U.S. Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-KSB
(Mark One)
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the Fiscal Year Ended March 31, 2003
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
Commission file number: 0-30263
SUREBET CASINOS, INC.
(Name of small business issuer in its charter)
UTAH 75-1878071
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1610 BARRANCAS AVENUE, PENSACOLA, FLORIDA 32501
(Address of principal executive offices) (Zip Code)
Issuer's telephone number: (850) 438-9647
Securities registered under Section 12(b) of the Exchange Act: NONE
Securities registered under Section 12(g) of the Exchange Act:
COMMON STOCK, $0.001 PAR VALUE
(Title of class)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act 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 / / No /X/
Check if no disclosure of delinquent filers in response to Item 405 of
Regulation S-B is contained in this form, and no disclosure will be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. / /
Issuer's revenues for the fiscal year ended March 31, 2003: $-0-
Aggregate market value of the registrant's common stock held by non-affiliates
as of July 8, 2003: APPROXIMATELY $36,283.
Number of shares of the registrant's common stock outstanding: 7,889,169 as of
July 8, 2003.
Transitional Small Business Disclosure Format (check one): Yes/ / No/X/
1
PART I
ITEM 1. DESCRIPTION OF BUSINESS.
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sureBET Casinos, Inc. ("the Company") is a corporation organized under
the laws of the State of Utah on June 13, 1985. Although the Company has been in
existence since June 1985, it changed its business strategy in 1999 to enter
into the casino business. The Company intended to develop, acquire, joint
venture, manage, and operate gaming establishments with an initial focus on
water-based gaming, the emerging gaming markets, and the rehabilitation and
reorganization of casinos that were underperforming financially. The Company's
operations were conducted through a subsidiary, Casino Padre Investment Company,
LLC, a Nevada limited liability company, from November 1999 to November 2000.
The LLC ceased operations in November 2000 and no longer exists.
The Company is currently considered a "public shell" corporation with
no active business operations and is in the process of searching for an
operating business with which to merge or to acquire. The Company is an Over the
Counter Bulletin Board stock trading under the symbol "SBET".
CORPORATE HISTORY
The Company was formed in Utah on June 13, 1985 under the name Navis,
Bona, Inc. On March 29, 1988, the company merged with I Love Yogurt Corporation,
a Texas corporation. Navis Bona, Inc., the surviving corporation, changed its
name upon completion of the merger to I Love Yogurt Corporation.
On June 24, 1992, I Love Yogurt Corporation merged with Chelsea Street
Holding Company, Inc., a Delaware corporation. I Love Yogurt Corporation was the
surviving corporation after the merger. Pursuant to the Merger Agreement, I Love
Yogurt Corporation changed its name to Chelsea Street Financial Holding
Corporation. On November 23, 1993, Chelsea Street Financial Holding Corporation
amended its Articles of Incorporation changing the name of the corporation to
Wexford Technology Incorporated.
On March 5, 1999, the Company entered into an Asset Purchase Agreement
with its controlling shareholder, Imperial Petroleum, Inc. ("Imperial").
Pursuant to the Agreement, Imperial acquired all of the assets and liabilities
of the Company. No consideration was exchanged in return for the sale of the
assets and transfer of the liabilities.
On May 12, 1999, the Company entered into an Agreement to Exchange
Common Stock with U.S. Gaming & Leisure Corp. ("USGL"). Pursuant to the
agreement with USGL, the Company was to issue 6,000,000 new common shares to
shareholders of USGL for 100% of the outstanding shares of USGL. This
transaction was never consummated.
On June 7, 1999, there was a change in the Board of Directors of the
Company. The new board changed the Company's business strategy and decided to
enter into the casino business. On June 24, 1999, the Articles of Incorporation
of the Company were amended to change the name of the Company to sureBET
Casinos, Inc.
Under the direction of its new management, the Company intended to
develop, acquire, joint venture, manage, and operate gaming establishments with
an initial focus on water-based gaming, the emerging gaming markets, and the
rehabilitation and reorganization of casinos that were underperforming
financially.
On October 1, 1999, the Company entered into a Management Contract with
Casino Padre Investment Company, LLC, a Nevada limited liability company. Under
the terms of the contract, the Company had an exclusive agreement to operate the
gaming ship M/V Entertainer and the gaming operations located on the ship on
behalf of and for the account of Casino Padre Investment Company, LLC.
On October 27, 1999, the Company acquired 50 membership units in Casino
Padre Investment Company LLC in exchange for 5,000,000 shares of the common
stock of the Company. Immediately following the transaction, the Company owned
83% of Casino Padre Investment Company LLC. The shares were
2
acquired from Charles S. Liberis, the President of the Company. The LLC was
formed on September 14, 1999 and at the time of the acquisition, was still in a
developmental stage. Casino Padre commenced operations on November 18, 1999.
The LLC ceased operations on November 6, 2000. The charter on the M/V
Entertainer has been terminated and the LLC no longer exists. See Item 12.
Certain Relationships and Related Transactions.
