UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-QSB [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1998. OR [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ___________ TO ___________. 0-20630 (Commission File No) FULL HOUSE RESORTS, INC. (Exact name of small business issuer as specified in its charter) DELAWARE 13-3391527 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 12555 HIGH BLUFF DRIVE SUITE 380 SAN DIEGO, CALIFORNIA 92130 (Address of principal executive offices) (zip code) (619) 350-2030 (Registrant's telephone number) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 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 [X] No [ ] APPLICABLE ONLY TO CORPORATE ISSUERS As of November 3, 1998, Registrant had 10,340,380 shares of its $.0001 par value common stock outstanding. FULL HOUSE RESORTS, INC TABLE OF CONTENTS PAGE ---- PART I. Financial Information Item 1. Condensed Financial Statements Condensed Consolidated Balance Sheets as of September 30, 1998 and December 31, 1997 3 Condensed Consolidated Statements of Income for the three months and nine months ended September 30, 1998 and 1997 4 Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 1998 and 1997 5 Notes to Condensed Consolidated Financial Statements 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 8 PART II. Other Information 12 Signatures 13 -2- FULL HOUSE RESORTS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS - --------------------------------------------------------------------------------
SEPTEMBER 30, DECEMBER 31, 1998 1997 ---- ---- ASSETS CURRENT ASSETS: Cash and cash equivalents $ 2,037,560 $ 2,422,884 Note receivable - joint venture, current portion - 544,911 Restricted cash - 530,881 Accounts receivable - 10,210 Receivable from related party - 106,760 Inventories - 89,437 Prepaid expenses 121,620 286,126 Receivable from joint ventures 408,378 343,200 ------------ ------------- Total current assets 2,567,558 4,334,409 ASSETS HELD FOR SALE - net - 5,542,078 LAND HELD FOR DEVELOPMENT 4,568,090 - GOODWILL - net 1,518,816 1,898,517 NOTE RECEIVABLE - JOINT VENTURE 29,249 23,748 INVESTMENTS IN JOINT VENTURES 5,120,168 5,025,379 DEPOSITS AND OTHER ASSETS 430,711 922,612 ------------ ------------- TOTAL $ 14,234,592 $ 17,746,743 ============ ============= LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Current portion of long-term debt $ - $ 697,100 Accounts payable 20,674 93,504 Accrued expenses 103,465 526,297 Income taxes payable - 16,862 ------------ ------------- Total current liabilities 124,139 1,333,763 ------------ ------------- LONG-TERM DEBT, net of current portion 3,000,000 6,190,562 ------------ ------------- COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY: Cumulative, convertible preferred stock, par value $.0001, 5,000,000 shares authorized; 700,000 shares issued and outstanding; aggregate liquidation preference of $3,412,500 and $3,255,000 70 70 Common stock, par value $.0001, 25,000,000 shares authorized; 10,340,380 shares issued and outstanding 1,034 1,034 Additional paid in capital 17,135,469 16,957,487 Accumulated deficit (6,026,120) (6,736,173) ------------ ------------- Total stockholders' equity 11,110,453 10,222,418 ------------ ------------- TOTAL $14,234,592 $ 17,746,743 ============ =============
See notes to condensed consolidated financial statements. -3- FULL HOUSE RESORTS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME - --------------------------------------------------------------------------------
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, 1998 1997 1998 1997 ---- ---- ---- ---- JOINT VENTURE REVENUES $ 941,304 $ 849,205 $ 2,735,994 $ 2,442,523 OPERATING COSTS AND EXPENSES: General and administrative 440,181 348,658 1,361,622 1,166,131 Depreciation and amortization 129,239 128,365 387,626 385,043 ------------- ------------ ------------ ------------- Total operating costs and expenses 569,420 477,023 1,749,248 1,551,174 ------------- ------------ ------------ ------------- OPERATING INCOME 371,884 372,182 986,746 891,349 OTHER INCOME (EXPENSE): Interest expense and debt issue costs (64,938) (63,872) (268,251) (191,087) Interest and other income 21,481 36,167 158,568 114,982 ------------- ------------ ------------ ------------- INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES 328,427 344,477 877,063 815,244 Provision for income taxes (61,843) (79,554) (199,543) (207,979) ------------- ------------ ------------ ------------- INCOME FROM CONTINUING OPERATIONS 266,584 264,923 677,520 607,265 DISCONTINUED OPERATIONS (NOTE 3): Income (loss) from operations of Deadwood Gulch Resort 4,351 834,203 (352,692) 670,765 Gain on disposal of Deadwood Gulch Resort - - 385,225 - Impairment of Deadwood Gulch Resort long lived assets - - - (3,220) ------------- ------------ ------------ ------------- NET INCOME 270,935 1,099,126 710,053 1,274,810 Less, undeclared dividends on cumulative preferred stock (52,500) (52,500) (157,500) (157,500) ------------- ------------ ------------ ------------- NET INCOME APPLICABLE TO COMMON SHARES $ 218,435 $ 1,046,626 $ 552,553 $ 1,117,310 ============= ============ ============ ============= INCOME PER COMMON SHARE FROM CONTINUING OPERATIONS BASIC AND DILUTED $ 0.03 $ 0.03 $ 0.07 $ 0.06 ============= ============ ============ ============= NET INCOME PER COMMON SHARE BASIC AND DILUTED $ 0.02 $ 0.10 $ 0.05 $ 0.11 ============= ============ ============ ============= WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING 10,340,380 10,340,380 10,340,380 10,340,252 ============= ============ ============ =============
See notes to condensed consolidated financial statements. -4- FULL HOUSE RESORTS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - --------------------------------------------------------------------------------
NINE MONTHS ENDED SEPTEMBER 30, 1998 1997 ---- ---- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 710,053 $ 1,274,810 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 387,626 385,043 Debt issue costs and imputed interest amortization 33,840 192,834 Amortization of deferred compensation expense 177,982 75,709 Impairment of long-lived assets - 3,220 Gain on disposal of assets held for sale (385,225) (274) Equity in income of joint ventures (2,735,994) (2,442,523) Investments in joint ventures - (177,061) Distributions from joint ventures 2,641,205 2,469,937 Changes in assets and liabilities: (Increase) decrease in accounts receivable 112,983 (175,540) (Increase) decrease in restricted cash 530,881 (303,563) Decrease in inventories 8,297 4,836 (Increase) decrease in prepaid expenses 138,132 (60,536) Increase in other assets (4,774) (1,480) Increase (decrease) in accounts payable and accrued expenses (425,150) 200,031 ------------- ------------- Net cash provided by operating activities 1,189,856 1,444,543 ------------- ------------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of assets held for sale (5,855) (46,054) Proceeds from sale of assets held for sale 5,930,326 43,661 Proceeds from sale of current assets and liabilities 11,439 - Acquisition of land held for development (3,954,340) - Net payments on purchase options (125,000) (200,000) Decrease in receivables from joint ventures 474,232 381,986 ------------- ------------- Net cash provided by investing activities 2,330,802 179,593 ------------- ------------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from bank loan 2,000,000 - Proceeds from exercise of warrants - 3,500 Repayment of debt (5,905,982) (214,904) ------------- ------------- Net cash used in financing activities (3,905,982) (211,404) ------------- ------------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (385,324) 1,412,732 CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 2,422,884 1,049,183 ------------- ------------- CASH AND CASH EQUIVALENTS, END OF PERIOD $ 2,037,560 $ 2,461,915 ============= =============
See notes to condensed consolidated financial statements. -5- FULL HOUSE RESORTS, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES INTERIM CONDENSED FINANCIAL STATEMENTS - The interim condensed consolidated financial statements of Full House Resorts, Inc. (the "Company") included herein reflect all adjustments which are, in the opinion of management, necessary to present a fair statement of the results for the interim periods presented. All such adjustments are of a normal recurring nature. Certain information and note disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been omitted pursuant to the rules and regulations of the Securities and Exchange Commission. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-KSB for the year ended December 31, 1997. The results of operations for the three and nine month periods ended September 30, 1998 are not necessarily indicative of the results to be expected for the year ending December 31, 1998. CONSOLIDATION - The condensed consolidated financial statements include the accounts of the Company and all its majority-owned subsidiaries. All material intercompany accounts and transactions have been eliminated. 