41,762,549 )
 



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 acquisitions;
 
- management contracts;
 
- working capital requirements;
- obtaining funds via long-term subordinated debt instruments;
- debt service requirements;  and
 
- disposition of non-gaming related assets.
 
At April 30, 2009, outstanding indebtedness was $6.0 million which is not due until June 30, 2013. Historically, tax distributions from IC-BH, monetizing non-core assets, and repayments from affiliates have been sufficient to satisfy our current debt obligations and working capital needs. We no longer receive cash flow from these sources. In addition to cash flow expected to be generated from the Colorado Grande Casino and existing management contracts, we anticipate that cash flow from notes receivable and the recently acquired mini-casinos in Washington State will generate sufficient cash flow.

On June 14, 2007, we sold our membership interest in American Racing and Entertainment. We received $2.1 million cash and two notes for $1.1 million each. The notes bear interest of 5% and were paid on June 15, 2008 and 2009, respectively. On June 18, 2007, we used the proceeds from the sale of American Racing to repay $2.2 million of our previously held $55 million Credit Facility (“Credit Facility”). In addition to the cash received from the sale of American Racing, certificates of deposit of approximately $1.1 million pledged as collateral for a bank line of credit for American Racing was released to us on July 13, 2007.  We used $950,000 of the certificates of deposit proceeds to pay down the Credit Facility. On June 26, 2007, we drew down $1.0 million from the Credit Facility. In addition, in conjunction with the sale agreement we were indemnified by the purchasers in connection with the guarantees of approximately $11 million of debt or any other obligations of American Racing. On March 31, 2008, the $11 million debt was refinanced and the Company was released from being a guarantor.

We have continued to examine our corporate overhead. As a result, we have implemented several cost saving measures that have saved approximately $2.5 million of general and administrative expenses annually. These measures included the elimination of several senior level positions and a number of corporate staff positions which resulted in a 60% reduction in our corporate full time equivalents. These cost savings have continued during fiscal year 2009.

 
18

 

On January 27, 2008, we sold our ownership interest in IC-BH to our partner for $64.6 million in cash. On the same date we repaid $38.8 million of the Credit Facility. In addition, from proceeds of the sale a $13.0 million Project Fund was established and a $2.0 million deposit was escrowed in regards to our proposed acquisition of the Vicksburg Horizon Casino and Hotel in Vicksburg, Mississippi. The remaining funds were made available to pay transaction fees, income taxes and fund our continuing operations.

On July 31, 2008, RCI sold its principal asset, International Restaurants of Brazil, which consisted of 16 Pizza Huts in San Paulo, Brazil, for $5.5 million.  On August 12, 2008, the company received $4.7 million from RCI as payment in full of the outstanding note and accrued interest.

On December 15, 2008 the Company received $16 million in cash for our 40% ownership of BVD.  The cash and a $4 million receivable due no later than two years after the gaming/entertainment facility opens, paid in full the $14.8 million note receivable and accrued interest.

We have listed the 270 acres in Black Hawk, CO with a real estate broker. If the acreage is sold we will use the proceeds to pay operating expenses or debt or, reinvest the funds into acquisition opportunities.

On April 30, 2009, excluding restricted cash of $6.0 million, we had cash and cash equivalents of $13.8 million. The restricted cash is the Project Fund referred to above.

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, and are in the process of making, arrangements to ensure that we have sufficient working capital to fund our obligations as they come due. These potential funding transactions include divesting of non-core assets and obtaining long-term financing. We believe that some or all of these sources of funds will be funded in a timely manner and 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 in divesting of the non-core assets or achieving the desired level of working capital at terms that are favorable to us. Should cash resources not be sufficient to meet our current obligations as they come due, repay or refinance our long-term debt due on June 30, 2010 and, acquire operations that generate positive cash flow, we would be required to curtail our activities and grow at a pace that cash resources could support which may require a restructuring of our debt or selling core assets of the Company.

Indebtedness

Effective March 1, 2008, we entered into a $15.6 million loan agreement with our lender that replaced the $55.0 million Credit Facility with the same lender. The principal bears interest at 10.0% per annum and has a maturity date of June 30, 2010. The loan is secured by substantially all of our assets.  In fiscal year 2009, we repaid $9.6 million of Notes Payable. As of April 30, 2009, we had $6.0 million in outstanding debt under the loan agreement.

Off-Balance Sheet Arrangements

None.