On December 20, 1999, the Company entered into an agreement with Black
Hawk Hotel Corporation, an unaffiliated entity, to lease Lilly Belle's Casino,
an existing casino facility located in Black Hawk, Colorado. The Company later
canceled the lease based on the determination that increased competition
impaired economic feasibility of the proposed venture.
The Company issued 200,000 common shares valued at $200,000 as a
deposit on the lease. Lilly Belle's Casino filed for bankruptcy in November
2001. The common shares that were issued are being held in escrow and the
Company is currently negotiating to receive the shares back. Due to this
uncertainty, the deposit was written off during the year ended March 31, 2002.
See Item 6. Management's Discussion and Analysis or Plan of Operation.
EMPLOYEES
As of July 15, 2003, the Company is inactive and has no employees.
The Company's future success depends in significant part upon the
continued service of its key senior management personnel and its continuing
ability to attract and retain highly qualified managerial personnel. The time
that the officers and directors devote to the business affairs of the Company
and the skill with which they discharge their responsibilities will
substantially impact the Company's success. To the extent the services of these
individuals would be unavailable to the Company for any reason, the Company
would be required to identify, hire, train and retain other highly qualified
managerial personnel to manage and operate the Company. The Company's business
could be adversely affected to the extent such key individuals could not be
replaced.
ITEM 2. DESCRIPTION OF PROPERTY.
--------------------------------------------------------------------------------
The Company's administrative offices are located in 1,996 square feet
of office space in Pensacola, Florida, that is owned by Charles S. Liberis, the
Company's Chairman of the Board of Directors, Chief Executive Officer and
principal stockholder. The Company pays no rent for the space.
ITEM 3. LEGAL PROCEEDINGS.
--------------------------------------------------------------------------------
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
--------------------------------------------------------------------------------
No matters were submitted to a vote of security holders during the
fourth quarter of the fiscal year ended March 31, 2003.
3
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
--------------------------------------------------------------------------------
The Company's Common Stock is not traded on a registered securities
exchange, or on NASDAQ. The Company's Common Stock has been quoted on the OTC
Bulletin Board since 1987. It traded under the symbol "DICE" from July 14, 1999
to August 23, 2000. The stock was delisted from August 23, 2000 to May 23, 2001
and began trading under the symbol "SBET" on May 24, 2001. The following table
sets forth the range of high and low bid quotations for each fiscal quarter
within the last two fiscal years, as well as the current fiscal year. These
quotations reflect inter-dealer prices without retail mark-up, mark-down, or
commissions and may not necessarily represent actual transactions.
FISCAL QUARTER ENDED HIGH BID LOW BID
June 30, 2001..................... - -
September 30, 2001................ $ 0.01 $ 0.01
December 31, 2001................. $ 0.30 $ 0.01
March 31, 2002.................... $ 0.10 $ 0.03
June 30, 2002..................... $ 0.03 $ 0.01
September 30, 2002................ $ 0.02 $ 0.01
December 31, 2002................. $ 0.01 $ 0.01
March 31, 2003.................... $ 0.01 $ 0.00
June 30, 2003..................... $ 0.01 $ 0.00
As of July 15, 2001, there were 291 record holders of the Company's
Common Stock. On August 11, 2003, the closing bid price was $0.01. Since the
Company's inception, no cash dividends have been declared on the Company's
Common Stock.
The Securities and Exchange Commission (SEC) has adopted rules that
regulate broker-dealer practices in connection with transactions in "penny
stocks". Generally, penny stocks are equity securities with a price of less than
$5.00 (other than securities registered on certain national exchanges or quoted
on the NASDAQ system). If the Company's shares are traded for less than $5 per
share, as they currently are, the shares will be subject to the SEC's penny
stock rules unless (1) the Company's net tangible assets exceed $5,000,000
during the Company's first three years of continuous operations or $2,000,000
after the Company's first three years of continuous operations; or (2) the
Company has had average revenue of at least $6,000,000 for the last three years.
The penny stock rules require a broker-dealer, prior to a transaction in a penny
stock not otherwise exempt from the rules, to deliver a standardized risk
disclosure document prescribed by the SEC that provides information about penny
stocks and the nature and level of risks in the penny stock market. The
broker-dealer also must provide the customer with current bid and offer
quotations for the penny stock, the compensation of the broker-dealer and its
salesperson in the transaction, and monthly account statements showing the
market value of each penny stock held in the customer's account. In addition,
the penny stock rules require that prior to a transaction in a penny stock not
otherwise exempt from those rules, the broker-dealer must make a special written
determination that the penny stock is a suitable investment for the purchaser
and receive the purchaser's written agreement to the transaction. These
requirements may have the effect of reducing the level of trading activity in
the secondary market for a stock that becomes subject to the penny stock rules.
As long as the Company's Common Stock is subject to the penny stock rules, the
holders of the Common Stock may find it difficult to sell the Common Stock of
the Company.
