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EX-32.2 - EX-32.2 - FULL HOUSE RESORTS INCfll-20200930ex32232419f.htm
EX-32.1 - EX-32.1 - FULL HOUSE RESORTS INCfll-20200930ex3210681f8.htm
EX-31.2 - EX-31.2 - FULL HOUSE RESORTS INCfll-20200930ex3129b35e2.htm
EX-31.1 - EX-31.1 - FULL HOUSE RESORTS INCfll-20200930ex3112eaac7.htm
EX-10.2 - EX-10.2 - FULL HOUSE RESORTS INCfll-20200930ex1024ebdba.htm
EX-10.1 - EX-10.1 - FULL HOUSE RESORTS INCfll-20200930ex1017ac6a4.htm
EX-4.2 - EX-4.2 - FULL HOUSE RESORTS INCfll-20200930ex42d3b1f83.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2020

or

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. 1-32583

FULL HOUSE RESORTS, INC.

(Exact name of registrant as specified in its charter)

Delaware

(State or other jurisdiction

of incorporation or organization)

    

13-3391527

(I.R.S. Employer

Identification No.)

One Summerlin, 1980 Festival Plaza Drive, Suite 680

Las Vegas, Nevada

(Address of principal executive offices)

89135

(Zip Code)

(702) 221-7800

(Registrant’s telephone number, including area code)

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

Title of each Class

  

Trading Symbol(s)

  

Name of each exchange on which registered

Common Stock, $0.0001 par value per share

FLL

The Nasdaq Stock Market LLC

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. Yes  No 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes  No 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

Large accelerated filer

Accelerated filer

Emerging growth company

Non-accelerated filer

Smaller reporting company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act:  

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  No 

As of November 4, 2020, there were 27,105,728 shares of Common Stock, $0.0001 par value per share, outstanding.


FULL HOUSE RESORTS, INC. AND SUBSIDIARIES

FORM 10-Q

INDEX

2


PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

FULL HOUSE RESORTS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

(In thousands, except per share data)

Three Months Ended

Nine Months Ended

September 30, 

September 30, 

    

2020

    

2019

    

2020

    

2019

Revenues

 

  

 

  

 

  

 

  

Casino

$

31,910

$

30,644

$

63,616

$

87,392

Food and beverage

 

5,612

 

9,262

 

14,596

 

26,783

Hotel

 

2,511

 

3,077

 

5,204

 

8,843

Other operations, including online/mobile sports operations

 

1,923

 

1,276

 

3,904

 

3,398

Total revenues

 

41,956

 

44,259

 

87,320

 

126,416

Operating costs and expenses

 

  

 

  

 

  

 

  

Casino

 

10,125

 

12,188

 

23,886

 

35,565

Food and beverage

 

5,234

 

10,154

 

14,453

 

28,972

Hotel

 

1,113

 

2,522

 

2,663

 

7,321

Other operations

 

564

 

1,189

 

1,441

 

3,030

Selling, general and administrative

 

12,555

 

12,485

 

35,332

 

38,172

Project development costs

 

108

 

228

 

423

 

503

Depreciation and amortization

 

1,848

 

2,089

 

5,868

 

6,263

Loss on disposal of assets, net

 

 

10

 

439

 

5

 

31,547

 

40,865

 

84,505

 

119,831

Operating income

 

10,409

 

3,394

 

2,815

 

6,585

Other (expense) income

 

  

 

  

 

  

 

  

Interest expense, net of $208 and $478 capitalized for the three-months ended September 30, 2020 and 2019, and $639 and $608 capitalized for the nine-months ended September 30, 2020 and 2019

(2,391)

(2,428)

(7,329)

(8,062)

Adjustment to fair value of warrants

 

(403)

 

(262)

 

1,159

 

(161)

 

(2,794)

 

(2,690)

 

(6,170)

 

(8,223)

Income (loss) before income taxes

 

7,615

 

704

 

(3,355)

 

(1,638)

Income tax (benefit) provision

(93)

(234)

(2)

51

Net income (loss)

$

7,708

$

938

$

(3,353)

$

(1,689)

Basic earnings (loss) per share

$

0.28

$

0.03

$

(0.12)

$

(0.06)

Diluted earnings (loss) per share

$

0.28

$

0.03

$

(0.17)

$

(0.06)

See condensed notes to consolidated financial statements.

3


FULL HOUSE RESORTS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (Unaudited)

(In thousands, except share data)

September 30, 

December 31, 

    

2020

    

2019

ASSETS

Current assets

 

  

 

  

Cash and equivalents

$

34,032

$

28,851

Restricted cash

1,000

Accounts receivable, net of allowance of $187 and $141

 

1,900

 

2,206

Inventories

 

1,467

 

2,292

Prepaid expenses and other

 

2,632

 

3,340

 

40,031

 

37,689

Property and equipment, net

 

117,013

 

121,487

Operating lease right-of-use assets, net

18,097

19,171

Goodwill

 

21,286

 

21,286

Other intangible assets, net

 

10,987

 

11,056

Deposits and other

 

633

 

646

$

208,047

$

211,335

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities

Accounts payable

$

3,905

$

5,216

Accrued payroll and related

 

3,628

 

3,044

Other accrued expenses and other

 

9,041

 

10,613

Current portion of operating lease obligations

3,263

2,707

Current portion of finance lease obligation

486

448

Current portion of long-term debt

 

1,154

 

1,100

Common stock warrant liability

896

2,055

 

22,373

 

25,183

Operating lease obligations, net of current portion

 

15,723

 

16,706

Finance lease obligation, net of current portion

3,422

3,829

Long-term debt, net

 

107,193

 

102,923

Deferred income taxes, net

 

710

 

712

Contract liabilities, net of current portion

5,576

5,886

 

154,997

 

155,239

Commitments and contingencies (Note 8)

 

  

 

  

Stockholders’ equity

 

  

 

  

Common stock, $0.0001 par value, 100,000,000 shares authorized; 28,375,291 and 28,345,525 shares issued and 27,105,728 and 27,075,962 shares outstanding

 

3

 

3

Additional paid-in capital

 

64,709

 

64,402

Treasury stock, 1,269,563 common shares

 

(1,548)

 

(1,548)

Accumulated deficit

 

(10,114)

 

(6,761)

 

53,050

 

56,096

$

208,047

$

211,335

See condensed notes to consolidated financial statements.

