NEVADA GOLD & CASINOS INC - FORM 8-K/A - EX-99.2

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8-K/A - NEVADA GOLD & CASINOS INC	v196715_8ka.htm
EX-23.1 - NEVADA GOLD & CASINOS INC	v196715_ex23-1.htm
EX-99.3 - NEVADA GOLD & CASINOS INC	v196715_ex99-3.htm

Exhibit 99.2

Gaming Consultants, Inc.

and Affiliates

Combined Financial Statements and

Independent Auditors’ Report

December 31, 2009

INDEPENDENT AUDITORS’ REPORT

Grant Thornton, Ltd.

Receiver of Gaming Consultants, Inc. and Affiliates

Renton, Washington

We have audited the accompanying combined balance sheet of Gaming Consultants, Inc. and Affiliates (the Company) as of December 31, 2009, and the related combined statements of income, stockholder’s equity, and cash flows for the year then ended. These combined financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these combined financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the combined financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the combined 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 audit provides a reasonable basis for our opinion.

In our opinion, the combined financial statements referred to above present fairly, in all material respects, the financial position of Gaming Consultants, Inc. and Affiliates as of December 31, 2009, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.

Our audit was made for the purpose of forming an opinion on the combined financial statements taken as a whole. The supplemental information on pages 15-20 is presented for purposes of additional analysis and is not a required part of the basic combined financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic combined financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic combined financial statements taken as a whole.

Yakima, Washington

June 25, 2010

Gaming Consultants, Inc. and Affiliates

Combined Balance Sheet

Assets

CURRENT ASSETS:
Cash			$	2,988,773
Accounts receivable				197,114
Prepaid expenses and other assets				476,897
Inventory				212,517
Total current assets				3,875,301

PROPERTY AND EQUIPMENT:
Furniture, fixtures, and equipment	$	4,783,728
Leasehold improvements		3,573,768
		8,357,496
Less accumulated depreciation		6,025,841
Total property and equipment				2,331,655

OTHER ASSETS:
Note receivable		497,985
Deposits		161,824
Goodwill		1,419,943
Other assets, net of amortization		1,035,009
Total other assets				3,114,761

			$	9,321,717

See accompanying notes to combined financial statements.



		December 31, 2009

Liabilities and Stockholder's Equity

CURRENT LIABILITIES:
Accounts payable				$	797,291
Accrued expenses:
Payroll					1,001,130
Sales and business taxes					793,149
Other accrued expenses					252,811
Deferred revenue					4,632
Chips outstanding					109,057
Jackpots and prize liabilities					1,070,560
Total current liabilities					4,028,630

LONG-TERM DEBT					508,325

Total liabilities					4,536,955

COMMITMENTS AND CONTINGENCIES

STOCKHOLDER’S EQUITY:
Capital	$	33,107,196
Retained earnings (accumulated deficit)		(28,322,434	)
Total stockholder’s equity					4,784,762

				$	9,321,717

Gaming Consultants, Inc. and Affiliates

Combined Statement of Income		Year Ended December 31, 2009

REVENUE:
Gaming operations				$	32,317,098
Food and beverage					8,521,908
Pull tabs					895,944
Other					1,124,731
					42,859,681
Less promotional allowances					4,249,196

NET REVENUE					38,610,485

EXPENSES:
Operating costs	$	25,884,024
Selling, general, and administrative		10,611,007
Depreciation and amortization		849,219
Total expenses					37,344,250

INCOME FROM OPERATIONS					1,266,235

OTHER INCOME (EXPENSE):
Interest income		465,696
Interest expense		(276,548	)
Other loss, including impairment loss on goodwill		(15,570,521	)
Loss on fixed asset disposal		(166	)
Total other income (expense)					(15,381,539	)

LOSS BEFORE INCOME TAXES					(14,115,304	)

PROVISION FOR INCOME TAXES					74,668

NET LOSS				$	(14,189,972	)

See accompanying notes to combined financial statements.

Gaming Consultants, Inc. and Affiliates

Combined Statement of
Stockholder’s Equity	Year Ended December 31, 2009

			Retained Earnings
			(Accumulated
	Capital		Deficit)			Total

BALANCES, JANUARY 1, 2009	$	32,619,516	$	(12,476,662	)	$	20,142,854

ADD:
Paid in capital, Washington Gaming, Inc.		487,680		-			487,680

DEDUCT:
Net loss		-		(14,189,972	)		(14,189,972	)
Stockholder distributions		-		(1,655,800	)		(1,655,800	)

BALANCES, DECEMBER 31, 2009	$	33,107,196	$	(28,322,434	)	$	4,784,762

See accompanying notes to combined financial statements.