4
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
--------------------------------------------------------------------------------
The Company ceased conducting an active trade or business in April
1997. During the fiscal years ended March 31, 1999 and 1998, the Company had no
operating business. The Company entered into an Asset Purchase Agreement (the
"Agreement") on March 5, 1999 with its controlling shareholder, Imperial
Petroleum, Inc. ("Imperial"). The Agreement provided that Imperial would acquire
all of the assets and liabilities of the Company. No consideration was exchanged
in return for the sale of the net liabilities of the Company. As a result of the
Agreement, the Company had no assets or liabilities as of March 31, 1999.
In November 1999, the Company commenced operations in the casino
business. The sole source of revenue for the Company through the fiscal year
ended March 31, 2001 was derived from the operation of Casino Padre. Casino
Padre began operations on November 18, 1999 and ceased operations on November 6,
2000.
RESULTS OF OPERATIONS
The Company has not generated any revenues for the fiscal years ended
March 31, 2003 and 2002.
For the year ended March 31, 2003, the Company incurred a net operating
loss of $51,405, as compared to a net operating loss of $356,486 for the year
ended March 31, 2002.
For the year ended March 31, 2003, general and administrative expenses,
consisting primarily of audit fees, legal fees, and transfer agent fees, were
$21,405. This represents a decrease of $25,081 or 54% from the previous year. In
addition, the Company wrote off a $30,000 deposit during the 2003 fiscal year.
In March 2000, Newpark Shipbuilding - Pasadena, Inc. ("Newpark") filed a lawsuit
against the Company seeking approximately $140,000 for repair work on the M/V
Casino Padre. The Company disputed the amount of the claim and posted a bond in
the amount of $140,000. The case has been settled for $100,000 and CSL
Development, the vessel owner, was refunded $40,000 that it had posted on behalf
of the Company.
General and administrative expenses for the year ended March 31, 2002,
totaled $46,486. In fiscal 2002, the Company wrote off a deposit of $200,000 on
the Black Hawk casino lease and recognized $110,000 as a legal settlement
expense in connection with the Newpark Shipping - Pasadena claim.
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 2003, the Company had a working capital deficiency of
$781,232, as compared to a deficiency of $759,827 at March 31, 2002. The Company
does not believe that it will be able to meet its normal operating costs and
expenses as the Company does not presently have any operations.
The Company has been dependent upon loans from its principal
shareholder and President, Charles Liberis. The loans are not evidenced by
promissory notes and there is no fixed date for repayment. At March 31, 2003,
$86,602 was owed to Mr. Liberis.
In addition, at March 31, 2003, $48,506 was owed to CSL Development
Corporation for past due charter payments, payments of Company operating
expenses, and accrued interest thereon. Mr. Liberis is also the President of CSL
Development Corporation.
The report of the Company's independent auditors on the financial
statements for the year ended March 31, 2002, included an explanatory paragraph
relating to the uncertainty of the Company's ability to continue as a going
concern due to the loss incurred for the year ended March 31, 2002 and the
working capital deficit and stockholders' deficit existing as of March 31, 2002.
The Company must raise additional capital, incur debt, or obtain financing in
order to fund operations.
The Company's financial condition has not improved since that audit
report was issued. Accordingly, the going concern issue still applies to the
Company.
5
The Company believes that it will be able to raise additional capital
through debt and equity financing which, along with additional loans from its
principal shareholders, will be sufficient to meet the Company's current working
capital needs for at least the next twelve months. However, there can be no
assurance that the Company will be able to raise additional capital or to take
advantage of any expansion opportunities that may become available. There can be
no assurance that additional capital will be available at all, at an acceptable
cost, or on a basis that is timely to allow the Company to finance any further
business opportunities.
FORWARD LOOKING STATEMENTS
Except for historical information contained herein, the matters
discussed in this Item 6, in particular, statements that use the words
"believes", "intends", "anticipates", or "expects" are intended to identify
forward looking statements that are subject to risks and uncertainties
including, but not limited to, inclement weather, mechanical failures, increased
competition, financing, governmental action, environmental opposition, legal
actions, and other unforeseen factors.
ITEM 7. FINANCIAL STATEMENTS.
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The consolidated financial statements and notes are included herein
beginning at page F-1. The financial statements as of and for the year ended
March 31, 2003 were not audited in reliance on Rule 3-11 of Regulation S-X,
since the Company is deemed to be an inactive entity under that rule. For the
past fiscal year, the Company's gross receipts do not exceed $100,000, the
Company has not purchased, sold, or granted options on its common stock, the
Company's expenditures do not exceed $100,000, and no material change in the
Company's business has occurred.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
--------------------------------------------------------------------------------
None.
6
PART III
ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
--------------------------------------------------------------------------------
The officers and directors of the Company are as follows:
NAME Age POSITION
Charles S. Liberis 61 Chairman of the Board of Directors,
President, Chief Operating Officer
Michael Georgilas 49 Director
The term of office of each director of the Company ends at the next
annual meeting of the Company's stockholders or when the director's successor is
elected and qualified. No date for the next annual meeting of stockholders is
specified in the Company's Bylaws, nor has a meeting been fixed by the Board of
Directors. The term of office of each officer of the Company ends at the next
annual meeting of the Company's Board of Directors, which is expected to take
place immediately after the next annual meeting of stockholders, or when such
officer's successor is elected and qualified.