2. RECENTLY ISSUED ACCOUNTING STANDARDS In June 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 130, REPORTING COMPREHENSIVE INCOME (FASB 130), which is effective for fiscal years beginning after December 15, 1997. FASB 130 establishes standards for reporting and display of comprehensive income and its components in a full set of general-purpose financial statements. The Company adopted FASB 130 during the first quarter of 1998 without a material effect on the disclosures in its consolidated financial statements. In June 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 131, DISCLOSURES ABOUT SEGMENTS OF AN ENTERPRISE AND RELATED INFORMATION (FASB 131), which is effective for financial statements for periods beginning after December 15, 1997. FASB 131 establishes standards for the way that public business enterprises report information about operating segments in annual financial statements and requires that those enterprises report selected information about operating segments on interim financial reports issued to shareholders. It also establishes standards for related disclosures about products and services, geographic areas and major customers. The Company has not yet determined the effect adoption of FASB 131 will have on disclosures in its consolidated financial statements. In June 1998, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 133, ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (FASB 133). This statement establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts, (collectively referred to as derivatives) and for hedging activities. It requires that an entity recognize all derivatives as either assets or liabilities in the statement of financial position and measure those instruments at fair value and is effective for all fiscal quarters of all fiscal years beginning after June 15, 1999. Management does not believe this new statement will have a material impact on the consolidated financial statements of the Company. -6- 3. DISCONTINUED OPERATIONS On May 12, 1998, the Company completed the sale of Deadwood Gulch Resort ("DGR") for $6 million cash and the proration of certain related items. The Company received net proceeds of $5,941,765 from the sale of DGR, which includes the $6 million cash portion of the sales price in addition to $11,439 received from the buyer for the proration of inventory, receivables and prepaid assets, offset by advance deposits, progressive jackpot liabilities and closing costs of $69,674. Revenues from DGR for the three and nine month periods ended September 30, 1998 were $0 and $1,076,240 compared to $2,322,188 and $4,504,794 for the comparable periods of 1997. The gain on the sale, recorded in the second quarter 1998, was $385,225. The results of DGR have been classified as discontinued operations in the accompanying financial statements. 4. SUPPLEMENTAL STATEMENT OF CASH FLOW INFORMATION Cash payments for interest for the nine months ended September 30, 1998 and 1997 were $437,822 and $329,705, respectively. The following noncash investing activity is not reflected in the condensed consolidated statements of cash flows: During the nine months ended September 30, 1998, the Company applied purchase option deposits of $613,750 towards the acquisition of land held for development. ****** -7- ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. RESULTS OF OPERATIONS THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 1998 COMPARED TO THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 1997 JOINT VENTURE INCOME. Joint venture income increased $92,099, or 10.8%, and $293,471, or 12.0%, respectively, for the three month and nine month periods ended September 30, 1998 as compared to the comparable periods in 1997. These increases are due to the improved operating results from the Delaware and Oregon joint ventures. DELAWARE JOINT VENTURE. The Company's share of income from the Delaware joint venture was $648,284 and $1,953,840, respectively, for the three and nine month periods ended September 30, 1998. These represented increases in the Company's share of income of $74,910, or 13.1%, and $228,585, or 13.3%, over the comparable periods of 1997. The increases are attributed to an established marketing plan in place at the facility and the addition of 122 video slot machines on May 22, 1998. As a result of operating results exceeding initial projections, Midway Slots and Simulcast has prepaid its obligation to the Delaware joint venture. The joint venture, in turn, prepaid its obligation to the Company in February 1998. OREGON JOINT VENTURE. The Company's share of income from the Oregon joint venture increased $22,142, or 7.8%, and $70,120, or 9.3%, for the three and nine month periods ended September 30, 1998, respectively, as compared to 1997 as a result of improved marketing of the casino. CALIFORNIA AND MICHIGAN JOINT VENTURES. The Company's share of the loss from the California and Michigan joint ventures increased by $4,953 and $5,243 for the three and nine month periods ended September 30, 1998, respectively, as