Contractual Obligations

The following table sets forth estimates of our contractual obligations as of April 30, 2009 to make future payments in fiscal year 2010 through fiscal year 2014 and thereafter:

         
Fiscal Year
       
Estimated Contractual Obligations:
 
Total
   
2010
   
2011
   
2012
   
2013
   
2014
   
Thereafter
 
Long-term debt (1)
  $ 6,000,000     $     $     $     $     $ 6,000,000     $  
Estimated interest payments (2)
    2,680,000       600,000       650,000       660,000       660,000       110,000        
Operating lease commitments (3)
    9,694,092       490,171       503,921       400,000       400,000       400,000       7,500,000  
Other commitments(3)
                                         
Total
  $ 18,374,092     $ 1,090,171     $ 1,153,921     $ 1,060,000     $ 1,060,000     $ 6,510,000     $ 7,500,000  
 
(1)
See Notes 5 and 19 to our Consolidated Financial Statements in this Annual Report.
(2)
Estimated interest payments are based on the outstanding balance of our debt as of April 30, 2009.
(3) 
See Note 16 to our Consolidated Financial Statement in this Annual Report.

 
19

 

Recent Accounting Pronouncements

Fair Value Measurements
 
In September 2006, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standard (“SFAS”) No. 157 “Fair Value Measurements” (“SFAS No. 157”). SFAS No. 157 defines fair value, establishes a framework for measuring fair value under generally accepted accounting principles, and expands disclosures about fair value measurements. SFAS No. 157 applies to other accounting pronouncements that require or permit fair value measurements. The FASB has previously concluded in those accounting pronouncements that fair value is the relevant measurement attribute. Accordingly, SFAS No. 157 does not require any new fair value measurements. However, for some entities, the application of SFAS No. 157 will change current practice. SFAS No. 157 is effective for fiscal years beginning after November 15, 2007 (the Company’s fiscal year 2009), and interim periods within those years. The Company has assessed the effect of the implementation of this pronouncement on its financial statements and concluded that application of SFAS No. 157 does not materially change current practice.

Fair Value Option for Financial Assets and Liabilities
 
 In February 2007, the FASB issued SFAS No. 159 “The Fair Value Option for Financial Assets and Financial Liabilities, Including an Amendment of FASB Statement No. 115” (“SFAS No. 159”). SFAS No. 159 permits entities to choose to measure many financial instruments and certain other items at fair value. The objective is to improve financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. SFAS No. 159 is expected to expand the use of fair value measurement, which is consistent with the FASB’s long-term measurement objectives for accounting for financial instruments. SFAS No. 159 is effective for fiscal years beginning after November 15, 2007 (the Company’s fiscal year 2009). The Company has assessed the effect of implementation of this pronouncement on its financial statements and concluded that application of SFAS No. 159 does not materially change current practice.

New Accounting Pronouncements Issued But Not Yet Adopted

As of April 30, 2009, there were several accounting standards and interpretations that had not yet been adopted by us. Below is a discussion of significant standards that may impact us.

Business Combinations

In December 2007, the FASB issued SFAS No. 141 (revised 2007), “Business Combinations” (“SFAS No. 141(R)”).  SFAS No. 141(R) establishes principles and requirements to recognize the assets acquired and liabilities assumed in an acquisition transaction and determines what information to disclose to investors regarding the business combination.  SFAS No. 141(R) is effective for business combinations for which the acquisition date is on or after the beginning of the first annual period beginning after December 15, 2008.  The Company will assess the effect of the implementation of this pronouncement on the financial statements  as a result of the May 12, 2009 acquisition of three mini-casinos in Washington State.

Noncontrolling Interests in Consolidated Financial Statements

In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements – an amendment of ARB No. 51” (“SFAS No. 160”).  SFAS No. 160 establishes accounting and reporting standards with respect to the disclosure of a noncontrolling ownership interest in the statement of financial position within equity, the presentation of the share of consolidated net income attributable to the parent and noncontrolling interest on the consolidated statement of income, the accounting treatment of changes in a parent’s ownership interest while the parent retains a controlling interest and the accounting for the deconsolidation of a subsidiary.  SFAS No. 160 is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008.  The Company currently has no noncontrolling ownership interests in consolidated subsidiaries and does not expect a material impact from SFAS No. 160 on its consolidated financial statements.

Disclosures About Derivative Instruments and Hedging Activities

In March 2008, the FASB issued SFAS No. 161, "Disclosures About Derivative Instruments and Hedging Activities - an amendment of FASB Statement No. 133" ("SFAS No. 161"). SFAS No. 161 expands the disclosure requirements in SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities," regarding an entity's derivative instruments and hedging activities. SFAS No. 161 is effective for the Company's fiscal year beginning May 1, 2009. SFAS No. 161 relates specifically to disclosures, and is not expected to have a material impact on the Company's consolidated financial statements.