4


FULL HOUSE RESORTS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (Unaudited)

(In thousands)

Additional

Total

Common Stock

Paid-in

Treasury Stock

Accumulated

Stockholders’

    

Shares

    

Dollars

    

Capital

    

Shares

    

Dollars  

    

Deficit

    

Equity

Balance, January 1, 2020

 

28,346

$

3

$

64,402

 

1,270

$

(1,548)

$

(6,761)

$

56,096

Stock-based compensation

 

 

 

83

 

 

 

 

83

Net loss

 

 

 

 

 

 

(4,358)

 

(4,358)

Balance, March 31, 2020

 

28,346

3

64,485

 

1,270

(1,548)

(11,119)

51,821

Stock grants

13

24

24

Stock-based compensation

79

79

Net loss

(6,703)

(6,703)

Balance, June 30, 2020

28,359

3

64,588

1,270

(1,548)

(17,822)

45,221

Stock grants

16

24

24

Stock-based compensation

97

97

Net income

7,708

7,708

Balance, September 30, 2020

28,375

$

3

$

64,709

 

1,270

$

(1,548)

$

(10,114)

$

53,050

Additional

Total

Common Stock

Paid-in

Treasury Stock

Accumulated

Stockholders’

    

Shares

    

Dollars

    

Capital

    

Shares

    

Dollars  

    

Deficit

    

Equity

Balance, January 1, 2019

 

28,289

$

3

$

63,935

 

1,357

$

(1,654)

$

(939)

$

61,345

Exercise of stock options

 

26

 

 

45

 

 

 

 

45

Stock-based compensation

 

 

 

86

 

 

 

 

86

Net loss

 

 

 

 

 

 

(1,617)

 

(1,617)

Balance, March 31, 2019

 

28,315

3

64,066

 

1,357

(1,654)

(2,556)

59,859

Stock grants

22

48

48

Stock-based compensation

59

59

Net loss

(1,010)

(1,010)

Balance, June 30, 2019

28,337

3

64,173

1,357

(1,654)

(3,566)

58,956

Stock-based compensation

70

70

Net income

938

938

Balance, September 30, 2019

28,337

$

3

$

64,243

 

1,357

$

(1,654)

$

(2,628)

$

59,964

See condensed notes to consolidated financial statements.

5


FULL HOUSE RESORTS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(In thousands)

Nine Months Ended

September 30, 

    

2020

    

2019

Cash flows from operating activities:

 

  

 

  

Net loss

$

(3,353)

$

(1,689)

Adjustments to reconcile net loss to net cash provided by operating activities:

 

  

 

  

Depreciation and amortization

 

5,868

 

6,263

Amortization of debt issuance and warrant costs and other

 

827

 

845

Stock-based compensation

 

307

 

263

Change in fair value of stock warrants

 

(1,159)

 

161

Change in fair value of interest rate cap

90

Loss on disposal of assets

 

439

 

5

Increases and decreases in operating assets and liabilities:

 

  

 

  

Accounts receivable

 

306

 

249

Prepaid expenses, inventories and other

 

1,533

 

(1,477)

Deferred taxes

 

(2)

 

51

Deferred revenue

(109)

2,000

Accounts payable and accrued expenses

 

(1,732)

 

(1,048)

Net cash provided by operating activities

 

2,925

 

5,713

Cash flows from investing activities:

 

  

 

  

Purchase of property and equipment

 

(1,883)

 

(5,662)

Other

 

11

 

(563)

Net cash used in investing activities

 

(1,872)

 

(6,225)

Cash flows from financing activities:

 

  

 

  

Proceeds from Senior Secured Notes borrowings

 

 

10,000

Proceeds from CARES Act unsecured loans

 

5,606

 

Payment of debt discount and issuance costs

 

(1,284)

 

(1,182)

Repayment of Senior Secured Notes

 

(825)

 

(800)

Repayment of finance lease obligation

(369)

(403)

Proceeds from exercise of stock options

 

 

45

Net cash provided by financing activities

 

3,128

 

7,660

Net increase in cash, cash equivalents and restricted cash

 

4,181

 

7,148

Cash, cash equivalents and restricted cash, beginning of period

 

29,851

 

20,634

Cash, cash equivalents and restricted cash, end of period

$

34,032

$

27,782

Supplemental Cash Flow Information:

 

  

 

  

Cash paid for interest, net of amounts capitalized

$

6,324

$

6,962

Non-Cash Investing Activities:

 

  

 

  

Accounts payable related capital expenditures

$

265

$

651

See condensed notes to consolidated financial statements.

6


FULL HOUSE RESORTS, INC. AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

1. ORGANIZATION

Organization. Formed as a Delaware corporation in 1987, Full House Resorts, Inc. owns, leases, operates, develops, manages, and/or invests in casinos and related hospitality and entertainment facilities. References in this document to “Full House,” the “Company,” “we,” “our,” or “us” refer to Full House Resorts, Inc. and its subsidiaries, except where stated or the context otherwise indicates.

The Company currently operates five casinos; four are part of real estate that it owns or leases, and one is located within a hotel owned by a third party. The following table identifies the properties along with their respective dates of acquisition and locations:

    

Acquisition

    

Property

Date

 Location

Silver Slipper Casino and Hotel

 

2012

 

Hancock County, MS
(near New Orleans)

Bronco Billy’s Casino and Hotel

 

2016

 

Cripple Creek, CO
(near Colorado Springs)

Rising Star Casino Resort

 

2011

 

Rising Sun, IN
(near Cincinnati)

Stockman’s Casino

 

2007

 

Fallon, NV
(one hour east of Reno)

Grand Lodge Casino
(leased and part of the Hyatt Regency Lake Tahoe Resort, Spa and Casino)

 

2011

 

Incline Village, NV
(North Shore of Lake Tahoe)

The Company manages its casinos based on geographic regions within the United States. See Note 11 for further information.

2. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation. As permitted by the rules and regulations of the Securities and Exchange Commission (“SEC”), certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) have been condensed or omitted. These consolidated financial statements should be read in conjunction with the Company’s 2019 annual consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.

The interim consolidated financial statements of the Company included herein reflect all adjustments (consisting of normal recurring adjustments) that are, in the opinion of management, necessary to present fairly the financial position and results of operations for the interim periods presented. The results of operations for the interim periods are not necessarily indicative of annualized results for an entire year.

The consolidated financial statements include the accounts of Full House and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.

Liquidity, Going Concern and Management Plans. The consolidated financial statements have been prepared on the going concern basis of accounting, assuming the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. The Company’s casinos are its primary sources of income and operating cash flows and they are relied upon to remain in compliance with debt covenants and meet the Company’s obligations when due. As described in Note 5, the Senior Secured Notes agreement requires the Company to maintain a total leverage ratio covenant, which measures Consolidated EBITDA (as defined in the indenture) against outstanding debt. As detailed in Notes 2 and 14 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, the Company temporarily suspended operations at its casinos and hotels in March 2020 pursuant to orders from governmental authorities as a precautionary measure against the ongoing spread of a

7


highly contagious coronavirus that was declared a pandemic (“COVID-19”) by the World Health Organization. The Company’s properties began reopening when permitted by local authorities, beginning with the Silver Slipper Casino and Hotel on May 21, 2020, Grand Lodge Casino and Stockman’s Casino on June 4, 2020, and Bronco Billy’s Casino and Hotel and Rising Star Casino Resort on June 15, 2020. The Company believes it has sufficient resources to fund its operations through the generation of cash by its reopened properties (including in the third quarter of 2020), its current cash balances and the continued management of labor, marketing expenses, and capital expenditures. However, management does not control and is not qualified to predict the ongoing effects of the continuing pandemic.

As described in Notes 2 and 14 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, a significant period, or periods, of closure or significant declines in business volumes could negatively impact our ability to remain in compliance with our debt covenants. In the event that the Company would fail to meet its debt covenants in the next twelve months from the issuance of the consolidated financial statements, the Company would either seek covenant waivers or attempt to amend its covenants, though there is no certainty that the Company would be successful in such efforts. For example, the Company’s lenders agreed to amend our leverage covenant (which compares Adjusted EBITDA for the latest twelve months to debt levels, as defined in the loan agreement) for the periods ended September 30, June 30, and March 31, 2020. Even though results in the recent quarter generally exceeded those of the prior-year quarter, the closure period in early 2020 will continue to affect the leverage ratio for the next few quarters. The parties continue to discuss amending covenants for future quarters in case such amendments are needed. Accounting Standards Codification 205-40 (“ASC 205-40”), “Going Concern,” calls for management to evaluate whether there are conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within twelve months after the date that the financial statements are issued. Because of the length of this look-forward period and the substantial items that are outside of the Company’s control, and despite its intent and best efforts to overcome the challenges in the current environment, management concluded that there is substantial doubt as to the Company’s ability to continue as a going concern. The Company is attempting to mitigate the impacts of COVID-19 on the Company through the plans described above. The consolidated financial statements do not include adjustments that might result from the outcome of this uncertainty.

Fair Value and the Fair Value Input Hierarchy. Fair value measurements affect the Company’s accounting for net assets acquired in acquisition transactions and certain financial assets and liabilities, such as its interest rate cap agreement and common stock warrant liability. Fair value measurements are also used in the Company’s periodic assessments of long-lived tangible and intangible assets for possible impairment, including for property and equipment, goodwill, and other intangible assets. Fair value is defined as the expected price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

GAAP categorizes the inputs used for fair value into a three-level hierarchy:

Level 1: Observable inputs, such as quoted prices in active markets for identical assets or liabilities;
Level 2: Comparable inputs other than quoted prices that are observable for similar assets or liabilities in less active markets; and
Level 3: Unobservable inputs which may include metrics that market participants would use to estimate values, such as revenue and earnings multiples and relative rates of return.

The Company utilizes Level 2 inputs when measuring the fair value of its interest rate cap.

The Company utilizes Level 3 inputs when measuring the fair value of net assets acquired in business combination transactions, subsequent assessments for impairment, and most financial instruments, including but not limited to the estimated fair value of common stock warrants at issuance and for recurring changes in the related warrant liability (see Note 6).

Cash Equivalents and Restricted Cash. Cash equivalents include cash involved in operations and cash in excess of daily requirements that is invested in highly liquid, short-term investments with initial maturities of three months or less when purchased.

Restricted cash balances were funds received from certain sports wagering agreements that had not commenced and were contractually required to be separated from the Company’s operating cash. In March 2020, such cash was no longer categorized

8


as restricted, as the Company was approved for its “master license” for sports betting by the Colorado Limited Gaming Control Commission on March 19, 2020.

Revenue Recognition of Accrued Club Points and Deferred Revenues

Accrued Club Points: Operating Revenues and Related Costs and Expenses. The Company’s revenues consist primarily of casino gaming, food and beverage, hotel, and other revenues (such as entertainment). The majority of the Company’s revenues are derived from casino gaming, principally slot machines.

Gaming revenue is the difference between gaming wins and losses, not the total amount wagered. The Company accounts for its gaming transactions on a portfolio basis as such wagers have similar characteristics and it would not be practical to view each wager on an individual basis.

The Company sometimes provides discretionary complimentary goods and services (“discretionary comps”). For these types of transactions, the Company allocates revenue to the department providing the complimentary goods or services based upon its estimated standalone selling price, offset by a reduction in casino revenues.