Gaming Consultants, Inc. and Affiliates

Combined Statement of Cash Flows	Year Ended December 31, 2009

Increase (Decrease) in Cash

CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss				$	(14,189,972	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	$	849,219
Loss on sale of fixed assets		166
Loss on writeoff of related-party receivable		4,154,285
Impairment loss on goodwill		11,124,421
Deferred income tax		(606,000	)
Change in assets:
Accounts receivable		106,990
Inventory		12,229
Prepaid expenses and other assets		(192,813	)
Change in liabilities:
Accounts payable and accrued expenses		88,606
Chips outstanding		12,538
Jackpots and prize liabilities		479,953
Deferred revenue		(2,972	)
Accrued interest on long-term debt		29,704
Total adjustments					16,056,326

Net cash provided by operating activities					1,866,354

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment		(154,207	)
Increase in deposits		(102,825	)
Net cash used in investing activities					(257,032	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of note payable, related party		(146,788	)
Repayment of principal on capital leases		(133,614	)
Dividends paid to Washington Gaming, Inc.		(1,655,800	)
Investment from Washington Gaming, Inc.		487,680
Net cash used in financing activities					(1,448,522	)

NET INCREASE IN CASH					160,800

CASH, BEGINNING OF YEAR					2,827,973

CASH, END OF YEAR				$	2,988,773

Supplemental Disclosures:

Cash paid for interest				$	15,435
Cash paid for income taxes					37,529

Gaming Consultants, Inc. and Affiliates

Notes to Combined Financial Statements

NOTE 1 ¾ NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

The combined financial statements include the accounts of Gaming Consultants, Inc. and Affiliates (“the Company”): Big Nevada, Inc. (doing business as Silver Dollar Casino SeaTac), Little Nevada, Inc. (doing business as Silver Dollar Casino Tukwila and as Silver Dollar Casino Renton), Shoreline Gaming, Inc. (doing business as Golden Nugget Shoreline), Royal Casino Holdings, Inc. (doing business as Royal Casino Everett), Hollydrift Gaming, Inc. (doing business as Drift on Inn Casino and as Club Hollywood Casino), Silver Dollar Mill Creek, Inc. (doing business as Silver Dollar Casino Mill Creek), Golden Nugget Tukwila, Inc. (doing business as Golden Nugget Tukwila), Little Nevada II, Inc., Little Nevada III, Inc., Gaming Management, Inc., Shoreline Holdings, Inc., Snohomish Gaming, Inc., Mill Creek Gaming, Inc., and Gameco, Inc. Gaming Consultants, Inc. (“GCI”) has a management services agreement with each of the Affiliates, acts as the service administrator for the Company, provides consulting services relating to the casino related activities and assuring compliance with local, state, and federal law.

The assets and stock of the combined companies were pledged as security in October 2007 when the Company’s parent, Washington Gaming, Inc. (“WGI”), became party to a loan entered into by WGI’s parent company, Evergreen Gaming Corp. (“Evergreen”). The loan had a term of six years, with payment due in full by September 30, 2013. The note to the principal secured creditor (“Lender”) was secured by the assets of Evergreen, WGI, and substantially all of WGI’s subsidiaries. On March 31, 2009, the Lender made a written demand for immediate payment of the amount that was owed to them by Evergreen. In response to the demand, on April 15, 2009, Evergreen filed with the Supreme Court of British Columbia for protection from its creditors under the Companies’ Creditors Arrangement Act (“CCAA”). The Lender and Evergreen reached a settlement whereby the assets and operations of the Companies reported on herein were put into receivership in full settlement of the amounts owed to the Creditor by Evergreen. On July 6, 2009, control over all of the assets of the Company were transferred to the court-appointed Receiver, while ownership of the stock remains with WGI. The Receiver has operated the Company since July 6, 2009, and has pursued a sale of the assets and operations of the Company in order to satisfy secured and unsecured claims of creditors against the Company. The operations of the Company were not interrupted by the court proceedings or subsequent receivership.

As the balance of the amounts payable to the Lender exceeds the expected sales proceeds from these Companies and other Evergreen assets, it is expected that unsecured creditors and trade payable balances outstanding as of April 16, 2009, will not receive payments in full satisfaction of the amounts due. These amounts include $508,325 of unsecured notes payable and $527,000 of trade payables. The Company continues to recognize the amounts payable on the combined balance sheet until such time as these obligations are relieved.