 
20

 
 

In May 2008, the FASB issued SFAS No. 162, "The Hierarchy of Generally Accepted Accounting Principles" ("SFAS No. 162"), which identifies the sources of accounting principles and the framework for selecting the principles to be used in the preparation of financial statements that are presented in conformity with GAAP. In June 2009, SFAS No. 162 was replaced by SFAS No. 168, “The FASB Accounting Standard Codification and the Hierarchy of Generally Accepted Accounting Principles – replacement of FASB Statement No. 162”. SFAS No. 168 will become the source of authoritative U.S. generally accepted accounting principles recognized by FASB. SFAS No. 168 becomes effective for financial statements issued for interim and annual periods ending after September 15, 2009. The Company plans to adopt SFAS No. 168 when it becomes effective. The adoption of SFAS No. 168 will have no material impact on the Company's consolidated financial statements.

Subsequent Events

In May 2009, the FASB issued SFAS No. 165, "Subsequent Events" ("SFAS No. 165"). SFAS No. 165 expands the disclosure requirements for subsequent events. SFAS No. 165 is effective for the Company's fiscal year beginning May 1, 2009. SFAS No.165 relates specifically to disclosures, and is not expected to have a material impact on the Company's consolidated financial statements.

Item 7A.
Quantitative and Qualitative Disclosures About Market Risk 

Market risk is the risk of loss arising from adverse changes in market rates and prices, including interest rates, foreign currency exchange rates, credit risk, commodity price and equity prices. Our primary exposure to market risk is credit risk concentrations. We do not believe we are subject to material interest risk.

All of our borrowings are at fixed interest rates; thus an interest rate change would not have a significant impact on our operations.

Item 8.
Financial Statements and Supplementary Data

The information required under Item 310(a) of Regulation S-K is included in this report as set forth in the “Index to Consolidated Financial Statements.” See Index to Consolidated Financial Statements.

Item 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A.
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 Securities and Exchange Commission (“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 Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

In accordance with Exchange Act Rules 13a-15 and 15d-15, we carried out an evaluation, under the supervision and with the participation of management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report.  As described below under Management’s Annual Report on Internal Control over Financial Reporting, our CEO and CFO have concluded that, as of the end of the period covered by this Annual Report on Form 10-K, the Company’s disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

(b)            Management’s Annual Report on Internal Control over Financial Reporting.

Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended. The Company’s internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. The Company’s internal control over financial reporting includes those policies and procedures that:

 
21

 
 
 
1.
Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company;

 
2.
Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and

 
3.
Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements.

Because of the inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management assessed the effectiveness of the Company’s internal control over financial reporting as of April 30, 2009.  In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework.  Management has concluded that the internal control over financial reporting was effective as of April 30, 2009.

(c)           Changes in Internal Control Over Financial Reporting.> 

A material weakness noted in our Form 10-K for the year ended April 27, 2008, is listed below:

In conjunction with the preparation of the tax provision for the year ended April 27, 2008, a material unreconciled difference was identified that was not appropriately researched and resolved.  Management later completed its reconciliation of the identified difference and a material adjustment was required to be recorded to bring the accounting records into agreement with the final tax provision.  Additionally, corresponding tax disclosures were required to be adjusted.  Management believes that the material weakness was caused by the lack of tax expertise on its accounting staff.

Based on such assessment and those criteria, management believes that the Company did not maintain effective internal control over financial reporting as of April 27, 2008.

To mitigate this material weakness, management has engaged a tax expert to assist in the preparation and review of the Company’s tax provision and related disclosures to ensure that they have been prepared consistent with the requirements of SFAS No. 109.  Management believes that by engaging this expert that this material weakness has been mitigated to a level of risk that the likelihood of material misstatement to occur would be deemed to be remote.

 
(d)
Report of Independent Registered Public Accounting Firm.

This annual report does not include an attestations report of the Company’s independent registered public accounting firm regarding internal control over financial reporting.  Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to the temporary rules of the SEC that permit the Company to provide only Management’s report in this annual report.
 
Item 9B.
Other Information

None.

Part III

Item 10.
Directors, Executive Officers and Corporate Governance

We have adopted a Code of Ethics that applies to directors, officers and employees, including our principal executive officer, principal financial officer and principal accounting officer. Our Code of Ethics is posted on our website at http://www.nevadagold.com, under Investor Relations - Investor Info. Changes to and waivers granted with respect to this Code of Ethics related to our officers, other executive officers and directors are required to be disclosed pursuant to applicable rules and regulations of the Securities and Exchange Commission will also be posted on our website and a Current Report on Form 8-K will be filed within 4 business days of the change or waiver.

 
22

 

The other information required by this item is incorporated by reference to our definitive proxy statement for our 2009 Annual Meeting to be filed with the Securities and Exchange Commission pursuant to Regulation 14A within 120 days after the end of the fiscal year covered by this report.