Many of the Company’s customers choose to earn points under its customer loyalty programs. As points are accrued, the Company defers a portion of its gaming revenue based on the estimated standalone value of loyalty points being earned by the customer. The standalone value of loyalty points is derived from the retail value of food, beverages, hotel rooms, and other goods or services for which such points may be redeemed. A liability related to these customer loyalty points is recorded, net of estimated breakage and other factors, until the customer redeems these points, primarily for “free casino play,” complimentary dining, or hotel stays. Such liabilities were approximately $1.0 million for September 30, 2020 and $1.4 million for December 31, 2019. Upon redemption, the related revenue is recognized at retail value within the department providing the goods or services.

Revenue for food and beverage, hotel, and other revenue transactions is typically the net amount collected from customers for such goods and services, plus the retail value of (i) discretionary comps and (ii) comps provided in return for redemption of loyalty points. The Company records such revenue as the good or service is transferred to the customer. Additionally, the Company may collect deposits in advance for future hotel reservations or entertainment, among other services, which represent obligations to the Company until the service is provided to the customer.

Deferred Revenues: Market Access Fees from Sports Wagering Agreements. The Company entered into several agreements with various unaffiliated companies allowing for online/mobile sports wagering within Indiana and Colorado, as well as on-site sports wagering at Rising Star Casino Resort and at Bronco Billy’s Casino and Hotel (the “Sports Agreements”). As part of these long-term Sports Agreements, the Company received one-time market access fees in cash, which were recorded as a long-term liability in the same amount and will be recognized as revenue ratably over the initial term length of 10 years, beginning with the commencement of operations. The current and noncurrent portions of the deferred revenues balance totaling $5.88 million for September 30, 2020 is included with “Other accrued expenses and other” and “Contract liabilities, net of current portion” on the consolidated balance sheets, respectively. Of the Company’s Sports Agreements, on-site sports wagering commenced at Rising Star in the fourth quarter of 2019, as did one of the Company’s three contracted mobile sports wagering websites in Indiana. In the second quarter of 2020, one of the Company’s three contracted mobile sports wagering websites in Colorado also commenced operations. In September 2020, on-site sports wagering commenced at Bronco Billy’s.

Income Taxes. For interim income tax reporting for the three- and nine-months ended September 30, 2020, the Company estimates its annual effective tax rate and applies it to its year-to-date pretax income or loss.

Reclassifications. The Company made certain minor financial statement presentation reclassifications to prior-period amounts to conform to the current-period presentation. Such reclassifications had no effect on the previously reported results of operations or financial position.

Earnings (Loss) Per Share. Earnings (loss) per share is net income (loss) applicable to common stock divided by the weighted average number of common shares outstanding during the period. Diluted earnings per share reflects additional dilutive effects for all potentially-dilutive securities, including common stock options and warrants, using the treasury stock method.

9


Leases. The Company determines if a contract is or contains a lease at inception or modification of the agreement. A contract is or contains a lease if there are identified assets and the right to control the use of an identified asset is conveyed for a period of time in exchange for consideration. Control over the use of the identified asset means that the lessee has both the right to obtain substantially all of the economic benefits from the use of the asset and the right to direct the use of the asset. Accounting Standards Codification 842 (“ASC 842”) requires a dual approach for lessee accounting under which a lessee would classify and account for leases as either finance leases or operating leases, both of which result in the lessee recognizing a right-of-use (“ROU”) asset and a corresponding lease liability on the balance sheet, as measured on a discounted basis for leases with terms greater than a year. For finance leases, the lessee will recognize interest expense associated with the lease liability and depreciation expense associated with the ROU asset; for operating leases, the lessee will recognize straight-line rent expense.

The Company does not recognize ROU assets or lease liabilities for leases with a term of 12 months or less. However, costs related to short-term leases with terms greater than one month, which the Company deems material, are disclosed as a component of lease expenses when applicable. Additionally, the Company accounts for new and existing leases containing both lease and non-lease components (“embedded leases”) together as a single lease component by asset class for gaming-related equipment; therefore, the Company does not allocate contract consideration to the separate lease and non-lease components based on their relative standalone prices.

Finance and operating lease ROU assets and liabilities are recognized based on the present value of future minimum lease payments over the expected lease term at commencement. As the implicit rate is not determinable in most of the Company’s leases, management uses the Company’s incremental borrowing rate as estimated by third-party valuation specialists in determining the present value of future payments. The expected lease terms include options to extend or terminate the lease when it is reasonably certain that the Company will exercise such options. Lease expense for minimum lease payments is recognized on a straight-line basis over the expected lease term.

Recently Issued Accounting Pronouncements Not Yet Adopted

Income Taxes. In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes” (“ASU 2019-12”). This standard simplifies the accounting for income taxes and includes removal of certain exceptions to the general principles of ASC 740, Income Taxes, and updates and simplifies certain areas of the codification. ASU 2019-12 is effective for the Company beginning on January 1, 2021, with early adoption permitted. The Company is currently assessing the impact ASU 2019-12 will have on its consolidated financial statements and footnote disclosures and whether it intends to early adopt the new standard.

The Company believes that there are no other recently-issued accounting standards not yet effective that are currently likely to have a material impact on its financial statements.

3. LEASES

The Company has no leases in which it is the lessor. As lessee, the Company has one finance lease for a hotel and various operating leases for land, casino and office space, equipment, buildings, and signage. The Company’s lease terms, including extensions, range from one month to approximately 38 years. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants, but the land lease at Silver Slipper does include contingent rent as further discussed below.

Operating Leases

Silver Slipper Casino Land Lease through April 2058 and Options to Purchase. In 2004, the Company’s subsidiary, Silver Slipper Casino Venture, LLC, entered into a land lease with Cure Land Company, LLC for approximately 31 acres of marshlands and a seven-acre parcel on which the Silver Slipper Casino and Hotel is situated. The agreement includes fixed, base monthly payments of $77,500 plus contingent rents of 3% of monthly gross gaming revenue (as defined in the lease) in excess of $3.65 million, with no scheduled base rent increases through the remaining lease term ending in 2058.