Gaming Consultants, Inc. and Affiliates

Notes to Combined Financial Statements

NOTE 1 ¾ NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued):

All intercompany transactions between the combined entities have been eliminated in the preparation of the combined financial statements.

a.	Nature of operations – The major source of the Company’s revenue is derived from gaming operations, primarily house-banked card rooms and poker. The Company also derives revenue from the sale of food and beverage sold in casino restaurants.

b.	Cash – The Washington State Gambling Commission requires that cash be on deposit to cover certain jackpots offered to gaming participants, and those monies cannot be used for any other purpose. Included in cash are amounts restricted for jackpots at December 31, 2009, of $1,118,088.

c.	Inventory – Inventory is valued at the lower of cost or market with cost determined on a first-in, first-out basis. The majority of inventory consists of food and beverage items.

Property and equipment – Property and equipment are stated at cost. Depreciation of property and equipment is computed using the straight-line method over estimated useful lives of 3 to 20 years. Leasehold improvements are depreciated over the estimated useful life of the related asset or the remaining term of the lease whichever is shorter. Depreciation expense for the year ended December 31, 2009 was $730,315. The Company reviews its property and equipment for impairment whenever events or changes in circumstances indicate that the carrying value of such property may not be recoverable.

Other assets – Other assets as of December 31, 2009, are comprised of three noncompete agreements totaling $300,000, less accumulated amortization of $193,333. Also included is memorabilia from Club Hollywood Casino valued at $500,000. In addition, other assets include $428,342 related to licenses for various house bank card games to use in perpetuity.

Goodwill – Goodwill is tested for impairment at least annually or whenever events or changes in circumstances have indicated that the asset may be impaired. The first step of the impairment test compares the fair value of the reporting unit with its carrying value. If fair value is greater than the carrying value, goodwill is not impaired, and the second step of the impairment test is not necessary. As a result in the decline in profitability of certain of the casinos managed by Gaming Consultants, as well as the closure of the gaming operations at two of the casinos subsequent to December 31, 2009, goodwill was deemed to be impaired as of that date. Total impairment loss recognized in 2009 was $11,124,421. Goodwill of $1,419,943 remains on the combined balance sheet as of December 31, 2009.

Gaming Consultants, Inc. and Affiliates

Notes to Combined Financial Statements

NOTE 1 ¾ NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued):

Fair value of financial instruments – The carrying amounts of financial instruments, including cash and cash equivalents, receivables, payables, and deposits, approximate fair value due to the short maturity of these instruments. The carrying amount of the notes payable approximates fair value because the interest rate is based on current rates offered for loans and debt with similar terms and maturities.

Washington Players Club Points Program – The Company’s customer rewards program, Washington Players Club, offers incentives to customers who gamble at the Company’s casinos. Under the program, customers are able to accumulate reward points over time, which customers may redeem at their discretion under the terms of the program. The reward points will expire if the customer does not redeem their points within one year of being earned or if there is no activity in their account for the prior six months. A liability is recorded for the amount of outstanding points expected to be redeemed and is included in other accrued expenses.

i.	Casino revenue – Casino revenue is the net win from gaming activities, which is the difference between gaming wins and losses.

Promotional allowances – Promotional allowances represent goods and services, which would be accounted for as revenue if sold, that the Company provided to customers at a discount or at no charge. The retail amount of promotional allowances are included in gross revenue and offset by deducting it from gross revenue to arrive at net revenue. The cost of providing promotional allowances is included in operating costs.

k.	Advertising – The Company expenses advertising costs as they are incurred. Advertising expenses incurred during the year ended December 31, 2009, were $50,000.

Income taxes – As described previously, control over all of the assets of the Company were transferred to the court-appointed receiver, while ownership of the stock remains with WGI. As the legal stockholder, WGI is responsible for the filing of the federal tax return as well as any associated tax liability or asset generated as part of the federal tax filing for the Company. As such, all tax assets and associated liabilities have been written-off as part of the combined statements.

Gaming Consultants, Inc. and Affiliates

Notes to Combined Financial Statements

NOTE 1 ¾ NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued):

l.	Income taxes (continued) –

On January 1, 2009, the Company adopted the accounting standard on accounting for uncertainty in income taxes, which addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under this guidance, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. The guidance on accounting for uncertainty in income taxes also addresses de-recognition, classification, interest and penalties on income taxes, and accounting in interim periods.