Item 11.
Executive Compensation

The information required by this item is incorporated by reference to our definitive proxy statement for our 2009 Annual Meeting to be filed with the Securities and Exchange Commission pursuant to Regulation 14A within 120 days after the end of the fiscal year covered by this report.

Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The information required by this item is incorporated by reference to our definitive proxy statement for our 2009 Annual Meeting to be filed with the Securities and Exchange Commission pursuant to Regulation 14A within 120 days after the end of the fiscal year covered by this report.

Item 13.
Certain Relationships and Related Party Transactions and Director Independence

The information required by this item is incorporated by reference to our definitive proxy statement for our 2009 Annual Meeting to be filed with the Securities and Exchange Commission pursuant to Regulation 14A within 120 days after the end of the fiscal year covered by this report.

Item 14.
Principal Accountant Fees and Services 

The information required by this item is incorporated by reference to our definitive proxy statement for our 2009 Annual Meeting to be filed with the Securities and Exchange Commission pursuant to Regulation 14A within 120 days after the end of the fiscal year covered by this report.

Part IV

Item 15.
Exhibits and Financial Statement Schedules 

(a) 1. Financial Statements.

Included in Part II of this Report:

Consolidated Financial Statements of Nevada Gold & Casinos, Inc.
Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets as of April 30, 2009 and April 27, 2008
Consolidated Statements of Operations for fiscal years ended April 30, 2009 and April 27, 2008
Consolidated Statements of Stockholders’ Equity for fiscal years ended April 30, 2009 and April 27, 2008
Consolidated Statements of Cash Flows for fiscal years ended April 30, 2009 and April 27, 2008
Notes to Consolidated Financial Statements

Consolidated Financial Statements of Isle of Capri Black Hawk, L.L.C.
Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheet as of January 27, 2008
Consolidated Statement of Income for the fiscal year ended January 27, 2008
Consolidated Statement of Members' Equity for the fiscal year ended January 27, 2008
Consolidated Statement of Cash Flows for the fiscal year ended January 27, 2008
Notes to Consolidated Financial Statements

(a) 2. Financial Statement Schedules.

We have omitted all schedules because they are not required or are not applicable, or the required information is shown in the consolidated financial statements or notes to the consolidated financial statements.

 
23

 

(a)  3. Exhibits

EXHIBIT
NUMBER
  DESCRIPTION
     
3.1A
 
Amended and Restated Articles of Incorporation of Nevada Gold & Casinos, Inc. (filed previously as Exhibit A to the Company's definitive proxy statement filed on Schedule 14A on July 30, 2001)
     
3.1B
 
Certificate of Amendment to the Articles of Incorporation of Nevada Gold & Casinos, Inc. (filed previously as Exhibit 4.2 to the Company’s Form S-8 filed October 11, 2002)
     
3.1C
 
Certificate of Amendment to the Articles of Incorporation of Nevada Gold & Casinos, Inc. (filed previously as Exhibit 3.3 to the Company’s Form 10-Q filed November 9, 2004)
     
3.1D
 
Certificate of Amendment to the Articles of Incorporation of Nevada Gold & Casinos, Inc. (filed previously as Exhibit 3.1 to the Company’s Form 8-K filed October 17, 2007)
     
3.2
 
Amended and Restated Bylaws of Nevada Gold & Casinos, Inc. (filed previously as Exhibit 3.2 to the Company’s From 10-QSB filed August 14, 2002)
     
3.3
 
Amended and Restated Bylaws of Nevada Gold & Casinos, Inc., effective July 24, 2007 (filed previously as Exhibit 3.2 to the Company’s From 8-K filed July 27, 2007)
     
4.1
 
Common Stock Certificate of Nevada Gold & Casinos, Inc. (filed previously as Exhibit 4.1 to the Company’s Form S-8/A, file no. 333-79867)
     
4.2
 
Second Amended and Restated Nevada Gold & Casinos, Inc. 1999 Stock Option Plan (filed previously as Exhibit 4.6 to the Company’s Form S-8, file no. 333-126027)
     
4.3
 
Nevada Gold & Casinos, Inc.’s 2009 Equity Incentive Plan (filed previously as Exhibit 10.1 to the Company’s Form S-8, file no. 333-158576)
     
10.1
 
Stock Purchase Agreement dated as of April 25, 2005 among Isle of Capri Black Hawk, L.L.C., IC Holdings Colorado, Inc., Colorado Grande Enterprise, Inc., and CGC Holdings, L.L.C. (filed previously as Exhibit 2.1 to the Company’s Form 8-K filed April 29, 2005)
     