CHARLES S. LIBERIS. Mr. Liberis was elected Chairman, President and
Chief Operating Officer of the Company on July 8, 1999. Since 1992, Mr. Liberis
served as President of CSL Development Corporation, a private company. CSL
Development Corporation has been engaged in general development of real estate
property including condominiums, resorts, golf courses, and casinos. Mr. Liberis
was a founder of Europa Cruises Corporation (NASDAQ - KRUZ), Pensacola, Florida,
and served as its Chief Executive Officer from 1989 to 1992. Prior to joining
Europa, Mr. Liberis was a practicing attorney for over twenty years and was a
Senior Partner in the law firm of Liberis, Sauls, and Fleming, P.A., with
offices in Pensacola and Tallahassee, Florida, and Atlanta, Georgia. His
practice consisted primarily of real estate and corporate reorganization law and
he has had an extensive background in the reorganization of numerous hospitality
operations. Mr. Liberis was a founder and served on the Board of Directors and
as General Counsel of Southern National Bankshares, Atlanta, Georgia, from 1983
to 1985. Mr. Liberis majored in business and finance and received his Juris
Doctorate from Stetson University College of Law in 1977. He is a member of the
American and Florida Bar Associations and the International Association of
Gaming Attorneys. Mr. Liberis has previously been found suitable for licensing
by the Mississippi Gaming Commission.
MICHAEL GEORGILAS. Mr. Georgilas was elected to the Board of Directors
of the Company in June 1999. Since September 1996, Mr. Georgilas has served as
Chairman and Chief Executive Officer of Mondial Group Inc, Athens, Greece, an
international casino development and management company. From July 1993 to
August 1996, he was Vice President of Gaming and Director of Gaming Development
for ITT/Sheraton Corporation, Boston, Massachusetts. From June 1992 to December
1992, he served as Chief Operating Officer of Europa Cruises Corporation,
Pensacola, Florida. From 1991 to 1992, he served as Associate Director of the
Casino and Gaming Management Division at the University of Nevada in Las Vegas.
From 1986 through 1991, he held various positions with Hilton Corporation having
last served as President and General Manager of the Flamingo Hilton Reno. Mr.
Georgilas holds a Bachelor of Science Degree in Hotel Administration and a
Master of Science Degree in Hotel Administration from the University of Nevada,
Las Vegas.
Mr. Liberis may be deemed to be the "promoter" of the Company within
the meaning of the Rules and Regulations under federal securities laws.
We do not have any standing audit, nominating, or compensation
committees of our board of directors.
7
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
During the fiscal year ended March 31, 2003, there were no other known
failures to file a report required by Section 16(a) of the Securities Exchange
Act of 1934.
CODE OF ETHICS
We have not yet adopted a code of ethics that applies to our principal
executive officer, principal financial officer, principal accounting officer or
controller, or persons performing similar functions, since we have been focusing
our efforts on obtaining a business opportunity for the Company. We expect to
adopt a code by the end of the current fiscal year.
ITEM 10. EXECUTIVE COMPENSATION.
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The following table sets forth information for all persons who have
served as the chief executive officer of the Company during the last completed
fiscal year. No disclosure need be provided for any executive officer, other
than the CEO, whose total annual salary and bonus for the last completed fiscal
year did not exceed $100,000. Accordingly, no other executive officers of the
Company are included in the table.
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG TERM COMPENSATION
--------------------------------------------- ------------------------------------------
AWARDS PAYOUTS
---------------------------- ------------
RESTRICTED SECURITIES
NAME AND OTHER ANNUAL STOCK UNDERLYING ALL OTHER
PRINCIPAL COMPENSATION AWARD(S) OPTIONS/ LTIP COMPEN-
POSITION YEAR SALARY ($) BONUS ($) ($) ($) SARS (#) PAYOUTS SATION ($)
------------- --------- ------------ ------------ ------------------ -------------- ------------- ------------ ------------
Charles S. 2001 $0.00 $0.00 $0.00 $0.00 0 0 $0.00
Liberis, 2002 $0.00 $0.00 $0.00 $0.00 0 0 $0.00
President 2003 $0.00 $0.00 $0.00 $0.00 0 0 $0.00
(1)
---------------
(1) Charles S. Liberis has been the President of the Company since July 8,
1999.
The Company does not have any employment contracts with any of its
officers or directors. Such persons are employed by the Company on an at will
basis, and the terms and conditions of employment are subject to change by the
Company.
STOCK OPTION PLANS
The Company has no stock option plans.
OPTION GRANTS IN LAST FISCAL YEAR
There were no options granted as executive compensation during the past
year.
DIRECTOR COMPENSATION
No employees will receive additional compensation as directors.
Non-Employee directors will be compensated at the rate of $500 per meeting for
attendance at meetings with the Board of Directors.