Management evaluated the Company’s tax positions and concluded that the Company had taken no uncertain tax positions that require adjustment to the combined financial statements to comply with the provisions of this guidance. With few exceptions, the Company is no longer subject to income tax examinations by the U.S. federal tax authorities for years before 2006.

Use of estimates – The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

NOTE 2 ¾ CONCENTRATIONS OF CREDIT RISK:

The Company maintains cash balances in financial institutions in Washington State. The Federal Deposit Insurance Corporation (FDIC) insures the accounts at each of these institutions. The aggregate funds held in one institution may exceed the FDIC insured limit from time to time and specific funds held by the institution may not be covered by FDIC insurance.

Management does not anticipate any material effect on the financial position of the Company as a result of these concentrations. The Company also maintains a significant amount of cash on hand. The total cash on hand as of December 31, 2009, was $1,128,000.

Gaming Consultants, Inc. and Affiliates

Notes to Combined Financial Statements

NOTE 3 ¾ FAIR VALUE AND FAIR VALUE MEASUREMENTS:

The Company has adopted the provisions of ASC Section 820 Subsection 10, for its goodwill. Section 820 Subsection 10 establishes a framework for measuring fair value under generally accepted accounting principles, and expands disclosure about fair value measurements. The framework enables a reader of the financial statements to assess the inputs used to develop the measurements by establishing a hierarchy for ranking the quality and reliability of the information used to determine fair values. The standard requires that assets and liabilities carried at fair value be classified and disclosed in one of the following three categories:

Level 1: Quoted market prices in active markets for identical assets or liabilities.

Level 2: Observable market based inputs or unobservable inputs that are corroborated by market data.

Level 3: Unobservable inputs that are not corroborated by market data.

As a result of the bankruptcy proceedings and the subsequent asset purchase agreement previously mentioned, goodwill was impaired at December 31, 2009. The valuation resulted in a write off of $11,124,421 for the year ended December 31, 2009. The valuation was performed using the market approach, based on the asset purchase agreement with Nevada Gold & Casinos, Inc. signed on April 14, 2010, see note 8.

The resulting fair value of goodwill of $1,419,943 at December 31, 2009, is based on the value assigned in the asset purchase agreement related to the actual sale of the casino, and therefore is considered to be a Level 1 item.

A reconciliation of goodwill measured at fair value on a recurring basis using subsequent sale information during the year ended December 31, 2009, is as follows:

Balance, beginning of year	$	12,544,364
Impairment charge		(11,124,421	)

Balance, end of year	$	1,419,943

Gaming Consultants, Inc. and Affiliates

Notes to Combined Financial Statements

NOTE 4 ¾ LONG-TERM DEBT:

Long-term debt consisted of four unsecured notes payable with balances due at December 31, 2009 of $508,325, which are due for repayment between 2011 and 2015. Management expects that the resolution of the CCAA and Receivership proceedings will result in unsecured notes being rendered worthless at the time a sale of the businesses is complete. The Company continues to recognize the amounts payable on the combined balance sheet until such time as these obligations are relieved.

NOTE 5 ¾ RELATED PARTIES:

Gaming Consultants, Inc., acts as the service administrator for the Company, providing consulting services relating to the casino related activities and assuring compliance with local, state, and federal law. The operating casinos pay Gaming Consultants, Inc. a service fee of 0.5% of gross revenue and a corporate overhead allocation of 2% of monthly gross revenue that is used to compensate for the costs incurred. Total corporate overhead expense for the year ended December 31, 2009, was $2,782,000. These expenses were eliminated during preparation of the combined statements.

NOTE 6 ¾ LEASES:

The Company has numerous cancelable operating leases for food and beverage equipment, table games, and related equipment. Rent expense under these leases for the year ended December 31, 2009, was $1,021,000. The Company also incurred $3,010,695 of expense for the rental of the facilities in which the Company operates. The Company does not have any capital leases.

NOTE 7 ¾ COMMITMENTS AND CONTINGENCIES:

As discussed more fully in note 8, the Company is party to an Asset Purchase Agreement that would result in substantially all of the assets and operations of the Company being acquired by a third-party buyer.

Gaming Consultants, Inc. and Affiliates

Notes to Combined Financial Statements

NOTE 8 ¾ SUBSEQUENT EVENTS:

On February 22, 2010, the Golden Nugget Shoreline casino was closed. The lease for the casino building was terminated by the Receiver in accordance with their duties under the court order.