10.2
 
Unit Purchase Agreement among Nevada Gold & Casinos, Inc., Black Hawk Gold, Ltd., Casino America of Colorado, Inc. and Isle of Capri Casinos, Inc. dated November 13, 2007 (filed previously as Exhibit 10.5 to the Company’s Form 8-K filed November 13, 2007)
     
10.3
 
Purchase and Sale Agreement among Nevada Gold & Casinos, Inc. Nevada Gold NY, Inc., Southern Tier Acquisition, LLC and Oneida Entertainment LLC (filed previously as Exhibit 10.1 to the Company’s Form 8-K filed June 21, 2007)
     
10.4
 
Purchase Agreement dated November 25, 2008 between Nevada Gold BVR, LLC and B.V. Oro, LLC (filed previously as Exhibit 10.1 to the Company’s Form 8-K filed December 12, 2008)
     
10.5
 
Management Agreement dated November 10, 2008 between Nevada Gold & Casinos, Inc. and Oceans Casino Cruises, Inc. (filed previously as Exhibit 10.1 to the Company’s Form 8-K filed November 12, 2008)
     
10.6
 
Settlement Agreement and Release dated April 15, 2008 among Nevada Gold & Casinos, Inc., American Heritage, Inc. and Frederick C. Gillmann (filed previously as Exhibit 10.1 to the Company’s Form 8-K filed April 16, 2008)
     
10.7
 
Asset Purchase Agreement dated March 12, 2009 among Crazy Moose Casino, Inc., Crazy Moose Casino II, Inc., Coyote Bob’s, Inc. and Gullwing III, LLC, as sellers, and NG Washington, LLC, as purchaser (filed previously as Exhibit 10.1 to the Company’s Form 8-K filed March 13, 2009)
     
10.8 (**)
 
Amended and Restated Credit Facility dated January 19, 2006 (portions of this exhibit have been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment in accordance with Rule 24b-2 under the Exchange Act) (filed previously as Exhibit 10.15 to the Company's Form 8-K filed January 25, 2006)
     
10.9 (**)
 
Form of Guarantee of Credit Facility among Nevada Gold and Casinos, Inc., each of Black Hawk Gold, LTD, Gold River, LLC, Nevada Gold BVR, LLC, and Nevada Gold NY, Inc., and the Lender signing as a party thereto (portions of this exhibit have been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment in accordance with Rule 24b-2 under the Exchange Act) (filed previously as Exhibit 10.16 to the Company’s Form 10-Q filed March 3, 2006)
 
 
24

 

10.10 (**)
 
    January 2006 Security Agreement dated January 19, 2006, by and between Nevada Gold & Casinos, Inc., its wholly-owned subsidiary, Black Hawk Gold, Ltd., and the Lender listed as a party thereto (portions of this exhibit have been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment in accordance with Rule 24b-2 under the Exchange Act) (filed previously as Exhibit 10.17 to the Company’s Form 10-Q filed March 3, 2006)
     
10.11 (**)
 
Commercial Pledge Agreement dated January 19, 2006, among Nevada Gold & Casinos, Inc., Black Hawk Gold, LTD, and the Lender listed as a party thereto (portions of this exhibit have been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment in accordance with Rule 24b-2 under the Exchange Act) (filed previously as Exhibit 10.18 to the Company’s Form 10-Q filed March 3, 2006)
     
10.12 (**)
 
Commercial Pledge Agreement dated January 19, 2006, among Nevada Gold & Casinos, Inc., Nevada Gold BVR, and the Lender listed as a party thereto (portions of this exhibit have been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment in accordance with Rule 24b-2 under the Exchange Act) (filed previously as Exhibit 10.19 to the Company’s Form 10-Q filed March 3, 2006)
     
10.13 (**)
 
Commercial Pledge Agreement dated January 19, 2006 among Nevada Gold & Casinos, Inc., Gold River, LLC, and the Lender listed as a party thereto (portions of this exhibit have been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment in accordance with Rule 24b-2 under the Exchange Act) (filed previously as Exhibit 10.20 to the Company’s Form 10-Q filed March 3, 2006)  
     
10.14 (**)
 
Commercial Pledge Agreement dated January 19, 2006, among Nevada Gold & Casinos, Inc., Nevada Gold NY, Inc., and the Lender listed as a party thereto (portions of this exhibit have been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment in accordance with Rule 24b-2 under the Exchange Act) (filed previously as Exhibit 10.21 to the Company’s Form 10-Q filed March 3, 2006)
     