8
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
AND RELATED STOCKHOLDER MATTERS.
--------------------------------------------------------------------------------
The following table provides certain information as to the officers and
directors individually and as a group, and the holders of more than 5% of the
Common Stock of the Company, as of March 31, 2003:
NAME AND ADDRESS OF OWNER NUMBER OF SHARES OWNED PERCENT OF CLASS (1)
Charles S. Liberis 6,000,000 76.1%
1610 Barrancas Avenue
Pensacola, FL 32501
Michael Georgilas 75,000 1.0%
Ellis 26
N. Erythrea 14671
Athens, Greece
Officers and directors as a group 6,075,000 77.0%
(3 persons)
---------------
(1) This table is based on 7,889,169 shares of Common Stock outstanding on
March 31, 2003.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
--------------------------------------------------------------------------------
On March 5, 1999, the Company entered into an Asset Purchase Agreement
with its controlling shareholder, Imperial Petroleum, Inc. ("Imperial").
Pursuant to the Agreement, Imperial acquired all of the assets and liabilities
of the Company. No consideration was exchanged in return for the sale of the
assets and transfer of the liabilities.
On October 1, 1999, Casino Padre Investment Company LLC entered into a
Charter Agreement to charter the vessel, "MV Entertainer", and the equipment
associated therewith, pursuant to a Charter Agreement (the "Charter Agreement")
with CSL Development Corporation (CSLD). The initial charter period was for five
(5) years commencing on October 1, 1999. The Charter Agreement was terminated.
At March 31, 2003, $48,506 was owed to CSLD for past due charter payments,
payment of other operating expenses and for accrued interest at 12% annually.
Since May 31, 1999, Charles Liberis, the President of the Company, had
advanced funds to the Company as necessary to cover operating expenses. The
loans are not evidenced by promissory notes. There is no fixed date for
repayment. At March 31, 2003, $86,602 was owed to Mr. Liberis.
The Company's administrative offices are located in 1,996 square feet
of office space in Pensacola, Florida, that is owned by Charles S. Liberis, the
Company's Chairman of the Board of Directors, Chief Executive Officer and
principal stockholder. The Company pays no rent for the space.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.
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The following exhibits are included with this annual report:
EXHIBIT
NUMBER DOCUMENT
2.1 Agreement to Exchange Common Stock with U.S. Gaming & Leisure
Corp. (1)
3.1 Articles of Incorporation, as amended (1)
9
EXHIBIT
NUMBER DOCUMENT
3.2 Bylaws, as amended (1)
21 Subsidiaries of the Registrant (1)
31 Certification Pursuant to Rule 13a-14(a) of Sole Officer
32 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of
Sole Officer
-----------------------
(1) Previously filed as an exhibit to the Company's Registration Statement
on Form 10-SB dated April 10, 2000 and incorporated by reference
herein.
No reports on Form 8-K were filed during the last quarter of the period
covered by this report.
ITEM 14. CONTROLS AND PROCEDURES.
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The Company's sole officer believes that its disclosure controls and
procedures are adequate given the fact that the Company is currently an inactive
entity, as defined by Rule 3-11 of Regulation S-X. Should the Company increase
its level of activity and increase its cash flow, additional controls and
procedures will be implemented. The delinquency of this report is due to a lack
of funds, as opposed to inadequate controls and procedures.
ITEM 15. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
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AUDIT FEES
For the 2002 fiscal year, fees billed by the Company's principal
accountant for the audit of the Company's annual financial statements were
$5,000. The Company did not have its financial statements for the 2003 fiscal
year audited.
AUDIT-RELATED FEES
The Company's principal accountant did not render any audit-related
services for the last two fiscal years.
TAX FEES
The Company's principal accountant did not render any services for tax
compliance, tax advice, and tax planning for the last two fiscal years.
ALL OTHER FEES
There were no other fees billed by the Company's principal accountant
for the last two fiscal years, other than the fees disclosed above.
10
PRE-APPROVAL POLICIES AND PROCEDURES
The Company does not have an audit committee of its board of directors.
Prior to engaging the principal accountants to perform a particular service, the
board of directors obtains an estimate for the service to be performed. All of
the services described above were approved by the board of directors in
accordance with its procedures.
11
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
SUREBET CASINOS, INC.
Date: August 22, 2003 By: /s/ CHARLES S. LIBERIS
------------------------- -------------------------------------
Charles S. Liberis, President
In accordance with the Exchange Act, this report has been signed below
by the following persons on behalf of the registrant and in the capacities and
on the dates indicated.