compared to the comparable periods in 1997. These joint venture companies are still in the development stage and do not have operating revenues. GENERAL AND ADMINISTRATIVE EXPENSES. Expenses increased $91,523, or 26.3%, and $195,491, or 16.8%, for the three and nine month periods ended September 30, 1998, respectively, as compared to the comparable periods in 1997. This increase is primarily due to the grant, on January 6, 1998 of a vested stock option to Gregg Giuffria, who later became president and chief operating officer of the Company, to purchase 70,001 common shares at $2.03. The value of $240,964 for the options was estimated on the date of grant using the Black-Scholes option-pricing model with the following assumptions: expected volatility of 95 percent, risk-free interest rate of 5.4 percent, and expected life of 2.0 years. As the options were granted to a then nonemployee in return for services, consulting expense was recognized in the first quarter of 1998 in the amount of $74,554, and the remaining $166,320 is being amortized over a 36 month period beginning April 1998. In addition, in 1998, the Company continued to incur costs related to the investigation, due diligence and pre-development of various ongoing opportunities for expansion of its business and the increase in the Company's corporate structure necessary to administer the Company's expansion. INTEREST EXPENSE AND DEBT ISSUE COSTS. For the three and nine month periods ended September 30, 1998, interest expense and debt issue costs increased by $1,066 and $77,164, respectively, as compared to 1997 due to a $2 million bank loan used to acquire property in Mississippi. INTEREST AND OTHER INCOME. Interest and other income decreased by $14,686 for the three months ended September 30, 1998 due to the prepayment of the Delaware LLC note receivable. Interest and other income increased by $43,586 for the nine months ended September 30, 1998 due to a one time reimbursement of $85,532 from the former Chairman of the Board for costs associated with the gaming opportunities presented to the Company by him, partially offset by a reduction in interest income due to the prepayment of the Delaware LLC note receivable. INCOME TAX EXPENSE. State income tax expense was $61,843 and $199,543 for the three months and nine months ended September 30, 1998, respectively. At September 30, 1998, the Company had net operating loss -8- carryforwards for federal income tax purposes of approximately $2,180,000, which may be carried forward to offset future taxable income. The loss carryforwards expire in 2007 through 2014. The availability of the loss carryforwards may be limited in the event of a significant change in ownership of the Company or its subsidiaries. DISCONTINUED OPERATIONS - DEADWOOD GULCH RESORT INCOME (LOSS) FROM OPERATIONS. Income (loss) from the operation of Deadwood Gulch Resort of $4,351 and ($352,692) represent decreased income and increased losses of $829,852 and $1,023,457 for the three and nine month periods ended September 30, 1998, respectively, as compared to the comparable periods in 1997. The increases are primarily due to the sale of the Resort on May 12, 1998 which was prior to the beginning of the peak season. IMPAIRMENT OF LONG-LIVED ASSETS. In January 1996, the Company announced its intent to dispose of DGR. The Company adopted the provisions of SFAS No. 121, ACCOUNTING FOR THE IMPAIRMENT OF LONG-LIVED ASSETS TO BE DISPOSED OF, during the fourth quarter of the year ended December 31, 1995. Under SFAS No. 121, the Company reviews the carrying values of its long-lived and identifiable intangible assets for possible impairment whenever events or changes in circumstances indicate that the carrying amount of assets may not be recoverable. Since the adoption of SFAS No. 121, the Company has written off $4,154,290 related to DGR. GAIN ON SALE OF ASSETS HELD FOR SALE. The Company recognized a gain on the sale of DGR of $385,225 after considering the impairment of long-lived assets discussed above. DGR was sold on May 12, 1998. See also "Liquidity and Capital Resources". LIQUIDITY AND CAPITAL RESOURCES The Company held cash and cash equivalents of $2,037,560 as of September 30, 1998. Net cash provided by operating activities during the nine months ended September 30, 1998 was $1,189,859. Net cash provided by investing activities of $2,330,802 and net cash used in financing activities of $3,905,982 for the nine month period ended September 30, 1998, were the result of two significant transactions described below. On May 12, 1998, the Company completed the sale of DGR for $6 million cash and the proration of certain related items. The Company received net proceeds of $5,941,765 from the