10.15
 
Amendment to the Amended and Restated Credit Facility dated January 19, 2006 among Nevada Gold & Casinos, Inc., Black Hawk Gold, Ltd. and Louise H. Rogers dated July 30, 2007 (filed previously as Exhibit 10.1 to the Company’s Form 8-K filed July 30, 2007)
     
10.16
 
Amendment to the Amended and Restated Credit Facility dated January 19, 2006 between Nevada Gold & Casinos, Inc. and Louise H. Rogers dated October 12, 2007 (filed previously as Exhibit 10.1 to the Company’s Form 8-K filed October 15, 2007)
     
10.17
 
Amendment to the Amended and Restated Credit Facility dated January 19, 2006 between Nevada Gold & Casinos, Inc. and Louise H. Rogers dated December 20, 2007 (filed previously as Exhibit 10.1 to the Company’s Form 8-K filed December 21, 2007)
     
10.18
 
Agreement Regarding Use of Proceeds of IC-BH Sale and Regarding Remaining Amount Due Under the Amended and Restated Credit Facility among Nevada Gold & Casinos, Inc., Black Hawk Gold, Ltd. and Louise H. Rogers dated November 13, 2007 (filed previously as Exhibit 10.1 to the Company’s Form 8-K filed November 13, 2007)
     
10.19
 
Amendment to the January 2006 Security Agreement among Nevada Gold & Casinos, Inc., Black Hawk Gold, Ltd. and Louise H. Rogers dated November 13, 2007 (filed previously as Exhibit 10.2 to the Company’s Form 8-K filed November 13, 2007)
     
10.20
 
Agreement Regarding Use of Proceeds from RCI/CCH Notes Receivable between Nevada Gold & Casinos, Inc. and Louise H. Rogers dated November 13, 2007 (filed previously as Exhibit 10.3 to the Company’s Form 8-K filed November 13, 2007)
     
10.21
 
Promissory Note issued by Nevada Gold & Casinos, Inc. to Louise H. Rogers dated November 13, 2007 (filed previously as Exhibit 10.4 to the Company’s Form 8-K filed November 13, 2007)
     
10.22
 
Agreement Regarding Loans effective March 1, 2008 between Nevada Gold & Casinos, Inc. and Louise H. Rogers (filed previously as Exhibit 10.1 to the Company’s Form 8-K filed June 17, 2008)
     
10.23
 
Amended and Restated Security Agreement effective March 1, 2008 between Nevada Gold & Casinos, Inc. and Louise H. Rogers (filed previously as Exhibit 10.2 to the Company’s Form 8-K filed June 17, 2008)
 
 
25

 
 
10.24
 
Schedule of Collateral, Notes, Security Interests and Ownership Interests effective March 1, 2008 between Nevada Gold & Casinos, Inc. and Louise H. Rogers (filed previously as Exhibit 10.3 to the Company’s Form 8-K filed June 17, 2008)
     
10.25
 
Promissory Note issued by Nevada Gold & Casinos, Inc. to Louise H. Rogers effective March 1, 2008 (filed previously as Exhibit 10.4 to the Company’s Form 8-K filed June 17, 2008)
     
10.26 (+)
 
Form of Indemnification Agreement between Nevada Gold & Casinos, Inc. and each officer and director (filed previously as Exhibit 10.5 to the Company’s Form 10-QSB, filed February 14, 2002)
     
10.27A (+)
 
Employment Agreement dated November 27, 2006 by and between Robert B. Sturges and Nevada Gold & Casinos, Inc. (filed previously as Exhibit 10.27 to the Company’s Form 10-Q filed December 15, 2006)
     
10.27B (+)
 
Amendment to the Employment Agreement dated August 30, 2007 by and between Robert B. Sturges and Nevada Gold & Casinos, Inc. (filed previously as Exhibit 99.1 to the Company’s Form 8-K filed August 31, 2007)
     
10.27C (+)
 
Amendment to the Employment Agreement dated October 30, 2007 by and between Robert B. Sturges and Nevada Gold & Casinos, Inc. (filed previously as Exhibit 99.1 to the Company’s Form 8-K filed October 30, 2007)
     
10.27D (+)
 
Second Amendment to the Employment Agreement dated January 23, 2008 by and between Robert B. Sturges and Nevada Gold & Casinos, Inc. (filed previously as Exhibit 10.1 to the Company’s Form 8-K filed January 24, 2008)
     
10.28A (+)
 
Employment Agreement dated October 24, 2006 by and between James J. Kohn and Nevada Gold & Casinos, Inc. (filed previously as Exhibit 10.28 to the Company’s Form 10-Q filed March 9, 2007)
     
10.28B(+)
 
First Amendment to the Employment Agreement dated April 14, 2008 by and between James J. Kohn and Nevada Gold & Casinos, Inc. (filed previously as Exhibit 10.24B to the Company’s Form 10-Q filed September 9, 2008)
     