SIGNATURE AND TITLE DATE
/s/ CHARLES S. LIBERIS August 22, 2003
-------------------------------------------
Carles S. Liberis
Chairman of the Board of Directors,
President and Chief Operating Officer
(Principal Executive, Financial and
Accounting Officer)
/s/ MICHAEL GEORGILAS August 22, 2003
-------------------------------------------
Michael Georgilas
Director
12
SUREBET CASINOS, INC. AND SUBSIDIARY
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
PAGE
Consolidated Balance Sheets as of March 31, 2003 and 2002...................F-2
Consolidated Statements of Operations
for the Years Ended March 31, 2003 and 2002........................F-3
Consolidated Statements of Changes in Stockholders' Deficit
for the Years Ended March 31, 2003 and 2002........................F-4
Consolidated Statements of Cash Flows
for the Years Ended March 31, 2003 and 2002........................F-5
Notes to Consolidated Financial Statements..................................F-6
F-1
SUREBET CASINOS, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
March 31, 2003 and 2002
ASSETS
2003 2002
----------------- -------------------
(Unaudited)
Current assets:
Cash $ - $ -
Receivables - -
----------------- -------------------
Total current assets - -
----------------- -------------------
Other assets:
Deposit on claim (Note 5) - 30,000
Deposit on Colorado casino lease (Note 5) - -
----------------- -------------------
Total other assets - 30,000
----------------- -------------------
$ - $ 30,000
================= ===================
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable and accrued liabilities $ 646,124 $ 646,124
Due to shareholder (Note 6) 86,602 86,602
Due to CSL Development Corporation (Notes 5 and 6) 48,506 27,101
----------------- -------------------
Total current liabilities 781,232 759,827
----------------- -------------------
Commitments and contingencies (Note 5) - -
Stockholders' deficit:
Preferred stock, $.01 par value, 500,000 shares
authorized, none issued and outstanding - -
Common stock, $.001 par value, 50,000,000 shares
authorized, 7,889,169 shares issued and outstanding 7,889 7,889
Additional paid-in capital 5,569,866 5,569,866
Accumulated deficit (6,358,987) (6,307,582)
----------------- -------------------
Total stockholders' deficit (781,232) (729,827)
----------------- -------------------
$ - $ 30,000
================= ===================
See notes to consolidated financial statements.
F-2
SUREBET CASINOS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
Years Ended March 31, 2003 and 2002
2003 2002
------------ -------------
(Unaudited)
Revenue:
Casino revenue $ - $ -
Ticket sales - -
Food and beverage sales - -
------------ -------------
Total revenue - -
------------- -------------
Operating expenses:
Cost of food and beverage sales - -
Casino operating costs - -
Casino vessel costs - -
Sales and marketing - -
General and administrative 21,405 46,486
Write-off of deposit (Note 5) 30,000 200,000
Legal settlement (Note 5) 110,000
Minority interest in losses - -
------------- -------------
Total operating expenses 51,405 356,486
------------- -------------
Net loss $ (51,405) $ (356,486)
============= =============
Basic net loss per share $ (0.01) $ (0.05)
============= =============
Weighted average common shares outstanding 7,889,169 7,889,169
============= =============
See accompanying notes to consolidated financial statements.
F-3
SUREBET CASINOS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
Years Ended March 31, 2003 and 2002
(Unaudited)
COMMON STOCK ADDITIONAL
------------------------------ PAID-IN ACCUMULATED
SHARES AMOUNT CAPITAL DEFICIT TOTAL
--------------- ------------- ---------------- ---------------- --------------
Balance, March 31, 2001 7,889,169 $ 7,889 $ 5,569,866 $ (5,951,096) $ (373,341)
Net loss - - - (356,486) (356,486)
--------------- ------------- ---------------- ---------------- --------------
Balance, March 31, 2002 7,889,169 7,889 5,569,866 (6,307,582) (729,827)
Net loss - - - (51,405) (51,405)
--------------- ------------- ---------------- ---------------- --------------
Balance, March 31, 2003 7,889,169 $ 7,889 $ 5,569,866 $ (6,358,987) $ (781,232)
=============== ============= ================ ================ ==============
See accompanying notes to consolidated financial statements.
F-4
SUREBET CASINOS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED MARCH 31, 2003 AND 2002
2003 2002
---------------- ---------------
(Unaudited)
Cash flows from operating activities:
Net loss $ (51,405) $ (356,486)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation - -
Loss on disposition of assets - -
Minority interest in losses - -
Legal settlement - 110,000
Write-off of deposit 30,000 200,000
Changes in operating assets and liabilities: -
Accounts receivable - 15,630
Inventory - -
Other assets - -
Accounts payable and accrued liabilities - 30,856
---------------- ---------------
Net cash provided by operating activities (21,405) -
---------------- ---------------
Cash flows from financing activities:
Net advances from shareholder 21,405 -
Sale of shares of subsidiary to minority interests - -
Sale of common shares - -
---------------- ---------------
Net cash used in financing activities 21,405 -
---------------- ---------------
Net decrease in cash and cash equivalents - -
Cash at beginning of year - -
---------------- ---------------
Cash at end of year $ - $ -
================ ===============
Supplemental disclosure:
Total interest paid $ - $ -
================ ===============
See accompanying notes to consolidated financial statements.