10


The Company executed a fourth amendment to the original lease with the landlord, effective March 2020, which granted a waiver of base rent for April and May of 2020. Such abatement totaled $155,000 and the value of such abatement will be amortized over the remaining term of the lease. This amendment also restricts the Company’s purchase option period for the leased land, so that the Company cannot exercise its purchase option until April 1, 2022. From such date through October 1, 2027, the Company may buy out the lease for $15.5 million plus a seller-retained interest in Silver Slipper Casino and Hotel’s operations of 3% of net income (as defined) for 10 years following the purchase date.

Bronco Billy’s Lease through January 2035 and Option to Purchase. Bronco Billy’s leases certain parking lots and buildings, including a portion of the hotel and casino, under a long-term lease. The lease term includes six renewal options in three-year increments to 2035. Bronco Billy’s exercised its first renewal option through January 2020, and currently pays $30,000 per month in rent. In May 2019, Bronco Billy’s also exercised its second renewal option to extend the lease term through January 31, 2023, which will increase the monthly rent to $32,500 beginning in February 2021. The lease also contains a $7.6 million purchase option exercisable at any time during the lease term, or as extended, and a right of first refusal on any sale of the property.

Christmas Casino / Third Street Corner Building through August 2021 and Option to Purchase. As part of the Bronco Billy’s expansion, the Company leased a nearby closed casino in August 2018. The lease includes a minimum three-year term with annual lease payments of $0.2 million, and can be extended an additional two years with annual lease payments of $0.3 million. The Company also has the right to purchase the casino at any time during the lease term, or as extended. The purchase price is currently $2.7 million if exercised by October 31, 2021 and increases to $2.8 million for purchase dates thereafter.

The Company reopened the closed casino in November 2018, but it did not produce enough incremental revenue to offset the incremental costs, and it was closed in September 2020. The Company is currently evaluating other concepts for the leased space, which is located on a key corner in Cripple Creek, Colorado.

Grand Lodge Casino Lease through August 2023. The Company’s subsidiary, Gaming Entertainment (Nevada), LLC, has a lease with Hyatt Equities, L.L.C. (“Hyatt”) to operate the Grand Lodge Casino. The lease is collateralized by the Company’s interests under the lease and property (as defined in the lease) and is subordinate to the liens of the senior secured notes due 2024 (see Note 5). Hyatt currently has an option to purchase the Company’s leasehold interest and related operating assets of the Grand Lodge Casino, subject to assumption of applicable liabilities. The option price is an amount equal to the Grand Lodge Casino’s positive working capital, plus Grand Lodge Casino’s earnings before interest, income taxes, depreciation and amortization (“EBITDA”) for the twelve-month period preceding the acquisition (or pro-rated if less than twelve months remain on the lease), plus the fair market value of the Grand Lodge Casino’s personal property. The current monthly rent of $166,667 is applicable through the remaining lease term ending in August 2023.

In July 2020, the Company executed a fifth amendment to the Hyatt lease that retroactively reduced rent amounts due during the closure period, specifically a 25% reduction in rent for March 2020 and a 50% reduction in rent for each of April and May of 2020. Such reductions totaled $208,000 and such benefit is being amortized over the remaining life of the lease.

Corporate Office Lease through January 2025. The Company leases 4,479 square feet of office space in Las Vegas, Nevada. Annual rent is approximately $0.2 million and the term of the office lease expires in January 2025.

Finance Lease

Rising Star Casino Hotel Lease through October 2027 and Option to Purchase. The Company’s Indiana subsidiary, Gaming Entertainment (Indiana) LLC, leases a 104-room hotel at Rising Star Casino Resort. At any time during the lease term, the Company has the option to purchase the hotel at a price based upon the hotel’s original cost of $7.7 million (see Note 4), reduced by the cumulative principal payments made by the Company during the lease term. At September 30, 2020, such net amount was $3.9 million. Upon expiration of the lease term in October 2027, (i) the landlord has the right to sell the hotel to the Company, and (ii) the Company has the option to purchase the hotel. In either case, the purchase price is $1 plus closing costs.

11


Leases recorded on the balance sheet consist of the following:

(In thousands)

September 30, 

December 31, 

Leases

    

Balance Sheet Classification

    

2020

2019

Assets

 

  

 

  

  

Operating lease assets

   

Operating Lease Right-of-Use Assets, Net

   

$

18,097

$

19,171

Finance lease assets

 

Property and Equipment, Net(1)

 

4,918

 

5,037

Total lease assets

 

  

$

23,015

$

24,208

Liabilities

 

  

 

  

 

  

Current

 

  

 

  

 

  

Operating

 

Current Portion of Operating Lease Obligations

$

3,263

$

2,707

Finance

 

Current Portion of Finance Lease Obligation

 

486

 

448

Noncurrent

 

  

 

 

Operating

 

Operating Lease Obligations, Net of Current Portion

 

15,723

 

16,706

Finance

 

Finance Lease Obligation, Net of Current Portion

 

3,422

 

3,829

Total lease liabilities

 

  

$

22,894

$

23,690

(1)

Finance lease assets are recorded net of accumulated amortization of $2.8 million as of September 30, 2020.

The components of lease expense are as follows:

(In thousands)

    

    

Three Months Ended

    

Nine Months Ended

September 30, 

September 30, 

Lease Costs

Statement of Operations Classification

2020

 

2019

2020

 

2019

Operating leases:

 

  

 

  

  

 

  

  

Fixed/base rent

 

Selling, General and Administrative Expenses

$

1,156

$

959

$

3,478

$

2,877

Variable payments

 

Selling, General and Administrative Expenses

 

219

 

146

 

442

 

501

Finance lease:

 

  

 

  

 

 

  

 

  

Amortization of leased assets

 

Depreciation and Amortization

 

39

 

40

 

118

 

119

Interest on lease liabilities

 

Interest Expense, Net

 

45

 

51

 

139

 

157

Total lease costs

$

1,459

$

1,196

$

4,177

$

3,654

12


Maturities of lease liabilities as of September 30, 2020 are summarized as follows:

(In thousands)

    

Operating

    

Financing

Years Ending December 31, 

Leases

Lease(1)

2020 (excluding the nine months ended September 30, 2020)

$

1,212

$

108

2021

 

4,792

 

652

2022

 

4,576

 

652

2023

 

2,984

 

652

2024

 

1,243

 

652

Thereafter

 

31,116

 

1,847

Total future minimum lease payments

 

45,923

 

4,563

Less: Amount representing interest

 

(26,937)

 

(655)

Present value of lease liabilities

 

18,986

 

3,908

Less: Current lease obligations

 

(3,263)

 

(486)

Long-term lease obligations

$

15,723

$

3,422

(1)The Company’s only material finance lease is at Rising Star Casino Resort for a 104-room hotel.