On April 14, 2010, an Asset Purchase Agreement (“APA”) was signed with Nevada Gold & Casinos, Inc. (“Nevada Gold”). The APA contemplates the sale of all of the assets of Gaming Consultants, Inc., Gaming Management, Inc., Gameco, Inc., and seven of the nine casinos, excluding the Golden Nugget Shoreline and the Drift on Inn. Sale closing is subject to a number of contingencies, particularly Court and regulatory approval.

On April 15, 2010, gaming operations at the Drift on Inn casino were suspended. The restaurant and its related operations continue to operate.

On May 25, 2010, an agreement was reached to sell the assets of the Drift on Inn to the current owner of the land and building on which that company is located. The terms of the agreement include provisions that amend the lease of the Club Hollywood Casino building and parking lot in order to ensure timely and efficient assignment of the lease to Nevada Gold as noted in the APA.

On May 28, 2010, a hearing was conducted in the United States Bankruptcy Court, Western District of Washington (“the Court”), to consider the APA noted above. The Court approved the APA, subject to the buyer being able to successfully obtain the necessary regulatory approvals. Such approvals are expected to be obtained.

SUPPLEMENTAL INFORMATION

Gaming Consultants, Inc. and Affiliates

Combining Balance Sheet	December 31, 2009

	Big		Silver Dollar		Shoreline		Silver Dollar		Silver Dollar		Golden Nugget		Balance
	Nevada, Inc.		Tukwila		Gaming, Inc.		Mill Creek, Inc.		Renton		Tukwila, Inc.		Carried Forward

Assets

CURRENT ASSETS:
Cash	$	486,537	$	113,186	$	127,049	$	369,250	$	258,894	$	502,041	$	1,856,957
Accounts receivable		8,430		13,187		6,396		24,859		39,549		10,808		103,229
Lines of credit, intercompany		700,329		-		-		-		-		417,343		1,117,672
Prepaid expenses and other assets		54,924		41,418		33,927		64,793		79,606		32,428		307,096
Inventory		17,858		16,996		9,260		18,369		15,887		20,248		98,618
Total current assets		1,268,078		184,787		176,632		477,271		393,936		982,868		3,483,572

PROPERTY AND EQUIPMENT:
Furniture, fixtures, and equipment		693,892		406,321		233,142		639,076		396,158		377,395		2,745,984
Leasehold improvements		1,011,476		656,446		301,964		1,033,311		204,351		264,516		3,472,064
		1,705,368		1,062,767		535,106		1,672,387		600,509		641,911		6,218,048
Less accumulated depreciation		1,497,099		987,052		452,122		882,677		371,954		559,520		4,750,424
Fixed assets, net of depreciation		208,269		75,715		82,984		789,710		228,555		82,391		1,467,624

OTHER ASSETS:
Note receivable		-		-		-		-		-		-		-
Investments in properties		-		-		-		-		-		-		-
Deposits		17,095		11,183		1,762		9,645		58,057		18,459		116,201
Goodwill		55,610		-		-		-		-		388,282		443,892
Other assets, net of amortization		-		-		-		-		-		-		-
Total other assets		72,705		11,183		1,762		9,645		58,057		406,741		560,093

Total assets	$	1,549,052	$	271,685	$	261,378	$	1,276,626	$	680,548	$	1,472,000	$	5,511,289

See accompanying independent auditors’ report.

Gaming Consultants, Inc. and Affiliates

Combining Balance Sheet (continued)	December 31, 2009

	Balance		Royal Casino		Drift on Inn		Hollywood						Eliminating
	Brought Forward		Holdings, Inc.		Casino Inc.		Casino Inc.		Other*		Subtotal		Entries			Total

Assets

CURRENT ASSETS:
Cash	$	1,856,957	$	293,744	$	154,078	$	519,532	$	164,462	$	2,988,773	$	-		$	2,988,773
Accounts receivable		103,229		17,819		20,782		46,685		178,427		366,942		(169,828	)		197,114
Lines of credit, intercompany		1,117,672		-		-		428,307		12,981,077		14,527,056		(14,527,056	)		-
Prepaid expenses and other assets		307,096		56,251		58,201		76,527		33,911		531,986		(55,089	)		476,897
Inventory		98,618		18,757		22,363		30,906		41,873		212,517		-			212,517
Total current assets		3,483,572		386,571		255,424		1,101,957		13,399,750		18,627,274		(14,751,973	)		3,875,301