F-5
SUREBET CASINOS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2003 AND 2002
1. DISCONTINUED OPERATIONS, REVERSE MERGER AND BUSINESS OF THE COMPANY
During the year ended March 31, 1999, SureBET Casinos, Inc. ("the
Company") had no operating assets and had been investigating the
acquisition of an operating business. The Company changed its name on
June 24, 1999 from Wexford Technology, Incorporated. In connection with
an Agreement to Exchange Stock with U.S. Gaming and Leisure Corp.
("USG&L") (see below), the Company entered into an Asset Purchase
Agreement (the "Agreement") on March 5, 1999 with its controlling
shareholder, Imperial Petroleum, Inc. ("Imperial"). The Agreement
provides that Imperial would acquire all the assets and liabilities of
the Company. No consideration was exchanged in return for the sale of the
net liabilities of the Company. As a result of the Agreement, the Company
had no assets or liabilities as of March 31, 1999.
In connection with the Agreement to Exchange Common Stock with USG&L,
dated May 12, 1999, which is contingent on a private placement which has
not been completed, the Company will issue 6,000,000 new common shares to
stockholders of USG&L for 100% of the outstanding shares of USG&L. As a
result of the tax-free transaction, USG&L will become a wholly owned
subsidiary of the Company. The owners of USG&L obtained effective control
of the Company in July 1999 by obtaining control of the Board of
Directors of the Company. USG&L is presently in the business of operating
a cruise ship and, after a private offering to raise additional capital,
intends to also enter the gaming business. The transaction will be
accounted for as a reverse acquisition whereby USG&L will be the
acquiring company for accounting purposes.
On June 7, 1999, there was a change in the Board of Directors of the
Company. The new board changed the Company's business strategy and
decided to enter into the casino business. On June 24, 1999, the
Company's articles of incorporation were amended to change the name of
the Company to SureBET Casinos, Inc.
Under the direction of its new management, the Company intends to
develop, acquire, joint venture, manage and operate gaming establishments
with an initial focus on water-based gaming, the emerging gaming markets,
and the rehabilitation and reorganization of casinos that are under
performing financially.
On October 1, 1999, the Company entered into a Management Contract with
Casino Padre Investment Company, LLC, ("Casino Padre") a Nevada limited
liability company. Under the terms of the contract, the Company has an
exclusive agreement to operate the gaming ship
F-6
SUREBET CASINOS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. DISCONTINUED OPERATIONS, REVERSE MERGER AND BUSINESS OF THE COMPANY
(CONTINUED)
M/Ventertainer (name changed in April 2000 to M/V Casino Padre) and the
gaming operations located on the ship on behalf of and for the account of
Casino Padre. On October 27, 1999, the Company acquired 50 membership
units in Casino Padre in exchange for 5,000,000 shares of the common
stock of the Company. Immediately following the transaction, the Company
owned 83% of Casino Padre. The shares were acquired from Charles S.
Liberis, the President of the Company. Casino Padre was formed on
September 14, 1999 and at the time of the acquisition, was still in a
developmental stage. Casino Padre commenced operations on November 18,
1999. As of March 31, 2003, the Company owns 74% of Casino Padre. Casino
Padre ceased operations on November 6, 2000.
The acquisition has been accounted for in a manner similar to the
pooling-of-interests method due to Charles L. Liberis' control of the
respective companies. Accordingly, the Company has presented, in the
accompanying consolidated financial statements, the combination of the
companies as if the acquisition had occurred at the inception of Casino
Padre in September 1999. Casino Padre's assets and liabilities are
presented on a historical basis with no adjustment for the acquisition.
On December 20, 1999, the Company entered into an agreement with Black
Hawk Hotel Corporation, an unaffiliated entity, to lease Lilly Belle's
Casino, an existing casino facility located in Black Hawk, Colorado.
Pursuant to terms of the lease, the Company has an option to purchase the
premises. The lease is contingent on the Company receiving approval for
the transaction and issuance of regulatory licenses from the Colorado
Gaming Commission. The Company's application with the Colorado Gaming
Commission was withdrawn effective August 7, 2001.
The Company is currently considered a "public shell" corporation with
nominal business operations and is in the process of searching for an
operating business with which to negotiate a "reverse merger."
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The Company's financial statements have been presented on the basis that
it is a going concern, which contemplates the realization of assets and
the satisfaction of liabilities in the normal course of business.
The Company has suffered continuing net losses from operations and its
working capital deficit and stockholders' deficit raise substantial doubt
about its ability to continue as a going concern as of March 31, 2003. As
explained in Note 1, without a merger partner or acquisition of operating
assets, the Company has nominal operations. The Company is dependant on a
merger partner or raising additional funds in order to provide capital
for the Company to
F-7
SUREBET CASINOS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
continue as a going concern. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty
The Company believes that it will be able to raise additional capital
through debt and equity financing, along with loans from its principal
shareholders, which will be sufficient to meet the Company's current
working capital needs for at least the next twelve months. However, there
can be no assurance that the Company will be able to raise additional
capital or take advantage of any expansion opportunities that may become
available. There can be no assurance that additional capital will be
available at all, at an acceptable cost, or on a basis that is timely to
allow the Company to finance any further business opportunities.