sale of DGR, which includes the $6 million cash portion of the sales price in addition to $11,439 received from the buyer for the proration of inventory, receivables and prepaid assets, offset by advance deposits, progressive jackpot liabilities and closing costs of $69,674. On May 31, 1995, DGR had borrowed $5 million, secured by its real property. The Company repaid the remaining $3,165,861 due under this note from the proceeds from the sale. The Company also used approximately $200,000 of the sale proceeds to payoff the remaining current liabilities of DGR. On February 23, 1998, the Company completed the purchase of a portion of a proposed gaming site in Biloxi, Mississippi. The Company acquired the site for $4,155,000 and the payment of certain related costs. The Company utilized cash on hand of $2,155,000 and obtained a $2 million bank loan in connection with the purchase. The bank loan was repaid on June 3, 1998 using proceeds from the sale of DGR. Negotiations to develop a theme hotel/casino at the site, with investment partners, remain underway. The completion of the proposed transaction is subject to the approval of all required Mississippi gaming authorities as well as completion of due diligence, approval by the Company's Board of Directors, execution of definitive agreements with respect to acquisition and development of the site, and receipt of financing for the project. Upon the payoff of the bank loan discussed above, the Company negotiated a $2 million line of credit with the same bank. The line bears interest adjustable daily at one percent above prime, requires interest payments monthly on the outstanding balance, and all principal and accrued interest is due at maturity on February 25, 1999. No amounts have been drawn on the line to date. On November 20, 1995, Full House merged a wholly-owned subsidiary into Omega Properties Inc. (30% owned by William P. McComas, a director/stockholder of the Company). In exchange, the shareholders of Omega -9- received an aggregate of 500,000 shares of Full House Common Stock and a promissory note of Full House in the principal amount of $375,000. William P. McComas received the note and Mr. Fugazy, the other stockholder of Omega, received the shares in exchange for their interests as shareholders of Omega. On May 11, 1998, Full House received a request for repayment of the $375,000 note and repaid the same, plus all accrued interest on May 14, 1998 from the DGR sale proceeds. Full House is a party to a series of agreements with GTECH Corporation, a leading supplier of computerized systems and services for government-authorized lotteries, to jointly pursue certain gaming opportunities. Pursuant to the agreements, joint venture companies equally owned by GTECH and Full House have been formed. Full House has contributed its rights to the North Bend, Oregon facility and the rights to develop the Torres-Martinez, Nottawaseppi Huron Band of Potawatomi and Delaware State Fair projects to the joint venture companies. GTECH has contributed cash and other intangible assets and has agreed to loan the joint venture entities up to $16.4 million to complete the North Bend, Oregon and Delaware facilities. Full House has agreed to guarantee one-half of the obligations of the joint venture companies to GTECH under these loans and has guaranteed to GTECH one-half of a $2.0 million loan to the North Bend, Oregon Indian Tribe. GTECH also provides project management, technology and other expertise to analyze and develop/manage the implementation of opportunities developed by the joint venture entities. GTECH has also loaned Full House $3 million, which loan was convertible, until January 1998 into 600,000 shares of Full House Common Stock. The loan conversion clause expired without exercise. The note bears interest at prime. Interest is paid monthly and the unpaid principal and interest are due on January 25, 2001. In addition, Full House has been reimbursed by one of the joint venture companies for certain advances and expenditures made by Full House relating to the gaming development agreements. As part of this transaction, Allen E. Paulson, William P. McComas and Lee Iacocca have granted to GTECH an option to purchase their shares should they propose to transfer the same. The parties are no longer required to present gaming opportunities to the other for joint development. The Company advanced funds to the Delaware joint venture company totaling $1,886,498, of which $544,911 was outstanding as of December 31, 1997. The note was paid in full as of February 1998. As a result of its agreements with GTECH, receipt by Full House of revenues from the operations of projects (other than the Deadwood Gulch Resort) is