PROPERTY AND EQUIPMENT:
Furniture, fixtures, and equipment		2,745,984		278,852		355,636		616,676		786,580		4,783,728		-			4,783,728
Leasehold improvements		3,472,064		-		17,890		13,290		70,524		3,573,768		-			3,573,768
		6,218,048		278,852		373,526		629,966		857,104		8,357,496		-			8,357,496
Less accumulated depreciation		4,750,424		155,338		194,192		334,494		591,393		6,025,841		-			6,025,841
Fixed assets, net of depreciation		1,467,624		123,514		179,334		295,472		265,711		2,331,655		-			2,331,655

OTHER ASSETS:
Note receivable		-		-		-		-		497,985		497,985		-			497,985
Investments in properties		-		-		-		-		5,650,000		5,650,000		(5,650,000	)		-
Deposits		116,201		9,213		11,523		13,887		11,000		161,824		-			161,824
Goodwill		443,892		360,701		-		615,350		-		1,419,943		-			1,419,943
Other assets, net of amortization		-		20,000		43,333		543,333		428,343		1,035,009		-			1,035,009
Total other assets		560,093		389,914		54,856		1,172,570		6,587,328		8,764,761		(5,650,000	)		3,114,761

Total assets	$	5,511,289	$	899,999	$	489,614	$	2,569,999	$	20,252,789	$	29,723,690	$	(20,401,973	)	$	9,321,717

Other is a combination of Gaming Consultants, Inc.; Mill Creek Gaming, Inc.; Gaming Management Inc.; Little Nevada II, Inc.;

Little Nevada III, Inc.; Shoreline Holdings, Inc.; Snohomish Gaming, Inc.; and Gameco, Inc

See accompanying independent auditors’ report.

Gaming Consultants, Inc. and Affiliates

Combining Balance Sheet (continued)	December 31, 2009

	Big			Silver Dollar			Shoreline			Silver Dollar			Silver Dollar		Golden Nugget			Balance
	Nevada, Inc.			Tukwila			Gaming, Inc.			Mill Creek, Inc.			Renton		Tukwila, Inc.			Carried Forward

Liabilities and Stockholder’s Equity

CURRENT LIABILITIES:
Lines of credit, intercompany	$	-		$	492,230		$	1,309,116		$	2,082,165		$	114,651	$	-		$	3,998,162
Accounts payable		86,342			42,601			32,354			74,137			79,197		91,163			405,794
Accrued expenses:
Payroll		120,094			70,130			63,370			96,077			99,487		120,549			569,707
Sales and business taxes		144,846			44,304			(7,803	)		96,674			27,575		128,308			433,904
Other accrued expenses		(26,763	)		23,988			(1,795	)		46,222			46,245		(54,512	)		33,385
Deferred revenue		-			-			-			-			-		-			-
Chips outstanding		20,003			4,296			5,965			15,040			8,488		10,859			64,651
Jackpots and prizes liabilities		198,160			3,769			-			204,043			109,283		280,560			795,815
Total current liabilities		542,682			681,318			1,401,207			2,614,358			484,926		576,927			6,301,418

LONG-TERM DEBT		-			-			-			-			68,829		-			68,829

Total liabilities		542,682			681,318			1,401,207			2,614,358			553,755		576,927			6,370,247

COMMITMENTS AND CONTINGENCIES

STOCKHOLDER’S EQUITY:
Capital		100			-			62,205			-			-		2,141,256			2,203,561
Retained earnings (accumulated deficit)		1,006,270			(409,633	)		(1,202,034	)		(1,337,732	)		126,793		(1,246,183	)		(3,062,519	)
Total stockholder’s equity		1,006,370			(409,633	)		(1,139,829	)		(1,337,732	)		126,793		895,073			(858,958	)

Total liabilities and stockholder’s equity	$	1,549,052		$	271,685		$	261,378		$	1,276,626		$	680,548	$	1,472,000		$	5,511,289

See accompanying independent auditors’ report.