Other information related to lease term and discount rate is as follows:

Lease Term and Discount Rate

    

September 30, 2020

December 31, 2019

Weighted-average remaining lease term

 

  

  

Operating leases

 

19.9

years

20.2

years

Finance lease

 

7.0

years

7.8

years

Weighted-average discount rate

 

  

  

Operating leases(1)

 

9.38

%

9.40

%

Finance lease

 

4.50

%

4.50

%

(1)Upon adoption of the new lease standard, discount rates used for existing operating leases were established on January 1, 2019.

Supplemental cash flow information related to leases is as follows:

(In thousands)

    

Nine Months Ended

September 30, 

Cash paid for amounts included in the measurement of lease liabilities:

2020

2019

Operating cash flows for operating leases

$

3,250

$

2,881

Operating cash flows for finance lease

$

139

$

157

Financing cash flows for finance lease

$

369

$

403

13


4. PROPERTY AND EQUIPMENT

Property and equipment, including finance lease assets, consists of the following:

(In thousands)

September 30, 

December 31, 

2020

2019

Land and improvements

$

16,144

$

16,144

Buildings and improvements

 

107,360

 

106,946

Furniture and equipment

 

47,752

 

47,886

Finance lease assets (see Note 3)

7,726

7,726

Construction in progress

 

11,175

 

10,856

 

190,157

 

189,558

Less: Accumulated depreciation

 

(73,144)

 

(68,071)

$

117,013

$

121,487

5. LONG-TERM DEBT

Long-term debt, related discounts and issuance costs consist of the following:

(In thousands)

September 30, 

December 31, 

2020

2019

Senior Secured Notes

$

107,100

$

107,925

Unsecured Loans (CARES Act)

5,606

Less: Unamortized discounts and debt issuance costs

 

(4,359)

 

(3,902)

 

108,347

 

104,023

Less: Current portion of long-term debt

 

(1,154)

 

(1,100)

$

107,193

$

102,923

Senior Secured Notes and Waivers. On April 28, 2020, the Company executed the Third Amendment to Indenture dated as of April 28, 2020 (the “Third Amendment”) to amend the Indenture dated as of February 2, 2018 (as amended and supplemented, the “Indenture”), which governs the senior secured notes due 2024 issued by the Company in the aggregate principal amount of $110.0 million (collectively, the “Notes”). Reflecting the impact of the temporary closures of the Company’s properties due to COVID-19, the Third Amendment (i) deleted the total leverage ratio covenant as of March 31, 2020, and (ii) resolved any potential ambiguities regarding a qualified auditor opinion in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. The Company paid an amendment fee of 0.35%, or $376,775, to the holders of its Notes, based on the outstanding balance of the aggregate principal amount as of the amendment date. Additionally, the Third Amendment increased the optional repayment premiums by 15 basis points, plus accrued and applicable unpaid interest, if the Company chooses to redeem all or a part of the Notes prior to, or at, maturity.

On August 12, 2020, due to the impact of the COVID-19 pandemic on the Company’s business operations, particularly in the second quarter of 2020, the Company executed the Fourth Amendment to Indenture dated as of August 12, 2020 (the “Fourth Amendment”) to amend the Indenture to the Notes. The Fourth Amendment (i) deleted the total leverage ratio covenant as of June 30, 2020, and (ii) permitted the incurrence of $5.6 million of unsecured loans under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), as detailed in the following section below. The Company paid an amendment fee of 0.75%, or $805,313, to the holders of its Notes, based on the outstanding balance of the aggregate principal amount as of the amendment date. Additionally, the Fourth Amendment increased the optional repayment premiums by 25 basis points, plus accrued and applicable unpaid interest, if the Company chooses to redeem all or a part of the Notes prior to, or at, maturity.

Similarly, on November 6, 2020, the Company executed the Fifth Amendment to Indenture dated as of November 6, 2020 (the “Fifth Amendment”) to amend the Indenture to the Notes. The Fifth Amendment deleted the total leverage ratio covenant as of September 30, 2020. The Company paid an amendment fee of 1.00%, or approximately $1.07 million, to the holders of its

14


Notes, based on the outstanding balance of the aggregate principal amount as of the amendment date. The Fifth Amendment did not increase the optional repayment premiums that were previously amended by the Third and Fourth Amendments.

The following table summarizes the current debt repayment premiums for the Notes:

Redemption Periods

    

Percentage Premium

On February 2, 2020 to February 1, 2021

 

1.90

%

On February 2, 2021 to February 1, 2022

 

0.90

%

On or after February 2, 2022

0.40

%

The Notes bear interest at the greater of the three-month London Interbank Offered Rate (“LIBOR”) or 1.0%, plus a margin rate of 7.0%. Interest on the Notes is payable quarterly in arrears, on March 31, June 30, September 30 and December 31 of each year until the Notes mature on February 2, 2024. On each interest payment date, the Company is required to make principal payments of $275,000 with a balloon payment for the remaining $103.5 million due upon maturity.

The Notes are collateralized by substantially all of the Company’s assets and are guaranteed by all of its material subsidiaries.