10.29A (+)
 
Employment Agreement dated December 29, 2006 by and between Ernest E. East and Nevada Gold & Casinos, Inc. (filed previously as Exhibit 10.28 to the Company’s Form 10-Q filed March 9, 2007)
     
10.29B (+)
 
First Amendment to the Employment Agreement dated April 14, 2008 by and between Ernest E. East and Nevada Gold & Casinos, Inc. (filed previously as Exhibit 10.25B to the Company’s Form 10-Q filed September 9, 2008)
     
10.29C (+)
 
Second Amendment to Employment Agreement between Nevada Gold & Casinos, Inc. and Ernest E. East dated June 8, 2009 (filed previously as Exhibit 10.1 to the Company’s Form 8-K filed June 8, 2009)
     
10.30 (+)
 
Separation Agreement and Release between Nevada Gold & Casinos, Inc. and H. Thomas Winn (filed previously as Exhibit 10.1 to the Company’s Form 8-K filed July 9, 2007)
     
21.1(*)
 
Subsidiaries of the Company
     
23.1(*)
 
Consent of Independent Registered Public Accounting Firm
     
23.2(*)
 
Consent of Independent Registered Public Accounting Firm
     
31.1(*)
 
Chief Executive Officer Certification Pursuant to Section 13a-14 of the Securities Exchange Act.
     
31.2(*)
 
Chief Financial Officer Certification Pursuant to Section 13a-14 of the Securities Exchange Act.
     
32.1(*)
 
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
     
32.2(*)
 
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

+
Management contract or compensatory plan, or arrangement.
*
Filed herewith.
**
Portions of these exhibits have been omitted pursuant to a request for confidential treatment.
 
 
26

 
 
SIGNATURES

Pursuant to Section 13 or 15(d) of the Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 
Nevada Gold & Casinos, Inc.
   
 
By:
/s/ James J. Kohn
 
James J. Kohn
 
Chief Financial Officer
   
 
Date: July 07, 2009
 
27

 
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant in the capacities and on the dates indicated.

Signature
 
Title
 
Date
/s/ JOSEPH A. JULIANO
       
Joseph A. Juliano
 
Chairman of the Board of Directors
 
July 07, 2009
/s/ WILLIAM J. SHERLOCK
 
Director
   
William J. Sherlock
     
July 07, 2009
/s/ WILLIAM G. JAYROE
       
William G. Jayroe
 
Director
 
July 07, 2009
/s/ FRANK CATANIA
       
Frank Catania
 
Director
 
July 07, 2009
/s/ FRANCIS M. RICCI
       
Francis M. Ricci
 
Director
 
July 07, 2009
/s/ WAYNE H. WHITE
       
Wayne H. White
 
Director
 
July 07, 2009
/s/ ROBERT B. STURGES
 
 Director and Chief Executive Officer
   
Robert B. Sturges
 
(principal executive officer)
 
July 07, 2009
         
/s/ JAMES J. KOHN
       
James J. Kohn
 
EVP and Chief Financial Officer (principal financial officer and principal accounting officer)
 
July 07, 2009
 
28

 
Index to Consolidated Financial Statements
Consolidated Financial Statements of Nevada Gold & Casinos, Inc.
 
   
Page
     
Report of Independent Registered Public Accounting Firm
 
30
Consolidated Balance Sheets as of April 30, 2009 and April 27, 2008 (restated)
 
31
Consolidated Statements of Operations for fiscal years ended April 30, 2009 and April 27, 2008 (restated)
 
32
Consolidated Statements of Stockholders’ Equity for fiscal years ended April 30, 2009, and April 27, 2008 (restated)
 
33
Consolidated Statements of Cash Flows for fiscal years ended April 30, 2009, and April 27, 2008 (restated)
 
34
Notes to Consolidated Financial Statements
 
35
 
Consolidated Financial Statements of Isle of Capri Black Hawk, L.L.C.
 
Report of Independent Registered Public Accounting Firm
 
58
Consolidated Balance Sheet as of January 27, 2008
 
59
Consolidated Statement of Income for nine months ended January 27, 2008
 
60
Consolidated Statement of Members' Equity for nine months ended January 27, 2008
 
61
Consolidated Statement of Cash Flows for nine months ended January 27, 2008
 
62
Notes to Consolidated Financial Statements
 
63
 
29

 
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of
Nevada Gold & Casinos, Inc.

We have audited the accompanying consolidated balance sheets of Nevada Gold & Casinos, Inc. and Subsidiaries as of April 30, 2009 and April 27, 2008 and the related consolidated statements of operations, stockholders’ equity and cash flows for the years ended April 30, 2009, and April 27, 2008. 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 the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.  Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion of the effectiveness of the Company’s internal control over financial reporting.  Accordingly, we express no such opinion. 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.