STATEMENT OF CASH FLOWS
For statement of cash flow purposes, the Company considers short-term
investments, with an original maturity of three months or less to be cash
equivalents.
USE OF ESTIMATES AND ASSUMPTIONS
Preparation of the Company's financial statements in conformity with
accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect certain
reported amounts and disclosures. Accordingly, actual results could
differ from those estimates.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company
and its subsidiary. All significant intercompany balances and
transactions are eliminated in consolidation.
INCOME TAXES
The Company accounts for income taxes in accordance with Statement of
Financial Accounting Standards ("SFAS") No. 109, "Accounting for Income
Taxes." SFAS No. 109 utilizes the asset and liability method of computing
deferred income taxes. The objective of the asset and liability method is
to establish deferred tax assets and liabilities for the temporary
differences between the financial reporting basis and the tax basis of
the Company's assets and liabilities at enacted tax rates expected to be
in effect when such amounts are realized or settled.
F-8
SUREBET CASINOS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NET LOSS PER COMMON SHARE
The Company follows the provisions of SFAS No. 128, Earnings Per Share.
SFAS No. 128 provides a different method of calculating earnings per
share than was formerly used in APB Opinion 15. SFAS No. 128 provides for
the calculation of basic and diluted earnings per share. Basic earnings
per share includes no dilution and is computed by dividing income
available to common stockholders by the weighted average number of common
shares outstanding for the period. Dilutive earnings per share reflects
the potential dilution of securities that could share in the earnings of
the Company. Because the Company has no dilutive securities, the
accompanying presentation is only of basic loss per share.
3. INCOME TAXES
At March 31, 2003, the Company had net operating loss carryforwards
totaling approximately $6,270,000 available to reduce future taxable
income through the year 2014. Due to changes in control of the Company,
these carryforwards are generally limited on an annual basis.
Deferred taxes are determined based on temporary differences between the
financial statement and income tax basis of assets and liabilities as
measured by the enacted tax rates which will be in effect when these
differences reverse.
Deferred tax assets are comprised of the following:
March 31,
2003 2002
------------ -------------
Net operating loss carryforwards $ 2,116.200 $ 2,114,800
Valuation Allowance (2,116,200) (2,114,800)
------------ -------------
Net deferred tax asset $ - $ -
------------- -------------
The Company has recorded a full valuation allowance against all deferred
tax assets because it could not determine whether it was more likely than
not that the deferred tax asset would be realized.
4. COMMON STOCK
At March 31, 2000, the Company issued 200,000 shares valued at $200,000
as a deposit for a lease on a casino in Colorado (see Note 5).
In February 2000, the Company entered into subscription agreements with
two individuals for the purchase of an aggregate of 1,000,000 units
consisting of one share of common stock and one warrant to purchase one
share of common stock at $.687 per share for a period of five years. The
purchase price of the units is $.6525 per share. The individuals
purchased an aggregate of 59,428 units in March 2000; therefore, there
exist 59,428 warrants to purchase common shares outstanding at March 31,
2003
F-9
SUREBET CASINOS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
5. CONTINGENT LIABILITIES
FAIR VALUE OF FINANCIAL INSTRUMENTS
The following disclosure of the estimated fair value of financial
instruments is made in accordance with the requirements of SFAS No. 107,
Disclosures about Fair Value of Financial Instruments. The estimated fair
value amounts have been determined by the Company, using available market
information and appropriate valuation methodologies.
The fair value of financial instruments classified as current liabilities
including accounts payable, due to shareholder, and due to CSL
Development Corporation (see Note 6) approximate carrying value due to
the short-term maturity of the instruments.
LITIGATION
In March 2000, Newpark Shipbuilding - Pasadena, Inc. ("Newpark") filed
lawsuit against the Company seeking approximately $140,000 for repair
work on the M/V Casino Padre. The Company disputed the amount of the
claim and posted a bond in the amount of $140,000. The case has been
settled for $100,000 and CSL Development, the vessel owner, was refunded
$40,000 that it had posted on behalf of the Company.
DEPOSIT ON CASINO LEASE
As explained in Note 4, the Company has issued 200,000 common shares
valued at $200,000 as a deposit on the lease of a casino in Black Hawk,
Colorado. The lease was a five-year lease for $30,000 per month and would
commence the earlier of October 1, 2000 or the issuance of a gaming
license by the Colorado Gaming Commission. The casino has filed for
bankruptcy. The common shares that were issued are being held in escrow
and the Company is currently in negotiations to receive the shares back;
however, due to this uncertainty, the deposit has been written-off during
the year ended March 31, 2002.
6. RELATED PARTY TRANSACTIONS
The payable to a principal shareholder included accrued interest at a
rate of 12% annually. The Company also owed CSL Development Corporation
for past due charter payments, payment of other operating expenses and
for accrued interest at 12% annually. Mr. Liberis is also president of
CSL Development Corporation.
F-10