Gaming Consultants, Inc. and Affiliates

Combining Balance Sheet (continued)	December 31, 2009

	Balance			Royal Casino			Drift on Inn			Hollywood									Eliminating
	Brought Forward			Holdings, Inc.			Casino Inc.			Casino Inc.			Other*			Subtotal			Entries			Total

Liabilities and Stockholder’s Equity

CURRENT LIABILITIES:
Lines of credit, intercompany	$	3,998,162		$	1,436,507		$	3,278,093		$	-		$	5,814,294		$	4,527,056		$	(14,527,056	)	$	-
Accounts payable		405,794			87,610			104,643			140,778			228,294			967,119			(169,828	)		797,291
Accrued expenses:
Payroll		569,707			112,860			93,920			156,079			68,564			1,001,130			-			1,001,130
Sales and business taxes		433,904			116,229			63,976			151,347			27,693			793,149			-			793,149
Other accrued expenses		33,385			12,490			38,768			7,413			160,755			252,811			-			252,811
Deferred revenue		-			-			-			-			59,721			59,721			(55,089	)		4,632
Chips outstanding		64,651			9,714			2,284			32,408			-			109,057			-			109,057
Jackpots and prizes liabilities		795,815			74,085			7,588			193,072			-			1,070,560			-			1,070,560
Total current liabilities		6,301,418			1,849,495			3,589,272			681,097			6,359,321			18,780,603			(14,751,973	)		4,028,630

LONG-TERM DEBT		68,829			-			-			-			439,496			508,325			-			508,325

Total liabilities		6,370,247			1,849,495			3,589,272			681,097			6,798,817			19,288,928			(14,751,973	)		4,536,955

COMMITMENTS AND CONTINGENCIES

STOCKHOLDER’S EQUITY:
Capital		2,203,561			-			1,050,000			4,600,000			30,903,635			38,757,196			(5,650,000	)		33,107,196
Retained earnings (accumulated deficit)		(3,062,519	)		(949,496	)		(4,149,658	)		(2,711,098	)		(17,449,663	)		(28,322,434	)		-			(28,322,434	)
Total stockholder’s equity		(858,958	)		(949,496	)		(3,099,658	)		1,888,902			13,453,972			10,434,762			(5,650,000	)		4,784,762

Total liabilities and stockholder’s equity	$	5,511,289		$	899,999		$	489,614		$	2,569,999		$	20,252,789		$	29,723,690		$	(20,401,973	)	$	9,321,717

Other is a combination of Gaming Consultants, Inc.; Mill Creek Gaming, Inc.; Gaming Management Inc.; Little Nevada II, Inc.;

Little Nevada III, Inc.; Shoreline Holdings, Inc.; Snohomish Gaming, Inc.; and Gameco, Inc.

See accompanying independent auditors’ report.

Gaming Consultants, Inc. and Affiliates

Combining Statement of Income	Year Ended December 31, 2009

	Big						Shoreline			Silver Dollar			Silver			Golden
	Nevada, Inc.			Silver Dollar Tukwila			Gaming, Inc.			Mill Creek, Inc.			Dollar Renton			Nugget Tukwila, Inc.			Royal Casino Holdings, Inc.			Balance Carried Forward

REVENUE:
Gaming operations	$	4,876,841		$	1,727,986		$	1,893,591		$	4,049,947		$	3,625,627		$	4,244,132		$	3,978,944		$	24,397,068
Food and beverage		1,266,074			354,979			210,662			860,842			922,874			1,199,963			1,000,635			5,816,029
Pull tabs		51,568			69,380			57,585			120,655			73,529			91,119			289,228			753,064
Other		107,758			37,304			34,805			115,998			214,853			81,517			106,181			698,416
		6,302,241			2,189,649			2,196,643			5,147,442			4,836,883			5,616,731			5,374,988			31,664,577
Less promotional allowances		484,585			180,258			121,184			429,940			502,723			642,819			521,741			2,883,250

NET REVENUE		5,817,656			2,009,391			2,075,459			4,717,502			4,334,160			4,973,912			4,853,247			28,781,327

EXPENSES:
Operating costs		3,003,839			1,748,605			1,556,302			2,655,642			2,732,450			3,114,042			3,055,139			17,866,019
Selling, general, and administrative		1,346,938			631,604			687,195			1,366,542			1,428,347			1,068,358			1,337,927			7,866,911
Depreciation and amortization		71,024			47,028			25,818			141,043			59,368			42,260			72,580			459,121
Total expenses		4,421,801			2,427,237			2,269,315			4,163,227			4,220,165			4,224,660			4,465,646			26,192,051

INCOME (LOSS) FROM OPERATIONS		1,395,855			(417,846	)		(193,856	)		554,275			113,995			749,252			387,601			2,589,276

OTHER INCOME (EXPENSE):
Interest income		1,166			-			-			-			-			695			-			1,861
Other income (expense)		-			(22,750	)		(40,000	)		(1,429,591	)		-			(2,516,431	)		(1,459,981	)		(5,468,753	)
Interest expense		(1,518	)		(19,663	)		(110,511	)		(226,468	)		(10,679	)		(1,409	)		(157,817	)		(528,065	)
Loss on fixed asset disposal		-			-			-			(167	)		-			-			-			(167	)
Total other income (expense)		(352	)		(42,413	)		(150,511	)		(1,656,226	)		(10,679	)		(2,517,145	)		(1,617,798	)		(5,995,124	)