Unsecured Loans Under the CARES Act.  On May 8, 2020, two wholly-owned subsidiaries of the Company executed promissory notes (the “Promissory Notes”) evidencing unsecured loans in the aggregate amount of $5,606,200 through programs established under the CARES Act (the “Loans”) and administered by the U.S. Small Business Administration (the “SBA”). Such funds were principally used to rehire several hundred employees at Rising Star and Bronco Billy’s in advance of, and subsequent to, their reopenings in mid-June. The Loans were made through Zions Bancorporation, N.A. dba Nevada State Bank (the “Lender”), bear interest at a rate of 1.00% per annum, and originally had a two-year term.

Recently-passed legislation extended the original maturity dates to May 3, 2025 with no change to the annual interest rate. After a 15-month deferment period for principal and interest payments, the Company is required to make monthly loan payments totaling $128,557 beginning in September 2021 to the Lender. The Loans may be prepaid at any time prior to maturity with no prepayment penalties. Such Loans may be forgiven, either in whole or in part, depending on the amount of such proceeds that are used for certain eligible expenses over a 24-week period, including primarily the payroll and health benefits of employees who might otherwise be without jobs or health benefits. There is no certainty that any or all of such Loans will be forgiven.

Maturities of the unsecured loans as of September 30, 2020, unless forgiven, are as follows:

(In thousands)

Unsecured

For Years Ending December 31, 

Loans

2020

$

2021

426

2022

1,498

2023

1,513

2024

1,528

Thereafter

641

$

5,606

Covenants. The Indenture governing the Notes contains customary representations and warranties, events of default, and positive and negative covenants, including financial covenants. The Company is required to maintain a total leverage ratio, which measures Consolidated EBITDA (as defined in the Indenture) against outstanding debt. The Company is allowed to deduct up to $15 million of its cash and equivalents (beyond estimated cash utilized in daily operations) from its total debt when calculating the numerator of such ratio. The Third, Fourth, and Fifth Amendments deleted the total leverage ratio covenant for the respective periods ended March 31, 2020, June 30, 2020, and September 30, 2020. For the period ending December 31, 2020, the total leverage ratio maximum is 5.50x. There can be no assurances that the Company will remain in compliance with its covenants and/or that it would be successful in obtaining waivers or modifications in the event of noncompliance in the future.

15


6. COMMON STOCK WARRANT LIABILITY

As part of the Company’s former Second Lien Credit Facility, on May 13, 2016, the Company granted the Second Lien Credit Facility lenders 1,006,568 warrants, which have an exercise price of $1.67 and expire on May 13, 2026. The warrants also provide for redemption rights, preemptive rights under certain circumstances to maintain their ownership interest in the Company, piggyback registration rights and mandatory registration rights. In addition to a refinancing, the redemption rights allow the warrant-holders, at their option, to require the Company to repurchase all or a portion of the warrants upon the occurrence of certain events, including: (i) a liquidity event, as defined in the warrant purchase agreement, or (ii) the Company’s insolvency. The repurchase value is the 21-day average price of the Company’s common stock at the time of such liquidity event, net of the warrant exercise price. If the redemption rights are exercised, the repurchase amount is payable by the Company in cash or through the issuance of an unsecured note with a four-year term and a minimum interest rate of 13.25%, as further defined in the warrant purchase agreement, and would be guaranteed by the Company’s subsidiaries. Alternatively, the warrant-holders may choose to have the Company register and sell the shares related to the warrants through a public stock offering.

The Company’s debt refinancing of the Second Lien Credit Facility during 2018 was considered a “triggering event” for the possible redemption or registration of the warrants. The Company’s warrant-holders have not yet requested the redemption or registration of their outstanding warrants, though they may do so on any six-month anniversary of the refinancing date prior to warrant expiration. Accordingly, the obligation is reflected as a current liability.

The Company measures the fair value of the warrants at each reporting period (see Note 2). At September 30, 2020, the estimated fair value was determined using the following assumptions:  an expected contractual term of 5.62 years, an expected stock price volatility rate of 61.9%, an expected dividend yield of 0%, and an expected risk-free interest rate of 0.3%. Decreases in our share price result in decreases in the value of the warrants, causing non-cash income. Conversely, increases in our share price result in increases in the value of the warrants, causing non-cash expense.

7. INCOME TAXES

The Company’s effective income tax rate for the three- and nine-months ended September 30, 2020 was (1.2%) and 0.1%, respectively, compared to an effective income tax rate of (33.2%) and (3.1%) for the corresponding prior-year periods. The Company’s tax rate differs from the statutory rate of 21.0% primarily due to the effects of valuation allowances against net deferred tax assets, adjustments made to certain deferred taxes, and certain permanent item differences between tax and financial reporting purposes. The Company recorded a benefit of approximately $269,000 during the period ended September 30, 2020, related to the removal of a state deferred balance on indefinite-lived assets.

On March 18, 2020, the Families First Coronavirus Response Act (the “FFCR Act”), and on March 27, 2020, the CARES Act were each enacted in response to COVID-19. The FFCR Act and the CARES Act contain numerous income tax provisions, such as relaxing limitations on the deductibility of interest and the use of net operating losses arising in taxable years beginning after December 31, 2017; however, these benefits do not impact the Company’s current tax provision.

8. COMMITMENTS AND CONTINGENCIES

Litigation

The Company is party to a number of pending legal proceedings related to matters that occurred in the normal course of business. Management does not expect that the outcome of any such proceedings, either individually or in the aggregate, will have a material effect on the Company’s financial position, results of operations and cash flows.

16


Options to Purchase or Lease Land

La Posada del Llano Racetrack Proposal in New Mexico. In July 2018, the Company paid $125,000 for options to purchase approximately 520 acres of adjoining land in Clovis, New Mexico as part of its racetrack casino proposal to the New Mexico Racing Commission. The proposal was in response to the New Mexico Racing Commission’s request for proposals related to the potential issuance of the state’s sixth racing license (“RFP”). In July 2019, the Company paid an additional $125,000 to renew these land options. In August 2019, the New Mexico Racing Commission announced that it would not issue the sixth racing license at this time. Due to uncertainties surrounding the timing of the RFP process, as well as uncertainties created by the ongoing pandemic, the Company elected to let the New Mexico land options expire in July 2020. Accordingly, the Company wrote-off these option deposits totaling $250,000 in the second quarter of 2020, reflected on the income statement under “Project development costs.”