governed by the terms of the joint venture agreements applicable to such projects. These contracts provide that net cash flow (after certain deductions) is to be distributed monthly to Full House and GTECH. While Full House does not believe that this arrangement will adversely impact its liquidity, with the sale of DGR, the Company's continuing cash flow is dependent on the operating performance of its joint ventures, and the ability to receive monthly distributions. As of September 30, 1998, Full House had cumulative undeclared and unpaid dividends in the amount of $1,312,500 on the 700,000 outstanding shares of its 1992-1 Preferred Stock. Such dividends are cumulative whether or not declared, and are currently in arrears. Additional financing will be required for the Company to effect its business strategy and no assurance can be given that such financing will be available upon commercially reasonable terms. YEAR 2000 ISSUES The Company has implemented a Year 2000 program to ensure that its computer systems and applications will function properly beyond 1999. The Company believes that it has allocated adequate resources for this purpose and expects its Year 2000 date conversion program to be completed successfully on a timely basis. Although the ability of third parties with whom the Company transacts business to address their Year 2000 issues is outside the Company's control, the Company is discussing with its joint venture partners, significant vendors and customers the possibility of any interface difficulties which may affect the Company. The Company currently does not expect the costs necessary to address this matter to be material to its financial condition or results of operations. -10- FORWARD LOOKING STATEMENTS This report contains certain "forward-looking statements" as such term is defined in the Private Securities Litigation Reform Act of 1995 or by the Securities and Exchange Commission in its rules, regulations and releases, which represents the Company's interpretation or beliefs. These forward looking statements, by their nature, involve substantial risks and uncertainties, certain of which may be beyond the Company's control and actual results may differ materially depending on a variety of important factors including uncertainties related to acquisitions, government regulation, managing and maintaining growth, the effect of adverse publicity, competition and other factors described in the Company's filings with the Securities and Exchange Commission. For this purpose, any statements contained in this Report that are not statements of historical fact may be deemed to be forward looking statements. Without limiting the generality of the foregoing, words such as "may," "will," "expect," "believe," or "continue"or the negative or other variations thereof or comparable terminology are intended to identify forward looking statements. -11- PART II - OTHER INFORMATION ITEM 3. DEFAULTS UPON SENIOR SECURITIES As of September 30, 1998, cumulative dividends with respect to the Company's Series 1992-1 Preferred Stock were $1,312,500, which were undeclared, unpaid and were in arrears, which class ranks prior to the Company's Common Stock with regard to dividend and liquidation rights. ITEM 5. OTHER INFORMATION Pursuant to recent amendments to the proxy rules under the Securities Exchange Act of 1934, the Company's stockholders are notified that the deadline for providing the Company timely notice of any stockholder proposal to be submitted outside of the Rule 14a-8 process for consideration at the Company's 1999 Annual Meeting of Stockholders (the "Annual Meeting") will be April 30, 1999. As to all such matters which the Company does not have notice on or prior to April 30, 1999, discretionary authority shall be granted to the designated persons in the Proxy Statement for the Annual Meeting. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits. 27.1 Financial Data Schedule (b) Reports on Form 8-K. On May 26, 1998, the Company filed a Current Report on form-8-K with the Commission, reporting under Item 2. Disposition of Assets, that the sale of the Deadwood Gulch Resort had been completed. On July 23, 1998 the Company filed an amendment to its Current Report on Form 8-K/A with the Commission including Financial Information with respect to the sale of the Resort. -12- SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Company has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. FULL HOUSE RESORTS, INC. Date: November 10, 1998 By /s/ GREGG R. GIUFFRIA -------------------------------------- Gregg R. Giuffria, President and Chief Operating Officer -13- EXHIBIT INDEX EXHIBIT DESCRIPTION - ------- ----------- 27.1 Financial Data Schedule