INCOME (LOSS) BEFORE INCOME TAXES		1,395,503			(460,259	)		(344,367	)		(1,101,951	)		103,316			(1,767,893	)		(1,230,197	)		(3,405,848	)

PROVISION (BENEFIT)
FOR INCOME TAXES		(70,000	)		(27,000	)		(3,900	)		(230,000	)		(22,000	)		(279,000	)		(121,000	)		(752,900	)

NET INCOME (LOSS)	$	1,465,503		$	(433,259	)	$	(340,467	)	$	(871,951	)	$	125,316		$	(1,488,893	)	$	(1,109,197	)	$	(2,652,948	)

See accompanying independent auditors’ report.

Gaming Consultants, Inc. and Affiliates

Combining Statement of Income (continued)	Year Ended December 31, 2009

	Balance			Drift on Inn			Hollywood									Eliminating
	Brought Forward			Casino Inc.			Casino Inc.			Other*			Subtotal			Entries			Total

REVENUE:
Gaming operations	$	24,397,068		$	1,546,446		$	6,373,584		$	-		$	32,317,098		$	-		$	32,317,098
Food and beverage		5,816,029			1,080,691			1,625,188			-			8,521,908			-			8,521,908
Pull tabs		753,064			142,880			-			-			895,944			-			895,944
Other		698,416			190,979			118,222			514,914			1,522,531			(397,800	)		1,124,731
		31,664,577			2,960,996			8,116,994			514,914			43,257,481			(397,800	)		42,859,681
Less promotional allowances		2,883,250			384,409			981,537			-			4,249,196			-			4,249,196

NET REVENUE		28,781,327			2,576,587			7,135,457			514,914			39,008,285			(397,800	)		38,610,485

EXPENSES:
Operating costs		17,866,019			2,306,437			3,909,194			1,991,099			26,072,749			(188,725	)		25,884,024
Selling, general, and administrative		7,866,911			1,015,934			2,243,850			(306,613	)		10,820,082			(209,075	)		10,611,007
Depreciation and amortization		459,121			93,231			141,811			155,056			849,219			-			849,219
Total expenses		26,192,051			3,415,602			6,294,855			1,839,542			37,742,050			(397,800	)		37,344,250

INCOME (LOSS) FROM OPERATIONS		2,589,276			(839,015	)		840,602			(1,324,628	)		1,266,235			-			1,266,235

OTHER INCOME (EXPENSE):
Interest income		1,861			-			720			1,457,391			1,459,972			(994,276	)		465,696
Other income (expense)		(5,468,753	)		(2,768,700	)		(2,896,650	)		(4,436,418	)		(15,570,521	)		-			(15,570,521	)
Interest expense		(528,065	)		(286,871	)		(3,474	)		(452,414	)		(1,270,824	)		994,276			(276,548	)
Loss on fixed asset disposal		(167	)		-			-			1			(166	)		-			(166	)
Total other income (expense)		(5,995,124	)		(3,055,571	)		(2,899,404	)		(3,431,440	)		(15,381,539	)		-			(15,381,539	)

INCOME (LOSS) BEFORE INCOME TAXES		(3,405,848	)		(3,894,586	)		(2,058,802	)		(4,756,068	)		(14,115,304	)		-			(14,115,304	)


PROVISION (BENEFIT) FOR INCOME TAXES		(752,900	)		(64,000	)		168,000			723,568			74,668			-			74,668

NET INCOME (LOSS)	$	(2,652,948	)	$	(3,830,586	)	$	(2,226,802	)	$	(5,479,636	)	$	(14,189,972	)	$	-		$	(14,189,972	)

Other is a combination of Gaming Consultants, Inc.; Mill Creek Gaming, Inc.; Gaming Management Inc.; Little Nevada II, Inc.;

Little Nevada III, Inc.; Shoreline Holdings, Inc.; Snohomish Gaming, Inc.; and Gameco, Inc.

See accompanying independent auditors’ report.

NEVADA GOLD & CASINOS INC - FORM 8-K/A - EX-99.2 - September 15, 2010

Attached files

NEVADA GOLD & CASINOS INC Reports