9. EARNINGS (LOSS) PER SHARE

The table below reconciles basic and diluted income (loss) per share of common stock:

(In thousands)

Three Months Ended

Nine Months Ended

September 30, 

September 30, 

    

2020

    

2019

    

2020

    

2019

Numerator:

 

  

 

  

 

  

 

  

Net income (loss) - basic

$

7,708

$

938

$

(3,353)

$

(1,689)

Adjustment for assumed conversion of warrants

(1,159)

Net income (loss) - diluted

$

7,708

$

938

$

(4,512)

$

(1,689)

Denominator:

 

  

 

  

 

  

 

  

Weighted-average common and common share equivalents - basic

 

27,106

 

26,980

 

27,087

 

26,963

Potential dilution from share-based awards

358

521

Potential dilution from assumed conversion of warrants

 

 

 

133

 

Weighted-average common and common share equivalents - diluted

 

27,464

 

27,501

 

27,220

 

26,963

Anti-dilutive share-based awards and warrants excluded from the calculation of diluted loss per share

 

2,360

 

1,901

 

3,534

 

3,959

17


10. SHARE-BASED COMPENSATION

As of September 30, 2020, the Company had 105,677 share-based awards authorized by shareholders and available for grant from the 2015 Equity Incentive Plan (the “2015 Plan”).

The following table summarizes information related to the Company’s common stock options as of September 30, 2020:

    

    

Weighted

Number

Average

of Stock

Exercise

Options

Price

Options outstanding at January 1, 2020

 

2,844,405

$

1.71

Granted

 

388,000

 

1.73

Exercised

 

 

Canceled/Forfeited

 

(8,650)

 

2.23

Expired

 

(25,158)

 

2.30

Options outstanding at September 30, 2020

 

3,198,597

$

1.71

Options exercisable at September 30, 2020

 

2,497,262

$

1.65

Share-based compensation expense totaled $121,000 and $70,000 for the three-months ended September 30, 2020 and 2019, respectively, and $307,000 and $263,000 for the nine-months ended September 30, 2020 and 2019, respectively. As of September 30, 2020, there was approximately $0.6 million of unrecognized compensation cost related to unvested stock options previously granted that is expected to be recognized over a weighted-average period of approximately 2.1 years.

11. SEGMENT REPORTING AND DISAGGREGATED REVENUE

The Company manages its casinos based on geographic regions within the United States. The casino/resort operations include four segments:  Silver Slipper Casino and Hotel (Hancock County, Mississippi); Rising Star Casino Resort, consisting of Rising Star Casino Resort (Rising Sun, Indiana) and its ferry boat operations (connecting Rising Sun, Indiana with Boone County, Kentucky); Bronco Billy’s Casino and Hotel (including the former Christmas Casino and Christmas Inn, both in Cripple Creek, Colorado); and the Northern Nevada segment, consisting of Grand Lodge Casino (Incline Village, Nevada) and Stockman’s Casino (Fallon, Nevada).

The Company utilizes Adjusted Property EBITDA as the measure of segment profit in assessing performance and allocating resources at the reportable segment level. Adjusted Property EBITDA is defined as earnings before interest and other non-operating income (expense), taxes, depreciation and amortization, pre-opening expenses, impairment charges, asset write-offs, recoveries, gain (loss) from asset disposals, project development and acquisition costs, non-cash share-based compensation expense, and corporate-related costs and expenses that are not allocated to each property.

18


The following tables present the Company’s segment information:

(In thousands)

Three Months Ended September 30, 2020

    

Silver

    

    

Bronco

    

    

Slipper

Rising Star

Billy’s

Northern

Casino

Casino

Casino

Nevada

and Hotel

Resort

and Hotel

Casinos

Total

Total Revenues

Casino

$

13,972

$

7,204

$

6,866

$

3,868

$

31,910

Food and beverage

 

4,231

 

711

 

505

 

165

 

5,612

Hotel

 

1,303

 

1,034

 

174

 

 

2,511

Other operations

 

460

 

1,018

 

365

 

80

 

1,923

$

19,966

$

9,967

$

7,910

$

4,113

$

41,956

Adjusted Property EBITDA

$

6,495

$

2,436

$

3,393

$

1,032

$

13,356

Other operating costs and expenses:

Depreciation and amortization

 

(1,848)

Corporate expenses

 

(870)

Project development costs

 

(108)

Stock-based compensation

(121)

Operating income

 

10,409

Other (expense) income:

Interest expense, net

 

(2,391)

Adjustment to fair value of warrants

 

(403)

(2,794)

Income before income taxes

7,615

Income tax benefit

 

(93)

Net income

$

7,708

19


(In thousands)

Three Months Ended September 30, 2019

    

Silver

    

    

Bronco

    

    

Slipper

Rising Star

Billy’s

Northern

Casino

Casino

Casino

Nevada

and Hotel

Resort

and Hotel

Casinos

Total

Total Revenues

Casino

$

10,718

$

7,744

$

6,438

$

5,744

$

30,644

Food and beverage

 

5,676

 

1,760

 

1,345

 

481

 

9,262

Hotel

 

1,266

 

1,560

 

251

 

 

3,077

Other operations

 

406

 

671

 

80

 

119

 

1,276

$

18,066

$

11,735

$

8,114

$

6,344

$

44,259

Adjusted Property EBITDA

$

3,009

$

156

$

1,582

$

2,108

$

6,855

Other operating costs and expenses:

Depreciation and amortization

 

(2,089)

Corporate expenses

(1,064)

Project development costs

 

(228)

Loss on disposal of assets, net

(10)

Stock-based compensation

 

(70)

Operating income

 

3,394

Other (expense) income:

Interest expense, net

 

(2,428)

Adjustment to fair value of warrants

 

(262)

(2,690)

Income before income taxes

704

Income tax benefit

 

(234)

Net income

$

938

20