As referred to in Note 20, the Company has elected to restate its consolidated financial statements for the year ended April 27, 2008 to correct an error related to deferred tax expense and liability.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Nevada Gold & Casinos, Inc. and Subsidiaries as of April 30, 2009 and April 27, 2008 and the results of their operations and their cash flows for the years ended April 30, 2009 and April 27, 2008 in conformity with U.S. generally accepted accounting principles.

/s/ Pannell Kerr Forster of Texas, P.C.
 
Houston, Texas
July 7, 2009
 
30

 
Nevada Gold & Casinos, Inc.
Consolidated Balance Sheets
.
   
April 30,
   
April 27,
 
   
2009
   
2008
 
         
(Restated)
 
ASSETS
 
Current assets:
           
Cash and cash equivalents
  $ 13,834,544     $ 1,396,313  
Restricted cash
    6,000,000       13,014,000  
Accounts receivable
    12,342       2,313,593  
Accounts receivable - affilates
          57,359  
Prepaid expenses
    235,847       369,025  
Income tax receivable
    1,872,369        
Notes receivable, current portion
    1,100,000       1,100,000  
Other current assets
    46,444       54,446  
Total current assets
    23,101,546       18,304,736  
                 
Investments in unconsolidated affiliates
          154,969  
Investments in development projects
    746,024       2,407,562  
Investments in development projects held for sale
    3,437,932       3,437,932  
Notes receivable
          1,100,000  
Notes receivable - affiliates
          3,521,066  
Notes receivable - development projects, net of allowances
    1,700,000       16,510,200  
Goodwill
    5,462,918       5,462,918  
Property and equipment, net of accumulated depreciation of $2,408,595 and $1,808,883 at April 30, 2009 and April 27, 2008, respectively
    1,091,549       1,327,275  
Deferred tax asset
    599,797       885,726  
Other assets
    5,915,220       6,780,317  
Total assets
  $ 42,054,986     $ 59,892,701  
                 
LIABILITIES AND STOCKHOLDERS’ EQUITY
 
Current liabilities:
               
Accounts payable and accrued liabilities
  $ 846,062     $ 1,097,277  
Accrued interest payable
          115,027  
Other accrued liabilities
    197,833       203,071  
Taxes payable
          3,911,475  
Total current liabilities
    1,043,895       5,326,850  
                 
Long-term debt, net of current portion
    6,000,000       15,550,000  
Other liabilities
    44,487       56,505  
Total liabilities
    7,088,382       20,933,355  
                 
Commitments and contingencies
           
                 
Stockholders' equity:
               
Common stock, $0.12 par value per share; 50,000,000 shares authorized; 13,935,330 shares issued and 12,939,130 shares outstanding at April 30, 2009 and April 27, 2008, respectively
    1,672,240       1,672,240  
Additional paid-in capital
    19,297,560       19,092,706  
Retained earnings
    24,213,754       28,401,890  
Treasury stock, 996,200 shares at April 30, 2009 and April 27, 2008, respectively, at cost
    (10,216,950 )     (10,216,950 )
Accumulated other comprehensive income
          9,460  
Total stockholders' equity
    34,966,604       38,959,346  
Total liabilities and stockholders' equity
  $ 42,054,986     $ 59,892,701  

The accompanying notes are an integral part of these consolidated financial statements.
 
31

 
Nevada Gold & Casinos, Inc.
Consolidated Statements of Operations

    Fiscal Years Ended  
   
April 30,
   
April 27,
 
   
2009
   
2008
 
         
(Restated) 
 
Revenues:
           
Casino
  $ 5,356,885     $ 6,636,652  
Food and beverage
    1,395,130       1,414,423  
Other
    49,366       101,203  
Management fees
    493,382       40,174  
Gross revenues
    7,294,763       8,192,452  
Less promotional allowances
    (1,426,511 )     (1,459,539 )
Net revenues
    5,868,252       6,732,913  
                 
Operating expenses:
               
Casino
    1,750,014       1,935,791  
Food and beverage
    614,779       674,961  
Marketing and administrative
    2,485,881       2,900,887  
Facility
    362,009       377,608  
Corporate expense
    4,366,670       5,001,190  
Legal expenses
    403,694       871,428  
Depreciation and amortization
    627,618       743,783  
Write-off of notes receivable related to gaming projects
    -       4,026,893  
Impairment of equity investment
    -       308,350  
Write-off of project development cost
    1,215,383       -  
Other
    145,018       67,439  
Total operating expenses
    11,971,066